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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
____________________
Date of Report (Date of Earliest Event Reported): July 22, 1997
PIMCO ADVISORS L.P.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-09772 06-1349805
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
800 NEWPORT CENTER DRIVE, NEWPORT BEACH, CA 92660
(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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ITEM 5. OTHER EVENTS
On July 22, 1997, the Registrant entered into an Amended and Restated
Agreement and Plan of Merger by and among Oppenheimer Group, Inc., Oppenheimer
Financial Corp., the Seller Trust under Declaration of Trust dated July 22,
1997, the Indemnity Trust under Delcaration of Trust dated July 22, 1997, the
Registrant, PIMCO Advisors Inc., PAI Transitory Corp. and Thomson Advisory Group
Inc. The agreement is attached as Exhibit 2.1 hereto. On the same date, the
Registrant issued the press release regarding such agreement attached as Exhibit
99.2 hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS
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<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
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2.1 Amended and Restated Agreement and Plan of Merger dated as of
July 22, 1997 by and among Oppenheimer Group, Inc., Oppenheimer
Financial Corp., the Seller Trust under Declaration of Trust
dated July 22, 1997, the Indemnity Trust under Declaration of
Trust dated July 22, 1997, PIMCO Advisors L.P., PIMCO Advisors
Inc., PAI Transitory Corp. and Thomson Advisory Group Inc.
99.1 Agreement to Furnish Exhibits and Schedules
99.2 Press Release dated July 22, 1997 issued by Registrant
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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: July 23, 1997 PIMCO ADVISORS L.P.
By: /s/ ROBERT FITZGERALD
--------------------------
Robert Fitzgerald
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit No. Description of Exhibit
- ----------- ----------------------
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2.1 Amended and Restated Agreement and Plan of Merger dated as of
July 22, 1997 by and among Oppenheimer Group, Inc., Oppenheimer
Financial Corp., the Seller Trust under Declaration of Trust
dated July 22, 1997, the Indemnity Trust under Declaration of
Trust dated July 22, 1997, PIMCO Advisors L.P., PIMCO Advisors
Inc., PAI Transitory Corp. and Thomson Advisory Group Inc.
99.1 Agreement to Furnish Exhibits and Schedules
99.2 Press Release dated July 22, 1997 issued by Registrant
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EXHIBIT 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
Dated as of July 22, 1997
By and Among
OPPENHEIMER GROUP, INC.
OPPENHEIMER FINANCIAL CORP.
PIMCO ADVISORS L.P.
THOMSON ADVISORY GROUP INC.
PIMCO ADVISORS INC.
PAI TRANSITORY CORP.
THE INDEMNITY TRUST
THE SELLER TRUST
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TABLE OF CONTENTS
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RECITALS.............................................................................. 1
ARTICLE I DEFINITIONS...................................................... 2
Section 1.1 Definitions...................................................... 2
ARTICLE II THE MERGER....................................................... 14
Section 2.1 The Merger....................................................... 14
Section 2.2 Consideration to Be Delivered in the Merger...................... 14
Section 2.3 Alternative Merger............................................... 17
Section 2.4 Consideration to Be Delivered in the Alternative Merger.......... 17
Section 2.5 Effect of Merger or Alternative Merger on Opgroup Shareholders... 18
Section 2.6 Surrender of Certificates........................................ 19
Section 2.7 Optional Cash Election........................................... 20
ARTICLE III CLOSING.......................................................... 20
Section 3.1 Closing.......................................................... 20
Section 3.2 Delayed Closing.................................................. 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF OPGROUP AND THE TRUSTS......... 21
Representations and Warranties of Opgroup........................................ 21
Section 4.1 Organization and Related Matters................................. 21
Section 4.2 Authority; No Violation.......................................... 21
Section 4.3 Consents and Approvals........................................... 22
Section 4.4 Regulatory Documents............................................. 22
Section 4.5 Capitalization................................................... 23
Section 4.6 Financial Statements............................................. 24
Section 4.7 Ineligible Persons............................................... 25
Section 4.8 Material Contracts............................................... 25
Section 4.9 Legal Proceedings................................................ 26
Section 4.10 Permits and Applicable Law....................................... 26
Section 4.11 Insurance........................................................ 27
Section 4.12 Labor and Employment Matters..................................... 27
Section 4.13 Employee Benefit Plans; ERISA.................................... 27
Section 4.14 Intellectual Property............................................ 28
Section 4.15 Taxes............................................................ 28
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Section 4.16 Investment Companies, Managed Account Clients, Distributors, Etc. 30
Section 4.17 No Material Adverse Effect....................................... 31
Section 4.18 Bringdown........................................................ 31
Section 4.19 Brokers.......................................................... 32
Section 4.20 Additional Fund Representations.................................. 32
Section 4.21 Regarding Equities............................................... 32
Representations and Warranties of the Indemnity Trust........................... 32
Section 4.22 Organization and Related Matters................................. 32
Section 4.23 Authority; No Violation.......................................... 32
Section 4.24 Consents and Approvals........................................... 33
Representations and Warranties of the Seller Trust.............................. 33
Section 4.25 Organization and Related Matters................................. 33
Section 4.26 Authority; No Violation.......................................... 34
Section 4.27 Consents and Approvals........................................... 34
ARTICLE V REPRESENTATIONS AND WARRANTIES OF TAG AND PAI.................... 35
Representations and Warranties of TAG........................................... 35
Section 5.1 Organization and Related Matters................................. 35
Section 5.2 Authority; No Violation.......................................... 35
Section 5.3 Consents and Approvals........................................... 36
Section 5.4 Regulatory Documents............................................. 36
Section 5.5 Capitalization................................................... 36
Section 5.6 Financial Statements............................................. 37
Section 5.7 Material Contracts............................................... 37
Section 5.8 Brokers.......................................................... 38
Section 5.9 Legal Proceedings................................................ 38
Section 5.10 Permits and Applicable Law....................................... 38
Section 5.11 Insurance........................................................ 39
Section 5.12 Intellectual Property............................................ 39
Section 5.13 Taxes............................................................ 39
Section 5.14 Section 15 of the Investment Company Act......................... 40
Section 5.15 No Material Adverse Effect....................................... 40
Section 5.16 Bringdown........................................................ 42
Representations and Warranties of PAI........................................... 42
Section 5.17 Organization and Related Matters................................. 42
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Section 5.18 Authority; No Violation.......................................... 42
Section 5.19 Consents and Approvals........................................... 43
Section 5.20 Capitalization................................................... 43
Section 5.21 Financial Condition and Subsidiaries............................. 44
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PIMCO ADVISORS................. 45
Section 6.1 Organization..................................................... 45
Section 6.2 Authority; No Violation.......................................... 45
Section 6.3 Consents and Approvals........................................... 46
Section 6.4 Regulatory Documents............................................. 46
Section 6.5 Capitalization................................................... 46
Section 6.6 Financial Statements............................................. 47
Section 6.7 Ineligible Persons............................................... 47
Section 6.8 Material Contracts............................................... 48
Section 6.9 No Broker........................................................ 48
Section 6.10 Legal Proceedings................................................ 48
Section 6.11 Permits and Applicable Law....................................... 49
Section 6.12 Insurance........................................................ 49
Section 6.13 Labor and Employment Matters..................................... 49
Section 6.14 Employment Benefit Plans; ERISA.................................. 50
Section 6.15 Intellectual Property............................................ 51
Section 6.16 Taxes............................................................ 51
Section 6.17 Investment Companies, Managed Account Clients, Distributors, Etc. 51
Section 6.18 Section 15 of the Investment Company Act......................... 53
Section 6.19 No Material Adverse Effect....................................... 53
ARTICLE VII COVENANTS........................................................ 53
Section 7.1 Conduct of Business.............................................. 53
Section 7.2 Section 15 of the Investment Company Act--Opgroup and Opfin...... 56
Section 7.3 Section 15 of the Investment Company Act; TAG
and PIMCO Advisors.............................................. 56
Section 7.4 Non-Investment Company Advisory Agreement Consents............... 57
Section 7.5 Insurance........................................................ 58
Section 7.6 Further Assurances............................................... 58
Section 7.7 Efforts of Parties to Close...................................... 58
Section 7.8 Announcements.................................................... 59
Section 7.9 Access, Certain Communications................................... 59
Section 7.10 Regulatory Matters; Third Party Consents......................... 60
Section 7.11 Notification of Certain Matters.................................. 61
Section 7.12 Expenses......................................................... 62
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Section 7.13 Omitted.......................................................... 62
Section 7.14 Omitted.......................................................... 62
Section 7.15 Admission of PA Holdings as a General Partner of PIMCO Advisors.. 62
Section 7.16 Closing Date Balance Sheets...................................... 62
Section 7.17 Brokers.......................................................... 63
Section 7.18 Omitted.......................................................... 64
Section 7.19 The CIBC Agreement............................................... 64
Section 7.20 Omitted.......................................................... 64
Section 7.21 Execution of Certain Documents................................... 64
Section 7.22 Adoption of Plans of Liquidation................................. 65
ARTICLE VIII CONDITIONS TO CLOSING............................................ 65
Section 8.1 Conditions to TAG's and PAI's Obligations........................ 65
Section 8.2 Conditions to Opgroup's and Opfin's Obligations.................. 67
Section 8.3 Mutual Conditions................................................ 68
ARTICLE IX ACTIONS SUBSEQUENT TO THE MERGER................................. 70
Section 9.1 Formation of New PIMCO Advisors Investment
Management Subsidiary........................................... 70
Section 9.2 Incorporation Restructuring...................................... 70
Section 9.3 Additional Fund Related Covenants................................ 70
Section 9.4 Omitted.......................................................... 70
Section 9.5 Omitted.......................................................... 70
ARTICLE X INDEMNIFICATION.................................................. 71
Section 10.1 Indemnification by PIMCO Advisors and the Surviving Corporation.. 71
Section 10.2 Indemnification by Opgroup, Opfin and the Indemnity Trust........ 71
Section 10.3 Monetary Limitation.............................................. 72
Section 10.4 Nature and Survival; Time Limits................................. 73
Section 10.5 Limitation on Remedies........................................... 73
Section 10.6 General Provisions............................................... 73
ARTICLE XI TERMINATION AND SURVIVAL......................................... 75
Section 11.1 Termination...................................................... 75
Section 11.2 Survival After Termination....................................... 76
Section 11.3 Termination Fee.................................................. 77
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ARTICLE XII MISCELLANEOUS................................................... 77
Section 12.1 Limitation on Liability......................................... 77
Section 12.2 No Right of Set Off............................................. 78
Section 12.3 Amendments; Waiver.............................................. 78
Section 12.4 Entire Agreement................................................ 78
Section 12.5 Interpretation.................................................. 78
Section 12.6 Severability.................................................... 78
Section 12.7 Notices......................................................... 79
Section 12.8 Binding Effect; No Third Party Beneficiaries; No Assignment..... 80
Section 12.9 Counterparts.................................................... 81
Section 12.10 Governing Law................................................... 81
Section 12.11 Waiver of Jury Trial and Punitive Damages....................... 81
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of July
22, 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"), Thomson
Advisory Group Inc., a Delaware corporation ("TAG"), PIMCO Advisors Inc., a
Delaware corporation ("PAI"), PAI Transitory Corp., a Delaware corporation
("PAIT"), the Indemnity Trust, under Declaration of Trust dated July 22, 1997
(the "Indemnity Trust") and the Seller Trust, under Declaration of Trust dated
July 22, 1997.
