AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 7, 2000
PRELIMINARY COPY
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X] Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
NVEST, L.P.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
units of limited partner interest in Nvest, L.P. and units of
general partner interest in Nvest, L.P.
(2) Aggregate number of securities to which transaction applies:
(a) 6,382,395 units of limited partner interest of Nvest, L.P.,
(b) 110,00 units of general partner interest of Nvest, L.P. and
(c) 7,432,430 units underlying outstanding options to purchase
units of limited partner interest of Nvest, L.P.
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined): The filing fee was determined based upon (a)
the product of 6,492,395, the sum of units of limited partner
and general partner interests in Nvest, L.P., and the merger
consideration of $40.00 per unit in cash and (b) the difference
between $40.00 per unit and the exercise price per unit of each
of the 7,432,430 options outstanding to purchase units of
limited partner interest of Nvest, L.P. In accordance with Rule
0-11 under the Securities Act of 1934, as amended, the filing
fee was determined by multiplying the amount calculated
pursuant to the preceding sentence by 1/50 of one percent.
(4) Proposed maximum aggregate value of transaction: $374,137,166
(5) Total fee paid: $74,827.
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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PRELIMINARY COPY
[LOGO]
NVEST, L.P.
399 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
SPECIAL MEETING OF UNITHOLDERS
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
September 19, 2000
Dear Nvest, L.P. Unitholder:
On behalf of the general partner of Nvest, L.P. (also referred to as
the "Partnership"), I cordially invite you to attend the special meeting of
the unitholders of the Partnership to be held on September 19, 2000 at 2:00
p.m. local time, at 399 Boylston Street, Boston, Massachusetts 02116.
At the special meeting, we will ask you to vote on proposals to (i)
approve the acquisition of the Partnership by CDC Asset Management, through
a merger of an indirect subsidiary of CDC Asset Management with and into
the Partnership pursuant to the terms of the agreement and plan of merger
dated June 16, 2000 and (ii) instruct the Partnership's general partner,
Nvest Corporation, how to vote the Partnership's interest in Nvest
Companies, L.P. with respect to the acquisition of Nvest Companies, L.P. by
CDC Asset Management, through a merger of an indirect subsidiary of CDC
Asset Management with and into Nvest Companies, L.P. also pursuant to the
terms of the Agreement and Plan of Merger.
If the mergers are completed you will receive $40.00 cash for each
unit of the Partnership you own, subject to a possible downward adjustment
(but not below $34.00 per Partnership unit), and the Partnership will
become a 100% owned subsidiary of CDC Asset Management. The $40 per unit
price represents a premium of 100% over the $20.00 New York Stock Exchange
closing price of the Partnership's units on June 15, 2000, the last trading
day before we announced the signing of the merger agreement.
The mergers cannot be completed unless the conditions to closing are
satisfied or waived, including the approval of the mergers of the
Partnership and Nvest Companies, L.P. by the holders of a majority of the
outstanding units of each partnership (not including units held by the
general partner of the Partnership and its affiliates), the obtaining of
consents from a certain percentage of registered investment company clients
and other investment advisory clients of our subsidiaries, and the
satisfaction of various regulatory requirements and of certain other
conditions that are described in the proxy statement.
The board of directors of Nvest Corporation carefully reviewed and
considered the terms and conditions of the proposed merger. Based on its
review, the board has determined that the terms of the merger agreement and
the mergers are advisable and fair to and in the best interest of the
Partnership and its unitholders. In making this determination, the board of
directors considered, among other things, an opinion of our financial
advisor Credit Suisse First Boston Corporation to the effect that, as of
that date and based upon and subject to the factors and assumptions
explained to the board and set forth in the opinion, the cash consideration
to be received by you in the merger was fair to you from a financial point
of view.
THE BOARD OF DIRECTORS OF NVEST CORPORATION, BASED ON ITS
DETERMINATION THAT THE MERGER AGREEMENT AND THE MERGERS ARE ADVISABLE AND
ARE FAIR TO AND IN THE BEST INTEREST OF THE PARTNERSHIP AND ITS
UNITHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE MERGERS.
ACCORDINGLY, THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE PARTNERSHIP
MERGER AND THAT YOU INSTRUCT NVEST CORPORATION TO VOTE THE PARTNERSHIP'S
INTEREST IN NVEST COMPANIES, L.P. "FOR" THE NVEST COMPANIES, L.P. MERGER.
The attached notice of special meeting and proxy statement explain
the proposed mergers and the merger agreement and provide specific
information concerning the special meeting. Please read these materials
(including appendices) carefully.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the
special meeting, please take the time to vote by completing, signing,
dating and promptly returning the enclosed proxy card to us at the address
set forth in the proxy statement. If you attend the special meeting and
wish to vote in person, you may withdraw your proxy and vote in person.
If you have any questions or need assistance with the voting
procedures, please call our investor relations department at (617) 578-3500
or D.F. King & Co., Inc., our proxy solicitors, toll-free at 1-800-
755-7250.
/s/ Peter S. Voss
Peter S. Voss
Chairman, President
and Chief Executive Officer
Nvest Corporation
This proxy statement is dated August 3, 2000 and was first mailed to
unitholders on or about [August ], 2000.
NVEST, L.P.
399 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
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NOTICE OF SPECIAL MEETING OF UNITHOLDERS
TO BE HELD ON SEPTEMBER 19, 2000
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To the Unitholders of Nvest, L.P. :
NOTICE IS HEREBY GIVEN that a special meeting of unitholders of
Nvest, L.P. will be held on September 19, 2000, at 2:00 p.m. local time at
399 Boylston Street, Boston, Massachusetts 02116, for the purpose of
considering and voting upon proposals to: (i) approve the acquisition of
Nvest, L.P. by CDC Asset Management pursuant to the terms of an Agreement
and Plan of Merger, dated June 16, 2000, by and among Nvest Corporation,
Nvest, L.P., Nvest Companies, L.P., CDC Finance, CDC Asset Management,
CDCAM North America Corporation, CDCAM Partnership, L.P. and CDCAM
Partnership II, L.P.; and (ii) instruct our general partner, Nvest
Corporation, how to vote Nvest, L.P.'s interest in Nvest Companies, L.P.
with respect to the acquisition of Nvest Companies, L.P. by CDC Asset
Management also pursuant to the terms of the Agreement and Plan of Merger.
Each proposal is described in the attached proxy statement, and a
proxy card for voting on the proposals is enclosed.
The Board of Directors of our general partner, Nvest Corporation, has
fixed the close of business on August 9, 2000 as the record date for
determining unitholders entitled to notice of, and to vote at, the special
meeting and any adjournment or postponement of the meeting. A list of
unitholders entitled to vote at the special meeting will be available for
examination at Nvest, L.P.'s principal offices, during ordinary business
hours, from September 9, 2000 until the meeting.
You should not send any certificates representing Nvest, L.P.
ownership with your proxy card.
Whether or not you attend the special meeting, you should complete,
sign, date and promptly return the enclosed proxy card to ensure that your
shares will be represented at the meeting. If you attend the special
meeting and wish to vote in person, you may withdraw your proxy and vote in
person.
BY ORDER OF THE GENERAL PARTNER,
/s/ Jeffrey D. Plunkett
Jeffrey D. Plunkett
Executive Vice President, General Counsel
and Secretary of Nvest Corporation
Dated: [August ], 2000
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE MERGER.......................................1
SUMMARY......................................................................3
The Special Meeting....................................................3
Companies..............................................................4
The Merger Agreement and the Mergers...................................4
Our General Partner's Recommendation...................................6
Material United States Federal Income Tax Consequences.................6
Opinion of Our Financial Advisor.......................................7
Interests of Certain Persons in the Transaction........................7
SPECIAL MEETING OF UNITHOLDERS...............................................8
Purpose................................................................8
Date, Time and Place...................................................8
Recommendation of Our General Partner..................................8
Record Date; Quorum; Units Outstanding Entitled to Vote................8
Voting Rights..........................................................8
Solicitation of Proxies; Expenses......................................9
Voting of Proxies......................................................9
Revocability of Proxies................................................9
Support Agreements....................................................10
Other Matters.........................................................10
PAYMENT OF CASH MERGER CONSIDERATION........................................10
THE TRANSACTION.............................................................11
Overview..............................................................11
Parties Involved in the Transactions..................................12
Calculation of the Unit Price.........................................13
Treatment of Employee Benefit Awards..................................14
No Appraisal Rights...................................................14
SPECIAL FACTORS.............................................................15
Recommendation........................................................15
Reasons for the Merger................................................15
Background of the Transaction.........................................16
Opinion of Our Financial Advisor......................................18
Interests of Certain Persons in the Transaction.......................24
REGULATORY APPROVALS........................................................27
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES......................28
Conversion of Partnership Units into Cash.............................28
Backup Withholding....................................................28
THE MERGER AGREEMENT........................................................29
The Mergers...........................................................29
Representations and Warranties........................................30
Covenants.............................................................32
Conditions to Obligations to Effect the Transactions..................37
Termination of the Merger Agreement...................................39
Termination Fee.......................................................40
Amendment and Waiver..................................................40
DIRECTORS AND MANAGEMENT....................................................41
The Partnership.......................................................41
PRICE RANGE OF UNITS AND DISTRIBUTIONS......................................42
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF.............................43
Security Ownership of Certain Beneficial Owners and Management........43
Principal Holders of Nvest Companies, L.P. Limited Partner Units......45
Beneficial Owners Entitled to Vote....................................48
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS..................50
WHERE YOU CAN FIND MORE INFORMATION.........................................51
APPENDIX A: AGREEMENT AND PLAN OF MERGER..................................A-1
APPENDIX B: OPINION OF CREDIT SUISSE FIRST BOSTON CORPORATION.............B-1
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QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT WILL I RECEIVE IN THE PARTNERSHIP MERGER?
A: If the Partnership merger is consummated, you will receive $40 per
unit for each unit of limited partner interest in the Partnership you
own, without interest, subject to a possible downward adjustment.
Q: UNDER WHAT CIRCUMSTANCES COULD I RECEIVE LESS THAN $40.00 PER UNIT?
A: You will receive less than $40.00 per unit in the event that
annualized investment management fees (without giving effect to
market or currency fluctuations) of Nvest Companies, L.P., as of the
month-end prior to the closing, in respect of which advisory client
consents have been obtained in accordance with the merger agreement,
are less than 90% of annualized investment management fees measured
as of April 30, 2000. In that event, the amount you receive per unit
would be reduced by 1% for each 1% this amount falls below the 90%
threshold to 85% and further reduced by 2% for each 1% this amount
falls below the 85% threshold, subject to a maximum reduction of 15%.
In no event will you receive less than $34.00 per unit if the merger
is consummated.
Q: WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PARTNERSHIP
MERGER TO ME?
A: In general, upon conversion of your Partnership units into cash
pursuant to the merger, you will recognize gain or loss for U.S.
federal income tax purposes equal to the difference between the
amount of cash received, plus your share of Partnership liabilities,
if any, and your adjusted tax basis in your Partnership units. Such
gain or loss will generally be capital gain or loss, except that you
will recognize ordinary income to the extent any cash received is
attributable to tax deductions previously allocated to you relating
to goodwill and certain other Partnership assets.
Q: WHAT VOTE OF UNITHOLDERS IS REQUIRED TO CONSUMMATE THE PARTNERSHIP
MERGER?
A: In order to consummate the Partnership merger, it must be approved by
the affirmative vote of the holders of a majority of outstanding
Partnership units, not including those Partnership units held by our
general partner and its affiliates.
Q: WHAT IS THE GENERAL PARTNER'S RECOMMENDATION?
A: Our general partner has determined that the merger agreement, the
mergers and the other transactions contemplated by the merger
agreement are advisable, fair to you, and in your best interest, and
our general partner recommends that you vote "For" the Partnership
merger, and instruct our general partner to vote the Partnership's
interest in Nvest Companies, L.P. "For" the Nvest Companies, L.P.
merger. In making these recommendations our general partner took into
account the opinion of Credit Suisse First Boston Corporation stating
that, as of June 15, 2000, and based upon and subject to the factors
and assumptions
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set forth in their opinion, the cash consideration to
be received by you was fair to you from a financial point of view.
Q: WHAT REGULATORY APPROVALS AND FILINGS AND THIRD-PARTY CONSENTS ARE
NEEDED TO COMPLETE THE MERGER?
A: Before we can complete the mergers contemplated by the merger
agreement, the parties will be required to:
o await the expiration of the waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976; and
o obtain consents in accordance with the merger agreement from
investment management clients.
Q: WHEN DO YOU EXPECT THE TRANSACTIONS TO BE COMPLETED?
A: We believe that efforts sufficient to satisfy the requisite
regulatory and third-party consent requirements can be concluded
during the fourth quarter of 2000 and, assuming the mergers are
approved by unitholders of the Partnership and Nvest Companies, L.P.
and the other closing conditions are satisfied or waived, the mergers
will be consummated promptly after obtaining such consents. However,
we cannot assure you that such requirements will be satisfied (or
waived where permitted by applicable law) or, if satisfied or waived,
the date by which they will be satisfied.
Q: WHEN AND WHERE IS THE SPECIAL MEETING?
A: The special meeting will take place at 399 Boylston Street, Boston,
Massachusetts 02116, on September 19, 2000 at 2:00 p.m. local time.
Q: WHAT DO I NEED TO DO NOW?
A: You should complete, date and sign your proxy card and mail it in the
enclosed return envelope as soon as possible so that your Partnership
units may be represented at the special meeting, even if you plan to
attend the special meeting in person. Unless contrary instructions
are indicated on your proxy, all of your Partnership units
represented by valid proxies will be voted FOR the approval of the
Partnership merger and will instruct our general partner to vote the
Partnership's interest in Nvest Companies, L.P. FOR the Nvest
Companies, L.P. merger.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you would like additional copies of this proxy statement or if you
have questions about the merger agreement, the mergers and the other
transactions contemplated by the merger agreement, including how to
complete and return your proxy card, or you would like more
information about the Partnership, you should call our investor
relations department at (617) 578-3500 or D.F. King & Co. Inc.,
toll-free at 1-800-755- 7250.
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SUMMARY
This summary, together with the preceding Questions and Answer
section, highlights selected information in this proxy statement and may
not contain all of the information that is important to you. We urge you to
read carefully this entire proxy statement and the documents to which we
refer you in this proxy statement to understand fully the transactions
contemplated by the merger agreement and for a more complete description of
their legal terms. See "Where You Can Find More Information" on page 51 for
details of how you can obtain more information about the transactions
contemplated by the merger agreement. This summary is qualified in its
entirety by reference to the more detailed information appearing elsewhere
in this proxy statement.
THE SPECIAL MEETING
Purpose of the Special Meeting (page 8)
At the special meeting, you and our other unitholders will (i)
consider and vote on the proposal to approve the acquisition of the
Partnership by CDC Asset Management through the merger of an indirect
subsidiary of CDC Asset Management into the Partnership pursuant to the
terms of the merger agreement and (ii) vote to instruct our general
partner, Nvest Corporation, how to vote the Partnership's interest in Nvest
Companies, L.P. with respect to the acquisition of Nvest Companies, L.P. by
CDC Asset Management through the merger of an indirect subsidiary of CDC
Asset Management into Nvest Companies, L.P. pursuant to the terms of the
merger agreement.
Date, Time and Place (page 8)
The special meeting of the unitholders of the Partnership will be
held at 2:00 p.m. local time on September 19, 2000, at the offices of Nvest
Companies, L.P. at 399 Boylston Street, Boston, Massachusetts 02116.
Record Date (page 8)
We have fixed the close of business on August 9, 2000, as the record
date for the determination of Partnership unitholders entitled to notice
of, and to vote at, the special meeting and any adjournment of the special
meeting. Each Partnership unitholder of record as of the record date will
be entitled to one vote for each Partnership unit then owned. As of the
record date, there were [_] Partnership units outstanding and entitled to
vote at the special meeting.
Vote Required (page 8)
In order to consummate the Partnership merger, the affirmative vote
of the holders of a majority of the Partnership units outstanding on the
record date (other than units held by our general partner and its
affiliates) is required to approve the Partnership merger. Under our
limited partnership agreement, our general partner and its affiliates,
which beneficially own approximately 7% of the outstanding units of the
Partnership and approximately 48% of the outstanding units of Nvest
Companies, L.P., will not vote on the mergers. In addition, the unitholders
of the Partnership will vote to instruct our general partner how to vote
the Partnership's interest in Nvest Companies, L.P. with respect to its
acquisition by CDC Asset Management. Properly signed and dated proxies that
do not include voting instructions will be voted FOR the Partnership merger
and will be treated as instructing our general partner to vote the
Partnership's interest in Nvest Companies, L.P. FOR the Nvest Companies,
L.P. merger. However, properly signed and dated proxies marked "ABSTAIN"
will have the same effect as votes against the Partnership merger and as
votes instructing
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our general partner to vote against the Nvest Companies, L.P. merger.
Our general partner will vote the Partnership's interest in Nvest
Companies, L.P. in accordance with the voting instructions received from
the Partnership's unitholders.
COMPANIES
The Partnership and Nvest Companies, L.P.
The Partnership is a publicly traded Delaware limited partnership
owned, as of June 30, 2000, approximately 7% by its general partner Nvest
Corporation and affiliates of its general partner, and approximately 93% by
its public limited partners. The Partnership's primary source of income is
its proportionate share of the net income of Nvest Companies, L.P. As of
June 30, 2000, the Partnership held approximately 6,492,395 general partner
units of Nvest Companies, L.P. representing an approximate 15% interest in
Nvest Companies, L.P. Nvest Corporation and other private holders hold the
remaining interests in Nvest Companies, L.P.
Nvest Companies, L.P., formed as a Delaware limited partnership, is a major
investment manager that offers a broad array of investment management
products and styles across a wide range of asset categories to
institutions, mutual funds and private clients. The business of Nvest
Companies, L.P. is conducted through affiliated investment management and
distribution and consulting firms, all but one of which are majority-owned
by Nvest Companies, L.P.
The principal executive offices of the Partnership and Nvest Companies,
L.P. are located at 399 Boylston Street, Boston, Massachusetts, 02116 and
the telephone number of each is (617) 578-3500.
THE MERGER AGREEMENT AND THE MERGERS
The merger agreement is attached to this proxy statement as Appendix
A. Please read the merger agreement carefully and in its entirety. It is
the legal document that governs the mergers.
The Transactions (page 11)
The Agreement and Plan of Merger, dated as of June 16, 2000, by and
among Nvest Corporation, Nvest, L.P., Nvest Companies, L.P., CDC Finance,
CDC Asset Management, CDCAM North America Corporation, CDCAM Partnership,
L.P. and CDCAM Partnership II, L.P. provides for the acquisition of the
Partnership by CDC Asset Management through a merger of CDCAM Partnership,
L.P. with and into the Partnership. As a result of the merger, the
Partnership will become an indirect wholly- owned subsidiary of CDC Asset
Management and your ownership interest in the Partnership will be
terminated.
Immediately following the Partnership merger, CDC Asset Management
will acquire all of the remaining equity interests in Nvest Companies, L.P.
through a merger of CDCAM Partnership II, L.P. into Nvest Companies, L.P.
As a result of the two mergers, CDC Asset Management will own 100% of
the issued and outstanding partnership interests of Nvest Companies, L.P.
What You Will Receive as a Result of the Partnership Merger (page 15)
In the Partnership merger, all of the issued and outstanding units of
limited and general partner interest in the Partnership will be converted
into the right to receive cash in an amount equal to $40.00 per unit,
without interest, subject to a possible downward adjustment
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(but not below $34.00). The Partnership merger price represents a premium
of 100% over the $20.00 per unit closing price of the Partnership units on
June 15, 2000, the last trading day before we announced the signing of the
merger agreement. See "The Transaction" for a more detailed discussion of
the proposed transactions.
Conditions to the Mergers (page 37-39)
The completion of the transactions contemplated by the merger
agreement (also referred as the closing) depends on the satisfaction of a
number of customary conditions, including the accuracy of representations
and warranties, compliance with pre-closing covenants, absence of
injunctions or similar legal impediments that prevent the closing, receipt
of material third party consents, compliance with certain regulatory
requirements and receipt of necessary government and regulatory approvals
and consents. Particularly noteworthy conditions to the obligations of all
parties to complete the mergers include:
o the expiration or termination of the waiting period under the
Hart-Scott- Rodino Act;
o approval by the Partnership unitholders of the Partnership merger;
and
o approval by the Nvest Companies, L.P. unitholders of the Nvest
Companies, L.P. merger.
In addition, the obligation of CDC Asset Management and CDCAM North America
Corporation to complete the mergers are subject to certain additional
conditions, including the following:
o Nvest Companies, L.P.'s annualized investment management fees (also
referred to as the revenue run-rate), calculated as of the calendar
month-end prior to the closing, have not declined, other than due to
market or currency movements, to less than 80% of the April 30, 2000
level; and
o a sufficient number of key employees of Nvest Companies, L.P. and its
subsidiaries designated in the merger agreement have entered into
employment agreements with Nvest Companies, L.P. or its affiliates
and the employment agreements entered into simultaneously with the
merger agreement (but effective as of the closing) are in full force
and effect (other than due to the death or disability of the employee
party).
The obligations of CDC Asset Management and CDCAM North America Corporation
to complete the merger are not subject to a financing condition or any
additional corporate proceedings by either of them, such as the approval of
their shareholders.
Termination of the Merger Agreement (page 39-40)
The merger agreement may be terminated, whether before or after
receipt of unitholder approvals, by consent of the parties and for certain
failures of representations, warranties or covenants. It may also be
terminated:
o by our general partner or CDC Asset Management if the transactions
contemplated by the merger agreement have not been consummated by
December 31, 2000;
o by our general partner or CDC Asset Management if our unitholders
fail to approve the Partnership merger or if unitholders of Nvest
Companies, L.P.
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fail to approve the merger of that partnership;
o by our general partner or CDC Asset Management if any order
permanently restraining, enjoining or otherwise prohibiting the
merger becomes final and non-appealable;
o by CDC Asset Management, if our general partner fails to recommend,
withdraws or adversely modifies its approval or recommendation of the
merger agreement; or
o by our general partner, if it enters an agreement involving a
competing acquisition transaction after it determines in good faith
that such action is required to comply with its fiduciary duties.
Termination Fee (page 40)
Nvest Companies, L.P. will be required to pay CDC Asset Management a
termination fee of $66.5 million if either:
o the merger agreement is terminated by our general partner in
connection with entering into an agreement involving a competing
acquisition proposal; or
o the merger agreement is terminated by CDC Asset Management following
the withdrawal or adverse modification by our general partner of its
approval or recommendation of the mergers to the Partnership
unitholders or the failure of either the Partnership or Nvest
Companies, L.P. unitholders to approve its merger, and, in either
case, within 12 months after such termination, Nvest Corporation, the
Partnership or Nvest Companies, L.P. subsequently enters into a
binding agreement for a transaction implementing another acquisition
proposal or consummates an acquisition proposal.
No Appraisal Rights (page 14)
Holders of the Partnership units are not entitled to dissenting
unitholders' appraisal rights or other similar rights under Delaware law or
the Partnership's partnership agreement.
OUR GENERAL PARTNER'S RECOMMENDATION
Nvest Corporation, our general partner, taking into account, among
other things, the opinion of Credit Suisse First Boston Corporation, has
determined that the terms of the mergers contemplated by the merger
agreement are advisable and fair to, and in the best interests of, the
unitholders of the Partnership and Nvest Companies, L.P. It therefore
recommends that you vote FOR the approval of the Partnership merger and
that you instruct our general partner to vote the Partnership's interest in
Nvest Companies, L.P. FOR the Nvest Companies, L.P. merger.
MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES (page 28-29)
In general, upon the conversion of your Partnership units into cash
pursuant to the merger, you will recognize gain or loss for United States
federal income tax purposes equal to the difference between the amount of
cash you receive, plus your share of the Partnership's liabilities, if any,
and your adjusted tax basis in your Partnership units. The gain or loss
will generally be capital gain or loss, except that you will recognize
ordinary income to the extent any cash received is attributable to (i)
previously allocated amortization deductions relating to goodwill of the
Partnership that is eligible for amortization pursuant to Section 197 of
the Internal Revenue Code of 1986, as amended, and (ii) other unrealized
receivables and inventory of
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the Partnership within the meaning of Section 751 of the Internal Revenue
Code of 1986, as amended (which amount attributable to such other
unrealized receivables and inventory is not expected to be material to
you). Each Partnership unitholder is urged to consult his, her or its tax
advisor with respect to the tax consequences of the mergers, including the
effects of applicable state, local, foreign or other tax laws.
OPINION OF OUR FINANCIAL ADVISOR (page 18-24)
Credit Suisse First Boston Corporation delivered an opinion on June
15, 2000 to the board of directors of our general partner that, as of that
date and based upon and subject to the factors and assumptions set forth in
the opinion and reviewed with the board, the consideration to be received
by you in the transactions contemplated by the merger agreement was fair
from a financial point of view to you. The opinion of Credit Suisse First
Boston Corporation is dated June 15, 2000, and opines as to the fairness as
of that date only. Credit Suisse First Boston Corporation is not obligated
to update its opinion. Events could occur prior to the date of the special
meeting which could result in a different valuation or conclusion if the
opinion was reissued on that date. In the event that there are material
changes to the terms of the proposed transactions or other material changes
or conditions affecting the Partnership or its business, our general
partner will consider the advisability of requesting an updated fairness
opinion at that time. As of the date of this proxy statement, the general
partner does not believe any such material changes have occurred.
Credit Suisse First Boston Corporation will receive $10 million in
exchange for its services if the transactions are completed. The full text
of the written opinion of Credit Suisse First Boston Corporation, which
sets forth a description of assumptions made, matters considered and
limitations on its review, is attached as Appendix B to this proxy
statement. You are urged to read this opinion carefully in its entirety.
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION (page 24-27)
In considering the recommendation of our general partner with respect
to the mergers contemplated by the merger agreement, you should be aware
that certain executive officers and members of the board of directors of
our general partner, who are also officers of Nvest Companies, L.P. or its
affiliates, have interests in the transactions contemplated by the merger
agreement that are different than, or in addition to, the interests of
unitholders of the Partnership generally.
The board of directors of our general partner was aware of these
interests and considered them, among other matters, in making its
recommendation. See "Special Factors-- Interests of Certain Persons in the
Transaction" for a more detailed discussion of these different interests.
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SPECIAL MEETING OF UNITHOLDERS
PURPOSE
At the special meeting you will be asked to consider and vote on
proposals to (i) approve the acquisition of the Partnership by CDC Asset
Management through the merger of an indirect subsidiary of CDC Asset
Management into the Partnership pursuant to the terms of the merger
agreement and (ii) vote to instruct our general partner, Nvest Corporation,
how to vote the Partnership's interest in Nvest Companies, L.P. with
respect to the acquisition of Nvest Companies, L.P. by CDC Asset Management
through a merger of another indirect subsidiary of CDC Asset Management
into Nvest Companies, L.P. pursuant to the terms of the merger agreement.
It is expected that a vote of the Nvest Companies, L.P. unitholders to
consider and vote on a proposal to approve the Nvest Companies, L.P. merger
will occur shortly following the special meeting.
DATE, TIME AND PLACE
We are furnishing this proxy statement to you in connection with the
solicitation of proxies by our general partner for use at a special meeting
of our unitholders to be held on September 19, 2000, at 2:00 p.m. local
time, at the offices of Nvest Companies, L.P. at 399 Boylston Street,
Boston, Massachusetts 02116, or any adjournments thereof. This proxy
statement, the notice of special meeting and the enclosed proxy card are
being mailed to you and our other unitholders on or about [August ], 2000.
RECOMMENDATION OF OUR GENERAL PARTNER
Nvest Corporation, our general partner, has approved the merger
agreement and the mergers contemplated by the merger agreement and
recommends that you vote "FOR" approval of the Partnership merger pursuant
to the terms of the merger agreement and vote to instruct our general
partner to vote the Partnership's interest in Nvest Companies, L.P. "FOR"
the Nvest Companies, L.P. merger pursuant to the terms of the merger
agreement. See "Special Factors--Recommendation; --Reasons for the Merger."
RECORD DATE; QUORUM; UNITS OUTSTANDING ENTITLED TO VOTE
Our unitholders as of the close of business on the record date of
August 9, 2000 are entitled to receive notice of, and to vote at, the
special meeting. The presence, in person or by proxy, of unitholders of a
majority of the outstanding Partnership units entitled to vote is required
to constitute a quorum for the transaction of business. At the close of
business on June 30, 2000 there were 6,492,395 Partnership units issued and
outstanding. As of the record date, there were [_] Partnership units
outstanding and entitled to vote at the special meeting. A list of record
Partnership unitholders will be available for examination at our principal
offices from September 9, 2000 until the special meeting.
VOTING RIGHTS
You are entitled to one vote for each Partnership unit that you hold
as of the close of business on the record date. The affirmative vote of the
holders of Partnership units outstanding on the record date (other than
those held by our general partner and its affiliates) is required to
approve the Partnership merger. Under the Partnership's limited partnership
agreement, Nvest Corporation and its affiliates are not entitled to vote
their Partnership units at the special meeting. As of the record date, our
general
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partner and its affiliates owned 457,900 units, representing less
than 8% of the outstanding units. In determining whether approval of the
Partnership merger has received the requisite number of affirmative votes,
abstentions and broker non-votes will have the same effect as a vote
against approval of the Partnership merger.
SOLICITATION OF PROXIES; EXPENSES
Our general partner makes this solicitation on our behalf. The
Partnership and CDC Asset Management will pay the costs of the
solicitation. Further solicitation may be made by our officers and
employees and our affiliates by telephone, telecopy or personal interview,
but they will not receive additional compensation for these solicitation
activities. Upon request, the Partnership will reimburse banks, brokerage
firms and other custodians, nominees and fiduciaries for reasonable and
documented expenses incurred by them in sending proxy materials to you and
our other unitholders. We have retained D.F. King & Co. Inc. to coordinate
the solicitation of proxies for a fee of $7,500, plus reasonable out-of-
pocket expenses.
VOTING OF PROXIES
You may vote by completing, dating and signing the proxy card and
returning it in the enclosed postage pre-paid envelope as soon as possible.
If the proxy is properly executed and returned and not revoked, your
Partnership units will be voted as specified in the proxy. Each Partnership
unit that you own on the record date entitles you to one vote. To be voted,
the proxy must be received by our Secretary prior to voting. Our transfer
agent will administer an automated system to tabulate votes cast at the
special meeting.
If you properly execute and date your proxy, but do not include
voting instructions, your Partnership units will be voted "FOR" approval of
the Partnership merger and to instruct our general partner to vote the
Partnership's interest in Nvest Companies, L.P. "FOR" the Nvest Companies,
L.P. merger. If you properly execute and date your proxy and mark "ABSTAIN"
your units will be counted for the purposes of determining whether there is
a quorum but will have the same effect as a vote against approval of the
Partnership merger and as instructing our general partner to vote the
Partnership's interest in Nvest Companies, L.P. against the Nvest
Companies, L.P. merger. If your Partnership units are held by your broker,
your broker will vote your units for you only if you provide instructions
to your broker on how to vote your units. Broker non-votes will have the
same effect as votes against approval of the Partnership merger and as
instructing our general partner to vote the Partnership's interest in Nvest
Companies, L.P. against the Nvest Companies, L.P. merger.
REVOCABILITY OF PROXIES
You may revoke any proxy given pursuant to this solicitation at any
time before its use by:
o delivering to us a written notice of revocation;
o delivering to us a duly executed proxy bearing a later date with
voting instructions; or
o attending the special meeting and voting in person.
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SUPPORT AGREEMENTS
Ten persons holding units of Nvest Companies, L.P. (including 2
persons holding units of the Partnership) and certain of their affiliates
who are entitled to vote on and approve of the Partnership merger and/or
the Nvest Companies, L.P. merger, as the case may be, have entered into
support agreements with CDC Asset Management pursuant to which they have
agreed to vote for the approval of the Partnership merger and the Nvest
Companies, L.P. merger. These unitholders hold approximately 2% of the
units entitled to vote on the merger of the Partnership approximately 46%
of the units entitled to vote on the merger of Nvest Companies, L.P.
OTHER MATTERS
Except for the vote on the mergers, and upon appropriate motion, an
adjournment of the special meeting, no other matters may come before the
special meeting.
Your vote is important. Please vote by returning your marked proxy
card so your Partnership units can be represented at the meeting, even if
you plan to attend the meeting in person.
You should not send any certificates representing Partnership units
with your proxy card. If we complete the merger, the procedure for the
surrender of certificates representing Partnership units in exchange for
the merger consideration will be as described on page 10 of this proxy
statement.
PAYMENT OF CASH MERGER CONSIDERATION
The Partnership merger will become effective at the time and on the
date specified in the certificate of merger to be filed with the Secretary
of State of the State of Delaware, and the Nvest Companies, L.P. merger
will become effective immediately thereafter as specified in a separate
certificate of merger. We expect such filings and effective times to occur
as soon as practicable after the special meeting, subject to approval of
the mergers and the other transactions contemplated by the merger agreement
by the Partnership and Nvest Companies, L.P. and the satisfaction or waiver
of the other conditions to completing the transactions provided in the
merger agreement.
We currently expect to complete the Partnership merger, which is
subject to obtaining requisite approvals and to other conditions, during
the fourth quarter of 2000 although there can be no assurance of the date
by which the merger will be completed. See "The Transaction" and "The
Merger Agreement--Conditions to Obligations to Effect the Transactions."
Detailed instructions with respect to the surrender of your unit
certificates, together with a letter of transmittal, will be forwarded to
you by the paying agent appointed by CDC Asset Management and approved by
us, promptly following the effective time. You should not submit your unit
certificates to the paying agent until you receive these materials. The
paying agent will send payment of the merger consideration to you as
promptly as practicable following determination of the merger consideration
and receipt by the paying agent of your certificates and other required
documents. No interest will be paid on the merger consideration.
You should not send in your Partnership unit certificates until you
receive a letter of transmittal. You should send them only pursuant to
instructions set forth in the letter of transmittal.
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We strongly recommend that certificates for Partnership units and
letters of transmittal be transmitted only by registered United States
mail, return receipt requested, appropriately insured for the risk of loss.
Title to the certificates will pass only upon delivery of the certificates
to the paying agent. Holders of Partnership units whose certificates are
lost will be required to make an affidavit identifying such certificate or
certificates as lost, stolen or destroyed and, if required by us, to post a
bond in such amount as we may reasonably require to indemnify against any
claim that may be made against us with respect to such certificate.
THE TRANSACTION
OVERVIEW
The Partnership Merger. CDC Asset Management will acquire the
Partnership through the merger of CDCAM Partnership, L.P., its indirect
subsidiary, into the Partnership, with the Partnership as the surviving
entity in the merger. As a result of the merger, each of the units of
limited partner interest in the Partnership will be converted into the
right to receive the unit price, which will be an amount in cash equal to
$40.00, without interest, subject to a possible downward adjustment (but
not below $34.00 per unit). In addition, each of the units of general
partner interest in the Partnership will be converted into the right to
receive the unit price. As of the record date, our general partner, Nvest
Corporation, and its affiliates held 347,900 limited partner units and
110,000 general partner units in the Partnership.
As a result of the Partnership merger, your interest in the
Partnership will end, and you therefore will not participate in our future
earnings and growth. Instead, you will have the right to receive the unit
price for each Partnership unit you hold. In addition, the Partnership
units will no longer be traded on the New York Stock Exchange, price
quotations of the Partnership units will no longer be available and the
registration of the Partnership units under the Securities Exchange Act of
1934 will be terminated. As a further result of the Partnership merger, CDC
Asset Management will indirectly own all of the partnership interests in
the Partnership after the merger.
As a result of the Partnership merger, the limited partner interest
in CDCAM Partnership, L.P. issued and outstanding immediately prior to the
merger will be converted into and become exchangeable for the limited
partner interest in Nvest, L.P., and the general partner interest in CDCAM
Partnership, L.P. issued and outstanding immediately prior to the merger
will be converted into the general partner interest in the Partnership. A
certificate of merger will be filed with the Secretary of State of the
State of Delaware specifying the effective date and time of the Partnership
merger.
Nvest Companies, L.P. Merger. Immediately following the Partnership
merger, CDCAM Partnership II, L.P., another indirect subsidiary of CDC
Asset Management, will acquire all of the remaining limited partner
interests in Nvest Companies, L.P. through a merger of CDCAM Partnership
II, L.P. into Nvest Companies, L.P., with Nvest Companies, L.P. surviving.
