Home | Literature Index | Movies & Broadway Index | Television Index | Music Index | Miscellaneous Index | Submit Your Own
ARTICLE VIII
Covenants, Representations and Warranties of the Fellows
8.1 Each of the Fellows jointly and severally covenant
and represent and warrant to the other Fellows, and
acknowledges and confirms that the other Fellows are
relying on such covenants, restrictions and warranties
in connection with the entering into of this agreement,
that:
(a) such Fellow is and will continue to be a Fellow,
validly subsisting in good standing, and has and will
continue to have power and authority to own his Fellowship
Interest, to carry on the Business and to hold such
property and assets as it has transferred to the Fellowship
or may hereafter acquire from the Fellowship or as a
result of the dissolution of the Fellowship;
(b) such Fellow is and will continue to be duly registered
and qualified to carry on business, and has and will
continue to have all requisite authority, licences and
permits to carry on the Business;
(c) such Fellow has and will continue to have the power
and authority to execute and perform this agreement
and such execution and performance does not and will
not result in a breach of any term or provision of,
or constitute a default under any indenture, agreement,
contract or commitment to which he is or will be a party
or by which he is or will be bound or any law or regulation
applicable to him; and
(d) all necessary actions, proceedings and authorizations
required in accordance with applicable laws have been
taken or will be taken by such Fellow to authorize the
execution and delivery of this agreement and the conduct
of the Business contemplated hereby and this agreement
constitutes a legal, valid and binding obligation of
such Fellow enforceable against such Fellow in accordance
with its terms.
8.2 The covenants, representations and warranties contained
in this agreement shall survive the execution and delivery
of this agreement and notwithstanding such execution
and delivery, and regardless of any investigation made
by or on behalf of any Fellow with respect thereto,
shall continue in full force and effect for the benefit
of each Fellow to which such covenants, representations
and warranties were given or made.
ARTICLE IX
Transfer of Fellowship Interests
9.1 Except a specifically provided in this agreement,
no Fellow shall, except with the prior approval given
in accordance with the provisions of section 5.2 hereof,
sell, transfer, assign or other wise dispose of, whether
absolutely or by way of security, or mortgage, charge,
pledge or otherwise encumber or grant a security interest
in all or any part of the respective Fellowship Interest
to any person.
9.2 Notwithstanding the provisions of section 9.1, but
subject to the provisions of section 9.4, nothing herein
shall prevent the sale, transfer, assignment or other
disposition by a Fellow of his Fellowship Interest to
such Fellow's respective Affiliate (or by any such Affiliate
to a further such Affiliate).
9.3 In the event that any sale, transfer, assignment
or other disposition of a Fellowship Interest shall
be permitted in accordance with this agreement, prior
to such sale, transfer, assignment or other disposition
becoming effective, the transferee or assignee of such
Fellowship Interest shall have covenanted and agreed
with the other Fellow by an instrument in writing reasonably
satisfactory to the other Fellow to be bound by, observe
and perform the duties and obligations under this agreement
of the Fellow disposing of its Fellowship Interest (the
"Withdrawing Fellow") as fully as if it had been originally
named as a Fellow of the Fellowship. From and after
the date upon which such transferee or assignee so covenants
and agrees, such transferee or assignee shall be entitled
to hold and enforce all of the rights and privileges
under this agreement of the Withdrawing Fellow and from
and after such date this agreement shall continue in
full force and effect with such transferee or assignee
substituted as a Fellow in the place of the Withdrawing
Fellow and any references herein to the Withdrawing
Fellow shall be deemed to be a reference to such transferee
or assignee. The Withdrawing Fellow shall be released
from its liabilities and obligations hereunder only
to the extent that such liabilities and obligations
are assumed by the transferee or assignee of such Fellowship
Interest.
9.4 Notwithstanding the provisions of section 9.1, a
successor to either Fellow by amalgamation, continuance,
arrangement or other reorganization of such Fellow shall,
without the consent of the other Fellow, be entitled
to be substituted for its predecessor as a Fellow of
the Fellowship, upon the condition that, unless such
successor is by operation of law vested with the Fellowship
Interest of its predecessor and responsible for the
liabilities and obligations of such predecessor hereunder
(and evidence thereof reasonably satisfactory to the
other Fellow shall have been provided to the other Fellow),
such successor shall comply with the provisions of section
9.3 as if it were a transferee or assignee of a Withdrawing
Fellow.
