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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K/A
AMENDMENT TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
--------------------
Date of Report (Date of Earliest Event Reported): November 4, 1997
PIMCO ADVISORS L.P.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-09772 06-1349805
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
800 NEWPORT CENTER DRIVE, NEWPORT BEACH, CA 92660
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (714) 717-7022
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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This Amendment to Current Report on Form 8-K/A amends that certain
Current Report on Form 8-K filed by PIMCO Advisors L.P. ("PIMCO Advisors") on
November 6, 1997.
ITEM 2.
As previously reported in the Current Report on Form 8-K filed on
November 6, 1997 by PIMCO Advisors, on November 4, 1997, PIMCO Advisors acquired
the investment advisory assets of Oppenheimer Group, Inc. ("Opgroup"), including
a 32.4% managing general partner interest in Oppenheimer Capital, the one
percent general partner interest in Oppenheimer Capital, L.P. ("Opcap LP"), one
percent general partner interests in three subsidiaries of Oppenheimer Capital
and the ownership of Value Advisors LLC, a newly formed limited liability
company holding eight closed-end investment fund management contracts formerly
held by Advantage Advisers, Inc. (the "Opgroup Transaction"). As consideration
for these assets, the Opgroup stockholders received 2,119,608 Class A units of
limited partner interest in PIMCO Advisors (the "PIMCO Advisors Class A LP
Units"), rights (the "Opgroup Exchange Rights") to acquire up to 6,900,000
additional PIMCO Advisors Class A LP Units (or, after December 31, 1997, the
same number of units of limited partner interest in Opcap LP ("Opcap LP Units"))
at $33 1/3 per unit upon exchange of 6% Senior Notes due December 1, 2037 of
Opgroup (the "Opgroup Notes") and rights to require PIMCO Advisors to repurchase
some or all of these units for $25.50 per unit (the "Opgroup Put Rights"). Such
consideration was the result of arms' length negotiations between PIMCO Advisors
and Opgroup.
PIMCO Advisors acquisition of Opgroup's investment advisory assets in
the Opgroup Transaction was accomplished as follows:
(i) Immediately prior to the transaction, Opgroup redeemed
certain shares of its outstanding stock in exchange for (A) $244
million in available cash, (B) $150 million in Opgroup Notes and (C) an
$80 million face amount Certificate of Long-Term Indemnity Indebtedness
(subject to reduction upon the occurrence of certain indemnity
obligations with respect to the investment management assets), which
under certain circumstances converts into an equal principal amount of
Opgroup Notes. The Opgroup Notes are limited in recourse to the assets
of Opgroup.
(ii) Following the redemption, a newly-formed, wholly-owned
limited liability company subsidiary of PIMCO Advisors merged with and
into Opgroup. In the merger, Opgroup became a subsidiary of PIMCO
Advisors, and the Opgroup stockholders received 2,119,608 PIMCO
Advisors Class A LP Units, the Opgroup Exchange Rights, and the Opgroup
Put Rights. The Opgroup stockholders also received certain registration
rights with respect to these units.
(iii) Immediately following the merger, Opgroup, then a
subsidiary of PIMCO Advisors, caused its subsidiary Oppenheimer
Financial Corp. ("Opfin") to contribute (i) the ownership of Value
Advisors LLC and the one percent general partner interest in Opcap LP
and then (ii) Opfin's 32.4% managing general partner interest in
Oppenheimer Capital and the one percent general partner interests in
three subsidiaries of Oppenheimer Capital to Value Advisors LLC (then a
subsidiary of PIMCO Advisors). In exchange for these contributions,
Opfin received 6,000,000 Class C units of limited partner interest (the
"PIMCO Advisors Class C LP Units"). Each PIMCO Advisors Class C LP Unit
is entitled to the same proportionate share of profits, losses and
distributions as a PIMCO Advisors Class A LP Unit, but with a maximum
distribution of $3.00 per year, or $0.75 per quarter subject to a
catch-up on an annual basis. In connection with this transaction, Opcap
LP adopted an amendment to its partnership agreement converting the one
percent general partner interest into a one-one hundredth of one
percent general partner interest, with the remaining interest converted
into Opcap LP Units. PIMCO Advisors then sold the general partner
interest in Opcap LP to PIMCO Partners, G.P., the general partner of
PIMCO Advisors, for $80,000.
ITEM 5.
On November 10, 1997, Richard Buzby filed an action on behalf of a
purported class of limited partners of Opcap LP against PIMCO Advisors and
certain individuals associated with the previous general partner of Opcap LP in
the Court of Chancery of the State of Delaware, New Castle County. The
complaint alleges, among other things, various breaches of fiduciary duty,
conflicts of interest and unfair dealing in connection with the previously
disclosed proposed merger of Oppenheimer Capital with a subsidiary of PIMCO
Advisors (the "Oppenheimer Capital Merger"). The complaint seeks compensatory
and/or recessionary money damages or, alternatively, injunctive relief or
rescission of the transactions. Since that date, certain other complaints have
been filed in the states of Delaware and New York, making similar allegations.
These cases are expected to be consolidated in the Court of Chancery of the
State of Delaware. PIMCO Advisors and Opcap LP believe the suits are without
merit, and intend to contest them vigorously.
ITEM 7.
(a)-(b) Any required financial statements and pro forma information with
respect to the transactions reported will be filed as required. Form
8-K requires that financial statements and pro forma information shall
be filed within 60 days of the initial filing of the report.
(c) Exhibits
Exhibit No. Description of Exhibits
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10.1 Agreement and Plan of Merger dated November 4, 1997
10.2 Put Right dated November 4, 1997
10.3 Exchange Right dated November 4, 1997
10.4 Note Agreement dated November 4, 1997
10.5 Contribution Agreement dated November 4, 1997
10.6 Certificate of Long Term Indemnity Indebtedness dated
November 4, 1997
10.7 Registration Rights Agreement dated November 4, 1997
2
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: November 20, 1997 PIMCO ADVISERS L.P.
/s/ ROBERT M. FITZGERALD
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Robert M. Fitzgerald
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description of Exhibits Numbered Page
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<S> <C> <C>
10.1 Agreement and Plan of Merger dated November 4, 1997
10.2 Put Right dated November 4, 1997
10.3 Exchange Right dated November 4, 1997
10.4 Note Agreement dated November 4, 1997
10.5 Contribution Agreement dated November 4, 1997
10.6 Certificate of Long Term Indemnity Indebtedness dated
November 4, 1997
10.7 Registration Rights Agreement dated November 4, 1997
</TABLE>
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EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 4, 1997
BY AND AMONG
OPPENHEIMER GROUP, INC.
OPPENHEIMER FINANCIAL CORP.
PIMCO ADVISORS L.P.
PIMCO ADVISORS TRANSITORY MERGER LLC
THE INDEMNITY TRUST
AND
THE SELLER TRUST
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TABLE OF CONTENTS
<TABLE>
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ARTICLE I. DEFINITIONS......................................................................1
Section 1.1. Definitions.............................................................1
ARTICLE II. THE REDEMPTION AND MERGER......................................................12
Section 2.1. The Redemption.........................................................12
Section 2.2. The Merger.............................................................14
Section 2.3. Consideration to Be Delivered in the Merger............................14
Section 2.4. Effect of Merger on Opgroup Shareholders...............................15
Section 2.5. No Fractional Shares...................................................15
Section 2.6. Tax Characterization of the Merger.....................................15
ARTICLE III. CLOSING.......................................................................15
Section 3.1. Closing................................................................15
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF OPGROUP AND THE TRUSTS......................16
Representations and Warranties of Opgroup...........................................16
Section 4.1. Organization and Related Matters.......................................16
Section 4.2. Authority: No Violation................................................16
Section 4.3. Consents and Approvals.................................................17
Section 4.4. Regulatory Documents...................................................17
Section 4.5. Capitalization.........................................................17
Section 4.6. Financial Statements...................................................19
Section 4.7. Ineligible Persons.....................................................20
Section 4.8. Material Contracts.....................................................20
Section 4.9. Legal Proceedings......................................................21
Section 4.10. Permits and Applicable Law............................................21
Section 4.11. Insurance.............................................................21
Section 4.12. Labor and Employment Matters..........................................22
Section 4.13. Employee Benefit Plans, ERISA.........................................22
Section 4.14. Intellectual Property.................................................23
Section 4.15. Taxes.................................................................23
Section 4.16. Investment Companies, Managed Account Clients, Distributors, Etc......24
Section 4.17. No Material Adverse Effect............................................26
Section 4.18. Bringdown.............................................................26
Section 4.19. Brokers...............................................................28
Section 4.20. Additional Fund Representations.......................................28
Section 4.21. Regarding Equities....................................................28
</TABLE>
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<TABLE>
<S> <C>
Section 4.22. Non-Investment Company Advisory Agreement Consents....................28
Section 4.23. Section 15 of the Investment Company Act--Opgroup and Opfin...........29
Representations and Warranties of the Indemnity Trust...............................29
Section 4.24. Organization and Related Matters......................................29
Section 4.25. Authority, No Violation...............................................29
Section 4.26. Consents and Approvals................................................30
Representations and Warranties of the Seller Trust..................................30
Section 4.27. Organization and Related Matters......................................30
Section 4.28. Authority; No Violation...............................................30
Section 4.29. Consents and Approvals................................................31
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PATM..........................................31
Section 5.1. Organization and Related Matters.......................................31
Section 5.2. Authority; No Violation................................................32
Section 5.3. Consents and Approvals.................................................32
Section 5.4. Capitalization.........................................................33
Section 5.5. Financial Condition and Subsidiaries...................................33
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF PIMCO ADVISORS...............................33
Section 6.1. Organization...........................................................33
Section 6.2. Authority, No Violation................................................34
Section 6.3. Consents and Approvals.................................................34
Section 6.4. Regulatory Documents...................................................34
Section 6.5. Capitalization.........................................................35
Section 6.6. Financial Statements...................................................35
Section 6.7. Ineligible Persons.....................................................36
Section 6.8. Material Contracts.....................................................36
Section 6.9. No Broker..............................................................37
Section 6.10. Legal Proceedings.....................................................37
Section 6.11. Permits and Applicable Law............................................37
Section 6.12. Insurance.............................................................38
Section 6.13. Labor and Employment Matters..........................................38
Section 6.14. Employment Benefit Plans; ERISA.......................................38
Section 6.15. Intellectual Property.................................................39
Section 6.16. Taxes.................................................................39
Section 6.17. Investment Companies. Managed Account Clients, Distributors, Etc......40
Section 6.18. Section 15 of the Investment Company Act..............................41
Section 6.19. No Material Adverse Effect............................................41
ARTICLE VII. [OMITTED].....................................................................41
</TABLE>
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<TABLE>
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ARTICLE VIII. CLOSING DELIVERIES...........................................................41
Section 8.1. Deliveries by Opgroup, Opfin and the Trusts............................41
Section 8.2. Deliveries by PIMCO Advisors and PATM..................................43
Section 8.3. Other Deliveries.......................................................43
Section 8.4. Execution of Certain Documents.........................................44
ARTICLE IX. ACTIONS SUBSEQUENT TO THE MERGER...............................................44
Section 9.1. Contribution...........................................................44
Section 9.2. Additional Fund Related Covenants......................................44
Section 9.3. Insurance..............................................................44
Section 9.4. Closing Date Balance Sheets............................................45
Section 9.5. Section 15 of the Investment Company Act; PIMCO Advisors...............46
Section 9.6. Further Assurances.....................................................47
Section 9.7. Expenses...............................................................47
Section 9.8. Disposition of OGI Stock...............................................47
ARTICLE X. INDEMNIFICATION.................................................................48
Section 10.1. Indemnification by PIMCO Advisors and the Surviving Corporation.......48
Section 10.2. Indemnification by the Indemnity Trust................................48
Section 10.3. Monetary Limitation...................................................49
Section 10.4. Nature and Survival; Time Limits......................................50
Section 10.5. Limitation on Remedies................................................50
Section 10.6. General Provisions....................................................50
ARTICLE XI. TERMINATION AND SURVIVAL.......................................................52
Section 11.1. Omitted...............................................................52
ARTICLE XII. MISCELLANEOUS.................................................................52
Section 12.1. Limitation on Liability...............................................52
Section 12.2. No Right of Set Off...................................................53
Section 12.3. Amendments, Waiver....................................................53
Section 12.4. Entire Agreement......................................................53
Section 12.5. Interpretation........................................................53
Section 12.6. Severability..........................................................53
Section 12.7. Notices...............................................................54
Section 12.8. Binding Effect; No Third Party Beneficiaries; No Assignment...........55
Section 12.9. Counterparts..........................................................55
Section 12.10. Governing Law........................................................56
Section 12.11. Waiver of Jury Trial.................................................57
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 4, 1997, by
and among Oppenheimer Group, Inc., a Delaware corporation ("Opgroup"),
Oppenheimer Financial Corp., a Delaware corporation ("Opfin"), PIMCO Advisors
L.P., a Delaware limited partnership ("PIMCO Advisors"), PIMCO Advisors
Transitory Merger LLC, a Delaware limited liability company ("PATM"), the
Indemnity Trust, under Declaration of Trust dated July 22, 1997, as amended (the
"Indemnity Trust") and the Seller Trust, under Declaration of Trust dated July
22, 1997, as amended (the "Seller Trust").
RECITALS
WHEREAS, Opgroup, Opfin, PIMCO Advisors, the Indemnity Trust, the
Seller Trust and certain other parties were parties to that certain Amended and
Restated Agreement and Plan of Merger dated July 22, 1997 (the "Original
Agreement"), and the parties to the Original Agreement, concurrently with the
execution hereof, have terminated such agreement;
WHEREAS, on July 22, 1997, CIBC Wood Gundy Securities Corp.
("CIBC"), Opgroup, and Oppenheimer Equities, Inc. ("Equities") entered into that
certain Stock Acquisition Agreement (as amended November 3, 1997, the "CIBC
Agreement") pursuant to which, among other things, Equities agreed to sell to
CIBC (the "CIBC Transaction") all of the capital stock of Oppenheimer Holdings,
Inc., a Delaware corporation ("Holdings");
WHEREAS, PATM is a wholly owned limited liability company
subsidiary of PIMCO Advisors;
WHEREAS, the parties hereto desire that, following the
consummation of the transactions contemplated under the CIBC Agreement, PIMCO
Advisors acquire Opgroup by way of a merger of PATM with and into Opgroup, with
the stockholders of Opgroup receiving, among other things, securities of PIMCO
Advisors in respect of their equity interests in Opgroup;
NOW THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be bound hereby, the parties hereby agree as
follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions.
For all purposes of this Agreement, the following terms shall
have the respective meanings set forth in this Section 1.1 (such definitions to
be equally applicable to both the singular and plural forms of the terms herein
defined):
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"Accounting Firm" has the meaning set forth in Section 9.4(b).
"Advantage Advisers" shall mean Advantage Advisers, Inc., a
Delaware corporation.
"Advantage Advisers Balance Sheets" has the meaning set forth in
Section 4.6(b).
"Advisers Act" shall mean the Investment Advisers Act of 1940, as
amended, and the rules and regulations of the SEC thereunder.
"Advisory Agreement" shall mean any agreement with respect to the
provision of investment advisory services as provided in the Advisers Act.
"Affiliate" shall mean any Person that, directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified.
"Agreement" shall mean this Amended and Restated Agreement and
Plan of Merger, as it may hereafter be amended.
"Applicable Law" with respect to a Person, shall mean any
domestic or foreign federal, state or local statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree, policy, guideline or other requirement applicable to such
Person or any of its Affiliates, or to its or their properties or assets.
"Available Cash" shall mean an amount in cash estimated in good
faith to be equal at the close of business on the Business Day next preceding
the Closing Date to the lesser of (i) cash on hand of Opgroup, Opfin and Value
Advisors, or (ii) net current assets of Opgroup, Opfin and Value Advisors on a
combined basis, or (iii) net assets of Opgroup, Opfin and Value Advisors on a
combined basis, in each case without consolidation of any Excluded Affiliate,
Opcap LP, Opcap or any of their Subsidiaries, without attribution of any value
to the Interests, stock of the Excluded Affiliates, rights to receive the Buyer
Adjustment Payment or amounts released from the Tax Payment Account or the
Holdback Amount, or the management contracts for the Value Advisors Funds, and
without taking into account principal of the Opgroup Equities Note.
"Brokerage Business" shall mean the businesses, including without
limitation the securities, brokerage, investment banking and asset management
businesses, conducted by Holdings and its controlled Affiliates, but excluding
the Value Advisors Business.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banks in the State of New York are permitted or required to be
closed for regular banking business.
"Buyer Adjustment Payment" shall have the meaning set forth in
the CIBC Agreement.
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"Certificate" means that certain Certificate of Long Term
Indemnity Indebtedness dated November 4, 1997.
"CIBC" has the meaning set forth in the Recitals to this
Agreement.
"CIBC Agreement" has the meaning set forth in the Recitals to
this Agreement.
"CIBC Transaction" has the meaning set forth in the Recitals to
this Agreement.
"Class A Units" has the meaning set forth in Section 2.3.
"Class B Units" shall mean the Class B units of limited partner
interest of PIMCO Advisors.
"Class C Units" shall mean the Class C units of limited partner
interest of PIMCO Advisors.
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
"Closing Date Balance Sheets" has the meaning set forth in
Section 9.4(a).
"Closing Valuation Date" shall mean October 31, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
or any successor statute.
"Combined Balance Sheet" has the meaning set forth in Section
9.4(a).
"Contribution Agreement" has the meaning set forth in Section
8.4(b).
"D&O Insurance" has the meaning set forth in Section 9.3.
"DGCL" has the meaning set forth in Section 2.2.
"DLLCA" has the meaning set forth in Section 2.2.
"Effective Time" shall mean the time at which the certificate of
merger of the Merger is duly filed with the Secretary of State of the State of
Delaware (or such other time as may be specified in such certificate of merger).
"Encumbrance" shall mean any lien, pledge, security interest,
claim, charge, easement, limitation, commitment, encroachment, restriction or
encumbrance of any kind or nature whatsoever.
"Equities" has the meaning set forth in the Recitals to this
Agreement.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations and class exemptions of the Department of
Labor thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"Exchange Right" has the meaning set forth in Section 2.3.
"Excluded Affiliates" has the meaning set forth in the CIBC
Agreement.
"GAAP" shall mean generally accepted accounting principles as
used in the United States of America, as in effect at the time any applicable
financial statements were prepared.
"Governmental Authority" shall mean any government (domestic or
foreign), any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without limitation, the
SEC, the Commodity Futures Trading Commission or any other government authority,
agency, department, board, commission or instrumentality of the United States,
any State of the United States or any political subdivision thereof, and any
court, tribunal or arbitrator(s) of competent jurisdiction, and any governmental
or non-governmental self-regulatory organization, agency or authority (including
the New York Stock Exchange and the National Association of Securities Dealers,
Inc.).
"GP Unit" has the meaning set forth in Section 6.5.
"Holdback Amount" shall have the meaning set forth in the CIBC
Agreement.
"Holdings" has the meaning set forth in the Recitals to this
Agreement.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Identified Funds" shall mean, collectively: (i) the Value
Advisors Funds, (ii) OCC Cash Reserves, Inc. and (iii) OCC Accumulation Trust.
"Indemnified Claim" has the meaning set forth in Section 10.6(a).
"Indemnified Party" has the meaning set forth in Section 10.6(a).
"Indemnifying Party" has the meaning set forth in Section
10.6(a).
"Indemnity Declaration" has the meaning set forth in Section
4.23(a).
"Indemnity Trust" has the meaning set forth in the first
paragraph of this Agreement.
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"Indemnity Trustees" shall mean the managing trustees from time
to time under the Indemnity Trust.
"Independent Director" has the meaning set forth in Section
4.23(b).
"Interests" shall mean each of the general partner interests in
Opcap LP, Opcap, Opcap Advisors, OCC Distributors and 225 Liberty Street
Advisers, L.P. owned by Opfin.
"Investment Company" shall have the meaning provided in the
Investment Company Act.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended, and the rules and regulations of the SEC thereunder.
"IRS" shall mean the Internal Revenue Service.
"License Agreement" shall mean that certain License Agreement
dated as of July 22, 1997 between Holdings and Opcap.
"Losses" has the meaning set forth in Section 10.6(g).
"Maximum Premium" has the meaning set forth in Section 9.3.
"Merger" has the meaning set forth in Section 2.2.
"Money Management Business" shall mean the (i) the business
operated by Opcap LP, Opcap and their respective Subsidiaries, (ii) the business
operated by Opfin, but only to the extent of its acting as general partner of
Opcap, Opcap LP, Opcap Advisors, OCC Distributors and 225 Liberty Street
Advisers, L.P. and (iii) the Value Advisors Business.
"Objections" has the meaning set forth in Section 9.4(b).
"OCC Distributors" shall mean OCC Distributors, a Delaware
general partnership (formerly Quest For Value Distributors).
"Offshore Investment Company" shall mean an Investment Company
organized under the laws of a jurisdiction other than the United States or any
political subdivision thereof.
"OFI" shall mean Oppenheimer Funds, Inc. (formerly Oppenheimer
Management Corporation).
"OGI Notes" has the meaning set forth in Section 2.1(a).
"Opcap" shall mean Oppenheimer Capital, a Delaware general
partnership.
"Opcap Advisors" shall mean Opcap Advisors, a Delaware general
partnership.
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"Opcap Balance Sheets" has the meaning set forth in Section
4.6(a).
"Opcap Interest" shall mean the partnership interest in Opcap
owned by Opfin.
"Opcap LP" shall mean Oppenheimer Capital, L.P., a Delaware
limited partnership.
"Opcap LP Interest" shall mean the partnership interest in Opcap
LP owned by Opfin.
"Opcap Portion" has the meaning set forth in Section 2.1(c).
"Opcap LP Portion" has the meaning set forth in Section 2.1(c).
"Opcap Run Rate Revenues" at a particular date shall mean
revenues calculated by multiplying the assets under management of Opcap and each
of its subsidiaries at such date by the applicable management fee rates
(reflective of any discounts and excluding any performance fees) then in effect
for such assets. For purposes of calculating any decline in Opcap Run-Rate
Revenues, the first $3 million of any such decline attributable to the
termination and sale of the Dual Purpose Fund shall be disregarded.
"Opcap Portion" has the meaning set forth in Section 2.1(c).
"Opco" shall mean Oppenheimer & Co., Inc., a Delaware
corporation.
"Opco LP" shall mean Oppenheimer & Co., L.P., a Delaware limited
partnership.
"Opco Share" shall mean the shares of Opgroup Class C Common
Stock and Opgroup Class D Common Stock held of record and beneficially by Opco
LP and not reserved for unexercised warrants.
"Opfin" has the meaning set forth in the first paragraph of this
Agreement.
"Opgroup" has the meaning set forth in the first paragraph of
this Agreement.
"Opgroup Benefit Plan" has the meaning set forth in Section
4.13(a).
"Opgroup Business" shall mean the business conducted by Opgroup
and its Subsidiaries prior to the Effective Time.
"Opgroup Class A Common Stock" shall mean the Class A Common
Stock, $.01 par value, of Opgroup.
"Opgroup Class B Common Stock" shall mean the Class B Common
Stock, $.01 par value, of Opgroup.
"Opgroup Class C Common Stock" has the meaning set forth in
Section 2.1.
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"Opgroup Class D Common Stock" has the meaning set forth in
Section 2.1.
"Opgroup Common Stock" shall mean Opgroup Class A Common Stock,
Opgroup Class B Common Stock, Opgroup Class C Common Stock and Opgroup Class D
Common Stock.
"Opgroup Distribution Contract" has the meaning set forth in
Section 4.16(g).
"Opgroup Equities Note" shall mean the 10% note due 2012, in the
current principal amount of $32,193,000, issued by Equities to Opcap LP.
"Opgroup Indemnitees" has the meaning set forth in Section
10.1(a).
"Opgroup Intellectual Property" has the meaning set forth in
Section 4.14.
"Opgroup Investment Company Client" shall mean any Opgroup Public
Investment Company Client, Opgroup Private Investment Company Client or Opgroup
Offshore Investment Company Client.
"Opgroup's Knowledge" or "to the Knowledge of Opgroup" shall mean
only the knowledge after due inquiry of Roger W. Einiger, Nathan Gantcher,
Stephen Robert, Joseph M. La Motta, George Long, Kenneth Mortensen, Sheldon
Siegel and Thomas Duggan.
"Opgroup Managed Account Client" shall mean any Person, other
than an Investment Company, for or in respect of which any Opgroup Subsidiary
provides investment advisory or similar services (including, without limitation,
investment sub-advisory services).
"Opgroup Material Adverse Effect" shall mean any matter or
matters affecting Opgroup or any Opgroup Subsidiary that has or reasonably could
be expected to have a material adverse effect on the business, assets, financial
condition or results of operations of Opgroup (after taking into account the
Opgroup Restructuring) and the Opgroup Subsidiaries, taken as a whole, or on the
ability of Opgroup to complete the Closing; provided, however, that a claim or
action by OFI arising under that certain Agreement Not to Compete dated as of
November 22, 1995 or that certain License Agreement dated November 25, 1995
shall not be considered an Opgroup Material Adverse Effect; and provided
further, that a decline in Opcap Run-Rate Revenues for any reason between
February 13, 1997 and the Closing Valuation Date of less than or equal to 20%
shall not be considered in determining whether there has been an Opgroup
Material Adverse Effect (it being agreed that this exclusion shall not be
considered in any determination of whether any event or events other than a
decline in Opcap Run-Rate Revenues (or a related market downturn) constitutes an
Opgroup Material Adverse Effect).
"Opgroup Material Contract" has the meaning set forth in Section
4.8.
"Opgroup Offshore Investment Company Client" shall mean each
Offshore Investment Company for or in respect of which any Opgroup Subsidiary
provides investment advisory or similar services (including, without limitation,
subinvestment advisory services).
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"Opgroup Private Investment Company Client" shall mean each
Private Investment Company for or in respect of which any Opgroup Subsidiary
provides investment advisory or similar services (including, without limitation,
sub-investment advisory services).
"Opgroup Public Investment Company Client" shall mean each Public
Investment Company for or in respect of which any Opgroup Subsidiary provides
investment advisory or similar services (including, without limitation,
sub-investment advisory services); provided, that for purposes of Sections
4.23(a) and 9.5, the Persons listed on Schedule 1.1(b) shall be deemed not to be
Opgroup Public Investment Company Clients; and provided further, that for all
purposes of this Agreement, none of the Persons listed on Schedule 1.1(c) shall
be deemed to be an Opgroup Public Investment Company Client.
"Opgroup Restructuring" shall mean that series of transactions
described in Annex A.
"Opgroup Shareholders" shall mean the holders of Opgroup Common
Stock immediately prior to the Effective Time.
"Opgroup Subgroup" shall mean Opgroup, Opfin, Equities and Value
Advisors.
"Opgroup Subsidiary" shall mean each of Opfin, Equities,
Advantage Advisers (but only with respect to the Value Advisors Business prior
to the Closing Date), Value Advisors, Opcap LP, Opcap, Opcap Advisors, OCC
Distributors, Oppenheimer Capital Limited, Oppenheimer Capital Trust Company,
225 Liberty Street Advisers, L.P., Oppenheimer Capital Luxembourg Funds, Paragon
Management Group, OCC Partners, L.P., Oppenheimer Capital Equity Partners, L.P.
and Bank Street Partners, L.P.
"PATM" has the meaning set forth in the first paragraph of this
Agreement.
"Permits" shall mean licenses, franchises, permits, registrations
and authorizations of any Governmental Authority.
"Person" shall mean any individual, corporation, partnership
(limited or general), limited liability company, joint venture, association,
trust or other entity.
"PIMCO Advisors" has the meaning set forth in the first paragraph
of this Agreement.
"PIMCO Advisors Balance Sheets" has the meaning set forth in
Section 6.6.
"PIMCO Advisors Benefit Plan" has the meaning set forth in
Section 6.14(a).
"PIMCO Advisors Distribution Contract" has the meaning set forth
in Section 6.17(g).
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"PIMCO Advisors Investment Company Client" shall mean any PIMCO
Advisors Public Investment Company Client, PIMCO Advisors Private Investment
Company Client or PIMCO Advisors Offshore Investment Company Client.
"PIMCO Advisors' Knowledge" or "to the Knowledge of PIMCO
Advisors" shall mean only the knowledge after due inquiry of William Cvengros,
William Thompson, Robert Fitzgerald, Kenneth Poovey and Richard Weil.
"PIMCO Advisors Managed Account Client" shall mean any Person,
other than an Investment Company, for or in respect of which PIMCO Advisors and
any PIMCO Advisors Subsidiary provides investment advisory or similar services
(including, without limitation, sub-investment advisory services).
"PIMCO Advisors Material Adverse Effect" shall mean any matter or
matters affecting PIMCO Advisors or any PIMCO Advisors Subsidiary that has or
have or could reasonably be expected to have a material adverse effect on the
business, assets, financial condition or results of operations of PIMCO Advisors
and PIMCO Advisors' investment management partnerships taken as a whole or on
the ability of PIMCO Advisors to complete the Closing.
"PIMCO Advisors Material Client" has the meaning set forth in
Section 6.17(a).
"PIMCO Advisors Material Contract" has the meaning set forth in
Section 6.8.
"PIMCO Advisors Offshore Investment Company Client" shall mean
each Offshore Investment Company for or in respect of which PIMCO Advisors or
any PIMCO Advisors Subsidiary provides investment advisory or similar services
(including, without limitation, sub-investment advisory services).
"PIMCO Advisors Private Investment Company Client" shall mean
each Private Investment Company for, or in respect of which, PIMCO Advisors or
any PIMCO Advisors Subsidiary provides investment advisory or similar services
(including, without limitation, sub-investment advisory services).
"PIMCO Advisors Public Investment Company Client" shall mean each
Public Investment Company for or in respect of which PIMCO Advisors or any PIMCO
Advisors Subsidiary provides investment advisory or similar services (including,
without limitation, sub-investment advisory services).
"PIMCO Advisors Subsidiary" shall mean each of Pacific Investment
Management Company, Parametric Portfolio Associates, Cadence Capital Management,
NFJ Investment Group, Blairlogie Capital Management, Columbus Circle Investors
and PIMCO Funds Distribution Company.
"PIMCO Indemnitees" has the meaning set forth in Section 10.2(a).
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"PIMCO Partners" shall mean PIMCO Partners, G.P., a California
general partnership.
"Present Value Benefit" shall mean the present value (based on a
discount rate equal to the short-term applicable federal rate as determined
under Section 1274(d) of the Code at the time of determination, and assuming
that the Indemnified Party will be liable for Taxes at all relevant times at the
maximum marginal rates) of any income tax benefit; provided, however, that the
tax rates applicable to a partnership shall be deemed to be those applicable to
a Subchapter C corporation.
"Private Investment Company" shall mean an Investment Company,
other than an Offshore Investment Company, that would be an investment company,
as defined in the Investment Company Act, but for the exception contained in
Section 3(c)(1) or Section 3(c)(7) of that Act.
