=============================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 10, 1998
Ryan Beck & Co., Inc.
---------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey
-------------------------------------------
(State or other jurisdiction of incorporation)
0-14684 22-1773796
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
220 South Orange Avenue, Livingston, New Jersey
-----------------------------------------------
(Address of principal executive offices)
973-597-6000
-------------------------------------------------
(Registrant's telephone number, including area code)
=============================================================
<PAGE>
Item 5. Other Events
On February 10, 1998 Ryan, Beck & Co., Inc. ("Ryan Beck" or the
"Company")(NASDAQ:RBCO) announced that it had entered into a definitive merger
agreement with BankAtlantic Bancorp ("BankAtlantic") (NYSE:BBX) whereby all of
the Company's outstanding shares of common stock would be acquired by
BankAtlantic in a tax-free exchange for BankAtlantic's Class A non-voting common
stock. The merger agreement contemplates the continued operation of the Company
as an autonomous independent subsidiary of BankAtlantic under the direction of
the current management of Ryan Beck. BankAtlantic is a South Florida based
financial services holding company.
The merger agreement establishes a fixed exchange ratio of .609 shares
of BankAtlantic Class A common stock for each share of the Company's common
stock, until the payment on February 18, 1998 of BankAtlantic's recent 5 for 4
stock split, after which the ratio will be adjusted upwards to .761 shares. The
Company will have the right to terminate the agreement if the average closing
price of BankAtlantic Class A common stock in a 10 day period immediately prior
to closing is less than $13.60 ($10.88 after the stock split). BankAtlantic
would then have the right to avoid a termination of the agreement if it
increases the exchange ratio so that, based on the average closing price, Ryan
Beck shareholders will receive for each Ryan Beck share Class A common stock
having a value of $8.28. Under the agreement, BankAtlantic will establish an
incentive and retention pool, under which shares of BankAtlantic's Class A
non-voting stock equal in the aggregate to approximately 20% of the transaction
value (excluding shares issued after the date of the merger agreement and
exchanged options) will be allocated to key employees of Ryan Beck and the
allocated shares, subject to certain exceptions, will be distributed in four
years after consummation to an employee who remains with Ryan Beck for that
period. Consummation of the merger agreement is subject to the receipt of all
regulatory approvals and the approval of shareholders of Ryan Beck at a
shareholders meeting which is anticipated to be held early in the second
quarter. Ryan Beck expects that the transaction will be closed during the second
quarter of 1998.
Simultaneous with the execution of the merger agreement, Ryan Beck
granted BankAtlantic an option to purchase 714,000 shares of Ryan Beck common
stock for $8.00 per share. The merger agreement also provides for Ryan Beck to
pay a termination fee to BankAtlantic in certain cases.
Ryan Beck also announced simultaneously on February 10, 1998, an
agreement to acquire for stock and cash Cumberland Advisors, a Vineland, New
Jersey-based money manager with approximately $400 million under management.
Under the agreement, Cumberland will become a subsidiary of Ryan Beck and will
continue to do business as Cumberland. Ryan Beck also will acquire Cumberland
Consulting, a Vineland, New Jersey-based financial advisor to state and local
government units. Initially, the owners of Cumberland will be paid cash of $1.9
million and 167,742 shares of Ryan Beck common stock. The agreement with
Cumberland is an earn-out transaction which provides for receipt of additional
shares and cash in the future if Cumberland performs well and a return of a
portion of cash and shares initially issued if Cumberland does not perform up to
certain benchmarks. Consummation of the transaction with Cumberland is subject
to certain consents and approvals, but is not conditioned upon a shareholder
vote by Ryan Beck and is not contingent upon the approval of the BankAtlantic
transaction. The Cumberland transaction is expected to close in the first
quarter of 1998.
Filed with this Form 8-K as Exhibit are the acquisition agreement (with
exhibits) and stock option agreement with BankAtlantic, and the merger agreement
(without exhibits) with Cumberland, all of which are herein incorporated by
reference. The foregoing descriptions of the BankAtlantic transaction and the
Cumberland transaction are qualified in their entirety by reference to the
documents filed as Exhibits.
Also filed as an Exhibit is a press release dated February 10, 1998.
<PAGE>
Item 7. Exhibits
99(a) Press Release dated February 10, 1998
99(b) Stock Option Agreement
99(c) Acquisition Agreement (with Exhibits)
99(d) Merger Agreement (Cumberland), without Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Ryan Beck & Co., Inc.
Dated: February 13, 1998 By: LEONARD J. STANLEY
-------------------------
Leonard J. Stanley,
Chief Administrative Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ---------- -----------
99(a) Press Release dated February 10, 1998
99(b) Stock Option Agreement
99(c) Acquisition Agreement (with Exhibits)
99(d) Merger Agreement (Cumberland), without Exhibits
Press Contact:
Ben A. Plotkin, Chief Executive Officer of David Finkelman
Leonard J. Stanley, Chief Administrative Officer Corporate Communications
Ryan, Beck & Co. BankAtlantic Bancorp, Inc.
(973) 597-6000 (954) 760-5317
FOR IMMEDIATE RELEASE:
RYAN, BECK ANNOUNCES PROPOSED STRATEGIC ALLIANCE WITH
BANKATLANTIC BANCORP AND ACQUISITION OF ASSET MANAGEMENT FIRM
LIVINGSTON, NJ - February 10, 1998 -- Ryan, Beck & Co., Inc. (NASDAQ:
RBCO), today announced that it has entered into a definitive agreement with
BankAtlantic Bancorp, Inc. (NYSE: BBX; NASDAQ: BANC) whereby all of Ryan, Beck's
outstanding common shares would be acquired by BankAtlantic Bancorp in a tax
free exchange for BankAtlantic Bancorp's Class A Common Stock. The agreement
contemplates the continued operation of Ryan, Beck as an autonomous independent
subsidiary of BankAtlantic Bancorp under the direction of the current management
of Ryan, Beck. BankAtlantic Bancorp is a Fort Lauderdale, Florida based
financial services holding company.
The agreement establishes a fixed exchange ratio of .609 shares of
BankAtlantic Bancorp Class A Common Stock for each share of Ryan, Beck until the
payment on February 18, 1998 of BankAtlantic Bancorp's recent 5 for 4 stock
split, after which date the ratio will be adjusted upward to .761 shares. Based
upon the closing price of BankAtlantic Bancorp on February 9, 1998, the value of
the agreement to Ryan, Beck shareholders is $9.75 per share, or an aggregate
consideration of approximately $38.1 million. BankAtlantic Bancorp has Class A
(non-voting) and Class B common stock outstanding. The Class A common stock is
traded on the NYSE under the symbol "BBX." Ryan, Beck will have the right to
terminate the agreement if the value per Ryan, Beck share, based upon the
specified 10 day period prior to closing, is less than $8.28.
The agreement contemplates a strategic alliance between Ryan, Beck &
Co. and BankAtlantic Bancorp in which Ryan, Beck's capital markets expertise
will be available to BankAtlantic Bancorp. Also, BankAtlantic Bancorp will be
furnishing substantial new capital to Ryan, Beck in order to enable it to
accelerate the expansion of its business. The agreement, when consummated, also
will establish an incentive and retention pool, under which shares of
BankAtlantic Bancorp's Class A common stock equal in the aggregate to
approximately 20% of the transaction value will be allocated to key employees of
Ryan, Beck and the allocated shares, subject to certain exceptions, will be
distributed in four years to an employee who remains with Ryan, Beck for that
period.
The BankAtlantic Bancorp agreement is subject to the receipt of all
regulatory approvals and approval of the shareholders of Ryan, Beck at a
shareholders meeting, which will be called shortly. Ryan, Beck expects that the
transaction will be closed during the second quarter of 1998 and thereafter
Ryan, Beck will operate as an autonomous independent subsidiary of BankAtlantic
Bancorp.
Ryan Beck also simultaneously announced an agreement to acquire for
stock and cash Cumberland Advisors, a Vineland, New Jersey based money manager
with approximately $400 million under management. Under the agreement,
Cumberland will become a subsidiary of Ryan, Beck and will continue to do
business as Cumberland. Ryan, Beck also acquired Cumberland Consulting, a
Vineland, New Jersey based financial advisor to state and local governmental
units.
The agreement with Cumberland is an earn-out transaction which provides
for receipt of more shares in the future if Cumberland performs well and tile
return of a portion of the shares initially issued if Cumberland does not
perform up to certain benchmarks. Initially, 167,742 shares of Ryan, Beck common
stock will be issued. The transaction with Cumberland is subject to certain
consents and approvals but is not conditioned upon a shareholder vote by Ryan,
Beck and is not contingent upon the approval of the BankAtlantic Bancorp
transaction. The Cumberland transaction is expected to close in the first
quarter of 1998.
Commenting oil the proposed transactions. Ryan. Beck President and
Chief Executive Officer Ben A. Plotkin stated, "We are excited about the
potential benefits of the BankAtlantic Bancorp transaction for our clients. our
employees and, most importantly, our shareholders. For our retail and investment
banking clients, tile transaction is structured to preserve tile independence of
Ryan, Beck & Co., which will ensure continued excellence in our products and
service. The additional capital provided by this agreement will enable Ryan,
Beck to substantially expand our market making and capital markets activities.
For our employees, the substantial stock incentive plan will provide continued
incentives to build the Firm. The acquisition of Cumberland Advisors will
dramatically expand the money management products Ryan, Beck can offer its
customers."
Alan B. Levan, Chairman of BankAtlantic Bancorp, stated, "We have been
a client of Ryan, Beck for years and have great confidence in the Firm. This
investment will not only enable the expansion of Ryan, Beck as an independent
entity, but also is in the best interest of BankAtlantic Bancorp shareholders as
it will lead to further growth in non-interest income."
Ryan, Beck & Co. Chairman Richard B. Neff commented, "For our
shareholders, the transaction offers the ability to exchange Ryan, Beck shares
into an actively traded stock of an exciting company. I share Ben Plotkin's
excitement about this transaction."
Ryan Beck is headquartered in Livingston, New Jersey and engages in
underwriting, market making, distribution, and trading, of bank and thrift
equity and debt securities, and tax-exempt bonds; consulting, research, and
financial advisory services to the financial services industries; insurance
products and general securities brokerage. The Firm has offices in New Jersey,
Pennsylvania and Florida.
BankAtlantic Bancorp is the parent company of BankAtlantic which, with
assets of $3.1 billion, is the largest financial institution based in Florida.
BankAtlantic Bancorp operates 65 full-service branches in Broward. Dade. Palm
Beach, Sarasota, Lee, Charlotte, Osceola, Hagler, Hernando and Manatee counties.
At December 31. 1997, BankAtlantic Bancorp marked its sixth consecutive year of
record earnings.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of February 9, 1998 (this
"Agreement"), between RYAN, BECK & CO., INC., a New Jersey corporation (the
"Company"), and BANKATLANTIC BANCORP, INC., a Florida corporation ("Bancorp").
WHEREAS, Bancorp, the Company and BCP Acquisition Corporation, a
Florida corporation and a wholly-owned subsidiary of Bancorp ("Acquisition"),
propose to enter into, simultaneously herewith, an Acquisition Agreement (the
"Acquisition Agreement"; capitalized terms used but not defined in this
Agreement shall have the meanings ascribed to them in the Acquisition Agreement)
which provides, upon the terms and subject to the conditions thereof, for the
acquisition by Bancorp of the Company through the merger of the Company with and
into Acquisition (the "Merger"); and
WHEREAS, as a condition to the willingness of Bancorp to enter into the
Acquisition Agreement, Bancorp has required that the Company agree, and in order
to induce Bancorp to enter into the Acquisition Agreement the Company has agreed
to grant Bancorp an option to purchase 714,000 newly issued shares of the
Company's common stock, par value $.10 per share (the "Company Common Stock"),
representing approximately 19.9% of the issued and outstanding shares of Company
Common Stock, in accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Acquisition Agreement, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.1 Grant of Stock Option. The Company hereby grants
to Bancorp, as of the date hereof (the "Grant Date") an irrevocable option (the
"Stock Option") to purchase up to 714,000 shares (the "Option Shares") of
Company Common Stock at a cash purchase price per Option Share equal to $8.00
(the "Purchase Price"), subject to the terms and conditions set forth herein.
SECTION 1.2 Exercise of Stock Option.(a) Subject to the
conditions set forth in Section 1.03 and to any additional requirements of Law,
the Stock Option may be exercised by Bancorp, in whole or in part, at any time
or from time to time after the occurrence of an Exercise Event (as defined
below) and prior to the Termination Date (as defined below).
<PAGE>
(b) An "Exercise Event" shall occur for purposes of this
Agreement upon (i) the occurrence of any event or circumstance which, pursuant
to the terms of Section 8.8(c) of the Acquisition Agreement, entitles Bancorp to
the payment by the Company of the amount specified therein or (ii) the
termination of the Acquisition Agreement by Bancorp pursuant to the provisions
of Sections 7.1(f), (g) or (j) (and, with respect to Section 7.1(j), at the time
of such termination there exists a Competing Transaction) under circumstances
that would not then entitle Bancorp to the payment by the Company of the amount
specified in Section 8.8(c) (an Exercise Event described in this subsection (ii)
being further defined as a "Termination Exercise Event").
(c) The "Termination Date" shall occur for purposes of this
Agreement upon the first to occur of any of the following:
(i) the Effective Time;
(ii) the date which is 18 months after the occurrence of an
Exercise Event (unless prior thereto the Option shall have been
exercised); or
(iii) the termination of the Acquisition Agreement in any
manner which (A) would not trigger an Exercise Event and (B) in which
Bancorp would not be entitled pursuant to Section 8.8(c) of the
Acquisition Agreement to payment of the amount specified therein.
(d) In the event Bancorp wishes to exercise the Stock Option,
Bancorp shall send a written notice (a "Stock Exercise Notice") to the Company
specifying the total number of Option Shares Bancorp wishes to purchase, the
denominations of the certificate or certificates evidencing such Option Shares
which Bancorp wishes to receive, a date (subject to the earlier satisfaction or
waiver of the conditions set forth in Section 1.03) (a "Closing Date"), which
shall be a business day (as defined in the Acquisition Agreement) which is not
later than 10 business days and not earlier than the fifth business day after
delivery of such notice, and place for the closing of such purchase (a
"Closing").
<PAGE>
(e) If at any time the Stock Option is then exercisable
pursuant to the terms of Section 1.02(a) hereof (other than as a result of a
Termination Exercise Event), Bancorp may elect, in lieu of exercising the Stock
Option to purchase Option Shares as provided in Section 1.02(a) hereof, to send
a written notice to the Company (a "Cash Exercise Notice"; either a Cash
Exercise Notice or a Stock Exercise Notice, an "Exercise Notice") specifying a
date not later than 10 business days and not earlier than the fifth business day
following the date such notice is given on which date the Company shall pay to
Bancorp an amount in cash equal to the Spread (as defined below) multiplied by
such number of Option Shares as Bancorp shall specify; provided, however, that
Bancorp shall not be entitled to receive cash from the Company equal to the
Spread pursuant to a Cash Exercise Notice unless a Competing Transaction shall
have been consummated (other than a tender offer or exchange offer for less than
50% of the outstanding shares of capital stock of the Company or the acquisition
by any Person or group of less than 50% of the then outstanding shares of
capital stock of the Company). As used herein, "Spread" shall mean the excess,
if any, over the Purchase Price of the higher of (x) if applicable, the highest
price per share of Company Common Stock paid by any person in a Competing
Transaction (the "Competing Purchase Price") or (y) the closing price of the
shares of Company Common Stock on NASDAQ on the last trading day immediately
prior to the date of the Cash Exercise Notice (the "Closing Price"). If the
Competing Purchase Price includes any property other than cash, the Competing
Purchase Price shall be the sum of (i) the fixed cash amount, if any, included
in the Competing Purchase Price plus (ii) the fair market value of such other
property. If such other property consists of securities with an existing public
trading market, the average of the closing prices (or the average of the closing
bid and asked prices if closing prices are unavailable) for such securities in
their principal public trading market on the five trading days ending five days
prior to the date of the Cash Exercise Notice shall be deemed to equal the fair
market value of such property. If such other property consists of something
other than cash or securities with an existing public trading market and, as of
the payment date for the Spread, agreement on the value of such other property
has not been reached, the Competing Purchase Price shall be deemed to be the
amount of any cash included in the Competing Purchase Price plus the fair market
value of such other property (as determined by a nationally recognized
investment banking firm jointly selected by Bancorp and the Company). For this
purpose, the parties shall use their reasonable commercial efforts to cause any
determination of the fair market value of such other property to be made within
three business days after the date of delivery of the Cash Exercise Notice. Upon
exercise of its right to receive the Spread pursuant to this Section 1.02(e),
the obligations of the Company to deliver Option Shares pursuant to Section
1.02(d) shall be terminated with respect to such number of Option Shares for
which Bancorp shall have elected to be paid the Spread.
SECTION 1.3 Conditions to Closing. The obligation of the
Company to deliver Option Shares or pay the Spread, as applicable, upon any
exercise of the Stock Option is subject to the following conditions:
(a) Such delivery or payment would not in any material respect
violate, or otherwise cause the material violation of, any Law,
including, without limitation, the HSR Act, applicable thereto; and
(b) There shall be no preliminary or permanent injunction or
other final, non-appealable judgment by a court of competent
jurisdiction preventing or prohibiting such exercise of the Stock
Option, the delivery of the Option Shares or payment of the Spread in
respect of such exercise.
<PAGE>
SECTION 1.4 Closings. At each Closing, (i) in the event of a
Closing pursuant to Section 1.02(d), the Company shall deliver to Bancorp a
certificate or certificates evidencing the applicable number of Option Shares
(in the denominations specified therein), and Bancorp shall purchase each such
Option Share from the Company at the Purchase Price, or (ii) in the event of any
other Closing pursuant to Section 1.02(e), the Company shall deliver to Bancorp
cash in an amount determined pursuant to Section 1.02(e). All payments made
pursuant to this Agreement shall be made by wire transfer of immediately
available funds. Certificates evidencing Option Shares delivered hereunder may,
at the Company's election, contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933 OR AN EXEMPTION THEREFROM.
The Company shall, upon the written request of the holder thereof, issue such
holder a new certificate evidencing such Option Shares without such legend in
the event (x) such Option Shares have been registered pursuant to the Securities
Act, (y) such Option Shares have been sold in reliance on and in accordance with
Rule 144 under the Securities Act or (z) such holder shall have delivered to the
Company an opinion of counsel, in form and substance reasonably satisfactory to
the Company, to the effect that subsequent transfers of such Option Shares may
be effected without registration under the Securities Act.
SECTION 1.5 Adjustments upon Share Issuances, Changes in
Capitalization, Etc. (a) In the event of any change in Company Common Stock or
in the number of outstanding shares of Company Common Stock by reason of a stock
dividend, stock split, recapitalization, combination, exchange of shares or
similar transaction or any other extraordinary change in the corporate or
capital structure of the Company (including, without limitation, the declaration
or payment of an extraordinary dividend of cash, securities or other property),
the type and number of shares or securities to be issued by the Company upon
exercise of the Stock Option shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such transaction, so that
Bancorp shall receive upon exercise of the Stock Option the number and class of
shares or other securities or property that Bancorp would have received in
respect of Company Common Stock if the Stock Option had been exercised
immediately prior to such event, or the record date therefor, as applicable, and
elected to the fullest extent it would have been permitted to elect, to receive
such securities, cash or other property.
<PAGE>
(b) In the event that the Company shall enter into an
agreement (other than the Acquisition Agreement) (i) to consolidate with or
merge into any Person, and shall not be the continuing or surviving corporation
of such consolidation or merger, (ii) to permit any Person to merge into the
Company and the Company shall be the continuing or surviving corporation, but,
in connection with such merger, the then outstanding shares of Company Common
Stock shall be changed into or exchanged for stock or other securities of the
Company or any other person or cash or any other property or then outstanding
shares of Company Common Stock shall after such merger represent less than 50%
of the outstanding shares and share equivalents of the surviving corporation or
(iii) to sell or otherwise transfer all or substantially all of its assets to
any Person then, and in each such case, proper provision shall be made in the
agreements governing such transaction so that Bancorp shall receive upon
exercise of the Stock Option the number and class of shares or other securities
or property that Bancorp would have received in respect of Company Common Stock
if the Stock Option had been exercised immediately prior to such transaction, or
the record date therefor, as applicable, and elected to the fullest extent it
would have been permitted to elect, to receive such securities, cash or other
property.
(c) The provisions of this Agreement, including, without
limitation, Sections 1.01, 1.02, 1.04 and 3.02, shall apply with appropriate
adjustments to any securities for which the Stock Option becomes exercisable
pursuant to this Section 1.05.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Bancorp as
follows:
SECTION 2.1 Authority Relative to this Agreement. The Company
is duly organized and validly existing under the laws of the State of New
Jersey. The Company has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate such
transactions. This Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. This Agreement has
been authorized by the Board of Directors of the Company for purposes of
Sections 14A:10A-1 through 14A:10A-6 of the New Jersey BCA.
<PAGE>
SECTION 2.2 Authority to Issue Shares. The Company has taken
all necessary corporate action to authorize and reserve and permit it to issue,
and at all times from the date hereof through the Termination Date shall have
reserved, all the Option Shares issuable pursuant to this Agreement, and the
Company shall take all necessary corporate action to authorize and reserve and
permit it to issue all additional shares of Company Common Stock or other
securities which may be issued pursuant to Section 1.05, all of which, upon
their issuance and delivery in accordance with the terms of this Agreement,
shall be duly authorized, validly issued, fully paid and nonassessable, shall be
delivered free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on Bancorp's voting
rights, charges and other encumbrances of any nature whatsoever (other than this
Agreement) and shall not be subject to any preemptive rights. Without limiting
the generality of the foregoing, the Company has taken all necessary corporate
action so that the issuance of the option to Bancorp hereunder or the issuance
of shares of Company Common Stock or other securities pursuant to this Agreement
to Bancorp shall not subject Bancorp to any restrictions or limitations under
the Company's Certificate of Incorporation or Bylaws or the New Jersey BCA,
including, without limitation, the provisions of Sections 14A:10A-1 through
14A:10A-6.
SECTION 2.3 No Conflict; Required Filings and Consents. The
execution and delivery of this Agreement by the Company do not, and the
performance by the Company of its obligations pursuant to this Agreement and the
consummation of the transactions contemplated hereby will not, (i) require any
consent, approval, authorization or permit of, or filing with or notification to
(other than pursuant to the HSR Act, state securities and "blue sky" Laws, the
regulations of NASDAQ, if applicable, the rules of the NASD and the SEC) any
court or Regulatory Agency, (ii) conflict with or violate any provision of the
Certificate of Incorporation or Bylaws of the Company or any equivalent
organizational documents of any Company Subsidiary, (iii) assuming that all
consents, approvals, authorizations and permits described in this Section 2.03
have been obtained and all filings and notifications described in this Section
2.03 have been made, conflict with or violate any Law applicable to the Company
or any Company Subsidiary or by which any property or asset of the Company or
any Company Subsidiary is bound or affected or (iv) result in any breach of or
constitute a default (or an event which with the giving of notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien or other encumbrance on any property or asset of the Company
or any Company Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation, except, with respect to clauses (iii) and (iv), for any such
conflicts, violations, breaches, defaults or other occurrences which would
neither, individually or in the aggregate, prevent or materially delay the
performance by the Company of any of its obligations pursuant to this Agreement.
ARTICLE III
COVENANTS OF THE COMPANY
SECTION 3.1 Listing; Other Action. (a) The Company shall, at
its expense, use its best efforts to cause the Option Shares to be approved for
listing on NASDAQ, subject to notice of issuance, as promptly as practicable
following an Exercise Event, and shall provide prompt notice to NASDAQ of the
issuance of each Option Share.
<PAGE>
(b) The Company shall use its best efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate and make
effective the transactions contemplated hereunder, including, without
limitation, using its best efforts to obtain all licenses, permits, consents,
authorizations, orders and approvals of any court or Regulatory Agency. Without
limiting the generality of the foregoing, the Company shall when required in
order to effect the transactions contemplated hereunder make all necessary
filings, and thereafter make any other required or appropriate submissions,
under the HSR Act and shall supply as promptly as practicable to the appropriate
court or Regulatory Agency any additional information and documentary material
that may be requested pursuant to the HSR Act.
SECTION 3.2 Registration. (a) In the event that Bancorp
shall desire to sell any of the Option Shares within two years after the
purchase of such Option Shares pursuant hereto, and such sale requires, in the
opinion of counsel to Bancorp, which opinion shall be reasonably satisfactory to
the Company and its counsel, registration of such Option Shares under the
Securities Act, the Company shall cooperate with Bancorp and any underwriters in
registering such Option Shares for resale, including, without limitation,
promptly filing a registration statement which complies with the requirements of
applicable federal and state securities Laws and entering into an underwriting
agreement with such underwriters upon such terms and conditions as are
customarily contained in underwriting agreements with respect to secondary
distributions; provided, however, that the Company shall be entitled to delay
the filing or effectiveness of any registration statement for up to 30 days if
the offering would, in the reasonable judgment of the Board of Directors of the
Company, require premature disclosure of any material corporate development or
otherwise interfere with or adversely affect any pending or proposed offering of
securities of the Company or any other material transaction involving the
Company.
<PAGE>
(b) If the Company Common Stock is registered pursuant to the
provisions of this Section 3.02, the Company agrees (i) to furnish copies of the
registration statement and prospectus relating to the Option Shares covered
thereby in such numbers as Bancorp may from time to time reasonably request and
(ii) if any event shall occur as a result of which it becomes necessary to amend
or supplement any registration statement or prospectus, to prepare and file
under the applicable securities Laws such amendments and supplements as may be
necessary to keep available for at least 90 days a prospectus covering the
Company Common Stock meeting the requirements of such securities Laws, and to
furnish Bancorp such numbers of copies of the registration statement and
prospectus as amended or supplemented as may reasonably be requested. The
Company shall bear the cost of the registration, including, but not limited to,
all registration and filing fees, printing expenses, and fees and disbursements
of counsel and accountants for the Company, except that Bancorp shall pay the
fees and disbursements of its counsel and the underwriting fees and selling
commissions applicable to the shares of Company Common Stock sold by Bancorp.
The Company shall indemnify and hold harmless Bancorp, its affiliates and its
officers and directors from and against any and all losses, claims, damages,
liabilities and expenses arising out of or based upon any statements contained
in, or omissions or alleged omissions from, each registration statement or
prospectus filed pursuant to this paragraph; provided, however, that this
provision shall not apply to any loss, liability, claim, damage or expense to
the extent it arises out of any untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by
Bancorp, its Affiliates and its officers and other representatives expressly for
use in any registration statement (or any amendment thereto) or any prospectus
filed pursuant to this paragraph. The Company shall also indemnify and hold
harmless each underwriter and each person who controls any underwriter within
the meaning of either the Securities Act or the Exchange Act against any and all
losses, claims, damages, liabilities and expenses arising out of or based upon
any statements contained in, or omissions or alleged omissions from, each
registration statement or prospectus filed pursuant to this paragraph; provided,
however, that this provision shall not apply to any loss, liability, claim,
damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by the underwriters expressly for use in any
registration statement (or any amendment thereto) or any prospectus filed
pursuant to this paragraph. Bancorp shall indemnify and hold harmless the
Company, its affiliates and its officers and directors against any and all
losses, claims, damages, liabilities and expenses arising out of or based upon
any untrue statements contained in, or omissions or alleged omissions from, each
registration statement or prospectus filed pursuant to this paragraph if such
statements, omissions or alleged omissions are made in reliance upon and in
conformity with written information furnished to the Company by Bancorp
expressly for use in any registration statement (or any amendment thereto) or
any prospectus filed pursuant to this paragraph.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP
Bancorp hereby represents and warrants to the Company as
follows:
SECTION 4.1 Purchase for Investment. Bancorp will acquire the
Option Shares for its own account for investment and not with a view towards any
resale or distribution of all or any part thereof.
ARTICLE V
TERMINATION OF AGREEMENT
SECTION 5.1 Termination. This Agreement, other than the rights
and obligations of the Company and Bancorp under Sections 3.01, 3.02 and 4.01
and Article VI, shall terminate on the Termination Date.
<PAGE>
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Amendment. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 6.2 Waiver. Either party hereto may (a) extend the
time for or waive compliance with the performance of any obligation or other act
of the other party hereto or (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 6.3 Fees and Expenses. Except as otherwise provided
herein or in Section 8.8 of the Acquisition Agreement, all fees and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such expenses.
SECTION 6.4 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or facsimile, by registered or certified mail (postage prepaid, return
receipt requested) or by a nationally recognized courier service to the
respective parties at their addresses as specified in Section 8.2 of the
Acquisition Agreement.
SECTION 6.5 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner to the fullest extent permitted by applicable Law in order
that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
<PAGE>
SECTION 6.6 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by the Company without the prior written consent of Bancorp. This
Agreement and the rights, interests and obligations of Bancorp hereunder may be
freely assigned after an Exercise Event subject to the consent of the Company,
which shall not be unreasonably withheld, and subject to compliance with
applicable securities laws. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement, express
or implied, is intended to confer on any person other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 6.7 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or in equity.
SECTION 6.8 Governing Law. Except to the extent that the Laws
of the jurisdiction of organization of any party hereto, or any other
jurisdiction, are mandatorily applicable to the matters arising under or in
connection with this Agreement, this Agreement shall be governed by the Laws of
the State of Florida.
SECTION 6.9 Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 6.10 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 6.11 Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings between the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
RYAN, BECK & CO., INC.
By:----------------------------------
Name:
Title:
BANKATLANTIC BANCORP, INC.
By:----------------------------------
Name:
Title:
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT is entered into as of February 9, 1998,
between BANKATLANTIC BANCORP, INC., a Florida corporation ("Bancorp"), RYAN,
BECK & CO., INC., a New Jersey corporation (the "Company"), and BCP ACQUISITION
CORPORATION, a New Jersey corporation which is wholly-owned by Bancorp
("Acquisition").
Preliminary Statements
WHEREAS, Bancorp and the Company believe that the mutual best interests
of Bancorp and the Company and of their respective stockholders will be served
by the acquisition provided for herein in which the Company will, subject to the
terms and conditions set forth herein, be acquired by Bancorp through the merger
of the Company with and into Acquisition.
WHEREAS, Bancorp recognizes the value of maintaining and intends to
maintain the operations of the Company in an autonomous subsidiary after the
acquisition contemplated hereby; and
WHEREAS, Bancorp is a savings bank holding company with over $3 billion
of assets and has the resources and capital to enable the Company to grow and
pursue its business plan; and
WHEREAS, simultaneously with or prior to the execution of this
Agreement, the members of the Board of Directors of the Company executed and
delivered to Bancorp a voting agreement in the form attached hereto as Exhibit
A; and
WHEREAS, Bancorp and the Company have agreed, in connection with the
transactions contemplated hereby, to establish a retention program as described
in Section 5.17 hereto for the purpose of retaining the services of certain
employees of the Company following consummation of the transactions contemplated
hereby; and
WHEREAS, concurrently with the execution of this Agreement and as a
material inducement to Bancorp to enter into this Agreement, the Company and
Bancorp have entered into a Stock Option Agreement (the "Company Stock Option
Agreement") pursuant to which the Company has granted to Bancorp an option to
purchase from the Company shares of Company Common Stock, upon the terms and
subject to the conditions set forth therein;
Agreement
In consideration of the preliminary statements and the respective
covenants, representations and warranties contained in this Agreement, and
intending to be legally bound, the parties agree as set forth below.
<PAGE>
DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
terms when used in this Agreement shall have the meanings indicated below:
"Acquisition Common Stock" means the common stock of Acquisition, par
value $.01 per share.
"Affiliate" has the meaning specified in Rule 144 promulgated by the
SEC under the Securities Act.
"Agreement" means this Acquisition Agreement together with all exhibits
and schedules referred to herein.
"Average Price" means the average of the closing sale prices per share
of Class A Common Stock on the NYSE for the period of 10 consecutive trading
days ending with (and including) the second trading day prior to the Closing
Date.
"Class A Common Stock" means the Class A Common Stock of Bancorp, par
value $0.01 per share.
"Class B Common Stock" means the Class B Common Stock of Bancorp, par
value $0.01 per share.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Common Stock" means the common stock of the Company, par value
$0.10 per share.
"Company Preferred Stock" means the preferred stock of the Company, par
value $0.10 per share.
"Company Subsidiary" means a Subsidiary of the Company.
"Cumberland Transaction" means the acquisition of Cumberland Advisors,
a New Jersey general partnership, substantially on the terms set forth in the
merger agreement relating to such acquisition as described in the disclosure
schedules to this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Florida BCA" means the Business Corporation Act of the State of
Florida.
<PAGE>
"Guaranty" means, as to any Person, any contract, agreement or
understanding of such Person pursuant to which such Person guarantees the
indebtedness, liabilities or obligations of others, directly or indirectly, in
any manner, including agreements to purchase such indebtedness, liabilities or
obligations, or to supply funds to or in any manner invest in others, or to
otherwise assure the holder of such indebtedness, liabilities or obligations
against loss.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Knowledge" or "known", whether or not capitalized, means, with respect
to any representation or warranty or other statement in this Agreement qualified
by the knowledge of any party, that such party has made a reasonable
investigation as to the matters that are the subject of such representation,
warranty or other statement. Where reference is made to the knowledge of Bancorp
or the Company, such reference shall be deemed to include the officers and
managerial employees of Bancorp or the Company, respectively, all of whom shall
be deemed to have conducted the investigation required by this definition.
"Lien" means any lien, encumbrance, charge, security interest,
restriction (including any restriction on voting rights or disposition),
default, equity, claim or third party right of any nature whatsoever.
"Material Adverse Effect" means, with respect to any Person, a material
adverse effect on the business, operations, financial condition, results of
operations or business prospects of such Person and its Subsidiaries, considered
as one enterprise.
"NASD" means the National Association of Securities Dealers, Inc.
"NASDAQ" means the National Market Segment of the NASDAQ Stock Market.
"New Jersey BCA" means the Business Corporation Act of the State of New
Jersey.
"NYSE" means the New York Stock Exchange, Inc.
"Person" means any natural person, corporation, unincorporated
organization, partnership, association, joint stock company, limited liability
company, joint venture, trust or government, or any agency or political
subdivision of any government, or any other entity.
"Regulatory Agency" means any federal, state or foreign governmental or
regulatory agency or authority or any Self-Regulatory Body.
"SEC" means the Securities and Exchange Commission.
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Self-Regulatory Body" means any non-governmental self-regulatory
agency, commission or authority.
"Stockholder Voting Agreements" mean those certain agreements, in the
form attached hereto as Exhibit A, between certain stockholders of the Company
and Bancorp, dated as of the date hereof, pursuant to which, among other things,
each of such stockholders has agreed to vote his shares of Company Common Stock
in favor of the Merger.
"Subsidiary" of any Person means any Person, whether or not
capitalized, in which such Person owns, directly or indirectly, an equity
interest of 50% or more, or any Person which may be controlled, directly or
indirectly, by such Person, whether through the ownership of voting securities,
by contract, or otherwise.
