<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
X SECURITIES EXCHANGE ACT OF 1934
For the quarter ended December 31, 1998
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number: 1-8408
THE ADVEST GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0950444
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
90 State House Square
Hartford, Connecticut 06103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 509-1000
NONE
Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $.01 par value 8,833,169 Shares
Class Outstanding at February 5, 1998
<PAGE>
THE ADVEST GROUP, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
December 31, 1998 and September 30, 1998 3
Condensed Consolidated Statements of Earnings
Three Months Ended December 31, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended December 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 10
Part II. Other Information
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 13
<PAGE>
<TABLE>
Part I. Financial Information
Item 1. Financial Statements
The Advest Group, Inc.
Condensed Consolidated Balance Sheets
In thousands, except share and per share amount December 31, 1998 September 30, 1998
Unaudited
-------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and short-term investments
Cash and cash equivalents $ 27,607 $ 13,882
Cash and securities segregated under federal and other regulations 7,251 248
--------- ------------
34,858 14,130
--------- ------------
Receivables
Brokerage customers, net 431,427 433,840
Loans, net 170,676 180,528
Securities borrowed 354,105 270,638
Brokers and dealers 10,883 5,310
Other 18,571 18,417
--------- ------------
985,662 908,733
--------- ------------
Securities
Trading, at market value 319,967 241,681
Held to maturity (market values of $18,188 and $18,911) 18,122 18,776
Available for sale, at market value 11,718 11,787
--------- ------------
349,807 272,244
--------- ------------
Other assets
Equipment and leasehold improvements, net 13,152 13,377
Other 26,164 24,787
--------- ------------
39,316 38,164
--------- ------------
Total assets $ 1,409,643 $ 1,233,271
========= =============
Liabilities & shareholders' equity
Liabilities
Deposits $ 180,185 $ 171,074
Brokerage customers 366,324 329,975
Securities loaned 242,385 216,275
Compensation and benefits 21,165 27,247
Short-term borrowings 195,819 134,762
Checks payable 798 2,973
Brokers and dealers 20,722 13,984
Securities sold, not yet purchased, at market value 192,571 149,189
Long-term borrowings 41,237 41,308
Other 21,616 22,817
--------- ------------
1,282,822 1,109,604
--------- ------------
Shareholders' equity
Common stock, par value $.01, authorized 25,000,000 shares,
issued 10,898,159 and 10,893,159 shares 109 109
Paid-in capital 74,597 72,966
Retained earnings 70,117 65,785
Accumulated other comprehensive income, net (11) (12)
Treasury stock, at cost, 2,028,172 and 1,943,833 shares (16,620) (14,100)
Unamortized restricted stock compensation (1,371) (1,081)
--------- ------------
126,821 123,667
--------- ------------
Total liabilities and shareholders' equity $ 1,409,643 $1,233,271
========= =============
See Notes to Consolidated Financial Statements
</TABLE>
3
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<TABLE>
The Advest Group, Inc.
Condensed Consolidated Statements of Earnings
Unaudited
Three months ended
December 31,
In thousands, except per share amounts 1998 1997
- ---------------------------------------------------------------------
<S> <C> <C>
Revenues
Commissions $ 32,436 $ 32,423
Interest 16,033 16,642
Principal transactions 14,960 10,762
Investment banking 12,332 8,759
Asset management and administration 8,617 7,974
Other 1,440 1,415
------------------
Total revenues 85,818 77,975
------------------
Expenses
Compensation $ 50,085 $ 45,084
Interest 8,992 9,357
Communications 7,540 6,022
Occupancy & equipment 5,144 4,552
Business development 1,859 1,669
Professional 1,252 1,526
Brokerage, clearing & exchange 1,186 1,211
Other 1,932 1,890
------------------
Total expenses 77,990 71,311
------------------
Income before taxes $ 7,828 $ 6,664
Provision for income taxes 3,131 2,666
------------------
Net income $ 4,697 $ 3,998
==================
Per share data:
Basic $ 0.59 $ 0.49
Diluted $ 0.51 $ 0.43
Dividend declared $ 0.04 $ 0.04
</TABLE>
See Notes to Consolidated Financial Statements
4
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<TABLE>
The Advest Group, Inc.
