<PAGE>
As filed with the Securities and Exchange Commission on June 29, 1998
Registration No. 333-______
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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Investors Financial Services Corp.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 04-3279817
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
200 Clarendon Street, P.O. Box 9130, Boston, MA 02117-9130 (617) 330-6700
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
John E. Henry
General Counsel and Secretary
Investors Financial Services Corp.
200 Clarendon Street, P.O. Box 9130
Boston, MA 02117-9130
(617) 330-6700
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
----------
Copy to:
Steven C. Browne, Esq.
TESTA, HURWITZ & THIBEAULT, LLP
125 High Street
High Street Tower
Boston, Massachusetts 02110
(617) 248-7000
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. /_/
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. /X/
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------- --------------------- -------------------- ---------------------- --------------------
Title of Proposed Maximum Proposed Maximum
Shares Amount to Offering Price Aggregate Amount of
to be Registered be Registered Per Share(1) Offering Price(1) Registration Fee(2)
- --------------------------------------- --------------------- -------------------- ---------------------- --------------------
- --------------------------------------- --------------------- -------------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 175,068 shares $51.9375 $9,092,594.25 $2,682.32
- --------------------------------------- --------------------- -------------------- ---------------------- --------------------
- --------------------------------------- --------------------- -------------------- ---------------------- --------------------
Preferred Stock Purchase Rights(3) - - - -
- --------------------------------------- --------------------- -------------------- ---------------------- --------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933.
(2) Pursuant to Rule 457(c) of the Securities Act of 1933, the registration
fee has been calculated based upon the average of the high and low prices
per share of the Common Stock of Investors Financial Services Corp. (the
"Company") on the Nasdaq National Market on June 22, 1998.
(3) Pursuant to the Company's Rights Agreement, one right to purchase a unit of
preferred stock of the Company (each a "Preferred Stock Purchase Right" or
"Right") is deemed to be delivered with each share of Common Stock issued by
the Company. The Rights currently are not separately transferable apart from
the Common Stock, nor are they exercisable until the occurrence of certain
events. Accordingly, no independent value has been attributed to the Rights.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED JUNE 29, 1998
PROSPECTUS
175,068 SHARES
INVESTORS FINANCIAL SERVICES CORP.
COMMON STOCK
-----------------------
This Prospectus relates to the sale of up to 175,068 shares (the
"Shares") of the common stock, par value $.01 per share (the "Common Stock"),
of Investors Financial Services Corp., a Delaware corporation ("Investors" or
the "Company"), issued to the stockholders (collectively, the "Selling
Stockholders") of AMT Capital Services, Inc. and AMT Capital Advisers, Inc.
(collectively, "AMT Capital") in connection with the Company's acquisition of
AMT Capital. The Selling Stockholders may sell the Shares from time to time
at fixed prices that may be changed, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Stockholders may effect these transactions by selling the
Shares to or through broker-dealers, who may receive compensation in the form
of discounts or commissions from the Selling Stockholders or from the
purchasers of the Shares for whom the broker-dealers may act as an agent or
to whom they may sell as principal, or both. See "Selling Stockholders" and
"Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares. The Company has agreed to bear all of the expenses in connection with
the registration and sale of the Shares (other than selling commissions and the
fees and disbursements of counsel for the Selling Stockholders). The Selling
Stockholders will pay or assume brokerage commissions or other similar charges
incurred in the sale of the Shares and will be responsible for the fees and
disbursements of their legal counsel incurred in connection with the
registration and sale of the Shares. The Company has agreed to indemnify the
Selling Stockholders against certain liabilities, including liabilities under
the Securities Act of 1933.
The Common Stock of the Company is quoted on the Nasdaq National
Market under the symbol "IFIN." On June 22, 1998, the last reported sale
price for the Common Stock of the Company on the Nasdaq National Market was
$52.125 per share.
---------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR BY ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO OR SOLICITATION OF ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT BE LAWFULLY MADE.
---------------
The date of this Prospectus is ______ __, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices located at Seven World Trade Center, New York, New York 10048, and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies may also be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Common Stock of the Company is traded on the Nasdaq National Market.
Reports, proxy statements and other information concerning the Company may be
inspected at the offices of the National Association of Securities Dealers, Inc.
located at 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (including all amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Common Stock offered hereby. This Prospectus does not contain all
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information regarding the Company and the Common Stock offered hereby,
reference is hereby made to the Registration Statement and to the exhibits and
schedules filed therewith. Statements contained in this Prospectus regarding the
contents of any agreement or other document filed as an exhibit to the
Registration Statement are necessarily summaries of such documents, and in each
instance reference is made to the copy of such document filed as an exhibit to
the Registration Statement for a more complete description of the matters
involved. The Registration Statement, including the exhibits and schedules
thereto, may be inspected at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and copies of all
or any part thereof may be obtained from such office upon payment of the
prescribed fees. In addition, the Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
The Company will provide without charge to each person to whom a
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference herein (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such documents). Requests for such copies should be directed to
Investor Relations, Investors Financial Services Corp., P.O. Box 9130, Boston,
Massachusetts 02117-9130 (telephone: (617) 330-6700).
2
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated in this Prospectus by reference
(File No. 0-26996):
1. The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
3. The description of the Company's Common Stock, $.01 par value per
share, contained in the section entitled "Description of
Registrant's Securities to be Registered" contained in the
Company's Registration Statement on Form 8-A filed under the
Exchange Act with the Commission on October 14, 1995, and
incorporating by reference the information contained in the
Company's Registration Statement on Form S-1 (File No. 33-95980),
including any amendment or report filed for the purpose of
updating such description.
4. The description of the Preferred Stock Purchase Rights which
accompany each share of the Company's Common Stock contained in
the Company's Registration Statement on Form 8-A filed under the
Exchange Act with the Commission on October 14, 1995, and
incorporating by reference the information contained in the
Company's Registration Statement on Form S-1 (File No. 33-95980),
including any amendment or report filed for the purpose of
updating such description.
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the
offering of the Shares, shall be deemed to be incorporated by reference in this
Prospectus and made a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein or in any Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
3
<PAGE>
THE COMPANY
Investors Financial Services Corp. (the "Company"), based in Boston,
Massachusetts, provides a broad range of asset administration services for
the financial services industry through its wholly-owned subsidiary,
Investors Bank & Trust Company -Registered Trademark-. The Company provides
global custody, multicurrency accounting, institutional transfer agency,
performance measurement, foreign exchange, securities lending, mutual fund
administration and investment advisory services to a variety of financial
asset managers, including mutual fund complexes, investment advisors, banks
and insurance companies. The Company provides financial asset administration
services for assets that totaled approximately $155 billion at March 31,
1998, including assets managed by 55 mutual fund complexes and insurance
companies and approximately $11 billion of foreign assets. The Company also
engages in private banking transactions, including secured lending and
deposit accounts.
The Company's principal offices are located at 200 Clarendon Street,
Boston, Massachusetts 02117-9130, and the Company's telephone number is (617)
330-6700.
4
<PAGE>
RECENT DEVELOPMENTS
On May 29, 1998, the Company acquired all of the outstanding share
capital of AMT Capital Services, Inc. and AMT Capital Advisers, Inc.
(collectively, "AMT Capital"), pursuant to an Agreement and Plan of Merger
dated as of May 12, 1998 (the "Merger Agreement"), by and among the Company,
Investors Acquisition Sub I, Inc., Investors Acquisition Sub II, Inc., AMT
Capital and the Selling Stockholders (the "Acquisition"), in exchange for
194,006 shares of the Company's Common Stock. Of the 194,006 shares of Common
Stock issued to the Selling Stockholders, 18,938 shares are being held in
escrow by First Chicago Trust Company of New York as escrow agent pursuant to
an Escrow Agreement dated as of May 29, 1998 among the Company, the Selling
Stockholders and the escrow agent (the "Escrow Agreement") until the earlier
of (i) February 28, 1999 and (ii) the Company's first public announcement of
earnings following completion by the Company's independent public accountants
of the first full-year audit of the Company's financial statements following
May 29, 1998 to cover any reimbursable claims relating to the Acquisition.
The Acquisition has been accounted for under the "pooling-of-interests"
method and was structured as a tax-free reorganization under the Internal
Revenue Code. Each of the Selling Stockholders acquired his or her Shares as
a result of the Acquisition.
AMT Capital is a New York-based firm recognized for providing fund
administration services to global and domestic institutional investment
management firms. The acquisition will enhance the Company's offerings to
institutional investment managers who outsource the administration of pooled
investment products. Additionally, the combination of the substantial
expertise at both the Company and AMT Capital will further strengthen the
Company's strategic product development capabilities in support of clients
worldwide.Upon the consummation of the Acquisition, the AMT Capital companies
were renamed Investors Capital Services, Inc. and Investors Capital Advisors,
Inc.
5
<PAGE>
RISK FACTORS
In addition to other information presented in this Prospectus and the
information incorporated in this Prospectus by reference, the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing the Common Stock offered hereby. Certain statements
set forth in this Prospectus and the documents incorporated by reference herein
may constitute forward-looking statements (statements which are other than
historical fact) within the meaning of the Private Securities Litigation Reform
Act of 1995. Such statements are subject to risks and uncertainties, and the
Company's actual future results may differ materially from those stated in any
such forward-looking statements. Factors that may cause such differences
include, but are not limited to, those described in the following Risk Factors
and in the other risk factors described from time to time in the Company's
filings with the Securities and Exchange Commission.
Difficulty of Integrating Acquisitions. The acquisition of AMT Capital
Services, Inc. and AMT Capital Advisers, Inc. (collectively, "AMT Capital")
was consummated on May 29, 1998. AMT Capital currently operates as two
wholly-owned subsidiaries of the Company, Investors Capital Services, Inc.
and Investors Capital Advisers, Inc. The Company has limited experience in
integrating acquired companies, assets or technologies into its operations.
The Company may from time to time pursue the acquisition of other companies,
assets, products or technologies. There can be no assurance that the
products, technologies, key personnel and businesses of AMT Capital or any
other acquired companies will be successfully integrated into the Company's
business or product offerings, or that such integration and the corresponding
diversion of the attention of management will not adversely affect the
Company's business, financial condition or results of operations. There can
be no assurance that any acquired companies, assets, products or
technologies, including AMT Capital, will contribute significantly to the
Company's revenues, or that the revenues from acquired businesses will not be
adversely affected by the integration process or other factors. If the
Company is not successful in the integration of such acquired businesses,
including AMT Capital, there could be an adverse impact on the financial
results of the Company. There can be no assurance that the Company will
continue to be able to identify and consummate suitable acquisition
transactions in the future.
Management of Growth. The Company is currently experiencing a period of growth
which has placed, and could continue to place, a strain on the Company's
financial and other resources. The Company's ability to manage its staff and
facilities growth effectively will require it to continue to improve its
operational, financial and other internal systems, and to train, motivate and
manage its employees. If the Company's management is unable to manage growth
effectively and new employees are unable to achieve anticipated performance
levels, the Company's results of operations could be adversely affected.
Potential investors should consider the risks, expenses and difficulties
frequently encountered in connection with the operation and development of an
expanding business.
6
<PAGE>
Ability to Attract and Retain Employees. The Company's business involves the
delivery of professional services. The Company's success will depend in large
part upon its ability to attract, retain and motivate highly skilled employees,
particularly client managers and other senior financial services personnel.
Qualified senior financial services are in particularly great demand and are
likely to remain a limited resource for the foreseeable future. Although the
Company expects to continue to attract sufficient numbers of highly skilled
employees and to retain existing senior financial services, client managers and
other senior personnel for the foreseeable future, there can be no assurance
that the Company will be able to do so. The loss of a significant number of the
Company's senior personnel could have a material adverse impact on the Company,
including its ability to retain clients.
Fluctuation in Stock Markets and Interest Rates. Because certain fees charged by
the Company for its services are based on the market values of assets processed,
such fees and the Company's quarterly and annual operating results are sensitive
to changes in interest rates, declines in stock market values, and investors
seeking alternatives to the investment offerings of the Company's clients. Also,
the Company's interest-related services, along with the market value of the
Company's investments, may be adversely affected by rapid changes in interest
rates. In addition, many of the Company's client engagements are, and in the
future are likely to continue to be, terminable upon 60 days notice. Any
unanticipated client terminations, fluctuations in interest rates or declines in
stock market values could result in fluctuating quarterly and annual operating
results and could have a material adverse effect on the Company's results of
operations.
Intellectual Property. The Company relies on certain intellectual property
protections to preserve its intellectual property rights. Any failure by the
Company to properly protect its intellectual property rights or any invalidation
of the Company's intellectual property rights or lengthy and expensive defense
of those rights could have a material adverse effect on the Company and its
results of operations. In addition, the Year 2000 Issue discussed below may
adversely affect the Company's operations.
Competition. The segment of the financial services industry in which the Company
is engaged is extremely competitive. Certain current and potential competitors
of the Company are more established and benefit from greater market recognition
and have substantially greater financial and marketing resources than the
Company. As the large mutual fund complexes continue to grow and build in-house
asset administration service capabilities, they may no longer need to outsource
these services to the Company. The Company's competitors may succeed in
developing products and services that are more effective than those that have
been or will be developed by the Company and may also prove to be more
successful than the Company in producing and marketing those services to third
party asset managers. Any failure of the Company to compete effectively could
have a material adverse effect on the Company and its results of operations.
7
<PAGE>
Variability of Quarterly and Annual Operating Results. The Company's quarterly
and annual operating results are affected by a wide variety of factors that
could materially adversely affect revenues and profitability, including: the
timing of the commencement or termination of client engagements, the rate of net
inflows and outflows of investor funds in the debt and equity-based investment
vehicles offered by the Company's clients, the introduction and market
acceptance of new services by the Company and changes or anticipated changes in
economic conditions, including fluctuations in interest rates and declines in
stock market values. Because the Company's operating expenses are relatively
fixed, any unanticipated shortfall in revenues in a specified period may have an
adverse impact on the Company's results of operations for that period. As a
result of the foregoing and other factors, the Company may experience material
fluctuations in future operating results on a quarterly or annual basis which
could materially and adversely affect its business, financial condition,
operating results and stock price.
Impact of the Year 2000 Issue. The Year 2000 issue is the result of computer
programs being written using two digits rather than four to define the
applicable year. Any of the Company's computer programs that have date-sensitive
software may recognize a date using `00' as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions or operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities. The Company has determined that it will be required to modify or
upgrade portions of its software so that its computer systems will properly
utilize dates beyond December 31, 1999. The Company presently believes that with
modifications to, or upgrades of, existing software the Year 2000 issue can be
mitigated. However, if such modifications and upgrades are not made or are not
completed in a timely manner, the Year 2000 issue could have a material impact
on the operations of the Company. In addition, the Company may be vulnerable to
the failure of its significant suppliers and large customers to remediate their
own Year 2000 issue. There can be no assurance that the systems of the companies
on which the Company's systems rely will be timely remediated, or that the
failure to so remediate by another company, or a remediation that is
incompatible with the Company's systems, would not have a material adverse
effect on the Company.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of Shares by the
Selling Stockholders. See "Selling Stockholders" and "Plan of Distribution."
8
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the name of each Selling Stockholder,
the number and percentage of shares of Common Stock of the Company beneficially
owned prior to this offering by each Selling Stockholder and the maximum number
of Shares that each Selling Stockholder, his or her transferees, distributees,
pledgees, donees or other successors in interest may offer and sell pursuant to
this Prospectus. Since the Selling Stockholders may sell all, some or none of
their Shares, no estimate can be made of the actual number of shares of Common
Stock that will be sold by each Selling Stockholder or of the aggregate number
or percentage of shares of Common Stock of the Company that each Selling
Stockholder will own upon completion of the offering to which this Prospectus
relates. See "Plan of Distribution."
The Shares offered by this Prospectus may be offered from time to time
by and for the respective accounts of the Selling Stockholders named below.
<TABLE>
<CAPTION>
Number and Percentage Number of Shares
of Shares Beneficially Offered Pursuant
Selling Stockholders Owned Prior to Offering(1) to this Prospectus
-------------------- -------------------------- ------------------
Number Percent(2)
------ ----------
<S> <C> <C> <C>
Alan M. Trager 182,356(3) 2.7% 156,073
Carla E. Dearing 21,050(4) * 18,995
- ----------------
* Less than 1%.
</TABLE>
(1) Except as otherwise indicated, the persons named in the above table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission, and
includes voting and investment power with respect to shares.
(2) Based upon 6,691,549 shares of Common Stock outstanding as of June 22,
1998.
(3) Includes 16,883 shares of Common Stock held in escrow pursuant to the terms
of an Escrow Agreement dated as of May 29, 1998 by and among the Company,
First Chicago Trust Company of New York and the Selling Stockholders (the
"Escrow Agreement"), which shares are not included in the number of shares
offered pursuant to this Prospectus.
(4) Includes 2,055 shares of Common Stock held in escrow pursuant to the Escrow
Agreement, which shares are not included in the number of shares offered
pursuant to this Prospectus.
Each of the Selling Stockholders acquired his or her Shares in
connection with the Acquisition described under "Recent Developments." Neither
of the Selling Stockholders has had any material relationship with the Company
or any of its affiliates within the past three years except as described under
"Recent Developments" and this Section. Each Selling Stockholder was an officer
of each of AMT Capital Services, Inc. and AMT Capital Advisers, Inc. prior to,
and ending with, the consummation of the Acquisition.
Each Selling Stockholder represented to the Company that such Selling
Stockholder was acquiring his, her or its Shares without any present intention
of effecting a distribution of those Shares. In recognition of the fact,
however, that the Selling Stockholders may desire the ability to sell their
Shares when they consider it appropriate, in connection with the Acquisition the
9
<PAGE>
Company agreed in a Registration Rights Agreement dated as of May 29, 1998
between the Company and the Selling Stockholders (the "Registration Rights
Agreement") to file the Registration Statement with the Commission to permit the
public sale of the Shares and to use its best efforts to keep the Registration
Statement effective until the earlier of June 1, 2000 or the sale of all of the
Shares pursuant to the Registration Statement or Rule 144 under the Securities
Act. The Company will prepare and file such amendments and supplements to the
Registration Statement as may be necessary to keep it effective during such
period.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time by the Selling
Stockholders for their own accounts, subject to any contractual agreements by
the Selling Stockholders with respect to sales and the requirements relating to
sales of Shares under the "pooling-of-interests" accounting method. The Company
is responsible for the expenses incurred in connection with the registration of
the Shares, other than the fees and disbursements of legal counsel to the
Selling Stockholders. The Company will receive none of the proceeds from this
offering. The Selling Stockholders will pay or assume brokerage commissions or
other charges and expenses incurred in the sale of the Shares. In addition, the
Company has agreed to indemnify the Selling Stockholders against certain
liabilities, including liabilities under the Securities Act, and the Selling
Stockholders have agreed to indemnify the Company against certain liabilities,
including liabilities under the Securities Act.