RECITALS
WHEREAS, on February 13, 1997, Opgroup, Opfin, PIMCO Advisors and TAG
entered into an Agreement and Plan of Merger and, on June 3, 1997 and June 30,
1997, such parties entered into Amendment No. 1 and Amendment No. 2,
respectively, to such Agreement and Plan of Merger (as so amended, the "Original
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 (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, the parties hereto desire to amend the terms of the Original
Agreement to reflect changes relating to the CIBC Agreement, as well as to make
certain other changes, and to restate the Original Agreement in its entirety;
WHEREAS, PAI and PAIT wish to join in this Agreement as parties; and
WHEREAS, the Indemnity Trust and the Seller Trust wish to join in this
Agreement as parties;
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:
<PAGE>
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):
"Accounting Firm" has the meaning set forth in Section 7.16(a).
"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.
"Alternative Merger" has the meaning set forth in Section 2.3(a).
"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 New Fund
Advisors, or (ii) net current assets of Opgroup, Opfin and New Fund Advisors on
a combined basis, or (iii) net assets of Opgroup, Opfin and New Fund 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
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contracts for the New Fund 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 New Fund 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.
"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" shall mean the Class A units of limited partner
interest of PIMCO Advisors.
"Class B Units" shall mean the Class B 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
7.16(a).
"Closing Valuation Date" shall mean the date four calendar days prior
to the Closing Date unless such date is not a Business Day, in which event such
date shall be the Business Day next preceding the fourth preceding calendar day.
"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 7.16(a).
"Consenting Share" shall mean a share of Opgroup Class A Common Stock
or Opgroup Class B Common Stock, other than an Opco Share, held by an Opgroup
Shareholder which consents to the transactions contemplated by the CIBC
Agreement and this Agreement with respect to such share.
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"Contribution Agreement" has the meaning set forth in Section 7.21(a).
"Current Market Price" has the meaning set forth in the Amended and
Restated Certificate of the Surviving Corporation.
"D&O Insurance" has the meaning set forth in Section 7.5(b).
"DGCL" has the meaning set forth in Section 2.1.
"Delayed Closing Date" has the meaning set forth in Section 3.2.
"Effective Time" shall mean the time at which the certificate of
merger of the Merger or the Alternative Merger, as applicable, 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.
"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.
"Excluded Affiliates" has the meaning set forth in 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.
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"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 New Fund Advisors
Funds, (ii) OCC Cash Reserves, Inc. and (iii) OCC Accumulation Trust.
"Incorporation Restructuring" has the meaning set forth in Section
9.2.
"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.
"Indemnity Trustees" shall mean the managing trustees from time to
time under the Indemnity Trust.
"Independent Director" has the meaning set forth in Section 7.2(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.
"Keepwell Agreement" has the meaning set forth in Section 7.21(c).
"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).
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"Maximum Premium" has the meaning set forth in Section 7.5(b).
"Merger" has the meaning set forth in Section 2.1.
"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 New Fund Advisors Business.
"New Convertible Preferred Stock" has the meaning set forth in Section
2.6(c).
"New Fund Advisors" has the meaning set forth in Annex A.
"New Fund Advisors Business" shall mean the business of sponsoring,
managing and advising for compensation the New Fund Advisors Funds.
"New Fund Advisors Funds" shall mean the funds set forth on Schedule
1.1(a).
"Objections" has the meaning set forth in Section 7.16(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).
"Opcap" shall mean Oppenheimer Capital, a Delaware general
partnership.
"Opcap Advisors" shall mean Opcap Advisors, a Delaware general
partnership.
"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 LP Portion" has the meaning set forth in Section 2.2(d).
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"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 2.2(d).
"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 one of the 470,000 shares of Opgroup Class A
Common Stock or 175,522 shares of Opgroup Class B 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" has the meaning set forth in Section
2.2(d).
"Opgroup Class B Common Stock" has the meaning set forth in Section
2.2(d).
"Opgroup Common Stock" shall mean Opgroup Class A Common Stock and
Opgroup Class B Common Stock.
"Opgroup Consolidated Group" shall mean the affiliated group of
corporations, within the meaning of Section 1504(a) of the Code, of which
Opgroup was the common parent before the Effective Time.
"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
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.
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"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, sub-
investment advisory services).
"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 7.2(a)
and 7.3, 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.
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"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 New Fund
Advisors.
"Opgroup Subsidiary" shall mean each of Opfin, Equities, Advantage
Advisers (but only with respect to the New Fund Advisors Business prior to the
Closing Date), New Fund 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.
"Original Agreement" has the meaning set forth in the Recitals to this
Agreement.
"PA Holdings" shall mean Opgroup as renamed by the amendment and
restatement of its certificate of incorporation pursuant to Section 2.1.
"PA Holdings Common Stock" has the meaning set forth in Section
2.2(a).
"PA Holdings Series A Preferred Stock" has the meaning set forth in
Section 2.2(b).
"PA Holdings Series B Preferred Stock" has the meaning set forth in
Section 2.2(c).
"PA Holdings Series C Convertible Preferred Stock" has the meaning set
forth in Section 2.2(d).
"PAI" has the meaning set forth in the first paragraph of this
Agreement.
"PAI Class A Common Stock" has the meaning set forth in Section
5.20(a).
"PAI Class B Common Stock" has the meaning set forth in Section
5.20(a).
"PAI Series A Convertible Preferred Stock" has the meaning set forth
in Section 5.20(a).
"PAI Holdings" shall mean Opgroup as renamed by the amendment and
restatement of its certificate of incorporation pursuant to Section 2.3(a).
"PAIT" has the meaning set forth in the first paragraph of this
Agreement.
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"PAIT Common Stock" has the meaning set forth in Section 5.21(b).
"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).
"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 TAG, PAI, 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 TAG, PAI,
PIMCO Advisors and PIMCO Advisors' investment management partnerships taken as a
whole or on the ability of TAG or PAI, as applicable, 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
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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 Purchase Agreement" has the meaning set forth in
Section 7.21(d).
"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).
"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.
"Public Investment Company" shall mean an Investment Company, other
than a Private Investment Company or an Offshore Investment Company.
"Registration Rights Agreement" has the meaning set forth in Section
7.21(b).
"Regulatory Documents" shall mean all (i) Forms ADV (and amendments
thereto), (ii) Forms BD (and amendments thereto), (iii) forms filed under the
Exchange Act
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(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-1A 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 Keepwell
Agreement, the License Agreement, the PIMCO Advisors Purchase Agreement, the
Registration Rights Agreement, the Release and Indemnity Agreement, the Tax
Indemnity Agreement, the Transition Agreement, and the Surviving Corporation
Purchase Agreement.
"Release and Indemnity Agreement" shall mean the Release and Indemnity
Agreement dated July 22, 1997 between Opgroup, CIBC, TAG and PIMCO Advisors.
"Relevant Entities" has the meaning set forth in Section 7.3.
"SBAM Funds" has the meaning set forth in Section 7.2(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 2.2(d).
"Stand-Alone Balance Sheets" has the meaning set forth in Section
7.16(a).
"Subsidiary" has the meaning set forth in Regulation S-X promulgated
under the Securities Act.
"Surviving Corporation" shall mean, in the case of the Merger, PA
Holdings, or in the case of the Alternative Merger, PAI.
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"Surviving Corporation Purchase Agreement" has the meaning set forth
in Section 7.21(e).
"TAG" has the meaning set forth in the first paragraph of this
Agreement.
"TAG Balance Sheets" has the meaning set forth in Section 5.6.
"TAG Common Stock" has the meaning set forth in Section 2.2(a).
"TAG's Knowledge" or "to the Knowledge of TAG" shall mean only the
knowledge after due inquiry of Donald Miller, Khanh Tran, William Cvengros,
William Thompson, Robert Fitzgerald, Kenneth Poovey and Richard Weil.
"TAG Material Contract" has the meaning set forth in Section 5.7.
"TAG Series A Preferred Stock" has the meaning set forth in Section
2.2(b).
"TAG Series B Preferred Stock" has the meaning set forth in Section
2.2(c).
"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 Tax Indemnity Agreement dated
July 22, 1997 between Opgroup, CIBC, TAG and PIMCO Advisors.
"Tax Payment Account" shall have the meaning set forth in the CIBC
Agreement.
"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.
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"Unconsolidated Subsidiary," 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" has the meaning set forth in Section 9.1.
ARTICLE II
THE MERGER
Section 2.1 The Merger.
----------
If the Incorporation Restructuring is not effected on or before the
Closing, then subject to the terms and conditions of this Agreement, at the
Effective Time, (i) the certificate of incorporation of Opgroup shall be
amended and restated in the form of the Amended and Restated Certificate of
Incorporation of PA Holdings Corp. attached as Annex B, and (ii) TAG shall be
merged with and into PA Holdings (formerly Opgroup) in accordance with this
Agreement (the "Merger") and the separate corporate existence of TAG shall
thereupon cease. PA Holdings shall be the surviving corporation in the Merger.
The Merger shall have the effects specified in the Delaware General Corporation
Law (the "DGCL").
Section 2.2 Consideration to Be Delivered in the Merger.
-------------------------------------------
(a) At the Effective Time, each share of Common Stock, $.01 par value,
of TAG (the "TAG Common Stock") issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into 4,434.540326 shares of Common Stock,
$.01 par value, of PA Holdings (the "PA Holdings Common Stock"), all shares of
TAG Common Stock shall cease to be outstanding and shall be canceled and retired
and cease to exist, and each holder of shares of TAG Common Stock shall
thereafter cease to have any rights with respect to such shares, except the
right to receive, without interest, shares of PA Holdings Common Stock in
accordance with this Section 2.2(a) upon surrender to PA Holdings of a
certificate which represented shares of TAG Common Stock immediately prior to
the Effective Time.
(b) At the Effective Time, each share of Series A Preferred Stock,
$.01 par value, of TAG ("TAG Series A Preferred Stock") issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into one
share of Series A Preferred Stock, $.01 par value, of PA Holdings ("PA
Holdings Series A Preferred Stock"), all shares of TAG Series A Preferred Stock
shall cease to be outstanding and shall be canceled and retired and cease to
exist, and each holder of shares of TAG Series A Preferred Stock shall
thereafter cease to have any rights with respect to such shares, except the
right to receive, without interest, shares of PA Holdings Series A
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Preferred Stock in accordance with this Section 2.2(b), upon surrender to PA
Holdings of a certificate which represented shares of TAG Series A Preferred
Stock immediately prior to the Effective Time.