Condensed Consolidated Statements of Cash Flows
Unaudited
Three months ended December 31,
In thousands 1998 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 4,697 $ 3,998
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization 1,717 2,121
Provision for credit losses and asset devaluation 106 35
Deferred income taxes (345) (538)
Other 257 1,931
(Increase) decrease in operating assets:
Receivables from brokerage customers, net 2,392 (63,305)
Securities borrowed (83,467) (5,191)
Receivables from brokers and dealers (5,573) (4,154)
Trading securities (78,286) (58,437)
Cash and securities segregated under federal and other regulations (7,003) (14)
Proceeds from sales of mortgages held for sale 35,242 6,718
Originations and purchases of mortgages held for resale (29,979) (10,230)
Other (358) (1,008)
Increase (decrease) in operating liabilities:
Brokerage customers 36,349 26,034
Securities loaned 26,110 13,855
Securities sold, not yet purchased 43,382 39,411
Checks payable (2,175) 4,127
Other 92 (9,018)
------------------------
Net cash used in operating activities (56,842) (53,665)
------------------------
FINANCING ACTIVITIES
Net increase (decrease) in deposits 9,111 (3,798)
Proceeds from short-term borrowings 61 24,006
Repayment of short-term borrowings (4,874) (19,066)
Short-term brokerage borrowings, net 65,800 59,975
Other (2,830) 233
------------------------
Net cash provided by financing activities 67,268 61,350
------------------------
INVESTING ACTIVITIES
Proceeds from (payments for):
Sales of available for sale securities 5,000 3,293
Maturities of available for sale securities 94 382
Maturities of held to maturity securities 5,679 10,380
Purchases of available for sale securities (5,021) (1)
Purchases of held to maturity securities (4,907) (10,000)
Loans sold 1,290 5,713
Principal collections on loans 18,859 11,132
Loans originated (16,351) (15,807)
Other (1,344) (2,690)
------------------------
Net cash provided by investing activities 3,299 2,402
------------------------
Increase in cash and cash equivalents 13,725 10,087
Cash and cash equivalents at beginning of period 13,882 12,459
------------------------
Cash and cash equivalents at end of period $ 27,607 $ 22,546
========================
Interest paid $ 9,481 $ 7,414
Income taxes paid $ 653 $ 1,579
Non-cash activities:
Restricted stock awards, net of forfeitures $ 225 $ 610
Securization of residential mortgages $ $ 2,633
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Financial Statements:
The consolidated financial statements include the accounts of
The Advest Group, Inc. and all subsidiaries (collectively the
"Company"). Principal operating subsidiaries are Advest, Inc.
("Advest"), a broker-dealer and Advest Bank and Trust Company (the
"Bank"), a federal savings bank. The Company provides diversified
financial services including securities brokerage, trading,
investment banking, consumer lending, trust and asset management.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates. Management believes that all
adjustments (consisting of normal recurring accruals) necessary for a
fair statement of the results of operations for the periods presented
have been included. All material intercompany accounts and
transactions have been eliminated. Certain fiscal 19986 amounts have
been reclassified in the accompanying consolidated financial
statements to provide comparability with the current year
presentation. The results of operations for the interim periods are
not necessarily indicative of the results for a full year.
The statements should be read in conjunction with the Notes to
Consolidated Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations included in
the Company's Annual Report for the year ended September 30, 19986,
as filed with the Securities and Exchange Commission on Form 10-K.
2. Summary of Significant Accounting Policies:
In October 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards ("SFAS")
134, "Accounting for Mortgage-Backed Securities Retained after the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise". The Company adopted SFAS 134 as of January 1, 1999, as
required, and its adoption did not have a material impact on the
presentation of the Company's financial condition, results of
operations or cash flows.
SFAS 134 amends SFAS 65 to require that, after the
securitization of mortgage loans held for sale, an entity engaged in
mortgage banking activities classify the resulting mortgage-backed
securities or other retained interests based on its ability and
positive intent to sell or hold those investments.
