(File Nos. 33-49570 and 811-6742)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(3)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
MONARCH FUNDS
(Name of Registrant as Specified in its Charter)
BOARD OF TRUSTEES OF REGISTRANT
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
____________________
2) Form, Schedule or Registration Statement No.:
____________________
3) Filing Party:
____________________
4) Date Filed:
____________________
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M O N A R C H F U N D S
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Treasury Cash Fund
Government Cash Fund
Cash Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 12, 1997
Dear Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of Treasury Cash
Fund, Government Cash Fund and Cash Fund (each a "Fund" and collectively the
"Funds"), the three series of Monarch Funds (the "Trust"), will be held at the
offices of Forum Financial Services, Inc., the Trust's manager and distributor,
at Two Portland Square, Portland, Maine 04101, on Friday, December 12, 1997 at
2:00 p.m. Eastern time, for the following purpose:
1. To authorize the Trust, on behalf of the Funds, to vote at a
meeting of Core Trust (Delaware) to approve a new Investment
Advisory Agreement between Core Trust (Delaware) and Forum
Investment Advisors, LLC; and
2. To transact such other business as may properly come
before the meeting.
The Proposal is discussed more fully in the attached Proxy Statement.
You are entitled to vote at the meeting and any adjournment thereof if you owned
shares of any of the Funds at the close of business on November 3, 1997. If you
do not expect to attend the meeting, please complete, date, sign and return the
enclosed proxy card(s) in the enclosed postage paid envelope.
By order of the Board of Trustees,
David I. Goldstein
Vice President and Secretary
Portland, Maine
November 12, 1997
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YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE. IN
ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WE URGE YOU
TO INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD(S), DATE AND
SIGN IT, AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
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<PAGE>
M O N A R C H F U N D S
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Treasury Cash Fund
Government Cash Fund
Cash Fund
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 12, 1997
INTRODUCTORY MATTERS
This is a proxy statement for Monarch Funds (the "Trust"), a registered open-end
management investment company that currently has three series of shares
outstanding: Treasury Cash Fund, Government Cash Fund and Cash Fund (each a
"Fund" and collectively the "Funds"). This proxy statement is being furnished to
the shareholders of the Funds in connection with the Board of Trustees' (the
"Board") solicitation of proxies to be used at a special meeting of shareholders
of the Funds to be held on December 12, 1997 or any adjournment(s) thereof (the
"Meeting"). This proxy statement will first be mailed to shareholders on or
about November 12, 1997.
The record date to determine shareholders eligible to vote at the meeting is
November 3, 1997. Shareholders of the Funds on the record date (hereafter
"Shareholders") will be entitled to one vote for each share held on that date.
One third of the shares of a Fund outstanding on the record date, represented in
person or by proxy, must be present to form a quorum for the transaction of
business at the Meeting for that Fund. In the event that a quorum for a Fund is
present at the meeting but sufficient votes to approve the proposal for that
Fund are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of those shares of
the Fund represented at the Meeting in person or by proxy. If a quorum is
present, the persons named as proxies will vote those proxies that they are
entitled to vote for any such proposal for such adjournment and will vote those
proxies required to be voted against any such proposal against such adjournment.
A shareholder vote may be taken on any proposal in this proxy statement prior to
adjournment if sufficient votes have been received and it is otherwise
appropriate.
The persons named as proxies on the enclosed proxy card(s) will vote in
accordance with your direction as indicated thereon if your proxy card is
received properly executed. If you give no voting instructions, your shares will
be voted in favor of the proposal described in this proxy statement. The proxy
card may be revoked by giving another proxy, by letter or telegram revoking your
proxy received by the Trust prior to the meeting, or by appearing and voting at
the meeting.
Abstentions and broker non-votes will be counted as shares present for
determining whether a quorum is present but will not be counted for or against
any adjournment. Accordingly, abstentions and broker non-votes effectively will
be a vote against adjournment. Abstentions and broker non-votes will also not be
counted as votes cast for the purpose of determining whether sufficient votes
have been received to approve a proposal. Broker non-votes are shares held by a
broker or nominee as to which instructions have not been received from the
beneficial owners or persons entitled to vote and the broker or nominee does not
have discretionary voting power.
The solicitation of proxies, the cost of which will be borne by Forum Financial
Services, Inc. ("Forum"), the Trust's manager and distributor, will be made
primarily by mail but also may include telephone or oral communications by
regular employees of Forum or its affiliates. These persons will not receive any
compensation from the Trust for their solicitation efforts. The Trust will
furnish to each person to whom the Proxy Statement is delivered, a copy of the
Trust's latest annual report to
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shareholders upon request without charge. Requests may be directed by phone to
shareholder services at (800) 754-8757 or in writing, in care of the Trust, at
Two Portland Square, Portland, Maine 04101.
MASTER-FEEDER ARRANGEMENTS
Under a structure commonly referred to as "master-feeder," each of Treasury Cash
Fund, Government Cash Fund and Cash Fund invests all of its investable assets in
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio (each a
"Portfolio" and collectively the "Portfolios"), respectively. These three
portfolios are separate series of Core Trust (Delaware) ("Core Trust"), itself a
registered open-end management investment company. Each Portfolio directly
acquires securities and its corresponding Fund (as well as other investors in
the Portfolio) acquires an indirect interest in those securities. Under this
structure, investment advisory services are rendered to the Portfolios and not
the Funds, but shareholders of the Funds are afforded the same rights to vote on
the investment advisory agreement of the Portfolios as they would have if the
Funds invested directly in portfolio securities.
Under the master-feeder structure, on behalf of each Fund as an interestholder
in the applicable Portfolio, at the meeting of interestholders of the Portfolio
the Board will vote the Fund's interest in the same proportion as Shareholders
cast their votes at the Meeting. For example, as of November 3 Cash Fund owned [
]% of the outstanding interests in Cash Portfolio (Daily Assets Cash Fund, a
separate series of Forum Funds, a registered open-end management investment
company, owned the other [ ]% in Cash Portfolio). If, at the Meeting, 60% of the
votes cast by Cash Fund Shareholders are for Proposal 1, the Board will vote 60%
of Cash Fund's interest in Cash Portfolio for the investment advisory agreement
amendment. As of November [ ], Treasury Cash Fund and Government Cash Fund owned
substantially all of the outstanding interests of Treasury Cash Portfolio and
Government Cash Portfolio, respectively. There can be no assurance that a
majority of each Fund's shareholders will be able to determine the outcome of
the vote by interestholders of each Portfolio on the Proposal.
PROPOSAL 1 - APPROVAL OF INVESTMENT ADVISORY AGREEMENT
Linden Asset Management, Inc. ("Linden"), current investment adviser to the
Portfolios, plans to enter into a purchase and sale agreement (the "Purchase and
Sale Agreement") with Forum Advisors, Inc. ("Forum Advisors"), current
investment subadviser to the Portfolios, under which Form Advisors will acquire
Linden (the "Acquisition"). Management of Forum Advisors anticipates that Forum
Advisors will reorganize into a limited liability company, Forum Investment
Advisors, LLC ("Forum Investment Advisors") prior to the closing of the
Acquisition, which is currently planned for January 2, 1998. The Acquisition
will result in the automatic termination of the current investment advisory
agreement between Linden and Core Trust (the "Current Advisory Agreement").
Accordingly, as a result of the anticipated termination of the Current Advisory
Agreement, the Board is proposing for shareholder approval a new investment
advisory agreement between Core Trust and Forum Investment Advisors with respect
to each Portfolio (the "New Advisory Agreement") that would become effective
upon termination of the Current Advisory Agreement. The Acquisition is
contingent upon approval of the New Advisory Agreement by the interestholders of
all three Portfolios.
In order for the New Advisory Agreement to be approved, a "majority of the
interests in a Portfolio" must approve the agreement. For this purpose, a
"majority of the interests in a Portfolio" requires the affirmative vote of the
lesser of (i) more than 50% of the outstanding interests of the Portfolio or
(ii) 67% of the interests of the Portfolio present or represented at an
interestholders meeting at which the holders of more than 50% of the outstanding
interests of the Portfolio are present or represented. The Portfolios and, to
the best of the Trust's knowledge, all other investment company interestholders
in the Portfolios, will have a shareholders meeting on or about the same date as
the Meeting.
In addition, the current investment advisory agreement between Forum Advisors
and Core Trust, under which Forum Advisors provides investment advisory services
to each Portfolio at the request of Linden (the "Current Subadvisory
Agreement"), will also terminate automatically upon approval of the New Advisory
Agreement.
CURRENT ADVISORY AGREEMENT
Under the Current Advisory Agreement, Linden, subject to the control of the
Board of Trustees of Core Trust (the "Core Board"), manages the Portfolios'
investments. In this regard, it is the responsibility of Linden to continuously
provide the
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Portfolios with investment management, including investment research, advice and
supervision, to determine which securities shall be purchased or sold by the
Portfolios, and to make purchases and sales of securities on behalf of the
Portfolios. The Portfolios are currently the only advisory accounts of Linden.
The Current Advisory Agreement was initially approved by the Core Board on
August 30, 1995. The Current Advisory Agreement was last submitted to
interestholders for approval on December 27, 1996 and the current Advisory
Agreement is dated January 1, 1997. The Current Advisory Agreement with respect
to the Portfolios continues in effect for successive twelve-month periods with
respect to a Portfolio; provided that the continuance is specifically approved
at least annually (i) by the Core Board or by vote of a majority of the
outstanding voting interests of a Portfolio, and in either case, (ii) by a
majority of Core Trust's trustees who are not parties to the Current Advisory
Agreement or interested persons of any such party (other than as trustees of
Core Trust). If the continuation of the Current Advisory Agreement is not
approved as to a Portfolio, Linden may continue to render services described in
the Current Advisory Agreement to the other Portfolios. Continuance of the
Current Advisory Agreement in its present form was most recently approved by the
Core Board at a meeting held on September 22, 1997. The Current Advisory
Agreements is terminable without penalty (i) by the Core Board or by a vote of a
majority of the outstanding voting securities of a Portfolio on 60 days' written
notice to Linden or (ii) by Linden on 60 days' written notice to Core Trust. The
Current Advisory Agreement will automatically terminate in the event of its
assignment.
On September 1, 1995 each Fund converted to a master-feeder structure by
contributing all of its assets to its respective Portfolio. Linden provided
investment advisory services to each Fund prior to that date.
Prior to January 1, 1997, Linden received from each Portfolio and advisory fee
for its services based on the total assets of the Portfolios combined (the
"Total Portfolio Assets") as follows: 0.05% of the first $200 million of Total
Portfolio Assets, 0.03% of the next $300 million of Total Portfolio Assets, and
0.02% of the remaining Total Portfolio Assets. Since January 1, 1997, Linden has
received from each Portfolio an advisory fee for its services based on Total
Portfolio Assets as follows: 0.06% of the first $200 million of Total Portfolio
Assets, 0.04% of the next $300 million of Total Portfolio Assets, and 0.03% of
the remaining Total Portfolio Assets. All advisory fees are paid to Linden
monthly. The advisory fees paid to Linden for the Portfolio's fiscal year ended
August 31, 1997 were: Treasury Cash Portfolio; $19,083; Government Cash
Portfolio; $196,857; and Cash Portfolio; $72,872.
TERMS OF LINDEN ACQUISITION
Linden is wholly owned by Anthony R. Fischer, Jr., its president and sole
director. Linden's and Mr. Fischer's principal business address is 812 North
Linden Drive, Beverly Hills, California 90210. Under the Purchase and Sale
Agreement, Forum Advisors would pay to Mr. Fischer a purchase price of $750,000
for all of Linden's stock. A copy of the proposed Purchase and Sale Agreement is
attached hereto as Exhibit A. Under the Purchase and Sale Agreement, Forum
Investment Advisors intends to enter into an agreement (the "Consulting
Agreement") with a new company solely owned by Mr. Fischer under which Mr.
Fischer will continue to provide portfolio management services to the
Portfolios, under the supervision of Forum Investment Advisors, for five years
from the Acquisition closing date, which is currently scheduled for January 2,
1998.
NEW INVESTMENT ADVISORY AGREEMENT
Under the proposed New Advisory Agreement, Forum Investment Advisors, subject to
the control of the Board of Trustees of Core Trust (the "Core Board"), will
manage the Portfolios' investments. In this regard, it will be the
responsibility of Forum Investment Advisors to continuously provide the
Portfolios with investment management, including investment research, advice and
supervision, to determine which securities shall be purchased or sold by the
Portfolios, and to make purchases and sales of securities on behalf of the
Portfolios. Forum Advisors currently advises (and it is anticipated that Forum
Investment Advisors will advise effective as of January 2, 1998) five other
mutual funds, including another money market fund. As described above, Mr.
Fischer will continue to provide portfolio management services to the Portfolios
under the proposed Consulting Agreement.
Like the Current Advisory Agreement, the New Advisory Agreement with respect to
the Portfolios will continue in effect for successive twelve-month periods with
respect to a Portfolio; provided that the continuance is specifically approved
at least
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annually (i) by the Core Board or by vote of a majority of the outstanding
voting interests of a Portfolio, and in either case, (ii) by a majority of Core
Trust's trustees who are not parties to the New Advisory Agreement or interested
persons of any such party (other than as trustees of Core Trust). If the
continuation of the New Advisory Agreement is not approved as to a Portfolio,
Forum Investment Advisors may continue to render services described in the New
Advisory Agreement to the other Portfolios. The New Advisory Agreement will be
terminable without penalty (i) by the Core Board or by a vote of a majority of
the outstanding voting securities of a Portfolio on 60 days' written notice to
Linden or (ii) by Linden on 60 days' written notice to Core Trust. The New
Advisory Agreement will automatically terminate in the event of its assignment.
Under the New Advisory Agreement, Forum Investment Advisors would receive from
each Portfolio an advisory fee equal to that under the Current Advisory
Agreement. No fee change is proposed in the New Advisory Agreement, a copy of
which is attached hereto as Exhibit B.
FORUM INVESTMENT ADVISORS AND ITS AFFILIATES
As described above, management of Forum Advisors anticipates that Forum Advisors
will reorganize into a Delaware limited liability company, Forum Investment
Advisors, prior to the closing of the Acquisition, which is currently planned
for January 2, 1998. It is also anticipated that Forum Investment Advisors,
Forum, Forum Financial Corp., the Trust's transfer agent, as well as several
other of their affiliated entities, will become subsidiaries of Forum Financial
Group, LLC ("Forum Financial Group"), a Maine limited liability company which
will be owned solely by John Y. Keffer, Chairman and President of the Trust. The
principal business address of Forum Investment Advisors as well as its parent
company, Forum Financial Group, will be Two Portland Square, Portland, Maine
04101. At some future time, Forum Investment Advisors, Forum, Forum Financial
Corp., as well as several other of their affiliated entities, may become
subsidiaries of an intermediary company to be owned solely by Forum Financial
Group. If so, appropriate approval will be sought at that time.
Forum serves as the principal underwriter of each Fund, the manager of the Trust
and administrator of the Portfolios. Forum and its affiliates currently has over
$[ ] billion in assets under administration, which includes the assets of the
Trust and various other clients. Forum Financial Corp. currently provides both
fund accounting and transfer agency services to over [ ] clients. As described
above, Forum Advisors currently provides portfolio management services to five
mutual funds including one money market fund.