ARTICLE I
THE MERGER
1.1 Merger: Closing Date, Closing and Effective Time. Unless a
different date, time and/or place are agreed to by the parties hereto, the
closing of the Merger (the "Closing") shall take place at 10:00 a.m., at such
place and on a date determined by Bancorp on at least five business days notice
(the "Closing Notice") given to the Company, which date (the "Closing Date")
shall be as soon as practicable following the receipt of all necessary approvals
and consents of all Regulatory Agencies and the expiration of all statutory
waiting periods in respect thereof and the satisfaction or waiver of all of the
conditions to the consummation of the Merger specified in Article VI hereof
(other than the delivery of certificates, opinions and other instruments and
documents to be delivered at the Closing). Simultaneous with or immediately
following the Closing, Bancorp and the Company shall cause to be filed a
certificate of merger in accordance with Section 10.7 of the New Jersey BCA, in
form and substance satisfactory to Bancorp and the Company, with the Secretary
of State of the State of New Jersey (the "Certificate of Merger"). The
Certificate of Merger shall specify as the "Effective Time" of the Merger a date
and time following the Closing agreed to by Bancorp and the Company (which date
and time the parties currently anticipate will be the close of business on the
Closing Date). In the event the parties fail to specify the date and time in the
Certificate of Merger, the Merger shall become effective upon (and the
"Effective Time" shall be) the filing of the Certificate of Merger. (As used
herein, the "Effective Date" of the Merger shall be the date of the Effective
Time.) The separate corporate existence of the Company shall thereupon cease and
Acquisition shall be the surviving corporation (the "Surviving Corporation") and
the separate corporate existence of Acquisition shall continue unaffected and
unimpaired by the Merger.
<PAGE>
1.2 Certificate of Incorporation of Surviving Corporation. From and
after the Effective Time, and until further amended in accordance with the New
Jersey BCA, the Certificate of Incorporation of Acquisition shall be the
Certificate of Incorporation of the Surviving Corporation, except that after the
Effective Date of the Merger, the name of Acquisition shall be "Ryan, Beck &
Co., Inc.".
1.3 Bylaws of Surviving Corporation. The Bylaws of Acquisition, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until duly amended in accordance with such Bylaws and
applicable law.
1.4 Officers and Directors of Surviving Corporation. As of the
Effective Date, the officers and directors of the Surviving Corporation shall be
as mutually agreed to by the parties prior to the Effective Time, who shall
serve in each case until their respective successors are duly appointed or
elected and qualified, or until their earlier death, resignation or removal.
1.5 Articles of Incorporation of Bancorp. The Articles of Incorporation
of Bancorp shall not be affected by the Merger.
ARTICLE II
CONSIDERATION; SHARE EXCHANGE; OPTIONS
2.1 Conversion of Company Common Stock. At the Effective Time, each
share of Company Common Stock which is issued and outstanding immediately prior
to the Effective Time shall be converted without any action on the part of the
holder thereof into and be exchangeable for 0.609 shares of Class A Common Stock
(the "Conversion Ratio") (rounded to the nearest thousandth of a share), subject
to adjustment as provided in Section 7.1(m) hereof and subject to the payment of
cash in lieu of fractional shares in accordance with Section 2.6 hereof.
In the event Bancorp effects a stock split, stock dividend,
recapitalization or similar transaction with respect to Bancorp's outstanding
Class A Common Stock prior to the Effective Time, the Conversion Ratio set forth
in this Section 2.1 and the Average Price "collar" of $13.60 set forth in
Section 7.1(m) shall be proportionately adjusted as appropriate. For example,
with respect to the previously announced 25% stock dividend payable on February
18, 1998 to holders of record of Class A Common Stock on February 4, 1998, the
Conversion Ratio will be adjusted to .761 and the Average Price "collar" of
$13.60 set forth in Section 7.1(m) will be adjusted to $10.88.
<PAGE>
2.2 Impact on Stock Options. At the Effective Time, each unexpired and
unexercised option to purchase shares of Company Common Stock (other than under
the Company Stock Option Agreement), whether or not then exercisable (a Company
Option"), shall be assumed by Bancorp, and each Company Option shall be
converted automatically into an option to purchase a number of shares of the
Class A Common Stock (a "Substitute Option") equal to the number of shares of
Company Common Stock that could have been purchased under the Company Option
multiplied by the Conversion Ratio as determined in Section 2.1 (except that
upon exercise any options to purchase fractional shares resulting from any such
adjustment shall be eliminated unless the terms of the option award provides
otherwise), at a price per share of Company Common Stock equal to the option
exercise price under the Company Option, divided by the Conversion Ratio as
determined in Section 2.1 (with the resulting exercise price rounded to the
nearest whole cent), provided that in the case of any Company Option intended to
qualify as an incentive stock option under Section 422 of the Code, the option
price, the number of shares purchasable pursuant to such option and the terms
and conditions of exercise of such option shall be determined in compliance with
Section 424(a) of the Code. The duration, vesting and other terms of the
Substitute Options shall be the same as the original Company Options, except
that references to the Company shall be deemed to be references to Bancorp.
2.3 Conversion of Acquisition Common Stock. At the Effective Time,
each share of Acquisition Common Stock that is issued and outstanding
immediately prior to the Effective Time shall thereafter represent one validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation.
2.4 Exchange of and Payment for Company Common Stock.
(a) Bancorp will cause the exchange agent selected by Bancorp
(which shall be an exchange agent reasonably acceptable to the Company) (the
"Exchange Agent") to send to each record holder of shares of Company Common
Stock which shall have been converted into shares of Class A Common Stock in the
Merger an appropriate letter of transmittal for purposes of such stockholder's
obtaining certificates representing such shares of Class A Common Stock, which
letter of transmittal shall be mailed to such stockholder's address of record
provided by the Company. As soon as practicable after the Effective Time and
after surrender to the Exchange Agent of a properly executed letter of
transmittal and any certificates which immediately prior to the Effective Time
shall have represented any then issued and outstanding shares of Company Common
Stock, Bancorp shall, subject to the provisions of Section 2.4(c) hereof, cause
to be distributed to the person in whose name such Company Common Stock shall
have been registered, certificates registered in the name of such person
representing the shares of Class A Common Stock into which such shares of
Company Common Stock shall have been converted at the Effective Time and a check
payable to such person representing the payment of cash in lieu of fractional
shares determined in accordance with Section 2.6 hereof. Until surrendered as
contemplated by the preceding sentence, each certificate which immediately prior
to the Effective Time shall have represented any then issued and outstanding
shares of Company Common Stock shall be deemed at and after the Effective Time
to represent only the right to receive, upon such surrender, the certificates
and payment contemplated by the preceding sentence.
<PAGE>
(b) No dividends or other distributions declared after the
Effective Time with respect to shares of Class A Common Stock and payable to the
holders of record thereof after the Effective Time shall be paid with respect to
Company Common Stock converted into Class A Common Stock in the Merger until
such properly executed letter of transmittal and any unsurrendered certificates
representing such shares of Company Common Stock are surrendered as provided
herein. Upon the surrender of such letter of transmittal and any such
outstanding certificates, however, there shall be paid to the record holder of
the certificates of Class A Common Stock issued in exchange for the shares of
Company Common Stock, the aggregate amount of dividends and distributions, if
any, which theretofore became payable in respect of the shares of Class A Common
Stock into which such Company Common Stock is converted, subject in any case to
any applicable escheat laws and unclaimed property laws. No interest shall be
payable on or in respect of the payment of such dividends or cash in lieu of
fractional shares on surrender of outstanding certificates.
(c) If any cash or certificate representing shares of Class A
Common Stock is to be paid to or issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it shall be a
condition of the payment or issuance thereof that the certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange shall pay to the Exchange Agent any transfer
or other taxes required by reason of the issuance of a certificate representing
shares of Class A Common Stock in any name other than that of the registered
holder of the certificate surrendered.
(d) Any portion of the Class A Common Stock or cash in lieu of
fractional shares payable hereunder that remains unclaimed by the stockholders
of the Company for 12 months after the Effective Time shall, if on deposit with
the Exchange Agent, be paid to the Company. Any stockholders of the Company who
have not theretofore complied with this Article II shall thereafter look only to
the Company for payment of the shares of Class A Common Stock or cash in lieu of
any fractional shares and any unpaid dividends and distributions on the Class A
Common Stock deliverable in respect of each share of Company Common Stock such
stockholder holds as determined pursuant to this Agreement without any interest
thereon. Notwithstanding the foregoing, none of the Company, Bancorp, the
Exchange Agent or any other person shall be liable to any former holder of
shares of Company Common Stock for any amount delivered in good faith to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(e) In the event any certificate which, immediately prior to
the Effective Time, represented Company Common Stock shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such certificate to be lost, stolen or destroyed and the posting by
such person of a bond in such amount as Bancorp or the Exchange Agent may
determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed certificate the shares of Class A
Common Stock and any cash in lieu of fractional shares deliverable in respect
thereof pursuant to this Agreement.
<PAGE>
2.5 No Further Transfers of Company Common Stock. After the Effective
Time, there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing such outstanding shares are presented
to the Surviving Corporation, they shall be canceled and exchanged for
certificates representing the shares of Class A Common Stock or cash in lieu of
fractional shares into which they were converted, or both, as provided in this
Article II.
2.6 Cash in Lieu of Fractional Shares. Notwithstanding any other
provision of this Agreement, no certificates or scrip representing fractional
shares of Class A Common Stock shall be issued upon the conversion of shares
which prior to the Effective Time shall have represented any then outstanding
shares of Company Common Stock, no dividend or distribution of Bancorp shall
relate to any fractional share otherwise issuable pursuant to the terms hereof
and such fractional share interests will not entitle the owner thereof to vote
or to any rights of a shareholder of Bancorp. In lieu of any fractional shares,
there shall be paid to each holder of shares of Company Common Stock who
otherwise would be entitled to receive a fractional share of Class A Common
Stock, an amount of dollars in cash (without interest) determined by multiplying
such fraction by the Average Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Bancorp as follows:
3.1 Organization, Standing and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New Jersey. The Company is duly qualified to do business and is
in good standing in each jurisdiction (whether federal, state, local or foreign)
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified, except where the failure to be duly qualified is
not reasonably likely to have a Material Adverse Effect on the Company. The
Company and each of the Company Subsidiaries has in effect all federal, state,
local, and foreign governmental authorizations necessary for it to own or lease
its properties and assets and to carry on its business as it is now conducted.
The Company and each of the Company Subsidiaries has the corporate power and
authority to carry on its business as it is now being conducted and to own or
lease all its properties and assets.
<PAGE>
3.2 Capitalization. The authorized capital stock of the Company
consists of 30,000,000 shares of Company Common Stock, of which, as of the date
hereof, 3,594,933 shares were issued and outstanding and 88,000 were held in
treasury, and 2,000,000 shares of Company Preferred Stock, none of which, as of
the date hereof, were issued and outstanding and none of which were held in
treasury. All of the issued and outstanding shares of Company Common Stock have
been duly authorized and validly issued and are fully paid, non-assessable and
free of common law, statutory or contractual preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of this Agreement,
except as set forth on Schedule 3.2 and except for the Company Stock Option
Agreement, the Company does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, stock appreciation rights, commitments
or agreements of any character calling for the purchase or issuance of any
shares of Company Common Stock or any other equity securities of the Company or
any securities representing the right to purchase or otherwise receive any
shares of Company Common Stock. Schedule 3.2 sets forth, as of the date hereof,
the number of shares of Company Common Stock that were reserved for issuance
upon the exercise of Company Options and the number of shares of Company Common
Stock purchasable under such options. Except as set forth in Schedule 3.2 and
except for shares reserved in connection with the Company Stock Option
Agreement, no other shares of Company Common Stock were reserved for issuance.
The Company has previously provided Bancorp with a list, as of the date hereof,
of the holders of Company Options, the date of each grant of a Company Option,
the number of shares subject to each such Company Option, the expiration date of
each such Company Option, the vesting schedule of each such Company Option and
the price at which each such Company Option may be exercised. Except as set
forth on Schedule 3.2 and except for the Company Stock Option Agreement, there
are no outstanding contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire, or to register for sale,
any shares of capital stock of the Company. Except as set forth on Schedule 3.2,
there are no outstanding contractual obligations of the Company or any Company
Subsidiary to vote or to dispose of any shares of the capital stock of any
Company Subsidiary.
<PAGE>
3.3 Company Subsidiaries. Schedule 3.3 sets forth a list of all the
Company Subsidiaries, including the jurisdictions (whether federal, state, local
or foreign) in which such Company Subsidiaries are organized or qualified to do
business as a foreign corporation, a brief description of such Company
Subsidiary's principal activities and, if any of such Company Subsidiaries is
not wholly-owned by the Company or a Company Subsidiary, the percentage owned by
the Company or any Company Subsidiary and the names, addresses and percentage
ownership of any Person having an ownership interest in such Company Subsidiary.
No equity securities of any of the Company Subsidiaries are or may become
required to be issued (other than to the Company or a wholly-owned Company
Subsidiary), and there are no contracts, commitments, understandings or
arrangements by which any of the Company Subsidiaries is or may be bound to sell
or otherwise issue any shares of its capital stock, and there are no contracts,
commitments, understandings or arrangements relating to the rights of the
Company to vote or to dispose of such shares. All of the shares of capital stock
of each Company Subsidiary are fully paid and nonassessable and subject to no
common law, statutory or contractual preemptive rights and, except as set forth
on Schedule 3.3, are owned by the Company or a Company Subsidiary free and clear
of any Liens. Each Company Subsidiary is in good standing under the laws of the
jurisdiction in which it is incorporated or organized, and is duly qualified to
do business and in good standing in each jurisdiction (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified, except where the failure to be duly
qualified would not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect on the Company. Except as set forth on Schedule
3.3, the Company does not own beneficially, directly or indirectly, any equity
securities or similar interests of any Person. Schedule 3.3 sets forth a list of
all equity securities the Company holds, directly or indirectly, and involving,
in the aggregate, ownership or control of 5% or more of any class of the
issuer's voting securities or 25% or more of the issuer's equity (treating
subordinated debt as equity); provided, that the Company is not required to list
on Schedule 3.3 any (i) securities held by it in its capacity as a broker-dealer
for the benefit of others, (ii) securities with a value of less than $250,000
held by it in its capacity as a market maker, and (iii) securities held by it
for less than thirty (30) days in its capacity as a market-maker. Schedule 3.3
lists or describes in reasonable detail all partnership, joint ventures or
similar entities, in which the Company owns or controls an interest, directly or
indirectly.
3.4 Corporate Authority. The Company has full corporate power and
authority to execute this Agreement and the Company Stock Option Agreement and
to consummate the transactions contemplated hereby and thereby. Subject to the
approval by its stockholders of this Agreement and the transactions contemplated
hereby, this Agreement and the Company Stock Option Agreement have been
authorized by all necessary corporate action of the Company and each is a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms.
3.5 No Violation. Except as set forth on Schedule 3.5, the execution,
delivery and performance of this Agreement and the Company Stock Option
Agreement and the consummation by the Company of the transactions contemplated
hereby and thereby, does not and will not (i) violate or conflict with the
Certificate of Incorporation or by-laws or other organizational documents of the
Company or of any Company Subsidiary and (ii) assuming that the consents and
approvals referred to in Section 3.6 are duly obtained (a) violate, conflict
with, or result in a breach of any of the provisions of, or constitute a default
(or an event which, with notice of lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration, or the
creation of any Lien upon any of the properties or assets of the Company or any
Company Subsidiary under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company or any Company Subsidiary is a
party or by which the Company or any Company Subsidiary may be bound, or to
which the Company or any Company Subsidiary or any of their respective
properties or assets may be subject, or (b) violate any judgment, ruling, order,
writ, injunction, decree, statute, rule or regulation applicable to the Company
or any Company Subsidiary or any of their respective properties or assets other
than violations, conflicts, breaches, defaults, terminations, accelerations, or
Lien creations which would not be reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on the Company or prevent the
consummation of the transactions contemplated by this Agreement or the Company
Stock Option Agreement.
3.6 Consent and Approvals. Other than in connection with (a) the HSR
Act, (b) the Securities Act, (c) the Exchange Act, (d) the securities laws of
any federal, state, local or foreign jurisdiction, and except as set forth on
Schedule 3.6, no consent, approval or authorization of, or registration,
qualification or filing with any federal, state, local or foreign Regulatory
Agency or other Person is required to be made by the Company in connection with
the execution, delivery or performance by the Company of this Agreement or the
Company Stock Option Agreement or the consummation by the Company of the
transactions contemplated hereby or thereby, other than consents, approvals,
authorizations, registrations, qualifications or filings, the failure of which
to obtain or make would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company or prevent the consummation
of the transactions contemplated by this Agreement or the Company Stock Option
Agreement.
<PAGE>
3.7 Company Reports. Except as set forth on Schedule 3.7, the Company
and each Company Subsidiary has in all material respects timely filed all
reports, registrations, statements, and other filings, together with any
amendments required to be made with respect thereto, that were required to be
filed since December 31, 1994 with any Regulatory Agency, including, without
limitation, the SEC or the NASD (all such reports and statements, including the
financial statements, exhibits and schedules thereto, being collectively
referred to herein as the "Company Reports"), including, without limitation, all
reports, registrations, statements and filings required under the Securities
Act, the Exchange Act or any applicable state securities or "blue sky" laws, and
has paid all fees and assessments payable in connection therewith. As of their
respective dates, except as and to the extent amended or modified on a
subsequent date prior to the date of this Agreement, each of the Company Reports
complied in all material respects with the statutes, rules, regulations and
orders enforced or promulgated by the Regulatory Agency (including the SEC or
the NASD) with which they were filed and did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
<PAGE>
3.8 Financial Statements. The Company has previously made available
to Bancorp copies of (a) the consolidated balance sheets of the Company and the
Company Subsidiaries as of December 31 for the fiscal years 1995 and 1996, and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for the fiscal years then ended, as reported in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Company 1996 Form 10-K") filed with the SEC under the Exchange Act, in each
case accompanied by the audit report of Deloitte & Touche, LLP, independent
public accountants with respect to the Company and (b) the unaudited
consolidated balance sheet of the Company and the Company Subsidiaries as of
September 30, 1997 and related consolidated statements of income, changes in
stockholders' equity and cash flows for the nine months then ended as reported
in the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1997 (collectively, the "Company Financial Statements"). The December 31,
1996 and the September 30, 1997 consolidated balance sheets of the Company
(including the related notes, where applicable) fairly present in all material
respects (subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount) the consolidated financial position of
the Company and the Company Subsidiaries as of the respective dates thereof, and
the other Company Financial Statements referred to in this Section 3.8, and any
Company Financial Statements filed by the Company with the SEC under the
Exchange Act after the date of this Agreement (including the related notes,
where applicable) will fairly present in all material respects (subject, in the
case of the unaudited statements, to recurring audit adjustments normal in
nature and amount) the results of the consolidated operations and changes in
stockholders' equity and consolidated financial position of the Company and the
Company Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth. Each of such Company Financial Statements (including
the related notes, where applicable) complies in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, and each of the Company Financial Statements
(including the related notes, where applicable) has been prepared in accordance
with generally accepted accounting principles consistently applied ("GAAP")
during the periods involved except, in each case, as indicated in such Company
Financial Statements or in the notes thereto. The books and records of the
Company and the Company Subsidiaries have been, and are being, maintained in
accordance with GAAP and any other applicable legal and accounting requirements.
3.9 Absence of Undisclosed Liabilities. Except as disclosed in the
Company Financial Statements, or as set forth on Schedule 3.9, neither the
Company nor any of the Company Subsidiaries has any obligation or liability
(contingent or otherwise), including liabilities under Environmental Laws (as
hereinafter defined), that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on the Company.
3.10 Absence of Certain Changes. The business of the Company and the
Company Subsidiaries has been conducted in the ordinary and usual course,
consistent with past practice, and there has not been: (1) since December 31,
1996, any event, occurrence, development or state of circumstances or facts
which has had or could reasonably be expected to constitute or result in a
Material Adverse Effect on the Company; or (2) since September 30, 1997, except
as set forth on Schedule 3.10 or in the Company Reports, any event, occurrence,
development or state of circumstances or facts which would result in a violation
of the covenants set forth in Section 5.1 of this Agreement had such events,
occurrences, developments or state of circumstances or facts occurred after the
date hereof.
3.11 Properties; Securities. Except as specifically reserved against
or otherwise disclosed in the Company Financial Statements (including the
related notes and schedules thereto) and except for those properties and assets
that have been sold or otherwise disposed of in the ordinary course of business,
and except as set forth on Schedule 3.11, the Company and the Company
Subsidiaries have good and marketable title, free and clear of all Liens to all
of the properties and assets, tangible or intangible, reflected in the Company
Financial Statements as being owned by the Company or the Company Subsidiaries
as of the dates thereof, other than those Liens that, individually or in the
aggregate, are not reasonably like to have a Material Adverse Effect on the
Company. The Company and the Company Subsidiaries do not, directly or
indirectly, control any real property not used in the ordinary course of their
business, except as set forth on Schedule 3.11. All buildings and all fixtures,
equipment and other property and assets which are held under leases or subleases
by any of the Company or the Company Subsidiaries are held under valid leases or
subleases enforceable in accordance with their respective terms. The properties
and assets now owned, leased or used by the Company and the Company Subsidiaries
are sufficient and adequate to carry on their businesses as presently conducted.
Except as set forth on Schedule 3.11 or reflected on the Company Financial
Statements, each of the Company and the Company Subsidiaries has good and
marketable title to all securities held by it (except securities sold under
repurchase agreements or held in any fiduciary or agency capacity), free and
clear of any Lien. Such securities are valued on the books of the Company or the
Company Subsidiaries in accordance with GAAP.
<PAGE>
3.12 Litigation; Regulatory Action.
(a) Except as set forth on Schedule 3.12(a) or in the Company
Reports, (1) no litigation, proceeding or controversy ("Litigation") before any
court, arbitrator, mediator or Regulatory Agency is pending against the Company
or any of the Company Subsidiaries and, to the Company's knowledge, no such
Litigation has been threatened; (2) neither the Company nor any of the Company
Subsidiaries nor any of their respective properties is a party to or is subject
to any order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission to, any
Regulatory Agency charged with the supervision or regulation of broker-dealers,
securities underwriting or trading, stock exchanges, commodities exchanges, or
insurance agents and brokers (including, without limitation, the SEC, the NYSE,
the NASD, or any other Self-Regulatory Body) or the supervision or regulation of
the Company or any of the Company Subsidiaries; and (3) neither the Company nor
any of the Company Subsidiaries has received any notice (whether or not in
writing) from any Regulatory Agency (i) that the Company or any Company
Subsidiary has or may have violated any of the statutes, rules, regulations, or
ordinances which such Regulatory Agency enforces, or has otherwise engaged in
any unlawful business practice, (ii) threatening to revoke any license,
franchise, permit, seat on any stock or commodities exchange, or governmental
authorization, (iii) requiring any of them (including any of the Company's or
the Company Subsidiary's, directors or controlling persons) to enter into a
cease and desist order, agreement, or memorandum of understanding (or requiring
the board of directors thereof to adopt any resolution or policy), (iv)
restricting or disqualifying the activities of the Company or any of the Company
Subsidiaries (except for restrictions generally imposed by rule, regulation or
administrative policy on broker-dealers generally) or (v) in any manner relating
to its capital adequacy, its management or its business. Set forth on Schedule
3.12(a) is a true and complete list, as of the date hereof, of all Litigation
affecting the Company, its assets or its officers or directors (to the extent
the Company might be obligated to provide indemnification with respect thereto)
pending or threatened arising out of any state of facts relating to the sale of
securities or investment products by the Company, the Company Subsidiaries or
any employees thereof (including, without limitation, equity or debt securities,
mutual funds, insurance contracts, annuities, partnership and limited
partnership interests, interests in real estate, investment banking services,
securities underwritings in which the Company or any Company Subsidiaries was a
manager, co-manager, syndicate member or distributor, Derivatives Contracts (as
hereinafter defined) or structured notes).
(b) Except as disclosed in Schedule 3.12(b), and except for
normal examinations conducted by a Regulatory Agency in the regular course of
the business of the Company and the Company Subsidiaries, no Regulatory Agency
has initiated any proceeding or, to the knowledge of the Company, investigation
into the business or operations of the Company or any Company Subsidiary since
December 31, 1994. Except as set forth on Schedule 3.12(b), there is no material
unresolved violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of the Company
or any Company Subsidiary.
<PAGE>
3.13 Compliance with Laws. Except as set forth on Schedule 3.13, the
Company and each of the Company Subsidiaries and their respective officers and
employees: (a) in the conduct of its business (including, without limitation,
its municipal securities and NASDAQ market-making activities) is in compliance
in all material respects with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto or to the employees conducting such businesses, and the rules
of all Self-Regulatory Bodies applicable thereto; (b) has all permits, licenses,
authorizations, orders and approvals of, and has made all filings, applications
and registrations with, all Regulatory Agencies that are required in order to
permit them to own and operate their businesses as presently conducted; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect and, to the Company's knowledge, no suspension or cancellation
of any of them is threatened or reasonably likely; and all such filings,
applications and registrations are current; and (c) is not aware of any pending
or threatened investigation, review or disciplinary proceedings by any
Regulatory Agency against the Company, any Company Subsidiary or any officer,
director or employee thereof.
3.14 Registrations. Except as set forth on Schedule 3.14, neither the
Company, nor any of the Company Subsidiaries or Affiliates of the Company, is
subject to regulation under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), or the Investment Advisors Act of 1940, as amended
(the "Investment Advisors Act"). The Company and the Company Subsidiaries and
each of their employees which are or who are required to be registered as a
broker/dealer, a registered representative, an insurance agent or a sales person
with the SEC, the securities commission of any state or foreign jurisdiction or
any Self-Regulatory Body are duly registered as such and in good standing and
such registrations are in full force and effect. All federal, state and foreign
registration requirements have been complied with and such registrations as
currently filed, and all periodic reports required to be filed with respect
thereto, are accurate and complete in all material respects.
3.15 Material Contracts.
<PAGE>
(a) Except as set forth on Schedule 3.15(a), neither the
Company nor any Company Subsidiary is a party to or bound by any contract,
arrangement, commitment or understanding (each a "Contract") (i) with respect to
the employment of any directors, executive officers, key employees or material
consultants, (ii) which is a "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K promulgated by the SEC under the Securities
Act) that has not been filed or incorporated by reference in the Company
Reports, (iii) which contains any material non-competition or exclusivity
provisions with respect to any business or geographic area in which business is
conducted with respect to the Company or any Company Subsidiary or which
restricts the conduct of any business by the Company or any Company Subsidiary
or any geographic area in which the Company or any Company Subsidiary may
conduct business or requires exclusive referrals of any business, (iv) with or
to a labor union or guild (including any collective bargaining agreement), (v)
under which any of the benefits of any other party thereto will be increased, or
the vesting of the benefits of any other party thereto will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of any other party thereto will be calculated on
the basis of any of the transactions contemplated by this Agreement or (vi)
which would prohibit or materially delay the consummation of the Merger or any
of the transactions contemplated by this Agreement. The Company has previously
made available to Bancorp true and correct copies of all employment, severance
and deferred compensation agreements with executive officers, key employees or
material consultants to which the Company or any Company Subsidiary is a party,
all of which are listed on Schedule 3.15(a). Each Contract of the type described
in this Section 3.15(a), whether or not set forth on Schedule 3.15(a), is
referred to herein as a "Company Contract", and neither the Company nor any
Company Subsidiary knows of, or has received notice of, any violation of any
Company Contract by any of the other parties thereto. Except as set forth on
Schedule 3.15(a), neither the Company nor any of the Company Subsidiaries is in
material default under any Company Contract to which it is a party, by which its
respective assets, business, or operations may be bound or affected, or under
which it or its respective assets, business, or operations receives benefits and
there has not occurred any event that with the lapse of time or the giving of
notice or both, would constitute such a material default. Except as set forth on
Schedule 3.15(a), there are no Contracts between any Affiliate of the Company,
on the one hand, and the Company or any Company Subsidiary, on the other hand.
(b) The Company and each of the Company Subsidiaries is in
compliance in all material respects with the terms of each Contract with any
Person to whom the Company or any Company Subsidiary provides services (a
"Client"), and each such Contract is in full force and effect with respect to
the applicable Client. Each extension of credit by the Company or any of the
Company Subsidiaries to any Client (i) is in full compliance with Regulation T
of the Federal Reserve Board or any substantially similar regulation of any
Regulatory Agency, (ii) is fully secured, and (iii) the Company or a Company
Subsidiary, as the case may be, has a first priority perfected security interest
in the collateral securing such extension.
3.16 No Brokers. Neither the Company nor any Company Subsidiary nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or the transactions contemplated by this Agreement.
It shall not be deemed a breach of this Section 3.16 for the Company to employ
an investment banking firm to provide a fairness opinion in connection with the
transactions contemplated by this Agreement.
3.17 Employee Benefit Plans.
<PAGE>
(a) Set forth on Schedule 3.17(a) is a complete list of all
bonus, deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted stock
and stock option plans, all employment or severance contracts, all medical,
dental, health and life insurance plans, all other employee benefit plans,
contracts or arrangements and any applicable "change of control" or similar
provisions in any plan, contract or arrangement maintained or contributed to by
the Company or any of the Company Subsidiaries for the benefit of employees,
former employees, directors or former directors of the Company or any of the
Company Subsidiaries or their beneficiaries (the "Compensation and Benefit
Plans"). True and complete copies of all Compensation and Benefit Plans,
including, but not limited to, any trust instruments and/or insurance contracts,
if any, forming a part thereof, and all amendments thereto have been supplied to
Bancorp.
(b) All "employee benefit plans" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than "multiemployer plans" within the meaning of Section 3(37)
of ERISA ("Multiemployer Plans"), covering employees or former employees of the
Company and the Company Subsidiaries (the "ERISA Plans"), to the extent subject
to ERISA, comply, in all material respects, with ERISA. Except as set forth on
Schedule 3.17(b), each ERISA Plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA ("Pension Plan") and which is
intended to be qualified, under Section 401(a) of the Code, has received,
pursuant to a request that accurately described such Pension Plan, a
determination letter to that effect from the Internal Revenue Service with
respect to all applicable statutes as enacted through 1994, and the Company is
not aware of any circumstances reasonably likely to result in the revocation of
any such favorable determination letter or that otherwise would adversely affect
the Pension Plan's qualified status under Code Section 401(a). There are no
pending, threatened or anticipated material claims (other than routine claims
for benefits) by, or on behalf of, or against any of the ERISA Plans. Neither
the Company nor any of the Company Subsidiaries has engaged in a transaction
with respect to any ERISA Plan that would subject the Company or any of the
Company Subsidiaries to a tax or penalty imposed by either Section 4975 of the
Code or Section 502(i) of ERISA in an amount which would be material to the
Company. With respect to each ERISA Plan, the transaction contemplated by this
Agreement is in compliance with ERISA and does not constitute a prohibited
transaction, within the meaning of the Code and ERISA, or an exemption from such
prohibition is available under the Code and ERISA.
(c) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of the Company
Subsidiaries with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which is
considered one employer with the Company or any Company Subsidiary under Section
4001(a)(15) of ERISA or Section 414 of the Code (an "ERISA Affiliate"). Neither
the Company nor any of the Company Subsidiaries presently contributes to a
Multiemployer Plan, nor have they contributed to such a plan within the past
five calendar years. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the past 12 months.
(d) All contributions required to be made under the terms of
any ERISA Plan have been timely made. Neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA. Neither the Company nor any of the Company
Subsidiaries has provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
<PAGE>
(e) Under each Pension Plan which is a single-employer plan,
as of the last day of the most recent plan year, the actuarially determined
present value of all "benefit liabilities", within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions
contained in the plan's most recent actuarial valuation) did not exceed the then
current value of the assets of such Plan, and there has been no material change
in the financial condition of such plan since the last day of the most recent
plan year.
(f) Neither the Company nor any of the Company Subsidiaries
has any obligations for retiree health and life benefits under any plan, except
as set forth on Schedule 3.17(f). There are no restrictions on the rights of the
Company or any of the Company Subsidiaries to amend or terminate any such Plan
without incurring any liability thereunder.
(g) Except as set forth on Schedule 3.17(g), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of the Company or any of
the Company Subsidiaries under any Compensation and Benefit Plan or otherwise
from the Company or any of the Company Subsidiaries, (ii) increase any benefits
otherwise payable under any Compensation and Benefit Plan, (iii) result in any
acceleration of the time of payment or vesting of any such benefit, or (iv)
result in the imposition to the recipient of any excise tax pursuant to Section
4999 of the Code.
3.18 No Knowledge. The Company knows of no reason why the regulatory
approvals referred to in Section 6.1(b) should not be obtained without the
imposition of any condition of the type referred to in such Section 6.1(b).
<PAGE>
3.19 Labor Relations. Each of the Company and the Company
Subsidiaries is in compliance with all currently applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, including, without limitation, the Immigration Reform and
Control Act, the Worker Adjustment and Retraining Notification Act, any such
laws respecting employment discrimination, disability rights or benefits, equal
opportunity, plant closure issues, affirmative action, workers' compensation,
employee benefits, severance payments, labor relations, employee leave issues,
wage and hour standards, occupational safety and health requirements and
unemployment insurance and related matters. Neither the Company nor any of the
Company Subsidiaries is engaged in any unfair labor practice and there is no
unfair labor practice complaint pending or threatened against the Company or any
of the Company Subsidiaries before the National Labor Relations Board. Neither
the Company nor any of the Company Subsidiaries is a party to, or is bound by,
any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is the Company or
any of the Company Subsidiaries the subject of a proceeding asserting that it or
any such Company Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel the Company or
such Company Subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor dispute
involving the Company or any of the Company Subsidiaries pending or, to the
Company's knowledge, threatened, nor is the Company aware of any activity
involving its or any of the Company Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
3.20 Insurance. The Company and the Company Subsidiaries are insured
with reputable insurers against such risks and in such amounts as the management
of the Company reasonably has determined to be prudent in accordance with
industry practices. All of the insurance policies, binders, or bonds maintained
by the Company or the Company Subsidiaries are in full force and effect; the
Company and the Company Subsidiaries are not in default thereunder; and all
claims thereunder have been filed in due and timely fashion. Set forth on
Schedule 3.20 is a list of all insurance policies maintained by or for the
benefit of the Company or the Company Subsidiaries or their directors, officers,
employees or agents.
3.21 Affiliates. Except as set forth on Schedule 3.21, there is no
person who, as of the date of this Agreement, may be deemed to be an Affiliate
of the Company.
3.22 State Takeover Laws; Certificate of Incorporation. The Company
has taken all necessary action to exempt the Merger, this Agreement, the Company
Stock Option Agreement and the transactions contemplated hereby and thereby
from, and the Merger, this Agreement, the Company Stock Option Agreement and the
transactions contemplated hereby and thereby are exempt from (a) any applicable
state takeover laws, including, without limitation, the provisions of Sections
14A:10A-1 through 14A:10A-6 of the New Jersey BCA, (b) any applicable takeover
provisions in the Company's Certificate of Incorporation or By-laws, and (c) any
takeover provisions set forth in any Contract to which the Company is a party or
may be bound.
3.23 Environmental Matters. The Company and the Company Subsidiaries
have obtained and maintained in effect all material licenses, permits and other
authorizations required under all applicable laws, regulations and other
requirements of governmental or regulatory authorities relating to pollution or
to the protection of the environment ("Environmental Laws") and is in compliance
in all material respects with all Environmental Laws and with all such licenses,
permits and authorizations. There are no legal, administrative, arbitral or
other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that could reasonably result in the imposition, on
the Company or any Company Subsidiary, of any material liability or obligation
arising under common law or under any local, state or federal Environmental Law
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), pending or
threatened against the Company or any Company Subsidiary. To the knowledge of
the Company, there is no reasonable basis for any such proceeding, claim, action
or governmental investigation.