(c) At the Effective Time, each share of Series B Preferred Stock,
$.01 par value, of TAG ("TAG Series B Preferred Stock") issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into one
share of Series B Preferred Stock, $.01 par value, of PA Holdings ("PA
Holdings Series B Preferred Stock"), all shares of TAG Series B Preferred Stock
shall cease to be outstanding and shall be canceled and retired and cease to
exist, and each holder of shares of TAG Series B Preferred Stock shall
thereafter cease to have any rights with respect to such shares, except the
right to receive, without interest, shares of PA Holdings Series B Preferred
Stock in accordance with this Section 2.2(c), upon surrender to PA Holdings of a
certificate which represented shares of TAG Series B Preferred Stock immediately
prior to the Effective Time.
(d) At the Effective Time, each share of Class A Common Stock, $.01
par value, of Opgroup (the "Opgroup Class A Common Stock") and each share of
Class B Common Stock, $.01 par value, of Opgroup (the "Opgroup Class B Common
Stock") issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into:
(i) 1.644737 shares of Series C Cumulative Convertible Preferred
Stock, $.01 par value, of PA Holdings ("PA Holdings Series C Convertible
Preferred Stock"), 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 number of shares of PA Holdings Series C
Convertible Preferred Stock into which each share of Opgroup Common Stock shall
be converted pursuant to this clause (i) shall be reduced by a 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 number of shares of PA Holdings Series C Convertible Preferred Stock into
which a share of Opgroup Common Stock would be converted pursuant to this clause
(i) would be reduced by 5.75% (that is, 1.15(15% -10%)) to 1.550165 shares of PA
Holdings Series C Convertible Preferred Stock.
(ii) 0.877193 shares of PA Holdings Series C Convertible
Preferred Stock.
(iii) If such share is not an Opco Share, an amount in cash
equal to Available Cash divided by 912,000.
(iv) If such share is an Opco Share, an amount in cash equal to
(A) Available Cash divided by 912,000 minus (B) $46.47.
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(v) If such share is a Consenting Share, $112.58 in cash.
(vi) If such share is an Opco Share, an amount in cash equal to
(A) $30 million minus the total amount of cash paid pursuant to clause (v)
above, divided by (B) 645,522.
(vii) The right to receive one-nine hundred twelve thousandth
of each of the following amounts of cash, to the extent actually received by PA
Holdings, 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 the 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 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.
(viii) The right to receive one-nine hundred twelve thousandth
of the Buyer Adjustment Payment, if any, any amounts released from the Tax
Payment Account and the Holdback Amount, and the stock of the Excluded
Affiliates.
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Section 2.3 Alternative Merger.
------------------
(a) If the Incorporation Restructuring is effected on or before the
Closing, then subject to the terms and conditions of this Agreement, (i) before
the Effective Time, the certificate of incorporation of PAI shall be amended and
restated in the form of the Amended and Restated Certificate of Incorporation of
PIMCO Advisors Inc. attached as Annex C; and (ii) at the Effective Time, (A)
the certificate of incorporation of Opgroup shall be amended and restated in the
form of the Amended and Restated Certificate of Incorporation of PAI Holdings
Corp. attached as Annex D, and (B) PAIT shall be merged with and into PAI
Holdings (formerly Opgroup) in accordance with this Agreement (the "Alternative
Merger") and the separate corporate existence of PAIT shall thereupon cease.
PAI Holdings shall be the surviving corporation in the Alternative Merger. The
Alternative Merger shall have the effects specified in the DGCL.
(b) The parties intend that the merger of PAIT into PAI Holdings shall
constitute an integral part of the Incorporation Restructuring, that the
contribution of Class A Units to PAI and the merger of TAG into PAI as provided
in Annex E, and the merger of PAIT into PAI Holdings as provided in this Section
2.3, shall constitute integrated transfers of property to PAI by the holders of
such Class A Units, the shareholders of TAG and the Opgroup Shareholders solely
in exchange for stock in PAI, and that the transferors shall be in control of
PAI within the meaning of Section 351 of the Code immediately after the
exchange.
Section 2.4 Consideration to Be Delivered in the Alternative Merger.
-------------------------------------------------------
(a) At the Effective Time, each share of PAIT Common Stock issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Alternative Merger and without any action on the part of the holder thereof, be
converted into one share of Common Stock, $.01 par value, of PAI Holdings.
(b) At the Effective Time, each share of Opgroup Common Stock issued
and outstanding immediately prior to the Effective Time shall, by virtue of the
Alternative Merger and without any action on the part of the holder thereof, be
converted into:
(i) 1.644737 shares of PAI Series A Convertible Preferred Stock,
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 number of shares of PAI Series A Convertible Preferred Stock into
which each share of Opgroup Common Stock shall be converted pursuant to this
clause (i) shall be reduced by a 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 number of shares of
PAI Series A Convertible Preferred Stock into which a share of Opgroup Common
Stock would be converted pursuant to this clause (i) would be reduced by 5.75%
(that is, 1.15(15% - 10%)) to 1.550165 shares of PAI Series A Convertible
Preferred Stock.
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(ii) 0.877193 shares of PAI Series A Convertible Preferred
Stock.
(iii) If such share is not an Opco Share, an amount in cash
equal to Available Cash divided by 912,000.
(iv) If such share is an Opco Share, an amount in cash equal to
(A) Available Cash divided by 912,000 minus (B) $46.47.
(v) If such share is a Consenting Share, $112.58 in cash.
(vi) If such share is an Opco Share, an amount in cash equal to
(A) $30 million minus the total amount of cash paid pursuant to clause (v)
above, divided by (B) 645,522.
(vii) The right to receive one-nine hundred twelve thousandth
of each of the following amounts of cash, to the extent actually received by PAI
Holdings, 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 the 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 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.
(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 Portion divided by (x) the net income of Opcap LP allocated
to the Opcap LP Interest for the Straddle Quarter.
(viii) The right to receive one-nine hundred twelve thousandth
of the Buyer Adjustment Payment, if any, any amounts released from the Tax
Payment Account and the Holdback Amount, and the stock of the Excluded
Affiliates.
Section 2.5 Effect of Merger or Alternative 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
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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 2.6 Surrender of Certificates.
-------------------------
(a) At the Effective Time, the Seller Trustees, on behalf of the
Opgroup Shareholders, shall surrender to the Surviving Corporation certificates
representing all of the outstanding shares of Opgroup Common Stock. In exchange
therefor, the Surviving Corporation shall (i) issue and deliver the securities
described in Section 2.2(d)(i) or 2.4(b)(i), as applicable, to the Opgroup
Shareholders as provided therein; (ii) issue and deliver the securities
described in Section 2.2(d)(ii) or 2.4(b)(ii), as applicable, to the Indemnity
Trust for the benefit of the Opgroup Shareholders; and (iii) deliver the cash
and rights to cash described in Sections 2.2(d)(iii), (iv), (v), (vi), (vii) and
(viii), or 2.4(b)(iii), (iv), (v), (vi), (vii) and (viii), as applicable, to the
Seller Trust.
(b) At or after the Effective Time, there shall be no transfers on the
stock transfer books of PA Holdings or PAI Holdings, as applicable, of the
shares of Opgroup Common Stock which were outstanding immediately prior to the
Effective Time.
(c) No fractional shares of PA Holdings Series C Convertible Preferred
Stock or PAI Series A Convertible Preferred Stock (in the alternative, "New
Convertible Preferred Stock") shall be issued pursuant to this Article II. In
lieu of the issuance of any fractional share of New Convertible Preferred Stock,
(i) any Person who, but for this Section 2.6(c), would have been entitled to
receive a fractional share of New Convertible Preferred Stock representing one-
half or more of a share of New Convertible Preferred Stock, shall receive
instead one whole share of New Convertible Preferred Stock, and (ii) any Person
who, but for this Section 2.6(c), would have been entitled to receive a
fractional share of New Convertible Preferred Stock representing less than one-
half of a share of New Convertible Preferred Stock, shall receive nothing in
lieu of such fractional share.
(d) If TAG merges into PA Holdings, then (i) at or after the Effective
Time, the holders of the TAG Series A Preferred Stock, TAG Series B Preferred
Stock and TAG Common Stock shall surrender the certificates representing such
shares to PA Holdings in exchange for shares of PA Holdings Series A Preferred
Stock, PA Holdings Series B Preferred Stock and PA Holdings Common Stock,
respectively, and the certificates so surrendered shall forthwith be canceled;
and at or after the Effective Time, there shall be no transfers on the stock
transfer books of PA Holdings of the shares of TAG Series A Preferred Stock, TAG
Series B Preferred Stock and TAG Common Stock which were outstanding immediately
prior to the Effective Time.
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Section 2.7 Optional Cash Election.
----------------------
Opgroup or PAI, as applicable, shall, at the option of PIMCO Advisors,
offer a cash election to the Opgroup Shareholders, pursuant to which each
Opgroup Shareholder may elect to receive, in lieu of any or all of the shares of
New Convertible Preferred Stock which such Opgroup Shareholder would otherwise
have received pursuant to Section 2.2(d)(i) or 2.4(b)(i), as applicable, cash in
the amount of $100 per share; provided, that if the cash election is offered,
PIMCO Advisors may limit the total amount of cash to be delivered to the
Opgroup Shareholders pursuant to this Section 2.7 to an amount not less than
$100 million, in which event such total amount of cash shall be prorated if
necessary among the Opgroup Shareholders who elect to receive cash, on the basis
of the ratio of such limit to the total amount of cash such Opgroup Shareholders
elect to receive. PIMCO Advisors shall give notice of its exercise of such
option to Opgroup as soon as practicable but in no event later than ten Business
Days prior to the Closing Date, which notice shall state that PIMCO Advisors is
exercising such option, and, if applicable, that the cash election is limited to
the amount specified in the notice. Such notice shall be accompanied by the
unconditional promise of PIMCO Advisors to loan to TAG or PAI, as applicable,
the funds necessary to perform the obligations of the Surviving Corporation
pursuant to the cash election.
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 the Business Day (the "Closing Date")
specified in a notice from Opgroup to PIMCO Advisors given not less that five
days before the Closing Date, which notice shall state that the conditions to
the Closing set forth in Article VIII have been, or will be as of the Closing,
satisfied or waived.
Section 3.2 Delayed Closing.
---------------
If the Closing would otherwise occur before December 31, 1997, and
PIMCO Advisors has not irrevocably committed to extend the tax status of PIMCO
Advisors as a publicly traded partnership, the Closing shall be delayed until
the later of (i) December 1, 1997 and (ii) the earlier of (A) the day which is
thirty days after the day on which the Closing would otherwise have occurred, or
if such day is not a Business Day, the next succeeding Business Day, or (B)
December 31, 1997 (the "Delayed Closing Date"). In the event the Closing is so
delayed,
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PIMCO Advisors shall either irrevocably commit, on or before the Delayed Closing
Date, not to effect the Incorporation Restructuring, or shall take the necessary
actions to effect the Incorporation Restructuring on the Delayed Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OPGROUP
AND THE TRUSTS
Representations and Warranties of Opgroup
Opgroup represents and warrants to PIMCO Advisors, TAG and PAI 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, TAG
and PAI) 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
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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 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 compliance with Sections
7.2 and 7.3, (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.
