MEMBERSHIP INTEREST PURCHASE AGREEMENT

Exhibit 2.1

EXECUTION COPY

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

by and among

BRYN MAWR BANK CORPORATION,

JNJ HOLDINGS LLC,

LAU ASSOCIATES LLC,

LAU PROFESSIONAL SERVICES LLC,

MARIGOT DAZE LLC,

and

JUDITH W. LAU

 

INDEX OF SCHEDULES AND EXHIBITS

 

 

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EXECUTION COPY

MEMBERSHIP INTEREST PURCHASE AGREEMENT

This Membership Interest Purchase Agreement, dated as of June 9, 2008 (“ Agreement ”), is entered into by and among Bryn Mawr Bank Corporation, a Pennsylvania corporation (“ Buyer ”), Marigot Daze LLC, a Delaware limited liability company (“ Seller ”), Judith W. Lau, an individual (“ Lau ”), JNJ Holdings LLC, a Delaware limited liability company (“ JNJ ”), Lau Associates LLC, a Delaware limited liability company (“ Lau Associates ”) and Lau Professional Services LLC, a Delaware limited liability company (“ Lau Professional ”). The parties to this Agreement are sometimes referred to herein, individually, as a “ Party ” and collectively, as the “ Parties ”.

Background

A. JNJ and its two wholly-owned subsidiaries, Lau Associates and Lau Professional (JNJ, Lau Associates and Lau Professional are collectively referred to herein as the “ Company ”) are engaged in the business of providing investment management and related services to high net worth individuals and families (the “ Business ”).

B. Seller is the owner of one hundred percent (100%) of the issued and outstanding membership interests in JNJ (the “ Interests ”). Subject to the terms and conditions set forth in this Agreement, Seller has determined to sell, and Buyer desires to purchase, all of the Interests, free and clear of Encumbrances.

Agreement

NOW, THEREFORE, intending to be legally bound, in consideration of the mutual covenants and agreements contained herein, the Parties hereby agree as follows:

1. Definitions . For purposes of this Agreement, the capitalized terms not otherwise defined in the body of this Agreement shall have the meanings ascribed to such terms in Exhibit A attached hereto, which defined terms are incorporated herein by reference.

2. Sale and Purchase of Interests . On the Closing Date, subject to and upon the terms and conditions contained herein, Seller shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of Encumbrances, good and marketable title to all, and not less than all, of the Interests.

3. Purchase Price .

3.1 Purchase Price Calculation . The consideration to be paid to Seller for the Interests, subject to terms and conditions of this Agreement, shall consist of the following (collectively, the “ Purchase Price ”):

(a) The Acquisition Consideration; plus

(b) The amount, if any, by which the Closing Date Working Capital, as finally determined in accordance with the provisions of this Agreement, is greater than One Hundred Fifty Thousand Dollars ($150,000); or minus the amount, if any, by which the Closing Date Working Capital is less than One Hundred Fifty Thousand Dollars ($150,000) (such adjustment is referred to herein as the “ Working Capital Adjustment ”); plus

(c) The Earn-Out Payments.

Notwithstanding any language to the contrary contained in this Agreement, in no event shall the Purchase Price exceed Nineteen Million Dollars ($19,000,000) in the aggregate (the “ Maximum Purchase Price ”).

3.2 Initial Payments at Closing . On the Closing Date:

(a) Buyer shall pay to Seller an amount equal to:

(i) $3,659,580.00 + the Tail Coverage Cost (the “ Acquisition Consideration ”); plus or minus, as appropriate,

(ii) the Estimated Working Capital Surplus or the Estimated Working Capital Deficiency,

which amount shall be paid to Seller via wire transfer of immediately available funds to the account(s) designated in writing by Seller at least three (3) business days prior to the Closing Date. Notwithstanding the foregoing, the Parties acknowledge and agree that if, as of the Closing Date, affirmative written Consent from Clients representing at least ninety-five percent (95%) of client revenue to the Business for calendar year 2007 has not been obtained with respect to the assignments of their respective Contracts with the Company that shall occur at the Closing pursuant to Section 202(a)(1) of the Advisers Act, then the Acquisition Consideration shall be reduced on a pro-rata basis.

3.3 Earn-Out Payments .

(a) Subject to the other provisions of this Agreement (including, without limitation, the last sentence of Section 3.1), on December 31, 2008, in the case of the calendar year 2008, and following the end of each of the succeeding three calendar years ending December 31, 2009, December 31, 2010, and December 31, 2011 (such four calendar years constituting the “ Earn-Out Payment Period ”), Seller may be entitled to a payment (each, an “ Earn-Out Payment ”) based upon Pre-Tax Income for such calendar year, as detailed below; provided, however, that the 2008 Earn-Out Payment, shall be based on the Pre-Tax Income, calculated for 2008 in accordance with the methodology set forth below, minus $46,860.00.

(b) For purposes of this Agreement, “ Pre-Tax Income ” shall mean the earnings before taxes of the Company (determined on a consolidated basis with intercompany transfers eliminated) for a calendar year, calculated in accordance with the Company Cash Method of Accounting. A calculation of Pre-Tax Income for calendar year 2007, which equaled $891,000.00 (“ Base Year Pre-Tax Income ”), is set forth on Schedule 3.3(b) . Notwithstanding the foregoing, the Parties acknowledge and agree that in determining Pre-Tax Income for periods after the Closing:

(i) “extraordinary items” of gain, as that term is defined in GAAP, shall be excluded from income;

 

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(ii) gains, losses, and profits realized from the sale of any assets (other than in the Ordinary Course of Business) shall be excluded from income;

(iii) revenue attributable to (a) any acquisition consummated by the Company after the Closing Date, and (b) any business which may be merged with or otherwise combined with the Business after the Closing Date shall be excluded from income;

(iv) purchase accounting adjustments shall be excluded from the determination of income;

(v) salary, bonus, benefits and other compensation paid to Lau shall be included as an operating expense;

(vi) salary, bonus, benefits and other compensation paid to any employee of the Company who is hired after the Closing Date at the direction of Buyer in order to supplement the Company’s existing employment staff as of the Closing Date, shall be excluded as an operating expense;

(vii) $322,950.00 shall be excluded as an operating expense for purposes of the 2008 Earn-Out Payment only; and

(viii) the Tail Coverage Cost shall be excluded as an operating expense.

(c) Not later than sixty (60) days following the end of each calendar year during the Earn-Out Payment Period, Buyer shall prepare and deliver to the Seller’s Representative (i) an unaudited consolidated income statement of the Company (with intercompany transfers eliminated) for such calendar year prepared in accordance with the Company Cash Method of Accounting, and (ii) a statement setting forth Buyer’s calculation of Pre-Tax Income for such calendar year.

(d) Not later than thirty (30) days after delivery of the items to the Seller’s Representative referenced in the last sentence of Section 3.3(c) above, the Seller’s Representative shall present any objections that Seller may have to any of the matters set forth therein, which objections shall be set forth in writing and in reasonable detail, and in such case the Seller’s Representative shall present its own calculation of Pre-Tax Income for the calendar year in question. Following the delivery to Buyer of any objections, Buyer and the Seller’s Representative shall meet to discuss the objections raised by Seller with a view toward resolving such objections. If the Seller’s Representative does not deliver any written objections to Buyer within such 30-day period, Seller shall be deemed to have accepted Buyer’s calculation of Pre-Tax Income for such calendar year and irrevocably waived any right to object thereto.