The sale of the Shares by the Selling Stockholders is not currently
subject to any underwriting agreement. The Shares covered by this Prospectus may
be sold by the Selling Stockholders or by pledgees, donees, transferees,
distributees or other successors in interest from time to time. The Shares
offered by the Selling Stockholders may be sold from time to time at fixed
prices that may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. Such
sales may be effected in the over-the-counter market, on the National
Association of Securities Dealers Automated Quotation System, on the Nasdaq
National Market, or on any exchange on which the Shares may then be listed. The
Shares may be sold by one or more of the following: (a) in one or more block
trades in which a broker or dealer so engaged will attempt to sell all or a
portion of the Shares held by the Selling Stockholders as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
(b) through purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this Prospectus; (c) in ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
(d) in negotiated transactions; and (e) through other means.
The Selling Stockholders may effect such transactions by selling Shares
to or through broker-dealers, and such broker-dealers may receive compensation
in the form of underwriting discounts, concessions, commissions, or fees from
the Selling Stockholders and/or purchasers of the Shares for whom such
broker-dealers may act as agent or to whom they may sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). Such broker-dealers and the Selling Stockholders may be
deemed to be
10
<PAGE>
"underwriters" within the meaning of the Securities Act, in connection with such
sales, and any commissions received by them and any profit on the resale of
Shares placed by them might be deemed to be underwriting compensation.
The Company has informed the Selling Stockholders that the
antimanipulation rules under the Exchange Act (including, without limitation,
Rule10b-5 and Regulation M - Rule 102) may apply to sales in the market and will
furnish the Selling Stockholders upon request with a copy of these Rules. The
Company will also inform the Selling Stockholders of the need for delivery of
copies of this Prospectus.
Any Shares covered by this Prospectus that qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this Prospectus.
Pursuant to the Registration Rights Agreement, the Company agreed to
file the Registration Statement with the Commission to permit the public sale of
the Shares and to use its best efforts to keep the Registration Statement
effective until the earlier of June 1, 2000 or the sale of all of the Shares
pursuant to the Registration Statement or Rule 144 under the Securities Act. The
Selling Stockholders are not restricted as to the price or prices at which they
may sell their Shares. Sales of such Shares at less than the market prices may
depress the market price of the Company's Common Stock. During the effective
time of this Prospectus, the Selling Stockholders have agreed to potential
restrictions on resale if notified by the Company that there exists material
non-public information relating to the Company which, in the reasonable opinion
of the Company, should not be disclosed. Notwithstanding the foregoing, the
Company has agreed that the maximum aggregate number of days during which the
resale rights of the Selling Stockholders may be suspended during the
distribution period shall not exceed 90 days. The Selling Stockholders are not
restricted as to the number of Shares which may be sold at any one time, and it
is possible that a significant number of Shares could be sold at the same time.
First Chicago Trust Company of New York, 525 Washington Boulevard,
Jersey City, NJ 07303 is the transfer agent for the Company's Common Stock.
LEGAL MATTERS
Certain legal matters with respect to the issuance of the shares of
Common Stock offered hereby will be passed upon for the Company by Testa,
Hurwitz & Thibeault, LLP, Boston, Massachusetts. As of the date of this
Prospectus, certain attorneys with the firm of Testa, Hurwitz & Thibeault, LLP
beneficially own an aggregate of 2000 shares of the Company's Common Stock.
EXPERTS
The consolidated financial statements incorporated in this
prospectus by reference from the Company's Annual Report on Form 10-K have
been audited by Deloitte & Touche LLP, independent auditors, as stated in
their reports which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
11
<PAGE>
- ------------------------------------------------------
No person has been authorized to give any
information or to make any representations other
than those contained in this Prospectus and, if
given or made, such information or representations
must not be relied upon as having been authorized by
the Company, any Selling Stockholder or any other
person. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy in any
jurisdiction in which such offer or solicitation
would be unlawful or to any person to whom it is
unlawful. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any
circumstances, create an implication that there has
been no change in the affairs of the Company or that
information contained herein is correct as of any
time subsequent to the date hereof.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information 2
Incorporation of Certain Information
by Reference 3
The Company 4
Recent Developments 5
Risk Factors 6
Use of Proceeds 8
Selling Stockholders 9
Plan of Distribution 10
Legal Matters 11
Experts 11
</TABLE>
- -------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------
175,068 Shares
INVESTORS FINANCIAL SERVICES CORP.
COMMON STOCK
----------
PROSPECTUS
__________
________ __, 1998
- -----------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Estimated expenses (other than underwriting discounts and commissions)
payable in connection with the sale of the Common Stock offered hereby are as
follows:
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee...................... $ 2,682.32
Nasdaq Filing Fees........................ 3,880.12
Legal fees and expenses................... 20,000.00
Accounting fees and expenses.............. 1,000.00
----------
TOTAL..................................... $ 27,562.44
----------
----------
</TABLE>
The Company will bear all expenses shown above. The Selling
Stockholders will bear all fees and disbursements of their legal counsel.
Item 15. Indemnification of Directors and Officers.
The Delaware General Corporation Law and the Company's Certificate of
Incorporation provide for indemnification of the Company's directors and
officers for liabilities and expenses that they may incur in such capacities. In
general, directors and officers are indemnified with respect to actions taken in
good faith in a manner reasonably believed to be in, or not opposed to, the best
interests of the Company, and with respect to any criminal action or proceeding,
actions that the indemnity had no reasonable cause to believe were unlawful.
Reference is made to the Company's Certificate of Incorporation and By-laws
filed as Exhibits 3.1 and 3.2, respectively, to the Company's Registration
Statement on Form S-1 (File No. 33-95980).
The Company maintains directors' and officers' liability insurance to
insure the directors and certain officers of the Company against certain
liabilities and certain expenses in connection therewith which arise out of or
in connection with their capacities as such.
In addition, the Registration Rights Agreement executed in connection
with the Acquisition provides that the Selling Stockholders are obligated, under
certain circumstances, to indemnify the Company and its directors and officers
against certain liabilities, including liabilities under the Securities Act.
Reference is made to the Registration Rights Agreement filed as Exhibit 10.2 to
this Registration Statement on Form S-3.
II-1
<PAGE>
Item 16. Exhibits.
4.1 Certificate of Incorporation of the Company (filed as Exhibit 3.1
to the Company's Registration Statement on Form S-1 (File No.
33-95980) and incorporated herein by reference)
4.2 By-laws of the Company (filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (File No. 33-95980) and
incorporated herein by reference)
4.3 Rights Agreement, dated as of September 25, 1995, by and between
the Company and First Chicago Trust Company of New York (filed as
Exhibit 4.2 to the Company's Registration Statement on Form S-1
(File No. 33-95980) and incorporated herein by reference)
5.1* Opinion of Testa, Hurwitz & Thibeault, LLP
10.1/2.1* Agreement and Plan of Merger dated as of May 12, 1998 among the
Company, AMT Capital, Investors Acquisition Sub I, Investors
Acquisition Sub II and the Selling Stockholders
10.2* Registration Rights Agreement dated as of May 29, 1998 among the
Company, Alan M. Trager and Carla E. Dearing
10.3* Escrow Agreement dated as of May 29, 1998 among the Company,
First Chicago Trust Company of New York, Alan M. Trager and Carla
E. Dearing
23.1* Consent of Deloitte & Touche LLP
23.2* Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit
5.1)
24.1* Power of attorney (included on signature page)
- ------------------------
*Filed herewith.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in this Registration Statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in this Registration Statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where appropriate, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Boston, Massachusetts on June 29, 1998.
INVESTORS FINANCIAL SERVICES CORP.
By: /s/ Kevin J. Sheehan
-----------------------------------------
Kevin J. Sheehan
President, Chief Executive Officer
and Chairman of the Board
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Investors Financial
Services Corp., hereby severally constitute and appoint Kevin J. Sheehan and
Karen C. Keenan, and each of them singly, our true and lawful attorneys, with
full power to them and each of them singly, to sign for us in our names in the
capacities indicated below, all pre-effective and post-effective amendments to
this registration statement, and generally do all things in our names and on our
behalf in such capacities to enable Investors Financial Services Corp. to comply
with the provisions of the Securities Act of 1933 and all requirements of the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title(s) Date
- --------- -------- ----
<S> <C> <C>
/s/ Kevin J. Sheehan President, Chief Executive Officer and June 29, 1998
- ----------------------------------------
Kevin J. Sheehan Chairman (Principal Executive Officer)
/s/ Karen C. Keenan Senior Vice President, Chief Financial June 29, 1998
- ----------------------------------------
Karen C. Keenan Officer and Treasurer (Principal Financial
Officer an Principal Accounting Officer)
/s/ James M. Oates Director June 29, 1998
- ----------------------------------------
James M. Oates
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title(s) Date
- --------- -------- ----
<S> <C> <C>
/s/ Thomas P. McDermott Director June 29, 1998
- ----------------------------------------
Thomas P. McDermott
/s/ Robert B. Fraser Director June 29, 1998
- ----------------------------------------
Robert B. Fraser
/s/ Frank B. Condon, Jr. Director June 29, 1998
- ----------------------------------------
Frank B. Condon, Jr.
/s/ Donald G. Friedl Director June 29, 1998
- ----------------------------------------
Donald G. Friedl
/s/ Phyllis S. Swersky Director June 29, 1998
- ----------------------------------------
Phyllis S. Swersky
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
4.1 Certificate of Incorporation of the Company (filed as Exhibit 3.1
to the Company's Registration Statement on Form S-1 (File No.
33-95980) and incorporated herein by reference)
4.2 By-laws of the Company (filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (File No. 33-95980) and
incorporated herein by reference)
4.3 Rights Agreement, dated as of September 25, 1995, by and between
the Company and First Chicago Trust Company of New York (filed as
Exhibit 4.2 to the Company's Registration Statement on Form S-1
(File No. 33-95980) and incorporated herein by reference)
5.1* Opinion of Testa, Hurwitz & Thibeault, LLP
10.1/2.1* Agreement and Plan of Merger dated as of May 12, 1998 among the
Company, AMT Capital, Investors Acquisitions Sub I, Investors
Acquisition Sub II and the Selling Stockholders
10.2* Registration Rights Agreement dated as of May 29, 1998 among the
Company, Alan M. Trager and Carla E. Dearing
10.3* Escrow Agreement dated as of May 29, 1998 among the Company,
First Chicago Trust Company of New York, Alan M. Trager and Carla
E. Dearing
23.1* Consent of Deloitte & Touche LLP
23.2* Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit
5.1)
24.1* Power of attorney (included on signature page)
- ------------------------
*Filed herewith.
<PAGE>
Exhibit 5.1
June 29, 1998
Investors Financial Services Corporation
200 Clarendon Street
Boston, Massachusetts 02117-9130
Re: S-3 Registration Statement
--------------------------
Ladies and Gentlemen:
We are counsel to Investors Financial Services Corporation, a Delaware
corporation (the "Company"), and have represented the Company in connection with
the preparation and filing of the Company's Registration Statement on Form S-3
(the "Registration Statement") under the Securities Act of 1933, as amended,
covering the sale to the public of an aggregate of 175,068 outstanding shares of
the Company's Common Stock, $.01 par value per share (the "Shares"), being sold
by certain stockholders of the Company.
We have reviewed the corporate proceedings taken by the Board of
Directors of the Company with respect to the authorization and issuance of the
Shares. We have also examined and relied upon originals or copies, certified or
otherwise authenticated to our satisfaction, of all corporate records,
documents, agreements or other instruments of the Company and have made all
investigations of law and have discussed with the Company's officers all
questions of fact that we have deemed necessary or appropriate.
Based upon and subject to the foregoing, we are of the opinion that the
Shares are legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm in the Prospectus
contained in the Registration Statement under the caption "Legal Matters."
Very truly yours,
/s/ Testa, Hurwitz & Thibeault, LLP
TESTA, HURWITZ & THIBEAULT, LLP
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
among
INVESTORS FINANCIAL SERVICES CORP.,
INVESTORS ACQUISITION SUB. I
AND
INVESTORS ACQUISITION SUB. II
AND
AMT CAPITAL SERVICES, INC.,
AMT CAPITAL ADVISERS, INC.
AND
THE SHAREHOLDERS LISTED HEREIN
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Dated as of May 12, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
ARTICLE I
DEFINITIONS.....................................................................................................1
1.01. Definitions.....................................................................................1
ARTICLE II
THE MERGERS.....................................................................................................3
2.01. The Mergers.....................................................................................3
2.02. Closing.........................................................................................4
2.03. Effective Time..................................................................................4
2.04 Effect of Each Merger............................................................................4
2.05. Certificate of Incorporation; By-Laws...........................................................4
2.06 Directors and Officers...........................................................................4
2.07 Consent of Shareholders..........................................................................5
ARTICLE III
CONVERSTION OF SHARES; EXCHANGE OF SHARES.......................................................................5
3.01. Conversion of Shares............................................................................5
3.02. Delivery of Parent Common Stock.................................................................6
3.03. Adjustments.....................................................................................7
3.04. Dissenting Shares...............................................................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE
COMPANY SHAREHOLDERS............................................................................................7
4.01. Corporate Existence.............................................................................7
4.02. Title to and Validity of Shares; Authority......................................................8
4.03. Governmental Authorization; Consents............................................................8
4.04. Non-Contravention...............................................................................8
4.05. Capitalization..................................................................................9
4.06. Subsidiaries....................................................................................9
4.07. Financial Statements............................................................................9
4.08. Absence of Certain Changes.....................................................................10
4.09. Property and Equipment.........................................................................10
4.10. No Undisclosed Material Liabilities............................................................11
4.11. Litigation.....................................................................................11
4.12. Material Contracts.............................................................................11
4.13. Insurance Coverage.............................................................................12
4.14. Compliance with Laws; No Defaults..............................................................12
4.15. Finders' Fees..................................................................................13
4.16. Intellectual Property..........................................................................13
4.17. Taxes..........................................................................................14
4.18. Employees......................................................................................15
4.19. Environmental Compliance.......................................................................16
4.20. Customers and Suppliers........................................................................16
4.21. Transactions with Affiliates...................................................................17
4.22. Other Information..............................................................................17
4.23. Investment Representations.....................................................................17
4.24. Accounts Receivable............................................................................18
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE MERGER SUBS...................................................18
5.01. Organization and Existence.....................................................................18
5.02. Corporate Authorization........................................................................18
5.03. Governmental Authorization.....................................................................18
5.04. Non-Contravention..............................................................................18
5.05. Finders' Fees..................................................................................18
5.06. Purchase for Investment........................................................................18
5.07. Litigation.....................................................................................19
5.08. SEC Reports....................................................................................19
5.09. Validity of Parent Common Stock................................................................19
5.10. Absence of Certain Changes or Events...........................................................19
5.11. Capitalization.................................................................................19
ARTICLE VI
COVENANTS OF THE COMPANIES AND THE COMPANY SHAREHOLDERS........................................................20
6.01. Conduct of the Companies.......................................................................20
6.02. Access to Information..........................................................................21
6.03. Notices of Certain Events......................................................................21
6.04. No Negotiations with Third Parties.............................................................21
6.05. Confidentiality................................................................................21
6.06. Continuing Disclosure..........................................................................22
6.07. Taxation.......................................................................................22
6.08. Resale Covenant................................................................................22
6.09. Insurance......................................................................................22
6.10. Financial Statements...........................................................................22
ARTICLE VII
COVENANTS OF PARENT............................................................................................23
7.01. Confidentiality................................................................................23
7.02. Access.........................................................................................23
7.03. Documents to be Furnished......................................................................23
7.04. Tax Treatment..................................................................................23
ARTICLE VIII
COVENANTS OF ALL PARTIES ......................................................................................24
8.01. Best Efforts...................................................................................24
8.02. Certain Filings................................................................................24
8.03. Public Announcements...........................................................................24
8.04. Pooling........................................................................................24
ARTICLE IX
EMPLOYEE BENEFITS..............................................................................................24
9.01. Employee Benefits Definitions..................................................................24
9.02. ERISA Representations..........................................................................25
9.03. No Third Party Beneficiaries...................................................................26
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE X
CONDITIONS TO CLOSING..........................................................................................26
10.01. Conditions to the Obligations of Each Party...................................................26
10.02. Conditions to the Obligations of Parent and the Merger Subs...................................26
10.03. Conditions to the Obligations of the Companies and the Company Shareholders...................28
ARTICLE XI
SURVIVAL; INDEMNIFICATION......................................................................................28
11.01. Survival of Representations and Covenants.....................................................28
11.02. Indemnification...............................................................................29
11.03. Indemnification Procedure.....................................................................29
11.04. Claims Against Escrow.........................................................................31
11.05. No Waiver.....................................................................................31
11.06. Sole Remedy...................................................................................31
ARTICLE XII
TERMINATION....................................................................................................31
12.01. Grounds for Termination.......................................................................31
12.02. Effect of Termination.........................................................................32
ARTICLE XIII
MISCELLANEOUS..................................................................................................32
13.01. Company Shareholders..........................................................................32
13.02. Notices.......................................................................................32
13.03. Amendments; No Waivers........................................................................33
13.04. Expenses......................................................................................33
13.05. Successors and Assigns........................................................................33
13.06. Further Assurances............................................................................33
13.07. Governing Law.................................................................................33
13.08. Counterparts; Effectiveness...................................................................33
13.09. Entire Agreement..............................................................................34
13.10. Captions......................................................................................34
13.11. Jurisdiction..................................................................................34
</TABLE>
Schedules
<TABLE>
<S> <C>
Schedule 4.01.....Corporate Existence Schedule 4.12.....Material Contracts
Schedule 4.02.....Title to and Validity of Shares Schedule 4.14.....Permits Schedule
.........Authority Schedule 4.16.....Intellectual Property
Schedule 4.03.....Governmental Authorities; Consents Schedule 4.17.....Tax Matters
Schedule 4.04.....Non-Contravention Schedule 4.18.....Employees
Schedule 4.06.....Subsidiaries Schedule 4.20.....Customers and Suppliers
Schedule 4.07.....Financial Statements Schedule 4.21.....Transactions with Affiliates
Schedule 4.08.....Absence of Certain Changes Schedule 4.22.....Other Information
Schedule 4.09.....Property and Equipment Schedule 6.01.....Conduct of the Companies
Schedule 4.10.....Liabilities Schedule 9.02.....ERISA Matters
Schedule 4.11.....Litigation Schedule 10.02....Certain Employees
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 12,
1998 by and among Investors Financial Services Corp., a Delaware corporation
("Parent"); Investors Acquisition Sub. I ("Merger Sub I") and Investors
Acquisition Sub. II ("Merger Sub II"), both Delaware corporations and
wholly-owned subsidiaries of Parent (Merger Sub I and Merger Sub II sometimes
referred to herein collectively as the "Merger Subs"); AMT Capital Services,
Inc. ("Capital Services") and AMT Capital Advisers, Inc. ("Capital Advisers"),
both Delaware corporations (each of Capital Services and Capital Advisers
sometimes referred to herein individually as a "Company" and collectively as the
"Companies"); and Alan M. Trager ("Trager") and Carla E. Dearing ("Dearing")
(collectively, "Company Shareholders" and each individually a "Company
Shareholder").