3. Capital and Regulatory Requirements:
Advest is subject to the net capital rule adopted and
administered by the New York Stock Exchange, Inc. ("NYSE") and the
Securities and Exchange Commission. Advest has elected to compute its
net capital under the alternative method of the rule which requires
the maintenance of minimum net capital equal to 2% of aggregate debit
balances arising from customer transactions, as defined. The NYSE
also may require a member firm to reduce its business if net capital
is less than 4% of aggregate debit balances and may prohibit a member
firm from expanding its business and declaring cash dividends if net
capital is less than 5% of aggregate debit balances. At December 31,
1998, Advest's regulatory net capital of $66.1 million was 13% of
aggregate debit balances and exceeded required net capital by $56.0
million.
6
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Advest maintains separate accounts for the exclusive benefit of
customers in accordance with Securities and Exchange Commission Rule
15c3-3, as determined by periodic computations. The rule allows
Advest to maintain the required amounts in cash or qualified
securities.
Under bank regulatory restrictions, the Bank is required to
maintain a minimum level of capital. With its conversion to a federal
charter in April 1997, the Bank is required to limit annual dividends
to the most recent the total of the current and prior four quarters
retained of net income, subject to limitations. No dividends have
been declared or paid by the Bank in fiscal year 19997. At December
310, 1998, the Bank's leverage capital, riskbased and Tier 1 capital
ratios were 7.62%, 10.81% and 9.56%, respectively, which met all
regulatory requirements.
4. Net Income Per Common Share:
The following table provides the calculation of net income per
common share for the quarters ended December 31, 1998 and 1997:
For the quarters ended December 31,
-----------------------------------
Basic Diluted
---------------- -------
In thousands, except per share amounts 1998 1997 1998 1997
_____________________________________________________________________
Net income $4,697 $3,998 $4,697 $3,998
====== ====== ====== ======
Average number of common shares
outstanding during the period 8,882 8,704 8,882 8,704
Adjustments:
Contingently issuable shares (860) (605) -- --
Exercise of stock options -- -- 379 509
_____ _____ _____ ____
Average number of common
shares outstanding 8,022 8,099 9,261 9,213
===== ===== ===== =====
Net income per common share $ .59 $ .49 $ .51 $ .43
===== ===== ===== =====
7
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5. Comprehensive Income
In October 1998, the Company adopted the provisions of FASB
Statement No. 130, "Reporting Comprehensive Income". Statement No.
130 requires reporting of comprehensive income for all gains and
losses that result from transactions not included in net earnings.
The components of comprehensive income are as follows:
Three months ended
December 31,
____________
In thousands 1998 1997
____________________________________________________________________
Net earnings $4,697 $3,998
Other comprehensive income:
Unrealized holding gains arising during period 5 38
Less: reclassification adjustment for gains
realized in net income 0 (36)
_____ _____
Net unrealized holding gains arising during the period 5 2
Deferred income taxes 3 (1)
_____ _____
Total other comprehensive income 2 3
_____ ____
Comprehensive income $4,699 $4,001
====== ======
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
The Advest Group, Inc. ("AGI"), together with its subsidiaries
(the "Company"), provides diversified financial services including
securities brokerage, trading, investment banking, consumer lending,
trust and asset management. Advest, Inc. ("Advest"), a regional
broker/dealer and the Company's principal subsidiary, provides
brokerage, investment banking and asset management services to retail
and institutional investors through 89 sales offices in 16 states and
Washington, DC. Advest Bank and Trust Company (the "Bank"), an FDIC-
insured, federal savings bank, offers residential mortgage lending
and trust services primarily through Advest's branch network.
All aspects of the Company's business are highly competitive and
impacted by regulatory and other factors outside of its control,
including domestic and global economic and financial conditions, the
volume and price levels of securities markets, the demand for
investment banking services and interest rate volatility. The
Company closely monitors its operating environment to enable it to
respond promptly to market cycles. In addition, the Company seeks to
lessen earnings volatility by controlling expenses, increasing fee-
based business and developing new revenue sources. Nonetheless,
operating results of any individual period should not be considered
representative of future performance.