9.5 No Fellowship Interest may be sold, assigned, transferred
or otherwise disposed of to any person which is non-resident
in Middle Earth for the purposes of the Middle Earth
Income Tax Act.
9.6 If the Committee decides at any time that it is
desirable in the interests of the Fellowship, in order
to expand the scope of the Business, to admit one or
more additional Fellows to the Fellowship, such new
Fellows shall have such Ratios as may be proportionate
to the capital contributed by them, or the value of
such additional business operations appropriate to the
Business as such new Fellows may transfer to the Fellowship
by way of capital contribution to the Fellowship, having
regard to the value of the existing assets of the Fellowship
at the time such new Fellows are introduced. The Ratios
of the Fellow shall be reduced pro rata upon the admission
of any such new Fellows, provided that either or both
of them may elect, in their sole discretion, to offset
such dilution by making additional capital contributions
to the Fellowship, whether in Cash or (with the agreement
of the other existing Fellow) in property or in some
other manner, whereupon the Ratios shall be adjusted
to reflect such additional capital contributions, on
a basis consistent with the values attributed to the
capital contributions made by new Fellows. If additional
Fellows are admitted to the Fellowship as contemplated
by this section, Gandalf shall cause a revised version
of this agreement to be prepared, incorporating such
changes as are necessary to recognize the admission
of the new Fellows, but making no other amendments except
with the prior approval of Aragorn, provided that the
Committee may elect to convert the Fellowship into a
limited Fellowship, the limited Fellows of which would
be any new additional Fellows and general Fellows of
which would continue to be Gandalf and Aragorn (unless
otherwise agreed between Gandalf and Aragorn). Upon
the preparation of such revised agreement, the Fellows
shall execute and deliver the revised agreement and
this agreement shall cease to have effect, without prejudice
to any actions taken hereunder up to the date of such
replacement and without affecting the continuing existence
of the Fellowship.
9.7 Except as expressly provided in this agreement,
the Fellowship shall not be terminated by the happening
of any act or event and, without limiting the generality
of the foregoing, the Fellowship shall not be terminated
by reason of either Fellow having disposed of its Fellowship
Interest in accordance with the provisions of this agreement,
by operation of law or in any other manner whatsoever
or having otherwise ceased to be a Fellow, or by reason
of the admission of any one or more new Fellows to the
Fellowship or the acquisition by any person in accordance
with this agreement of the Fellowship Interest of either
Fellow.
ARTICLE X
Death of Principals
10.1 If at any time one of the Fellows shall die, the
surviving fellows shall purchase, and the deceased Fellow’s
Estate shall sell, such deceased’s Fellow’s Fellowship
Interest for a purchase price equal to the fair market
value of such Fellowship Interest as at the date of
death of the deceased Fellow, or Fellows, if such deaths
occurred on the same day (the "Effective Date"). The
Fellowship Interest to be purchased and sold pursuant
to the foregoing is hereinafter referred to after the
"Purchased Interest". The fair market value of the Purchased
Interest shall be determined in accordance with sections
10.2 through 10.4, inclusive, and shall be payable in
Cash.
10.2 The vendor(s) and the purchaser(s) shall endeavour
in good faith to agree upon the fair market value of
the Purchased Interest. In the event that they are unable
to agree upon such fair market value within 30 days
from the Effective Date, such fair market value shall
be determined by such national accounting firm independent
of each of the Fellows as may be selected by the vendor
(hereinafter referred to as the "vendor's valuator"),
the costs of such determination by the vendor's valuator
to be borne by the vendor. In making such determination,
the vendor's valuator shall (i) be entitled to consult
with and accept the opinion of the Fellowship's auditors
or such other expert or experts as it may deem advisable,
(ii) have unrestricted access to the books, records
and all relevant documentation of the Fellowship, and
(iii) not apply any minority discount or similar control
factor or majority premium to the Purchased Interest
and value the Purchased Interest as a proportionate
interest in the Fellowship as a going concern. The vendor's
valuator shall submit to the Fellows a written report
setting out its determination of the fair market value
of the Purchased Interest as soon as practicable but
in no event later than 60 days following the Effective
Date. The vendor's valuator shall forthwith upon the
submission of its report make available to the Fellows,
upon written request, all materials and calculations
reviewed or made in making the determination set forth
in its report or necessary in connection with the preparation
of its report.
10.3 If the purchaser does not agree with the fair market
value of the Purchased Interest as determined by the
vendor's valuator, it may at any time within 30 days
following the delivery of the vendor's valuator's report
appoint another national accounting firm independent
of the parties hereto (hereinafter referred to as the
"purchaser's valuator") to determine the fair market
value of the Purchased Interest. The costs of such determination
by the purchaser's valuator shall be borne by the purchaser.