"Proportionate Share" shall mean a fraction equal to one divided
by all shares of Opgroup Common Stock outstanding after the Redemption.
"Public Investment Company" shall mean an Investment Company,
other than a Private Investment Company or an Offshore Investment Company.
"Put Right" shall have the meaning set forth in Section 8.4(c).
"Redeemed Shares" shall mean all shares of Opgroup Class C Common
Stock and Opgroup Class D Common Stock outstanding immediately prior to the
Redemption.
"Redemption" has the meaning set forth in Section 2.1.
"Registration Rights Agreement" has the meaning set forth in
Section 8.4(c).
"Regulatory Documents" shall mean all (i) Forms ADV (and
amendments thereto), (ii) Forms BD (and amendments thereto), (iii) forms filed
under the Exchange Act (other than Forms 3, 4, and 5 or Schedules 13D, 13F or
13G) and (iv), with respect to an Opgroup Public Investment Company Client,
Registration Statements on Form N-IA under the Investment Company Act.
"Related Agreement" shall mean any agreement delivered hereunder
or contemplated hereby, including but not limited to the Contribution Agreement,
the Irrevocable Proxy dated July 22, 1997 given by the Indemnity Trust to
Kenneth M. Poovey and Richard M. Weil, the Irrevocable Proxy dated July 22, 1997
given by Opco LP to Kenneth M. Poovey and Richard M. Weil, the License
Agreement, the Registration Rights Agreement, the Release and Indemnity
Agreement, the Tax Indemnity Agreement, the Transition Agreement, the Exchange
Rights and the Put Agreements.
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"Release and Indemnity Agreement" shall mean the Amended and
Restated Release and Indemnity Agreement dated November 3, 1997 among Opgroup,
CIBC and PIMCO Advisors.
"Relevant Entities" has the meaning set forth in Section 9.5.
"SBAM Funds" has the meaning set forth in Section 4.23(b).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the SEC thereunder.
"Securities Laws" shall mean the Securities Act, the Exchange
Act; the Investment Company Act, the Advisers Act, the Commodity Exchange Act
and the rules under such Acts, and state securities and commodities laws; and,
with respect to the issuance of interests of any Offshore Investment Company,
the securities laws of any jurisdiction in which interests of such company are
offered or sold.
"Seller Declaration" has the meaning set forth in Section
4.26(a).
"Seller Trust" has the meaning set forth in the first paragraph
of this Agreement.
"Seller Trustees" shall mean the managing trustees from time to
time under the Seller Trust.
"Straddle Quarter" has the meaning set forth in Section 2.1(c).
"Stand-Alone Balance Sheets" has the meaning set forth in Section
9.4(a).
"Subsidiary" has the meaning set forth in Regulation S-X
promulgated under the Securities Act.
"Surviving Corporation" has the meaning set forth in Section 2.2.
"Tax" or "Taxes" shall mean all taxes, charges, fees, imposts,
levies or other assessments, including, without limitation, all net income,
gross receipts, capital, sales, use, gains, ad valorem, value added, transfer,
franchise, profits, inventory, goods and services, capital stock, license,
withholding, payroll, employment, social security, unemployment, disability,
excise, severance, stamp, documentary stamp, occupation, property, mortgage
recording and estimated taxes, together with any interest, penalties, or
additions thereto imposed by any governmental taxing authority (domestic or
foreign).
"Tax Indemnity Agreement" shall mean the Amended and Restated Tax
Indemnity Agreement dated November 3, 1997 among Opgroup, CIBC and PIMCO
Advisors.
"Tax Payment Account" shall have the meaning set forth in the
CIBC Agreement.
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"Tax Return" shall mean any return, report, information
statement, schedule or other document (including any related or supporting
information) with respect to Taxes required to be provided to any Governmental
Authority, and any amendments thereof.
"Taxable Year" shall mean, with respect to any Tax of any
taxpayer, the period, for applicable federal, state, local or foreign Tax
purposes, for which such Tax is computed.
"Transition Agreement" shall mean that certain Transition
Agreement dated as of July 22, 1997 between CIBC, Opco and PIMCO Advisors.
"Trusts" shall mean the Indemnity Trust and the Seller Trust.
"Trustees" shall mean the Indemnity Trustees and the Seller
Trustees.
"Unconsolidated Subsidiaries" with respect to any Person, shall
mean any other Person which is (i) a controlled Affiliate of such Person and
(ii) which is not included in the affiliated group of which such Person is a
member within the meaning of Section 1504(a) of the Code.
"Value Advisors" shall mean the newly-formed limited liability
company referred to in Annex A.
"Value Advisors Business" shall mean the business of sponsoring,
managing and advising for compensation the Value Advisors Funds.
"Value Advisors Funds" shall mean the funds set forth on Schedule
1.1(a).
ARTICLE II.
THE REDEMPTION AND MERGER
Section 2.1. The Redemption.
Immediately before the Effective Time, Opgroup shall redeem the
Redeemed Shares, pro rata from the Opgroup Shareholders according to the number
of shares of Class C Common Stock, $.01 par value, of Opgroup ("Opgroup Class C
Common Stock") and Class D Common Stock $.01 par value, of Opgroup ("Opgroup
Class D Common Stock") owned by each of them, paying in consideration for such
redemption the following amounts per share redeemed (the "Redemption"):
(a) To each Opgroup Shareholder, notes issued by Opgroup having
the form of Annex B hereto (the "OGI Notes"), in principal amount equal to the
quotient of (i) $150 million divided by (ii) the number of Redeemed Shares,
subject to adjustment as follows: If there is a decline in Opcap Run-Rate
Revenues from February 13, 1997 through the Closing Valuation Date of more than
10%, then the principal amount of OGI Notes for which each share of Opgroup
Common Stock shall be redeemed pursuant to this clause (a) shall be reduced by a
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percentage equal to 1.15 multiplied by the whole or fractional number of
percentage points of the decline in excess of 10%, up to a maximum reduction of
11.5%. For example, if there were a decline in Opcap Run-Rate Revenues between
such dates of 15%, then the principal amount of OGI Notes for which a share of
Opgroup Common Stock would be redeemed pursuant to this clause (a) would be
reduced by 5.75% (that is, 1.15(15% - 10%));
(b) To the Indemnity Trust, on behalf of each Opgroup
Shareholder, a pro rata portion of the Certificate of Long-Term Indemnity
Indebtedness in the form of Annex C hereto, in the face amount of $80 million;
and
(c) To the Seller Trust on behalf of each Opgroup Shareholder:
(i) If such share is not an Opco Share, an amount in cash
equal to (A) Available Cash divided by the number of Redeemed Shares plus (B) an
amount equal to (1) $30 million divided by (2) the number of Redeemed Shares
multiplied by 0.29219079.
(ii) If such share is an Opco Share, an amount in cash
equal to (A) Available Cash divided by the number of Redeemed Shares minus (B)
an amount equal to (1) $30 million divided by (2) the number of Redeemed Shares
multiplied by 0.70780921.
(iii) The right to receive a fraction equal to (x) one
divided by (y) the number of Redeemed Shares, of each of the following amounts
of cash, to the extent actually received by Opgroup, Opfin, PIMCO Advisors or
any of its Affiliates, not later than three Business Days after the date of
receipt:
(A) In the event that the Closing Date occurs after
the end of an Opcap fiscal quarter but before the distribution for such quarter
has been paid by Opcap, an amount in cash equal to the distribution in respect
of the Opcap Interest for such quarter.
(B) In the event that the Closing Date occurs after
the end of an Opcap LP fiscal quarter but before any distribution for such
quarter has been paid by Opcap LP, an amount in cash equal to the distribution
in respect of the Opcap LP Interest for such quarter. (C) With respect to any
fiscal quarter of Opcap or Opcap LP that begins before and ends after the
Closing Date (a "Straddle Quarter"):
(1) an amount in cash equal to the
distribution in respect of the Opcap Interest for such Straddle Quarter
multiplied by a fraction equal to (w) the Opcap Portion divided by (x) the net
income of Opcap allocated to the Opcap Interest for the Straddle Quarter. The
"Opcap Portion" is equal to the sum of the net income of Opcap allocated to the
Opcap Interest for each full month in the Straddle Quarter prior to the Closing
Date plus a pro rata portion of the net income of Opcap allocated to the Opcap
Interest for the month in which the Closing Date occurs, based on the ratio of
(y) the number of days in such month elapsed prior to the Closing Date to (z)
the total number of days in such month.
(2) an amount equal to the distribution in
respect of the Opcap LP Interest for such Straddle Quarter multiplied by a
fraction equal to (w) the Opcap LP
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Portion divided by (x) the net income of Opcap LP allocated to the Opcap LP
Interest for the Straddle Quarter. The "Opcap LP Portion" is equal to the sum of
the net income of Opcap LP allocated to the Opcap LP Interest for each full
month in the Straddle Quarter prior to the Closing Date plus a pro rata portion
of the net income of Opcap allocated to the Opcap LP Interest for the month in
which the Closing Date occurs, based on the ratio of (y) the number of days in
such month elapsed prior to the Closing Date to (z) the total number of days in
such month.
(iv) The right to receive a fraction of (x) one divided by
(y) the number of Redeemed Shares of the Buyer Adjustment Payment, if any, any
amounts released from the Tax Payment Account and the Holdback Amount, and a
call on the stock of the Excluded Affiliates.
Section 2.2. The Merger.
At the Effective Time, PATM shall be merged with and into Opgroup
in accordance with this Agreement and the separate corporate existence of PATM
shall thereupon cease, and Opgroup shall be the surviving entity of the Merger
(the "Surviving Corporation") in accordance with Section 18-209 of the Delaware
Limited Liability Company Act ("DLLCA") and Section 264 of the Delaware General
Corporation Law (the "DGCL") (the "Merger"). The Surviving Corporation shall
cause to be filed at the Effective Time a Certificate of Merger in the form
attached as Annex D. The certificate of incorporation of the Surviving
Corporation shall be amended and restated in the form of the Amended and
Restated Certificate of Incorporation of Oppenheimer Group, Inc. attached as
Annex E.
Section 2.3. Consideration to Be Delivered in the Merger.
At the Effective Time:
(a) Each share of Opgroup Common Stock issued and outstanding
immediately prior to the Effective Time (after giving effect to the Redemption)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into a Proportionate Share of an aggregate of 2,119,608
Class A units of limited partner interest in PIMCO Advisors ("Class A Units").
(b) The certificates for such Class A Units shall bear the
following legend: "The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Securities Act").
Such securities may not be sold or transferred unless such sale or transfer is
(i) registered under the Securities Act or (ii) exempt from registration under
the Securities Act and the Partnership is presented with an opinion of counsel,
reasonably satisfactory in form and substance to the Partnership, that an
exemption from registration under the Securities Act is available."
(c) The member interests in PATM shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into one
hundred shares of common stock of the Surviving Corporation.
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(d) PIMCO Advisors agrees to cooperate with the Opgroup
Shareholders in connection with any reissuance of such Class A Units to the
beneficial owners of the entities which are Opgroup Shareholders and to cause
the Surviving Corporation to cooperate in any such reissuances with respect to
the OGI Notes.
Section 2.4. Effect of Merger on Opgroup Shareholders.
At the Effective Time, all shares of Opgroup Common Stock shall
cease to be outstanding and shall be canceled and retired and cease to exist,
and each holder of shares of Opgroup Common Stock shall thereafter cease to have
any rights with respect to such shares, except the right to receive the
securities, cash and rights to receive cash described in this Article II upon
surrender to the Surviving Corporation of a certificate which represented shares
of Opgroup Common Stock immediately prior to the Effective Time.
Section 2.5. No Fractional Shares.
No fractional Class A Units shall be issued pursuant to this
Article II. In lieu of the issuance of any fractional Class A Unit (i) any
Person who, but for this Section 2.5, would have been entitled to receive a
fractional Class A Unit representing one-half or more of a Class A Unit, shall
receive instead one whole Class A Unit, and (ii) any Person who, but for this
Section 2.5, would have been entitled to receive a fractional Class A Unit
representing less than one-half of a Class A Unit, shall receive nothing in lieu
of such fractional share.
Section 2.6. Tax Characterization of the Merger.
The parties hereto intend that the Merger shall be treated for
income tax purposes as an exchange, by each holder of Opgroup Common Stock
issued and outstanding immediately prior to the Effective Time (after giving
effect to the Redemption) with PIMCO Advisors, of such Opgroup Common Stock for
Class A Units which qualifies for tax-free exchange treatment under Section 721
of the Code (and under applicable similar provisions of state and local law).
ARTICLE III.
CLOSING
Section 3.1. Closing.
Subject to the terms and conditions of this Agreement, the
closing of the transactions provided for in this Agreement (the "Closing") shall
be at 10:00 A.M. New York City Time at the offices of Weil, Gotshal & Manges
LLP, 767 Fifth Avenue, New York, New York 10153 (or at such other location as
may be agreed by PIMCO Advisors and Opgroup) on November 4, 1997 (the "Closing
Date").
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF OPGROUP
AND THE TRUSTS
REPRESENTATIONS AND WARRANTIES OF OPGROUP
Opgroup represents and warrants to PIMCO Advisors and PATM at
February 13, 1997 and at the Closing Date, as follows:
Section 4.1. Organization and Related Matters.
Each of Opgroup and the Opgroup Subsidiaries that is a
corporation or a limited partnership is validly existing and in good standing
under the laws of the jurisdiction of its organization. Each of the Opgroup
Subsidiaries that is a general partnership is validly existing under the laws of
the jurisdiction of its organization. Each of Opgroup and the Opgroup
Subsidiaries has the corporate or partnership, as applicable, power and
authority to carry on its business as it is now being conducted and to own,
lease and operate all of its properties and assets, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned, leased or operated by it makes such qualification or licensing
necessary. Copies of the certificate of incorporation, by-laws or partnership
agreement of Opgroup and the Opgroup Subsidiaries, as applicable, heretofore
delivered to PIMCO Advisors, are complete and correct copies of such instruments
as currently in effect.
Section 4.2. Authority: No Violation.
(a) Opgroup and Opfin have full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. Except as set forth on Schedule 4.2(a), the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly approved by all requisite corporate action,
and no other corporate or partnership proceedings on the part of Opgroup, any
Opgroup Subsidiary or any of their shareholders or interest holders, as
applicable, is necessary to approve this Agreement and to authorize and
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Opgroup and Opfin, and (assuming the due
authorization, execution and delivery of this Agreement by PIMCO Advisors and
PATM) constitutes a valid and binding obligation of Opgroup and Opfin,
enforceable against Opgroup and Opfin in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency, moratorium and
similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by
Opgroup or Opfin, nor the consummation by Opgroup and the Opgroup Subsidiaries
of the transactions contemplated hereby or the Opgroup Restructuring, nor
compliance by Opgroup or Opfin with any of the terms or provisions hereof, will
(i) violate any provision of the articles of
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incorporation or bylaws or, as applicable, partnership agreement, of Opgroup or
any of the Opgroup Subsidiaries or (ii) except as set forth in Schedule 4.2(b),
and assuming the accuracy of Section 4.23 and compliance with Section 9.5, (x)
violate any Applicable Law or (y) violate, conflict with, result in a breach of
any provision of or the loss of any benefit under, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any
material Encumbrance upon, any of Opgroup's, Opfin's or any Opgroup Subsidiary's
properties or assets, or any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Opgroup or
any Opgroup Subsidiary, is a party, or by which any of their respective
properties or assets may be bound.
Section 4.3. Consents and Approvals.
As of the Closing Date, except for such consents, approvals and
notices as are set forth in Schedule 4.3, no consents or approvals of or filings
or registrations with any Governmental Authority or third party are necessary in
connection with (A) the execution and delivery by Opgroup and Opfin of this
Agreement and (B) the consummation by Opgroup and the Opgroup Subsidiaries of
the transactions contemplated by this Agreement.
Section 4.4. Regulatory Documents.
(a) Since April 30, 1993, Opgroup, the Opgroup Subsidiaries and
the Identified Funds (other than the SBAM Funds) and, to the Knowledge of
Opgroup, the SBAM Funds, have filed all Regulatory Documents, together with any
amendments required to be made with respect thereto, that were required to be
filed by them with any Governmental Authority, including the SEC, with respect
to the Money Management Business.
(b) As of their respective dates, the Regulatory Documents filed
with respect to the Money Management Business, including those with respect to
the Identified Funds (other than the SBAM Funds) and, to Opgroup's Knowledge,
the Regulatory Documents filed with respect to the SBAM Funds, complied in all
material respects with the requirements of the Securities Laws, and the rules
and regulations of the SEC promulgated thereunder applicable to such Regulatory
Documents, and none of such Regulatory Documents, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Where legally required to maintain such Regulatory Documents
current, none of such Regulatory Documents contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
Section 4.5. Capitalization.
(a) At the Closing Date, and immediately prior to the Redemption,
the authorized capital stock of Opgroup will consist of (i) 500,000 shares of
Class A Common Stock,
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of which 65,800 shares will be issued and outstanding and owned of record and
beneficially by Opco LP, (ii) 500,000 shares of Class B Common Stock, of which
61,880 shares will be issued and outstanding and owned of record and, to
Opgroup's Knowledge, beneficially by Opco LP and the other stockholders listed
on Schedule 4.5(a) in the respective amounts set forth opposite their names,
(iii) 500,000 shares of Class C Common Stock, of which 404,200 will be issued
and outstanding and owned of record and beneficially by Opco LP, (iv) 500,000
shares of Class D Common Stock, of which 380,120 will be issued and outstanding
and owned of record and, to Opgroup's Knowledge, beneficially by Opco LP and the
other stockholders listed on Schedule 4.5(a) in the respective amounts set forth
opposite their names, and (v) 10,000 shares of preferred stock, par value $.01
per share, none of which will be issued and outstanding. All of the outstanding
shares of Opgroup Common Stock (x) will be duly and validly authorized and
issued, fully paid and nonassessable and (y) will not have been issued in
violation of any preemptive right. Following the Redemption, no shares of
Opgroup Class C Common Stock or Opgroup Class D Common Stock will be issued or
outstanding. Except as set forth in Schedule 4.5(a) there are no outstanding
options, warrants, calls, rights, commitments or agreements of any kind to which
Opgroup is party or by which it is bound obligating it to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of the capital
stock of any class or series of, or other equity interests in, Opgroup, or any
securities convertible or exchangeable into or evidencing the right to purchase
any shares of capital stock of any class or series of, or other equity interests
in, Opgroup, or obligating Opgroup to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. There are no outstanding
contractual obligations of Opgroup to repurchase, redeem or otherwise acquire
any shares of capital stock of Opgroup. There are no outstanding bonds,
debentures, notes or other securities or instruments of Opgroup (other than the
Opgroup Common Stock) having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matter on which
stockholders of Opgroup may vote.
(b) At the Closing Date, all of the member interests in Value
Advisors will be owned legally and beneficially owned by Opfin. All of such
member interests will be duly and validly authorized and issued, fully paid and
nonassessable and will not have been issued in violation of any preemptive
right.
(c) Omitted.
(d) Schedule 4.5(d) sets forth the equity ownership of each
Opgroup Subsidiary and of each other Person in which Opgroup directly or
indirectly owns any equity interest (other than Holdings and its direct and
indirect subsidiaries). Except as set forth in Schedule 4.5(d), (i) 100% of the
equity interests in each Opgroup Subsidiary is, and will at the Closing be,
owned directly or indirectly by Opgroup, in each case free and clear of any
Encumbrances (other than statutory liens for Taxes not yet due and restrictions
on transferability under the Securities Laws) and (ii) there are no outstanding
options, warrants, calls, rights, commitments or agreements of any kind to which
any Opgroup Subsidiary is party or by which any of them is bound obligating it
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of any class or series of, or other equity interests
in, any Opgroup Subsidiary, or any securities convertible or exchangeable into
or evidencing the right to purchase any shares of capital stock of any class or
series of, or other equity interests in,
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any Opgroup Subsidiary, or obligating any Opgroup Subsidiary to grant, extend or
enter into any such option, warrant, call, right, commitment or agreement. There
are no outstanding contractual obligations of any Opgroup Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of any
Opgroup Subsidiary.
(e) Upon effectiveness of the amendment and restatement of the
Opgroup certificate of incorporation pursuant to Section 2.2, (i) the common
stock to be issued in the Merger will be duly authorized for issuance and, upon
issuance in the manner and for the consideration set forth in this Agreement,
will be validly issued, fully paid and non-assessable and will not be issued in
violation of any preemptive rights and (ii) common stock to be issued in the
Merger will, when issued, be free and clear of all Encumbrances (other than
restrictions on transferability under the Securities Laws).
Section 4.6. Financial Statements.
(a) Opgroup has previously delivered to PIMCO Advisors copies of
(a) the audited consolidated balance sheets of Opcap LP and Opcap as of and for
the fiscal years ended April 30, 1994, 1995 and 1996 (collectively, the "Opcap
Balance Sheets") and the related audited statements of income, changes in
stockholders' equity and cash flows, in each case accompanied by the audit
report of Price Waterhouse LLP, independent public accountants with respect to
each such entity, and (b) the unaudited consolidated interim balance sheets and
related statements of income, changes in stockholders' equity and cash flows of
both such entities at or for the periods ended July 31, 1996 and October 31,
1996. Each of the balance sheets referred to in the previous sentence (including
the related notes, where applicable) present fairly, in all material respects,
the financial position of each of Opcap LP and Opcap as of the dates thereof,
and the other financial statements referred to in the preceding sentence present
fairly (subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount) the results of each of Opcap LP's and
Opcap's operations and their respective cash flows for the respective periods
therein set forth. Each of such financial statements (including the related
notes, where applicable) has been prepared in accordance with GAAP consistently
applied during the periods involved and are consistent with the books and
records of the entity presented.
(b) Opgroup has previously delivered to PIMCO Advisors copies of
the unaudited balance sheets of Advantage Advisers as of and for the fiscal
years ended April 30, 1994, 1995 and 1996 and unaudited balance sheets as of and
for the periods ended July 31, 1996 and October 31, 1996 (collectively, the
"Advantage Advisers Balance Sheets") and the related unaudited statements of
income. Each of the Advantage Advisers Balance Sheets (including the related
notes, where applicable) present fairly, in all material respects, the financial
position of Advantage Advisers as of the dates thereof, and the other financial
statements referred to in the preceding sentence present fairly (subject to
recurring audit adjustments normal in nature and amount) the results of
Advantage Advisers' operations for the respective periods therein set forth.
Each of such financial statements (including the related notes, where
applicable) has been prepared in accordance with GAAP consistently applied
during the periods involved and are consistent with the books and records of
Advantage Advisers.
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Section 4.7. Ineligible Persons.
Neither Opgroup 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. Neither Opgroup nor any "associated person" (as defined in the Advisers
Act) thereof is ineligible pursuant to Section 203 of the Advisers Act to serve
as an investment adviser or as an associated person to a registered investment
adviser. Neither Opgroup nor any "associated person" (as defined in the Exchange
Act) 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.
Section 4.8. Material Contracts.
PIMCO Advisors has been provided true and correct copies of each
of the following agreements as currently in effect, including all amendments and
modifications thereto, to which Opgroup or any Opgroup Subsidiary will be a
party at the Closing Date or by which any of them will be, or their assets will
be, bound at the Closing Date and after giving effect to the Opgroup
Restructuring: (a) any lease (whether of real or personal property) providing
for annual rentals of $250,000 or more; (b) any agreement for the purchase of
materials, supplies, goods, services, equipment or other assets providing for
annual payments of $250,000 or more; (c) any sales, distribution or similar
agreement providing for the sale by Opgroup or any Opgroup Subsidiary of
materials, supplies, goods, services, equipment or other assets providing for
annual payments of $250,000 or more (except for agreements made in the ordinary
course of business and involving investment banking, brokerage, or investment
management services); (d) any joint venture or strategic alliance agreement
providing for annual payments of $250,000 or more or involving an investment by
Opgroup or any Opgroup Subsidiary of $750,000 or more; (e) any agreement
relating to the disposition or sale of any business (whether by merger, sale of
stock, sale of assets or otherwise); (f) any agreement relating to indebtedness
or the deferred purchase price of property involving an aggregate principal
amount of $250,000 or more; (g) any license, franchise or similar agreement
providing for annual payments of $250,000 or more; (h) any agency, dealer, sales
representative, marketing or other similar agreement, providing for annual
payments of $250,000 or more, (i) any severance or similar arrangement in
respect of any personnel of Opgroup and any Opgroup Subsidiary that will result
in any obligation (whether absolute or contingent) of Opgroup, any Opgroup
Subsidiary or any other Person to make any payment to such personnel following
termination of employment or consummation of the transactions contemplated by
this Agreement; (j) any contract or agreement in which rights (including rights
to receive cash or other consideration) are granted, made exercisable or
accelerated due to the execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby; and (k) any other
agreement which involves annual payments in excess of $250,000 or is not
terminable without penalty by Opgroup or any Opgroup Subsidiary within six
months (each such contract, an "Opgroup Material Contract") and a complete and
correct list of all such Opgroup Material Contracts is set forth in Schedule
4.8. To Opgroup's Knowledge, (i) each Opgroup Material Contract is in full force
and effect, and (ii) no
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event has occurred which would (with or without the passage of time, notice or
both) constitute a breach or default of any material obligations of any party to
such Opgroup Material Contract.
Section 4.9. Legal Proceedings.
Except as set forth on Schedule 4.9, there are no legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature that are pending or, to Opgroup's
Knowledge, have been threatened against Opgroup or any Opgroup Subsidiary with
respect to the Money Management Business or any of their respective properties
or assets or that challenge the validity or propriety of the transactions
contemplated by this Agreement.
Section 4.10. Permits and Applicable Law.
(a) Except as disclosed in Schedule 4.10(a), as of the Closing
Date, Opgroup and the Opgroup Subsidiaries will hold all Permits that are
required to conduct the Money Management Business as it is currently being
conducted. As of such date, all Permits shall be valid and in good standing and
shall not be the subject of any suspension, modification or revocation or
proceedings related thereto.
(b) Except as disclosed in Schedule 4.10(b), since April 30, 1993
and except for normal examinations conducted by any Governmental Authority in
the regular course of the Money Management Business, no Governmental Authority
has initiated any administrative proceeding or, to Opgroup's Knowledge,
investigation into the Money Management Business (including, without limitation,
the Identified Funds). A copy of all material correspondence with Governmental
Authorities with respect to the Money Management Business during the last year
has been made available to PIMCO Advisors.
(c) All proxy statements to be prepared for use by the Opgroup
Public Investment Company Clients in connection with the transactions
contemplated by this Agreement (other than any information provided or to be
provided by PIMCO Advisors relating to themselves and their Affiliates expressly
for use in the proxy statements) will not contain, at the times such proxy
statements are furnished to the shareholders, or at the time of the meetings
thereof, any untrue statement of a material fact, or omit to state any material
fact required to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Section 4.11. Insurance.
All of Opgroup's and the Opgroup Subsidiaries' material insurance
policies and bonds with respect to the Money Management Business are listed in
Schedule 4.11. To Opgroup's Knowledge, each such insurance policy or bond is in
full force and effect, and neither Opgroup nor any Opgroup Subsidiary has
received written notice or any other indication from any insurer or agent of any
proposed cancellation of any such insurance policy or bond.
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Section 4.12. Labor and Employment Matters.
Except as set forth in Schedule 4.12, (a) no collective
bargaining arrangement or agreement or similar arrangement or agreement with any
labor organization, or work rules or practices agreed to with any labor
organization or employee association, exists which is binding on Opgroup or any
Opgroup Subsidiary, (b) there are no unfair labor practice complaints pending
against Opgroup or any Opgroup Subsidiary before the National Labor Relations
Board and (c) there are no strikes, slowdowns, work stoppages, lockouts, or to
Opgroup's Knowledge threats thereof, by or with respect to any employees of
Opgroup or any Opgroup Subsidiary.
Section 4.13. Employee Benefit Plans, ERISA.
(a) For purposes of this Agreement "Opgroup Benefit Plan" means
all "employee benefit plans," as defined in Section 3(3) of ERISA, and any bonus
or other incentive compensation, profit sharing, compensation, termination,
stock option, stock appreciation right, restricted unit, restricted option,
performance unit, retirement, deferred compensation, employment, severance,
termination pay, retiree medical or retiree life insurance plan, agreement or
other arrangement in effect for the benefit of any current or former employee or
director of Opgroup or any Opgroup Subsidiary, and any trust or other funding
arrangement relating thereto. Schedule 4.13(a) contains a true and complete list
or description of all Opgroup Benefit Plans other than those to be terminated or
assumed by Holdings or Opco in the Opgroup Restructuring. With respect to each
Opgroup Benefit Plan listed on Schedule 4.13(a), there has been delivered or
made available to PIMCO Advisors copies of any: (i) plans and related trust
documents and amendments thereto; (ii) the most recent summary plan descriptions
and the most recent annual report (including Schedule B); (iii) all other
material employee communications; (iv) the most recent actuarial valuation; and
(v) the most recent determination letter received from the IRS.
(b) Except as set forth in Schedule 4.13(b), with respect to each
Opgroup Benefit Plan, (i) such plan is in compliance in all material respects
with all applicable laws, including ERISA and the Code; (ii) no condition exists
that is reasonably expected to subject Opgroup or any Opgroup Subsidiary to a
civil penalty under Section 502(i) of ERISA, liability under Section 4069 of
ERISA or Sections 4971 through 4980E of the Code, the loss of a federal tax
deduction under Section 404 of the Code, or any penalties or tax liability
arising from the loss of qualification under Section 401(a) of the Code that is
not reflected on the Opgroup Balance Sheets; (iii) each Opgroup Benefit Plan
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS with respect to such qualification, and its
related trust has been determined to be exempt from taxation under Section
501(a) of the Code; and, to Opgroup's Knowledge, nothing has occurred since the
date of such letter that would adversely affect such qualification or exemption;
(iv) there are no claims or legal actions or proceedings (other than routine
claims for benefits) pending or, to Opgroup's Knowledge, threatened, with
respect to any Opgroup Benefit Plan or against the assets of any Opgroup Benefit
Plan; (v) none of Opgroup or any Opgroup Subsidiary or Opco LP has engaged in,
or is a successor corporation to an entity that has engaged in, a transaction
described in Section 4069 of ERISA; and (vi) no event has occurred under
Sections 4041, 4043, 4062, 4063 and 4064 of ERISA during the current or any of
the preceding five plan years that could subject Opgroup, any Opgroup
Subsidiary, any Opgroup Benefit Plan to any liability. Any Opgroup
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Benefit Plan which constitutes a "multiemployer plan" as defined in Section
3(37) of ERISA would not subject PIMCO Advisors to any liability. All
contributions prescribed by law or required under the Opgroup Benefit Plans have
been made or accrued on the Opgroup Balance Sheets to the extent required by
GAAP.
Section 4.14. Intellectual Property.