----------------------
Except for (i) such consents, approvals and notices as are set forth
in Sections 7.2, 7.3 and 7.10(c) and Schedule 4.3, and (ii) the applicable
filings under the HSR Act, 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
22
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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, the authorized capital stock of Opgroup will
consist of (i) 1,000,000 shares of Class A Common Stock, 470,000 shares of which
will be issued and outstanding and are owned of record and beneficially by Opco
LP, (ii) 1,000,000 shares of Class B Common Stock, 442,000 shares of which 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 (iii) 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. 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, the authorized capital stock of New Fund
Advisors will consist of 100 shares of common stock, all of which will be issued
and outstanding legally and beneficially owned by Opfin. All of the outstanding
shares of stock of New Fund Advisors 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
23
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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, 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 2.1, (i) the PA Holdings Common
Stock, PA Holdings Series A Preferred Stock, PA Holdings Series B Preferred
Stock and PA Holdings Series C Convertible Preferred 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, (ii) the shares of PA Holdings Common Stock, PA Holdings Series A
Preferred Stock, PA Holdings Series B Preferred Stock and PA Holdings Series C
Convertible Preferred 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), and (iii) the shares of PA Holdings Common Stock to
be issued upon the conversion of the PA Holdings Series C Convertible Preferred
Stock will have been duly authorized and, when issued as contemplated by the PAI
Holdings certificate of incorporation, will be validly issued, fully paid and
non-assessable and will not be issued in violation of any preemptive rights.
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.
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(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.
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
25
<PAGE>
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 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 TAG.
(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, TAG or
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PAI 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.
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
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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 Benefit Plan which constitutes a "multiemployer plan" as defined in
Section 3(37) of ERISA would not subject TAG or 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
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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 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 TAG 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 TAG without the prior written consent of TAG.
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.
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<PAGE>
(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 Alternative
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 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.
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<PAGE>
(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 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 July 22, 1997, except as otherwise
disclosed in writing to TAG 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.
---------
From October 31, 1996 through July 22, 1997, to Opgroup's Knowledge,
Opgroup and the Opgroup Subsidiaries have conducted the Money Management
Business substantially in accordance with the covenants set forth in Section
7.1(a).
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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.
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
lender under the Opgroup Equities Note and (iii) as obligor under a note to
Opgroup in the principal amount of $69.7 million.
Representations and Warranties of the Indemnity Trust
The Indemnity Trust represents and warrants to each of PIMCO Advisors, TAG
and PAI, at July 22, 1997 and at the Closing Date, as follows:
Section 4.22 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 4.23 Authority; No Violation.
-----------------------
(a) Each Indemnity Trustee has accepted appointment as "Managing
Trustee" under the Declaration of Trust of the Indemnity Trust (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
32
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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 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 4.24 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 each of PIMCO Advisors, TAG
and PAI, at July 22, 1997 and at the Closing Date, as follows:
Section 4.25 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.
33
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Section 4.26 Authority; No Violation.
-----------------------
(a) Each Seller Trustee has accepted appointment as "Managing Trustee"
under the Declaration of Trust of the Seller Trust (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 CIBC 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 CIBC 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 CIBC 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 4.27 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.
34
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TAG AND PAI
Representations and Warranties of TAG
TAG represents and warrants to each of Opgroup and Opfin, at February 13,
1997 and at the Closing Date, as follows:
Section 5.1 Organization and Related Matters.
--------------------------------
TAG is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. TAG has the corporate 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. The copies of the organizational documents and any amendments
thereto of TAG heretofore delivered to Opgroup are complete and correct copies
of such instruments as currently in effect.
Section 5.2 Authority; No Violation.
-----------------------
(a) TAG has full corporate 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 corporate action on the part of TAG and its
shareholders, and no other corporate proceedings on the part of TAG are
necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by TAG, and (assuming the due authorization, execution and delivery of
this Agreement by Opgroup and Opfin) constitute a valid and binding obligation
of TAG, enforceable against it in accordance with their 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 TAG, nor
the consummation of the Merger, nor compliance by TAG with any of the other
terms or provisions hereof, will (i) violate any provision of its certificate of
incorporation or bylaws or (ii) except as set forth in Schedule 5.2(b), and
assuming compliance with Sections 7.2 and 7.3, (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,
35
<PAGE>
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 TAG's assets or
any note, bond, mortgage, indenture, deed of trust, license, lease agreement or
other instrument or obligation to which TAG is a party, or by which TAG or any
of its properties or assets, may be bound.
Section 5.3 Consents and Approvals.
----------------------
Except for (i) consents, approvals and notices as are set forth in
Sections 7.2 and 7.3 and in Schedule 5.3, and (ii) the applicable filings under
the HSR Act, 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 TAG of this Agreement and (x) the consummation by
TAG of the transactions as contemplated hereby.
Section 5.4 Regulatory Documents.
--------------------
(a) Since April 30, 1993, TAG has filed all Regulatory Documents,
together with any amendments required to be made with respect thereto, that were
required to be filed by it with any Governmental Authority, including the SEC,
with respect to its business.
(b) As of their respective dates, the Regulatory Documents filed with
respect to TAG's business 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 5.5 Capitalization
--------------
(a) The authorized capital stock of TAG consists of 826,083 shares of
TAG Common Stock, 2,145 shares of which are issued and outstanding; and
4,868,128 shares of preferred stock, of which 2,028,386 shares of TAG Series A
Preferred Stock are issued and outstanding, and 2,839,742 shares of TAG Series B
Preferred Stock are issued and outstanding. The shares of TAG Common Stock, TAG
Series A Preferred Stock and TAG Series B Preferred Stock are owned of record
and, to TAG's Knowledge, beneficially by the holders listed on Schedule 5.5(a)
in the respective amounts set forth opposite their names. All of the
outstanding shares of TAG capital stock (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 set forth on Schedule 5.5(a) and as
contemplated by this Agreement, (i) there are no outstanding options, warrants,
calls, rights, commitments or agreements of any kind to which TAG is party or
36
<PAGE>
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, TAG 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, TAG, or
obligating TAG to grant, extend or enter into any such option, warrant, call,
right, commitment or agreement; (ii) there are no outstanding contractual
obligations of TAG to repurchase, redeem or otherwise acquire any shares of
capital stock of TAG; and (iii) there are no outstanding bonds, debentures,
notes or other securities or instruments of TAG having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matter on which stockholders of TAG may vote.
Section 5.6 Financial Statements.
--------------------
TAG has previously delivered to Opgroup copies of (i) the audited
statements of financial condition of TAG as of December 31, 1994 and 1995
(collectively, the "TAG Balance Sheets") and the related audited statements of
operations, changes in stockholders' equity and cash flows for the period
November 16, 1994 through December 31, 1994 and for the year ended December 31,
1995, in each case accompanied by the audit report of Deloitte & Touche LLP
(with respect to the period ended December 31, 1994) and Price Waterhouse LLP
(with respect to the year ended December 31, 1995), independent public
accountants with respect to TAG and (ii) the unaudited interim statements of
financial condition and related statements of operations, changes in
stockholders' equity and cash flows of TAG at or for the periods ended March 31,
June 30 and September 30, 1996. The balance sheets referred to in the previous
sentence (including the related notes, where applicable) fairly present the
financial condition of TAG as of the dates thereof, and the other financial
statements referred to in the preceding sentence fairly present (subject, in the
case of the unaudited statements, to recurring audit adjustments normal in
nature and amount) the results of the operations, cash flows and changes in
stockholder's equity of TAG, 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 TAG.
Section 5.7 Material Contracts.
------------------
Opgroup 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 TAG will be a party or which TAG will be, or its
assets will be, bound at the Closing Date: (i) any lease (whether of real or
personal property) providing for annual rentals of $250,000 or more; (ii) any
agreement for the purchase of materials, supplies, goods, services, equipment or
other assets providing for annual payments of $250,000 or more; (iii) any sales,
distribution or similar agreement providing for the sale by TAG 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); (iv) any joint venture or strategic alliance agreement
providing for annual payments of $250,000 or more or involving an investment by
TAG of $750,000 or more; (v) any agreement relating to the disposition or sale
of any business (whether by merger, sale of stock, sale
37
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of assets or otherwise); (vi) any agreement relating to indebtedness or the
deferred purchase price of property involving an aggregate principal amount of
$250,000 or more; (vii) any license, franchise or similar agreement providing
for annual payments of $250,000 or more; (viii) any agency, dealer, sales
representative, marketing or other similar agreement, providing for annual
payments of $250,000 or more and (ix) any other agreement which involves annual
payments in excess of $1 million or is not terminable without penalty by TAG
within six months (each such contract, a "TAG Material Contract") and a complete
and correct list of all such TAG Material Contracts is set forth in Schedule
5.7. To TAG's Knowledge, (i) each TAG 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 TAG Material Contract.
Section 5.8 Brokers
-------
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 TAG or its Affiliates in connection with this Agreement or the Merger.
Section 5.9 Legal Proceedings.
-----------------
Except as set forth on Schedule 5.9, there are no legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature that are pending or, to TAG's
Knowledge, have been threatened against TAG or its properties or assets or that
challenge the validity or propriety of the transactions contemplated by this
Agreement.
Section 5.10 Permits and Applicable Law.
--------------------------
(a) Except as disclosed in Schedule 5.10(a), as of the Closing Date,
TAG will hold all Permits that are material to its business. As of such date,
all Permits will be valid and in good standing and are not the subject of any
suspension, modification or revocation or proceedings related thereto.
(b) Except as disclosed in Schedule 5.10(b), since November 15, 1994
and except for normal examinations conducted by any Governmental Authority in
the regular course of the business of TAG, no Governmental Authority has
initiated any administrative proceeding or, to TAG's Knowledge, investigation
into its business. A copy of all material correspondence with Governmental
Authorities during the last year has been made available to Opgroup.
(c) The information provided or to be provided in writing by TAG
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
38
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to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they are made, not misleading.
Section 5.11 Insurance.
---------
All of TAG's material insurance policies and bonds are listed in
Schedule 5.11. To the Knowledge of TAG, each such insurance policy or bond is in
full force and effect, and TAG has received no written notice or any other
indication from any insurer or agent of any proposed cancellation of any such
insurance policy or bond.
Section 5.12 Intellectual Property.
---------------------
Except as set forth in Schedule 5.12, TAG has no right, title or
interest to any trademarks, service marks, copyright registrations, and patents
and pending applications therefor. No written notice has been received by TAG
that the use by TAG of any such intellectual property in which it has any right,
title or interest infringes on any rights of any other Person nor, to TAG's
Knowledge, has any other Person infringed on a continuing basis any rights that
TAG has in the such intellectual property.
Section 5.13 Taxes.
-----
(a) TAG 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 TAG was complete and correct in all material respects.
Except as set forth on Schedule 5.13(a), TAG has not 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 TAG 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. TAG does not have any liability
for Taxes in excess of such amounts so paid or reserves so established.