John Y. Keffer, Chairman and President of the Trust, and David I. Goldstein,
Vice President and Secretary of the Trust, are the only executive officers of
the Trust. Mr. Keffer is the president and director of Forum, Forum Advisors and
Forum Financial Corp. Mr. Goldstein is a Managing Director and General Counsel
of Forum. Messrs. Keffer and Goldstein also serve other investment companies,
including Core Trust, in capacities similar to those they hold with the Trust.
Their address is Two Portland Square, Portland, Maine 04101. For a further
description of the services provided by and compensation paid to any of these
persons, shareholders should refer to the Funds' prospectuses.
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COMPARATIVE FEE TABLE (UNIVERSAL SHARES)
The following table shows, for the Funds' fiscal year ended August 31, 1997, the
operating expenses of the Funds (Universal Shares) and the pro forma operating
expenses of the Funds assuming the proposed New Advisory Agreement had been in
effect throughout the year. Because the Funds' management voluntarily capped
each Fund's expense ratio at the amount set forth on the "Total Operating
Expenses" line, the increase in advisory fees would have had no effect on the
Funds' total operating expenses. The purpose of the table and example that
follows is to assist investors in understanding the various costs and expenses
of investing in Universal Shares of the Funds (as of the date hereof, no
Universal Shares of Treasury Cash Fund were outstanding).
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)(1)
<TABLE>
Government
Cash Fund CASH FUND
ACTUAL PRO FORMA ACTUAL PRO FORMA
<S> <C> <C> <C> <C>
Management Fees(2) (after fee waivers) 0.09% [ ]% 0.08% [ ]%
Other Expenses (after reimbursements) 0.06% [ ]% 0.15% [ ]%
----- -------- ----- --------
Total Operating Expenses 0.17% [ ]% 0.23% [ ]%
</TABLE>
(1) All information is net of applicable waivers and reimbursements and
includes the Fund's pro rata portion of the expenses of its corresponding
Portfolio. Absent expense reimbursements and fee waivers, the actual and
pro forma expenses of (i) Government Cash Fund would be: Management Fees;
0.14% (actual) and [ ]% (pro forma); Other Expenses; 0.12% (actual) and [
]% (pro forma); and Total Operating Expenses, 0.26% (actual) and [ ]% (pro
forma); and (ii) Cash Fund would be: Management Fees; 0.14% (actual) and [
]% (pro forma); Other Expenses; 0.32% (actual) and [ ]% (pro forma); and
Total Operating Expenses, 0.46% (actual) and [ ]% (pro forma).
(2) Includes all advisory, management and administration fees.
EXAMPLE
The following illustrates the expenses an investor would pay on a $1,000
investment in Universal Shares under the existing and proposed fees and the
expenses stated above, assuming a five percent annual return, reinvestment of
all distributions and redemption at the end of each time period:
<TABLE>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Actual and Pro Forma
Government Cash Fund $[ ] $[ ] $[ ] $[ ]
Cash Fund $[ ] $[ ] $[ ] $[ ]
</TABLE>
THE FIVE PERCENT ANNUAL RETURN IS NOT PREDICTIVE OF AND DOES NOT REPRESENT THE
FUND'S PROJECTED RETURNS; RATHER IT IS REQUIRED BY GOVERNMENT REGULATION. THE
EXAMPLE SHOULD NOT BE CONSIDERED A PRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
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COMPARATIVE FEE TABLE (INSTITUTIONAL SHARES)
The following table shows, for the Funds' fiscal year ended August 31, 1997, the
operating expenses of the Funds (Institutional Shares) and the pro forma
operating expenses of the Funds assuming the proposed amendments to the Advisory
Agreement had been in effect throughout the year. Because the Funds' management
voluntarily capped the expense ratio for Cash Fund and Treasury Cash Fund at the
amount set forth on the "Total Operating Expenses" line, the increase in
advisory fees would have had no effect on those Funds' total operating expenses.
The purpose of the table and example that follows is to assist investors in
understanding the various costs and expenses of investing in Institutional
Shares of the Funds.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)(1)
<TABLE>
Treasury Government
CASH FUND CASH FUND CASH FUND
ACTUAL PRO FORMA ACTUAL PRO FORMA ACTUAL PRO FORMA
<S> <C> <C> <C> <C> <C> <C>
Management Fees(2) (after fee waivers) 0.06% [ ]% 0.14% [ ]% 0.13% [ ]%
Other Expenses (after reimbursements) 0.39% [ ]% 0.43% [ ]% 0.44% [ ]%
----- -------- ----- -------- ----- --------
Total Operating Expenses 0.45% [ ]% 0.57% [ ]% 0.57% [ ]%
</TABLE>
(1) All information is net of applicable waivers and reimbursements and
includes the Fund's pro rata portion of the expenses of its corresponding
Portfolio. Absent expense reimbursements and fee waivers, the actual and
pro forma expenses of (i) Treasury Cash Fund would be: Management Fees;
0.14% (actual) and [ ]% (pro forma); Other Expenses; 0.53% (actual) and [
]% (pro forma); and Total Operating Expenses, 0.67% (actual) and [ ]% (pro
forma); (ii) Government Cash Fund would be: Management Fees; 0.14% (actual)
and [ ]% (pro forma); Other Expenses; 0.43% (actual) and [ ]% (pro forma);
and Total Operating Expenses, 0.57% (actual) and [ ]% (pro forma); and (i)
Cash Fund would be: Management Fees; 0.14% (actual) and [ ]% (pro forma);
Other Expenses; 0.46% (actual) and [ ]% (pro forma); and Total Operating
Expenses, 0.60% (actual) and [ ]% (pro forma).
(2) Includes all advisory, management and administration fees.
EXAMPLE
The following illustrates the expenses an investor would pay on a $1,000
investment in Institutional Shares under the existing and proposed fees and the
expenses stated above, assuming a five percent annual return, reinvestment of
all distributions and redemption at the end of each time period:
<TABLE>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Actual and Pro Forma
Treasury Cash Fund $[ ] $[ ] $[ ] $[ ]
Government Cash Fund $[ ] $[ ] $[ ] $[ ]
Cash Fund $[ ] $[ ] $[ ] $[ ]
</TABLE>
THE FIVE PERCENT ANNUAL RETURN IS NOT PREDICTIVE OF AND DOES NOT REPRESENT THE
FUND'S PROJECTED RETURNS; RATHER IT IS REQUIRED BY GOVERNMENT REGULATION. THE
EXAMPLE SHOULD NOT BE CONSIDERED A PRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
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<PAGE>
COMPARATIVE FEE TABLE (INVESTOR SHARES)
The following table shows, for the Funds' fiscal year ended August 31, 1997, the
operating expenses of the Funds (Investor Shares) and the pro forma operating
expenses of the Funds assuming the proposed amendments to the Advisory Agreement
had been in effect throughout the year. Because the Funds' management
voluntarily capped each Fund's expense ratio at the amount set forth on the
"Total Operating Expenses" line, the increase in advisory fees would have had no
effect on the Funds' total operating expenses. The purpose of the table and
example that follows is to assist investors in understanding the various costs
and expenses of investing in Investor Shares of the Funds (as of the date
hereof, no Investor Shares of Government Cash Fund were outstanding).
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)(1)
<TABLE>
Treasury
CASH FUND CASH FUND
ACTUAL PRO FORMA ACTUAL PRO FORMA
<S> <C> <C> <C> <C>
Management Fees(2) (after fee waivers) 0.06% [ ]% 0.13% [ ]%
Rule 12b-1 Fees None None None None
Other Expenses (after reimbursements) 0.77% [ ]% 0.69% [ ]%
----- ------- ------ -------
Total Operating Expenses 0.83% [ ]% 0.82% [ ]%
</TABLE>
(1) All information is net of applicable waivers and reimbursements and
includes the Fund's pro rata portion of the expenses of its corresponding
Portfolio. Absent expense reimbursements and fee waivers, the actual and
pro forma expenses of (i) Treasury Cash Fund would be: Management Fees;
0.14% (actual) and [ ]% (pro forma); Other Expenses; 0.83% (actual) and [
]% (pro forma); and Total Operating Expenses, 0.97% (actual) and [ ]% (pro
forma); and (ii) Cash Fund would be: Management Fees; 0.14% (actual) and [
]% (pro forma); Other Expenses; 0.71% (actual) and [ ]% (pro forma); and
Total Operating Expenses, 0.85% (actual) and [ ]% (pro forma).
(2) Includes all advisory, management and administration fees.
EXAMPLE
The following illustrates the expenses an investor would pay on a $1,000
investment in Investor Shares under the existing and proposed fees and the
expenses stated above, assuming a five percent annual return, reinvestment of
all distributions and redemption at the end of each time period:
<TABLE>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Actual and Pro Forma
Treasury Cash Fund $[ ] $[ ] $[ ] $[ ]
Cash Fund $[ ] $[ ] $[ ] $[ ]
</TABLE>
THE FIVE PERCENT ANNUAL RETURN IS NOT PREDICTIVE OF AND DOES NOT REPRESENT THE
FUND'S PROJECTED RETURNS; RATHER IT IS REQUIRED BY GOVERNMENT REGULATION. THE
EXAMPLE SHOULD NOT BE CONSIDERED A PRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
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<PAGE>
FACTORS CONSIDERED BY THE BOARDS OF TRUSTEES
At a meeting held on September 22, 1997, the Core Board considered various
matters in determining the reasonableness and fairness of the proposed New
Advisory Agreement with Forum Investment Advisors. At a meeting held September
20, 1997, and through additional information provided to the Board thereafter in
connection with the Board's execution of a unanimous consent, the Board reviewed
the same information in determining to submit this proposal to Shareholders.
In reaching their decisions, the Core Board and the Board (collectively, the
"Boards") examined and weighed certain factors, including:
* NATURE AND QUALITY OF SERVICES. The Boards considered the nature and
quality of services rendered and the results achieved by Linden in its
management of the Portfolios. The Boards also considered that Mr. Fischer
would continue to provide portfolio management services to the Portfolios
under the supervision of Forum Investment Advisors after the Acquisition.
Also considered were the various services Forum and its affiliates
currently provide to the Trust, including distribution, administration,
fund accounting and transfer agency services.
* ORGANIZATIONAL CAPABILITIES AND FINANCIAL CONDITION OF FORUM INVESTMENT
ADVISORS. The Boards considered the organizational capabilities as well as
the financial condition of Forum Investment Advisors relative to Linden.
* ADVISORY FEES AND EXPENSES. The Boards considered the current advisory fee
rate as well as the fact that there is no proposed advisory fee increase
and, therefore, no impact on the Portfolios' fee rates and annual expenses
(which include the advisory fee and all other operating expenses incurred
by the Portfolios). For information concerning the Portfolios' expense
ratios on both an existing and pro forma basis, see "Comparative Fee Table"
above.
* COMPARISONS WITH OTHER FUNDS. The Boards considered the advisory fees paid
by other funds with similar investment objectives. The Boards also compared
the proposed operating expense ratios of the Portfolios with the ratios of
those other investment companies.
* PORTFOLIO PERFORMANCE. The Boards considered the performance of the
Portfolios as compared to the performance of securities indices and
performance of other funds having comparable investment objectives and
policies. The Boards took into account the historical investment results of
the Portfolios and, prior to their conversion to a master-feeder structure,
the Funds.
After full consideration of the matter, the Core Board and the Board recommended
that the New Advisory Agreement be approved and that it be submitted to all
interestholders of the Portfolios, including the Funds.
If approved by the interestholders of the Portfolios, the proposed New Advisory
Agreement will become effective on January 2, 1998, and the New Advisory
Agreement will continue from year to year thereafter if approved in the same
manner as the Current Advisory Agreement. If the New Advisory Agreement is not
approved by interestholders of all three Portfolios, the Current Advisory
Agreement will continue in effect in its present form.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
PROPOSAL ONE
OTHER BUSINESS
Management knows of no other business to be presented at the Meeting. If any
additional matters should be properly presented, it is intended that the
enclosed proxy will be voted on such matters in accordance with the judgment of
the persons designated in the proxy.
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ADDITIONAL INFORMATION
CERTAIN INFORMATION CONCERNING SHARE OWNERSHIP
As of November 3 (the record date), there were [ ] shares of the Trust
outstanding as follows: Treasury Cash Fund, [ ] shares; Government Cash Fund,
[ ] shares; and Cash Fund, [ ] shares. Also as of November 3, the Trust believed
the following persons beneficially owned five percent or more of the total
outstanding shares of each Fund or the Trust. Management is not aware of any
other person who owns of record or beneficially five percent or more of the
shares of the Trust.
Number of Percent of
SHARES FUND SHARES
TREASURY CASH FUND
GOVERNMENT CASH FUND
CASH FUND
As of November 3, the Trustees and officers of the Trust, in the aggregate,
owned less than one percent of the shares of the Trust. As of November 3, the
following Trustees owned shares of the Trust: Maurice J. DeWald, [ ] shares;
Rudolph I. Estrada, [ ] shares; Robert M. Franko, [ ] shares; John Y. Keffer, [
] shares; Jack J. Singer, [ ] shares. Also as of November [ ], no officer of the
Trust owned any Trust shares.
SUBMISSION OF SHAREHOLDER PROPOSALS
Following the Meeting, it is anticipated that neither the Trust nor any of the
Funds will hold any shareholder meetings except as required by Federal or
Delaware state law. Shareholders wishing to submit proposals, including
proposals to nominate persons for election as trustees, for inclusion in a proxy
statement for a subsequent shareholder meeting should send proposals to the
Secretary of the Trust, David I. Goldstein, in care of Forum Administrative
Services, LLC.
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<PAGE>
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES
Banks, broker-dealers and voting trustees and their nominees should advise the
Vice President and Secretary of the Trust, David I. Goldstein, in care of Forum
Administrative Services, LLC, whether, with respect to shares of record held by
them, other persons are beneficial owners of shares for which proxies are being
solicited and if so, the number of copies of the Proxy Statement needed in order
to supply copies to the beneficial owners of the shares.
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY
November 12, 1997 By order of the Board of Trustees,
David I. Goldstein
Vice President and Secretary
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<PAGE>
EXHIBIT A
PURCHASE AND SALE AGREEMENT
STOCK PURCHASE AGREEMENT
AMONG
LINDEN ASSET MANAGEMENT, INC.,
ANTHONY R. FISCHER
AND
FORUM ADVISORS, INC.