Schedule 4.14 sets forth a complete and accurate list of all
trademark, service mark and copyright registrations, and patents and pending
applications therefor, in which Opgroup or any Opgroup Subsidiary has any right,
title or interest and which relate to the Money Management Business ("Opgroup
Intellectual Property"), the jurisdictions in which the Opgroup Intellectual
Property has been registered or patented or in which an application for such
registration or patent has been filed, and any licenses, sublicenses and other
agreements in which Opgroup or any Opgroup Subsidiary grants a license to any
other Person to use such Opgroup Intellectual Property. Except as set forth in
Schedule 4.14, no written notice has been received by Opgroup or its
Subsidiaries that the use by Opgroup or any of the Opgroup Subsidiaries of
Opgroup Intellectual Property in which they have any right, title or interest
infringes on any rights of any other Person nor, to Opgroup's Knowledge, has any
other Person infringed on a continuing basis any rights that Opgroup or any of
the Opgroup Subsidiaries have in the Opgroup Intellectual Property.
Section 4.15. Taxes.
(a) Each of Opgroup and the Opgroup Subsidiaries has duly and
timely filed (or there has been duly and timely filed on its behalf) with the
appropriate Governmental Authorities all Tax Returns in respect of Taxes
required to be filed through the date as of which this representation is made
(taking into account extensions). The information filed on behalf of Opgroup and
the Opgroup Subsidiaries was complete and correct in all material respects.
Except as set forth on Schedule 4.15(a), neither Opgroup nor any of the Opgroup
Subsidiaries has requested any extension of time within which to file Tax
Returns in respect of any Taxes, which Tax Returns have not been filed.
(b) All material Taxes of Opgroup and the Opgroup Subsidiaries
due to be paid on or prior to the Closing Date (taking into account extensions)
have been paid or will be paid prior to the Closing Date or an adequate reserve
has been (or, with respect to periods for which financial reports have not yet
been prepared, will be) established therefor in accordance with GAAP. Opgroup
and the Opgroup Subsidiaries do not have any liability for Taxes in excess of
such amounts so paid or reserves so established.
(c) Except as set forth on Schedule 4.15(c), no material
deficiencies for Taxes have been claimed, proposed or assessed by any
Governmental Authority against Opgroup or the Opgroup Subsidiaries for any
taxable year ended subsequent to December 31, 1990. Except as set forth on
Schedule 4.15(c), there are no pending or, to Opgroup's Knowledge, threatened
audits, investigations or claims for or relating to any material additional
liability in respect of Taxes against Opgroup or the Opgroup Subsidiaries, and
there are no matters under discussion with any Governmental Authorities with
respect to Taxes that in the reasonable judgment of
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Opgroup, the Opgroup Subsidiaries is likely to result in a material additional
liability for Taxes for any of such companies. Except as set forth on Schedule
4.15(c), none of Opgroup or the Opgroup Subsidiaries has been notified that any
Governmental Authority intends to audit a Tax Return for any other period.
Except as set forth on Schedule 4.15(c), no extension of a statute of
limitations relating to Taxes is in effect with respect to Opgroup or the
Opgroup Subsidiaries.
(d) There are no Encumbrances upon the assets of Opgroup or any
Opgroup Subsidiary for or arising from Taxes (except for statutory liens for
Taxes not yet due and payable).
(e) All material elections with respect to Taxes affecting
Opgroup and the Opgroup Subsidiaries as of February 13, 1997 are set forth on
Schedule 4.15(e). Opgroup shall notify PIMCO Advisors of new elections with
respect to Taxes, or changes in current elections with respect to Taxes,
affecting Opgroup or the Opgroup Subsidiaries that are made prior to the
Closing, and shall make no such election that would be adverse to PIMCO Advisors
without the prior written consent of PIMCO Advisors. None of Opgroup or the
Opgroup Subsidiaries (i) has made or will make a deemed dividend election under
Treasury Regulation Section 1.1502-32(f)(2) or a consent dividend election under
Section 565 of the Code; (ii) has consented at any time under Section 341 (f)(1)
of the Code to have the provisions of Section 341(f)(2) of the Code apply to any
disposition of any of Opgroup's or the Opgroup Subsidiaries' assets; (iii) has
agreed, or is required, to make any adjustment under Section 481(a) of the Code
by reason of a change in accounting method or otherwise; (iv) has made an
election, or is required, to treat any asset of Opgroup or the Opgroup
Subsidiaries as owned by another Person pursuant to the provisions of former
Section 168(f)(8) of the Code or as "tax-exempt use property" within the meaning
of Section 168 of the Code; or (v) has made any of the foregoing elections or is
required to apply any of the foregoing rules under any comparable state or local
income Tax provision.
(f) All tax-sharing agreements or similar arrangements with
respect to or involving Opgroup and the Opgroup Subsidiaries are identified on
Schedule 4.15(f).
(g) Opgroup is not a U.S. real property holding corporation as
defined in Section 897 of the Code.
(h) Neither Opgroup nor any of the Opgroup Subsidiaries has made
or will, as a result of any event connected with the Merger, the CIBC
Transaction or any other transaction contemplated by this Agreement, make or
become obligated to make, any "excess parachute payment" as defined in Section
280G of the Code.
(i) Neither Opgroup nor any of the Opgroup Subsidiaries has
participated in or will participate in an international boycott within the
meaning of Section 999 of the Code.
Section 4.16. Investment Companies, Managed Account Clients,
Distributors, Etc.
(a) Schedule 4.16(a) sets forth a complete and accurate list of
(i) each Opgroup Public Investment Company Client, (ii) each Opgroup Private
Investment Company Client, (iii) each Opgroup Offshore Investment Company Client
and (iv) each Opgroup Managed Account Client, and indicates the Run-Rate
Revenues with respect to such clients as of
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October 31, 1996. Each Opgroup Public Investment Company Client sponsored by
Opgroup or its Affiliates is duly registered with the SEC as an investment
company under the Investment Company Act. Except as set forth in Schedule
4.16(a), no Opgroup Investment Company Client or Opgroup Managed Account Client
in respect of which any Opgroup Subsidiary has accrued asset management or
similar fees in excess of $100,000 during the twelve months ended October 31,
1996, has, between such date and February 13, 1997, to Opgroup's Knowledge,
indicated in writing any intent to terminate any Advisory Agreement with any of
the Opgroup Subsidiaries. Opgroup provides no investment advice for compensation
and is not a party to any contracts or agreements in which Opgroup agrees to act
as an investment advisor, subadvisor, manager or act in a similar capacity.
(b) True and correct copies of each Advisory Agreement pursuant
to which any of the Opgroup Subsidiaries acts as investment adviser to the
Opgroup Investment Company Clients have been made available to PIMCO Advisors.
Each such Advisory Agreement is in full force and effect with respect to the
Opgroup Investment Company Client and Opgroup and the Opgroup Subsidiaries which
are parties thereto.
(c) Shares of each Opgroup Public Investment Company Client
sponsored by any Opgroup Subsidiary have been duly registered under the
Securities Act and applicable state securities laws, and the related
registration statements were effective under the Securities Act and applicable
state securities laws at all times when such effectiveness was required and no
stop order suspending the effectiveness of any such registration statement has
been issued.
(d) No shares or other equity interests of any Opgroup Private
Investment Company Client sponsored by any Opgroup Subsidiary which have been
offered or sold have been registered or qualified, as the case may be under the
Securities Act or any other Securities Laws and no such registration or
qualification was or is required.
(e) Shares or other equity interests of each Opgroup Offshore
Investment Company Client sponsored by any Opgroup Subsidiary have been duly
registered, or qualified, as the case may be, to the extent required under
applicable Securities Laws.
(f) Each Opgroup Investment Company Client sponsored by an
Opgroup Subsidiary is duly organized and validly existing and in good standing
under the laws of the jurisdiction of its organization and has the requisite
corporate power and authority to own all its properties and assets and to carry
on its business as it is now being conducted.
(g) True and correct copies of each agreement pursuant to which
any of the Opgroup Subsidiaries provides distribution services to any Opgroup
Investment Company Client ("Opgroup Distribution Contract") have been made
available to PIMCO Advisors. Schedule 4.16(g) sets forth a list of each such
Opgroup Distribution Contract. Each Opgroup Distribution Contract is in full
force and effect with respect to the Opgroup Subsidiaries which are parties
thereto.
(h) Each Identified Fund (other than the SBAM Funds) and, to the
Knowledge of Opgroup, each SBAM Fund, is in compliance in all material respects
with all applicable
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federal and state securities laws. Each Opgroup Public Investment Company Client
is in compliance in all material respects with applicable investment policies
and restrictions. Each Opgroup Public Investment Company Client has been managed
in a manner consistent with the qualification of such Opgroup Public Investment
Company Client's as a "regulated investment company" under Subchapter M of the
Code.
Section 4.17. No Material Adverse Effect.
From October 31, 1996 through the Closing Date, except as
otherwise disclosed in writing to PIMCO Advisors with specific reference to this
Section 4.17, to Opgroup's Knowledge, there has occurred no event which could
reasonably be expected to have an Opgroup Material Adverse Effect.
Section 4.18. Bringdown.
(a) From October 31, 1996 through the Closing Date, to Opgroup's
Knowledge, except as expressly contemplated or permitted by this Agreement or
with the prior written consent of PIMCO Advisors, Opgroup and the Opgroup
Subsidiaries has (1) carried on the Money Management Business in the ordinary
course; (2) used commercially reasonable efforts to preserve their present
business organization and relationships with respect to the Money Management
Business; (3) used commercially reasonable efforts to keep available the present
services of their employees related to the Money Management Business (which
efforts need not include materially increasing such employee's compensation
except with respect to restricted unit rights as may be agreed by the parties);
and (4) used commercially reasonable efforts to preserve their rights,
franchises, goodwill and relations with clients and others with whom they
conduct the Money Management Business. Without limiting the generality of the
foregoing, except as expressly contemplated or permitted by this Agreement and
Annex A or with the prior written consent of PIMCO Advisors, Opgroup and the
Opgroup Subsidiaries have not:
(i) created, renewed, amended, terminated or canceled, or
taken any other action that may result in the creation, renewal, amendment,
termination or cancellation of, any Opgroup Material Contract except in the
ordinary course of business;
(ii) adopted, amended, renewed or terminated any Opgroup
Benefit Plan or any other employee program, agreement, arrangement or policy
between Opgroup, any Opgroup Subsidiary and one or more of their employees,
other than in the ordinary course of business;
(iii) committed any act or omission which constitutes a
breach or default under any contract or license to which it is a party or by
which it or any of its properties is bound the effect of which could reasonably
be expected to cause an Opgroup Material Adverse Effect;
(iv) waived any right or modified or amended any
commitment other than in the ordinary course of business, or incurred any
material obligation;
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(v) incurred, assumed, or guaranteed any indebtedness or
liability for or in respect of borrowed money;
(vi) made any material change to the total compensation of
any employee of Opgroup or the Opgroup Subsidiaries;
(vii) declared or paid any dividends or made any other
distribution in cash or property in respect of its capital stock or partnership
interests, other than normal and customary dividends or distributions (including
special dividends or distributions customarily paid from time to time);
(viii) voluntarily divested itself of the management of
any mutual fund or other assets currently under management;
(ix) acquired or agreed to acquire in any manner,
including by way of merger, consolidation, purchase of an equity interest or
assets, any business or any corporation, partnership, association or other
business organization or division thereof;
(x) entered into any joint venture or partnership except
as set forth on Schedule 4.23(a);
(xi) created or permitted the creation or attachment of
any Encumbrances except in the ordinary course of business;
(xii) sold, assigned, conveyed or transferred any assets
other than in the ordinary course and for fair value, provided, however, that no
consent shall be required for such sales, assignments, conveyances or transfers
in the ordinary course for fair value and not in excess of $5 million in the
aggregate, or for ordinary course investment activity involving assets under
management;
(xiii) entered into any new line of business; or
(xiv) assumed or otherwise become liable for any
obligation, indebtedness, commitment or other liability of any direct or
indirect Subsidiary of Equities or any entity in which Equities has a direct or
indirect interest.
(b) From July 22, 1997 through the Closing Date, Opgroup has used
commercially reasonable efforts, and has caused the Opgroup Subsidiaries to use
commercially reasonable efforts, to maintain in effect until the Closing Date
all material casualty and public liability policies maintained by Opgroup and
the Opgroup Subsidiaries on the February 13, 1997 relating to the Opgroup
Business, or has procured comparable replacement policies (to the extent
commercially reasonable) and maintained such replacement policies in effect
through the Closing Date.
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(c) Each of Holdings, Opco and Advantage Advisers did, prior to
the closing of the CIBC Transaction, adopt and have in effect a plan of
liquidation pursuant to Section 332 of the Code.
Section 4.19. Brokers.
Other than Goldman Sachs & Co., no broker, finder or similar
intermediary has acted for or on behalf of, or is entitled to any broker's,
finder's or similar fee or other commission from, Opgroup or its Affiliates.
Opgroup has paid, or caused to be paid, any broker's, finder's or similar fee or
other commission owed by Opgroup or any Opgroup Subsidiary in connection with
this Agreement or the Merger, including but not limited to that, owed to
Goldman, Sachs & Co.
Section 4.20. Additional Fund Representations.
(a) To the Knowledge of Opgroup, there is no beneficial owner
(within the meaning of the Exchange Act) of 5% of the outstanding voting
securities of any closed-end Identified Fund.
(b) To the Knowledge of Opgroup, no action has been taken, or is
pending or proposed, to convert any closed-end Identified Fund into an open-end
investment company.
Section 4.21. Regarding Equities.
The sole business and operations of Equities has from its
inception been (i) as a holding company, owning 100% of the stock of Holdings,
(ii) as obligor under the Opgroup Equities Note and (iii) as obligee under a
note from Opgroup in the principal amount of $69.7 million.
Section 4.22. Non-Investment Company Advisory Agreement Consents.
Opgroup and the Opgroup Subsidiaries have informed their
respective investment advisory clients (other than the Opgroup Public Investment
Company Clients) of the transactions contemplated by this Agreement. Opgroup has
caused the Opgroup Subsidiaries, in compliance with the Advisers Act, to request
written consent of each such client to the assignment to PIMCO Advisors or its
Affiliate of its Advisory Agreement and used commercially reasonable efforts to
obtain such consent, or in the case of agreements which prohibit assignment or
state by their terms that they terminate upon assignment, used commercially
reasonable efforts to enter into new agreements with PIMCO Advisors or its
Affiliate effective upon Closing. For purposes of this representation, except in
the case of such Advisory Agreements which prohibit assignment or state by their
terms that they terminate upon assignment or which, by their terms, require
written consent of the client, Opgroup and the Opgroup Subsidiaries may have
obtained consent by requesting written consent and informing such client: (i) of
Opgroup's intention to assign such Advisory Agreement to PIMCO Advisors; (ii) of
PIMCO Advisors' intention to continue the advisory services, pursuant to the
existing Advisory Agreement with such client after the Closing if such client
does not terminate such agreement prior to the Closing; and (iii) that the
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consent of such client will be implied if such client continues to accept such
advisory services for at least 30 days after receipt of such notice without
termination.
Section 4.23. Section 15 of the Investment Company Act--Opgroup and
Opfin.
(a) Opgroup and Opfin have obtained the approval of the Board of
Directors or trustees, as applicable, and shareholders of each Opgroup Public
Investment Company Client, pursuant to the provisions of Section 15 of the
Investment Company Act, of a new Advisory Agreement with PIMCO Advisors or its
Affiliate or of the assignment of its respective Advisory Agreement, as
applicable.
(b) Opgroup and Opfin have taken such actions as necessary to
satisfy or obtain exemption from the conditions set forth in Section 15(f) of
the Investment Company Act with respect to each Opgroup Public Investment
Company Client, including the receipt of exemptive relief from the SEC with
respect to the status of the directors of each Opgroup Public Investment Company
Client as "interested persons" of the entities referred to in Section
15(f)(1)(A), with respect to the transactions contemplated by this Agreement.
REPRESENTATIONS AND WARRANTIES OF THE INDEMNITY TRUST
The Indemnity Trust represents and warrants to PIMCO Advisors at
July 22, 1997 and at the Closing Date, as follows:
Section 4.24. Organization and Related Matters.
The Indemnity Trust is properly formed, validly existing and in
good standing under the laws of the jurisdiction of its formation, and has not
been established, revoked, modified, or amended in any manner which would cause
the representations and warranties contained herein to be incorrect or to cause
this Agreement to be unenforceable against it.
Section 4.25. Authority, No Violation.
(a) Each Indemnity Trustee has accepted appointment as "Managing
Trustee" under the Declaration of Trust of the Indemnity Trust, as amended (the
"Indemnity Declaration"), by the terms of such trust is qualified and possesses
the necessary trust powers to act, and does act as managing trustee pursuant to
the Indemnity Declaration. The Indemnity Trustees possess the full power and
authority to execute and deliver this Agreement and consummate the transactions
contemplated hereby, and in doing so are properly acting in exercising their
powers under the Indemnity Declaration such that this Agreement (assuming the
due authorization, execution and delivery of this Agreement by each other party
hereto) constitutes a valid and binding obligation of the Indemnity Trust,
enforceable against such trust in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency, moratorium and
similar laws affecting creditors' rights and remedies generally.
(b) The Indemnity Trustees constitute all of the currently acting
managing trustees of the Indemnity Trust. The signature authority of the
Indemnity Trustees is all that is
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required for the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby; and no other signature, or other
proceedings on the part of the Indemnity Trust, or any of its beneficiaries is
necessary to approve this Agreement and to authorize the performance of the
terms hereof.
(c) Neither the execution and delivery of this Agreement by the
Indemnity Trustees, nor the performance of the terms and conditions hereof by
the Indemnity Trustees, will (i) violate any provision of the Indemnity
Declaration, or (ii) (A) violate any federal, state or local statue, law,
ordinance, rule, administrative interpretation, regulation, order, writ,
injunction, directive, judgment, decree, policy, guideline or other requirement
applicable to the Indemnity Trust or the Indemnity Trustees or (B) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any material Encumbrance upon, any of the properties
or assets of the Indemnity Trust, as applicable, or any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which such trust or a Indemnity Trustee is a party, or by which
any of their respective properties or assets may be bound.
Section 4.26. Consents and Approvals.
No consents or approvals of or filings or registrations with any
Governmental Authority or third party are necessary in connection with (i) the
execution and delivery by the Indemnity Trustees, on behalf of the Indemnity
Trust, of this Agreement and (ii) the performance by the Indemnity Trustees, on
behalf of the Indemnity Trust, of the terms and provisions of this Agreement.
REPRESENTATIONS AND WARRANTIES OF THE SELLER TRUST
The Seller Trust represents and warrants to PIMCO Advisors at
July 22, 1997 and at the Closing Date, as follows:
Section 4.27. Organization and Related Matters.
The Seller Trust is properly formed, validly existing and in good
standing under the laws of the jurisdiction of its formation, and has not been
established, revoked, modified, or amended in any manner which would cause the
representations and warranties contained herein to be incorrect or to cause this
Agreement to be unenforceable against it.
Section 4.28. Authority; No Violation.
(a) Each Seller Trustee has accepted appointment as "Managing
Trustee" under the Declaration of Trust of the Seller Trust, as amended (the
"Seller Declaration"), by the terms of such trust is qualified and possesses the
necessary trust powers to act, and does act as managing trustee pursuant to the
Seller Declaration. The Seller Trustees possess the full power and authority to
execute and deliver this Agreement and consummate the transactions contemplated
hereby, and in doing so are properly acting in exercising their powers under the
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Seller Declaration such that this Agreement (assuming the due authorization,
execution and delivery of this Agreement by each other party hereto) constitutes
a valid and binding obligation of the Seller Trust, enforceable against such
trust in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency, moratorium and similar laws affecting
creditors' rights and remedies generally.
(b) The Seller Trustees constitute all of the currently acting
managing trustees of the Seller Trust. The signature authority of the Seller
Trustees is all that is required for the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; and no
other signature, or other proceedings on the part of the Seller Trust, or any of
its beneficiaries is necessary to approve this Agreement and to authorize the
performance of the terms hereof.
(c) Neither the execution and delivery of this Agreement by the
Seller Trustees, nor the performance of the terms and conditions hereof by the
Seller Trustees, will (i) violate any provision of the Seller Declaration, or
(ii) (A) violate any federal, state or local statue, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree, policy, guideline or other requirement applicable to the
Seller Trust or the Seller Trustees or (B) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any material Encumbrance upon, any of the properties
or assets of the Seller Trust, as applicable, or any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which such trust or a Seller Trustee is a party, or by which any
of their respective properties or assets may be bound.
Section 4.29. Consents and Approvals.
No consents or approvals of or filings or registrations with any
Governmental Authority or third party are necessary in connection with (i) the
execution and delivery by the Seller Trustees, on behalf of the Seller Trust, of
this Agreement and (ii) the performance by the Seller Trustees, on behalf of the
Seller Trust, of the terms and provisions of this Agreement.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PATM
PATM represents and warrants to each of Opgroup and Opfin at the
Closing Date as follows:
Section 5.1. Organization and Related Matters.
PATM is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware. PATM has
the limited liability company power
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and authority to carry on its business as it is proposed to be conducted and to
own, lease and operate all of the properties and assets proposed to be owned,
leased and operated by it, and will be duly licensed or qualified to do business
in each jurisdiction in which the nature of the business proposed to be
conducted by it or the character or location of the properties and assets
proposed to be owned, leased or operated by it makes such qualification or
licensing necessary. The copies of the organizational documents of PATM
heretofore delivered to Opgroup are complete and correct copies of such
instruments as currently in effect.
Section 5.2. Authority; No Violation.
(a) PATM has full limited liability company power and authority
to execute and deliver this Agreement and take all actions necessary or
appropriate to be taken by it to consummate the transactions contemplated
hereby. Except as set forth on Schedule 5.2(a), the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by all requisite limited liability company action
on the part of PATM and its members, and no other limited liability company
proceedings on the part of PATM are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by PATM and (assuming the due authorization,
execution and delivery of this Agreement by Opgroup and Opfin) constitutes a
valid and binding obligation of PATM, enforceable against it in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency, moratorium and similar laws affecting creditors' rights and remedies
generally.
(b) Neither the execution and delivery of this Agreement by PATM,
nor the consummation of the Merger, nor compliance by PATM with any of the other
terms or provisions hereof, will (i) violate any provision of the limited
liability company agreement of PATM or (ii) except as set forth in Schedule
5.2(b), and assuming the accuracy of Section 4.23 and compliance with Section
9.5, (x) violate any Applicable Law, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any material Encumbrance upon any assets of PATM or
any note, bond, mortgage, indenture, deed of trust, license, lease agreement or
other instrument or obligation to which PATM is a party, or by which PATM or any
of its respective properties or assets may be bound.
Section 5.3. Consents and Approvals.
As of the Closing Date, except for consents, approvals and
notices as are set forth in Schedule 5.3, no consents or approvals of or filings
or registrations with any Governmental Authority or any third party are
necessary in connection with (w) the execution and delivery by PATM of this
Agreement and (x) the consummation by PATM of the transactions contemplated
hereby.
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Section 5.4. Capitalization.
PATM has a single member, PIMCO Advisors, which owns all member
interests in PATM. The outstanding member interests (x) are duly and validly
authorized and issued, fully paid and nonassessable and (y) have not been issued
in violation of any preemptive right. Except as contemplated by this Agreement,
(i) there are no outstanding options, warrants, calls, rights, commitments or
agreements of any kind to which PATM is party or by which it is bound obligating
it to issue, deliver or sell, or cause to be issued, delivered or sold,
additional member interests in PATM or any securities convertible or
exchangeable into or evidencing the right to purchase any such interests in
PATM, or obligating PATM to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement; (ii) there are no outstanding
contractual obligations of PATM to repurchase, redeem or otherwise acquire any
equity interests in PATM; and (iii) there are no outstanding bonds, debentures,
notes or other securities or instruments of PATM having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matter on which members of PATM may vote.
Section 5.5. Financial Condition and Subsidiaries.
PATM is a newly-formed limited liability company and has no
assets or liabilities of any kind or description other than $100 in cash
representing the proceeds of issuance of the outstanding member interest in PATM
and its obligations under this Agreement.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF PIMCO ADVISORS
PIMCO Advisors represents and warrants to each of Opgroup and
Opfin at February 13, 1997 and at the Closing Date, as follows:
Section 6.1. Organization.
PIMCO Advisors is a limited partnership, validly existing and in
good standing under the laws of the State of Delaware. Each PIMCO Advisors
Subsidiary that is a corporation or a partnership is validly existing and in
good standing under the jurisdiction of its organization. Each of PIMCO Advisors
and the PIMCO Advisors Subsidiaries has the partnership or corporate power and
authority, as the case may be, to carry on its business as it is now being
conducted and to own, lease and operate all of its properties and assets, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned, leased or operated by it makes such qualification
or licensing necessary. A complete and correct copy of the PIMCO Advisors
partnership agreement and of the certificate of incorporation, by-laws or
partnership agreement of each PIMCO Advisors Subsidiary have been made available
to Opgroup.
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Section 6.2. Authority, No Violation.
(a) PIMCO Advisors has full partnership power and authority to
execute and deliver this Agreement and take all actions necessary or appropriate
to be taken by it to consummate the transactions contemplated hereby. Except as
set forth on Schedule 6.2(a), the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly approved by all requisite partnership action on the part of PIMCO
Advisors and its unitholders, and no other partnership proceedings on the part
of PIMCO Advisors or its unitholders or any PIMCO Advisors Subsidiary or their
unitholders, or shareholders, as the case may be, are necessary to approve this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by PIMCO Advisors, and
(assuming the due authorization, execution and delivery of this Agreement by
Opgroup and Opfin) constitutes a valid and binding obligation of PIMCO Advisors,
enforceable against it in accordance with its terms, except as enforcement may
be limited by general principles of equity whether applied in a court of law or
a court of equity and by bankruptcy, insolvency, moratorium and similar laws
affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by PIMCO
Advisors, nor the consummation by PIMCO Advisors of the transactions
contemplated hereby, nor compliance by PIMCO Advisors with any of the terms or
provisions hereof, will (i) violate any provision of any partnership agreement,
certificate or incorporation or bylaws of PIMCO Advisors or any of the PIMCO
Advisors Subsidiaries or (ii) except as set forth in Schedule 6.2(b), and
assuming the accuracy of Section 4.23 and compliance with Section 9.5, (x)
violate any Applicable Law, or (y) violate, conflict with, result in a breach of
any provision of or the loss of any benefit under, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any
material Encumbrance upon any of PIMCO Advisors' or any PIMCO Advisors
Subsidiary's properties or assets, or any note, bond, mortgage, indenture, deed
of trust, license, lease agreement or other instrument or obligation to which
PIMCO Advisors or any of the PIMCO Advisors Subsidiaries is a party, or by which
PIMCO Advisors or any of the PIMCO Advisors Subsidiaries or any of their
properties or assets, may be bound.
Section 6.3. Consents and Approvals.
As of the Closing Date, except for such consents, approvals and
notices as are set forth in Schedule 6.3, no consents or approvals of or filings
or registrations with any Governmental Authority or any third party are
necessary in connection with the execution and delivery by PIMCO Advisors of
this Agreement and the consummation by PIMCO Advisors of the transactions
contemplated hereby.
Section 6.4. Regulatory Documents.
(a) Since November 15, 1994, PIMCO Advisors and each PIMCO
Advisors Subsidiary has timely filed all Regulatory Documents, together with any
amendments required
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to be made with respect thereto, that were required to be filed by them with any
Governmental Authority, including the SEC.
(b) At their respective dates, the Regulatory Documents of PIMCO
Advisors and each PIMCO Advisors Subsidiary complied in all material respects
with the requirements of the Securities Laws, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to such Regulatory
Documents, and none of such Regulatory Documents, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Where legally required to maintain such Regulatory Documents
current, none of such Regulatory Documents contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
Section 6.5. Capitalization.
At February 13, 1997, PIMCO Advisors had issued and outstanding
800,000 units of general partner interest ("GP Units") and 40,146,155 Class A
Units and 32,964,759 Class B Units. All of PIMCO Advisors' outstanding units of
partnership interest have been duly issued pursuant to its partnership
agreement, are fully paid and nonassessable (except as provided in Section
17-607 or former Section 17-608 of the Delaware Revised Uniform Limited
Partnership Act) and have not been issued in violation of any preemptive right.
Except as contemplated by this Agreement and the Annexes hereto and as set forth
on Schedule 6.5, (i) there are no outstanding options, warrants, calls, rights,
commitments or agreements of any kind to which PIMCO Advisors or any PIMCO
Advisors Subsidiary is party or by which any of them is bound obligating it to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
units of the partnership interest of any class or series of, or other equity
interests in, PIMCO Advisors or any PIMCO Advisors Subsidiary, or any securities
convertible or exchangeable into or evidencing the right to purchase any units
of partnership interest of any class or series of, or other equity interests in,
PIMCO Advisors or any PIMCO Advisors Subsidiary, or obligating PIMCO Advisors or
any PIMCO Advisors Subsidiary to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement; (ii) there are no outstanding
contractual obligations of PIMCO Advisors or any PIMCO Advisors Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of PIMCO
Advisors or any PIMCO Advisors Subsidiary; and (iii) there are no outstanding
bonds, debentures, notes or other securities or instruments of PIMCO Advisors or
any PIMCO Advisors Subsidiary having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matter on which
unitholders or shareholders, as the case may be, of PIMCO Advisors or any PIMCO
Advisors Subsidiary may vote.
Section 6.6. Financial Statements.
PIMCO Advisors has previously delivered to Opgroup copies of (i)
the audited consolidated statements of financial condition of PIMCO Advisors as
of December 31, 1994 and 1995 (collectively, the "PIMCO Advisors Balance
Sheets") and the related audited statements of
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operations, changes in owners' equity and cash flows for the years then ended,
in each case accompanied by the audit report of Deloitte & Touche LLP,
independent public accountants with respect to PIMCO Advisors and (ii) the
unaudited interim statements of financial condition and related statements of
operations, changes in owners' equity and cash flows of PIMCO Advisors at or for
the periods ended March 31, June 30 and September 30, 1996. Each of the PIMCO
Advisors Balance Sheets (including the related notes, where applicable) present
fairly the consolidated financial position of PIMCO Advisors as of the dates
thereof, and the other financial statements referred to in the previous sentence
present fairly (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount) the consolidated results of
operations, cash flows and changes in unitholders' equity of PIMCO Advisors, for
the respective fiscal periods therein set forth; each of such statements
(including the related notes, where applicable) has been prepared in accordance
with GAAP consistently applied during the periods involved and are consistent
with the books and records of PIMCO Advisors.
Section 6.7. Ineligible Persons.
Neither PIMCO Advisors 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. Neither PIMCO Advisors nor any "associated person" (as
defined in the Advisers Act) of PIMCO Advisors, is ineligible pursuant to
Section 203 of the Advisers Act to serve as an investment adviser or as an
associated person to a registered investment adviser. Neither PIMCO Advisors nor
any "associated person" (as defined in the Exchange Act) 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.
Section 6.8. Material Contracts.
