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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 18, 2000
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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
------------------------
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<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-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)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/ / 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) 110,000 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.
/X/ 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:
</TABLE>
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[LOGO]
NVEST, L.P.
399 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
SPECIAL MEETING OF UNITHOLDERS
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
August 17, 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.
<PAGE>
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 1-888-414-5566.
BY ORDER OF THE GENERAL PARTNER
[LOGO]
Peter S. Voss
CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
NVEST CORPORATION
This proxy statement is dated August 17, 2000 and was first mailed to
unitholders on or about August 18, 2000.
<PAGE>
NVEST, L.P.
399 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
------------------------
NOTICE OF SPECIAL MEETING OF UNITHOLDERS
TO BE HELD ON SEPTEMBER 19, 2000
------------------------
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
[LOGO]
Jeffrey D. Plunkett
EXECUTIVE VICE PRESIDENT, GENERAL
COUNSEL
AND SECRETARY OF NVEST CORPORATION
Dated: August 17, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
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QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
SUMMARY..................................................... 3
The Special Meeting....................................... 3
Companies................................................. 3
The Merger Agreement and the Mergers...................... 4
Our General Partner's Recommendation...................... 5
Material United States Federal Income Tax Consequences.... 6
Opinion of Our Financial Advisor.......................... 6
Interests of Certain Persons in the Transaction........... 6
SPECIAL MEETING OF UNITHOLDERS.............................. 7
Purpose................................................... 7
Date, Time and Place...................................... 7
Recommendation of Our General Partner..................... 7
Record Date; Quorum; Units Outstanding Entitled to Vote... 7
Voting Rights............................................. 7
Solicitation of Proxies; Expenses......................... 8
Voting of Proxies......................................... 8
Revocability of Proxies................................... 8
Support Agreements........................................ 8
Other Matters............................................. 9
PAYMENT OF CASH MERGER CONSIDERATION........................ 9
THE TRANSACTION............................................. 9
Overview.................................................. 9
Parties Involved in the Transactions...................... 10
Calculation of the Unit Price............................. 12
Treatment of Employee Benefit Awards...................... 12
No Appraisal Rights....................................... 13
SPECIAL FACTORS............................................. 13
Recommendation............................................ 13
Reasons for the Merger.................................... 13
Background of the Transaction............................. 14
Opinion of Our Financial Advisor.......................... 16
Interests of Certain Persons in the Transaction........... 21
REGULATORY APPROVALS........................................ 24
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES...... 24
Conversion of Partnership Units into Cash................. 25
Backup Withholding........................................ 25
THE MERGER AGREEMENT........................................ 26
The Mergers............................................... 26
Representations and Warranties............................ 27
Covenants................................................. 28
Conditions to Obligations to Effect the Transactions...... 33
Termination of the Merger Agreement....................... 34
Termination Fee........................................... 35
Amendment and Waiver...................................... 35
</TABLE>
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DIRECTORS AND MANAGEMENT.................................... 36
PRICE RANGE OF UNITS AND DISTRIBUTIONS...................... 36
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF............. 37
Security Ownership of Certain Beneficial Owners and
Management.............................................. 37
Principal Holders of Nvest Companies, L.P. Limited Partner
Units................................................... 38
Beneficial Owners Entitled to Vote........................ 41
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS................................................ 43
WHERE YOU CAN FIND MORE INFORMATION......................... 43
APPENDIX A: AGREEMENT AND PLAN OF MERGER.................... A-1
APPENDIX B: OPINION OF CREDIT SUISSE FIRST BOSTON
CORPORATION............................................... B-1
</TABLE>
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<PAGE>
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 $40.00 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 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:
- await the expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976; and
- obtain consents in accordance with the merger agreement from investment
management clients.
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<PAGE>
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 1-888-414-5566.
2
<PAGE>
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 43 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 7)
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 7)
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 7)
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
6,273,889 Partnership units outstanding and entitled to vote at the special
meeting.
VOTE REQUIRED (PAGE 7)
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 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 the record date, approximately 7% by its general partner, Nvest Corporation,
and affiliates of its general partner, and approximately 93% by its
3
<PAGE>
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 the record
date, the Partnership held 6,731,789 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 (PAGES 9-10)
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 12)
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 (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--
Calculation of the Unit Price" for a more detailed discussion of the proposed
transactions.