DATED AS OF NOVEMBER [ ], 1997
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TABLE OF CONTENTS
PAGE
ARTICLE I..................................................................5
DEFINITIONS................................................................5
1.01. Definitions......................................................5
ARTICLE II.................................................................7
PURCHASE AND SALE..........................................................7
2.01. Purchase and Sale................................................7
2.02. Closing..........................................................7
2.03. Closing Balance Sheet............................................8
2.04. Adjustment of Purchase Price.....................................9
ARTICLE III................................................................9
REPRESENTATIONS AND WARRANTIES OF SELLER...................................9
3.01. Corporate Existence and Power....................................9
3.02. Corporate Authorization..........................................9
3.03. Governmental Authorization; Consents.............................9
3.04. Non-Contravention...............................................10
3.05. Capitalization..................................................10
3.06. Subsidiaries....................................................10
3.07. Financial Statements............................................10
3.08. Absence of Certain Changes......................................11
3.09. Property and Equipment..........................................12
3.10. No Undisclosed Material Liabilities.............................12
3.11. Litigation......................................................12
3.12. Material Contracts..............................................12
3.13. Insurance Coverage..............................................13
3.14. Compliance with Laws; No Defaults...............................13
3.15. Finders, Fees...................................................14
3.16. Intellectual Property...........................................14
3.17. Inventories.....................................................14
3.18. Receivables.....................................................15
3.19. Taxes...........................................................15
3.20. Employees.......................................................15
3.21. Products........................................................15
3.22. Environmental Compliance........................................15
3.23. Customers and Suppliers.........................................17
3.24. Transactions with Affiliates....................................17
3.25. Other Information...............................................17
3.26. Intercompany Arrangements.......................................17
3.27. Representations.................................................17
ARTICLE IV................................................................18
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLER.......................18
4.01. Title to and Validity of Shares.................................18
4.02. Authority.......................................................18
4.03. Power To Act as Trustee or Executor.............................18
ARTICLE V.................................................................18
REPRESENTATIONS AND WARRANTIES OF BUYER...................................18
5.01. Organization and Existence......................................18
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5.02. Corporate Authorization.........................................18
5.03. Governmental Authorization......................................18
5.04. Non-Contravention...............................................19
5.05. Finders' Fees...................................................19
5.06. Financing.......................................................19
5.07. Purchase for Investment.........................................19
5.08. Litigation......................................................19
ARTICLE VI................................................................19
COVENANTS OF THE COMPANY AND SELLER.......................................19
6.01. Conduct of the Company..........................................19
6.02. Access to Information...........................................20
6.03. Notices of Certain Events.......................................20
6.04. Resignations....................................................20
6.05. Noncompetition..................................................20
6.06. No Negotiations with Third Parties..............................21
6.07. Confidentiality.................................................21
6.08. Continuing Disclosure...........................................21
ARTICLE VII...............................................................22
COVENANTS OF BUYER........................................................22
7.01. Confidentiality.................................................22
7.02. Access..........................................................22
ARTICLE VIII..............................................................22
COVENANTS OF ALL PARTIES..................................................22
8.01. Best Efforts....................................................22
8.02. Certain Filings.................................................22
8.03. Public Announcements............................................23
ARTICLE IX................................................................23
EMPLOYEE BENEFITS [60]....................................................23
9.01. Employee Benefits Definitions...................................23
9.02. ERISA Representations...........................................23
9.03. No Third Party Beneficiaries....................................24
ARTICLE X.................................................................25
CONDITIONS TO CLOSING.....................................................25
10.01. Conditions to the Obligations of Each Party....................25
10.02. Conditions to Obligation of Buyer..............................25
10.03. Conditions to Obligation of Seller.............................26
ARTICLE XI................................................................27
SURVIVAL; INDEMNIFICATION.................................................27
11.01. Survival.......................................................27
11.02. Indemnification................................................27
11.03. Procedures; [No Waiver]; [; Exclusivity].......................28
ARTICLE XII...............................................................28
TERMINATION...............................................................28
12.01. Grounds for Termination........................................28
12.02. Effect of Termination..........................................28
ARTICLE XIII..............................................................29
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SELLER' COMMITTEE.........................................................29
13.01. Appointment of Seller' Committee...............................29
13.02. Limitation on Actions..........................................30
13.03. Indemnification................................................30
ARTICLE XIV...............................................................31
MISCELLANEOUS.............................................................31
14.01. Notices........................................................31
14.02. Amendments; No Waivers.........................................31
14.03. Expenses.......................................................32
14.04. Successors and Assigns.........................................32
14.05. Further Assurances.............................................32
14.06. Governing Law..................................................32
14.07. Counterparts; Effectiveness....................................32
14.08. Entire Agreement...............................................32
14.09. Captions.......................................................32
14.10. Jurisdiction...................................................32
SCHEDULES
Schedule 2.01 List of Stockholders
Schedule 3.03 Required Consents
Schedule 3.07 Financial Statements
Schedule 3.08 Certain Changes
Schedule 3.10 Liabilities
Schedule 3.12 Material Contracts
Schedule 3.14 Permits
Schedule 3.16 Intellectual Property
Schedule 3.20 Employees
Schedule 3.22 Environmental Matters
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STOCK PURCHASE AGREEMENT
AGREEMENT dated as of November __1997 among Anthony R. Fischer, Jr.,
("Seller"); and Forum Advisors, Inc., a Delaware corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, Buyer desires to purchase from Seller all of the outstanding
shares of capital stock of the Company (the "Shares"); and
WHEREAS, Seller desires to sell to Buyer all of the Shares owned by Seller;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01. DEFINITIONS (a) The following terms, as used herein, have the following
---------- meanings:
"AFFILIATE" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under common
control with such Person.
"ANCILLARY AGREEMENTS" means the Sub-Advisory Agreement by and
between [Buyer] and ____________ in the form attached hereto is
Exhibit A.
"BALANCE SHEET" means the consolidated [Company's designation of
balance sheet] of the Company and its consolidated subsidiaries as of
[date of most recent audited balance sheet] referred to in Section
3.07.
"BALANCE SHEET DATE" means [date of most recent audited balance
sheet].
"BASE STOCKHOLDER'S EQUITY" means $__________.
"CLOSING BALANCE SHEET" means a consolidated balance sheet of the
Company and its consolidated subsidiaries as at the close of business
on the Closing Date, together with the notes thereto.
"CLOSING DATE" means the date of the Closing.
"COMMON STOCK" means the common stock, $_____ par value, of the
Company.
"CLOSING STOCKHOLDER'S EQUITY" means the consolidated
stockholder's equity of the Company and its consolidated subsidiaries
as of the close of business on the Closing Date determined in
accordance with generally accepted accounting principles and practices
applied on the basis to be used in the preparation of the Closing
Balance Sheet (i) less, to the extent reflected in the Closing Balance
Sheet, all amounts due to Seller under Article VIII; (ii) plus, to the
extent reflected in the Closing Balance Sheet, (x) all liabilities for
which Buyer is indemnified under Article VIII, (y) the amount of any
Taxes which would not have arisen but for any election under Section
338 of the Code or any successor provision, made, or caused or deemed
to be made, by Buyer (or any Affiliate thereof) and (z) any provision
for deferred income taxes; and (iii) excluding the effect (including
the Tax effect) of any act or transaction on the Closing Date after
the Closing not in the ordinary course of business of the Company.
"FINAL STOCKHOLDER'S EQUITY" means Closing Stockholder's Equity
(i) as shown in Buyer's calculation delivered pursuant to Section
2.03(a) if no notice of disagreement with respect thereto is duly
delivered pursuant to Section 2.03(b) or (ii) if such a notice of
disagreement is duly delivered, (A) as agreed by the parties pursuant
to
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<PAGE>
Section 2.03(c) or (B) in the absence of such agreement, as shown in
the independent accountant's calculation delivered pursuant to Section
2.03(c); PROVIDED that Final Stockholder's Equity shall not in any
event be less than Buyer's calculation of Closing Stockholder's Equity
delivered pursuant to Section 2.03(a) nor more than Seller's
calculation of Closing Stockholder's Equity delivered pursuant to
Section 2.03(b).
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"INTELLECTUAL PROPERTY RIGHT" means any trademark, service mark,
registration thereof or application for registration therefor, trade
name, invention, patent, patent application, trade secret, know-how,
copyright, copyright registration, application for copyright
registration, or any other similar type of proprietary intellectual
property right, in each case which is owned or licensed by Seller or
any Affiliate of Seller and used or held for use by the Company or any
Subsidiary.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, restriction or encumbrance of any
kind in respect of such asset.
"MATERIAL ADVERSE CHANGE" means a material adverse change in the
business, assets, condition (financial or otherwise), results of
operations or [prospects][6] of the Company and the Subsidiaries taken
as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets, condition (financial or otherwise), results or
operations or (prospects] of the Company and the Subsidiaries taken as
whole.
"1934 ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"PERSON" means an individual, corporation, partnership,
association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"PROPRIETARY RIGHTS" means all (A) patents, patent applications,
patent disclosures and all related continuation, continuation-in-part,
divisional, reissue, re-examination, utility, model, certificate of
invention and design patents, patent applications, registrations and
applications for registrations, (B) trademarks, service marks, trade
dress, logos, tradenames, service names and corporate names and
registrations and applications for registration thereof, (C)
copyrights and registrations and applications for registration
thereof, (D) mask works and registrations and applications for
registration thereof, (E) computer software, data and documentation,
(F) trade secrets and confidential business information, whether
patentable or nonpatentable and whether or not reduced to practice,
know-how, manufacturing and product processes and techniques, research
and development information, copyrightable works, financial, marketing
and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information, (G)
other proprietary rights relating to any of the foregoing (including
without limitation associated goodwill and remedies against
infringements thereof and rights of protection of an interest therein
under the laws of all jurisdictions) and (H) copies and tangible
embodiments thereof.
"SELLER' COUNSEL" means the law firm of _______________, [CITY,
STATE].
"SUBSIDIARY" means any entity of which securities or other
ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar
functions are owned directly or indirectly by the Company.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
Benefit Arrangement 9.01
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Closing 2.02
Code 3.19
Company Securities 3.05
Damages 11.02
Employee Plans 9.01
ERISA 9.01
ERISA Affiliate 9.01
Federal Taxes 8.01
Final Determination 8.01
Financial Statements
Hazardous Substance 3.20
Indemnified Party 11.02
Indemnifying Party 11.02
Indemnities 13.01
Loss 8.10
Multiemployer Plan 9.01
Purchase Price 2.01
Release 3.20
Subsidiary Securities 3.06
Permit 3.14
PBGC 9.01
Seller' Committee 13.01
ARTICLE II
PURCHASE AND SALE
2.01. PURCHASE AND SALE. Upon the terms and subject to the conditions of
this Agreement, Seller shall sell to Buyer, and Buyer shall purchase from each
such Seller, at the Closing, that number of Shares as is set forth opposite such
Seller's name on Schedule 2.01. The purchase price per Share is $______ in cash
and _______ shares of Buyer Stock, or $_________ in cash and _______ shares of
Buyer Stock in the aggregate (the "Purchase Price"). The Purchase Price shall be
paid as provided in Section 2.02.[7]
2.02. CLOSING. The closing (the "Closing") of the purchase and sale of the
Shares hereunder shall take place at the offices of __________ in __________ as
soon as possible, but in no event later than 10 business days after satisfaction
of the conditions set forth in Article X, or at such other time or place as
Buyer and Seller's may agree.[8] At the Closing,
(a) Buyer shall deliver to Seller $________ by wire transfer to an
escrow or similar account maintained by Seller' Counsel, such account to be
designated by the Company by written notice to Buyer not later than two business
days prior to the Closing Date.
(b) Buyer shall deliver to the Escrow Agent $750,000, by certified
or official bank check or by wire transfer, to be held by the Escrow Agent in
accordance with the Escrow Agreement.
(c) Buyer shall deliver to Seller certificates for the Buyer
Stock, registered in the names of Seller for the number of shares shown in
SCHEDULE 2.01.
(d) Seller shall deliver to Buyer certificates for the Shares duly
endorsed or accompanied by stock powers duly endorsed in blank, with any
required transfer stamps affixed thereto.
(e) The appropriate parties shall enter into the Ancillary
Agreements.
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<PAGE>
(f) The Company and Seller shall deliver to Buyer revised
schedules to this Agreement updating the information shown thereon to the
Closing Date.
(g) The parties shall execute and deliver any other instruments,
documents and certificates that are required to be delivered pursuant to this
Agreement or as may be reasonably requested by any party in order to consummate
the transactions contemplated by this Agreement.
2.03. CLOSING BLANCE SHEET. (a) As promptly as practicable after the
Closing Date, Buyer will cause the Closing Balance Sheet to be prepared, will
cause [specify independent accountant] to conduct an audit for the purpose of
rendering its unqualified report on the Closing Balance Sheet and will prepare a
certificate based on such Closing Balance Sheet setting forth its calculation of
Closing Stockholder's Equity. As promptly as practicable, but no later than [901
days, after the Closing Date, Buyer will cause the Closing Balance Sheet
together with its certificate and the report of [specify independent accountant]
thereon, to be delivered to Seller. The Closing Balance Sheet shall (x) fairly
present the consolidated financial position of the Company and its consolidated
subsidiaries as at the close of business on the Closing Date in accordance with
generally accepted accounting principles applied on a basis consistent with
those used in the preparation of the Balance Sheet, (y) include line items
substantially consistent with those in the Balance Sheet, and (z) be prepared in
accordance with accounting policies and practices consistent with those used in
the preparation of the Balance Sheet.
(b) If Seller disagrees with Buyer's calculation of Closing
Stockholder's Equity delivered pursuant to Section 2.03(a), Seller may, within
(20] days after delivery of the documents referred to in Section 2.03(a),
deliver a notice to Buyer disagreeing with such calculation and setting forth
Seller's calculation of such amount. Any such notice of disagreement shall
specify those items or amounts as to which Seller disagrees, and Seller shall be
deemed to have agreed with all other items and amounts contained in the Closing
Balance Sheet and the calculation of Closing Stockholder's Equity delivered
pursuant to Section 2.03(a).
(c) If a notice of disagreement shall be duly delivered pursuant
to Section 2.03(b), the parties shall, during the (151 days following such
delivery, use their best efforts to reach agreement on the disputed items or
amounts in order to determine, as may be required, the amount of Closing
Stockholder's Equity, which amount shall not be less than the amount thereof
shown in Buyer's calculations delivered pursuant to Section 2.03(a) nor more
than the amount thereof shown in Seller's calculation delivered pursuant to
Section 2.03(c). If, during such period, the parties are unable to reach such
agreement, they shall promptly thereafter cause or other independent accountants
of nationally recognized standing reasonably satisfactory to Seller and Buyer
(who shall not have any material relationship with Seller or Buyer), promptly to
review this Agreement and the disputed items or amounts for the purpose of
calculating Closing Stockholder's Equity. In making such calculation, such
independent accountants shall consider only those items or amounts in the
Closing Balance Sheet or Buyer's calculation of Closing Stockholder's Equity as
to which Seller has disagreed. Such independent accountants shall deliver to
Seller and Buyer, as promptly as practicable, a report setting forth such
calculation. Such report shall be final and binding upon the parties hereto. The
cost of such review and report shall be borne (i) by Buyer if the difference
between Final Stockholder's Equity and Closing Stockholder's Equity as set forth
in Buyer's calculation of Closing Stockholder's Equity delivered pursuant to
Section 2.03(a) is greater than the difference between Final Stockholder's
Equity and Closing Stockholder's Equity as set forth in Seller's calculation of
Closing Stockholder's Equity delivered pursuant to Section 2.03(b), (ii) by
Seller if the first such difference is less than the second such difference and
(iii) otherwise equally by Seller and Buyer.[13]
(d) The parties hereto agree that they will, and agree to cause
their respective independent accountants and the Company to, cooperate and
assist in the preparation of the Closing Balance Sheet and the calculation of
Closing Stockholder's Equity and in the conduct of the audits and reviews
referred to in this Section 2.03, including without limitation the making
available to the extent necessary of books, records, work papers and personnel.