There have been made available to Opgroup copies of each of the
following agreements to which PIMCO Advisors or any PIMCO Advisors Subsidiary is
a party or by which any of them is bound: (a) any lease (whether of real or
personal property) providing for annual rentals of $1 million or more; (b) any
agreement for the purchase of materials, supplies, goods, services, equipment or
other assets providing for annual payments of $1 million or more; (c) any sales,
distribution or similar agreement providing for the sale by PIMCO Advisors or
any PIMCO Advisors Subsidiary of materials, supplies, goods, services, equipment
or other assets providing for annual payments of $1 million or more (except for
agreements made in the ordinary course of business and involving investment
banking, brokerage, or investment management services); (d) any joint venture or
strategic alliance agreement providing for annual payments of $1 million or more
or involving an investment by PIMCO Advisors or any PIMCO Advisors Subsidiary of
$1.5 million or more; (e) any agreement relating to the disposition or sale of
any business (whether by merger, sale of stock, sale of assets or otherwise);
(f) any agreement relating to indebtedness or the deferred purchase price of
property involving an aggregate principal amount of $1 million or more; (g) any
license, franchise or similar agreement providing for annual payments of $1
million or more; (h) any agency, dealer, sales representative, marketing or
other similar agreement, providing for annual payments of $1 million or more and
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(i) any other agreement which involves annual payments in excess of $1 million
or is not terminable without penalty by PIMCO Advisors or any PIMCO Advisors
Subsidiary within six months (each such contract, a "PIMCO Advisors Material
Contract") and a complete and correct list of all such PIMCO Advisors Material
Contracts is set forth in Schedule 6.8. To PIMCO Advisors' Knowledge, (i) each
PIMCO Advisors Material Contract is in full force and effect, and (ii) no event
has occurred which would (with or without the passage of time, notice or both)
constitute a breach or default of any material obligations of any other party to
such PIMCO Advisors Material Contract.
Section 6.9. No Broker.
No broker, finder or similar intermediary has acted for or on
behalf of, or is entitled to any broker's, finder's or similar fee or other
commission from PIMCO Advisors or any of its Affiliates in connection with this
Agreement or the Merger.
Section 6.10. Legal Proceedings.
Except as set forth on Schedule 6.10, there are no legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature that are pending or, to PIMCO
Advisors' Knowledge, have been threatened against PIMCO Advisors or PATM, any
PIMCO Advisors Subsidiary or their respective properties or assets or that
challenge the validity or propriety of the transactions contemplated by this
Agreement.
Section 6.11. Permits and Applicable Law.
(a) Except as disclosed in Schedule 6.11(a), PIMCO Advisors and
each PIMCO Advisors Subsidiary holds all Permits that are material to the lawful
ownership and use of its properties and assets and the conduct of its business.
All such Permits are valid and in good standing and are not subject to any
suspension, modification or revocation or proceedings related thereto.
(b) Except as disclosed in Schedule 6.11(b), since November 15,
1994 and except for normal examinations conducted by any Governmental Authority
in the regular course of the business of PIMCO Advisors or any PIMCO Advisors
Subsidiary, no Governmental Authority has initiated any administrative
proceeding or, to the best of such PIMCO Advisors' Knowledge, investigation into
the business or operations of PIMCO Advisors or the PIMCO Advisors Subsidiaries.
A copy of all material correspondence with Governmental Authorities during the
last year with respect to PIMCO Advisors or any PIMCO Advisors Subsidiary has
been made available to Opgroup.
(c) The information provided or to be provided in writing by
PIMCO Advisors relating to it and its Affiliates expressly for use in the proxy
statements to be furnished to shareholders of the Opgroup Public Investment
Company Clients in connection with the transactions contemplated by this
Agreement will not contain, at the times such proxy statements are furnished to
the shareholders or at the times of the meetings thereof, any untrue statement
of a material fact, or omit to state any material fact required to be stated
therein or necessary in
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order to make the statements made therein, in light of the circumstances under
which they are made, not misleading.
Section 6.12. Insurance.
All of PIMCO Advisors' and PIMCO Advisors Subsidiaries' material
insurance policies and bonds are listed in Schedule 6.12. To the Knowledge of
PIMCO Advisors, each such insurance policy or bond is in full force and effect,
and neither PIMCO Advisors nor any PIMCO Advisors Subsidiary has received
written notice or any other indication from any insurer or agent of any proposed
cancellation of any such insurance policy or bond.
Section 6.13. Labor and Employment Matters.
Except as set forth in Schedule 6.13, (i) no collective
bargaining arrangement or agreement or similar arrangement or agreement with any
labor organization, or work rules or practices agreed to with any labor
organization or employee association, exists which is binding on PIMCO Advisors
or any PIMCO Advisors Subsidiary, (ii) there are no unfair labor practice
complaints pending against PIMCO Advisors or any PIMCO Advisors Subsidiary
before the National Labor Relations Board and (iii) there are no strikes,
slowdowns, work stoppages, lockouts, or to the knowledge of PIMCO Advisors
threats thereof, by or with respect to any employees of PIMCO Advisors or any
PIMCO Advisors Subsidiary.
Section 6.14. Employment Benefit Plans; ERISA.
(a) Schedule 6.14(a) contains a true and complete list or
description of all "employee benefit plans" as defined in Section 3(3) of ERISA,
and any bonus or other incentive compensation, profit sharing, compensation,
termination, stock option, stock appreciation right, restricted unit, restricted
option, performance unit, retirement, deferred compensation, employment,
severance, termination pay, retiree medical or retiree life insurance plan,
agreement, fund or other arrangement in effect for the benefit of any current or
former employee or director of PIMCO Advisors or any PIMCO Advisors Subsidiary,
and any trust or other funding arrangement relating thereto (each a "PIMCO
Advisors Benefit Plan"). With respect to each of such PIMCO Advisors Benefit
Plan, there has been delivered or made available to Opgroup, as applicable,
copies of any: (i) plans and related trust documents and amendments thereto;
(ii) the most recent summary plan descriptions and the most recent annual report
(including Schedule B); (iii) all other material employee communications; (iv)
the most recent actuarial valuation; and (v) the most recent determination
letter received from the IRS.
(b) Except as set forth on Schedule 6.14(b), with respect to each
PIMCO Advisors Benefit Plan, (i) such plan is in compliance in all material
respects with all applicable laws, including ERISA and the Code; (ii) no
condition exists that is reasonably expected to subject PIMCO Advisors or any
PIMCO Advisors Subsidiary to a civil penalty under Section 502(i) of ERISA,
liability under Sections 4971 through 4980E of the Code, the loss of a federal
tax deduction under Section 404 of the Code, or any penalties or tax liability
arising from the loss of qualification under Section 401(a) of the Code that is
not reflected on the PIMCO Advisors Balance Sheets; (iii) each PIMCO Advisors
Benefit Plan intended to qualify under
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Section 401(a) of the Code has received a favorable determination letter from
the IRS with respect to such qualification, and its related trust has been
determined to be exempt from taxation under Section 501(a) of the Code; and, to
PIMCO Advisors Knowledge, nothing has occurred since the date of such letter
that would adversely affect such qualification or exemption; (iv) there are no
claims or legal actions or proceedings (other than routine claims for benefits)
pending or, to PIMCO Advisors' Knowledge, threatened, with respect to any PIMCO
Advisors Benefit Plan or against the assets of any PIMCO Advisors Benefit Plan;
(v) neither PIMCO Advisors nor any PIMCO Advisors Subsidiary has engaged in, or
is a successor or parent corporation to an entity that has engaged in, a
transaction described in Section 4069 of ERISA; and (vi) no event has occurred
under Sections 4041, 4043, 4062, 4063 and 4064 of ERISA during the current or
any of the preceding five plan years that could subject PIMCO Advisors, any
PIMCO Advisors Subsidiary, any PIMCO Advisors Benefit Plan or any officer or
director of any of PIMCO Advisors or any PIMCO Advisors Subsidiary to any
liability. Any PIMCO Advisors Benefit Plan which constitutes a "multiemployer
plan" as defined in Section 3(37) of ERISA would not subject Opgroup or Opgroup
to any material liability. All contributions prescribed by law or required under
the PIMCO Advisors Benefit Plans have been made or accrued on the PIMCO Advisors
Balance Sheets to the extent required by GAAP.
Section 6.15. Intellectual Property.
Schedule 6.15 sets forth a complete and accurate list of all
material trademark, service mark and copyright registrations, and patents and
pending applications therefor, in which PIMCO Advisors or any PIMCO Advisors
Subsidiary has any right, title or interest, the jurisdictions in which such
intellectual property has been registered or patented or in which an application
for such registration or patent has been filed, and any licenses, sublicenses
and other agreements in which PIMCO Advisors or any PIMCO Advisors Subsidiary
grants a license to any other Person to use such intellectual property. Except
as set forth in Schedule 6.15, to the Knowledge of PIMCO Advisors, no written
notice has been received by PIMCO Advisors or any PIMCO Advisors Subsidiary that
the use by PIMCO Advisors or any PIMCO Advisors Subsidiary of such intellectual
property in which they have any right, title or interest infringes on any rights
of any other Person nor, to the Knowledge of PIMCO Advisors, has any other
Person infringed on a continuing basis any rights that PIMCO Advisors or any
PIMCO Advisors Subsidiary have in such intellectual property.
Section 6.16. Taxes.
(a) Except as disclosed on Schedule 6.16, PIMCO Advisors and each
PIMCO Advisors Subsidiary has (i) properly prepared and timely filed (or there
has been filed on its behalf) with the appropriate Governmental Authorities all
Tax Returns required to be filed through the date as of which this
representation is made, and all such Tax Returns were true and correct in all
material respects, and (ii) duly paid in full or will pay in full prior to the
Closing or has made provision in accordance with GAAP (or there has been paid or
provision has been made on their behalf) for the payment of, all material Taxes
due to be paid on or prior to the Closing Date (taking into account extensions).
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(b) There are no Encumbrances upon the assets of PIMCO Advisors
or any PIMCO Advisors Subsidiary for or arising from Taxes except for statutory
liens for Taxes not yet due.
(c) PIMCO Advisors is not a "foreign person" within the meaning
of Section 1445 of the Code.
Section 6.17. Investment Companies. Managed Account Clients,
Distributors, Etc.
(a) Schedule 6.17(a) sets forth a complete and accurate list of
(i) each PIMCO Advisors Public Investment Company Client, (ii) each PIMCO
Advisors Private Investment Company Client, (iii) each PIMCO Advisors Offshore
Investment Company Client and (iv) each PIMCO Advisors Managed Account Client,
in each case who is a PIMCO Advisors Material Client. For purposes of this
Section, a "PIMCO Advisors Material Client" is any Person in respect of which
PIMCO Advisors or any PIMCO Advisors Subsidiary have accrued asset management or
similar fees in excess of $375,000 during the nine months ended September 30,
1996. Each PIMCO Advisors Public Investment Company Client sponsored by PIMCO,
Advisors or its Affiliates is duly registered with the SEC as an investment
company under the Investment Company Act. Except as set forth in Schedule
6.17(a), no PIMCO Advisors Investment Company Client or PIMCO Advisors Managed
Account Client that is a PIMCO Material Client has, prior to February 13, 1997,
to PIMCO Advisors' Knowledge, indicated in writing any intent to terminate any
Advisory Agreement with PIMCO Advisors or any of the PIMCO Advisors
Subsidiaries.
(b) True and correct copies of each Advisory Agreement pursuant
to which PIMCO Advisors or any of the PIMCO Advisors Subsidiaries acts as
investment adviser to the PIMCO Advisors Investment Company Clients have been
made available to Opgroup. Each such Advisory Agreement is in full force and
effect with respect to the PIMCO Advisors Investment Company Client and PIMCO
Advisors and the PIMCO Advisors Subsidiaries which are parties thereto.
(c) Shares of each PIMCO Advisors Public Investment Company
Client sponsored by PIMCO Advisors or its Affiliates have been duly registered
under the Securities Act and applicable state securities laws, and the related
registration statements were effective under the Securities Act and applicable
state securities laws at all times when such effectiveness was required and no
stop order suspending the effectiveness of any such registration statement has
been issued.
(d) No shares or other equity interests of any PIMCO Advisors
Private Investment Company Client sponsored by PIMCO Advisors or its Affiliates
which have been offered or sold have been registered or qualified, as the case
may be under the Securities Act or any other Securities Laws and no such
registration or qualification was or is required.
(e) Shares or other equity interests of each PIMCO Advisors
Offshore Investment Company Client sponsored by PIMCO Advisors or its Affiliates
have been duly
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registered, or qualified, as the case may be, to the extent required under
applicable Securities Laws.
(f) Each PIMCO Advisors Investment Company Client sponsored by
PIMCO Advisors or its Affiliates is duly organized and validly existing and in
good standing under the laws of the jurisdiction of its organization and has the
requisite corporate power and authority to own all its properties and assets and
to carry on its business as it is now being conducted.
(g) True and correct copies of each agreement pursuant to which
PIMCO Advisors or any of the PIMCO Advisors Subsidiaries provides distribution
services to any PIMCO Advisors Investment Company Client ("PIMCO Advisors
Distribution Contract") have been made available to Opgroup. Schedule 6.17(g)
sets forth a list of each such PIMCO Advisors Distribution Contract. Each PIMCO
Advisors Distribution Contract is in full force and effect with respect to PIMCO
Advisors and the PIMCO Advisors Subsidiaries which are parties thereto.
Section 6.18. Section 15 of the Investment Company Act.
Neither PIMCO Advisors nor any of its Affiliates has any express
or implied understanding or arrangement which would impose an unfair burden on
any of the Opgroup Public Investment Company Clients or would in any way violate
Section 15(f) of the Investment Company Act as a result of the Merger.
Section 6.19. No Material Adverse Effect.
From September 30, 1996 through the Closing Date, except as
otherwise disclosed in writing to Opgroup with specific reference to this
Section 6.19, to the Knowledge of PIMCO Advisors, there has occurred no event
which could reasonably be expected to have a PIMCO Advisors Material Adverse
Effect.
ARTICLE VII.
[OMITTED]
ARTICLE VIII.
CLOSING DELIVERIES
Section 8.1. Deliveries by Opgroup, Opfin and the Trusts.
At the Closing:
(a) Opgroup shall deliver to PIMCO Advisors and PATM a
certificate, dated the Closing Date, signed on its behalf by its Chief Executive
Officer and Chief Financial Officer confirming that: (i) the representations and
warranties of Opgroup and the Trusts contained in
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this Agreement are true and correct as of the Closing Date, except for changes
or inaccuracies therein that do not individually or in the aggregate reflect an
Opgroup Material Adverse Effect; and (ii) Opgroup and Opfin have performed and
complied in all material respects with all agreements, covenants, obligations
and conditions required by this Agreement to be performed or complied with by
them at or prior to the Closing Date;
(b) Counsel to Opgroup and Opfin shall deliver their opinion,
dated the Closing Date, substantially in the form of Annex F;
(c) Opgroup shall deliver a certificate stating that the
approvals set forth in Section 4.23(a) have been obtained, all of the conditions
described in Section 4.23(b) have been satisfied and consents from clients
representing at least 92.5% of the Opcap Run Rate Revenues generated by all
clients (on an annualized basis as of February 13, 1997) have been obtained; and
(d) Opgroup shall deliver a certificate confirming that,
effective as of the Closing:
(i) Each of Alan H. Rappaport, Mark C. Biderman and Robert
I. Kleinberg has resigned from the board of directors of each Advantage Adviser
Fund of which he is a member, and one replacement on each such board selected by
PIMCO Advisors has been elected to the board, such replacement selected by PIMCO
Advisors having the longest available term if the Identified Fund has a
staggered board of directors, with Joseph M. La Motta to serve initially as
PIMCO Advisors' nominee for the boards of directors on which he already serves
as a director;
(ii) A majority of the Board of Directors of each
Identified Fund has approved, and a majority of the outstanding voting
securities (as defined in the Investment Company Act) of each Identified Fund
has approved, an investment advisory agreement to come into effect at the
Effective Time with the Affiliate of Opcap that is an investment advisor to such
fund, each such agreement being substantially in the form of the current
agreement between the Identified Fund and a current Opcap Affiliate and, in the
case of the Value Advisors Funds, to have an initial term of two years;
(iii) The Board of Directors of each SBAM Fund has elected
that Person designated by PIMCO Advisors to hold such titles as are currently
held by any Persons affiliated with Oppenheimer & Co., Inc. and also has
appointed one additional designee of PIMCO Advisors to the office of Vice
President of each such fund; and the Board of Directors of each other Identified
Fund has elected those Persons designated by PIMCO Advisors to hold such titles
as officers of the Identified Fund as were determined by PIMCO Advisors; and
(iv) A majority of the board of directors of The Czech
Republic Fund, Inc. has approved an administration agreement with Value Advisors
which is substantially in the form of the current agreement between such fund
and Oppenheimer & Co., Inc.
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Section 8.2. Deliveries by PIMCO Advisors and PATM.
At the Closing:
(a) PIMCO Advisors and PATM shall each deliver to Opgroup a
separate certificate, dated the Closing Date, signed on its behalf by its Chief
Executive Officer and Chief Financial Officer confirming that (i) the
representations and warranties of PIMCO Advisors and PATM contained in this
Agreement are true and correct, except for changes or inaccuracies therein that
do not individually or in the aggregate reflect a PIMCO Advisors Material
Adverse Effect; and (ii) PIMCO Advisors and PATM each have performed and
complied in all material respects with all agreements, covenants, obligations
and conditions required by this Agreement to be performed or complied with by it
at or prior to the Closing Date; and
(b) Counsel to PIMCO Advisors and PATM shall deliver their
opinion, dated the Closing Date, substantially in the form of Annex G.
Section 8.3. Other Deliveries.
At the Closing:
(a) Oppenheimer Capital shall deliver to the parties a
certificate confirming that, effective as of the Closing, the Board of Directors
or trustees, as applicable, and shareholders of each Opgroup Public Investment
Company Client have approved a new Advisory Agreement with PIMCO Advisors or its
Affiliate, or the assignment of its Advisory Agreement, as applicable, pursuant
to the provisions of Section 4.23(a);
(b) The parties shall receive an opinion of Delaware counsel in
the form of Annex H.
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Section 8.4. Execution of Certain Documents.
At the Closing:
(a) PIMCO Advisors shall execute the Exchange Right;
(b) PIMCO Advisors shall execute and deliver a registration
rights agreement substantially in the form of Annex I (the "Registration Rights
Agreement"); and
(c) PIMCO Advisors shall execute and deliver an agreement (each a
"Put Right") substantially in the form of Annex J in favor of each Opgroup
Shareholder providing for the repurchase by PIMCO Advisors under certain
circumstances of the Class A Units issued pursuant to Section 2.3 or issuable
pursuant to the Exchange Rights granted pursuant to Section 2.3.
(d) PIMCO Advisors shall execute and deliver an agreement (the
"Exchange Right") in the form of Annex K hereto, to exchange the OGI Notes for
Class A Units.
Immediately following the completion of the actions specified in
Sections 8.1, 8.2 and 8.3 and in this Section 8.4, PIMCO Advisors, Value
Advisors, Opgroup and Opfin shall execute a contribution agreement substantially
in the form of Annex L (the "Contribution Agreement").
ARTICLE IX.
ACTIONS SUBSEQUENT TO THE MERGER
Section 9.1. Contribution.
In connection with the Closing, the Surviving Corporation will,
pursuant to the Contribution Agreement, cause Opfin to contribute the Interests
and the member interest in Value Advisors to PIMCO Advisors as provided in the
Contribution Agreement.
Section 9.2. Additional Fund Related Covenants.
Holdings shall cause Alan H. Rappaport and Mark C. Biderman for a
period of one year from the Closing Date, at Advantage Advisers' request and at
a reasonable fee rate to be designated by Value Advisors, to act as consultants
to Value Advisors with respect to the Value Advisors Funds and/or attend Board
meetings of the Value Advisors Funds.
Section 9.3. Insurance.
The Surviving Corporation will cause to be maintained, for a
period of not less than six years from the Closing Date, policies of directors'
and officers, general partner and investment advisor insurance covering
Opgroup's and the Opgroup Subsidiaries' current
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directors and officers, as well as other contractual arrangements, i.e.,
partnership agreements and indemnification agreements, as applicable, to the
extent that they provide coverage for events occurring prior to and including
the Closing (the "D&O Insurance") for all present and past directors and
officers of Opgroup and the Opgroup Subsidiaries, so long as the annual premium
therefor would not be in excess of 200% of the last annual premium paid prior to
February 13, 1997 (the "Maximum Premium"). If the existing D&O Insurance
expires, is terminated or canceled during such six-year period, the Surviving
Corporation will use commercially reasonable efforts to cause to be obtained as
much D&O Insurance as can be obtained for the remainder of such period for an
annualized premium not in excess of the Maximum Premium, on terms and conditions
no less advantageous in the aggregate to the insured directors and officers than
the D&O Insurance as in effect on February 13, 1997.
Section 9.4. Closing Date Balance Sheets.
(a) Promptly following the Closing Date, the Seller Trust will
cause to be prepared in accordance with GAAP pro forma balance sheets for each
of Opgroup, Opfin and Value Advisors setting forth the financial position of
each such corporation as of the close of business on the Closing Date (the
"Stand-Alone Balance Sheets"), and a combined balance sheet of Opgroup, Opfin
and Value Advisors derived from the Stand-Alone Balance Sheets (the "Combined
Balance Sheet", and together with the Stand-Alone Balance Sheets, the "Closing
Date Balance Sheets"), and shall deliver the same to the Surviving Corporation.
The Stand-Alone Balance Sheets shall be prepared on a stand-alone basis (i) as
though the Merger had not been effected, (ii) without attribution of any value
to the Interests, stock of the Excluded Affiliates, rights to receive the Buyer
Adjustment Payment or amounts released from the Tax Payment Account or the
Holdback Amount, or the management contracts for the Value Advisors Funds, and
(iii) without taking into account any liabilities which are not attributable to
the Money Management Business, including without limitation the principal of
(but not the interest on) the Opgroup Equities Note. The Combined Balance Sheet
shall reflect a current account payable equal in amount to the amount of cash
delivered to the Seller Trust pursuant to Section 2.1.
(b) Representatives of the Seller Trust will be entitled to
reasonable access during normal business hours to the relevant books, records
and working papers of Opgroup, Opfin and Value Advisors, and the Surviving
Corporation's accountants, if applicable, to aid in their preparation of the
Closing Date Balance Sheets. The Closing Date Balance Sheets shall be deemed to
be accepted by the Surviving Corporation and shall be final and binding for all
purposes of this Agreement unless the Surviving Corporation, within sixty days
after the date on which the Closing Date Balance Sheets are delivered to the
Surviving Corporation, gives notice to the Seller Trust stating each and every
item as to which the Surviving Corporation takes exception ("Objections"),
specifying in detail the nature and extent of any such Objection. If an
Objection is disputed by the Seller Trust, then the Seller Trust and the
Surviving Corporation shall negotiate in good faith to resolve such dispute. If,
after a period of thirty days following the date on which the Surviving
Corporation gave notice of Objections, any Objection still remains disputed,
then the Surviving Corporation's accountants and the Seller Trust's accountants
shall together choose an independent firm of public accountants of nationally
recognized standing (the "Accounting Firm") to resolve such remaining
Objections. The Accounting Firm shall act as an
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arbitrator and shall have the power and authority to determine, based solely on
presentations by the Surviving Corporation and the Seller Trust, and not by
independent review, only those issues still in dispute. The determination of the
Accounting Firm shall be final and binding. The fees and expenses of the
Accounting Firm, if any, shall be paid equally by the Surviving Corporation and
the Seller Trust; provided, however, that, if the Accounting Firm determines
that either party's position is completely correct, then the other party shall
pay the fees charged by the Accounting Firm in connection with any such
determination.
(c) If either the net current assets or the net assets set forth
on the Combined Balance Sheet as finally determined are negative, the Seller
Trust shall promptly pay to the Surviving Corporation cash in an amount equal to
the greater of the deficit in net current assets or the deficit in net assets.
If both the net current assets and the net assets set forth on the Combined
Balance Sheet are positive, the Surviving Corporation shall promptly pay to the
Seller Trust cash in an amount equal to the lesser of the surplus in net current
assets or the surplus in net assets. Any such payment shall be deemed to
constitute an adjustment in the Merger consideration for all purposes of this
Agreement.
Section 9.5. Section 15 of the Investment Company Act; PIMCO Advisors.
PIMCO Advisors and, the Surviving Corporation agree to use their
commercially reasonable efforts to enable the following to be true regarding
Section 15(f) of the Investment Company Act with respect to the Opgroup Public
Investment Company Clients: (a) for a period of not less than three years after
the Closing Date, no more than 25% of the members of the Board of Directors of
any Opgroup Public Investment Company Client shall be "interested persons" (for
purposes of Section 15(f)(1)(A) of the Investment Company Act, as it may be
modified by an exemptive order referred to in Section 4.23(b) of this Agreement)
of PIMCO Advisors (or such other entity which acts as adviser or subadvisor to
the Opgroup Public Investment Company Clients), or of the predecessor investment
adviser of the Opgroup Public Investment Company Clients (including "interested
persons" of Opgroup or its Affiliates) (collectively, the "Relevant Entities"),
other than with respect to any Opgroup Public Investment Company Client not
meeting such requirement as of the Closing; and (b) for a period of not less
than two years after the Closing Date, neither PIMCO Advisors nor any Affiliate
of PIMCO Advisors (or any entity which will act as adviser to the Opgroup Public
Investment Company Clients) has or shall have any express or implied
understanding, arrangement or intention to impose an unfair burden on any of the
Opgroup Public Investment Company Clients as a result of the transactions
contemplated herein. For purposes of paragraph (a) of this Section 9.5,
"commercially reasonable efforts" shall mean PIMCO Advisors and, after the
Closing Date, the Surviving Corporation, (i) causing to be distributed to the
directors of each Opgroup Public Investment Client (A) on at least an annual
basis, a questionnaire containing questions reasonably designed to elicit
information pertaining to the status of such directors as "interested persons"
of the Relevant Entities, and (B) on at least an annual basis, a legal
memorandum describing to the directors the requirements of Section 15(f) of the
Investment Company Act and the relevance of their status thereunder, (ii) at
such time as they learn of a change in the board composition of an Opgroup
Public Investment Company Client or the disinterested status of a director
thereof that would cause more than 25% of the members of such Board of Directors
to be interested persons of Relevant Entities, taking reasonable steps to
correct such situation as
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promptly as practicable, (iii) obtaining the agreement of any transferee of all
or a portion of the business of the Surviving Corporation and/or PIMCO Advisors
to comply with provisions substantially identical to the provisions of this
Section 9.5 for a period of not less than three years after the Closing Date and
(iv) taking such additional steps (which shall not require the incurrence of any
out-of-pocket expenses by PIMCO Advisors or its Affiliates) as the Indemnity
Trust may from time to time reasonably request in writing in connection with
compliance with Section 15(f) of the Investment Company Act.
Section 9.6. Further Assurances.
Each party to this Agreement shall execute such documents and
other papers and perform such further acts as may be reasonably required to
carry out the provisions hereof and the transactions contemplated hereby.
Section 9.7. Expenses.
The parties agree that the expenses incurred in soliciting
proxies from shareholders of the Opgroup Public Investment Companies (including
reasonable fees and expenses of legal counsel to such Investment Companies and
legal counsel to their trustees or directors, if applicable) shall be borne
two-thirds by PIMCO Advisors and one-third by Opgroup (including for purposes of
Section 9.4); provided, however, that any such expenses incurred without the
consent of PIMCO Advisors, which consent may not unreasonably be withheld or
delayed, shall be borne by Opgroup. Except as provided in the preceding
sentence, each party shall be solely responsible for all direct and indirect
expenses incurred by it in connection with the negotiation and preparation of
this Agreement and the consummation of the transactions contemplated hereby.
Section 9.8. Disposition of OGI Stock.
PIMCO Advisors agrees that (i) so long as any Opgroup Shareholder
(including the beneficial owners of the entities which are Opgroup Shareholders
and transferees of such Opgroup Shareholders and/or beneficial owners whose
basis for tax purposes is based upon that of the transferors) continues to hold
the Class A Units he received at the Closing or upon exchange of OGI Notes,
PIMCO Advisors shall not sell, assign or otherwise transfer the capital stock of
Opgroup or the OGI Notes received in exchange for the Class A Units in such a
way as to cause the Opgroup Shareholders (including such beneficial owners and
transferees) to recognize taxable gain and (ii) so long as all of the OGI Notes
are not owned by PIMCO Advisors or its Affiliates, PIMCO Advisors will not sell,
assign or otherwise transfer the capital stock of Opgroup and will continue to
hold all of the equity interests of Opgroup.
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ARTICLE X.
INDEMNIFICATION
Section 10.1. Indemnification by PIMCO Advisors and the Surviving
Corporation.
(a) Subject to the limitations and conditions set forth in this
Article X, PIMCO Advisors and the Surviving Corporation shall, jointly and
severally, indemnify and hold harmless, to the fullest extent permitted by law,
the Opgroup Shareholders and each of their respective officers, directors,
employees, agents and Affiliates (collectively, the "Opgroup Indemnitees") from
and against any and all Losses which they or an of them may suffer or incur, to
the extent arising from:
(i) any breach or default in performance by PIMCO Advisors
or PATM of any covenant or agreement of PIMCO Advisors or PATM contained in this
Agreement; or
(ii) any breach of any representation or warranty made by
PIMCO Advisors or PATM in this Agreement, or any certificate or instrument
delivered by or on behalf of PIMCO Advisors or PATM pursuant to this Agreement
(but excluding any Related Agreement).
(b) Indemnification under this Section 10.1 shall be available
regardless of any investigation made at any time before the Closing Date by or
on behalf of Opgroup or after the Closing Date by on behalf of the Indemnity
Trust or the Indemnity Trustees or any of their Affiliates or of any information
any such party may have in respect thereof; provided, however, that no such
indemnification shall be available for a breach of a particular representation
or warranty if written notice has been given to Opgroup prior to the Closing
Date, specifying in reasonable detail the information or circumstances making
such representation or warranty untrue, and such state of affairs, taking into
account all matters which have occurred, would have resulted in a PIMCO Advisors
Material Adverse Effect.
Section 10.2. Indemnification by the Indemnity Trust.