CONDITIONS TO THE MERGERS (PAGES 33-34)
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:
- the expiration or termination of the waiting period under the Hart-Scott-
Rodino Act;
- approval by the Partnership unitholders of the Partnership merger; and
- 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
4
<PAGE>
to certain additional conditions, including the following:
- 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
- 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
(PAGES 34-35)
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:
- by our general partner or CDC Asset Management if the transactions
contemplated by the merger agreement have not been consummated by
December 31, 2000;
- 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.
fail to approve the merger of that partnership;
- by our general partner or CDC Asset Management if any order permanently
restraining, enjoining or otherwise prohibiting the merger becomes final
and non-appealable;
- by CDC Asset Management, if our general partner fails to recommend,
withdraws or adversely modifies its approval or recommendation of the
merger agreement; or
- 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 35)
Nvest Companies, L.P. will be required to pay CDC Asset Management a
termination fee of $66.5 million if either:
- the merger agreement is terminated by our general partner in connection
with entering into an agreement involving a competing acquisition
proposal; or
- 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 13)
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
5
<PAGE>
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 (pages 24-25)
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 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 (pages 16-21)
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 (pages 21-24)
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 18, 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 the record date, there were
6,731,789 Partnership units issued and outstanding, and there were 6,273,889
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 partner and its affiliates
owned 457,900 units, representing approximately 7% 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.
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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:
- delivering to us a written notice of revocation;
- delivering to us a duly executed proxy bearing a later date with voting
instructions; or
- attending the special meeting and voting in person.
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 and approximately 46% of the units entitled to vote on the
merger of Nvest Companies, L.P.
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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 BELOW ON PAGE 9 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.
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
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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 the
Partnership, 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 the record date, Nvest Companies, L.P. had outstanding 44,823,168
units in the aggregate, including 38,091,279 limited partner units, 100 general
partner units held by Nvest Corporation and 6,731,789 general partner units held
by the Partnership.
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
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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 des 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.
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 listed 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 approximately 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.
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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:
<TABLE>
<CAPTION>
REVENUE
RUN-RATE UNIT PRICE % REDUCTION
------------------------ ------------------------ ------------------------
<S> <C> <C>
90% or more $40.00 0%
85% 38.00 5%
80% or less 34.00 15%
</TABLE>
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 July 31, 2000, and assuming a unit price of $40.00, it is expected
that an aggregate of approximately $111 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."
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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.
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:
- the fact that the merger consideration on a per unit basis represented a
significant premium over recently prevailing market prices for our units;
- 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;
- 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;
- 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;
- structural and tax impediments to certain alternative transactions due to
our organization as a partnership;
- the terms of the mergers and the merger agreement as negotiated,
including:
(1) the $40.00 per unit cash merger consideration, subject to a possible
downward adjustment (but not below $34.00);
(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;
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(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.
- the likelihood of the Partnership merger being approved by requisite
regulatory authorities; and
- 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 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.
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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 meetings 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 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
"Special Factors--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
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<PAGE>
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 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:
- reviewed drafts of the merger agreement;
- held discussions with certain of our senior officers concerning the
business, operations, financial condition and prospects of our company;
- 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;
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<PAGE>
- 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;
- 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
- 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
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.
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<PAGE>
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
- Franklin Resources
- T. Rowe Price
- Waddell & Reed
- Eaton Vance
- Gabelli Asset Management
- Federated Investors
- Liberty Financial
- John Nuveen
- AMVESCAP
- Neuberger Berman
- Black Rock
INSTITUTIONAL MANAGERS
- United Asset Management
MASTER LIMITED PARTNERSHIPS
- 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 to:
- Assets under management ("AUM") for fiscal year 1999;
- Revenue for fiscal year 1999; and
- Earnings before income tax, depreciation and amortization ("EBITDA") for
fiscal year 1999.