<PAGE>
3.24 Taxes. Except as set forth on Schedule 3.24, (a) all federal,
state, local or foreign income, gross receipts, windfall profits, severance,
property, production, sales, use, license, excise, franchise, employment,
premium, recording, documentary, documentary stamp, real estate transfer,
transfer, back-up withholding or similar taxes, together with any interest,
additions, or penalties with respect thereto (collectively "Taxes"), imposed on
the income, properties or operations of the Company or the Company Subsidiaries
have been paid in full or have been adequately reserved against on the books of
the Company or the Company Subsidiaries, (b) all reports and returns with
respect to Taxes and tax related information reporting requirements that are
required to be filed by or with respect to the Company or the Company
Subsidiaries, including without limitation consolidated federal income tax
returns of the Company and the Company Subsidiaries (collectively, the "Company
Tax Returns"), have been duly filed or requests for extensions have been filed
and have not expired, and such Company Tax Returns were true, complete and
accurate in all material respects, (c) the Company Tax Returns have been
examined by the Internal Revenue Service or the appropriate state, local or
foreign taxing authority or the period for assessment of the Taxes in respect of
which such Company Tax Returns were required to be filed has expired, (d) all
Taxes due with respect to completed and settled examinations have been paid in
full, (e) no issues have been raised by the relevant taxing authority in
connection with the examination of any of the Company Tax Returns, except as
reserved against in the Company Financial Statements prior to the date of this
Agreement, (f) no waivers of statutes of limitations have been given by or
requested with respect to any Taxes of the Company or the Company Subsidiaries
and (g) neither the Company, the Company Subsidiaries, Bancorp nor any direct or
indirect Subsidiary of Bancorp, as a consequence of the Company's actions prior
to the Effective Time, will be obligated to make a payment to an individual that
would be a "parachute payment" as such term is defined in Section 280G of the
Code without regard to whether such payment is to be performed in the future.
3.25 Derivatives. All currently outstanding exchange-traded or
over-the-counter swap, forward future, option, cap, floor or collar financial
contracts or any other similar arrangements, when (a) entered into for the
Company's account or for the account of one or more of the Company Subsidiaries
were entered into (i) in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and (ii) with
counterparties believed to be financially responsible at the time; and each of
them constitutes the valid and legally binding obligation of the Company or
Company Subsidiary, enforceable in accordance with its terms, and each of them
is in full force and effect, and (b) when entered into on behalf of the
Company's Clients, were entered into in a manner consistent with the directions
of such Clients. Neither the Company nor any Company Subsidiary nor, to the
Company's knowledge, any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement. The Company Financial
Statements disclose the value of such agreements and arrangements entered into
for the Company's account on a mark-to-market basis in accordance with GAAP and,
since December 31, 1996, there has not been a change in such value that,
individually or in the aggregate, has resulted in a Material Adverse Effect on
the Company.
<PAGE>
3.26 Accounting Controls. Each of the Company and the Company
Subsidiaries maintains systems of internal accounting controls sufficient to
provide reasonable assurances in the judgment of the Board of Directors of the
Company, that (a) all material transactions are executed in accordance with
management's general or specific authorization, (b) all material transactions
are recorded as necessary to permit the preparation of financial statements in
conformity with GAAP, (c) access to the material property and assets of the
Company and the Company Subsidiaries is permitted only in accordance with
management's general or specific authorization, and (d) the recorded
accountability for items is compared with the actual levels at reasonable
intervals and appropriate action is taken with respect to any differences.
3.27 Proprietary Rights. The Company and the Company Subsidiaries
have the right to use the names, service-marks, trademarks and other
intellectual property, including computer software applications, material to the
conduct of their business, all of which are listed on Schedule 3.27 and in the
case of such names, service-marks and trademarks, in each state of the United
States, such right of use is free and clear of any Liens, and no other person
has the right to use such names, service-marks or trademarks in any such state.
3.28 Reorganization. As of the date hereof, the Company is aware of
no reason why the Merger will fail to qualify as a reorganization under Section
368(a) of the Code.
3.29 Investment Advisory Activities. Except as set forth on Schedule
3.29, neither the Company nor any Company Subsidiary is or has been during the
past five years an "investment advisor" within the meaning of the Investment
Advisers Act, required to be registered, licensed or qualified as an investment
advisor under the Investment Advisers Act or subject to any liability or
disability by reason of any failure to be so registered, licensed or qualified.
Neither the Company nor any Company Subsidiary is or has been during the past
five years an "investment company" within the meaning of the Investment Company
Act.
3.30 Dissenters' Rights. No stockholder of the Company is entitled to
exercise or assert dissenters' or appraisal rights as a result of the Merger,
this Agreement or the transactions contemplated by this Agreement under the New
Jersey BCA or any other applicable law.
3.31 Opinion of Financial Advisor. Duff & Phelps, LLC ("Duff &
Phelps") has delivered to the board of directors of the Company its written
opinion (the "Fairness Opinion") to the effect that, as of February 9, 1998, the
Conversion Ratio to be offered to the stockholders of the Company is fair to
such stockholders from a financial point of view. The Company shall use its best
efforts to deliver or cause to be delivered to Bancorp a signed copy of the
Fairness Opinion.
3.32 Year 2000 Compliance. The Company has taken all reasonable steps
necessary to address the software, accounting and record keeping issues raised
by the Year 2000 and the Company does not expect the cost of addressing such
issues to have a Material Adverse Effect on the Company.
<PAGE>
3.33 Accuracy of Information. No representation or warranty of the
Company contained in this Agreement, and none of the statements or information
concerning the Company or the Company Subsidiaries contained in this Agreement
or the exhibits and the schedules hereto, contains or will contain any untrue
statement of a material fact nor will such representations, warranties,
covenants or statements taken as a whole omit a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP AND ACQUISITION
Bancorp hereby represents and warrants to the Company as follows:
4.1 Organization, Standing and Authority. Each of Bancorp and
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida. Bancorp is duly qualified to do
business and is in good standing in each jurisdiction (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified, except where the failure to be duly
qualified is not reasonably likely to have a Material Adverse Effect on Bancorp.
Bancorp and each of its Subsidiaries has in effect all federal, state, local,
and foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now conducted,
except for such authorizations, the absence of which is not reasonably likely to
have a Material Adverse Effect on Bancorp. Bancorp and each of its Subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own or lease all its properties and assets.
4.2 Capitalization. The authorized capital stock of Bancorp consists
of (i) 80,000,000 shares of Class A Common Stock, of which, as of the date
hereof, 15,078,072 shares were issued and outstanding and none of which were
held in treasury, (ii) 45,000,000 shares of Class B Common Stock, of which, as
of the date hereof, 10,724,265 shares were issued and outstanding and none of
which were held in treasury and (iii) 10,000,000 shares of preferred stock, par
value $.01 per share, none of which, as of the date hereof, were issued and
outstanding and none of which were held in treasury. All of the issued and
outstanding shares of Class A Common Stock and Class B Common Stock have been
duly authorized and validly issued and are fully paid, non-assessable and free
of common law, statutory or contractual preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of this Agreement,
except as set forth on Schedule 4.2, Bancorp does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, stock appreciation
rights, commitments or agreements of any character calling for the purchase or
issuance of any shares of Class A Common Stock, Class B Common Stock or any
other equity securities of Bancorp or any securities representing the right to
purchase or otherwise receive any shares of Class A Common Stock or Class B
Common Stock. Except as set forth on Schedule 4.2, there are no outstanding
contractual obligations of Bancorp or any of its Subsidiaries to repurchase,
redeem or otherwise acquire, or to register for sale, any shares of capital
stock of Bancorp. Except as set forth on Schedule 4.2, there are no outstanding
contractual obligations of Bancorp or any Subsidiary to vote or to dispose of
any shares of the capital stock of any of its Subsidiaries.
<PAGE>
4.3 Corporate Authority. Each of Bancorp and Acquisition has full
corporate power and authority to execute this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been authorized by all
necessary corporate action of Bancorp and Acquisition and is a valid and binding
agreement of each of Bancorp and Acquisition enforceable in accordance with its
terms.
4.4 No Violation . The execution, delivery and performance of this
Agreement and the consummation by Bancorp and Acquisition of the transactions
contemplated hereby, does not and will not (i) violate or conflict with the
Articles of Incorporation or by-laws or other organizational documents of
Bancorp or any of its Subsidiaries and (ii) assuming that the consents and
approvals referred to in Section 4.5 are duly obtained (a) violate, conflict
with, or result in a breach of any of the provisions of, or constitute a default
(or an event which, with notice of lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration, or the
creation of any Lien upon any of the properties or assets of Bancorp or any of
its Subsidiaries under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Bancorp or any of its Subsidiaries is a party
or by which Bancorp or any of its Subsidiaries may be bound, or to which Bancorp
or any of its Subsidiaries or any of their respective properties or assets may
be subject, or (b) violate any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to Bancorp or any Subsidiary
thereof or any of their respective properties or assets.
4.5 Consent and Approvals. Other than in connection with (a) the HSR
Act, (b) the Securities Act, (c) the Exchange Act, (d) the securities laws of
any federal, state, local or foreign jurisdiction, and except as set forth on
Schedule 4.5, no consent, approval or authorization of, or registration,
qualification or filing with any federal, state, local or foreign Regulatory
Agency or other Person is required to be made by Bancorp or Acquisition in
connection with the execution, delivery or performance by Bancorp and
Acquisition of this Agreement or the consummation by Bancorp and Acquisition of
the transactions contemplated hereby, other than consents, approvals,
authorizations, registrations, qualifications or filings, the failure of which
to obtain or make would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Bancorp or prevent the consummation of
the transactions contemplated by this Agreement.
<PAGE>
4.6 Bancorp Reports. Bancorp and each Subsidiary of Bancorp has in all
material respects timely filed all reports, registrations, statements, and other
filings, together with any amendments required to be made with respect thereto,
that were required to be filed since December 31, 1994 with any Regulatory
Agency, including, without limitation, the SEC (all such reports and statements,
including the financial statements, exhibits and schedules thereto, being
collectively referred to herein as the "Bancorp Reports"), including, without
limitation, all reports, registrations, statements and filings required under
the Securities Act, the Exchange Act or any applicable state securities or "blue
sky" laws, and has paid all fees and assessments payable in connection
therewith. As of their respective dates, except as and to the extent amended or
modified on a subsequent date prior to the date of this Agreement, each of the
Bancorp Reports complied in all material respects with the statutes, rules,
regulations and orders enforced or promulgated by the Regulatory Agency with
which they were filed and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
4.7 Financial Statements. Bancorp has previously made available to the
Company copies of (a) the consolidated statements of financial condition of
Bancorp and its Subsidiaries as of December 31 for the fiscal years 1995 and
1996, and the related consolidated statements of operations, stockholders'
equity and cash flows for the fiscal years then ended, as reported in Bancorp's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Bancorp 1996 Form 10-K") filed with the SEC under the Exchange Act, in each
case accompanied by the audit report of KPMG Pear Marwick LLP, independent
public accountants with respect to Bancorp and (b) the unaudited consolidated
statement of financial condition of Bancorp and its Subsidiaries as of September
30, 1997 and related consolidated statements of operations, stockholders' equity
and cash flows for the nine months then ended as reported in Bancorp's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997 (collectively, the
"Bancorp Financial Statements"). The December 31, 1996 and the September 30,
1997 consolidated statements of financial condition of Bancorp and its
Subsidiaries (including the related notes, where applicable) fairly present in
all material respects (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount) the consolidated
financial position of Bancorp and its Subsidiaries as of the respective dates
thereof, and the other Bancorp Financial Statements referred to in this Section
4.7, and any Bancorp Financial Statements filed by Bancorp with the SEC under
the Exchange Act after the date of this Agreement will fairly present in all
material respects (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount) the results of the
consolidated operations and changes in stockholders' equity and consolidated
financial position of Bancorp and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth. Each of such Bancorp
Financial Statements (including the related notes, where applicable) complies in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, and each of the
Bancorp Financial Statements (including the related notes, where applicable) has
been prepared in accordance with GAAP during the periods involved except, in
each case, as indicated in such Bancorp Financial Statements or in the notes
thereto.
4.8 Absence of Certain Changes. Since December 31, 1996, the business
of Bancorp and its Subsidiaries has been conducted in the ordinary and usual
course, consistent with past practice, and there has not been any event,
occurrence, development or state of circumstances or facts which has had or
could reasonably be expected to constitute or result in a Material Adverse
Effect on Bancorp.
<PAGE>
4.9 Litigation; Regulatory Action.
(a) Except as disclosed in the Bancorp Reports, neither
Bancorp nor any of its Subsidiaries is a party to any Litigation before any
court, arbitrator, mediator or Regulatory Agency which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on Bancorp
and, to Bancorp's knowledge, no such Litigation has been threatened; and neither
it nor any of its Subsidiaries or any of its or their material properties or
their officers, directors or controlling persons is a party to or is the subject
of any order, decree, agreement, memorandum or understanding or similar
arrangement with, or a commitment letter or similar submission to, any
Regulatory Agencies, which is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on Bancorp and neither it nor any
of its Subsidiaries has been advised by any Regulatory Agencies that any such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum or understanding, commitment letter or similar submission.
(b) Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of Bancorp and its Subsidiaries, no
Regulatory Agency has initiated any proceeding or, to the knowledge of Bancorp,
investigation into the business or operations of Bancorp or any of Bancorp's
Subsidiaries since December 31, 1994. There is no material unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of Bancorp or any of its Subsidiaries.
4.10 Compliance with Laws. Bancorp and each of its Subsidiaries and
their respective officers and employees (a) is in compliance in all material
respects with all applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable thereto
or to the employees conducting such businesses and (b) has all permits,
licenses, authorizations, orders and approvals of, and have made all filings,
applications and registrations with, all Regulatory Agencies that are required
in order to permit them to own and operate their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to Bancorp's knowledge, no
suspension or cancellation of any of them is threatened or reasonably likely;
and all such filings, applications and registrations are current.
4.11 No Brokers. Neither Bancorp nor any of its Subsidiaries nor any
of their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or the transactions contemplated by this Agreement.
<PAGE>
4.12 Shares Authorized. The shares of Class A Common Stock to be
issued in exchange for shares of Company Common Stock upon consummation of the
Merger in accordance with Article II of this Agreement, have been duly
authorized and, when issued in accordance with the terms of this Agreement and
in the case of shares issued upon the exercise of Company Options, the related
stock option plan, will be validly issued, fully paid and nonassessable and
subject to no preemptive rights.
4.13 Absence of Undisclosed Liabilities. Except as disclosed in the
Bancorp Financial Statements, neither Bancorp nor any of its Subsidiaries has
any obligation or liability (contingent or otherwise), including liabilities
under Environmental Laws, that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on Bancorp.
4.14 Taxes. All Taxes imposed on the income, properties or operations
of Bancorp or its Subsidiaries have been paid in full or have been adequately
reserved against on the books of Bancorp or its Subsidiaries. All reports and
returns with respect to Taxes and tax related information reporting requirements
that are required to be filed by or with respect to Bancorp or its Subsidiaries,
including without limitation consolidated federal income tax returns of Bancorp
and its Subsidiaries (collectively, the "Bancorp Tax Returns"), have been duly
filed or requests for extensions have been filed and have not expired, and such
Bancorp Tax Returns were true, complete and accurate in all material respects.
The Bancorp Tax Returns have been examined by the Internal Revenue Service or
the appropriate state, local or foreign taxing authority or the period for
assessment of the Taxes in respect of which such Bancorp Tax Returns were
required to be filed has expired. All Taxes due with respect to completed and
settled examinations have been paid in full. No issues have been raised by the
relevant taxing authority in connection with the examination of any of Bancorp
Tax Returns, except as reserved against in the Bancorp Financial Statements
prior to the date of this Agreement. No waivers of statutes of limitations have
been given by or requested with respect to any Taxes of Bancorp or its
Subsidiaries.
4.15 Reserves. As of September 30, 1997, each of the allowance for
loan losses and the reserve for OREO properties in the Bancorp Financial
Statements was adequate pursuant to GAAP, and the methodology used to compute
each of the loan loss reserve and the reserve for OREO properties complies in
all material respects with GAAP and all applicable policies of the applicable
Regulatory Agencies.
4.16 Agreements with Regulators. Except as disclosed in writing to the
Company by Bancorp prior to the date of this Agreement, neither Bancorp nor any
Bancorp Subsidiary is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution submitted to a
regulatory authority or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any Regulatory Agency which restricts materially the conduct of its business, or
in any manner relates negatively to its capital adequacy, its credit or reserve
policies or its management, nor has Bancorp been advised by any Regulatory
Agency that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission. Neither Bancorp nor any Bancorp Subsidiary is required by
Section 32 of the Federal Deposit Insurance Act to give prior notice to a
Federal banking agency of the proposed addition to an individual to its board of
directors or the employment of an individual as a senior executive officer.
<PAGE>
4.17 No Knowledge. Bancorp knows of no reason why the regulatory
approvals referred to in Section 6.1(b) should not be obtained without the
imposition of any condition of the type referred to in such Section 6.1(b).
4.18 Acquisition. Acquisition has no material liabilities or other
obligations other than those incurred or entered into in connection with this
Agreement or the transactions contemplated hereby. The authorized capital stock
of Acquisition consists of 2,500 shares of common stock, no par value, and all
issued and outstanding shares are owned solely Bancorp, free and clear of any
Liens.
4.19 Year 2000 Compliance. Bancorp has taken all reasonable steps
necessary to address the software, accounting and record keeping issues raised
by the Year 2000 and Bancorp does not expect the cost of addressing such issues
to have a Material Adverse Effect on Bancorp.
4.20 Accuracy of Information. No representation or warranty of Bancorp
contained in this Agreement, and none of the statements or information
concerning Bancorp and its Subsidiaries contained in this Agreement or the
exhibits and the schedules hereto, contains or will contain any untrue statement
of a material fact nor will such representations, warranties, covenants or
statements taken as a whole omit a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE V
COVENANTS
The Company hereby covenants to Bancorp, and Bancorp hereby covenants
to the Company, as applicable, that:
5.1 Forbearances of the Company. During the period from the date hereof
until the Effective Time, except as expressly contemplated by this Agreement,
the Company Stock Option Agreement or as set forth in Schedule 5.1, without the
prior written consent of Bancorp, the Company will not, and will cause each of
the Company Subsidiaries not to:
(a) conduct the business of the Company and the Company
Subsidiaries other than in the ordinary and usual course or fail to use its best
efforts to preserve intact their business organizations and assets and maintain
their rights, franchises and existing relations with clients, customers,
suppliers, employees and business associates, or take any action reasonably
likely to have an adverse affect upon the Company's ability to perform any of
its material obligations under this Agreement;
<PAGE>
(b) (i) adjust, split, combine or reclassify any capital
stock; (ii) make, declare or pay any dividend (except for regular cash dividends
at a rate not in excess of $.04 per share per annum on the Company Common Stock)
or make any other distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock; (iii) grant any stock appreciation rights or grant any Person any right
to acquire any shares of its capital stock; (iv) issue any additional shares of
capital stock, other than with respect to exercise of currently outstanding
Company Options or any security or obligation convertible into or exchangeable
for any shares of its capital stock; or (v) enter into any agreement,
understanding or arrangement with respect to the sale or voting of its capital
stock;
(c) enter into, amend, modify or renew any employment,
consulting, severance or similar agreements or arrangements with any director,
officer or employee of the Company or any Company Subsidiary, pay any bonus, or
grant any salary or wage increase or increase any employee benefit (including
incentive or bonus payments), except (i) for normal individual increases in
compensation to employees in the ordinary course of business consistent with
past practice, (ii) for changes that are required by applicable law, (iii) for
bonuses paid in the ordinary course of business consistent with past practice,
(iv) for employment arrangements for, or grants of awards to newly hired
employees in the ordinary course of business consistent with past practice, or
(v) for the termination of employment contracts disclosed in the disclosure
schedules to this Agreement without the need to accrue more than $50,000 per
contract pursuant to such termination;
(d) enter into, establish, adopt or amend (except as may be
required by applicable law) any pension, retirement, stock option, stock
purchase, savings, profit sharing, deferred compensation, consulting, bonus,
group insurance or other employee benefit, incentive or welfare contract, plan
or arrangement, or any trust agreement (or similar arrangement) related thereto,
in respect of any director, officer or employee of the Company or any of the
Company Subsidiaries, or take any action to accelerate the vesting or
exercisability of stock options, restricted stock or other compensation or
benefits payable thereunder;
(e) except for sales of securities or other investments or
assets in the ordinary course of business consistent with past practice, sell,
transfer, mortgage, encumber or otherwise dispose of or discontinue any of its
assets, business or properties;
(f) except for the purchase of securities or other investments
or assets in the ordinary course of business consistent with past practice, make
any material investment either by purchase of stock or securities, contributions
to capital, property transfers, or purchase of any property or assets of any
other Person other than a wholly owned Subsidiary of the Company;
(g) amend the Company's Certificate of Incorporation, by-laws
or the certificate or articles of incorporation or by-laws (or similar governing
documents) of any of the Company Subsidiaries;
(h) implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by GAAP,
provided such GAAP required changes are agreed to by the Company's independent
public accountants;
<PAGE>
(i) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material lease,
contract or agreement, or make any change in any of its material leases,
contracts or agreements, other than renewals of leases, contracts or agreements
without material changes of terms;
(j) settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually and in the aggregate for all such settlements, not more than
$50,000 and which is not reasonably likely to establish an adverse precedent or
basis for subsequent settlements;
(k) (i) take any action reasonably likely to prevent or impede
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code; or (ii) take any action that is intended or is reasonably
likely to result in (A) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (B) any of the conditions to the Merger set
forth in Article VI not being satisfied or (C) a violation of any provision of
this Agreement except, in each case, as may be required by applicable law or
regulation;
(l) other than in the ordinary course of business consistent
with past practice, incur (i) any indebtedness for borrowed money (other than
short-term indebtedness incurred to refinance existing short-term indebtedness,
and indebtedness under existing lines of credit), assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other Person, or make any loan or advance or (ii) any capital expenditures,
obligations or liabilities; and
(m) agree, commit to or enter into any agreement to take any
of the actions prohibited by this Section 5.1.
5.2 Forbearances of Bancorp. During the period from the date hereof
until the Effective Time, except as expressly contemplated by this Agreement,
without the prior written consent of the Company, Bancorp will not, and will
cause each of its Subsidiaries not to:
(a) make, declare, pay or set aside for payment any
extraordinary dividend; provided, however, the foregoing shall not apply to
increases in the quarterly dividend rate payable on the Class A Common Stock and
Class B Common Stock in the ordinary course of business consistent with past
practices or the payment of any stock dividends on such shares; and
<PAGE>
(b) (i) take any action while knowing that such action would,
or is reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code; or (ii) take
any action that is intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective Time,
(B) any of the conditions to the Merger set forth in Article VI not being
satisfied or (C) a violation of any provision of this Agreement except, in each
case, as may be required by applicable law or regulation.
5.3 Efforts. Subject to the terms and conditions of this Agreement,
each party hereto shall shall use its reasonable best efforts in good faith to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or desirable, or advisable under applicable laws, so as
to permit consummation of the Merger on the Effective Date and to otherwise
enable consummation of the transactions contemplated hereby and shall cooperate
fully with the other parties hereto to that end (it being understood that any
amendments to the Registration Statement (as hereinafter defined) or a
resolicitation of proxies as a consequence of an acquisition agreement by
Bancorp or any of its Subsidiaries shall not violate this covenant).
5.4 Registration Statement; Proxy Statement. The Company and Bancorp
shall prepare a proxy statement/prospectus (the "Proxy Statement") to be mailed
to the holders of Company Common Stock in connection with the transactions
contemplated hereby and to be filed by Bancorp in a registration statement (the
"Registration Statement") with the SEC. When the Registration Statement or any
post-effective amendment or supplement thereto shall become effective, and at
all times subsequent to such effectiveness, up to and including the date of the
Meeting (as hereinafter defined), such Registration Statement and all amendments
or supplements thereto, with respect to all information set forth therein
furnished or to be furnished by or on behalf of the Company relating to the
Company or the Company Subsidiaries and by or on behalf of Bancorp relating to
Bancorp or its Subsidiaries (A) will comply in all material respects with the
provisions of the Securities Act and the Exchange Act and any other applicable
statutory or regulatory requirements, and (B) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading; provided, however, in no event shall any party hereto be liable for
any untrue statement of a material fact or omission to state a material fact in
the Registration Statement made in reliance upon, and in conformity with,
written information concerning another party furnished by or on behalf of such
other party specifically for use in the Registration Statement.
5.5 Registration Statement Effectiveness. Bancorp will advise the
Company, promptly after Bancorp receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed (after providing drafts in advance to the Company and its counsel for
review and comment), of the issuance of any stop order or the suspension of the
qualification of the Class A Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
<PAGE>
5.6 Company Stockholder Approval. The Company shall take all such
action as may be necessary to call, notice and convene as promptly as
practicable a meeting of its stockholders (the "Meeting") to consider and vote
upon the Merger, this Agreement and the transactions contemplated hereby. The
Board of Directors of the Company has determined that the Merger is advisable
and in the best interests of the Company and its stockholders and shall
recommend in the Proxy Statement and otherwise that the Company's stockholders
approve the Merger, this Agreement, and the transactions contemplated hereby,
and otherwise use its best efforts to obtain stockholder approval of the Merger,
this Agreement, and the transactions contemplated hereby; provided that said
Board of Directors shall not be obligated to make such recommendation if the
Company shall have received an offer for a Competing Transaction that the Board
of Directors, after consultation with its outside legal counsel and financial
advisors, determines in good faith is more favorable to the stockholders of the
Company from a financial point of view than the transaction contemplated by this
Agreement.
5.7 Press Releases. The parties agree to reasonably cooperate in
issuing any press release or other public announcement (including any filings
made with the SEC) concerning this Agreement or the transactions contemplated
hereby. Nothing contained herein shall prevent any party from at any time
furnishing any information to any governmental authority which it is by law or
otherwise so obligated to disclose or from making any disclosure which its
counsel deems necessary or advisable in order to fulfill such party's disclosure
obligations under applicable law or the rules of the NYSE or NASDAQ; provided,
such party uses good faith efforts to notify the other party about such pending
disclosure and gives the other party a reasonable opportunity to cooperate in
preparing such disclosure.
5.8 Access; Information. Upon reasonable notice, the Company and
Bancorp shall each afford the other and its officers, employees, counsel,
accountants and other authorized representatives access, during normal business
hours throughout the period prior to the Effective Date, to all of its
properties, books, contracts, data processing system files, commitments and
records and, during such period, shall furnish promptly to the other (A) a copy
of each material report, schedule and other document filed by it and its
Subsidiaries with any Regulatory Agency, and (B) other than confidential client
or customer information which a party is prohibited from disclosing, all other
information concerning its business, properties and personnel as the other may
reasonably request, provided that no investigation pursuant to this Section 5.8
shall affect or be deemed to modify or waive any representation or warranty made
hereunder or the conditions to the obligations of either party to consummate the
transactions contemplated by this Agreement. Neither party will use any
information obtained pursuant to this Section 5.8 for any purpose unrelated to
the consummation of the transactions contemplated by this Agreement and, if this
Agreement is terminated, each party will hold all information and documents
obtained pursuant to this paragraph in confidence unless and until such time as
such information or documents become publicly available other than by reason of
any action or failure to act by such party or as it is advised by counsel in
writing that any such information or document is required by law or applicable
published stock exchange rule to be disclosed, and in the event of the
termination of this Agreement, such party will, upon request by the other,
deliver to the other all documents so obtained by it or destroy such documents.
<PAGE>
5.9 Acquisition Proposals. The Company shall not, directly or
indirectly, and shall instruct its officers, directors, employees, Subsidiaries,
agents or advisors or other representatives (including, without limitation, any
investment banker, attorney or accountant retained by it), not to, directly or
indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing nonpublic information), or take any other action knowingly to
facilitate, any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to its stockholders) that constitutes,
or may reasonably be expected to lead to, any Competing Transaction (as defined
below), or enter into or maintain or continue discussions or negotiate with any
person in furtherance of such inquiries or to obtain a Competing Transaction, or
agree to or endorse any Competing Transaction, or authorize or permit any of the
officers, directors or employees of the Company or any of the Company
Subsidiaries, or any investment banker, financial advisor, attorney, accountant
or other representative retained by the Company or any of the Company
Subsidiaries, to take any such action; provided, however, that nothing contained
in this Section 5.9 shall prohibit the Board of Directors of the Company from
furnishing information to, or entering into discussions or negotiations with,
any person in connection with an unsolicited proposal by such person to acquire
the Company pursuant to a merger, consolidation, share exchange, tender offer,
exchange offer, business combination or other similar transaction or to acquire
all or substantially all of the assets of the Company or any of the Company
Subsidiaries, if, and only to the extent that, (i) such Board of Directors,
after consultation with outside legal counsel, determines in good faith that
such action is required for such Board of Directors to comply with its duties to
its stockholders imposed by applicable law and (ii) prior to furnishing such
information to, or entering into discussions or negotiations with, such person,
such party uses all reasonable efforts to obtain from such person an executed
confidentiality agreement. The Company shall notify Bancorp promptly if any
proposal or offer, or any inquiry or contact with any person with respect
thereto, regarding a Competing Transaction is made. For purposes of this
Agreement, "Competing Transaction" shall mean any of the following involving the
Company or any of the Company Subsidiaries: (i) any merger, consolidation, share
exchange, business combination, or other similar transaction (other than the
transactions contemplated by this Agreement and the Cumberland Transaction);
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition
outside the ordinary course of business of 15% or more of the assets of the
Company and the Company Subsidiaries, taken as a whole, in a single transaction
or series of transactions; (iii) any tender offer or exchange offer for 15% or
more of the outstanding shares of capital stock of the Company or the filing of
a registration statement under the Securities Act in connection therewith; (iv)
any Person shall have acquired beneficial ownership or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder)
shall have been formed which beneficially owns or has the right to acquire
beneficial ownership of, 40% or more of the then outstanding shares of capital
stock of the Company; (v) any public announcement of a proposal, plan or
intention to do any of the foregoing; provided, however, that for purposes of
this Agreement and the Company Stock Option Agreement, none of the foregoing
transactions or actions shall be deemed to constitute a Competing Transaction
unless such transaction or action was initiated, or initial discussions or
communications with respect thereto were initiated, prior to the termination of
this Agreement.
5.10 Blue-Sky Filings. Bancorp shall use its reasonable efforts to
obtain all necessary state securities laws or "blue sky" permits and approvals,
provided that Bancorp shall not be required by virtue thereof to submit to
general jurisdiction in any state.
<PAGE>
5.11 State Takeover Laws; Certificate of Incorporation. The Company
shall not take any action that would cause the transactions contemplated by this
Agreement to be subject to any applicable state takeover statute and the Company
shall take all necessary steps to exempt (or ensure the continued exemption of)
the transactions contemplated by this Agreement from (A) any applicable state
takeover law, as now or hereafter in effect, including, without limitation,
Sections 14A:10A-1 through 14A:10A-6 of the New Jersey BCA, (B) any applicable
takeover provisions in the Company's Certificate of Incorporation or By-laws,
and (C) any takeover provisions set forth in any agreement to which the Company
is a party or may be bound.
5.12 Affiliate Agreements. The Company will cause each person who may
be deemed by the Company to be an Affiliate of the Company (for purposes of Rule
145 under the Securities Act) to execute and deliver to Bancorp, as soon as
practicable after the date of this Agreement, and before the mailing of the
Proxy Statement for the Meeting, an agreement in the form attached hereto as
Exhibit B restricting the disposition of the shares of Class A Common Stock to
be received by such Affiliate in exchange for such Affiliate's shares of Company
Common Stock except in compliance with the applicable provisions of the
Securities Act and the rules and regulations thereunder. The Company represents
and warrants that Schedule 5.12 sets forth a list of all persons who, as of the
date of this Agreement, are Affiliates of the Company.
5.13 Shares Listed. Bancorp shall use its reasonable best efforts to
list, prior to the Effective Date, on the NYSE, upon official notice of
issuance, the shares of Class A Common Stock to be issued to the holders of
Company Common Stock pursuant to this Agreement.
5.14 Regulatory Applications. The parties hereto shall cooperate with
each other and use their reasonable best efforts to promptly prepare and file
all necessary documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable all permits, consents, approvals
and authorizations of all third parties and Regulatory Agencies which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger), and to comply fully with
the terms and conditions of all such permits, consents, approvals and
authorizations of all Regulatory Agencies. The parties hereto shall have the
right to review in advance, and, to the extent practicable, each will consult
the other on, in each case subject to applicable laws relating to the exchange
of information, all the information relating to the Company or Bancorp, as the
case may be, and any of their respective Subsidiaries, which appear in any
filing made with, or written materials submitted to, any third party or any
Regulatory Agency in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Regulatory
Agencies necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
<PAGE>
5.15 Current Information.
(ai During the period from the date of this Agreement to the
Effective Date, each of the Company and Bancorp shall, and shall cause its
representatives to, confer on a regular and frequent basis with representatives
of the other.
(bi The Company shall promptly notify Bancorp of (1) any
material change in the business or operations of the Company or any Company
Subsidiary, (2) any material complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any Regulatory
Agency relating to the Company or any Company Subsidiary, (3) the institution or
the threat of material Litigation involving or relating to the Company or any
Company Subsidiary, or (4) any event or condition that might be reasonably
expected to cause any of the Company's representations or warranties set forth
herein not be true and correct as of the Effective Time or prevent the Company
from fulfilling its obligations hereunder; and in each case shall keep Bancorp
informed with respect thereto.
(ci Bancorp shall (1) promptly notify the Company of any event
or condition that might reasonably be expected to cause any of Bancorp's
representations or warranties set forth herein not to be true and correct as of
the Effective Time or prevent Bancorp from fulfilling its obligations hereunder
and (2) notify the Company immediately of any denial of any application filed by
Bancorp with any Regulatory Agency with respect to this Agreement, and in each
case shall keep the Company informed with respect thereto.
5.16 ESOP Termination. The Company shall take all steps necessary to
terminate the Company's Employee Stock Ownership Program (the "ESOP") effective
at or prior to the Effective Time. The termination of the ESOP shall be in
accordance with all applicable laws, statutes and regulations, including,
without limitation, ERISA, and shall not subject the Company or Bancorp to any
material obligation or liability.
5.17 Incentive Plan.
(a) Retention Pool. At the Effective Time, Bancorp will
establish a retention pool (the "Retention Pool") consisting of restricted
shares of Class A Common Stock to be used to retain key employees of the
Company. The value of the shares which will be dedicated to the Retention Pool
shall be equal to 20% of the aggregate of the value of the shares of Class A
Common Stock issued in the Merger (excluding options issued in the Merger in
exchange for other options and excluding shares of Class A Common Stock issued
in the Merger in exchange for shares of Company Common Stock which were issued
by the Company after the date of this Agreement) and the value of the shares
dedicated to the Retention Pool. As used in the previous sentence, the "value"
of the number of shares of Class A Common Stock shall be equal to the Average
Price multiplied by the number of shares. The individuals eligible for inclusion
in the Retention Pool and the respective allocations will be determined by the
management of the Company, in consultation with and subject to the approval of
Bancorp, prior to the Effective Time.