(e) If the Seller’s Representative delivers such written objections and all such objections are not resolved by Buyer and the Seller’s Representative within thirty (30) calendar days after delivery to Buyer of such objections, then such dispute shall be

 

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submitted to a nationally or regionally recognized firm of independent certified public accountants to be agreed upon by Buyer and the Seller’s Representative other than any firm which performs, or within the past three years has performed, audits or financial statement reviews or financial statement compilations for the Company, Seller or Buyer (such accounting firm being referred to herein as the “ Independent Accountant ”) for resolution. The Independent Accountant shall be instructed to deliver a decision within thirty (30) calendar days after the submission of such matters to the Independent Accountant, and to only render a decision with respect to the matters submitted for resolution. The Independent Accountant shall be instructed that its decision shall be in writing and shall include (i) a statement describing in reasonable detail the decision of the Independent Accountant with respect to each item in dispute submitted to the Independent Accountant, and (ii) the Independent Accountant’s computation of Pre-Tax Income for the calendar year in question, it being understood that the amount of such Pre-Tax Income shall not be (A) less than the amount set forth in the statement delivered by Buyer pursuant to Section 3.3(c), nor (B) more than the amount set forth in Seller’s written objections delivered to Buyer pursuant to Section 3.3(d). The decision of the Independent Accountant shall be final and binding and conclusive upon Buyer, the Seller’s Representative and Seller, absent manifest error. The fees and expenses of the Independent Accountant shall be shared equally by Buyer and Seller.

(f) Within ten (10) business days after the final determination of Pre-Tax Income for a given calendar year during the Earn-Out Payment Period has been made, Buyer shall pay to Seller an Earn-Out Payment which shall equal the product of (i) Pre-Tax Income for such year, (ii) the Applicable Percentage for such year, and (iii) the Pre-Tax Income Multiple for such year. “ Applicable Percentage ” shall mean 32.5% for the calendar year ending December 31, 2008, and shall mean 11.667% for each of the calendar years ending December 31, 2009, December 31, 2010 and December 31, 2011. “ Pre-Tax Income Multiple ” shall mean, with respect to a given calendar year, the multiple set forth in the chart below corresponding to the Compound Annual Growth Rate of Pre-Tax Income for such year measured against Base Year Pre-Tax Income. “ Compound Annual Growth Rate ” shall mean a number, expressed as a percentage, equal to: (A) a fraction, the numerator of which is Pre-Tax Income for the calendar year in question, and the denominator of which is Base Year Pre-Tax Income, to the power of (B) a fraction, the numerator of which is one, and the denominator of which is the number of calendar years having passed since December 31, 2007, less (C) one. By way of example, the Compound Annual Growth Rate for the calendar year ending December 31, 2010, should the Pre-Tax Income for such year be $1,463,942, would be (A) $1,463,942/$891,000, to the power of (B) 1/3, less (C) 1, equaling 0.1798 or 17.98%.

 

 

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(g) On December 15, 2008, Buyer shall prepare and deliver to Seller’s Representative (i) a projected consolidated income statement of the Company (with intercompany transfers eliminated) for the calendar year ending December 31, 2008 prepared in accordance with the Company Cash Method of Accounting and (ii) a statement setting forth Buyer’s calculation of Pre-Tax Income for such calendar year. The projected consolidated income statement and calculation of Pre-Tax Income described in the preceding sentence shall be prepared based on actual items of income and expense incurred through November 30, 2008, and estimated items of income and expense from December 1, 2008 through December 31, 2008 (the “ 2008 Estimated Earn-Out Payment Calculations ”).

On December 31, 2008, Buyer shall pay to Seller an Earn-Out Payment which shall equal the product of (i) Pre-Tax Income for the year ended December 31, 2008 (based on the 2008 Estimated Earn-Out Payment Calculations), (ii) 32.5%, and (iii) the Pre-Tax Income Multiple for such year (the “ 2008 Estimated Earn-Out Payment ”).

Notwithstanding anything to the contrary contained herein, for the calendar year ending December 31, 2008, (i) if the final determination of the Earn-Out Payment is greater than the 2008 Estimated Earn-Out Payment, then Buyer shall pay to Seller the amount by which the finally-determined Earn-Out Payment exceeds the 2008 Estimated Earn-Out Payment within ten (10) days after the final determination of calendar year 2008 Pre-Tax Income has been made pursuant to Sections 3.3(b) through (e), and (ii) if the final determination of the Earn-Out Payment is less than the 2008 Estimated Earn-Out Payment, then Seller shall pay to Buyer the amount by which the finally-determined Earn-Out Payment is less than the 2008 Estimated Earn-Out Payment within ten (10) days after the final determination of calendar year 2008 Pre-Tax Income has been made pursuant to Sections 3.3(b) through (e).

(h) Notwithstanding anything to the contrary contained herein, if a Change of Control occurs and, subsequent to such Change of Control, Buyer breaches the provisions of Section 8.7 of this Agreement, and such breach remains uncured for thirty (30) days after Buyer receives written notice of such breach from Seller, then, in such event, Buyer shall pay to Seller an amount equal to the difference between the Maximum Purchase Price and the aggregate amount of Purchase Price theretofore paid by Buyer to Seller.

3.4 Working Capital Adjustment .

(a) Payments .

(i) Not later than three (3) business days prior to the anticipated Closing Date, the Seller’s Representative shall prepare in good faith a written estimate of the Closing Date Working Capital (the “ Estimated Closing Date Working Capital ”).

 

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If the Estimated Closing Date Working Capital is less than One Hundred Fifty Thousand Dollars ($150,000), the Acquisition Consideration shall be decreased by the amount of any such difference (the “ Estimated Working Capital Deficiency ”), as set forth in Section 3.2. If the Estimated Closing Date Working Capital is greater than One Hundred Fifty Thousand Dollars ($150,000), the Acquisition Consideration shall be increased by the amount of any such difference (the “ Estimated Working Capital Surplus ”), as set forth in Section 3.2.

(ii) Not later than ten (10) business days after the Closing Date Working Capital is finally determined pursuant to Section 3.4(b), Seller shall pay to Buyer the amount, if any, by which the Closing Date Working Capital, as finally determined in accordance with Section 3.4(b), is less than the Estimated Closing Date Working Capital, or Buyer shall pay to Seller the amount, if any, by which such Closing Date Working Capital is greater than the Estimated Closing Date Working Capital.

(b) Preparation of the Closing Date Balance Sheet .

(i) Not later than sixty (60) days after the Closing Date, Buyer shall prepare and deliver to the Seller’s Representative (i) an unaudited consolidated balance sheet of the Company as of the close of business on the Closing Date (the “ Closing Date Balance Sheet ”) which shall be prepared in accordance with the Company Cash Method of Accounting; and (ii) a schedule (the “ Schedule of Adjustments ”) setting forth in reasonable detail a computation of the Working Capital Adjustment based upon the Closing Date Balance Sheet and reflecting any change from the Estimated Closing Date Working Capital.

(ii) Not later than thirty (30) days after the delivery of the Closing Date Balance Sheet and Schedule of Adjustments to the Seller’s Representative, the Seller’s Representative shall present any objections that Seller may have to any of the matters set forth therein, which objections shall be set forth in writing and in reasonable detail, and in such case the Seller’s Representative shall present its own calculation of the Closing Date Working Capital. Following the delivery to Buyer of any objections to the Closing Date Balance Sheet, Schedule of Adjustments or Working Capital Adjustment, Buyer and the Shareholders’ Representative shall meet to discuss the objections raised by Seller with a view toward resolving such objections. If the Seller’s Representative does not deliver any written objections to Buyer within such 30-day period, Seller shall be deemed to have accepted the Closing Date Balance Sheet, Schedule of Adjustments and Working Capital Adjustment and irrevocably waived any right to object thereto.