The Company reported net income of $4.7 million for the quarter
ended December 31, 1998 compared with $4.0 million in the prior year,
an increase of 17%. Current quarter basic and diluted earnings per
share were $.59 and $.51, respectively, compared with $.49 and $.43,
respectively, a year ago. Total revenues increased 10% to a record
$85.8 million. Current quarter revenues include $3.7 million in
realized and unrealized gains on an equity position acquired in an
investment banking transaction in a prior year. After expenses and
taxes, these gains increased net income by
8
<PAGE>
$900,000 or $.10 per diluted share. At December 31, 1998, book value
per share was $14.30, up 15% from the prior year.
Advest, Inc.
Equity markets rebounded in the December quarter, recouping the
losses of the preceding quarter, and closed calendar year 1998 on an
upward trend for an unprecedented eighth consecutive year. Despite
significant international fiscal crises, the markets were favorably
impacted by continued economic growth, a strong dollar, low interest
rates, low unemployment and low inflation.
Advest posted pre-tax income of $8.0 million, reflecting a 13%
increase from the year earlier quarter. Revenues increased 12% to
$81.5 million, a record high. Record revenue levels were attained for
investment banking, principal transactions and asset management fees.
Advest Bank and Trust
The Bank posted pre-tax income of $.1 million for both the
current and year earlier quarters. The Bank remains wellcapitalized
and in full regulatory compliance. At December 31, 1998, the Bank's
nonperforming assets totaled $2.2 million (1.0% of total Bank assets)
compared with $5.2 million (2.3% of total Bank assets) in the prior
year.
Results of Operations
Three Months Ended December 31, 1998 Versus
Three Months Ended December 31, 1997
Net revenues, total revenues less interest expense, increased
$8.2 million (12%) to $76.8 million, with increases posted in all
categories except net interest income. Net expenses increased $7.0
million (11%) to $69.0 million, primarily as a result of salesrelated
compensation, retail and investment banking incentives and higher
general payroll as well as technology and related service upgrades.
The effective tax rate was 40% for both the current and prior year.
Revenue from principal transactions increased $4.2 million
(39%). The Corporate Institutional Bond Department had a record
setting quarter generating trading profits of $2.2 million, up $1.4
million (173%) from the prior year, and related bond commissions, up
$1 million (141%). Also contributing to a $3.6 million (84%)
increase in bond commissions were sales of mortgage-backed
securities, including collateralized mortgage obligations, which
increased $1.2 million, and sales of government agency securities,
which increased $.5 million. The latter increases were primarily due
to sales by two new sales units established by Advest in the latter
part of fiscal 1998: a new fixed income sales unit in Boca Raton,
Florida and a Community Reinvestment Act Sales (CRA) unit which sells
securitized loans to banks and other financial institutions.
Investment banking revenues increased $3.6 million (41%),
primarily due to the $3.7 million gain on an equity investment
discussed earlier in the Overview. Merger and acquisition fee income
increased $.7 million (209%) in the current year with the Investment
Banking Group completing three transactions valued at over $81
million. Four public underwritings were sole or comanaged by the
Company raising $61 million in the current quarter compared with
three underwritings in fiscal 1998 which raised $75 million.
Underwriting commissions declined $.7 million (24%) and related fees
declined $.3 million (38%) year-to-year.
9
<PAGE>
Asset management revenues increased $.9 million (12%) primarily
as a result of higher service fees related to money market accounts
and increased fee-based managed account business at Advest. The
Bank's revenue increased 28% to $.3 million primarily due to
increased trust revenues.
Compensation costs increased $5.0 million (11%) primarily due to
higher sales-related compensation, higher investment banking and
retail sales incentives and increased staff levels especially in
research, investment banking, sales and trading departments.
Communication costs increased $1.5 million (25%) primarily related to
upgrades in technology and services including quotes and market data
services. Occupancy and equipment costs increased $.6 million (13%)
primarily due to higher rent expense including the opening of offices
in Tampa, Florida and Greenwich and Westport, Connecticut.