As a result of the merger, each unit of limited partner interest in the
Nvest Companies, L.P. will be converted into the right to receive the same
unit price as paid to the Partnership limited partner unitholders, as will
each unit of general partner interest in Nvest Companies, L.P. As of June
30, 2000, Nvest Companies, L.P. had outstanding 44,593,399 units in the
aggregate, including 38,100,904 limited partner units, 100 general partner
units held by Nvest Corporation and 6,492,395 general partner units held by
the Partnership.
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As a result of the Nvest Companies, L.P. merger, each unitholder's
interest in Nvest Companies, L.P. will end, and therefore the unitholder
will not participate in Nvest Companies, L.P.'s future earnings and growth.
Instead, each Nvest Companies, L.P. unitholder will have the right to
receive the unit price for each Nvest Companies, L.P. unit it holds. As a
further result of the Nvest Companies, L.P. merger, CDC Asset Management
will indirectly own all of the partnership interests in Nvest Companies,
L.P.
As a result of Nvest Companies, L.P. merger, the limited partner
interest in CDCAM Partnership II, L.P. issued and outstanding immediately
prior to the merger will be converted into and become exchangeable for the
limited partner interest in Nvest Companies, L.P., and the general partner
interest in CDCAM Partnership II, L.P. issued and outstanding immediately
prior to the merger will be converted into the general partner interest in
Nvest Companies, L.P. A certificate of merger will be filed with the
Secretary of State of the State of Delaware specifying the effective date
and time of the Nvest Companies, L.P. merger.
The mergers will occur once all conditions in the merger agreement
have been met or waived, including the approval of the Partnership merger
by the holders of a majority of the Partnership units, other than those
held by Nvest Corporation and its affiliates, which is the subject of this
proxy statement. See "The Merger Agreement--Conditions to Obligations to
Effect the Transaction" for a description of the conditions.
PARTIES INVOLVED IN THE TRANSACTIONS
The transactions contemplated by the merger agreement are complex and
involve multiple parties. In order to facilitate your understanding of the
transactions, the following is a list of parties to the transaction. The
parties will be referred to throughout this proxy statement by the terms
ascribed to them below:
CDC PARTIES
CDC Finance is a French legal entity.
CDC Asset Management, a French legal entity, is the direct corporate
parent of CDCAM. CDC Asset Management is a leading French institutional
money management company. It is the investment management arm and an
indirect subsidiary of France's Caisse de depots et consignations (also
referred to as "CDC"). Founded in 1816, the Paris-based CDC is a major
diversified financial institution with a strong global presence in the
banking, insurance, investment banking, asset management and global custody
industries. CDC Asset Management is owned 60% by CDC Finance, 20% by Caisse
Nationale des Caisses d'Epargne (also referred to as "CNCE") and 20% by CNP
Assurances. CDC owns 100% of CDC Finance, 35% of CNCE and 40% of CNP
Assurances.
CDCAM refers to CDCAM North America Corporation, a corporation
organized under the laws of Delaware, which is a direct and wholly-owned
subsidiary of CDC Asset Management. CDCAM Partnership, L.P., also referred
to as "Merger Sub," is a Delaware corporation and a wholly-owned subsidiary
of CDCAM upon its formation. CDCAM Partnership II, L.P., also referred to
as "Merger Sub II," is a Delaware corporation and a wholly-owned subsidiary
of CDCAM upon its formation.
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NVEST RELATED PARTIES
Nvest Corporation, a corporation organized under the laws of
Massachusetts, is the sole general partner of Nvest L.P. and the managing
general partner of Nvest Companies, L.P. Nvest Corporation is an indirect
wholly-owned subsidiary of Metropolitan Life Insurance Company, also
referred to as "MetLife". MetLife owns, directly or indirectly,
approximately 7% of the units of the Partnership and approximately 48% of
the units of Nvest Companies, L.P., but as an affiliate of Nvest
Corporation, MetLife is not entitled to vote at the special meeting. As a
result of the transactions contemplated by the merger agreement, Nvest
Corporation will cease to have any interest in the Partnership or Nvest
Companies, L.P.
Nvest, L.P., also referred to as the "Partnership," is a limited
partnership formed under the laws of Delaware and is the advising general
partner of Nvest Companies, L.P. Nvest, L.P.'s units currently are traded
on the New York Stock Exchange under the symbol NEW.
Nvest Companies, L.P., a limited partnership formed under the laws of
Delaware, is a major investment manager that offers a broad array of
investment management products and styles across a wide range of asset
categories to institutions, mutual funds and private clients. The business
of Nvest Companies, L.P. is conducted through affiliated investment
management and distribution and consulting firms, all but one of which are
majority-owned by Nvest Companies, L.P. The Partnership is the advising
general partner of Nvest Companies, L.P. and owns 15% of the outstanding
units of Nvest Companies, L.P. Nvest Corporation is the managing general
partner of Nvest Companies, L.P. As a result of the transactions
contemplated by the merger agreement, neither the Partnership nor Nvest
Corporation will retain any general partner interest in Nvest Companies,
L.P.
PRINCIPAL OFFICES
The main place of business of CDC Asset Management is 7 Place des
Cinq Martyrs du Lycee Buffon, 75015 Paris, France and its telephone number
from the United States of America is 011-33-1-42- 79-55-00.
The principal executive offices of the Partnership, Nvest Companies,
L.P. and Nvest Corporation, are located at 399 Boylston Street, Boston,
Massachusetts, 02116. The phone number is (617) 578-3500. The principal
executive offices of MetLife are located at 1 Madison Avenue, New York, New
York, 10010. The phone number is (212) 578-2211.
CALCULATION OF THE UNIT PRICE
If the transactions contemplated by the merger agreement are
consummated, all of our Partnership units will be exchanged by way of
merger for the right to receive $40.00 per unit in cash, without interest,
subject to a downward adjustment (but not below $34.00 per unit). The unit
price will be adjusted downward if Nvest Companies, L.P.'s revenue
run-rate, calculated as of the calendar month-end immediately prior to the
closing, is less than 90% of the revenue run-rate on April 30, 2000. In
that event, the unit price will be reduced by 1% for each 1% this amount
falls below the 90% threshold to 85% and will be reduced by 2% for each 1%
this amount falls below the 85% threshold, subject to a maximum reduction
of 15%. In no event will you receive less than $34.00 per unit if the
merger is approved and consummated. As a result, the unit price can range
between $40 and $34. For example:
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Revenue
Run-Rate Unit Price % Reduction
--------------- --------------- ----------------
90% or more $ 40.00 0%
85% 38.00 5%
80% or less 34.00 15%
The "revenue run-rate" of Nvest Companies, L.P. is calculated based
on the aggregate annualized investment advisory, investment management and
subadvisory fees for all investment management accounts (subject to certain
exceptions) managed by Nvest Companies, L.P. and its subsidiaries, and is
calculated to exclude the impact of market or currency fluctuation. The
revenue run-rate is determined by multiplying the "adjusted assets under
management" for each such account by the applicable fee rate for
such account at such date (excluding performance-based fees). Adjusted
assets under management for an account as of a particular date means the
amount of assets under management by Nvest Companies, L.P. and its
subsidiaries at such date, as adjusted to reflect net cash flows
(additions, withdrawals and reinvestments), new accounts and terminated
accounts, but excluding the impact of market appreciation or depreciation
or currency fluctuations, from or after April 30, 2000. For these purposes,
assets are treated as withdrawn if, in the case of registered investment
company clients, the board of directors and shareholders of that entity do
not approve a new investment advisory agreement to become effective on or
immediately after the closing or if, in the case of other investment
advisory clients, such clients fail to consent to the assignment of their
investment advisory agreement in accordance with the terms of the merger
agreement.
TREATMENT OF EMPLOYEE BENEFIT AWARDS
In connection with the closing, all outstanding unit options and
restricted unit awards under the Restricted Unit Plan, 1993 Equity
Incentive Plan, 1997 Equity Incentive Plan and 2000 Equity Incentive Plan
of the Partnership and Nvest Companies L.P. (also referred to as the
"partnership equity plans"), whether or not then vested or exercisable or
free of restrictions, will be cancelled and will thereafter represent the
right to receive (i) in the case of unit options, a cash payment equal to
the excess of the unit price over the exercise price per unit of such unit
option, multiplied by the number of units subject to such unit option and
(ii) in the case of restricted unit awards, a cash payment equal to the
unit price multiplied by the number of units underlying such restricted
unit awards. Based on the number of outstanding unit options as of June 30,
2000, and assuming a unit price of $40.00, it is expected that an aggregate
of approximately $114 million will be paid in settlement of all outstanding
unit options following the closing and an aggregate of approximately $3.4
million will be paid in settlement of the outstanding restricted unit
awards. For additional discussion of the partnership equity plans, see
"Special Factors-- Interests of Certain Persons in the Transaction--Unit
Option Awards."
NO APPRAISAL RIGHTS
Holders of the Partnership units are not entitled to dissenting
unitholders' appraisal rights or other similar rights under Delaware law or
the Partnership's partnership agreement.
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SPECIAL FACTORS
RECOMMENDATION
Our general partner, Nvest Corporation, and its board of directors
believe that the Partnership merger and the terms of the merger agreement
are fair and in the best interests of the Partnership and our unaffiliated
unitholders. Accordingly, our general partner's board of directors approved
the merger agreement, the Partnership merger and the merger of Nvest
Companies, L.P., and our general partner recommends approval of both the
Partnership merger and the Nvest Companies, L.P. merger pursuant to the
terms of the merger agreement.
REASONS FOR THE MERGER
In its determination to approve and recommend the mergers, and in
reaching its determination that the merger agreement and the mergers are
advisable and are fair to and in the best interest of the Partnership and
our unitholders, our general partner and its board of directors considered
the following factors:
o the fact that the merger consideration on a per unit basis
represented a significant premium over recently prevailing market prices
for our units;
o our general partner's view, based on its knowledge and beliefs of
the current and prospective environment in which we operate, regarding the
globalization of the securities markets, the increasing consolidation of
financial services companies resulting in large and powerful global
players, the opportunities presented by financial changes in Europe and the
advantages of becoming a global financial services company with significant
overseas markets, particularly in Europe;
o the strategic options available to us and the assessment of the
board of directors of our general partner that none of these options were
reasonably likely to present superior opportunities, or were reasonably
likely to create greater value for our unitholders, than the prospects
presented by the mergers with CDC Asset Management;
o the opinion of Credit Suisse First Boston Corporation given to the
board of directors of our general partner on June 15, 2000, that as of that
date and on the basis of and subject to the matters reviewed with the
board, the merger consideration was fair from a financial point of view to
our unitholders;
o structural and tax impediments to certain alternative transactions
due to our organization as a partnership;
o the terms of the mergers and the merger agreement as negotiated,
including:
(1) the $40 per unit cash merger consideration, subject to a
possible downward adjustment (but not below $34.00);
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(2) the permissibility of distributing 80% of the operating
cash flow of Nvest Companies, L.P. with respect to the
period beginning January 1, 2000 and ending on the date
of the closing;
(3) the ability to terminate the merger agreement under
certain circumstances; and
(4) the payment of a termination fee to CDC Asset Management
in the event the transactions are not consummated under
certain circumstances.
o the likelihood of the Partnership merger being approved by
requisite regulatory authorities; and
o the interests of certain directors and executive officers that are
different from, or in addition to, the interests of our unitholders
generally as described under "Special Factors-Interests of Certain Persons
in the Transaction".
The above discussion concerning the information and factors
considered by the board of directors of our general partner is not intended
to be exhaustive, but includes all of the material factors considered by
the board in making its determination. In view of the wide variety of
factors considered in connection with our evaluation of the merger
agreement, our general partner did not find it practicable to, and did not,
quantify or otherwise attempt to assign relative weights to the foregoing
factors. Rather, our general partner viewed its position and recommendation
as being based on the totality of the information presented to and
considered by it.
BACKGROUND OF THE TRANSACTION
As an ongoing part of its growth strategy, Nvest Companies, L.P. has
from time to time engaged in discussions with representatives of European
asset management companies regarding possible strategic transactions,
including joint ventures or possible acquisitions of such firms by Nvest
Companies, L.P. During a trip to Europe in the fall of 1999 for the purpose
of identifying and conducting initial fact finding regarding potential
business combinations and partnerships, Mr. Peter S. Voss, Chairman,
President and CEO of Nvest Corporation, and Mr. Shaun R. Levesque,
President of Nvest Associates, Inc. (the institutional marketing subsidiary
of Nvest Companies, L.P.), met with Mr. Gerard Barbot, Chairman of the
Supervisory Board of CDC Asset Management, and Mr. Daniel Roy, Chairman of
the Executive Board of CDC Asset Management. During the course of this
meeting, Mr. Voss and Mr. Levesque conveyed to Mr. Barbot and Mr. Roy the
interest that Nvest Companies, L.P. had in identifying a compatible
European partner that could provide Nvest Companies, L.P. increased access
to the European market.
As a result of this meeting, Mr. Voss and Mr. Levesque decided to
stay in touch with CDC Asset Management, which they regarded as a serious
candidate for joint venture discussions in the future. During the fall of
1999, management of Nvest Companies, L.P. from time to time informed CDC
Asset Management about Nvest Companies L.P.'s investment management
business and related information and updated CDC Asset Management about the
business activities of Nvest Companies, L.P.
During the first quarter of 2000, Mr. Levesque and Mr. Voss continued
to communicate with Mr. Roy about the marketplace, the consolidation of the
asset management industry and their suggestions for
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alternatives for possible cooperation between CDC Asset Management and
Nvest Companies, L.P. Mr. Voss had several general conversations with Mr.
Roy about business strategy, product development, trends in Europe, U.S.
products specifically relating to Nvest Companies, L.P. and the potential
interest of Nvest Companies, L.P. for another equity partner, but Mr. Roy
declined to discuss a possible cooperative venture at that time.
In late spring of 2000, Mr. Voss, while in business in Europe, met
with Mr. Roy and another member of management of CDC Asset Management and
discussed CDC Asset Management's goals and strategies and the goals and
strategies of Nvest Companies, L.P. During the discussions, mention of a
possible equity investment by CDC Asset Management in Nvest Companies, L.P.
was made. Mr. Voss conveyed his belief that the then current market price
was not reflective of the value of the Nvest Companies, L.P. franchise, but
a strong partner in Europe could be a positive step in enhancing long-term
growth.
In late April 2000, Mr. Voss and Ms. Sherry Umberfield, Executive
Vice President for Corporate Development at Nvest Companies, L.P., met with
Mr. Roy at the New York offices of Donaldson, Lufkin & Jenrette to discuss
a possible business combination involving CDC Asset Management and Nvest
Companies, L.P., including a possible acquisition by CDC Asset Management
of a partnership interest in Nvest Companies, L.P. Subsequent to the New York
meeting, Mr. Voss had telephone conversations with Mr. Gary A. Beller,
Senior Executive Vice-President and General Counsel of MetLife, and with
members of the board of directors of Nvest Corporation, to keep them
apprised of his discussions with CDC Asset Management.
During the last week of April and the first week of May, Mr. Voss
held a number of telephone conversations with the senior management of CDC
Asset Management regarding the possible terms and structure of the
transaction. During this period, Mr. Roy and Mr. Voss also met in New York
City at the offices of Donaldson, Lufkin & Jenrette, along with certain key
members of their respective senior managements, to discuss a possible
business combination. Another meeting was then held at the offices of
MetLife, attended by Mr. Beller, Terence Lennon, Executive Vice-President
of MetLife, and Jeffrey J. Hodgman, Executive Vice-President of MetLife, to
discuss CDC Asset Management's interest in an equity investment in Nvest
Companies, L.P. (including the possibility of a complete acquisition of
Nvest Companies, L.P.) and the strategic rationale and the logic for such
an investment. During this period, Mr. Voss also continued to inform
members of the board of directors of Nvest Corporation of CDC Asset
Management's interest in Nvest Companies, L.P.
On May 12, 2000, CDC Asset Management, MetLife and Nvest Companies
entered into a confidentiality agreement relating to a possible transaction
and, during the next ten days, the parties engaged in a series of meeting
to discuss the fundamental terms of the proposed transaction and to conduct
due diligence investigations. On May 16, 2000, senior executives of Nvest
Companies, L.P., CDC Asset Management and MetLife and representatives of
Donaldson, Lufkin and Jenrette and Credit Suisse First Boston Corporation
attended an all day due diligence presentation.
On May 21, 2000, Nvest Companies, L.P. forwarded to CDC Asset
Management a summary of proposed terms pertaining to the potential
transaction and, immediately thereafter, the parties and their advisors
began to negotiate the proposed merger and related agreements. The
negotiations over the following three and a half weeks addressed
significant issues for both parties, including the price per unit that
would be paid by CDC Asset Management, the price adjustment mechanism, the
conditions to
17
<PAGE>
closing, the termination events, the amount of the termination fee to be
paid to CDC Asset Management and the amount of the pre-closing
distributions that Nvest Companies, L.P. could make. Also during this
period, CDC Asset Management negotiated the terms of support agreements
pursuant to which certain unitholders of Nvest Companies, L.P. agreed to
vote their units in favor of the mergers, and it negotiated the terms of
employment agreements with certain members of senior management of Nvest
Companies, L.P. and its operating firms.
On May 30, 2000, the board of directors of Nvest Corporation held a
meeting to discuss the proposed transaction. At this meeting, the board
heard management presentations regarding the reasons for and potential
benefits of the mergers and related transactions (including those reasons
set forth under the heading "-Reasons for the Merger") and other business
issues related to the proposed merger agreement and the advice of outside
legal counsel regarding the structure of the transaction and the board's
fiduciary obligations in reviewing and approving it. Credit Suisse First
Boston Corporation presented its valuation analysis of Nvest Companies,
L.P.
On June 15, 2000, the board of directors of Nvest Corporation met
again to review the terms of the proposed merger agreement and the related
agreements, as more fully negotiated. At the meeting, Mr. Voss summarized
the strategic rationale for the mergers and Credit Suisse First Boston
Corporation gave its opinion that, as of that date and on the basis of and
subject to the matters reviewed with the board, the proposed price of
$40.00 per unit, subject to possible downward adjustment (but not below
$34.00), was fair to and in the best interest of the unitholders of the
Partnership and Nvest Companies, L.P. Following its consideration of the
proposed merger agreement, the board unanimously approved the merger
agreement and the mergers contemplated thereby.
Early in the morning of June 16, 2000, the Partnership, Nvest
Companies, L.P., Nvest Corporation and CDC Asset Management finalized the
terms of the transaction and executed the agreement and plan of merger. The
parties issued press releases regarding the execution of the transaction
documents prior to the opening of business in Paris and New York on June
16, 2000.
OPINION OF OUR FINANCIAL ADVISOR
On May 8, 2000, Credit Suisse First Boston Corporation was retained
by Nvest Companies, L.P. to act as financial advisor to Nvest Corporation,
our general partner, in connection with the merger agreement and the
transactions contemplated thereby. In connection with this engagement,
Credit Suisse First Boston Corporation was requested to evaluate the
fairness, from a financial point of view, of the merger consideration to be
received by the unitholders of the Partnership and Nvest Companies, L.P. At
a meeting of the board of directors of our general partner held on June 15,
2000, to consider the merger agreement, Credit Suisse First Boston
Corporation delivered to the board its opinion that, as of that date and
based upon and subject to the matters reviewed with the board, the merger
consideration to be received by the unitholders of the Partnership and
Nvest Companies, L.P. was fair from a financial point of view to such
unitholders.
The opinion of Credit Suisse First Boston Corporation is dated as of
June 15, 2000 and opines as to the fairness as of that date only. Credit
Suisse First Boston Corporation is not obligated to update its opinion.
Events could occur prior to the date of the special meeting which could
result in a different valuation or conclusion if the opinion was reissued
on that date. In the event that there are material changes to the terms of
the proposed transactions or other material changes or conditions affecting
the
18
<PAGE>
Partnership or Nvest Companies, L.P. or its business, our general
partner will consider the advisability of requesting an updated fairness
opinion at that time. As of the date of this proxy statement, the general
partner does not believe any such material changes have occurred.
THE FULL TEXT OF CREDIT SUISSE FIRST BOSTON CORPORATION'S WRITTEN
OPINION DATED JUNE 15, 2000, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS
CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS
APPENDIX B TO THIS PROXY STATEMENT. YOU SHOULD READ THE OPINION CAREFULLY
IN ITS ENTIRETY. THE OPINION OF CREDIT SUISSE FIRST BOSTON CORPORATION IS
DIRECTED TO NVEST CORPORATION'S BOARD OF DIRECTORS AND RELATES ONLY TO THE
FAIRNESS OF THE MERGER CONSIDERATION FROM A FINANCIAL POINT OF VIEW. THE
OPINION DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGERS CONTEMPLATED BY
THE MERGER AGREEMENT AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
UNITHOLDER AS TO HOW SUCH UNITHOLDER SHOULD VOTE WITH RESPECT TO ANY OF THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT. IN ADDITION, THE OPINION
DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION BY OUR BOARD OF DIRECTORS
TO EFFECT THE MERGERS CONTEMPLATED BY THE MERGER AGREEMENT. THE SUMMARY OF
THE OPINION OF CREDIT SUISSE FIRST BOSTON CORPORATION SET FORTH IN THIS
DOCUMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
OPINION.
In arriving at its opinion, Credit Suisse First Boston Corporation:
o reviewed a draft of the merger agreement;
o held discussions with certain of our senior officers concerning
the business, operations, financial condition and prospects of
our company;
o examined certain publicly available business and financial
information relating to, as well as certain financial forecasts
and other information and data for, our company which were
provided to or otherwise discussed with Credit Suisse First
Boston Corporation by our management;
o reviewed the financial terms of the mergers as set forth in the
merger agreement in relation to, among other things: current
and historical market prices and trading volumes of Partnership
units; historical and projected earnings and other operating
data pertaining to Nvest Companies, L.P. and its capitalization
and financial condition;
o considered, to the extent publicly available, the financial
terms of other transactions recently effected which Credit
Suisse First Boston Corporation considered relevant in
evaluating the two mergers contemplated by the merger agreement
and analyzed certain financial, stock market and other publicly
available information relating to the businesses of other
companies whose operations Credit Suisse First Boston
Corporation considered relevant in evaluating the operations of
Nvest Companies, L.P.; and
o performed a discounted cash flow analysis of Nvest Companies,
L.P.'s projected after-tax unlevered free cash flows.
In addition to the foregoing, Credit Suisse First Boston Corporation
conducted such other analyses, studies and examinations and considered such
other financial, economic and market criteria as Credit Suisse First Boston
Corporation deemed appropriate in arriving at its opinion. Credit Suisse
First
19
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Boston Corporation noted that its opinion was necessarily based upon
information available to Credit Suisse First Boston Corporation, and
financial, stock market and other conditions and circumstances as they
existed and had been disclosed to Credit Suisse First Boston Corporation
and could be evaluated as of the date of its opinion.
In rendering its opinion, Credit Suisse First Boston Corporation
assumed and relied, without independent verification, upon the accuracy and
completeness of all financial and other information and data publicly
available or furnished to or otherwise reviewed by or discussed with Credit
Suisse First Boston Corporation. With respect to financial forecasts
provided to or otherwise reviewed by or discussed with Credit Suisse First
Boston Corporation, Nvest Companies, L.P. management advised Credit Suisse
First Boston Corporation that such forecasts were reasonably prepared
reflecting the best currently available estimates and judgments of
management as to the future financial performance of the company, and
Credit Suisse First Boston Corporation expressed no opinion as to such
forecasts. Credit Suisse First Boston Corporation did not make and was not
provided with any independent evaluation or appraisal of the assets or
liabilities of Nvest Companies, L.P. In connection with its engagement,
Credit Suisse First Boston Corporation was not requested to, and did not,
solicit third party indications of interest in all or a part of Nvest
Companies, L.P. Credit Suisse First Boston Corporation was not requested to
consider, and its opinion did not address, the relative merits of the
mergers contemplated by the merger agreement as compared to any alternative
business strategies that might exist for Nvest Companies, L.P. or the
effect of any other transaction in which it might engage.
In connection with its opinion, Credit Suisse First Boston
Corporation performed various financial analyses which it presented to and
discussed with the board of Nvest Corporation on June 15, 2000. The
analyses performed by Credit Suisse First Boston Corporation in connection
with rendering its opinion are described below. These descriptions of
financial analyses include information presented in tabular format. In
order to fully understand the financial analyses performed by Credit Suisse
First Boston Corporation, the tables must be read together with the text of
each description. The tables alone do not constitute a complete description
of the financial analyses. Considering the data in the tables without
considering the full narrative description of the financial analyses,
including the methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of the financial analyses performed
by Credit Suisse First Boston Corporation.
Comparable Public Companies Analysis
Using publicly available information, Credit Suisse First Boston
Corporation analyzed selected financial data for each of thirteen publicly
traded asset management companies, including eleven mutual fund managers,
one institutional manager and one master limited partnership, that Credit
Suisse First Boston Corporation considered comparable to Nvest Companies,
L.P. (the "Selected Companies"). Credit Suisse First Boston Corporation
compared the data with comparable data for Nvest Companies, L.P. In
performing this analysis, Credit Suisse First Boston Corporation reviewed
selected financial data for the following Selected Companies:
Mutual Fund Managers
o Franklin Resources
o T. Rowe Price
o Waddell & Reed
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o Eaton Vance
o Gabelli Asset Management
o Federated Investors
o Liberty Financial
o John Nuveen
o AMVESCAP
o Neuberger Berman
o Black Rock
Institutional Managers
o United Asset Management
Master Limited Partnerships
o Alliance Capital
For each of the Selected Companies and for Nvest Companies, L.P.,
Credit Suisse First Boston Corporation calculated multiples of the equity
value of Nvest Companies, L.P. (on a fully diluted basis at the current
market price less any options proceeds) plus debt, capitalized operating
leases, capitalized leases, minority interests, preferred stock and out of
the money convertible securities, less investments in unconsolidated
affiliates and cash ("Enterprise Value") to:
o Assets under management ("AUM") for fiscal year 1999;
o Revenue for fiscal year 1999; and
o Earnings before income tax, depreciation and amortization
("EBITDA") for fiscal year 1999.
Credit Suisse First Boston Corporation's analysis resulted in the
following range of multiples:
RELEVANT IMPLIED EQUITY
MULTIPLE VALUE RANGE
RANGE (PER UNIT)
--------------------------------- ---------------- ------------------
Assets Under Management ($bns) 1.0% - 1.5% $21.93 - $35.95
1999 Revenues 2.0x - 2.5x $21.31 - $28.16
1999 EBITDA 6.5x - 8.5x $18.45 - $26.01
Indicated Equity Value Range $19.00 - $24.00
--------------------------------- ---------------- ------------------
Financial data used to calculate the multiples for the Selected
Companies was based on consensus estimates published by First Call. Credit
Suisse First Boston Corporation compared the multiples for the Selected
Companies with comparable data for Nvest Companies, L.P. Based on the
analysis described
21
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above, Credit Suisse First Boston Corporation derived an
equity value reference range per Partnership unit of $19.00 to $24.00.
In addition Credit Suisse First Boston Corporation also applied three
possible control premiums to the equity value reference range per
Partnership unit derived from the above Comparable Companies Analysis. This
analysis resulted in the following equity value reference ranges:
-----------------------------------------------------------------------------
Indicated Value with Control Premium of: 20% $22.80 - $28.80
30% $24.70 - $31.20
40% $26.60 - $33.60
-------------------------------------- ------------------- ------------------
This analysis derived an equity value reference range per Partnership unit
of $22.80 to $33.60.
Comparable Acquisition Analysis
Using publicly available information, Credit Suisse First Boston
Corporation considered thirty transactions within the asset management
industry that were announced and consummated during the period from
February, 1997 to June, 2000. Credit Suisse First Boston Corporation
analyzed the implied purchase price multiples paid in those transactions
that it considered to have somewhat similar factors to the acquisition of
the Partnership and Nvest Companies, L.P. For those transactions, Credit
Suisse First Boston Corporation calculated aggregate transaction value and
implied multiples of selected financial data, and applied relevant
multiples to historical Nvest Companies, L.P. data to estimate an implied
acquisition price range for the Partnership and Nvest Companies, L.P. The
range of aggregate transaction values and implied multiple for thirty
companies reviewed by Credit Suisse First Boston Corporation was:
(Dollars in Millions)
------------------------------------------------------------------------------
TRANSACTION VALUE PRICE TO:
---------------------------- --------------------------- ---------------------
Assets Under Management 100 - 5,230 0.5% - 8.5%
Revenues 100 - 5,230 1.7x - 9.4x
EBITDA 100 - 5,230 7.5x - 32.4x
---------------------------- --------------------------- ---------------------
Credit Suisse First Boston Corporation's analysis resulted in the
following comparable acquisitions summary:
22
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<TABLE>
<CAPTION>
IMPLIED EQUITY VALUE
RELEVANT MULTIPLE RANGE
RANGE (Per Unit)
------------------------------------ --------------------------- ---------------------------
<S> <C> <C>
Assets Under Management 1.5% - 2.0% $35.95 - $49.97
1999 Revenues 3.5x - 4.0x $41.87 - $48.73
1999 EBITDA 11.0x - 14.0x $35.46 - $46.80
Indicated Equity Value Range per Unit $37.00 - $45.00
------------------------------------ --------------------------- ---------------------------
</TABLE>
This analysis derived an equity value reference range per Partnership
unit of $37.00 to $45.00.
Discounted Cash Flow Analysis
Credit Suisse First Boston Corporation performed a discounted cash
flow analysis of Nvest Companies, L.P.'s projected after-tax unlevered free
cash flows. After-tax unlevered free cash flow is defined as operating
earnings before depreciation, amortization and interest expense, but after
changes in working capital, net capital spending, and taxes. This analysis
was based on forecasts for a five year period prepared by the management of
Nvest Companies, L.P. Credit Suisse First Boston Corporation discounted
back to present the cash flow available for distribution to the unitholders
and estimated the terminal value based on multiples of final year's
projected cash flow.
Credit Suisse First Boston Corporation calculated implied equity
values per partnership unit by utilizing discount rates ranging from 11.0%
to 15.0% and terminal value multiples of estimated 2005 EBITDA for Nvest
Companies, L.P. ranging from 9.0x to 11.0x. Credit Suisse First Boston
Corporation arrived at these discount rates based on its judgment of the
weighted average cost of capital for the Selected Companies, and arrived at
these terminal value multiples based upon the current values of the
Selected Companies.
TERMINAL VALUE AS A MULTIPLE OF 2005 EBITDA
---------------------------------------------
9.0X 10.0X 11.0X
--------------- --------------- -------------
----------------- ---------------
11% $42.68 $46.28 $49.97
Discount Rate 13% 38.94 42.20 45.46
15% 35.58 38.54 41.51
----------------- --------------- --------------- --------------- -------------
Based upon this analysis, Credit Suisse First Boston Corporation
derived an equity value reference range per Partnership and Nvest
Companies, L.P. unit of $37.00 to $44.00.
Other
No company, transaction or business used in Credit Suisse First
Boston Corporation's analyses as a comparison is identical to Nvest
Companies, L.P. or the mergers contemplated by the merger agreement, nor is
an evaluation of the results of such analyses entirely mathematical;
rather, it involves complex considerations and judgments concerning
differences in financial and operating characteristics and other factors
that could affect the acquisition, public trading or other values of the
companies, transactions or business segments being analyzed. In its
analyses, Credit Suisse First Boston Corporation
23
<PAGE>
made numerous assumptions with respect to Nvest Companies, L.P., industry
performance, general business, economic, and financial market conditions
and other matters, many of which are beyond Nvest Companies, L.P.'s
control. The estimates contained in Credit Suisse First Boston
Corporation's analyses and the valuation ranges resulting from any
particular analysis are not necessarily indicative of actual value or
predictive of future results or values, which may be significantly more or
less favorable than those suggested by such analysis. In addition, analyses
relating to the value of businesses or securities do not purport to be
appraisals or to reflect the prices at which businesses or securities
actually may be sold. Accordingly, such analyses and estimates are
inherently subject to substantial uncertainty.
Credit Suisse First Boston Corporation's opinion and analyses were
only one of many factors considered by Nvest Corporation's board of
directors in its evaluation of the merger and should not be viewed as
determinative of the views of the board or management with respect to the
merger consideration or the mergers.
Pursuant to the terms of Credit Suisse First Boston Corporation's
engagement, Nvest Companies, L.P. has agreed to pay Credit Suisse First
Boston Corporation a fee of $10,000,000 for its services in connection
with the transactions contemplated by the merger agreement. Nvest
Companies, L.P., has also agreed to reimburse Credit Suisse First Boston
Corporation for all reasonable expenses incurred in performing its services
in connection with the transactions contemplated by the merger agreement,
including the reasonable fees and expenses of its legal counsel, and has
agreed to indemnify Credit Suisse First Boston Corporation and certain
related persons against various liabilities relating to or arising out of
its engagement, including liabilities under the federal securities laws.
Nvest Corporation, the general partner of the Partnership and the
managing general partner of Nvest Companies, L.P., is an indirect
subsidiary of MetLife, which is in turn a subsidiary of MetLife, Inc.
MetLife owns approximately 1% of the outstanding common stock of Credit
Suisse Group, Credit Suisse First Boston Corporation's parent. One of its
officers and directors is a director of Credit Suisse Group. An officer of
MetLife is a member of the Investment Committee of Credit Suisse First
Boston International Equity Partners, L.P. Credit Suisse Group owns
approximately 4% of the outstanding common stock of MetLife, Inc. From time
to time Credit Suisse First Boston Corporation provides investment banking
services and engages in transactions with MetLife, Inc. and its
subsidiaries and receives customary fees for such services. During the past
year, among other transactions, Credit Suisse First Boston Corporation
acted as financial advisor to MetLife on a number of mergers and
acquisitions assignments and as a financial advisor, managing underwriter
and joint book-runner in the demutualization of MetLife and the related
initial public offering of MetLife, Inc.
Credit Suisse First Boston Corporation has informed Nvest Companies,
L.P. that in the ordinary course of its business it and its affiliates may
actively trade the debt and equity securities of Nvest L.P., MetLife, Inc.,
CNP Assurances and CNCE for Credit Suisse First Boston Corporation's and
such affiliates own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such
securities.
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
Some of the executive officers of Nvest Corporation, the Partnership
and Nvest Companies, L.P., and some of the members of the board of
directors of Nvest Corporation, have interests in the merger that are
different from and in addition to your interests as a unitholder of the
Partnership. These interests exist
24
<PAGE>
based upon employment agreements that
were entered into in connection with the mergers, the vesting of unit-based
compensation held by the executive officers and the payment of cash
retention bonus awards following the consummation of the mergers. You
should be aware of these interests in the transactions contemplated by the
merger agreement that are different from yours. The board of directors of
Nvest Corporation, our general partner, was aware of these interests and
considered them, among other matters, in making its recommendation.
Employment Agreements. The merger agreement provides that in
connection with the mergers, employment agreements will be entered into by
a number of executives and key employees of Nvest Companies, L.P. and its
affiliated investment management and distribution firms, including Mr. Voss
and Mr. Robert J. Blanding, who is President and Chief Executive Officer of
Loomis, Sayles & Company, L.P. Each of Messrs. Voss and Blanding are also
directors of Nvest Corporation, our general partner. The term of each of
the employment agreements entered into by Mr. Voss and Mr. Blanding will be
five years, commencing upon consummation of the mergers. In addition, CDC
Asset Management has required that a specified number of other executives
and key employees of Nvest Companies, L.P. and its affiliated investment
management and distribution firms enter into employment agreements, as a
condition to CDC Asset Management's obligation to complete the mergers,
including Mr. G. Neal Ryland, who is Executive Vice President and Chief
Financial Officer of Nvest Companies, L.P. and Mr. Jeffrey D. Plunkett, who
is Executive Vice President and General Counsel of Nvest Companies, L.P.
The employment agreements entered into with such executives will have a
three year term commencing on the consummation of the mergers. Pursuant to
the applicable employment agreement, during the term of employment, Mr.