(c) Except as set forth on Schedule 5.13(c), no material deficiencies
for Taxes have been claimed, proposed or assessed by any Governmental Authority
against TAG for any taxable year ended subsequent to December 31, 1990. Except
as set forth on Schedule 5.13(c), there are no pending or, to TAG's Knowledge,
threatened audits, investigations or claims for or relating to any material
additional liability in respect of Taxes against TAG, and there are no matters
under discussion with any Governmental Authorities with respect to Taxes that in
the reasonable judgment of TAG is likely to result in a material additional
liability for Taxes. Except as set forth on Schedule 5.13(c), TAG has not been
notified that any Governmental Authority intends to audit a Tax Return for any
other period. Except as set forth on Schedule 5.13(c), no extension of a
statute of limitations relating to Taxes is in effect with respect to TAG.
39
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(d) There are no Encumbrances upon the assets of TAG 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 TAG as of
February 13, 1997 are set forth on Schedule 5.13(e). TAG shall notify Opgroup
of any new elections with respect to Taxes, or changes in current elections with
respect to Taxes, affecting TAG which shall be made prior to the Closing, and
shall make no such election that would be adverse to the Opgroup Shareholders
without the prior written consent of Opgroup. TAG (i) has not made and will
not 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
not 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
TAG's assets; (iii) has not agreed, and is not required, to make any adjustment
under Section 481(a) of the Code by reason of a change in accounting method or
otherwise; (iv) has not made an election, and is not required, to treat any
asset of TAG 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 not made any of the foregoing elections
and is not 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 TAG are identified on Schedule 5.13(f).
(g) TAG is not a U.S. real property holding corporation as defined in
Section 897 of the Code.
(h) TAG has not made and will not, as a result of any event connected
with the Merger 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) TAG has not participated in and will not participate in an
international boycott within the meaning of Section 999 of the Code.
Section 5.14 Section 15 of the Investment Company Act.
----------------------------------------
Neither TAG 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 5.15 No Material Adverse Effect.
--------------------------
From September 30, 1996 through July 22, 1997, except as disclosed in
writing to Opgroup with specific reference to this Section 5.15, to TAG's
Knowledge, there has occurred no event which could reasonably be expected to
have a PIMCO Advisors Material Adverse Effect.
40
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Section 5.16 Bringdown.
---------
From September 30, 1996 through July 22, 1997, except as provided on
Schedule 5.16, to TAG's Knowledge, TAG has conducted its business substantially
in accordance with the covenants set forth in Section 7.1(b).
Representations and Warranties of PAI
PAI represents and warrants to each of Opgroup and Opfin, at July 22, 1997
and at the Closing Date, as follows:
Section 5.17 Organization and Related Matters.
--------------------------------
Each of PAI and PAIT is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Each of PAI and
PAIT has the corporate power 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 PAI and PAIT heretofore delivered to Opgroup are complete and
correct copies of such instruments as currently in effect.
Section 5.18 Authority; No Violation.
-----------------------
(a) Each of PAI and PAIT has full corporate 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 5.18(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 on the part of PAI and PAIT
and their respective shareholders, and no other corporate proceedings on the
part of PAI or PAIT are necessary to approve this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by PAI, and PAIT and (assuming the due authorization,
execution and delivery of this Agreement by Opgroup and Opfin) constitutes a
valid and binding obligation of PAI and PAIT, enforceable against each of them
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 PAI or
PAIT, nor the consummation of the Alternative Merger, nor compliance by PAI or
PAIT with any of the other terms or provisions hereof, will (i) violate any
provision of their respective certificates of incorporation or bylaws or (ii)
except as set forth in Schedule 5.18(b), and assuming compliance with Sections
7.2 and 7.3, (x) violate any Applicable Law, or (y) violate, conflict with,
result in a
41
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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 PAI or
PAIT or any note, bond, mortgage, indenture, deed of trust, license, lease
agreement or other instrument or obligation to which PAI or PAIT is a party, or
by which PAI or PAIT or any of their respective properties or assets may be
bound.
Section 5.19 Consents and Approvals.
----------------------
Except for (i) consents, approvals and notices as are set forth in
Sections 7.2 and 7.3 and in Schedule 5.19, and (ii) the applicable filings under
the HSR Act, 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 PAI or PAIT of this Agreement and (x) the
consummation by PAI or PAIT of the transactions contemplated hereby.
Section 5.20 Capitalization.
--------------
(a) At the Closing Date, but before the Incorporation Restructuring,
the authorized capital stock of PAI will consist of 40,000,000 shares of Class A
Common Stock, $.01 par value ("PAI Class A Common Stock"), none of which will
issued and outstanding; 10,000,000 shares of Class B Common Stock, $.01 par
value ("PAI Class B Common Stock"), 100 shares of which will be issued and
outstanding, and 10,000,000 shares of Preferred Stock, $.01 par value, of which
3,335,000 shares are designated as Series A Cumulative Convertible Preferred
Stock ("PAI Series A Convertible Preferred Stock"), and none of which will be
issued and outstanding. The outstanding shares of PAI Class B Common Stock are
owned of record and beneficially by PIMCO Partners. The outstanding shares of
PAI Class B Common Stock (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 and Annex E, (i)
there are no outstanding options, warrants, calls, rights, commitments or
agreements of any kind to which PAI 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, PAI 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, PAI, or obligating PAI to grant, extend
or enter into any such option, warrant, call, right, commitment or agreement;
(ii) there are no outstanding contractual obligations of PAI to repurchase,
redeem or otherwise acquire any shares of capital stock of PAI; and (iii) there
are no outstanding bonds, debentures, notes or other securities or instruments
of PAI having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matter on which stockholders of PAI
may vote.
(b) Upon effectiveness of the amendment and restatement of the PAI
certificate of incorporation pursuant to Section 2.3(a), (i) the PAI Series A
Convertible Preferred Stock to be issued in the Alternative 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
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non-assessable and will not be issued in violation of any preemptive rights,
(ii) the shares of PAI Series A Convertible Preferred Stock to be issued in the
Alternative Merger will, when issued, be free and clear of all Encumbrances
(other than restrictions on transferability under the Securities Laws), and
(iii) the shares of PAI Class A Common Stock to be issued upon the conversion of
the PAI Series A Convertible Preferred Stock will have been duly authorized and,
when issued as contemplated by the PAI certificate of incorporation, will be
validly issued, fully paid and non-assessable and will not be issued in
violation of any preemptive rights.
Section 5.21 Financial Condition and Subsidiaries.
------------------------------------
(a) PAI is a newly-formed corporation and has no assets or liabilities
of any kind or description other than $2,500 in cash representing the proceeds
of issuance of the outstanding PAI Class B Common Stock and its obligations
under this Agreement.
(b) The authorized capital stock of PAIT consists of 100 shares of
Common Stock, $.01 par value ("PAIT Common Stock"), 100 shares of which are
issued and outstanding. The outstanding shares of PAIT Common Stock are owned of
record and beneficially by PAI. The outstanding shares of PAIT Common Stock (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 and Annex E, (i) there are no outstanding
options, warrants, calls, rights, commitments or agreements of any kind to which
PAIT 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, PAIT 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, PAIT,
or obligating PAIT to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement; (ii) there are no outstanding contractual
obligations of PAIT to repurchase, redeem or otherwise acquire any shares of
capital stock of PAIT; and (iii) there are no outstanding bonds, debentures,
notes or other securities or instruments of PAIT having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matter on which stockholders of PAIT may vote. PAI has no Subsidiaries other
than PAIT.
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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.
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 compliance with Sections 7.2 and 7.3, (x) violate any Applicable Law,
or (y) violate,
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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.
----------------------
Except for such consents, approvals and notices as are set forth in
Sections 7.2 and 7.3 and in Schedule 6.3, and the applicable filings under the
HSR Act, 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 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
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Act) and have not been issued in violation of any preemptive right. Except 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 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
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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
(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 TAG, PAI, PIMCO
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Advisors, 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 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
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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 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
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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).
(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
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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 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.
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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 July 22, 1997, 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
COVENANTS
Section 7.1 Conduct of Business.
-------------------
(a) During the period from July 22, 1997 and continuing through the
Closing Date, except as expressly contemplated or permitted by this Agreement or
with the prior written consent of PIMCO Advisors, Opgroup and the Opgroup
Subsidiaries shall (1) carry on the Money Management Business in the ordinary
course; (2) use commercially reasonable efforts to preserve their present
business organization and relationships with respect to the Money Management
Business; (3) use 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) use 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 shall not,
and shall not permit any of the Opgroup Subsidiaries to:
(i) create, renew, amend, terminate or cancel, or take 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) adopt, amend, renew or terminate 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;
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(iii) commit 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) waive any right or modify or amend any commitment other than in
the ordinary course of business, or incur any material obligation;
(v) incur, assume, or guarantee any indebtedness or liability for
or in respect of borrowed money;
(vi) make any material change to the total compensation of any
employee of Opgroup or the Opgroup Subsidiaries;
(vii) declare or pay any dividends or make 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 divest itself of the management of any mutual fund
or other assets currently under management;
(ix) acquire or agree 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) enter into any joint venture or partnership except as set forth
on Schedule 7.1(a);
(xi) create or permit the creation or attachment of any Encumbrances
except in the ordinary course of business;
(xii) sell, assign, convey or transfer 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) enter into any new line of business; or
(xiv) assume 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.
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(b) During the period from July 22, 1997 and continuing through the
Closing Date, except as expressly contemplated or permitted by this Agreement,
the Incorporation Restructuring or Schedule 7.1(b), or with the prior written
consent of Opgroup, TAG shall not:
(i) incur, assume, or guarantee any indebtedness or liability for or
in respect of borrowed money except to fund the cash election described in
Section 2.7;
(ii) amend, alter or repeal any provision of its certificate of
incorporation or bylaws;
(iii) issue or repurchase any equity securities;
(iv) effect any recapitalization, liquidation or dissolution;
(v) enter into any merger or consolidation involving, or sell all or
a substantial portion of its assets;
(vi) enter into any business or activity other than the investment
management business; or
(vii) enter into any transaction with any shareholder of TAG or any
Affiliate of any shareholder of TAG, except on arms' length terms.
(c) During the period from July 22, 1997 and continuing through the
Closing Date, except as expressly contemplated or permitted by this Agreement,
the Incorporation Restructuring or Schedule 7.1(c), or with the prior written
consent of Opgroup, PAI shall not, and shall not permit PAIT to:
(i) incur, assume, or guarantee any indebtedness or liability for or
in respect of borrowed money except to fund the cash election described in
Section 2.7;
(ii) amend, alter or repeal any provision of its certificate of
incorporation or bylaws;
(iii) issue or repurchase any equity securities;
(iv) effect any recapitalization, liquidation or dissolution;
(v) enter into any merger or consolidation involving, or sell all or
a substantial portion of its assets;
(vi) enter into any business or activity other than the investment
management business; or
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(vii) enter into any transaction with any shareholder of PAI or
any Affiliate of any shareholder of PAI, except on arms' length terms.