Liquidity and Capital Resources
Three Months Ended December 31, 1998
Total assets increased $176.4 million (14%) primarily as a
result of an $83.5 million (31%) increase in securities borrowed
which was used in part to cover a $43.4 million (29%) increase in
short trading positions and a $78.3 million (32%) increase in trading
securities, related to new principal trading activities initiated by
the broker/dealer in late fiscal 1998, as discussed above.
During the quarter, the Company re-purchased 167,800 shares of
its common stock at a cost of $2.9 million under a buyback program
begun in August 1990. A cash dividend of $.04 per share payable to
holders of record date December 31 (8,869,987 shares outstanding) was
also declared.
There have been no other material changes to the Company's
liquidity or capital resources since September 30, 1998.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There were no material changes to the Company's market risk
analysis during the current quarter.
Part II. Other Information
Item 1. Legal Proceedings
The Company has been named as defendant, or has been threatened
with being named defendant in various actions, suits and proceedings
before a court or arbitrator arising principally from its securities
and investment banking business. Such matters involve alleged
violations of federal and state securities laws and other laws.
Certain of these actions claim substantial damages and, if determined
adversely to the Company, could have a material adverse effect on the
consolidated financial condition, results of operations or cash flows
of the Company. The Estate of Gabriel Levine and his wife and various
related entities have threatened a proceeding before the American
Arbitration Association against Advest. They originally commenced
related arbitration and court proceedings in 1993, which were stayed
pending consideration of statue of limitations defenses. In 1998 the
Connecticut Supreme Court ruled that arbitrators and not a court
should decide whether those defenses apply. The claimants allege that
the option trading in their accounts was unsuitable, and that there
was a failure to disclose risks and to supervise their accounts. In
court
10
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papers filed in 1993 the claimants asserted claims for principal
losses of nearly $30,000,000, plus interest since October 1987.
Management believes that Advest, Inc. has strong defenses to these
claims and intends to defend them vigorously. While the outcome of
any litigation is uncertain, management, based in part upon
consultation with legal counsel, believes that the resolution of all
matters pending or threatened against the Company will not have a
material adverse effect on the financial condition or future
results of operations or cash flows of the Company.
Item 2. Changes in Securities
During the current quarter, the Company assigned 29,490 shares
of its common stock as compensation to employees under separate
Employment Agreements. In the same period, 47,529 shares were
forfeited.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10(a) -- Amendment dated January 28, 1999 to
Amended and Restated Employment Agreement with
Registrant's Chief Executive Officer.
Exhibit 27 -- Financial Data Schedule (Selected financial
data -for EDGAR electronic filing only to SEC)
The interim financial information contained herein has been
subjected to a review by PricewaterhouseCoopers LLP,
the registrant's Independent Accountants, whose
report is included on page 12 of this filing.
(b) Reports on Form 8-K
None
11
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Report of Independent Accountants
To the Shareholders and Board of Directors of
The Advest Group, Inc.:
We have reviewed the accompanying condensed consolidated balance
sheet of The Advest Group, Inc. and subsidiaries as of December 31,
1998, and the related condensed consolidated statements of earnings
and cash flows for the three-month period ended December 31, 1998 and
1997., and changes in shareholders' equity for the three-month
period ended December 31, 1997. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with Statements on Standards
for Accounting and Review Services issued by the American Institute
of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to
financial data and making inquires of persons responsible for
financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted
auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the aforementioned financial statements for
them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of September
30, 1998, and the related statements of earnings, changes in
shareholders' equity and cash flows for the year then ended (not
presented herein), and in our report, dated October 21, 1998, we
expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of September 30,
1998, is fairly stated, in all material respects, in relation to the
balance sheet from which it has been derived.
PricewaterhouseCoopers LLP
Hartford, Connecticut
January 20, 1999
12
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant duly caused this report to be signed on its
behalf by the thereunto duly authorized.
The Advest Group, Inc.