Voss will serve as President and Chief Executive Officer of CDCAM and as a
member of the Executive Board of CDC Asset Management, Mr. Blanding will
serve as President and Chief Executive Officer of Loomis, Sayles & Company,
L.P., Mr. Ryland will serve as Executive Vice President and Chief Financial
Officer of CDCAM and Mr. Plunkett will serve as Executive Vice President
and General Counsel of CDCAM. The annual salary under the employment
agreements for each of Messrs. Voss, Blanding, Ryland and Plunkett,
respectively, will be not less than each executive's annual base salary
immediately prior to the consummation of the mergers. In addition, each of
these executives will receive annual performance based bonuses and
retention bonus awards under the retention bonus plan (as described below)
and be entitled to participate in the benefit plans and programs of the
company for which they provide services that are provided to employees in
similar positions. Mr. Voss is entitled to a minimum annual bonus such that
the sum of his annual base salary and his annual bonus will be no less than
$2,265,950.
With respect to the employment agreement entered into with Mr. Voss,
if, during the term of the agreement, his employment is terminated by CDCAM
for any reason other than for "Cause," as defined in the employment
agreement, or by Mr. Voss for "Good Reason," as defined in the employment
agreement, Mr. Voss will become entitled to receive (i) any earned but
unpaid minimum annual bonus from a prior fiscal year, (ii) the minimum
annual bonus for the year of termination, pro-rated through the date of
termination, (iii) continued payment of the executive's base salary,
minimum annual bonus and retention bonus award under the retention bonus
plan (described below) through the end of the term of the employment
agreement, and (iv) full vesting and payment with respect to all long-term
incentives and equity awards, if any. Also, pursuant to the terms of Mr.
Voss' employment agreement, during his employment and for a period of
eighteen months following the termination of his employment, Mr. Voss has
agreed not to (a) compete with the asset management or other financial
services operations of CDCAM or its affiliates or (b) solicit anyone
employed by such company (including its affiliates).
25
<PAGE>
With respect to the employment agreement entered into with Mr.
Blanding, if, during the term of the agreement, his employment is
terminated by CDCAM for any reason other than for "Cause," as defined in
the employment agreement, or by Mr. Blanding for "Good Reason," as defined
in the employment agreement, Mr. Blanding will become entitled to receive
(i) any earned but unpaid annual bonus, (ii) an annual bonus for the year
of termination, pro-rated through the date of termination, (iii) continued
payment of his base salary plus average annual bonus (based on the average
annual amount paid to the executive under the relevant annual incentive
plan during the three years prior to the date of termination) for one year
following the date of termination, (iv) continued welfare benefits coverage
for one year following the date of termination and (v) continued payment of
his retention bonus award under the retention bonus plan through the fourth
anniversary of the consummation of the mergers. Also, pursuant to the terms
of the employment agreement, during his employment and for a period of
twelve months following the termination of his employment, Mr. Blanding has
agreed not to (a) compete with the asset management or other financial
services operations of Loomis, Sayles & Company or any of its affiliates or
(b) solicit anyone employed by such company (including its affiliates).
The employment agreements entered into by Messrs. Ryland and Plunkett
provide that if, during the term of the agreement, the executive's
employment is terminated by CDCAM without "Cause," as defined in the
employment agreement, or by the executive for "Good Reason," as defined in
the employment agreement, the executive will be entitled to receive (i) any
earned but unpaid annual bonus, (ii) an annual bonus for the year of
termination, pro-rated through the date of termination, (iii) continued
payment of the executive's base salary plus average annual bonus (based on
the average annual amount paid to the executive under the relevant annual
incentive plan during the three years prior to the date of termination) for
one year following the date of termination, (iv) continued welfare benefits
coverage for one year following the date of termination and (v) continued
payment of the executive's retention bonus award under the retention bonus
plan (described below). Also, pursuant to the terms of these employment
agreements, during their employment and until the earlier of 42 months
following consummation of the mergers or one year following the termination
of the executive's employment, each executive has agreed not to (a) compete
with the asset management or other financial services operations of CDCAM
or its affiliates or (b) solicit anyone employed by such company (including
its affiliates).
Retention Payments. In connection with the transactions contemplated
by the merger agreement, Nvest Companies, L.P. or its successor entity will
adopt a retention bonus plan. The retention bonus plan will create a
retention pool of $194 million, to vest and become payable over one to five
years in installments to selected employees of the Partnership and Nvest
Companies, L.P. and its subsidiaries, generally subject to the continued
employment of the employee. The retention bonus plan will be administered
by the Chief Executive Officer of CDCAM, or by a committee of persons
appointed by the CEO of CDCAM and the Chairman of CDCAM (the
"Administrator"). The Administrator will have the discretion to determine
the allocation of, and the terms and conditions that apply to, retention
bonus awards under the Retention Bonus Plan; provided, however, that the
terms and conditions of the retention bonus awards made to Messrs. Voss,
Blanding, Ryland, Plunkett and certain other employees of Nvest Companies,
L.P.'s subsidiaries will be set forth in their respective employment
agreements. Subject to the continued employment of each of Messrs. Voss,
Blanding, Ryland and Plunkett (other than upon a termination without Cause
or for Good Reason, each as defined in the applicable employment
agreement), the retention bonus award vests and becomes payable over a
three to five year period as follows: in the case of Mr. Voss, in five
installments (15%, 15%, 20%, 25% and 25%) over five years, in the case of
Mr. Blanding in four equal installments of 25% each over four years, and in
the case of each of Messrs. Ryland and Plunkett, in three equal
installments of 33-1/3% each over three years. Assuming
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<PAGE>
that each of Messrs. Voss, Blanding, Ryland, Plunkett and Ms. Sherry A.
Umberfield, Executive Vice President for Corporate Development, remain
employed by CDCAM or its affiliates on each relevant installment payment
date, the aggregate amount of the retention bonus awards that will be paid
to such executives will be approximately $ __________ million. The
remainder of the retention pool funds will be allocated to employees of the
Partnership and Nvest Companies, L.P. and its subsidiaries in the
discretion of the Administrator.
Unit Option Awards. Immediately prior to the closing, all outstanding
unit option awards under the 1993 Equity Incentive Plan, 1997 Equity
Incentive Plan and 2000 Equity Incentive Plan (the "Unit Incentive Plans"),
to the extent not fully vested and exercisable, will become fully vested
and exercisable. In addition, each outstanding unit option award will be
cancelled as of the closing and will thereafter represent the right to
receive a cash payment equal to the excess of the unit price over the
exercise price per unit of such unit option, multiplied by the number of
units subject to such unit option. Assuming the mergers are consummated on
December 31, 2000, Messrs. Voss, Blanding, Ryland, Plunkett and Ms.
Umberfield will vest in respect of options to acquire units, in the
aggregate. Such units will be cashed out in the aggregate amount of
approximat assuming a unit price of $40.00.
Indemnification and Insurance. Pursuant to the merger agreement, CDC
Asset Management has agreed that for a period of six years from the date of
the closing it will:
o continue the benefits of any partnership agreement, limited
liability company agreement or indemnification agreement
pursuant to which any of the Partnership, Nvest Companies,
L.P., Nvest Corporation or any of their respective officers,
directors, members, partners or other controlling persons of
such entities is or may be entitled to exculpation or
indemnification, and CDC Asset Management will cause Nvest
Companies, L.P. and the Partnership or their successor entities
to honor any such provision and to pay to the intended
recipient any amounts to which such person is properly entitled
under such provisions, provided, however, that MetLife, Nvest
Corporation and any subsidiary of MetLife (other than Nvest,
L.P. and Nvest Companies, L.P. and their subsidiaries) and the
directors and officers of MetLife and persons serving as
directors or officers at the request of MetLife as of June 16,
2000 shall not be entitled to be exculpated or indemnified for
any claims or damages resulting from any fact or circumstance
that between June 16, 2000 and the closing constituted a breach
of a representation or warranty of the merger agreement; and
o not take any affirmative action which causes the termination or
cancellation of any directors' and officers' liability
insurance for partners, members, managing members, directors
and officers of the Partnership and Nvest Companies, L.P., or
for directors and officers of Nvest Corporation for a period of
six years following the closing, unless such insurance is
replaced with comparable insurance coverage. (CDC Asset
Management, however, is not obligated to expend more than 150%
of the current aggregate annual premium per year for directors'
and officers' liability insurance coverage).
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REGULATORY APPROVALS
The Hart-Scott-Rodino Act provides that transactions such as the
Partnership and Nvest Companies, L.P. mergers may not be completed until
certain information has been submitted to the Federal Trade Commission and
the Antitrust Division of the U.S. Department of Justice and specified
waiting requirements have been satisfied. We and Nvest Companies, L.P. ,
along with CDC, made the required filings under the Hart-Scott-Rodino Act
on ___________, 2000, and therefore expect the waiting period to expire on
___________, 2000 (assuming that no additional information is requested by
the Federal Trade Commission or Antitrust Division of the U.S. Department
of Justice).
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material United States federal
income tax consequences of the merger to holders of Partnership units and
is for general information only. This discussion is based on the provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury
Regulations promulgated thereunder, and judicial and administrative rulings
and decisions as of the date hereof, all of which are subject to change or
differing interpretations at any time, possibly with retroactive effect.
Furthermore, no rulings regarding the tax consequences of the merger have
been or will be sought from the Internal Revenue Service ("IRS"), and no
one can be sure that the IRS will not take a view that is contrary to that
expressed herein. The tax treatment of a holder of Partnership units may
vary depending upon his or her particular situation. Certain holders
(including partnerships, insurance companies, tax- exempt organizations,
financial institutions, broker-dealers, persons holding Partnership units
as part of a "hedge," "straddle," or "synthetic security transaction," and
foreign holders) may be subject to special rules not discussed below. This
discussion does not consider the effect of any state, local or foreign tax
laws or any United States tax considerations (e.g., estate or gift) other
than United States federal income tax considerations that may be relevant
to particular holders. This discussion is limited to holders who have held
their Partnership units as "capital assets" (generally property held for
investment) within the meaning of Section 1221 of the Code. EACH HOLDER OF
PARTNERSHIP UNITS IS URGED TO CONSULT HIS OR HER TAX ADVISOR WITH RESPECT
TO THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME TAX AND REPORTING
CONSEQUENCES ARISING FROM THE MERGER AS THEY MAY RELATE TO HIS OR HER TAX
SITUATION.
CONVERSION OF PARTNERSHIP UNITS INTO CASH
A holder who receives cash upon the conversion of Partnership units
pursuant to the Partnership merger will recognize gain or loss for United
States federal income tax purposes equal to the difference between (i) the
sum of (A) the amount of cash received, plus (B) the holder's share of the
Partnership's liabilities and (ii) the holder's tax basis in such
Partnership units so converted (as adjusted for Partnership taxable income,
distributions and nondeductible expenses, as well as the holder's allocable
share of liabilities). Subject to the rules described in the next
paragraph, any such gain or loss will generally constitute long-term
capital gain or loss if the holder has held the Partnership units for more
than one year.
A holder of Partnership units will, however, be required to recognize
ordinary income rather than capital gain to the extent any cash received
upon the conversion of such Partnership units pursuant to the merger is
attributable to (i) amortization deductions that have been allocated to
such holder related to
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goodwill of the Partnership that is eligible for amortization pursuant to
Section 197 of the Code, and (ii) other unrealized receivables and
inventory of the Partnership within the meaning of Section 751 of the Code
(which amount attributable to such other unrealized receivables and
inventory is not expected to be material to a holder of Partnership units).
Such ordinary income may exceed net gain realized upon the conversion of
the Partnership units and may be recognized even if there is a net loss on
the conversion of the Partnership units. Commencing in 1993, the
Partnership has followed a practice of generally allocating amortization
deductions to holders. These deductions have been significant for the
applicable years.
BACKUP WITHHOLDING
The Partnership unitholders may be subject to backup withholding at
the rate of 31% with respect to the gross proceeds from the conversion of
such Partnership units pursuant to the merger unless such holder (i) is a
corporation or other exempt recipient and, when required, establishes this
exemption or (ii) provides his or her correct taxpayer identification
number (which, in the case of an individual, is his or her social security
number), certifies that he or she is not currently subject to backup
withholding and otherwise complies with applicable requirements of the
backup withholding rules. A unitholder who does not provide the Partnership
with his or her correct taxpayer identification number may be subject to
penalties imposed by the IRS. Any amount withheld under these rules will be
creditable against the holder's federal income tax liability, and if
withholding results in an overpayment of taxes, the holder may apply for a
refund.
THE MERGER AGREEMENT
The following is a brief summary of the material provisions of the
merger agreement. The following summary is qualified in its entirety by
reference to the merger agreement, which we have attached as Appendix A and
which is incorporated by reference in this proxy statement. The summary is
qualified in its entirety by reference to the merger agreement. We urge you
to read the merger agreement in its entirety.
THE MERGERS
The merger agreement provides that, following the approval of the
Partnership merger by the Partnership unitholders, the approval of the
Nvest Companies, L.P. merger by the Nvest Companies, L.P. unitholders and
the satisfaction or waiver of the other conditions to the mergers,
including the receipt of requisite third-party consents and regulatory
approvals, the Partnership will be merged with Merger Sub, with the
Partnership surviving, immediately followed by the merger of Nvest
Companies, L.P., with Merger Sub II, with Nvest Companies, L.P. surviving.
The mergers will become effective upon the filing of the respective
certificates of merger with the Secretary of the State of Delaware for each
of the Partnership and Nvest Companies, L.P. or at such later time agreed
to by the parties and specified in the certificates of merger.
Merger Consideration. At the effective time of the Partnership
merger, pursuant to the merger agreement and the Delaware Revised Limited
Partnership Act, each issued and outstanding unit of Partnership interest
will be converted into the right to receive, without interest, an amount in
cash equal to $40.00, subject to downward adjustment (but not below $34.00
per unit). See "The Transaction--Calculation of the Unit Price" for a
description of the unit price adjustment formula.
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Surrender of Partnership Unit Certificates. At the effective time,
each certificate representing Partnership units then outstanding will
represent the right to receive the cash into which such issued and
outstanding Partnership units may be converted. At the effective time, all
such Partnership units will be canceled and cease to exist, and each holder
of a certificate representing any such Partnership units shall thereafter
cease to have any rights with respect to such Partnership units other than
the right to receive, upon the surrender of such certificate, the cash
consideration payable under the merger agreement, without interest.
At or prior to the effective time of the Partnership merger, CDCAM
will select a paying agent not reasonably objected to by the Partnership,
and CDCAM will deposit with such paying agent the cash consideration to be
paid to the Partnership unitholders. Promptly after the effective time of
the Partnership merger, the Partnership will mail a letter of transmittal
to you. The letter of transmittal will tell you to whom to surrender your
Partnership unit certificates in exchange for the cash consideration to be
received by you. In all cases, the Partnership merger consideration will be
provided only in accordance with the procedures set forth in the merger
agreement and such letters of transmittal. See "Payment of Cash Merger
Consideration".
One year following the effective time of the Partnership merger, we
may cause the paying agent to deliver to us any funds that have not been
disbursed to Partnership unitholders since the effective time of the
Partnership merger, and thereafter, such holders shall be entitled to look
to us only as general creditors with respect to the cash payable upon due
surrender of Partnership unit certificates. In addition, neither the paying
agent nor any party to the merger agreement will be liable to any person in
respect of any merger consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
Other Equity Interests. Nvest Corporation, Nvest, L.P. and Nvest
Companies, L.P. have agreed to take all actions necessary so that (i) each
option granted to purchase Partnership units under any Partnership equity
plan becomes fully vested and exercisable immediately prior to closing and
(ii) the restrictions applicable to each restricted unit granted under any
Partnership equity plan lapses immediately prior to the closing. At the
closing, outstanding options will be canceled and will be converted into
the right to receive a cash payment from us equal to the per unit purchase
price being paid in the mergers, minus the exercise price of the option,
multiplied by the number of Partnership units subject to the option. Each
restricted unitholder, after lapse of the restrictions of the restricted
units, will be entitled to participate in the Nvest, L.P. merger in the
same manner as all other Partnership unitholders.
REPRESENTATIONS AND WARRANTIES
Nvest Companies, L.P., the Partnership and Nvest Corporation
collectively have made representations and warranties in the merger
agreement relating to:
o their organization and the organization of their subsidiaries
and their respective standing and authority to carry on their
businesses;
o the respective capital structures of the Partnership and of
Nvest Companies, L.P., their aggregate capitalization and, as
applicable, certain aspects of the capital structures of their
subsidiaries;
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o Nvest Companies, L.P.'s ownership interest in its subsidiaries
and controlled affiliates;
o the authorization, execution, delivery and enforceability of
the merger agreement and other documents relating to the merger
agreement;
o documents and financial statements filed with the SEC on behalf
of the Partnership and the accuracy of information contained
therein, including financial statements and schedules
pertaining to Nvest Companies, L.P. and, as applicable, their
respective subsidiaries;
o regulatory filings and approvals;
o the absence of certain changes or events;
o litigation;
o compliance with applicable laws and permits;
o tax matters;
o employee benefit plans;
o brokers and finders;
o investment advisory activities;
o the eligibility of Nvest Companies, L.P., its subsidiaries,
affiliates and associated persons to qualify to serve in
certain capacities pursuant to the Investment Company Act of
1940, the Investment Advisers Act of 1940 and the Securities
Exchange Act of 1934;
o material contracts;
o insurance;
o technology and intellectual property;
o environmental matters;
o an opinion of Credit Suisse First Boston Corporation delivered
to the board of directors of Nvest Corporation, our general
partner; and
o the amount of annualized advisory fees of Nvest Companies, L.P.
and its subsidiaries as of April 30, 2000.
CDC Asset Management and CDCAM have made representations and
warranties in the merger agreement as to itself, CDCAM, Merger Sub and
Merger Sub II relating to:
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o organization, standing and authority to carry on its business
as currently conducted;
o authorization, execution, delivery and enforceability of the
merger agreement and other documents relating to the merger
agreement;
o required regulatory filings and approvals;
o certain matters related to the Investment Company Act of 1940;
o brokers and finders; and
o the financing of the transactions contemplated by the merger
agreement and other documents relating to the merger agreement.
Pursuant to the merger agreement, the representations and warranties
made by the parties, except those regarding brokers and finders, shall
survive only until the closing.
COVENANTS
Conduct of Parties Prior to Closing. Prior to the closing, each of
the Partnership, Nvest Companies, L.P. and Nvest Corporation has agreed to
conduct its respective business, and to cause its subsidiaries to conduct
their businesses, in the ordinary and usual course and to use reasonable
best efforts to preserve its respective business organization and assets
intact, and to maintain existing relations and goodwill with customers,
suppliers, distributors, creditors, lessors, employees and business
associates. In addition, each of the Partnership, Nvest Companies, L.P. and
Nvest Corporation has agreed that it will not, and will not permit any its
subsidiaries to, do any of the following, except as previously disclosed,
without the prior written consent of CDCAM, which shall not be unreasonably
withheld or delayed:
o issue, sell, pledge, grant, allocate, dispose of or encumber
any equity interests in it or any of its subsidiaries or any
options, warrants, conversion or other rights or understandings
of any kind, contingent or otherwise, to purchase any such
equity interests other than in accordance with the terms of the
Partnership equity plans;
o admit any new partner or member other than in the ordinary
course of its business;
o adjust, split, combine or reclassify any of its or its
subsidiaries' equity interests or change or agree to change in
any manner the rights of such equity interests or liquidate or
dissolve itself or any of its subsidiaries;
o declare, set aside, make or pay any dividend or other
distribution in cash, stock or property in respect of its
equity interests, or repurchase, redeem or otherwise acquire,
directly or indirectly, any of its equity interests, provided
that (i) the Partnership and Nvest Companies, L.P. will be
permitted to make distributions of 80% of its operating cash
flow with respect to the period beginning January 1, 2000 and
ending on the closing date and (ii) subsidiaries of Nvest
Companies, L.P. will be permitted to make distributions to
Nvest Companies, L.P.;
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o other than in the ordinary course of its business transfer,
lease, license, guarantee, sell, mortgage, pledge, dispose of
or encumber any of its or their material property or assets,
tangible or intangible, or incur, modify, cancel or waive any
material indebtedness or other liability or obligation;
o make, authorize or commit for any capital expenditures other
than in the ordinary course of business of their respective
businesses, as the case may be, or, by any means, make any
acquisition of, or investment in, assets or stock of any other
person or entity, provided that the investments committed to as
of the date of the merger agreement or made in the ordinary
course of business are not subject these restrictions;
o terminate, establish, adopt, enter into, or make any new grants
or awards, under any compensation and benefit plan or amend or
otherwise modify any compensation and benefit plan in a manner
that would increase the benefits provided thereunder to any
executive officer or, other than in the ordinary course of
business consistent with prior practice, any other person;
o amend, supplement or restate its or any of its subsidiaries'
partnership agreements or articles of incorporation or bylaws,
as the case may be, or enter into any written consents which in
effect amend, supplement or restate such documents;
o implement or adopt any change in any respect of its accounting
practices, policies or principles other than as may be required
by GAAP;
o enter into or renew or terminate any material contract with
Nvest Corporation, the Partnership or Nvest Companies, L.P. or
any of their affiliates or subsidiaries, or make any amendment
or modification to any such agreement if such entry, renewal,
termination, amendment or modification would have a material
adverse effect on the Partnership or Nvest Companies, L.P.;
o take any action that might reasonably be expected to be or to
result in "an addition of a substantial new line of business"
with respect to Nvest Companies, L.P. (within the meaning of
Section 7704(g)(2) of the Internal Revenue Code) or that might
reasonably be expected to cause the Partnership to cease to be
an "electing 1987 partnership" under that section;
o settle any claim, action or proceeding involving any liability
for money damages in excess of $1,500,000 or any material
restrictions upon any of its operations;
o in the case of any investment company, request that any action
be taken by any of the investment company boards, other than as
contemplated by the merger agreement and other than routine
actions taken in the ordinary course of business that would not
materially adversely affect Nvest Corporation, the Partnership,
Nvest Companies, L.P. or any investment company, except as and
to the extent required, after consultation with outside legal
counsel, in the exercise of fiduciary obligations;
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o voluntarily divest itself of management of any client or any
assets under management other than in the ordinary course of
business;
o accelerate the billing or other realizations of advisory fees
payable by clients to Nvest Companies, L.P. or any of its
subsidiaries or delay the payment of liabilities beyond the
ordinary course of business;
o except as required by applicable law, increase the compensation
of any executive officer or, other than in the ordinary course
of business consistent with prior practice, any other current
or former employee, managing director, officer, director or
consultant of the Nvest Corporation, the Partnership, Nvest
Companies, L.P. or their respective subsidiaries, or enter
into, adopt, amend or commit to enter into, adopt or amend any
employment, consulting, severance, change of control or
incentive pay agreement with or for the benefit of any
executive officer or, other than in the ordinary course of
business consistent with prior practice, any other current or
former employee, managing director, officer, director or
consultant of any such person;
o take any action or fail to take any action that would or could
reasonably be expected to result in any of the representations
or warranties made by Nvest Corporation, the Partnership and
Nvest Companies, L.P. in the merger agreement being or becoming
untrue; or
o authorize or enter into an agreement to do any of the foregoing.
Acquisition Proposals. The Partnership, Nvest Companies, L.P. and
Nvest Corporation have agreed that they will not, and that each of their
subsidiaries and their respective executive officers and directors will
not, except as described below, (i) initiate or solicit, directly or
indirectly, any inquiry or the making of any proposal or offer, (ii)
directly or indirectly engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
regarding a proposal or offer or (iii) otherwise facilitate any effort or
attempt to make or implement any proposal or offer, in each case with
respect to a merger, reorganization, share exchange, consolidation or
similar transaction involving, or any purchase of, all or any significant
portion of the assets or equity interest in the Partnership, Nvest
Companies, L.P. or their Subsidiaries (any such proposal or offer
hereinafter referred to as "Acquisition Proposal").
Notwithstanding the foregoing, the Partnership, Nvest Companies, L.P.
and Nvest Corporation, their management members, general partners or boards
of directors and their representatives may take any actions necessary to
comply with Rule 14e-2 of the Exchange Act of 1934 with regard to an
Acquisition Proposal. In addition, if the board of directors of our general
partner, Nvest Corporation, determines in good faith, after consultation
with outside legal counsel, that its fiduciary duties under applicable law
require it to take the following actions, and, after entering into
confidentiality agreements on customary terms as advised by outside legal
counsel, our general partner may:
o provide information to or engage in negotiations with a third
party that has made an unsolicited written bona fide
Acquisition Proposal; and
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o recommend a competing Acquisition Proposal to the members,
partners or unitholders, as applicable, and withdraw its prior
recommendation of the merger agreement with CDC Asset
Management and CDCAM.
The Partnership, Nvest Companies, L.P. and Nvest Corporation have
agreed to notify CDC Asset Management and CDCAM within one day of receipt
of any Acquisition Proposal, any request for information relating to an
Acquisition Proposal or upon any intent to initiate discussions or
negotiations with respect to an Acquisition Proposal. The notification must
identify the party making the proposal or offer and the material terms and
conditions of the proposal or offer. Nvest Corporation will keep CDC Asset
Management and CDCAM reasonably informed on the status and terms of any
such proposals or offers and the status of any discussions or negotiations.
The Partnership, Nvest Companies, L.P. and Nvest Corporation agreed
to terminate any activities, discussions or negotiations conducted prior to
the date of the merger agreement with any parties other than CDC Asset
Management and CDCAM regarding any Acquisition Proposal.
Retention and Other Compensation Related Matters. Prior to the
closing, Nvest Companies, L.P. shall implement the employee retention plan
provided for in the merger agreement. CDC Asset Management agrees that it
shall honor the terms of such retention plan following the closing and it
shall make funds available to make the payments under such retention plan.
More information about the retention bonus plan can be found in "Special
Factors--Interests of Certain Persons in the Transaction."
Filings, Other Actions, Notification. Each of the Partnership, Nvest
Corporation, Nvest Companies, L.P. and CDCAM has agreed to cooperate with
each other and to use its respective reasonable best efforts to cause all
actions to be taken to consummate and make effective the transactions
proposed by the merger agreement, including preparing and filing as
promptly as practicable all documentation to effect all necessary notices,
reports and other filings and to obtain as promptly as practicable all
consents, registrations, approvals, permits and authorizations necessary or
advisable to be obtained from any third party and any governmental
authority in order to consummate the transactions. Each of the Partnership,
Nvest Corporation and Nvest Companies, L.P. has agreed to use its
reasonable efforts to obtain the consents and approvals necessary to assign
any agreements including any advisory agreements that may not be assigned
by operation of law or the terms of the applicable agreement without the
consent or approval of another party thereto or that terminates upon any
such assignment.
Investment Company Matters. Each of CDC Asset Management and CDCAM
has agreed to use its reasonable best efforts, both before and after the
closing, to ensure compliance with Section 15(f) of the Investment Company
Act of 1940 as it applies to the change in control of Nvest Companies, L.P.
and certain subsidiaries that act as investment advisers to registered
investment companies. In that regard, they shall, subject to applicable
fiduciary duties and to the extent within their control, use reasonable
best efforts to cause each of its affiliates to conduct its business so as
to ensure that:
o for a three year period after closing, at least 75% of the
boards of the applicable registered investment companies to be
non-interested persons of such investment companies' investment
adviser prior to and following the closing; and
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o for a two year period after the closing, there shall not be
imposed an unfair burden on such investment companies.
Client Consent. The Partnership and Nvest Companies, L.P. have agreed
to use their reasonable best efforts to cause each registered investment
company advised by subsidiaries of Nvest Companies, L.P. to obtain board of
directors and shareholder approval of new investment advisory agreements
with such subsidiaries, to become effective at the closing. The Partnership
and Nvest Companies, L.P. have also agreed to notify, and to cause each of
its subsidiaries that is a registered investment adviser to notify, their
respective clients (other than registered investment companies) of the
transactions contemplated by the merger agreement and to obtain, prior to
the closing, the consent of such client to the assignment of its advisory
agreement in accordance with procedures set forth in the merger agreement.
Taxation. The parties have agreed that the Partnership and Nvest
Companies, L.P. shall prepare and file all tax returns for any partial
period ending on or before the closing for each of the Partnership, Nvest
Companies, L.P. and its subsidiaries subject to approval by MetLife, the
parent company of our general partner. MetLife will control all tax
examinations, audits and contests relating to the Partnership, Nvest
Companies, L.P. or its subsidiaries for periods or partial periods ending
on or before the closing.
Access; Information. The Partnership, Nvest Companies, L.P. and Nvest
Corporation have each agreed to allow CDC Asset Management and CDCAM access
to their and their subsidiaries' books, records, offices, properties and
personnel, and access to information reasonably requested by CDC Asset
Management or CDCAM prior to the closing. The parties have agreed that none
of this information will be used for any purpose unrelated to the
consummation of the transactions contemplated by the merger agreement and
each party shall keep this information confidential.
Publicity. The parties have agreed to consult with each other prior
to issuing any press releases or making any public announcements regarding
the merger agreement.
Takeover Statutes. If a takeover statute is, or becomes, applicable
to any of the merger transactions each of the Partnership, Nvest Companies,
L.P. or Nvest Corporation and each of their respective boards, general
partners, managing members and managing boards, as applicable, has agreed
to take the actions necessary to eliminate or minimize the effects of the
statute or regulation on the merger transactions.
Reasonable Best Efforts. Each of the Partnership, Nvest Companies,
L.P. and Nvest Corporation and CDC Asset Management and CDCAM have agreed
to take all actions necessary or desirable to fulfill the conditions and
obligations of the merger agreement.
Pre-Closing Distributions. The Partnership and Nvest Companies, L.P.
shall, prior to the closing, distribute 80% of their respective operating
cash flow with respect to the period beginning January 1, 2000 and ending
on the date of the closing less the amount of their operating cash flow
distributed between January 1, 2000 and June 16, 2000, the date the merger
agreement was executed.
Expenses. Each party has agreed to bear its own expenses incurred in
connection with the merger agreement; provided, however, that CDCAM will
bear 50% of the costs associated with the solicitation of the shareholders
of the registered investment companies and of the expenses incurred by the
Partnership in connection with this proxy statement and solicitation of the
Partnership's unitholders.
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Subsidiary Action. To the extent that action on the part of a
subsidiary of a party is necessary in order for such party to fulfill any
of its obligations under the merger agreement, then each such obligation
shall be deemed to include an undertaking on the part of such party to
cause such subsidiary to take such necessary action.
Unitholder Approval. The Partnership, Nvest Companies, L.P. and Nvest
Corporation have each agreed, as applicable and necessary, to (i) convene a
meeting of the Partnership's unitholders to consider and vote upon approval
of the merger of the Partnership and any other matters required to be
approved by the Partnership's unitholders for consummation of the mergers
contemplated by the merger agreement and (ii) obtain written consents of
unitholders of Nvest Companies, L.P. to approve the merger of Nvest
Companies, L.P. and any other matters required to be approved by Nvest
Companies, L.P.'s unitholders for consummation of that merger. Nvest
Corporation has agreed, subject to its fiduciary obligations under
applicable law, to recommend such approval by the Partnership unitholders
and Nvest Companies, L.P. unitholders and the Partnership and Nvest
Companies, L.P. have agreed to take all reasonable, lawful action to
solicit such approval from their respective unitholders.
Proxy Statement. Nvest Companies, L.P. and Nvest Corporation have
agreed to cooperate with the Partnership in preparing this proxy statement
to be filed with the SEC and to hold a special meeting of the Partnership
for unitholders of the Partnership to consider and vote upon the
Partnership merger contemplated by the merger agreement. CDCAM had the
right to review and approve all information related to CDCAM and its
affiliates before it appeared in this proxy statement.
Indemnification; Directors' and Officers' Insurance. CDCAM has agreed
to maintain, for a period of six years after the closing, any partnership,
limited liability company or indemnification agreement pursuant to which
the Partnership, Nvest Companies, L.P. or Nvest Corporation, their
affiliates or any officer, director, member, partner or other controlling
person of such entities is or may be entitled to exculpation or
indemnification, and CDCAM shall cause the Partnership and Nvest Companies,
L.P. and their successor entities, as the case may be, to honor any such
provision for a period of six years following the closing; provided,
however, that MetLife, Nvest Corporation and any subsidiary of MetLife
(other than Nvest, L.P. and Nvest Companies, L.P. and their subsidiaries)
and the directors and officers of MetLife and persons serving as directors
or officers at the request of MetLife as of June 16, 2000 shall not be
entitled to be exculpated or indemnified for any claims or damages
resulting from any fact or circumstance that between the June 16, 2000 and
the closing constituted a breach of a representation or warranty contained
in the merger agreement. Furthermore, CDCAM has agreed for a period of six
years following the closing not to take any affirmative action which might
cause the termination or cancellation of any extension of directors' and
officers' liability insurance for partners, members, managing members,
directors and officers of the Partnership, Nvest Companies, L.P. or Nvest
Corporation unless CDCAM replaces such insurance with comparable insurance
coverage. CDCAM however, is not obligated to expend more than 150% or the
current aggregate annual premium per year for directors' and officers'
liability coverage.
Financial Obligations of CDC Finance. CDC Finance, CDC Asset
Management's parent, has agreed to cause each of CDC Asset Management and
CDCAM to fulfill all of its financial obligations under the merger
agreement.
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CONDITIONS TO OBLIGATIONS TO EFFECT THE TRANSACTIONS
The respective obligations of each of the Partnership, Nvest
Companies, L.P., Nvest Corporation, CDC Asset Management and CDCAM to
effect the mergers and the transactions contemplated by the merger
agreement are subject to the satisfaction or waiver of several conditions,
including:
o the expiration or termination of the waiting period under the
Hart-Scott-Rodino Act and the approval of the Commission of the
European Union under applicable competition law (which approval
the parties to the merger agreements have agreed, is not
required by law);
o the approval of the Partnership merger by the unitholders of
the Partnership and approval of the Nvest Companies, L.P.
merger by affirmative vote or written consent of the
unitholders of Nvest Companies, L.P.; and
o the absence of any statute, law, ordinance, rule, regulation,
judgment, decree, injunction or other order that prohibits
consummation of the transactions contemplated by the merger
agreement.
Except as may be waived by CDCAM, the obligations of CDC Asset
Management, CDCAM, Merger Sub and Merger Sub II to effect the transactions
contemplated in the merger agreement are subject to the satisfaction or
waiver of the following conditions:
o subject to materiality standards set forth in the merger
agreement, the accuracy of the representations and warranties
of each of the Partnership, Nvest Companies, L.P. and Nvest
Corporation in the merger agreement as of the date of the
merger agreement and the closing;
o the performance in all material respects by each of the
Partnership, Nvest Companies, L.P. and Nvest Corporation of all
obligations required to be performed by it prior to the
closing;
o the compliance with certain requirements of Section 15(f) of
the Investment Company Act of 1940;
o at least 50% percent of a designated group of employees of
Nvest Companies, L.P., and its affiliates entering into new
employment agreements to be effective from and after the
closing, which shall be in full force and effect;
o existing employment agreements with designated key employees of
Nvest Companies, L.P. and its affiliates entered into
simultaneously with entering into the merger agreement shall be
in full force and effect;
o the investment management revenue run-rate of Nvest Companies,
L.P. and its subsidiaries (calculated to exclude the effects of
market and currency fluctuations) as of the calendar month-end
prior to the closing, in respect of which consents have been
obtained,
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being not less than 80% of the investment management
revenue run-rate as of April 30, 2000;
o the receipt by each of the Partnership, Nvest Companies, L.P.
and Nvest Corporation of the consents or approvals as may be
necessary to be obtained from any third party in connection
with the consummation of the merger (other than consents in
respect of advisory agreements), unless the failure to obtain
such consents or approvals individually or in the aggregate,
would not have a material adverse effect on the Partnership,
Nvest Companies, L.P. and their subsidiaries taken as a whole.