(a) Subject to the limitations and conditions set forth in this
Article X, the Indemnity Trust on behalf of the Opgroup Shareholders, shall
indemnify and hold harmless, to the fullest extent permitted by law, PIMCO
Advisors, the Surviving Corporation and each of their officers, directors,
limited liability company members and managers, employees, agents and Affiliates
(collectively, the "PIMCO Indemnitees") from and against any and all Losses
which they or any of them may suffer or incur, to the extent arising from:
(i) any breach or default in performance of any covenant
or agreement of or regarding Opgroup or any Opgroup Subsidiary contained in this
Agreement; or
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(ii) any breach of any representation or warranty made by
Opgroup in this Agreement, or any certificate or instrument delivered by or on
behalf of Opgroup in connection with this Agreement (but excluding any Related
Agreement); or
(iii) any liabilities and obligations (whether known or
unknown, direct or indirect and including, without limitation, accrued and
contingent liabilities) attributable to the Opgroup Business other than (A)
liabilities attributable to the Money Management Business (other than any such
liabilities and obligations arising from, in connection with or constituting any
breach or default described in clause (i) or clause (ii) above), (B) liabilities
attributable to the Brokerage Business, (C) liabilities under the Opgroup
Equities Note and (D) other liabilities which are fully funded at the Closing
Date, in each case other than liabilities for Taxes; or
(iv) without duplication, (A) liabilities for Taxes of any
member of the Opgroup Subgroup and any of its Unconsolidated Subsidiaries for or
with respect to (1) all taxable periods or portions thereof that end on or prior
to the Closing Date; and (2) the CIBC Transaction, regardless of the taxable
period or periods in which recognized, (B) Opfin's allocable share of
liabilities for Taxes of Opcap for or with respect to all taxable periods or
portions thereof that end on or prior to the Closing Date, based upon Opfin's
direct and indirect partnership interest in Opcap as of each date any such
liability for Taxes was incurred; (C) one half of all liabilities for Taxes of
any member of the Opgroup Subgroup attributable to gain recognized on and at the
time of the contribution of property by Opfin to PIMCO Advisors pursuant to the
Contribution Agreement by reason of PIMCO Advisors' ownership of common stock of
the Surviving Corporation; and (D) any costs and expenses related to the
foregoing (including, without limitation, reasonable attorneys' fees and
expenses); provided, however, that to the extent that the PIMCO Indemnitees are
indemnified for any such liabilities pursuant to Section 4(a) of the Tax
Indemnity Agreement, they shall not be indemnified under this clause (iv).
(b) Indemnification under this Section 10.2 shall be available
regardless of any investigation made at any time before or after the Closing
Date by or on behalf of PIMCO Advisors or of any of their Affiliates or of any
information any such party may have in respect thereof; provided, however, that
no such indemnification shall be available for a breach of a particular
representation or warranty if notice has been given to PIMCO Advisors prior to
the Closing Date, specifying in reasonable detail the information or
circumstances making such representation or warranty untrue, and such state of
affairs, taking into account all matters which have occurred, would have
resulted in an Opgroup Material Adverse Effect.
Section 10.3. Monetary Limitation.
(a) Neither the Indemnity Trust on the one hand, nor PIMCO
Advisors or the Surviving Corporation, on the other hand, shall have any
obligation to indemnify any Opgroup Indemnitee or PIMCO Indemnitee,
respectively, pursuant to Section 10.1(a)(ii) or 10.2(a)(ii), respectively,
unless and until the aggregate of all Losses suffered or incurred by all PIMCO
Indemnitees or Opgroup Indemnitees, as applicable, by reason of the breaches
described in such clauses exceeds $2,000,000, and then only for the excess over
$2,000,000; provided, however, that such limitation shall not apply with respect
to any obligation to indemnify (i) a PIMCO
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Indemnitee which arises under both Section 10.2(a)(ii) and one or more of
Sections 10.2(a)(i), 10.2(a)(iii) or 10.2(a)(iv), or (ii) an Opgroup Indemnitee
which arises under both Sections 10.1(a)(ii) and 10.1(a)(i). The aggregate
amount of Losses that may be recovered by the Opgroup Indemnitees under Section
10.1 or by the PIMCO Indemnitees under Section 10.2 shall not exceed $80
million.
(b) Whenever any breach, default, or other event which triggers a
party's indemnification obligations under Section 10.1(a)(ii) or 10.2(a)(ii)
contains a materiality standard, the dollar amount of the Loss which causes such
breach, default, or other event to meet or exceed such materiality standard
shall be counted from dollar one in determining whether or not the $2,000,000
threshold set forth in Section 10.3(a) has been met. For example, if the
materiality standard for a breach were $400,000 and the Losses from a breach
were $500,000, the total Losses of $500,000 would be counted against the
$2,000,000 threshold.
Section 10.4. Nature and Survival; Time Limits.
(a) The representations and warranties of the parties made herein
or pursuant hereto or in connection with the transactions contemplated hereby
shall survive the Closing and continue in effect until the end of the 12th month
following the month in which the Closing Date occurs unless specifically
provided otherwise herein (unless the conditions set forth in 10.1(b) or
10.2(b), as applicable, regarding notice and waiver are satisfied); provided
however, the representations and warranties set forth in Sections 4.15 and 6.16
shall survive until the end of the applicable statute of limitations; and
provided, further, that any such time limit shall not apply to bar any claim
based on a party's fraud or intentional misrepresentation.
(b) The covenants and agreements of the parties set forth in this
Agreement shall survive indefinitely until performed; provided, however, that
any claim for indemnification brought pursuant to Section 10.2(a)(iii) must be
made within 36 months following the month in which the Closing Date occurs.
Section 10.5. Limitation on Remedies.
(a) The remedies provided in this Article X, subject to the
limitations set forth in this Agreement, shall be the exclusive remedies
available to a party to this Agreement for any breach or violation of this
Agreement (but not any Related Agreement) by another party hereto.
(b) No Indemnified Party shall seek or be entitled to, or accept
payment of any award or judgment for, punitive damages from an Indemnifying
Party.
Section 10.6. General Provisions.
In the case of any claim for indemnification brought pursuant to
this Article X:
(a) The party entitled to indemnification (the "Indemnified
Party") shall promptly notify the party obligated to provide indemnification
(the "Indemnifying Party") of any claim for which indemnification is sought
pursuant to this Article X ("Indemnified Claim"), in writing and in reasonable
detail and accompanied by reasonable supporting documentation, and
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within any applicable time limits specified in this Agreement; provided,
however, that the failure of an Indemnified Party to give such notice shall not
affect such Indemnified Party's rights to indemnification under this Article X,
except and only to the extent that the Indemnifying Party actually incurred an
incremental out of pocket expense (in which case recovery shall be reduced by
such expense) or was materially prejudiced by such failure.
(b) The Indemnified Party shall use all reasonable efforts to
mitigate any Losses.
(c) The Indemnifying Party will be entitled to participate in the
prosecution or defense of an Indemnified Claim and, at its option, jointly with
any other Indemnifying Party which so elects, elect to assume control of such
Indemnified Claim, including without limitation the filing and prosecution, or
defense, of any action in connection with such Indemnified Claim. Subsequent to
such assumption of control, (i) the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with such Indemnified Claim; and (ii) the
Indemnifying Party shall control such Indemnified Claim; provided, however, that
the Indemnified Party shall have the right to participate in the prosecution or
defense of such Indemnified Claim and to be represented, solely at its expense,
by counsel selected by it.
(d) The Indemnified Party will, at the expense of the
Indemnifying Party, cooperate with the Indemnifying Party in the investigation,
preparation, prosecution or defense of an Indemnified Claim and shall furnish
any documents and endeavor to make available any employees under its control.
(e) The Indemnified Party shall not admit any liability with
respect to, or settle, compromise or discharge, any Indemnified Claim without
the prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed; provided, however, that if the defense of any
proceeding in respect of an Indemnified Claim has been assumed by an
Indemnifying Party, the Indemnified Party shall consent to any settlement,
compromise or discharge of such Indemnified Claim which the Indemnifying Party
may recommend, so long as such settlement, compromise or discharge by its terms
obligates the Indemnifying Party to pay all of the Losses of such Indemnified
Party arising from such Indemnified Claim, releases such Indemnified Party from
any and all liabilities and obligations it may have in connection with such
Indemnified Claim, and does not otherwise adversely affect such Indemnified
Party.
(f) All payments by the Indemnity Trust under this Article X
shall be made through the reduction of the face amount of the Certificate.
(g) For purposes of this Agreement, "Losses" shall mean any and
all losses, damages and liabilities, joint or several, and expenses (including,
without limitation, attorney fees and other costs of litigation, arbitration and
settlement) suffered or incurred by an Indemnified Party in respect of an
Indemnified Claim, (i) reduced by the Present Value Benefit realized or
realizable by the Indemnified Party in connection with or as a result of the
incurrence of such losses, claims, damages, liabilities and expenses and (ii)
reduced by any applicable
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insurance proceeds actually received by the Indemnified Party. If any such
reduction is determined after payment by the Indemnifying Party of any amount
otherwise required to be paid pursuant to this Article X, the Indemnified Party
shall repay to the Indemnifying Party, promptly after such determination, any
amount that the Indemnifying Party would not have had to pay pursuant to this
Article X had such determination been made at the time of such payment. Losses
shall include (i) punitive damages awarded to a third party and (ii)
consequential damages (but only if the Closing has occurred.
(h) With respect to any claim for indemnification under Section
10.2(a)(iv), the Indemnifying Parties and Indemnified Parties shall follow the
procedures set forth in Sections 2(b), 2(c)(2), 2(d)(2), 4(c), 7, 8 and 9 of the
Tax Indemnity Agreement.
ARTICLE XI.
TERMINATION AND SURVIVAL
Section 11.1. Omitted.
ARTICLE XII.
MISCELLANEOUS
Section 12.1. Limitation on Liability.
(a) Anything contained herein to the contrary notwithstanding, no
recourse under or upon any obligation, covenant or agreement of Opgroup or its
Affiliates or the Trusts in this Agreement or any Related Agreement shall be had
against any general partner, officer, director, shareholder, trustee or
controlling person, whether past, present or future, of Opgroup or its
Affiliates or the Trusts or of any successor corporation, partnership or trust,
either directly or through any successor corporation, partnership or trust,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived as a condition of,
and as a consideration for, the execution and performance of this Agreement, and
that this limitation on recourse is made expressly for the benefit of any
general partner of Opco LP, any officer or director of Opgroup and their
respective Affiliates and any trustee of the Trusts, and may be enforced by any
of them; provided, however, that this limitation on recourse shall not limit
recourse against or otherwise modify any obligation, covenant or agreement of
any party to this Agreement or any Related Agreement.
(b) Anything contained herein to the contrary notwithstanding, no
recourse under or upon any obligation, covenant or agreement of PIMCO Advisors
or PATM or their respective Affiliates in this Agreement or any Related
Agreement shall be had against any general partner, officer, director, board
member, shareholder, controlling person, whether past, present or future, of
PIMCO Advisors or PATM or their respective Affiliates or of any successor
corporation or partnership,
52
<PAGE> 57
either directly or through any successor corporation or partnership, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived as a condition of, and as a consideration
for, the execution and performance of this Agreement, and that this limitation
on recourse is made expressly for the benefit of any general partner of PIMCO
Advisors or PATM and their respective Affiliates and may be enforced by any of
them; provided, however, that this limitation on recourse shall not limit
recourse against or otherwise modify any obligation, covenant or agreement of
any party to this Agreement or any Related Agreement.
Section 12.2. No Right of Set Off.
(a) Each of PIMCO Advisors and PATM agrees for itself, and its
successors and assigns, that it shall have no right to set off any amounts that
may be owed to it by any Trust or Trustee under this Agreement or any Related
Agreement against any amounts payable by it to Opgroup, Opfin, any Trust or any
Trustee.
(b) The Trustees, on behalf of the Trusts, agree that the Trusts
shall have no right to set off any amounts that may be owed by them to PIMCO
Advisors, PATM or the Surviving Corporation under this Agreement or any Related
Agreement against any amounts payable by them to PIMCO Advisors, PATM or the
Surviving Corporation.
Section 12.3. Amendments, Waiver.
This Agreement may not be amended, modified or waived except by
written instrument executed by the parties hereto.
Section 12.4. Entire Agreement.
This Agreement (including Annexes, Schedules, certificates and
lists referred to herein, and any documents executed by the parties
simultaneously herewith or pursuant hereto) constitutes the entire agreement of
the parties hereto, except as provided herein, and supersedes all prior
agreements and understandings, written and oral, among the parties with respect
to the subject matter hereof.
Section 12.5. Interpretation.
When a reference is made in this Agreement to Sections, Annexes
or Schedules, such reference shall be to a Section of or Annex or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
Section 12.6. Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or
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<PAGE> 58
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 12.7. Notices.
All notices and other communications hereunder shall be in
writing and shall be deemed given (i) when delivered in person, (ii) when
transmitted by telecopy (with written confirmation), (iii) on the third Business
Day following the mailing thereof by certified or registered mail (return
receipt requested) or (iv) when delivered by an express courier (with written
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to the Indemnity Trust:
The Indemnity Trust
Oppenheimer Tower
World Financial Center
200 Liberty Street
New York, New York 10281
Attention: Roger W. Einiger and Robert I. Kleinberg, Esq.
Telephone: (212) 667-7300
Telecopy: (212) 667-2369
With a copy to:
Oppenheimer & Co., L.P.
Oppenheimer Tower
World Financial Center
200 Liberty Street
New York, New York 10281
Attention: Roger W. Einiger and Robert I. Kleinberg, Esq.
Telephone: (212) 667-7300
Telecopy: (212) 945-2369
And, in each case, with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Robert Todd Lang, Esq.
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
54
<PAGE> 59
If to PATM or the Surviving Corporation:
c/o PIMCO Advisors L.P.
800 Newport Center Drive, Suite 100
Newport Beach, California 92660
Attention: General Counsel
Telephone: (714) 717-7022
Telecopy: (714) 717-7076
If to PIMCO Advisors:
PIMCO Advisors L.P.
800 Newport Center Drive, Suite 100
Newport Beach, California 92660
Attention: General Counsel
Telephone: (714) 717-7022
Telecopy: (714) 717-7076
And in each case, with a copy to:
Latham & Watkins
650 Town Center Drive
Costa Mesa, California 92626
Attention: David C. Flattum
Telephone: (714) 540-1235
Telecopy: (714) 755-8290
Section 12.8. Binding Effect; No Third Party Beneficiaries; No
Assignment.
This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement is intended or shall be construed to confer upon any
Person other than the parties hereto and their respective successors and
permitted assigns any right, remedy or claim under or by reason of this
Agreement or any part hereof. This Agreement may not be assigned by any party
hereto without the prior written consent of the other parties hereto.
Section 12.9. Counterparts.
This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same agreement, it being understood that all of the
parties need not sign the same counterpart.
55
<PAGE> 60
Section 12.10.Governing Law.
THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN THE PARTIES AND THE
ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE GOVERNED BY AND INTERPRETED
AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO APPLICABLE CHOICE OF LAW PROVISIONS THEREOF.
56
<PAGE> 61
Section 12.11. Waiver of Jury Trial.
AFTER THE CLOSING DATE, THE PARTIES TO THIS AGREEMENT AGREE TO
WAIVE ANY RIGHT TO A JURY TRIAL AS TO ALL DISPUTES.
OPPENHEIMER GROUP, INC. PIMCO ADVISORS L.P.
By: /s/ ROGER W. EINIGER By: /s/ WILLIAM D. CVENGROS
--------------------------- ---------------------------
Name: Roger W. Einiger Name: William D. Cvengros
Title: Executive Vice President Title: Chief Executive Officer
OPPENHEIMER FINANCIAL CORP. PIMCO ADVISORS TRANSITORY MERGER LLC
By: /s/ ROGER W. EINIGER By: /s/ WILLIAM D. CVENGROS
--------------------------- ---------------------------
Name: Roger W. Einiger Name: William D. Cvengros
Title: Executive Vice President Title: Chief Executive Officer
THE INDEMNITY TRUST
By: /s/ NATHAN GANTCHER
---------------------------
Nathan Gantcher
By: /s/ STEPHEN ROBERT
---------------------------
Stephen Robert
Its Managing Trustees
THE SELLER TRUST
By: /s/ NATHAN GANTCHER
---------------------------
Nathan Gantcher
By: /s/ STEPHEN ROBERT
---------------------------
Stephen Robert
Its Managing Trustees
57
<PAGE> 1
EXHIBIT 10.2
PUT RIGHT
This Put Right is granted by PIMCO Advisors L.P., a Delaware limited
partnership ("PIMCO Advisors"), on November 4, 1997 (the "Grant Date"), to the
registered holders from time to time (the "Holders") of Class A units of limited
partner interest in PIMCO Advisors ("Class A LP Units") (i) issued pursuant to
that certain Agreement and Plan of Merger, dated November 4, 1997 (the "Merger
Agreement"), to which PIMCO Advisors is a party ("Merger Units"), (ii) issued in
exchange for the 6% Senior Notes due December 1, 2037 ("Notes") of Oppenheimer
Group, Inc., a Delaware corporation ("Opgroup"), issued in the Redemption
contemplated by the Merger Agreement ("Note Units"), or (iii) issued in exchange
for the Notes ("Certificate Notes") issued upon reduction or cancellation of the
Certificate of Long-Term Indemnity Indebtedness (the "Certificate") issued
pursuant to the Merger Agreement ("Certificate Units").
Section 1. Definitions.
The terms defined in this Section 1 shall, for the purposes of this
Put Right, have the meanings set forth herein. Capitalized terms not defined
herein are defined in the Amended and Restated Partnership Agreement of PIMCO
Advisors or the Merger Agreement.
Certificate is defined in the preamble to this Put Right.
Certificate Units are defined in the preamble to this Put Right.
Class A LP Units are defined in the preamble to this Put Right.
Covered Unit means a Merger Unit, a Note Unit or a Certificate Unit
which is a "restricted security" within the meaning of Rule 144 under the
Securities Act.
Current Market Price of a Class A Unit for any Trading Day means the
last reported sale price regular way on such day, or if no sale takes place on
such day, the average of the reported closing bid and asked prices regular way
on such day, in either case as reported on the principal National Securities
Exchange on which the Class A LP Units are listed or admitted for trading.
Grant Date is defined in the preamble to this Put Right.
Holders are defined in the preamble to this Put Right.
Independent Investment Banker means an independent nationally
recognized investment banking firm retained by PIMCO Advisors and reasonably
acceptable to the Indemnity Trustees.
<PAGE> 2
Issue Date, with respect to a particular Certificate Unit, means the
date on which the Certificate Note exchanged for such Certificate Unit was first
issued.
Liquidity Event with respect to a day means that for each of the
thirty consecutive Trading Days immediately preceding such day, (i) the Class A
LP Units shall have been listed or admitted for trading on a National Securities
Exchange, (ii) a Registration Statement shall have been continuously in effect
covering the Covered Units, or PIMCO Advisors shall have provided to the
Holders, at or before the beginning of such period, an opinion of counsel to the
effect that the Holders may sell the Covered Units without registration under
the Securities Act or qualification under any state securities laws not already
obtained, and (iii) the Current Market Price shall have been not less than the
Put Price.
Merger Agreement is defined in the preamble to this Put Right.
Merger Units are defined in the preamble to this Put Right.
Note Units are defined in the preamble to this Put Right.
Notes are defined in the preamble to this Put Right.
Opgroup is defined in the preamble to this Put Right.
PIMCO Advisors is defined in the preamble to this Put Right.
Put Date, with respect to a particular Certificate Unit, means the
later of (i) December 31, 2004, or (ii) the sixtieth day after the Issue Date
with respect to such Certificate Unit.
Put Price means the price at which PIMCO Advisors shall purchase one
Covered Unit from a Holder upon exercise of this Put Right, as adjusted pursuant
to Section 4 or 6. The Put Price as of the Grant Date is $25.50 per Covered Unit
Registration Statement means a registration statement filed under
the Securities Act.
Securities Act means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
Trading Day means a day on which the principal National Securities
Exchange on which the Class A LP Units are listed or admitted for trading is
open for trading.
Transaction is defined in Section 5.
2
<PAGE> 3
Section 2. Put Right for Covered Units Which Are Not Certificate
Units.
(a) Unless sooner terminated pursuant to Section 2(d), the
Holder of a Covered Unit which is not a Certificate Unit shall have the right,
exercisable on December 31, 2004, to require PIMCO Advisors to purchase such
Covered Unit for cash in the amount of the Put Price.
(b) In order to exercise the right described in Section
2(a), the Holder shall, no later than the close of business on December 31,
2004, surrender the certificate evidencing such Covered Unit, duly endorsed or
assigned to PIMCO Advisors, at the principal office of PIMCO Advisors,
accompanied by written notice in the form of the Notice of Exercise attached
hereto as Exhibit A.
(c) Not later than January 5, 2005, PIMCO Advisors shall
transfer funds in the amount of the Put Price for such Covered Unit by wire
transfer to the account specified by the Holder in the Notice of Exercise, or if
no such account is specified, shall mail a check payable to the Holder in such
amount to the address specified in the Notice of Exercise.
(d) The right described in Section 2(a) shall terminate
upon the occurrence of a Liquidity Event on any day during the period beginning
January 1, 1998 and ending December 31, 2004, and the obligations of PIMCO
Advisors under such right shall thereupon be extinguished.
Section 3. Put Rights for Covered Units Which Are Certificate Units.
(a) Unless sooner terminated pursuant to Section 3(d), the
Holder of a Covered Unit which is a Certificate Unit shall have the right,
exercisable on the Put Date with respect to such Certificate Unit, to require
PIMCO Advisors to purchase such Covered Unit for cash in the amount of the Put
Price.
(b) In order to exercise the right described in Section
3(a), the Holder shall, no later than the close of business on such Put Date,
surrender the certificate evidencing such Covered Unit, duly endorsed or
assigned to PIMCO Advisors, at the principal office of PIMCO Advisors,
accompanied by written notice in the form of the Notice of Exercise attached
hereto as Exhibit A.
(c) Not later than three business days after such Put
Date, PIMCO Advisors shall transfer funds in the amount of the Put Price for
such Covered Unit by wire transfer to the account specified by the Holder in the
Notice of Exercise, or if no such account is specified, shall mail a check
payable to the Holder in such amount to the address specified in the Notice of
Exercise.
3
<PAGE> 4
(d) The right described in Section 3(a) shall terminate
upon the occurrence of a Liquidity Event on any day during the period beginning
on the Issue Date with respect to such Certificate Unit, and ending on the Put
Date for such Certificate Unit, and the obligations of PIMCO Advisors under such
right shall thereupon be extinguished.
Section 4. Adjustments for Recapitalizations.
If, at any time after the Grant Date, PIMCO Advisors shall effect a
Recapitalization affecting Class A LP Units, the Put Price in effect at the
opening of business on the day following the effective date for the
Recapitalization shall be adjusted so that Holders shall be entitled thereafter
to receive upon surrender of their Covered Units the amount of cash that such
Holders would have received had they exercised this Put Right for their Covered
Units immediately prior to the effective date for the Recapitalization.
Section 5. Adjustments for Transactions.
If, at any time after the Grant Date, PIMCO Advisors shall be a
party to a transaction, including without limitation a Restructuring, a merger
or consolidation, a sale of all or substantially all of the Partnership Assets,
or an exchange of all or substantially all of the Partnership Interests, but
excluding a transaction to which Section 4 applies, in each case as a result of
which Class A LP Units held by Public Unitholders are exchanged for or converted
into cash, securities or other property (each, a "Transaction"), Holders shall
be entitled thereafter to receive, upon surrender of the cash, securities and
other property received for or in place of each Covered Unit, the Put Price then
in effect.
Section 6. Other Adjustments.
If, at any time after the Grant Date, PIMCO Advisors shall take any
action affecting the Class A LP Units other than an action described in Section
4 or 5, that would adversely affect this Put Right, this Put Right and the Put
Price may be adjusted in such manner, if any, and at such time as the General
Partners may determine to be equitable under the circumstances; provided, that
if the Indemnity Trustees object to such determination by notice mailed to PIMCO
Advisors at its principal office within thirty days after notice of such action
is mailed to the Indemnity Trust pursuant to Section 8(a), the Independent
Investment Banker shall determine an equitable adjustment to this Put Right and
the Put Price, and such determination shall be conclusive and binding on PIMCO
Advisors and the Holders.
Section 7. Successive Adjustments.
The provisions of Sections 4, 5 and 6 shall apply similarly to
successive Recapitalizations, Transactions and actions described in Section 6.
4
<PAGE> 5
Section 8. Notices to Holder.
(a) If any Recapitalization or Transaction or action
described in Section 6 is proposed to occur, PIMCO Advisors shall cause to be
mailed to the Indemnity Trust at the address specified pursuant to the Merger
Agreement, to each Holder at his address as shown on the records of PIMCO
Advisors, and to each holder of a Note at his address as shown on the records of
Opgroup, as promptly as practicable, a notice stating the effective date for the
proposed Recapitalization or Transaction or action, and describing in general
terms the proposed Recapitalization or Transaction or action.
(b) If the Put Price is adjusted, or there is a change in
the cash, securities or other property to be surrendered upon exercise of the
Put Right, PIMCO Advisors shall cause to be mailed to the Indemnity Trust at the
address specified pursuant to the Merger Agreement, to each Holder at his
address as shown on the records of PIMCO Advisors, and to each holder of a Note
at his address as shown on the records of Opgroup, as promptly as practicable, a
notice stating the effective date for such adjustment or change, and stating the
adjusted Put Price or describing the change, as the case may be.
(c) Failure to give or receive a notice described in
Section 8(a) or (b) or any defect in such notice shall not affect the validity
of the Recapitalization or Transaction or action which gives rise to such
notice.
Section 9. General.
(a) This Put Right is granted for the express benefit of
the Holders, and may be altered or amended only with the prior written consent
of PIMCO Advisors and the Indemnity Trust.
(b) PIMCO Advisors may cause a legend to be imprinted on
each certificate evidencing Covered Units, stating "The Units evidenced by this
Certificate are [Merger Units] [Note Units] [Certificate Units] within the
meaning of that certain Put Right granted by PIMCO Advisors L.P. on November 4,
1997, and are entitled to the benefits accorded Covered Units by the Put Right."
Any such legend shall be removed upon registration of a transfer which results
in such Class A LP Units losing their status as Covered Units.
(c) This Put Right shall be deemed to be a contract made
under the laws of the State of Delaware, and shall be construed in accordance
with the internal laws of the State of Delaware, without regard to the
principles of conflict of laws.
5
<PAGE> 6
IN WITNESS WHEREOF, PIMCO Advisors has executed this Put Right in
New York, New York on the Grant Date.
PIMCO Advisors L.P.
By /s/ KENNETH M. POOVEY
---------------------------
Kenneth M. Poovey
Executive Vice President
6
<PAGE> 7
EXHIBIT A
NOTICE OF EXERCISE
To: PIMCO Advisors L.P.
This Notice of Exercise is given pursuant to that certain Put Right
granted by PIMCO Advisors L.P. ("PIMCO Advisors") on November 4, 1997.
Capitalized terms not defined herein are defined in the Put Right or the Amended
and Restated Agreement of Limited Partnership of PIMCO Advisors.
Pursuant to the terms of the Put Right, the undersigned (the
"Holder") hereby irrevocably elects to require PIMCO Advisors to purchase
_____________________
Class A LP Units held of record by the Holder and covered by the Put Right (the
"Tendered Units"). Accompanying this Notice of Exercise are certificates
evidencing the Tendered Units, duly endorsed or assigned to PIMCO Advisors.
The purchase price for the Tendered Units should be :
[ ] Wired to the following account:
_____________________________________________
_____________________________________________
_____________________________________________
[ ] Paid by check mailed to the following address:
_____________________________________________
_____________________________________________
_____________________________________________
<PAGE> 8
The Holder represents and warrants to PIMCO Advisors that the
Tendered Units are Covered Units, and that he is transferring good and
marketable title to the Tendered Units to PIMCO Advisors, free and clear of any
liens, encumbrances or adverse claims.
Executed in _____________________________ on______________________.
(City and State) (Date)
_________________________________
(Signature)
_________________________________
(Printed Name)
_________________________________
Signature Guarantee:(1)
_____________________
1 All signatures shall be guaranteed by a bank or trust company
having an office or correspondent in the United States or a broker or dealer
which is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc.
2
<PAGE> 1
EXHIBIT 10.3
EXCHANGE RIGHT
This Exchange Right is granted by PIMCO Advisors L.P., a Delaware
limited partnership ("PIMCO Advisors") on November 4, 1997 (the "Grant Date") to
the registered holders from time to time (the "Noteholders") of the 6% Senior
Notes due December 1, 2037 ("Notes") of Oppenheimer Group, Inc., a Delaware
corporation ("Opgroup"). Capitalized terms not defined herein are defined in the
Amended and Restated Partnership Agreement of PIMCO Advisors, that certain
Agreement and Plan of Merger, dated November 4, 1997, to which PIMCO Advisors is
a party, or the Certificate of Long-Term Indemnity Indebtedness issued by
Opgroup on November 4, 1997 (the "Certificate").
Section 1. Exchange of Notes for Class A LP Units.
(a) Each Noteholder shall have the right, at his option,
at any time and from time to time, during the period beginning at the opening of
business on November 5, 1997 and ending at the close of business on the later of
(i) December 1, 2007, or (ii) the sixtieth day after the cancellation of the
Certificate pursuant to its terms, to exchange his Notes, in whole or in part,
at the rate of one Class A LP Unit for each $33a in principal amount of Notes
surrendered for exchange (the "Exchange Rate"), in each case as of the close of
business on the day such Notes are surrendered for exchange.
(b) In order to exercise this Exchange Right, the
Noteholder (the "Exchanging Noteholder") shall surrender the Notes to be
exchanged, duly endorsed to the order of PIMCO Advisors, at the principal office
of PIMCO Advisors, accompanied by (i) written notice in the form of the Exchange
Notice attached hereto as Exhibit A, and (ii) if the Exchanging Noteholder is
not a Partner of PIMCO Advisors, a duly executed Admission Application.
(c) No payment shall be made or credit given for interest
accrued but not paid on Notes surrendered for exchange.
(d) As promptly as practicable after the surrender of
Notes for exchange, PIMCO Advisors shall issue and deliver at its principal
office to the Exchanging Noteholder, or mail to the Exchanging Noteholder at the
address noted on the Exchange Notice, a certificate for the number of full Class
A LP Units issuable upon exchange for such Notes, and any fractional Class A LP
Unit which would otherwise be issued upon such exchange shall be settled as
provided in Section 1(f).
(e) The Exchanging Noteholder will become the holder of
record of the Class A LP Units issued in the exchange as of the close of
business on the day the Notes are surrendered for exchange, accompanied by a
duly executed Exchange Notice, and if required, a duly executed Admission
Application.
<PAGE> 2
(f) In lieu of any fractional Class A LP Unit which would
otherwise be issued upon an exchange, PIMCO Advisors shall pay to the Exchanging
Noteholder cash equal to (i) such fractional interest times (ii) the Unit Price.
(g) PIMCO Advisors shall at all times reserve and keep
available, free from preemptive rights, solely for the purpose of effecting the
Exchange Right, the full number of Class A LP Units deliverable upon exchange of
all outstanding Notes not held by PIMCO Advisors.
(h) PIMCO Advisors represents and warrants to the
Noteholders that any Class A LP Units issued in exchange for Notes shall be
validly issued, fully paid and nonassessable.
(i) PIMCO Advisors will pay any and all documentary stamp
or similar issue or transfer taxes payable in respect of the issuance or
delivery of Class A LP Units to an Exchanging Noteholder in exchange for his
Notes.
Section 2. Adjustment for Recapitalizations.