2.04. ADJUSTMENT OF PURCHASE PRICE. (a) If Base Stockholder's Equity
exceeds Final Stockholder's Equity [by at least $__________], Seller shall pay
to Buyer, as an adjustment to the Purchase Price, in the manner and with
interest as provided in Section 2.04(b), the amount of such excess [by at least
$__________]. If Final Stockholder's
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Equity exceeds Base Stockholder's Equity [by at least $__________], Buyer shall
pay to Seller, in the manner and with interest as provided in Section 2.04(b),
the amount of such excess. Any such payment pursuant to this Section 2.04(a)
shall be made at a mutually convenient time and place (i) within 30 days after
Buyer's delivery of the documents referred to in Section 2.03(a) if no notice of
disagreement with respect to Closing Stockholder's Equity is duly delivered
pursuant to Section 2.03(b) or (ii) if a notice of disagreement with respect to
Closing Stockholder's Equity is duly delivered pursuant to Section 2.03(b) then
within 10 days after the earlier of (A) agreement between the parties pursuant
to Section 2.03(c) with respect to Closing Stockholder's Equity and (B) delivery
of the calculation of Closing Stockholder's Equity referred to in Section
2.03(c).
(b) METHOD OF PAYMENT. Any payments pursuant to this Section 2.04
shall be made by delivery by Buyer, or Seller, as the case may be, of a
certified or official bank check payable in immediately available funds to
Seller or Buyer, as the case may be, or by causing such payments to be credited
to such account of Buyer or Seller, as the case may be, as may be designated by
Buyer or Seller, as the case may be. The amount of any payment to be made
pursuant to this Section 2.04 shall bear interest from and including the Closing
Date to but excluding the date of payment at a rate per annum equal to the (rate
publicly announced from time to time by __________ in New York City as its prime
rate] in effect from time to time during the period from the Closing Date to the
date of payment. Such interest shall be payable at the same time as the payment
to which it relates and shall be calculated daily on the basis of a year of 365
days and the actual number of days for which due.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND SELLER
The Company and each Seller hereby jointly and severally represent and
warrant to Buyer as of the date hereof and as of the Closing Date that:[14]
3.01. CORPORATE EXISTENCE AND POWER. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
make such qualification necessary, except for those jurisdictions where failure
to be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. The Company has heretofore delivered to Buyer true and complete
copies of the corporate charter and bylaws of the Company as currently in
effect.
3.02. CORPORATE AUTHORIZATION. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby are within the Company corporate powers and [,
except for any required approval by Seller's stockholders[15],] have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement constitutes a valid and binding agreement of the Company.
3.03. GOVERNMENTAL AUTHORIZATION; CONSENTS. (a) The execution, delivery and
performance by the Company and Seller of this Agreement require no action by or
in respect of, or filing with, any governmental body, agency, official or
authority other than (i) compliance with any applicable requirements of the HSR
Act; [(ii) compliance with any applicable requirements of the 1934 Act]; and
(iii) specify any other applicable regulatory approvals including any applicable
environmental protection clearances.[16]
(b) No consent, approval, waiver or other action by any Person
(other than any governmental body, agency, official or authority referred to in
(a) above) under any contract, agreement, indenture, lease, instrument or other
document to which the Company or any Subsidiary is a party or by which any of
them is bound is required or necessary for the execution, delivery and
performance of this Agreement by the Company or the consummation of the
transactions contemplated hereby.
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3.04. NON-CONTRAVENTION. The execution, delivery and performance by the
Company of this Agreement and the consummation of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the corporate charter
or bylaws of the Company, (ii) assuming compliance with the matters referred to
in Section 3.03(a), contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to the Company or any Subsidiary; (iii) constitute a default
under or give rise to any right of termination, cancellation or acceleration of
any right or obligation of the Company or any Subsidiary or to a loss of any
benefit to which the Company or any Subsidiary is entitled under any provision
of any agreement, contract or other instrument binding upon the Company or any
Subsidiary or any permit held by the Company or any Subsidiary or (iv) assuming
the receipt of all required consents result in the creation or imposition of any
Lien on any asset of the Company or any Subsidiary.
3.05. CAPITALIZATION. The authorized capital stock of the Company consists
of [insert number of authorized shares and designations of each authorized class
of capital stock of the Company]. As of the date hereof, there were outstanding
[insert number of outstanding shares of each class of capital stock of the
Company] and employee stock options to purchase an aggregate of [insert number]
shares of Common Stock (of which options to purchase an aggregate of [insert
number] shares were exercisable). [Insert information concerning any outstanding
convertible securities and any other outstanding options or rights to acquire
capital stock, or other equity securities. All outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and are owned by Seller as shown on SCHEDULE 2.01. Except as set forth in
this Section, there are no outstanding (i) shares of capital stock, other
securities or phantom or other equity interests of the Company, (ii) securities
of the Company convertible into or exchangeable for shares of capital stock or
other securities of the Company or (iii) options or other rights to acquire from
the Company any capital stock, other securities or phantom or other equity
interests of the Company (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "Company Securities"). There are no outstanding
obligations of the Company or any Subsidiary, actual or contingent, to issue or
deliver or to repurchase, redeem or otherwise acquire any Company Securities.
3.06. SUBSIDIARIES. If no Subsidiaries: The Company dues not have and never
has had any Subsidiaries or any ownership or equity interest in or control of
(direct or indirect) any other person.
3.07. FINANCIAL STATEMENTS.[18] The Company has previously furnished Buyer
with a true and complete copy of (i) the consolidated balance sheets of the
Company as of __________ and __________ and the statements of operations, cash
flows and changes in stockholders' equity of the Company for the respective
fiscal years then ended, as audited by __________, and (ii) the unaudited
consolidated statements of income, cash flows and changes in stockholders'
equity of the Company for the interim periods ended __________ and __________
(collectively, the "FINANCIAL STATEMENTS" which are attached hereto as SCHEDULE
3.07). Each of the consolidated balance sheets included in the Financial
Statements fairly presents in all material respects the consolidated financial
position of the Company as of its date, and the other statements included in the
Financial Statements fairly present in all material respects the consolidated
results of operations, cash flows and stockholders' equity, as the case may be,
of the Company for the periods therein set forth, in each case in accordance
with generally accepted accounting principles consistently applied during the
periods involved except as otherwise stated therein and, with respect to the
unaudited interim financial statements, for the omission of footnote disclosures
and, to the extent consistent with generally accepted accounting principles, for
normally recurring year-end audit adjustments.
3.08. ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date, the Company
and the Subsidiaries have conducted their businesses in the ordinary course
consistent with past practices and there has not been:
(a) any Material Adverse Change [or any event, occurrence,
development or state of circumstances or facts which could reasonably be
expected to result in a Material Adverse Change][19];
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any Company Securities or any repurchase,
redemption or other acquisition by the Company or any Subsidiary of any
outstanding shares of capital stock or other securities of, or other ownership
interests in, the Company or any Subsidiary;
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(c) any amendment of any outstanding security of the Company or
any Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money [other than in the ordinary
course of business and in amounts and on terms consistent with past
practices)[20];
(e) any creation or assumption by the Company or any Subsidiary of
any Lien on any asset;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in wholly-owned Subsidiaries made in the ordinary course of
business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
Subsidiary which, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any Subsidiary relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other right,
in either case, material to the Company and the Subsidiaries taken as a whole,
other than transactions and commitments in the ordinary course of business
consistent with past practices and those contemplated by this Agreement;
(i) any change in any method of accounting or accounting practice
by the Company or any Subsidiary,
(j) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary, (ii) entering
into of any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or employee
of the Company or any Subsidiary, (iii) change in benefits payable under
existing severance or termination pay policies or employment agreements or (iv)
change in compensation, bonus or other benefits payable to directors, officers
or employees of the Company or any Subsidiary [, other than in the ordinary
course of business consistent with past practice]; or
(k) any labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representation thereof to
organize any employees of the Company or any Subsidiary, which employees were
not subject to a collective bargaining agreement at the Balance Sheet Date, or
any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to any employees of the Company or any Subsidiary.
3.09. PROPERTY AND EQUIPMENT. (a) The Company and the Subsidiaries have
good and marketable title to, or in the case of leased property have valid
leasehold interests in, all [personal][21] property and assets (whether [real or
personal,] tangible or intangible) reflected on the Balance Sheet or acquired
after the Balance Sheet Date [, except for properties and assets sold since the
Balance Sheet Date in the ordinary course of business consistent with past
practices]. None of such properties or assets is subject to any Liens, except:
(i) Liens disclosed on the Balance Sheet;
(ii) Liens for taxes not yet due or being contested in good
faith (and for which adequate accruals or reserves have been established
on the Balance Sheet); or
(iii) Liens which do not materially detract from the value
of such property or assets as now used, or materially interfere with any
present or intended use of such property or assets.
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(b) There are no developments affecting any of such properties or
assets pending or, to the knowledge of Seller threatened, which might materially
detract from the value of such property assets, materially interfere with any
present or intended use of any such property or assets or materially adversely
affect the marketability of such properties or assets.
(c) The equipment owned by the Company and the Subsidiaries has no
material defects, is in good operating condition and repair (ordinary wear and
tear excepted), and is substantially adequate for the uses to which it is being
put.
(d) The assets owned or leased by the Company, or which it
otherwise has the right to use, constitute all of the assets held for use or
used in connection with the business of the Company and the Subsidiaries and are
generally adequate to conduct such business as currently conducted.
3.10. NO UNDISCLOSED MATERIAL LIABILITIES.[22] Except as set forth in
SCHEDULE 3.10, there are no liabilities of the Company or any Subsidiary of any
kind whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, and there is no existing condition, situation or set of
circumstances which could reasonably be expected to result in such a liability,
other than:
(i) liabilities disclosed or provided for in the Balance Sheet;
and
(ii) liabilities incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date, which in the
aggregate are not material to the Company and the Subsidiaries, taken as a
whole.
3.11. LITIGATION. There is no action, suit, investigation or proceeding (or
any basis therefor) pending against, or to the knowledge of Seller threatened
against or affecting, the Company or any Subsidiary or any of their respective
properties or the transactions contemplated hereby before any court or
arbitrator or any governmental body, agency, official or authority.
3.12. MATERIAL CONTRACTS. (a) Except for agreements, contracts, plans,
leases, arrangements or commitments disclosed in SCHEDULE 3.12 or any other
schedule to this Agreement, neither the Company nor any Subsidiary is a party to
or subject to:
(i) any lease providing for annual rentals of [insert amount]
or more;
(ii) any contract for the purchase of materials, supplies, goods,
services, equipment or other assets providing for annual payments by the
Company or any Subsidiary of $[insert amount] or more;
(iii) any sales, distribution or other similar agreement providing
for the sale by the Company or any Subsidiary of materials, supplies,
goods, services, equipment or other assets providing for annual payments
to the Company or any Subsidiary of $[insert amount] or more;
(iv) any partnership, joint venture or other similar contract
arrangement or agreement;
(v) any contract relating to indebtedness for borrowed money or
the deferred purchase price of property (whether incurred, assumed,
guaranteed or secured by any asset), except contracts relating to
indebtedness incurred in the ordinary course of business in an amount not
exceeding $[insert amount];
(vi) any license agreement, franchise agreement or agreement in
respect of similar rights granted to or held by the Company or any
Subsidiary;
(vii) any agency, dealer, sales representative or other similar
agreement;
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(viii) any contract or other document that limits the freedom of the
Company or any Subsidiary to compete in any line of business or with any
Person or in any area or which would so limit the freedom of the Company
or any Subsidiary after the Closing Date; or
(ix) any other contract or commitment not made in the ordinary
course of business that is material to the Company and the Subsidiaries
taken as a whole.
(b) Each agreement, contract, plan, lease, arrangement and
commitment disclosed in any schedule to this Agreement or required to be
disclosed pursuant to Section 3.12(a) is a valid and binding agreement of the
Company or a Subsidiary and is in full force and effect, and neither the
Company, any Subsidiary nor, to the knowledge of the Company and Seller, any
other party thereto is in default in any material respect under the terms of any
such agreement, contract, plan, lease, arrangement or commitment.
3.13. INSURANCE COVERAGE. The Company has furnished to Buyer a list of, and
true and complete copies of, all insurance policies and fidelity bonds covering
the assets, business, equipment, properties, operations, employees, officers and
directors of the Company and the Subsidiaries. There is no claim by the Company
or any Subsidiary pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. All premiums payable under all such policies and bonds have
been paid and the Company and the Subsidiaries are otherwise in full compliance
with the terms and conditions of all such policies and bonds. Such policies of
insurance and bonds (or other policies and bonds providing substantially similar
insurance coverage) have been in effect since [insert date sufficiently long ago
to assure Buyer of adequate insurance coverage for period of most applicable
statutes of limitation (E.G., 3 to 5 years)] and remain in full force and
effect. Such policies of insurance and bonds are of the type and in amounts
customarily carried by Persons conducting businesses similar to those of the
Company and the Subsidiaries. Seller does not know of any threatened termination
of, or premium increase with respect to, any of such policies or bonds.
3.14. COMPLIANCE WITH LAWS; NO DEFAULTS. (a) Neither the Company nor any
Subsidiary is in violation of, or has since (date] violated, any applicable
provisions of any laws, statutes, ordinances or regulations [except for
violations that have not had and would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect].
(b) Schedule 3.14 correctly describes each license and permit (a
"Permit") material to the business of the Company, together with the name of the
governmental agency or entity issuing such license or permit. Such licenses and
permits are valid and in full force and effect and none of such licenses or
permits will be terminated or impaired or become terminable as a result of the
transactions contemplated hereby.
(c) Neither the Company nor any Subsidiary is in default under,
and no condition exists that with notice or lapse of time or both would
constitute a default under, (i) any mortgage, loan agreement, indenture or
evidence of indebtedness for borrowed money to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any material
amount of their assets is bound or (ii) any judgment, order or injunction of any
court, arbitrator or governmental body, agency, official or authority [which
defaults or potential defaults individually or in the aggregate would reasonably
be expected to have a Material Adverse Effect].
3.15. FINDERS FEES. Except for (specify], whose fees will be paid by
Seller, there is no investment banker, broker, finder" or other intermediary
which has been retained by or is authorized to act on behalf of Seller, the
Company or any Subsidiary who might be entitled to any fee or commission from
Buyer, the Company or any of their respective Affiliates upon consummation of
the transactions contemplated by this Agreement.
3.16. INTELLECTUAL PROPERTY.[23] (a) SCHEDULE 3.16 includes a list of all
Intellectual Property Rights specifying as to each, as applicable: (i) the
nature of such Intellectual Property Right; (ii) the owner of such Intellectual
Property Right; (iii) the jurisdictions by or in which such Intellectual
Property Right is recognized without regard to registration or has been issued
or registered or in which an application for such issuance or registration has
been filed, including the respective registration or application numbers; and
(iv) licenses, sublicenses and other agreements as to which the Company or any
of its Affiliates is a party and pursuant to which
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<PAGE>
any Person is authorized to use such intellectual Property Right, including the
identity of all parties thereto, a description of the nature and subject matter
thereof, the applicable royalty and the term thereof.
(b)(i) Neither the Company nor any Subsidiary during the three
years preceding the date of this Agreement has been sued or charged in writing
with or been a defendant in any claim, suit, action or proceeding relating to
its business that has not been finally terminated prior to the date hereof and
that involves a claim of infringement of any patents, trademarks, service marks
or copyrights, and (ii) the Company and Seller have no knowledge of any other
claim or infringement by the Company or any Subsidiary, and no knowledge of any
continuing infringement by any other Person of any Intellectual Property Rights.