ARTICLE I
DEFINITIONS
1.01. Definitions. 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 Registration Rights
Agreement, the Non-Competition Agreement, the License Agreement, the Employment
Agreement, the Escrow Agreement, the Pooling Lock-Up Agreement and the Space
Agreement.
"Balance Sheet" means the consolidated balance sheets of each
Company as of December 31, 1997 referred to in Section 4.07.
"Balance Sheet Date" means December 31, 1997.
"CERCLA" means the Comprehensive Environmental Responses,
Compensation and Liability Act of 1980, as amended.
"Closing Financial Statements" means the unaudited
consolidated balance sheets of each Company as of the date five business days
prior to the Closing Date and the unaudited consolidated statements of income,
cash flows and changes in stockholders' equity of each Company for the period
from January 1, 1998 through the date five business days prior to the Closing
Date.
"Closing Market Value" means the average of the closing bid
price of the Parent Stock as reported on the Nasdaq Stock Market for the ten-day
trading period ending two days prior to the Closing Date.
"Company Shares" means, collectively, the Advisors Shares and
the Services Shares.
"Employment Agreement" means the Employment Agreement to be
delivered by William Vastardis in the form attached hereto as Exhibit 1.
"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
<PAGE>
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
Companies 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 and (ii) arise from or relate in any way
to actions occurring or conditions existing before the Closing Date.
"Escrow Agent" shall have the meaning ascribed thereto in the
Escrow Agreement.
"Escrow Agreement" means the Escrow Agreement to be delivered
by the Company Shareholders, Parent and the Escrow Agent in the form set forth
in Exhibit 2.
"Hazardous Substance" means any toxic, caustic or otherwise
hazardous substance, including, without limitation, petroleum, its derivatives,
by-products and other hydrocarbons, regulated under Environmental Laws.
"Intellectual Property" shall mean: all domestic and foreign
letters patent, patents, patent applications and patent licenses; software and
software licenses; know-how and know-how licenses; trade secrets and trade
secret licenses; proprietary (including "confidential") information of every
nature, and proprietary information licenses; common law trademarks; trademarks
and trademark registration applications and registrations therefor; service
marks, registered service marks and service mark registration applications;
trade names, registered trade names and trade name registration applications;
common law copyrights; registered copyrights and copyright registration
applications; and all other technical or technological information or rights of
every nature, owned by or licensed to the Companies or any Subsidiary, whether
or not used by the Companies or any such Subsidiary in, or necessary to the
conduct of, its business as presently conducted.
"License Agreement" shall mean the License Agreement to be
delivered by Parent and Trager in the form attached hereto as Exhibit 3.
"Lien" means any mortgage, lien, pledge, charge, security
interest, license, restriction or encumbrance of any kind whatsoever.
"Material Adverse Change" means a material adverse change in
the business, assets, condition (financial or otherwise), or results of
operations of the Companies and the Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on
the business, assets, condition (financial or otherwise), or results or
operations of the Companies and the Subsidiaries taken as whole.
"1933 Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"1933 Act Legend" means the following legend:
"The Securities represented hereby have not been
registered under the Securities Act of 1933, as
amended, or any state securities laws and may not be
sold, transferred or otherwise disposed of except in
accordance with the terms thereof and unless
registered with the Securities and Exchange
Commission of the United States and the securities
regulatory authorities of certain states or unless an
exemption from such registration is available."
"1934 Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
2
<PAGE>
"Non-Competition Agreement" means the Non-Competition
Agreement to be delivered by Trager in the form attached hereto as Exhibit 4.
"Parent Stock" means the Parent's Common Stock, $.01 par value
per share.
"Parent's Counsel" means the law firm of Testa, Hurwitz &
Thibeault, LLP, Boston, Massachusetts.
"Person" means an individual, corporation, partnership,
association, limited liability company or partnership, trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Pooling Lock-Up Agreement" means the Pooling Lock-Up
Agreement to be delivered by the Company Shareholders in the form attached
hereto as Exhibit 5.
"Registration Rights Agreement" means the Registration Rights
Agreement to be delivered by the Parent and the Company Shareholders in the form
attached hereto as Exhibit 6.
"Regulated Activity" means any generation, treatment, storage,
recycling, transportation or disposal of any Hazardous Substance.
"Release" has the meaning specified in 42 U.S.C. Section 9601.
"Space Agreement" means the Space Agreement to be delivered by
Parent in a form acceptable to Trager and Parent.
"Stockholders' Agreements" means the Stockholders' Agreement
by and among Trager, Dearing and Capital Services dated May 5, 1992 and the
Stockholders' Agreement by and among Trager, Dearing and Capital Advisers dated
May 5, 1992.
"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 either Company.
"Trager's Counsel" means the law firm of Gilbert, Segall and
Young, LLP, New York, New York.
ARTICLE II
THE MERGERS
2.01. The Mergers. At the Effective Time (as defined in Section 2.03),
and subject to and upon the terms and conditions of this Agreement and the
Delaware General Corporation Law ("DCL"), (i) Merger Sub I shall be merged with
and into Capital Services, the separate corporate existence of Merger Sub I
shall cease, and Capital Services shall continue as the surviving corporation
(the "Services Merger") and (ii) Merger Sub II shall be merged with and into
Capital Advisers, the separate corporate existence of Merger Sub II shall cease,
and Capital Advisers shall continue as the surviving corporation (the "Advisers
Merger"). Each of the Services Merger and the Advisers Merger is sometimes
referred to individually as a "Merger" and collectively as the "Mergers". Each
of Capital Services and Capital Advisers, as the surviving corporation after its
Merger, is hereinafter sometimes referred to as the "Surviving Corporation" with
respect to that Merger.
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2.02. CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Article
XII, the consummation of the Mergers (the "Closing") will take place at 10:00
a.m., Boston time, as soon as practicable (but in no event later than the second
business day) after satisfaction or waiver of the conditions set forth in
Article X (the "Closing Date"), at the offices of Investors Financial Services
Corp., 17th Floor, 200 Clarendon Street, Boston, Massachusetts, unless another
date, time or place is agreed to in writing by the parties hereto.
2.03. EFFECTIVE TIME. On the Closing Date, the parties hereto shall
cause each Merger to be consummated by filing, with respect to each Merger, a
certificate of merger as contemplated by Section 251 of the DCL (each a
"Certificate of Merger" and collectively the "Certificates of Merger"), together
with any required related certificates, with the Secretary of State of the State
of Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DCL (the time of such filing being the "Effective
Time" of such Merger).
2.04. EFFECT OF EACH MERGER. At the Effective Time of each Merger, the
effect of such Merger shall be as provided in this Agreement, the relevant
Certificate of Merger and the applicable provisions of the DCL. Without limiting
the generality of the foregoing, and subject thereto, (i) at the Effective Time
of the Services Merger, all the property, rights, privileges, powers and
franchises of Capital Services and Merger Sub I shall vest in the Surviving
Corporation of the Services Merger, and all debts, liabilities and duties of
Capital Services and Merger Sub I shall become the debts, liabilities and duties
of the Surviving Corporation of the Services Merger, and (ii) at the Effective
Time of the Advisers Merger, all the property, rights, privileges, powers and
franchises of Capital Advisers and Merger Sub II shall vest in the Surviving
Corporation of the Advisers Merger, and all debts, liabilities and duties of
Capital Advisers and Merger Sub II shall become the debts, liabilities and
duties of the Surviving Corporation of the Advisers Merger. At the Effective
Time, the Stockholders' Agreements shall terminate and be of no further force
and effect. Each Merger is intended to constitute a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
2.05. CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) Certificate of Incorporation. Unless otherwise determined
by Parent prior to the Closing Date, (i) at the Effective Time of the Services
Merger, the Certificate of Incorporation of the Surviving Corporation of the
Services Merger shall be amended to be in the form of the Certificate of
Incorporation of Merger Sub I as in effect immediately prior to the Effective
Time of the Services Merger; provided, however, that Article I of the
Certificate of Incorporation of such Surviving Corporation shall be amended to
read as follows: "FIRST: The name of the corporation is "Investors Capital
Services, Inc."; and (ii) at the Effective Time of the Advisers Merger, the
Certificate of Incorporation of the Surviving Corporation of the Advisers Merger
shall be amended to be in the form of the Certificate of Incorporation of Merger
Sub II, as in effect immediately prior to the Effective Time of the Advisers
Merger; provided, however, that Article I of the Certificate of Incorporation of
such Surviving Corporation shall be amended to read as follows: "FIRST: The name
of the corporation is "Investors Capital Advisers, Inc."
(b) By-Laws. The By-Laws of Merger Sub I, as in effect
immediately prior to the Effective Time of the Services Merger, shall be the
By-Laws of the Surviving Corporation of the Services Merger until thereafter
amended as provided by the DCL, the Certificate of Incorporation of the
Surviving Corporation of the Services Merger and such By-Laws. The By-Laws of
Merger Sub II, as in effect immediately prior to the Effective Time of the
Advisers Merger, shall be the By-Laws of the Surviving Corporation of the
Advisers Merger until thereafter amended as provided by the DCL, the Certificate
of Incorporation of the Surviving Corporation of the Advisers Merger and such
By-Laws.
2.06. DIRECTORS AND OFFICERS. The directors of Merger Sub I immediately
prior to the Effective Time of the Services Merger shall be the initial
directors of the Surviving Corporation of the Services Merger, each to hold
office in accordance with the Certificate of Incorporation and By-Laws of the
Surviving Corporation of the Services Merger, and the officers of Merger Sub I
immediately prior to the Effective Time of the Services Merger shall be
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the initial officers of the Surviving Corporation of the Services Merger, in
each case until their respective successors are duly elected or appointed and
qualified. The directors of Merger Sub II immediately prior to the Effective
Time of the Advisers Merger shall be the initial directors of the Surviving
Corporation of the Advisers Merger, each to hold office in accordance with the
Certificate of Incorporation and By-Laws of the Surviving Corporation of the
Advisers Merger, and the officers of Merger Sub II immediately prior to the
Effective Time of the Advisers Merger shall be the initial officers of the
Surviving Corporation of the Advisers Merger, in each case until their
respective successors are duly elected or appointed and qualified.
2.07. CONSENT OF SHAREHOLDERS. Each Company will take all action
necessary in accordance with applicable law and its Certificate of Incorporation
and By-Laws to solicit the approval of this Agreement, the relevant Merger and
all of the transactions contemplated hereby by all of the shareholders of such
Company. Each Company represents and warrants that its Board of Directors,
pursuant to a unanimous written consent, has approved this Agreement, the
relevant Merger and all of the transactions contemplated hereby. The Parent
represents and warrants that its Board of Directors, at a meeting duly called
and held, has approved this Agreement, the relevant Merger and all of the
transactions contemplated hereby.
ARTICLE III
CONVERSION OF SHARES; EXCHANGE OF SHARES
3.01 CONVERSION OF SHARES.
(a) Subject, without limitation, to the provisions of Section 3.02
hereof, at the Effective Time of the Services Merger, by virtue of the Services
Merger and without any action on the part of any holder of any shares of common
stock, par value $1.00 per share, of Capital Services (the "Services Shares" and
each a "Services Share"), each Services Share issued and outstanding immediately
prior to the Effective Time of the Services Merger (excluding any Services
Shares owned, directly or indirectly, by either Company or any Subsidiary or by
Parent, either Merger Sub or any other subsidiary of Parent and Dissenting
Shares (as defined in Section 3.04) shall be converted into the right to receive
a number of shares (which number may be a fraction) of Parent Common Stock equal
to the quotient obtained by first dividing the Services Consideration Value (as
defined below) by 1,241.07, and then dividing that quotient by the Closing
Market Value. The term "Services Consideration Value" means $9,208,000, subject
to adjustment as set forth in this Section 3.01(a). At least four business days
prior to the Closing Date, the Company Shareholders shall deliver to Parent the
Closing Financial Statements. If the net income of Capital Services as set forth
on the face of the statement of income of Capital Services included in the
Closing Financial Statements is greater than $300,000, the Services
Consideration Value shall be increased by the amount by which such net income
exceeds $300,000. If such net income is less than $300,000, the Services
Consideration Value shall be decreased by the amount by which such net income is
less than $300,000 (the amount of the net loss).
(b) Subject, without limitation, to the provisions of Section 3.02
hereof, at the Effective Time of the Advisers Merger, by virtue of the Advisers
Merger and without any action on the part of any holder of any shares of common
stock, par value $1.00 per share, of Capital Advisers (the "Advisers Shares" and
each an "Advisers Share"), each Advisers Share issued and outstanding
immediately prior to the Effective Time of the Advisers Merger (excluding any
Advisers Shares owned, directly or indirectly, by either Company or any
Subsidiary or by Parent, either Merger Sub or any other subsidiary of Parent and
Dissenting Shares) shall be converted into the right to receive a number of
shares (which number may be a fraction) of Parent Common Stock equal to the
quotient obtained by first dividing the Advisers Consideration Value (as defined
below) by 1,111.11, and then dividing that quotient by the Closing Market Value.
The term "Advisers Consideration Value" means $1,250,000, subject to adjustment
as set forth in this Section 3.01(b). At least four business days prior to the
Closing Date, the Company Shareholders shall deliver to Parent the Closing
Financial Statements. If the net income of Capital Advisers as set forth on the
face of the statement of income of Capital Advisers included in the Closing
Financial Statements is greater than zero, the Advisers Consideration Value
shall be increased by the amount by which such net income exceeds zero. If such
net income is less than zero (a net loss), the Advisers Consideration Value
shall
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be decreased by the amount by which such net income is less than zero (the
amount of the net loss).
(c) Each share of the capital stock of Merger Sub I issued and
outstanding immediately prior to the Effective Time of the Services Merger shall
be converted into and become one fully paid and nonassessable share of Common
Stock, par value $.01 per share, of the Surviving Corporation of the Services
Merger. Each share of the capital stock of Merger Sub II issued and outstanding
immediately prior to the Effective Time of the Advisers Merger shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $.01 per share, of the Surviving Corporation of the Advisers
Merger.
(d) Each Services Share and each Advisers Share and all other shares of
capital stock of both Companies that are owned by either Company or any
Subsidiary and each Services Share and each Advisers Share and all other shares
of capital stock of both Companies that are owned by Parent, either Merger Sub
or any other wholly-owned subsidiary of Parent shall be canceled and retired and
shall cease to exist and no consideration shall be delivered or deliverable in
exchange therefor.
(e) All Services Shares and Advisers Shares, when converted as provided
herein, no longer shall be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each Certificate (as defined in Section
3.02) previously evidencing Services Shares or Advisers Shares which has not
been surrendered shall thereafter represent only the right to receive shares of
Parent Common Stock as provided in Sections 3.01(a) and (b) above, subject to
Section 3.02. The holders of Certificates previously evidencing Services Shares
and Advisers Shares outstanding immediately prior the applicable Effective Time
shall cease to have any rights with respect to the Services Shares and the
Advisers Shares, as applicable, except as otherwise provided herein or by law
and, upon the surrender of Certificates in accordance with the provisions of
Section 3.02, shall only represent the right to receive for their Services
Shares and Advisers Shares shares of Parent Common Stock as provided in Sections
3.01(a) and (b) above, subject to Section 3.02. Any dividends or other
distributions declared after the Effective Time with respect to Parent Common
Stock shall be paid to the holder of any Certificate only when the holder
surrenders such Certificate in accordance with Section 3.02. After the Effective
Time, there shall be no transfers on the stock record books of either Company,
which books shall be closed.
3.02. DELIVERY OF PARENT COMMON STOCK.
(a) At the Closing, each Company Shareholder shall deliver to
the Parent such Company Shareholder's certificate or certificates which
immediately prior to the Effective Time represented issued and outstanding
Company Shares (individually a "Certificate" and collectively the
"Certificates"). Subject to this Section 3.02(a), such Company Shareholder shall
be entitled to receive in exchange therefor a certificate representing all of
the shares of Parent Common Stock that such holder is entitled to receive
pursuant to Section 3.01 hereof, rounded up to the nearest whole number. No
certificates or scrip for fractional shares of Parent Common Stock will be
issued, no Parent stock split or dividend shall be paid in respect of any
fractional share interest, and no such fractional shares interest shall entitle
the owner thereof to vote or to any rights of or as a stockholder of Parent. Of
the total number of shares of Parent Common Stock issuable to the Company
Shareholders, an aggregate number of shares of Parent Common Stock equal to
$1,000,000 divided by the Closing Market Value rounded up to the nearest share
(the "Escrow Shares") shall be deposited by the Parent with the Escrow Agent in
accordance with the terms and provisions of the Escrow Agreement. The Escrow
Shares to be delivered to the Escrow Agent shall be allocated to, and deemed
delivered on behalf of, each Company Shareholder in an amount equal the product
of (i) the total number of Escrow Shares to be delivered to the Escrow Agent and
(ii) a fraction, the numerator of which is the number of shares of Parent Common
Stock to which such Company Shareholder is entitled pursuant to Section 3.01 and
this Section 3.02, and the denominator of which is the total number of shares of
Parent Common Stock issued pursuant to Section 3.01 and this Section 3.02,
rounded up to the next whole share. The delivery of the Escrow Shares shall be
made on behalf of the Company Shareholders in accordance with the provisions
hereof, with the same force and effect as if such shares had been delivered by
Parent directly to such holders and subsequently delivered by such holders to
the Escrow Agent. The shares so deposited shall be evidenced by separate
certificates in the names of the Company Shareholders and shall be subject to
the terms and conditions of the Escrow Agreement.
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(b) If any certificate for shares of Parent Common Stock is to
be issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it will be a condition of the issuance thereof
that such transfer be in compliance with any applicable state and federal
securities laws and that the certificate so surrendered will be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Common Stock in any name other than that of the registered
holder of the certificate surrendered, or established to the satisfaction of
Parent or any agent designated by it that such tax has been paid or is not
payable.
3.03 ADJUSTMENTS. If, between the date hereof and the Effective Time,
the outstanding shares of Parent Common Stock shall be changed into a different
number of shares or a different class by reason of any reclassification,
recapitalization, split-up, exchange of shares or readjustment, or if a stock
dividend thereon shall be declared with a record date within such period, the
number of shares of Parent Common Stock to be issued and delivered in the
Mergers for each outstanding Company Share as provided in this Agreement shall
be correspondingly adjusted.