Except as may be waived by Nvest Corporation, the obligations of the
Partnership, Nvest Companies, L.P. and Nvest Corporation to effect the
transactions contemplated by the merger agreement are subject to
satisfaction of the following conditions:
o subject to materiality standards set forth in the merger
agreement, the accuracy of the representations and warranties
of each of CDC Asset Management and CDCAM in the merger
agreement as of the date of the merger agreement and the
closing; and
o the performance by each CDC Asset Management, CDCAM, Merger Sub
and Merger Sub II in all material respects of all obligations
to be performed by it prior to the closing.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement provides that prior to the closing, the merger
agreement may be terminated:
o at any time by mutual written consent of CDCAM and Nvest
Corporation; or
by CDCAM or Nvest Corporation if:
o the transactions contemplated by the merger agreement have not
been consummated by December 31, 2000, so long as the
terminating party did not prevent consummation by materially
failing to fulfill any of its obligations under the merger
agreement;
o any court or other governmental authority has issued or
promulgated any statute, law, ordinance, rule, regulation,
judgment, decree, injunction or other order, that has become
final and non-appealable, permanently restraining, enjoining or
otherwise prohibiting the consummation of the merger;
o the Partnership's unitholders do not vote to approve the merger
agreement and the mergers or the requisite vote or written
consents are not received from the unitholders of Nvest
Companies, L.P.; or
by CDCAM if:
o Nvest Corporation (i) has failed to recommend, has withdrawn or
has adversely modified its approval or recommendation of the
merger agreement, or (ii) has failed to reconfirm
39
<PAGE>
its recommendation of the merger agreement or the merger of the
Partnership within five business days after being requested in
writing by CDCAM to do so, or (iii) has recommended another
Acquisition Proposal to the Partnership's or Nvest Companies,
L.P.'s unitholders, or (iv) a tender offer or exchange offer
for 15% or more of the outstanding Partnership units is
commenced and Nvest Corporation fails to recommend against
acceptance of such tender offer or exchange within the time
period required pursuant to Rule 14e-2 of the Exchange Act of
1934;
o any of the Partnership, Nvest Companies, L.P. or Nvest
Corporation has breached any representation, warranty, covenant
or agreement in the merger agreement that would allow CDCAM not
to close and the breach cannot be cured, or if curable, was not
cured 30 days after notice by CDCAM; or
by Nvest Corporation if:
o CDCAM has breached a representation, warranty, covenant or
agreement in the merger agreement that would allow Nvest
Corporation not to close and the breach cannot be cured, or if
curable, was not cured 30 days after notice by Nvest
Corporation.
o at any time prior to approval of the merger agreement by the
unitholders of Nvest Companies, L.P., Nvest Corporation may
terminate the merger agreement if after receipt of an
Acquisition Proposal, (i) Nvest Corporation's directors
determine, in good faith, after consultation with their
advisors, that termination of the merger agreement is required
to comply with its fiduciary duties under applicable law; (ii)
after receiving requisite notice of that Acquisition Proposal
from Nvest Corporation, CDCAM does not make, within five
business days, an offer that is at least as favorable as such
Acquisition Proposal; and (iii) simultaneous with such
termination Nvest Companies, L.P. pays the required termination
fee described below.
TERMINATION FEE
Nvest Companies, L.P. has agreed to pay CDCAM a termination fee of
$66.5 million if either of the following events occur:
o the merger agreement is terminated by Nvest Corporation
following receipt of a competing Acquisition Proposal, or
o the merger agreement is terminated by CDCAM because (A) Nvest
Corporation (i) failed to recommend, withdrew or adversely
modified its approval or recommendation of the merger
agreement, (ii) failed to reconfirm its recommendation of the
merger agreement or the merger within five business days of
being requested by CDCAM to do so, (iii) failed to recommend
against acceptance of a tender offer for 15% or more of the
outstanding units of the Partnership or (iv) has recommended a
different Acquisition Proposal to the Partnership's or Nvest
Companies, L.P.'s unitholders or (B) either the unitholders of
the Partnership or the unitholders of Nvest Companies, L.P.
shall have failed to approve their respective mergers upon a
vote, and, in any such case, within 12 months of CDCAM's
termination, any of the Partnership, Nvest Companies, L.P. or
40
<PAGE>
Nvest Corporation enters into a binding agreement with a third
party to implement an Acquisition Proposal or consummates an
Acquisition Proposal.
AMENDMENT AND WAIVER
Prior to the closing, any provision of the merger agreement may be:
o waived by the party that benefits from the provision;
o amended or modified by an agreement in writing among all
parties to the merger agreement; or
o amended or modified by an agreement in writing among CDC Asset
Management, CDCAM, Nvest Corporation, the Partnership and Nvest
Companies, L.P. However, such agreement cannot amend or modify
a term of the merger agreement if the amendment or modification
(i) occurs after the Partnership's unitholders have approved
the merger agreement and the amendment or modification would
change the amount or kind of consideration to be received by
the unitholders without their consent, (ii) could reasonably be
expected to materially delay or impede the consummation of any
of the transactions contemplated by the merger agreement or
(iii) would constitute a waiver of any provision of the merger
agreement other than a waiver by the party benefitted by the
provision.
DIRECTORS AND MANAGEMENT
Information with respect to the management of the Partnership and
Nvest Companies, L.P. is set forth in Part III of the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1999.
See "Where You Can Find More Information."
In addition, a description of the relationships between the
Partnership, Nvest Companies, L.P. and its general partner, Nvest
Corporation, along with other contracts, arrangements, understandings or
relationships relating the Partnership and its units, is set forth and
described in the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1999.
Our general partner's reasons for approving the merger agreement, the
merger and the other transactions contemplated by the merger agreement are
set forth in the section entitled "Special Factors-Reasons for the Merger."
In coming to its decision to approve the transactions contemplated by the
merger agreement, subject to the Partnership's and Nvest Companies, L.P.'s
unitholders approval, the general partner did not have an independent board
or independent third party review or approve the contemplated transactions.
Certain officers and directors of Nvest Corporation and partners of
the Partnership and of Nvest Companies, L.P., including affiliates of such
officers, directors and partners, have entered into support agreements with
CDC Asset Management by which they have agreed to vote their Partnership
units and Nvest Companies, L.P. units in favor of the mergers contemplated
by the merger agreement. Pursuant to these agreements approximately 135,300
Partnership units, comprising approximately 4% of the units required to
approve the Partnership merger pursuant to the terms of the merger
agreement, are already
41
<PAGE>
committed to vote to approve the merger. With respect to the merger of
Nvest Companies, L.P., holders of approximately 11 million Nvest Companies,
L.P. units, comprising over 90% of the units required to approve the Nvest
Companies, L.P. merger pursuant to the terms of the merger agreement, are
already committed to vote to approve the merger. Each of them has indicated
that he or she will vote the Partnership units with respect to which he or
she has voting power in favor of the Partnership merger and will vote to
instruct our general partner to vote the Partnership's interest in Nvest
Companies, L.P. in favor of the Nvest Companies, L.P. merger. To the
Partnership's knowledge, none of the executive officers or directors of
Nvest Corporation has made a recommendation in support of or opposed to the
transactions contemplated by the management, other than the recommendation
described in this proxy statement.
PRICE RANGE OF UNITS AND DISTRIBUTIONS
Partnership units are traded on the New York Stock Exchange under the
symbol "NEW". The following table sets forth the high and low sales prices
for Partnership units for the periods indicated, as reported on the New
York Stock Exchange, and the quarterly cash distributions per unit
declared, for the periods indicated. On June 15, 2000, the last trading day
prior to the execution of the merger agreement, the units of limited
partner interest in the Partnership closed at $20.00 per unit.
Price Range of
units Total
--------------------- Distributions
High Low Paid
---------- ---------- -----------
Fiscal 1998 (ended December 31, 1998)
First Quarter...................... $ 36 13/16 $ 28 $ 0.60
Second Quarter..................... 35 5/16 31 5/8 0.63
Third Quarter...................... 32 1/2 21 1/16 0.63
Fourth Quarter..................... 29 1/4 15 7/8 0.63
Fiscal 1999 (ended December 31, 1999)
First Quarter...................... $ 27 9/16 $ 22 7/8 $ 0.63
Second Quarter..................... 25 5/16 22 1/4 0.63
Third Quarter...................... 25 5/8 21 0.63
Fourth Quarter..................... 21 3/4 15 7/8 0.63
Fiscal 2000
First Quarter...................... 21 1/8 14 $ 0.63
Second Quarter..................... 38 3/8 16 1/8 0.63
------------
On July 31, 2000, the closing price of Partnership units was $38
13/16 per unit and there were approximately 325 holders of record of
Partnership units. There is no known restriction on the Partnership's
ability to make distributions to its unitholders other than the
availability of sufficient funds, the terms of the Partnership's
partnership agreement and the terms of the merger agreement.
42
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets out information as of June 30, 2000, as to
(i) each person known by Nvest Corporation to hold 5% or more of the
outstanding Partnership units (or who would own 5% or more of the
outstanding Partnership units assuming such person exchanged all Nvest
Companies, L.P. units for Partnership units in "block transfers" as
described below), (ii) each director of Nvest Corporation, (iii) each
executive officer of Nvest Corporation and (iv) all directors and executive
officers of Nvest Corporation as a group. The table indicates both (a) the
number of Partnership limited partner units owned by each such person and
(b) for each such person who owns at least 2% of the total Nvest Companies,
L.P. limited partner units outstanding (in general not including those
Nvest Companies, L.P. units held by Nvest Corporation, the Partnership or
their respective affiliates) and is therefore able to exchange its Nvest
Companies, L.P. limited partner units for Partnership limited partner units
in "block transfers" under the regulations promulgated pursuant to Internal
Revenue Code Section 7704, the number of Partnership limited partner units
that such person would own assuming it exchanged all of its Nvest
Companies, L.P. limited partner units for Partnership limited partner
units. However, since Nvest Companies, L.P. limited partner units may only
be exchanged for Partnership limited partner units with the consent of
Nvest Corporation, which will not consent to any transfer that creates a
risk that such transfers will not fit into the safe harbors described in
the Treasury Regulations under Internal Revenue Code Section 7704 or that
Nvest Companies, L.P. will be required to register any class of its
securities under the Exchange Act of 1934, Partnership limited partner
units to be received in such exchange may not in fact be beneficially owned
within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934.
The total of the percentages in the fifth column of the following table
exceeds 100% because, as required by Rule 13d-3 under the Securities
Exchange Act of 1934, the percentage ownership of each person reflected in
such column assumes that (i) such person exchanged all of his or her Nvest
Companies, L.P. limited partner units for Partnership limited partner
units, and (ii) no other person exchanged any Nvest Companies, L.P. limited
partner units for Partnership limited partner units. The Partnership
believes that, except as otherwise indicated in the footnotes to this
table, the persons named in this table have sole voting and investment
power with respect to all of Partnership limited partner units indicated.
43
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND AMOUNT AND NATURE
NATURE OF OF BENEFICIAL OWNERSHIP OF
BENEFICIAL PARTNERSHIP LIMITED
OWNERSHIP OF PARTNER UNITS (INCLUDING
PARTNERSHIP BLOCK TRANSFERS OF NVEST
BENEFICIAL LIMITED PARTNER PERCENT COMPANIES, L.P. LIMITED PERCENT
OWNER UNITS OF CLASS PARTNER UNITS) OF CLASS
-------------------------------------------------------------------------------------------
Metropolitan Life
<S> <C> <C> <C> <C>
Insurance Company 457,900(1) 7.05% 21,452,076(1) 78.05%
Reich & Tang, Inc. 110,300(2) 1.73% 5,990,900(2) 48.67%
JV Investments, Inc. 0(3) -- 701,284(3) 9.90%
Peter B. Foreman 0(4) -- 701,284(4) 9.90%
Myron R. Szold 0(5) -- 701,284(5) 9.90%
Roger O. Brown 38,027(6) ** 701,284(6) 9.90%
Earl J. Rusnak, Jr. 750(7) ** 701,284(7) 9.90%
Sherwin A. Zuckerman 0(8) -- 566,710(8) 8.16%
Robert H. Harper 0(9) -- 692,392(9) 9.79%
Robert J. Sanborn 0(10) -- 528,010(10) 7.64%
Oscar L. Tang+ 52,271(11) ** 2,839,061(11) 30.96%
William S. Antle III+ 2,050(12) ** 2,050(12) **
Robert J. Blanding+ 25,000(13) ** 25,000(13) **
Paul E. Gray+ 500 ** 500 **
Jeffrey J. Hodgman+ 1,000 ** 1,000 **
Harry P. Kamen+ 5,000 ** 5,000 **
Charles M. Leighton+ 23,567(12)(14) ** 23,567(12)(14) **
Victor A. Morgenstern+ 26,500(15) ** 801,182(15) 11.19%
Peter S. Voss+* 900,000(16) 12.36% 1,250,000(16) 16.38%
G. Neal Ryland* 450,000(17) 7.05% 450,000(17) 6.56%
Sherry A. Umberfield* 300,000(18) 4.70% 300,000(18) 4.46%
Jeffrey D. Plunkett* 56,250(19) ** 56,250(19) **
Edward N. Wadsworth* 4,000(20) ** 4,000(20) **
All directors and Named
Executive Officers of the
General Partner as a group
(13 persons) 1,846,138 24.27% 5,757,610 49.98%
</TABLE>
44
<PAGE>
+ Director
* Executive Officer
** Less than 1%
The footnotes to this table appear after the table entitled "Principal
Holders of Nvest Companies, L.P. Limited Partner Units," below.
PRINCIPAL HOLDERS OF NVEST COMPANIES, L.P. LIMITED PARTNER UNITS
As of June 30, 2000, there were 44,593,399 Nvest Companies, L.P.
units outstanding, two holders of Nvest Companies, L.P. general partner
units (Nvest Corporation and the Partnership) and approximately 125 holders
of record and beneficial owners of Nvest Companies, L.P. limited partner
units. The following table sets out information as of June 30, 2000 as to
(i) each person known by Nvest Corporation to hold 5% or more of the
outstanding Nvest Companies, L.P. units, (ii) each director of the Nvest
Corporation, (iii) each officer of Nvest Corporation who is or was listed
as an a executive officer in the Partnership's most recent annual report on
Form 10-K and (iv) all directors and executive officers of Nvest
Corporation as a group. The number of Nvest Companies, L.P. limited partner
units shown in the table represents the sum of (a) the number of Nvest
Companies, L.P. units, if any, owned indirectly through ownership of
Partnership units (shown in the table of "Principal Holders of Partnership
Limited Partner Units," above) plus (b) the number of Nvest Companies, L.P.
units owned directly. Nvest Companies, L.P. believes that, except as
otherwise indicated in the footnotes to this table, the persons named in
this table have sole voting and investment power with respect to all of the
Nvest Companies, L.P. units indicated.
AMOUNT AND NATURE OF PERCENT OF CLASS
BENEFICIAL OWNER BENEFICIAL OWNERSHIP
MetLife 21,452,076(1) 48.11%
Nvest, L.P. 6,492,395 14.56%
Reich & Tang, Inc. 5,990,900(2) 13.43%
JV Investments, Inc. 2,260,900(3) 5.07%
Oscar L. Tang+ 2,839,061(11) 6.37%
William S. Antle III+ 2,050(12) **
Robert J. Blanding+ 45,000(13) **
Paul E. Gray+ 500 **
Jeffrey J. Hodgman+ 1,000 **
Harry P. Kamen+ 5,000 **
Charles M. Leighton+ 23,567(12)(14) **
Victor A. Morgenstern+ 801,182(15) 1.80%
Peter S. Voss+* 1,250,000(16) 2.75%
G. Neal Ryland* 479,344(17) 1.07%
45
<PAGE>
Sherry A. Umberfield* 350,310(18) **
Jeffrey D. Plunkett* 62,250(19) **
Edward N. Wadsworth* 53,225(20) **
All directors and Named Executive
Officers of the General Partner
as a group (13 persons) 5,757,610 12.90%
+ Director
* Executive Officer
** Less than 1%
(1) The ownership of MetLife shown includes 110,000 Partnership limited
partner units issuable upon conversion of an equal number of units of
general partner units owned by Nvest Corporation, the Partnership's
general partner, which represent all general partner units of the
Partnership outstanding. Such 110,000 units are also included in the
number of units of Nvest Companies, L.P. held by the Partnership. The
amount shown does not include Nvest Companies, L.P. limited partner
units contributed to the Restricted Unit Plan of Nvest Companies, L.P.
by MetLife as to which it retains certain income and reversionary
rights. The holder's address is One Madison Avenue, New York, NY
10010.
(2) The amount shown does not include Nvest Companies, L.P. limited
partner units contributed to the Restricted Unit Plan by Reich & Tang,
Inc. as to which it retains certain income and reversionary rights.
All stockholders of Reich & Tang, Inc. are parties to a stockholders'
agreement relating to the maintenance of such corporation's status as
an "S" corporation under the Internal Revenue Code and which creates
numerous reciprocal and other rights relating to the disposition of
stock in Reich & Tang, Inc. by the stockholders. The holder's address
is P.O. Box 36, Armonk, NY 10504.
(3) The number of Partnership limited partner units shown excludes
1,559,616 Partnership limited partner units that may be acquired upon
the permitted exercise of exchange rights with respect to Nvest
Companies, L.P. limited partner units that may not be exercised within
60 days. The holder's address is 1999 Harrison, Suite 700, Oakland, CA
94612-3517.
(4) The number of Partnership limited partner units shown excludes 745,770
Partnership limited partner units that may be acquired upon the
permitted exercise of exchange rights with respect to Nvest Companies,
L.P. limited partner units that may not be exercised within 60 days.
The number reflected in the tables represents Nvest Companies, L.P.
limited partner units held by trusts for the benefit of Mr. Foreman
and family members, with respect to which Mr. Foreman has sole
discretionary authority as to voting and disposition. The holder's
address is 225 W. Washington St., Suite 1650, Chicago, IL 60606.
(5) The number of Partnership limited partner units shown excludes 233,268
Partnership limited partner units that may be acquired upon the
permitted exercise of exchange rights with respect to Nvest Companies,
L.P. limited partner units that may not be exercised within 60 days.
All of such units are held by a trust for the benefit of Mr. Szold and
family members, with respect to which Mr. Szold has sole discretionary
authority as to voting and disposition. The holder's address is c/o
Talon Asset Management, Inc., One North Franklin, Suite 450, Chicago,
IL 60606.
46
<PAGE>
(6) The number of Partnership limited partner units shown excludes 149,743
Partnership limited partner units that may be acquired upon the
permitted exercise of exchange rights with respect to Nvest Companies,
L.P. limited partner units that may not be exercised within 60 days.
The number reflected in the tables represents Partnership limited
partner units and Nvest Companies, L.P. limited partner units held by
trusts and partnerships for the benefit of Mr. Brown and family
members, with respect to which Mr. Brown has sole discretionary
authority as to voting and disposition. The holder's address is 225 W.
Washington St., Suite 1650, Chicago, IL 60611.
(7) The number of Partnership limited partner units shown excludes 95,755
Partnership limited partner units that may be acquired upon the
permitted exercise of exchange rights with respect to Nvest Companies,
L.P. limited partner units that may not be exercised within 60 days.
The Nvest Companies, L.P. limited partner units are owned by a trust
of which Mr. Rusnak is the trustee and with respect to which has sole
discretionary authority as to voting and disposition. The holder's
address is c/o Harris Associates, Two N. LaSalle St., Suite 500,
Chicago, IL 60602.
(8) The number reflected in the table includes 104,936 Nvest Companies,
L.P. limited partner units held by a limited partnership of which Mr.
Zuckerman serves as general partner. The holder's address is c/o
Harris Associates, Two N. LaSalle St., Suite 1650, Chicago, IL 60602.
(9) The holder's address is c/o Harris Associates, Two N. LaSalle St.,
Suite 500, Chicago, IL 60602.
(10) The number reflected in the table includes 300,000 Nvest Companies,
L.P. limited partner units held by a limited partnership of which Mr.
Sanborn serves as general partner. The holder's address is c/o Harris
Associates, Two N. LaSalle St., Suite 500, Chicago, IL 60602.
(11) All Mr. Tang's units are beneficially owned indirectly through stock
ownership in Reich & Tang, Inc., and such units are included in the
ownership attributed to Reich & Tang, Inc. set out in the above
tables. Included are (i) 609 Partnership limited partner units and
32,473 Nvest Companies, L.P. limited partner units indirectly held by
a trust for the lifetime benefit of Mr. Tang of which Mr. Tang is one
of two trustees, and (ii) 14,840 Partnership limited partner units and
791,165 Nvest Companies, L.P. limited partner units indirectly held by
trusts for Mr. Tang's children, as to which Mr. Tang disclaims
beneficial ownership and (iii) 11,628 Partnership limited partner
units and 619,943 Nvest Companies, L.P. limited partner units
indirectly held by a trust for the benefit of Mr. Tang's descendants,
as to which Mr. Tang disclaims beneficial ownership. The holder's
address is P.O. Box 36, Armonk, NY 10504.
(12) Includes or represents accounts holding values equal to 2,050
Partnership limited partner units and 18,305 Partnership limited
partner units for Messrs. Antle and Leighton, respectively, under a
plan whereby directors of the General Partner can defer some or all of
their Board retainer and meeting fees.
(13) Includes 25,000 Partnership limited partner units that may be acquired
upon the exercise of options that are exercisable within 60 days.
47
<PAGE>
(14) Includes 785 Partnership limited partner units owned by Mr. Leighton's
spouse as to which he disclaims beneficial ownership.
(15) Includes 204,936 Nvest Companies, L.P. limited partner units held by a
limited partnership of which Mr. Morgenstern serves as general
partner. Includes 1,500 Partnership limited partner units held by a
trust of which Mr. Morgenstern's spouse is the trustee, as to which he
disclaims beneficial ownership. The holder's address is c/o Harris
Associates, Two N. LaSalle St., Suite 500, Chicago, IL 60602.
(16) Includes 900,000 Partnership limited partner units that may be
acquired upon the exercise of options within 60 days. The holder's
address is c/o Nvest Companies, L.P., 399 Boylston St., Boston, MA
02116.
(17) Includes 450,000 Partnership limited partner units that may be
acquired upon the exercise of options within 60 days. Also includes
1,700 Partnership limited partner units and 1,800 Nvest Companies,
L.P. limited partner units held by Mr. Ryland's children, as to which
he disclaims beneficial ownership.
(18) Includes 300,000 Partnership limited partner units that may be
acquired upon the exercise of options within 60 days.
(19) Includes 56,250 Partnership limited partner units that may be acquired
upon the exercise of options within 60 days.
(20) Mr. Wadsworth served as Executive Vice President, General Counsel and
Secretary until his retirement in the Spring of 2000. Includes 800
Nvest Companies, L.P. limited partner units held by Mr. Wadsworth's
children, as to which he disclaims beneficial ownership.
BENEFICIAL OWNERS ENTITLED TO VOTE
As of June 30, 2000, there were 6,034,495 Partnership units that
would be entitled to vote for the Partnership merger. The following table
sets out information as of June 30, 2000, with respect to persons entitled
to vote for the approval of the Partnership merger, as to (i) each person
known by Nvest Corporation to hold 5% or more of the outstanding
Partnership units as of the record date, (ii) each director of Nvest
Corporation, (iii) each executive officer of Nvest Corporation and (iv) all
directors and executive officers of Nvest Corporation as a group. The table
sets forth the number of Partnership units beneficially owned by each such
person as of the record date that can be voted at the special meeting and
therefore does not include Partnership units that may be acquired by such
person after the record date through the exercise of options or the
exchange of units of Nvest Companies, L.P.
48
<PAGE>
----------------------------------------------------------------------------
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
OF PARTNERSHIP LIMITED
BENEFICIAL PARTNER UNITS PERCENT OF UNITS
OWNER ELIGIBLE TO VOTE ELIGIBLE TO VOTE
----------------------------------------------------------------------------
Reich & Tang, Inc. 110,300(1) 1.83%
Oscar L. Tang+ 52,271(2) 0.87%
William S. Antle III+ 0 - -
Robert J. Blanding+ 0 - -
Paul E. Gray+ 500 **
Jeffrey J. Hodgman+ 1,000 **
Harry P. Kamen+ 5,000 **
Charles M. Leighton+ 5,262(3) **
Victor A. Morgenstern+ 26,500(4) **
Peter S. Voss+* 0 - -
G. Neal Ryland* 0 - -
Sherry A. Umberfield* 0 - -
Jeffrey D. Plunkett* 0 - -
Edward N. Wadsworth* 4,000 **
All directors and Named
Executive Officers of the
General Partner as a group
(13 persons) 90,533 1.48%
----------------------------------------------------------------------------
** Less than 1%
(1) The amount shown does not include Nvest Companies, L.P. limited
partner units contributed to the Restricted Unit Plan by Reich & Tang,
Inc. as to which it retains certain income and reversionary rights.
All stockholders of Reich & Tang, Inc. are parties to a stockholders'
agreement relating to the maintenance of such corporation's status as
an "S" corporation under the Internal Revenue Code and which creates
numerous reciprocal and other rights relating to the disposition of
stock in Reich & Tang, Inc. by the stockholders. The holder's address
is P.O. Box 36, Armonk, NY 10504.
(2) All Mr. Tang's units are beneficially owned indirectly through stock
ownership in Reich & Tang, Inc., and such units are included in the
ownership attributed to Reich & Tang, Inc. set out in the above
tables. See Footnote 11 to the table appearing above for further
information regarding the nature of Mr. Tang's beneficial ownership.
The holder's address is P.O. Box 36, Armonk, NY 10504.
49
<PAGE>
(3) Includes 785 Partnership limited partner units owned by Mr. Leighton's
spouse as to which he disclaims beneficial ownership.
(4) Includes 1,500 Partnership limited partner units held by a trust of
which Mr. Morgenstern's spouse is the trustee, as to which he
disclaims beneficial ownership. The holder's address is c/o Harris
Associates, Two N. LaSalle St., Suite 500, Chicago, IL 60602.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
The Partnership has made forward-looking statements in this document
and the documents referenced herein that are subject to risks and
uncertainties. These statements are based on management's beliefs and
assumptions, based on information currently available to management.
Forward-looking statements include the information concerning possible or
assumed future results of operations of the Partnership set forth (i) under
"Summary", "Special Factors", "The Transaction" and "Certain Estimates
Provided to CDC Asset Management", (ii) under "Business" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
in the Partnership's Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q referenced in this document and (iii) in this document and the
documents referenced preceded by, followed by or that include the words
"believes," "expects," "anticipates," "intends," "plans," "estimates,"
"should" or similar expressions.
Some statements contained in this proxy statement may constitute
"forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements involve a number of risks,
uncertainties and other factors that could cause actual results to differ
materially, including the performance of financial markets, the investment
performance of Nvest Companies, L.P.'s sponsored investment products and
separately managed accounts, general economic conditions, future
acquisitions, competitive conditions and government regulations, including
changes in tax laws. The Partnership cautions you to carefully consider
such factors. Further, such forward-looking statements speak only as of the
date on which such statements are made. The Partnership undertakes no
obligation to update any forward-looking statements to reflect events or
circumstances after the date of such statement even if new information,
future events or other circumstances have made them incorrect or
misleading. For those statements, the Partnership claims the protection of
the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
Unitholders should understand that the following important factors,
in addition to those discussed elsewhere in the documents which are
referenced in this proxy statement, could affect the future results of the
Partnership and could cause results to differ materially from those
expressed in such forward-looking statements: competitive pressures among
financial services companies may increase significantly; general economic
conditions, either internationally or nationally or in the states in which
the Partnership is doing business, may be less favorable than expected;
legislative or regulatory changes may adversely affect the business in
which the Partnership is engaged; and technological changes may be more
difficult or expensive than anticipated.
50
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
The Partnership files annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other
information we file at the Securities and Exchange Commission's Public
Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Securities and Exchange Commission's regional offices located at 7 World
Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Please call the Securities and
Exchange Commission at 1-800-SEC- 0330 for further information on the
public reference rooms. Our Securities and Exchange Commission filings are
also available to the public from commercial document retrieval services
and at the website maintained by the Securities and Exchange Commission at
"http://www.sec.gov." You may inspect information that the Partnership
files with the New York Stock Exchange at the offices of the New York Stock
Exchange at 20 Broad Street, New York, New York 10005.
In addition to the information provided in this proxy statement, the
following documents contain important information about our company and its
finances.
<TABLE>
<CAPTION>
Partnership SEC Filings Period or Date Filed
------------------------------------ ------------------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1999.
Quarterly Reports on Form 10-Q Quarters ended March 31, 2000 and June 30, 2000.
Current Reports on Form 8-K or 8-K/A Filed on June 20, 2000.
</TABLE>
Partnership unitholders may obtain the above-mentioned documents by
requesting them in writing or by telephone from the appropriate party at
the following addresses:
Nvest, L.P.
399 Boylston Street
Boston, Massachusetts 02116
Attention: Investor Relations
Telephone: (617) 578-3500
If you would like to request documents from us, please do so by
September 5, 2000 to receive them before the special meeting.
You should rely only on the information contained in this proxy
statement or other document to which we refer to vote on the merger. We
have not authorized anyone to provide you with information that is
different from what is contained in this proxy statement. This proxy
statement is dated [August ], 2000. You should not assume that the
information contained in this proxy statement is accurate as of any date
other than [August ], 2000, and the mailing of the proxy statement to
unitholders shall not create any implication to the contrary.
51
<PAGE>
Your vote is important. To vote your units, please complete, date,
sign and return the enclosed proxy card as soon as possible in the enclosed
postage-prepaid envelope or follow the instructions on your voting card to
vote by telephone. Please call our investor relations department at (617)
578-3500 or D.F. King & Co. Inc., toll-free at 1-800-755-7250 if you have
questions or need assistance with the voting procedures.
BY ORDER OF THE GENERAL PARTNER
/s/ Peter S. Voss
---------------------------------
Peter S. Voss
Chairman, President
and Chief Executive Officer
Nvest Corporation
Boston, Massachusetts
[August ], 2000
52
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
by and among
CDC Finance
CDC Asset Management
CDCAM North America Corporation
CDCAM Partnership, L.P.
CDCAM Partnership II, L.P.
Nvest Corporation
Nvest, L.P.
and
Nvest Companies, L.P.
------------------------
Dated as of June 16, 2000
------------------------
<PAGE>
TABLE OF CONTENTS
Page
RECITALS
The Parties.................................................................1
The Transactions............................................................1
Agreement of Merger.........................................................2
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions................................................2
1.02 Terms Generally...................................................10
ARTICLE II
THE TRANSACTIONS
2.01 The Public Partnership Merger.....................................11
2.02 The Private Partnership Merger....................................15
2.03 Treatment of Other Equity Interests...............................18
2.04 Closing...........................................................19
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Disclosure Schedules..............................................20
3.02 Standards.........................................................20
3.03 Representations and Warranties of the Sellers.....................21
3.04 Representations and Warranties of Buyer...........................43
ARTICLE IV
COVENANTS
4.01 Conduct Prior to Closing..........................................45
4.02 Acquisition Proposals.............................................47
4.03 Retention and Other Compensation Related Matters..................48
4.04 Filings, Other Actions; Notification..............................48
4.05 Investment Company Matters........................................50
4.06 Advisory Agreements...............................................51
4.07 Taxation..........................................................52
4.08 Access; Information. .............................................53
4.09 Publicity.........................................................53
4.10 Takeover Statutes.................................................54
A-i
<PAGE>
4.11 Reasonable Best Efforts...........................................54
4.12 Pre-Closing Distributions.........................................54
4.13 Expenses..........................................................54
4.14 Subsidiary Action.................................................54
4.15 Unitholder Approval...............................................54
4.16 Proxy Statement...................................................55
4.17 Indemnification; Directors' and Officers' Insurance...............56
4.18 Financial Obligations of Buyer Parent.............................56
4.19 Further Assurances................................................57
ARTICLE V
CONDITIONS
5.01 Conditions to Each Party's Obligation to Effect the Transactions..57
5.02 Conditions to Obligations of Buyer................................57
5.03 Conditions to Obligations of the Sellers..........................59
ARTICLE VI
TERMINATION
6.01 Termination by Mutual Consent.....................................60
6.02 Termination by Either Buyer or the Sellers........................60
6.03 Termination by Buyer..............................................60
6.04 Termination by General Partner....................................61
6.05 Effect of Termination and Abandonment.............................61
6.06 Termination Fee...................................................61
ARTICLE VII
MISCELLANEOUS AND GENERAL
7.01 Survival..........................................................62
7.02 Waiver; Amendment.................................................63
7.03 Governing Law and Venue; Waiver of Jury Trial.....................63
7.04 Waiver of Sovereign Immunity......................................64
7.05 Notices...........................................................64
7.06 Entire Understanding; Third Party Beneficiaries...................66
7.07 Obligations of Buyer..............................................66
7.08 Transfer Taxes....................................................67
7.09 Interpretation....................................................67
7.10 Assignment........................................................67
7.11 Counterparts......................................................67
7.12 Specific Performance..............................................67
A-ii
<PAGE>
Exhibit A Post-Closing Employee Plan
A-iii
<PAGE>
This AGREEMENT AND PLAN OF MERGER, dated as of June 16, 2000
(this "Agreement"), by and among Nvest Corporation, a Delaware corporation,
Nvest, L.P., a Delaware limited partnership, Nvest Companies, L.P. ., a
Delaware limited partnership, CDC Finance, a French legal entity, CDC Asset
Management, a French legal entity, CDCAM North America Corporation, a
Delaware corporation, CDCAM Partnership, L.P., a Delaware limited
partnership, and CDCAM Partnership II, L.P., a Delaware limited partnership
(each, a "Party" and, collectively, the "Parties").
RECITALS
A. The Parties. The Parties to this Agreement are as
follows:
CDC Finance is a French legal entity.
CDC Asset Management ("Buyer Parent"), a French legal
entity, is a majority owned subsidiary of CDC Finance.
CDCAM North America Corporation ("Buyer"), a corporation
organized under the laws of Delaware, is a wholly-owned direct subsidiary
of Buyer Parent.
CDCAM Partnership, L.P. ("Public Partnership Merger Sub"), a
limited partnership formed under the laws of Delaware.
CDCAM Partnership II, L.P. ("Private Partnership Merger
Sub"), a limited partnership formed under the laws of Delaware.
Nvest Corporation ("General Partner"), a corporation
organized under the laws of Massachusetts, is the managing general partner
of Private Partnership and the sole general partner of Public Partnership.
Nvest, L.P. ("Public Partnership"), a limited partnership
formed under the laws of Delaware, is the advising general partner of
Private Partnership.
Nvest Companies, L.P. ("Private Partnership") is a limited
partnership formed under the laws of Delaware.
B. The Transactions. The Parties desire and intend to engage
in a series of transactions, which will include (i) a merger of Public
Partnership Merger Sub with and into Public Partnership and (ii) a merger
of Private Partnership Merger Sub with and into Private Partnership.
<PAGE>
C. Agreement of Merger. This Agreement constitutes an
agreement of merger within the meaning of Section 17-211 of the DE
Partnership Law with respect to each of the Public Partnership Merger and
the Private Partnership Merger.
NOW, THEREFORE, in consideration of the premises, and of the
covenants, representations, warranties and agreements contained herein and
in the other Transaction Documents, the Parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquired Entities" has the meaning set forth in Section
4.07(a).
"Acquisition Proposal" has the meaning set forth in Section
4.02.
"Adjusted Assets Under Management" has the meaning set forth
in Section 2.01(d).
"Advisory Agreement" means, with respect to any Person, each
Contract relating to its rendering of investment management or investment
advisory services to a Client, including any sub-advisory or similar
agreement.
"Affiliate" means, with respect to any specified Person, any
other Person directly or indirectly controlling, controlled by or under
common control with such specified Person. For the purposes of this
definition, "control", when used with respect to any specified Person,
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of Equity Interests, by Contract or otherwise; and
the terms "controlling" and "controlled" have correlative meanings to the
foregoing. For purposes of the definition of "control", a general partner
or managing member of a Person shall always be considered to control such
Person.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Applicable Law" means any domestic or foreign federal or
state statute, law, ordinance, rule, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, decree, policy,
guideline or other requirement (including those of any Self-Regulatory
Organization) applicable to any of the Parties, any of each of their
respective Subsidiaries, or any of the Parties' or their respective
Subsidiaries' properties or assets, as the case may be.
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<PAGE>
"Audit Date" has the meaning set forth in Section 3.03(h).
"Authority" means any Governmental Authority or
Self-Regulatory Organization.
"Base Date" has the meaning set forth in Section 2.01(d).
"Base Revenue Run-Rate" has the meaning set forth in Section
2.01(d).
"Buyer" has the meaning set forth in Recital A.
"Buyer Parent" has the meaning set forth in Recital A.
"Buyer Representatives" has the meaning set forth in Section
4.08(a).
"CGM" has the meaning set forth in Section 3.03(k).
"Client" means each Investment Company and each other Person
for which a Subsidiary of Private Partnership is a Service Provider.
"Closing" has the meaning set forth in Section 2.04.
"Closing Date" has the meaning set forth in Section 2.04.
"Closing Revenue Run-Rate" has the meaning set forth in
Section 2.01(d).
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation and Benefit Plan" shall have the meaning set
forth in Section 3.03(m)(i).