Section 7.2 Section 15 of the Investment Company Act--Opgroup and Opfin.
------------------------------------------------------------
(a) Opgroup and Opfin will use commercially reasonable efforts to
obtain, as promptly as practicable, 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 shall use best efforts to assure, prior to the
Closing Date, the satisfaction of or 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). Subject to the exercise of independent discretion of the
directors of the Identified Funds who are not "interested persons" thereof
("Independent Directors") to the extent contemplated by Section 16(b) of the
Investment Company Act, Opgroup and Opfin shall use their commercially
reasonable efforts to have nominated and elected to the boards of directors of
the Identified Funds for which Salomon Brothers Asset Management, Inc. serves as
an investment adviser (the "SBAM Funds") the requisite number of additional
Independent Directors to fulfill the condition described in Section 15(f)(1) of
the Investment Company Act, with one out of every two such new Independent
Directors for each SBAM Fund to be an individual endorsed by TAG and, if an odd
number of Independent Directors needs to be nominated and elected, with the
final additional Independent Director to be endorsed jointly by TAG and Salomon
Brothers Asset Management. Inc.
(c) Omitted.
(d) Omitted.
Section 7.3 Section 15 of the Investment Company Act; TAG and PIMCO
-------------------------------------------------------
Advisors.
- ---------
PIMCO Advisors, TAG and PAI and, after the Closing, 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 7.2(c) 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)
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(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 7.3, "commercially reasonable efforts" shall mean PIMCO
Advisors, TAG and PAI, 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 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 7.3 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, TAG, PAI or their 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 7.4 Non-Investment Company Advisory Agreement Consents
--------------------------------------------------
As soon as reasonably practicable after February 13, 1997, Opgroup
shall, or shall cause an Opgroup Subsidiary to, inform such entity's investment
advisory clients (other than the Opgroup Public Investment Company Clients) of
the transactions contemplated by this Agreement. Opgroup shall cause 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 use 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, use commercially reasonable
efforts to enter into new agreements with PIMCO Advisors or its Affiliate
effective upon Closing. PIMCO Advisors and TAG each agrees that, 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 obtain
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
consent of such client will be implied if such
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client continues to accept such advisory services for at least 30 days after
receipt of such notice without termination.
Section 7.5 Insurance.
---------
(a) Opgroup will use commercially reasonable efforts, and will cause
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 will procure comparable replacement
policies (to the extent commercially reasonable) and maintain such replacement
policies in effect until the Closing Date.
(b) 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 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 7.6 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 7.7 Efforts of Parties to Close.
---------------------------
During the period from July 22, 1997 through the Closing Date, each
party hereto shall use all reasonable efforts to fulfill or obtain the
fulfillment of the conditions precedent to the consummation of the transactions
contemplated hereby, including the execution and delivery of any documents,
certificates, instruments or other papers that are reasonably required for the
consummation of the transactions contemplated hereby. During the period from
July 22, 1997 and continuing through the Closing, except as required by
Applicable Law or with the prior written consent of the other parties to this
Agreement, no party to this Agreement shall take any action which, or fail to
take any action the failure of which to be taken, would, or could reasonably be
expected to, (a) result in any of the representations and warranties set forth
in this Agreement on
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the part of the party taking or failing to take such action being or becoming
untrue in any material respect; (b) result in any conditions to the Closing set
forth in Article VIII not being satisfied; (c) result in a material violation of
any provision of this Agreement; or (d) adversely affect or materially delay the
receipt of any of the requisite regulatory approvals. The efforts required by
this Section 7.7 shall not be deemed to include any obligation for any party
hereto to make cash payment or other compensation to a third party to obtain
consent to the transactions contemplated by this Agreement.
Section 7.8 Announcements.
-------------
Except for such statements and regulatory filings as may be required
by Applicable Law or any Governmental Authority, no party (or any agent or
Affiliate of a party) shall make any public statements, including, without
limitation, any press releases, with respect to this Agreement and the
transactions contemplated herein without the prior written consent of the other
party (which consent may not be unreasonably withheld or delayed); provided,
however, the foregoing restrictions should not apply if either party is required
by law or regulation to make an immediate announcement, the non-announcing party
is unavailable for review of the announcement, and such party remains
unavailable after a good faith attempt was made for it to be contacted.
Section 7.9 Access, Certain Communications.
------------------------------
(a) Between July 22, 1997 and the Closing Date, subject to any
Applicable Laws or other agreements relating to the exchange of information,
Opgroup shall, and shall cause the Opgroup Subsidiaries to, afford to PIMCO
Advisors and its authorized agents and representatives complete access, upon
reasonable notice and during normal business hours, to all contracts, documents
and information of or relating to the assets, liabilities, business, operations,
personnel and other aspects of the Opgroup Business; provided, however, that
PIMCO Advisors' investigation shall be conducted in a manner which does not
unreasonably interfere with the normal operations of the Opgroup Business. All
such information and access shall be subject to the terms and conditions of that
certain Confidentiality Agreement between Opgroup and PIMCO Advisors, dated
August 13, 1996.
(b) Between July 22, 1997 and the Closing Date, subject to any
Applicable Laws or other agreements relating to the exchange of information,
PIMCO Advisors, TAG and PAI shall afford to Opgroup, the Opgroup Subsidiaries
and their authorized agents and representatives complete access, upon reasonable
notice and during normal business hours, to all contracts, documents and
information of or relating to the assets, liabilities, business, operations,
personnel and other aspects of TAG, PAI, PIMCO Advisors and the PIMCO Advisors
Subsidiaries; provided, however, that Opgroup and the Opgroup Subsidiaries'
investigation shall be conducted in a manner which does not unreasonably
interfere with the normal operations of the business of TAG, PAI, PIMCO
Advisors, and the PIMCO Advisors Subsidiaries. All such information and access
shall be subject to the terms and conditions of that certain Confidentiality
Agreement between Opgroup and PIMCO Advisors, dated January 10, 1997.
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Section 7.10 Regulatory Matters; Third Party Consents.
-----------------------------------------
(a) The parties to this Agreement shall cooperate with each other and
use all reasonable efforts promptly to prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable such permits, consents, approvals, waivers
and authorizations of all third parties and Governmental Authorities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement.
(b) Opgroup and the Opgroup Subsidiaries will assist each of the
Opgroup Public Investment Company Clients to prepare and file with the SEC as
soon as is reasonably practicable after February 13, 1997 a preliminary proxy
statement, together with a form of proxy, to be used in connection with the
meeting of the shareholders of each such Opgroup Public Investment Company
Client and, as promptly as practicable thereafter, subject to compliance with
the rules and regulations of the SEC, definitive proxy statements with respect
to such meetings shall be mailed to the shareholders of such Opgroup Public
Investment Company Clients. Each such proxy statement shall comply as to form
in all material respects with all Applicable Law.
(c) Omitted.
(d) As promptly as practicable, each of Opgroup and PIMCO Advisors
shall file, or cause to be filed, any reports or notifications that may be
required to be filed under the HSR Act with the United States Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
and shall cooperate with each other in connection with such filings or responses
to requests for additional information.
(e) Each party to this Agreement shall, upon request, furnish each
other with all information concerning themselves, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any statement, filing, notice or application made by or on
behalf of or at the direction of Opgroup or PIMCO Advisors to any Governmental
Authority in connection with the transactions contemplated by this Agreement
(except to the extent that such information would be, or relates to information
that would be, filed under a claim of confidentiality).
(f) The parties to this Agreement shall promptly advise each other
upon receiving any communication from any Governmental Authority whose consent
or approval is required for consummation of the transactions contemplated by
this Agreement which causes such party to believe that there is a reasonable
likelihood that any requisite regulatory approval will not be obtained or that
the receipt of any such approval will be materially delayed or that the
transactions contemplated hereby will become subject to additional conditions
imposed by such Governmental Authority.
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Section 7.11 Notification of Certain Matters.
-------------------------------
Each party to this Agreement shall give prompt notice to the other
party of (i) the occurrence, or failure to occur, of any event or existence of
any condition that has caused or could reasonably be expected to cause any of
its representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect at any time after February 13, 1997, up to
and including the Closing Date, and (ii) any failure on its part to comply with
or satisfy, in any material respect, any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement. In connection with the
Closing, Opgroup and PIMCO Advisors will promptly supplement or amend the
various Schedules to this Agreement to reflect any matter which, if existing,
occurring or known at February 13, 1997, would have been required to be set
forth or described in such Schedules or which is necessary to correct any
information in such Schedules which was or has been rendered inaccurate thereby.
Section 7.12 Expenses.
--------
Expenses of 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; 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 7.13 Omitted.
-------
Section 7.14 Omitted.
-------
Section 7.15 Admission of PA Holdings as a General Partner of PIMCO
------------------------------------------------------
Advisors.
- --------
If TAG merges into PA Holdings, PIMCO Advisors shall, promptly
following the Closing Date, cause PA Holdings to be admitted as an additional
general partner of PIMCO Advisors.
Section 7.16 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 New Fund 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 New Fund Advisors derived from the Stand-Alone Balance Sheets (the "Combined
Balance Sheet", and together with the Stand-Alone Balance Sheets, the "Closing
Date
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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 or the Alternative Merger, as applicable, 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 New Fund 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 2.6(a).
(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 New Fund 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 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 or Alternative Merger consideration for all purposes of
this Agreement.
Section 7.17 Brokers.
-------
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Opgroup shall pay, or cause 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 or Alternative Merger, including
but not limited to that owed to Goldman, Sachs & Co.
Section 7.18 Omitted.
-------
Section 7.19 The CIBC Agreement.
------------------
(a) Opgroup shall use commercially reasonable efforts to complete the
Opgroup Restructuring, and shall not consent to the termination of the CIBC
Agreement without the consent of PIMCO Advisors.
(b) Opgroup will not allow the CIBC Agreement to be amended in any
manner adverse to PIMCO Advisors, TAG or PAI without the prior written consent
of PIMCO Advisors to such amendment, which consent shall not unreasonably be
withheld. Opgroup shall provide PIMCO Advisors with a copy of any proposed
amendment or modification to the CIBC Agreement as soon as practicable.
Section 7.20 Omitted.
-------
Section 7.21 Execution of Certain Documents.