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Credit Suisse First Boston Corporation's analysis resulted in the following
range of multiples:
<TABLE>
<CAPTION>
RELEVANT IMPLIED EQUITY
MULTIPLE VALUE RANGE
RANGE (PER UNIT)
------------------- ---------------------
<S> <C> <C> <C> <C>
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
</TABLE>
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 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 Public Companies Analysis. This analysis
resulted in the following equity value reference ranges:
<TABLE>
<S> <C> <C> <C> <C>
Indicated Value with Control Premium of:.... 20% $22.80-$28.80
30% $24.70-$31.20
40% $26.60-$33.60
</TABLE>
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:
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS) TRANSACTION VALUE PRICE TO:
--------------------- ------------------ --------------------
<S> <C> <C> <C> <C>
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
</TABLE>
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Credit Suisse First Boston Corporation's analysis resulted in the following
comparable acquisitions summary:
<TABLE>
<CAPTION>
IMPLIED EQUITY
RELEVANT VALUE RANGE
MULTIPLE RANGE (PER UNIT)
--------------------- ---------------------
<S> <C> <C> <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.
<TABLE>
<CAPTION>
TERMINAL VALUE AS A MULTIPLE OF
2005 EBITDA
------------------------------------
9.0X 10.0X 11.0X
-------- -------- --------
<S> <C> <C> <C> <C>
11% $42.68 $46.28 $49.97
Discount Rate............................. 13% 38.94 42.20 45.46
15% 35.58 38.54 41.51
</TABLE>
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 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
20
<PAGE>
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 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 &
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<PAGE>
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).
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).
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<PAGE>
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
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 $26.3 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 1,418,750
units, in the aggregate. Such units will be cashed out in the aggregate amount
of approximately $23.5 million, assuming a unit price of $40.00.
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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:
- 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
- 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).
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, expect to make the
required filings under the Hart-Scott-Rodino Act by the end of August, 2000, and
therefore expect the waiting period to expire on or before September 30, 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
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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 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.
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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.
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
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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:
- their organization and the organization of their subsidiaries and their
respective standing and authority to carry on their businesses;
- 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;
- Nvest Companies, L.P.'s ownership interest in its subsidiaries and
controlled affiliates;
- the authorization, execution, delivery and enforceability of the merger
agreement and other documents relating to the merger agreement;
- 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;
- regulatory filings and approvals;
- the absence of certain changes or events;
- litigation;
- compliance with applicable laws and permits;
- tax matters;
- employee benefit plans;
- brokers and finders;
- investment advisory activities;
- 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;
- material contracts;
- insurance;
- technology and intellectual property;
- environmental matters;
- an opinion of Credit Suisse First Boston Corporation delivered to the
board of directors of Nvest Corporation, our general partner; and
- the amount of annualized advisory fees of Nvest Companies, L.P. and its
subsidiaries as of April 30, 2000.
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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:
- organization, standing and authority to carry on its business as currently
conducted;
- authorization, execution, delivery and enforceability of the merger
agreement and other documents relating to the merger agreement;
- required regulatory filings and approvals;
- certain matters related to the Investment Company Act of 1940;
- brokers and finders; and
- 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:
- 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;
- admit any new partner or member other than in the ordinary course of its
business;
- 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;
- 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.;
- 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;
- 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
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investments committed to as of the date of the merger agreement or made in
the ordinary course of business are not subject these restrictions;
- 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;
- 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;
- implement or adopt any change in any respect of its accounting practices,
policies or principles other than as may be required by GAAP;
- 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.;
- 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;
- 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;
- 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;
- voluntarily divest itself of management of any client or any assets under
management other than in the ordinary course of business;
- 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;
- 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;
- 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
- authorize or enter into an agreement to do any of the foregoing.
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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:
- provide information to or engage in negotiations with a third party that
has made an unsolicited written bona fide Acquisition Proposal; and
- 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
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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:
- 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
- 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.
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PRE-CLOSING DISTRIBUTIONS. The Partnership and Nvest Companies, L.P. shall,
prior to the closing, distribute 80% of its operating cash flow with respect to
the period beginning January 1, 2000 and ending on the date of the closing, less
the amount of 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.
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.
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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.
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:
- 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);
- 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
- 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:
- 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;
- 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;
- the compliance with certain requirements of Section 15(f) of the
Investment Company Act of 1940;
- 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;
- 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;
- 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, being not less than 80% of
the investment management revenue run-rate as of April 30, 2000;
- 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.
33
<PAGE>
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:
- 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
- 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:
- at any time by mutual written consent of CDCAM and Nvest Corporation; or
by CDCAM or Nvest Corporation if:
- 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;
- 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;
- 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:
- 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 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;
- 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:
- 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.