No Intellectual Property Right is subject to any outstanding order, judgment,
decree, stipulation or agreement restricting the use thereof by the Company or
any Subsidiary or restricting the licensing thereof by the Company or any
Subsidiary to any Person. Neither the Company nor any Subsidiary has entered
into any agreement to indemnify any other Person against any charge of
infringement of any patent, trademark, service mark or copyright.
(c) None of the processes and formulae, research and development
results and other know-how of the Company or any Subsidiary, the value of which
to the Company or such Subsidiary is contingent upon maintenance of the
confidentiality thereof, has been disclosed by the Company or any Subsidiary to
any Person other than employees, representatives and agents of the Company or
the Subsidiaries who are parties to confidentiality agreements with the Company
or a Subsidiary.
(d) To the knowledge of the Company and Seller, no third party has
asserted any claim, or has any reasonable basis to assert any valid claim,
against the Company with respect to (i) the continued employment by, or
association with, the Company or any Subsidiary of any of the present officers,
employees of or consultants to the Company or any Subsidiary or (ii) the use by
the Company or any Subsidiary or any of such Persons in connection with their
activities for or on behalf of the Company or any Subsidiary of any information
which the Company or any of such Persons would be prohibited from using under
any prior agreements or arrangements or any laws applicable to unfair
competition, trade secrets or proprietary information.
3.17. INVENTORIES. The inventories set forth in the Balance Sheet were
properly stated therein at the lesser of cost or fair market value determined in
accordance with generally accepted accounting principles consistently applied by
the Company and the Subsidiaries. Since the Balance Sheet Date, the inventories
of the Company and the Subsidiaries have been maintained in the ordinary course
of business. All such inventory is owned free and clear of all Liens. All of the
inventory recorded on the Balance Sheet consists of, and all inventory on the
Closing Date will consist of, items of a quality usable or saleable within
[__________] in the ordinary course of business consistent with past practices
and are and will be in qualities sufficient for the normal operation of the
business of the Company and the Subsidiaries in accordance with past practice.
3.18. RECEIVABLES. All accounts, notes receivable and other receivables
(other than receivables collected since the Balance Sheet Date) reflected on the
Balance Sheet are, and all accounts and notes receivable of the Company and the
Subsidiaries at the Closing Date will be, valid, genuine and fully collectible
within [____] days in the aggregate amount thereof, subject to normal and
customary trade discounts, less any reserves for doubtful accounts recorded on
the Balance Sheet. All accounts, notes receivable and other receivables of the
Company and the Subsidiaries at the Balance Sheet Date have been included in the
Balance Sheet.
3.19. TAXES. All tax returns, reports, declarations of estimated tax and
forms required to be filed on or before the Closing Date by or on behalf of the
Company or any Subsidiary with respect to any income, properties or operations
of the Company with respect to any income, properties or operations of the
Company with any taxing authority have been filed through the date hereof, or
will be filed on or before the Closing Date in accordance with all applicable
laws, and all taxes, fees, penalties, interest and other governmental charges
due under applicable law on such returns, reports, declarations and forms have
been paid, and there are no deficiencies for any taxes owed to any government.
As of the time of filing, the foregoing returns correctly reflected in all
material respects the facts regarding the income, business, assets, operations
and status of any entity required to be shown thereon. There is no action, suit,
proceeding, investigation, audit or claim now pending against, or with respect
to any tax or assessment, nor is any claim for additional tax or assessment
asserted by any such authority relating to the taxes of, the
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<PAGE>
Company or any Subsidiary. Neither the Company nor any Subsidiary has filed any
agreement or consent under Section 341(f) of the Internal Revenue Code of 1986,
as amended (the "CODE"). There are no Liens for federal or state income taxes
upon the assets of the Company or any Subsidiary, except Liens for current
federal and state income taxes not yet due. None of the Company is subject to
withholding with respect to any transaction contemplated hereby. There are no
agreements for the extension of the time for the assessments of any taxes of the
Company or any Subsidiary with respect to any income, properties or operations
of the Company or any Subsidiary. None of the Company or any Subsidiary is a
party to any tax sharing or similar agreement with my Pension. The Company does
not have any excess loss accounts with respect to my direct or indirect
Subsidiaries and has not engaged in any "______________ transaction" within the
meaning of the consolidated return regulations, other than in the ordinary
course of business.
3.20. EMPLOYEES.[24] SCHEDULE 3.17 sets forth a true and complete list of
(a) the names, titles, annual salaries and other compensations of all employees
of the Company and the Subsidiaries whose annual base salary exceed $35,000 and
(b) the wage rates for non-salaried employees of the Company and the
Subsidiaries (by classification). None of such employees and no other by
employee of the Company or a Subsidiary has indicated to the Company or a Seller
that he intends to resign or retie as a result of the transactions contemplated
by this _______ or otherwise.
3.21. PRODUCTS. Each of the products produced or sold by the Company or any
Subsidiary (i) is, and at all times has been, in compliance in all material
respects with all applicable federal, state, local and foreign laws and
regulations and (ii) is, and at all relevant times has been, fit for the
ordinary purposes for which it is intended to be used and conforms in all
material respects to any promises or affirmations of fact made on the container
or label for such product or in connection with its sale. There is no known
design defect with respect to any of such products and each of such products
contains adequate warnings, presented in a reasonably prominent manner, in
accordance with applicable laws and current industry practice with respect to
its contents and use. The Company has no products placed with its customers
under an understanding permitting this return to the Company other than pursuant
a breach of warranty.
3.22. ENVIRONMENTAL COMPLIANCE[26]
(a) ENVIRONMENTAL DEFINITIONS. The following terms, as used
herein, have the following meanings:
"CERCLA" means the Comprehensive Environmental Responses,
Compensation and Liability Act of 1980, as amended.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, laws (including common or case law), regulations, ordinances,
rules, judgments, judicial decisions, orders, decrees, codes, plans,
injunctions, permits, concessions, grants, franchises, licenses, agreements, or
governmental restrictions, whether now or hereinafter in effect, relating to
human health, the environment or to emissions, discharges or releases of
pollutants, contaminants, or Hazardous Substances or wastes into the environment
including, without limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
Hazardous Substances or wastes or the clean-up or other remediation thereof.
"ENVIRONMENTAL LIABILITIES" means all liabilities of the Company
and each Subsidiary, whether vested or unvested, contingent or fixed, actual or
potential, known or unknown, which (i) arise under or relate to articles covered
by Environmental Laws or arise in connection with or relate to any matter
disclosed or required to be disclosed in SCHEDULE 3.22 and (ii) arise from or
relate in any way to actions occurring or conditions existing before the Closing
Date.
"HAZARDOUS SUBSTANCE" means any toxic, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, regulated under Environmental Laws.
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"REGULATED ACTIVITY" means my question, treatment, storage,
recylcing, transportations or disposal of my Hazardous Substance.
"RELEASE" has the meaning specified in 42 U.S.C. ss.9601.
(b) ENVIRONMENTAL REPRESENTATIONS. Except as disclosed on SCHEDULE
3.22:
(i) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending, or to the
Company's or a Seller's knowledge, threatened by any governmental or other
entity with respect to any (A) alleged violation by the Company or any
Subsidiary of any Environmental Law or liability thereunder, (B) alleged failure
by the Company to have any permit, certificate, license, approval, registration
or authorization required under my Environmental Law, (c) Regulated Activity or
(D) any general, treatment, storage, recycling, Release of Hazardous Substance.
(ii) (A) The Company has not handled any Hazardous Substance,
other than as a generator, on any property now or previously owned or leased by
it; (B) no polychlorinated biphenyls or urea formaldehyde is or has been present
at any property now or previously owned or leased by the Company; (C) no
asbestos is or has been present at any property now or previously owned or
leased by the Company; (D) there are not underground storage tanks for Hazardous
Substances, active or abandoned, at any property now or previously owned or
leased by the Company; (E) no Hazardous Substance has been Released at, or under
any property now or previously owned or leased by the Company and (F) no
Hazardous Substance has been Released or is present, in a reportable or
threshold planning quantity, where such a quantity has been established by
statute, ordinance, rule, regulation or order, at, on or under any property now
or previously owned by the Company.
(iii) The Company has not transported or arranged for the
transportation (directly or indirectly) of any Hazardous Substance to any
location which is listed or proposed for listing under CERCLA, or on any similar
state list or which is the subject of Federal, state or local enforcement
actions or other investigations which may lead to claims against Buyer for
clean-up costs, remedial work, damages to natural resources or for personal
injury claims, including, but not limited to, claims under CERCLA.
(iv) No oral or written notification of a Release of a Hazardous
Substance has been filed by or on behalf of the Company and no property now or
previously owned or leased by the Company is listed or, to the Company's or a
Seller's knowledge, proposed for listing, on the National Priorities List
promulgated pursuant to CERCLA or on any similar state list of sites requiring
investigation or clean-up.
(v) There are no environmental Liens on any of the Company's
assets, and no governmental actions have been taken or are in process that could
subject any of such assets to such Liens. The Company would not be required to
place any notice or restriction relating to the presence of Hazardous Substances
at any property used in connection with the operation of its business in any
deed to such property.
(vi) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or which are in the
possession of the Company in relation to any property or facility now or
previously owned or leased by the Company which have not been delivered to Buyer
prior to the date hereof.
3.23. CUSTOMERS AND SUPPLIERS. Neither the Company ____ _____ Subsidiary
has received notice from or is otherwise aware that any group of customers who
are under common ownership or control and who accounted as a group for a
material percentage of the aggregate products and services furnished by the
Company and the Subsidiaries during the past 18 months has stopped or intends to
stop purchasing the Company's or a Subsidiary's products or services, nor has
the Company or a Subsidiary lost any supplier, or group of suppliers, which
accounted for a material percentage of the aggregate supplies purchased by the
Company during the past 18 months.
3.24. TRANSACTIONS WITH AFFILIATES. There are no loans, leases, royalty
agreements or other continuing transactions between the Company and any Seller,
any Affiliate of any Seller, or any member of any Seller's family.
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To the knowledge of the Company and Seller, none of the officers or directors of
the Company or Seller (a) has any material direct or indirect interest in any
entity which does business with the Company; (b) has any direct or indirect
interest in any property, asset or right which is used by the Company in the
conduct of its business; or (c) has any contractual relationship with the
Company other than such relationships which occur from being an officer,
director or stockholder of the Company.
3.25. OTHER INFORMATION.[25] None of the documents or information delivered
to Buyer in connection with the transactions contemplated by this Agreement,
including, without limitation, [specify any documents that were material to
either Buyer's decision to acquire the Company or to the determination of the
Purchase Price] contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein not misleading. The financial projections relating to the Company and
the Subsidiaries delivered to Buyer constitute the Company's and the Company's
and Seller' best estimate of the information purported to be shown therein, and
Seller is aware of any fact or information that would lead it to believe that
such projections are incorrect or misleading in any material respect.
3.26. INTERCOMPANY ARRANGEMENTS. Neither the Company nor any Subsidiary
owns any note, bond, debenture or other indebtedness, or is otherwise a
creditor, of Seller or any of its Affiliates. Since the Balance Sheet Date there
has not been any payment by the Company or any Subsidiary to Seller or any of
its Affiliates, charge by Seller or any of its Affiliates to the Company or any
Subsidiary or other transaction between the Company or any Subsidiary and Seller
and any of its Affiliates, except in any such case in the ordinary course of
business of the Company and the Subsidiaries consistent with past practice.
3.27. REPRESENTATIONS. The joint representations and warranties of the
Company and Seller contained in this Agreement, disregarding all qualifications
and exceptions contained therein relating to materiality or Material Adverse
Effect, are true and correct with only such exceptions as would not in the
aggregate reasonably be expected to have a Material Adverse Effect.
ARTICLE IV
ADDITIONAL REPRESENTATIONS
AND WARRANTIES OF SELLER
Each Seller, severally but not jointly, represents and warrants to, and
agrees with, Buyer as follows:
4.01. TITLE AND VALIDITY OF SHARES. Except as set forth in the Escrow
Agreement, such Seller now has, and on the Closing Date will have, good and
marketable title to and unrestricted power to vote and sell the Shares
designated as owned by such Seller opposite such Seller's name on SCHEDULE 2.01,
free and clear of any Lien and, upon purchase and payment therefor and delivery
to Buyer thereof in accordance with the terms of this Agreement, Buyer will
obtain good and marketable title to such Shares free and clear of any Lien. All
Shares owned by such Seller have been duly authorized and validly issued and are
fully paid and non-assessable. All Shares to be sold by such Seller are
registered in the name of such Seller.
4.02. AUTHORITY. Such Seller has the legal power, right and authority to
enter into and perform this Agreement, and to perform each of his obligations
hereunder. The execution, delivery and performance of this Agreement by such
Seller (a) require no action by or in respect of, or filing with, or consent of,
any governmental body, agency or official or any other Person and (b) do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of any agreement, judgment, injunction, order, decree or any other
instrument binding upon such Seller. This Agreement has been duly executed and
delivered by such Seller and constitutes a valid and binding obligation of such
Seller, enforceable in accordance with its terms.
4.03. POWER TO ACT AS TRUSTEE OR EXECUTOR. If such Seller is serving as
trustee or executor with respect to its Shares, such Seller is duly authorized
and empowered by the instruments creating such trust or trusts or by the
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will of which such Seller is acting as executor and under applicable law to
enter into this Agreement with respect to the Shares held by such Seller and to
consummate the transactions contemplated herein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Company and Seller that:
5.01. ORGANIZATION AND EXISTENCE. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of [insert jurisdiction of
incorporation] and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
5.02. CORPORATE AUTHORIZATION. The execution, delivery and performance by
Buyer of this Agreement [and the Note] and the consummation by Buyer of the
transactions contemplated hereby are within the corporate powers of Buyer and [,
except for any required approval by Buyer's stockholders,][27] have been duly
authorized by all necessary corporate action on the part of Buyer. This
Agreement constitutes a valid and binding agreement of Buyer. [The Note, when
executed and delivered, will constitute a valid and binding obligation of
Buyer.]
5.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance
by Buyer of this Agreement require no action by or in respect of, or filing
with, any governmental body, agency, official or authority other than (i)
compliance with any applicable requirements of the HSR Act; [(ii) compliance
with any applicable requirements of the 1934 Act;] and (iii) [specify any
applicable regulatory approvals including any applicable environmental
protection clearances].
5.04. NON-CONTRAVENTION. The execution, delivery and performance by Buyer
of this Agreement do not and will not (i) contravene or conflict with the
corporate charts or bylaws of Buyer or (ii) assuming compliance with the matters
referred to in Section 4.03, contravene or conflict with any provision of any
law, regulation, judgment, injunction, order or decree binding upon Buyer.[28]
5.05. FINDERS' FEES. Except for [specify Buyer's financial adviser], whose
fees will be paid by Buyer, there is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Buyer who might be entitled to any fee or commission from the Company or any
or any Affiliate thereof upon consummation of the transactions contemplated by
this Agreement.
[5.06. FINANCING. Buyer has sufficient funds available to purchase the
Stock.[29]]
5.07. PURCHASE FOR INVESTMENT. Buyer is purchasing the Shares for
investment for its own account and not with a view to, or for sale in connection
with, any distribution thereof.
5.08. LITIGATION. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Buyer threatened against or affecting,
Buyer before any court or arbitrator or any governmental body, agency or
official which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby.