The provisions of (i), (ii) and (iii) of section 12.2
above shall apply to the valuation made by the purchaser's
valuator. The purchaser's valuator shall submit to the
Fellows a written report setting out its determination
of the fair market value of the Purchased Interest as
soon as practicable but in no event later than 60 days
following the appointment of the purchaser's valuator.
10.4 If the difference between the fair market value
of the Purchased Interest as determined by the purchaser's
valuator and such fair market value as determined by
the vendor's valuator does not exceed an amount (the
"Amount") equal to 10% of the higher of such two valuations,
such fair market value shall be deemed to equal the
average of such two valuations for the purposes of the
purchase and sale of the Purchased Interest pursuant
hereto. If the difference between such valuations exceeds
the Amount, the purchaser's valuator and the vendor's
valuator shall jointly appoint another national accounting
firm independent of the parties hereto (the "third valuator")
within 15 days following the delivery of the purchaser's
valuator's report or, if they are unable to agree upon
such third valuator, either the vendor's valuator or
the purchaser's valuator may request the President of
the Middle Earth Institute of Chartered Accountants
to select such a firm as the third valuator. The third
valuator shall, within 60 days of its appointment, determine
which of the two valuations made by the vendor's valuator
and the purchased's valuator is closest, in the opinion
of the third valuator, to the fair market value of the
Purchased Interest, provided that if the third valuator
reasonably considers that either of the previous valuations
is materially affected by any arithmetic or other manifest
error, the third valuator may correct such error in
arriving at its determination. The provisions of (i),
(ii) and (iii) of section 10.2 above shall apply to
the determination by the third valuator. The costs of
the determination by the third valuator shall be borne
by the vendor if the third valuator chooses the valuation
made by the purchaser's valuator, or by the purchaser
if the third valuator chooses the valuation made by
the vendor's valuator. If the valuation accepted by
the third valuator was affected by an arithmetic or
other manifest error as aforesaid which the third valuator
corrected in accepting such valuation, such error shall
not affect the manner in which the fees and expenses
of the third valuator shall be borne pursuant hereto.
If the correction of any such arithmetic or other manifest
error result in the difference between the valuations
made by the vendor's valuator and the purchaser's valuator
being reduced to an amount not greater than the Amount,
the fair market value of the Purchased Interest shall
be deemed to equal the average of such two valuations
as aforesaid and the fees and expenses of the third
valuator shall be borne by the party whose valuator
committed such arithmetic or other manifest error (or
by the vendor and the purchaser equally if both their
valuators committed such errors). The determination
by the third valuator shall be conclusive and binding
upon the parties.
10.5 At such time as the fair market value of the Purchased
Interest has been determined in accordance with sections
10.2 through 10.4, inclusive, the purchaser shall forthwith
notify the vendor in writing of a date and time for
closing of the purchase and sale of the Purchased Interest,
which date shall be not earlier than 30 days nor more
than 60 days after the date upon which such notice is
required to be given. The purchase and sale of the Purchased
Interest shall take place on the date and at time set
out in such notice. If no notice is given as aforesaid
establishing such date and time of closing, such date
shall be the last day which could be designated hereunder
as such date of closing (or the first business day immediately
following such day if such day is not a business day)
and the time of closing shall be 11 o'clock a.m. (local
time) on such date, provided, however, that the vendor
and the purchaser may otherwise mutually agree upon
such date and time (the date and time determined in
accordance with the foregoing shall be the "Date of
Closing" and the "Time of Closing", respectively, for
purposes of Article XII). The purchase and sale of the
Purchased Interest shall be in accordance with the provisions
of Article XII.
10.6 Obligations to purchase and sell a Purchased Interest
shall not arise pursuant to section 10.1 at any time
following (a) obligations having arisen pursuant to
section 11.4 to sell and purchase the Fellowship Interest
of a defaulting Fellow, unless the purchase and sale
of such Fellowship Interest has not been completed at
the Time of Closing, other than by reason of a default
by the vendor, or (b) the delivery of a notice pursuant
to section 10.1 or 10.2 or the making of an offer pursuant
herein, unless (i) the vendor has elected or is deemed
to have elected to retain its Fellowship Interest, or
(ii) a purchase and sale arising pursuant herein has
not been completed at the Time of Closing, other than
by reason of a default by the vendor.