3.04. DISSENTING SHARES. Notwithstanding any other provisions of this
Agreement to the contrary, Services Shares and Advisers Shares that are
outstanding immediately prior to the relevant Effective Time and which are held
by shareholders who shall have not voted in favor of the relevant Merger or
consented thereto in writing and who shall have demanded properly in writing
appraisal for such shares in accordance with Section 262 of the DCL
(collectively, the "Dissenting Shares") shall not be converted into or represent
the right to receive shares of Parent Common Stock. Such shareholders shall be
entitled to receive payment in cash of the appraised value of such Services
Shares and Advisers Shares held by them in accordance with the provisions of
such Section 262, except that all Dissenting Shares held by shareholders who
shall have failed to perfect or who effectively shall have withdrawn or lost
their rights to appraisal of such Services Shares or Advisers Shares under such
Section 262 shall thereupon be deemed to have been converted into and to have
become exchangeable, as of the applicable Effective Time, for the right to
receive Parent Common Stock upon surrender, in the manner provided in Section
3.02, of the Certificate or Certificates that immediately prior to the Effective
Time evidenced such Services Shares and/or Advisers Shares. Each Company shall
give Parent (i) prompt notice of any written demand for appraisal received by
either Company pursuant to the applicable provisions of the DCL and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
such demands. Neither Company shall, except with the prior written consent of
Parent, voluntarily make any payment with respect to any such demands or offer
to settle or settle any such demands.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
AND THE COMPANY SHAREHOLDERS
Each of the Companies and each Company Shareholder hereby jointly and
severally represent and warrant to Parent and the Merger Subs that:
4.01. CORPORATE EXISTENCE. Each Company is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and, except as set forth in Schedule 4.01, has
all corporate powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted. Each 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. Each Company has heretofore
delivered to Parent true and complete copies of the corporate charter and bylaws
of such Company as currently in effect.
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4.02. TITLE TO AND VALIDITY OF SHARES; AUTHORITY.
(a) Except as set forth on Schedule 4.02, Each Company
Shareholder now has, and on the Closing Date will have, good and marketable
title to and unrestricted power to vote the Shares designated as owned by such
Company Shareholder opposite such Company Shareholder's name on Schedule 4.02,
free and clear of any Lien. All Shares owned by such Company Shareholder have
been duly authorized and validly issued by the relevant Company and are fully
paid and non-assessable. All Shares to be exchanged by each Company Shareholder
are registered in the name of such Company Shareholder. Each Company Shareholder
has the legal power, right and authority to enter into and perform this
Agreement and each of the Ancillary Agreements to be executed by such Company
Shareholder, and to perform each of such Company Shareholder's obligations
hereunder. Except as set forth in Schedule 4.02, the execution, delivery and
performance by each Company Shareholder of this Agreement and each of the
Ancillary Agreements to be executed by such Company Shareholder (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 Company Shareholder. This Agreement and each of the Ancillary
Agreements to which such Company Shareholder is a party has been duly executed
and delivered by each Company Shareholder and constitutes a valid and binding
obligation of such Company Shareholder, enforceable against such Company
Shareholder in accordance with its terms, except that the Companies and the
Company Shareholders make no representation or warranty as to the enforceability
of the indemnification provisions of the Registration Rights Agreement.
(b) The execution, delivery and performance by each Company of
this Agreement and the Ancillary Agreements, to the extent delivered by them,
and the consummation by each Company of the transactions contemplated hereby and
thereby are within the corporate powers of each Company and have been duly
authorized by all necessary corporate action on the part of each Company. This
Agreement and each of the Ancillary Agreements to which either Company is a
party constitutes a valid and binding agreement of such Company enforceable
against such Company in accordance with its terms, except that the Companies and
the Company Shareholders make no representation or warranty as to the
enforceability of the indemnification provisions of the Registration Rights
Agreement.
4.03. GOVERNMENTAL AUTHORIZATION; CONSENTS.
(a) Except as set forth in Schedule 4.03(a), the execution,
delivery and performance by the Company Shareholders of this Agreement and the
Ancillary Agreements, to the extent delivered by them, require no action by or
in respect of, or filing with, any governmental body, agency, official or
authority.
(b) Except as set forth in Schedule 4.03(b), no consent,
approval, waiver or other action by any Person under any contract, agreement,
indenture, lease, instrument or other document to which either Company
Shareholder, the Companies or any Subsidiary is a party or by which any of them
is bound or to which any of them is subject is required or necessary for the
execution, delivery and performance of this Agreement and each of the Ancillary
Agreements.
4.04. NON-CONTRAVENTION. The execution, delivery and performance of
this Agreement do not and will not (i) contravene or conflict with the corporate
charter or bylaws of either of the Companies, (ii) assuming compliance with the
matters referred to in 4.03(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 either Company Shareholder, the
Companies or any Subsidiary; (iii) except as set forth in Schedule 4.04,
constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of the Companies or any
Subsidiary or to a loss of any benefit to which the Companies or any Subsidiary
is entitled under any provision of any agreement, contract or other instrument
binding upon the Companies or any Subsidiary or any permit held by the Companies
or any Subsidiary or (iv) result in the creation or imposition of any Lien on
any asset of either Company or any Subsidiary.
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4.05. CAPITALIZATION. The authorized capital stock of Capital Services
consists of 3,000 shares of common stock, $1.00 par value. As of the date
hereof, there were outstanding 1,241.07 shares of the common stock of Capital
Services. The authorized capital stock of Capital Advisers consists of 3,000
shares of common stock, $1.00 par value. As of the date hereof, there were
outstanding 1,111.11 shares of the common stock of Capital Advisers. All
outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable and are owned by the Company
Shareholders as shown on Schedule 4.01. 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 Companies, (ii) securities of the
Companies convertible into or exchangeable for shares of capital stock or other
securities of the Companies or (iii) options or other rights to acquire from the
Companies any capital stock, other securities or phantom or other equity
interests of the Companies (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "Company Securities"). There are no outstanding
obligations of the Companies or any Subsidiary, actual or contingent, to issue
or deliver or to repurchase, redeem or otherwise acquire any Company Securities.
4.06. SUBSIDIARIES.
(a) Each Subsidiary is a limited liability company or
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and 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. All Subsidiaries and their respective jurisdictions of
incorporation are identified on Schedule 4.06.
(b) All of the outstanding capital stock of, or other
ownership interest in, each Subsidiary, is wholly-owned by the applicable
Company, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other ownership interests).
There are no outstanding (i) securities of the Companies or any Subsidiary
convertible into or exchangeable for shares of capital stock or other voting
securities or ownership interests in any Subsidiary or (ii) options or other
rights to acquire from the Companies or any Subsidiary or to require the
Companies or any Subsidiary to issue, any capital stock, voting securities or
other ownership interests in, or any securities convertible into or exchangeable
for any capital stock, voting securities or ownership interests in, any
Subsidiary (the items in clauses (i) and (ii) being referred to collectively as
the "Subsidiary Securities"). There are no outstanding obligations of the
Companies or any Subsidiary to repurchase, redeem or otherwise acquire any
outstanding Subsidiary Securities.
4.07. FINANCIAL STATEMENTS. The Companies have previously furnished
Parent with a true and complete copy of (i) the consolidated balance sheets of
each Company as of December 31, 1996 and 1997 and the statements of income, cash
flows and changes in stockholders' equity of each Company for the fiscal years
ended December 31, 1995, 1996 and 1997, as audited by Ernst & Young LLP, and
(ii) the unaudited consolidated statements of income, cash flows and changes in
stockholders' equity of each Company for the interim periods ended March 31,
1998 (collectively, the "Financial Statements," copies of which are attached
hereto as Schedule 4.07). Each of the consolidated balance sheets included in
the Financial Statements fairly presents in all material respects the
consolidated financial position of the relevant 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 each Company for the periods
therein set forth, in each case in accordance with GAAP 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 GAAP, for normally recurring
year-end audit adjustments.
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4.08. ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule 4.08,
since the Balance Sheet Date, the Companies 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;
(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 Companies or any Subsidiary of any
Company Securities or Subsidiary Securities;
(c) any amendment of any outstanding Company Securities or
Subsidiary Securities;
(d) any incurrence, assumption or guarantee by the Companies
or any Subsidiary of any indebtedness for borrowed money;
(e) any creation or assumption by the Companies 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 Companies or
any Subsidiary which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or
agreement entered into, by either Company or any Subsidiary relating to its
assets or business (including the acquisition or disposition of any assets) or
any relinquishment by either Company or any Subsidiary of any contract or other
right, in either case, material to either Company and its 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 either Company or any Subsidiary;
(j) any operational error or other client related issue that
could reasonably be expected to have a Material Adverse Effect; or
(k) any (i) grant of any severance or termination pay to any
director, officer or employee of the Companies 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 Companies 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 Companies or any Subsidiary.
4.09. PROPERTY AND EQUIPMENT.
(a) None of the Companies or any Subsidiaries own any real
property. The Companies and the Subsidiaries have good and marketable title to,
or in the case of leased property have valid leasehold interests in, all
property and assets (whether real or personal, tangible or intangible) reflected
on the Balance Sheet or acquired after the Balance Sheet Date. None of such
properties or assets is subject to any Liens, except:
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(i) Liens disclosed on the Balance Sheet;
(ii) Liens for ad valorem taxes not yet due (and for
which adequate accruals or reserves have been established on the Balance
Sheet);
(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; or
(iv) Liens disclosed on Schedule 4.09.
(b) There are no developments affecting any of such properties
or assets pending or, to the knowledge of Company Shareholders 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 Companies and the Subsidiaries
has no material defects, is in 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 Companies, or which they
otherwise have the right to use, constitute all of the assets held for use or
used in connection with the business of the Companies and the Subsidiaries and
are adequate to conduct such business as currently conducted.
4.10. NO UNDISCLOSED MATERIAL LIABILITIES. Except as set forth in
Schedule 4.10, there are no liabilities of either 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, including any operational errors or omissions, other than:
(a) liabilities disclosed or provided for in the Balance
Sheet; and
(b) 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 either Company and its Subsidiaries, taken
as a whole.
4.11. LITIGATION. There is no action, suit, investigation or proceeding
(or any basis therefor) pending against, or to the knowledge of Company
Shareholders threatened against or affecting, either Company or any Subsidiary
or any of their respective assets or properties or the transactions contemplated
hereby before any court or arbitrator or any governmental or self-regulatory
body, agency, official or authority. Except as disclosed on Schedule 4.11,
neither the Companies nor any Subsidiary have received any notice of a claim, or
have knowledge of any pending claim, by any client of the Companies related to
any operational errors by the Company or any Subsidiary.
4.12. MATERIAL CONTRACTS.
(a) Except for agreements, contracts, plans, leases,
arrangements or commitments disclosed in Schedule 4.12, neither the Companies
nor any Subsidiary is a party to or subject to:
(i) any lease providing for annual rentals of $10,000
or more;
(ii) any contract for the purchase of materials,
supplies, goods, services, equipment or other assets providing for
payments by the Companies or any Subsidiary of $10,000 or more in any
twelve-month period;
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(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 payments to the Companies or any Subsidiary of $10,000 or more in any
twelve-month period;
(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 $10,000;
(vi) any license agreement, franchise agreement or
agreement in respect of similar rights granted to or held by the Companies
or any Subsidiary;
(vii) any agency, dealer, sales representative or
other similar agreement;
(viii) any contract or other document that limits the
freedom of the Companies 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 Companies 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 Companies 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 4.12(a) is a valid and binding agreement of the
Companies or a Subsidiary and is in full force and effect, and none of the
Companies, any Subsidiary nor, to the knowledge of the Company Shareholders, any
other party thereto is in default in any material respect under the terms of any
such agreement, contract, plan, lease, arrangement or commitment.
4.13. INSURANCE COVERAGE. The Companies have furnished to Parent 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 Companies and the Subsidiaries. There is no claim
by the Companies 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 Companies and the Subsidiaries are in full
compliance with the terms and conditions of all such policies and bonds. Except
as set for in Schedule 4.13, such policies of insurance and bonds (or other
policies and bonds providing substantially similar insurance coverage) have been
in effect since 1996 and remain in full force and effect. Company Shareholders
do not know of any threatened termination of, or premium increase with respect
to, any of such policies or bonds. The transactions contemplated hereby will not
cause a termination of any of such policies.
4.14. COMPLIANCE WITH LAWS; NO DEFAULTS.
(a) Except as set forth in Schedule 4.14, none of the
Companies or any Subsidiary is in material violation of any applicable
provisions of any laws, statutes, ordinances or regulations, including any
Environmental Laws.
(b) Schedule 4.14 correctly describes each license and permit
(a "Permit") material to the business of either Company or any Subsidiary,
together with the name of the governmental agency or entity issuing such license
or permit. Except as set forth in Schedule 4.14, 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. Except as set forth in Schedule 4.14, the Companies and the
Subsidiaries
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have made all filings required by applicable regulation, governmental authority
or self-regulatory authority in a timely and accurate manner, whether on their
own behalf or on behalf of clients.
(c) Neither 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 either Company or any
Subsidiary is a party or by which either 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.
4.15. FINDERS' FEES. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of either Company Shareholder, either Company or any Subsidiary who might be
entitled to any fee or commission from Parent, the Companies or any of their
respective Affiliates (other than the Company Shareholders) upon consummation of
the Mergers.
4.16. INTELLECTUAL PROPERTY.
(a) Schedule 4.16(a) lists all of the documented Intellectual
Property as well as Intellectual Property licensed by either Company or their
Subsidiaries to or from others. Unless otherwise indicated on Schedule 4.16(a),
the Companies and the Subsidiaries own the entire right, title and interest in
and to the Intellectual Property (including, without limitation, the exclusive
right to use and license the same), and each item constituting part of the
Intellectual Property which is owned by the Companies or any Subsidiary, to the
extent indicated on Schedule 4.16(a), has been duly registered with, filed in or
issued by, as the case may be, the United States Patent and Trademark Office or
such other government entities, domestic or foreign, as are indicated on
Schedule 4.16(a), and such registrations, filings and issuances remain in full
force and effect.
(b) Schedule 4.16(a) also identifies all of the Intellectual
Property used by the Companies and the Subsidiaries in their business which is
owned or controlled by any shareholder, director, officer or employee of either
Company or any Subsidiary. The Company Shareholders will cause full right, title
and interest in any such Intellectual Property to be duly and effectively
transferred to the Companies prior to or at the Closing, and no royalties will
be due and payable by the Companies or Parent with respect to such Intellectual
Property.
(c) There are no pending or, to the knowledge of the Company
Shareholders, threatened proceedings, litigation or other adverse claims
affecting or with respect to any part of the Intellectual Property, and, to the
knowledge of the Company Shareholders, no Person is infringing the Intellectual
Property. The Intellectual Property comprises all such rights necessary to
permit the operation of the business of the Companies and the Subsidiaries as
now being conducted. None of the Intellectual Property is subject to any
outstanding order, decree, judgment, stipulation, lien, charge, encumbrance or
attachment other than as set forth on Schedule 4.16(c) attached hereto.
(d) Schedule 4.16(d) lists all notices or claims (whether
written or oral) received by either Company or any Subsidiary which claim
infringement, violation or breach by either Company or any Subsidiary of any
domestic or foreign letters patent, patents, and patent licenses; software and
software licenses; know-how and know-how licenses; trade secrets and trade
secret licenses; proprietary (including "confidential") information and
proprietary information licenses; common law trademarks; trademarks and
registrations therefor; service marks and registrations therefor; trade names
and registrations therefor; common law copyrights; and copyrights and
registrations therefor; and all other technical or technological information or
rights of every nature, owned or controlled by parties other than the Companies,
any Subsidiary or any of their respective directors, officers and employees
(collectively, "Others' Intellectual Property"). To the Company Shareholders'
knowledge, except as set forth on Schedule 4.16(e), none of the Company
Shareholders, the Companies or any Subsidiary infringes, violates or is in
breach of any part of Others' Intellectual Property. The execution, delivery and
performance by the Company Shareholders of this Agreement and each of the
Ancillary Agreements and the Parent's ownership and usage of the Intellectual
Property as presently used following the Closing will not infringe, violate or
breach any part of Others' Intellectual Property.
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(e) None of the processes and formulae, research and
development results and other know-how of the Companies or any Subsidiary, the
value of which to the Companies or such Subsidiary is contingent upon
maintenance of the confidentiality thereof, has been disclosed by the Companies
or any Subsidiary to any Person other than employees, representatives and agents
of the Companies or the Subsidiaries who are parties to confidentiality
agreements with the Companies or a Subsidiary.
(f) To the knowledge of the Companies and Company
Shareholders, no third party has asserted any claim, or has any reasonable basis
to assert any valid claim, against the Companies with respect to (i) the
continued employment by, or association with, the Companies or any Subsidiary of
any of the present officers, employees of or consultants to the Companies or any
Subsidiary or (ii) the use by the Companies or any Subsidiary or any of such
Persons in connection with their activities for or on behalf of the Companies or
any Subsidiary of any information which the Companies 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.
4.17. TAXES.
(a) The term "Taxes" as used herein means all federal, state,
local, foreign net income, alternative or add-on minimum tax, estimated, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, capital profits, lease, service, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit taxes, customs, duties or other taxes,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty, addition to tax or additional amount with
respect thereto, and the term "Tax" means any one of the foregoing Taxes. The
term "Tax Returns" as used herein means all returns, declarations, reports,
claims for refund, information statements and other documents relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof, and the term "Tax Return" means any one of the foregoing Tax Returns.
The term "Tax Authority" means any governmental authority responsible for the
imposition of any Tax.
(b) Each of the Companies and their Subsidiaries has timely
filed all Tax Returns required to be filed and has paid all Taxes owed (whether
or not shown as due on such returns), including, without limitation, all Taxes
which any of the Company and its Subsidiaries is obligated to withhold for
amounts owing to employees, creditors and third parties. All Tax Returns filed
by or on behalf of any of the Companies or their Subsidiaries were complete and
correct in all material respects, and such Tax Returns correctly reflected the
facts regarding the income, business, assets, operations, activities and status
of each of the Companies and their Subsidiaries.
(c) There are no liens for Taxes upon any of the assets of any
of the Companies and their Subsidiaries, other than ad valorem Taxes that are
not yet due and payable. The unpaid Taxes of each of the Companies and their
Subsidiaries as of the Closing Date do not exceed the reserve for actual Taxes
(as opposed to any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) as shown on their respective Financial
Statements dated March 31, 1998.
(d) None of the Tax Returns filed by or on behalf of any of
the Companies and their Subsidiaries have been the subject of an audit, action,
suit, proceeding, claim or examination by any Tax Authority, and no such audit,
action, suit, proceeding, claim, deficiency or assessment is pending or, to the
knowledge of the Company, threatened with respect to any Taxes of the Companies
and their Subsidiaries. None of the Companies and their Subsidiaries is
currently the beneficiary of any extension of time within which to file any Tax
Return, and none of the Companies and their Subsidiaries has waived any statute
of limitation with respect to any Tax or agreed to any extension of time with
respect to a Tax assessment or deficiency. All material elections with respect
to Taxes affecting any of the Companies and their Subsidiaries, as of the date
hereof, are set forth in the Tax Returns described in Section 4.17(b). None of
the Companies and their Subsidiaries is a party to any agreement, contract,
arrangement or plan that has resulted or would result, separately or in the
aggregate, in the payment of (i) any "excess parachute payments" within the
meaning of Section 280G of the Code (without regard to the
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exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of the Code) or (ii)
any amount for which a deduction would be disallowed under Section 162 or
Section 404 of the Code. None of the Companies and their Subsidiaries has agreed
to make any adjustment under Section 481(a) of the Code (or any corresponding
provision of state, local or foreign Tax law) by reason of a change in
accounting method or otherwise, and will not be required to make such an
adjustment as a result of the Mergers. None of the Tax Returns filed by or on
behalf of any of the Companies and their Subsidiaries contain a disclosure
statement under former Section 6661 of the Code or Section 6662 of the Code (or
any similar provision of state, local or foreign Tax law). None of the Companies
and their Subsidiaries has been a U.S. real property holding company (as defined
in Section 897(c)(2) of the Code) during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code. None of the Company Shareholders is a
"foreign person" as that term is defined in Section 1445 of the Code. No claim
has ever been made by a Tax Authority in a jurisdiction where any of the Company
and its Subsidiaries does not file Tax Returns that any of the Companies and
their Subsidiaries is or may be subject to Tax in that jurisdiction. No portion
of the Purchase Price is subject to the tax withholding provisions of Section
3406 of the Code, or of Subchapter A of Chapter 3 of the Code or of any other
provision of law. None of the Companies and their Subsidiaries is a party to any
joint venture, partnership, or other arrangement or contract which could be
treated as a partnership for federal income tax purposes. None of the Companies
and their Subsidiaries has, or has had, a permanent establishment in any foreign
country, as defined in any applicable Tax treaty or convention between the
United States and such foreign country.