"Constituent Documents" means, with respect to any
corporation, its charter and by-laws; with respect to any partnership, its
certificate of partnership and partnership agreement; with respect to any
limited liability company, its certificate of formation and limited
liability company or operating agreement; with respect to any trust, its
declaration or agreement of trust; and with respect to each other Person,
its comparable constitutional instruments or documents; together in each
case, with all material consents and other instruments delegating authority
pursuant to such Constituent Documents.
"Contract" means, with respect to any Person, any agreement,
indenture, undertaking, debt instrument, contract, guarantee, loan, note,
mortgage, arrangement, license, lease or other commitment, whether written
or oral, to which such Person or any of its Subsidiaries
A-3
<PAGE>
is a party or by which any of them is bound or to which any of their assets
or properties is subject.
"Controlled Affiliate" has the meaning set forth in Section
3.03(e).
"Corporate Subsidiaries" has the meaning set forth in Section
3.03(l)(vi).
"CSFB" has the meaning set forth in Section 3.03(n).
"DE Partnership Law" means the Delaware Revised Uniform
Limited Partnership Act, 6 Del. C.ss.ss.17-101 et seq., as amended from
time to time.
"Disclosure Schedule" has the meaning set forth in Section
3.01.
"Encumbrance" means any lien, encumbrance, mortgage,
restriction, pledge, security interest, right of first refusal, claim or
other encumbrance.
"Environmental Law" has the meaning set forth in Section
3.03(t).
"Equity Interest" means, with respect to any Person, any
share of capital stock of, general, limited or other partnership interest,
membership interest or similar ownership interest in the equity of, such
Person.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Person, any
trade or business, whether or not incorporated, which together with such
Person would be deemed a "single-employer" within the meaning of Section
4001 of ERISA.
"ERISA Client" has the meaning set forth in Section
3.03(o)(ii)(F).
"Escrow Account" has the meaning set forth in Section 2.04.
"Exchange Act" means the Securities and Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Executive Officers" means those officers of Public
Partnership who file beneficial ownership reports due to their status as
"officers" within the meaning of Rule 16a-1(f) under the Exchange Act.
"Federal Reserve" means the Board of Governors of the Federal
Reserve System.
A-4
<PAGE>
"Fee Triggering Event" has the meaning set forth in Section
6.06(b).
"GAAP" means generally accepted accounting principles in the
United States of America as in effect at the time any applicable financial
statements were prepared.
"General Partner" has the meaning set forth in Recital A.
"General Partner Parent" means the immediate parent of
General Partner.
"Governmental Authority" means any United States or foreign
government, any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including the SEC, the securities
commission or other authority of any state or foreign jurisdiction, the
Federal Reserve or any other government authority, agency, department,
board, commission or instrumentality of any such government, state or
political subdivision thereof, and any court, tribunal or arbitrator(s) of
competent jurisdiction, and any governmental organization, agency or
authority.
"Hazardous Substance" has the meaning set forth in Section
3.02(t)(v).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Investment Advisers Act" means the Investment Advisers Act
of 1940, as amended, and the rules and regulations promulgated thereunder.
"Investment Company" means an investment company, as such
term is defined in the Investment Company Act, and any entity that, but for
the provisions of Section 3(c) of such Act, would be an investment company
under such Act. When used herein without such a reference to a specified
Person, "Investment Company" refers to any Investment Company for which
Private Partnership or any Subsidiary of Private Partnership acts as a
Service Provider.
"Investment Company Act" means the Investment Company Act of
1940, as amended, and the rules and regulations promulgated thereunder.
"Investment Company Advisory Agreement" means any Advisory
Agreement to which an Investment Company is a party.
"Investment Company Board" or "Board" means the board of
directors or trustees (or Persons performing similar functions) of an
Investment Company.
"IRS" means the Internal Revenue Service, and any successor
thereto.
A-5
<PAGE>
"Material Adverse Effect" means, with respect to any Seller,
any effect that is material and adverse to the financial condition, assets,
properties, management, business or results of operations of Public
Partnership, Private Partnership and their respective Subsidiaries, taken
as a whole, or, with respect to Buyer Parent, Buyer and their respective
Subsidiaries, taken as a whole other than to the extent resulting from
changes in U.S. or global securities markets, currency fluctuations or
industry or economic conditions in general, provided that a reduction in
the Revenue Run-Rate between the Base Date and the Closing Date in and of
itself shall not constitute a Material Adverse Effect.
"Material Subsidiaries" shall mean those Persons Previously
Disclosed.
"Multiemployer Plan" has the meaning set forth in Section
3.03(m)(v).
"Multiple Employer Plan" has the meaning set forth in Section
3.03(m)(v).
"NASD" means the National Association of Securities Dealers,
Inc., and any successor thereto.
"Non-Registered Investment Company" means an Investment
Company that is not required to be registered under the Investment Company
Act.
"Notice" has the meaning set forth in Section 4.06.
"Option" shall have the meaning set forth in Section 2.03.
"Order" has the meaning set forth in Section 5.01(c).
"Partnership Equity Plans" means collectively the Nvest, L.P.
and Nvest Companies, L.P. 2000 Equity Incentive Plan, the Nvest, L.P. and
Nvest Companies, L.P. 1997 Equity Incentive Plan, the Nvest Companies, L.P.
Restricted Unit Plan and the Nvest, L.P. and Nvest Companies, L.P. 1993
Equity Incentive Plan.
"Party" and "Parties" have the meaning set forth in the
preamble to the Agreement.
"Paying Agent" has the meaning set forth in Section 2.01(f).
"PBGC" has the meaning set forth in Section 3.03(m)(iv).
"Pension Plan" means an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA.
A-6
<PAGE>
"Person" means any individual, bank, corporation, company,
partnership (limited or general), limited liability company, association,
joint venture, trust, stock insurance company, unincorporated organization
or other entity or similar contractual arrangement or relationship.
"Previously Disclosed" by a Party or Parties means
information set forth in its or their Disclosure Schedule.
"Private Partnership" has the meaning set forth in Recital A.
"Private Partnership Certificate of Merger" has the meaning
set forth in Section 2.02(b).
"Private Partnership Effective Time" has the meaning set
forth in Section 2.02(b).
"Private Partnership GP Unit" has the meaning set forth in
Section 2.02(d).
"Private Partnership LP Unit" has the meaning set forth in
Section 2.02(d).
"Private Partnership Merger" has the meaning set forth in
Section 2.02(a).
"Private Partnership Merger Sub" has the meaning set forth in
Recital A.
"Private Partnership Partnership Agreement" means the Amended
and Restated Agreement of Limited Partnership of Private Partnership.
"Private Partnership Surviving Partnership" has the meaning
set forth in Section 2.02(a).
"Private Partnership Unitholders" has the meaning set forth
in Section 2.02(f)(i).
"Private Partnership Units" has the meaning set forth in
Section 2.02(d)(iii).
"Private Partnership Unitholders" has the meaning set forth
in Section 2.02(f)(i).
"Proxy Statement" has the meaning set forth in Section 4.16.
"Public Partnership" has the meaning set forth in Recital A.
"Public Partnership Certificate of Merger" has the meaning
set forth in Section 2.01(b).
"Public Partnership Effective Time" has the meaning set forth
in Section 2.01(b).
A-7
<PAGE>
"Public Partnership GP Unit" has the meaning set forth in
Section 2.01(d).
"Public Partnership LP Unit" has the meaning set forth in
Section 2.01(d).
"Public Partnership Merger" has the meaning set forth in
Section 2.01(a).
"Public Partnership Merger Sub" has the meaning set forth in
Recital A.
"Public Partnership Partnership Agreement" means the Second
Amended and Restated Agreement of Limited Partnership of Public
Partnership.
"Public Partnership Surviving Partnership" has the meaning
set forth in Section 2.01(a).
"Public Partnership Unitholders" has the meaning set forth in
Section 2.01(f)(i).
"Public Partnership Unitholders Meeting" has the meaning set
forth in Section 4.15(a).
"Public Partnership Units" has the meaning set forth in
Section 2.01(d)(iii).
"Registered Investment Company" means an Investment Company
registered under the Investment Company Act.
"Report" has the meaning set forth in Section
3.03(o)(iii)(H).
"Restricted Unit" means an award of restricted limited
partnership units in Public Partnership granted pursuant to the Partnership
Equity Plans.
"Revenue Run-Rate" has the meaning set forth in Section
2.01(d).
"SEC" means the Securities and Exchange Commission, and any
successor thereto.
"SEC Reports" has the meaning set forth in Section 3.03(h).
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
A-8
<PAGE>
"Securities Laws" means the Securities Act, the Exchange Act,
the Investment Company Act, the Investment Advisers Act and the state "blue
sky" laws, and the rules and regulations promulgated thereunder.
"Self-Regulatory Organization" means the NASD, the National
Futures Association, each national securities exchange in the United States
and each other commission, board, agency or body, whether United States or
foreign, that is charged with the supervision or regulation of brokers,
dealers, securities underwriting or trading, stock exchanges, commodities
exchanges, insurance companies or agents, investment companies or
investment advisers, or to the jurisdiction of which it is otherwise
subject.
"Seller Material Contract" has the meaning set forth in
Section 3.02(q).
"Seller Parent" means Metropolitan Life Insurance Company, an
indirect parent company of General Partner.
"Sellers" means, collectively, Private Partnership, Public
Partnership and General Partner.
"Service Provider" means any Person who acts as investment
manager, investment adviser or subadviser or who provides distribution or
marketing services.
"Shortfall Ratio" has the meaning set forth in Section
2.01(d).
"Sponsored" means, with respect to any Investment Company, an
Investment Company which has a majority of its officers who are employees
of Private Partnership or any of its Subsidiaries or of which Private
Partnership or any of its Subsidiaries holds itself out as the "Sponsor".
"Subsidiary" of any Person (the "subject Person") means any
Person, whether incorporated or unincorporated, of which (i) at least fifty
percent (50%) of the securities or ownership interests having by their
terms ordinary voting power to elect a majority of the board of directors
or managers or other Persons performing similar functions or (ii) (A) a
general partner interest or (B) a managing membership interest, is directly
or indirectly owned or controlled by the subject Person or by one or more
of its Subsidiaries; provided, however, that the term Subsidiary shall not
apply to any Sponsored Non-Registered Investment Company.
"Superior Proposal" has the meaning set forth in Section
4.02.
"Takeover Statute" means any "interested holder," "fair
price," "moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation.
"Tax" and "Taxes" means any and all federal, state, local or
foreign taxes, charges, fees, levies or other assessments, however
denominated, including, without limitation, all net income, gross income,
gross receipts, gains, sales, use, ad valorem, goods and services, capital,
production, transfer, franchise, windfall profits, license, withholding,
payroll, employment, disability, employer health, excise, estimated,
severance, stamp, occupation,
A-9
<PAGE>
property, environmental, unemployment or other taxes, custom duties, fees,
assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
taxing authority whether arising before, on or after the Closing Date.
"Tax Returns" mean any return, amended return or other report
(including, without limitation elections, declarations, disclosures,
schedules, estimates and information returns) required to be filed with
respect to any Tax.
"Termination Date" has the meaning set forth in Section 6.02.
"Termination Fee" has the meaning set forth in Section
6.06(a).
"Transaction Documents" means this Agreement, the Support and
Cooperation Agreement, Support Agreements with certain unitholders of
Private Partnership and each employment agreement entered into in
contemplation of the Transactions.
"Transactions" means, collectively, the Private Partnership
Merger, the Public Partnership Merger and each other transaction
contemplated by Article II of this Agreement.
"12b-1 Plan" has the meaning set forth in Section 3.03(o)(i).
"Unit Price" has the meaning set forth in Section 2.01(d).
1.02 Terms Generally. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Agreement include both the
plural and the singular;
(b) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not
to any particular Article, Section or other subdivision;
(c) the words "including" and "include" and other words of
similar import shall be deemed to be followed by the phrase
"without limitation"; and
(d) the term "reasonable best efforts" of any Party with
respect to any specified action or result shall mean efforts that
a reasonable Person would make to take such action or accomplish
such result in light of the present intentions of such Party with
respect to the Transactions and the benefits to be obtained by
such Party upon the consummation of the transactions contemplated
by the Transaction Documents.
A-10
<PAGE>
ARTICLE II
THE TRANSACTIONS
2.01 The Public Partnership Merger.
(a) The Public Partnership Merger. Upon the terms and subject
to the conditions set forth in this Agreement, at the Public
Partnership Effective Time, Public Partnership Merger Sub shall be
merged with and into Public Partnership and the separate
partnership existence of Public Partnership Merger Sub shall
thereupon cease (the "Public Partnership Merger"). Public
Partnership shall be the surviving entity in the Public
Partnership Merger (sometimes hereinafter referred to as the
"Public Partnership Surviving Partnership"), and the separate
partnership existence of Public Partnership, with all its rights,
privileges, immunities, powers and franchises, shall continue
unaffected by the Public Partnership Merger, except as set forth
in Section 2.01(c). The Public Partnership Merger shall have the
effects specified in Section 17-211(h) of the DE Partnership Law.
(b) Public Partnership Effective Time. On the Closing Date,
immediately following the satisfaction of all the conditions set
forth in Article V, Public Partnership and Public Partnership
Merger Sub shall cause a certificate of merger (the "Public
Partnership Certificate of Merger") to be executed, acknowledged
and filed with the Secretary of State of Delaware as provided in
Section 17-211(c) of the DE Partnership Law. The Public
Partnership Merger shall become effective at the time on the
Closing Date specified in the Public Partnership Certificate of
Merger (the "Public Partnership Effective Time").
(c) The Public Partnership Surviving Partnership Agreement.
Effective as of the Public Partnership Effective Time, the Public
Partnership Partnership Agreement shall be amended and restated in
its entirety and a new partnership agreement shall be adopted
which limited partnership agreement shall be in a form to be
determined by Buyer prior to the Closing.
(d) Effect on Partnership Interests. At the Public
Partnership Effective Time, as a result of the Public Partnership
Merger and without any action on the part of the holders of any
partnership interest in Public Partnership:
(i) Public Partnership Merger Consideration.
Each unit of limited partner interest in Public
Partnership issued and outstanding immediately prior to
the Public Partnership Effective Time (a "Public
Partnership LP Unit"), shall be converted into the right
to receive, without interest, an amount in cash equal to
$40.00 (such amount, as it may be adjusted in accordance
with this Section 2.01(d)(i), the "Unit Price"), provided
that:
A-11
<PAGE>
(x) in the event that the Revenue
Run-Rate as of the most recent calendar
month-end prior to the Closing Date (the
"Closing Revenue Run-Rate") is less than 90% of
the Revenue Run-Rate as of the Base Date (the
"Base Revenue Run-Rate") and is equal to or
greater than 85% of the Base Revenue Run-Rate,
then the Unit Price shall be reduced by an
amount equal to the Unit Price multiplied by the
Shortfall Ratio; and
(y) in the event that the Closing
Revenue Run-Rate is less than 85% of the Base
Revenue Run-Rate, then the Unit Price shall be
reduced by an amount equal to the sum of (A) the
Unit Price multiplied by the Shortfall Ratio and
(B) the Unit Price multiplied by the Additional
Shortfall Ratio.
provided, further, that the Unit Price as so
adjusted shall not be less than $34.00.
The "Shortfall Ratio" shall be equal to
the excess of (i) 90% over (ii) a fraction
(expressed as a percentage) the numerator of
which is the Closing Revenue Run-Rate and the
denominator of which is the Base Revenue
Run-Rate.
The "Additional Shortfall Ratio" shall
be equal to the excess of (i) 85% over (ii) a
fraction (expressed as a percentage) the
numerator of which is the Closing Revenue
Run-Rate and the denominator of which is the
Base Revenue Run-Rate.
"Revenue Run-Rate" shall mean, as of
any date, the aggregate annualized investment
advisory, investment management and subadvisory
fees for all investment management accounts
(other than, in the case of the Closing Revenue
Run-Rate, accounts of Clients that have not
consented in accordance with Section 4.04(c) or
Section 4.06 to the assignment or deemed
assignment of their respective Advisory
Agreements resulting from the Transactions or
that have withdrawn such consents) managed by
the Subsidiaries of Private Partnership and
payable to such Subsidiaries, determined by
multiplying the Adjusted Assets Under Management
for each such account by the applicable fee rate
for such account at such date (excluding any
performance-based fees) or, with respect to
calculating the Closing Revenue Run-Rate, in the
case of any Registered Investment Company that
has modified its applicable fee rate, by such
modified fee rate to be in effect for such
account immediately following the Closing. The
calculation of the Closing Revenue Run-Rate
shall be made using
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substantially the same methodology as the
calculation of the Base Revenue Run-Rate.
"Base Date" shall mean April 30, 2000.
"Adjusted Assets Under Management"
shall mean, for any investment management
account as of a particular date, the amount of
assets under management by the Subsidiaries of
Private Partnership in that account as of the
Base Date, as adjusted, in the case of the
Closing Revenue Run-Rate, (i) to reflect net
cash flows (additions, withdrawals and
reinvestments), new accounts and terminated
accounts from and after the Base Date and (ii)
to exclude any increase or decrease in assets
under management due to market appreciation or
depreciation or currency fluctuations from and
after the Base Date.
For purposes of calculating the Base Revenue Run-Rate and
the Closing Revenue Run-Rate, all accounts of the Clients
Previously Disclosed in section 2.01(d)(i) of the General
Partner's Disclosure Schedules shall be excluded.
(ii) Public Partnership GP Units. Each unit of
general partner interest in Public Partnership issued and
outstanding immediately prior to the Public Partnership
Effective Time (a "Public Partnership GP Unit") shall be
converted into the right to receive, without interest, an
amount in cash equal to the Unit Price.
(iii) Cancellations of Units, Etc. All such
Public Partnership LP Units and all such Public
Partnership GP Units (collectively, "Public Partnership
Units"), by virtue of the Public Partnership Merger and
without any action on the part of the holders thereof,
shall no longer be outstanding and shall be canceled and
retired and shall cease to exist, and each holder of a
certificate representing any such Public Partnership
Units shall thereafter cease to have any rights with
respect to such Public Partnership Units, except the
right to receive the Unit Price for each Public
Partnership Unit upon the surrender of such certificate
in accordance with Section 2.01(f).
(e) Public Partnership Merger Sub. At the Public Partnership
Effective Time, the limited partner interest in Public Partnership
Merger Sub issued and outstanding immediately prior to the Public
Partnership Effective Time shall be converted into and become
exchangeable for the limited partner interest in the Public
Partnership Surviving Partnership and the general partner interest
in Public Partnership Merger Sub issued and outstanding
immediately prior to the Public Partnership Effective Time shall
be converted into the general partner interest in Public
Partnership Surviving Partnership.
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(f) Payment for Public Partnership Units.
(i) Paying Agent. At or prior to the Public
Partnership Effective Time, Buyer shall deposit, or shall
cause to be deposited, with a paying agent selected by
Buyer and not reasonably objected to by Public
Partnership (the "Paying Agent"), amounts sufficient in
the aggregate to provide all funds necessary for the
Paying Agent to make payments pursuant to Section
2.01(d)(i) and (ii) to holders of Public Partnership
Units issued and outstanding immediately prior to the
Public Partnership Effective Time ("Public Partnership
Unitholders").
(ii) Payment Procedures. Promptly after the
Public Partnership Effective Time, Buyer shall cause
Public Partnership Surviving Partnership to cause to be
mailed to each Person who was, at the Public Partnership
Effective Time, a holder of record of issued and
outstanding Public Partnership Units (i) a letter of
transmittal specifying that delivery shall be effected,
and the risk of loss and title to each certificate
representing Public Partnership Units shall pass, only
upon delivery of such certificate (or affidavits of loss
in lieu thereof) to the Paying Agent, such letter of
transmittal to be customary in form and substance, and
(ii) instructions for use in effecting the surrender of
such certificates. Upon surrender to the Paying Agent of
any such certificate, together with such letter of
transmittal, duly executed and completed in accordance
with the instructions thereto, Buyer shall cause Public
Partnership Surviving Partnership to promptly cause to be
paid to the Person(s) entitled thereto, by check, the
amount to which such Person(s) are entitled pursuant to
Section 2.01(d)(i) or (ii), as the case may be, after
giving effect to any required tax withholding. No
interest will be paid or will accrue on the amount
payable upon the surrender of any such certificate. If
payment is to be made to a Person other than the
registered holder of a certificate surrendered, it shall
be a condition of such payment that the certificate so
surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the Person requesting
such payment shall pay any transfer or other taxes
required by reason of the payment to a Person other than
the registered holder of the certificate surrendered or
establish to the satisfaction of Public Partnership Surviving
Partnership or the Paying Agent that such tax has been paid
or is not applicable.
(iii) Transfers. After the Public Partnership
Effective Time, there shall be no transfers on the books
and records of Public Partnership of the Public
Partnership Units that were outstanding immediately prior
to the Public Partnership Effective Time.
(iv) Termination of Payment Fund. Three hundred
and sixty five (365) days following the Public
Partnership Effective Time, Public Partnership
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Surviving Partnership or its successor shall be
entitled to cause the Paying Agent to deliver to it any
funds (including any interest received with respect
thereto) made available to the Paying Agent which have
not been disbursed to Public Partnership Unitholders
since the Public Partnership Effective Time, and
thereafter such holders shall be entitled to look to
Public Partnership Surviving Partnership only as
general creditors thereof with respect to the cash
payable upon due surrender of such certificates.
Notwithstanding the foregoing, neither the Paying Agent
nor any Party hereto shall be liable to any holder of
such certificates for any amount paid to a public
official pursuant to any applicable abandoned property,
escheat or similar law. Public Partnership Surviving
Partnership shall pay all charges and expenses,
including those of the Paying Agent, in connection with
the payment of cash in exchange for Public Partnership
Units.
(v) Lost, Stolen or Destroyed Public Partnership
Certificates. In the event any certificate representing
Public Partnership Units shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact
by the Person claiming such certificate to be lost,
stolen or destroyed and, if required by Public
Partnership, the posting by such Person of a bond in
customary amount as indemnity against any claim that may
be made against it with respect to such certificate, the
Paying Agent will pay in exchange for such lost, stolen
or destroyed certificate the consideration due to such
holder pursuant to Section 2.01(d)(i) or (ii) upon due
surrender of the Public Partnership Units represented by
such certificate.
(g) Dissenters' or Appraisal Rights. Public Partnership
Unitholders shall not be entitled to any dissenters' rights or
rights of appraisal with respect to such holders' Public
Partnership Units.
(h) Adjustments to Prevent Dilution. In the event that Public
Partnership changes the number of Public Partnership Units issued
and outstanding prior to the Public Partnership Effective Time, by
means of a unit split, recapitalization, unit consolidation or
similar transaction, the Unit Price shall be proportionately
adjusted.
2.02 The Private Partnership Merger.
(a) The Private Partnership Merger. Upon the terms and
subject to the conditions set forth in this Agreement, at the
Private Partnership Effective Time, Private Partnership Merger Sub
shall be merged with and into Private Partnership and the separate
partnership existence of Private Partnership Merger Sub shall
thereupon cease (the "Private Partnership Merger"). Private
Partnership shall be the surviving entity in the Private
Partnership Merger (sometimes hereinafter referred to as the
"Private Partnership Surviving Partnership"), and the separate
partnership existence of Private Partnership, with all its rights,
privileges, immunities, powers and franchises, shall continue
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unaffected by the Private Partnership Merger, except as set forth
in Section 2.02(c). The Private Partnership Merger shall have the
effects specified in Section 17-211(h) of the DE Partnership Law.
(b) Private Partnership Effective Time. Immediately following
the consummation of the transactions contemplated by Section
2.01(a), Private Partnership and Private Partnership Merger Sub
will cause a certificate of merger (the "Private Partnership
Certificate of Merger") to be executed, acknowledged and filed
with the Secretary of State of Delaware as provided in Section
17-211(c) of the DE Partnership Law. The Private Partnership
Merger shall become effective immediately following the Public
Partnership Effective Time, such time to be specified in the
Private Partnership Certificate of Merger (the "Private
Partnership Effective Time"), provided, however, that the Private
Partnership Merger shall not become effective and the provisions
of this Section 2.02 shall have no effect unless the Public
Partnership Merger shall have become effective prior thereto.
(c) The Private Partnership Surviving Partnership Agreement.
Effective as of the Private Partnership Effective Time, the
Private Partnership Partnership Agreement shall be amended and
restated in its entirety and a new partnership agreement shall be
adopted which limited partnership agreement shall be in a form to
be determined by Buyer prior to the Closing.
(d) Effect on Partnership Interests. At the Private
Partnership Effective Time, as a result of the Private Partnership
Merger and without any action on the part of the holders of any
partnership interest in Private Partnership:
(i) Private Partnership Merger Consideration.
Each unit of limited partner interest in Private
Partnership issued and outstanding immediately prior to
the Private Partnership Effective Time (a "Private
Partnership LP Unit") shall be converted into the right
to receive, without interest, an amount in cash equal to
the Unit Price.
(ii) Private Partnership GP Units. (A) Each unit
of general partner interest in Private Partnership held
by Public Partnership Surviving Partnership immediately
prior to the Private Partnership Effective Time shall be
canceled and extinguished, and no payment will be made
with respect to those Units and (B) each other unit of
general partner interest in Private Partnership issued
and outstanding immediately prior to the Private Partnership
Effective Time (a "Private Partnership GP Unit") shall be
converted into the right to receive, without interest, an
amount in cash equal to the Unit Price.
(iii) Cancellations of Units, Etc. All such
Private Partnership LP Units and all such Private
Partnership GP Units (collectively, "Private Partnership
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<PAGE>
Units"), by virtue of the Private Partnership Merger and
without any action on the part of the holders thereof,
shall no longer be outstanding and shall be canceled and
retired and shall cease to exist, and each Private
Partnership Unitholder shall thereafter cease to have any
rights with respect to such Private Partnership Units,
except the right to receive the Unit Price for each
Private Partnership Unit in accordance with Section
2.02(f).
(e) Private Partnership Merger Sub. At the Private
Partnership Effective Time, the limited partner interest in
Private Partnership Merger Sub issued and outstanding immediately
prior to the Private Partnership Effective Time shall be converted
into and become exchangeable for the limited partner interest in
Private Partnership Surviving Partnership, and the general partner
interest in Private Partnership Merger Sub issued and outstanding
immediately prior to the Private Partnership Effective Time shall
be converted into the general partner interest in Private
Partnership Surviving Partnership.
(f) Payment for Private Partnership Units.
(i) Private Partnership Paying Agent. At or
prior to the Private Partnership Effective Time, Buyer
shall deposit, or shall cause to be deposited, with the
Paying Agent, amounts sufficient in the aggregate to
provide all funds necessary for the Paying Agent to make
payments pursuant to Section 2.02(d)(i) and (ii), as the
case may be, to holders of Private Partnership Units
issued and outstanding immediately prior to the Private
Partnership Effective Time ("Private Partnership
Unitholders").
(ii) Payment Procedures. Promptly after the
Private Partnership Effective Time, Buyer shall cause
Private Partnership Surviving Partnership to cause to be
mailed or delivered to each Person who was, at the
Private Partnership Effective Time, a holder of record of
issued and outstanding Private Partnership Units a letter
of transmittal, such letter of transmittal to be
customary in form and substance. Upon receipt by the
Paying Agent of such letter of transmittal, duly executed
and completed in accordance with the instructions
thereto, Buyer shall cause Private Partnership Surviving
Partnership to promptly cause to be paid to the Person(s)
entitled thereto, by check or by wire, as indicated on
such letter of transmittal, the amount to which such
Person(s) are entitled pursuant to Section 2.02(d)(i) and
2.02(ii), after giving effect to any required tax
withholding. No interest will be paid or will accrue on the
amount payable upon the surrender of any such certificate.
(iii) Transfers. After the Private Partnership
Effective Time, there shall be no transfers on the books
and records of Private Partnership of the Private
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Partnership Units that were outstanding immediately prior
to the Private Partnership Effective Time.
(iv) Termination of Payment Fund. Three hundred
and sixty five (365) days following the Private
Partnership Effective Time, Private Partnership Surviving
Partnership or its successor shall be entitled to cause
the Paying Agent to deliver to it any funds (including
any interest received with respect thereto) made
available to the Private Partnership Paying Agent which
have not been disbursed to Private Partnership
Unitholders since the Private Partnership Effective Time,
and thereafter such holders shall be entitled to look to
Private Partnership Surviving Partnership only as general
creditors thereof with respect to the cash payable upon
due surrender of such certificates. Notwithstanding the
foregoing, neither the Paying Agent nor any Party hereto
shall be liable to Private Partnership Unitholders for
any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
Private Partnership Surviving Partnership shall pay all
charges and expenses, including those of the Paying
Agent, in connection with the payment of cash in exchange
for Private Partnership Units.
(g) Dissenters' or Appraisal Rights. Private Partnership
Unitholders shall not be entitled to any dissenters' rights or
rights of appraisal with respect to such holders' Private
Partnership Units.
(h) Adjustments to Prevent Dilution. In the event that
Private Partnership changes the number of Private Partnership
Units issued and outstanding prior to the Private Partnership
Effective Time, by means of a unit split, recapitalization, unit
consolidation or similar transaction, the Unit Price shall be
proportionately adjusted.
2.03 Treatment of Other Equity Interests. The Sellers shall take
all actions necessary so that (i) each outstanding option (an "Option") to
purchase Public Partnership Units granted to employees, directors or
consultants of the Public Partnership and its Affiliates under the
Partnership Equity Plans, whether or not then vested or exercisable, shall
(x) become fully vested and exercisable immediately prior to the Closing,
and (y) be canceled as of the Closing and thereafter represent the right to
receive at the Closing, or as soon as practicable thereafter, from Private
Partnership Surviving Partnership in consideration for such cancellation an
amount in cash equal to the product of (A) the number of Public Partnership
Units previously subject to such Option and (B) the excess, if any, of the
Unit Price over the exercise price per Public Partnership Unit previously
subject to such Option, less any required withholding taxes; and (ii) the
restrictions applicable to each Restricted Unit granted to employees,
directors or consultants of the Public Partnership and its Affiliates under
the Partnership Equity Plans in respect of Public Partnership Units shall
lapse immediately prior to the Closing; it being understood that the
holders of each Restricted Unit shall thereafter be entitled to participate
in the Public Partnership Merger in the same manner as all other Public
Partnership Unitholders. Buyer and Buyer Parent
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<PAGE>
agree to provide sufficient funds to Private Partnership Surviving
Partnership to allow it to meet its obligations under this Section 2.03.
2.04 Closing. The closing of the Transactions (the "Closing")
shall take place (i) at the offices of Skadden, Arps, Slate, Meagher & Flom
LLP, Four Times Square, New York, New York at 10:00 A.M. on the fifth
business day after the date on which the last of the conditions set forth
in Article V (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions) that are to be fulfilled or waived shall have been fulfilled or
waived in accordance with this Agreement (and, in any event, at least ten
days after the end of a calendar month), provided that, in the sole
discretion of General Partner,
(A) the Closing may be delayed in order
to permit the Sellers to obtain Client consents
(provided that such consents are reasonably
expected to be obtained within 45 days of when
the Closing would otherwise occur and provided
further, that Closing may not be delayed beyond
the Termination Date) in order to avoid or
mitigate the adjustment to the Unit Price set
forth in the first proviso of Section
2.01(d)(i), and
(B) the Closing may occur on such fifth
business day (or on such other date permitted by
clause (A) of this Section 2.04(i)), provided
that to the extent that the Unit Price will be
adjusted pursuant to the first proviso of
Section 2.01(d)(i) solely as a result of the
failure of the applicable Subsidiary of Private
Partnership to obtain the consent of one or more
Registered Investment Companies in accordance
with Section 4.04(c) due to the absence of a
quorum at a shareholder meeting, notwithstanding
any other term or provision of this Article II,
(1) the Buyer shall pay the amount of such
adjustment into an escrow account (the "Escrow
Account") to be established with a third party
financial institution with customary terms to be
agreed upon by General Partner and Buyer, (2) if
any such consent or consents are obtained in
accordance with Section 4.04(c) within the
period permitted by Rule 15a-4 under the
Investment Company Act, each Person who was
entitled to receive payments under this Article
II shall be promptly paid the excess of (x) the
amount such Person would have been paid under
this Article II (without regard to any required
withholding tax) had all such consents received
at or prior to such time from such consenting
Registered Investment Companies been obtained
prior to the Closing and (y) the aggregate
amount previously paid (or, had no tax
withholding been required, the aggregate amount
that would have been paid) to such Person
pursuant to this Article II, plus earnings on
such excess, net of any expenses, including
those of the escrow agent, if any, and less any
required tax withholding and (3) upon the
termination of such period, any amount remaining
in such
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<PAGE>
escrow account not required to paid in
accordance with clause (2) of this Section
2.04(i)(B) shall be promptly paid to Buyer (the
parties further agree that (1) notwithstanding
the foregoing, no payment under this Section
2.04(i)(B) shall be required to be made until
the later of (A) the compliance by the holder to
which any payment is required to be made with
the payment procedures described in Article II
and (B) the earlier of the time at which (i) all
such consents shall have been obtained, (ii)
sufficient consents shall have been obtained
such that had such consents been obtained prior
to the Closing no such adjustment would have
been required and (iii) the expiration of the
period permitted by Rule 15a-4 under the
Investment Company Act, (2) Buyer shall instruct
the third party financial institution selected
to act as escrow agent to invest the amounts
deposited into the Escrow Account in investments
as agreed to in the escrow agreement, and (3)
Buyer shall be entitled to make all payments to
the former unitholders in accordance with the
instructions received in connection with the
compliance with the payment procedures described
in Article II by the applicable former
unitholder), or
(ii) at such other place and time and/or on such
other date as Buyer and General Partner may agree in
writing (the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Disclosure Schedules. On or prior to the execution hereof,
(i) Buyer has delivered to General Partner a disclosure schedule and (ii)
General Partner has delivered to Buyer a disclosure schedule (with respect
to each such delivering Party or Parties, its "Disclosure Schedule"), in
each case setting forth, among other things, items the disclosure of which
is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to the
correspondingly labeled representation or warranty (or such other
representation or warranty to the extent that it is reasonably apparent
that such disclosure is applicable to such other representation or
warranty) made pursuant to Section 3.03 or 3.04, as the case may be;
provided that the mere inclusion of an item in a Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission
by a Party that such item represents such an exception or that such item is
reasonably likely to result in a Material Adverse Effect with respect to
such Party.
3.02 Standards. For purposes of the representations and warranties
set forth in Sections 3.03 and 3.04, no representation or warranty
contained in Section 3.03 (excluding paragraph (i)(D) thereof), in the case
of each Seller, and Section 3.04, in the case of Buyer shall be deemed
untrue or incorrect, and no Party shall be deemed to have breached such a
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representation or warranty, as a consequence of the existence of any fact,
event or circumstance unless:
(a) in the case of each representation and warranty
contained in paragraphs (b), (c), (f), (g)(ii)(A), (h) and
(l)(iii) and (ix) of Section 3.03, and paragraphs (b), (c) and (d)
of Section 3.04 (without regard to any qualification as to
materiality, Material Adverse Effect, substantially or other words
of qualification set forth in such representations and
warranties), such fact, circumstance or event would cause any such
representation and warranty to fail to be true and correct in any
material respect; and
(b) in the case of each other representation and warranty
contained in Section 3.03 and Section 3.04 (other than Section
3.03(d)) (without regard to any qualification as to materiality,
Material Adverse Effect, substantially or other words of
qualification set forth in such representations and warranties)
such fact, circumstance or event, individually or in the
aggregate, has had or is reasonably likely to have a Material
Adverse Effect with respect to such Party.
3.03 Representations and Warranties of the Sellers. Except as
Previously Disclosed, each of the Sellers makes each of the following
representations and warranties.
(a) Organization, Standing and Authority. Each of the
Sellers hereby represents and warrants that:
(i) it and each of its Subsidiaries is duly
organized or formed, validly existing and in good
standing under the laws of its jurisdiction of
organization or formation, with full power and authority
to own, lease or operate its assets and to carry on its
business as currently conducted;
(ii) it and each of its Subsidiaries is duly
qualified to do business and is in good standing in each
state of the United States and any jurisdiction outside
the United States where its ownership or leasing of
property or assets or the conduct of its business
requires it to be so qualified; and
(iii) prior to the date hereof, it has made
available to Buyer a complete and correct copy, as of the
date hereof, of its Constituent Documents and the
Constituent Documents of each of its Material
Subsidiaries, in each case as amended to such date. As of
the date hereof, each such Constituent Document is in
full force and effect.