(iii) If the Seller’s Representative delivers such written objections to the Closing Date Balance Sheet, Schedule of Adjustments or Working Capital Adjustment and all such objections are not resolved by Buyer and the Seller’s Representative within thirty (30) calendar days after delivery to Buyer of such objections, then such dispute shall be submitted not later than seven (7) calendar days thereafter to the Independent Accountant. The Independent Accountant shall be instructed to deliver a decision solely with respect to the matters referred to it for determination within thirty (30) calendar days after the submission of such matters to the Independent Accountant. The Independent Accountant shall be instructed that its decision shall be in writing and shall include a statement describing in reasonable detail the decision of the Independent Accountant with respect to each item in dispute

 

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submitted to the Independent Accountant. The Independent Accountant shall also be instructed that, in its final determination, the Closing Date Working Capital shall not be (A) less than the respective amounts shown in Buyer’s Schedule of Adjustments, nor (B) more than the respective amounts set forth in Seller’s written objections delivered to Buyer pursuant to Section 3.4(b)(ii). The decision of the Independent Accountant shall be final and binding and conclusive upon Buyer, the Seller’s Representative and Seller for all purposes under this Agreement, absent manifest error. The fees and expenses of the Independent Accountant shall be shared equally by Buyer and Seller.

4. Allocation of Purchase Price .

4.1. The Purchase Price shall be allocated as indicated on Schedule 4 .

4.2. The Parties agree to be bound by the Purchase Price allocation as set forth on Schedule 4 and to report the transaction contemplated herein for federal, state, and local tax purposes in accordance with such allocation. The Parties will file their respective Tax Returns in a manner consistent with such allocation.

5. Representations and Warranties Pertaining To Seller and Lau . Seller, the Company and Lau, jointly and severally represent and warrant to Buyer, as of the date hereof and as of the Closing Date, as follows:

5.1. Organization . Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Seller has full limited liability company power and authority to conduct its business as it is now being conducted, and to own or use the properties and assets that it purports to own or use. All of the members of Seller, and their respective equity interests in Seller, are listed on Schedule 5.1 .

5.2. Enforceability; Authority . This Agreement constitutes the legal, valid and binding obligation of each of Seller and Lau, Enforceable against each such Person in accordance with its terms. Upon the execution and delivery of each other agreement to be executed or delivered by Seller or Lau at the Closing (collectively, the “ Seller Closing Documents ”), each of the Seller Closing Documents will constitute the legal, valid and binding obligation of Seller or Lau (as applicable), Enforceable against such Person in accordance with its terms. Each of Seller and Lau has the absolute and unrestricted right, power and authority to execute and deliver this Agreement and the Seller Closing Documents to which such Person is a party and to perform its obligations under this Agreement and the Seller Closing Documents to which it is a party, and such action by Seller has been duly authorized by all necessary action by Seller.

5.3. Conflict . Neither the execution and delivery of this Agreement nor the consummation or performance of the transactions contemplated hereunder will, directly or indirectly (with or without notice or lapse of time): (i) breach or give any Governmental Body or other Person the right to challenge any of the transactions contemplated hereunder or to exercise any remedy or obtain any relief under any Legal Requirement or any Order to which Seller or Lau may be subject; (ii) cause Buyer to become subject to, or to become

 

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liable for, the payment of any Tax; (iii) result in the imposition or creation of any Encumbrance upon or with respect to the Interests; (iv) contravene, conflict with or result in a violation or breach of any Contract of Seller or Lau; or (v) contravene, conflict with or result in a violation or breach of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by Seller or Lau that otherwise relates to the Interests or the Business.

5.4. Consents . Neither Seller or Lau is required to give any notice to or obtain any Consent from any Person in connection with such Person’s execution and delivery of this Agreement or any of the Seller Closing Documents to which such Person is a party or the consummation or performance of the transactions contemplated hereby.

5.5. Legal Proceedings . There is no pending or, to the Knowledge of Seller, threatened Proceeding by or against Seller or Lau (i) that relates to or may affect the Business or the Interests; or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, the transactions contemplated hereby.

5.6. Brokers or Finders . Neither Seller, Lau or the Company has incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payments in connection with the sale of the Interests or the transactions contemplated hereby which shall not be the full obligation of Seller or Lau.

5.7. Disclosure . No representation or warranty or other statement made by Seller or Lau in this Agreement, the Seller Closing Documents, the Confidential Information Memorandum, or the Schedules or otherwise in connection with the transactions contemplated hereby contains any untrue statement or omits to state a material fact necessary to make any of them, in light of the circumstances in which it was made, not misleading. Seller has no Knowledge of any fact (other than general economic or industry conditions) that may materially adversely affect (i) Seller’s Interests or its ability to transfer to Buyer good and marketable title thereto; or (ii) the assets, business, prospects, financial condition or results of operations of the Company, in such instance, that has not been set forth in this Agreement or the Schedules hereto.

6. Representations and Warranties Pertaining to the Company . Seller, the Company and Lau, jointly and severally represent and warrant to Buyer, as of the date hereof and as of the Closing Date, as follows:

6.1. Organization and Good Standing . Each of JNJ, Lau Associates and Lau Professional is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Each of JNJ, Lau Associates and Lau Professional has full limited liability company power and authority to conduct its business as it is now being conducted, and to own or use the properties and assets that it purports to own or use. Each of JNJ, Lau Associates and Lau Professional is duly qualified to do business as a foreign limited liability company and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned

 

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or used by it, or the nature of the activities conducted by it, requires such qualification. Schedule 6.1 contains a complete and accurate list of any jurisdiction in which JNJ, Lau Associates or Lau Professional is qualified to do business as a foreign limited liability company. Except for the one hundred percent (100%) ownership interests of Lau Associates and Lau Professional held by JNJ, none of JNJ, Lau Associates or Lau Professional has any subsidiaries or owns any shares of capital stock, or other ownership interests in, any other Person.

6.2. Enforceability; Authority; No Conflict .

(a) This Agreement constitutes the legal, valid and binding obligation of the Company, Enforceable against the Company in accordance with its terms. The Company has the absolute and unrestricted right, power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement, and such action has been duly authorized by all necessary action by the Company.

(b) Except as set forth on Schedule 6.2(b) , neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated hereby will, directly or indirectly (with or without notice or lapse of time): (i) breach (A) any provision of any of the Governing Documents of the Company or (B) any resolution adopted by any of the members of the Company; (ii) breach or give any Governmental Body or other Person the right to challenge any of the transactions contemplated hereby or to exercise any remedy or obtain any relief under any Legal Requirement or any Order to which the Company, or any of the Assets, may be subject; (iii) contravene, conflict with or result in a violation or breach of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by the Company or that otherwise relates to the Assets or to the Business; (iv) cause Buyer to become subject to, or to become liable for the payment of, any Tax; (v) breach any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate or modify, any Company Contract; or (vi) result in the imposition or creation of any Encumbrance upon or with respect to any of the Assets.

(c) Except as set forth on Schedule 6.2(c) , the Company is not required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the transactions contemplated hereby.