Registrant
Date February 12, 1999 /s/Allen Weintraub
Allen Weintraub,
Chairman of the Board and
Chief Executive Officer
Date February 12, 1999 /s/Martin M. Lilienthal
Martin M. Lilienthal,
Executive Vice President
and Chief Financial Officer
13
<PAGE>
Exhibit Index
Exhibit Description
10(a) Amendment dated January 28, 1999 to Amended and
Restated Employment Agreement with Registrant's Chief
Executive Officer.
27 Financial Data Schedule (Selected financial data -for
EDGAR electronic transmission only for SEC.)
<PAGE>
Exhibit 10(a)
THE ADVEST GROUP, INC.
90 State House Square
Hartford, CT 06103
January 28, 1999
Allen Weintraub
President and Chief Executive Officer
The Advest Group, Inc.
90 State House Square
Hartford, CT 06103
Re: Amendment to Employment Agreement
Dear Allen:
The Board of Directors of The Advest Group, Inc. has
adopted a resolution, a copy of which is attached,
authorizing me to send you this letter implementing and
amending the terms of the Amended and Restated Employment
Agreement between The Advest Group, Inc. ("Advest") and you
dated November 30, 1995 (the "Employment Agreement").
Except to the extent as modified below, the Employment
Agreement shall remain in full force and effect.
Capitalized terms used herein shall have the same meaning as
used in the Employment Agreement.
The Employment Agreement is implemented and amended as
follows:
1. Extension of Continuation of Employment. Your full-time
employment in your present position as Chief Executive
Officer shall be extended through March 31, 1999 with the
same compensation and benefits you are receiving as of the
date of this Agreement. You shall step down from the
position as Chief Executive Officer as of April 1, 1999 and
commence full-time employment with Advest in accordance with
Section 6 of the Employment Agreement. Your bonus for the
fiscal year in which you stepped down from the position of
Chief Executive Officer shall be in an amount equal to
fifteen percent (15%) of the bonus pool for that fiscal
year.
2. Post-Employment Services. Immediately upon stepping
down from your present position as Chief Executive Officer
under Paragraph 1 above, you will commence
1
<PAGE>
employment services pursuant to Section 6 of the Employment
Agreement; provided however, that the services rendered by
you pursuant to Section 6 of the Employment Agreement shall
be services rendered as an employee of Advest rather than as
an independent contractor. Until further written direction
from Advest, your initial services shall include your
continuing to act as Chairman and a Member of the Board of
Directors of Advest and as a member of the boards of
directors of such subsidiaries and affiliates of Advest as
you presently occupy. Also, immediately upon stepping down
from your present position as Chief Executive Officer under
Paragraph 1 above, you shall become eligible to receive
supplemental retirement benefits in accordance with Section
7 of the Employment Agreement. The amount of the benefit
described in Section 7(a)(i) of the Employment Agreement
shall be treated for all purposes to be an amount equal to
$200,000. Pursuant to Section 9(a) of the Employment
Agreement, you have elected not to take a J&S Annuity, but
instead to receive the payments over a ten year period as
provided pursuant to Sections 6, 7 and 8 of the Employment
Agreement.
3. Continuation of Benefits. Notwithstanding any provision
to the contrary contained herein or in the Employment
Agreement, upon stepping down from your present position as
Chief Executive Office under Paragraph 1 above and while you
are providing or available to provide services pursuant to
Section 6 of the Employment Agreement, you shall be treated
as a full-time employee of Advest, and as such shall
continue to be eligible for participation and shall continue
to participate in all Advest-sponsored incentive, savings
and retirement plans, and, subject to paragraph 4 of this
Agreement, shall continue to receive benefits under all
welfare benefit plans, practices, policies and programs
provided by Advest (including, and without limitation,
medical, prescription, dental, disability, employee life,
group life, dependent life, accidental death and travel
insurance plans and programs) applicable to other senior
Advest executives.