If, at any time after the Grant Date, PIMCO Advisors shall effect a
Recapitalization affecting Class A LP Units, the Exchange Rate in effect at the
opening of business on the day following the record date or effective date for
the Recapitalization shall be adjusted so that each Noteholder shall be entitled
thereafter to receive upon exchange of his Notes the number of Class A LP Units
(including fractional interests) that such Noteholder would have owned or
received had he exchanged his Notes for Class A LP Units (including fractional
interests) immediately prior to the record date or effective date for the
Recapitalization. Any Class A LP Units issued in a Recapitalization after the
record date, if any, for such Recapitalization shall be issuable to an
Exchanging Noteholder on the effective date of such Recapitalization.
Section 3. Adjustment for Transactions.
(a) If, at any time after the Grant Date, PIMCO Advisors
shall be a party to a transaction, including without limitation a Restructuring,
a merger or consolidation, a sale of all or substantially all of the Partnership
Assets, or an exchange of all or substantially all of the Partnership Interests,
but excluding a transaction to which Section 2 applies, in each case as a result
of which Class A LP Units held by Public Unitholders are exchanged for or
converted into cash, securities or other property (each, a "Transaction"), each
Noteholder shall be entitled thereafter to receive upon exchange of his Notes
the cash, securities and other property ("Transaction Consideration") that such
Noteholder would have received had he exchanged his Notes for Class A LP Units
(including fractional interests) (and, in the case of a Restructuring, been a
Public Unitholder) immediately prior to the record date or effective date for
the Transaction. Any Transaction Consideration delivered after the record date,
if any, for a
2
<PAGE> 3
Transaction shall be issuable to an Exchanging Noteholder on the effective date
of such Transaction
(b) PIMCO Advisors shall not enter into any Transaction
unless the terms of the Transaction are consistent with the provisions of
Section 3(a), and PIMCO Advisors and the issuer of the Transaction Consideration
have entered into an agreement for the benefit of the Noteholders granting to
each Noteholder the right to exchange his Notes for the Transaction
Consideration that he would have received had he exchanged his Notes for Class A
LP Units (including fractional interests) (and, in the case of a Restructuring,
been a Public Unitholder) immediately prior to the record date or effective date
for the Transaction, on terms substantially equivalent to the terms of this
Exchange Right.
Section 4. Other Adjustments.
If, at any time after the Grant Date, PIMCO Advisors shall take any
action affecting the Class A LP Units other than an action described in Section
2 or 3, that would adversely affect this Exchange Right, the Exchange Rate and
the cash, securities or other property to be delivered upon exercise of this
Exchange Right may be adjusted in such manner, if any, and at such time as the
General Partners may determine to be equitable under the circumstances;
provided, that if the Indemnity Trustees object to such determination by notice
mailed to PIMCO Advisors at its principal office within thirty days after notice
of such action is mailed to the Indemnity Trust pursuant to Section 6(a), an
independent nationally recognized investment banking firm retained by PIMCO
Advisors and reasonably acceptable to the Indemnity Trustees shall determine an
equitable adjustment to this Exchange Right, the Exchange Rate and the cash,
securities, or other property to be delivered upon exercise of this Exchange
Right, and such determination shall be conclusive and binding on PIMCO Advisors
and the Noteholders.
Section 5. Successive Adjustments.
The provisions of Sections 2, 3 and 4 shall apply similarly to
successive Recapitalizations, Transactions and actions described in Section 4.
Section 6. Notices to Noteholders.
(a) If any Recapitalization or Transaction or action
described in Section 4 is proposed to occur, PIMCO Advisors shall cause to be
mailed to the Indemnity Trust at the address specified pursuant to the Merger
Agreement, and to each Noteholder at his address as shown on the records of
Opgroup, as promptly as practicable, a notice stating the record date or
effective date for the proposed Recapitalization or Transaction or action, and
describing in general terms the proposed Recapitalization or Transaction or
action.
(b) If the Exchange Rate is adjusted, or there is a change
in the cash, securities or other property to be delivered upon an exchange,
PIMCO Advisors shall cause to be mailed to
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the Indemnity Trust at the address specified pursuant to the Merger Agreement,
and to each Noteholder at his address as shown on the records of Opgroup, as
promptly as practicable, a notice stating the effective date for such adjustment
or change, and stating the adjusted Exchange Rate or describing the change, as
the case may be.
(c) Failure to give or receive a notice described in
Section 6(a) or (b) or any defect in such notice shall not affect the validity
of the Recapitalization or Transaction or action which gives rise to such
notice.
Section 7. General.
(a) This Exchange Right is granted for the express benefit
of the Noteholders, and may be altered or amended only with the prior written
consent of PIMCO Advisors and the Indemnity Trust.
(b) This Exchange Right shall be deemed to be a contract
made under the laws of the State of Delaware, and shall be construed in
accordance with the internal laws of the State of Delaware, without regard to
the principles of conflict of laws.
IN WITNESS WHEREOF, PIMCO Advisors has executed this Exchange Right
in New York, New York on the Grant Date.
PIMCO Advisors L.P.
By /s/ KENNETH M. POOVEY
---------------------------
Kenneth M. Poovey
Executive Vice President
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EXHIBIT A
EXCHANGE NOTICE
To: PIMCO Advisors L.P.:
This Exchange Notice is given pursuant to that certain Exchange
Right granted by PIMCO Advisors L.P. ("PIMCO Advisors") to the registered
holders from time to time of the 6% Senior Notes due December 1, 2037 ("Notes")
of Oppenheimer Group, Inc., a Delaware corporation. Capitalized terms not
defined herein are defined in the Amended and Restated Partnership Agreement of
PIMCO Advisors.
Pursuant to the terms of the Exchange Right, the undersigned (the
"Exchanging Noteholder") hereby irrevocably elects to exchange
$__________________
in principal amount of Notes for Class A LP Units (the "Exchange Units").
Accompanying this Exchange Notice are Notes (the "Tendered Notes") in such
aggregate principal amount, duly endorsed or assigned to PIMCO Advisors.
The certificate evidencing the Exchange Units and a check payable to
the Exchanging Noteholder in the amount of any cash settlement for a fractional
interest in a Class A LP Units should be mailed to the following address:
________________________________________
________________________________________
________________________________________
The Exchanging Noteholder represents and warrants to PIMCO Advisors
that he is transferring good and marketable title to the Tendered Notes to PIMCO
Advisors, free and clear of any liens, encumbrances or adverse claims.
Unless a registration statement under the Securities Act covering
the Exchange Units is effective on the date of the exchange:
(i) The Exchanging Noteholder represents and warrants to
PIMCO Advisors (A) that he is acquiring the Exchange Units for his own account
for investment and not on behalf of or for the benefit of any other Person, and
not with a view to, or for offer or sale in
<PAGE> 6
connection with, any distribution thereof (within the meaning of the Securities
Act) that would violate the Securities Act, and (B) that he will not sell or
transfer the Exchange Units unless (1) such sale or transfer is registered under
the Securities Act or (2) the Exchanging Noteholder provides to PIMCO Advisors
an opinion of counsel to the effect that the Exchanging Noteholder may sell the
Exchange Units without registration under the Securities Act.
(ii) The Exchanging Noteholder acknowledges that he has
been given access to and reviewed such documents and information (including
publicly filed reports) regarding PIMCO Advisors as he has deemed appropriate,
and he has been given the opportunity to ask questions of and to obtain
documents from representatives of PIMCO Advisors regarding its operations and
the terms and conditions of issuance of the Exchange Units and the merits and
risks of acquiring the same, and all such questions and documents have been
answered and provided to his full satisfaction
Executed in _________________________________ on___________________________
(City and State) (Date)
_________________________________
(Signature)
_________________________________
(Printed Name)
_________________________________
Signature Guarantee:(1)
_______________________
1 All signatures shall be guaranteed by a bank or trust company
having an office or correspondent in the United States or a broker or dealer
which is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc.
2
<PAGE> 1
EXHIBIT 10.4
OPPENHEIMER GROUP, INC.
$230,000,000
6% Senior Notes
Due December 1, 2037
-------------
NOTE AGREEMENT
Dated as of November 4, 1997
-------------
<PAGE> 2
NOTE AGREEMENT
NOTE AGREEMENT, dated as of November 4, 1997, by Oppenheimer
Group, Inc., a Delaware corporation ("Company"), for the equal and ratable
benefit of the Holders of the Company's 6% Senior Notes due December 1, 2037
("Notes"):
WHEREAS, the Board of Directors of the Company has determined to
effect a redemption of the outstanding shares of the Class C Common Stock, par
value $0.01 per share ("Class C Common Stock"), and the Class D Common Stock,
par value $0.01 per share ("Class D Common Stock");
WHEREAS, the amended and restated certificate of incorporation of
the Company provides that upon such redemption, the holders of the Class C
Common Stock and Class D Common Stock are to receive, among other things, the
Notes;
NOW THEREFORE, the Company agrees as follows:
ARTICLE 1.
DEFINITIONS
Section 1.01. Definitions.
"Affiliate" of a Person means any Person directly or indirectly
controlling, controlled by or under common control with such Person. As used in
this definition of Affiliate, the term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company
or any authorized committee of the Board.
"Business Day" means any day other than a Legal Holiday.
"Certificate" means that certain Certificate of Long-Term
Indemnity Indebtedness dated November 4, 1997 issued by the Company.
"Class C Units" means the Class C units of limited partner
interest of PIMCO Advisors to be issued to Opfin pursuant to the Contribution
Agreement.
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"Company" has the meaning set forth in the first paragraph of
this Agreement.
"Contribution Agreement" means that certain Contribution
Agreement dated November 4, 1997 among the Company, Opfin, PIMCO Advisors and
Value Advisors.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Equity Security" means a share of capital stock, a partnership
or limited liability company interest, or other equity interest, or any security
convertible or exchangeable, with or without consideration, into any such
security or interest, or carrying any warrant, option or right to subscribe to
or purchase any such security or interest or any such convertible or
exchangeable security, or any such warrant, option or right.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means with respect to any Person, (i) any
liability, contingent or otherwise, of such Person (A) for borrowed money
(whether or not recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), (B) evidenced by a note, debenture or
similar instrument (including a purchase money obligation) given in connection
with the acquisition of any property or assets, (C) for any letter of credit or
performance bond in favor of such Person, or (D) for the payment of money
relating to a capitalized lease obligation; (ii) any liability of any other
Person of the kind described in the preceding clause (i), which such Person has
guaranteed or which is otherwise its legal liability, contingent or otherwise;
(iii) any obligation secured by a lien to which the property or assets of such
Person are subject, whether or not the obligations secured thereby shall have
been assumed by or shall otherwise be such Person's legal liability; (iv) all
other items, which in accordance with generally accepted accounting principles,
would be included as a liability on the balance sheet of such Person on the date
of determination; and (v) any and all deferrals, renewals, extensions or
refinancing of, or amendments, modifications or supplements to, any liability of
the kind described in any of the preceding clauses (i), (ii), (iii) or (iv).
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in The City of New York or at a place of payment are
authorized or obligated by law, regulation or executive order to remain closed.
"Merger Agreement" means that certain Agreement and Plan of
Merger, dated November 4, 1997 (the "Merger Agreement"), by and among the
Company, Opfin, PIMCO Advisors, PIMCO Advisors Transitory Merger LLC, a Delaware
limited liability company, the Seller Trust, under Declaration of Trust dated
July 22, 1997, as amended, and the Indemnity Trust, under Declaration of Trust
dated July 22, 1997, as amended.
"Note Agreement" means this Note Agreement as amended from time
to time.
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<PAGE> 4
"Notes" has the meaning set forth in the first paragraph of this
Note Agreement.
"Officers" means the President, the Treasurer, any Assistant
Treasurer, Controller, Secretary or any Vice-President of the Company or any
other obligor upon the Notes.
"Opfin" means Oppenheimer Financial Corp., a Delaware
corporation, a wholly owned subsidiary of the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PIMCO Advisors" means PIMCO Advisors L.P., a Delaware limited
partnership.
"principal" of a debt security means the principal of the
security plus the premium, if any, on the security.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" has the meaning set forth in Regulation S-X
promulgated under the Securities Act.
"Value Advisors" means Value Advisors LLC, a Delaware limited
liability company.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
The Notes shall be substantially in the form of Exhibit A, which
is part of this Note Agreement. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Note shall be
dated the date of its issuance.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes.
Section 2.03. Registrar and Paying Agent.
The Company shall act as paying agent and registrar of the Notes.
The Company (or any other obligor upon the Notes) shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
paying agent. The Company shall preserve in as
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<PAGE> 5
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Holders.
Section 2.04. Transfer and Exchange.
(a) The issuance of the Notes has not been registered under the
Securities Act and will be offered pursuant to an exemption thereunder. A Holder
may not transfer any Notes unless such sale or transfer is (i) registered under
the Securities Act or (ii) exempt from registration thereunder and the Company
is presented with (A) an opinion of counsel, reasonably satisfactory to the
Company, that registration is not required and (B) the following representations
in writing by the transferee:
(1) The transferee is acquiring the Notes for its own
account for investment and not on behalf of or for the benefit of any other
Person, and not with a view to, or for offer or sale in connection with, any
distribution thereof (within the meaning of the Securities Act) that would
violate the Securities Act.
(2) The transferee understands that the issuance of the
Notes has not been registered under the Securities Act and that the Notes were
offered pursuant to an exemption thereunder. The transferee will not sell or
transfer the Notes except in compliance with this Section 2.04.
(3) The transferee understands that the Notes to be issued
upon transfer or exchange will bear the following legend: "The securities
evidenced or constituted hereby have been acquired for investment and have not
been registered under the Securities Act of 1933, as amended. Such securities
may not be sold, transferred, pledged or hypothecated unless the registration
provisions of said Act have been complied with or unless the Company has
received an opinion of counsel reasonably satisfactory to the Company that such
registration is not required."
(4) The transferee acknowledges that (i) it has been given
access to and reviewed such documents and information (including publicly filed
reports) regarding the Company as it has deemed appropriate, and (ii) it has
been given the opportunity to ask questions of and to obtain documents from the
representatives of the Company regarding the operations of the Company and the
terms and conditions of the issuance of such securities and the merits and risks
of acquiring the same, and all such questions and documents have been answered
and provided to the transferee's full satisfaction.
(b) Where Notes are presented to the Company with a request to
register, transfer or exchange them for an equal principal amount of Notes of
other denominations, the Company shall register the transfer or make the
exchange if its reasonable requirements for such transactions are met; provided,
however, that (i) any Note presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Company duly executed by the Holder or his
attorney duly authorized in writing and (ii) the opinions and representations
described above, if applicable, have been provided to the Company.
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<PAGE> 6
(c) No service charge shall be made for any registration of
transfer or exchange (except as otherwise expressly permitted herein), but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than such
transfer tax or similar governmental charge payable upon exchanges pursuant to
Section 7.04).
Section 2.05. Replacement Notes.
If any mutilated Note is surrendered, or the Company receives
evidence to its satisfaction of the destruction, loss or theft of any Note, the
Company shall issue a replacement Note. If required by the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Company to protect the Company from any loss which it may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note. Every
replacement Note is an additional obligation of the Company.
Section 2.06. Outstanding Notes.
The Notes outstanding at any time are all the Notes issued by the
Company except for those canceled by it, those delivered to it for cancellation
and those described in this Section as not outstanding. If a Note is replaced
pursuant to Section 2.05, it ceases to be outstanding unless the Company
receives proof satisfactory to it that the replaced Note is held by a bona fide
purchaser. If the principal amount of any Note is paid in full, it ceases to be
outstanding and interest on it ceases to accrue. A Note does not cease to be
outstanding because the Company or an Affiliate holds the Note.
Section 2.07. Notes Held by the Company and its Affiliates.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, unless all
of the Notes are owned by the PIMCO Advisors or the Company, Notes owned by the
Company, any other obligor upon the Notes or their respective Affiliates shall
be deemed to be not outstanding.
Section 2.08. Cancellation.
The Company shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation. The Company may not
issue new Notes to replace Notes that it has paid in full or that have been
canceled.
ARTICLE 3.
COVENANTS
Section 3.01. Payment of Principal and Interest.
The Company shall pay the principal of and interest on the Notes
on the dates and in the manner provided in the Notes.
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<PAGE> 7
Section 3.02. Limitations on Business Activities .
From and after the contribution contemplated by Section 1 of the
Contribution Agreement, the Company and its Subsidiaries shall not engage in any
business other than (i) directly or indirectly holding the Class C Units, (ii)
discharging their obligations under or in connection with this Note Agreement,
the Notes, the Certificate, the Merger Agreement, the Contribution Agreement and
any Indebtedness of the Company to PIMCO Advisors, and (iii) their respective
governance and existence.
Section 3.03. Limitation on Restricted Payments and Indebtedness.
From and after the completion of the contribution contemplated by
Section 1 of the Contribution Agreement, the Company will not, and will not
permit any Subsidiary to, directly or indirectly:
(a) declare or pay any dividend or make any distribution with
respect to the Company's capital stock, or purchase, redeem or otherwise acquire
or retire for value any Equity Security of the Company or any Affiliate of the
Company other than PIMCO Advisors or a wholly-owned subsidiary of the Company,
if at the time such dividend or distribution is declared, or such purchase,
redemption, acquisition or retirement is effected (i) there is any unpaid
principal or interest under the Notes, or (ii) a Default or Event of Default
shall have occurred and be continuing or shall occur as a consequence thereof;
or
(b) create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness other than
Indebtedness subordinated to the Notes and the Certificate as provided in
Section 4(d) of the Contribution Agreement.
Section 3.04. Corporate Existence.
The Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, will not
consolidate with, merge with or into, or sell or transfer all or substantially
all of its assets to, any other Person, and will continue to maintain Opfin as a
wholly-owned Subsidiary; provided, however, that the Company may cause Opfin to
merge with or liquidate into the Company.
Section 3.05. Negative Pledge.
The Company will not, and will not permit Opfin to, sell, assign,
transfer or otherwise dispose of, or pledge or otherwise encumber, any of the
Class C Units except as contemplated by the Contribution Agreement.
Section 3.06. No Amendment of Contribution Agreement.
The Company will not consent to any amendment of Section 3(b) or
4(d) of the Contribution Agreement without the consent of holders of at least a
majority in principal amount of the then outstanding Notes.
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ARTICLE 4.
[OMITTED]
ARTICLE 5.
DEFAULTS AND REMEDIES
Section 5.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any Note
when the same becomes due and payable and the Default continues for a
period of 15 days;
(2) the Company defaults in the payment of the principal of any
Note when the same becomes due and payable at maturity;
(3) the Company fails to observe or perform any other covenant,
condition or agreement on the part of the Company to be observed or
performed pursuant to the Notes or this Note Agreement and such failure
continues uncured for the period and after the written notice to the
Company specified below;
(4) the Company or Opfin pursuant to or within the meaning of any
Bankruptcy Law: (a) commences a voluntary case, (b) consents to the
entry of an order for relief against it in an involuntary case, (c)
consents to the appointment of a Custodian of it or for all or
substantially all of its property, (d) makes a general assignment for
the benefit of its creditors, or (e) generally is not paying its debts
as the same become due; or
(5) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (a) is for relief against the Company or
Opfin in an involuntary case, (b) appoints a Custodian of the Company or
Opfin or for all or substantially all of the property of the Company or
Opfin, or (c) orders the liquidation of the Company or any Opfin, and
such order or decree remains unstayed and in effect for 60 days.
Any Event of Default shall not be deemed to have occurred under
clause (3) above until the Company shall have received written notice from any
of the Holders. A Default under clause (3) is not an Event of Default until the
Holders of at least 25% in principal amount of the then outstanding Notes notify
the Company of the Default and the Company does not cure the Default within 30
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default."
Section 5.02. Acceleration.
If an Event of Default (other than an Event of Default specified
in clauses (4) and (5) of Section 5.01) occurs and is continuing, the Holders of
at least 25% in principal amount of the then outstanding Notes, by written
notice to the Company, may declare the unpaid principal of and any accrued
interest on all the Notes to be due and payable. Upon such declaration the
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<PAGE> 9
principal and interest shall be due and payable immediately. If an Event of
Default specified in clause (4) or (5) of Section 5.01 occurs, such an amount
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of any Holder. The Holders of a majority in
principal amount of the then outstanding Notes by written notice to the Company
may rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal or interest that has become due solely because
of the acceleration) have been cured or waived.
Section 5.03. Waiver of Past Defaults.
The Holders of a majority in principal amount of the then
outstanding Notes by notice to the Company may waive an existing Default or
Event of Default and its consequences except a continuing Default or Event of
Default in the payment of the principal of or interest on any Note. Upon any
such waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this Note
Agreement; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
Section 5.04. Control by Majority.
The Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Holders.
Section 5.05. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Note Agreement, the
right of any Holder of a Note to receive payment of principal and interest on
the Note, on or after the respective due dates expressed in the Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the Holder.
Section 5.06. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Note Agreement, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by a Holder pursuant to Section 5.05, or a
suit by Holders of more than 10% in principal amount of the then outstanding
Notes.
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ARTICLE 6.
TERMINATION
Section 6.01. Termination of Company's Obligations.
This Note Agreement shall cease to be of further effect when all
outstanding Notes theretofore issued have been delivered (other than destroyed,
lost or stolen Notes which have been replaced or paid) to the Company for
cancellation and the Company has paid all sums payable hereunder.
ARTICLE 7.
AMENDMENTS
Section 7.01. Without Consent of Holders.
This Note Agreement is made by the Company for the benefit of the
Holders of the Notes. The Company may amend this Note Agreement or the Notes
without the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to
certificated Notes; or
(3) to make any change that does not adversely affect the legal
rights hereunder of any Holder.
The Company may execute any Supplemental Note Agreement
authorized or permitted by the terms of this Note Agreement and make any further
appropriate agreements and stipulations which may be therein contained.
Section 7.02. With Consent of Holders.
The Company may amend this Note Agreement or the Notes with the
written consent of the Holders of at least a majority in principal amount of the
then outstanding Notes. The Holders of a majority in principal amount of the
Notes then outstanding may waive compliance in a particular instance by the
Company with any provision of this Note Agreement or the Notes.
It shall not be necessary for the consent of the Holders under
this Section 7.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment or waiver under this Section becomes
effective, the Company shall mail to the Holders of each Note affected thereby a
notice briefly describing the amendment or waiver. Any failure of the Company to
mail such notice, or any defect therein,
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<PAGE> 11
shall not, however, in any way impair or affect the validity of any such
Supplemental Note Agreement.
Without the consent of each Holder affected, an amendment or
waiver under this Section may not:
(1) reduce the principal amount of Notes whose Holders must
consent to an amendment or waiver;
(2) reduce the rate of or change the time for payment of interest
on any Note;
(3) reduce the principal of or change the fixed maturity of any
Note;
(4) make any Note payable in money other than that stated in the
Note;
(5) make any change in Section 5.03 or 5.05 or in this sentence
of this Section 7.02;
(6) waive a Default in the payment of principal of or interest
on, or redemption payment with respect to, any Note or an Event of
Default under clause (4) or (5) of Section 5.01.
Section 7.03. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as to
his Note or portion of a Note if the Company receives written notice of
revocation from the Holder or subsequent Holder with respect to all or a portion
of the principal amount of the Note before the date the amendment or waiver
becomes effective. An amendment or waiver becomes effective in accordance with
its terms and thereafter binds every Holder.
Section 7.04. Notation on or Exchange of Notes.
The Company in exchange for all Notes may issue new Notes that
reflect the amendment or waiver.
ARTICLE 8.
MISCELLANEOUS
Section 8.01. Notices.
Any notice or communication to the Company is duly given if in
writing and delivered in person or mailed by first-class mail (registered or
certified, return receipt requested), telex, telecopier or overnight air courier
guaranteeing next day delivery, to:
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Oppenheimer Group, Inc.
c/o PIMCO Advisors L.P.
800 Newport Center Drive
Newport Beach, CA 92660
Attention: General Counsel
Telecopier No.: (714) 717-7076
The Company or any other obligor upon the Notes, by notice to the
Holders, may designate additional or different addresses for subsequent notices
or communications.
All notices and communications to the Company shall be deemed to
have been duly given at the time delivered by hand, if personally delivered;
five Business Days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt acknowledged, if
telecopied; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail, certified or registered, return receipt requested, to his
address shown on the register kept by the registrar of the Notes. Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders.
If a notice or communication to a Holder is mailed in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.
Section 8.02. Limited Recourse; No Recourse Against Others.
The Notes shall be limited in recourse solely to the assets of
the Company. A director, officer, employee or stockholder of the Company, as
such, shall not have any liability for any obligations of the Company under the
Notes or this Note Agreement or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability.
Section 8.03. Governing Law.
The laws of the State of New York shall govern and be used to
construe this Note Agreement and the Notes.
Section 8.04. Successors.
All agreements of the Company in this Note Agreement and the
Notes shall bind its successor.
Section 8.05. Severability.
In case any provision in this Note Agreement or in the Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
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Section 8.06. Table of Contents, Headings, etc.
The Table of Contents, and Headings of the Articles and Sections
of this Note Agreement have been inserted for convenience of reference only, are
not to be considered a part hereof and shall in no way modify or restrict any of
the terms or provisions hereof.
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SIGNATURES
Dated as of November 4, 1997 OPPENHEIMER GROUP, INC.
By /s/ ROGER W. EINIGER
---------------------------
Name: Roger W. Einiger
Title: Executive Vice President
Attest:
[SIG]
- ---------------------------
(SEAL)
13
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EXHIBIT A
THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS THE REGISTRATION PROVISIONS OF SAID ACT HAVE BEEN
COMPLIED WITH OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
6% SENIOR NOTE
DUE DECEMBER 1, 2037
No. $__________
OPPENHEIMER GROUP, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars on December 1, 2037
Interest Payment Dates: March 1, June 1, September 1, December 1
Record Dates: February 15, May 15, August 15, November 15
Dated: November 4, 1997
OPPENHEIMER GROUP, INC.
By _________________________________
By _________________________________
(SEAL)
<PAGE> 16
6% SENIOR NOTE
DUE DECEMBER 1, 2037
1. Interest. Oppenheimer Group, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above from the date this Note is issued until maturity. The
Company will pay interest quarterly on the interest payment dates referred to on
the face hereof. Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided, that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding interest payment date, interest shall
accrue from such next succeeding interest payment date; provided further, that
the first interest payment date shall be December 1, 1997. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
to the Persons who are registered Holders of Notes ("Holders" and each a
"Holder") at the close of business on the record date next preceding the
interest payment date, even if such Notes are canceled after such record date
and on or before such interest payment date. The Holder must surrender this Note
to the Company to collect principal payments. The Company will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company, however, may pay
interest and principal by check payable in such money, and may mail interest
checks to a Holder's registered address.
3. Paying Agent and Registrar. The Company will act as paying
agent and registrar of the Notes.
4. Note Agreement. The Company issued the Notes under a Note
Agreement dated as of November 4, 1997 ("Note Agreement") entered into by the
Company for the benefit of the Holders. The terms of the Notes include those
stated in the Note Agreement. The Notes are subject to all such terms, and
Holders are referred to the Note Agreement for a statement of such terms. The
Notes are general obligations of the Company limited to $230,000,000 in
aggregate principal amount.
5. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Note Agreement. The Company may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Note
Agreement. The Notes are subject to restrictions on transfer as provided in the
Note Agreement.
6. Persons Deemed Owners. The registered holder of a Note shall
be treated as its owner for all purposes.
A-2
<PAGE> 17
7. Amendments and Waivers. Subject to certain exceptions, the
Note Agreement or the Notes may be amended with the consent of the Holders of at
least a majority in principal amount of the then outstanding Notes (other than
Notes held by the Company and its Affiliates unless the Company and its
Affiliates hold all of the Notes), and any existing default (except a payment
default) may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (other than Notes held by the
Company and its Affiliates). Without the consent of any Holder, the Note
Agreement or the Notes may be amended to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to certificated
Notes, or to make any change that does not adversely affect the rights of any
Holder.
8. Defaults and Remedies. Events of Default include: default in
payment of interest on the Notes for 15 days; default in payment of principal on
the Notes; failure by the Company to comply with any of its other agreements in
the Note Agreement or the Notes (in some cases, for 30 days after notice); and
certain events of bankruptcy or insolvency. If an Event of Default occurs and is
continuing, the Holders of at least 25% in principal amount of the then
outstanding Notes (other than Notes held by the Company and its Affiliates) may
declare all the Notes to be due and payable immediately, except that in the case
of an Event of Default arising from certain events of bankruptcy or insolvency,
all outstanding Notes become due and payable immediately without further action
or notice.
9. Limited Recourse; No Recourse Against Others. The Notes shall
be limited in recourse solely to the assets of the Company. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Notes or the Note Agreement or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
10. Exchange Right. The Holder of this Note is entitled to the
benefits accorded by that certain Exchange Right dated November 4, 1997.
11. Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
The Company will furnish to any Holder upon written request and
without charge a copy of the Note Agreement. Requests may be made to:
Oppenheimer Group, Inc.
c/o PIMCO Advisors L.P.
800 Newport Center Drive
Newport Beach, California 92660
Attention: General Counsel
A-3
<PAGE> 1
EXHIBIT 10.5
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT ("Agreement"), dated as of November 4, 1997, by
and among Oppenheimer Group, Inc., a Delaware corporation ("Opgroup"),
Oppenheimer Financial Corp., a Delaware corporation ("Opfin"), PIMCO Advisors
L.P., a Delaware limited partnership ("PIMCO Advisors"), and Value Advisors LLC,
a Delaware limited liability company ("Value Advisors"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings provided in that
certain Agreement and Plan of Merger, dated November 4, 1997 (the "Merger
Agreement"), by and among Opgroup, Opfin, PIMCO Advisors, PIMCO Advisors
Transitory Merger LLC, a Delaware limited liability company, the Seller Trust,
under Declaration of Trust dated July 22, 1997, as amended, and the Indemnity
Trust, under Declaration of Trust dated July 22, 1997, as amended.
WHEREAS, Opgroup owns all of the stock of Opfin, and Opfin owns (i) all
of the member interests of Value Advisors and (ii) a 1% general partner interest
in Oppenheimer Capital, L.P., a Delaware limited partnership (the "Opcap LP
Interest"), an approximate 32% general partner interest in Oppenheimer Capital,
a Delaware general partnership, a 1% general partner interest in Opcap Advisors,
a Delaware general partnership , a 1% general partner interest in OCC
Distributors, a Delaware general partnership, and a 1% general partner interest
in 225 Liberty Street Advisers, L.P. , a Delaware limited partnership
(collectively, the "Interests");
WHEREAS, Opfin desires to contribute, transfer and assign to PIMCO
Advisors, in exchange for the issuance by PIMCO Advisors of Class C units of
limited partner interest in PIMCO Advisors ("Class C Units"), all right, title,
interest, benefits, burdens and obligations of and to all of Opfin's interest in
the Interests and as a member of Value Advisors; and
WHEREAS, PIMCO Advisors desires to contribute, transfer and assign to
Value Advisors, as a capital contribution thereto, all right, title, interest,
benefits, burdens and obligations of and to all of the Interests other than the
Opcap LP Interest;
NOW THEREFORE, with reference to the foregoing and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Contributions
(a) Effective as of the date hereof, Opfin shall contribute,
transfer and assign to PIMCO Advisors all of Opfin's right, title, interest,
benefits, burdens and obligations as a member of Value Advisors, free and clear
of all liens, security interests and competing claims.