<PAGE>
(b) Vesting. The shares of Class A Common Stock in the
Retention Pool shall vest on the fourth anniversary of the Effective Date
subject to the conditions and upon the terms and as set forth in Exhibit C
hereto.
(c) Eligibility. Eligibility to participate in the Retention
Pool shall require an individual to be employed by the Company as of the vesting
date and subject to the terms and conditions set forth in Exhibit C hereto.
(d) Adjustment. If an employee of the Company who has been
selected to participate in the Retention Pool shall forfeit the right to receive
shares of Class A Common Stock thereunder, as set forth in Exhibit C, the shares
allocated to that individual shall be cancelled and the number of shares of
Class A Common Stock in the Retention Pool shall be adjusted accordingly.
5.18 Indemnification/Liability Coverage.
(a) For six years after the Effective Date, or for such longer
period as contemplated by any applicable statute of limitations, Bancorp shall,
and shall cause the Surviving Corporation to, indemnify, defend and hold
harmless the present and former directors and executive officers of the Company
and the Company Subsidiaries (each, an "Indemnified Party"), against all
liabilities and expenses (including, without limitation, professional fees and
disbursements, investigation and other costs, settlements and judgments) arising
out of, or asserted or incurred in connection with any claim, action, suit,
investigation or proceeding (including any proceeding by or in the right of the
Company, or the Surviving Corporation as statutory successor to the Company)
alleging, (i) actions or omissions occurring at or prior to the Effective Date
(including, without limitation, actions or omissions in connection with the
transactions contemplated by this Agreement) and (ii) actions or omissions
occurring after the Effective Date in connection with the transactions
contemplated by this Agreement in either case (whether (i) or (ii)) to the
fullest extent that the Indemnified Parties would be entitled to indemnification
under the New Jersey BCA and the Company's Certificate of Incorporation and
Bylaws as in effect on the date hereof. In furtherance and not in limitation of
the foregoing, as of the Effective Date, Bancorp shall, and shall cause the
Surviving Corporation to, assume and reaffirm each of the existing
Indemnification Agreements (the "Indemnification Agreement") between the Company
and its present and former directors and certain executive officers (each of
which is listed on Schedule 5.18 and copies of which have been previously
delivered to Bancorp). Notwithstanding anything herein to the contrary,
Bancorp's and the Surviving Corporation's aggregate obligation pursuant to this
indemnity (including amounts paid under available insurance coverage) shall not
exceed $35,000,000.
<PAGE>
(b) Bancorp shall use its reasonable best efforts to maintain
the Company's existing directors' and officers' liability insurance policy (or a
policy, including Bancorp's existing policy, providing comparable coverage
amount on terms no less favorable) covering persons who are currently covered by
such insurance for a period of three years after the Effective Date; provided,
that Bancorp shall not be obligated to make an annual premium payment in respect
to such policy (or replacement policy) which exceeds, for the portion related to
the Company's directors and officers, 150% of the annual premium payment on the
Company' current policy in effect as of the date of this Agreement; provided,
further, that if such coverage can only be obtained upon the payment of an
annual premium in excess of 150% of the annual premium payment of the Company's
current policy, Bancorp shall obtain such coverage as can reasonably be obtained
by paying a premium of 150% of the annual premium payment of the Company's
current policy in effect as of the date of this Agreement.
(c) Any Indemnified Party wishing to claim indemnification
under Section 5.18(a), upon learning of such claim, action, suit, proceeding or
investigation, shall promptly notify Bancorp thereof; provided, that the failure
so to notify shall not affect the obligations of Bancorp and the Surviving
Corporation under Section 5.18(a), unless such failure materially increases
Bancorp and the Surviving Corporation's liability under such Section. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Date and subject to the terms of the
relevant Indemnification Agreement), (1) Bancorp or the Surviving Corporation
shall have the right to assume the defense thereof, if it so elects, and the
Surviving Corporation shall pay all reasonable fees and expenses of counsel for
the Indemnified Parties promptly as statements therefor are received; provided,
however, that if Bancorp or the Surviving Corporation does not elect to assume
the defense thereof, the Indemnified Parties shall have the right to employ its
or their own counsel and Bancorp or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel; provided further, however, that
Bancorp and the Surviving Corporation shall be obligated pursuant to this
subsection (c) to pay for only one firm of counsel for all Indemnified Parties
in any jurisdiction for any single action, suits or proceedings arising out of
or related to a common body of facts, (2) the Indemnified Parties will cooperate
in the defense of any such matter, and (3) Bancorp and the Surviving Corporation
shall not be liable for any settlement effected without the prior written
consent of Bancorp. The provisions of this Section 5.18(c) shall not alter,
impair or be in derogation of the rights of the Company's present and former
directors and executive officers who were a party to an Indemnification
Agreement under their existing Indemnification Agreements with the Company, all
of which shall remain in effect and be assumed or affirmed, as the case may be,
by the Surviving Corporation and Bancorp as of the Effective Date in accordance
with and subject to Section 5.18(a).
5.19 SEC Filings. Each of the Company and Bancorp shall timely file all
reports on Form 10-K, Form 10-Q and Form 8-K and other documents required to be
filed by it with the SEC under the Exchange Act from the date of this Agreement
to the Effective Date.
5.20 Form S-8 Registration. Bancorp shall use all reasonable efforts to
file with the SEC within 30 days after the Effective Time a Registration
Statement on Form S-8 (or any successor form thereto) under the Securities Act
relating to shares of Class A Common Stock issuable (i) out of the Retention
Pool and (ii) upon exercise of a Company Option that was converted into a
Substitute Option pursuant to Section 2.2 hereof and upon exercise of any other
options which may be granted after the Effective Date under any stock option
plan of the Company in effect on the date of this Agreement.
<PAGE>
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
6.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligation of each of Bancorp and the Company to consummate the
transactions contemplated hereby is subject to the satisfaction or written
waiver by Bancorp and the Company prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approvals. This Agreement and the Merger shall
have been duly adopted by the requisite affirmative vote of the stockholders of
the Company.
(b) Regulatory Approval. All regulatory approvals required to
consummate the transactions contemplated hereby, shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which Bancorp reasonably determines
would (i) following the Effective Time, have a Material Adverse Effect on
Bancorp or the Surviving Corporation or (ii) reduce the benefits of the
transactions contemplated hereby to such a degree that Bancorp would not have
entered into this Agreement had such conditions, restrictions or requirements
been known at the date hereof.
(c) No Injunction. No court or Regulatory Agency of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statue, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits or
otherwise makes illegal consummation of the transactions contemplated by this
Agreement.
(d) Registration Statement. The Registration Statement shall
have been declared effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) Blue Sky Approvals. All permits and other authorizations
under state securities laws necessary to consummate the transactions
contemplated hereby and to issue the shares of Class A Common Stock to be issued
in the Merger shall have been received and be in full force and effect.
(f) Listing. The shares of Class A Common Stock to be issued
in the Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(g) Employment Agreement. The Company shall have entered into
an employment agreement with Ben Plotkin substantially in the form of Exhibit D
hereto.
<PAGE>
(h) Officers and Directors of the Surviving Corporation. The
officers and directors of the Surviving Corporation shall be mutually agreed
upon by the parties.
6.2 Conditions to Obligation of the Company. The obligation of the
Company to consummate the transactions contemplated by this Agreement is also
subject to the satisfaction or written waiver by the Company prior to the
Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Bancorp set forth in this Agreement shall be true and correct in
all material respects (except for representations and warranties qualified by
materiality or Material Adverse Effect which shall be true and correct in all
respects) as of the date of this Agreement and as of the Effective Time as
though made on and as of the Effective Date (except that representations and
warranties that by their terms speak as of the date of this Agreement or some
other date shall be true and correct as of such date); and the Company shall
have received a certificate, dated the Effective Date, signed on behalf of
Bancorp by an executive officer of Bancorp to such effect.
(b) Performance of Obligations of Bancorp. Bancorp shall have
performed in all material respects all agreements, covenants and obligations
required to be performed by it under this Agreement at or prior to the Effective
Time, including, without limitation, the establishment of the Retention Pool,
and the Company shall have received a certificate, dated the Effective Date,
signed on behalf of Bancorp by an executive officer of Bancorp to such effect.
(c) Opinion of the Company's Counsel. The Company shall have
received an opinion of Pitney, Hardin, Kipp & Szuch, special counsel to the
Company, dated the Effective Date, to the effect that on the basis of facts,
representations and assumptions set forth in such opinion, (i) the Merger
constitutes a "reorganization" within the meaning of Section 368(a) of the Code
and (ii) no gain or loss will be recognized by stockholders of the Company who
receive shares of Class A Common Stock in exchange for shares of Company Common
Stock, except with respect to cash received in lieu of fractional share
interests.
(d) Agreement with respect to Future Operations. The parties
will have entered into an agreement substantially in the form of Exhibit E
hereto, with respect to the future operations and management of the Company
after consummation of the transactions contemplated herein.
(e) Board Seat. Ben Plotkin shall be elected as a member of
the Board of Directors of Bancorp on or prior to the Effective Date.
6.3 Conditions to Obligation of Bancorp. The obligation of Bancorp to
consummate the transactions contemplated by this Agreement is also subject to
the satisfaction or written waiver by Bancorp prior to the Effective Time of
each of the following conditions:
<PAGE>
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects (except for representations and warranties qualified by
materiality or Material Adverse Effect which shall be true and correct in all
respects) as of the date of this Agreement and as of the Effective Time as
though made on and as of the Effective Time (except that representations and
warranties that by their terms speak as of the date of this Agreement or some
other date shall be true and correct as of such date); and Bancorp shall have
received a certificate, dated the Effective Date, signed on behalf of the
Company by an executive officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all agreements, covenants and
obligations required to be performed by it under this Agreement at or prior to
the Effective Time; and Bancorp shall have received a certificate, dated the
Effective Date, signed on behalf of the Company by an executive officer of the
Company to such effect.
(c) Consents. The Company shall have obtained all consents and
approvals of third parties required to effectuate the transactions contemplated
by this Agreement, each of which shall have been obtained without the imposition
of any materially adverse terms or conditions.
(d) Opinion of Bancorp's Counsel. Bancorp shall have received
an opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., counsel
to Bancorp, dated the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, the Merger
constitutes a reorganization under Section 368(a) of the Code.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time after the occurrence of any of the following events,
but prior to the Effective Date (notwithstanding any approval of this Agreement
by the stockholders of the Company):
(a) by mutual written consent of Bancorp and the Company;
(b) by either Bancorp or the Company, if any court or
Regulatory Agency shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting the
Merger, and such order, decree, ruling or other action shall have become final
and nonappealable;
(c) by either Bancorp or the Company, if the Merger has not
been consummated by August 31, 1998 (other than due to the failure of the party
seeking to terminate this Agreement to perform its obligations under this
Agreement required to be performed at or prior to the Effective Date);
<PAGE>
(d) by either Bancorp or the Company, if the Meeting shall
have been held, and the stockholders of the Company shall have failed to approve
and adopt the Merger, this Agreement and the transactions contemplated hereby at
such meeting;
(e) by either Bancorp or the Company in the event that written
notice is received which states that any required regulatory approval
contemplated by Section 6.1(b) will not be approved or has been denied or shall
be approved only upon or subject to conditions that would cause the condition
set forth in Section 6.1(b) not to be satisfied;
(f) by Bancorp, if a tender offer or exchange offer for more
than 15% of the outstanding shares of capital stock of the Company is commenced,
and the Board of Directors of the Company, within ten business days after such
tender offer or exchange offer is so commenced, fails to recommend against
acceptance of such tender offer or exchange offer by its stockholders or takes
no position with respect to such offer;
(g) by Bancorp, if any Person or group (as that term is
defined under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder), shall have acquired beneficial ownership or the right
to acquire beneficial ownership of more than 40% of the then combined voting
power of all classes of the capital stock of the Company;
(h) by Bancorp, if the Board of Directors of the Company does
not recommend to its stockholders the approval of the Merger, this Agreement and
the transactions contemplated hereby, or withdraws, or modifies or changes in a
manner adverse to Bancorp, its recommendation to approve the Merger, this
Agreement and the transactions contemplated hereby, or shall have resolved to do
any of the foregoing;
(i) by Bancorp or the Company, if the Company or its
stockholders received an offer for a Competing Transaction that the Board of
Directors of the Company, after consultation with its outside legal counsel and
financial advisors, determines in good faith is more favorable to the
stockholders of the Company from a financial point of view than the transactions
contemplated by this Agreement, and the Board of Directors of the Company
accepts, recommends or resolves to accept or recommend to the Company's
stockholders such a Competing Transaction; provided that prior to such
termination by the Company, the Company shall provide Bancorp written notice of
its intention to terminate this Agreement pursuant to this Section 7.1(i) at
least three business days prior to such termination, which notice shall also
identify the Competing Transaction and accurately describe all material terms
thereof;
<PAGE>
(j) by Bancorp, if there has been any breach of any
representation or warranty in this Agreement by the Company, which breach cannot
be or has not been cured within 30 days after the giving of written notice to
the Company (provided that Bancorp may terminate this Agreement pursuant to this
Section 7.1(j) only with respect to a breach or breaches that would permit
Bancorp not to consummate the Merger under the standards set forth in Section
6.3(a)), or if the Company breaches in any material respect any material
covenant of the Company contained in this Agreement and such breach cannot be or
has not been cured within 30 days of the giving of written notice to the
Company;
(k) by the Company, if there has been any breach of any
representation or warranty in this Agreement by Bancorp, which breach cannot be
or has not been cured within 30 days after the giving of written notice to
Bancorp (provided that the Company may terminate this Agreement pursuant to this
Section 7.1(k) only with respect to a breach or breaches that would permit the
Company not to consummate the Merger under the standards set forth in Section
6.2(a)), or if Bancorp breaches in any material respect any material covenant of
Bancorp contained in this Agreement and such breach cannot be or has not been
cured within 30 days of the giving of written notice to Bancorp; and
(l) by the Company, if Duff & Phelps shall have withdrawn its
Fairness Opinion prior to the date that the Proxy Statement is first mailed to
the holders of Company Common Stock; provided that the right of the Company to
terminate the Agreement pursuant to this Section 7.1(l) shall terminate on the
date that the Proxy Statement is first mailed to the holders of the Company
Common Stock.
(m) by the Company, if the Average Price is less than $13.60
and the Company notifies Bancorp in writing of its intention to terminate this
Agreement pursuant to this Section 7.1(m) and Bancorp does not within five
business days of receipt of such notice (i) agree to increase the Conversion
Ratio to an amount equal to the quotient of $8.28 divided by the Average Price
and (ii) agree to establish the Closing Date within ten business days of receipt
of the Company's notice under this Section 7.1(m).
7.2 Effect of Termination. In the event this Agreement is terminated
pursuant to this Article VII, the Merger shall be abandoned and this Agreement
shall become void and of no force and effect, without further action by any of
the parties to this Agreement, except for the agreements contained in the last
sentence of Section 5.8, and in Sections 8.8, 8.11, 8.12 and 8.13; provided
that, in addition to the amounts payable pursuant to Section 8.8, any
termination of this Agreement pursuant to this Article VII shall not relieve any
party from any liability for the breach of any material representation, warranty
or covenant contained in this Agreement or be deemed to constitute a waiver of
any remedy available for such breach. Subject to Section 5.8(B) hereof, upon
termination of this Agreement, each party shall return all documents and other
materials of any other party relating to the transactions contemplated by this
Agreement, whether so obtained before or after the execution of this Agreement,
to the party furnishing the same.
<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.1 Closing. Subject to the terms and conditions of this Agreement,
the consummation of the transactions contemplated hereby (the "Closing") will
take place at 10:00 a.m. on a date and at a place to be specified by Bancorp,
which shall be as soon as practicable after the satisfaction or waiver of the
latest to occur of the conditions set forth in Article VI hereof, unless
extended by mutual agreement of the parties.
8.2 Notices. Any notice or other communication under this Agreement
shall be in writing and shall be delivered personally or sent by registered
mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid
overnight courier to the parties at the addresses set forth below (or at such
other addresses as shall be specified by the parties by like notice).
If to Bancorp: BankAtlantic Bancorp, Inc.
1750 East Sunrise Boulevard
Fort Lauderdale, Florida 33304
Telecopy: (954) 768-0520
Attention: Alan B. Levan
Copy to: Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A.
150 West Flagler Street
Miami, Florida 33130
Telecopy: (305) 789-3395
Attention: Alison W. Miller, Esquire
If to the Company: Ryan, Beck & Co., Inc.
220 South Orange Avenue
Livingston, New Jersey 07039
Telecopy: (973) 597-1258
Attention: Ben A. Plotkin
Copy to: Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932
Telecopy: (973) 966-1550
Attention: Ronald H. Janis, Esq.
<PAGE>
Such notices, demands, claims and other communications shall be deemed given
when actually received or (a) in the case of delivery by overnight service with
guaranteed next day delivery, the next day or the day designated for delivery,
(b) in the case of registered U.S. mail, five days after deposit in the U.S.
mail, or (c) in the case of facsimile, the date upon which the transmitting
party received confirmation of receipt by facsimile, telephone or otherwise.
8.3 Entire Agreement. This Agreement and the Schedules and Exhibits
hereto contain every obligation and understanding between the parties relating
to the subject matter hereof and merge all prior discussions, negotiations and
agreements, if any, between them, and none of the parties shall be bound by any
representations, warranties, covenants, or other understandings, other than as
expressly provided or referred to herein.
8.4 Assignment. This Agreement may not be assigned by any party
without the written consent of the other party; provided that Bancorp may assign
this Agreement to one of its Subsidiaries, whether such Subsidiary currently
exists or is formed in the future, without such written consent; and provided
further that Bancorp shall remain primarily liable for all of its obligations
under this Agreement. Subject to the preceding sentence, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, heirs, personal representatives, legal representatives, and
permitted assigns.
8.5 Waiver and Amendment. Any representation, warranty, covenant,
term or condition of this Agreement which may legally be waived, may be waived,
or the time of performance thereof extended, at any time by the party hereto
entitled to the benefit thereof, and any term, condition or covenant hereof may
be amended by the parties hereto at any time. Any such waiver, extension or
amendment shall be evidenced by an instrument in writing executed on behalf of
the appropriate party by a person who has been authorized by its Board of
Directors to execute waivers, extensions or amendments on its behalf. No waiver
by any party hereto, whether express or implied, of its rights under any
provision of this Agreement shall constitute a waiver of such party's rights
under such provisions at any other time or a waiver of such party's rights under
any other provision of this Agreement. No failure by any party hereto to take
any action against any breach of this Agreement or default by another party
shall constitute a waiver of the former party's right to enforce any provision
of this Agreement or to take action against such breach or default or any
subsequent breach or default by such other party.
8.6 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any Person
(including, without limitation, any stockholders or employees of the Company)
other than the parties hereto and their respective successors and permitted
assigns, any rights or remedies under or by reason of this Agreement, except
that the present and former directors and executive officers of the Company and
the Company Subsidiaries are intended beneficiaries of Section 5.18.
8.7 Severability. In the event that any one or more of the
provisions contained in this Agreement shall be declared invalid, void or
unenforceable, the remainder of the provisions of this Agreement shall remain in
full force and effect, and such invalid, void or unenforceable provision shall
be interpreted as closely as possible to the manner in which it was written.
<PAGE>
8.8 Fees and Expenses.
(a) Except as provided below, all fees and expenses incurred
in connection with the Merger, this Agreement, the Company Stock Option
Agreement and the transactions contemplated by this Agreement and the Company
Stock Option Agreement shall be paid by the party incurring such fees or
expenses, except that the expenses payable in connection with printing and
mailing the Proxy Statement shall be shared equally between the Company and
Bancorp. In no event shall the aggregate fees and expenses incurred by or on
behalf of the Company in connection with the Merger, this Agreement and the
transactions contemplated hereby exceed $500,000 in the aggregate.
(b) If this Agreement shall be terminated pursuant to Section
7.1(d) and there has been a material breach of any Stockholder Voting Agreement
or if this Agreement shall be terminated pursuant to Sections 7.1(f), (g), (h),
(i) or (j), then the Company shall pay Bancorp an amount equal to all reasonable
expenses (including reasonable attorneys' and advisors' fees) incurred by
Bancorp and Acquisition in connection with this Agreement, the Stock Option
Agreement and the transactions contemplated by this Agreement and the Stock
Option Agreement up to $500,000 (the "Expense Reimbursement").
(c) If this Agreement shall be terminated pursuant to Sections
7.1(d) and on the date of the Meeting a Competing Transaction had been proposed
or publicly announced, or if this Agreement shall be terminated pursuant to
Sections 7.1(f), (g), (h), (i) or (j), and within eighteen (18) months
thereafter, the Company shall enter into a definitive agreement with respect to
any Competing Transaction or any Competing Transaction shall be consummated
(other than a tender offer or exchange offer for less than 50% of the
outstanding shares of capital stock of the Company or the acquisition by any
Person or group of less than 50% of the then outstanding shares of capital stock
of the Company), then the Company shall pay Bancorp an amount equal to
$2,000,000 (less any portion of the Expense Reimbursement theretofore paid) (the
"Termination Fee") and if all or any portion of the Expense Reimbursement has
not yet been paid, such portion of the Expense Reimbursement shall no longer be
payable upon payment of the Termination Fee.
(d) If this Agreement shall be terminated pursuant to Section
7.1(k), then Bancorp shall pay the Company an amount equal to all reasonable
expenses (including reasonable attorneys' fees and advisors' fees) incurred by
the Company in connection with this Agreement, the Stock Option Agreement and
the transactions contemplated hereby and thereby up to $500,000.
<PAGE>
(e) Each party agrees that the actual damages accruing to
Bancorp from termination of this Agreement pursuant to those termination
provisions and circumstances referenced in Section 8.8(c) are incapable of
precise estimation and would be difficult to prove, and that the damages
stipulated herein bear a reasonable relationship to the potential injury likely
to be sustained in the event of termination pursuant to such occurrences. The
payments stipulated in Section 8.8(c) are intended by the parties to provide
just compensation in the event of termination pursuant to those termination
provisions referenced in Section 8.8(c), and is not intended to compel
performance or to constitute a penalty for nonperformance.
(f) Any payment required to be made pursuant to Sections
8.8(b), (c) or (d) shall be made to Bancorp or the Company, as applicable, not
later than five business days after the occurrence of the event for which such
party is entitled to payment and delivery by the party entitled to such payment
to the other of a notice of demand for payment, provided that the payment of
expenses pursuant to Sections 8.8(b) or (d) shall be within five business days
after delivery of an itemization setting forth in reasonable detail all expenses
of Bancorp, Acquisition or the Company, as applicable, for which such party is
entitled to reimbursement hereunder (which itemization may be supplemented and
updated from time to time until the 30th day after the party entitled to payment
delivers such notice of demand for payment). All payments required to be made
pursuant to this Section 8.8 shall be made by wire transfer of immediately
available funds to an account designated by the party entitled to payment in the
notice of demand for payment delivered pursuant to this Section 8.8(f).
(g) In the event Bancorp exercises the option granted under
the Company Stock Option Agreement, Bancorp shall, simultaneously with the
closing under the Company Stock Option Agreement, refund to the Company an
amount equal to any Termination Fee paid to Bancorp prior to such exercise less
an amount equal to the expenses incurred by Bancorp and Acquisition in
connection with the Merger, this Agreement, the Company Stock Option Agreement
and the transactions contemplated by this Agreement and the Company Stock Option
Agreement. In the event that after Bancorp has exercised the option granted
under the Company Stock Option Agreement, Bancorp becomes entitled to receive
the Termination Fee hereunder, the Termination Fee due to Bancorp from the
Company shall be an amount equal to (i) the Termination Fee less (ii) the
aggregate net profit realized by Bancorp pursuant to all exercises of the option
under the Company Stock Option Agreement.
8.9 Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.11 Litigation; Prevailing Party. In the event of any litigation
with regard to this Agreement, the prevailing party shall be entitled to receive
from the non-prevailing party and the non-prevailing party shall pay upon demand
all reasonable fees and expenses of counsel for the prevailing party.
<PAGE>
8.12 Injunctive Relief. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to equitable
relief including, without limitation, injunctive relief, specific performance or
other equitable remedies in addition to all other remedies provided hereunder or
available to the parties hereto at law or in equity.
8.13 Governing Law. This Agreement has been entered into and shall
be construed and enforced in accordance with the laws of the State of Florida
without reference to the choice of law principles thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in counterparts by their duly authorized officers, all as of the
date and year first above written.
BANKATLANTIC BANCORP, INC.
By:-----------------------------------
Name:
Title:
BCP ACQUISITION CORPORATION
By:----------------------------------
Name:
Title:
RYAN, BECK & CO., INC.
By:----------------------------------
Name:
Title:
<PAGE>
Exhibit A
VOTING AGREEMENT
This Voting Agreement is entered into as of February __, 1998 between
BankAtlantic Bancorp, Inc., a Florida corporation ("Bancorp") and
________________________ ("Stockholder")
W I T N E S S E T H:
WHEREAS, simultaneously with the execution of this Agreement, Bancorp,
Ryan, Beck & Co., Inc., a New Jersey corporation (the "Company"), and BCP
Acquisition Corporation, a New Jersey corporation ("Acquisition"), have entered
into an Acquisition Agreement, dated as of the date hereof (the "Acquisition
Agreement"), pursuant to which Bancorp will acquire the Company through the
merger of the Company with and into Acquisition (the "Merger"); and
WHEREAS, in connection with the Merger, Stockholder will receive shares
of Bancorp's Class A Common Stock, par value $.01 per share, in exchange for
Stockholder's entire equity interest in the Company; and
WHEREAS, as a material inducement to Bancorp and Acquisition to enter
into the Acquisition Agreement and agree to acquire the Company, Stockholder,
who is also a member of the Board of Directors of the Company, has agreed to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants, representations and warranties contained in this Agreement, the
parties agree as follows:
1. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Bancorp as follows:
(a) Title to Shares. Stockholder is now, and at all times
through the Effective Time of the Merger (the "Effective Time") will be,
directly or indirectly, the record holder or beneficial owner of _________
shares of the Company's issued and outstanding common stock, par value $.01 per
share (collectively, the "Stockholder Stock").
(b) Authority; Binding Agreement. Stockholder has full legal
capacity, right, power and authority to enter into this Agreement. This
Agreement has been duly executed and delivered by Stockholder, and constitutes
the legal, valid and binding obligation of Stockholder, enforceable in
accordance with its terms, except to the extent that its enforcement may be
limited by bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally and by general
principles of equity.
(c) The execution, delivery and performance of this Agreement
by the Stockholder, and the consummation of the transactions contemplated
hereby, do not and will not constitute a breach or violation of, or a default
under, any law, rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture or instrument of the Stockholder or
to which the Stockholder is subject or bound, or require consent or approval
under such law, rule, regulation, judgment, decree, order, governmental permit
or license or the consent or approval of any other party to any such agreement,
indenture or instrument.
<PAGE>
2. Covenants of Stockholder.
(a) Vote of Stockholder Stock in Favor of Merger. Unless and
until the Merger Agreement shall have been validly terminated in accordance with
its terms (an "Event of Termination"), Stockholder agrees to vote, or cause all
of the Stockholder Stock to be voted, (i) in favor of the Merger,(ii) against
any merger, consolidation, share exchange, business combination, asset sale or
other extraordinary corporate transaction involving the Company, other than the
Merger, or any other action or agreement that would result in any of the
conditions to the Company's obligations under the Acquisition Agreement not
being fulfilled, or (iii) in favor of any other matter relating to consummation
of the transactions contemplated by the Acquisition Agreement. Stockholder also
agrees, unless and until an Event of Termination has occurred, to act in all
other respects to use his best efforts to cause the consummation of the Merger
and the transactions contemplated by the Acquisition Agreement.
(b) Sale of Stockholder Stock. Unless and until the occurrence
of an Event of Termination, Stockholder will not, directly or indirectly, (i)
tender or permit the tender into any tender or exchange offer of any shares of
Stockholder Stock, (ii) sell, transfer or otherwise dispose of or encumber or
permit the sale, transfer or other disposition or encumbrance of any shares of
Stockholder Stock or (iii) deposit any shares of Stockholder Stock into a voting
trust or enter into a voting agreement or arrangement with respect to such
Stockholder Stock or grant any proxy with respect thereto, except in each case
pursuant to the Acquisition Agreement.
3. Additional Shares. All references in this Agreement to Stockholder
Stock shall be deemed to include any shares of capital stock of the Company
subsequently acquired by Stockholder.
4. Miscellaneous.
(a) Notices. Any notice or other communication under this
Agreement shall be in writing and shall be delivered personally, by facsimile
transmission or by registered mail, return receipt requested, postage prepaid,
to the parties. Such notices, demands, claims and other communications shall be
deemed given when actually received or in the case of registered U.S. mail, on
the date the postal service first attempts delivery.
(b) Waiver and Amendment. This Agreement may only be amended
by an instrument in writing executed by the parties hereto. No failure by any
party hereto to take any action against any breach of this Agreement or default
by another party shall constitute a waiver of the former party's right to
enforce any provision of this Agreement or to take action against such breach or
default or any subsequent breach or default by such other party.
(c) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(d) Expenses. Except as otherwise provided herein or in the
Acquisition Agreement, all expenses incurred in connection with this Agreement
shall be paid by the party incurring such expenses.
<PAGE>
(e) Prevailing Party. In the event of any litigation with
regard to this Agreement, the prevailing party shall be entitled to receive from
the non-prevailing party and the non-prevailing party shall pay upon demand all
reasonable fees and expenses of counsel for the prevailing party.
(f) Severability. In the event that any one or more of the
provisions contained in this Agreement shall be declared invalid, void or
unenforceable, the remainder of the provisions of this Agreement shall remain in
full force and effect, and such invalid, void or unenforceable provision shall
be interpreted as closely as possible to the manner in which it was written.
(g) Injunctive Relief. It is likely that remedies at law may
be inadequate and, therefore, the parties hereto shall be entitled to equitable
relief including, without limitation, injunctive relief, specific performance or
other equitable remedies in addition to all other remedies provided hereunder or
available to the parties hereto at law or in equity.
(h) Governing Law. This Agreement has been entered into and
shall be construed and enforced in accordance with the laws of the State of
Florida.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.
BANKATLANTIC BANCORP, INC.
By:----------------------------
Name:
Title:
STOCKHOLDER
Name:--------------------------
<PAGE>
Exhibit B
Form of Affiliate Letter
BankAtlantic Bancorp, Inc.
1750 East Sunrise Boulevard
Fort Lauderdale, Florida 33304
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Ryan, Beck & Co., Inc., a New Jersey corporation (the "Company"),
as the term "affiliate" is defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act'). I have been further advised that pursuant to
the terms of the Acquisition Agreement dated as of February , 1998 (the
"Acquisition Agreement") among BankAtlantic Bancorp, Inc., a Florida corporation
("Bancorp"), the Company and BCP Acquisition Corporation, a wholly owned
subsidiary of Bancorp ("Acquisition"), the Company will be merged with and into
Acquisition (the "Merger") and that as a result of the Merger, I may receive
shares of Bancorp's Class A Common Stock (as defined in the Acquisition
Agreement) in exchange for shares of Company Common Stock (as defined in the
Acquisition Agreement) owned by me.
I represent, warrant and covenant to Bancorp that in the event I
receive any Class A Common Stock as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
the Class A Common Stock in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Acquisition
Agreement and discussed its requirements and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
Class A Common Stock to the extent I believed necessary with my counsel
or counsel for the Company.
<PAGE>
C. I have been advised that the issuance of Class A Common
Stock to me pursuant to the Merger will be registered with the
Commission under the Act on a Registration Statement on Form S-4.
However, I have also been advised that, since at the time the Merger
will be submitted for a vote of the stockholders of the Company I may
be deemed to have been an affiliate of the Company and the distribution
by me of the Class A Common Stock has not been registered under the
Act, that I may not sell, transfer or otherwise dispose of Class A
Common Stock issued to me in the Merger unless (i) such sale, transfer
or other disposition has been registered under the Act, (ii) such sale,
transfer or other disposition is made in conformity with the volume and
other limitations of Rule 145 promulgated by the Commission under the
Act, or (iii) in the opinion of counsel reasonably acceptable to
Bancorp, such sale, transfer or other disposition is otherwise exempt
from registration under the Act.
D. I understand that Bancorp is under no obligation to
register the sale, transfer or other disposition of the Class A Common
Stock by me or on my behalf under the Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available.
E. I also understand that stop transfer instructions will be
given to Bancorp's transfer agent with respect to the Class A Common
Stock and that there will be placed on the certificates for the Class A
Common Stock issued to me, or any substitutions therefor, a legend
stating in substance:
"The securities represented by this certificate have
been issued in a transaction to which Rule 145 promulgated
under the Securities Act of 1933 applies and may only be sold
or otherwise transferred in compliance with the requirements
of Rule 145 or pursuant to a registration statement under said
act or an exemption from such registration."
F. I also understand that unless the transfer by me of my
Class A Common Stock has been registered under the Act or is a sale
made in conformity with the provisions of Rule 145, Bancorp reserves
the right to put the following legend on the certificates issued to my
transferee:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and were
acquired from a person who received such shares in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with,
any distribution thereof within the meaning of the Securities
Act of 1933 and may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs E
and F above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to Bancorp a copy of a letter
from the staff of the Commission, or an opinion of counsel in form and substance
reasonably satisfactory to Bancorp, to the effect that such legend is not
required for purposes of the Act.
<PAGE>
I understand that pursuant to the Acquisition Agreement, no certificate
for Class A Common Stock shall be delivered to me in exchange for certificates
representing Company Common Stock until I have executed and delivered this
agreement.
Very truly yours,
By:-----------------------------------
Name:
Accepted this day of
February, 1998 by
BANKATLANTIC BANCORP, INC.
By:---------------------------------
Name:
Title:
<PAGE>
Exhibit C
SUMMARY OF TERMS AND CONDITIONS OF RESTRICTED STOCK AWARD
Grant: Restricted Shares of Class A Common
Stock ("Restricted Shares").
Vesting: On the fourth anniversary date of the
Merger (the "Vesting Date").
Condition for Vesting: Participant has remained an
active full-time employee from the date
of the Merger through the Vesting Date.
Accelerated Vesting: If during the four year period
following the Merger, the Company should
terminate participant's employment for
any reason other than Cause (as defined
below), Restricted Shares shall vest
immediately upon termination.
In the event employment is terminated
due to death or disability, remaining
Restricted Shares shall vest immediately
upon such termination. (In the event of
death, participant's Restricted Shares
shall be provided to his designated
beneficiary, or to his estate if no
beneficiary is named).
Cause: "Cause" shall mean:
(i) continued failure to perform
substantially participant's duties with
the Company or one of its affiliates
(other than any such failure resulting
from incapacity due to disability or
death) or
(ii) engaging in illegal conduct or
gross misconduct which is materially
injurious to the Company.
Limitation on Vesting: If during the four year
period the Company terminates
participant's employment for Cause, no
Restricted Shares shall vest following
such termination, and such Restricted
Shares shall be forfeited.
If during the four year period
employment is terminated by participant
for any reason other than death or
disability, no Restricted Shares shall
vest.
<PAGE>
Other: This summary is not an employment
agreement between any participant and
the Company.
Participant shall provide to the Company
any Federal, state, local or foreign
taxes as shall be required to be
withheld pursuant to any applicable law
or regulation, and may request the
Company to withhold sufficient
Restricted Shares to satisfy such
withholding requirement.