------------------------------
Immediately prior to the Closing:
(a) PIMCO Advisors, Value Advisors, Opgroup, Opfin and New Fund
Advisors shall execute and deliver a contribution agreement substantially in the
form of Annex F (the "Contribution Agreement"), with such changes therein as
shall not change the obligations of the parties to effect, immediately following
the Closing, the contribution of assets to PIMCO Advisors and Value Advisors as
described in Section 1 of the Contribution Agreement or the issuance by PIMCO
Advisors of Class A Units to Opfin and New Fund Advisors as described in Section
2 of the Contribution Agreement;
(b) If the Merger is effected, PA Holdings and Opco LP shall execute
and deliver a registration rights agreement substantially in the form of Annex
G-1 (the "Registration Rights Agreement"); or if the Alternative Merger is
effected, PAI and Opco LP shall execute and deliver the registration rights
agreement described in Annex G-2;
(c) PIMCO Advisors and the other parties thereto shall execute and
deliver keepwell agreements (the "Keepwell Agreements") substantially in the
form of Annexes H-1, H-2 and H-3;
(d) PIMCO Advisors shall execute and deliver a purchase agreement
substantially in the form of Annex I (the "PIMCO Advisors Purchase Agreement");
and
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(e) Unless the Surviving Corporation shall have offered a cash
election to the Opgroup Shareholders pursuant to Section 2.7, covering the total
number of shares of New Convertible Preferred Stock to be issued pursuant to
Section 2.2(d)(i) or 2.4(b)(i), as applicable, the Surviving Corporation shall
execute and deliver a purchase agreement substantially in the form of Annex J
(the "Surviving Corporation Purchase Agreement").
Section 7.22 Adoption of Plans of Liquidation.
--------------------------------
Each of Holdings, Opco and Advantage Advisers shall, prior to the
closing of the CIBC Transaction, adopt and have in effect a plan of liquidation
pursuant to Section 332 of the Code. Not less than ten Business Days before the
adoption of any such plan, Opgroup shall provide a copy of the proposed plan to
PIMCO Advisors, and such plan shall not be adopted if PIMCO Advisors reasonably
objects to the form or substance of the plan prior to its adoption.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions to TAG's and PAI's Obligations.
-----------------------------------------
The obligations of TAG or PAI, as applicable, and PIMCO Advisors to
effect the Closing shall be subject to the following conditions, any of which
may be waived in writing by PIMCO Advisors:
(a) The representations and warranties of Opgroup and the Trusts
contained in this Agreement shall be true and correct when made and at and as of
the Closing Date, with the same effect as though made on and as of the Closing
Date (except for representations and warranties made as of a specific date,
which shall be true and correct as of such date), except for changes or
inaccuracies therein that do not individually or in the aggregate reflect an
Opgroup Material Adverse Effect.
(b) Opgroup and Opfin shall 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;
(c) Opgroup shall have delivered to TAG or PAI, as applicable, a
certificate, dated the Closing Date, signed on its behalf by its Chief Executive
Officer and Chief Financial Officer confirming the satisfaction of the
conditions contained in Sections 8.1(a) and 8.1(b);
(d) TAG or PAI, as applicable, and PIMCO Advisors shall have received
the opinion of counsel to Opgroup and Opfin, dated the Closing Date,
substantially in the form of Annex K;
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(e) TAG or PAI, as applicable, and PIMCO Advisors shall have received
an opinion of Latham & Watkins, counsel to TAG, PAI and PIMCO Advisors, to the
effect that the merger of TAG into PA Holdings qualifies as a reorganization
pursuant to Section 368(a) of the Code or that the merger of PAIT into Opgroup
qualifies as an exchange pursuant to Section 351 of the Code, as applicable, and
which may rely on customary representations from TAG, PAI, PIMCO Advisors,
Opgroup and Opfin;
(f) Each of the approvals set forth in Section 7.2(a) shall have been
obtained, all of the conditions described in Section 7.2(b) shall 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) shall have been obtained;
(g) Since October 31, 1996, no event shall have occurred which shall
have had or could reasonably be expected to have, individually or in the
aggregate with any other event occurring after such date, an Opgroup Material
Adverse Effect; and
(h) Effective as of the Closing:
(i) Each of Alan H. Rappaport, Mark C. Biderman and Robert I.
Kleinberg shall have 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 shall have been elected to the board, such
replacement selected by PIMCO Advisors to have 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 Municipal Advantage
Fund Inc., Municipal Partners Fund Inc. and Municipal Partners Fund II Inc.
shall have approved, the Board of Directors of each other Identified Fund shall
have unanimously approved, and a majority of the outstanding voting securities
(as defined in the Investment Company Act) of each Identified Fund shall have
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 to be substantially in the form of the current agreement
between the Identified Fund and a current Opcap Affiliate and, in the case of
the New Fund Advisors Funds, to have an initial term of two years;
(iii) The Board of Directors of each SBAM Fund shall have
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
shall have 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 shall have elected those persons designated by PIMCO Advisors to
hold such titles as officers of the Identified Fund as may be determined by
PIMCO Advisors;
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(iv) The board of directors of The Czech Republic Fund, Inc.
shall have unanimously approved an administration agreement with Opcap which is
substantially in the form of the current agreement between such fund and
Oppenheimer & Co., Inc.; and
(v) Joseph M. La Motta shall have resigned from the Board of
Directors of each Identified Fund as may be requested by PIMCO Advisors in its
sole discretion except that such request must be joined by Opco in the case of
OCC Cash Reserves, Inc.
Section 8.2 Conditions to Opgroup's and Opfin's Obligations.
-----------------------------------------------
The obligation of Opgroup and Opfin to effect the Closing shall be
subject to the following conditions, any of which may be waived in writing by
Opgroup:
(a) The representations and warranties of TAG, PAI and PIMCO Advisors
contained in this Agreement shall be true and correct when made and at and as of
the Closing Date, with the same effect as though made on and as of the Closing
Date (except for representations and warranties made as of a specific date,
which shall be true and correct as of such date), except for changes or
inaccuracies therein that do not individually or in the aggregate reflect a
PIMCO Advisors Material Adverse Effect;
(b) TAG, PAI and PIMCO Advisors shall 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;
(c) TAG, PAI and PIMCO Advisors shall each have delivered to Opgroup a
separate certificate, dated the Closing Date, signed on its behalf by its Chief
Executive Officer and Chief Financial Officer confirming the satisfaction of the
conditions contained in Sections 8.2(a) and 8.2(b) insofar as such conditions
pertain to it;
(d) Opgroup shall have received the opinion of counsel to TAG, PAI and
PIMCO Advisors, dated the Closing Date, substantially in the form of Annex L;
(e) Opgroup shall have received an opinion of Weil, Gotshal & Manges
LLP, counsel to Opgroup and Opfin, to the effect that to the effect that the
merger of TAG into PA Holdings qualifies as a reorganization pursuant to Section
368(a) of the Code or that the merger of PAIT into Opgroup qualifies as an
exchange pursuant to Section 351 of the Code, as applicable, and which may rely
on customary representations from TAG, PAI, PIMCO Advisors, Opgroup and Opfin;
(f) Pursuant to the Contribution Agreement, PIMCO Advisors shall,
concurrently with the contribution to Value Advisors by Opfin and New Fund
Advisors of the Interests and the management contracts for the New Fund Advisors
Funds, have issued and delivered to Opfin and New Fund Advisors the number of
Class A Units specified therein.
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(g) Since September 30, 1996, no event shall have occurred which had
or could reasonably be expected to have, individually or in the aggregate with
any other event occurring after such date, a PIMCO Advisors Material Adverse
Effect; and
(h) Effective as of the Closing, no more than 25% of the members of
the Board of Directors of any Opgroup Public Investment Company Client (other
than those listed on Schedule 1.1(b)) shall be "interested persons" (as defined
in the Investment Company Act) of PIMCO Advisors or its Affiliates or Opgroup or
its Affiliates for purposes of Section 15(f)(1)(A) of the Investment Company Act
(as it may be modified by any exemptive order referred to in Section 7.2(b) of
this Agreement);
Section 8.3 Mutual Conditions.
-----------------
The obligations of each party to this Agreement to effect the Closing
shall be subject to the following conditions, any of which may be waived in
writing by both Opgroup and TAG:
(a) The CIBC Transaction shall have closed at least one day before the
Closing Date;
(b) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this Agreement shall be in
effect. No proceeding initiated by any Governmental Authority seeking an
injunction shall be pending. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Authority which prohibits, restricts or makes illegal consummation
of the transactions contemplated hereby;
(c) All regulatory approvals required to consummate the transactions
contemplated hereby shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof shall have expired;
(d) In respect of the notifications of the parties hereto pursuant to
the HSR Act, the applicable waiting period and any extensions thereof shall have
expired or terminated;
(e) Effective as of the Closing, the Board of Directors or trustees,
as applicable, and shareholders of each Opgroup Public Investment Company Client
shall 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 7.2(a);
(f) The stockholders of TAG shall have given their written consent to
the Merger, the transactions contemplated by this Agreement and the
Incorporation Restructuring; and
(g) PIMCO Partners shall have obtained all necessary consents of the
lenders to PIMCO Partners to the Merger and the Alternative Merger and the
transactions contemplated hereby.
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ARTICLE IX
ACTIONS SUBSEQUENT TO THE MERGER
Section 9.1 Formation of New PIMCO Advisors Investment Management
-----------------------------------------------------
Subsidiary.
- ----------
In connection with the Closing, the Surviving Corporation will,
pursuant to the Contribution Agreement, cause Opfin to contribute the Interests
and Opfin shall cause New Fund Advisors to contribute the management contracts
for the New Fund Advisors Funds, to a newly formed partnership or limited
liability company wholly-owned by PIMCO Advisors ("Value Advisors").
Section 9.2 Incorporation Restructuring.
---------------------------
Unless the tax status of PIMCO Advisors as a publicly traded
partnership is indefinitely extended, PIMCO Advisors and TAG shall, no later
than December 31, 1997, effect the Incorporation Restructuring described in
Annex E (the "Incorporation Restructuring"), on the terms described in Annex E
or on such other terms as will not adversely affect the holders of the PAI
Series A Convertible Preferred Stock or the receipt of the PAI Series A
Convertible Preferred Stock by the Opgroup Shareholders on a tax-free basis.
Until the earlier of (i) the extension of PIMCO Advisors' tax status as a
publicly traded partnership and (ii) completion of the Incorporation
Restructuring, PIMCO Advisors will submit to Opgroup (i) regular reports
concerning the current status of the timing and form of the Incorporation
Restructuring and (ii) not later than 45 days after the end of each fiscal
quarter of PIMCO Advisors and TAG, the financial statements of PIMCO Advisors
and TAG. PIMCO Advisors will promptly notify Opgroup of any events or changes
material to the Incorporation Restructuring; provided, however, that no such
notification shall relieve PIMCO Advisors and TAG from their respective
obligations, if any, to effect the Incorporation Restructuring.
Section 9.3 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 New Fund Advisors, to act as
consultants to New Fund Advisors with respect to the New Fund Advisors Funds
and/or attend Board meetings of the New Fund Advisors Funds.
Section 9.4 Omitted.
-------
Section 9.5 Omitted.
-------
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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 any of them may suffer or incur, to
the extent arising from:
(i) any breach or default in performance by TAG, PAI or PIMCO
Advisors of any covenant or agreement of TAG, PAI or PIMCO Advisors contained in
this Agreement; or
(ii) any breach of any representation or warranty made by TAG, PAI or
PIMCO Advisors in this Agreement, or any certificate or instrument delivered by
or on behalf of TAG, PAI or PIMCO Advisors 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 give Opgroup or Opfin the right
not to effect the Closing, and Opgroup elects to waive the same and effect the
Closing.
Section 10.2 Indemnification by Opgroup, Opfin and the Indemnity Trust.