6.3. Capitalization . Seller is the owner of one hundred percent (100%) of the issued and outstanding membership interests in JNJ, representing the Interests. Seller has good and marketable title to the Interests, free and clear of Encumbrances. All of the Interests were duly authorized, validly issued, and are fully paid and non-assessable. Except for the Interests, there are no other equity securities of JNJ outstanding and there are no profit interests in JNJ outstanding. No options, warrants or other rights to acquire, sell or issue membership interests or other equity securities or profit interests of JNJ, whether upon conversion of these securities or otherwise are outstanding or have been previously issued. Seller has not granted any rights (including a currently effective power of attorney

 

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or proxy) or options to any person with respect to all or any part of the Interests. Seller is not a party to or bound by any agreement, undertaking or commitment to sell, exchange or purchase any of the Interests. Seller is not a party to any voting trust or other agreement or understanding with respect to the Interests. None of the Interests has been issued in violation of any preemptive rights of any security holder of the Company or in violation of the Securities Act, applicable state securities laws or other requirements of law.

6.4. Financial Statements . Attached hereto as Schedule 6.4 is: (a) a client-prepared consolidated balance sheet of the Company as of December 31, 2007, and the related client-prepared consolidated statement of income and statement of changes in owner’s equity for the calendar year then ended (the “ Annual Financial Statements ”), and (b) a client-prepared consolidated balance sheet of the Company as of April 30, 2008, and the related client-prepared consolidated statement of income and statement of changes in owner’s equity for the four-month period then ended (the “ Interim Financial Statements ” and, together with the Annual Financial Statements, the “ Financial Statements ”). The Financial Statements fairly and accurately present the financial condition, the results of operations, and changes in owner’s equity of the Company on a consolidated basis at the respective dates of and for the periods referred to in such Financial Statements, all in accordance with the Company Cash Method of Accounting. The Financial Statements referred to in this Section 6.4 reflect the consistent application of the Company Cash Method of Accounting throughout the periods involved. The Financial Statements have been prepared from and are in accordance with the accounting Records of the Company.

6.5. Books and Records . The books of account and other financial Records of the Company, all of which have been made available to Buyer and its Representatives, are complete and correct and represent actual, bona fide transactions and have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls. The Company has no minute books or records of meetings held, or limited liability company actions taken, by the members of the Company.

6.6. Sufficiency of Assets . The Assets (a) constitute all of the assets, tangible and intangible, of any nature whatsoever, necessary to operate the Business in the manner presently operated by the Company and (b) include all of the assets of the Company.

6.7. Real Property . The Company does not own any Real Property, nor does the Company have any option or rights to acquire any Real Property. Schedule 6.7 sets forth a true, correct and complete list and description (and the Company has provided to Buyer true and complete copies) of all Real Property Leases of the Company (as lessor/sublessor or lessee/sublessee) and all material oral or written leases, licenses, permits, certificates, authorizations, contracts and other agreements relating thereto, any security deposits paid thereunder, outstanding rental concessions or abatements, any renewal or cancellation rights, and the terms thereof. The Company has a valid leasehold interest in and the right to quiet enjoyment of the real properties subject to the Real Property Leases where the Company is lessee or sublessee for the full term thereof. The Company does not owe any brokerage commissions with respect to any such leased space. The Company is not in default under the Real Property Leases and no approval or consent

 

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of, nor payment to, any Person is needed for any of the foregoing to continue to be in full force and effect upon consummation of the transactions contemplated by this Agreement. To the Knowledge of Seller, no other party to a Real Property Lease is in default under such lease. The Real Property Leases are in full force and effect and will continue to be in full force and effect upon consummation of the transactions contemplated hereby.

6.8. Title To Assets; Encumbrances .

(a) The Company owns good and marketable title to all of the Assets free and clear of Encumbrances other than Permitted Encumbrances. At the time of Closing, all Assets shall be free and clear of all Encumbrances other than Permitted Encumbrances. The Company’s Neo-Post postage meter is leased by the Company.

(b) Except as set forth on Schedule 6.8(b) , within five (5) years prior to the date hereof, the Company has not (i) conducted business under or used any name (whether corporate or assumed) other than as set forth on Schedule 6.8(b) , (ii) purchased or sold assets outside of the Ordinary Course of Business, or (iii) maintained, stored or otherwise located the Assets at any facility other than any Real Property which is the subject of any Real Property Lease set forth on Schedule 6.7 .

6.9. Personal Property .

(a) Schedule 6.9(a) sets forth a true, complete and accurate list of all Company Tangible Personal Property and the location of the same setting forth with respect to each item of Company Tangible Personal Property on a tax basis, the costs, accumulated depreciation and date acquired. Except as disclosed on Schedule 6.9(a) , each item of Company Tangible Personal Property of the Company is (or will be before the Closing Date) in good repair and good operating condition, ordinary wear and tear excepted, is suitable for immediate use in the Ordinary Course of Business and is free from latent and patent defects. No such Company Tangible Personal Property is in need of repair or replacement other than as part of routine maintenance in the Ordinary Course of Business. Except as disclosed in Schedule 6.9(a) , all Company Tangible Personal Property used in the Business is in the possession of the Company.

(b) Schedule 6.9(b) sets forth a true, complete and accurate list of tangible personal property located at the Current Premises which is not owned by the Company and which may be removed from the Current Premises before, on, or after the Closing Date by the owner(s) thereof.

6.10. Accounts Receivable . Schedule 6.10 contains a complete and accurate list of all Accounts Receivable, if any, as of the date of this Agreement, which list sets forth the aging of each such Account Receivable. All such Accounts Receivable (including those arising after the date hereof through and including the Closing Date) arose or will arise from services performed in the Ordinary Course of Business, and will be collectible in full within ninety (90) days of issuance (and not subject to any setoff or counterclaim) at the aggregate amount set forth in the Financial Statements.

 

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6.11. Powers of Attorney . There are no powers of attorney executed on behalf of the Company that remain presently in effect.

6.12. No Undisclosed Liabilities . The Company has no Liabilities except for Liabilities reflected or reserved against in the Interim Financial Statements and current liabilities incurred in the Ordinary Course of Business of the Company since the date thereof.

6.13. Taxes . Except as set forth on Schedule 6.13 :

(a) Except as noted in the succeeding sentence, on or before the Closing Date by the owner(s) thereof, JNJ, Lau Associates, Lau Professional and any predecessor are or were each classified, and have been or were continuously so classified since their date of organization, as a disregarded entity within the meaning of Code Section 7701 and the Treasury Regulations thereunder for U.S. federal income tax purposes. Notwithstanding the foregoing, JNJ, filed Internal Revenue Service Form 1065, United States Partnership Return of Income, for the taxable years ended December 31, 2006 and December 31, 2007, as JNJ was properly characterized as a partnership, for federal income tax purposes, during those taxable years. Neither any such entity nor Seller Parties have elected to treat JNJ, Lau Associates, Lau Professional or any predecessor as an association taxable as a corporation for federal, state, local or foreign income tax purposes; provided, however , that Lau & Associates, Ltd., which was a predecessor to Lau Associates, filed a final Form 1120-S for the taxable year ended December 31, 2005. All Tax Returns filed by the Company and Seller Parties have been and will be filed consistent with the entity classification of JNJ, as a partnership, or Lau Associates and Lau Professional and any predecessor as a disregarded entity.