(e) None of the Companies and their Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code, relating to collapsible
corporations. None of the Companies and their Subsidiaries is a party to any Tax
sharing or similar agreement. None of the Companies and their Subsidiaries has
been a member of a group filing a consolidated federal income Tax Return (other
than a group the common parent of which was either of the Companies). None of
the Companies and their Subsidiaries has any liability for the Taxes of any
Person (other than any of the Companies and their Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any corresponding provision of state, local or
foreign Tax law), as a transferee or successor, by contract, or otherwise. None
of the Companies and their Subsidiaries has net operating losses or other tax
attributes presently subject to limitation under Sections 382, 383 or 384 of the
Code, or the federal consolidated return regulations.
(f) The Companies and the Company Shareholders made a valid
election for each of the Companies to be treated as an "S corporation," as that
term is defined in Section 1361(a) of the Code. Each of the Companies has been
an S corporation since January 1, 1997 through the date hereof. Neither the
Companies nor the Company Shareholders have taken, or will take, any action that
would result in the termination of the S corporation status of either Company,
other than pursuant to this Agreement.
(g) The Company Shareholders have timely filed all Tax Returns
with respect to which items of income, gain, deduction, loss and credit of the
Companies and their Subsidiaries are properly reportable, and have timely paid
all Taxes attributable to items of income, gain, deduction, loss and credit of
the Companies and their Subsidiaries (whether or not shown on such Tax Returns).
Except as disclosed on Schedule 4.17 hereto, there has not been any audit of any
Tax Return filed by either Company Shareholder with respect to, or which may
relate to, items of income, gain, deduction, loss or credit of the Companies and
their Subsidiaries; no such audit of either Company Shareholder is in progress;
and neither Company Shareholder has been notified by any Tax authority that any
such audit is contemplated or pending.
4.18. EMPLOYEES. Schedule 4.18 sets forth a true and complete list of
(a) the names, titles, annual salaries and other compensations of all employees
of the Companies and the Subsidiaries and (b) the wage rates for non-salaried
employees of the Companies and the Subsidiaries (by classification). Except as
set forth on Schedule 4.18, to the knowledge of the Company Shareholders, none
of such employees and no other employee of the Companies or a Subsidiary has
indicated to the Companies or a Company Shareholder that such employee intends
to resign or retire as a result of the Mergers or otherwise.
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4.19. ENVIRONMENTAL COMPLIANCE.
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued to either Company, no complaint has
been filed against either Company, no penalty has been assessed against either
Company and no investigation or review is pending with respect to either
Company, or to the knowledge of the Company Shareholders, threatened by any
governmental or other entity with respect to either Company with respect to any
(i) alleged violation by the Companies or any Subsidiary of any Environmental
Law or liability thereunder, (ii) alleged failure by the Companies to have any
permit, certificate, license, approval, registration or authorization required
under my Environmental Law, (iii) Regulated Activity or (iv) any Release of any
Hazardous Substance.
(b) (i) Neither Company nor any Subsidiary has handled any
Hazardous Substance, other than as a generator, on any property now or
previously owned or leased by it; and, to the knowledge of the Company
Shareholders, (ii) no polychlorinated biphenyls or urea formaldehyde is or has
been present at any property now or previously owned or leased by the Companies
or any Subsidiary; (iii) no asbestos is or has been present at any property now
or previously owned or leased by the Companies or any Subsidiary; (iv) there are
no underground storage tanks for Hazardous Substances, active or abandoned, at
any property now or previously owned or leased by the Companies or any
Subsidiary; (v) no Hazardous Substance has been Released at, above or under any
property now or previously owned or leased by the Companies or any Subsidiary
and (vi) 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 Companies or any Subsidiary.
(c) Neither Company nor any Subsidiary has 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
Parent for clean-up costs, remedial work, damages to natural resources or for
personal injury claims, including, but not limited to, claims under CERCLA.
(d) No oral or written notification of a Release of a
Hazardous Substance has been filed by or on behalf of the Companies or any
Subsidiary and no property now or previously owned or leased by the Companies is
listed or, to the knowledge of the Company Shareholders, 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.
(e) To the knowledge of the Company Shareholders, there are no
environmental Liens on any of the assets of the Companies or any Subsidiary, and
no governmental actions have been taken or are in process that could subject any
of such assets to such Liens. The Companies and the Subsidiaries 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.
(f) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or which are in the
possession of the Companies or any Subsidiary in relation to any property or
facility now or previously owned or leased by the Companies or any Subsidiary
which have not been delivered to Parent prior to the date hereof.
4.20. CUSTOMERS AND SUPPLIERS. Except as set forth on Schedule 4.20,
Neither the Companies nor any Subsidiary has received notice from or is
otherwise aware that any customer or group of customers who are under common
ownership or control and who accounted, either individually or as a group, for a
material percentage of the aggregate products and services furnished by the
Companies and the Subsidiaries during the past 18 months has stopped or intends
to stop purchasing the services of the Companies, nor have the Companies or a
Subsidiary lost any supplier or service provider, or group of suppliers or
service providers, which accounted for a material percentage of the aggregate
supplies or services purchased by the Companies during the past 18 months.
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4.21. TRANSACTIONS WITH AFFILIATES. There are no loans, leases, royalty
agreements or other continuing transactions between the Companies and any
Company Shareholders, any Affiliate of any Company Shareholders, or any member
of any Company Shareholder's family (other than transactions between the
Companies). To the knowledge of the Company Shareholders, none of the Company
Shareholders or any of the officers or directors of the Companies (a) has any
material direct or indirect interest in any entity which does business with the
Companies or any Subsidiary; (b) has any direct or indirect interest in any
property, asset or right which is used by the Companies or any Subsidiary in the
conduct of its business; or (c) has any contractual relationship with the
Companies or any Subsidiary other than such relationships which occur from being
an officer, director or stockholder of the Companies.
4.22. OTHER INFORMATION. None of the documents or information delivered
to Parent in connection with the Mergers and the Ancillary Agreements 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 Companies and the Subsidiaries delivered
to Parent constitute the Companies' and Company Shareholders' reasonable
estimate of the information purported to be shown therein on the basis of the
information and assumptions set forth in Schedule 4.22, and neither Company
Shareholder is aware of any fact or information that would lead it to believe
that such projections are incorrect or misleading in any material respect.
4.23. INVESTMENT REPRESENTATIONS.
(a) NO DISTRIBUTION. The Company Shareholders are acquiring
the shares of Parent Stock for the purpose of investment for each Company
Shareholder's own account, and not with a view to, or for resale in connection
with, any distribution of such shares. Except for the Registration Rights
Agreement, the Company Shareholders are not a party to any contract,
undertaking, agreement or arrangement with any Person to sell, transfer or grant
participation rights to any such Person or any third party with respect to such
shares of Parent Stock.
(b) INVESTOR QUALIFICATION. Each Company Shareholder has such
knowledge and experience in financial and business matters so as to enable such
Company Shareholder to evaluate the merits and risks attendant to receipt of and
investment in the Parent Stock. Each Company Shareholders is able to bear the
risk of a complete loss of his or her investment in the Parent Stock.
(c) RESTRICTIONS ON RESALE. The Company Shareholders
acknowledge and understands that:
(i) The shares of Parent Stock are being issued
without registration under the 1933 Act based upon an exemption provided under
the 1933 Act, and the Company Shareholders' representations contained in this
Agreement are a material factor with respect to that exemption.
(ii) The shares of Parent Stock are "restricted
securities" within the meaning of Rule 144 under the 1933 Act and as such may
not be sold or disposed of other than pursuant to Rule 144, pursuant to an
exemption from registration provided by the 1933 Act or pursuant to an effective
registration statement thereunder.
(iii) The Company Shareholders hereby consent to the
1933 Act Legend being placed on the certificates representing the Parent Stock.
(d) ACCESS TO INFORMATION. The Company Shareholders
acknowledge that the Company Shareholders have had the opportunity to ask
questions of and receive answers from officers and employees of the Parent
relating to the terms and conditions of this Agreement and the Ancillary
Agreements. The Company Shareholders have received and reviewed complete and
accurate copies, as amended or supplemented, of the Parent's SEC Reports (as
defined in Section 5.08). The Company Shareholders have had the opportunity to
receive and review such other documents concerning the Parent as the Company
Shareholders have requested.
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4.24. ACCOUNTS RECEIVABLE. All accounts, notes and other receivables
("Accounts Receivable") represent bona fide sales and performance of services by
the Companies and the Subsidiaries, arising in the ordinary course of business
of the Companies and the Subsidiaries, and each of the Accounts Receivable is
good and collectible in full in the ordinary course of business. The Accounts
Receivable and other debts arising therefrom are not subject to any counterclaim
or right of set-off and there are no claims or disputes with regard to any such
Accounts Receivable.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE MERGER SUBS
Parent and the Merger Subs hereby represent and warrant to the Company
Shareholders that:
5.01. ORGANIZATION AND EXISTENCE. Parent and each Merger Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware 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 Parent and each Merger Sub of this Agreement and the Ancillary Agreements, to
the extent delivered by them, and the consummation by Parent and each Merger Sub
of the transactions contemplated hereby and thereby are within the corporate
powers of Parent and each Merger Sub and have been duly authorized by all
necessary corporate action on the part of Parent and each Merger Sub. This
Agreement and each of the Ancillary Agreements to which Parent or either Merger
Sub is a party constitutes a valid and binding agreement of Parent or such
Merger Sub enforceable against Parent or such Merger Sub in accordance with its
terms, except that the Parent and the Merger Subs make no representation or
warranty as to the enforceability of the indemnification provisions of the
Registration Rights Agreement.
5.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Parent and the Merger Subs of this Agreement and the Ancillary
Agreements, to the extent delivered by them and except for the Registration
Rights Agreement, require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (i) the requirements
of state securities (or "Blue Sky") laws; (ii) the filing of appropriate
documents with the Nasdaq Stock Market; (iii) the filing of a Form D with the
Commission, if applicable; (iv) notice filings with the Federal Reserve Bank of
Boston; and (v) compliance with any applicable requirements of the 1934 Act.
5.04. NON-CONTRAVENTION. The execution, delivery and performance by
Parent and the Merger Subs of this Agreement and the Ancillary Agreements, to
the extent delivered by them, do not and will not (i) contravene or conflict
with the corporate charter or bylaws of Parent or either Merger Sub or any
agreement or arrangement binding upon Parent or either Merger Sub or result in
the creation of any Lien, or (ii) assuming compliance with the matters referred
to in Section 5.03, contravene or conflict with any provision of any law,
regulation, judgment, injunction, order or decree binding upon Parent or either
Merger Sub, in any case which contravention or conflict would have a material
adverse effect on Parent's business or results of operations.
5.05. FINDERS' FEES. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Parent or either Merger Sub who might be entitled to any fee or commission
from the Company Shareholders or any of their Affiliates upon consummation of
the Mergers.
5.06. PURCHASE FOR INVESTMENT. Parent is acquiring the Shares for
investment for its own account and not with a view to, or for sale in connection
with, any distribution thereof. Parent has no commitment or present intention to
transfer any of the Shares to any Person
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5.07. LITIGATION. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Parent threatened against or affecting,
Parent or either Merger Sub 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.
5.08. SEC REPORTS. The Parent has previously furnished to the Company
Shareholders true and correct copies of its 1998 Annual Report to Shareholders,
which include Parent's Annual Report on Form 10-K for the year ended December
31, 1997 (together with any other Securities and Exchange Commission filing made
by the Parent subsequent to the filing of the aforementioned Form 10-K and prior
to the Closing Date, the "SEC Reports"). Parent is currently eligible to use a
registration statement on Form S-3. As of their respective dates, the SEC
Reports did not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Each of the audited consolidated financial statements and
unaudited interim financial statements included in the SEC Reports has been
prepared in accordance with GAAP applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly presents the consolidated
financial position of the Parent as at its date or the results of operations,
stockholders equity or cash flows, subject to normal year-end adjustments and
any other adjustments described therein, which adjustments will not be material
in amount or effect.
5.09 VALIDITY OF PARENT COMMON STOCK. The shares of Parent Stock to be
issued pursuant to this Agreement will be, when issued in accordance with this
Agreement, validly issued, fully paid and nonassessable and will not violate the
pre-emptive rights of any Person created by the Parent's Certificate of
Incorporation or otherwise granted by the Parent.
5.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1997,
there has not been any material adverse change in the business, assets,
condition (financial or otherwise) or results of operations of Parent and its
subsidiaries, taken as a whole.
5.11. CAPITALIZATION. The authorized capital stock of the Parent
consists of: (i) 1,000,000 shares of Preferred Stock, of which 100,000 shares
have been designated Series A Junior Participating Preferred Stock (the "Series
A Preferred") and of which 900,000 shares remain undesignated; (ii) 650,000
shares of Class A Common Stock; and (iii) 20,000,000 shares of Common Stock, all
with a par value of $.01 per share. As of March 31, 1998, there were no shares
of Preferred Stock or Class A Common Stock outstanding and there were 6,485,094
shares Common Stock outstanding. All outstanding shares of Common Stock of the
Parent have been duly authorized and validly issued and are fully paid. As of
March 31, 1998, the Parent had outstanding options to purchase 501,060 shares of
its Common Stock. Except as set forth in this Section, and except for the rights
to purchase shares of Series A Preferred pursuant to the Company's Rights Plan,
as of March 31, 1998 there were no outstanding (i) shares of capital stock,
other securities or phantom or other equity interests of the Parent, (ii)
securities of the Parent convertible into or exchangeable for shares of capital
stock or other securities of the Parent or (iii) options or other rights to
acquire from the Parent any capital stock, other securities or phantom or other
equity interests of the Parent (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "Parent Securities"). There are no outstanding
obligations of Parent, actual or contingent, to issue or deliver or to
repurchase, redeem or otherwise acquire any Parent Securities.
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ARTICLE VI
COVENANTS OF THE COMPANIES AND THE COMPANY SHAREHOLDERS
Each Company and each Company Shareholder agrees that:
6.01. CONDUCT OF THE COMPANIES. From the date hereof until the Closing
Date, the Companies and the Subsidiaries shall conduct their operations only in
the ordinary and usual course of business and consistent with past practice and
will use their best efforts to preserve intact the Companies' and Subsidiaries'
present business organization, keep available the services of their present
officers and key employees and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that their
goodwill and on-going business shall not be impaired. During such period the
Companies shall promptly report to the Parent any occurrence or omission which
shall have caused any representation or warranty of either Company hereunder to
become untrue as of the time of such occurrence or omission, and shall confer on
a regular and frequent basis with representatives of the Parent to report
operational matters of a material nature and to report the general status of the
ongoing operations of the business of the Companies and the Subsidiaries.
Without limiting the generality of the foregoing, from the date hereof until the
Closing Date, neither the Companies nor any Subsidiary shall:
(a) issue, sell or pledge, or authorize or propose the
issuance, sale or pledge of any Company Securities or any Subsidiary Securities;
(b) purchase or redeem or otherwise acquire, or propose to
purchase or redeem or otherwise acquire, any outstanding shares of capital stock
of any class (including Company Securities and Subsidiary Securities), or
securities convertible into any such shares, or any rights, warrants or options
to acquire any such shares or convertible securities;
(c) declare or pay any dividend or distribution on any shares
of its capital stock other than as approved in writing by the Parent, except as
set forth on Schedule 6.01;
(d) authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into a letter of intent (whether or
not binding), an agreement in principle or an agreement with respect to any
merger, consolidation or business combination (other than the transaction
contemplated by this Agreement), any acquisition of assets or securities, any
disposition of assets or securities, or any change in the capitalization of
either Company or any Subsidiary, or an entry into a material contract other
than in the ordinary course of business or any amendment or modification of any
material contract rights;
(e) take any action which would make any representation or
warranty in this Agreement untrue or incorrect, as if made as of such time;
(f) enter into any agreement, contract or commitment (other
than in the ordinary course of business and other than agreements, contracts or
commitments which were under negotiation on the date hereof and which are
disclosed on Schedule 4.12) which, if entered into prior to the date hereof,
would be required to be listed on Schedule 4.12;
(g) enter into any contract, agreement, license or commitment
which would be breached or violated or in respect of which a right of
acceleration would be created by the execution, delivery and performance of this
Agreement;
(h) (i) increase or agree to increase the compensation payable
or to become payable to its officers or employees, (ii) grant any severance or
termination pay to, or enter into any employment or severance agreement, with
any employee, (iii) enter into any collective bargaining agreement, (iv)
establish, adopt, enter into or amend in any material respect any bonus, profit
sharing, thrift, compensation, stock option, restricted stock,
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pension, retirement deferred compensation, employment, termination, severance or
other plan, trust, fund, policy or arrangement for the benefit of any directors,
officers or employees; or
(i) agree in writing or otherwise to take any of the foregoing
actions.
6.02. ACCESS TO INFORMATION. From the date hereof until the Closing
Date, each Company (a) will give Parent, its counsel, financial advisors,
financing sources, auditors and other authorized representatives full access to
the offices, properties, books and records of the Companies and the Subsidiaries
(b) will furnish Parent, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information relating to the Companies and the Subsidiaries as such Persons may
reasonably request and (c) will instruct the employees, counsel and financial
advisors of the Companies and the Subsidiaries to cooperate with Parent in its
investigation of the Companies and the Subsidiaries; provided that no
investigation pursuant to this Section or otherwise shall affect any
representation or warranty given by either Company or the Company Shareholders.
6.03. NOTICES OF CERTAIN EVENTS. The Company Shareholders will promptly
notify Parent of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
Mergers;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the Mergers; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting the Company Shareholders, the Companies or any Subsidiary,
disclosed pursuant to Section 5.07 or that relate to the consummation of the
Mergers.