(b) Capitalization of Private Partnership; Equity Interests.
Each of the Sellers hereby represents and warrants that:
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(i) as of May 31, 2000, there were 6,301,582
Private Partnership GP Units, and 38,078,004 Private
Partnership LP Units issued and outstanding, which
together constituted all of the issued and outstanding
Equity Interests in Private Partnership as of such date;
(ii) as of May 31, 2000, 100 Private Partnership
GP Units were held of record and beneficially by General
Partner free and clear of all Encumbrances by the General
Partner, and 6,301,482 Private Partnership GP Units were
held of record and beneficially by Public Partnership
free and clear of all Encumbrances;
(iii) as of May 31, 2000, all of the outstanding
Private Partnership LP Units were held of record by the
Persons set forth in Section 3.03(b) of its Disclosure
Schedule, which also sets forth the number of Private
Partnership LP Units held by each such Person;
(iv) each of the outstanding Private Partnership
LP Units and Private Partnership GP Units was duly
authorized and validly issued, is fully paid, and,
subject to Applicable Law, nonassessable, is not and
subject to preemptive rights and was not issued in
violation of any preemptive rights;
(v) as of May 31, 2000, there are no Equity
Interests in Private Partnership to be received by any
Person pursuant to any Contract or Compensation and
Benefit Plan;
(vi) as of May 31, 2000, there were no
outstanding rights, options, warrants, conversion rights,
redemption rights, repurchase rights, or agreements,
arrangements or commitments to issue or sell any Private
Partnership LP Units, Private Partnership GP Units or
other Equity Interests in Private Partnership or
securities of Private Partnership or any securities or
obligations convertible or exchangeable into or
exercisable for, or giving any Person a right to
subscribe for or acquire, any such Private Partnership LP
Units, Private Partnership GP Units or other Equity
Interests or securities of Private Partnership and no
securities or obligations evidencing such rights are
authorized, issued or outstanding; and
(vii) except as Previously Disclosed, neither
Private Partnership nor any of its Subsidiaries has
outstanding any bonds, debentures, notes or other
obligations for borrowed money the holders of which have
the right to vote or which are convertible into or
exercisable for securities having the right to vote, with
the holders of Private Partnership LP Units or Private
Partnership GP Units on any matter.
(c) Public Partnership Capitalization. Each of the
Sellers hereby represents and warrants that:
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<PAGE>
(i) as of May 31, 2000, there were 110,000
Public Partnership GP Units and 6,191,482 Public
Partnership LP Units issued and outstanding, which
together constituted all of the issued and outstanding
Equity Interests in Public Partnership;
(ii) each Public Partnership GP Unit is held of
record and beneficially by General Partner free and clear
of all Encumbrances;
(iii) each of the outstanding Public Partnership
LP Units and Public Partnership GP Units was and each
Public Partnership Unit issuable pursuant to options will
be, when so issued, duly authorized and validly issued,
is or, when so issued, will be fully paid and, subject to
Applicable Law, nonassessable, is not and, when so
issued, will not be subject to preemptive rights, and was
not and, when so issued, will not be issued in violation
of any preemptive rights;
(iv) except for the options to acquire 7,628,857
Public Partnership Units Previously Disclosed pursuant to
clause (v) below, as of May 31, 2000, there were no
outstanding rights, options, warrants, conversion rights,
redemption rights, repurchase rights, or agreements,
arrangements or commitments to issue or sell any Public
Partnership LP Units, Public Partnership GP Units or
other Equity Interests in Public Partnership or
securities of Public Partnership or any securities or
obligations convertible or exchangeable into or
exercisable for, or giving any Person a right to
subscribe for or acquire, any such Public Partnership LP
Units, Public Partnership GP Units or other Equity
Interests or securities of Public Partnership and no
securities or obligations evidencing such rights are
authorized, issued or outstanding;
(v) Previously Disclosed is a list, as of May
31, 2000, of any Equity Interests in Public Partnership
to be received by any Person pursuant to any Contract or
Compensation and Benefit Plan, indicating the name of
each such Person, the Contract or Compensation and
Benefit Plan pursuant to which it is entitled or will be
entitled to receive such Equity Interests, the type,
class and number of Equity Interests the Person is or
will be entitled to receive thereunder, the equivalent
amount of Public Partnership Units such Equity Interests
represent and the purchase price, if any, to be paid by
such Person in consideration for such Equity Interests;
and
(vi) except as Previously Disclosed, neither
Public Partnership nor any of its Subsidiaries has
outstanding any bonds, debentures, notes or other
obligations for borrowed money the holders of which have
the right to vote, or are convertible into or exercisable
for securities having the right to vote, with the
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holders of Public Partnership LP Units or Public
Partnership GP Units on any matter.
(d) Aggregate Capitalization. There will be no more than
52,050,000 Private Partnership Units outstanding (assuming all
options to acquire Public Partnership Units have been exercised)
at the Closing.
(e) Subsidiaries and Controlled Affiliates of Private
Partnership. Each of the Sellers hereby represents and warrants
that:
(i) Previously Disclosed is a complete and
correct list of all of the Subsidiaries of Private
Partnership and each Affiliate of Private Partnership
controlled by Private Partnership or any of its
Subsidiaries (other than any Affiliates that individually
or in the aggregate are not material to Private
Partnership and its Subsidiaries as a whole) (a
"Controlled Affiliate"), together with the jurisdiction
of organization of each such Subsidiary and Controlled
Affiliate;
(ii) except as Previously Disclosed, Private
Partnership owns, directly or indirectly, all of the
issued and outstanding Equity Interests in and other
securities of each of its Subsidiaries, free and clear of
any Encumbrances;
(iii) except as Previously Disclosed, each of
the outstanding Equity Interests in and each other
security of each of its Subsidiaries was duly authorized
and validly issued, is fully paid and, subject to
Applicable Law, nonassessable, and was not issued in
violation of any preemptive rights; and
(iv) except as Previously Disclosed, there are
no preemptive or other outstanding rights, options,
warrants, conversion rights, redemption rights,
repurchase rights, or agreements, arrangements or
commitments to issue or sell any Equity Interests of any
such Subsidiary or any securities or obligations
convertible or exchangeable into or exercisable for, or
giving any Person a right to subscribe for or acquire,
any such Equity Interests, and no securities or
obligations evidencing such rights are authorized, issued
or outstanding.
(f) Authority; Approval and Fairness. Each of the Sellers
hereby represents and warrants that:
(i) each such Person has all requisite
corporate, partnership or limited liability company power
and authority and has taken all corporate, partnership or
limited liability company action necessary in order to
execute, deliver and perform its obligations under each
of the Transaction Documents to which it is or will be a
party and to consummate, subject to the adoption of this
Agreement by
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<PAGE>
(A) the Public Partnership Unitholders in accordance
with the Public Partnership Partnership Agreement and
DE Partnership Law and (B) the Private Partnership
Unitholders in accordance with the Private Partnership
Partnership Agreement and DE Partnership Law, the
transactions contemplated by such Transaction
Documents;
(ii) no Person has any dissenter's, appraisal or
similar right with respect to the consummation of the
Transactions contemplated by this Agreement or the other
Transaction Documents; and
(iii) each Transaction Document to which such
Person is a party is or, when executed and delivered in
accordance with the terms thereof or of this Agreement
and assuming the due authorization, execution and
delivery by each other Person who is a party thereto,
will be a valid and binding agreement of such Person,
enforceable against such Person in accordance with its
respective terms, subject to bankruptcy, insolvency and
similar laws of general applicability relating to or
affecting creditors' rights, and subject as to
enforceability to general equity principles.
(g) Regulatory Filings; No Defaults. Each of the Sellers
hereby represents and warrants as to itself and each of its
Subsidiaries that:
(i) except as Previously Disclosed, no consents,
registrations, approvals, permits or authorizations of,
or notices, reports, registrations or other filings with,
any Authority are required to be made or obtained by any
such Person in connection with the execution, delivery or
performance by it or any of its Subsidiaries of this
Agreement or any other Transaction Document to which it
or any of its Subsidiaries is a party, or to consummate
the transactions hereunder or thereunder except for
filings to be made under the HSR Act and the filings
required pursuant to Sections 2.01(b) and 2.02(b); and
(ii) the execution and delivery by it and each
of its Subsidiaries that is a party to a Transaction
Document of each of the Transaction Documents to which
such Person is a party does not, and, subject to the
satisfaction of Section 3.03(f)(i) and 3.03(g)(i) above,
the consummation of the transactions thereunder will not,
constitute or result in (A) a breach or violation of, or
a default under, its Constituent Documents or those of
any of its Subsidiaries, (B) except as Previously
Disclosed, a breach or violation of, or a default or loss
of benefits under, the acceleration of any obligations or
the creation of an Encumbrance on its assets or those of
its Subsidiaries (with or without notice, lapse of time
or both) pursuant to any Seller Material Contract or any
governmental permit or license held by it or any of its
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<PAGE>
Subsidiaries or to which any such Person or any of its
assets is subject or (C) except as Previously Disclosed,
any change in the rights or obligations of any party
under any of such Contracts.
(h) Public Partnership Financial Statements; SEC Reports.
Each of the Sellers hereby represents and warrants that:
(i) Public Partnership has filed with the SEC
and made available to Buyer a copy of all reports,
registration statements, proxy statements or information
statements filed with the SEC by Public Partnership since
December 31, 1998, under the Securities Act, or under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
(collectively with any such reports filed subsequent to
the date hereof and as amended, the "SEC Reports");
(ii) as of their respective dates (or, if
amended, as of the date of such amendment), the SEC
Reports complied, and any SEC Reports filed with the SEC
subsequent to the date hereof will comply, in all
material respects with the Securities Act or the Exchange
Act, as the case may be, and the SEC Reports did not, and
any SEC Reports filed with the SEC subsequent to the date
hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
made therein, in the light of the circumstances in which
they were made, not misleading;
(iii) each of the statements of financial
condition of Public Partnership and the consolidated
statements of financial condition of Private Partnership
included in or incorporated by reference into the SEC
Reports (including the related notes and schedules)
fairly presents, or if filed after the date hereof will
fairly present, the financial condition of Public
Partnership and Private Partnership as of its respective
date, and each of the related statements of operations,
cash flows and changes in partners' capital of Public
Partnership and each of the related consolidated
statements of operations, cash flows and changes in
partners' capital of Private Partnership included in or
incorporated by reference into the SEC Reports (including
the related notes, statements and schedules) fairly
presents, or if filed after the date hereof will fairly
present, the results of operations, cash flow or changes
in partners' capital, as the case may be, of Public
Partnership and Private Partnership for the periods set
forth therein (subject, in the case of unaudited
statements, to the absence of notes and normal year-end
audit adjustments that will not be material in amount or
effect), in each case in accordance with GAAP
consistently applied during the periods involved, except
as may be noted therein;
(iv) except as disclosed in the SEC Reports or
as Previously Disclosed, since December 31, 1999 (the
"Audit Date"), none of Public Partnership, Private
Partnership or their respective Subsidiaries has incurred
any material liability
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<PAGE>
(accrued, contingent or otherwise) other than (A) in
the ordinary course of business consistent with past
practice since the Audit Date or (B) as contemplated by
or in connection with the Transaction Documents; and
(v) the books and records of each of the Sellers
and their respective Subsidiaries and Sponsored
Investment Companies have been maintained in accordance
with GAAP in all material respects and in accordance with
good business practices and all Applicable Laws and
reflect only actual transactions.
(i) Absence of Certain Changes. Each of the Sellers
hereby represents and warrants that, except as disclosed in the
SEC Reports filed prior to the date hereof, as Previously
Disclosed, or as contemplated by the Transaction Documents, since
the Audit Date, Public Partnership, Private Partnership and their
respective Subsidiaries have conducted their respective businesses
in the ordinary course and (A) there has not been, as of the date
hereof, any declaration, setting aside or payment of any dividend
or other distribution in respect of its Equity Interests, except
(x) for distributions of any kind not in excess of such Person's
operating cash flow for such period plus prior reserves or (y)
distributions to Private Partnership from any Subsidiaries
thereof; (B) there has not been any change by any such Persons in
accounting principles, practices or methods other than any change
required by a change in GAAP; (C) it has not (i) made or agreed to
make any increase in wages, salaries, compensation, pension, or
other fringe benefits or perquisites payable to any Executive
Officers or, other than in the ordinary course of business
consistent with past practice, to any other directors, managing
directors, officers, consultants or employees of Private
Partnership, Public Partnership or any of their Subsidiaries, (ii)
granted or agreed to grant any severance or termination pay,
entered into any contract to make or grant any severance or
termination pay, or paid any bonus, to any Executive Officers or,
other than in the ordinary course of business consistent with past
practice, to any other directors, managing directors, officers or
employees of Private Partnership, Public Partnership or any of
their Subsidiaries; (iii) granted or agreed to grant any stock
appreciation rights or granted any rights to acquire any Private
Partnership Units, Public Partnership Units or any other Equity
Interests in either Public Partnership or Private Partnership or
any of their Subsidiaries to any directors, managing directors,
officers or employees of Private Partnership, Public Partnership
or any of their Subsidiaries, in each case, other than grants to
employees that are not Executive Officers made in the ordinary
course of business consistent with past practice under its
Compensation and Benefits Plans; or (iv) amended or agreed to
amend any of the Compensation and Benefits Plans in a manner that
would cause a material increase in the costs of providing benefits
thereunder; and (D) there has occurred no event and arisen no
condition which has resulted in or could reasonably be expected to
result in a Material Adverse Effect with respect to the Sellers.
(j) Litigation. Except as disclosed in the SEC Reports or
as Previously Disclosed, there is no suit, action or proceeding
pending or, to the knowledge of Sellers,
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<PAGE>
threatened against or affecting General Partner, Public
Partnership, Private Partnership or their Subsidiaries or any of
their or their Subsidiaries' assets or properties that
individually or in the aggregate has had or would reasonably be
expected (i) to result in a Material Adverse Effect with respect
to the Sellers, Public Partnership Surviving Partnership or
Private Partnership Surviving Partnership, (ii) as of the date
hereof, to impair the ability of the Sellers to perform their
obligations under this Agreement in any material respect or (iii)
as of the date hereof, to delay in any material respect or
prevent the consummation of any of the Transactions, nor is there
any judgment, decree, injunction, rule or order of any Authority
or arbitrator outstanding against the General Partner, Public
Partnership, Private Partnership or any of their Subsidiaries
having, or which would reasonably be expected to result in, a
Material Adverse Effect with respect to the Sellers.
(k) Compliance with Applicable Laws; Permits. Each Seller
hereby represents and warrants that:
(i) it and each of its Subsidiaries is in
substantial compliance with all Applicable Laws;
(ii) it and each of its Subsidiaries is in
substantial compliance with all requirements under
Applicable Law for permits, licenses, authorizations,
orders and approvals of all Authorities that are required
in order to permit such Person to own or lease its
properties and assets and to conduct its business as
presently conducted; and all of such Person's material
permits, licenses, certificates of authority, orders and
approvals are in full force and effect and are current
and, to such Seller's knowledge, no suspension or
cancellation of any of them is threatened or is
reasonably likely;
(iii) (A) it and each of its Subsidiaries which
is required to be registered as a broker/dealer, an
investment adviser, a registered representative, a
commodity trading advisor, commodity pool operator,
futures commission merchant or transfer agent (or in a
similar capacity) with any Authority, is duly registered
and each such registration is in full force and effect;
and (B) each of the officers and employees of it and its
Subsidiaries and each other Person of which Private
Partnership or its Subsidiaries or any of their officers
or employees is a "person associated with a broker or
dealer", as defined in Section 3(a)(18) of the Exchange
Act that, in any case, is required to be registered or
licensed as a broker/dealer, an investment adviser, a
registered representative, a commodity trading advisor,
commodity pool operator, futures commission merchant,
transfer agent or a sales person (or in a similar
capacity) with any Authority, is duly registered or
licensed and each such registration or license is in full
force and effect; except, in the case of any officer or
employee, for any failure to be so registered or licensed
that, individually or in the aggregate, does not and
would not be reasonably likely to,
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<PAGE>
materially affect the business conducted by Public
Partnership, Private Partnership and their Subsidiaries
taken as a whole;
(iv) neither it nor any of its Subsidiaries has
received, since January 1, 1998, any notification or
communication in writing, from any Authority (A)
threatening to revoke or condition the continuation of
any material license, franchise, seat on any exchange,
permit, or governmental authorization or (B) restricting
or disqualifying their activities (except for
restrictions generally imposed by rule, regulation or
administrative policy on similarly regulated Persons
generally);
(v) to its knowledge, there are no pending or
threatened investigations, examinations, audits, reviews
or disciplinary proceedings by any Authority, other than
investigations, examinations, audits and reviews that are
(A) conducted in the ordinary course of it, any of its
Subsidiaries or any director, managing director, officer
or employee of any Seller or any such Subsidiary and (B)
that are not reasonably likely to materially adversely
affect the business conducted by Private Partnership,
Public Partnership and its Subsidiaries taken as a whole;
(vi) except as Previously Disclosed, neither any
Seller nor any Subsidiary thereof nor any of their
respective directors, managing directors, executive
officers or employees is subject to any cease and desist,
censure or other disciplinary or similar order issued by,
or is a party to any written agreement, consent
agreement, memorandum of understanding or disciplinary
agreement with, or is a party to any commitment letter or
similar undertaking to, or subject to any order or
directive by, or a recipient of any supervisory letter
from, any Authority with respect to the business of such
Person;
(vii) neither it nor any of its Subsidiaries is
registered as, or is required to be registered as, an
investment company under the Investment Company Act;
(viii) each Form ADV filed by each Subsidiary or
Private Partnership that is a registered investment
adviser under the Investment Advisers Act, in its most
recent form filed with the SEC, including any amendments
thereto filed with the SEC, complies in all material
respects with the Investment Advisers Act and is complete
and correct in all significant respects and omits no
material facts required to be stated therein;
(ix) each Form BD filed by each Subsidiary of
Private Partnership that is a registered broker dealer
under the Exchange Act, in its most recent form filed
with the SEC, including any amendments thereto filed with
the SEC, complies in all material respects with the
Exchange Act and is complete and correct in all
significant respects and omits no material facts required
to be stated therein; and
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<PAGE>
(x) each Form TA filed by each Subsidiary of
Private Partnership that is a registered transfer agent
under the Exchange Act, in its most recent form filed
with the SEC, including any amendments thereto filed with
the SEC, complies in all material respects with the
Exchange Act and is complete and correct in all
significant respects and omits no material facts required
to be stated therein.
(l) Tax Matters. Each Seller hereby represents and
warrants that except as Previously Disclosed:
(i) all material Tax Returns required to be
filed on or before the Closing Date by Private
Partnership or any of its Subsidiaries have been, or will
be, duly and timely filed or furnished, the information
reflected on those Tax Returns was, or when filed or
furnished will be, accurate and complete in all material
respects, and Private Partnership and each of its
Subsidiaries has, or will have, timely paid all material
Taxes for which it is responsible that are due on or
before the Closing Date, and through the Closing Date
will have maintained adequate reserves on its books in
accordance with GAAP for all Taxes payable by it that
have accrued but are not yet due;
(ii) no assessments, claims or deficiencies for
any material Taxes of Private Partnership or any of its
Subsidiaries have been proposed, asserted, assessed, or
threatened in writing;
(iii) there are no outstanding waivers or
agreements extending the applicable statute of
limitations for any period with respect to any material
Taxes of Private Partnership or any of its Subsidiaries;
(iv) each of Private Partnership and, to the
Seller's knowledge, Capital Growth Management L.P.
("CGM") is and since its formation has been properly
classified as a partnership for United States federal
income Tax purposes and not as an association taxable as
a corporation or a "publicly traded partnership" within
the meaning of Section 7704 of the Code;
(v) each of Private Partnership's Subsidiaries
(other than Subsidiaries organized as corporations (the
"Corporate Subsidiaries")) is and since its formation has
been properly characterized as either a partnership or a
disregarded entity for United States federal income Tax
purposes and not as an association taxable as a
corporation or a "publicly traded partnership" as defined
in Section 7704(b) of the Code;
(vi) Private Partnership and each Subsidiary of
Private Partnership (other than the Corporate
Subsidiaries and any Subsidiary properly classified
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<PAGE>
as a disregarded entity for United States federal income tax
purposes) and CGM has made a valid election under Section
754 of the Code and such election remains in full force and
effect, and will remain in full force and effect, through
the Closing Date;
(vii) all material Tax Returns required to be
filed on or before the Closing Date by Public Partnership
have been, or will be, duly and timely filed or
furnished, the information reflected on those Tax Returns
was, or when filed or furnished will be, accurate and
complete in all material respects, and Public Partnership
has, or will have, timely paid all material Taxes for
which it is responsible that are due on or before the
Closing Date, and through the Closing Date will have
maintained adequate reserves on its books in accordance
with GAAP for all Taxes payable that have accrued but are
not yet due;
(viii) no assessments, claims or deficiencies
for any material Taxes of Public Partnership have been
proposed, asserted, assessed, or threatened in writing;
(ix) there are no outstanding waivers or
agreements extending the applicable statute of
limitations for any period with respect to any material
Taxes of Public Partnership;
(x) Public Partnership is and since its
formation has been properly characterized as a
partnership for United States federal income tax purposes
and not as an association taxable as a corporation;
(xi) Public Partnership is an "electing 1987
partnership" as defined in Section 7704(g)(2) of the Code
and has made a valid election pursuant to Section
7704(g)(2) of the Code, and such election remains in full
force and effect, and will remain in full force and
effect through the Closing Date;
(xii) Public Partnership has made a valid
election under Section 754 of the Code and such election
remains in full force and effect, and will remain in full
force and effect, through the Closing Date;
(xiii) each Sponsored Registered Investment
Company is and since its formation has been a "regulated
investment company" as defined in Section 851(a) of the
Code, taking into account the limitations in Section
851(b) of the Code;
(xiv) each Sponsored Registered Investment
Company has met the requirements of Section 852(a) of the
Code for each taxable year since its formation;
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<PAGE>
(xv) each Sponsored Non-Registered Investment
Company is properly classified as a partnership for
United States federal income tax purposes and not as an
association taxable as a corporation or a "publicly
traded partnership" as defined in Section 7704(b) of the
Code;
(xvi) none of Public Partnership, Private
Partnership nor any of their Subsidiaries (other than the
Corporate Subsidiaries) is an "Electing Large
Partnership" as defined in Section 775 of the Code and no
"section 197 intangible" of Public Partnership, Private
Partnership or any of their Subsidiaries is excluded from
the definition of an "amortizable Section 197 intangible"
by virtue of Section 197(f)(9) of the Code; and
(xvii) all material Tax Returns required to be
filed on or before the Closing Date by each Sponsored
Registered Investment Company have been, or will be, duly
and timely filed or furnished, the information reflected
on those Tax Returns was, or when filed or furnished will
be, accurate and complete in all material respects, and
each Sponsored Registered Investment Company has, or will
have, timely paid all material Taxes for which it is
responsible that are due on or before the Closing Date,
and through the Closing Date will have maintained
adequate reserves on its books in accordance with GAAP
for all Taxes payable that have accrued but are not yet
due.
(m) Employee Benefit Plans. Each of the Sellers hereby
represents and warrants that:
(i) Previously Disclosed is a complete and
correct list of all existing bonus, incentive, deferred
compensation, pension, retirement, profit-sharing,
thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock, stock option,
severance, welfare and fringe benefit plans, including
but not limited to "employee benefit plans" within the
meaning of Section 3(3) of ERISA, and employment or
severance agreements and all similar plans and agreements
of Public Partnership, Private Partnership and their
Subsidiaries which cover any employee, former employee,
consultant, former consultant, director or former
director, member or former member, stockholder or former
stockholder, partner or former partner, of Public
Partnership or Private Partnership or any of their
Subsidiaries or such Person's beneficiaries (the
"Compensation and Benefit Plans"), excluding offer
letters made in the ordinary course of business. A
complete and correct copy of each material Compensation
and Benefit Plan, all amendments thereto, the most recent
actuarial report, if any, and the most recent
determination letter from the IRS, if any, has been
provided or made available to Buyer prior to the date
hereof. Except as Previously Disclosed, contemplated by
the Transaction Documents or as required under Applicable
Law (with respect to
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<PAGE>
modifications or changes to Compensation and Benefit Plans
existing as of the date hereof only), neither Public
Partnership, Private Partnership nor any of their respective
Subsidiaries has any commitment to create any additional
Compensation and Benefit Plan or to modify or change any
existing material Compensation and Benefit Plan;
(ii) each such Compensation and Benefit Plan has
been operated and administered substantially in
accordance with its terms and in substantial compliance
with Applicable Law, including, but not limited to, ERISA
and the Code, and any regulations or rules promulgated
thereunder, and all filings, disclosures and notices
required by ERISA and the Code, or any other Applicable
Law have been timely made. Each such Compensation and
Benefit Plan which is a Pension Plan and which is
intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter from the
IRS, and the Sellers are not aware of any circumstances
likely to result in revocation of any such favorable
determination letter from the IRS. No circumstances exist
that are likely to materially adversely affect the
qualified status of any material Compensation and Benefit
Plan or the related trust. To the knowledge of the
Sellers, there is no pending or, to their knowledge,
threatened legal action, suit or claim relating to such
Compensation and Benefit Plans, other than routine claims
for benefits. None of Public Partnership, Private
Partnership nor any of their respective Subsidiaries has
engaged in a transaction, or omitted to take any action,
with respect to any Compensation and Benefit Plan that
could reasonably be expected to subject any of them, any
such Plan or any fiduciary thereof to a tax or penalty
imposed by either Section 4975 of the Code or Section 502
of ERISA in an amount that would be material, assuming for
purposes of Section 4975 of the Code that the taxable period
of any such transaction expired as of the date hereof;
(iii) except as Previously Disclosed, neither
Public Partnership nor Private Partnership nor any of
their respective Subsidiaries or ERISA Affiliates has
ever maintained any Pension Plan subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code;
(iv) except as Previously Disclosed, with
respect to each Compensation and Benefit Plan that is a
Pension Plan subject to Title IV or Section 302 of ERISA
or Section 412 or 4971 of the Code and each Pension Plan
maintained by an ERISA Affiliate of Public Partnership or
Private Partnership: (1) there does not exist any
accumulated funding deficiency withing the meaning of
Section 412 of the Code or Section 302 of ERISA, whether
or not waived; (2) the fair market value of the assets of
such Compensation and Benefit Plan equals or exceeds the
actuarial present value of all accrued benefits under
such Plan (whether or not vested), based upon the
actuarial assumptions used to prepare the most recent
actuarial report for such Plan; (3) no reportable event
within the meaning of
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<PAGE>
Section 4043(c) of ERISA for which the 30-day notice
requirement has not been waived has occurred; (4) all
premiums to the Pension Benefit Guaranty Corporation
(the "PBGC") have been timely paid in full; (5) no
liability (other than for premiums to the PBGC) under
Title IV of ERISA has been or is expected to be
incurred by Private Partnership, Public Partnership or
any of their respective Subsidiaries; and (6) the PBGC
has not instituted proceedings to terminate any such
Plan and, to the Sellers' knowledge, no condition
exists that presents a risk that such proceedings will
be instituted or which would constitute grounds under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee of administer, any such Plan;
(v) no Compensation and Benefit Plan is a
"multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA ("Multiemployer Plan") or a plan that
has two or more contributing sponsors at least two of
whom are not under common control, within the meaning of
Section 4063 of ERISA ("Multiple Employer Plan"). None of
Public Partnership, Private Partnership or any of their
respective Subsidiaries or ERISA Affiliates has, at any
time during the last six years, contributed to or been
obligated to contribute to any Multiemployer Plan;
(vi) there does not now exist, nor do any
circumstances exist that could result in, any liability
(1) under Title IV or Section 302 of ERISA, (2) under
sections 412 and 4971 of the Code, (3) as a result of a
failure to comply with the continuation coverage
requirements of section 601 et seq. of ERISA and Section
4980B of the Code, and (4) under corresponding or similar
provisions of foreign laws or regulations, that would be
a liability of Public Partnership, Private Partnership or
their respective Subsidiaries following the Closing;
(vii) all contributions required to be made by
the Public Partnership or Private Partnership or their
respective Subsidiaries to any Compensation and Benefit
Plan by Applicable Law or regulation or by any plan
document or other contractual undertaking, and all
premiums due or payable with respect to insurance
policies under any Compensation and Benefit Plan, for any
period through the date hereof have been timely made or
paid in full to the extent required to be made or paid on
or before the date hereof. Liabilities in respect of
unfunded compensation plans and programs (including, but
not limited to, deferred compensation plans and annual
cash bonus plans) which are Compensation and Benefit
Plans have been properly accrued and are fully reflected
on the financial statements;
(viii) except as Previously Disclosed, none of
Private Partnership, Public Partnership nor any of their
respective Subsidiaries has any obligation to provide
retiree health and life insurance or other retiree death
benefits under any
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Compensation and Benefit Plan, other than benefits
mandated by Section 4980B of the Code or other
Applicable Law; and
(ix) except as Previously Disclosed or as
provided by Section 2.03 hereof, as provided under any
Compensation and Benefit Plan Previously Disclosed as in
effect on the date hereof or as contemplated by a
Transaction Document, the consummation of the
Transactions would not, directly or indirectly
(including, without limitation, as a result of any
termination of employment prior to or following the
Closing Date) (A) entitle any present or former employee,
consultant or director, member, stockholder or partner to
any payment (including severance pay or similar
compensation) or an excise tax gross-up or any increase
in compensation, (B) result in the vesting or
acceleration of any benefits under any such Compensation
and Benefit Plan or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or
benefits under any such Compensation and Benefit Plan,
(C) result in any increase in benefits payable under any
such Compensation and Benefit Plan, (D) result in any
breach or violation of, or a default under, any such
Compensation and Benefit Plans or (E) restrict or
prohibit the right to amend or terminate any Compensation
and Benefit Plan.
(n) Brokers and Finders. Each of the Sellers hereby
represents and warrants that neither it, nor its Subsidiaries, nor
any of its general partners, managing members, directors, managing
directors, officers, or employees, if any, has employed any broker
or finder or incurred any liability for any brokerage fees,
commissions or finders fees in connection with this Agreement or
any of the Transactions other than Credit Suisse First Boston
Corporation ("CSFB"), which has been employed as a financial
advisor to Private Partnership and the fees and expenses of which
have been Previously Disclosed and shall be paid by Private
Partnership Surviving Partnership if the Closing occurs and by
Private Partnership if this Agreement is terminated.
(o) Investment Advisory Activities. Each of the Sellers
hereby represents and warrants that:
(i) Advisory Agreements, Investment Companies
and Other Clients. Each Advisory Agreement with the
Investment Companies and each other Advisory Agreement
with a Client of a Subsidiary of Private Partnership is
valid, binding, in full force and effect, and enforceable
against such Subsidiary in accordance with its terms, and
as of the date hereof; none of the Sellers nor any of
their Subsidiaries has received written or oral notice of
default under or intent to call a default under any such
Advisory Agreement, and to Seller's knowledge, there
exists no event or condition which (with or without
notice or lapse of time or both) would be a breach or a
default on the part of the applicable Seller entity or on
the part of the other party to such Advisory Agreements,
other than such
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<PAGE>
defaults or breaches that, individually or in the
aggregate, would not reasonably be expected to have a
Material Adverse Effect on Public Partnership, Private
Partnership and their Subsidiaries, taken as a whole;
each Advisory Agreement with the Sponsored Registered
Investment Companies and to the Sellers' knowledge,
each Advisory Agreement with all other Sponsored
Investment Companies, subject to Section 15 of the
Investment Company Act to which Private Partnership or
any of its Subsidiaries is a party and all distribution
plans adopted by the relevant Investment Company in
accordance with Rule 12b-1 under the Investment Company
Act (each, a "12b-1 Plan") relating to such entities
have been duly approved and continued and have been at
all times in compliance with the Investment Company
Act; and each Advisory Agreement with the Investment
Companies and each other Advisory Agreement has been
performed by Private Partnership or the applicable
Subsidiary in accordance with its terms and with the
Investment Company Act and all other Applicable Laws in
all material respects; and each Advisory Agreement with
the Investment Companies and each other Advisory
Agreement, has been performed by Public Partnership or
Private Partnership or the applicable Subsidiary in
accordance with its terms and with the Investment
Advisers Act and all other Applicable Laws in all
material respects.
(ii) Sponsored Non-Registered Investment Companies.
(A) each Sponsored Non-Registered
Investment Company that is a juridical entity
has been duly organized, and is validly existing
and in good standing under the laws of the
jurisdiction of its organization and has all
requisite corporate partnership, limited
liability company, or similar power and
authority, and possesses all rights, licenses,
authorizations and approvals necessary to
entitle it to use its name, to own, lease or
otherwise hold its properties and assets and to
carry on its business as it is now conducted,
and is duly qualified, licensed or registered to
do business in each jurisdiction where it is
required to do so under Applicable Law (except
where the failure to do so is not material to
its business);
(B) (1) all outstanding shares or units
of each Sponsored Non-Registered Investment
Company have been issued and sold in substantial
compliance with Applicable Law; and (2) each
Sponsored Non-Registered Investment Company,
since inception of operations, has been operated
and is currently operating in substantial
compliance with its respective investment
objectives and policies and Applicable Law;
(C) none of the Sponsored
Non-Registered Investment Companies has been
enjoined, indicted, convicted or made the
subject of
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disciplinary proceedings, consent decrees or
administrative orders on account of any violation of
the Securities Laws;
(D) each Investment Company Board of
any Sponsored Non-Registered Investment Company
having such a Board operates in substantial
conformity with all requirements and
restrictions applicable to such Sponsored
Non-Registered Investment Company under all
Applicable Laws to which such Sponsored
Non-Registered Investment Company is subject;
(E) the shares of, units of or
interests in each Sponsored Non-Registered
Investment Company have been duly and validly
issued and, except as set forth in the
subscription or constituent documents of such
companies, are fully paid and nonassessable;
(F) each account to which Private
Partnership or any Subsidiary thereof provides
investment management, advisory or subadvisory
services that is (i) an employee benefit plan,
as defined in Section 3(3) of ERISA that is
subject to Title I of ERISA; (ii) a Person
acting on behalf of such a plan; or (iii) any
entity whose assets include the assets of such a
plan, within the meaning of ERISA and applicable
regulations (hereinafter referred to as an
"ERISA Client") have been managed by Private
Partnership or its applicable Subsidiary such
that (A) the exercise of such management or
provision of any services is in compliance in
all material respects with the applicable
requirements of ERISA and (B) neither Private
Partnership nor any Subsidiary of Private
Partnership has engaged in a "Prohibited
Transaction" within the meaning of Section 406
of ERISA or Section 4975(c) of the Code that
would subject it to liability or Taxes under
Section 5409 or 502(i) of ERISA or Section
4975(a) of the Code.
(iii) Sponsored Registered Investment Companies.