(b) The Company and Seller Parties (with respect to the Business) have timely filed all Tax Returns that were required to be filed by the Company and Seller Parties (with respect to the Business). All such filed Tax Returns were true, correct and complete and have been prepared in compliance with all Legal Requirements. All Taxes owed by the Company and Seller Parties (with respect to the Business) (whether or not shown on any Tax Return) have been paid. No penalty, interest or other charge is or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax. Neither of the Company nor Seller Parties (with respect to the Business) is currently the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by a Governmental Body in a jurisdiction where the Company or Seller Parties (with respect to the Business) does not file a Tax Return that it is or may be subject to taxation by that jurisdiction. Neither the Company nor Seller Parties (with respect to the Business) is liable for any Tax as a transferee or successor.

(c) The Company and/or Seller Parties (with respect to the Business) (i) have withheld from all employees, customers, independent contractors, creditors, members and any other applicable payees proper and accurate amounts for all taxable periods in compliance with all Tax withholding provisions of applicable federal, state, local and foreign laws, (ii) have remitted, or will remit on a timely basis, such amounts to the appropriate taxing authority, and (iii) have furnished or been furnished properly completed exemption certificates for all exempt transactions.

 

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(d) No audit or other examination of any Tax or Tax Return of the Company or Seller Parties (with respect to the Business) is presently in progress and none of the Company, Seller Parties (with respect to the Business) nor any member, director or officer) of the Company expects any Governmental Body to assess any additional Taxes for any period for which Tax Returns have been filed. No foreign, federal, state or local Tax audits, administrative Tax proceedings or judicial proceedings are pending or being conducted with respect to the Company. None of the Company, Seller Parties (with respect to the Business) nor any member, director or officer of the Company have received from any foreign, federal, state or local taxing authority (including jurisdictions where the Company has not filed Tax Returns) any (i) notice indicating an intent to open an audit or other review or investigation; (ii) request for information related to Tax matters; or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted or assessed by any taxing authority against the Company and none of the Company, Seller Parties (with respect to the Business) nor any member, director or officer of the Company expects any such items to be forthcoming.

(e) Schedule 6.13 : (i) lists all federal, state, local and foreign Tax Returns filed with respect to the Company or Seller Parties (with respect to the Business) for taxable periods ending on or after January 1, 2004; (ii) indicates those Tax Returns that have been audited; (iii) indicates those Tax Returns with respect to which audits have been closed, (iv) indicates those Tax Returns that currently are the subject of an audit; and (v) identifies each federal, state and local Tax election which has been made by each of the Company and Seller Parties (with respect to the Business). There are no rulings, requests for rulings or closing agreements with any Governmental Body which could affect the Taxes of the Company or Seller Parties (with respect to the Business) for any period after the Closing Date. The Company has not participated (and will not participate prior to the Closing Date) in or cooperated with an international boycott within the meaning of Section 999 of the Code. The Company and Seller Parties (with respect to the Business) have complied with all information reporting requirements of, and have maintained all required records and supporting information with respect to, Section 6038A of the Code and the regulations thereunder pertaining to information with respect to certain foreign-owned corporations. The Company and Seller have delivered to Buyer correct and complete copies of all examination reports and statements of deficiencies assessed against or agreed to by the Company or Seller Parties (with respect to the Business) since January 1, 2004.

(f) Neither the Company nor Seller Parties (with respect to the Business) has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

(g) No assessments or deficiency for any Tax has been proposed, asserted or assessed against the Company or Seller Parties (with respect to the Business) with respect to taxable periods ended on or before the Closing Date which has not been resolved or paid in full. There are no liens for Taxes upon the assets of the Company, other than liens for Taxes not yet due and payable.

 

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(h) The Company and Seller Parties (with respect to the Business) have disclosed on their federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code.

(i) The Company is not a party to any Tax allocation or sharing agreement (including any indemnity arrangement) pursuant to which it would have any obligation to make payments after Closing. The Company has not been a member of an affiliated group (as defined in Section 1504(a) of the Code) filing a consolidated federal income Tax Return nor does it have a Liability for Taxes of any Person under Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise. The Company is not a member of an affiliated, combined or unitary group for state or local income tax purposes.

(j) Neither the Company nor Seller Parties (with respect to the Business) (i) has made any payments; (ii) is obligated to make any payments; or (iii) is a party to any agreement that under certain circumstances could obligate it to make any payments, that will not be deductible (in whole or in part) under Sections 162, 280G or 404 of the Code.

(k) The Company is not and has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The Company shall, upon request, furnish to Buyer on or before the Closing Date a certification of the Company’s non-United States real property interest status, as set forth in Regulations Sections 1.1445-2(c) and 1.897-2(h). Seller is not a “foreign person” (as that term is defined in Section 1445 of the Code) and shall furnish to Buyer on or before the Closing Date certification of Seller’s non-foreign status, as set forth in Treasury Regulation Section 1.1445-2(b).

(l) Neither the Company nor Seller Parties (with respect to the Business) has been the “distributing corporation” (within the meaning of Section 355(a)(1) of the Code) nor the “controlled corporation” (within the meaning of Section 355(a)(1) of the Code) within the two-year period ending as of the date of this Agreement.

(m) Neither the Company nor Seller Parties (with respect to the Business) has participated in a “reportable transaction” within the meaning of Regulations Section 1.6011-4(b), nor have any of the Company or Seller acted as a material adviser within the meaning of Code Section 6111. Neither the Company nor Seller Parties (with respect to the Business) has participated in a “confidential corporate tax shelter” within the meaning of Section 6111 of the Code and the Regulations thereunder, or (iii) any “potentially abusive tax shelter” within the meaning of Section 6112 of the Code and the Regulations thereunder.

(n) Neither the Company nor Seller Parties (with respect to the Business) has (i) consented at any time under former Section 341(f)(1) of the Code to have the provisions of former Section 341(f)(2) of the Code apply to any disposition of any assets; or (ii) agreed to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise.

 

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(o) Neither the Company nor Seller Parties (with respect to the Business) will be required to include any amount in income for any taxable period ending after the Closing Date as a result of a change in accounting method for any taxable period beginning on or before the Closing Date or pursuant to any agreement with any Governmental Body with respect to any such taxable period. Neither the Company nor Seller Parties (with respect to the Business) will be required to include in any period ending after the Closing Date any income that accrued in a prior period but was not recognized in any prior period as a result of the installment method of accounting, the completed contract method of accounting, the long term contract method of accounting or the cash method of accounting.

(p) For taxable periods ending on or after January 1, 2004, no issue has arisen in any examination of Taxes of the Company or Seller Parties (with respect to the Business) by any Governmental Body or other Person that if raised with respect to any other taxable periods ending on or after January 1, 2004 not so examined would result in a Tax deficiency, if upheld.

(q) Each of the Company and Seller Parties (with respect to the Business) has made all payments of estimated and/or Composite Taxes required to be made under the Code and any comparable provision of state, local and foreign law.

(r) The Company has not disposed of property in a transaction presently being accounted for under the installment method under Section 453 of the Code and any comparable provision of state, local and foreign law. None of the assets of the Company is property which the Company or Seller Parties (with respect to the Business) is required to treat as being owned by any other Person pursuant to the so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Code. None of the assets of the Company directly or indirectly, secures any debt the interest on which is tax exempt under Section 103(a) of the Code. The Company does not presently hold assets for which an election under Section 108(b)(5) of the Code was made. None of the assets of the Company is “tax-exempt use property” within the meaning of Section 168(h) of the Code. The Company is not a party to any joint venture, partnership, or other arrangement or contract which could be treated as a partnership for federal income tax purposes. The Company does not own an interest in any controlled foreign corporation (as defined in section 957 of the Code), passive foreign investment company (as defined in section 1297 of the Code) or other entity the income of which is or could be required to be included in the income of the Company or Seller Parties (with respect to the Business).