6.04. NO NEGOTIATIONS WITH THIRD PARTIES. From the date hereof until
the earlier of the Closing Date or the date which is 45 days after the date on
which this Agreement is terminated, neither the Company, any Company
Shareholder, 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 Companies, whether by purchase of assets, stock, merger or otherwise,
other than as contemplated or permitted by this Agreement. The Companies and
each Company Shareholder agree to notify Parent promptly of interest by any
Person with respect to any such possible acquisition.
6.05. CONFIDENTIALITY. The Companies and respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents and
their respective Affiliates will hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of law,
all confidential documents and information concerning Parent furnished to the
either Company or its agents or Affiliates in connection with the Mergers, and,
after the Closing Date, all confidential documents and information concerning
the Companies and the Subsidiaries, except to the extent that any such
information concerning the Parent can be shown to have been (i) previously known
on a nonconfidential basis by either Company, (ii) in the public domain through
no fault of either Company or its agents or affiliates or (iii) later lawfully
acquired by either Company or its agents or Affiliates from sources other than
the Companies or Parent; provided that the Companies may disclose such
information to their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents who need to know such information in
connection with the Mergers so long as such persons are informed by the
Companies of the confidential nature of such information and are directed by the
Companies to treat such information confidentially. The obligation of Companies,
their agents and Affiliates to hold any such information in confidence shall be
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, the Companies, their agents and
their Affiliates will, and will use their best efforts to cause their respective
officers, directors,
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employees, accountants, counsel, consultants, advisors and agents to, destroy or
deliver to Parent, upon request, all documents and other materials, and all
copies thereof, obtained by the Companies or their agents or their Affiliates or
on their behalf from Parent in connection with this Agreement that are subject
to such confidence. The terms of this Agreement and the Ancillary Agreements
shall be treated as confidential information for the purposes of this Section
6.05.
6.06. CONTINUING DISCLOSURE. The Companies and the Company Shareholders
shall have the continuing obligation promptly to advise Parent 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 either Company or either Company Shareholder. The delivery
of any such notice shall not affect any representation or warranty given by the
Companies or the Company Shareholders.
6.07. TAXATION.
(a) In the event that it is determined by a finding or order
in connection with any government or judicial audit or proceeding or arbitration
proceeding to which a Company Shareholder, either Company or the Parent is a
party that either Company's Subchapter S election pursuant to Section 1362 of
the Code was not validly in effect for any period after such election was
purportedly made, then the Company Shareholders shall promptly remit to the
applicable Company in cash, any Tax liability of such Company in connection with
any Taxes which may be imposed on such Company as a result of such invalid
election.
(b) The Companies shall prepare and timely file all Tax
Returns required to be filed by them, and the Companies shall timely pay any
Taxes required to be paid by them on or before the Closing Date. The Parent
shall have an opportunity to review and comment on all Tax Returns and
amendments thereto. The Company Shareholders shall timely file all Tax Returns
with respect to which items of income, gain, deduction, loss and credit of the
Companies and their Subsidiaries are properly reportable for the period from
January 1, 1998 through the Closing Date, and shall timely pay all Taxes
attributable to items of income, gain, deduction, loss and credit of the
Companies and their Subsidiaries (whether or not shown on such Tax Returns) for
such period. All transfer, excise or other Taxes payable to any jurisdiction (in
the United States and outside the United States) by reason of the exchange and
transfer of the Shares pursuant to this Agreement shall be paid or provided for
by the Company Shareholders.
(c) The Company Shareholders shall furnish to the Parent on or
before the Closing Date a certification of each Company Shareholder's
non-foreign status as set forth in Treasury Regulation Section 1.1445-2(b).
6.08. RESALE COVENANT. In consideration of receipt of the Parent Stock
and for other good and valuable consideration, the Company Shareholders covenant
and agree that they will not sell, assign, transfer, pledge or otherwise dispose
of the Parent Stock unless pursuant to an effective registration statement under
the 1933 Act, pursuant to Rule 144 or unless the Company Shareholders have
provided the Parent with an opinion of counsel satisfactory to the Parent to the
effect that such registration is not required.
6.09. INSURANCE. The Companies shall use their best efforts to maintain
in force at the Closing Date policies or insurance of the same character and
coverage as those described in Schedule 4.13 and the Company Shareholders will
promptly notify the Parent in writing of any changes in such insurance coverage
occurring prior to the Closing Date.
6.10. FINANCIAL STATEMENTS. Each of the consolidated balance sheets
included in the Closing Financial Statements will fairly present in all material
respects the consolidated financial position of the relevant Company as of its
date. The other statements included in the Closing Financial Statements will
fairly present in all material respects the consolidated results of operations,
cash flows and stockholders' equity, as the case may be, of each Company for the
periods therein set forth, in each case in accordance with GAAP consistently
applied during the
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periods involved except as otherwise stated therein and for the omission of
footnote disclosures and, to the extent consistent with GAAP, for normally
recurring year-end audit adjustments.
ARTICLE VII
COVENANTS OF PARENT
Parent agrees that:
7.01. CONFIDENTIALITY. Prior to the Closing Date and after any
termination of this Agreement, Parent and its Affiliates will hold, and will use
reasonable 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
Companies and the Subsidiaries furnished to Parent or its Affiliates in
connection with the Mergers, except to the extent that such information can be
shown to have been (i) previously known on a nonconfidential basis by Parent,
(ii) in the public domain through no fault of Parent or (iii) later lawfully
acquired by Parent from sources other than the Companies or its Subsidiaries;
provided that Parent may disclose such information to its officers, directors,
employees, accountants, counsel, consultants, advisors and agents who need to
know such information in connection with the Mergers so long as such Persons are
informed by Parent of the confidential nature of such information and are
directed by Parent to treat such information confidentially. The obligation of
Parent 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, Parent 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
Company Shareholders, upon request, all documents and other materials, and all
copies thereof, obtained by Parent or its Affiliates or on their behalf from a
Company Shareholder, the Companies or the Subsidiaries in connection with this
Agreement that are subject to such confidence.
7.02. ACCESS. Parent shall cause the Surviving Corporations, on and
after the Closing Date, to afford promptly to the Company Shareholders and their
agents reasonable access to their properties, books, records, employees and
auditors to the extent necessary to permit the Company Shareholders to determine
any matter relating to their rights and obligations hereunder or to any period
ending on or before the Closing Date. The Company Shareholders will hold, and
will use reasonable 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
Companies and the Subsidiaries provided to it pursuant to this Section 7.02.
7.03. DOCUMENTS TO BE FURNISHED. The Parent shall furnish to the
Company Shareholders promptly after such documents are available to the Parent's
stockholders all reports, statements, documents and other items the Parent
delivers, or is required to deliver, to its stockholders prior to and including
the Closing Date.
7.04. TAX TREATMENT. From and after the date hereof and until the
Effective Time, neither Parent nor either Merger Sub shall knowingly take any
action, or knowingly fail to take any action, that would jeopardize
qualification of the Mergers as reorganizations within the meaning of Section
368(a) of the Code or enter into any contract, agreement, commitment or
arrangement with respect to the foregoing. After the Effective Time, Parent
shall not take or fail to take (and shall cause the Surviving Corporations not
to take or fail to take) any action that is reasonably likely to jeopardize
qualification of the Mergers as reorganizations within the meaning of Section
368(a) of the Code.
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ARTICLE VIII
COVENANTS OF ALL PARTIES
The parties hereto agree that:
8.01. BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each party will use its reasonable 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 Mergers and
the transactions contemplated by the Ancillary Agreements. The Companies, the
Company Shareholders, Parent and the Merger Subs each agree, and the Company
Shareholders, prior to the Closing, and Parent, after the Closing, agree to
cause the Companies, 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 Mergers.
8.02. CERTAIN FILINGS. The Companies, Company Shareholders, Parent and
the Merger Subs 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 Mergers and the transactions
contemplated by the Ancillary Agreements 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, regulatory process, the NASD or the Nasdaq
Stock Market, will not issue any such press release or make any such public
statement prior to such consultation.
8.04. POOLING. The Companies, Company Shareholders, Parent and the
Merger Subs shall use reasonable efforts, shall cooperate fully and shall take
all actions as are reasonably necessary to allow the Mergers to be accounted for
as a "pooling of interests" in accordance with United States GAAP which shall be
acceptable to the Securities and Exchange Commission.
ARTICLE IX
EMPLOYEE BENEFITS
9.01. EMPLOYEE BENEFITS DEFINITIONS. The following terms, as used
herein, having the following meanings:
"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 either Company or any of
its ERISA Affiliates, as the case may be.
"ERISA" means the Employee 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. Each of the Companies and each Company
Shareholder, jointly and severally, hereby represents and warrants to Parent
that:
(a) Schedule 9.02 lists each Employee Plan that covers any
employee of the Companies or any Subsidiary, copies or descriptions of all of
which have previously been made available or furnished to Parent. With respect
to each Employee Plan, the Companies have provided Parent with the most recently
filed Form 5500 and an accurate summary description of such plan. The Companies
have provided Parent with complete age, salary, service and related data as of
the most recent practicable date for employees of the Companies and the
Subsidiaries.
(b) Schedule 9.02 also includes a list of 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 Company Shareholders or any of their ERISA Affiliates and (iii)
covers any employee or former employee of the Companies or any Subsidiary. Such
contracts, plans and arrangements as are described above, copies or descriptions
of all of which have been made available or furnished previously to Parent, are
hereinafter referred to collectively as the "Benefit Arrangements."
(c) None of the Employee Plans or Benefit Arrangements listed
on Schedule 9.02 covers any non-United States employee or former employee of the
Companies or any Subsidiary.
(d) No Employee Plan is a Multiemployer Plan and no Employee
Plan is subject to Title IV of ERISA. The Companies and its ERISA Affiliates
have not incurred, nor do they reasonably expect to incur, 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.
(e) 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 Companies have
furnished to Parent 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.
(f) 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.
(g) With respect to the employees and former employees of the
Companies and the Subsidiaries, there are no employee post-retirement medical or
health plans in effect, except as required by Section 4980B of the Code. No tax
under Section 4980B or Section 4980D 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.
(h) 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 reflected on the Closing Balance Sheet. Except
as disclosed in writing to Parent prior to the date hereof, there has been no
amendment to, written interpretation of or announcement (whether written or not
written) by the Companies or any of their ERISA Affiliates relating to, or
change in employee participation or coverage under, any Employee Plan or Benefit
Arrangement.
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(i) No employee of the Companies or any Subsidiary will become
entitled to any bonus, retirement, severance or similar benefit or enhanced
benefit solely as a result of the transactions contemplated hereby.
(j) No "prohibited transaction" as defined in Section 4.06 of
ERISA or Section 4975 of the Code, has occurred with respect to any Employee
Plan.
(j) There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Companies or any of their ERISA
Affiliates 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.
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
Companies or any Subsidiary in respect of continued employment (or resumed
employment) with the Companies or any Subsidiary 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
Parent 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 respective
obligations of each party to effect the Mergers shall be subject to the
satisfaction of the following conditions:
(a) 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.
(b) Each other party, whether or not a party to this
Agreement, shall have executed and delivered each of the Ancillary Agreements to
be entered into by it at the Closing, in each case substantially in the form
attached as an exhibit to this Agreement.
10.02. CONDITIONS TO THE OBLIGATIONS OF PARENT AND THE MERGER SUBS. The
obligation of Parent and the Merger Subs to consummate the Mergers is subject to
the satisfaction of the following further conditions:
(a) (i) The Companies and each Company Shareholder shall have
performed in all material respects all of its obligations hereunder required to
be performed on or prior to the Closing Date, (ii) the representations and
warranties of each Company Shareholder contained in this Agreement, in each
Ancillary Agreement and in any certificate or other writing delivered by the
Companies or a Company Shareholder 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) Parent shall
have received a certificate signed by the President or Treasurer of the each
Company and each Company Shareholder 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 operation by Parent of the business of
the Companies and the Subsidiaries after the Closing Date.
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(c) Parent shall have received an opinion of Trager's Counsel,
dated the Closing Date, in form and substance reasonably satisfactory to Parent
and Parent's Counsel.
(d) The Companies shall have received and provided copies to
Parent of all consents, authorizations or approvals from the Governmental
Authorities referred to in Section 4.03(a), in each case in form and substance
reasonably satisfactory to the Parent, and no such consent, authorization or
approval shall have been revoked.
(e) The Parent shall have received all other closing documents
specified in this Agreement and all other closing documents that it may
reasonably request, all in form and substance reasonably satisfactory to the
Parent.
(f) All employees of the Companies shall have executed and
delivered a Non-Disclosure Agreement substantially in form of Exhibit 7 hereto.
(g) Dearing shall have executed and delivered a
Non-Competition Agreement substantially in form of Exhibit 8 hereto.
(h) None of the Persons listed on Schedule 10.02 attached
hereto shall have announced an intention to cease employment with the Company.
(i) Based on the written opinion of Deloitte & Touche, the
Parent shall have no basis for believing that the Mergers will not be accounted
for as a pooling-of-interests in accordance with GAAP or that such accounting
treatment will not be accepted by the Securities and Exchange Commission.
(j) There shall have been no Material Adverse Change on or
prior to the Closing Date.
(k) There shall be no action, suit, investigation or
proceeding pending or threatened against or affecting the Company or any
Subsidiary or any of their respective properties before any court, arbitrator or
Governmental Authority.
(l) Parent shall have completed to its reasonable satisfaction
an investigation of the financial statements of the Companies and the
Subsidiaries.
(m) The Company Shareholders shall have delivered or caused to
be delivered to the Parent the resignations of Alan M. Trager, Eleanor Hoagland,
Arthur Goetchius and Jonathan Brown.
(n) The Company Shareholders shall have delivered a consent to
assignment of lease, in form and substance satisfactory to Parent, executed by
Rockefeller Center Properties with regard to assignment to Parent of the Lease
dated August 28, 1995 between Capital Advisers and Rockefeller Properties.
(o) Parent shall have obtained long-term service agreements
with FFTW Funds, Inc. and related entities and TIFF related entities at the
compensation levels set forth in the current agreements with Capital Services.
(p) Parent shall have received confirmation, in form and
substance satisfactory to Parent, that the broker/dealer license held by Capital
Services and the Investment Adviser registration held by Capital Advisers have
been transferred to a third party or parties or withdrawn, as the case may be.
(q) Each Company Shareholder shall have delivered to Parent
the certification required by Section 6.07(c) hereof.
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(r) Each of the Company Shareholders shall have executed a
Written Consent of Shareholders approving each of the Mergers.
10.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANIES AND THE COMPANY
SHAREHOLDERS. The obligation of the Companies and the Company Shareholders to
consummate the Mergers is subject to the satisfaction of the following further
conditions:
(a) (i) Parent and each Merger Sub shall have performed in all
material respects all of their obligations hereunder required to be performed by
them at or prior to the Closing Date, (ii) the representations and warranties of
Parent and each Merger Sub contained in this Agreement, in each Ancillary
Agreement and in any certificate or other writing delivered by Parent or a
Merger Sub 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) the Company
Shareholders shall have received a certificate signed by the Chief Financial
Officer of Parent to the foregoing effect.
(b) The Company Shareholders shall have received an opinion of
Parent's Counsel, dated the Closing Date, in form and substance reasonably
satisfactory to the Company Shareholders and their counsel.
(c) Parent shall have received all consents, authorizations or
approvals from governmental agencies referred to in Section 5.03, in each case
in form and substance reasonably satisfactory to Company Shareholders, and no
such consent, authorization or approval shall have been revoked.
(d) From the date of this Agreement through the Closing Date
there shall not have occurred any event that would have or would be reasonably
likely to have a material adverse effect on the financial condition, business or
operations of Parent and its subsidiaries taken as a whole; provided that an
event will not be deemed to have occurred solely as a result of fluctuations in
the value of Parent's Common Stock due to or arising from general market
conditions or any public disclosures by Parent.
(e) There shall be no action, suit, investigation or
proceeding pending or threatened against or affecting Parent before any court,
arbitrator or Governmental Authority which suit, investigation or proceeding
would be reasonably likely to have a material adverse effect on the financial
condition, business or operations of Parent and its subsidiaries taken as a
whole.
(i) Parent shall have delivered a consent to assignment of
lease executed by Rockefeller Center Properties with regard to assignment to
Parent of the Lease dated August 28, 1995 between Capital Advisers and
Rockefeller Properties.
(j) The Company Shareholders shall have received all items
specified in 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 OF REPRESENTATIONS AND COVENANTS. The respective
representations and warranties of the Companies, the Company Shareholders,
Parent and the Merger Subs contained in this Agreement, or in any of the
Ancillary Agreements, as the case may be, or in any Exhibit or Schedule
delivered pursuant hereto or thereto shall survive the Closing Date, but shall
expire on the earlier of the first anniversary of the Closing Date or the
Parent's first public announcement of its earnings following completion by
Parent's independent public accountants of the first audit of Parent's financial
statements following the Closing Date covering the combined operations of Parent
and the Companies, except that (i) the Companies' and the Company Shareholders'
representations and warranties in Sections 4.16, 4.17, 4.19 and 9.02 hereof
shall expire upon the expiration of all statutes of limitation applicable
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thereto; and (ii) the Companies' and the Company Shareholders' representations
and warranties in Section 4.02, 4.05 and 4.24 hereof, and Parent's and the
Merger Subs' representations and warranties in Section 5.02, 5.03, 5.04, 5.06,
5.08 and 5.09 hereof, shall survive indefinitely, and except with respect to,
and to the extent of, any claim of which written notice specifying, in
reasonable detail, the nature and amount of the claim has been given by one
party to the other prior to such expiration. The respective covenants and
agreements of the Companies, the Company Shareholders, Parent and the Merger
Subs contained in this Agreement or in any Exhibit or Schedule attached hereto
(including, without limitation, the respective indemnification obligations of
the Company Shareholders and Parent set forth in Sections 11.02(a) and (b)
hereof) shall survive the consummation of the Mergers.
11.02 INDEMNIFICATION.
(a) Subject to Section 11.01 above, each Company Shareholder,
jointly and severally, agrees to indemnify, defend and hold harmless Parent, its
directors, officers, agents and Affiliates from and against any and all costs,
losses, damages or liabilities (including, without limitation, reasonable
attorneys' fees, costs and expenses, assessments, interest and any penalties)
(collectively, "Losses" and individually, a "Loss") incurred or suffered by
Parent, its directors, officers, agents or Affiliates with respect to or in
connection with:
(i) the failure of any representation or warranty
made in or pursuant to this Agreement or the Ancillary Agreements or in
the Schedules attached hereto or thereto by the Companies or the
Company Shareholders to be true and correct in all respects as of the
date of this Agreement and as of the Closing Date; or
(ii) any breach or nonfulfillment of any covenant or
obligation of either Company or the Company Shareholders under this
Agreement.
The Company Shareholders shall not be liable under Section
11.02 (a)(i) unless and until the aggregate amount of all Losses with respect to
all matters referred to in Section 11.02 (a)(i) exceeds $50,000; provided,
however, that once the aggregate amount of all such Losses exceeds $50,000, the
Company Shareholders shall be liable for the full amount of all such Losses. The
Company Shareholders' aggregate maximum liability and obligation under this
Article XI shall not exceed the sum of the Services Consideration Value and the
Advisers Consideration Value.