ARTICLE VI
COVENANTS OF THE COMPANY AND SELLER
The Company and each Seller agree that:
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6.01. .[30] From the date hereof until the Closing Date, Seller shall cause
the Company and the Subsidiaries to conduct their businesses in the ordinary
course consistent with past practices and to use their best efforts to preserve
intact their business organizations and relationships with third parties and to
keep available the services of their present officers and employees. Without
limiting the generality of the foregoing, from the date hereof until the Closing
Date, Seller will not permit the Company or any Subsidiary to:
(a) adopt or propose any change in its corporate charts or bylaws;
(b) merge or consolidate with any other Person or acquire a
material amount of assets of any other Person;
(c) sell, lease, license or otherwise dispose of any material
assets or property except (i) pursuant to existing contracts or
commitments and (ii) in the ordinary course consistent with past
practices;
(d) effect any direct or indirect redemption, purchase or other
acquisition of any Company Securities, or declare, set aside or pay any
dividend or make any other distribution of assets of any kind whatsoever
with respect to any Company Securities;
(e) issue any Securities; or
(f) agree or commit to do any of the foregoing.
The Company will not, and will not permit any Subsidiary to (i) take or agree or
commit to take any action that would make any representation and warranty of
Seller under this Agreement on the date of its execution and delivery inaccurate
in any respect at, or as of any time prior to, the Closing Date or (ii) omit or
agree or commit to omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect at any such
time.
6.02. ACCESS TO INFORMATION. From the date hereof until the Closing Date,
the Company (a) will give, and will cause each Subsidiary to give, Buyer, its
counsel, financial advisors, financing sources, auditors and other authorized
representatives full access to the offices, properties, books and records of the
Company and the Subsidiaries (b) will furnish, and will cause the Company and
each Subsidiary to furnish Buyer, its counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other
information relating to the Company and the Subsidiaries as such Persons may
reasonably request and (c) will instruct the employees, counsel and financial
advisors of, the Company and the Subsidiaries to cooperate with Buyer in its
investigation of the Company and the Subsidiaries; PROVIDED that no
investigation pursuant to this Section shall affect any representation or
warranty given by the Company or Seller. [Notwithstanding the foregoing, Buyer
shall not have access to personnel records of the Company or any Subsidiary
relating to individual performance or evaluation records, medical histories or
other information which in Seller's good faith opinion is sensitive or the
disclosure of which could subject Seller to risk of liability.]
6.03. NOTICES OF CERTAIN EVENTS. The Company will promptly notify Buyer of:
(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement;
(ii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or
involving or otherwise affecting Seller, the Company or any Subsidiary
disclosed pursuant to Section 3.11 or that relate to the consummation of
the transactions contemplated by this Agreement.
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6.04. RESIGNATIONS. The Company will deliver to Buyer the resignations of
all officers and directors of the Company and the Subsidiaries from their
positions with the Company and the Subsidiaries at or prior to the Closing Date,
unless otherwise specified by Buyer.
6.05. NONCOMPETITION.[31] (a) Each Seller agrees that for a period of
(three) full years from the Closing Date, neither he nor any of his Affiliates
shall:
(i) engage, either directly or indirectly, as a principal or for
its own account or solely or jointly with others, or as stockholder in any
corporation or joint stock association, in any business that competes with
the (business of the Company and the Subsidiaries relevant businesses)
[(the "Business")] as it exists on the Closing Date [SPECIFY GEOGRAPHIC
SCOPE -- E.G., COUNTRIES OR REGIONS IN WHICH THE COMPANY'S BUSINESS IS
CURRENTLY conducted]; or
(ii) employ or solicit, receive or accept the performance of
services by any employee currently employed by the Company or any
Subsidiary.
(b) If any provision contained in this Section shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section, but this Section shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein. It is the intention
of the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable law.
Seller acknowledge that Buyer would be irreparably harmed by any breach of this
Section and that there would be no adequate remedy at law or in damages to
compensate Buyer for any such breach. Seller agree that Buyer shall be entitled
to injunctive relief requiring specific performance by Seller of this Section,
and Seller consent to the entry thereof.
(c) The parties hereto agree that $__________ of the Purchase
Price represents payment by Buyer for the noncompetition covenant contained in
this Section 6.05.
6.06. NO NEGOTIATIONS WITH THIRD PARTIES. From the date hereof until the
earlier of the Closing Date or the date on which this Agreement is terminated,
neither the Company nor any Seller, nor any of their respective agents or
representatives, shall, directly or indirectly, encourage, solicit or engage in
any discussions or negotiations with, or provide any information to, any Person
or group concerning the possible acquisition by such third party of all or any
part of the business of the Company, whether by purchase of assets, stock,
merger or otherwise, other than as contemplated or permitted by this Agreement.
The Company and each Seller agree promptly to notify Buyer of interest by any
Person with respect to any such possible acquisition.
6.07. CONFIDENTIALITY. Seller and their Affiliates will hold, and will use
their best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning Buyer
furnished to Seller or their Affiliates in connection with the transactions
contemplated by this Agreement, and (after the Closing Date) all confidential
documents and information concerning the Company, except to the extent that such
information can be shown to have been (i) previously known on a nonconfidential
basis by Seller, (ii) in the public domain through no fault of Seller or (iii)
later lawfully acquired by Seller from sources other than the Company or Buyer;
PROVIDED that Seller may disclose such information to their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents in
connection with the transactions contemplated by this Agreement so long as such
persons are informed by Seller of the confidential nature of such information
and are directed by Seller to treat such information confidentially. The
obligation of Seller and their Affiliates to hold any such information in
confidence shall be
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satisfied if they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own similar
information. If this Agreement is terminated, Seller and their Affiliates will,
and will use their best efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents to, destroy or
deliver to Buyer, upon request, all documents and other materials, and all
copies thereof, obtained by Seller or their Affiliates or on their behalf from
Buyer in connection with this Agreement that are subject to such confidence.
6.08. CONTINUING DISCLOSURE. The Company and Seller shall have the
continuing obligation promptly to advise Buyer with respect to any matter
hereafter arising or discovered that, if existing or known at the date of this
Agreement, would have been required to be set forth or described in a schedule
to this Agreement, or that constitutes a breach or prospective breach of this
Agreement by the Company or a Seller. The delivery of any such notice shall not
affect Buyer's remedies hereunder.
ARTICLE VII
COVENANTS OF BUYER
Buyer agrees that:
7.01. CONFIDENTIALITY.[32] Prior to the Closing Date and after any
termination of this Agreement, Buyer and its Affiliates will hold, and will use
their best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
Company and the Subsidiaries furnished to Buyer or its Affiliates in connection
with the transactions contemplated by this Agreement, except to the extent that
such information can be shown to have been (i) previously known on a
nonconfidential basis by Buyer, (ii) in the public domain through no fault of
Buyer or (iii) later lawfully acquired by Buyer from sources other than the
Company or its Subsidiaries; PROVIDED that Buyer may disclose such information
to its officers, directors, employees, accountants, counsel, consultants,
advisors and agents in connection with the transactions contemplated by this
Agreement [and to its financing sources in connection with obtaining the
financing for the transactions contemplated by this Agreement] so long as such
Persons are informed by Buyer of the confidential nature of such information and
are directed by Buyer to treat such information confidentially. The obligation
of Buyer and its Affiliates to hold any such information in confidence shall be
satisfied if the exercise the same care with respect to such information as they
would take to preserve the confidentiality of their own similar information. If
this Agreement is terminated, Buyer and its Affiliates will, and will use their
best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or deliver to
Seller, upon request, all documents and other materials, and all copies thereof,
obtained by Buyer or its Affiliates or on their behalf from a Seller, the
Company or the Subsidiaries in connection with this Agreement that are subject
to such confidence.
7.02. ACCESS. The Company and the Subsidiaries, on and after the Closing
Date, will afford promptly to Seller and then agents reasonable access to their
properties, books, records, employees and auditors to the extent necessary to
permit Seller to determine any matter relating to its rights and obligations
hereunder or to any period ending on or before the Closing Date. Seller will
hold, and will use their best efforts to cause their officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law, all confidential documents and information
concerning the Company and the Subsidiaries provided to it pursuant to this
Section 6.02.
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ARTICLE VIII
COVENANTS OF ALL PARTIES
The parties hereto agree that:
8.01. BEST EFFORTS.[33] Subject to the terms and conditions of this
Agreement, each party will use its best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary or desirable
under applicable laws and regulations to consummate the transactions
contemplated by this Agreement. Seller and Buyer each agree, and Seller, prior
to the Closing, and Buyer, after the Closing, agree to cause the Company, to
execute and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transactions contemplated by
this Agreement.
8.02. CERTAIN FILINGS. The Company, Seller and Buyer shall cooperate with
each other (a) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (b) in taking such actions or
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents, approvals or waivers.
8.03. PUBLIC ANNOUNCEMENTS. The parties agree to consult with each other
before issuing any press release or making any public statement with respect to
this Agreement or the transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any national securities
exchange, will not issue any such press release or make any such public
statement prior to such consultation.
ARTICLE IX
EMPLOYEE BENEFITS[60]
9.01. EMPLOYEE BENEFITS. The following terms, as used herein, having the
following meanings:
"BENEFIT ARRANGEMENT" means each employment, severance or other similar
contract, arrangement or policy (written or oral) and each plan or arrangement
(written or oral) providing for severance benefits, insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (i) is not an Employee
Plan, (ii) is entered into, maintained or contributed to, as the case may be, by
Seller or any of their Affiliates and (iii) covers any employee or former
employee of the Company.
"EMPLOYEE PLANS" means each "employee benefit plan", as such term is
defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA
and (ii) is maintained or contributed to by the Company or any of its ERISA
Affiliates, as the case may be.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" of any entity means any other entity that, together with
such entity, would be treated as a single employer under Section 414 of the
Code.
"MULTIEMPLOYER PLAN" means each Employee Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
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9.02. ERISA REPRESENTATIONS. The Company and each Seller, jointly and
severally, hereby represent and warrant to Buyer that:
(a) SCHEDULE 9.02 lists each Employee Plan that covers any employee of the
Company, copies or descriptions of all of which have previously been made
available or furnished to Buyer. With respect to each Employee Plan, the Company
has provided the most recently filed Form 5500 and an accurate summary
description of such plan. The Company has provided Buyer with complete age,
salary, service and related data as of the most recent practicable date for
employees of the Company.
(b) SCHEDULE 9.02 also includes a list of each Benefit Arrangement of the
Company, copies or descriptions of which have been made available or furnished
previously to Buyer.
(c) None of the Employee Plans or other arrangements listed on SCHEDULE
9.02 covers any non-United States employee or former employee of the Business.
(d) No "prohibited transaction", as defined in Section 406 of ERISA
or Section 4975 of the Code, has occurred with respect to any Employee Plan.
(e) No Employee Plan is a Multiemployer Plan and no Employee Plan is
subject to Title IV of ERISA. The Company and its Affiliates have not incurred
any liability under Title IV or ERISA arising in connection with the termination
of any plan covered or previously covered by Title IV of ERISA.
(f) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the period
from its adoption to date, and each trust forming a part thereof is exempt from
tax pursuant to Section 501(a) of the Code. The Company has furnished to Buyer
copies of the most recent Internal Revenue Service determination letters with
respect to each such plan. Each Employee Plan has been maintained in compliance
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations, including but not limited to ERISA and the Code,
which are applicable to such plan. [ALTERNATE PROVISION IF NO RETIREMENT PLANS:
NO EMPLOYEE PLAN IS AN "EMPLOYEE PENSION BENEFIT PLAN" AS DEFINED IN SECTION
3(2) OF ERISA.]
(g) Each Employee Plan and each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations which are applicable to such
Benefit Arrangement.
(h) With respect to the employees and former employees of the Company,
there are no employee post-retirement medical or health plans in effect, except
as required by Section 4980B of the Code.
(i) All contributions and payments accrued under each Employee Plan and
Benefit Arrangement, determined in accordance with prior funding and accrual
practices, as adjusted to include proportional accruals for the period ending on
the Closing Date, will be discharged and paid on or prior to the Closing Date
except to the extent (i) reflected on the Closing Balance Sheet or (ii) retained
by Seller. Except as disclosed in writing to Buyer prior to the date hereof,
there has been no amendment to, written interpretation of or announcement
(whether or not written) by Seller or any of its ERISA Affiliates relating to,
or change in employee participation or coverage under, any Employee Plan or
Benefit Arrangement that would increase materially the expense of maintaining
such Employee Plan or Benefit Arrangement above the level of the expense
incurred in respect thereof for the fiscal year ended prior to the date hereof.
(j) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 280G of the Code.
(k) No tax under Section 4980B of the Code has been incurred in respect of
any Employee Plan that is a group health plan, as defined in Section 5000(b)(1)
of the Code.
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(l) No employee of the Company will become entitled to any bonus,
retirement, severance or similar benefit or enhanced benefit solely as a result
of the transactions contemplated hereby.
(m) The Company does not have, nor is it reasonably expected to have, any
liability under Title IV of ERISA.
9.03. NO THIRD PARTY BENEFICIARIES. No provision of this Article IX shall
create any third party beneficiary or other rights in any employee or former
employee (including any beneficiary or dependent thereof) of the Company in
respect of continued employment (or resumed employment) with the Company and no
provision of this Article IX shall create any such rights in any such Persons in
respect of any benefits that may be provided, directly or indirectly, under any
Employee Plan or Benefit Arrangement or any plan or arrangement that may be
established by Buyer or any of its Affiliates. No provision of this Agreement
shall constitute a limitation on rights to amend, modify or terminate after the
Closing Date any Employee Plan or Benefit Arrangement.
ARTICLE X
CONDITIONS TO CLOSING
10.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of
Buyer, the Company and Seller to consummate the Closing are subject to the
satisfaction of the following conditions:
(a) Any applicable waiting period under the HSR Act relating to
the transactions contemplated hereby shall have expired or been
terminated.
(b) No proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially
delay the Closing shall have been instituted by any Person before any
court, arbitrator or governmental body, agency or official and be pending.
(c) Each other party shall have executed and delivered each of the
Ancillary Agreements to be entered into by it at Closing, in each case
substantially in the form attached as an exhibit to this Agreement.
[(d) All actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit the
consummation of the Closing including, [specify any specific regulatory
approval] shall have been obtained.]
10.02. CONDITIONS TO OBLIGATION OF BUYER.[100] The obligation of Buyer to
consummate the Closing IS subject to the satisfaction of the following further
conditions:
(a)(i) the Company and each Seller shall have performed in all
material respects all of his or its obligations hereunder required to be
performed on or prior to the Closing Date, (ii) the representations and
warranties of the Company and each Seller contained in this Agreement at
the time of its execution and delivery and in any certificate or other
writing delivered by the Company or a Seller pursuant hereto, disregarding
all qualifications and exceptions contained therein relating to
materiality or Material Adverse Effect, shall be true at and as of the
Closing Date, as if made at and as of such date with only such exceptions
as would not in the aggregate reasonably be expected to have a Material
Adverse Effect and (iii) Buyer shall have received a certificate signed by
the [specify appropriate officer] Seller to the foregoing effect.
(b) No court, arbitrator or governmental body, agency or official
shall have issued any order, and there shall not be any statute, rule or
regulation, restraining the effective
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operation by Buyer of the business of the Company and the Subsidiaries
after the Closing Date, and no proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter, prevent or
materially delay the Closing shall have been instituted by any Person
before any court, arbitrator or governmental body, agency or official and
be pending.