(A) each Sponsored Registered
Investment Company that is a juridical entity
has been duly organized, and is validly existing
and in good standing under the laws of the
jurisdiction of its organization and has all
requisite corporate partnership, limited
liability company, or similar power and
authority, and possesses all rights, licenses,
authorizations and approvals necessary to
entitle it to use its name, to own, lease or
otherwise hold its properties and assets and to
carry on its business as it is now conducted,
and is duly qualified, licensed or registered to
do business in each jurisdiction where it is
required to do so under Applicable Law (except
where the failure to do so is not material to
its business);
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(B) (1) all outstanding shares or units
of each Sponsored Registered Investment Company
have been issued and sold in substantial
compliance with Applicable Law; and (2) each
Sponsored Registered Investment Company, since
inception of operations, has been operated and
is currently operating in substantial compliance
with its respective investment objectives and
policies and Applicable Law;
(C) none of the Sponsored Registered
Investment Companies has been enjoined,
indicted, convicted or made the subject of
disciplinary proceedings, consent decrees or
administrative orders on account of any
violation of the Securities Laws;
(D) each Investment Company Board of
any Sponsored Registered Investment Company
having such a Board operates in substantial
conformity with all requirements and
restrictions applicable to such Sponsored
Registered Investment Company under all
Applicable Laws to which such Sponsored
Registered Investment Company is subject;
(E) except as Previously Disclosed, the
shares or units of beneficial interest of each
Sponsored Registered Investment Company have
been duly and validly issued and are fully paid
and nonassessable and the shares or units of
beneficial interest of each Sponsored Registered
Investment Company are qualified for public
offering and sale in each jurisdiction where
offers are made to the extent required under
Applicable Law;
(F) each Subsidiary of the Private
Partnership that is an investment adviser to a
Registered Investment Company has adopted a
formal code of ethics and each Subsidiary of
Private Partnership that is a registered
investment adviser under the Investment Advisers
Act has adopted a written policy regarding
insider trading, each of which substantially
complies with Applicable Law. The policies of
such Subsidiary with respect to avoiding
conflicts of interest are as set forth in the
most recent Forms ADV thereof, as amended, and
to the Sellers' knowledge, there have been no
material violations or allegations of violations
of such policies that have occurred or been made
that have not been addressed in accordance with
these procedures;
(G) each Sponsored Registered
Investment Company is, and at all times required
under the Securities Laws has been, duly
registered with the SEC as an investment company
under the Investment Company Act;
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(H) neither Private Partnership nor any
of its Subsidiaries or Affiliates has any
express or implied understanding or arrangement
which would impose an unfair burden on any of
the Sponsored Registered Investment Companies or
would in any way violate Section 15(f) of the
Investment Company Act as a result of any of the
Transactions;
(I) All payments by the Sponsored
Registered Investment Companies relating to the
distribution of their shares (other than
payments that are not required by Applicable Law
to be paid pursuant to a 12b-1 Plan) have been
made in compliance with the related 12b-1 Plan
and each 12b-1 Plan adopted by a Fund and the
operation of each such 12b-1 Plan currently
complies with Rule 12b-1. No Sponsored
Registered Investment Company has paid or is
paying, directly or indirectly, any amount to
any person for the purpose of financing the
distribution of its shares, except in accordance
with a 12b-1 Plan or has made or is making any
other payments that violated or violate
Applicable Law;
(J) Each of the Sponsored Registered
Investment Companies has timely filed all
prospectuses, annual information forms,
registration statements, proxy statements,
financial statements, notices on Form 24F-2,
other forms, reports, sales literature and
advertising materials and any other documents
required to be filed with applicable regulatory
or other Authorities, and any amendments thereto
(the "Reports"), and has timely paid all fees
and interest required to be paid in connection
therewith. The Reports (i) have been prepared in
all material respects in accordance with the
requirements of Applicable Law, and (ii) did not
at the time they were filed, and with respect to
any prospectus, proxy statement, sales
literature or advertising material, did not
during the period of its authorized use, contain
any untrue statement of a material fact or omit
to state a material fact required to be stated
therein or necessary in order to make the
statements therein, in the light of the
circumstances under which they were or are made,
not misleading; and
(K) The Investment Company Board of
each Sponsored Registered Investment Company has
at all times been constituted and have operated
in conformity with the requirements and
restrictions of section 10, 15(f) and 16 of the
Investment Company Act.
(p) Ineligible Persons. None of Private Partnership or
any of its Subsidiaries, nor any "affiliated person" (as defined
in the Investment Company Act) thereof is ineligible pursuant to
Section 9(a) or 9(b) of the Investment Company Act to serve as an
investment adviser (or in any other capacity contemplated by the
Investment Company
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Act) to a registered investment company nor is there any action,
proceeding or investigation pending or, to the knowledge of the
Sellers, threatened by any Authority, which would result in the
ineligibility of Private Partnership or any of its Subsidiaries
or any of their "affiliated persons" (as defined in the
Investment Company Act) to serve in any such capacities. None of
Private Partnership, its Subsidiaries or any "associated person"
(as defined in the Investment Advisers Act) thereof, as
applicable, is ineligible pursuant to Section 203 of the
Investment Advisers Act to serve as an investment adviser or as
an associated person of a registered investment adviser, nor is
there any action, proceeding or investigation pending or, to the
knowledge of the Sellers, threatened by any Authority, that would
reasonably be expected to result in the ineligibility of Private
Partnership, its Subsidiaries or any of their associated persons
or, to the knowledge of the Sellers, that would reasonably be
expected to provide a basis for a proceeding that would result in
such ineligibility. None of the Private Partnership, its
Subsidiaries or any of their associated persons thereof is
ineligible pursuant to Section 15(b) of the Exchange Act to serve
as a broker-dealer or as an associated person to a registered
broker-dealer.
(q) Contracts. Except as Previously Disclosed or as
otherwise provided in this Agreement, none of Public Partnership,
Private Partnership, nor any of their Subsidiaries is a party to,
and none of the properties or assets of Public Partnership,
Private Partnership or any of their Subsidiaries is bound by, any
Contract (i) which, upon the consummation of the Transactions or
the approval of the holders of Private Partnership Units or Public
Partnership Units of the Transactions will (either alone or upon
the occurrence of any additional acts or events) result in any
payment (whether of severance pay or otherwise) becoming due from
Public Partnership, Private Partnership, Buyer, Buyer Parent,
Surviving Private Partnership, Surviving Public Partnership, or
any of their respective Subsidiaries to any officer or employee
thereof; (ii) which is a "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement; (iii) with or to a
labor union or guild (including any collective bargaining
agreement); (iv) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase
plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated upon the
consummation of the Transactions or the approval of the holders of
Private Partnership Units or Public Partnership Units of the
Transactions or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by
this Agreement; (v) granting any material Encumbrance on any
material asset of Public Partnership or Private Partnership or any
of their Subsidiaries; (vi) that is a material contract with (A)
General Partner or any of its Affiliates or (B) any current or
former (to the extent that any obligations of Public Partnership
or Private Partnership are outstanding under such contract)
officer, director or employee of Public Partnership or Private
Partnership or any of their Subsidiaries other than Previously
Disclosed Compensation and Benefit Plans; (vii) under which
General Partner, Public Partnership or Private Partnership or any
of their Subsidiaries has borrowed or may borrow any money from,
has guaranteed any borrowing by any Person, or issued or may issue
any note, bond, debenture or other evidence of indebtedness to,
any Person, or any other note, bond, debenture or other evidence
of indebtedness of Public Partnership or Private Partnership or
any of its Subsidiaries, in each case in excess of $5,000,000
individually and $15,000,000 in the aggregate; (viii) that is any
material currency exchange, interest rate exchange, commodity
exchange or similar contract; (ix) that is a contract for any
material joint venture or similar arrangement; or (x) that is a
contract that includes any noncompetition or nonsolicitation
covenant or any exclusive dealing or similar arrangement that
limits to any material extent the freedom of Public Partnership,
Private Partnership or any of their Subsidiaries to compete
(geographically or otherwise) in any line of business or will,
after the Closing, so limit competition by the Public Partnership
Surviving Partnership, Private Partnership Surviving Partnership
or their Subsidiaries (collectively, the "Seller Material
Contracts"). Each of the Seller Material Contracts is valid,
binding, in full force and effect, and is enforceable against
Public Partnership, Private Partnership and/or their Subsidiaries,
as the case may be, in accordance with its terms. As of the date
hereof, neither Public Partnership, Private Partnership nor any of
their Subsidiaries has received written or oral notice of
cancellation of or default under or intent to cancel or call a
default under any of the Seller Material Contracts. Public
Partnership, Private Partnership and each of its Subsidiaries has
performed all material obligations required to be performed by it
to date under the Seller Material Contracts, and to Sellers'
knowledge there exists no event or condition which (with or
without notice or lapse of time or both) would be a breach or a
default on the part of Public Partnership, Private Partnership or
any
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of their Subsidiaries or on the part of the other party to
such Seller Material Contracts.
(r) Insurance. Each insurance policy (including insurance
policies and fidelity bonds relating to the Sponsored Investment
Companies, and the assets, properties and employees of the Sellers
and their Subsidiaries) and bond of the Sellers and their
Subsidiaries is in full force and effect, all premiums due and
payable thereon have been paid and none of the Sellers nor any of
their Subsidiaries has received written notice from any insurer or
agent of any intent to cancel any such insurance policy or bond.
(s) Technology and Intellectual Property. Each of the
Sellers and their Subsidiaries and the Sponsored Investment
Companies has (and upon consummation of the transactions
contemplated hereby will have) ownership of, or such other rights
by license, lease or other agreement in and to, all intellectual
property necessary to conduct the business of the Private
Partnership and its Subsidiaries and the Sponsored Investment
Companies substantially in the manner presently conducted, and the
consummation of the Transactions as contemplated hereby does not
and will not conflict with, alter or impair any such ownership or
rights. None of the Sellers or their respective Affiliates has
granted any option or license of any kind to any third party
relating to any technology or intellectual property owned, used,
filed by or licensed to the Sellers or their Subsidiaries (and
used in conducting the business of such entity) or the marketing
or distribution thereof. All such material technology has been
maintained in confidence in accordance
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with protection procedures customarily used in the industry to
protect rights of like importance. None of the Sellers, their
Subsidiaries or the Sponsored Investment Companies has, to the
Seller's knowledge, infringed or violated any trademark, trade
name, copyright, patent, trade secret right or other proprietary
right of others, nor, to the Sellers' knowledge, has any other
Person infringed on a continuing basis any rights that the
Sellers or any of their Subsidiaries has in the intellectual
property. Each of the Sellers, their Subsidiaries and the
Sponsored Investment Companies owns or licenses all computer
software developed or currently used by it which is material to
the conduct of its business as currently conducted and has the
right to use such software without infringing upon the
intellectual property rights (including trade secrets rights) of
any third party. None of the Sellers, any of their Subsidiaries
or any of the Sponsored Investment Companies has received notice
of any claim respecting any such violation or infringement.
(t) Environmental Matters. The Sellers and their
Subsidiaries have complied in all material respects with all
applicable Environmental Laws, and none of the Sellers or any of
their Subsidiaries is subject to any actual or, to the knowledge
of the Sellers, threatened investigation, claim or liability under
any Environmental Law. "Environmental Law" means (i) any federal,
state, foreign or local law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, common
law, legal doctrine, order, judgment, decree, injunction,
requirement or agreement with any governmental entity, (x)
relating to the protection, preservation or restoration of the
environment (including, without limitation, air, water, vapor,
surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural
resource), or to human health or safety, or (y) the exposure to,
or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production,
release or disposal of Hazardous Substances (as hereinafter
defined), in each case as amended and as now in effect. "Hazardous
Substance" means any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any Environmental Law,
whether by type or by quantity, including any substance containing
any such substance as a component.
(u) Opinion of Financial Advisor. CSFB has delivered to
the board of directors of General Partner its opinion, dated the
date hereof, accompanied by an authorization to include such
opinion in the Proxy Statement to the effect that, as of the date
of this Agreement, the Unit Price is fair, from a financial point
of view, to the holders of Private Partnership Unitholders and
Public Partnership Unitholders.
(v) Annualized Advisory Fee Revenues. The aggregate
annualized investment advisory, investment management and
subadvisory fees for all investment management accounts managed by
the Subsidiaries of Private Partnership or by CGM and payable to
such Persons (excluding such fees from Clients set forth in
section 2.01(d) of the General Partner's Disclosure Schedule),
determined as of April 30, 2000 in good faith
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in accordance with the methodology described and applied in
section 3.03(v) of the General Partner's Disclosure Schedule, is
approximately $539 million.
3.04 Representations and Warranties of Buyer. Except as Previously
Disclosed, each of the Buyer and Buyer Parent makes each of the following
representations and warranties as to itself, Buyer, Public Partnership
Merger Sub and Private Partnership Merger Sub, provided that no
representation and warranty with respect or relating to Public Partnership
Merger Sub or Private Partnership Merger Sub, as the case may be, will be
deemed made until the Closing Date:
(a) Organization, Standing and Authority.
(i) It is duly organized or formed, validly
existing and, if organized in a jurisdiction recognizing
the concept of good standing, in good standing under the
laws of its jurisdiction of organization, as Previously
Disclosed, with full power and authority to own, lease or
operate its assets and to carry on its business as
currently conducted;
(ii) it is duly qualified to do business and is
in good standing in each state of the United States where
its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified;
and
(iii) prior to the date hereof, Buyer has made
available to Sellers a complete and correct copy, as of
the date hereof, of the Constituent Documents of each
such Person, in each case as amended to such date. As of
the date hereof, each such Constituent Document is in
full force and effect.
(b) Authority; Approval.
(i) It has all requisite corporate, partnership
or limited liability company power and authority and has
taken all corporate, partnership or limited liability
company action necessary in order to execute, deliver and
perform its obligations under each of the Transaction
Documents to which it is or will be a party and to
consummate the transactions contemplated thereby; and
(ii) each Transaction Document to which it is a
party is or, when executed and delivered in accordance
with the terms thereof or of this Agreement and assuming
the due authorization, execution and delivery by each
other Person who is a party thereto, will be a valid and
binding agreement of it, enforceable against it in
accordance with its respective terms, subject to
bankruptcy, insolvency and similar laws of general
applicability relating to or affecting creditors' rights,
and subject as to enforceability to general equity
principles.
(c) Regulatory Filings; No Defaults.
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(i) No consents, approvals, permits or
authorizations of, or notices, reports, registrations or
other filings with, any Authority or third party are
required to be made or obtained by it in connection with
the execution, delivery or performance by any such Person
of this Agreement or any other Transaction Document to
which it is a party, or to consummate the transactions
hereunder or thereunder except for filings to be made
under the HSR Act, the filing of a notification with the
European Commission under Council Regulation (EEC) No.
4064/89, the filing of a notice with the Supervisory
Board of Buyer Parent and the filings required pursuant
to Sections 2.01(b) and 2.02(b); and
(ii) the execution and delivery by it of each of
the Transaction Documents to which it is a party does
not, and, subject to the satisfaction of Section
3.04(c)(i) above, the consummation of the transactions
thereunder will not, constitute or result in a breach or
violation of, or a default under, the Constituent
Documents of any such Person.
(d) Investment Company Act. As of the date hereof,
neither Buyer Parent nor any Subsidiary of Buyer Parent has
entered into any Contract (disregarding for this purpose any of
the Transaction Documents) which would impose an "unfair burden"
(within the meaning of Section 15(f) of the Investment Company
Act) on any of the Sponsored Investment Companies of Private
Partnership after the Closing.
(e) Brokers and Finders. Each of Buyer Parent and Buyer
hereby represents and warrants that neither it, nor its
Subsidiaries, nor any of its general partners, managing members,
directors, managing directors, officers, or employees, if any, has
employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with
this Agreement or any of the Transactions other than Donaldson,
Lufkin & Jenrette, which has been employed as a financial advisor
to Buyer Parent and Buyer and the fees and expenses of which shall
be borne by Buyer Parent and Buyer.
(f) Buyer Financing. Buyer Parent and Buyer have, or
prior to the Public Partnership Effective Time will have,
sufficient funds to enable it to pay the consideration required to
be paid by the Buyer pursuant to Article II and to perform its
obligations hereunder.
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ARTICLE IV
COVENANTS
4.01 Conduct Prior to Closing. Except as otherwise provided
herein, each Seller shall, and each Seller shall cause each of its
Subsidiaries to, conduct its business and each of their respective
businesses, as the case may be, in the ordinary and usual course and use
reasonable best efforts to preserve its business organization and their
respective business organizations and assets intact and maintain existing
relations and goodwill with customers, suppliers, distributors, creditors,
lessors, employees and business associates. Without limiting the generality
of the foregoing, from the date hereof until the Closing, except as
contemplated in any Transaction Document or as Previously Disclosed, each
such Seller as to itself, shall not, and each Seller shall cause each of
its Subsidiaries not to, do any of the following without the prior written
consent of Buyer, which shall not be unreasonably withheld or delayed:
(a) issue, sell, pledge, grant, allocate, dispose of or
encumber any Equity Interests in it or any of its Subsidiaries or
any options, warrants, conversion or other rights or
understandings of any kind, contingent or otherwise, to purchase
any such Equity Interests other than upon exercise of any
Previously Disclosed outstanding Options in accordance with the
terms of the Partnership Equity Plans;
(b) admit any new partner or member other than in the
ordinary course of its business;
(c) directly or indirectly, adjust, split, combine or
reclassify any of its or its Subsidiaries' Equity Interests or
change or agree to change in any manner the rights of such Equity
Interests or liquidate or dissolve any Seller or any of Sellers'
Subsidiaries;
(d) declare, set aside, make or pay any dividend or other
distribution in cash, stock or property in respect of its Equity
Interests, or repurchase, redeem or otherwise acquire, directly or
indirectly, any of its Equity Interests, provided that (i) the
Public Partnership and Private Partnership shall be permitted to
make distributions required by Section 4.12 and (ii) Subsidiaries
of Private Partnership shall be permitted to make distributions to
Private Partnership;
(e) other than in the ordinary course of its business
transfer, lease, license, guarantee, sell, mortgage, pledge,
dispose of or encumber any of its or their material property or
assets, tangible or intangible, or incur, modify, cancel or waive
any material indebtedness or other liability or obligation;
(f) make, authorize or commit for any capital
expenditures other than in the ordinary course of business of
their respective businesses, as the case may be, or, by any means,
make any acquisition of, or investment in, assets or stock of any
other Person or
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entity, provided that the investment restrictions contained in
this clause (f) shall not apply to investments committed to as of
the date hereof and Previously Disclosed or made in the ordinary
course of business;
(g) terminate, establish, adopt, enter into, or make any
new grants or awards, under any Compensation and Benefit Plan or
amend or otherwise modify any Compensation and Benefit Plan in a
manner that would increase the benefits provided thereunder to any
Executive Officer or, other than in the ordinary course of
business consistent with prior practice, any other person;
(h) amend, supplement or restate its or any of its
Subsidiaries' Constituent Documents, as the case may be, or enter
into any Written Consents which in effect amend, supplement or
restate such Constituent Documents;
(i) implement or adopt any change in any respect of its
accounting practices, policies or principles other than as may be
required by GAAP;
(j) enter into or renew or terminate any Seller Material
Contract with any other Seller or any Affiliate or Subsidiary of
any Seller, or make any amendment or modification to any such
agreement if such entry, renewal, termination, amendment or
modification would have a Material Adverse Effect on Public
Partnership or Private Partnership;
(k) take any action that might reasonably be expected to
be or to result in "an addition of a substantial new line of
business" with respect to Public Partnership (within the meaning
of Section 7704(g)(2) of the Code) or that might reasonably be
expected to cause Public Partnership to cease to be an "electing
1987 partnership" under that section;
(l) settle any claim, action or proceeding involving any
liability for money damages in excess of $1,500,000 or any
material restrictions upon any of its operations;
(m) except as and to the extent required, after
consultation with outside legal counsel, in the exercise of the
fiduciary obligations of the Sellers, in the case of any
Investment Company, request that any action be taken by any of the
Investment Company Boards, other than as contemplated by this
Agreement and other than routine actions taken in the ordinary
course of business that would not materially adversely affect such
Seller or Investment Company;
(n) voluntarily divest itself of management of any Client
or any assets under management other than in the ordinary course
of business;
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(o) accelerate the billing or other realizations of
advisory fees payable by Clients to Private Partnership or any of
its Subsidiaries or delay the payment of liabilities beyond the
ordinary course of business;
(p) except as required by Applicable Law, increase the
compensation of any Executive Officer or, other than in the
ordinary course of business consistent with prior practice, any
other current or former employee, managing director, officer,
director or consultant of the General Partner, Public Partnership,
Private Partnership or their respective Subsidiaries, or enter
into, adopt, amend or commit to enter into, adopt or amend any
employment, consulting, severance, change of control or incentive
pay agreement with or for the benefit of any Executive Officer or,
other than in the ordinary course of business consistent with
prior practice, any other current or former employee, managing
director, officer, director or consultant of any such Person;
(q) take any action or fail to take any action that would
or could reasonably be expected to result in any of the
representations or warranties set forth in Section 3.03 of the
Agreement being or becoming untrue (subject to the standard set
forth in Section 3.02); or
(r) authorize or enter into an agreement to do any of the
foregoing.
4.02 Acquisition Proposals. Each of the Sellers agrees that it
will not and will cause each of its Subsidiaries, if any, and its and any
such Subsidiaries' respective executive officers and directors not to, and
each such Seller agrees to direct its and any such Subsidiaries' employees,
agents and representatives (including, without limitation, any investment
banker, attorney or accountant retained by it or any of its Subsidiaries)
not to initiate or solicit directly or indirectly, any inquiries or the
making of any proposal or offer (including, without limitation, any
proposal or offer to stockholders, members or unitholders) with respect to
a merger, reorganization, share exchange, consolidation or similar
transaction involving, or any purchase of all or any significant portion of
the assets or any Equity Interests in, any Seller or any of its
Subsidiaries (any such proposal or offer being hereinafter referred to as
an "Acquisition Proposal") or directly or indirectly engage in any
negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any Person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; provided, however, that nothing
contained in this Section 4.02 shall prevent any Seller or its managing
member, general partner or management board from (A) in the case of Public
Partnership or its management board or representatives, complying with Rule
14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal or providing any other legally required disclosure to the partners
of Private Partnership and Public Partnership; (B) providing information
to, or engaging in any negotiations or discussions with, any Person who has
made an unsolicited bona fide written Acquisition Proposal (i) if the board
of directors of the General Partner, determines, in good faith after
consultation with outside legal counsel, that providing such information
and engaging in such discussions or negotiations is
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required to comply with its fiduciary duties under Applicable Law and (ii)
if, prior to furnishing any non-public information to any such party,
Private Partnership and/or Public Partnership, as applicable, shall have
entered into a confidentiality agreement on customary terms as advised by
outside legal counsel; or (C) recommending such an Acquisition Proposal to
the members, partners or unitholders of such Seller and withdrawing the
prior recommendation of this Agreement, if and only to the extent that, in
each such case referred to in clause (B) or (C) above, the board of
directors of the General Partner, determines, in good faith after
consultation with outside legal counsel, that taking such action is
required to comply with its fiduciary duties under Applicable Law (any such
Acquisition Proposal, a "Superior Proposal"). Each Seller agrees that it
will notify Buyer Parent and Buyer promptly (within twenty-four hours of
receipt) if any such inquiries, proposals or offers are received by, any
such information is requested from, or any such discussions or negotiations
are sought to be initiated or continued with, any of its representatives
indicating, in connection with such notice, the name of such Person and the
material terms and conditions of any proposals or offers and thereafter
shall keep Buyer Parent and Buyer reasonably informed on the status and
terms of any such proposals or offers and the status of any such
discussions or negotiations. Each such Seller shall, and shall cause each
Subsidiary and each of such Sellers' and Subsidiaries' employees, agents
and representatives (including any investment banker, attorney or
accountant) to, immediately cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than Buyer Parent and Buyer with respect
to any of the foregoing.
4.03 Retention and Other Compensation Related Matters. Prior to
the Closing, Private Partnership shall implement an employee retention plan
containing terms and provisions set forth on Exhibit A hereto. Buyer Parent
agrees that it shall cause Private Partnership Surviving Partnership to
honor the terms of such retention plan following the Closing and that it
shall, or shall cause Private Partnership Surviving Partnership to, make
available the funds that are necessary to make the payments under such
retention plan.
4.04 Filings, Other Actions; Notification.
(a) Each of the Sellers and Buyer shall cooperate with
each other and shall cause their respective Subsidiaries to use
their respective reasonable best efforts to, and propose to the
Sponsored Investment Companies that they take or cause to be taken
all actions, and do or cause to be done all things necessary,
proper or advisable on its part under the Transaction Documents
and Applicable Law to consummate and make effective the
Transactions as soon as practicable, including preparing and
filing as promptly as practicable all documentation to effect all
necessary notices, reports and other filings and to obtain as
promptly as practicable all consents, registrations, approvals,
permits and authorizations necessary or advisable to be obtained
from any third party and any Authority in order to consummate the
Transactions. Subject to Applicable Laws relating to the exchange
of information, Buyer Parent, Buyer, Private Partnership, Public
Partnership and General Partner shall, to the extent practicable,
consult the other on and
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obtain consent with respect to all the information relating to
Buyer Parent, Buyer or the Sellers, as the case may be, and any
of their respective Subsidiaries that appear in any filing made
with, or written materials submitted to, any Authority or third
party in connection with the Transactions and the parties hereto
shall cooperate in such efforts. In exercising the foregoing
right, Buyer Parent, Buyer and the Sellers shall act reasonably
and as promptly as reasonably practicable.
(b) Buyer Parent, Buyer and each of the Sellers shall,
upon request by another Party, cooperate with and furnish to such
Party all information concerning itself, its Subsidiaries, general
partners, members, directors, officers and unitholders and such
other matters as may be reasonably necessary or advisable in
connection with any statement, filing, notice or application
required to be made by or on behalf of any of Buyer Parent, Buyer,
the Sellers, or any of their respective Subsidiaries to any
Authority in connection with the Transactions.
(c) To the extent that the rights of any Seller or any
Subsidiary thereof under any agreement, including any Advisory
Agreement, may not be assigned by operation of law or the terms of
the applicable agreement without the consent or approval of
another party thereto or terminates upon any such assignment, each
of the Sellers shall use its reasonable efforts to obtain, and to
cause its Subsidiaries, if any, to obtain, any such consent in
accordance with this Section 4.04(c) and Section 4.06. Without
limiting the generality of the foregoing, Private Partnership and
each of General Partner and Public Partnership, as general
partners of Private Partnership, as promptly as practicable shall
(i) use, and use its reasonable best efforts to cause each
Registered Investment Company to use, its reasonable best efforts
to obtain, or cause to be obtained, the approval of the Investment
Company Boards and the shareholders of such Registered Investment
Company, pursuant to the provisions of Section 15 of the
Investment Company Act applicable thereto, of a new Advisory
Agreement for such Registered Investment Company with the
applicable Subsidiary of Private Partnership serving as adviser or
subadviser to such Registered Investment Company, such agreement
containing terms (other than fee rates) that are not materially
less favorable to such Subsidiary than terms contained in the
Advisory Agreement existing on the date hereof and becoming
effective upon the Closing, (ii) use its reasonable best efforts
to cause each Registered Investment Company to prepare, file with
and cause to be cleared by the SEC and all other Authorities
having jurisdiction thereover, as promptly as practicable after
the date hereof, all proxy solicitation materials required to be
distributed to shareholders of the Registered Investment Companies
with respect to the actions recommended for shareholder approval
by the Investment Company Boards and (iii) use its reasonable best
efforts to cause each Registered Investment Company to mail such
proxy solicitation materials to such shareholders promptly after
clearance by the SEC and cause to be submitted to a meeting of
shareholders of such Registered Investment Company as soon as
practicable after such mailing the proposals described in clause
(ii) above, all such consents and such proxy
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solicitation, to be in form and substance reasonably satisfactory
to Buyer and in compliance with Section 3.03(o).
Each of (i) the proxy solicitation materials to be distributed to
the shareholders of each Registered Investment Company in
connection with the approvals described in Section 4.04 of this
Agreement and (ii) the materials provided or to be provided to the
applicable Investment Company Boards in connection with the
approvals required in connection with this Agreement have provided
or will provide all information necessary in order to make the
disclosure of information therein satisfy the requirements of all
Applicable Law (including Section 14 of the Exchange Act and
Sections 15, 20 and 36(b) of the Investment Company Act) in all
material respects (except to the extent that information supplied
by or on behalf of Buyer Parent or its Subsidiaries was
incomplete) and such materials and information (except to the
extent supplied by or on behalf of Buyer Parent or its
Subsidiaries) will be complete in all material respects and will
not contain (at the time such materials or information are
distributed, filed or provided, as the case may be) any statement
which, at the time and in the light of the circumstances under
which it is made, is false or misleading in any material respect,
and will not omit to state any fact necessary in order to make the
statements therein not false or misleading in any material respect
or (with respect to information included in proxy statements)
necessary to correct any statement or any earlier communication
with respect to the solicitation of a proxy for the same meeting
or subject matter which has become false or misleading in any
material respect.
4.05 Investment Company Matters.
(a) Buyer Parent and the Buyer acknowledge that each of
the Sellers has entered into this Agreement in reliance upon the
benefits and protections provided by Section 15(f) of the
Investment Company Act. Each of Buyer Parent and the Buyer shall
not take, and each of them shall use reasonable best efforts to
cause its Affiliates not to take, any action not contemplated by
this Agreement that would have the effect, directly and
indirectly, of causing the requirements of any of the provisions
of Section 15(f) of the Investment Company Act not to be met in
respect of this Agreement and the Transactions, and each of them
shall not fail to take, and, after the Closing, shall use
reasonable best efforts to cause each Affiliate of the Buyer
Parent to not fail to take, any action if the failure to take such
action would have the effect, directly or indirectly, of causing
the requirements of any of the provisions of Section 15(f) of the
Investment Company Act not to be met in respect of this Agreement
and the Transactions. In that regard, each of Buyer Parent and the
Buyer shall conduct its business and shall, subject to the
applicable fiduciary duties to the Sponsored Registered Investment
Companies, use its reasonable best efforts to cause each of its
Affiliates to conduct its business so as to assure that, insofar
as within the control of Buyer Parent, the Buyer or their
respective Affiliates:
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(i) for a period of three years after the
Closing, at least 75% of the members of the Investment
Company Boards of each Sponsored Registered Investment
Company are not (A) "interested persons" of the
investment adviser of such Sponsored Registered
Investment Company after the Closing, or (B) "interested
persons" of the present investment manager of such
Sponsored Registered Investment Company; and
(ii) for a period of two years after the
Closing, there shall not be imposed on any Sponsored
Registered Investment Company an "unfair burden" as a
result of the Transactions, or any terms, conditions or
understandings applicable thereto;
provided, however, that if Buyer Parent, Buyer or any of their
Affiliates shall have obtained an order from the SEC exempting it
from the provisions of Section 15(f), while still maintaining the
"safe harbor" provided by Section 15(f), then this covenant shall
be deemed to be modified to the extent necessary to permit Buyer
Parent, Buyer and their Affiliates to act in a manner consistent
with such SEC exemptive order.
(b) For a period of three years from the Closing, neither
Buyer Parent nor Buyer shall, and Buyer Parent and Buyer shall use
reasonable best efforts to cause their respective Affiliates not
to, voluntarily engage in any transaction that would constitute an
"assignment" of any Advisory Agreement with any Sponsored
Registered Investment Company currently managed by any Private
Partnership or its Subsidiaries to which Buyer Parent, the Buyer
or any such Affiliate is a party, without first obtaining a
covenant in all material respects the same as that contained in
this Section 4.05. Notwithstanding anything to the contrary
contained herein, the covenants of the Parties contained in this
Section 4.05 are intended only for the benefit of the Parties and
holders of their respective Equity Interests immediately prior to
the Closing and for no other Person.
(c) The terms used in quotations in this Section 4.05
shall have the meanings set forth in Sections 2(a)(4), 2(a)(19)
and 15(f) of the Investment Company Act.
4.06 Advisory Agreements. If consent to the assignment or deemed
assignment of an Advisory Agreement with Clients of Private Partnership or
its Subsidiaries (other than Clients that are Registered Investment
Companies) as a result of the Transactions is required by Applicable Law or
by such Clients' Advisory Agreement, as soon as reasonably practicable
following the date hereof, Private Partnership shall, and shall cause each
of its Subsidiaries to, send a notice (the "Notice") informing such Clients
of the Transactions, requesting written consent to the assignment of such
Client's Advisory Agreement and informing such Client: (a) of the intention
to complete the Transactions, which will result in a deemed assignment of
such Advisory Agreement; (b) of Private Partnership's or its Subsidiaries'
intention to continue to provide the advisory services
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pursuant to the existing Advisory Agreement with such Client after the
Closing; and (c) that the consent of such Client will be deemed to have
been granted if such client continues to accept such advisory services for
a period of at least forty-five (45) days after the sending of the Notice
without termination. Buyer agrees that consent for any Advisory Agreement
with a Client (other than Clients that are Registered Investment Companies)
to the assignment or deemed assignment resulting from the Transactions
shall be deemed given for all purposes hereunder (i) if no consent is
required under Applicable Law or the respective Advisory Agreement, (ii)
upon receipt of the written consent requested in the Notice or (iii) if
such consent is required under Applicable Law or the respective Advisory
Agreement, and if the written consent requested in any Notice is not
received within forty-five (45) days of mailing the Notice to a Client, to
the extent permissible under Applicable Law and the applicable Advisory
Agreement (provided, that such Client shall not have affirmatively stated
to any of the Sellers or any of their Affiliates that it does not so
consent or terminated its respective Advisory Agreement prior to the
Closing) (the "Negative Consent Procedure"). Buyer shall be provided a
reasonable opportunity to review all such consent materials to be used by
Private Partnership and such Subsidiaries prior to distribution. Private
Partnership and such Subsidiaries shall make available to Buyer copies of
any and all substantive correspondence between them and Clients or
representatives or counsel of such Clients relating to the consent
solicitation provided for in this Section 4.06. Prior to the Private
Partnership Effective Time, neither Buyer Parent, nor Buyer, nor any of
their respective Affiliates shall contact, in writing or otherwise, any
Client or any other Person who acts as an adviser to or "gatekeeper" for
any Client without the prior written approval of General Partner.
4.07 Taxation.
(a) From and after the Closing Date, all Tax
examinations, audits and contests relating to periods or partial
periods ending prior to or on the Closing Date relating to Private
Partnership or any of its Subsidiaries (other than the Corporate
Subsidiaries) or Public Partnership (such entities, the "Acquired
Entities"), shall be controlled by Seller Parent; provided,
however, that if any settlement of any such examination, audit or
contest would materially and adversely impact a Tax return or Tax
position of Buyer or any of its Subsidiaries with respect to a
period or partial period beginning on or after the Closing Date,
Seller Parent shall not enter into such settlement without the
consent of Buyer which shall not be unreasonably withheld.
(b) Public Partnership and Private Partnership will
prepare and file, or cause to be prepared and filed, all Tax
Returns that include the business and operations of the Acquired
Entities for any period or partial period ending prior to or on
the Closing Date, subject to prior approval by Seller Parent.
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(c) Each of the Acquired Entities (other than the
Corporate Subsidiaries and any Subsidiary of Private Partnership
that is a disregarded entity for United States federal income Tax
purposes) shall make an election, or, if an election has
previously been made, continue such election in effect, under
Section 754 of the Code and any comparable provision of any other
Tax law for the year in which the Closing occurs.
4.08 Access; Information.
(a) Each of General Partner, Public Partnership and
Private Partnership agrees that upon reasonable notice and subject
to Applicable Laws relating to the exchange of information, it
shall afford or cause its Subsidiaries to afford Buyer Parent,
Buyer and the officers, employees, counsel, financial advisors,
auditors, accountants and other authorized representatives of
Buyer Parent and Buyer (collectively, the "Buyer
Representatives"), such access throughout the period prior to the
Closing to the books, records (including, without limitation, any
Tax Returns and work papers of independent auditors), offices,
properties and personnel of such Person, its Subsidiaries and any
Sponsored Investment Company and to such other information as
Buyer may reasonably request and, during such period, it shall
promptly furnish or make available to Buyer Parent and Buyer and,
at the request of Buyer Parent or Buyer, to any Buyer
Representatives (i) a copy of each report, schedule and other
document filed by it or its Subsidiaries pursuant to the
requirements of federal or state securities laws, and (ii) all
other financial and operating data and other information
concerning the business, properties, assets and personnel of it
and its Subsidiaries as Buyer Representative may reasonably
request. Promptly following the date hereof, General Partner shall
use its reasonable best efforts to provide its calculation of the
Base Revenue Run-Rate, together with supporting details, to Buyer
Parent.
(b) The provisions of the confidentiality agreement,
dated as of May 12, 2000, among Public Partnership, Private
Partnership, Seller Parent and Buyer Parent shall survive the
execution of this Agreement and shall apply with respect to all
information made available to Buyer Representatives pursuant to
this Section 4.08.
4.09 Publicity. The Parties hereby confirm that they have
consented to the initial press releases announcing the execution of this
Agreement to be released jointly by Public Partnership, Private Partnership
and Buyer Parent and separately by Seller Parent. No Party hereto will
issue, and each Party will use reasonable best efforts to cause its
Affiliates not to issue, any additional press release or otherwise make any
additional public announcement with respect to the Transactions without the
prior consent of the other Parties, such consent not to be unreasonably
withheld or delayed, except as and to the extent that such Party or any of
its Affiliates determines in good faith that it is so obligated by
Applicable Law, in which case such Party shall consult, to the extent
practicable, with the other Parties prior to issuing such press release or
making such public announcement.