(b) Subject to Section 11.01 above, Parent agrees to
indemnify, defend and hold harmless the Company Shareholders and their
Affiliates from and against any and all Losses incurred or suffered by any
Company Shareholder or any of its Affiliates with respect to or in connection
with:
(i) the failure of any representation or warranty
made in or pursuant to this Agreement, the Ancillary Agreements
attached hereto or thereto by Parent or the Merger Subs to be true and
correct in all respect as of the date of this Agreement and as of the
Closing Date; or
(ii) any breach or nonfulfillment of any covenant or
obligation of Parent or the Merger Subs under this Agreement.
11.03 INDEMNIFICATION PROCEDURE.
(a) Within a reasonable time after the incurrence of any Loss
or Losses by the party seeking indemnification (the "Indemnified Party"),
including, without limitation, any claim by a third party described in Section
11.03(c) hereof, which might give rise to indemnification hereunder, the
Indemnified Party shall deliver to the party from which indemnification is
sought (the "Indemnifying Party") a certification (the "Certificate"), which
Certificate shall:
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(i) state that the Indemnified Party has paid or
properly accrued Losses, or anticipates that it will incur liability
for Losses for which such Indemnified Party is entitled to
indemnification pursuant to this Agreement; and
(ii) specify in reasonable detail each individual
item of Loss included in the amount so stated, the date such item was
paid or properly accrued, the basis for any anticipated liability and
the nature of the misrepresentation, breach of warranty or breach of
covenant or claim to which each such item is related and the
computation of the amount to which such Indemnified Party claims to be
entitled hereunder.
(b) In case the Indemnifying Party shall object to the
indemnification of an Indemnified Party in respect of any claim or claims
specified in any Certificate, the Indemnifying Party shall, within thirty (30)
days after receipt by the Indemnifying Party of such Certificate, deliver to the
Indemnified Party a written notice to such effect and the Indemnifying Party and
the Indemnified Party shall, within the thirty-day period beginning on the date
of receipt by the Indemnified Party of such written objection, attempt in good
faith to agree upon the rights of the respective parties with respect to each of
such claims to which the Indemnifying Party shall have so objected. If the
Indemnified Party and the Indemnifying Party shall succeed in reaching agreement
on their respective rights with respect to any of such claims, the Indemnified
Party and the Indemnifying Party shall promptly prepare and sign a memorandum
setting forth such agreement. Should the Indemnified Party and the Indemnifying
Party be unable to agree as to any particular item or items or amount or
amounts, then the Indemnified Party and the Indemnifying Party shall submit such
dispute to a court of competent jurisdiction.
(c) Promptly after the assertion by any third party of any
claim against any Indemnified Party that, in the judgment of such Indemnified
Party, may result in the incurrence by such Indemnified Party of Losses for
which such Indemnified Party would be entitled to indemnification pursuant to
this Agreement, such Indemnified Party shall deliver to the Indemnifying Party a
written notice describing in reasonable detail such claim and such Indemnifying
Party may, at its option, assume the defense of the Indemnified Party against
such claim (including the employment of counsel, who shall be reasonably
satisfactory to such Indemnified Party, and the payment of expenses). Any
Indemnified Party shall have the right to employ separate counsel in any such
action or claim and to participate in the defense thereof, but the fees and
expenses of such counsel shall not be at the expense of the Indemnifying Party
unless (i) the Indemnifying Party shall have failed, within twenty (20) days
after having been notified by the Indemnified Party of the existence of such
claims provided in the preceding sentence, to assume the defense of such claim
or to notify the Indemnified Party in writing that it will assume the defense of
such claim, (ii) the employment of such counsel has been specifically authorized
in writing by the Indemnifying Party, or (iii) the named parties to any such
action (including any impleaded parties) include both such Indemnified Party and
the Indemnifying Party and such Indemnified Party shall have been advised by
such counsel that there may be one or more legal defenses available to the
Indemnifying Party which are not available to, or the assertion of which would
be adverse to the interests of, the Indemnified Party. No Indemnifying Party
shall be liable to indemnify any Indemnified Party for any settlement of any
such action or claim effected without the consent of the Indemnifying Party, but
if settled with the written consent of the Indemnifying Party, or if there be a
final judgment for the plaintiff in any such action, the Indemnifying Party
shall indemnify and hold harmless each Indemnified Party from and against any
Loss or liability by reason of such settlement or judgment.
(d) Claims for Losses specified in any Certificate to which an
Indemnifying Party shall not object in writing within thirty (30) days of
receipt of such Certificate, claims for Losses covered by a memorandum of
agreement of the nature described in paragraph (b), claims for Losses the
validity and amount of which have been the subject of resolution by judicial
determination as described in paragraph (b), and claims for Losses the validity
and amount of which shall have been the subject of a final order or judicial
determination after appeal (if elected by the Indemnifying Party) as described
in paragraph (c) are hereinafter referred to, collectively, as "Agreed Claims".
Within twenty (20) Business Days of the determination of the amount of any
Agreed Claims, the Indemnifying Party shall pay to the Indemnified Party an
amount equal to the Agreed Claim by wire transfer to the bank account or
accounts designated in writing by the Indemnified Party not less than one (1)
Business Day prior to such payment or, if Parent elects to proceed against the
Escrow Amount, by providing written notice of an Agreed Claim to the Escrow
Agent as set forth in the Escrow Agreement.
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11.04 CLAIMS AGAINST ESCROW. In the event of any Loss or Losses
suffered by Parent, its directors, officers, agents or Affiliates for which they
are entitled to indemnification pursuant to Section 11.02(a) hereof, or if
Parent, its directors, officers, agents or Affiliates are entitled to be
indemnified by, or receive any payments from, Company Shareholders under any
other provision of this Agreement or any of the Ancillary Agreements, Parent
shall be entitled, inter alia, in its sole discretion, and in addition to any
right to indemnification it may have under this Article XI, to proceed against
the Escrow Amount held in escrow pursuant to the Escrow Agreement in accordance
with the procedures set forth therein; provided, however, that the foregoing
right to proceed pursuant to the Escrow Agreement shall be cumulative and in
addition to, and shall not in any way limit or preclude, any other remedy
available to Parent, its directors, officers, agents Affiliates against Company
Shareholders for failure to make any such indemnification or payments.
11.05. NO WAIVER. No waiver of a closing condition by either Parent or
the Company Shareholders shall limit its rights under Section 11.02. The parties
hereto shall identify in writing any closing condition so waived and of which
the individual or individuals waiving such closing condition on behalf of a
party has actual knowledge.
11.06. SOLE REMEDY. The sole and exclusive remedies under this
Agreement or the Ancillary Agreements available to any Indemnified Party for the
failure of any representation and warranty made in or pursuant to this Agreement
or the Ancillary Agreements to be true and correct, are the indemnities set
forth in this Article XI. Parent shall not be entitled to indemnification from
the Company Shareholders in respect of any Loss or Losses to the extent and only
to the extent that Parent has received payment for such Loss or Losses in the
form of a purchase price adjustment under Section 3.01(a) or Section 3.01(b)
hereof.
ARTICLE XII
TERMINATION
12.01. GROUNDS FOR TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(a) by written agreement of the Companies, the Company
Shareholders, Parent and the Merger Subs;
(b) By Parent, if there has been a material breach of this
Agreement on the part of either Company or either Company Shareholder with
respect to any of their covenants, representations or warranties contained
herein and such breach has not been cured by the earlier of the Closing Date or
within 10 business days after written notice thereof from Parent;
(c) By the Companies or the Company Shareholders if there has
been a material breach of this Agreement on the part of Parent with respect to
any of its covenants, representations or warranties contained herein and such
breach has not been cured by the earlier of the Closing Date or within 10
business days after written notice thereof from the Companies or the Company
Shareholders, as the case may be; or
(d) By Parent, the Companies or the Company Shareholders if,
at or before the Closing, any conditions set forth herein for the benefit of
Parent, the Companies or the Company Shareholders, as the case may be, (i) shall
not have been timely met or (ii) shall have become impossible to satisfy; or
(e) By Parent, the Companies or the Company Shareholders if:
(i) the Closing shall not have occurred on or before May 31, 1998 or such later
date as may have been agreed upon in writing by the parties hereto; provided,
that the right to terminate this Agreement under this clause (i) shall not be
available to any party if such party's breach of any representation, warranty or
agreement contained in this Agreement has been the cause of or resulted in the
failure of the Closing to occur on or before such date; (ii) there shall be a
final nonappealable
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order of a federal or state court in effect preventing consummation of the
Mergers; (iii) there shall be any action taken, or any statute, rule, regulation
or order enacted, promulgated or issued or deemed applicable to the Mergers by
any governmental agency or entity which would make consummation of the Mergers
illegal; or (iv) there shall be any action taken, or any statute, rule
regulation or order enacted, promulgated or issued or deemed applicable to the
Mergers by any governmental agency or entity, which would (A) prohibit Parent's
ownership or operation of all or a material portion of the business of the
Companies, or compel Parent to dispose of or hold separate all or a material
portion of the business or assets of the Companies or Parent as a result of the
Mergers or (B) render Parent, the Companies or the Company Shareholders unable
to consummate the Mergers.
The party desiring to terminate this Agreement shall give written
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 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 6.04, 6.05, 7.01, 8.03, 12.02, 13.03 and 13.04 shall
survive any termination hereof pursuant to Section 12.01.
ARTICLE XIII
MISCELLANEOUS
13.01. COMPANY SHAREHOLDERS. For the purpose of this Agreement, each of
Trager and Dearing is a separate party.
13.02. 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 Parent, to:
John E. Henry
General Counsel
Investors Financial Services Corp.
200 Clarendon Street
PO Box 9130
Boston, MA 02117-9130
Telecopy: (617) 351-4282
with a copy to:
Steven C. Browne
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Telecopy: (617) 248-7100
if to the Companies, to:
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Alan M. Trager
AMT Capital Services, Inc.
600 Fifth Avenue, 26th Floor
New York, NY
Telecopy: (212) 332-5199
with a copy to:
Ruth L. Lansner
Gilbert, Segall and Young, LLP
430 Park Avenue
New York, NY 10022
Telecopy: (212) 644-4051
if to a Company Shareholder:
at the address shown in Schedule 4.02
13.03. 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 Parent, the Companies and each of the Company
Shareholders.
(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.
13.04. 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, all such costs and expenses
incurred by the Companies shall be paid by the applicable Company or the Parent.
13.05. 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 Parent
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 Parent of its obligations hereunder.
13.06. FURTHER ASSURANCES. From time to time after the Closing, at the
request of Parent and without further consideration, Company Shareholders will
execute and deliver to Parent such other documents, and take such other action,
as Parent may reasonably request in order to consummate more effectively the
Mergers and to vest in Parent good, valid and marketable title to the Shares.
13.07. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the law of the Commonwealth of Massachusetts, without
regard to the conflicts of law rules of such state.
13.08. 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.
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13.09. ENTIRE AGREEMENT. This Agreement and the Ancillary 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. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
13.10. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
13.11. 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 Commonwealth of
Massachusetts, 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 Commonwealth of Massachusetts.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
COMPANY SHAREHOLDERS: INVESTORS FINANCIAL SERVICES CORP.
______________________________ By____________________________
Alan M. Trager Kevin J. Sheehan
President and Chief Executive Officer
- ------------------------------
Carla E. Dearing INVESTORS ACQUISITION SUB I
By____________________________
Kevin J. Sheehan
President and Chief Executive Officer
AMT CAPITAL SERVICES, INC. INVESTORS ACQUISITION SUB II
By /s/Alan M. Trager By /s/Kevin J. Sheehan
Kevin J. Sheehan
Name: Alan M. Trager President and Chief Executive Officer
Title: Chairman
AMT CAPITAL ADVISERS, INC.
By /s/Alan M. Trager
Name: Alan M. Trager
Title: President
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made this 29th
day of May, 1998 by and among Investors Financial Services Corp., a corporation
organized under the laws of Delaware (the "Company"), and Alan M. Trager and
Carla E. Dearing (collectively the "Company Shareholders").
WHEREAS, the Company and the Company Shareholders have entered into the
Merger Agreement pursuant to which all of the outstanding capital stock of AMT
Capital Services, Inc. and all of the outstanding capital stock of AMT Capital
Advisers, Inc. will be exchanged for 194,006 shares of Company's Common Stock
(the "Company Stock");
WHEREAS, pursuant to the Merger Agreement, the Company and the Company
Shareholders have agreed that a Registration Rights Agreement shall be delivered
at the time of the Closing of the Merger Agreement; and
WHEREAS, the Company wishes to grant, and the Company Shareholders wish
to obtain, certain registration rights with respect to certain shares of the
Company Stock.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Closing Date" shall have the meaning set forth in the Merger
Agreement.
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, $.01 par value, of the
Company (including the associated rights (the "Right") to purchase
preferred stock of the Company pursuant to the Company's Rights
Agreement), as constituted as of the date of this Agreement.
"Escrow Agent" shall have the meaning set forth in the Merger
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
"Merger Agreement" shall mean that certain Agreement and Plan of
Merger, dated May 12, 1998, by and among the Company, the Company
Shareholders and the other parties named therein, as the same may be
amended from time to time.
"Publication Date" shall mean the date on which the Company publishes
financial statements covering a period of not less than 30 days of
combined operations of the
<PAGE>
Company, AMT Capital Services, Inc. and AMT Capital Advisers, Inc.
following the Closing Date.
"Registration Expenses" shall mean the expenses so described in Section
5(a).
"Restricted Stock" shall mean the Company Stock, excluding shares of
Company Stock which (a) have been registered under the Securities Act
pursuant to an effective registration statement filed thereunder and
disposed of in accordance with the registration statement covering
them; or (b) have been sold pursuant to Rule 144 under the Securities
Act; or (c) are delivered to the Escrow Agent on the Closing Date
pursuant to the Merger Agreement, being 18,938 shares of Common Stock.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in Section
5(a).
Capitalized terms not herein defined shall have the meanings ascribed
thereto in the Merger Agreement.
2. Restrictive Legend. Each certificate representing Company Stock
shall, except as otherwise provided herein, be stamped or otherwise imprinted
with a legend substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND MAY
NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS: (i) THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION; (ii) THE
CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL SATISFACTORY TO
THE CORPORATION THAT SUCH TRANSACTION IS EXEMPT FROM SUCH
REGISTRATION OR (iii) THE CORPORATION IS OTHERWISE SATISFIED THAT
SUCH TRANSACTION IS EXEMPT FROM SUCH REGISTRATION. THE HOLDER OF
THIS SECURITY IS ENTITLED TO CERTAIN REGISTRATION RIGHTS SET FORTH
IN A REGISTRATION RIGHTS AGREEMENT DATED AS OF MAY __, 1998, A
COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF THE
CORPORATION."
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Company the securities represented thereby may be publicly
sold without registration under the Securities Act and any applicable state
securities laws or if such securities have been sold pursuant to Rule 144 or an
effective registration statement.
3. Registration. Not later than 30 days following the Closing Date, the
Company will file a registration statement under the Securities Act on an
appropriate form (which shall be Form S-3, if available) with respect to all of
the Restricted Stock and the Company shall use its best efforts to cause such
registration statement to become effective as soon as possible following the
filing thereof, but in no
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event sooner than the Publication Date. Such registration shall cover the resale
of such shares of the Restricted Stock in the public market in brokers'
transactions or transactions with market makers, or in privately negotiated
transactions, but in no event will it apply to an underwritten public offering
of the Restricted Stock. Company Shareholders undertake in connection therewith
to provide in a timely manner all such information and materials and take all
such action as may be required in order to permit the Company to comply with all
applicable requirements of the Commission and to obtain the acceleration of the
effective date of the registration statement. The Company shall use its best
efforts to keep such registration statement effective for a period ending on the
earlier of the sale of all Restricted Stock covered thereby or June 1, 2000.
4. Registration Procedures. If and whenever the Company is
required by the provisions of Section 3 to use its best efforts to effect the
registration of any shares of Restricted Stock under the Securities Act, the
Company will, as expeditiously as possible:
(a) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in Section 3 above;
(b) furnish to each seller of Restricted Stock such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably may request
in order to facilitate the public sale or other disposition of the Restricted
Stock covered by such registration statement;
(c) use its best efforts to register or qualify the Restricted
Stock covered by such registration statement under the securities or "blue sky"
laws of such jurisdictions as the sellers of Restricted Stock reasonably shall
request, provided, however, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign corporation in
any jurisdiction where it is not so qualified or to take any action which would
subject it to the service of process in suits other than those arising out of
the offer or sale of the securities covered by the registration statement in any
jurisdiction where it is not then so subject;
(d) use its best efforts to list the Restricted Stock (but not
including the Rights) covered by such registration statement subject to
quotation on the Nasdaq National Market; and
(e) notify each seller of Restricted Stock, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
In connection with the registration of Restricted Stock
hereunder, the sellers of Restricted Stock will furnish to the Company in
writing such information with respect to themselves and the proposed
distribution by them as shall be necessary in order to assure compliance with
federal and applicable state securities laws.
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5. Expenses; Indemnification.
(a) All expenses incurred by the Company in complying with
Sections 3 and 4, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses incurred in connection
with complying with state securities or "blue sky" laws, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents
and registrars, and costs of issuance, but excluding any Selling Expenses, are
called "Registration Expenses." All brokerage commission and expenses,
underwriting discounts, commissions and expenses and the fees and disbursements
of Company Shareholders' counsel and accountants are called "Selling Expenses."
The Company will pay all Registration Expenses in
connection with the registration statement under Section 3. All Selling Expenses
in connection with the registration statement under Section 3 shall be borne by
the participating Company Shareholders in proportion to the number of shares
sold by each.
(b) In connection with the registration of the Restricted
Stock under the Securities Act pursuant to Section 3 hereof, the Company agrees
to indemnify and hold each Company Shareholder and each person, if any, who
controls any Company Shareholder within the meaning of Section 15 of the
Securities Act harmless against any and all losses, claims, damages or
liabilities to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as any such losses, claims, damages,
liabilities or actions shall arise out of or shall be based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement relating to the sale of such shares of Restricted Stock
(including any documents incorporated therein by reference), or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in any case, at the
time it became effective under the Securities Act, or (ii) any untrue statement
or alleged untrue statement of a material fact contained in any preliminary
prospectus (as amended or supplemented if the Company shall have filed with the
Commission any amendment thereof or supplement thereto), if used prior to the
effective date of such registration statement, or contained in the prospectus
(as amended or supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto), if used within the period during
which the Company shall be required to keep the registration statement to which
such prospectus relates effective pursuant to the terms of this Agreement, or
the omission or alleged omission to state therein (if so used) a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
indemnification agreement contained in this Paragraph 5(b) shall not apply to
such losses, claims, damages, liabilities or actions which shall arise from the
sale of shares of Restricted Stock to any person if such losses, claims,
damages, liabilities or actions shall arise out of or shall be based upon any
such untrue statement or alleged untrue statement, or any such omission or
alleged omission, if such statement or omission shall have been (x) made in
reliance upon and in conformity with information furnished in writing to the
Company by any Company Shareholder specifically for use in connection with the
preparation of the registration statement or any preliminary prospectus or
prospectus contained in the registration statement or any such amendment thereof
or supplement thereto or (y) made in any preliminary prospectus, and the
prospectus contained in the registration statement in the form filed by the
Company with the Commission pursuant to Rule 424(b) under the Securities Act
shall have corrected such statement or omission and a copy of such prospectus
shall not have been sent or given to such person at or prior to the confirmation
of such sale to him.