(s) The Company has always dealt with its employment tax liabilities in accordance with IRS Notice 99-6.

6.14. No Material Adverse Change . Since December 31, 2007, there has not been any Material Adverse Change, and no event has occurred or circumstance exists that may result in such a Material Adverse Change.

 

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6.15. Employees; Employee Benefit Plans .

(a) Schedule 6.15(a) contains a complete and accurate list of the following information for each employee or independent contractor of the Company, including each employee on leave of absence or layoff status: name; job title; date of commencement of employment or engagement; employment classification (i.e., employee or independent contractor); current compensation paid or payable and any change in compensation since December 31, 2007; sick leave, vacation leave and all other paid leave that is accrued but unused; and service credited for purposes of vesting and eligibility to participate under any Employee Benefit Plan, or any other employee or director benefit plan.

(b) To the Knowledge of Seller, each officer, director, member, employee and independent contractor of the Company has obtained and holds all Governmental Authorizations required in order for such individual to lawfully provide the services to the Company required of his or her position. Schedule 6.15(b) sets forth a list of the persons which have executed an employment agreement and/or non-competition agreement with the Company, and a copy of all such agreements have been provided to Buyer. No employee is currently bound by a non-competition covenant with a third party restricting such employee from providing any investment advisory services in general or with regard to any Client or potential Client.

(c) The Company has obtained a completed form I-9 from each employee of the Company. Seller has no actual knowledge that any employee of the Company is unauthorized to work in the United States.

(d) A complete and accurate list of the Company’s Employee Benefit Plans is set forth on Schedule 6.15(d) . The Company has not maintained, contributed to or had an obligation to contribute to any other Employee Benefit Plan within the past five (5) years other than those set forth on Schedule 6.15(d) . The Company has not proposed any new Employee Benefit Plans nor has it proposed any amendments or modifications to its current Employee Benefit Plans. The Company’s Employee Benefit Plans have been operated and administered in all respects in accordance with their provisions and applicable Legal Requirements, including but not limited to ERISA and the Code and each of the Employee Benefit Plans which is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA and which is intended to be “qualified” under Section 401 (a) of the Code is so qualified. There are no pending or, to the Knowledge of Seller, threatened or anticipated claims, audits or investigations (other than routine claims for benefits) by, on behalf of, relating to or against any of the Employee Benefit Plans or any trusts related thereto.

(e) Except as set forth on Schedule 6.15(e) , Buyer shall have no responsibility for any obligations under Section 4980B of the Code, or Sections 601-609 of ERISA or any similar provisions for health care continuation coverage under applicable Legal Requirements with respect to the Company’s Employee Benefit Plans (collectively, “ COBRA Obligations ”) resulting from the transactions contemplated hereby.

 

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(f) No Liabilities exist or are reasonably expected to exist under any Employee Benefit Plan of the Company that, individually or in the aggregate, would have a Material Adverse Change.

(g) The Company has not entered into any individual agreement or otherwise made any individual commitment to any employee with respect to continued benefits or employment by the Company or Buyer.

(h) Upon termination of the employment of any of the employees or the change in control of the Company that will occur upon sale of the Interests pursuant to this Agreement, Buyer will not by reason of anything done or promised prior to the Closing Date be liable to any of the Company’s employees for severance pay or any other payments.

(i) The Company is in compliance with all Legal Requirements respecting its Employee Benefit Plans and its employment and employment practices, terms and conditions of employment, human rights practices, workers’ compensation practices, occupational health and safety practices, and pay and employment equity practices. All amounts due or accrued for all salary, wages, bonuses, paid leave (including, without limitation, vacation leave and sick leave), pension benefits and other employee benefits with respect to the employees of the Company, if any, are duly reflected in the Company’s Records. All premiums, contributions, levies, assessments and penalties under any legislation relating to employment including, without limitation, any workers’ compensation, pension or unemployment insurance legislation, in respect of the employees of the Company, if any, are fully paid or are reflected in the Records of the Company. All claims, potential claims, current assessment rates and special assessments under such legislation have been disclosed to Buyer. All fiduciaries of the Company’s Employee Benefit Plans have complied with the provisions of the Company’s Employee Benefit Plans and with all Legal Requirements respecting the Company’s Employee Benefit Plans.

(j) None of the Company’s Employee Benefit Plans, or any trusts created thereunder, have engaged in a non-exempt “prohibited transaction,” as such term is defined in Section 4975 of the Code or Section 406 of ERISA, which would subject the plan or any such trust or the Company to any liability as a result of any prohibited transactions imposed by Section 4975 of the Code or Title I of ERISA. None of such Employee Benefit Plans nor any trusts thereunder have been terminated.

(k) With respect to the Company’s Employee Benefit Plans, the Company has delivered to Buyer true and complete copies of: (i) any and all plan texts and agreements (including, but not limited to, trust agreements, insurance contracts and investment management agreements); (ii) any and all material employee communications (including any relating to summary plan descriptions and material modifications thereto); (iii) the two most recent Forms 5500 filed with the IRS for each plan for which a Form 5500 was required to be filed with the IRS and any other form or filing required to be submitted to any Governmental Body with regard to any such Employee Benefit Plans; (iv) the most recent annual and periodic accounting of plan assets, if applicable; (v) the most recent determination letter received from the IRS, if applicable; and (vi) in the case of any unfunded or self-insured plan or arrangement, an estimate of accrued and anticipated liabilities thereunder.

 

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(l) With respect to each of the Company’s Employee Benefit Plans, if intended to qualify under Section 401(a) of the Code: (i) such plan so qualifies, and its trust has been determined by the IRS to be exempt from taxation under Section 501(a) of the Code; (ii) such plan has been administered and enforced in accordance with its terms and all applicable laws, regulations and rulings in all material respects; (iii) no breach of fiduciary duty has occurred with respect to which the Company or any plan may have liability or be damaged in any material respect; (iv) no material disputes with nor any audits or investigations by any governmental authority are pending or, to the Knowledge of Seller, threatened; (v) all contributions, premiums, and other payment obligations have been made on a timely basis, in all material respects; and (vi) all contributions or benefit payments made or required to be made under such Plan meet the requirements for deductibility under the Code.

(m) With respect to each of the Company’s Employee Benefit Plans that provides welfare benefits of the type described in Section 3(1) of ERISA: (i) no such plan provides medical or death benefits with respect to current or former employees or directors of the Company beyond their termination of employment, other than coverage mandated by Sections 601-608 of ERISA or 4980B(f) of the Code; (ii) each such plan has been administered in compliance with Sections 601-609 of ERISA and 4980B(f) of the Code; and (iii) no such plan has reserves, assets, surpluses or prepaid premiums.

(n) Neither the Company nor any ERISA Affiliate is a participant in, or obligated to contribute to, any “multiemployer plan” as defined in Section 3(37) of ERISA and has not participated in or been obligated to contribute to any such plan within the past five (5) years.

(o) The consummation of the transactions contemplated by this Agreement will not (i) entitle any individual to severance pay, (ii) accelerate the time of payment or vesting under any plan, or (iii) increase the amount of compensation or benefits due to any individual.

(p) The Company has not violated the Worker Adjustment and Retraining Notification Act (the “ WARN Act ”) or any similar state or local Legal Requirement.