---------------------------------------------------------
(a) Subject to the limitations and conditions set forth in this
Article X, (i) prior to the Closing, Opgroup and Opfin, jointly and severally
and, (ii) after the Closing, the Indemnity Trust, shall indemnify and hold
harmless, to the fullest extent permitted by law, TAG, PAI and PIMCO Advisors
and, after the Closing Date, the Surviving Corporation and PIMCO Advisors, 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:
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(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
(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; and (iii) 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 TAG, PAI or 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 give TAG,
PAI or PIMCO Advisors the right not to effect the Closing, and PIMCO Advisors
elects to waive the same and effect the Closing.
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
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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 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, 5.13 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:
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(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 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) The Indemnity Trust shall have the option of paying for an
Indemnified Claim in cash or shares of New Convertible Preferred Stock (i)
valued at its liquidation preference at the time of payment unless the common
stock into which the New Convertible Preferred Stock is convertible is publicly
traded, or (ii) if such common stock is publicly traded, valued at the
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Current Market Price of the shares of common stock into which the New
Convertible Preferred Stock is convertible.
(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 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). For purposes of indemnification under Section 10.2, PIMCO Advisors
shall be deemed to suffer the Losses with respect to any of the Interests or
management contracts for the New Fund Advisors Funds which are contributed to it
by Opfin or New Fund Advisors.
(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), 4(c) 7, 8 and 9 of the Tax
Indemnity Agreement.
ARTICLE XI
TERMINATION AND SURVIVAL
Section 11.1 Termination.
-----------
(a) This Agreement may be terminated on or prior to the Closing Date
as follows:
(i) By written consent of Opgroup and PIMCO Advisors;
(ii) By Opgroup if the consents described in Section 8.3(f) have
not been obtained prior to August 30, 1997, or if the consents described in
Section 8.3(g) have not been obtained prior to September 30, 1997;
(iii) By Opgroup if there shall have been a material breach by
PIMCO Advisors, TAG or PAI, or by PIMCO Advisors if there shall have been a
material breach by Opgroup, of any of their respective representations and
warranties set forth in this Agreement, which breach shall not have been cured
within 20 Business Days following receipt by the breaching party of written
notice of such breach from Opgroup or PIMCO Advisors, as the case
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may be, which breach would entitle the party receiving such representation or
warranty not to effect the Closing under Section 8.1(a) (in the case of a breach
of representation or warranty by Opgroup) or Section 8.2(a) (in the case of a
breach of representation or warranty by TAG, PAI or PIMCO Advisors);
(iv) By Opgroup if there shall have been a material breach by TAG, PAI
or PIMCO Advisors, or by PIMCO Advisors if there shall have been a material
breach by Opgroup or Opfin, of any of their respective covenants or agreements
set forth in this Agreement, which breach shall not have been cured within 20
Business Days following receipt by the breaching party of written notice of such
breach from Opgroup or PIMCO Advisors, as the case may be;
(v) By PIMCO Advisors if an event shall have occurred which shall
have had or could reasonably be expected to have, individually or in the
aggregate with any other event occurring after such date, an Opgroup Material
Adverse Effect;
(vi) By Opgroup if an event shall have occurred which shall have had
or could reasonably be expected to have, individually or in the aggregate with
any other event occurring after such date, a PIMCO Advisors Material Adverse
Effect;
(vii) By any party to this Agreement if the CIBC Agreement is
terminated.
Notwithstanding Section 11.1(a)(ii)-(vi), a party who is, or whose Affiliate
is, in material breach of any of its obligations or representations and
warranties hereunder shall not have the right to terminate this Agreement
pursuant to Section 11.1(a)(ii)-(vi).
(b) The termination of this Agreement shall be effectuated by the
delivery by the party terminating this Agreement to each other party of a
written notice of such termination. If this Agreement so terminates, it shall
become null and void and have no further force or effect, except as provided in
Section 11.2.
Section 11.2 Survival After Termination.
--------------------------
If this Agreement is terminated in accordance with Section 11.1 and
the transactions contemplated hereby are not consummated, this Agreement shall
become void and of no further force and effect, except for the provisions of
Section 7.12 and Article X and the provisions of the Confidentiality Agreements
referred to in Section 7.9. Except as set forth in Section 11.3, none of the
parties hereto shall have any liability in the event of a termination of this
Agreement, except to the extent that such termination results from the violation
by such party of any of its obligations under this Agreement or any agreement
made as of February 13, 1997 or subsequent thereto pursuant to this Agreement.
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Section 11.3 Termination Fee.
---------------
If this Agreement is terminated by PIMCO Advisors pursuant to Section
11.1(a)(iii) or 11.1(a) (iv) or by any party pursuant to Section 11.1(a)(vii),
then Opgroup shall pay to PIMCO Advisors cash in the amount of $4 million
promptly following such termination.
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 TAG, PAI or
PIMCO Advisors 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
TAG, PAI or PIMCO Advisors or their respective Affiliates or of any successor
corporation or partnership, 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 and any officer or director of
TAG or PAI 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.
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Section 12.2 No Right of Set Off.
-------------------
(a) Each of TAG, PAI and PIMCO Advisors 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 Opgroup or Opfin (prior to the Closing) or any Trust or
Trustee (on or after the Closing) under this Agreement or any Related Agreement
against any amounts payable by it to Opgroup, Opfin, any Trust or any Trustee
(including but not limited to payments with respect to the New Convertible
Preferred Stock).
(b) Opgroup agrees for itself, and its Subsidiaries, successors and
assigns, and shall cause the Trustees, on behalf of the Trusts to agree, that
they (prior to the Closing) and the Trusts (on or after the Closing) shall have
no right to set off any amounts that may be owed by TAG, PAI, PIMCO Advisors or
the Surviving Corporation under this Agreement or any Related Agreement against
any amounts payable to TAG, PAI, PIMCO Advisors 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 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
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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 Opgroup or Opfin (before the Closing):
Oppenheimer Financial Corp.
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
If to the Indemnity Trust (after the Closing):
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
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<PAGE>
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
If to TAG, PAI 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 party hereto.
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<PAGE>
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.
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.
Section 12.11 Waiver of Jury Trial and Punitive Damages.
-----------------------------------------
AFTER THE CLOSING DATE, THE PARTIES TO THIS AGREEMENT AGREE TO WAIVE ANY
RIGHT TO A JURY TRIAL AS TO ALL DISPUTES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed as of the date first above written.
OPPENHEIMER GROUP, INC. PIMCO ADVISORS L.P.
By: /s/ Roger W. Einiger By: /s/ Kenneth M. Poovey
----------------------------- -----------------------------------
Name: Roger W. Einiger Name: Kenneth M. Poovey
--------------------------- ---------------------------------
Title: Executive Vice President Title: Executive Vice President
-------------------------- --------------------------------
OPPENHEIMER FINANCIAL CORP. THOMSON ADVISORY GROUP INC.
By: /s/ Roger W. Einiger By: /s/ Kenneth M. Poovey
----------------------------- -----------------------------------
Name: Roger W. Einiger Name: Kenneth M. Poovey
--------------------------- ---------------------------------
Title: Executive Vice President Title: Executive Vice President
-------------------------- --------------------------------
THE INDEMNITY TRUST PIMCO ADVISORS INC.
By: /s/ Nathan Gantcher By: /s/ Kenneth M. Poovey
-------------------------- ------------------------------------
Nathan Gantcher
Name: Kenneth M. Poovey
By: /s/ Stephen Robert ----------------------------------
--------------------------
Stephen Robert Title: President
Its Managing Trustees ---------------------------------
THE SELLER TRUST PAI TRANSITORY CORP.
By: /s/ Nathan Gantcher By: /s/ Kenneth M. Poovey
--------------------------- ------------------------------------
Nathan Gantcher
Name: Kenneth M. Poovey
By: /s/ Stephen Robert ----------------------------------
---------------------------
Stephen Robert Title: President
Its Managing Trustees ---------------------------------
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EXHIBIT 99.1
Agreement to Furnish Exhibits and Schedules
The Registrant agrees to furnish to the Commission upon request copies of all
exhibits and schedules to the Amended and Restated Agreement and Plan of Merger
dated as of July 22, 1997 by and among Oppenheimer Group, Inc., Oppenheimer
Financial Corp., the Seller Trust under Declaration of Trust dated July 22,
1997, the Indemnity Trust under Declaration of Trust dated July 22, 1997, PIMCO
Advisors L.P., PIMCO Advisors Inc., PAI Transitory Corp. and Thomson Advisory
Group Inc.
PIMCO Advisors L.P.
By: /s/ ROBERT FITZGERALD
---------------------------
Robert Fitzgerald
Chief Financial Officer
<PAGE>
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
For more information:
For PIMCO Advisors:
Mike Walker, Dave Sanson
714-361-7520
For Oppenheimer Group:
John Ryan
212-667-5059
PIMCO ADVISORS L.P. AND OPPENHEIMER GROUP REPORT
NEW TERMS IN AGREEMENT FOR PIMCO ADVISORS
TO ACQUIRE ONE-THIRD INTEREST IN OPPENHEIMER CAPITAL
NEWPORT BEACH, CA (July 22, 1997) -- PIMCO Advisors L.P. (NYSE: PA) and
Oppenheimer Group Inc. today reported that they have reached agreement on a
modification of the previously announced acquisition by PIMCO Advisors and its
affiliate, Thomson Advisory Group Inc. (TAG Inc.), of the managing general
partnership interest in Oppenheimer Capital, the general partnership interest in
Oppenheimer Capital L.P. (NYSE: OCC), and 100 percent of the stock of Advantage
Advisers, an Oppenheimer Group affiliate which manages eight closed-end funds.
The companies said that under the amendments the purchase price to be paid by
TAG Inc. will be $262 million, compared with $265 million previously announced.
In addition, all of the acquired interests will be contributed to PIMCO Advisors
L.P. by TAG Inc. in exchange for $262 million of new Class A PIMCO Advisors
limited partner units, compared with the previously announced contribution of
only the general partnership interest in Oppenheimer Capital for $233 million of
Class A limited partner units. The companies said the transaction structure will
no longer require an IRS ruling and the closing is now contingent upon the sale
of Oppenheimer & Co., a brokerage firm which is owned by an Oppenheimer Group
Inc. affiliate, to CIBC Wood Gundy Securities Corp.
Oppenheimer Capital is one of the nation's leading investment management firms,
with more than $50 billion in assets under management. It is well known for its
value-based investment disciplines, primarily in equity management, serving a
broad range of institutional clients, including public and private funds,
jointly trusteed funds, endowments, foundations, and individuals. Oppenheimer
Capital is headquartered in New York, NY.
PIMCO Advisors is a leading investment management organization with more than
$119 billion in assets under management. Its six affiliated investment
management firms are widely recognized for providing consistent performance and
high quality service for many of the nation's corporate and public pension
funds, endowments and foundations. Its affiliated mutual fund complex provides
institutional-quality investment management to individual investors and
institutions. The partnership is headquartered in Newport Beach, CA.
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