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<PAGE>
(c) In connection with the registration of the Restricted
Stock under the Securities Act pursuant to Section 3 hereof, each of the Company
Shareholders, severally and jointly, agrees in the same manner and to the same
extent as set forth in Paragraph 5(b) of this Agreement to indemnify and hold
harmless the Company and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, its directors and those
officers of the Company who shall have signed any such registration statement
with respect to any statement in or omission from such registration statement or
any preliminary prospectus (as amended or as supplemented, if amended or
supplemented as aforesaid) or prospectus contained in such registration
statement (as amended or as supplemented, if amended or supplemented as
aforesaid), if such statement or omission shall have been made in reliance upon
and in conformity with information furnished in writing to the Company by such
Company Shareholder specifically for use in connection with the preparation of
such registration statement or any preliminary prospectus or prospectus
contained in such registration statement or any such amendment thereof or
supplement thereto.
(d) Each party indemnified under Paragraph 5(b) or (c) of this
Agreement shall, promptly after receipt of notice of the commencement of any
action against such indemnified party in respect of which indemnity may be
sought, notify the indemnifying party in writing of the commencement thereof.
The omission of any indemnified party so to notify an indemnifying party of any
such action shall not relieve the indemnifying party from any liability in
respect of such action which it may have to such indemnified party on account of
the indemnity agreement contained in Paragraph 5(b) or (c) of this Agreement,
unless the indemnifying party was prejudiced by such omission, and only to the
extent so prejudiced. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under Paragraph
5(b) or (c) of this Agreement for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation.
(e) In order to provide for just and equitable contribution to
joint liability in any case in which a claim for indemnification is made
pursuant to this Section 5 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5 provides for indemnification in such case, the Company and each
Company Shareholder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
proportion to the relative fault of the Company, on the one hand, and each
Company Shareholder, severally, on the other hand; provided, however, that, in
any such case, no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
6. Changes in Common Stock. If, and as often as, there is any
change in the Common Stock by way of a stock split, stock dividend, combination
or reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
5
<PAGE>
7. Rule 144 Reporting. With a view to making available to the
Company Shareholders the benefits of Rule 144 promulgated under the Securities
Act ("Rule 144"), the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Company Stock forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
by the Company as such holder may reasonably request in availing itself of Rule
144.
9. Miscellaneous.
(a) All covenants and agreements contained in this Agreement
by or on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto (including
without limitation transferees of any Restricted Stock), provided that such
transferee executes a counterpart signature page to the Agreement in a form
acceptable to the Company, whether so expressed or not, provided further that no
holder or transferee of Common Stock which has ceased to be Restricted Stock
shall have the benefit of the covenants and agreements in this Agreement with
respect to such Common Stock.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered in accordance with the
notification requirements set forth in the Merger Agreement:
(c) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
(d) This Agreement may not be amended or modified, and no
provision hereof may be waived, without the written consent of the Company and
the holders of at least two-thirds of the outstanding shares of Restricted
Stock.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) Notwithstanding anything herein to the contrary, the
Company's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for a
period not to exceed 90 days and, by notice to the holders of Restricted Stock,
the Company may immediately suspend sales at any time under the registration
statement, if there exists at the time material non-public information relating
to the Company which, in the reasonable opinion of the Company, should not be
disclosed; provided, however, that if such registration shall be so suspended,
the period of time for which the Company is obligated to keep such registration
statement effective shall be extended for a like period of time.
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<PAGE>
(g) If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
WHEREFORE, the parties hereto have executed this Registration Rights
Agreement as of the date first written above.
INVESTORS FINANCIAL SERVICES, CORP.
By: /s/Kevin J. Sheehan
Kevin J. Sheehan
President and Chief Executive Officer
COMPANY SHARHOLDERS:
/s/Alan M. Trager
Alan M. Trager
/s/Carla E. Dearing
Carla E. Dearing
7
<PAGE>
ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement") made as of this 29th day of May,
1998 by and among Investors Financial Services Corp., a corporation organized
under the laws of Delaware (the "Parent"), Alan M. Trager and Carla E. Dearing
(the "Company Shareholders"), being all the stockholders of record of AMT
Capital Services, Inc. ("Capital Services") and AMT Capital Advisers, Inc.
("Capital Advisers"), both Delaware corporations (Capital Services and Capital
Advisers sometimes referred to herein individually as a "Company" and
collectively as the "Companies"), and The First National Bank of Chicago, as
escrow agent (the "Escrow Agent").
WHEREAS, the Parent and the Shareholders have entered into an Agreement
and Plan of Merger dated as of May 12, 1998 (the "Merger Agreement") pursuant to
which all of the outstanding capital stock of the Companies will be exchanged
for 194,006 shares of Parent's common stock, par value $.01 per share (the
"Parent Stock");
WHEREAS, pursuant to Section 3.02 of the Merger Agreement, the Parent
and the Company Shareholders have agreed that the Parent shall deliver 18,938
shares of Parent's Stock to the Escrow Agent on behalf of the Company
Shareholders to be held in escrow pursuant to the Merger Agreement and this
Agreement (such shares as are initially deposited with the Escrow Agent and
continue to be held pursuant to this Agreement hereinafter being referred to as
the "Escrowed Shares") as security for the indemnification obligations of the
Company Shareholders pursuant to Section 11.02(a) of the Merger Agreement; and
WHEREAS, pursuant to Sections 10.02 and 10.03 of the Merger Agreement,
it is a condition to each party's obligations under the Merger Agreement that
the other execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used in this Agreement and not
defined herein shall have the meaning assigned thereto in the Merger Agreement.
2. Appointment. The Parent and the Company Shareholders hereby appoint
The First National Bank of Chicago to act as the Escrow Agent and The First
National Bank of Chicago accepts such appointment.
3. Escrow. Contemporaneously with the execution hereof, the Parent, on
behalf of the Company Shareholders and as if such shares were delivered to the
Company Shareholders and then delivered by the Company Shareholders to the
Escrow Agent, has delivered to the Escrow Agent (and the Escrow Agent hereby
acknowledges receipt of) the Escrowed Shares, which shall be held in escrow by
the Escrow Agent, pursuant to the terms and conditions of this Agreement.
4. Claims Against Escrowed Shares. At any time or times prior to the
Escrow Termination Date (as defined in Section 5(b)), Parent may make claims
against the Escrowed Shares as set forth in Section 11.04 of the Merger
Agreement. Parent shall notify the Company Shareholders and the Escrow Agent of
each such claim and deliver a Certificate in respect thereof. Thereafter, the
relevant matter shall
<PAGE>
be resolved by Parent and the Company Shareholders in accordance with the
procedures set forth in Article XI of the Merger Agreement.
5. Release of Escrowed Shares. Except as otherwise expressly provided
in this Agreement, the Escrowed Shares shall be released by the Escrow Agent
only as follows:
(a) If Parent suffers any Loss or Losses which become an
Agreed Claim under the Merger Agreement, Parent shall present evidence of such
Agreed Claim to the Escrow Agent. Evidence of an Agreed Claim shall be (a) a
copy of a Certificate accompanied by a certification signed by the Parent
stating that the Parent delivered the Certificate to the Company Shareholders at
least 30 days prior to the date of the certification and that the Parent has
received no written objection to the Certificate from either Company
Shareholder; (b) a memorandum of agreement executed by the Parent and the
Company Shareholders; or (c) a copy of a final order of judicial determination
from a court of competent jurisdiction, for which the time for appeal for any
such final order has expired without any appeal being made. Upon receipt of such
properly evidenced Agreed Claim, the Escrow Agent shall immediately release to
the Parent a number of Escrowed Shares equal to the amount of the Agreed Claim
divided by the Closing Market Value ($52.80625), rounded to the nearest whole
number of Escrowed Shares.
(b) On the earlier to occur of (i) February 28, 1999 and (ii)
the Escrow Agent's receipt of notice of the Parent's first public announcement
of earnings following completion by the Parent's independent public accountants
of the first full-year audit of the Parent's financial statements following the
Closing Date (the "Escrow Termination Date"), the Escrow Agent shall immediately
release to the Company Shareholders, in accordance with the ratio of ownership
set forth in Schedule A hereto, all of the Escrowed Shares; provided, however,
that the Escrow Agent shall not distribute, and shall continue to hold in escrow
pursuant to this Agreement, a number of Escrowed Shares equal to (x) the
aggregate amount of all claims for Losses for which the Escrow Agent has
received a Certificate or Certificates which have not become an Agreed Claim and
paid out pursuant to Section 5(a) above divided by (y) the Closing Market Value
($52.80625), rounded to the nearest whole number of Escrowed Shares. Such notice
of Parent's first public announcement of earnings shall include such
announcement of earnings and may be delivered by Parent or either Company
Shareholder.
(c) After the Escrow Termination Date, each Company
Shareholder may from time to time request in writing that the Parent notify the
Escrow Agent of the amount, if any, by which the value of the Escrowed Shares
then retained by the Escrow Agent (valued at the Closing Market Value) exceeds
the aggregate of all claims for Losses subject to any unresolved Certificates
(the "Excess Value"). Upon receipt of such a request, the Parent shall promptly
notify the Escrow Agent and the Company Shareholders in writing of the Excess
Value, if any, (a "Release Notice"). Upon receipt of a Release Notice, the
Escrow Agent shall immediately deliver to the Company Shareholders a number of
Escrowed Shares equal to the Excess Value divided by the Closing Market Value
($52.80625), rounded to the nearest whole number of Escrowed Shares. Upon
delivery of the last Escrowed Share pursuant to this Section 5, this Escrow
Agreement shall terminate.
6. Dividends and Other Distributions. Except as otherwise set forth in
this Section 6, all cash dividends, non-cash dividends and distributions
declared by Parent with respect to the Parent Stock shall be payable to the
Company Shareholders, in accordance with the ratio of ownership set forth in
Schedule A hereto, as if no shares had been placed into escrow under this
Agreement (subject to reduction to reflect the delivery of Escrowed Shares to
Parent under this Agreement). All dividends in the form of Parent's Common Stock
shall be distributed directly to the Escrow Agent, to be held by the Escrow
Agent as additional Escrowed Shares hereunder.
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<PAGE>
7. Additional Remedies. The distribution of any Escrowed Shares to the
Parent provided for in Section 5 hereof shall be in addition to, and not in lieu
of, any other remedy which may be available to the Parent pursuant to the Merger
Agreement.
8. Exercise of Rights by the Company Shareholders. For so long as the
Escrowed Shares are held hereunder, and except as otherwise set forth herein,
the Company Shareholders shall be entitled to exercise all voting and consensual
powers and all other rights pertaining to the Escrowed Shares.
9. Interest in Escrowed Shares. The Company Shareholders severally
agree that they will not assign or transfer their interest in the Escrowed
Shares (until released to them hereunder) and such interest shall be
transferable only by operation of law, unless the Parent, in its sole
discretion, consents in writing otherwise and the Company Shareholders and any
transferee execute such documents as the Parent may request.
10. Matters Relating to the Escrow Agent.
(a) The duties and obligations of the Escrow Agent hereunder
shall be determined solely by the express provisions of this Agreement and no
implied duties or obligations shall be read into this Agreement against the
Escrow Agent, and under no circumstance shall the Escrow Agent be deemed to be a
fiduciary with respect to any of the parties hereto. IN NO EVENT SHALL THE
ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (i) DAMAGES OR EXPENSES
ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES WHICH RESULT
FROM THE ESCROW AGENT'S FAILURE TO EXERCISE REASONABLE CARE IN PERFORMING ITS
DUTIES, OR (ii) SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESCROW AGENT HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES . Except as specifically
provided herein, the Escrow Agent shall be under no obligation to refer to any
other documents between or among the parties related in any way to this Escrow
Agreement.
(b) The Escrow Agent shall not be liable to anyone by reason
of any error of judgment, or for any act done or step taken or omitted by it in
good faith, or for any mistake of fact or law, or for any thing which it may do
or refrain from doing in connection herewith, unless caused by or arising out of
its own negligence or bad faith.
(c) The Escrow Agent shall be entitled to rely and shall be
protected in acting in reliance upon any writing furnished to it by any party
hereto in accordance with the terms hereof, and shall be entitled to treat as
genuine, and as the document it purports to be, any letter, paper or other
document furnished to it by any party and believed by the Escrow Agent to be
genuine and to have been signed by the proper party.
(d) The Escrow Agent may consult with independent counsel,
including counsel who are employees of the Escrow Agent, with respect to any
question relating to its duties or responsibilities hereunder and shall not be
liable for any action taken or omitted in good faith on advice of such counsel.
(e) In the event of any disagreement or dispute between or
among the Company Shareholders, the Parent, the Companies or any of their
Affiliates concerning the rights and obligations of the Escrow Agent, the Escrow
Agent shall be entitled, at its option, to refuse to comply with the claims or
demands of any party hereto until such disagreement or dispute is finally
resolved by a court of
3
<PAGE>
competent jurisdiction (in proceedings which it or any other party may initiate)
and the time for appeal of any such final order shall have expired without an
appeal being made, and in so doing the Escrow Agent shall not be or become
liable to any party.
(f) Each other party hereto, jointly and severally, agrees to
indemnify and hold harmless the Escrow Agent against all legal fees, costs,
liabilities and other expenses, including the Escrow Agent's fees (the "Escrow
Expenses") incurred by the Escrow Agent in connection with or as a result of any
disagreement between or among the Company Shareholders, the Parent, the Company,
or any of their Affiliates or in connection with the performance or enforcement
of this Agreement, and such indemnification shall survive the Escrow Agent's
resignation or removal and the termination of this Agreement.
(g) The Escrow Agent and successor escrow agent, as the case
may be, may resign its duties and be discharged from all other further duties
and obligations hereunder at any time upon giving thirty (30) days' prior
written notice to the Company Shareholders and the Parent. The Parent shall
thereupon designate a successor escrow agent hereunder within said thirty-day
period, which successor shall be a commercial bank with net assets in excess of
$500 million and which is not an Affiliate of Parent, to whom the Escrow Agent
shall deliver the Escrowed Shares. If the parties hereto are unable to agree
upon a successor, or shall have failed to appoint a successor prior to the
expiration of thirty (30) days following receipt of the notice of resignation or
removal, the Escrow Agent may petition any court of competent jurisdiction for
the appointment of a successor escrow agent or for other appropriate relief, and
any such resulting appointment shall be binding upon all of the parties hereto.
(h) The Escrow Agent shall have the right to perform any of
its duties hereunder through agents, attorneys, custodians, or nominees.
(i) The Escrow Agent shall not be required by any provision of
this Agreement to expend or risk its own funds in the performance of its duties
if it shall have reasonable grounds for believing that repayment of such funds
is not reasonably assured to it.
(j) Any banking association or corporation into which the
Escrow Agent (or substantially all of its corporate trust business) may be
merger, converted or with which the Escrow Agent may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Escrow Agent shall be a party, succeed to all the Escrow Agent's rights,
obligations and immunities hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
11. Tax Matters. Any tax returns required to be prepared and filed in
connection with the Escrowed Shares will be prepared and filed by the Parent or
the Company Shareholders, as appropriate. The Escrow Agent shall have no
responsibility for the preparation and/or filing of any tax return with respect
to any earnings in connection with the Escrowed Shares.
12. Fees. The Parent, on the one hand, and the Company Shareholders,
jointly and severally on the other hand, will each pay half of the Escrow
Expenses of the Escrow Agent.
13. Notices. Any notice or other communication required or permitted
hereunder shall be in writing, and shall be given by registered mail (postage
prepaid), personal delivery, telecopier (confirmed by mail as aforesaid) or
courier service (such as Federal Express) addressed as follows:
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<PAGE>
If to the Parent:
John E. Henry
General Counsel
Investors Financial Services Corp.
200 Clarendon Street
PO Box 9130
Boston, MA 02117-9130
Telecopy: (617) 351-4282
With a copy to:
Steven C. Browne
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Telecopier: (617) 248-7100
If to the Company Shareholders:
Alan M. Trager
173 Riverside Drive, Apt. 14D
New York, NY 10024
Carla M. Dearing
1133 Park Ave
New York, NY 10128
If to Escrow Agent:
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Attn: Corporate Trust Administration
Telecopy: 312-407-8929
Each of the parties hereto shall be entitled to specify a different address by
giving notice as aforesaid. Such notices and communications shall be deemed
effective (i) three business days after being sent, if sent by registered mail
(postage prepaid) from one location in the United States to another location
therein, (ii) seven business days after being sent if sent by international
registered airmail (postage prepaid), or (iii) on the date delivered, if
delivered personally, transmitted by telecopier or delivered by courier service
such as Federal Express.
14. Headings. Section headings are not to be considered part of this
Agreement, are included solely for convenience of reference and are not intended
to be full or accurate descriptions of the contents of Sections to which they
relate.
5
<PAGE>
15. Governing Law. The validity, construction and interpretation of
this Agreement shall be governed by the laws of The Commonwealth of
Massachusetts applicable to contracts made and to be performed wholly within
that commonwealth.
16. Termination. This Agreement shall terminate automatically upon the
distribution of all of the Escrowed Shares in accordance with the terms of this
Agreement.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
18. Amendments. This Agreement may only be amended by an instrument in
writing signed by each of the parties hereto.
[SPACE INTENTIONALLY LEFT BLANK]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
INVESTORS FINANCIAL SERVICES CORP.
By:/s/Kevin J. Sheehan
-------------------
Kevin J. Sheehan
President and Chief Executive Officer
SELLERS
/s/Alan M. Trager
-----------------
Alan M. Trager
/s/Carla E. Dearing
-------------------
Carla E. Dearing
ESCROW AGENT
The First National Bank of Chicago
By:/s/Noreen T. Scaife
-------------------
Name: Noreen T. Scaife
Title: Trust Officer
7
<PAGE>
SCHEDULE A
RATIO OF OWNERSHIP
<TABLE>
<S> <C>
Alan M. Trager 89.15%
Carla E. Dearing 10.85%
</TABLE>
8
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We consent to the incorporation by reference in this Registration
Statement of Investors Financial Services Corp. (the "Company") on Form S-3
of our reports dated February 13, 1998, appearing in the Annual Report on
Form 10-K of the Company for the year ended December 31, 1997 and to the
reference to us under the heading "Experts" in the Prospectus, which is part
of this Registration Statement.
Deloitte & Touche LLP
Boston, Massachusetts
June 29, 1998