The Restricted Stock Plan will be
administered by the Company's
Compensation Committee.
The foregoing is qualified in its entirety to the plan.
<PAGE>
Exhibit D
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
_________, 1998, by and BEN A. PLOTKIN, whose address is 168 Western Drive,
Short Hills, New Jersey 07578 ("Executive"), and Ryan, Beck & Co., Inc., a New
Jersey corporation (the "Company"), a wholly-owned subsidiary of BankAtlantic
Bancorp, a Florida corporation ("Bancorp").
1. Pursuant to an Amended and Restated Employment Agreement dated
_________ (as amended through the date hereof, the "Prior Agreement"), between
Executive and the Company, Executive is currently employed by the Company as its
President and Chief Executive Officer.
2. The Company and Bancorp have entered into an Acquisition Agreement,
dated February 9, 1998 (such agreement, as the same may be amended from time to
time, is referred to as the "Acquisition Agreement"), pursuant to which Bancorp
will acquire the Company by merger of the Company into a wholly-owned subsidiary
of Bancorp (the "Merger"). At the Effective Date of the Merger, the Company and
Bancorp will execute an agreement governing the operation of the Company
independent from Bancorp (the "Independence Agreement").
3. The Company, Bancorp and the Executive desire that commencing with
the effective date of the Merger (the "Effective Date"), (i) the Executive be
employed as Chairman, President and Chief Executive Officer of the Company upon
the terms and conditions set forth in this Agreement, (ii) the Company's
obligations to the Executive under the Prior Agreement be terminated in exchange
for a lump sum payment to Executive of $780,000 (the "Buyout Sum") and the prior
Agreement be terminated; and (ii) the Prior Agreement be replaced and superseded
by this Agreement.
Accordingly, the parties agree as follows:
1. Employment, Title, Duties and Term.
1.1 Employment; Title; Duties. Subject to the terms and conditions of
this Agreement, the Company agrees to employ Executive during the term of
employment set forth in Section 1.2 below. Executive shall serve as President
and Chief Executive Officer of the Company and Chairman of the Company's Board
of Directors, shall be responsible for the day-to-day management and operations
of the Company and shall have such powers and perform such duties, consistent
with such executive capacity, as may be assigned or delegated to him from time
to time by the Board of Directors of the Company (the "Board of Directors").
Executive shall have the authority to hire employees of the Company, set their
salary and make purchases within the parameters of the Company's annual
operating and capital budget, which budget shall be subject to review and
approval by the Board of Directors and by Bancorp. All other officers of the
Company shall report directly to Executive, except as the Executive shall
otherwise determine, and except that the chief compliance officer and/or
internal auditor shall report directly to the Board of Directors. Executive's
primary office shall be located in Livingston, New Jersey unless Executive, the
Company and Bancorp mutually agree to change such location. Bancorp shall cause
Executive to be nominated for election by Bancorp's shareholders to serve as a
director of Bancorp during the Employment Period. If elected, Executive shall
serve as a director of Bancorp. Bancorp will use its best efforts to accomplish
such election. Executive shall not be entitled to receive any fees or other cash
compensation in addition to the compensation specifically set forth herein for
serving as a director, board committee member or officer of the Company, Bancorp
or any of their respective subsidiaries or affiliates. Executive accepts such
employment and agrees to perform all such services faithfully and diligently,
and to discharge the responsibilities thereof to the best of his ability.
Executive shall devote his full business time and attention and energies to the
duties of his employment.
1.2 Term and Payment.
(a) Except in the case of earlier termination, as hereinafter
specifically provided, the initial term of this Agreement shall be for two years
commencing on the Effective Date, with one year being added at the end of such
two year term and at each anniversary thereafter, provided that the Executive is
actively employed by the Company on such date.
(b) The Prior Agreement shall be terminated upon receipt by the
Executive of the Buyout Sum, which shall be paid to the Executive, subject to
federal and state tax withholding, on the date hereof.
2. Base Salary. Subject to the provisions herein regarding resignation,
termination with or without cause, death, and disability, the Company shall pay
the Executive a salary in connection with his services hereunder in the amount
of $260,000 per annum, subject to increase in the discretion of the Board of
Directors, but in any event not less than Executive's salary of the previous
year. The Executive's salary shall not be decreased without the Executive's
prior written approval. The salary under this Section 2 shall be payable to the
Executive not less frequently than monthly.
3. Bonus, Benefits and Expenses.
3.1 Bonuses and Other Benefits. The Company shall also cause the
Executive to receive, in addition to his salary, all other employee benefits
(including a bonus or bonuses if declared by the Board of Directors in its
discretion, and contributions to any profit sharing plan) in effect or hereafter
to be offered by the Company. During the first year of this Agreement, the bonus
paid to Executive shall not be less than $_________.
3.2 Reasonable Business Expenses. Executive is expected and is
authorized to incur reasonable expenses in the performance of his duties
hereunder, including such expenses for the promotion of the business of the
Company and Bancorp as entertainment, travel, and similar business expenses
incurred in the performance of his duties as allowed in the Company's expense
policy. The Company shall reimburse the Executive for all such expenses promptly
upon periodic presentation by Executive of an itemized account with
documentation of such expenses.
3.3 Vacation. Executive shall be entitled to annual vacation (without
deduction of salary or other compensation) in accordance with Bancorp's vacation
policy for employees in effect from time to time, but in no event less than four
weeks, such vacation to be taken at such time or times during such year as
determined by Executive.
3.4 Bancorp Directors' and Officers' Insurance. Executive shall be
entitled in connection with his service as a director of Bancorp to coverage
under any directors' and officers' insurance policy which Bancorp provides for
Bancorp's directors and officers.
3.5 Bancorp Option Plan. Executive shall be eligible to receive options
to acquire Bancorp Common Stock as determined by the Bancorp Stock Option
Committee pursuant to any plan maintained by Bancorp from time to time under
which stock options may be granted to executives of Bancorp and its
subsidiaries.
3.6 Continuation of Deferred Trust. During the term hereof the Company
shall use all reasonable efforts to continue in its current form the Company's
deferred trust compensation plan and the rabbi trust thereunder.
3.7 Automobile. The Company shall provide Executive with the use of an
appropriate Company-leased automobile and reimbursement for automobile related
expenses consistent with the Company's policy.
4. Death of the Executive.
(a) In the event of the Executive's death during the term of
this Agreement, the Company shall pay to the Executive's designated beneficiary,
or if no beneficiary has been designated then to the Executive's estate, in
addition to the salary earned by the Executive but unpaid as of the date of
death, the amount of the Executive's then current annual base salary. Said
amount shall be paid in a lump sum, within thirty (30) days after the date of
death.
(b) If, but only if, a bonus or bonuses are declared for the
salaried officers of the Company for such calendar year, the Company shall also
pay to the Executive's designated beneficiary or estate a cash bonus reflecting
Executive's performance for the partial calendar year in which his death occurs,
in an amount equal to the average of the bonus accrued by the Company for the
three previous fiscal years, multiplied by a fraction, the numerator of which is
the number of days of the calendar year in which Executive was actively employed
and the denominator of which is 365; then subtracting from the product so
calculated any cash bonus or bonuses previously paid to Executive relating to
(not necessarily paid during) such calendar year. Such bonus, if any, shall be
payable at such time as the Company next pays bonuses generally to other
executives.
(c) In the event of the death of the Executive, the
Executive's personal representative, executor or administrator, as the case may
be, shall be entitled, for the period set forth in the applicable plan, to
exercise stock options granted to him by the Company and Bancorp as would
otherwise have vested and been exercisable, had the Executive not died prior to
the date that such Options are exercised. All Options not so exercised shall
terminate.
5. Disability of the Executive. If the Executive is unable to perform
his regular duties and services by reason of illness or incapacity for a period
of four consecutive months in any 12 month period: (a) the Company shall
continue to pay his salary at his then current rate during such period of
illness or incapacity, less the amount of any disability insurance benefits paid
directly to the Executive from any policy or policies the premiums for which
have been paid by the Company, and (b) the Company may thereafter terminate the
Executive's employment under this Agreement upon payment of severance pay to the
Executive in a lump sum ten days following termination in the amount of the
Executive's annual base salary in effect immediately prior to the disability,
and assignment to the Executive at no cost to him of all rights which the
Company may then have in any disability income insurance policies on the
Executive, which shall become the property of the disabled Executive.
6. Termination and Severance Pay.
This Agreement may be terminated during its term as follows:
(a) Voluntary Resignation.
(i) The Executive may terminate this Agreement
without cause by voluntary resignation upon thirty (30) days' written notice to
the Company.
(ii) In that event, monetary compensation (salary or
otherwise) due to the Executive hereunder will be terminated upon the effective
date of the employment termination.
(iii) Following such termination of the Executive's
employment, the Company shall continue to provide such medical and other
benefits to Executive as it is required by law to provide and such other
benefits as called for pursuant to the Company's plans and policies, if any.
(b) Involuntary Termination Without Cause (or Resignation for
Good Reason).
(i) The Company may terminate this Agreement without
cause upon thirty (30) days' written notice to the Executive.
(ii) If Executive resigns from his employment
hereunder within six months of the occurrence of any of the events set forth
below (each such event being referred to as "Good Reason"), such resignation
shall have the same effect as a termination of this Agreement by the Company
without cause provided that the Company has no basis for terminating the
Executive pursuant to (c)(i) below (in which event it shall be treated as a
termination pursuant to (c)). Any of the following shall constitute "Good
Reason" hereunder: (a) the Company assigns Executive to a primary office located
outside of Livingston, New Jersey, Executive objects to such assignment in
writing and ten days pass following delivery of such written objection to
Bancorp and to the Board of Directors without such assignment being withdrawn;
(b) Executive is assigned any material duties inconsistent with his duties as a
President and Chief Executive Officer of the Company, (c) Executive is removed
from, or not re-elected to, his position as President and Chief Executive
Officer of the Company or any successor, or (d) persons are elected to the Board
of Directors other than those designated by the individuals specified in and
pursuant to the Independence Agreement without the prior written consent of
Executive, (e) Bancorp causes the Company to adopt substantive and material
policies with respect to the ongoing operations of the Company's business (such
as compensation of non-executive officers or more aggressive underwriting
policies) to which the Executive has indicated his opposition in a writing
delivered to Bancorp and to the Board of Directors and such policies are not
withdrawn within ten days after such written opposition is delivered, (f)
Bancorp fails to provide reasonably appropriate capital upon reasonable terms to
the Company to allow the company to operate and grow, Executive has notified
Bancorp of such failure in a writing delivered to Bancorp and to the Board of
Directors and such failure is not cured within ten days after such written
notice is delivered, (g) the annual base salary of the Executive is reduced, or
(h) Bancorp breaches this Agreement or the Independence Agreement and fails to
cure such breach within ten days after receiving written notice thereof from
Executive.
(iii) In the event the Company terminates this
Agreement without cause or the Executive resigns for Good Reason, the Company
shall pay severance pay to the Executive in an amount equal to the Executive's
annual base salary. Such severance pay shall be paid in a lump sum, within ten
(10) days after the effective date of termination.
(iv) If, but only if, a bonus or bonuses are
declared for the salaried officers of the Company for such calendar year, the
Company shall also pay Executive a cash bonus reflecting Executive's performance
for the partial calendar year in which such termination occurs, in an amount
equal to the average of the bonus accrued by the Company for the two previous
fiscal years, multiplied by a fraction, the numerator of which is the number of
days of the calendar year in which Executive was actively employed and the
denominator of which is 365; then subtracting from the product so calculated any
cash bonus or bonuses previously paid to Executive relating to (not necessarily
paid during) such calendar year. Such bonus, if any, shall be payable at such
time as the Company next pays bonuses generally to other executives.
(v) In the event of such termination without cause
or resignation for Good Reason, shares in the Company's retention pool created
pursuant to the Merger Agreement, awarded to or held by the Executive and which
have not fully vested shall automatically and fully vest and Executive shall
have a period of no less than three months following termination in which to
exercise such stock options.
(vi) Following such termination, the Company shall
continue to provide such medical and other benefits to Executive as it is
required by law to provide and such other benefits as called for pursuant to the
Company's then current plans and policies, if any.
(c) Involuntary Termination with Cause.
(i) The Company may terminate this Agreement for
cause by giving written notice to the Executive stating that it is the Company's
intention to terminate the Agreement effective immediately, and the Agreement
shall so terminate. The term "cause" as used in this Agreement shall mean any of
the following: (i) gross negligence, (ii) gross insubordination, (iii) material
violations of any regulatory compliance rules, or (iv) a felony conviction of
Executive.
(ii) Following such termination, the Company shall
continue to provide such medical and other benefits to Executive as it is
required by law to provide and such other benefits as called for pursuant to the
Company's then current plans and policies, if any.
7. Confidentiality.
(a) Non-Disclosure of Confidential Information. Except in the
course of his employment with the Company and in the pursuit of the business of
the Company or any of its subsidiaries or affiliates, Executive shall not, at
any time during or following the term hereof, disclose or use, any confidential
information or proprietary data of the Company or any of its subsidiaries or
affiliates.
(b) No Hire. During the term of this Agreement and for a
period of one year after the termination of this Agreement, Executive agrees
that he will not, directly or indirectly, for or on behalf of himself or any
other persons or entities, hire, initiate any offer of employment to or in a any
other manner solicit the services of any person or entity who was, at any time
during the one year period prior to the date of termination of this Agreement,
an employee, or sales agent of the Company; provided however, that this
provision shall not prohibit any person employing Executive from hiring any
former Company employee or sales agent who will not be supervised by or
reporting to the Executive.
(c) Specific Performance. Executive agrees that the Company
does not have an adequate remedy at law for the breach of this section and
agrees that he shall be subject to injunctive relief and equitable remedies as a
result of the breach of this section. The invalidity or unenforceability of any
provision of this Agreement shall not affect the force and effect of the
remaining valid portions.
(d) Survival. This section shall survive the termination of
Executive's employment hereunder and the expiration of this Agreement.
8. Notice.
Any notice to be given by either party under this Agreement
shall be in writing and hand-delivered, delivered by Federal Express (or a
similar courier) or mailed by certified mail with return receipt requested, and
addressed to the other party at the address stated herein or such other address
as may subsequently have been furnished by such other party in writing.. Any
such notice shall be deemed to have been given on the date of delivery or
mailing. Notices to the Company shall be sent to:
Ryan, Beck & Co.
200 South Orange Avenue
Livingston, NJ 07039
Attn.: CFO
and notices to the Executive shall be sent to him at:
168 Western Drive
Short Hills, New Jersey 07578.
9. Entire Agreement. Upon termination of the Prior agreement as set
forth herein, this Agreement shall set forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
whether written or oral will be superseded by this Agreement; provided, however,
that this Agreement shall not limit or in any way affect the rights, duties, or
obligations that the Executive may have under any benefit plan of the Company,
including, but not limited to, any pension plan, profit-sharing plan, or medical
or health plan.
10. Governing Law.
This Agreement has been executed and delivered in the State of New
Jersey and shall in all respects be governed by and construed and enforced in
accordance with the laws of New Jersey, including all matters of construction,
validity, and performance.
11. Modifications, etc.
No modification, amendment, or waiver of any of the provisions of this
Agreement shall be effective unless in writing specifically referring to this
Agreement and signed by both parties.
12. Enforcement of Agreement.
The failure of either party at any time to enforce any of the
provisions of this Agreement or to require performance by the other party of any
of the provisions hereof shall not operate as or be construed as a waiver of
such provisions or to affect either the validity of this Agreement, or any part
hereof, or the right of either party thereafter to enforce each and every
provision in accordance with the terms of this Agreement.
13. Severability.
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof, and this Agreement shall
be construed in all respects and to the fullest extent permitted by law as if
such invalid or unenforceable provision were omitted.
14. Binding Agreement; Assignment.
This Agreement shall be binding upon and shall inure to the benefit of
the Company and Bancorp any legal successor to either of the Company or Bancorp
shall be deemed to be substituted for the Company or Bancorp, as the case may
be, under the provisions hereof.
This Agreement shall also be binding upon and shall inure to the
benefit of the Executive, his heirs, executors, legal representatives and
assigns.
Other than as set forth above in this Section, none of the Company,
Bancorp or Executive shall have the right to assign its or his obligations or
duties hereunder.
15. Litigation: Prevailing Party. In the event of any litigation with
regard to this Agreement, the prevailing party shall be entitled to receive from
the non-prevailing party and the non-prevailing party shall pay upon demand all
reasonable fees and expenses of counsel for the prevailing party but in no event
shall such amount exceed $50,000.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives on the day and date first
above written.
RYAN, BECK & CO.
By: ______________________________
---------------------------------
EXECUTIVE
<PAGE>
Exhibit E
INDEPENDENCE AGREEMENT
THIS INDEPENDENCE AGREEMENT (the "Agreement") is entered into as of
this ___________ day of ___________, 1998 by and among BankAtlantic Bancorp,
Inc., a Florida corporation ("Bancorp"), BCP Acquisition Corporation, a New
Jersey corporation which is wholly-owned by Bancorp ("Acquisition") and Ryan,
Beck & Co., Inc., a New Jersey company ("Ryan, Beck").
WHEREAS, the parties have entered into an Acquisition Agreement dated
___________, 1998 pursuant to which Ryan, Beck will be merged into Acquisition
(the "Acquisition Agreement"); and
WHEREAS, it is the parties desire to maintain the operations of Ryan,
Beck (which after its merger with Acquisition will be referred to herein as the
"Resulting Company") as an independent, autonomous subsidiary; and
WHEREAS, Bancorp is in a position to provide capital to the Resulting
Company to enable the Resulting Company to grow and pursue its business plan;
and
WHEREAS, the parties wish to evidence their respective understandings
with respect to the ongoing operations of the Resulting Company after the
merger.
NOW THEREFORE, in consideration of the sum of ten dollars and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Separate Subsidiary. The parties agree that the Resulting Company
will be operated as a separate autonomous entity with operations separate and
apart from the operations of Bancorp and Bancorp's other subsidiaries. To this
end, the parties agree and acknowledge that (a) separate operating budgets will
be established for the Resulting Company which are mutually acceptable to both
Bancorp and the Resulting Company and (b) the books and records of the Resulting
Company will be maintained in a way which will accurately reflect the separate
operations and financial condition of the Resulting Company. Further, to the
extent permitted under and subject to the Internal Revenue Code of 1986, as
amended and the governing provisions of ERISA, Bancorp will seek to maintain
Ryan, Beck's existing benefit plans in place for employees of the Resulting
Company after the merger.
<PAGE>
2. Intercompany Transactions and Charges. The parties agree and
acknowledge that it is impossible at this time to predict the transactions
between and relative contributions of Bancorp and the Resulting Company after
the merger. However, in any event, for purposes of the internal budgets and
accounting contemplated by Paragraph 1, Bancorp and the Resulting Company will
not enter into or effect any transaction, or provide or receive any services
between the Resulting Company, on the one hand, and Bancorp and its subsidiaries
on the other hand, except at prices and on terms which are not materially
different than the prices and terms available for similar transactions and
services with unrelated third parties. Further, Bancorp will not, for such
purposes, charge the Resulting Company any intercompany charges or similar
charges, except that Bancorp may charge the Resulting Company for charges or
expenses actually incurred, whether directly by the Resulting Company or
attributable to the Resulting Company, for which the Resulting Company receives
an actual service or benefit. Additionally, Bancorp agrees that any restricted
shares of its Class A Common Stock, par value $.01 per share, granted under the
Incentive Plan (the "Plan") created pursuant to Section 5.17 of the Acquisition
Agreement which are forfeited pursuant to the terms of the Plan will revert to
Bancorp, and Bancorp stock options or restricted shares for a like amount of
shares shall be made available for grant to newly-hired employees and officers
of the Resulting Company (who are not participants in the Plan) pursuant to the
terms of the relevant Bancorp plan without any additional charge to the
Resulting Company for purposes of the internal budgets and accounting
contemplated by Paragraph 1 hereof.
3. Management.
(a) Bancorp, as the sole shareholder of the Resulting Company, agrees
to grant to Alan B. Levan and Ben A. Plotkin (so long as they are available and
employed by Bancorp in the case of Levan and the Resulting Company in the case
of Plotkin) and Richard B. Neff or such other third party as may be mutually
agreed upon by Messrs. Levan and Plotkin, the right to designate those persons
who shall serve as the members of the Resulting Company's Board of Directors;
provided, however, that any designee to the Resulting Company's Board of
Directors shall be acceptable to each of Messrs. Levan and Plotkin. Consistent
with the terms of this Agreement, Bancorp agrees to vote its shares of the
Resulting Company in favor of the election of the individuals so designated to
the Resulting Company's Board of Directors.
(b) The Board of Directors of the Resulting Company shall (i) elect the
officers of the Resulting Company who shall serve at the pleasure of the
Board,(ii) subject to the approval of Bancorp, establish annual budgets and
performance goals for the Resulting Company, (iii) designate a management
compensation committee which shall make recommendations to the Board regarding
the compensation of the Resulting Company's non-executive officers and employees
and recommendations to Bancorp regarding the compensation of executive officers
and the granting of options to purchase Bancorp common stock available under
Bancorp benefit plans and (iv) subject to anything to the contrary set forth
herein, exercise such other responsibilities as customarily exercised by the
Board of Directors of a corporation including, without limitation, the hiring
and firing of employees.
(c) Responsibilities of the Officers. Subject to the direction of the
Resulting Company's Board of Directors, the officers of the Company shall be
responsible for the day to day operations of the Resulting Company.
<PAGE>
4. Resources of Bancorp. Bancorp agrees that it will make available to
the Resulting Company such resources as the parties mutually agree is
appropriate, including capital, on terms consistent with past borrowings of the
Company and mutually acceptable to the Boards of Directors of Bancorp and the
Resulting Company.
5. Extraordinary Events. The parties agree and acknowledge that,
without Bancorp's prior approval, Resulting Company will take no extraordinary
actions outside of the ordinary course of its business and will in no event (a)
incur debt in violation of any net capital requirements applicable to the
Company, (b) raise capital from third parties or issue any securities, (c) make
any acquisitions or investments in excess of $100,000 for investment purposes,
(d) settle lawsuits outside of the ordinary course of business or on terms which
could establish an adverse precedent for subsequent settlements or adversely
affect the Resulting Company's future operations or (e) change the compensation
of its executive officers.
6. Termination. This agreement shall terminate in the event (a) the
parties fail to agree upon a budget or performance goals for the Resulting
Company, (b) the Resulting Company materially fails to meet its previously
established performance goals other than as a consequence of adverse changes in
market conditions or (c) there occurs a material change in the executive
officers of the Resulting Company, including but not limited to, any change in
the Chief Executive Officer of the Resulting Company.
7. Miscellaneous Assignment.
(a) Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
(b) Waiver. Any of the parties hereto may extend the time for or waive
compliance with the performance of any obligation or other act of any other
party hereto. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
(c) No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
(including, without limitation, any employees of the Company) other than the
parties hereto and their respective successors and permitted assigns, any rights
or remedies under or by reason of this Agreement.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) Governing Law. This Agreement has been entered into and shall be
construed and enforced in accordance with the laws of the State of Florida
without reference to the choice of law principles thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in counterparts by their duly authorized officers, all as of the
date and year first above written.
BANKATLANTIC BANCORP, INC.
By:-----------------------
Name:
Title:
BCP ACQUISITION CORPORATION
By:-----------------------
Name:
Title:
RYAN, BECK & CO., INC.
By:-----------------------
Name:
Title:
MERGER AGREEMENT
THIS MERGER AGREEMENT is made as of February 9, 1998, by and
among Ryan, Beck & Co., Inc., a New Jersey corporation ("RBC"), Cumberland
Advisors, Inc., a New Jersey corporation and wholly-owned subsidiary of RBC
("Newco" and, together with RBC, "Purchaser"), Cumberland Advisors, a New Jersey
general partnership ("Advisors"), David R. Kotok ("Kotok"), Suzanne N. Greenberg
("Greenberg") and Sheldon E. Goldberg ("Goldberg"). (Kotok, Greenberg and
Goldberg are each a "Seller" and collectively the "Sellers"; Advisors and the
Sellers are each a "Cumberland Party" and collectively the "Cumberland Parties"
and Purchaser and the Cumberland Parties are collectively the "Parties".) Unless
otherwise indicated, capitalized terms used but not defined prior to their first
usage herein are defined in Section 1.6 and Article 9.
The Parties hereby agree as follows:
ARTICLE 1
ACQUISITION OF ADVISORS; CLOSING
1.1 The Merger; Effect of the Merger. Subject to the terms and
conditions of this Agreement, at the Effective Time (as hereinafter defined),
Advisors will be merged with and into Newco (the "Merger") in accordance with
the New Jersey Business Corporation Act (the "NJBCA"). Newco will be the
surviving corporation (the "Surviving Corporation") in the Merger, with the
initial corporate name of "Cumberland Advisors, Inc." and will continue to be
governed by the laws of the state of New Jersey as a wholly-owned subsidiary of
RBC. The Merger will have the effects specified in Section 10-6 of the NJBCA (as
made applicable to the Merger by Section 10-14 of the NJBCA).
1.2 Certificate of Incorporation. As of the Effective Time, the
certificate of incorporation of Newco as it exists at the Effective Time will be
the certificate of incorporation of the Surviving Corporation and will not be
amended by this Agreement or the Merger.
1.3 By-Laws. As of the Effective Time, the By-laws of Newco will be the
By-laws of the Surviving Corporation until otherwise amended as provided by law.
1.4 Directors and Officers. As of the Effective Time, the persons set
forth on Exhibit A hereto, as the same may be amended by mutual agreement of the
Parties prior to the Effective Time, will be the directors and officers of the
Surviving Corporation in the positions shown next to their names on Exhibit A.
1.5 Effective Time; Closing and Closing Date. The Merger will become
effective and be consummated upon the filing of a Certificate of Merger for the
Merger, in form and substance satisfactory to the Parties, with the Secretary of
State of the State of New Jersey (the "Certificate of Merger"). The "Effective
Time" will be the date and time specified in the Certificate of Merger as the
Effective Time, which will be 5:00 p.m. on the Closing Date, unless the Parties
agree to the contrary, which agreement the Parties will evidence by filing the
Certificate of Merger with the new agreed-upon Effective Time noted thereon. A
closing (the "Closing") of the Merger and the other transactions contemplated
hereby will take place at the offices of Pitney Hardin Kipp & Szuch, 200 Campus
Drive, Florham Park, New Jersey, or at such other place as is mutually agreeable
to the Parties, commencing at 10:00 a.m. local time on February 27, 1998 or such
other date as the Parties may mutually determine (the "Closing Date"); provided,
that no Closing will occur until the satisfaction or waiver of all of the
conditions to the consummation of the Merger specified in Article 6 hereof
(other than the delivery of certificates, opinions and other instruments and
documents to be delivered at the Closing); and provided, further, that the
parties intend to close on the last business day of a month. Immediately
following the Closing, the Certificate of Merger will be filed with the New
Jersey Secretary of State.
1.6 Consideration; Method of Payment. The consideration to be paid by
Purchaser to the Sellers in connection with the Merger and the Purchaser's
acquisition thereby of the Sellers' interests in Advisors (the "Consideration")
will consist of the Initial Cash Payment, the Initial Stock Payment and the Earn
Outs (less the Penalties and the Returned Amount, if any) (as each such term is
defined below) and will be paid in accordance with this Section 1.6.
(a) Consideration Payable at Closing. At the Closing,
Purchaser will make the following payments and deliveries of Consideration
(collectively the "Initial Consideration") to the Sellers:
(i) Initial Cash Payment. Purchaser will pay
to the Sellers in immediately available funds the aggregate
amount of One Million Nine Hundred Thousand Dollars
($1,900,000) (the "Initial Cash Payment"), payable $720,000 to
Kotok, $720,000 to Goldberg and $460,000 to Greenberg. Six
Hundred Thousand Dollars ($600,000) of the Initial Cash
Payment (the "Returnable Amount") will be subject to repayment
or partial repayment by Purchaser in accordance with the terms
and conditions set forth in Exhibit D hereto.
(ii) Initial Stock Payment. Purchaser will
deliver to the Sellers (the "Initial Stock Payment") 167,742
shares of Common Stock of RBC, $0.10 par value per share ("RBC
Common Stock") (based on an estimated per share value of $7.75
and an estimated aggregate value of $1,300,000), with 110,968
shares of such RBC Common Stock ($860,000 in estimated value)
to be held in the Escrow Account (as defined below) with
39,549 shares (20% of the Initial Stock Payment) subject to
forfeiture as a Penalty as provided in paragraph (a)(vii) and
paragraph (c) below and the remaining shares in the Escrow
Account subject to forfeiture upon non-payment when due of any
Returned Amount (as defined below) to Purchaser. The RBC
Common Stock will be divided among the Sellers as follows: 40%
to Kotok, 40% to Goldberg and 20% to Greenberg.
(b) Earn Outs and Penalties Payable Following the Closing.
Following the Closing, Purchaser will deliver the additional consideration
specified in paragraphs (i) and (ii) below (the "Earn Outs") to the Sellers (all
Earn Outs are to be split among Kotok, Greenberg and Goldberg as specified in
paragraphs (vi) and (viii) below), and the Sellers will redeliver the
consideration specified in paragraphs (iii) and (iv) below (the "Penalties") to
Purchaser (the payment obligations of Kotok, Greenberg and Goldberg with respect
to Penalties are as specified in paragraphs (vii) and (viii) below):
(i) MMB Earn Outs. The "Year 1 MMB Earn Out"
will equal the positive amount, if any, obtained by taking 65%
of {Year 1 MMB Income - Year 1 MMB Benchmark}, and multiplying
by 7. The "Year 2 MMB Earn Out" will equal the positive
amount, if any, obtained by taking 65% of {Year 2 MMB Income -
Year 2 MMB Benchmark}, and multiplying by 7. The "Year 3 MMB
Earn Out" will equal the positive amount, if any, obtained by
taking 65% of {Year 3 MMB Income Year 3 MMB Benchmark}, and
multiplying by 7.
(ii) IA Earn Outs. Subject to the IA Earn
Out Cap described below: (x) the "Year 1 IA Earn Out" will
equal the positive amount, if any, obtained by taking 65% of
{Year 1 IA Income - Year 1 IA Benchmark}, and multiplying by
7; the "Year 2 IA Earn Out" will equal the positive amount, if
any, obtained by taking 65% of {Year 2 IA Income - Year 2 IA
Benchmark}, and multiplying by 7; and the "Year 3 IA Earn Out"
will equal the positive amount, if any, obtained by taking 65%
of {Year 3 IA Income - Year 3 IA Benchmark}, and multiplying
by 7. The IA Earn Outs will be subject to an aggregate cap of
$2,000,000 (the "IA Earn Out Cap") and each IA Earn Out
calculated as set forth above shall be reduced, if and to the
extent necessary, so that the aggregate amount of IA Earn Outs
does not exceed the IA Earn Out Cap.
(iii) MMB Penalty. The "Year 1 MMB Penalty"
will equal the positive amount, if any, obtained by taking 65%
of {Year 1 MMB Benchmark - Year 1 MMB Income}, and multiplying
by 7. The "Year 2 MMB Penalty" will equal the positive amount,
if any, obtained by taking 65% of {Year 2 MMB Benchmark - Year
2 MMB Income}, and multiplying by 7. The "Year 3 MMB Penalty"
will equal the positive amount, if any, obtained by taking 65%
of {Year 3 MMB Benchmark - Year 3 MMB Income}, and multiplying
by 7.
(iv) IA Penalty. The "Year 1 IA Penalty"
will equal the positive amount, if any, obtained by taking 65%
of {Year 1 IA Benchmark - Year 1 IA Income}, and multiplying
by 7. The "Year 2 IA Penalty" will equal the positive amount,
if any, obtained by taking 65% of {Year 2 IA Benchmark - Year
2 IA Income}, and multiplying by 7. The "Year 3 IA Penalty"
will equal the positive amount, if any, obtained by taking 65%
of {Year 3 IA Benchmark - Year 3 IA Income}, and multiplying
by 7.
(v) Netting of Earn Outs and Penalties. All
Earn Outs and Penalties for a particular Year will be netted
against each other before any Earn Out is Paid or any Penalty
is imposed with respect to that Year.
(vi) Payment of Earn Outs. Each Earn Out
will be paid 50% in cash and 50% in RBC Common Stock (with
such RBC Common Stock valued at the average reported closing
price of RBC Common Stock for the 10 trading day period ending
on (and including) the trading day immediately prior to the
Payment Date). All the RBC Common Stock delivered as an Earn
Out will be held in the Escrow Account and subject to
forfeiture as a Penalty as provided in paragraph (a)(vii) and
paragraph (c) below. Subject to paragraph (viii) below, all
MMB Earn Outs will be payable 40% to Kotok, 40% to Goldberg
and 20% to Greenberg. Subject to paragraph (viii) below, all
IA Earn Outs will be payable to Kotok, Greenberg and Goldberg
based upon the relative percentage of the IA Business
attributable to each of them in the Year with respect to which
the IA Earn Out is to be paid.
(vii) Payment of Penalties. Each Penalty
will be paid from the RBC Common Stock which has been
delivered to the Sellers under paragraph (vi) above as an Earn
Out hereunder (with such RBC Common Stock valued at the value
it was given under paragraph (vi) above on a last in first out
basis) and, to the extent that there is insufficient Earn Out
RBC Common Stock to pay the Penalty in full, then the
remainder of the Penalty will be paid from the RBC Common
Stock which has been delivered to the Sellers as Initial Stock
Payment hereunder (with such RBC Common Stock valued at the
average reported closing price of RBC Common Stock for the 10
trading day period ending on (and including) the trading day
immediately prior to the last day of the Year with respect to
which the Penalty is due). The aggregate Penalties payable
hereunder will be capped at 100% of the RBC Common Stock which
has been delivered to the Sellers as Earn Out hereunder and
20% of the RBC Common Stock which has been delivered to the
Sellers as Initial Stock Payment hereunder. All the RBC Common
Stock which remains subject to Penalty forfeiture will be held
in the Escrow Account as provided in paragraph (c) below.
Subject to paragraph (viii) below, the split among the Sellers
in payment of any Penalties with respect to any Year will be
as agreed to among all the Sellers and set forth in a writing
signed by each of the Sellers (or their respective estates)
and delivered to RBC, or if no such writing is delivered to
RBC prior to the time the Penalty is applied, the split shall
be determined as follows: first determine the split of any IA
Penalty based upon the split applicable in the issuance of RBC
Common Stock against which the IA Penalty is to be taken;
second, add in any MMB Penalty (or net out any MMB Earn Out),
on the basis of 40% for Kotok, 40% for Goldberg and 20% for
Greenberg.
(viii) Death or Disability of a Seller.
Following the death or Disability of any Seller, the portion
of the Earn Outs (if any) payable with respect to the Year in
which such Seller dies or becomes Disabled will be paid to the
Seller or his or her estate proportionately to the portion of
the Year during which such person worked as an employee or
consultant for RBC. With respect to the remaining portion for
such Year and with respect to each subsequent Year, the Earn
Outs will be distributed among the remaining Sellers in a
manner agreed to among all the Sellers and set forth in a
writing signed by each of the Sellers (or their respective
estates) and delivered to RBC. RBC may refrain from paying any
Earn Outs until it receives such a writing evidencing the
agreement of the Sellers and their respective estates.