(b) Effective as of the date hereof, and following the
contribution described in Section 1(a), Opfin shall contribute, transfer and
assign to PIMCO Advisors all of Opfin's right, title, interest, benefits,
burdens and obligations, to and under all of the Interests, free and clear of
all liens, security interests and competing claims, and PIMCO Advisors shall
contribute, transfer and assign to Value Advisors all of PIMCO Advisors' right,
title, interest, benefits, burdens and
<PAGE> 2
obligations, to and under all of the Interests other than the Opcap LP Interest,
free and clear of all liens, security interests and competing claims
(c) The contributions, transfers and assignments described in
Section 1(b), other than with respect to the Opcap LP Interest, shall be
effected through a direct assignment to and assumption by Value Advisors, as
provided in the Assignment and Assumption attached hereto as Exhibits A, B and
C. The parties agree that such assignments and assumptions are being effected
directly to Value Advisors in order to minimize the costs, expenses and
complications that might be associated with multiple and duplicative transfers
of identical assets and liabilities; provided, however, that for purposes of all
tax and other applicable federal and state laws, such assets and liabilities
shall be treated and deemed as having been transferred to PIMCO Advisors and
then transferred by PIMCO Advisors to Value Advisors.
(d) The contributions, transfers and assignments of the Opcap LP
Interest as described in Section 1(b) and the member interest in Value Advisors
as described in Section 1(a) shall be effected as a direct assignment and
assumption by PIMCO Advisors as provided in the Assignment and Assumption
attached hereto as Exhibits D and E, respectively.
Section 2. Unit Issuance
(a) Effective as of the date hereof, in exchange for the
Interests and the member interest in Value Advisors (subject to the related
liabilities), PIMCO Advisors shall issue to Opfin 6,000,000 Class C Units.
(b) The number of Class C Units to be issued pursuant to
subsection (a) above shall be subject to adjustment in accordance with the
provisions of this Agreement.
Section 3. Purchase Price Adjustment
(a) In entering into this Agreement, the parties have attempted,
based on the information available as of the date of this Agreement, to agree on
a purchase price, as reflected in the Class C Units issued pursuant to Section
2, that represents fair consideration for the assets being transferred to PIMCO
Advisors by Opfin pursuant to Section 1. This Section 3 is intended to provide
for adjustments to the consideration being transferred by and to the parties
pursuant to Section 1 upon the occurrence of certain contingent events.
(b) If a Loss (as defined below) is incurred by PIMCO Advisors or
its direct or indirect subsidiaries (other than Opgroup or Opfin) and, as a
result of such Loss, Opgroup receives an Indemnification Payment (as defined
below) in excess of any Loss incurred by Opgroup or Opfin attributable to the
same Loss event (the excess portion thereof, an "Excess Indemnification
Payment"), then (i) if the Indemnification Payment is in the form of a reduction
in Face Amount under the terms of the Certificate of Long-Term Indemnity
Indebtedness dated November 4, 1997 issued by Opgroup (the "Certificate"), Opfin
shall transfer to PIMCO Advisors a number of Class C Units equal to the quotient
of (x) 6,000,000 multiplied by the amount of the reduction in Face Amount
constituting such Excess Indemnification Payment
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<PAGE> 3
divided by (y) $265 million, or (ii) if the Excess Indemnification Payment is in
cash, Opgroup shall contribute such cash to PIMCO Advisors.
(c) As used herein "Losses" shall mean any and all losses,
damages and liabilities, joint or several, and expenses (including, without
limitation, attorney fees and other costs of litigation, arbitration and
settlement) suffered or incurred by a Opgroup, Opfin, PIMCO Advisors or any or
their respective subsidiaries based upon, related to or arising from the Money
Management Business, Value Advisors or the Interests, or which are otherwise
attributable to the Merger Agreement or the transactions contemplated thereby,
(i) reduced by the Present Value Benefit realized or realizable by the person
suffering the Loss in connection with or as a result of the incurrence of such
losses, claims, damages, liabilities and expenses and (ii) reduced by any
applicable insurance proceeds actually received by the person which suffered the
Loss. Without limitation of the foregoing, Losses shall include (x) punitive
damages awarded to a third party and (y) consequential damages.
(d) As used herein the term "Indemnification Payment" means a
reduction in Face Amount of the Certificate or an indemnification payment
received by Opgroup pursuant to the provisions of the Tax Indemnity Agreement or
the Release and Indemnity Agreement.
Section 4. Liquidity Assistance
(a) Following the Class C Unit issuance described in Section 2,
PIMCO Advisors shall loan Opgroup the sum of $35,000,000 (the "Initial
Advance"), and Opgroup shall use a portion of the proceeds of such loan to repay
unpaid principal and interest on that certain 10% note due 2012, in the
principal amount of $32,193,000, originally issued by Oppenheimer Equities, Inc.
to Oppenheimer Capital, L.P. The Initial Advance shall bear interest at PIMCO
Advisors' cost of funds plus 50 basis points. All principal and unpaid interest
on the Initial Advance and shall be due and payable on demand.
(b) As further consideration for the contributions described in
Section 1, in the event that Opgroup or Opfin has a Loss for which Opgroup does
not receive an Indemnification Payment in cash, then the Company agrees to loan
to Opgroup (each loan a "Loss Advance") an amount of cash sufficient, after any
applicable taxes, to cover the Loss. Loss Advances shall bear interest at PIMCO
Advisors' cost of funds plus 50 basis points. All principal and unpaid interest
on a Loss Advance and shall be due and payable on demand.
(c) In the event that Opgroup requires additional cash to fund
interest payments on its 6% Senior Notes due December 1, 2037 (the "6% Senior
Notes") or that certain Certificate of Long-Term Indemnity Indebtedness dated
November 4, 1997 (the "Certificate"), PIMCO Advisors may in its discretion make
loans to Opgroup (a "Shortfall Loan") to fund such interest obligations.
Shortfall Loans shall bear interest at PIMCO Advisors' cost of funds plus 50
basis points. All principal and unpaid interest on a Shortfall Loan and shall be
due and payable on demand.
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<PAGE> 4
(d) Each of the parties hereto agrees, that obligations under the
Initial Advance and any Loss Advance or Shortfall Loan are subordinated in right
of payment to the prior payment in full of all obligations under the 6% Senior
Notes and the Certificate (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of 6% Senior Notes and the Certificate.
If a default in the payment of any principal or interest on the
6% Senior Notes or the Certificate occurs and is continuing beyond any
applicable grace period, the Company may not make any payment to PIMCO Advisors
with respect to the Initial Advance or any Loss Advance or Shortfall Loan and
may not acquire from PIMCO Advisors any notes evidencing such obligations for
cash or property until all principal and other obligations with respect to the
6% Senior Notes and the Certificate have been paid in full.
Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, or in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities, holders of the 6% Senior Notes and the
Certificate shall be entitled to receive payment in full of all obligations due
in respect of such indebtedness (including interest after the commencement of
any such proceeding at the rate specified in the applicable instrument) before
PIMCO Advisors or its assigns shall be entitled to receive any payment with
respect to the Initial Advance, Loss Advance or Shortfall Loan, and, until all
obligations with respect to the 6% Senior Notes and the Certificate are paid in
full, any distribution to which PIMCO Advisors or its assignees would be
entitled but for this paragraph (c) shall be made to holders of 6% Senior Notes
and the Certificate.
In the event that PIMCO Advisors or its assigns receives any payment of
any obligations with respect to the Initial Advance or any Loss Advance or
Shortfall Loan at a time when the such payment is prohibited by this paragraph
(c), such payment shall be held by such person in trust for the benefit of, and
shall be paid over and delivered, upon written request, to, the holders of the
6% Senior Notes and the Certificate, for application to the payment of all
obligations with respect thereto remaining unpaid.
Section 5. Amendments, Waiver.
This Agreement may not be amended, modified or waived except by written
instrument executed by the parties hereto.
Section 6. Entire Agreement.
This Agreement (including Exhibits and any documents executed by the
parties simultaneously herewith or pursuant hereto) constitutes the entire
agreement of the parties hereto, except as provided herein, and supersedes all
prior agreements and understandings, written and oral, among the parties with
respect to the subject matter hereof.
4
<PAGE> 5
Section 7. Interpretation.
When a reference is made in this Agreement to Sections or Exhibits, such
reference shall be to a Section of Exhibit to this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 8. Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other Jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
Section 9. Binding Effect; No Third Party Beneficiaries; No Assignment.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. Nothing in
this Agreement is intended or shall be construed to confer upon any person other
than the parties hereto and their respective successors and permitted assigns
any right, remedy or claim under or by reason of this Agreement or any part
hereof. This Agreement may not be assigned by any party hereto without the prior
written consent of the other party hereto.
Section 10. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same agreement, it being understood that all of the
parties need not sign the same counterpart.
Section 11. Governing Law.
This agreement, the legal relations between the parties and the
adjudication and the enforcement thereof, shall be governed by and interpreted
and construed in accordance with the substantive laws of the state of Delaware,
without regard to applicable choice of law provisions thereof.
[Signature page follows]
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<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
Oppenheimer Group, Inc., PIMCO Advisors L.P.,
a Delaware corporation a Delaware limited partnership
By: /s/ KENNETH M. POOVEY By: /s/ KENNETH M. POOVEY
--------------------------- ---------------------------
Name: Kenneth M. Poovey Name: Kenneth M. Poovey
Title: Executive Vice President Title: Executive Vice President
Oppenheimer Financial Corp., Value Advisors LLC,
a Delaware corporation a Delaware limited liability company
By: /s/ KENNETH M. POOVEY By: /s/ KENNETH M. POOVEY
--------------------------- ---------------------------
Name: Kenneth M. Poovey Name: Kenneth M. Poovey
Title: Executive Vice President Title: Executive Vice President
6
<PAGE> 1
EXHIBIT 10.6
CERTIFICATE OF LONG-TERM INDEMNITY INDEBTEDNESS
This Certificate of Long-Term Indemnity Indebtedness (this
"Certificate") is issued on November 4, 1997 to the Indemnity Trust, under
Declaration of Trust dated July 22, 1997, as amended (the "Indemnity Trust"), by
Oppenheimer Group, Inc., a Delaware corporation ("Opgroup").
RECITALS
1. Opgroup, Oppenheimer Financial Corp., a Delaware corporation
("Opfin"), PIMCO Advisors L.P., a Delaware limited partnership ("PIMCO
Advisors"), its wholly-owned subsidiary PIMCO Advisors Transitory Merger LLC, a
Delaware limited liability company ("PATM"), the Indemnity Trust, and the Seller
Trust, under Declaration of Trust dated July 22, 1997, as amended, are parties
to that certain Agreement and Plan of Merger dated November 4, 1997 (the "Merger
Agreement") providing for the acquisition of Opgroup by PIMCO Advisors through
the merger of PATM with and into Opgroup (the "Merger"), with the Opgroup
Stockholders receiving Class A units of limited partner interest in PIMCO
Advisors ("Class A LP Units") and rights to receive Class A LP Units upon the
exchange of 6% Senior Notes due December 1, 2037 of Opgroup (the "Notes").
2. The Merger Agreement contemplates that, prior to the Merger, Opgroup
will redeem a portion of its outstanding capital stock in exchange for cash, a
pro rata share of $150,000,000 principal amount of Notes and this Certificate,
which is to be issued to and held by the Indemnity Trust for the benefit of the
Opgroup Stockholders.
AGREEMENT
1. Definitions.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Merger Agreement or the Exchange Right attached as
Annex D to the Merger Agreement, the Note Agreement relating to the Notes, or
the Amended and Restated Partnership Agreement of PIMCO Advisors.
2. Payment of Interest.
Opgroup will pay interest on the face amount of this Certificate, as
such face amount is adjusted from to time pursuant to Section 3 or 4 (as
adjusted, the "Face Amount"). The Face Amount is initially $80,000,000. Interest
will be paid quarterly on March 1, June 1, September 1 and December 1 of each
year, beginning December 1, 1997 (each an "Interest Payment Date"). Interest
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from November 4, 1997. Interest will be computed on the
basis of a 3 60-day year of twelve 30-day months.
<PAGE> 2
3. Reduction of Face Amount Based Upon Unit Price.
If, as of the close of business on an Interest Payment Date, an amount
equal to (i) the Face Amount divided by the Exchange Rate, times (ii) the Unit
Price, exceeds an amount equal to $88,000,000 minus 110% of the aggregate
amount, if any, by which the Face Amount has previously been reduced pursuant to
Section 4, the Face Amount shall be reduced to an amount equal to (i) the
Exchange Rate divided by the Unit Price, times (ii) $88,000,000 minus 110% of
the aggregate amount, if any, by which the Face Amount has been previously
reduced pursuant to Section 4, and Opgroup shall issue and deliver to the
Indemnity Trust a Note equal in principal amount to the amount of such reduction
in the Face Amount. For example, if as of the close of business on an Interest
Payment Date, the Exchange Rate were 33 1/3, the Unit Price were 40, and the
Face Amount had been previously reduced to $70,000,000 pursuant to Section 4,
the Face Amount would be reduced to $64,166,667 and Opgroup would issue and
deliver to the Indemnity Trust a Note for $5,833,333.
4. Reduction of Face Amount for Losses.
The Face Amount shall be reduced for any Losses suffered or incurred by
the PIMCO Indemmitees, in the amount of the payment which the Indemnity Trust
would have been required to make to such Persons pursuant to and in accordance
with the Merger Agreement in the absence of this provision.
5. Cancellation of Certificate.
Upon the expiration of the applicable statute of limitations (including
any extension thereof) relating to the indemnification obligations of the
Indemnity Trust to the PIMCO Indemnitees under the Merger Agreement, the
Certificate shall be canceled, and Opgroup shall issue and deliver to the
Indemnity Trust a Note equal in principal amount to the Face Amount and dated as
of the last Interest Payment Date to which interest was paid on the Face Amount.
6. Covenants of Opgroup.
(a) The Company shall pay interest on the Face Amount on the
dates and in the manner provided in this Certificate.
(b) From and after the completion of the contribution
contemplated by Section 1 of the Contribution Agreement, Opgroup and its
Subsidiaries shall not engage in any business other than (i) directly or
indirectly holding the Class C Units, (ii) discharging their obligations under
or in connection with this Certificate, the Note Agreement, the Notes, the
Merger Agreement, the Contribution Agreement and any Indebtedness of Opgroup to
PIMCO Advisors, and (iii) their respective governance and existence.
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<PAGE> 3
(c) From and after the completion of the contribution
contemplated by Section I of the Contribution Agreement, Opgroup will not, and
will not permit any Opgroup Subsidiary to, directly or indirectly:
(i) declare or pay any dividend or make any distribution
with respect to Opgroup capital stock, or purchase, redeem or otherwise acquire
or retire for value any Equity Security of Opgroup or any Affiliate of Opgroup
other than PIMCO Advisors or a wholly-owned Opgroup Subsidiary, if at the time
such dividend or distribution is declared, or such purchase, redemption,
acquisition or retirement is effected, (i) the Face Amount is greater than zero,
or (ii) a Default or Event of Default shall have occurred and be continuing or
shall occur as a consequence thereof, or
(ii) create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable with respect to any Indebtedness
other than Indebtedness subordinated to the Notes and this Certificate as
provided in Section 4(d) of the Contribution Agreement.
(d) Opgroup will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, will not
consolidate with, merge with or into, or sell or transfer all or substantially
all of its assets to, any other Person, and will continue to maintain Opfin as a
wholly-owned Subsidiary, provided, however, that Opgroup may cause Opfin to
merge or liquidate into Opgroup.
(e) Opgroup will not, and will not permit Opfin to, sell,
assign, transfer or otherwise dispose of, or pledge or otherwise encumber, any
of the Class C Units, except as contemplated by Section 3(b) of the Contribution
Agreement.
(f) Opgroup will not consent to any amendment of Section 3(b) or
4(d) of the Contribution Agreement without the prior written consent of the
Indemnity Trust.
7. Default.
(a) An "Event of Default" occurs if.
(i) Opgroup defaults in the payment of interest on the
Face Amount when the same becomes due and payable and the default continues for
a period of 15 days;
(ii) Opgroup fails to observe or perform any other
covenant, condition or agreement on the part of Opgroup to be observed or
performed pursuant to this Certificate and such failure continues uncured for 30
days after written notice to Opgroup by the Indemnity Trust;
(iii) Opgroup or Opfin pursuant to or within the meaning
of any Bankruptcy Law: (A) commences a voluntary case, (B) consents to the entry
of an order for relief against it in an involuntary case, (C) consents to the
appointment of a Custodian of it or for all or substantially all of its
property, (D) makes a general assignment for the benefit of its creditors, or
(E) generally is not paying its debts as the same become due; or
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<PAGE> 4
(iv) a court of competent Jurisdiction enters an order
or decree under any Bankruptcy Law that: (A) is for relief against Opgroup or
Opfin in an involuntary case, (B) appoints a Custodian of Opgroup or Opfin or
for all or substantially all of the property of Opgroup or Opfin, or (C) orders
the liquidation of Opgroup or any Opfin, and such order or decree remains
unstayed and in effect for 60 days.
(b) If an Event of Default (other than an Event of Default
specified in clauses (iii) or (iv) of Section 6(a)) occurs and is continuing,
the Indemnity Trust, by written notice to Opgroup, may declare the Face Amount
of and any accrued interest on the Certificate to be due and payable. Upon such
declaration the Face Amount and interest shall be due and payable immediately.
If an Event of Default specified in clause (iii) or (iv) of Section 6(a) occurs,
such an amount shall ipsofacto become and be immediately due and payable without
any declaration or other act on the part of the Indemnity Trust.
8. Limitations on Recourse.
This Certificate shall be limited in recourse solely to the assets of
Opgroup. A director, officer, employee or stockholder of Opgroup shall not have
any liability for any obligations of Opgroup under this Certificate or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting this Certificate, the Indemnity Trust waives and releases
all such liability. The waiver and release are part of the consideration for the
issuance of the Certificate.
9. Restrictions on Division or Transfer.
This Certificate may not be divided, transferred or assigned except by
operation of law, and any such purported division, transfer or assignment shall
be null and void and of no force or effect.
10. Amendments.
This Certificate may be amended only with the prior written consent of
the Indemnity Trust and Opgroup.
OPPENHEIMER GROUP, INC.
By /s/ ROGER W. EINIGER
---------------------
Roger W. Einiger
Executive Vice President
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EXHIBIT 10.7
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made effective
as of November 4, 1997 by and among PIMCO Advisors L.P., a Delaware limited
partnership (the "Partnership "), and each of the parties set forth on Exhibit A
hereto who executes this Agreement (the "Holders").
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated
November 4, 1997 (the "Merger Agreement"), by and among Oppenheimer Group, Inc.,
a Delaware corporation ("Opgroup"), Oppenheimer Financial Corp., a Delaware
corporation, the Partnership, PIMCO Advisors Transitory Merger LLC, a Delaware
limited liability company ("PATM"), the Seller Trust, under Declaration of Trust
dated July 22, 1997, as amended, and the Indemnity Trust, under Declaration of
Trust dated July 22, 1997, as amended, PATM is to be merged with and into
Opgroup (the "Merger"), with Opgroup surviving as a subsidiary of the
Partnership and the stockholders of Opgroup receiving Class A units of limited
partner interest in the Partnership ("Class A LP Units") as well as rights (the
"Exchange Rights") to acquire additional Class A LP Units upon the exchange of
6% Senior Notes due December 1, 2037 of Opgroup (the "6% Senior Notes") in
principal amount equal to the exercise price therefor;
WHEREAS, the Class A LP Units will be issued to the stockholders of
Opgroup in the Merger and pursuant to exercise of the Exchange Rights without
registration under the Securities Act of 1933, as amended (the "Securities Act")
in reliance on an applicable exemption from such registration, and the
Partnership and the Holders desire to provide for the registration of the sale
by the Holders of Registrable Securities (as hereinafter defined) from time to
time, upon the terms and subject to conditions set forth below; and
WHEREAS, it is intended by the Partnership and the Holders that this
Agreement shall become effective immediately upon the issuance of the Class A LP
Units pursuant to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions. For the purposes of this Agreement, the
following terms shall have the meanings set forth below:
(a) "1994 Agreement" means that certain Registration Rights
Agreement dated as of November 15, 1994, as it exists on the date hereof,
relating to securities of PIMCO Advisors, a copy of which is attached hereto as
Exhibit A.
(b) "6% Senior Notes" shall have the meaning set forth in the
Recitals to this Agreement.
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(c) "Class A LP Units" has the meaning set forth in the Recitals
to this Agreement.
(d) "Closing Date" means the date of the Closing under the
Merger Agreement.
(e) "Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
(f) "Controlling Holder" shall have the meaning set forth in
Section 3(a)(ii)(B).
(g) "Exchange Act" means the Securities Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
(h) "Exchange Rights" has the meaning set forth in the Recitals
to this Agreement.
(i) "Exchange Right Units" means any Class A LP Units issued
upon exercise of a Exchange Right.
(j) "Holder's Notice" shall have the meaning set forth in
Section 3(b) of this Agreement.
(k) "Material Disclosure Event" means any pending or imminent
event relating to the Partnership or any of its subsidiaries that, in the good
faith, reasonable opinion of the Partnership with the advice of nationally
recognized independent counsel to the Partnership: (i) requires disclosure of
material, non-public information relating to such event in any Partnership
registration statement that may be requested at the time so that such
registration statement would not be materially misleading and (ii) is otherwise
not required to be publicly disclosed at that time (e.g. on Form 8-K or 10-Q)
under applicable federal or state securities laws. Without limitation, "Material
Disclosure Event" could include (i) negotiations relating to a material
potential acquisition, disposition or other business combination or similar
transaction; (ii) litigation, arbitration or other claims or liability or
regulatory or governmental examination, investigation or assessment asserted or
commenced by or against the Partnership or any of its subsidiaries; or (iii)
disagreements with the Partnership's independent public accountants over
financial, accounting or reporting matters.
(l) "Merger Agreement" shall have the meaning set forth in the
Recitals to this Agreement.
(m) "Participating Units" shall have the meaning set forth in
Section 4(a)(ii).
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(n) "Piggyback Notice" shall have the meaning set forth in
Section 3(b)(i).
(o) "Priority Holder Request" shall have the meaning set forth
in Section 2(a) of this Agreement.
(p) "Priority Holders" means any person qualifying as a "Holder"
under the 1994 Agreement.
(q) The terms "register," "registered" and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act.
(r) "Registrable Securities" means the Class A LP Units issued
to the Holders in the Merger, as well as any Exchange Right Units; provided,
however, that as to any Registrable Securities, such securities shall cease to
constitute the same for purposes of this Agreement if and when (i) a
Registration Statement with respect to the sale of such securities shall have
been declared effective by the Commission and such securities shall have been
sold pursuant thereto in accordance with the intended plan and method of
distribution therefor set forth in the final prospectus forming part of the
Registration Statement or (ii) such securities shall have been sold in
satisfaction of all applicable resale provisions of Rule 144 under the
Securities Act (or any successor to such rule).
(s) "Registration Expenses" shall have the meaning set forth in
Section 5.
(t) "Registration Statement" shall mean a registration statement
on Form S-3 or any similar form of registration statement adopted by the
Commission from and after the date hereof.
(u) "Section 2(a) Initiating Holder" shall have the meaning set
forth in Section 2(a)(i).
(v) "Section 2(a) Requesting Holder" shall have the meaning set
forth in Section 2(a)(ii).
(w) "Section 2(a) Participating Holders" shall have the meaning
set forth in Section 2(a)(ii).
(x) "Section 2(a) Participating Units" shall have the meaning
set forth in Section 2(a)(ii).
(y) "Section 3(a) Participating Holder" shall have the meaning
set forth in Section 3(a)(i).
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(z) "Section 3(a) Participating Class A LP Units" shall have the
meaning set forth in Section 3(a)(ii)(B).
(aa) "Section 3(b) Participating Holder" shall have the meaning
set forth in Section 3(b)(ii)(B).
(ab) "Section 3(b) Participating Class A LP Units" shall have
the meaning set forth in Section 3(b) of this Agreement.
(ac) "Securities Act" has the meaning set forth in the Recitals
to this Agreement.
(ad) "Subsequent Holder" means any person or entity to whom the
Partnership has granted or does grant registration rights other than the Holders
and Priority Holders.
(ae) "Subsequent Holder Registrable Securities" means the Class
A LP Units held by any Subsequent Holder which are subject to registration
rights granted by the Partnership.
(af) "Third Party Holder" means any Priority Holder or
Subsequent Holder.
(ag) "Third Party Holder Registrable Securities" means the Class
A LP Units held by any Third Party Holder which are subject to registration
rights granted by the Partnership.
2. Underwritten Offerings.
(a) Request for Underwritten Offerings and Related Procedures.
(i) The Holders shall have the right, subject to the
conditions and procedures set forth herein, to cause the Partnership to
participate in the sale of Registrable Securities in a firm-commitment
underwritten offering. If any Holder or group of Holders (a "Section 2(a)
Initiating Holder") proposes to sell Registrable Securities in a firm-commitment
underwriting, the Section 2(a) Initiating Holder may request the Partnership in
writing to effect such underwritten public offering, stating the proposed
managing underwriter (which shall be subject to the Partnership's reasonable
approval) and the number of Registrable Securities proposed to be sold. Within
ten (10) days after receipt of the Section 2(a) Initiating Holders' notice, the
Partnership shall give written notice thereof to the other Holders and the Third
Party Holders (a "Section 2(a) Notice").
(ii) Within twenty (20) days after receipt of a Section 2(a)
Notice, any Holder or Subsequent Holder other than the Section 2(a) Initiating
Holder (a "Section 2(a) Requesting Holder") may deliver to the Partnership a
request to include some or all of its Registrable Securities in the underwritten
public offering effected in response to the request of the
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Section 2(a) Initiating Holder. Each Section 2(a) Requesting Holder's notice
shall state the number of his or its Registrable Securities proposed to be
included in the offering. Subject to the provisions of Section 2(b) below,
following the expiration of the above-referenced twenty (20) day period, the
Partnership shall cooperate in the preparation of a registration statement or,
if a shelf registration statement is then in effect under which the units may be
registered, a prospectus supplement, and all other documentation necessary to
effect the underwritten public offering of all of the Registrable Securities and
Subsequent Holder Registrable Securities (the "Section 2(a) Participating
Units") specified in the request of the Section 2(a) Initiating Holder pursuant
to Section 2(a)(i) and the requests, if any, of the Section 2(a) Requesting
Holders pursuant to this Section 2(a)(ii); provided, however, that if the
Partnership receives a request for registration from a Priority Holder pursuant
to Section 2(a)(iii), then, instead of effecting an underwritten public offering
pursuant to this Section 2(a)(ii), the Partnership shall follow the procedures
specified in Section 2(a)(iii).
If, in the case of an underwritten public offering pursuant
to Section 2(a)(ii), the managing underwriter determines that the Section 2(a)
Participating Units requested to be sold by the Section 2(a) Initiating Holder
and the Section 2(a) Requesting Holders (collectively, the "Section 2(a)
Participating Holders") should be limited due to market conditions or marketing
considerations, the Holders shall have priority over the Subsequent Holders and
shall not be required to withdraw any of their Registrable Securities from such
public offering until such time as all of the Subsequent Holder Registrable
Securities have been withdrawn. If, after all of the Subsequent Holder
Registrable Securities, if any, have been withdrawn, the managing underwriter
determines that the remaining Section 2(a) Participating Units should be limited
due to market conditions or marketing considerations, the Holders shall
participate in such public offering in such manner as they shall agree or, in
the absence of such an agreement, pro rata based upon the ratio of the
Registrable Securities (and Registrable Security equivalents), respectively,
owned by them to the total number Registrable Securities (and Registrable
Security equivalents) then outstanding. If, in such case, any Holder desires to
include in such underwriting fewer than its pro rata number of Section 2(a)
Participating Units, and as a result the offering can accommodate additional
Section 2(a) Participating Units, then all Holders who have already committed
their full pro rata share of Section 2(a) Participating Units shall be entitled
to include additional Section 2(a) Participating Units in such underwriting, up
to that number that can be accommodated pro rata based upon the relative numbers
of Section 2(a) Participating Units already included by such Holders in the
underwriting.
(iii) Within twenty (20) days after receipt of the Section
2(a) Notice, any Priority Holder which otherwise has demand registration rights
may deliver to the Partnership a request (a "Priority Holder Request")
obligating the Partnership to effect a Priority Holder-initiated registration
rather than effect an underwritten public offering pursuant to this Section
2(a). If the Partnership receives a Priority Holder Request, it shall effect a
Priority Holder-initiated registration and the Section 2(a) Initiating Holder
and Section 2(a) Requesting Holders
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shall have only those registration rights with respect to such registration as
set forth in Section 3(a) of this Agreement.
(b) Limitations on Underwritten Offerings.
(i) The Partnership shall not be required to effect more
than a total of two (2) underwritten public offerings at the Holders' request
pursuant to Section 2(a) hereof (which number shall not be reduced if the
Partnership effects a Priority Holder-initiated registration rather than an
underwritten public offering pursuant to Section 2(a)).
(ii) The Partnership shall not be required to effect an
underwritten public offering of Registrable Securities under Section 2(a) unless
the Section 2(a) Initiating Holder proposes to sell Registrable Securities
having a fair market value, as determined by the Partnership, of at least
$40,000,000.
(iii) Any underwritten offering pursuant to Section 2(a)
shall be managed by the Holder which contributes Registrable Securities having
the greatest fair market value, as determined by the Partnership, to the
offering, which Holder shall have the power to select the underwriter or
underwriters for such offering (subject to the reasonable approval of the
Partnership) and shall in consultation with the underwriter or underwriters have
the power to determine the number of Registrable Securities to be included in
such offering (subject to applicable limitations set forth herein), the offering
price of the Registrable Securities, the underwriting discounts and commissions,
the terms of the underwriting agreement (subject to the reasonable approval of
the Partnership), the timing of the registration and related offering, counsel
to the Holders and all other administrative matters related to the offering. Any
underwritten offering pursuant to a Priority Holder-initiated registration
pursuant to Section 2(a)(iii) shall be managed in accordance with the provisions
of Section 3(a)(ii)(B) hereof.
(iv) The Partnership shall not be required to prepare, file
or use its reasonable best efforts to cause to effect an underwritten public
offering or registration pursuant to Section 2(a): (A) which would become
effective within six months following the effective date of a registration
statement filed with the Commission pertaining to an underwritten public
offering of securities of the Partnership for cash for the account of the
Partnership or any Third Party Holder; or (B) if the Section 2(a) Initiating
Holders' request for an underwritten offering is received by the Partnership
subsequent to such time as the Partnership in good faith gives written notice to
the Holders that the Partnership is commencing to prepare a
Partnership-initiated registration statement (other than on Form S-8) or a
Priority Holder-initiated registration statement and the Partnership is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective.