4. Medical Benefits. Upon stepping down from your present
position as Chief Executive Officer under Paragraph 1 above,
you and your wife (and in the event you predecease your
wife, your wife only), shall continue to be eligible and be
entitled to participate in all medical, prescription and
dental plans and programs sponsored by Advest which are in
effect from time to time for senior Advest executives paying
amounts active full-time employees pay for such coverage
until, with respect to coverage for you and your wife while
you are alive, the later of you attaining age 65 or your
termination of rendering or being available to render
services under Section 6 of the Employment Agreement, and
with respect to coverage for your wife after your death,
until your wife attains age 65. If for any reason Advest
fails to provide you and your wife with coverage in all
medical, prescription and dental plans and programs
sponsored by Advest, which are in effect from time to time
for senior Advest executives as required by the immediately
preceding sentence, Advest shall pay you and your wife as
applicable an amount in cash sufficient to provide you and
your wife after you pay any applicable taxes on such payment
with sufficient funds to provide you with benefits
equivalent to those you and your wife would have received
had Advest provided such coverage. After such time Advest
agrees to use its best efforts to cause you and your wife
(or your wife only if
2
<PAGE>
you should predecease her) to be eligible for coverage under
all its medical, prescription and dental plans and programs
sponsored by Advest which are in effect from time to time
for senior Advest executives provided that you or your wife,
as the case may be, elect to pay the full per capita cost
to Advest of such coverage.
5. Stock Options. After stepping down from your present
position as Chief Executive Officer under Paragraph 1 above
and while you are providing or being available to provide
services pursuant to Section 6 of the Employment Agreement,
in accordance with your continued treatment as a full-time
employee of Advest, you shall continue to be permitted to
hold and to exercise all outstanding stock options for the
full unexpired term of such options. Further, Advest
agrees to take whatever steps are necessary or helpful to
assure that you continue to have full rights to hold and to
exercise your unexercised stock options. If you refuse to
be available to provide services pursuant to Section 6 of
the Employment Agreement, die or become disabled or have
your employment with Advest terminated for Cause, your
rights to continue to exercise your outstanding options to
purchase Advest stock shall terminate in accordance with the
applicable stock option plan and grant documents.
6. Office Services. While providing services pursuant to
Section 6 of the Employment Agreement, Advest agrees to
provide the following for you:
(a) an office, secretarial services, a computer and
other office equipment, all as comparable to that provided
from time to time to other senior Advest executives; and
(b) an executive parking space at Advest's offices.
7. Charitable Contributions. While providing or being
available to provide services pursuant to Section 6 of the
Employment Agreement, you shall have the right to designate
from Advest's charitable contribution budget each year, the
recipient or recipients of $50,000 of charitable
contributions subject to the following: (i) that the chief
executive officer of Advest consent (which consent shall
not be unreasonably withheld or delayed) to your
designation of the recipient; and (ii) that you cooperate
with Advest and Advest's chief executive officer to assure
that Advest and Advest's chief executive officer achieve the
optimal quality of relationship with the recipient and any
other resulting relationship and utilize to the optimal
extent such charitable contribution and resulting
relationships. To the extent Advest's annual charitable
contribution budget is decreased or increased from the
budget in place at the time of this Agreement, the $50,000
amount referred to above shall be equitably adjusted by the
chief executive officer of Advest.
8. Other Activities. While providing or being available to
provide services pursuant to Section 6 of the Employment
Agreement, you may serve on corporate, civic or charitable
boards or committees, deliver lectures, fulfill speaking
engagements, teach at educational
3
<PAGE>
institutions, manage personal investments and engage in
such other business activities as you desire (and keep all
such remuneration received therefrom), provided that (i)
such activities do not materially interfere with the
performance of your services pursuant to Section 6 of the
Employment Agreement, and (ii) the chief executive officer
of Advest consents to the performance of such activities
(which consent shall not be unreasonably withheld or
delayed).
Please sign the enclosed acknowledgment copy of this
letter confirming your agreement with the terms of this
letter.
Very truly yours,
/s/ Richard G. Dooley
Richard G. Dooley
Chairman, Human Resources Committee
for the Board of Directors
By signing below I confirm my agreement
with the terms of this letter.
/s/ Allen Weintraub
Allen Weintraub
4
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<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
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0
0
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