Penalties will continue to be payable by the Seller or his or
her estate following the death or Disability of the Seller, as
though the death or Disability had not occurred.
(ix) Determination of Attribution of
Business. In each instance in this Agreement when a
determination must be made as to the attribution of business
among the various Sellers, such attribution shall be made by
unanimous agreement of the Sellers (or their respective
estates), evidenced by a writing signed by all Sellers (or
their respective estates) and delivered to RBC.
(x) Earn Out and Penalty Definitions. The
following definitions will apply in this Section and elsewhere
in this Agreement:
"Business" means the IA Business and
the MMB Business.
"Business Day" means any day other
than a Saturday, Sunday or day which RBC has declared as a
holiday for its general staff.
"Business Expenses" mean those
expenses of the Surviving Corporation (or other successor to
the Business) during the period in question, including without
limitation (a) payouts to employees or others for the
Business, (b) salary, bonuses and benefits (including payments
to the Sellers as Executives under the Principal Agreements)
attributable to the Business, (c) actual expenses of the
Business, (d) those expenses for corporate parent level
services provided to the Business specified on Exhibit E
hereto, priced in accordance with Exhibit E hereto, (e) rent
(including any building maintenance costs, electric and
utilities payable by the lessee), for the offices of the
Business, including the Vineland office and other Business
offices, the locations of which are to be determined by the
President of the Surviving Corporation (and which may include
Livingston, New Jersey, Bala Cynwyd, Pennsylvania and/or
Portland, Maine); provided, however, Business Expense shall
exclude any general corporate parent level expenses or
overhead not specified above. Notwithstanding the foregoing,
all amounts paid out pursuant to the Surviving Corporation's
profit-sharing plan shall be excluded from Business Expense
for the Year for which they are paid. The term "Business
Expenses" is used solely for the purpose of making the
calculations required by this Agreement and is not intended to
affect the calculation of profit and loss or any other
financial accounting calculation to be made by RBC or the
Surviving Corporation with respect to their respective
businesses following the Closing. Further, "Business Expenses"
shall not include the deduction or amortization of any costs
or expenses associated with the Merger, amortization of good
will acquired by RBC or the Surviving Corporation in the
Merger or any other intangible or amortization of any amounts
assigned to the covenants not to compete in one or more of the
Principal Agreements.
"Consulting" means Cumberland
Consulting, a sole proprietorship owned by Kotok.
"Consulting Business" means the
business currently conducted by Consulting, as the same will
be conducted by the Surviving Corporation (or other successor
to the Business) following the Closing Date.
"Disability" means the determination
that a Seller is permanently disabled within the meaning of
any permanent disability insurance policy which may be
maintained by the Surviving Corporation or RBC for the benefit
of any of the Sellers.
"IA Benchmark" for Year 1, means
$300,000; for Year 2, means Year 1 IA Income; and, for Year 3,
means Year 2 IA Income.
"IA Business" means the investment
advisor business currently conducted by Advisors, as the same
will be conducted by the Surviving Corporation (or other
successor to the Business) following the Closing Date, whether
under the Cumberland Advisors name or any other name, and any
other related business conducted by the Surviving Corporation
(or other successor to the Business) following the Closing
Date. The term "IA Business" specifically excludes the
Consulting Business and the MMB Income.
"IA Income" for any Year means the
following amount (which may be a negative number), determined
on a pre-tax basis: the IA Revenues, less the Business
Expenses.
"IA Revenues" for any Year means the
gross fees attributable to the IA Business (excluding any fees
which are included in determining MMB Income), determined on a
pre-tax basis.
"MMB Benchmark" for Year 1, means
$150,000; for Year 2, means Year 1 MMB Income; and, for Year
3, means Year 2 MMB Income.
"MMB Business" means that portion of
the business currently conducted by Advisors which generates
money market fees and which will generate for RBC brokerage
commissions (net of out-of-pocket expenses, including
third-party charges, if any), as the same will be conducted by
the Surviving Corporation (or other successor to the Business)
following the Closing Date, whether under the Cumberland
Advisors name or any other name. The term "MMB Business"
specifically excludes the Consulting Business.
"MMB Income" for any Year means the
sum of the following two (2) components, determined on a
pre-tax basis for the Year (which sum may be a negative
number):
(i) The administrative fees (usually
up to sixty (60) basis points) paid during such Year by the
banks or funds holding the money-market accounts generated by
customers of the IA Business, regardless of whether such fees
are paid to RBC, the Surviving Corporation (or any successor
to the Surviving Corporation), or a custodian bank, less
third-party charges, if any, deducted from such payments; and
(ii) The commission income generated
from orders entered by employees of or consultants of the
Surviving Corporation on behalf of its clients to RBC during
such Year, less the amount of cash outlays incurred by RBC in
providing soft dollar research and other services requested by
the Surviving Corporation during such Year; provided that the
commission income derived from each transaction shall, if a
purchase or sale of equity securities, be determined; (x)
multiplying the number of shares purchased or sold by an
amount per share set forth on Schedule 1.6(b)(x) and (y)
subtracting therefrom the sum of Thirty-five Dollars ($35.00).
The Surviving Corporation and RBC
shall each maintain records of the MMB Income generated and
shall reconcile them monthly. The Surviving Corporation may
elect to carry forward a specified balance of MMB Income from
Year 1 or Year 2, and the amount of any such carryover shall
be considered MMB Income for the succeeding Year. Such
carryover shall be made only if Kotok recommends such
carryover to the Board of Directors of the Surviving
Corporation within 60 days after the end of the carryover Year
and the Board of Directors approves such carryover
The "Payment Date" for any Earn Out
or Penalty means the 90th day following the end of the Year to
which the Earn Out or Penalty relates, or if such day is not a
Business Day, then the Payment Date will be the next Business
Day. The "Final Payment Date" is the last date on which an
Earn Out or Penalty is scheduled to be paid hereunder.
"Returned Amount" means any amount
of Initial Cash Payment which any of the Sellers is required
to return to Purchaser in accordance with the terms and
conditions set forth on Exhibit D hereto.
"Year" (only when capitalized) means
the twelve full month period beginning with the first full
calendar month which follows the Closing Date (sometimes
called "Year 1"), and each successive twelve full month period
(sometimes called "Year 2," "Year 3" and so on). Thus,
assuming a February 27, 1998 Closing Date, "Year 1" would mean
the period beginning March 1, 1998 and ending February 28,
1999, "Year 2" would mean the period beginning March 1, 1999
and ending February 29, 2000, and "Year 3" would mean the
period beginning March 1, 2000 and ending February 28, 2001.
(c) Limitations on Transfer of RBC Common Stock Consideration.
The RBC Common Stock included within the Consideration will be delivered to the
Sellers in a private placement and will not be registered under federal or state
securities laws for resale by the Sellers. The Sellers will not sell, transfer
or otherwise dispose of ("transfer") any portion of such RBC Common Stock prior
to the Final Payment Date, except for transfers by will or under intestacy laws,
transfers in divorce or transfers to family members, in each case with the
transferee bound by all transfer restrictions contained herein and with all
transferred shares subject to forfeiture pursuant to the Penalty provisions
hereof. Following the Final Payment Date, no Seller will transfer or sell any
portion of such RBC Common Stock unless (i) such transfer is made in conformity
with the volume and other limitations of Rule 144 promulgated by the Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act"), (ii) in the opinion of RBC's counsel or counsel reasonably
acceptable to RBC, such transfer is otherwise exempt from registration under the
1933 Act or (iii) such transfer is registered under the 1933 Act. Stop transfer
instructions will be given to RBC's transfer agents with respect to such RBC
Common Stock and there will be placed on the certificates representing such RBC
Common Stock an appropriate legend with respect to such restrictions. Prior to
the Final Payment Date, all such RBC Common Stock which is subject to forfeiture
as a Penalty and all such RBC Common Stock which is to serve as collateral for
the obligation to repay any Returned Amount will be deposited into an escrow
account (the "Escrow Account") with an escrow agent mutually agreed upon between
Purchaser and Sellers. The RBC Common Stock held in the Escrow Account which is
subject to forfeiture as a Penalty will be delivered to Sellers upon the Final
Payment Date; provided, however, that if any Penalties are imposed hereunder,
that portion of such RBC Common Stock necessary for RBC to recover such
Penalties shall first be redelivered to RBC. The RBC Common Stock held in the
Escrow Account which is to serve as collateral for the obligation to repay any
Returned Amount will be delivered to Sellers upon the determination that no
Returned Amount is to be repaid to Purchaser hereunder, or the determination
that all such Returned Amounts have been paid in full; provided, however, that
if any Returned Amounts are required to be repaid hereunder and are not repaid
immediately upon written notice thereof from Purchaser to the Seller(s)
obligated to make such repayment, Purchaser may retain such escrowed RBC Common
Stock and apply it against such repayment obligations (with such RBC Common
Stock valued at its fair market value on the date of such application).
Dividends upon RBC Common Stock held in the Escrow Account shall be payable
directly to the Sellers and shall not be deposited in the Escrow Account.
(d) Certification of Earn Outs, Penalty and Returned Amounts.
RBC and Kotok (or such other person appointed by the majority of the Sellers)
will cooperate each Year to determine the amount of any Earn Out, Penalty or
Returned Amount. Prior to or contemporaneously with making or demanding any Earn
Out, Penalty or Returned Amount payment required hereunder, RBC will deliver to
each of the Sellers a certificate of RBC's Chief Financial Officer or Chief
Executive Officer which sets forth the calculations by which RBC derived the
amount of the payment due to or from each of the Sellers and certifies their
accuracy.
(e) Allocation of Consideration. Purchaser and the Sellers
shall agree upon an allocation of the Consideration and shall report the Merger
for all Federal, state and local tax purposes in a manner consistent with such
allocation.
1.7 Principal Agreements. As a condition to Purchaser's obligation to
consummate the transactions contemplated hereby: (a) Kotok will enter into an
employment and non-compete agreement with the Surviving Corporation
substantially in the form attached hereto as Exhibit F (the "Kotok Employment
Agreement"); (b) Greenberg will enter into an employment and non-compete
agreement with the Surviving Corporation substantially in the form attached
hereto as Exhibit G (the "Greenberg Employment Agreement"); and (c) Goldberg
will enter into a consulting and non-compete agreement with the Surviving
Corporation substantially in the form attached hereto as Exhibit H (the
"Goldberg Consulting Agreement"). The Kotok and Greenberg Employment Agreements
and the Goldberg Consulting Agreement are each sometimes referred to herein as a
"Principal Agreement" and collectively as the "Principal Agreements."
1.8 Agreements Regarding Consulting. As a condition to Purchaser's
obligation to consummate the transactions contemplated hereby: (a) Kotok will
contribute the Consulting Business to the Surviving Corporation, and (b) Kotok
will enter into a separate employment and non-compete agreement with the
Surviving Corporation relating to the conduct of the Consulting Business,
substantially in the form attached hereto as Exhibit F-1 (the "Second Kotok
Employment Agreement"). The Surviving Corporation intends to operate the
Consulting Business as a division of the Surviving Corporation. Following the
Closing, the Surviving Corporation will keep its books and records so that the
financial results of the Consulting Business can be determined as though it were
a stand-alone business, and the revenues (or losses, if any) of the Consulting
Business shall not be counted in determining the revenues (or losses, if any) of
either the IA Business or the MMB Business for purposes of the calculations
called for by this Agreement.
Following the Closing, the allocation of expenses between the Surviving
Corporation and the Consulting Business, where such expenses have been jointly
incurred or where employees of the Consulting Business are requested to perform
services for the Surviving Corporation, or vice versa, shall be calculated in
good faith by the President of the Surviving Corporation based upon, and
consistent with, the past practices in allocating expenses between Advisors an
Consulting prior to the Closing Date. Such allocation shall be reported to, and
shall be subject to the approval of, the Board of Directors of the Surviving
Corporation. A report of the allocation, as approved by the Board of Directors
of the Surviving Corporation, shall be submitted promptly to the Cumberland
Parties, who shall have twenty (20) days from their receipt thereof to object in
writing. The Board of Directors of the Surviving Corporation shall consider any
such objections in good faith and determine whether to revise the allocation.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF RBC AND NEWCO
As a material inducement to the Cumberland Parties to enter into this
Agreement, each of RBC and Newco hereby jointly and severally represents and
warrants to each of the Cumberland Parties that:
2.1 Organization of RBC and Newco. RBC is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey.
RBC has the requisite corporate power and authority and all licenses, permits
and authorizations necessary to enter into, deliver and carry out its
obligations pursuant to, this Agreement. Newco is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey.
Newco has the requisite corporate power and authority and all licenses, permits
and authorizations necessary to enter into, deliver and carry out its
obligations pursuant to, this Agreement.
2.2 Authorization; Binding Effect; No Breach. Each of RBC's and Newco's
execution, delivery and performance of this Agreement has been duly and validly
authorized by all necessary corporate action on its part. This Agreement
constitutes a valid and binding obligation of each of RBC and Newco which is
enforceable against it in accordance with its terms, except as such
enforceability may be limited by (a) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and (b) applicable equitable principles (whether considered in a
proceeding at law or in equity). The execution and delivery of this Agreement by
each of RBC and Newco and the performance of its obligations hereunder are not
in violation or breach of, and do not conflict with or constitute a default
under, any law, rule or regulation of any Government Entity, or any of the terms
or provisions of its certificate of incorporation or by-laws or any material
agreement, license or other instrument to which it is a party. No consent,
approval, authorization or order of any Government Entity is required for the
execution and delivery of this Agreement by either RBC or Newco or for the
performance by either RBC or Newco of its obligations hereunder, other than such
consents, approvals, authorizations or orders as are required to continue,
renew, or reissue to the Surviving Corporation following the Merger those
licenses under which Advisors conducts its business prior to the Merger.
2.3 Brokerage. There is no claim for brokerage commissions, finders'
fees or similar compensation in connection with the Merger based on any
arrangement or agreement which is binding upon either RBC or Newco.
2.4 Certain Litigation. Except as set forth on Schedule 2.4 hereto,
there is no action, suit, proceeding, order, investigation or claim pending (or,
to the best of RBC's Knowledge, threatened) against or affecting RBC (or to the
best of RBC's Knowledge, pending or threatened against or affecting any partner,
officer or employee of RBC with respect to RBC's business), by or before any
court, other Governmental Entity or arbitrator, including, without limitation,
(a) with respect to the Merger, or (b) concerning any aspect of the conduct of
RBC's business, and, to the best of RBC's Knowledge, there is no basis for any
of the foregoing. Except as set forth in Schedule 2.4, there is no outstanding
order, writ, judgment, injunction, award or decree of any court, other
Governmental Entity or arbitrator against or affecting RBC or any of its
Affiliates.
2.5 SEC Filings. RBC has filed all forms, reports and documents
required to be filed with the SEC since January 1, 1996 and has made available
to Sellers in the form filed with the SEC (i) its Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 and its Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31, 1997, June 30, 1997 and September 30,
1997, (ii) all proxy statements relating to RBC's meetings of shareholders held
since December 31, 1996, (iii) all other reports or registration statements
filed by RBC with the SEC since December 31, 1996 (not including Reports filed
on Forms 3, 4 or 5 by or on behalf of RBC's affiliates) and (iv) all amendments
and supplements to all such reports and registration statements (collectively,
the "SEC Reports"). The SEC Reports (i) were prepared in accordance with the
requirements of the 1933 Act or the Securities Exchange Act of 1934, as amended
(the "1934 Act"), as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such amending or superseding filing) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
2.6 Disclosure. Neither this Article 2 nor any certificate or other
item delivered to any Cumberland Party by or on behalf of RBC or Newco pursuant
to this Agreement contains any untrue statement of a material fact or omits a
material fact which is necessary to make any statement contained herein or
therein not misleading.
2.7 Accuracy on Closing Date. Each representation and warranty set
forth in this Article 2 and all information contained in any certificate
delivered by or on behalf of RBC or Newco pursuant to this Agreement will be
true and correct as of the time of the Closing as though then made, except (a)
as affected by the transactions expressly contemplated hereby and (b) to the
extent that such representation or warranty by its terms relates solely to an
earlier date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES REGARDING ADVISORS
As a material inducement to RBC and Newco to enter into and consummate
this Agreement, each of the Cumberland Parties hereby jointly and severally
represents and warrants to RBC and Newco that:
3.1 Organization and Power. Advisors is a general partnership duly
organized and validly existing under the laws of the State of New Jersey.
Advisors has the requisite partnership power necessary to own and operate its
respective properties, carry on its respective business and enter into and
deliver this Agreement and carry out the transactions contemplated hereby.
3.2 Partnership Interests. Advisors has heretofore delivered to
Purchaser a true and complete copy of the Advisors Partnership Agreement and any
other organization documents, in each case including all amendments thereto, of
Advisors (the "Advisors Governing Documents"). The interests of each of the
Sellers in Advisors (collectively the "Advisors Interests") are the only
existing interests of a partnership or equity nature in Advisors and are held by
the Sellers free and clear of any Liens. There are no outstanding or authorized
options, warrants, purchase rights, or other contracts or commitments that could
require Advisors to issue, sell or otherwise cause to become outstanding any of
its partnership interests. There are no voting trusts, proxies or other
agreements or understandings with respect to the voting of any of the Advisors
Interests. The capital contributed to Advisors by each Seller consists of the
amounts specified in Schedule 3.2 hereto. All such capital contributions have
been fully paid and no one is obligated to contribute any further amounts as
capital to Advisors.
3.3 Authorization; Binding Effect; No Breach. Advisors' execution,
delivery and performance of this Agreement has been duly authorized by all
necessary partnership action. This Agreement constitutes a valid and binding
obligation of Advisors which is enforceable against it in accordance with its
terms, except as such enforceability may be limited by (a) applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws
affecting creditors' rights generally and (b) applicable equitable principles
(whether considered in a proceeding at law or in equity). The execution and
delivery of this Agreement by Advisors and the performance of its obligations
hereunder are not in violation or breach of, and do not conflict with or
constitute a default under, any law, rule or regulation of any Government
Entity, or any of the terms or provisions of any Advisors Governing Document or
any material agreement, license or other instrument to which Advisors is a
party. No consent, approval, authorization or order of any Government Entity is
required for the execution and delivery of this Agreement by Advisors or, except
for the consents described on Schedule 3.3 hereto, for the performance by it of
its obligations hereunder. All consents described on Schedule 3.3 hereto will
have been obtained on or prior to the Closing Date.
3.4 Partnership Actions. All actions taken by Advisors have been duly
authorized, and no such actions have been taken in breach or violation of any
Advisors Governing Document.
3.5 Financial Statements. Attached as Schedule 3.5 to this Agreement
are true and complete copies of the Financial Statements. The Financial
Statements were prepared in accordance with GAAP consistently applied throughout
the periods involved, were prepared in accordance with the books and records of
Advisors, and present fairly, in all material respects, the financial position
of Advisors, as of the respective dates thereof and the results of operations of
Advisors, for the respective periods then ended.
3.6 Absence of Undisclosed Liabilities. Except as set forth on Schedule
3.6 hereto, as of the date hereof Advisors has not, and as of the Closing Date
will not have, any liability (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to Advisors, whether due or to
become due, and regardless of when asserted) other than: (a) the liabilities set
forth on the face of the Latest Balance Sheet, (b) liabilities pursuant to the
Contracts listed on Schedule 3.10, (c) current liabilities which have arisen
after the date of the Latest Balance Sheet in the ordinary course of business
and consistent with Advisors' past practice (none of which is a liability
resulting from breach of contract, breach of warranty, tort, infringement,
violation of law, claim or lawsuit) and (d) other liabilities and obligations
expressly disclosed in the other Schedules to this Agreement.
3.7 Title to Assets. Except as set forth on Schedule 3.7 hereto,
Advisors owns outright and has good and marketable title to all of its
respective assets and properties (including those reflected on the Latest
Balance Sheet), in each case free and clear of any Liens, except for (i) assets
and properties which have been disposed of in the ordinary course of business
since the date of the Latest Balance Sheet, (ii) lease obligations under
Contracts set forth on Schedule 3.10 entered into in the ordinary course of
business, and (iii) Liens which in the aggregate are not substantial in amount
and which do not materially detract from the value of the assets or properties
subject thereto (as carried on the Latest Balance Sheet) or interfere with the
present use of such assets or properties.
3.8 Absence of Certain Developments.
(a) Since the date of the Latest Balance Sheet, except for the
payment of $15,000 in professional fees, Advisors has operated the Business only
in the ordinary course of business consistent with past practice and with the
Advisors Governing Documents, and has not directly or indirectly:
(i) amended any Advisors Governing Document;
(ii) issued any partnership interest;
(iii) declared, paid or set aside any sum for any
distributions of any kind (including without
limitation cash, accounts receivable or leasehold
improvements) to any of its partners, or made any
direct or indirect redemption, retirement, purchase
or other acquisition of any partnership interest;
provided, however, that this clause (iii) will not be
deemed breached by Advisors' payment of rent in
accordance with the terms of its existing lease as
disclosed to Purchaser, nor by Advisors' distribution
of profits for 1997 and 1998 up to the Closing Date,
so long as Advisors retains at least $165,000 of
capital as of the Closing Date;
(iv) made any change in its
accounting methods or practices;
(v) made any loan or advance to any other Person
outside the ordinary course of business, or made any loan or
advance to any Affiliate;
(vi) acquired all or any substantial part of the
assets, securities or business of any other Person; or
(vii) entered into any Contract to do any of the
foregoing.
(b) Except as set forth on Schedule 3.8 hereto, since the
date of the Latest Balance Sheet there has been no material adverse change in
the financial condition, operating results, assets, customer relations, employee
relations or business prospects of the Business and, without limiting the
foregoing, Advisors has not directly or indirectly:
(i) incurred any Indebtedness or entered into any
commitment to borrow money or any contingent obligation, or
incurred or assumed any Liability or series of related
Liabilities not set forth in Schedule 3.10 and in excess of
$10,000 singly or $75,000 in the aggregate;
(ii) made any material change in any of its business
policies or practices, including, without limitation,
commission or fee structures;
(iii) suffered any damage, destruction, casualty or
loss, whether or not covered by insurance, affecting any of
its property;
(iv) allowed the creation of any Lien on any of its
tangible or intangible assets, or any sale, transfer,
assignment, lease or abandonment of any interest in any of
its tangible or intangible assets, other than sales,
transfers, assignments and leases in the ordinary course of
business consistent with past practice;
(v) terminated, failed to renew, received any written
notice (that was not subsequently withdrawn) to terminate or
fail to renew, amended, altered, modified, suffered the
occurrence of any default under, failed to perform any
Liabilities or obligations under, or waived or released any
rights under, any Contract which is material to the
Business;
(vii) forgiven or permitted any cancellation of any
claim, debt or account receivable, other than cancellations
in the ordinary course of business consistent with past
practice of any claim, debt or account receivable in an
amount below $1,000;
(viii) made any payment, discharge or satisfaction of
any Liability in excess of $5,000 before the same became due
in accordance with its terms;
(ix) hired any new employees, consultants, agents or
other representatives or entered into any employment or
consulting agreements, or terminated, or made any change in
the employment terms or conditions of, any officers,
directors, employees, consultants, agents or other
representatives, provided, however, that no disclosure need
be made hereunder if Advisors collectively have hired ten or
fewer such persons since the date of the Latest Balance
Sheet and none of them is being paid at a rate in excess of
$75,000 per year;
(x) increased or agreed to increase any salary,
wages, bonus, severance, compensation, pension or other
benefits payable or to become payable, or granted any
severance or termination payments or benefits, to any of its
current or former officers, directors, employees,
consultants, agents or other representatives, or amended any
Plan in any respect; or
(xi) entered into any Contract, commitment or
transaction to do any of the foregoing.
3.9 Employees.
(a) Continued Employment. Advisors does not have any Knowledge
that any of its executives or key employees plans to terminate his or her
employment.
(b) Compliance and Restrictions. Advisors has complied in all
substantial respects with all laws relating to the employment of labor in
connection with its business, including provisions of such laws relating to
wages, hours, equal opportunity, collective bargaining and the payment of social
security and other taxes, and it has no material labor relations problem
(including any union organization activities, threatened or actual strikes or
work stoppages or material grievances). Except as set forth in Schedule 3.9,
neither Advisors nor any of its employees are subject to any noncompete,
nondisclosure, confidentiality, employment, consulting or similar agreement
relating to, affecting, or in conflict with, the business activities as
presently conducted or as proposed to be conducted by Advisors. There are no
collective bargaining or other labor union contracts to which Advisors is a
party or which are applicable to any Person employed by Advisors. There is no
pending or, to the Knowledge of Advisors, threatened union organizational
effort, material labor dispute, strike or work stoppage against Advisors.
(c) Compensation. Advisors has previously provided to
Purchaser true and correct copies of the Financial Statements and its
year-to-date payroll registers. Such documents list (i) the name and total
compensation (payable by Advisors) of each partner and each employee of
Advisors, (ii) all bonuses and other incentive compensation received by such
Persons since January 1, 1997 and any accrual for such bonuses and incentive
compensation, and (iii) all Contracts or commitments by Advisors or any of its
Affiliates to increase the compensation or to modify the conditions or terms of
employment of any of their partners or employees, provided, however, that no
disclosure need be made with respect to persons hired by Advisors since the date
of the Latest Balance Sheet if Advisors has hired ten or fewer such persons
since the date of the Latest Balance Sheet and none of them is being paid at a
rate in excess of $75,000 per year. To the Knowledge of Advisors, except as set
forth in the Financial Statements or in Advisors' year-to-date payroll register
or on Schedule 3.10(d), none of the partners of Advisors, nor any relative of
any such partner, is directly or indirectly a party to any Contract or
arrangement with Advisors providing for the furnishing of services by, the
purchase, acquisition, lease or rental of property from, or otherwise requiring
payments to any such partner or relative (other than for service in such
capacity as a partner.
3.10 Contracts and Commitments.
(a) Contracts Schedule. Schedule 3.10 contains a true and
complete list of all written or oral contracts, agreements, understandings or
other binding arrangements (each a "Contract") to which Advisors is a party or
by or to which Advisors or its assets are or may be bound or subject, as each
such Contract may have been amended, modified or supplemented, which falls into
one or more of the following categories and is not listed in Schedule 3.9:
(i) brokerage, management, servicing, advisory or
consulting Contracts;
(ii) partnership or joint venture Contracts;
(iii) Contracts containing any covenant or provision
limiting the ability of any Person to engage in any line of
business, engage in business in any geographical area or
compete with any other Person;
(iv) Contracts relating to the borrowing of money or
other Indebtedness, or the direct or indirect guaranty of
any obligation for, or Contract to service the repayment of,
Indebtedness, or any other contingent obligation;
(v) lease, sublease, rental or other Contracts under
which Advisors is a lessor or lessee of any real Property;
(vi) lease, sublease, rental, licensing, use or
similar Contracts with respect to personal property used by
Advisors in the conduct of its business, operations or
affairs and providing for annual rental or use payments in
excess of $5,000;
(vii) Contracts for the purchase or sale of
materials, supplies or equipment (including, without
limitation, computer hardware and software), or the
provision of services (including, without limitation, data
processing services), provided, however, that disclosure
need not be made pursuant to this clause (viii) with respect
to Contracts entered into since the date of the Latest
Balance Sheet for the purpose of acquiring materials,
supplies and equipment necessary for Advisors' offices so
long as such Contracts, in the aggregate, require the
payment by Advisors of less than $250,000 and none of such
Contracts are with any of the Sellers or any Affiliates of
any of the Sellers;
(viii) Contracts relating to licenses of trademarks,
trade names, service marks or other similar rights;
(ix) Contracts between or among (A) Advisors, on the
one hand, and (B) any other Cumberland Party or any other
Affiliate of Advisors (or any officer, director, employee,
consultant, agent or representative of any such other
Affiliate), on the other hand ("Affiliate Agreements");
(x) Contracts under which Advisors agrees to
indemnify any Person;
(xi) any powers of attorney granted by Advisors to
any Person;
(xii) Contracts providing for any consequences upon
any sale of a interest in Advisors or other direct or
indirect change of control of Advisors; or
(xiii) any other Contracts which are material to
Advisors.
(b) Enforceability. Each Contract described on Schedule 3.10
is valid, binding and enforceable in accordance with its terms, except as such
enforceability may be limited by (i) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and (ii) applicable equitable principles (whether considered in a
proceeding at law or in equity).
(c) Compliance. Advisors has performed all obligations
required to be performed by it under each Contract, and it is not in default
under or in breach in any material respect of (nor is it in receipt of any claim
of default or breach under) any such obligation. No event has occurred which
with the passage of time or the giving of notice (or both) would result in a
default, breach or event of noncompliance in any material respect under any
obligation of Advisors pursuant to any Contract. Advisors has a present
expectation and intention of fully performing every one of its obligations
pursuant to each Contract to which it is a party, and Advisors has no Knowledge
of any breach or anticipated breach by any other party to any Contract.
(d) Affiliated Transactions. Except as disclosed in Schedule
3.10(d) pursuant to clause (ix) of Section 3.10(a), no Affiliate of any
Cumberland Party (and no individual related by blood or marriage to any such
Person, and no entity in which any such Person or individual owns any beneficial
interest) is a party to any Contract with Advisors (other than this Agreement)
or has any material interest in any material property used by Advisors.
(e) Copies. Except for Investment Management Agreements and
related documents entered into in the ordinary course of Advisors' business (the
forms of which are included in Schedule 3.10), Purchaser has been supplied with
a true and correct copy of each written Contract, each as currently in effect.
3.11 Intellectual Property; Software. The only name under which
Advisors has conducted business since its formation is "Cumberland Advisors."
Advisors has no other trademarks, service marks, copyrights, patents or similar
rights. The only trademarks, service marks, copyrights, patents, trade secrets,
computer software or other similar intellectual property rights ("Intellectual
Property") used by Advisors and material to the conduct of its business is
described on Schedule 3.11. Except as indicated in Schedule 3.11, Advisors owns,
or has registered or valid rights to use, free and clear of any Lien, all such
Intellectual Property. Advisors has received no written notice that, nor has any
Knowledge that, it is infringing or otherwise in conflict with the rights of any
other Person in respect of Intellectual Property. All software programs owned or
licensed by Advisors that are used in the operation of its business are in good
working order. Except as described on Schedule 3.11, the consummation of the
Merger will have no adverse effect on any Intellectual Property or Advisors'
rights therein, nor will it give rise to a right on the part of any owner or
licensor of such Intellectual Property to charge additional fees to Advisors or
otherwise increase the costs to Advisors of using such Intellectual Property.
3.12 Certain Litigation. Except as set forth on Schedule 3.12 hereto,
there is no action, suit, proceeding, order, investigation or claim pending (or,
to the best of Advisors' Knowledge, threatened) against or affecting Advisors
(or to the best of Advisors' Knowledge, pending or threatened against or
affecting any partner, officer or employee of Advisors with respect to the
Business), by or before any court, other Governmental Entity or arbitrator,
including, without limitation, (a) with respect to the Merger, or (b) concerning
any aspect of the conduct of the Business, and, to the best of Advisors'
Knowledge, there is no basis for any of the foregoing. Except as set forth in
Schedule 3.12, there is no outstanding order, writ, judgment, injunction, award
or decree of any court, other Governmental Entity or arbitrator against or
affecting Advisors or any of its Affiliates.
3.13 Brokerage. There is no claim for brokerage commissions, finders'
fees or similar compensation in connection with the Merger based on any
arrangement or agreement which may be binding upon any Cumberland Party or to
which any Cumberland Party or any assets of Advisors may be subject.
3.14 Insurance. Schedule 3.14 hereto contains a list of each insurance
policy maintained by Advisors with respect to its properties, assets or
business, and each such policy is in full force and effect. Advisors is not in
default of any obligation pursuant to any insurance policy maintained by it.
Except as set forth on Schedule 3.14, no such insurance policy contains any
provision providing that any other party thereto may terminate or cancel the
same by reason of the Merger, or any other provision which would be altered or
otherwise become inapplicable by reason of the Merger, and no party has given
notice of cancellation or non-renewal of any such insurance policy or that it
intends to cancel or fail to renew any such insurance policy as a result of the
Merger. Neither Advisors nor any of its Affiliates has failed to give any notice
or present any claim under any such insurance policy in due or timely fashion or
as required thereby in a manner which may jeopardize full recovery thereunder.
3.15 ERISA. Except as set forth on Schedule 3.15 hereto:
----- -------------
(a) with respect to all current employees (including those on
lay-off, disability or leave of absence), former employees, and retired
employees of Advisors (the "Employees"), Advisors does not maintain or
contribute to any (i) employee welfare benefit plans (as defined in Section 3(1)
of ERISA) ("Employee Welfare Plans"), or (ii) any plan, policy or arrangement
which provides nonqualified deferred compensation, bonus or retirement benefits,
severance or "change of control" (as set forth in Code Section 280G) benefits,
or life, disability accident, vacation, tuition reimbursement or other material
fringe benefits ("Other Plans");
(b) Advisors does not maintain, contribute to, or participate
in any defined benefit plan or defined contribution plan which are employee
pension benefit plans (as defined in Section 3(2) of ERISA) ("Employee Pension
Plans");
(c) Advisors does not contribute to nor participate in any
multiemployer plan (as defined in Section 3(37) of ERISA) (a "Multiemployer
Plan");
(d) Advisors does not maintain nor have any obligation to
contribute to or provide any post-retirement health, accident or life insurance
benefits to any Employee, other than limited medical benefits required to be
provided under Code Section 4980B;
(e) all Plans (and all related trusts and insurance contracts)
comply in form and in operation in all respects with the applicable requirements
of ERISA and the Code;
(f) all required reports and descriptions (including all Form
5500 Annual Reports, Summary Annual Reports, PBGC-1s and Summary Plan
Descriptions) with respect to all Plans have been properly filed with the
appropriate government agency or distributed to participants, and each
Cumberland Party has complied with the requirements of Code Section 4980B;
(g) with respect to each Plan, all contributions, premiums or
payments which are due on or before the Closing Date have been paid to such
Plan; and
(h) Advisors has not incurred any liability to the Pension
Benefit Guaranty Corporation (the "PBGC"), the United States Internal Revenue
Service, any multiemployer plan or otherwise with respect to any employee
pension benefit plan or with respect to any employee pension benefit plan
currently or previously maintained by members of the controlled group of
companies (as defined in Sections 414(b) and (c) of the Code) that includes
Advisors that has not been satisfied in full, and no condition exists that
presents a material risk to Advisors or any member of such controlled group of
incurring such a liability (other than liability for premiums due the PBGC)
which could reasonably be expected to have any adverse effect on Purchaser,
Advisors or any of Advisor's assets after the Closing.
3.16 Real Estate and Personal Property. Schedule 3.16 hereto contains a
true and complete list (designating the relevant owners, lessors and lessees) of
(a) all real property owned, leased or subleased by Advisors and all buildings
and other structures located on such real property (including leasehold
improvements) , and (b) all vehicles, equipment, furniture, fixtures and other
personal property owned, leased, subleased or managed by Advisors which, in the
case of clause (b) only, is material to Advisors. The Properties owned, leased
or subleased by Advisors are sufficient to conduct its operations as currently
conducted, and the foregoing personal properties are in sound operating
condition and repair, normal wear and tear excepted. There has not been any
material interruption of the operations of Advisors due to inadequate
maintenance of any such properties. With respect to the leases under which
Advisors leases real property, each such lease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the Merger.
3.17 Advisors' Business. Advisors currently conducts, and has since its
inception conducted, no business other than the investment advisory and
consulting businesses.