(v) The Partnership may defer its obligations under Section
2(a) for a period not to exceed one hundred twenty (120) days from the date of
receipt of the written
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request from the Holders if (A) in the good faith judgment of the Partnership's
Board of Directors it would be seriously detrimental to the Partnership or its
stockholders for an underwritten public offering of Registrable Securities to be
effected in the near future and (B) the Partnership shall furnish to the Holders
a certificate to that effect signed by the Chief Executive Officer of the
Partnership. During any period in which the Partnership defers its obligations
pursuant to this Section 2(b)(iv), it may not effect any registration of its
securities.
(vi) The Partnership may defer its obligations under Section
2(a) during the pendency of a Material Disclosure Event, provided that the Board
of Directors of the Partnership shall have made a good faith, reasonable
determination that disclosure at such time would have a material adverse effect
on the business or financial condition of the Partnership. The foregoing
deferral shall expire upon the earliest to occur of: (A) ninety (90) days from
the date of receipt of the written request from the Holders; (B) public
disclosure of the Material Disclosure Event in question; and (C) the termination
or cessation of such event, or the need to disclose such event.
(c) Holdback Restrictions. The right of the Holders to effect
any distribution of Registrable Securities pursuant to Section 2 is subject to
the holdback restrictions set forth in Section 8.
(d) Cooperation in Marketing Efforts. In the event of an
underwritten offering pursuant to Section 2(a), the Partnership shall provide to
the Holders the reasonable assistance of members of its management in connection
with marketing efforts for such offering, except, and to the extent, that no
such assistance shall be required of the Partnership where it would cause a
significant disruption in the management duties of its management personnel.
3. Incidental Registrations.
(a) Registrations by Third Party Holders.
(i) Registration Obligations. If the Partnership receives a
request from one or more Third Party Holders obligating the Partnership to
effect a registration of the Third Party Holder Registrable Securities, then
within ten (10) days after receipt of such registration request, the Partnership
shall give written notice thereof to the Holders. Within twenty (20) days after
receipt of the Partnership's notice, any Holder may deliver to the Partnership a
request to include some or all of his or its Registrable Securities in the
registration effected in response to the request of the Third Party Holders.
Each Holders' notice shall state the number of their Registrable Securities
proposed to be included in the registration. Subject to the provisions of
Section 3(a)(ii) below, the Partnership shall use its reasonable best efforts to
effect promptly the registration under the Securities Act of all Third Party
Holder Registrable Securities and Registrable Securities (collectively, the
"Section 3(a) Participating Class A LP Units") specified in
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the requests of the Third Party Holders and the Holders (collectively, the
"Section 3(a) Participating Holders").
(ii) Limitations on Third Party Holder Registrations.
A. If the registration referred to in Section 3(a)(i)
relates to a firm commitment underwriting and the managing underwriter
determines, in its sole discretion, that the number of shares of Section 3(a)
Participating Class A LP Units included in a registration initiated pursuant to
Section 3(a)(i) which are to be sold by the Section 3(a) Participating Holders
should be limited due to market conditions or marketing considerations, the
Holders and the Third Party Holders proposing to sell their Section 3(a)
Participating Class A LP Units in such underwriting and registration shall
participate in such registration in such manner as they shall agree or, in the
absence of such an agreement, (x) if none of the Section 3(a) Participating
Holders are Priority Holders pro rata based upon the ratio of the Registrable
Securities and Third Party Holder Registrable Securities, respectively, owned by
them to the total number of Registrable Securities and Third Party Holder
Registrable Securities then outstanding, unless any of the Subsequent Holders
who are Section 3(a) Participating Holders have priority rights with respect to
registrations initiated by them, in which case the Holders shall participate in
such registrations subject to the priority rights held by such Subsequent
Holders or (y) if some of the Section 3(a) Participating Holders are Priority
Holders, then the participation by the Priority Holders shall not be reduced and
the participation by the other Section 3(a) Participating Holders shall be as
determined in clause (x) above, after taking account of the Class A LP Units to
be sold by the Priority Holders. If any of the Section 3(a) Participating
Holders desire to include in such underwriting and registration fewer than its
pro rata number of Section 3(a) Participating Class A LP Units, and as a result
the offering can accommodate additional Section 3(a) Participating Class A LP
Units, then all Section 3(a) Participating Holders who have already committed
their full pro rata share of Section 3(a) Participating Class A LP Units shall
be entitled to include additional Section 3(a) Participating Class A LP Units in
such underwriting and registration, up to that number that can be accommodated
pro rata based upon the relative numbers of Section 3(a) Participating Class A
LP Units already included by such Section 3(a) Participating Holders in such
underwriting and registration.
B. Any registration and offering initiated pursuant to
Section 3(a)(i) shall be managed by either (a) the Priority Holder entitled to
so manage the registration under the 1994 Agreement or (b) if no such Priority
Holder is participating, by the Section 3(a) Participating Holder contributing
the greatest number of Class A LP Units to such registration (the "Controlling
Holder"), which Controlling Holder shall have the power to select the
underwriter or underwriters for the offering related to such registration, and
shall in consultation with the underwriter or underwriters have the power to
determine on behalf of all Section 3(a) Participating Holders the number of
Class A LP Units to be included in such registration (subject to applicable
limitations set forth herein), the offering price per Class A LP Unit, the
underwriting discounts and commissions, the terms of the underwriting agreement,
the timing of the
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registration and related offering, counsel to the Section 3(a) Participating
Holders, and all other administrative matters related to the registration and
related offering. If any Holder participates in any registration or offering
pursuant to Section 3(a)(i), such Holder shall sell his or its Registrable
Securities only pursuant to the underwriting arranged by the Controlling Holder
and shall either commit to attend the closing of the offering and take such
other actions as may be reasonably necessary to effect the Holder's
participation in the offering and to provide any assurances reasonably requested
by the Partnership, the underwriters, and other Section 3(a) Participating
Holders in that regard, or shall deliver to the Controlling Holder in custody
certificates representing all Registrable Securities of such Holder to be
included in the registration and shall execute and deliver to the Controlling
Holder a custody agreement and a power of attorney, each in form and substance
reasonably appropriate for the purpose of effecting the Holder's participation
in the registration and sale and otherwise reasonably satisfactory to the
Controlling Holder. If any Holder disapproves of the features of the
registration, he or it may elect to withdraw therefrom (in whole or part) by
written notice to the Partnership, the underwriters and the other Section 3(a)
Participating Holders (including the Controlling Holder) delivered no later than
ten (10) days prior to the effectiveness of the applicable registration
statement (provided that if the Holder disapproves of the offering price or
underwriter's discount or commission, he or it may withdraw immediately upon
being advised thereof), and the Registrable Securities of the Holder shall
thereupon be withdrawn from such registration.
(b) Partnership Registrations.
(i) Partnership Registrations. Each time the Partnership
proposes to register any Class A LP Units for sale for its own account (other
than pursuant to a registration statement on Form S-8 or Form S-4 or otherwise
in connection with an acquisition, merger or consolidation), it shall at its
expense give the Holders written notice of its intention to do so (the
"Piggyback Notice") at least twenty-five (25) days prior to the filing with the
Commission of a registration statement with respect to such registration. If any
Holder desires to include all or part of his or its Registrable Securities in
such registration, he or it may request registration thereof in connection with
the Partnership's registration by delivering to the Partnership, within fifteen
(15) days after receipt of the Piggyback Notice, written notice of such request
(a "Holder's Notice") stating the number of Registrable Securities proposed to
be included. The Partnership shall use its reasonable best efforts to cause all
Registrable Securities specified in each Holder's Notice to be included in such
registration so as to permit the sale by the applicable Holders of the
Registrable Securities so registered, subject, however, to the limitations set
forth in Section 3(b)(ii).
(ii) Limitations on Partnership Registrations.
A. If the registration of which the Partnership gives
notice pursuant to Section 3(b)(i) is for the purpose of permitting an issuance
of Class A LP Units by the Partnership pursuant to a firm commitment
underwritten offering, the notice shall so state, and the Partnership shall have
the right to limit the aggregate size of the offering or the number of
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Registrable Securities to be included therein by the Holders if requested to do
so in good faith by the managing underwriters of the offering.
B. Whenever the number of Class A LP Units that may be
registered pursuant to Section 3(b)(i) is limited pursuant to the provisions of
Section 3(b)(ii)(A) above, the Partnership shall have priority over the Holders
and any Third Party Holders and the Holders hereby agree that they shall
withdraw their Registrable Securities from such registration to the extent
necessary to allow the Partnership to include all the Class A LP Units that the
Partnership desires to sell for its own account to be included within such
registration; provided that in no event shall the aggregate of the Registrable
Securities requested to be included pursuant to Section 3(b)(i) and the Third
Party Holder Registrable Securities requested to be included by the Third Party
Holders (collectively, the "Section 3(b) Participating Class A LP Units") be
reduced below forty percent (40%) of the total amount of Class A LP Units
included in such registration. The Holders and the Third Party Holders who
request inclusion (collectively, the "Section 3(b) Participating Holders") shall
share (as a single class) in the available portion of the registration in
question pro rata based upon the ratio of the number of Registrable Securities
and Third Party Holder Registrable Securities, respectively, owned by them to
the total number of Section 3(b) Participating Class A LP Units and other
Registrable Securities then outstanding; provided, however, that any such
participation shall be established only after any Priority Holders have been
allowed the full amount of participation in such offering to which they may be
entitled under the 1994 Agreement. If any of the Section 3(b) Participating
Holders desire to include in such underwriting and registration fewer than their
pro rata number of Section 3(b) Registrable Securities, and as a result the
offering can accommodate additional Section 3(b) Participating Class A LP Units,
then the Section 3(b) Participating Holders who have already committed their
full pro rata share of Section 3(b) Participating Class A LP Units shall be
entitled to include additional Section 3(b) Participating Class A LP Units in
such underwriting and registration, up to that number that can be accommodated
pro rata based upon the relative numbers of Section 3(b) Participating Class A
LP Units already included by the Section 3(b) Participating Holders in such
underwriting and registration.
C. Any registration and offering initiated by the
Partnership shall be managed by the Partnership, and all Registrable Securities
included in such a registration and offering pursuant to Section 3(b)(i) shall
be included upon the same terms and conditions as applicable to Class A LP Units
included for the Partnership's account, as such may be determined by the
Partnership in consultation with the underwriter. If any Holder participates in
any registration or offering pursuant to Section 3(b)(i), he or it shall sell
his or its Registrable Securities only pursuant to the underwriting arranged by
the Partnership, and shall either commit to attend the closing of the offering
and take such other actions as may be reasonably necessary to effect his or its
participation in the offering and to provide any assurances reasonably requested
by the Partnership, the underwriters, and participating Third Party Holders in
that regard, or shall deliver to the Partnership in custody certificates
representing all Registrable Securities of such Holder being included in the
registration, and shall execute and deliver to the Partnership a
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custody agreement and power of attorney, each in form and substance reasonably
appropriate for the purpose of effecting the Holders' participation in the
registration and sale and otherwise reasonably satisfactory to the Partnership.
If any Holder disapproves of the features of the registration, it may elect to
withdraw therefrom (in whole or part) by written notice to the Partnership, the
underwriters and the participating Third Party Holders delivered no later than
ten (10) days prior to the effectiveness of the applicable registration
statement (provided that if a Holder disapproves of the offering price or
underwriter's discount or commission, the Holder may withdraw immediately upon
being advised thereof), and the Registrable Securities of the Holder shall be
withdrawn from registration. The Partnership may determine, in its sole
discretion, to withdraw the registration.
4. Registration Procedures.
(a) If and when the Partnership is required by the provisions of
this Agreement to use its reasonable best efforts to effect the registration of
Registrable Securities, the Partnership shall:
(i) prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become and remain effective for the
applicable period in which all Registrable Securities covered by the
registration statement have been sold or withdrawn;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectuses used in
connection therewith as may be necessary to keep such registration statement
effective and current and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of all Registrable Securities
covered by such registration statement, including such amendments and
supplements as may be reasonably required by the Holders participating in the
registration (the "Participating Holders"), in their discretion, to accommodate
their intended method of disposition from time to time;
(iii) furnish to the Participating Holders such number of
copies of each prospectus, including each preliminary prospectus, in conformity
with the requirements of the Securities Act, and such other documents, as may be
reasonably requested in order to facilitate the public sale or other disposition
of the Registrable Securities;
(iv) use its reasonable best efforts to register or qualify
the Registrable Securities covered by such registration statement under such
other securities or blue sky or other applicable laws of such jurisdictions as
the Participating Holders shall reasonably request to enable the Participating
Holders to consummate the public sale or other disposition of the Registrable
Securities; provided that the Partnership shall not be required in connection
therewith to qualify to do business or to file a general consent to service of
process in any such jurisdiction;
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(v) upon written request, cause its attorneys or
accountants, as applicable, to furnish to the Participating Holders a signed
counterpart, addressed to the Participating Holders and their underwriters, if
any, of: (A) an opinion of counsel for the Partnership, dated the effective date
of the registration statement, covering substantially the same matters with
respect to the registration statement (and the prospectus included therein) as
are customarily covered (at the time of such registration) in the opinions of
issuers' counsel delivered to the underwriters in connection with comparable
underwritten public offerings; and (B) such negative assurances or agreed upon
procedures reports from the Partnership's independent public accountants as and
to the extent that the same may be available to the Participating Holders under
then outstanding statements and pronouncements of the Auditing Standards Board
or other similar accounting industry bodies;
(vi) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the Partnership
are then listed;
(vii) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(viii) enter into such customary agreements (including an
underwriting agreement) and take all such other customary actions as the
Participating Holders reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities; and
(ix) make available for inspection by any Participating
Holder, any participating underwriter, and any attorney, accountant or other
agent retained by the Participating Holder in a registration pursuant to
Sections 2(a) (if the Participating Holder is the manager of such registration)
and 3(a) (if the Participating Holder is the Controlling Holder), all financial
and other records, pertinent documents and properties of the Partnership, and
cause the Partnership's affiliates and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with the preparation of such registration statement.
(b) The Holders' rights to exercise registration rights under
Section 2 or 3 with respect to Registrable Securities which are Exchange Right
Units shall be contingent upon the offering of the Exchange Right Units being
effected through: (i) the sale by the Holders to the underwriters in such
offering of Exchange Rights and 6% Senior Notes sufficient upon exercise to
provide for the issuance of the number of Exchange Right Units desired to be
sold in the offering, (ii) the exercise of such Exchange Rights by the
underwriters and the tender to the Partnership of 6% Senior Notes sufficient in
principal amount to pay the exercise price thereof, and (iii) the sale to the
public by the underwriters of the Exchange Right Units received upon exercise of
the Exchange Rights. The Partnership agrees that if any Holder has prior to such
an offering already exercised Exchange Rights and desires to sell the Exchange
Right Units, the Holder may present
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<PAGE> 13
the Exchange Right Units to the Partnership for redemption at the exchange rate
then in effect under the Exchange Rights in exchange for Exchange Rights for an
equivalent number of Exchange Right Units and 6% Senior Notes in principal
amount equal to the aggregate exercise price of such Exchange Rights.
(c) The Participating Holders shall (i) furnish to the
Partnership such information regarding the Participating Holders, their
Registrable Securities, and the intended method of distribution of the
Registrable Securities to be included by the Participating Holders in the
registration as the Partnership may reasonably require from the Participating
Holders for inclusion in the registration statement (and the prospectus included
therein) pursuant to applicable securities laws and rules; and (ii) enter into
such customary agreements as may be reasonably required by the Partnership or
the underwriter in order to facilitate the registration and offering.
(d) The Participating Holders shall not effect sales of the
Registrable Securities covered by the registration statement after receipt of
telegraphic or written notice from the Partnership to suspend sales in order to
permit the Partnership promptly and expeditiously to correct or update a
registration statement or prospectus until such time as the Participating
Holders shall have received from the Partnership a written notice that the
registration statement or prospectus has been corrected or updated.
(e) When participating in any underwriting pursuant to this
Agreement, the Participating Holders shall deliver to the underwriter and the
Partnership the opinion of its outside counsel to the effect that inclusion of
such Registrable Securities in the underwriting has been duly authorized and
will not conflict with charter documents or contracts known to such counsel of
the Participating Holders, and such other matters as are customary and
reasonable under the circumstances.
5. Expenses of Registration.
(a) All expenses incurred in connection with underwritten public
offerings pursuant to Section 2(a) in which no Third Party Holders or the
Partnership sell securities of the Partnership for their own account (other than
the expenses incurred in maintaining any shelf registration), including, without
limitation, all registration and filing fees, listing fees, underwriting
discounts and commissions, printing expenses, expenses of compliance with blue
sky laws, reasonable fees and disbursements of counsel for the Partnership, fees
and disbursements of counsel for the Participating Holders, expenses of any
audits incidental to or required by any such registration, and expenses of all
marketing and promotional efforts requested by the managing underwriter
(collectively, "Registration Expenses") shall be borne by the Participating
Holders and divided among them pro rata based on the fair market value of the
Registrable Securities included by each Participating Holder.
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<PAGE> 14
(b) All expenses incurred in effecting and maintaining a shelf
registration pursuant to Section 2(b) (other than the expenses of underwritten
public offerings pursuant to such a shelf registration) and all Registration
Expenses incurred in effecting any registration in which any Holders participate
pursuant to Section 3(b) shall be borne by the Partnership, provided that such
Holders shall bear their own attorney's fees and expenses and all underwriting
discounts and commissions applicable to their Registrable Securities.
(c) All Registration Expenses incurred in effecting any
registration (other than a shelf registration) in which the any Holders
participate pursuant to Sections 2(a) and 3(a) shall be borne pro rata by the
Participating Holders, the participating Third Party Holders and/or the
Partnership, in each case for whose account Class A LP Units are included in
such registration, based upon a fraction, the numerator of which shall be the
number of Registrable Securities of each Participating Holder, Third Party
Holder Registrable Securities of each participating Third Party Holder or Class
A LP Units being offered by the Partnership to be included in such requested
registration by the Participating Holder, participating Third Party Holder or
the Partnership, as the case may be, and the denominator of which shall be the
total number of all Registrable Securities, Third Party Holder Registrable
Securities and/or Class A LP Units being offered by the Partnership to be
included in the requested registration. All Registration Expenses paid by the
Partnership or the participating Third Party Holders for which a Participating
Holder is liable hereunder shall be reimbursed by the Participating Holder to
the Partnership or participating Third Party Holders upon demand, including,
without limitation, out of offering proceeds.
6. Indemnification.
(a) In the event of any registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, the Partnership
shall indemnify and hold harmless the Holders requesting or joining in a
registration of such Registrable Securities, each underwriter (as defined in the
Securities Act) and each controlling person of any underwriter (within the
meaning of the Securities Act), if any, and the officers, directors, direct and
indirect beneficial owners, employees, and agents of the Holders, underwriters
or controlling persons, and the successors and assigns of any of them (each an
"Indemnitee"), against any losses, claims, damages or liabilities, joint or
several (or actions in respect thereof), to which such Indemnitee may be subject
under the Securities Act, under any other statute or at common law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement (or alleged untrue
statement) of any material fact contained in any registration statement under
which such Registrable Securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any summary
prospectus issued in connection with any securities being registered, or any
amendment or supplement thereto, or (ii) any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any violation by the Partnership
of the Securities Act or any rule or regulation promulgated under the Securities
Act ((i), (ii) and (iii) are
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<PAGE> 15
each referred to hereafter as a "Violation"), and shall reimburse each such
Indemnitee for any legal or other expenses reasonably incurred by such
Indemnitee in connection with investigating or defending any such loss, claim,
damage, liability or action, such reimbursement to be paid on a current basis as
such expenses are incurred; provided, however, that the Partnership shall not be
liable to any Indemnitee in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or omission made in such registration statement, preliminary
prospectus, summary prospectus, prospectus, or amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Partnership by or on behalf of such Indemnitee, specifically for use therein
unless such written information is subsequently corrected in writing and
provided to the Partnership at least one business day prior to the effectiveness
of the registration statement relating to such registration. The indemnity
provided for herein shall remain in full force and effect regardless of any
investigation made by or on behalf of the Partnership or Indemnitee.
(b) In the event of any registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, each
Participating Holder shall (severally, and not jointly) indemnify and hold
harmless the Partnership, each underwriter (within the meaning of the Securities
Act), if any, and each officer, director and controlling person of the
Partnership or underwriter (within the meaning of the Securities Act), if any,
and the officers, directors, direct and indirect beneficial owners, employees,
and agents of the Partnership, underwriters or controlling persons, and the
successors and assigns of any of them (each a "Partnership Indemnitee"), against
any losses, claims, damages or liabilities, joint or several (or actions in
respect thereof), to which the Partnership Indemnitee may be subject under the
Securities Act, under any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon written information
furnished by or on behalf of the Holder expressly for use in connection with
such registration unless such information was corrected in writing and provided
to the Partnership at least one business day prior to the effectiveness of the
registration statement relating to such registration, and shall reimburse the
Partnership Indemnitee for any legal or other expenses reasonably incurred by
the Partnership Indemnitee in connection with investigating or defending any
such loss, claim, damage, liability or action, such reimbursement to be paid on
a current basis as such expenses are incurred; provided, however, that a
Participating Holder shall be liable to the Partnership Indemnitee in any such
case only to the extent of, in the aggregate, the lesser of (i) the amount of
such loss, claim, damage or liability or (ii) the net proceeds actually received
by the Participating Holder in such offering. The indemnity provided for herein
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Participating Holder or any Partnership Indemnitee. Nothing
provided herein shall preclude the Participating Holders from receiving
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in any registration to the same
extent as customarily furnished by such persons in similar circumstances and the
existence of such other indemnities shall not reduce, terminate or otherwise
diminish the Partnership's obligations under Section 6(a).
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<PAGE> 16
(c) If the indemnification provided for in Section 6(a) or 6(b)
is unavailable to an indemnified party in respect of any losses, claims, damages
or liabilities referred to therein, then the indemnifying party in lieu of
indemnifying such indemnified party thereunder shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party, or by the indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6(c) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities or actions in respect thereof referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 6(c), the
Participating Holders shall not be required to contribute any amount which in
the aggregate exceeds the lesser of (i) the amount of such loss, claim, damage
or liability or (ii) the net proceeds actually received by the Participating
Holders in such offering. No person guilty of fraudulent misrepresentations
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentations.
(d) Promptly after receipt by an indemnified party under Section
6(a) or 6(b) of notice of the commencement of any action, such indemnified party
shall notify the indemnifying party in writing of the commencement thereof; but
the omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under such
Sections or to the extent that it has not been prejudiced as a proximate result
of such failure. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party; provided,
however, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the
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<PAGE> 17
indemnifying party, the indemnified party or parties shall have the right to
select one single separate counsel to assert such legal defenses at the
indemnifying party's expense (in which case the indemnifying party shall not
have the right to direct the defense of such action on behalf of the indemnified
party or parties). The selection of one single separate counsel to indemnified
parties entitled to a separate defense shall be made by concurrence of
indemnified parties who have received at least 51% of the proceeds received by
all indemnified parties entitled to a separate defense in the offering giving
rise to the claim for indemnity. Upon the permitted assumption by the
indemnifying party of the defense of such action, and approval by the
indemnified party of counsel, the indemnifying party shall not be liable to such
indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed one single separate
counsel in connection with the assertion of different or additional legal
defenses in accordance with this Section 6(d), (ii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time, (iii) the indemnifying
party and its counsel do not actively and vigorously pursue the defense of such
action, or (iv) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party.
7. Rule 144 Requirements. The Partnership shall undertake to make
publicly available, and available to the Holders, such information as is
necessary to enable the Holders to make sales of Registrable Securities pursuant
to Rule 144 of the Commission under the Securities Act, or any successor to such
rule. The Partnership shall furnish to the Holders, upon request, a written
statement executed by the Partnership as to the steps it has taken to comply
with the current public information requirements of Rule 144, or any successor
to such rule.
8. Holdback. If the Partnership files a registration statement in
connection with an underwritten public offering for its own account or for the
account of any securityholder, the Holders shall not, pursuant to a shelf
registration statement or otherwise, effect any sale or distribution of any
Registrable Securities (except pursuant to such registration statement) or other
securities of the Partnership, whether now owned or hereafter acquired, during
the period requested by the underwriters commencing with the effective date of
such registration statement and ending on the close of business on a date which
is not more than one hundred twenty (120) days thereafter or such time as the
registration statement is withdrawn, whichever is earlier.
9. Assignment of Registration Rights. The rights of the Holders pursuant
to this Agreement may be assigned (but only with all related obligations) to
transferees or assignees (other than competitors of the Partnership that have
publicly traded securities or assets under management in excess of $100 million)
of Registrable Securities, provided the Partnership is, within a reasonable time
after such transfer, furnished with written notice of the name and address of
such transferee or assignee and the securities with respect to which such
registration rights are being assigned.
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<PAGE> 18
10. Rights Which May Be Granted to Other Persons; Termination of Rights.
The Holders acknowledge and agree that the Partnership may grant registration
rights to other holders of Class A LP Units that are pari passu with the
registration rights granted to the Holders in this Agreement; provided, however,
that the Holders shall maintain their rights with respect to Holder-initiated
public offerings as set forth in Section 2, and Subsequent Holders may be
granted rights with respect to Subsequent Holder-initiated public offerings
similar to those set forth in Section 2. The Holders shall not be entitled to
exercise any registration right provided for in this Agreement (and the
Partnership may cease and withdraw any pending registration) after the date that
securities of the Partnership are no longer publicly traded. If the securities
of the Partnership cease to be publicly traded, and if the Partnership is able
to cause the issuer of the successor security, if any, to the publicly traded
securities of the Partnership to enter into a registration rights agreement with
the Priority Holders, then the Holders will be granted by the issuer of the
successor security to the publicly traded securities of the Partnership
registration rights providing to the Holders, as nearly as practicable,
registration rights with respect to the successor security to the publicly
traded units of the Partnership that are substantially similar to those granted
hereunder. The Holders acknowledge and agree that under the terms of the 1994
Agreement, the Partnership would be obligated under such circumstances to grant
to the Priority Holders rights with respect to the successor security comparable
to the rights under the 1994 Agreement.
11. Miscellaneous.
(a) Notices. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or telecopied (with a confirmation copy marked as described
below) or mailed by certified or registered mail, postage prepaid, return
receipt requested, addressed as follows:
If to the Partnership: c/o PIMCO Advisors L.P.
800 Newport Center Drive
Newport Beach, CA 92660
Attn: Kenneth M. Poovey, Esq.
Fax: (714) 717-7076
with copies to: Latham & Watkins
650 Town Center Drive, Suite 2000
Costa Mesa, CA 92626
Attn: David C. Flattum, Esq.
Fax: (714) 755-8290
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If to the Holders:: c/o Oppenheimer & Co., Inc.
Oppenheimer Tower
One World Financial Center
200 Liberty Street
New York, NY 10281
Attn: Roger W. Einiger
Fax: (212) 667-7000
and to: The Indemnity Trust
Oppenheimer Tower
One World Financial Center
200 Liberty Street
New York, NY 10281
Attn: Roger W. Einiger and Robert I.
Kleinberg
Fax: (212) 667-2369
with copies to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attn: Robert Todd Lang, Esq.
Fax: (212) 310-8007
(b) Governing Law; Jurisdiction. This Agreement shall be
governed by, and construed and enforced in accordance with, the internal laws,
but not the laws pertaining to choice or conflicts of laws, of the State of
Delaware. Each of the parties to this Agreement hereby irrevocably and
unconditionally agrees (i) to be subject to the jurisdiction of the courts of
the State of Delaware and of the federal courts sitting in the State of
Delaware, and (ii) (A) to the extent such party is not otherwise subject to
service of process in the State of Delaware, to appoint and maintain an agent in
the State of Delaware as such party's agent for acceptance of legal process, and
(B) that service of process may also be made on such party by delivery of notice
pursuant to Section 11(b) with a proof of mailing receipt validated by the
Shared States Postal Service constituting evidence of valid service, and that
service made pursuant to (ii)(A) or (B) above shall have the same legal force
and effect as if served upon such party personally within the State of Delaware.
For purposes of implementing the parties' agreement to appoint and maintain an
agent for service of process in the State of Delaware, each such party that has
not as of the date hereof already duly appointed such an agent does hereby
appoint RL&F Service Corp., One Rodney Square, 10th Floor, Wilmington, Delaware,
19801, as such agent.
(c) Entire Agreement; No Third Party Beneficiaries.
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(i) This Agreement constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, representations, and undertakings of the parties.
(ii) Nothing in this Agreement shall be deemed to grant to
or vest in any person other than the parties hereto and their permitted assigns
any rights or privileges or status as an intended beneficiary hereof.
(d) Amendments and Waivers. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally or in writing,
except that, subject to the final sentence of this Section 11(d), any term of
this Agreement may be amended in any respect whatsoever and the observance of
any such term may be waived (either generally or in a particular instance and
either retroactively or prospectively) with the written consent of (i) the
Partnership and (ii) Holders owning a majority in interest of the Registrable
Securities; provided, however, that no such amendment or waiver shall alter the
rights or priorities of the Agent which may be granted pursuant to Section 10.
(e) Specific Performance. The parties hereto acknowledge and
agree that they would not have adequate remedies at law and would be irreparably
harmed if any of the provisions of this Agreement were not performed by the
parties hereto in accordance with the specific terms hereof or were otherwise
breached, and that, in such case, it would be impossible to measure in money the
damages to such parties. It is accordingly agreed that the parties hereto shall
be jointly and severally entitled to injunctive relief or the enforcement of
other equitable remedies, without bond or other security, to compel performance
and to prevent breaches of this Agreement by any party hereto and specifically
to enforce the terms and provisions hereof, in addition to any other remedy to
which they may be entitled, at law or in equity.
(f) Severability. Any provision of this Agreement that is
invalid, illegal, or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality, or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction.
(g) Legal and Other Fees and Expenses. Each of the parties shall
pay its own expenses incurred in connection with the negotiation and preparation
of this Agreement and, except as otherwise specifically set forth herein, the
transactions contemplated hereby, including, without limitation, all fees and
disbursements of their respective legal counsel, advisors, and accountants. If
any legal action or any arbitration or other proceeding or appeal therefrom is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Agreement, the successful or prevailing party or parties shall be
entitled to recover from the non-prevailing party or parties
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reasonable attorneys' fees and other costs incurred in that action or
proceeding, whether or not such action or proceeding is prosecuted to judgment
or, in addition to any other relief to which it or they may be entitled.
(h) Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors, and assigns.
(i) Headings; References. Headings used in this Agreement are
for convenience of reference only, do not constitute a part of this Agreement,
and shall not affect the construction or interpretation hereof. References in
this Agreement to sections are, unless otherwise noted, references, to the
specified section of this Agreement.
(j) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Registration
Rights Agreement to be executed as of the date first written above.
PIMCO Advisors L.P.,
a Delaware limited partnership
By /s/ KENNETH M. POOVEY
------------------------
Name: Kenneth M. Poovey
Title: Executive Vice President
HOLDERS
----------------------------
Name:_______________________
[Signature blocks of individual Holders
may be on separate pages]
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