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4.10 Takeover Statutes. If any Takeover Statute is or may become
applicable to any of the Transactions, each of the Sellers and their
respective boards of directors, general partners, managing members or
managing boards, as applicable, shall grant such approvals and take such
actions as are necessary so that such transactions may be consummated as
promptly as practicable on the terms contemplated by the Transaction
Documents, and otherwise act to eliminate or minimize the effects of such
statute or regulation on such Transactions.
4.11 Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, each of the Sellers shall, and shall cause each of its
Subsidiaries, if any, to, and shall use its reasonable best efforts to
cause each of the Sponsored Investment Companies to, and each of Buyer
Parent and Buyer shall take, or cause to be taken, all actions, and shall
do, or cause to be done, all things necessary, proper or desirable, or
advisable under Applicable Laws, so as to fulfill all conditions and
obligations on its part to be performed or fulfilled under the Transaction
Documents, to permit consummation of the Transactions as promptly as
practicable and otherwise to enable consummation of the Transactions, and
shall cooperate fully with each of the other Parties to that end.
4.12 Pre-Closing Distributions. Public Partnership and Private
Partnership shall distribute prior to the Closing the excess of (i) 80% of
their respective operating cash flow with respect to the period beginning
January 1, 2000 and ending on the Closing Date over (ii) the amount of
their operating cash flow distributed between January 1, 2000 and the date
of execution of this Agreement.
4.13 Expenses. Each Party will bear all expenses incurred by it in
connection with this Agreement and the Transactions; provided, however,
that (i) Buyer shall bear 50% of the expenses incurred by Private
Partnership and its Subsidiaries in connection with the solicitation of
shareholders of Registered Investment Companies contemplated by Section
4.04(c) and (ii) Public Partnership and Buyer shall each bear 50% of the
expenses incurred by Public Partnership in connection with the solicitation
of Public Partnership Unitholders, as contemplated by Section 4.16.
4.14 Subsidiary Action. To the extent that action on the part of a
Subsidiary of a Party is necessary in order for such Party to fulfill any
of its obligations under this Agreement, then each such obligation shall be
deemed to include an undertaking on the part of such Party to cause such
Subsidiary to take such necessary action.
4.15 Unitholder Approval. Each of the Sellers shall take, in
accordance with Applicable Law and each of their and Public Partnership's
and Private Partnership's Constituent Documents, all action necessary to:
(a) convene appropriate meetings of Public Partnership
Unitholders to consider and vote upon the approval and adoption of
this Agreement, the Public Partnership Merger, and any other
matters required to be approved by Public Partnership
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Unitholders for consummation of the Public Partnership Merger
(including any adjournment or postponement thereof, the "Public
Partnership Unitholders Meeting") as promptly as practicable
after the Proxy Statement is cleared by the SEC; and
(b) obtain written consents of Private Partnership
Unitholders to approve the adoption of this Agreement, the Private
Partnership Merger, and any other matters required to be approved
by Private Partnership Unitholders for consummation of the Private
Partnership Merger as promptly as practicable after the date
hereof.
General Partner, as general partner of Public Partnership and of Private
Partnership, shall recommend (unless General Partner determines, in good
faith after consultation with outside legal counsel, that it must not make
such recommendation and/or must withdraw any prior recommendation in
connection with the Public Partnership Merger, if it is to comply with its
fiduciary duties under Applicable Law), and Public Partnership and Private
Partnership shall take all reasonable, lawful action to solicit, such
approval by Public Partnership Unitholders and by Private Partnership
Unitholders.
4.16 Proxy Statement. (a) Each of the Sellers shall cooperate with
Public Partnership to, and Public Partnership shall, prepare a proxy
statement to be filed by Public Partnership with the SEC in connection with
the Public Partnership Merger (including all other proxy solicitation
materials of Public Partnership, the "Proxy Statement"). Each of the
Parties agrees to cooperate, and to cause its Subsidiaries to cooperate,
with the other, its counsel and its accountants, in preparation of the
Proxy Statement; and, promptly after clearance by the SEC, Public
Partnership shall mail the Proxy Statement to the Public Partnership
Unitholders.
(b) Each of the Parties agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be
supplied by it for inclusion or incorporation by reference in the
Proxy Statement and any amendment or supplement thereto will, at
the date of mailing to Public Partnership Unitholders and at the
time of the Public Partnership Unitholders Meeting, contain any
statement, which, at such times and in the light of the
circumstances under which it is made, is false or misleading with
respect to any material fact, or which omits to state any material
fact necessary in order to make the statements therein not false
or misleading. Each of the Parties further agrees that if it shall
become aware prior to the Closing of any information furnished by
it that would cause any of the statements in the Proxy Statement
to be false or misleading with respect to any material fact, or to
omit to state any material fact necessary to make the statements
therein not false or misleading, to promptly inform the other
Parties and to take the necessary steps to amend or supplement the
Proxy Statement. All documents that Public Partnership is
responsible for filing with the SEC in connection with the Public
Partnership Merger will comply as to form and substance in all
material aspects with the applicable requirements of the Exchange
Act.
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(c) Buyer shall have the right to review in advance and
to approve all the information relating to Buyer and any of its
Affiliates proposed to appear in the Proxy Statement or any
amendment or supplement thereto submitted to the SEC in connection
with the Transactions contemplated by this Agreement. In
exercising the foregoing right, Buyer shall act reasonably and as
promptly as practicable.
4.17 Indemnification; Directors' and Officers' Insurance.
(a) Buyer agrees that from the Closing, and for a period
of six (6) years thereafter, Buyer shall continue the benefits of
any provision of any partnership, limited liability company or
indemnification agreement pursuant to which any Seller, its
Affiliates or any of their directors, officers, members, partners
or other controlling persons is or may be entitled to exculpation
or indemnification; and Buyer shall cause Public Partnership
Surviving Partnership and Private Partnership Surviving
Partnership to honor any such provision and to pay any amounts to
which such Seller or any of such other Persons would properly be
entitled thereunder; provided, however, that Seller Parent,
General Partner and any other Subsidiary of Seller Parent (other
than Public Partnership, Private Partnership and their
Subsidiaries) and the directors and officers of Seller Parent and
persons serving as directors or officers at the request of Seller
Parent as of the date hereof shall not be entitled to be
exculpated or indemnified pursuant to any such provision for
claims, damages or costs to the extent resulting from any fact or
circumstance that, between the date hereof and the Closing,
constituted a breach by the Sellers of any representations or
warranties contained in this Agreement.
(b) Buyer acknowledges that Public Partnership Surviving
Partnership and Private Partnership Surviving Partnership intend
to maintain directors' and officers' liability insurance policy
with a financially sound carrier with terms, conditions, limits
and deductions (or retentions) at least as favorable as carried as
of the date of this Agreement for partners, members, managing
members, directors and officers of Private Partnership and Public
Partnership and for directors and officers of General Partner for
claims arising from wrongful acts prior to the Closing and Buyer
agrees that, for a period of six (6) years following the Closing,
Buyer shall not take any affirmative action which causes the
termination or cancellation of such insurance coverage unless
Buyer shall replace such insurance coverage with comparable
insurance coverage; provided, however, that Public Partnership
Surviving Partnership and Private Partnership Surviving
Partnership, considered in the aggregate, shall in no event be
required to expend pursuant to this Section 4.17(b) more than an
amount per year equal to 150% of the current premiums paid by
Public Partnership and Private Partnership (such premiums having
been Previously Disclosed), considered in the aggregate, for such
insurance.
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4.18 Financial Obligations of Buyer Parent. CDC Finance agrees to
cause Buyer Parent and Buyer to fullfill all of its financial obligations
under this Agreement.
4.19 Further Assurances. As of and following the Closing,
consistent with the terms and conditions hereof, Buyer shall, and each of
the Sellers shall and shall cause each of their respective Subsidiaries to,
and shall use reasonable best efforts to cause its Affiliates (including
for this purpose any Sponsored Investment Company) to, promptly execute,
acknowledge and deliver such instruments, certificates and other documents
and take such other action as a Party may reasonably require in order to
carry out any of the transactions contemplated by the Transaction Documents
or for a Party to obtain the benefits contemplated by any of the
Transaction Documents. Following the Closing Date, the Parties shall
cooperate with one another to prepare and file all documents and forms and
amendments thereto as may be required by Applicable Law with respect to the
Transactions.
ARTICLE V
CONDITIONS
5.01 Conditions to Each Party's Obligation to Effect the
Transactions. The respective obligation of each Party to effect the
Transactions is subject to the satisfaction or waiver at or prior to the
Closing of each of the following conditions:
(a) Governmental and Regulatory Consents. (i) The waiting
period (and any extension thereof) applicable to the consummation
of the Transactions under the HSR Act shall have expired or been
terminated and (ii) the Commission of the European Union shall
have approved the transaction contemplated by this Agreement under
Regulation (EEC) No. 4064/89 of the Council of the European Union.
(b) Partnership Unitholder Approval. This Agreement and
the Transactions shall have been duly approved by the affirmative
vote of Public Partnership Unitholders and the affirmative vote or
written consent of Private Partnership Unitholders to the extent
required by Section 17-211 of the DE Partnership Law, other
Applicable Laws and the Constituent Documents of Public
Partnership and Private Partnership.
(c) No Injunction. No court or other Authority of
competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, law, ordinance, rule, regulation,
judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and restrains, enjoins
or otherwise prohibits consummation of the Transactions
(collectively, an "Order").
5.02 Conditions to Obligations of Buyer. The obligations of Buyer
and Buyer Parent to effect the Transactions are also subject to the
satisfaction, or waiver by Buyer at or prior to the Closing, of the
following conditions:
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(a) Representations and Warranties. The representations
and warranties of each of the Sellers set forth in Section 3.03,
shall be true and correct as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date
(except that representations and warranties that by their terms
speak as of the date of this Agreement or some other date shall be
true and correct as of such date) and Buyer shall have received a
certificate of an executive officer of General Partner to such
effect; provided, however, that for purposes of this paragraph,
such representations and warranties (other than the
representations set forth in Section 3.03(d)) shall be deemed to
be true and correct unless the failure or failures of such
representations and warranties to be so true and correct, either
individually or in the aggregate, and without giving effect to the
standard set forth in Section 3.02 or to any qualification as to
materiality, Material Adverse Effect, substantiality or other
words of qualification set forth in such representations or
warranties, will have a Material Adverse Effect on Private
Partnership, Public Partnership and their Subsidiaries, taken as a
whole, or on Private Partnership Surviving Partnership, Public
Partnership Surviving Partnership and their Subsidiaries, taken as
a whole.
(b) Performance of Obligations of the Sellers. Each of
the Sellers shall have performed in all material respects the
obligations required to be performed by it under this Agreement
and the other Transaction Documents at or prior to the Closing,
and Buyer shall have received a certificate of an executive
officer of General Partner to such effect.
(c) Compliance with Section 15(f) of the Investment
Company Act. (i) At least seventy-five percent (75%) of the
members of the Investment Company Boards of each Sponsored
Registered Investment Company which has approved a new investment
advisory contract shall not be "interested persons" (as such term
is defined in the Investment Company Act) of that Subsidiary of
Private Partnership Surviving Partnership that will act as
investment adviser to such Investment Companies following the
Closing, of Private Partnership or of any Affiliate of Private
Partnership that was the investment adviser of any such Investment
Company immediately preceding the Closing; and (ii) the
requirements of Section 15(f)(1)(B) of the Investment Company Act
shall have been complied with in that no "unfair burden" shall
have been imposed on any of the Sponsored Registered Investment
Companies as a result of this Agreement, the transactions
contemplated hereunder, new Investment Company Advisory Agreements
or otherwise.
(d) Continued Employment. At least 50% of the group
Previously Disclosed shall have entered into an employment
agreement, substantially in the form set forth on Schedule
5.02(d), with Buyer that is in full force and effect; and Buyer
shall not be aware of any basis that would reasonably be expected
to cause employment agreements with fewer than 50% of such group
to be in full force and effect.
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(e) Employment Agreements. Other than due to the death or
disability of the employee party thereto, the employment
agreements attached as Schedule 5.02(e), between Buyer and the
individuals Previously Disclosed relating to the terms of
employment of such individuals by Buyer shall be in full force and
effect and Buyer shall not be aware of any basis that would
reasonably be expected to cause any of such agreements to no
longer be in full force and effect.
(f) Revenue Run-Rate. The Closing Revenue Run-Rate shall
not be less than 80% of the Base Revenue Run-Rate.
(g) Third Party Consents. The Sellers shall have received
all consents or approvals as may be necessary to be obtained from
any third party in connection with the consummation of the
Transactions (other than consents in respect of Advisory
Agreements), unless the failure to obtain such consents or
approvals, individually or in the aggregate, would not have a
Material Adverse Effect on Public Partnership, Private Partnership
and their Subsidiaries taken as a whole.
5.03 Conditions to Obligations of the Sellers. The obligation of
the Sellers to effect the Transactions is also subject to the satisfaction,
or waiver by General Partner at or prior to the Closing, of the following
conditions:
(a) Representations and Warranties. The representations
and warranties of Buyer and Buyer Parent set forth in Section
3.04, subject to the standard set forth in Section 3.02, shall be
true and correct as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except
that representations and warranties that by their terms speak as
of the date of this Agreement or some other date shall be true and
correct as of such date) and General Partner shall have received a
certificate of an executive officer of Buyer to such effect.
(b) Performance of Obligations of Buyer. Each of Buyer,
Buyer Parent, Public Partnership Merger Sub and Private
Partnership Merger Sub shall have performed in all material
respects the obligations required to be performed by it under this
Agreement and the Transaction Documents at or prior to the
Closing, and an officer of the General Partner shall have received
a certificate of an executive officer of Buyer to such effect.
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ARTICLE VI
TERMINATION
6.01 Termination by Mutual Consent. This Agreement may be
terminated and the Transactions may be abandoned at any time prior to
Closing by mutual written consent of Buyer and General Partner.
6.02 Termination by Either Buyer or the Sellers. This Agreement
may be terminated and the Transactions may be abandoned at any time prior
to the Closing by (i) Buyer or by (ii) General Partner if (a) the
Transactions shall not have been consummated by December 31, 2000 (the
"Termination Date"), whether such date is before or after the date of
approval by the Public Partnership Unitholders or the Private Partnership
Unitholders, (b) any Order permanently restraining, enjoining or otherwise
prohibiting consummation of the Transaction shall become final and
non-appealable, or (c) this Agreement shall fail to receive the requisite
vote for adoption by the Public Partnership Unitholders at the Public
Partnership Unitholders Meeting or any adjournment or postponement thereof
or shall fail to receive the requisite written consents for adoption by the
Private Partnership Unitholders in accordance with the materials provided
by General Partner to the Private Partnership Unitholders for the purposes
of obtaining such written consent (or, if a meeting of the Private
Partnership Unitholders is held to obtain such consent, if this Agreement
shall fail to receive the requisite vote for adoption by the Private
Partnership Unitholders at such meeting of any adjournment or postponement
thereof); provided that the right to terminate this Agreement pursuant to
clause (a) above shall not be available to any Party that has breached in
any material respect its obligations under this Agreement in any manner
that shall have proximately and substantially contributed to the occurrence
of the failure of the Transactions to be consummated.
6.03 Termination by Buyer. This Agreement may be terminated by
written notice provided by Buyer and the Transactions may be abandoned at
any time prior to the Closing, whether before or after the approval by the
Public Partnership Unitholders or Private Partnership Unitholders referred
to in Section 5.01(b), if (i) General Partner shall have (A) failed to
recommend or shall have withdrawn or adversely modified its approval or
recommendation of this Agreement, (B) failed to reconfirm its
recommendation of this Agreement or the Public Partnership Merger within
five business days after a written request by Buyer to do so, (C)
recommended to Public Partnership Unitholders or Private Partnership
Unitholders an Acquisition Proposal or (D) a tender offer or exchange offer
for 15% or more of the outstanding Public Partnership Units is commenced,
and the General Partnership fails to recommend against acceptance of such
tender offer or exchange offer by the Public Partnership Unitholders
(including by taking no position with respect to the acceptance of such
tender offer or exchange offer by the Public Partnership Unitholders)
within the time period required pursuant to Rule 14e-2 of the Exchange Act,
or (ii) there has been a breach by any Seller of any representation,
warranty, covenant or agreement contained in this Agreement that (x) would
entitle Buyer to assert that the conditions to its obligations hereunder
set forth in Section 5.02(a) or (b) have not
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been satisfied and (y) is not curable or, if curable, is not cured within
30 days after written notice of such breach is given by Buyer to the Party
committing such breach.
6.04 Termination by General Partner. This Agreement may be
terminated by the written consent of General Partner and the Transactions
may be abandoned:
(a) at any time prior to the approval of the Private
Partnership Unitholders if (i) after receiving a bona fide
Superior Proposal, the board of directors of General Partner
determines, in good faith and after consulting with outside legal
counsel, that taking such action is required to comply with its
fiduciary duties under Applicable Law, (ii) the board of directors
of General Partner notifies Buyer Parent and Buyer in writing that
it intends to enter into such an agreement, attaching the most
current version of such agreement to such notice, (iii) Buyer does
not make, within five business days of receipt of the General
Partner's written notification of its intention, an offer that the
board of directors of General Partner determines, in good faith
after consultation with its advisors, is at least as favorable,
from a financial point of view, to the members, partners or
unitholders, as the case may be, as the Superior Proposal and (iv)
simultaneously with such termination such Seller pays or causes
Private Partnership to pay to Buyer in immediately available funds
the Termination Fee described in Section 6.06; or
(b) if at any time prior to the Closing there has been a
breach by Buyer of any covenant, representation, warranty or
agreement contained in this Agreement that (x) would entitle
General Partner to assert that the conditions to its obligations
hereunder set forth in Section 5.03(a) or (b) have not been
satisfied and (y) is not curable or, if curable, is not cured
within thirty (30) days after written notice of such breach is
given by the General Partner.
6.05 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Transactions
pursuant to this Article VI, this Agreement (other than as set forth in
Sections 6.06 and 7.01) shall become void and of no effect with no
liability on the part of any Party (or of any of its directors, officers,
controlling persons, employees, agents, legal and financial advisors or
other representatives); provided, however, except as otherwise provided
herein, no such termination shall relieve any Party of any liability or
damages resulting from any wilful breach of this Agreement.
6.06 Termination Fee.
(a) Upon the occurrence of a Fee Triggering Event,
Private Partnership agrees to pay Buyer, and Buyer shall be
entitled to payment of, a fee of $66.5 million (the "Termination
Fee"). Except as provided in Section 6.04(a). Such payment shall
be made to Buyer in immediately available funds within three
business days after the occurrence of the Fee Triggering Event.
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(b) The term "Fee Triggering Event" shall mean any of the
following events or transactions occurring on or after the date
hereof:
(i) this Agreement is terminated by the General
Partner pursuant to Section 6.04(a); or
(ii) this Agreement is terminated by Buyer
pursuant to Section 6.02(c) or 6.03(i) and, within 12
months after such termination, a Seller either (A) enters
into a binding agreement with any Person providing for a
transaction implementing an Acquisition Proposal or (B)
consummates an Acquisition Proposal.
(c) General Partner shall notify Buyer promptly in
writing of the occurrence of any Fee Triggering Event.
(d) The payment by the Public Partnership or Private
Partnership of the Termination Fee required to be made by this
Section 6.06 shall constitute liquidated damages for any breach by
any of the Sellers (other than a willful breach by any of the
Sellers) of this Agreement although a breach is not necessary for
any payment to be required to be made under this Section 6.06.
(e) Each of the Sellers acknowledges that the agreements
contained in this Section 6.06 are an integral part of the
Transactions and that, without these agreements, neither Buyer nor
any of its Subsidiaries would have entered into this Agreement or
any of the other Transaction Documents; accordingly, if Private
Partnership fails to promptly pay the amount due pursuant to this
Section 6.06, and, in order to obtain such payment, Buyer or any
of its Subsidiaries commences a suit which results in a judgment
against the Sellers for the Termination Fee, the Private
Partnership shall pay to Buyer its reasonable costs and expenses
(including reasonable attorneys' fees) in connection with such
suit, together with interest on the amount of the Termination Fee
at the prime rate of Citibank N.A. in effect on the date such
payment was required to be made.
ARTICLE VII
MISCELLANEOUS AND GENERAL
7.01 Survival. Each of the covenants of the Sellers and Buyer set
forth in Sections 4.03, 4.05, 4.07, 4.08(b), 4.13, 4.14 (but only with
respect to actions to be taken after Closing), 4.17 and 4.18 (but only with
respect to actions to be taken after Closing) shall survive the
consummation of the Transactions until the satisfaction of such covenants
in accordance with each of their terms. Each of the representations and
warranties of the Sellers and Buyer set forth in Sections 3.03 and 3.04,
respectively, shall survive only until the Closing. Sections 3.03(n),
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3.04(e), 4.09, 4.13, 6.05, 6.06, 7.01, 7.03, 7.04, 7.05, 7.06, 7.08 and
7.10 shall survive the termination of this Agreement. All other covenants
and agreements in this Agreement shall not survive the termination of this
Agreement.
7.02 Waiver; Amendment. Prior to the Closing, any provision of
this Agreement may be (i) waived by the Party benefitted by the provision,
(ii) amended or modified at any time, by an agreement in writing among the
Parties executed in the same manner as this Agreement or (iii) amended or
modified by an agreement in writing among Buyer Parent, Buyer, General
Partner, Public Partnership and Private Partnership and executed in the
same manner as this Agreement, provided, that no such amendment or
modification pursuant to clause (iii) shall (A) in the case of any such
amendment or modification proposed after the Public Partnership Unitholders
shall have approved this Agreement and the Public Partnership Merger at the
Public Partnership Unitholders Meeting, alter or change the amount or kind
of consideration to be received by Public Partnership Unitholders and
holders of Private Partnership Units pursuant to this Agreement without
such Party's consent, (B) reasonably be expected to materially impede or
delay the consummation of any of the Transactions or (C) constitute a
waiver of any provision of this Agreement other than in accordance with
clause (i) of this Section 7.02.
7.03 Governing Law and Venue; Waiver of Jury Trial.
(a) This Agreement shall be deemed to be made in and in
all respects shall be interpreted, construed and governed by and
in accordance with the law of the State of New York applicable to
contracts made and to be performed entirely within such state
(except to the extent mandatory provisions of U.S. federal law or
the DE Partnership Law are applicable).
(b) Each Party (i) consents to submit itself to the
personal jurisdiction of any federal court or New York State court
located in the State and City of New York in the event any dispute
arises out of or relates to the Transaction Documents or any of
the Transactions, (ii) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for
leave from any such court, including, without limitation, a motion
to dismiss on the grounds of forum non conveniens and (iii) agrees
that it will not bring any action arising out of or relating to
the Transaction Documents or any of the Transactions in any court
other than a federal court or New York State court sitting in the
State and City of New York.
(c) Each Party acknowledges and agrees that any
controversy which may arise under the Transaction Documents or the
Transaction is likely to involve complicated and difficult issues,
and therefore each such Party hereby irrevocably and
unconditionally waives any right such Party may have to a trial by
jury in respect of any litigation directly or indirectly arising
out of or relating to the Transaction Documents or the
Transactions. Each Party certifies and acknowledges that (i) no
representative, agent or attorney of any other Party has
represented, expressly or otherwise, that such other Party would
not, in
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the event of litigation, seek to enforce the foregoing waiver,
(ii) each Party understands and has considered the implications
of this waiver, (iii) each Party makes this waiver voluntarily,
and (iv) each Party has been induced to enter into the
Transaction Documents to which it is a Party by, among other
things, the mutual waivers and certifications in this Section
7.03.
7.04 Waiver of Sovereign Immunity. To the extent that Buyer
Parent, Buyer, Public Partnership Surviving Partnership or Private
Partnership Surviving Partnership has any sovereign immunity under the laws
of France or any other country or in accordance with any international
treaty to which the French Republic is a signatory or from which France is
a non-signatory beneficiary, each of Buyer Parent, Buyer, Public
Partnership Surviving Partnership or Private Partnership Surviving
Partnership hereby waives the defense of sovereign immunity for all
purposes, including, without limitation, defenses with respect to the
commencement of litigation, court proceedings relating thereto, any pre-or
post-award attachment, any pre-or post judgment attachment, or execution
of any award or judgment.
7.05 Notices. Any notice, request, instruction or other document
to be given hereunder by any Party to the others shall be in writing and
delivered personally or sent by registered or certified mail, postage
prepaid, by nationally recognized overnight courier, or by facsimile:
if to CDC Finance:
CDC Finance
56 Rue de Lille
Paris 75007 FRANCE
Attention: Isabelle Bouillot
Facsimile: 33-1-40-49-7439
Telephone: 33-1-40-49-5450
with a copy to:
Adam D. Chinn, Esq.
Wachtell, Lipton, Rosen and Katz
51 W. 52nd Street
New York, New York 10019
Facsimile: (212) 403-2000
Telephone: (212) 403-1000
if to Buyer, Buyer Parent, Public Partnership
Merger Sub or Private Partnership Merger Sub:
CDC Asset Management
Immeuble Atlantique Montparnasse
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7 Place des Cinq Martyrs du Lycee Buffon
BP 541, 75725 Paris Cedex 15 FRANCE
Attention: Louise Laidi
Facsimile: 33-1-42-79-5320
Telephone: 33-1-42-79-5617
with a copy to:
Adam D. Chinn, Esq.
Wachtell, Lipton, Rosen and Katz
51 W. 52nd Street
New York, New York 10019
Facsimile: (212) 403-2000
Telephone: (212) 403-1000
if to Private Partnership or Public Partnership:
Nvest, L.P.
399 Boylston Street
Boston, Massachusetts 02116
Attention: Jeffrey D. Plunkett
Facsimile: (617) 578-1082
Telephone: (617) 578-1925
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<PAGE>
with a copy to:
Ralph Arditi, Esq.
Skadden, Arps, Slate, Meagher
& Flom LLP
Four Times Square
New York, New York 10036
Facsimile: (212) 735-2000
Telephone: (212) 735-3000
if to General Partner prior to Closing:
Nvest Corporation
399 Boylston Street
Boston, Massachusetts 02116
Attention: Jeffrey D. Plunkett
Facsimile: (617) 578-1082
Telephone: (617) 578-1925
with a copy to:
Ralph Arditi, Esq.
Skadden, Arps, Slate, Meagher
& Flom LLP
Four Times Square
New York, New York 10036
Facsimile: (212) 735-2000
Telephone: (212) 735-3000
if to General Partner after the Closing:
c/o Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Attention: Gary Beller
Facsimile: (212) 679-4523
Telephone: (212) 578-5899
with a copy to:
Ralph Arditi, Esq.
Skadden, Arps, Slate, Meagher
& Flom LLP
Four Times Square
New York, New York 10036
Facsimile: (212) 735-2000
Telephone: (212) 735-3000
or to such other persons or addresses as may be designated in writing by
the party to receive such notice as provided above.
7.06 Entire Understanding; Third Party Beneficiaries. This
Agreement and each of the other Transaction Documents represent the entire
understanding of the Parties with reference to the Transactions and
supersede any and all other oral or written agreements heretofore made.
Nothing in this Agreement, expressed or implied, is intended to confer upon
any person, other than the Parties or their respective successors, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. Seller Parent shall be a third-party beneficiary with respect to
Sections 4.07 and 4.09 of this Agreement.
7.07 Obligations of Buyer. Whenever this Agreement requires a
Subsidiary of Buyer Parent to take any action, such requirement shall be
deemed to include an undertaking on the part of Buyer Parent to cause such
Subsidiary to take such action.
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7.08 Transfer Taxes. All transfer (including real estate
transfer), transfer gains, documentary, sales, use, stamp, registration and
other such Taxes (including penalties and interest) incurred in connection
with the Transactions, other than such Taxes that are the primary
obligation of the partners of Public Partnership or Private Partnership
under Applicable Law, shall be paid by Buyer when due.
7.09 Interpretation. The table of contents and headings herein are
for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof. Where a reference in this Agreement is made to a Section or
Exhibit, such reference shall be to a Section of or Exhibit to this
Agreement unless otherwise indicated.
7.10 Assignment. This Agreement shall not be assignable by
operation of law or otherwise, except with the consent of all of the
Parties.
7.11 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
7.12 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition
to any other remedy at law or equity.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date set forth above.
CDC FINANCE
By:
---------------------------------------
Name: Isabelle Bouillot
Title: Chief Executive Officer
CDC ASSET MANAGEMENT
By:
---------------------------------------
Name: Daniel Roy
Title: President and Directoire
CDCAM NORTH AMERICA CORPORATION
By:
---------------------------------------
Name: Christian Fersing
Title: Chief Executive Officer
CDCAM PARTNERSHIP, L.P.
By: CDCAM North America, LLC, its general
partner
By:
-------------------------------------
Name: Mireille Chetioui
Title: Vice President
CDCAM PARTNERSHIP II, L.P.
By: CDCAM North America, LLC, its general
partner
By:
------------------------------------
Name: Louise Laidi
Title: Vice President
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NVEST CORPORATION
By:
----------------------------------------
Name: Peter S. Voss
Title: Chairman & Chief Executive Officer
NVEST, L.P.
By: Nvest Corporation, its general partner
By:
-----------------------------------
Name: Peter S. Voss
Title: Chairman & Chief Executive
Officer
NVEST COMPANIES, L.P.
By: Nvest Corporation, its managing general
partner
By:
----------------------------------
Name: Peter S. Voss
Title: Chairman & Chief Executive
Officer
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<PAGE>
APPENDIX B
OPINION OF CREDIT SUISSE FIRST BOSTON CORPORATION
[Credit Suisse First Boston Corporation Letterhead]
Board of Directors
Nvest Corporation
as General Partner of Nvest, L.P.
as Managing General Partner of Nvest Companies, L.P.
399 Boylston Street
Boston, Massachusetts 02116
June 15, 2000
Dear Sirs and Mesdames:
You have asked us to advise you with respect to the fairness to the
unitholders of Nvest Companies, L.P. (the "Company") and Nvest L.P.
("Nvest" and together with the Company, the "Companies") from a financial
point of view of the consideration to be received by such unitholders
pursuant to the terms of the Agreement and Plan of Merger, dated as of June
16, 2000 (the "Merger Agreement"), by and among CDC Finance, CDC Asset
Management, CDCAM North America Corporation (the "Acquiror"), CDCAM
Partnership, L.P. (the "Public Partnership Merger Sub"), CDCAM Partnership
II, L.P. (the "Private Partnership Merger Sub"), Nvest Corporation, Nvest
and the Company. The Merger Agreement provides for the mergers (the
"Mergers") of the Public Partnership Merger Sub with and into Nvest and the
Private Partnership Merger Sub with and into the Company, pursuant to which
Nvest and the Company will each become a wholly owned subsidiary of the
Acquiror, each outstanding unit of partnership interest of the Company will
be converted into the right to receive $40 in cash, as may be adjusted
pursuant to the terms of the Merger Agreement, and each outstanding unit of
partnership interest of Nvest will be converted into the right to receive
$40 in cash, as may be adjusted pursuant to the terms of the Merger
Agreement.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Companies, as well as
the Merger Agreement. We have also reviewed certain other information,
including financial forecasts, provided to us by the Companies and have met
with management of the Company and Nvest to discuss the business and
prospects of the Company and Nvest.
We have also considered certain financial and stock market data of the
Company and Nvest, and we have compared those data with similar data for
other publicly held companies in businesses similar to the Companies and we
have considered the financial terms of certain other business combinations
and other transactions which have recently been effected. We also
considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant.
B-1
<PAGE>
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have
relied on its being complete and accurate in all material respects. With
respect to the financial forecasts, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available
estimates and judgments of the Companies' management as to the future
financial performance of the Company and Nvest. In addition, we have not
been requested to make, and have not made, an independent evaluation or
appraisal of the assets or liabilities (contingent or otherwise) of the
Company or Nvest, nor have we been furnished with any such evaluations or
appraisals. Our opinion is necessarily based upon financial, economic,
market and other conditions as they exist and can be evaluated on the date
hereof. We were not requested to, and did not, solicit third party
indications of interest in acquiring all or any part of the Company or
Nvest.
We have acted as financial advisor to the Company and Nvest in connection
with the Mergers and will receive a fee for our services, a significant
portion of which is contingent upon the consummation of the Mergers.
Nvest Corporation, the general partner of Nvest, L.P. and the managing
general partner of Nvest Companies, L.P., is an indirect subsidiary of
Metropolitan Life Insurance Company ("Metropolitan Life"), in turn a
subsidiary of MetLife, Inc. Metropolitan Life owns approximately 1% of the
outstanding common stock of our parent, Credit Suisse Group. One of its
officers and directors is a director of Credit Suisse Group. An officer of
Metropolitan Life is a member of the Investment Committee of Credit Suisse
First Boston International Equity Partners, L.P. Credit Suisse Group owns
approximately 4% of the outstanding common stock of MetLife, Inc. We from
time to time provide investment banking services and engage in transactions
with MetLife, Inc. and its subsidiaries and receive customary fees for such
services. During the past year, among other transactions, we acted as
financial advisor to Metropolitan Life on a number of M&A assignments and
as a financial advisor, managing underwriter and joint book-runner in the
demutualization of Metropolitan Life and the related initial public
offering of MetLife, Inc.
In the ordinary course of our business, we and our affiliates may actively
trade the debt and equity securities of Nvest, MetLife, Inc., the Acquiror
and its affiliates for our and such affiliates' own accounts and for the
accounts of customers and, accordingly, may at any time hold a long or
short position in such securities.
It is understood that this letter is for the information of the Board of
Directors of Nvest Corporation in connection with its consideration of the
Mergers and does not constitute a recommendation to any unitholder of the
Company or of Nvest as to how such unitholder should vote on the proposed
Mergers.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration to be received by the unitholders of the
Company and of Nvest in the Mergers is fair to such unitholders from a
financial point of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
By: ____________________________
B-2
<PAGE>
PROXY
NVEST, L.P.
399 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF NVEST CORPORATION, THE GENERAL PARTNER OF NVEST, L.P.
FOR THE SPECIAL MEETING OF UNITHOLDERS
ON SEPTEMBER 9, 2000
The undersigned unitholder of Nvest, L.P. hereby appoints Peter S.
Voss and Jeffrey D. Plunkett, or either of them, with full power of
substitution, the proxy of the undersigned, to vote all units of Nvest,
L.P. that the undersigned is entitled, in any capacity, to vote at the
Special Meeting of Unitholders to be held on , 2000 and any and all
adjournments or postponements thereof (the "Special Meeting"), with all
powers the undersigned would possess if personally present, as follows:
1. To approve the acquisition of Nvest, L.P. by CDC Asset Management
pursuant to the Agreement and Plan of Merger, dated as of June 16, 2000
(the "Merger Agreement"), between Nvest Corporation, Nvest, L.P., Nvest
Companies, L.P., CDC Finance, CDC Asset Management, CDCAM North America
Corporation, CDCAM Partnership, L.P. and CDCAM Partnership II, L.P. through
the merger of CDCAM Partnership, L.P. with and into Nvest, L.P., with
Nvest, L.P. surviving (the "Nvest, L.P. Merger").
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To instruct Nvest Corporation to vote Nvest, L.P.'s interest in Nvest
Companies, L.P. in favor of the merger of CDCAM Partnership II, L.P. with
and into Nvest Companies, L.P. pursuant to the Merger Agreement (the "Nvest
Companies, L.P. Merger").
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(FACE OF PROXY CARD)
------------------
This proxy, if properly executed and returned, will be voted in
accordance with the instructions appearing on the proxy. IN THE ABSENCE OF
SPECIFIC INSTRUCTIONS, THIS PROXY WILL BE VOTED FOR APPROVAL OF THE NVEST,
L.P. MERGER AND VOTED TO INSTRUCT NVEST CORPORATION TO VOTE NVEST, L.P.'S
INTEREST IN NVEST COMPANIES, L.P. FOR APPROVAL OF THE NVEST COMPANIES, L.P.
MERGER.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL
MEETING AND THE PROXY STATEMENT DATED _________, 2000, RELATING TO THE
SPECIAL MEETING.
PLEASE SIGN, DATE AND MAIL THIS PROXY PROMPTLY IN THE RETURN ENVELOPE
whether or not you expect to attend the Special Meeting. You may
nevertheless vote in person if you do attend.
Date
--------------------
------------------------
Signature(s)
Note: Please sign this proxy exactly as name appears hereon. If shares are
held as joint tenants, both joint tenants should sign. Attorneys-in-fact,
executors, administrators, trustees, guardians, corporate officers or
others signing in a representative capacity should indicate the capacity in
which they are signing.
(REVERSE OF PROXY CARD)