3.18 Compliance with Laws.
(a) Generally. Subject to the qualifications contained in
Schedule 3.18(a), Advisors is in compliance with, and Advisors has not received
notice of any violation by it of, or default by it under any of: (i) the
Advisors Governing Documents, (ii) laws, statutes, ordinances, rules,
regulations or other Legal Requirements, whether federal, state, local or
foreign and (iii) orders, writs, judgments, injunctions, awards and decrees of
any court, other Governmental Entity or arbitrator.
(b) Industry Governing Laws. In furtherance and not in
limitation of the foregoing, except as set forth in Schedule 3.18(a), Advisors
is in compliance with, and has not received notice of any violation by it of, or
default by it under, any Industry Governing Law.
(c) Required Permits. Advisors (and to the extent set forth on
Schedule 3.18(c) hereto, its personnel) possesses all Permits necessary for the
ownership of its assets and the conduct of its business. Schedule 3.18(c) hereto
sets forth a true and complete list of all such Permits. Advisors has heretofore
delivered or made available to Purchaser true and complete copies of all such
Permits as currently in effect. All such Permits are valid and in full force and
effect, without any restriction or impairment, except as set forth in Schedule
3.18(c). There is no action, proceeding, inquiry or investigation pending or, to
the Knowledge of Advisors, threatened for the suspension, modification,
limitation, cancellation, revocation or nonrenewal of any such Permit, and
Advisors has no Knowledge of any existing fact or circumstance which (with or
without notice or lapse of time or both) is reasonably likely to result in the
suspension, modification, limitation, cancellation, revocation or nonrenewal of
any such Permit. Schedule 3.18(c) sets forth those Permits which, to the
Sellers' Knowledge, the Surviving Corporation will require in order to conduct
the Business following the Closing and which will not pass to the Surviving
Corporation by operation of law pursuant to the Merger (the "Required New
Permits"). Except for the Required New Permits and except for compliance with
periodic renewal procedures, no approvals or authorizations will be required to
permit the Surviving Corporation to continue conducting the Business presently
conducted by Advisors following the Closing, nor will the consummation of the
Merger result in the suspension, modification, cancellation, revocation or
nonrenewal of any Permit possessed by Advisors' personnel and necessary for the
Surviving Corporation's ownership of its assets or the conduct of its business.
Advisors is not engaged in nor has it engaged in any operations in any
jurisdiction in which it is not, and was not then, duly authorized or qualified
to transact such business, except for those jurisdictions specified on Schedule
3.18 as jurisdictions for which qualification is not required.. Advisors has not
been advised by any Person that any Permit will not in the ordinary course be
renewed upon its expiration or that the Merger will make it more difficult to
renew or obtain any Permit.
(d) Environmental and Safety Matters. Except as disclosed on
Schedule 3.18(d): (i) Advisors has no Knowledge that there has been any release,
spill, emission, leaking, deposit, disposal, discharge, dispersal or leaching
into the environment of any Hazardous Material at, in, on, under or from any
real property leased, used or managed by it ("Advisors Real Property"); (ii)
Advisors has no Knowledge that any Hazardous Materials are being stored or
otherwise are present at, in, on or under any Advisors Real Property where, to
the actual Knowledge of Advisors, such activity is not in compliance with
Environmental and Safety Requirement; (iii) Advisors has no Knowledge that it is
not in compliance with all Environmental and Safety Requirements, nor has
Advisors received notice of any violation or non-compliance by it with any
Environmental and Safety Requirement, nor does Advisors have any Knowledge of
any existing facts or circumstances that are likely to result in any such
violation or non-compliance; and (iv) there is no action or proceeding pending
or, to the Knowledge of Advisors, threatened against it or any of its Affiliates
that alleges or would allege any violation of or non-compliance with any
Environmental and Safety Requirement.
3.19 Regulatory Compliance. Except as set forth in Schedule 3.19
hereto, Advisors has filed all material reports, statements, registrations,
applications, filings or other documents and submissions required to be filed
with, or provided to, any Governmental Entity. Except as set forth in Schedule
3.19, all such reports, statements, registrations, applications, filings,
documents and submissions were in compliance in all material respects with all
applicable laws, statutes, ordinances, rules or regulations and were complete
and correct in all material respects when filed, and no material deficiencies
have been asserted by any Governmental Entity with respect thereto. Except as
set forth in Schedule 3.19, there is no action, proceeding, dispute,
controversy, inquiry or investigation pending or, to the Knowledge of Advisors,
threatened by any such Governmental Entity relating to Advisors.
3.20 Accounts Receivable. The accounts receivable of Advisors as
reflected in the Latest Balance Sheet, to the extent uncollected on the date
hereof, and the accounts receivable reflected on the books and records of
account of Advisors as of the date hereof and as of the Closing Date, are and
will be valid and existing and represent and will represent monies due, and
Advisors has established and will establish reserves reasonably considered
adequate for receivables not collectible in the ordinary course of business, and
(subject to the aforesaid reserves) no amounts are subject to refunds or other
adjustments or to any defenses, rights of setoff, assignments, restrictions,
encumbrances or conditions enforceable by third parties on or affecting it.
3.21 Investments; Bank Accounts. Schedule 3.21 hereto contains a true
and complete list of all securities and other investments owned by Advisors as
of the end of the most recent calendar month. Except as set forth in Schedule
3.21, no such security or other Investment is in default in the payment of
principal or interest or dividends. Schedule 3.21 hereto contains a true and
complete list of (i) the names and locations of all banks, trust companies,
securities brokers and other financial institutions at which Advisors has an
account, deposit, lock box or safety deposit box for its own benefit or
maintains a banking, custodial, trading or other similar relationship for its
own benefit, (ii) each such account, deposit, box or relationship and (iii) the
name of every Person authorized to draw thereon or having access thereto.
3.22 Clients and Fees. Schedule 3.22 hereto sets forth (i) a correct
list of the names and addresses of all Current Clients, and (ii) a correct list
of the names and addresses of all Clients that have been gained or lost since
January 1, 1997, and (iii) a copy of the form of contract currently in effect
with, and the brochure most recently distributed to, the Current Clients.
Schedule 3.22 includes a summary of all revenues earned by Advisors from each
Current Client during 1997. To the Knowledge of Advisors, none of the Current
Clients intends to cease doing business with Advisors, or to materially alter
the amount of the business that such Client is presently doing with Advisors.
Schedule 3.22 identifies each Current Client which is (i) an employee benefit
plan subject to Title I of ERISA, or Section 4975 of the Code, or (ii) a Person
whose assets are treated as assets of such a plan under ERISA or applicable
regulations, and Advisors is in compliance in all material respects with the
provisions of ERISA and Section 4975 of the Code applicable to its relationships
with those Current Clients.
3.23 Disclosure. Neither this Article 3 nor any schedule, attachment,
written statement, document, certificate or other item supplied to Purchaser by
or on behalf of Advisors with respect to the transactions contemplated hereby
contains any untrue statement of a material fact or omits a material fact
necessary to make each statement contained herein or therein not misleading.
There is no fact which Advisors has not disclosed to Purchaser in writing and of
which Advisors has Knowledge (other than matters of a general economic nature)
and which has had or could reasonably be expected to have a material adverse
effect upon the financial condition, operating results, assets, customer
relations, employee relations or business prospects of Advisors.
3.24 Accuracy on the Closing Date. Each representation and warranty set
forth in this Article 3 and all information contained in any exhibit, schedule
or attachment to this Agreement or in any certificate or other writing delivered
by, or on behalf of, Advisors to Purchaser will be true and correct as of the
time of the Closing as though then made, except (a) as affected by the
transactions expressly contemplated hereby and (b) to the extent that such
representation or warranty by its terms relates solely to an earlier date.
ARTICLE 3A
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As a material inducement to Purchaser to enter into this Agreement and
acquire Advisors, each of the Sellers hereby severally (and not jointly)
represents and warrants to Purchaser, as to himself only and not as to the other
Sellers, that:
3A.1 Power and Capacity. The Seller has the requisite power and
capacity to enter into and deliver this Agreement and carry out the transactions
contemplated hereby.
3A.2 Partnership Interests; Capital. All of the partnership interests
shown next to the Seller's name on Schedule 3.2(a) are held of record and
beneficially by the Seller free and clear of any Liens. The capital contributed
to Advisors by the Seller consists of the amounts specified in Schedule 3.2(b)
hereto. Such capital contributions have been fully paid and the Seller is not
obligated to contribute any further amounts as capital to Advisors.
3A.3 Authorization; Binding Effect; No Breach. This Agreement
constitutes a valid and binding obligation of the Seller which is enforceable
against the Seller in accordance with its terms, except as such enforceability
may be limited by (a) applicable insolvency, bankruptcy, reorganization,
moratorium or other similar laws affecting creditors' rights generally and (b)
applicable equitable principles (whether considered in a proceeding at law or in
equity). The execution and delivery of this Agreement by the Seller and the
performance of the Seller's obligations hereunder are not in violation or breach
of, and do not conflict with or constitute a default under, any law, rule or
regulation of any Government Entity, or any material agreement, license or other
instrument to which the Seller is a party. No consent, approval, authorization
or order of any Government Entity or any other Person is required for the
execution and delivery by the Seller of this Agreement or any other agreement
entered into in connection herewith or, except for the consents described on
Schedule 3.3 hereto, for the performance by the Seller of his obligations
hereunder or under any other agreement entered into in connection herewith.
3A.4 Affiliated Transactions. Except as set forth on Schedule 3.10(d)
hereto, neither the Seller nor any individual related by blood or marriage to
the Seller, nor any entity in which the Seller or any such related individual
owns any beneficial interest, is a party to any Contract with Advisors (other
than this Agreement) or has any material interest in any material property used
by Advisors.
3A.5 Certain Litigation. Except as set forth on Schedule 3.12 hereto,
there is no action, suit, proceeding, order, investigation or claim pending (or,
to the best of the Seller's Knowledge, threatened) against or affecting the
Seller, by or before any court, other Governmental Entity or arbitrator (a) with
respect to the Merger, or (b) concerning any aspect of the conduct of the
Business, and, to the best of the Seller's Knowledge, there is no basis for any
of the foregoing. Except as set forth in Schedule 3.12, there is no outstanding
order, writ, judgment, injunction, award or decree of any court, other
Governmental Entity or arbitrator against or affecting the Seller (a) with
respect to the Merger, or (b) concerning any aspect of the conduct of the
Business.
3A.6 Brokerage. There is no claim for brokerage commissions, finders'
fees or similar compensation in connection with the Merger based on any
arrangement or agreement which may be binding upon the Seller or to which the
Seller may be subject.
3A.7 Investments; Bank Accounts. Other than as set forth on Schedule
3.21 hereto, the Seller has no Knowledge of any account, deposit, lock box,
safety deposit box, banking, custodial, trading or other similar relationship of
Advisors.
3A.8 Private Placement Representations and Warranties
(a) Acquisition for Investment Only. The shares of RBC Common
Stock which are to be received by the Seller as Consideration hereunder (the
"Securities") will be acquired for investment for the Seller's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof; the Seller has no present intention of selling, granting any
participation in, or otherwise distributing the same; and the Seller does not
presently have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any third
person, with respect to any of the Securities.
(b) Disclosure of Information. The Seller believes he or she
has received all the information he or she considers necessary or appropriate
for deciding whether to acquire the Securities. The Seller has had an
opportunity to ask questions and receive answers from RBC regarding the terms
and conditions of the offering of the Securities and the business, properties,
prospects and financial condition of RBC.
(c) Investment Experience. The Seller is able to fend for him
or herself, can bear the economic risk of his or her investment in the
Securities, and has such knowledge and experience in financial or business
matters that he or she is capable of evaluating the merits and risks of the
investment in the Securities.
(d) Accredited Investor. The Seller is an "accredited
investor" within the meaning of SEC Rule 501 of Regulation D, as presently in
effect.
(e) Restricted Securities. The Seller understands that the
Securities are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from RBC in a transaction
not involving a public offering and that under such laws and applicable
regulations the Securities may be resold without registration under the 1933 Act
only in certain limited circumstances. The Seller is familiar with SEC Rule 144,
as presently in effect, and understands the resale limitations imposed thereby
and by the 1933 Act.
(f) Legends. It is understood that the Securities, and any
securities issued in respect thereof or exchange therefor, may bear the
following legends, as well as any legend required by the Blue Sky laws of any
state to the extent such laws are applicable to the shares represented by the
certificate so legended:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT."
3A.9 Accuracy on the Closing Date. Each representation and warranty of
the Seller set forth in this Article 3A will be true and correct as of the time
of the Closing as though then made, except (a) as affected by the transactions
expressly contemplated hereby and (b) to the extent that such representation or
warranty by its terms relates solely to an earlier date.
ARTICLE 4
CERTAIN COVENANTS OF ADVISORS
Advisors covenants and agrees with Purchaser as follows:
4.1 Conduct of Business.
(a) From the date hereof to and including the Closing Date
(the "Interim Period"), Advisors will (i) conduct its operations in the ordinary
course of business consistent with past practice and use its best efforts to
preserve intact its business organizations, goodwill and Permits, to keep
available the services of its officers and employees and to maintain existing
relationships with Clients, customers, accounts, managers, agents, distributors,
suppliers and others having business dealings with it, (ii) maintain insurance
coverages and its books, records and accounts in the usual manner consistent
with prior practice, (iii) comply in all material respects with all laws,
statutes, ordinances, rules and regulations of Governmental Entities applicable
to it, (iv) maintain and keep its Properties and equipment in good repair,
working order and condition, normal wear and tear excepted, and (v) perform in
all material respects its obligations under all Contracts and commitments to
which it is a party or by or to which it is bound or subject.
(b) During the Interim Period, Advisors will not, directly or
indirectly (i) amend or modify any of its Advisors Governing Documents, (ii)
issue, sell, deliver or agree or commit to issue, sell or deliver any
partnership interest, (iii) declare, pay or set aside any sum for any
distribution in respect of the partnership interests, or redeem, purchase or
otherwise acquire (or agree to redeem, purchase or otherwise acquire) any
partnership interest, provided, that this clause (iii) will not be deemed
breached by Advisors' payment of rent in accordance with the terms of its
existing lease as disclosed to Purchaser, nor by Advisors' distribution of
profits for 1997 and for 1998 up to the Closing Date, so long as Advisors
retains at least $165,000 of capital as of the Closing Date, (iv) adopt a plan
of complete or partial liquidation, dissolution, rehabilitation, merger,
consolidation, restructuring, recapitalization or other reorganization, (v) make
any material change in any financial reporting, Tax or accounting methods or
practices, (vi) make any Tax election or settle or compromise any federal,
state, local or foreign income Tax liability, (vii) purchase or sell securities
or other investments, or invest or reinvest income and proceeds in respect
thereof, other than in the ordinary course of business consistent with past
practice, or (viii) without the prior written consent of Purchaser, take any of
the other actions described in Section 3.8 hereof or take any action, or omit to
do any act, that individually or in the aggregate would, or would be reasonably
likely to, result in (A) any of the representations and warranties set forth in
Article 3 of this Agreement not being true in all respects or (B) any of the
conditions set forth in Article 6 not being satisfied or (C) any breach of any
covenant or obligation hereunder.
4.2 Access to Information; Consultation; Updated Schedules. During the
Interim Period, Advisors will (i) allow Purchaser and its officers, employees,
counsel, accountants, consultants and other authorized representatives
("Representatives") to have reasonable access to its books, records, Contracts,
facilities, management and personnel, (ii) furnish promptly to Purchaser and its
Representatives all information and documents concerning it as Purchaser or its
Representatives may reasonably request, and (iii) cause its officers, employees
and Representatives and those of its Affiliates to cooperate in good faith with
Purchaser and its Representatives in connection with all such access. In
addition, Advisors will consult with Purchaser a reasonable period of time prior
to entering into any transaction or arrangement or taking any action which is
material to it, in a manner which will allow Purchaser a reasonable opportunity
to evaluate and present its views to them regarding such transaction,
arrangement or action.
4.3 Interim Financial Statements. During the Interim Period, as soon as
practicable after they become available (and in any event within 15 business
days after the end of each calendar month), Advisors will deliver to Purchaser
true and complete copies of (i) its balance sheet as at the end of each month
and the related statements of income for such month and (ii) to the extent
prepared, any and all other financial statements of Advisors covering any date
or period during the period from the date hereof to the Closing Date (the
"Interim Financial Statements"). In addition, during the Interim Period, if and
when available, Advisors will deliver to Purchaser true and complete copies of
any budgets, business plans and financial projections, or modifications thereof,
prepared by or on behalf of it or its Affiliates. The Interim Financial
Statements with respect to Advisors, if any, will be prepared on a basis
consistent with the accounting principles and practices used in the preparation
of the Financial Statements and in accordance with the books and records of
Advisors, and will present fairly, in all material respects, the financial
condition of Advisors as of the dates thereof and the results of operations of
Advisors for the respective periods then ended, subject to normal recurring
year-end audit adjustments.
ARTICLE 4A
CERTAIN COVENANTS OF THE SELLERS
Each of the Sellers hereby severally (and not jointly) covenants and
agrees with Purchaser, as to himself only and not as to the other Sellers:
4A.1 Access to Information; Consultation; Updated Schedules. From time
to time prior to the Closing Date, and on and as of the Closing Date, the Seller
will promptly supplement or amend (by written notice to Purchaser) any Schedule
delivered pursuant hereto with respect to which the Seller has made a
representation or warranty hereunder (a "Seller Schedule"), with respect to any
matter hereafter arising which, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or described in such
Seller Schedule or which is necessary to correct any information in such Seller
Schedule which had been rendered inaccurate thereby.
4A.2 Cumberland Name. From and after the Closing, the Seller will not,
and will cause his or her Affiliates not to, use the name "Cumberland" or any
name or other Intellectual Property of any type which is confusingly similar to
such name or any Intellectual Property of the Surviving Corporation or RBC,
other than in the operation of a business owned, directly or indirectly, by RBC.
Notwithstanding the foregoing, Goldberg can continue to use the name "Cumberland
Brokerage" for his independent business ("Cumberland Brokerage"); provided, that
if (a) the Surviving Corporation determines in its sole discretion that the use
of such name by Goldberg or his Affiliates has caused or is reasonably likely to
cause confusion among one or more Clients, or (b) Goldberg increases the net
number of registered representatives working in his brokerage business in a
building which also houses a business operated by the Surviving Corporation,
then promptly upon written notice from the Purchaser, Goldberg will, and will
cause his Affiliates to, cease using the name "Cumberland" in connection with
their business.
4A.3 Instruments. Any monies, checks, drafts, money orders, postal
notes and other instruments received after the Closing by the Seller or any of
his Affiliates (other than the Surviving Corporation or any of the other
Sellers) in payment of any amounts due Advisors will be forthwith after receipt
by the Seller or any of such Affiliates be transferred and delivered by the
Seller and such Affiliates to the Surviving Corporation (or other designee of
Purchaser), and any such instruments made payable to the Seller or any of such
Affiliates when so delivered will bear all endorsements required to effectuate
the transfer of the same to the Surviving Corporation (or any such other
designee).
4A.4 Further Assurances. The Seller, for himself and his successors and
assigns, hereby covenants and agrees that, at Purchaser's sole expense and
without the assumption of any additional liability therefor, upon the reasonable
written request of Purchaser within 90 days after the Closing Date, the Seller
will execute and deliver to Purchaser and its successors and assigns such
further instruments of sale, conveyance, assignment and transfer, and take such
other action in order more effectively to sell, convey, grant, assign, transfer
and deliver the Advisors Interests to Purchaser, and to permit Purchaser to
exercise any of the rights or privileges intended to be conveyed, assigned,
transferred and delivered by such Seller to Purchaser pursuant to this
Agreement.
4A.5 Principal Agreement. At the Closing, the Seller will enter into
the Principal Agreement in the form attached hereto bearing the Seller's name.
4A.6 Limitations on Disposition of Securities. Without limiting any
other restrictions on transfer of the Securities contained herein, and other
than transfers by will or under intestacy laws, transfers in divorce or
transfers to family members, in each case with the transferee having agreed in
writing for the benefit of RBC to be bound in writing by all transfer
restrictions contained in this Merger Agreement and with all transferred shares
subject to forfeiture pursuant to the Penalty provisions hereof, the Seller
shall not make any disposition of all or any portion of the Securities until and
unless: (a) there is then in effect a registration statement under the 1933 Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or (b) (i) The Seller shall have notified RBC
of the proposed disposition and shall have furnished RBC with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by RBC, the Seller shall have furnished RBC with an opinion
of counsel, reasonably satisfactory to RBC, that such disposition will not
require registration under the 1933 Act. It is agreed that RBC will not require
opinions of counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
ARTICLE 4B
CERTAIN COVENANTS OF THE CUMBERLAND PARTIES
Each of the Cumberland Parties covenants and agrees with Purchaser as
follows:
4B.1 No Solicitation. The Cumberland Parties and their Representatives
will immediately cease any existing communications or negotiations with any
Persons other than Purchaser and its Representatives with respect to any
acquisition of any material portion of the assets of, or any interest in,
Advisors, or any business combination with Advisors or any other transaction
inconsistent with consummation of the Merger (an "Alternative Transaction"), and
will not, directly or indirectly, solicit, encourage or participate in
discussions or negotiations with, or provide any information or documents to, or
otherwise cooperate in any way with, any Person other than Purchaser and its
Representatives concerning any Alternative Transaction. If any Cumberland Party
receives any oral or written proposal relating to an Alternative Transaction,
such Cumberland Party will (i) inform the Person proposing such Alternative
Transaction that the Cumberland Parties are required by contract to refrain from
discussing any Alternative Transaction, (ii) not make any other statement or
engage in any other discussions with such Person concerning any Alternative
Transaction, and (iii) immediately notify Purchaser of the Alternative
Transaction proposal.
4B.2 Inter-Affiliate Accounts; Affiliate Agreements. Each of the
Cumberland Parties will cause all accounts receivable or payable (whether or not
currently due or payable) between (i) Advisors on the one hand, and (ii) the
Sellers or any of their Affiliates, or any of the directors, officers, employees
or relatives of any of the same, on the other hand, to be settled in full
(without any premium or penalty, and at values mutually agreed upon by the
parties hereto) at or prior to the Closing. Except as set forth on Schedule 4B.2
or as otherwise agreed to in writing by Purchaser, all Affiliate Agreements will
be terminated without any further Liability or obligation thereunder effective
at or prior to the Closing, upon terms and pursuant to instruments reasonably
satisfactory to Purchaser.
4B.3 Partnership Records. At or prior to the Closing, the Cumberland
Parties will deliver to Purchaser (or its designee) originals or, with
Purchaser's consent which shall not be unreasonably withheld, copies of all
ledgers, books, records, files and Properties of Advisors that are in the
possession or. control of it or its Affiliates.
4B.4 Confidentiality. Each Cumberland Party will keep confidential and
will not divulge to any party, without the prior written consent of Purchaser,
any confidential information with respect to Purchaser, or any of the terms of
this Agreement, including without limitation, the Consideration paid by
Purchaser, unless any such information or documents (i) is or becomes generally
available to the public (other than as a result of a disclosure by any
Cumberland Party or any of its or his Representatives) , (ii) was already known
by or available on a non-confidential basis to the Cumberland Parties prior to
being furnished hereunder, (iii) is or becomes available to the Cumberland
Parties from a third party not bound by any contractual obligation to keep such
information confidential or (iv) upon advice of counsel, is required to be
disclosed in order to comply with applicable law or regulatory authority
(provided that the disclosing party will use reasonable good faith efforts to
notify Purchaser, and attempt to obtain the reasonable approval of Purchaser,
prior to such disclosure). In the event of the termination of this Agreement in
accordance with its terms, each of the Cumberland Parties will, upon request of
Purchaser, promptly deliver to Purchaser all written information and documents
with respect to Purchaser provided to them by Purchaser or its Representative in
the possession of such Cumberland Party or any personnel thereof, including all
copies, reproductions, summaries, analyses and extracts thereof or based
thereon.
4B.5 Vineland Lease Amendment. Prior to the Closing, the Cumberland
Parties will cause the lease agreement (the "Vineland Lease") governing
Advisors' principal office in Vineland, New Jersey (the "Vineland Office") to be
amended in form and substance satisfactory to RBC so that the annual rent
thereunder is reduced by $50,000 for at least five years, with building cost
allocations unchanged. The Parties understand that this will result in an annual
rent of $24,000, plus all building maintenance costs and all electric and
utilities, but that the lessee will not be responsible for structural costs.
ARTICLE 4C
CERTAIN COVENANTS OF ALL THE PARTIES
Each of the Parties covenants and agrees with the other as follows:
4C.1 Cooperation and Reasonable Best Efforts. Subject to the terms and
conditions hereof: (a) each of the Parties will cooperate with the other in
connection with consummating the transactions contemplated by this Agreement and
(b) each of the Parties will use commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
For purposes of this Agreement, the covenant of the Parties to use their
"commercially reasonable efforts" will not require any party to (i) incur any
unreasonable expenses, (ii) agree to materially limit the conduct of its
business or (iii) divest itself of any material assets or Properties, in each
case except as otherwise contemplated hereunder.
4C.2 Consents and Approvals; Required New Permits. As soon as
practicable after the execution of this Agreement, each of the Parties will
obtain any necessary Consents of, and make any filing with or give any notice
to, any Governmental Entities and other Persons as are required to be obtained,
made or given by such Party to consummate the transactions contemplated by this
Agreement, including without limitation obtaining all Required New Permits on
behalf of Newco. The Parties will cooperate with one another in exchanging such
information and reasonable assistance as may be required by any such
Governmental Entity or as any other Party may request in connection with the
foregoing.
4C.3 Notification of Certain Matters. Each of the Parties will give
prompt notice to the other of (a) the occurrence or nonoccurrence of any event,
the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty of such Party contained in this Agreement to be
untrue or inaccurate at or prior to the Closing and (b) any material failure of
such Party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it or him hereunder; provided, however, that the
delivery of any notice pursuant to this Section 4C.3 will not cure such failure
or limit or otherwise affect the remedies available hereunder to the Parties
receiving such notice. Without limiting the generality of the foregoing, from
the date hereof through the Closing Date, each of the Parties will promptly
notify the others of any action, suit, claim, proceeding or investigation of the
type required to be described in Schedule 3.12 hereof that is commenced or, to
its or his Knowledge, threatened, and of any request for additional information
or documentary materials by any Governmental Entity in connection with the
Merger.
4C.4 Client Notices. The Parties will cooperate with each other in
causing notices in form and substance satisfactory to each of them ("Client
Notices") to be sent to Current Clients advising them with respect to the Merger
and providing an opportunity for them to elect not to continue as clients of the
Surviving Corporation following the Merger. The Cumberland Party shall promptly
inform Purchaser with respect to Current Clients who make such an election.
ARTICLE 5
CERTAIN COVENANTS OF THE PURCHASER
Each of RBC and Newco covenants and agrees with each Cumberland
Party as follows:
5.1 Inspection by the Sellers. After the Closing Date, each Seller, at
such Seller's expense, will have the continuing right to use, inspect, and make
extracts from or copies of any documents or records delivered to Purchaser under
this Agreement. Before destruction or disposition of any documents or files
transferred hereunder, Purchaser will give reasonable notice to each Seller and
will allow each Seller, at its own expense, to recover the same from Purchaser.
5.2 Confidentiality. Purchaser will keep confidential and will not
divulge to any party, without the prior written consent of the Sellers, any
confidential information with respect to any of the Cumberland Parties, or any
of the terms of this Agreement, including without limitation, the Consideration
paid by Purchaser, unless any such information or documents (i) is or becomes
generally available to the public (other than as a result of a disclosure by any
Cumberland Party or any of its or his Representatives) , (ii) was already known
by or available on a non-confidential basis to Purchaser prior to being
furnished hereunder, (iii) is or becomes available to Purchaser from a third
party not bound by any contractual obligation to keep such information
confidential or (iv) upon advice of counsel, is required to be disclosed in
order to comply with applicable law or regulatory authority (provided that
Purchaser will use reasonable good faith efforts to notify the party who
furnished such information and documents, and attempt to obtain the reasonable
approval of the latter party, prior to such disclosure). In the event of the
termination of this Agreement in accordance with its terms, Purchaser will, upon
request of the Sellers, promptly deliver to the Sellers all written information
and documents with respect to any of the Cumberland Parties provided to it by
any Cumberland Party or its Representative in the possession of Purchaser, or
any personnel thereof, including all copies, reproductions, summaries, analyses
and extracts thereof or based thereon. Upon consummation of the transactions
contemplated hereby, all rights to the confidential information of Advisors will
remain with Advisors, and Purchaser will have no continuing obligations to the
Sellers with respect to keeping such information confidential.
5.3 Reports Under the 1934 Act. With a view to making available to the
Sellers the benefits of Rule 144 promulgated under the 1933 Act and any other
rule or regulation of the SEC that may at any time permit a Seller to sell RBC
Common Stock to the public without registration (when such sale is permitted
hereunder), RBC will: (a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times; (b) file with
the SEC in a timely manner all reports and other documents required of RBC under
the 1934 Act; and (c) furnish to each Seller forthwith upon such Seller's
request (at any time when sale of RBC Common Stock by such Seller is permitted
hereunder) (i) a written statement by RBC that it has complied with the
reporting requirements of SEC Rule 144 and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of RBC and such other reports and documents so
filed by RBC, and (iii) such other information as may be reasonably requested in
availing such Seller of any rule or regulation of the SEC which permits the
selling of such securities without registration.
5.4 Payments of Advisors' Payable to Principals. On or before March 15,
1998, RBC shall cause the Surviving Corporation to pay to the Principals all
amounts remaining due to them with respect to Advisors' distribution of profits
for 1998 up to the Closing Date in accordance with Section 4.1(b), which amounts
shall be calculated during the 15-day period following the Closing.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions of the Cumberland Parties to Close. The obligations of
the Cumberland Parties to consummate the Merger and the other transactions
contemplated hereby at the Closing will be subject to the satisfaction or, if
permitted by law, waiver of the following conditions at or prior to the Closing.
(a) Representations and Warranties. Each representation and
warranty set forth in Article 2 will be true and correct in all material
respects at and as of the Closing as though then made, except to the extent of
any change solely caused by the transactions expressly contemplated hereby.
(b) Covenants. Each of RBC and Newco will have performed in
all material respects each covenant or other obligation required to be performed
by it pursuant hereto prior to the Closing.
(c) Compliance with Applicable Laws. The consummation of the
Merger will not be prohibited by any Legal Requirement or subject any Seller to
any penalty or liability arising under any Legal Requirement or imposed by any
Government Entity. Newco shall have all Required New Permits.
(d) Proceedings. No action, suit or proceeding will be pending
or threatened before any Government Entity the result of which could prevent or
prohibit the consummation of the Merger, cause such transactions to be rescinded
following such consummation or adversely affect Purchaser's performance of its
obligations pursuant hereto, and no judgment, order, decree, stipulation,
injunction or charge having any such effect will exist.
(e) Certificates. Each of RBC and Newco will have delivered to
the Sellers a copy of the resolutions adopted by their respective Board of
Directors, certified by their respective corporate Secretary, authorizing and
approving this Agreement and the Merger.
(f) Principal Agreements. At the Closing, the Surviving
Corporation will enter into each of the Principal Agreements.
(g) Opinion of Counsel. The Sellers will have received from
Pitney, Hardin, Kipp & Szuch, legal counsel for RBC and Newco, an opinion with
respect to the matters set forth in Exhibit J attached hereto addressed to the
Sellers. Such opinion will be dated the Closing Date and will be in form
satisfactory to the Sellers' legal counsel.
(h) No Material Adverse Change. There will have been no
material adverse change in the business, operations or condition (financial or
otherwise), results of operations, or prospects of either RBC or Newco between
December 31, 1997 and the Closing Date.
(i) Client Rescission. Current Clients, in their responses to
the Client Notices, shall not have indicated that they would terminate or reduce
their business dealings with the Surviving Corporation after the Merger such
that an aggregate reduction of more than $168,000 in annual IA Revenues would be
likely to result from such terminations and reductions (without giving effect to
any offsetting increases in IA Revenues which might be anticipated).
(j) Purchaser Closing Documents. Each of RBC and Newco will
have delivered to the Sellers an Officer's Certificate, dated the Closing Date,
stating that the conditions specified in Sections 6.1(a) through 6.1(b),
inclusive, have been fully satisfied, and such other documents relating to the
Merger to be consummated at the Closing as the Sellers reasonably request.
All corporate and other proceedings or actions taken or required to be taken by
each of RBC and Newco in connection with the Merger and the other transactions
contemplated hereby, and all documents incident thereto, must be reasonably
satisfactory in form and substance to the Sellers and their legal counsel.
6.2 Conditions of Purchaser to Close. The obligation of each of RBC and
Newco to consummate the Merger and the other transactions contemplated hereby at
the Closing will be subject to the satisfaction or, if permitted by law, waiver
of the following conditions at or prior to the Closing.
(a) Representations and Warranties. Each representation and
warranty set forth in Articles 3 and 3A will be true and correct in all
respects, at and as of the Closing as though then made, except to the extent of
any change solely caused by the transactions expressly contemplated hereby.
(b) Covenants; Cumberland Lease. Each Cumberland Party will
have performed and observed in all respects each covenant or other obligation
required to be performed or observed by such Person pursuant hereto prior to the
Closing. Without limiting the foregoing, the Cumberland Parties will have caused
the Vineland Lease to be amended in form and substance satisfactory to RBC as
set forth in Section 4B.5.
(c) Compliance with Applicable Laws. The consummation of the
Merger will not be prohibited by any Legal Requirement or subject Purchaser,
Advisors, or Advisors' assets to any penalty, liability or (in Purchaser's sole
judgment) other onerous condition arising under any applicable Legal Requirement
or imposed by any Government Entity. Without limiting the foregoing, it shall be
a condition to Purchaser's obligation to close that Purchaser shall be satisfied
that (x) Newco has all Required New Permits and (y) none of the Cumberland
Parties has taken any action or omitted to take any action (whether or not such
action or omission was permissible for such party at the time taken or omitted)
which would cause RBC or any of its Affiliates to be in violation of any
material legal requirement (such as the so-called "pay-to-play" rules)
applicable to RBC or any of its Affiliates following the Closing.
(d) Proceedings. No action, suit or proceeding will be pending
or threatened before any Government Entity the result of which could prevent or
prohibit the consummation of any transaction pursuant hereto, cause any such
transaction to be rescinded following consummation, or adversely affect
Purchaser's right to conduct the Business or any Cumberland Party's performance
or its obligations pursuant hereto, and no judgment, order, decree, stipulation,
injunction or charge having any such effect will exist. No Person will have
brought or threatened to bring, or notified any Cumberland Party in writing of a
claim which could result in, any action, suit or proceeding before any
Government Entity with respect to an alleged violation of any Industry Governing
Law.
(e) Consents. All filings, notices, licenses, consents,
authorizations, accreditation, waivers, approvals and the like of, to or with
any Government Entity or any other Person that are required for the consummation
of the Merger or the conduct of the Business by Purchaser thereafter (the
"Consents") will have been duly made or obtained, none of which will impose upon
Purchaser or Advisors any material condition, restriction or required
undertaking. Without limiting the foregoing, all consents, approvals,
authorizations and orders of any Government Entity required to continue, renew,
or reissue to Advisors following the Merger those licenses under which Advisors
conducts its Business prior to the Merger will have been obtained.