- 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
34
<PAGE>
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:
- the merger agreement is terminated by Nvest Corporation following receipt
of a competing Acquisition Proposal, or
- 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 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:
- waived by the party that benefits from the provision;
- amended or modified by an agreement in writing among all parties to the
merger agreement; or
- 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.
35
<PAGE>
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 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.
36
<PAGE>
<TABLE>
<CAPTION>
PRICE RANGE
OF
UNITS TOTAL
------------------------- DISTRIBUTIONS
HIGH LOW PAID
-------- -------- -------------
<S> <C> <C> <C>
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
</TABLE>
On July 31, 2000, the closing price of Partnership units was $38 13/16 per
unit. As of the record date, there were approximately 300 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.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of the record date, there were 6,731,789 units of the Partnership
outstanding, consisting of 110,000 general partner units held by Nvest
Corporation and 6,621,789 limited partner units held by approximately 300
holders of record.
The following table sets out information as of the record date, 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
37
<PAGE>
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.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF
PARTNERSHIP LIMITED
AMOUNT AND NATURE OF PARTNER UNITS (INCLUDING
BENEFICIAL OWNERSHIP OF BLOCK TRANSFERS OF NVEST
BENEFICIAL PARTNERSHIP LIMITED PERCENT OF COMPANIES, L.P. LIMITED PERCENT OF
OWNER PARTNER UNITS CLASS PARTNER UNITS) CLASS
-------------------------------- ----------------------- ---------- ------------------------ ----------
<S> <C> <C> <C> <C>
Metropolitan Life Insurance
Company....................... 457,900(1) 6.80% 21,452,076(1) 77.37%
Reich & Tang, Inc............... 110,300(2) 1.73% 5,990,900(2) 47.75%
JV Investments, Inc............. 0(3) -- 727,588(3) 9.90%
Peter B. Foreman................ 0(4) -- 727,588(4) 9.90%
Myron R. Szold.................. 0(5) -- 727,588(5) 9.90%
Roger O. Brown.................. 31,342(6) ** 727,588(6) 9.90%
Earl J. Rusnak, Jr.............. 0(7) -- 692,168(7) 9.46%
Sherwin A. Zuckerman............ 0(8) -- 566,710(8) 7.88%
Robert H. Harper................ 0(9) -- 692,392(9) 9.47%
Robert J. Sanborn............... 0(10) -- 528,010(10) 7.38%
Oscar L. Tang+.................. 52,271(11) ** 2,839,061(11) 30.18%
William S. Antle III+........... 2,572(12) ** 2,572(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+............ 26,165(12)(14) ** 26,165(12)(14) **
Victor A. Morgenstern+.......... 26,500(15) ** 801,182(15) 10.83%
Peter S. Voss+*................. 900,000(16) 11.97% 1,250,000(16) 15.88%
G. Neal Ryland*................. 452,300(17) 6.83% 452,300(17) 6.37%
Sherry A. Umberfield*........... 300,000(18) 4.53% 300,000(18) 4.30%
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)...................... 1,851,558 23.60% 5,763,030 49.01%
</TABLE>
------------------------
+ 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 the record date, there were 44,593,399 Nvest Companies, L.P. units
outstanding, held by two holders of Nvest Companies, L.P. general partner units
(Nvest Corporation and the Partnership) and approximately 119 holders of record
and beneficial owners of Nvest Companies, L.P. limited partner
38
<PAGE>
units. The following table sets out information as of the record date 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 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
appearing under the heading "Security Ownership of Certain Beneficial Owners and
Management," 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.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
---------------- -------------------- ----------------
<S> <C> <C>
MetLife..................................................... 21,452,076(1) 47.86%
Nvest, L.P.................................................. 6,731,789 15.02%
Reich & Tang, Inc........................................... 5,990,900(2) 13.37%
JV Investments, Inc......................................... 2,260,900(3) 5.04%
Oscar L. Tang+.............................................. 2,839,061(11) 6.33%
William S. Antle III+....................................... 2,572(12) **
Robert J. Blanding+......................................... 45,000(13) **
Paul E. Gray+............................................... 500 **
Jeffrey J. Hodgman+......................................... 1,000 **
Harry P. Kamen+............................................. 5,000 **
Charles M. Leighton+........................................ 26,165(12)(14) **
Victor A. Morgenstern+...................................... 801,182(15) 1.79%
Peter S. Voss+*............................................. 1,250,000(16) 2.73%
G. Neal Ryland*............................................. 481,644(17) 1.07%
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)........................... 5,763,030 12.85%
</TABLE>
------------------------
+ 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
39
<PAGE>
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 1,533,312
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 6140 Plumas Street, Reno, NV 89509.