(q) No Employee Benefit Plan that is subject to Section 412 of the Code or Title IV of ERISA and to which the Company or any ERISA Affiliate may have any liability has any Unfunded Liability as of the most recent annual valuation date applicable thereto, and neither the Company nor any ERISA Affiliate has engaged in a transaction with respect to any such Employee Benefit Plan that could be subject to Section 4069 of ERISA. With respect to any Employee Benefit Plan that is subject to Section 412 of the Code or Title IV of ERISA and to which the Company or any ERISA Affiliate may have any liability, no ERISA Event (i) has occurred within the past five (5) years, (ii) has occurred and is continuing, or (iii) to the Knowledge of Seller is reasonably expected to occur.

(r) While employed by the Company no employee has been, and prior to being employed by the Company, to the Knowledge of the Seller after due inquiry, no employee has been, the subject of any governmental proceeding, investigation or inquiry

 

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involving the SEC or any other Governmental Body having jurisdiction over the business activities of any employee or the Company and, during the past ten years, no employee has been indicted or convicted of any felony. No employee has been the subject of any order, judgment, or decree of any court of competent jurisdiction, permanently or temporarily enjoining any employee from, or otherwise limiting, the following activities: (i) acting as an investment adviser, underwriter, broker or dealer in securities, or engaging in or continuing any conduct or practice in connection with such activity, (ii) engaging in any type of business practice, or (iii) engaging in any activity in connection with the purchase or sale of any security or in connection with any violation of securities laws. For purposes of this Section, the term “employee” shall include all officers and portfolio managers of the Company.

6.16. Labor Disputes . Except as disclosed in Schedule 6.16 , (i) the Company has not been, and is not now, a party to any collective bargaining agreement or other labor contract; and (ii) there is not pending or, to the Knowledge of Seller, threatened against or affecting the Company any Proceeding relating to the alleged violation of any Legal Requirement pertaining to labor relations or employment matters, including any charge or complaint filed with the National Labor Relations Board or any comparable Governmental Body, and there is no organizational activity or other labor dispute against or affecting the Company or the Facilities.

6.17. Compliance With Legal Requirements; Governmental Authorizations .

(a) Except as set forth on Schedule 6.17 , the operation of the Business, the conduct of the Business as and where such business has been conducted, the hiring, terminating, compensating and otherwise managing or dealing with employees, and the ownership, possession and use of the Assets used in or for the Business, fully comply and have fully complied with all Legal Requirements applicable to the Company, its operations, the Business, the Assets and the Liabilities. Except as set forth on Schedule 6.17 , the Company and its employees have obtained and hold all Governmental Authorizations required for the lawful operation of the Business as and where such business is presently conducted, including the continued operation of the Business under new ownership in substantially the same manner as it was conducted immediately prior to the Closing Date. All Governmental Authorizations relating to the Business (whether held by the Company or its employees) are identified on Schedule 6.17 , and copies of such Governmental Authorizations have been delivered to Buyer.

(b) Except as set forth on Schedule 6.17 , all such Governmental Authorizations are in full force and effect, no violations are or have been recorded in respect of any Governmental Authorization and no Proceeding is pending or, to the Knowledge of Seller, threatened to enforce, revoke, terminate or limit any Governmental Authorization. Except as set forth on Schedule 6.17, the Company and its employees are in compliance with and not in default, and have not received any notice of any claim of default, with respect to any such Governmental Authorization or of any notice of any other claim or Proceeding (or threatened Proceeding) relating to any such Governmental Authorization. Except as set forth on Schedule 6.17 , all such Governmental Authorizations shall survive a change in ownership of the Company without the Consent of any Person and shall remain in full force and effect immediately following the Closing.

 

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6.18. Proceedings and Judgments . Except as set forth on Schedule 6.18 , (a) no Proceeding involving or related to the Company, the Business, the Assets or any employees of the Business is currently pending; (b) no Judgment involving or related to the Company, the Business or the Assets or any employees of the Business is currently outstanding; and (c) no breach of contract, breach of warranty, tort, negligence, infringement, product liability, discrimination, wrongful discharge or other claim of any nature or related to the Business has been asserted or, to the Knowledge of Seller, threatened against the Company or any employees of the Business at any time since January 1, 2005, which would be reasonably likely to impair Buyer’s or the Company’s ability to operate the Business as currently conducted or proposed to be conducted.

6.19. Absence Of Certain Changes And Events . Except as set forth on Schedule 6.19 , since December 31, 2007, the Company has conducted the Business only in the Ordinary Course of Business and there has not been any:

(a) amendment to any of the Governing Documents of the Company;

(b) payment (except in the Ordinary Course of Business) or increase by the Company of any bonuses, salaries or other compensation to any member, director, officer or employee or entry into any employment, severance or similar Contract with any director, officer or employee;

(c) adoption of, amendment to or increase in the payments to or benefits under, any Employee Benefit Plan;

(d) damage to or destruction or loss of any Asset, whether or not covered by insurance;

(e) sale, lease or other disposition of any Asset or property of the Company (including the Intellectual Property) or the creation of any Encumbrance on any Asset, except for the replacement of computers in the Ordinary Course of Business;

(f) cancellation or waiver of any claims or rights with a value to the Company in excess of $50,000 individually, or $100,000 in the aggregate;

(g) change in the accounting methods used by the Company; or

(h) Contract by the Company to do any of the foregoing.

6.20. Contracts; No Defaults .

(a) Schedule 6.20(a) sets forth a true and correct list of all of the Contracts to which the Company is a party or is bound. A description of each material oral Contract is included on Schedule 6.20(a) , and, except as otherwise indicated on Schedule 6.20(a) , copies of each written Contract have been delivered to Buyer.

 

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(b) Except as set forth on Schedule 6.20(b) , all of the Company Contracts are in full force and effect and the Company is not in default under any of them, nor to the Knowledge of Seller is any other party to any such Company Contract in default thereunder, nor is there any condition or basis for any claim of a default by any party thereto or event which, with notice, lapse of time or both, would constitute a default thereunder. Except as disclosed in Schedule 6.20(b) , all rights of the Company under Contracts otherwise extending beyond the Closing shall be unaffected by the consummation of the transactions contemplated hereby and shall not require the consent or approval of any Person, nor shall such consummation constitute a condition or basis for any claim of a default by any party thereto or event which, with notice, lapse of time or both, would constitute or give rise to a default, or a right of any party other than Buyer to assert or enforce any remedy or any right to terminate or accelerate the termination or any obligation under, or seek any payment with respect to, such Company Contract. Except as set forth on Schedule 6.20(b) , Seller has no Knowledge that any party to any Company Contract intends, or has threatened, to terminate or change the terms of its Company Contract following the Closing.

6.20A Reserved .

6.20B Regulatory Compliance .

(a) The Company has adopted and implemented written policies and procedures required by Rule 206(4)-7 of the Advisers Act (“ Policies and Procedures ”). The Company has (i) appointed Lau to serve as its Chief Compliance Officer; and (ii) provided to the Buyer a copy of its current Policies and Procedures, together with copies of each annual report prepared by the Company’s Chief Compliance Officer since the SEC requirement was adopted under Rule 206(4)-7 of the Advisers Act. The Company has fully complied with the requirements of Rule 206(4)-7 of the Advisers Act, its Policies and Procedures, and there have been no material violations or allegations of material violations of the Policies and Procedures.

(b) Neither Lau nor the Company and no other person “associated” (as defined under the Advisers Act) with the Company or Lau, has been convicted of any crime or is or has been subject to any disqualification that would be a basis for denial, suspension or revocation of registration of an investment adviser under Section 203(e) of the Advisers Act or Rule 206(4)-4(b) thereunder and to the knowledge of Lau there is no basis for, or proceeding or investigation that is reasonably likely to become the basis for, any such disqualification, denial, suspension or revocation.