(c) Buyer shall have received an opinion of Seller' Counsel, dated
the Closing Date, to the effect specified in Sections 3.01 through 3.06
and 3.11 and with respect to such other matters as Buyer may reasonably
request. [Such opinion shall recite that it may be relied upon by Buyer's
senior secured lender and equity and subordinated debt investors as if it
were addressed to them.] In rendering such opinion, such counsel may rely
upon certificates of public officers, as to matters governed by the laws
of jurisdictions other than [specify] or the federal laws of the United
States of America, upon opinions of counsel reasonably satisfactory to
Buyer, copies of which shall be contemporaneously delivered to Buyer, and
as to matters of fact, upon certificates of officers of Seller, the
Company and the Subsidiaries.
(d) [Execution and delivery of other relevant agreements,
including non-compete, employment agreements, trademark or software
licenses, leases, supply, service or administrative agreements or other
transition agreements.]
(e) The Company shall have received all consents, authorizations
or approvals from the governmental agencies referred to in Section
3.03(a), in each case in form and substance reasonably satisfactory to
Buyer, and no such consent, authorization or approval shall have been
revoked.
[(f) Simultaneously with or prior to the Closing, Buyer shall have
obtained sufficient bank and other financing, on terms satisfactory to it,
to allow it to consummate the transactions contemplated by this Agreement
and to finance the business of the Company following the Closing.]
(g) Buyer shall have received all other closing documents
specified in Section 2.02 of this Agreement and all other closing
documents that it may reasonably request, all in form and substance
reasonably satisfactory to Buyer.
10.03. CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to
consummate the Closing is subject to the satisfaction of the following further
conditions:
(a)(i) Buyer shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to
the Closing Date, (ii) the representations and warranties of Buyer
contained in this Agreement at the time of its execution and delivery and
in any certificate or other writing delivered by Buyer pursuant hereto
shall be true in all material respects at and as of the Closing Date, as
if made at and as of such date and (iii) Seller shall have received a
certificate signed by the [specify appropriate officer] of Buyer to the
foregoing effect.
[(b) No proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially
delay the Closing shall have been instituted by any Person before any
court, arbitrator or governmental body, agency or official and be
pending.][101]
[(c) Seller shall have received an opinion of Buyer's Counsel,
dated the Closing Date, to the effect specified in Sections 5.01 through
5.04 and 5.07 and with respect to such other matters as Seller shall
reasonably request. In rendering such opinion, such counsel may rely upon
certificates of public officers, as to matters governed by the laws of
jurisdictions other than [specify] or the federal laws of the United
States of America, upon opinions of counsel
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reasonably satisfactory to Seller, copies of which shall be
contemporaneously delivered to Seller, and as to matters of fact, upon
certificates of officers of Buyer.]
(d) [Execution and delivery of other relevant agreements,
including non-compete, employment agreements, trademark or software
licenses, leases, supply, service or administrative agreements or other
transition agreements].
[(e) Buyer shall have received all consents, authorizations or
approvals from governmental agencies referred to in Section 3.03, in each
case in form and substance reasonably satisfactory to Seller, and no such
consent, authorization or approval shall have been revoked.]
(f) Seller shall have received all items specified in Section 2.02
of this Agreement and all other closing documents that they may reasonably
request, all in form and substance reasonably satisfactory to them.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01. SURVIVAL. The covenants, agreements, representations and warranties
of the parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive the
Closing until the [third] anniversary of the Closing Date [or (i) in the case of
Section , for the period set forth therein, (ii) in the case of Section ,
indefinitely, and (iii) in the case of the covenants, agreements,
representations and warranties contained in Article , until expiration of the
applicable statutory period of limitations (giving effect to any waiver,
mitigation or extension thereof), if later.] Notwithstanding the preceding
sentence, any covenant, agreement, representation or warranty in respect of
which indemnity may be sought under Section 11.02 shall survive the time at
which it would otherwise terminate pursuant to the preceding sentence, if notice
of the inaccuracy or breach thereof giving rise to such right to indemnity shall
have been given to the party against whom such indemnity may be sought prior to
such time.
11.02. INDEMNDIFICATION.[102] (a) Each Seller, jointly and severally,
hereby indemnifies Buyer and, effective at the Closing, without duplication, the
Company and the Subsidiaries against and agrees to hold them harmless from any
and all damage, loss, liability and expense (including without limitation
reasonable expenses of investigation and reasonable attorneys' fees and expenses
in connection with any action, suit or proceeding) ("Damages") incurred or
suffered by Buyer, the Company or any of the Subsidiaries arising out of any
misrepresentation or breach of warranty, covenant or agreement made or to be
performed by the Company or a Seller pursuant to this Agreement (other than the
Covenants and agreements of Seller contained in Articles I, II and IV [;
PROVIDED that (i) Seller shall not be liable under this Section 11.02(a) unless
the aggregate amount of Damages with respect to all matters referred to in this
Section 11.02(a) (determined without regard to any materiality qualification
contained in any representations, warranty or covenant giving rise to claim for
indemnity hereunder) exceeds $__________ and then only to the extent of such
excess and (ii) each Seller's maximum liability under this Section 11.02(a)
shall not exceed [the amount paid to such Seller (or the Escrow Agent) with
respect to the Shares sold by such Seller to Buyer] $__________.]
(b) Each Seller, severally but not jointly, hereby indemnifies
Buyer and, effective at the Closing, without duplication, the Company agrees to
hold them harmless from and against all Damages incurred or suffered by Buyer or
the Company arising out of any breach of any covenant or agreement of such
Seller pursuant to Article I or II or the inaccuracy or breach of any
representation, warranty, covenant or agreement made by such Seller pursuant to
Article IV.
(c) Buyer hereby indemnifies Seller against and agrees to hold it
harmless from any and all Damages incurred or suffered by Seller arising out of
any misrepresentation or breach of warranty, covenant or agreement made or to be
performed by Buyer pursuant to this Agreement (other than pursuant to Article
VIII [or
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IX]) [; PROVIDED that (i) Buyer shall not be liable under this Section 11.02(b)
unless the aggregate amount of Damages with respect to all matters referred to
in this Section 11.02(b) (determined without regard to any materiality
qualification contained in any representations, warranty or covenant giving rise
to the claim for indemnity hereunder) exceeds $__________ and then only to the
extent of such excess and (ii) Buyer's maximum liability under this Section
11.02(b) shall not exceed $__________.]
(d) Seller shall have no right of indemnification, contribution or
subrogation against the Company with respect to any indemnification by any
Seller or Seller under this Section 11.02 if the transactions contemplated by
this Agreement are consummated. Seller shall have a right of contribution
against each other with respect to amounts actually paid pursuant to this
Section 11.02, but such right of contribution shall in no way limit or affect
Buyer's and the Company's rights contained in this Article XI.
(e) Buyer's claims for indemnification pursuant to this Article XI
may (but without prejudice to its rights to proceed directly against one or more
of the Seller should it, in its sole discretion, choose to do so) be satisfied
from funds withheld or deposited and held in escrow pursuant to Section 2.02.
11.03. PROCEDURES; [NO WAIVER]; [EXCLUSIVITY].103] [(a)] The party seeking
indemnification under Section 11.02 (the "Indemnified Party") agrees to give
prompt notice to the party against whom indemnity is sought (the "Indemnifying
Party") of the assertion of any claim, or the commencement of any suit, action
or proceeding in respect of which indemnity may be sought under such Section.
The Indemnifying Party may, and at the request of the Indemnified Party shall,
participate in and control the defense of any third party suit, action or
proceeding at its own expense. The Indemnifying Party shall not be liable under
Section [9.09 or] 11.02 for any settlement effected without its consent of any
claim, litigation or proceeding in respect of which indemnity may be sought
hereunder.
(b) No waiver of a closing condition by either Buyer or Seller
shall limit its rights under Section 11.02.
[(c) After the Closing, Sections 8.10 [, 9.09] and 11.02 will
provide the exclusive remedy for any misrepresentation, breach of warranty,
covenant or other agreement (other than those contained in Sections 2.03, 2.04,
5.05 and 6.02) or other claim arising out of this Agreement or the transactions
contemplated hereby.]
ARTICLE XII
TERMINATION
12.01. GROUNDS FOR TERMINATION.[104] This Agreement may be terminated at
any time prior to the Closing:
(i) by written agreement of Seller and Buyer;
(ii) by either Seller or Buyer if the Closing shall not have been
consummated on or before 199-; or
(iii) by either Seller or Buyer [if there shall be any law or
regulation that makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or][105] if consummation of the
transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any court or governmental body having
competent jurisdiction.
The party desiring to terminate this Agreement pursuant to clauses (ii) or
(iii) shall give notice of such termination to the other parties.
12.02. EFFECT OF TERMINATION. If this Agreement is terminated as permitted
by Section 12.01, such termination shall be without liability of either party
(or any shareholder, director, officer, employee, agent, consultant or
representative of such party) to the other party to this Agreement; PROVIDED
that if such termination
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shall result from the willful failure of any party to fulfill a condition to the
performance of the obligations of another party or to perform a covenant of this
Agreement or from a willful breach by any party to this Agreement, such party
shall be fully liable for any and all Damages incurred or suffered by the other
party as a result of such failure or breach. The provisions of Sections 7.01 and
14.03 [specify others] shall survive any termination hereof pursuant to Section
12.01.
ARTICLE XIII
SELLER' COMMITTEE
13.01. APPOINTMENT OF SELLER' COMMITTEE. (a) Each Seller hereby irrevocably
constitutes and appoints, ________________, ________________ and
________________ (the "Seller' Committee"), or a majority of them acting
separately, as such Seller's attorneys-in-fact and agents in connection with the
transactions contemplated by this Agreement and the Escrow Agreement. This power
is irrevocable and coupled with an interest, and shall not be affected by the
death, incapacity, illness or other inability to act of any Seller.
(b) Each Seller hereby irrevocably grants the Seller' Committee,
or a majority of the members thereof acting separately, full power and authority
on behalf of such Seller:
(i) to execute and deliver, and to accept delivery of, such
documents as may be deemed by the Seller' Committee, in its sole
discretion, to be appropriate to consummate the transactions contemplated
by this Agreement and the Escrow Agreement.
(ii) to endorse to Buyer and to deliver certificates representing
the Shares to be sold by such Seller at the Closing.
(iii) to accept, at the Closing, the purchase price for each Share
sold by such Seller at the Closing, as payment in full for such Shares,
and to certify as to the accuracy of the representations and warranties of
the Company and of such Seller under, or pursuant to the terms of, this
Agreement.
(iv) to (A) dispute or refrain from disputing any claim made by
Buyer under this Agreement; (B) negotiate and compromise any dispute that
may arise under, and to exercise or refrain from exercising any remedies
available under, this Agreement and the Escrow Agreement and (C) execute
any settlement agreement, release or other document with respect to such
dispute or remedy;
(v) to waive any closing condition contained in Article X of this
Agreement and to give or agree to any and all consents, waivers,
amendments or modifications deemed by the Seller' Committee, in its sole
discretion, to be necessary or appropriate under this Agreement or the
Escrow Agreement, and, in each case, to execute and deliver any documents
that may be necessary or appropriate in connection therewith;
(vi) to enforce any claim against Buyer arising under this
Agreement or the Escrow Agreement.
(vii) to engage attorneys, accountants and agents at the expense of
the Seller; and
(viii) to give such instructions and to take such action or refrain
from taking such action as the Seller' Committee deems, in its sole
discretion, necessary or appropriate to carry out the provisions of, and
to consummate the transactions contemplated by, this Agreement or the
Escrow Agreement.
(c) Each Seller hereby agrees that:
(i) a majority of the members of the Seller' Committee is
authorized to act on behalf of such Seller, notwithstanding any dispute or
disagreement among the Seller or among the members of the Seller'
Committee, and that the Company and Buyer shall be entitled to rely on any
and all action taken by the Seller'
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Committee under this Agreement and the Escrow Agreement without any
liability to, or obligation to inquire of, any Seller or the other members
of the Seller' Committee, notwithstanding any knowledge on the part of the
Company or Buyer of any such dispute or disagreement;
(ii) notice to the Seller' Committee, delivered in the manner
provided herein, shall be deemed to be notice to such Seller for the
purposes of this Agreement and the Escrow Agreement;
(iii) the authority of the Seller' Committee, as described in this
Agreement, shall be effective until the rights and obligations of the
Seller' Committee under this Agreement and the Escrow Agreement shall
terminate by virtue of the termination of any and all rights and
obligations of such Seller to Buyer under this Agreement and the Escrow
Agreement;
(iv) if any member of the Seller' Committee resigns or is removed
or otherwise ceases to function in his capacity as such for any reason
whatsoever, and no successor acceptable to Buyer is appointed by a
majority-in-interest of the Seller within thirty (30) days, the Seller'
Committee shall consist solely of the remaining members of the Seller'
Committee. If, as a result of such resignation or removal, there are no
remaining members of the Seller' Committee and no successor acceptable to
Buyer is appointed by a majority- in-interest of Seller within thirty (30)
days, then Buyer shall have the right to appoint a member of the Seller'
Committee to serve as described in this Agreement (who shall be a Seller);
(v) there shall at no time be more than three members of the
Seller' Committee; and
(vi) notwithstanding the provisions of this Section 13.01 or any
other provision of this Agreement or the Escrow Agreement, if at any time
there are less than three members of the Seller' Committee (as a result of
the death, resignation or removal of a member or otherwise), all of the
members of the Seller' Committee are (or the one member, where there is
only one member of such Seller' Committee, is) authorized to act on behalf
of the Seller' Committee to the same extent as a majority of the members
of the Seller' Committee is authorized to act pursuant to this Section
13.01 and, under such circumstances, Buyer and the Company shall be
entitled to rely on any and all actions taken by all of the members of the
Seller' Committee, or such member.
(d) Each Seller agrees that, notwithstanding the foregoing, at the
request of Buyer, he shall take all actions necessary or appropriate to
consummate the transactions contemplated by this Agreement or the Escrow
Agreement (including, without limitation, delivery of his Shares and acceptance
of the purchase price therefor) individually on his own behalf. Each Seller has
delivered to the Seller' Committee certificates for the Shares to be sold by
such Seller pursuant to this Agreement, duly endorsed or accompanied by stock
powers duly endorsed in blank, to be held by the Seller' Committee and delivered
by the Seller' Committee to Buyer at the Closing if the Closing shall occur and
the Seller' Committee acknowledges receipt thereof.
13.02. LIMITATION ON ACTIONS. Any claim, action, suit or other proceeding,
whether at law or in equity, to enforce any right, benefit or remedy granted to
Seller under this Agreement shall be asserted, brought, prosecuted, or
maintained only by the Seller' Committee on behalf of the other Seller. Any
claim, action, suit or other proceeding, whether at law or in equity, to enforce
any right, benefit or remedy granted under this Agreement, including without
limitation any right of indemnification provided in this Agreement, may be
asserted, brought, prosecuted or maintained by Buyer against the Seller by
service of process on each member of the Seller' Committee and without the
necessity of serving process on, or otherwise joining or naming any other Seller
as a defendant in such claim, action, suit or other proceeding. With respect to
any matter contemplated by this Section, a Seller shall be bound by any
determination in favor of or against the Seller' Committee or the terms of any
settlement or release to which the Seller' Committee shall become a party.