(4) The number of Partnership limited partner units shown excludes 719,466
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 206,964
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.
(6) The number of Partnership limited partner units shown excludes 123,439
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 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
40
<PAGE>
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 2,572 Partnership
limited partner units and 20,903 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.
(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 2,300
Partnership limited partner units and 5,750 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 the record date, there were 6,273,889 Partnership units that would be
entitled to vote for the Partnership merger. The following table sets out
information as of the record date, 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
41
<PAGE>
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.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF PARTNERSHIP LIMITED
BENEFICIAL PARTNER UNITS PERCENT OF UNITS
OWNER ELIGIBLE TO VOTE ELIGIBLE TO VOTE
---------- -------------------------------- ----------------
<S> <C> <C>
Reich & Tang, Inc.................................. 110,300(1) 1.76%
Oscar L. Tang+..................................... 52,271(2) **
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*.................................... 2,300 **
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).......... 96,833 1.54%
</TABLE>
------------------------
+ Director.
* Executive Officer.
** 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.
(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.
42
<PAGE>
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.
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.
43
<PAGE>
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 17, 2000. You
should not assume that the information contained in this proxy statement is
accurate as of any date other than August 17, 2000, and the mailing of the proxy
statement to unitholders shall not create any implication to the contrary.
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 1-888-414-5566 if you have questions or need
assistance with the voting procedures.
BY ORDER OF THE GENERAL PARTNER
[LOGO]
Peter S. Voss
Chairman, President
and Chief Executive Officer
Nvest Corporation
Boston, Massachusetts
August 17, 2000
44
<PAGE>
APPENDIX A
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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
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
RECITALS
The Parties......................................................................... A-1
The Transactions.................................................................... A-1
Agreement of Merger................................................................. A-1
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions......................................... A-1
1.02 Terms Generally............................................. A-7
ARTICLE II
THE TRANSACTIONS
2.01 The Public Partnership Merger............................... A-7
2.02 The Private Partnership Merger.............................. A-10
2.03 Treatment of Other Equity Interests......................... A-12
2.04 Closing..................................................... A-12
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Disclosure Schedules........................................ A-13
3.02 Standards................................................... A-14
3.03 Representations and Warranties of the Sellers............... A-14
3.04 Representations and Warranties of Buyer..................... A-28
ARTICLE IV
COVENANTS
4.01 Conduct Prior to Closing.................................... A-30
4.02 Acquisition Proposals....................................... A-31
4.03 Retention and Other Compensation Related Matters............ A-32
4.04 Filings, Other Actions; Notification........................ A-32
4.05 Investment Company Matters.................................. A-34
4.06 Advisory Agreements......................................... A-35
4.07 Taxation.................................................... A-35
4.08 Access; Information......................................... A-36
4.09 Publicity................................................... A-36
4.10 Takeover Statutes........................................... A-36
4.11 Reasonable Best Efforts..................................... A-36
4.12 Pre-Closing Distributions................................... A-36
4.13 Expenses.................................................... A-37
4.14 Subsidiary Action........................................... A-37
4.15 Unitholder Approval......................................... A-37
4.16 Proxy Statement............................................. A-37
4.17 Indemnification; Directors' and Officers' Insurance......... A-38
4.18 Financial Obligations of Buyer Parent....................... A-38
4.19 Further Assurances.......................................... A-38
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE V
CONDITIONS
5.01 Conditions to Each Party's Obligation to Effect the A-39
Transactions................................................