(c) The Company has operated and is currently operating its investment advisory business in compliance with the Advisers Act and any and all other Legal Requirements of any Governmental Body.

(d) The Company has provided its investment advisory portfolio management services and other services in material compliance with the investment objective, principal policies and strategies, profiles of each Client account and in accordance with the other terms of its advisory contract with the Client.

 

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(e) The Company has, or has caused to be, prepared, filed, distributed and otherwise used all advertisements, sales literature and marketing materials relating to its investment advisory business in compliance with the Legal Requirements of any and all applicable Governmental Bodies, including the investment advisory, financial planning and/or portfolio management services that the Company has provided.

(f) In performing its investment advisory, financial planning, and portfolio management services, neither the Company, Lau nor any of their respective employees has taken any action(s) or performed any service(s) that would require the Company to be regulated by or registered under the broker-dealer rules or regulations of any Governmental Body.

6.20C Investment Adviser Registration . The Company is duly registered as an investment adviser under the Advisers Act and under all applicable Legal Requirements relating to the activity of investment advisers. The Company has delivered to Buyer a true and complete copy of the Company’s currently effective Form ADV, as filed with the SEC, and has provided to the Buyer all currently effective state, federal and foreign registration forms. The Company (or its predecessor(s)) has made all Form ADV filings and reports required to be made by it or its predecessor(s) during the last five years, and has filed all such filings or reports with the SEC under the Advisers Act and the rules promulgated thereunder or otherwise and under similar Legal Requirements currently applicable to the Company. The Company has provided to Buyer copies of all such filings and reports. The Company has also provided to Buyer all correspondence between the Company and the SEC and any state or foreign regulator within the last five years, and will provide to the Company such forms and reports as are filed from and after the date hereof and prior to the Closing Date. The information contained in such forms and reports was or will be true and complete in all material respects as of the time of filing and, except as indicated on a subsequent form or report filed before the Closing Date, continues to be true and complete in all material respects. Each such registration is in full force and effect except to the extent the Company is no longer subject to registration in any state.

6.20D Investment Performance . The Company has made available to the Buyer all investment performance information that the Company delivered to any Client since January 1, 2005. All such performance information was prepared on a consistent basis in accordance with the standards for investment performance presentation established by the AIMR (to the extent such standards were in effect at the time such information was prepared) and all other applicable laws. In addition, the Company provided to the Buyer the requisite documentation (including documentation to establish compliance with applicable AIMR and SEC rules and regulations) to support the Company’s continued use of such investment performance information.

6.20E Execution and Brokerage Allocation Practices . The Company’s execution and brokerage allocation practices (including soft dollar practices), with respect to all Client accounts are, and have been at all times since January 1, 2005, in material

 

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compliance with the provisions of the Exchange Act, the Advisers Act and similar state laws, and the rules and regulations under each. When purchasing or selling for Clients’ accounts securities which are normally traded on a principal basis, the Company, at all times since January 1, 2005, has dealt directly with one or more dealers making a market in such securities or otherwise through broker-dealers each of which was at all applicable dates, registered as such under the Exchange Act. !

6.21. Insurance . Schedule 6.21 is an accurate and complete list and description (including, without limitation, the type of policy, the effective date, and the names of the issuing insurers) of all Insurance Policies currently owned or maintained by the Company (excluding Insurance Policies that constitute Employee Benefit Plans) in connection with or for the benefit of the Business and all liability Insurance Policies owned or maintained by the Company or any of its respective predecessors at any time during the five (5) years prior to the date of this Agreement in connection with or for the benefit of the Business. The Company has provided the Buyer with copies of all of the policies listed on Schedule 6.21 . Except as set forth on Schedule 6.21 , all such Insurance Policies are or were on a “claims made” basis. All premiums due to date under such Insurance Policies have been paid and no default by the Company exists thereunder. The Company has not received any notice of cancellation with respect to any such current Insurance Policy, and there is no basis for the insurer thereunder to terminate any such current Insurance Policy. Each such Insurance Policy is or was in full force and effect during the period(s) of coverage indicated on Schedule 6.21 . With regard to the change in control of the Company that will occur upon sale of the Interests pursuant to this Agreement, no notice to, or Consent from, any insurer is required under any of the Insurance Policies. Except as described on Schedule 6.21 , (i) there are no claims that are pending under any of the Insurance Policies described on Schedule 6.21 , and (ii) no other Person is a named or additional insured under any such Policies. No insurer has made any “reservation of rights” or refused to cover all or any portion of any pending claims. No party to any Insurance Policy has repudiated any provision thereof. The insurance maintained by each Company is customary in terms of type and amount of coverage for businesses of the same type as the Company and is otherwise sufficient for its participation in the Business. True and correct copies of all Insurance Policies have been delivered to Buyer. The Company is not a named or additional insured under any insurance policy other than the Insurance Policies.

6.22. Environmental Matters . Except as set forth on Schedule 6.22 :

(a) To the Knowledge of Seller, the Company, the Business and the Assets used in or for the Business are, and at all times have been, in full compliance with, and have not been and are not in violation of or liable under, any Environmental Law. The Company has no basis to expect, nor has it or any other Person for whose conduct it is or may be held to be responsible received, any actual or threatened order, notice or other communication from (i) any Governmental Body or private citizen acting in the public interest, (ii) the current or prior owner or operator of any Facilities, or (iii) any other Person, of any actual or potential violation or failure to comply with any Environmental Law, or of any actual or threatened obligation to undertake, bear the cost of or otherwise be responsible for any Environmental, Health and Safety Liabilities including with respect to any Facility or other property or asset (whether real, personal or mixed) in which the Company has or had an

 

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interest, or with respect to any property or Facility at or to which Hazardous Materials were generated, manufactured, refined, transferred, imported, used, handled, processed, treated, leaked, spilled, discharged, emitted, disposed, Released or subject to Threat of Release by the Company, the Business or any other Person for whose conduct it is or may be held responsible, or from which Hazardous Materials have been transported, treated, stored, handled, transferred, disposed, recycled or received. !

(b) There are no pending or, to the Knowledge of Seller, threatened claims, Encumbrances, or other restrictions of any nature resulting from any Environmental, Health and Safety Liabilities or arising under or pursuant to any Environmental Law including with respect to or affecting the Company, the Business or the Assets used in or for the Business.

(c) Seller has no Knowledge of or any basis to expect, nor have they, or any other Person for whose conduct they are or may be held responsible, received, any citation, directive, inquiry, notice, Order, summons, warning or other communication that relates to Hazardous Activity, Hazardous Materials, or any alleged, actual, or potential violation or failure to comply with or Liability under any Environmental Law, or of any alleged, actual, or potential obligation to undertake or bear the cost of any Environmental, Health and Safety Liabilities including with respect to any Facility or property or asset (whether real, personal or mixed) in which the Company has or had an interest, or with respect to any property or facility to which Hazardous Materials generated, manufactured, refined, transferred, imported, used, handled, or processed by the Company, the Business or any other Person for whose conduct they are or may be held responsible, have been transported, treated, stored, handled, transferred, disposed, recycled or received.

(d) Neither the Company nor, to the Knowledge of Seller, any other Person for whose conduct it is or may be held responsible has any Environmental, Health and Safety Liabilities including, without limitation, with respect to the Business or the Assets used in or for the Business.

(e)