13.03. INDEMNIFICATION. (a) Seller, jointly and severally, shall indemnify
Buyer and the Company (collectively, the "INDEMNITEES") against, and agree to
hold the Indemnitees harmless from, any and all Damages incurred or suffered by
any Indemnitee arising out of, with respect to or incident to the operation of,
or any breach of any covenant or agreement pursuant to, this Article XIII, or
the designation, appointment and actions of the
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Seller' Committee pursuant to this Article XIII, including, without limitation,
with respect to (i) actions taken by the Seller' Committee or any member thereof
and (ii) reliance by any Indemnitee on, and actions taken by any Indemnitee in
response to or in reliance on, the instructions of, notice given by or any other
action taken by the Seller' Committee.
(b) Each Seller shall indemnify each member of the Seller'
Committee against any Damages (except such as result from such member's gross
negligence or willful misconduct) that such member may suffer or incur in
connection with any action taken by such member as a member of the Seller'
Committee. No member of the Seller's Committee shall be liable to any Seller
with respect to any action or omission taken or omitted to be taken by the
Seller' Committee pursuant to this Article XIII, except for such member's gross
negligence or willful misconduct.
ARTICLE XIV
MISCELLANEOUS
14.01. NOTICES. All notices, requests and other communications to either
party hereunder shall be in writing (including telecopy or similar writing) and
shall be given,
if to Buyer, to:
[address]
Telecopy:
with a copy to:
[name]
[address]
Telecopy:
if to the Company, to:
(address]
Telecopy:
with a copy to:
[name]
[address]
Telecopy:
if to a Seller:
at his address shown in
SCHEDULE 2.01, or to the
Seller' Committee
14.02. AMENDMENTS; NO WAIVERS. (a) Any provision of this Agreement may be
amended or waived prior to the Closing Date if, and only if, such amendment or
waiver is in writing and signed by Buyer, the Company and
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Seller. Any amendment, waiver or action of Seller hereunder may be taken by a
majority-in-interest of Seller or by the Seller' Committee.
(b) No failure or delay by either party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
14.03. EXPENSES. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense; provided,
however, that if the Closing shall occur al such costs and expenses incurred by
the Company shall be paid or reimbursed by Seller.
14.04. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED that no party may assign, delegate or otherwise
transfer any of his or its rights or obligations under this Agreement without
the consent of the other parties hereto, except that Buyer may transfer or
assign, in whole or from time to time in part, to one or more of its Affiliates,
the right to purchase all or a portion of the Shares, but no such transfer or
assignment will relieve Buyer of its obligations hereunder, and Buyer may
collaterally assign its rights to receive payments pursuant to Article XI hereof
or pursuant to the Escrow Agreement to one or more lenders providing financing
for the transactions contemplated by this Agreement.
14.05. FURTHER ASSURANCES. From time to time after the Closing, at the
request of Buyer and without further consideration, Seller will execute and
deliver to Buyer such other documents, and take such other action, as Buyer may
reasonably request in order to consummate more effectively the transactions
contemplated hereby and to vest in Buyer good, valid and marketable title to the
Shares.
14.06. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the law of the State of [_____]) [, without regard to the
conflicts of law rules of such state].[106]
14.07. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
14.08. ENTIRE AGREEMENT. This Agreement [and specify other agreements]
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter hereof. No representation, inducement, promise, understanding,
condition or warranty not set forth herein has been made or relied upon by
either party hereto. Neither this Agreement nor any provision hereof is intended
to confer upon any Person other than the parties hereto any rights or remedies
hereunder.[107]
14.09. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
14.10. JURISDICTION. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the courts of the State of [__________],
and each of the parties hereby consents to the jurisdiction of such courts (and
of the appropriate appellate courts) in any such action or proceeding and waives
any obligation to venue laid therein. Process in any such action or proceeding
may be served on any party anywhere in the world, whether within or without the
State of [__________].
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
[BUYER]
By____________________________
Title:
[COMPANY]
By____________________________
Title:
______________________________
[Seller]
______________________________
[Seller]
_______________________________
[Stockholder]
SELLER' COMMITTEE
(in their capacity as such)
_______________________________
_______________________________
_______________________________
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EXHIBIT B
CORE TRUST (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 2nd day of January, 1998 between Core Trust
(Delaware) (the "Trust"), a business trust organized under the laws of the State
of Delaware with its principal place of business at Two Portland Square,
Portland, Maine 04101, and Forum Investment Advisors, LLC (the "Adviser"), a
corporation organized under the laws of State of Delaware with its principal
place of business at Two Portland Square, Portland, Maine 04101.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "Act") as an open-end management investment company and
is authorized to issue interests (as defined in the Trust's Trust Instrument) in
separate series; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for Treasury Cash Portfolio, Government Cash Portfolio and Cash
Portfolio (each a "Portfolio," and collectively the "Portfolios"), and the
Adviser is willing to provide those services on the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS
The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument and Registration Statement filed with the
Securities and Exchange Commission (the "Commission") under the Act, as may be
supplemented from time to time, all in such manner and to such extent as may
from time to time be authorized by the Trust's Board of Trustees (the "Board").
The Trust is currently authorized to issue eight series of interests and the
Board is authorized to issue interests in any number of additional series. The
Trust has delivered to the Adviser copies of the Trust's Trust Instrument and
Registration Statement and will from time to time furnish the Adviser with any
amendments thereof.
SECTION 2. INVESTMENT ADVISER; APPOINTMENT
The Trust hereby employs the Adviser, subject to the direction and
supervision of the Board, to manage the investment and reinvestment of the
assets in each Portfolio and, without limiting the generality of the foregoing,
to provide other services specified in Section 3 hereof.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in each Portfolio. To carry out
such decisions, the Adviser is hereby authorized, as agent and attorney-in-fact
for the Trust, for the account of, at the risk of and in the name of the Trust,
to place orders and issue instructions with respect to those transactions of the
Portfolios. In all purchases, sales and other transactions in securities for the
Portfolios, the Adviser is authorized to exercise full discretion and act for
the Trust in the same manner and with the same force and effect as the Trust
might or could do with respect to such purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(b) The Adviser will report to the Board at each meeting thereof all
changes in each Portfolio since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Portfolios and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are
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included in the Portfolios' holdings, the industries in which they engage, or
the economic, social or political conditions prevailing in each country in which
the Portfolios' maintain investments. The Adviser will also furnish the Board
with such statistical and analytical information with respect to securities in
the Portfolios as the Adviser may believe appropriate or as the Board reasonably
may request.
(c) In making purchases and sales of securities for the Portfolios, the
Adviser will follow and comply with the policies set from time to time by the
Board as well as the limitations imposed by the Trust's Trust Instrument and
Registration Statement under the Act, the limitations in the Act and in the
Internal Revenue Code of 1986, as amended, in respect of regulated investment
companies and the investment objectives, policies and restrictions of the
Portfolios.
(d) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly qualified to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(e) The Adviser shall either monitor the performance of brokers,
dealers and other persons who introduce or execute purchases, sales and other
transactions of securities and other investment assets of the Portfolios or
select an introducing broker who shall, as part of its transaction charges,
monitor such performance. Such persons may be affiliated with the Adviser, any
investment subadviser or other affiliates of the Trust to the extent permitted
by the Act.
(f) The Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Commission and the Internal Revenue
Service. The books and records pertaining to the Trust which are in possession
of the Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Adviser's normal business hours. Upon the reasonable request of
the Trust, copies of any such books and records shall be provided promptly by
the Adviser to the Trust or the Trust's authorized representatives.
SECTION 4. SUBADVISERS
The Adviser may carry out any of its obligations under this Agreement
by employing, subject to the Board's supervision, one or more persons who are
registered as investment advisers pursuant to the Investment Advisers Act of
1940, as amended, (the "Advisers Act") or who are exempt from registration
thereunder ("SubAdvisers"). Each SubAdviser's employment will be evidenced by a
separate written agreement approved by the Trustees of the Trust and the
interestholders of the applicable Portfolios. The Adviser shall not be liable
for any act or omission of any SubAdviser except with respect to matters as to
which the Adviser specifically assumes responsibility in writing.
SECTION 5. EXPENSES
The Trust hereby confirms that the Trust shall be responsible and shall
assume the obligation for payment of all the Trust's expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the Trust's custodian and
transfer agent; telecommunications expenses; auditing, legal and compliance
expenses; costs of the Trust's formation and maintaining its existence; costs of
preparing the Trust's registration statement, account application forms and
interestholder reports and delivering them to existing and prospective
interestholders; costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts and of calculating the net
asset value of interests in the Trust; costs of reproduction, stationery and
supplies; compensation of the Trust's trustees, officers and employees
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and the costs of other personnel performing services for the Trust; costs of
Trust meetings; registration fees and related expenses for registration with the
Commission and the securities regulatory authorities of other countries in which
the Trust's interests are sold; state securities law registration fees and
related expenses; and fees and out-of-pocket expenses payable to Forum Financial
Services, Inc. under any placement agent, management or similar agreement.
SECTION 6. STANDARD OF CARE
(a) The Adviser shall give the Trust the benefit of its best judgment
and efforts in rendering its services to the Trust and shall not be liable for
error of judgment or mistake of law, for any loss arising out of any investment,
or in any event whatsoever, provided that nothing herein shall be deemed to
protect, or purport to protect, the Adviser against any liability to the Trust
or to the security holders of the Trust to which it would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder, or by reason of reckless disregard of its
obligations and duties hereunder. No provision of this Agreement shall be
construed to protect any Trustee or officer of the Trust, or the Adviser, from
liability in violation of Sections 17(h), 17(i) or 36(b) of the Act.
(b) The Adviser shall not be held responsible for any loss incurred by
reason of any act or omission of any dealer, broker or custodian; provided that
such loss in not the result of the Adviser's willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder, or the result of
the Adviser's reckless disregard of its obligations and duties hereunder.
(c) This Section shall survive the termination of this Agreement and
shall be binding upon the Trust's and the Adviser's successors and personal
representatives.
SECTION 7. COMPENSATION
For the services provided by the Adviser pursuant to this Agreement,
the Trust shall pay the Adviser, with respect to each of the Portfolios, a fee
based upon the total average daily net assets of the Portfolios ("Total
Portfolio Assets"). The Trust shall pay the Adviser a total fee of 0.06% for the
first $200 million of Total Portfolio Assets, 0.04% of the next $300 million of
Total Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets. Such
fees shall be accrued by the Trust daily with respect to each Portfolio in the
proportion that Portfolio's average daily net assets bear to Total Portfolio
Assets and shall be payable monthly in arrears on the first day of each calendar
month. Upon the termination of this Agreement, the Trust shall pay to the
Adviser such compensation as shall be payable prior to the effective date of
such termination. The Adviser shall be paid a minimum annual fee of $50,000 for
its services to the Trust with respect to the Portfolios. To the extent the
Adviser has delegated its responsibilities with respect to a Portfolio to a
SubAdviser, the Adviser shall pay the advisory fee to that SubAdviser.
SECTION 8. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Portfolio
immediately upon approval by a majority of the outstanding voting interests of
that Portfolio.
(b) This Agreement shall remain in effect with respect to a Portfolio
for a period of two years from the date of its effectiveness and shall continue
in effect for successive twelve-month periods (computed from each anniversary
date of the approval) with respect to the Portfolio; provided that such
continuance is specifically approved at least annually (i) by the Board or by
the vote of a majority of the outstanding voting interests of the Portfolio,
and, in either case, (ii) by a majority of the Trust's trustees who are not
parties to this Agreement or interested persons of any such party (other than as
trustees of the Trust); provided further, however, that if this Agreement or the
continuation of this Agreement is not approved as to a Portfolio, the Adviser
may continue to render to that Portfolio the services described herein in the
manner and to the extent permitted by the Act and the rules and regulations
thereunder.
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(c) This Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Portfolio on 60 days'
written notice to the Adviser or (ii) by the Adviser on 60 days' written notice
to the Trust. This agreement shall terminate upon assignment.
SECTION 9. ACTIVITIES OF THE ADVISER
(a) Except to the extent necessary to perform its obligations
hereunder, nothing herein shall be deemed to limit or restrict the Adviser's
right, or the right of any of the Adviser's officers, directors or employees who
may also be a trustee, officer or employee of the Trust, or persons otherwise
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
(b) The Adviser represents that it is currently registered, and will
during the entire period this Agreement is in effect be registered, as an
investment adviser under the Advisers Act.
SECTION 10. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interestholders of each Portfolio
shall not be liable for any obligations of the Trust or of the Portfolios under
this Agreement, and the Adviser agrees that, in asserting any rights or claims
under this Agreement, it shall look only to the assets and property of the Trust
or the Portfolio to which the Adviser's rights or claims relate in settlement of
such rights or claims, and not to the Trustees of the Trust or the
interestholders of the Portfolios.
SECTION 11. NOTICE
Any notice or other communication required to be given pursuant to this
Agreement shall be in writing or by telex and shall be effective upon receipt.
Notices and communications shall be given, if to the Trust, at:
Two Portland Square
Portland, Maine 04101
Attention: Secretary
and if to the Adviser at:
Two Portland Square
Portland, Maine 04101
Attention: Secretary
SECTION 12. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting interests of the Portfolios thereby affected. No amendment to
this Agreement or the termination of this Agreement with respect to a Portfolio
shall effect this Agreement as it pertains to any other Portfolio.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
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(c) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Delaware.
(f) The terms "vote of a majority of the outstanding voting interests,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act to the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated person" and
"assignment," respectively.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
CORE TRUST (DELAWARE)
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[ ]
Trustee
FORUM INVESTMENT ADVISORS, LLC
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John Y. Keffer
President
-B5-
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M O N A R C H F U N D S
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Treasury Cash Fund
Government Cash Fund
Cash Fund
PROXY
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 12, 1997
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Revoking any such prior appointments, the undersigned appoints David I.
Goldstein and Robert B. Campbell (or, if only one shall act, that one) proxies
with the power of substitution to vote all of the shares of Treasury Cash Fund,
Government Cash Fund and Cash Fund (the "Funds"), each a series of Monarch Funds
(the "Trust"), registered in the name of the undersigned at the Special Meeting
of Shareholders of the Funds to be held at the offices of Forum Financial
Services, Inc., the Trust's manager and distributor, at Two Portland Square,
Portland, Maine 04101, on Friday, December 12, 1997 at 2:00 p.m. Eastern time,
and at any adjournment or adjournments thereof.
PROPOSAL 1:
To consider and act upon a proposal to authorized the Trust, on behalf
of the Funds, to vote at a meeting of Core Trust (Delaware) to approve
a new Investment Advisory Agreement between Core Trust (Delaware) and
Forum Investment Advisors, LLC with respect to Treasury Cash Portfolio,
Government Cash Portfolio and Cash Portfolio.
For |_| Against |_| Abstain |_|
Receipt is acknowledged of the Proxy Statement for the Special Meeting of
Shareholders to be held on December 12, 1997. (NOTE: Checking the box labeled
ABSTAIN will result in the shares covered by the Proxy being treated as if they
were voted AGAINST the proposal.)
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Authorized Signature Date
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Printed Name (and Title if Applicable)
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Authorized Signature (Joint Investor) Date
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Printed Name (and Title if Applicable)
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