5.02 Conditions to Obligations of Buyer.......................... A-39
5.03 Conditions to Obligations of the Sellers.................... A-39
ARTICLE VI
TERMINATION
6.01 Termination by Mutual Consent............................... A-41
6.02 Termination by Either Buyer or the Sellers.................. A-41
6.03 Termination by Buyer........................................ A-41
6.04 Termination by General Partner.............................. A-41
6.05 Effect of Termination and Abandonment....................... A-42
6.06 Termination Fee............................................. A-42
ARTICLE VII
MISCELLANEOUS AND GENERAL
7.01 Survival.................................................... A-43
7.02 Waiver; Amendment........................................... A-43
7.03 Governing Law and Venue; Waiver of Jury Trial............... A-43
7.04 Waiver of Sovereign Immunity................................ A-44
7.05 Notices..................................................... A-44
7.06 Entire Understanding; Third Party Beneficiaries............. A-46
7.07 Obligations of Buyer........................................ A-46
7.08 Transfer Taxes.............................................. A-46
7.09 Interpretation.............................................. A-46
7.10 Assignment.................................................. A-46
7.11 Counterparts................................................ A-46
7.12 Specific Performance........................................ A-46
Exhibit A Post-Closing Employee Plan
</TABLE>
ii
<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.
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.
<PAGE>
"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.
"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 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).
A-2
<PAGE>
"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. SectionSection 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.
"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
A-3
<PAGE>
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.
"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.
"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.
A-4
<PAGE>
"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).
"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).
A-5
<PAGE>
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"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, 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.
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<PAGE>
"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.
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.
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(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:
(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
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.
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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.
(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.
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(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 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 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
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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 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
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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 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 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,
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(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 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
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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 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:
(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;
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(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:
(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
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(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 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 (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.
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(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 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;
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(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 (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, 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.
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(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,
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
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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
(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 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;
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(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;
(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
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"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 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 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
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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 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
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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 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 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;
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(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);
(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;
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(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;
(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 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.
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(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 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
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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 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 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
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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.
(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.
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(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.
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 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;
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(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;
(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
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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 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
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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 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 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
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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:
(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.
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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 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.
(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.
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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.
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.
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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 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
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Partnership Merger will comply as to form and substance in all material aspects
with the applicable requirements of the Exchange Act.
(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.
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.
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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:
(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.
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(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.
(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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<PAGE>
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 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
A-41
<PAGE>
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.
(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.
A-42
<PAGE>
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), 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 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.
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<PAGE>
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
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
A-44
<PAGE>
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
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
A-45
<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
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.
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.
A-46
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date set forth above.
<TABLE>
<S> <C> <C>
CDC FINANCE
By: /s/ ISABELLE BOUILLOT
-----------------------------------------
Name: Isabelle Bouillot
Title: Chief Executive Officer
CDC ASSET MANAGEMENT
By: /s/ DANIEL ROY
-----------------------------------------
Name: Daniel Roy
Title: President and Directoire
CDCAM NORTH AMERICA CORPORATION
By: /s/ CHRISTIAN FERSING
-----------------------------------------
Name: Christian Fersing
Title: Chief Executive Officer
CDCAM PARTNERSHIP, L.P.
By: CDCAM North America, LLC, its general
partner
By: /s/ MIREILLE CHETIOUI
-----------------------------------------
Name: Mireille Chetioui
Title: Vice President
CDCAM PARTNERSHIP II, L.P.
By: CDCAM North America, LLC, its general
partner
By: /s/ LOUISE LAIDI
-----------------------------------------
Name: Louise Laidi
Title: Vice President
</TABLE>
A-47
<PAGE>
<TABLE>
<S> <C> <C>
NVEST CORPORATION
By: /s/ PETER S. VOSS
-----------------------------------------
Name: Peter S. Voss
Title: Chairman & Chief Executive Officer
NVEST, L.P.
By: Nvest Corporation, its general partner
By: /s/ PETER S. VOSS
-----------------------------------------
Name: Peter S. Voss
Title: Chairman & Chief Executive Officer
NVEST COMPANIES, L.P.
By: Nvest Corporation, its managing general
partner
By: /s/ PETER S. VOSS
-----------------------------------------
Name: Peter S. Voss
Title: Chairman & Chief Executive Officer
</TABLE>
A-48
<PAGE>
APPENDIX B
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.
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
B-1
<PAGE>
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
B-2
<PAGE>
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 19, 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 September 19, 2000 and any and all adjournments or postponements
thereof (the "Special Meeting"), with all powers the undersigned would possess
if personally present.
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 AUGUST 17, 2000, RELATING TO THE
SPECIAL MEETING.
(FACE OF PROXY CARD)
<PAGE>
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
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 units 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)