(f) Opinion of Counsel. Purchaser will have received from
Pelino & Lentz, legal counsel for the Sellers, an opinion with respect to the
matters set forth in Exhibit I attached hereto addressed to Purchaser. Such
opinion will be dated the Closing Date and will be in form satisfactory to
Purchaser's legal counsel.
(g) Principal Agreements. Each of the Sellers will have
executed and delivered to Purchaser his or her respective Principal Agreement.
(h) Estoppel Letters. With respect to each parcel of real
estate which Advisors leases or subleases, Advisors will have initiated the
process of obtaining for Purchaser (and, with respect to the Vineland Office,
will have obtained and delivered to Purchaser) an estoppel letter from the
lessor under the related lease or sublease to the effect that: (i) the copy of
the lease or sublease attached to such estoppel letter is a true, correct and
complete copy of such lease or sublease and represents the entire agreement
between such lessor and Advisors, as to such parcel; (ii) Advisors is not in
breach or default under such lease or sublease, and no event has occurred which,
with the giving of notice or the passage of time, would constitute such a breach
or default, or permit termination, modification or acceleration under such lease
or sublease; (iii) such lessor has not repudiated any provision of such lease or
sublease; (iv) there are no disputes, oral agreements or forbearance programs in
effect as to such lease or sublease; (v) such lessor consents to the Merger (if
such consent is required by the terms of the lease), and (vi) such other matters
as Purchaser reasonably may request.
(i) No Material Adverse Change. There will have been no
material adverse change in the business, operations, assets, Properties,
Liabilities, condition (financial or otherwise) , results of operations,
prospects or Permits of Advisors between the date of the Latest Balance Sheet
and the Closing Date.
(j) Due Diligence. Purchaser will have completed to its
satisfaction the due diligence investigation and acquisition audit of Advisors.
(k) Client Rescission. Current Clients, in their responses to
the Client Notices, shall not have indicated that they would terminate or reduce
their business dealings with the Surviving Corporation after the Merger such
that an aggregate reduction of more than $168,000 in annual IA Revenues would be
likely to result from such terminations and reductions (without giving effect to
any offsetting increases in IA Revenues which might be anticipated).
(l) The Cumberland Parties Closing Documents. The Cumberland
Parties will have delivered to Purchaser the following documents:
(i) a certificate of each of the Sellers,
dated the Closing Date, stating that the conditions
specified in Sections 6.2(a) through 6.2(b), inclusive, have
been fully satisfied;
(ii) the Books and Records;
(iii) copies of the Consents; and
(iv) Such other documents relating to the
Merger as Purchaser reasonably requests.
All partnership and other proceedings or actions taken or required to be taken
by any Cumberland Party in connection with the Merger, and all documents
incident thereto, must be reasonably satisfactory in form and substance to
Purchaser and its legal counsel.
ARTICLE 7
SURVIVAL AND INDEMNIFICATION
7.1 Survival. The representations, warranties, covenants and agreements
of the Parties contained in this Agreement, or in any Schedule or Exhibit hereto
or any certificate delivered pursuant hereto, will survive for a period of 18
months following the Closing Date; provided, however, that (a) the
representations, warranties, covenants and agreements of the Parties contained
in Sections 3.10(a)(ix), 3.10(d), 3.18(b), 3.18(d), 3.19, 3A.4 and 4B.2 will
survive until the Final Payment Date, (b) the representations, warranties,
covenants and agreements of the Parties contained in Sections 3.15 will survive
until one year after the end of the applicable statute of limitations, and (c)
the representations, warranties, covenants and agreements of the Parties
contained in Sections 2.1, 2.2, 3.1, 3.2, 3A.1, 3A.2 4A.2, 4A.3, 4B.4 and 5.2
will survive forever. If an Indemnified Party gives notice to an Indemnifying
Party that the Indemnified Party has a claim for indemnification under Section
7.2, the giving of such notice will toll the period during which the applicable
representation, warranty, covenant or agreement survives until the claim is
resolved.
7.2 Indemnification; Deductible and Indemnification Cap.
(a) Each of the Sellers hereby severally (and not jointly)
agrees to indemnify, defend and hold harmless each of RBC and Newco and its
directors, officers, employees, Affiliates (including the Surviving
Corporation), successors and assigns (each, a "Purchaser Indemnitee") from and
against any losses, Liabilities, damages, costs or expenses, including, without
limitation, interest, penalties and reasonable fees and expenses of counsel
(collectively, "Losses"), based upon, arising out of or otherwise resulting from
(i) any inaccuracy in any representation or breach of any warranty of such
Seller (without regard to any qualification as to materiality) contained in this
Agreement or in any Seller Schedule or certificate of Seller delivered pursuant
hereto and (ii) the breach or nonfulfillment of any covenant, agreement or other
obligation of such Seller under this Agreement (other than the Seller's
Principal Agreement).
(b) Each of the Cumberland Parties hereby jointly and
severally agree to indemnify, defend and hold harmless each Purchaser Indemnitee
from and against any Losses (including Losses suffered indirectly through a
reduction in the earnings or value of Advisors) based upon, arising out of or
otherwise resulting from (i) any inaccuracy in any representation or breach of
any warranty of Advisors (without regard to any qualification as to materiality)
contained in this Agreement or in any schedule or certificate delivered pursuant
hereto, (ii) the breach or nonfulfillment of any covenant, agreement or other
obligation of Advisors under this Agreement, (iii) any compensation due or
payable to any officers, employees or agents of Advisors arising or related to
services or activities prior to the Closing, and (iv) any actual or alleged
violation by Advisors, prior to the Closing, of any Industry Governing Law.
(c) RBC and Newco jointly and severally hereby agrees to
indemnify, defend and hold harmless the Sellers from and against any Losses
based upon, arising out of or otherwise resulting from (i) any inaccuracy in any
representation or breach of any warranty of either RBC or Newco (without regard
to any qualification as to materiality) contained in this Agreement or in any
schedule or certificate delivered pursuant hereto or thereto, or (ii) the breach
or nonfulfillment of any covenant, agreement or other obligation of either RBC
or Newco under this Agreement (other than the Principal Agreements).
(d) Notwithstanding anything herein to the contrary, in the
event the Closing is consummated, each Seller hereby irrevocably and
unconditionally waives and agrees never to assert or exercise any rights of
contribution against Advisors in respect of his indemnification obligations or
any Liabilities for breach of any representation, warranty, covenant, agreement
or obligation hereunder.
(e) Promptly after the receipt by any party hereto of notice
of any third party claim or the commencement of any third party action, suit or
proceeding subject to indemnification hereunder (a "Third Party Claim"), such
party (the "Indemnified Party") will, if a claim in respect thereto is to be
made against any party obligated to provide indemnification hereunder (the
"Indemnifying Party"), give such Indemnifying Party reasonable written notice of
such Third Party Claim, provided, however, that the failure to provide such
notice will not relieve the Indemnifying Party of any of its or his obligations,
or impair the right of the Indemnified Party to indemnification, pursuant to
this Section 7.2 unless, and only to the extent that, such failure materially
prejudices the Indemnifying Party's opportunity to defend or compromise the
Third Party Claim. Such Indemnifying Party will have the right, at its or his
option, to defend at its or his own expense and by its or his own counsel any
Third Party Claim, provided that (i) the Indemnifying Party acknowledges in
writing (at the time such Indemnifying Party elects to assume such defense) its
or his obligation under this Section 7.2 to indemnify the Indemnified Party with
respect to such Third Party Claim, (ii) such counsel is reasonably satisfactory
to the Indemnified Party, (iii) the Indemnified Party is kept fully informed of
all developments, and is furnished with copies of all documents and papers,
related thereto and is given the right to participate in the defense and
investigation thereof as provided below, and (iv) such counsel proceeds with
diligence and in good faith with respect thereto. If any Indemnifying Party will
undertake to defend any Third Party Claim, such Indemnifying Party will notify
the Indemnified Party of its or his intention to do so promptly (and in any
event no later than 30 days) after receipt of notice of the Third Party Claim,
and the Indemnified Party agrees to cooperate in good faith with the
Indemnifying Party and its counsel in the defense of such Third Party Claim.
Notwithstanding the foregoing, the Indemnified Party will have the right to
participate in the defense and investigation of any Third Party Claim with its
own counsel at its or his own expense, except that the Indemnifying Party will
bear the expense of such separate counsel if (A) in the written opinion of
counsel to the Indemnified Party reasonably acceptable to the Indemnifying
Party, use of counsel of the Indemnifying Party's choice would be expected to
give rise to a conflict of interest, (B) there are or may be legal defenses
available to the Indemnified Party that are different from or additional to
those available to the Indemnifying Party, (C) the Indemnifying Party will not
have employed counsel to represent the Indemnified Party within a reasonable
time after notice of the Third Party Claim is given to the Indemnifying Party or
notice that the Indemnifying Party intends to assume the defense of the Third
Party Claim is given to the Indemnified Party or (D) the Indemnifying Party will
authorize the Indemnified Party to employ separate counsel at the expense of the
Indemnifying Party. The Indemnifying Party will not settle any Third Party Claim
without the prior written consent of the Indemnified Party, which will not be
unreasonably withheld; provided, however, that an Indemnified Party will not be
required to consent to any settlement involving the imposition of equitable
remedies.
(f) No Purchaser Indemnitee shall be entitled to
indemnification under this Article 7 unless and until the total of all Losses
suffered, sustained or incurred by all the Purchaser Indemnitees equals or
exceeds $10,000 in the aggregate (the "Deductible") and shall only be entitled
to indemnification hereunder for Losses in excess of the Deductible and up to a
maximum amount equal to the dollar value of the Consideration (the
"Indemnification Cap"). No Seller shall be entitled to indemnification under
this Article 7 unless and until the total of all Losses suffered, sustained or
incurred by all the Sellers equals or exceeds the Deductible and shall only be
entitled to indemnification hereunder for Losses in excess of the Deductible and
up to a maximum amount equal to the Indemnification Cap.
7.3 Right of Setoff. Purchaser is hereby authorized at any time and
from time to time, with prior notice to the affected Seller, to set off and
apply any and all of the Consideration at any time owing by Purchaser to any
Seller against any and all of the obligations of that Seller now or hereafter
existing under this Article 7, in each case irrespective of whether or not
Purchaser will have made any demand under the respective agreement and although
such obligations may be unmatured. Purchaser agrees promptly to notify such
Seller of any such setoff and application, provided that the failure to give
such notice will not affect the validity of such setoff and application. The
rights of Purchaser under this Section are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which Purchaser
may have.
7.4 Tax Indemnification. Notwithstanding anything in this Article 7 to
the contrary, the rights and obligations of the parties with respect to the
breach of representations, warranties, covenants, and agreements set forth in
Article 8 (concerning Tax Matters) and the indemnification for Taxes will be
governed by the provisions of Article 8.
ARTICLE 8
TAX MATTERS
8.1 Representations and Warranties. As a material inducement to RBC and
Newco to enter into this Agreement, each Cumberland Party hereby jointly and
severally represents and warrants to each of RBC and Newco as follows:
(a) Advisors is, and since its inception has been, a
partnership for federal income tax purposes.
(b) All of the partnership interests in Advisors are, and
since the inception of Advisors have been, owned by the Sellers, and no other
party has owned or has any right to acquire any interests in Advisors.
(c) All Tax Returns required to be filed by each Cumberland
Party for all Taxable Periods ending on or before the Closing Date have been or
will be timely filed. All such Returns (i) were prepared in the manner required
by applicable law, (ii) are true, correct and complete in all material respects,
and (iii) reflect the correct liability for Taxes of or relating to Advisors.
All Taxes shown to be payable on such Returns, and all assessments of Tax made
with respect to such Returns have been or will be paid when due, subject to the
right of the Cumberland Parties to obtain extensions and to contest in good
faith any assessment with which such Cumberland Parties do not agree. No
adjustment relating to such Returns has been proposed formally or informally by
or to any taxing authority and, to the Knowledge of Advisors, no basis exists
for any such adjustment.
(d) Advisors has paid, or has adequately provided, for the
payment of all Taxes with respect to all Taxable Periods, or portions thereof,
ending on or before the Closing Date.
(e) Advisors has withheld from its employees, customers, and
other payees (and timely paid to the appropriate Government Entity) all amounts
required by the Tax withholding provisions of applicable federal, state, local,
and foreign laws (including, without limitation, income, social security, and
employment Tax withholding for all types of compensation, and withholding on
payments to non-United States persons) for all periods, or portions thereof,
ending on or before the Closing Date.
(f) Except for Liens for real and personal property Taxes that
are not yet due and payable, there are no Liens for any Tax upon any asset of
Advisors.
(g) Except as set forth in Schedule 8.1, no power of attorney
that is currently in force with respect to Advisors has been granted to any
person with respect to any matter relating to Taxes.
(h) Advisors has not made any guaranty, indemnification or
similar agreement on or before the Closing Date relating to the sharing of
liability for, or payment of, any Taxes.
8.2 Filing of Tax Returns and Payment of Taxes.
(a) Advisors will timely file or cause to be timely filed all
Tax Returns that are required to be filed by it (with extensions) with respect
to any Tax periods ending on or before the Closing Date. Advisors will timely
pay or cause to be timely paid all Tax reported, or required to be reported, on
such Returns.
(b) At the Closing, Advisors will deliver to Purchaser a
schedule that lists all Tax Returns for it for all Taxable Periods ending on or
before the Closing Date.
(c) Purchaser will prepare and file all Tax Returns of
Advisors other than those described in Section 8.2(a). All Taxes shown on such
Tax Returns will be paid by Purchaser or Advisors, subject to the right of
indemnification of Purchaser against the Sellers for any Tax to the extent such
Seller is liable for such Tax pursuant to this Agreement.
(d) Each of the Parties will cooperate fully, as and to the
extent reasonably requested by the other Parties, in connection with the filing
of Tax Returns pursuant to this Section and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation will include the retention
and (upon the other Party's request) the provision of records and information
which are reasonably relevant to any such Tax Return, audit, litigation or other
proceeding.
8.3 Apportionment. The Parties hereby agree that for federal income tax
purposes, and for state and local income tax purposes, there will be a closing
of Advisors' books consistent with normal tax accounting rules as of the Closing
Date, and items of income, loss, deduction and credit will be allocated to the
Sellers, either directly or through Advisors, for all periods ending on or
before the Closing Date.
8.4 Indemnification by Sellers. Each of the Sellers hereby jointly and
severally agrees to indemnify, defend and hold harmless RBC and Newco and their
directors, officers, employees, Affiliates, successors and assigns harmless from
and against any Losses (including Losses suffered indirectly through a reduction
in the earnings or value of Advisors), based upon, arising out of or otherwise
resulting from:
(a) any and all Taxes incurred by Purchaser or Advisors in
connection with or arising from any inaccuracy, breach, or nonfulfillment of any
representation, warranty, covenant, or agreement of such Seller contained in or
made pursuant to this Article 8;
(b) any and all Taxes for any Taxable Period, or portion
thereof, ending on or before the Closing Date;
(c) any cost or expense (including, without limitation,
reasonable attorneys' and accountants' fees) incurred by Purchaser, Advisors, or
any of their successors or assigns in connection with any Tax described in this
Section 8.4.
8.5 Indemnification by Purchaser. Purchaser agrees to indemnify and
hold harmless the Sellers from and against (i) any and all unpaid federal,
state, local, and foreign Tax imposed for any Taxable Period or portion thereof
beginning after the Closing Date, and (ii) any cost or expense (including,
without limitation, reasonable attorneys' and accountants' fees) incurred by the
Sellers or any of their successors or assigns in connection with any such Tax
identified in this Section 8.5.
8.6 Gross Up. The amount of any Tax or other amount for which
indemnification is provided under any of Sections 7.2, 8.4 or 8.5 hereof will be
(i) increased to take account of any Tax incurred by the Indemnified Party
arising from the receipt or right to receive the indemnity payments hereunder
(increased by any Tax incurred with respect to such increased amount) and (ii)
reduced to take into account any reduction of Tax realized by the Indemnified
Party arising from the incurrence or payment of the amount for which
indemnification was provided.
8.7 Access to Information. From the date hereof, Advisors will provide
Purchaser with copies of all Tax Returns for Taxable Periods ended on or before
the Closing Date and any examination reports and statements of deficiencies
assessed against, proposed to be assessed against, or agreed to by Advisors for
such Taxable Periods, all within ten days after the filing or receipt, as the
case may be, of same.
8.8 Books and Records. Advisors will deliver to Purchaser, on or before
the Closing Date, originals or, with Purchaser's consent which shall not be
unreasonably withheld, copies of all books and records pertinent to Advisors for
each Taxable Period or portion thereof ending on or prior to the Closing Date.
Purchaser will retain such information until one year after the expiration of
the applicable statute of limitations (giving effect to any and all extensions
and waivers) for such Taxable Periods.
8.9 Notice of Audit. If any Party receives any written notice from any
taxing authority proposing an adjustment to any Tax for which any other Party
may be obligated, through indemnification or otherwise, under this Agreement,
such Party will give copies of such notice to such other Party immediately after
the receipt of such notice. The failure to provide such copies however, will not
reduce the obligations of a Party hereunder unless, and to the extent that, such
failure prejudices the rights of the other Party to contest such Tax.
8.10 Tax Contest. Purchaser will have the sole right to negotiate,
resolve, settle or contest any claim for Tax made by a taxing authority relating
to the income or liability of the Surviving Corporation. The Sellers will have
the sole right to negotiate, resolve, settle or contest any claim for Tax made
by a taxing authority relating to the income or liability of Advisors, provided,
that any such Tax would be borne by the Sellers.
8.11 Miscellaneous.
(a) All representations and warranties contained in this
Article 8 with respect to any Tax will survive the Closing and will terminate
and expire thereafter one year after the lapse of the applicable statute of
limitations with respect to the assessment or contesting of such Tax (including
any extensions thereof).
(b) For purposes of this Article 8, all Taxes for all
pre-Closing periods will be determined without regard to the carryback of any
net operating loss, capital loss, general business credit, or other tax
attribute from a post-Closing period.
(c) Any indemnification payment made to a Party pursuant to
this Agreement will be treated for federal income Tax purposes as an adjustment
to the Consideration unless otherwise required by applicable law.
(d) All references in this Article 8 to "Tax" or "Taxes" will
include, in addition to any taxes of Advisors, any Taxes with respect to items
of income, gain, credit, loss or deduction attributable to the Sellers and all
references to "Tax Returns" will include Tax Returns filed (or required to be
filed) by the Sellers with respect to any such Taxes.
ARTICLE 9
DEFINITIONS
9.1 Definitions. For purposes hereof, the following terms, when used
herein with initial capital letters, will have the respective meanings set forth
herein:
"Affiliate" of any Person means any other Person controlling,
controlled by or under common control with such first Person.
"Books and Records" means all lists, records and other
information pertaining to accounts, personnel and referral sources of Advisors,
all lists and records pertaining to suppliers and customers of Advisors, and all
other books, ledgers, files and business records of every kind relating or
pertaining to the Business, in each case whether evidenced in writing,
electronically (including by computer) or otherwise.
"Client" means any Person party to or bound by a Contract with
Advisors or its Affiliates pursuant to which Advisors provides or has agreed to
provide investment advice, management or servicing, consulting or other similar
services to such Person; provided, that the term "Client" shall not include any
client of Cumberland Brokerage unless such Person is also a client of Advisors.
"Code" means the United States Internal Revenue Code of 1986,
as amended.
"Current Clients" means those Clients from which Advisors
generated revenues in 1997.
"Environmental and Safety Requirements" means all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law, in each case
concerning public health and safety, worker health and safety and pollution or
protection of the environment (including, without limitation, all those relating
to the presence, use, production, generation, handling, transport, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
Release, threatened Release, control, or cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or by-products, asbestos,
polychlorinated biphenyls (or PCBs), noise or radiation).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Industry Governing Law" means without limitation, any
federal, state or local law or ordinance, and any rule, regulation or order
issued thereunder governing or pertaining to investment advisors or persons
associated with or employed by investment advisors, including without limitation
ERISA, the Investment Advisers Act of 1940, as amended, and the "blue sky" laws
of those states in which Advisors is registered.
"Financial Statements" means, collectively, the audited
balance sheet of Advisors as of December 31, 1997 and the audited statement of
income of Advisors for the years ended December 31, 1997 and December 31, 1996.
"GAAP" means, at a given time, United States generally
accepted accounting principles, consistently applied.
"Government Entity" means the United States of America or any
other nation, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of government.
"Hazardous Material" means any material or substance which is
deemed a "hazardous waste", "hazardous material", "hazardous substance", "solid
waste", "industrial waste", "contaminant", "pollutant", "toxic waste" or "toxic
substance" under any Environmental and Safety Requirement.
"Indebtedness" of any Person means, without duplication: (a)
indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor or otherwise (other than trade payables and other current
liabilities incurred in the ordinary course of business) and any commitment by
which such Person assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit; (b) indebtedness
guaranteed in any manner by such Person, including a guarantee in the form of an
agreement to repurchase or reimburse; (c) obligations under capitalized leases
in respect of which such Person is liable, contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such Person
assures a creditor against loss; and (d) any unsatisfied obligation of such
Person for "withdrawal liability" to a "multiemployer plan," as such terms are
defined under ERISA.
"Investment" means, with respect to any Person, any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or other ownership or beneficial interest
(including partnership interests and joint venture interests) of any other
Person, and any capital contribution by such Person to any other Person.
"Knowledge" means, with respect to an individual Person, the
actual knowledge of such Person or any Person who is his agent. "Knowledge"
means, with respect to a corporation or partnership, (a) the actual knowledge of
all officers, directors and executive employees of such Person or of any of its
partners and (b) the knowledge which a prudent business person in one of the
positions referenced in clause (a) above would have obtained in the conduct of
his or her business after making reasonable inquiry and reasonable diligence
with respect to the particular matter in question.
"Latest Balance Sheet" means the audited balance sheet of
Advisors as of December 31, 1997 included within the Financial Statements.
"Legal Requirement" means any requirement arising under any
action, law, treaty, rule or regulation, determination or direction of an
arbitrator or Government Entity, including any Environmental and Safety
Requirement.
"Liability" means any direct or indirect debt, obligation,
loss, damages, deficiency or other liability of any nature, whether absolute,
accrued, contingent or otherwise.
"Lien" means any mortgage, pledge, security interest,
encumbrance, easement, restriction, charge, or other lien.
"Permits" means all licenses, certificates of authority,
permits, orders, consents, approvals, registrations, authorizations,
qualifications and filings under any federal, state, local or foreign laws or
with any Government Entities.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Plans" means all Employee Pension Plans, Employee Welfare
Plans, Other Plans and Multiemployer Plans to which Advisors contributes or is a
party.
"Release" has the meaning set forth in CERCLA.
"Properties" means real, personal or mixed property, tangible
or intangible, of any Person.
"Taxes" means all income, profits, gains, gross receipts, net
worth, premium, value added, ad valorem, sales, use, excise, stamp, transfer,
franchise, withholding, payroll, employment, occupation, workers, compensation,
disability, severance, unemployment insurance, social security and Property
taxes, and all other taxes, duties, assessments, fees, levies, or similar
charges of any kind whatsoever, together with any interest, penalties and
additions thereto, required under any federal, state, local or foreign law or
imposed by any federal, state, local or foreign Government Entity, including all
amounts imposed as a result of being a member of an affiliated or combined
group.
"Tax Return" means all returns, reports, elections, estimates,
declarations, information statements and other forms and documents (including
all schedules, exhibits, and other attachments thereto) relating to any Taxes
and required to be filed under any federal, state, local or foreign law or with
any Government Entity.
"Taxable Period" means any taxable year or any other period
that is treated as a taxable year (including any taxable period ending on the
Closing Date or beginning on the day immediately preceding the Closing Date)
with respect to which any Tax may be imposed under any applicable statute, rule,
or regulation.
9.2 Other Definition Provisions.
(a) Accounting Terms. Accounting terms which are not otherwise
defined in this Agreement have the meanings given to them under GAAP. To the
extent that the definition of accounting term that is defined in this Agreement
is inconsistent with the meaning of such term under GAAP, the definition set
forth in this Agreement will control.
(b) Successor Laws. Any reference to any particular Code
section or any other law or regulation will be interpreted to include any
revision of or successor to that section regardless of how it is numbered or
classified.
ARTICLE 10
OTHER AGREEMENTS
10.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual agreement of Purchaser and the Sellers,
(b) by Purchaser, at any time when any Cumberland Party is in
breach of any of its material obligations pursuant to this Agreement or if any
representation or warranty of any Cumberland Party is false or misleading in any
material respect (provided that such condition is not the result of any breach
of any covenant, representation or warranty of Purchaser set forth herein),
(c) by the Sellers, at any time when Purchaser is in breach of
any of its material obligations pursuant to this Agreement or if any
representation or warranty of Purchaser is false or misleading in any material
respect (provided that such condition is not the result of any breach of any
covenant, representation or warranty of any Cumberland Party set forth herein),
(d) by Purchaser or the Sellers if Current Clients accounting
for at least 10% of Advisors' 1997 revenues respond to the Client Notices
indicating that they will not, or are not likely to, continue substantially the
same business relationship with the Surviving Corporation after the Merger as
their business relationship with Advisors before the Merger, or
(e) by Purchaser or the Sellers, at any time after February
28, 1998, if the Closing has not then occurred; provided that such failure to
timely close is not the result of any breach of any covenant, representation or
warranty of the terminating Party.
Any termination of this Agreement pursuant to any of clauses 10.1(b) through (e)
will be effected by written notice from the terminating Party to Purchaser (if
the Sellers are the terminating Party) or the Sellers (if Purchaser is the
terminating Party). If this Agreement is terminated other than by a valid
termination pursuant to clause 10.1(a) or a valid termination by Sellers
pursuant to either clause 10(c) or 10(d) and, within six months following such
termination, Advisors merges with or is acquired by another entity or one or
more Cumberland Parties enters into an agreement or understanding pursuant to
which Advisors is to be merged with or acquired by another entity, then Advisors
shall pay RBC a termination fee of $250,000 (the "Termination Fee") prior to
consummation of such merger or acquisition. If any party (treating the
Cumberland Parties as one party and Purchaser as the other party) validly
terminates this Agreement based upon a material breach or default by the other
party, the non-terminating party shall pay to the terminating party liquidated
damages in the amount of $90,000 ("Liquidated Damages"). (Any Liquidated Damages
paid by Sellers shall be credited towards any Termination Fee which may become
due from Sellers.) If either a Termination Fee or Liquidated Damages become due
hereunder and the party which owes such Termination Fee or Liquidated Damages
fails to pay the amount owed in full upon demand by the other, then the party
which owes the Termination Fee or Liquidated Damages shall in addition reimburse
the other party for the legal fees and expenses incurred by it in seeking to
enforce and collect such amount.
10.2 Remedies. No failure to exercise, and no delay in exercising, any
right, remedy, power or privilege under this Agreement by any Party will operate
as a waiver of such right, remedy, power or privilege, nor will any single or
partial exercise of any right, remedy, power or privilege under this Agreement
preclude any other or further exercise of such right, remedy, power or privilege
or the exercise of any other right, remedy, power or privilege. Except as
expressly set forth herein, the rights, remedies, powers and privileges provided
pursuant to this Agreement are cumulative and not exhaustive of any other
rights, remedies, powers and privileges which may be provided by law.
10.3 Consent to Amendments. No waiver, amendment, modification or
supplement of this Agreement will be binding upon any Party unless such waiver,
amendment, modification or supplement is set forth in writing and is executed by
such Party. No other course of dealing between or among any of the Parties or
any delay in exercising any rights pursuant to this Agreement will operate as a
waiver of any rights of any Party.
10.4 Successors and Assigns. Except as otherwise expressly provided in
this Agreement, all covenants and agreements set forth in this Agreement by or
on behalf of the Parties will bind and inure to the benefit of the respective
successors and assigns of the Parties. Except as otherwise provided in this
Section 10.4, neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by any Party without the others' prior
written consent. Nothing in this Agreement shall be deemed to limit the ability
of RBC or its successors to cause the Surviving Corporation to merge with or
into another entity which is wholly-owned by RBC. Nothing in this Agreement
shall be deemed to limit the ability of RBC or its successors to merge with or
into another entity or transfer all or any portion of its assets (including the
Business) to another entity; provided, that the entity which succeeds to the
ownership of the Business shall, by operation of law or by written agreement,
undertake to perform the obligations of RBC hereunder. Should RBC enter into an
agreement to merge with another entity pursuant to which the shares of RBC
Common Stock outstanding prior to the effective time of such merger shall be
converted into cash or other securities, the Parties hereto agree, and RBC shall
cause adequate provisions to be made in such merger agreement so that following
the effective time of such merger, all provisions in this Agreement which
provide for delivery of RBC Common Stock to Sellers shall thereafter be
construed as providing for delivery of the equivalent amount of cash or other
securities into which such RBC Common Stock was converted pursuant to such
merger.
10.5 Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of New Jersey, without giving
effect to any choice of law or conflict provision or rule (whether of the State
of New Jersey or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of New Jersey to be applied. In furtherance of
the foregoing, the internal law of the State of New Jersey will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
10.6 Arbitration. Any controversy or claim, directly or indirectly,
arising out of or relating to this Agreement, will be submitted to and settled
by arbitration conducted in Morristown, New Jersey in accordance with the rules
and procedures then existing under the Commercial Arbitration Rules of the
American Arbitration Association, provided that notwithstanding anything to the
contrary contained in such Rules: (a) a panel of three arbitrators will be used,
with one arbitrator chosen by Purchaser, one arbitrator chosen by the Sellers
and the third arbitrator chosen by the other two arbitrators; (b) the decision
in writing of a majority of the arbitrators on the panel will be final,
conclusive, and binding on all Parties hereto who had notice of such arbitration
and an opportunity to participate therein, whether or not such Party so
participated; and (c) the arbitrators will not award any punitive damages except
in the case of intentional fraud. The determination of the panel of arbitrators
will be final, binding and nonappealable, except that any determination that
there has been intentional fraud, and any award of punitive damages, will be
appealable in any court having jurisdiction. Judgment upon any binding decision
rendered by such panel may be entered in any court having jurisdiction. Any and
all reasonable travel expenses incurred by any of the Sellers in connection with
such arbitration will be reimbursed by Purchaser. The Parties intend that the
arbitrators use reasonable efforts to limit the nature, scope and timing of any
discovery which they permit in connection with any arbitration so that neither
the duration nor the expense of the arbitration will be unduly burdensome on any
Party. Notwithstanding the foregoing, any determination of the arbitrators with
respect to discovery will be binding on the Parties.
10.7 Notices. All demands, notices, communications and reports provided
for in this Agreement will be in writing and will be either personally
delivered, mailed by first class mail (postage prepaid) or sent by reputable
overnight courier service (delivery charges prepaid) to any Party at the address
specified below, or at such address, to the attention of such other Person, and
with such other copy, as the recipient party has specified by prior written
notice to the sending Party pursuant to the provisions of this Section 10.7. Any
such demand, notice, communication or report will be deemed to have been given
pursuant to this Agreement when delivered personally, on the third business day
after deposit in the U.S. mail or on the business day after deposit with a
reputable overnight courier service, as the case may be.
If to any Cumberland Party Cumberland Advisors
614 Landis Avenue
Vineland, NJ 08360
Tel.: (609) 692-6690
Fax: (609) 794-9113
with a copy to: Each of the Sellers at their home address
and with a copy to: Richard N. Weiner, Esq.
Pelino & Lentz
One Liberty Place, 32nd Floor
1650 Market Street
Philadelphia, PA 19103-7393
Tel.: (215) 246-3135
Fax: (215) 665-1536
If to Purchaser: Ryan, Beck & Co.
220 South Orange Avenue
Livingston, NJ 07039-5817
Tel.: (973) 597-6000
Fax: (973) 597-6414
Attn.: Leonard Stanley
with a copy to: Ronald H. Janis , Esq.
Pitney Hardin Kipp & Szuch
By Mail:
P.O. Box 1945
Morristown, NJ 07962-1945
Delivery:
200 Campus Drive
Florham Park, NJ 07932-0950
Tel.: (973) 966-8263
Fax: (973) 966-1550
10.8 Severability of Provisions. If any covenant, agreement, provision
or term of this Agreement is held to be invalid for any reason whatsoever, then
such covenant, agreement, provision or term will be deemed severable from the
remaining covenants, agreements, provisions and terms of this Agreement and will
in no way affect the validity or enforceability of any other provision of this
Agreement.
10.9 Schedules and Exhibits. The Schedules and Exhibits constitute a
part of this Agreement and are incorporated into this Agreement for all
purposes.
10.10 Counterparts; Facsimile Signatures. The Parties may execute this
Agreement in separate counterparts (no one of which need contain the signatures
of all Parties), each of which will be an original and all of which together
will constitute one and the same instrument. A facsimile, telecopy or photocopy
of an original signature of the any Party appearing on this Agreement or any
document to be executed and delivered in connection herewith will be valid and
binding on such Party as if it were an original signature; provided, that at the
request of any Party, all Parties will exchange counterparts of this Agreement
and such other documents which contain original signatures; and provided,
further, that failure to exchange original signatures will not in any way affect
the validity and binding nature of the facsimile, telecopy or photocopy of the
original signatures.
10.11 No Third-Party Beneficiaries. Except as otherwise expressly
provided in this Agreement, no Person which is not a Party will have any right
or obligation pursuant to this Agreement.
10.12 Headings. The headings used in this Agreement are for the purpose
of reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
10.13 Merger and Integration. Except as otherwise provided in this
Agreement, this Agreement sets forth the entire understanding of the Parties
relating to the subject matter hereof, and all prior understandings, whether
written or oral are superseded by this Agreement.
10.14 Press Releases. No Party will issue any press releases or make
any public announcements of the transactions contemplated by this Agreement
except as may be mutually agreed to in writing by the Sellers and Purchaser;
except that each Party will in any event have the right to issue any such
release or statement upon advice of its counsel that such issuance is required
in order to comply with applicable law or stock exchange rules so long as such
party determines in good faith that it is necessary to do so and uses its
reasonable best efforts to agree upon the content of the proposed disclosure in
advance.
10.15 Expenses. The Purchaser will be solely responsible for and bear
all its own expenses (including the expenses of legal counsel, accountants and
other advisers), and the Sellers will jointly and severally be responsible for
and bear all expenses (including the expenses of legal counsel, accountants and
other advisers)of the Cumberland Parties incurred at any time in connection with
the pursuing, negotiating or consummating the transactions contemplated by, this
Agreement and any and all documents executed, delivered or filed in connection
herewith. None of the expenses of any Cumberland Parties (including Advisors)
will be borne by Advisors.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
The Sellers: SHELDON E. GOLDBERG:
-------------------------------------
SUZANNE N. GREENBERG:
-------------------------------------
DAVID R. KOTOK:
-------------------------------------
Advisors: CUMBERLAND ADVISORS
By:----------------------------------
By:----------------------------------
By:----------------------------------
Its General Partners
RBC: RYAN BECK & CO., INC.
By:----------------------------------
Name:
Title:
Newco: CUMBERLAND ADVISORS, INC.
By:----------------------------------
Name:
Title:
<PAGE>
INDEX TO EXHIBITS
EXHIBIT A - OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
EXHIBIT B - RESERVED
EXHIBIT C - RESERVED
EXHIBIT D - TERMS AND CONDITIONS FOR REPAYMENT OF RETURNED AMOUNTS
EXHIBIT E - IDENTIFICATION OF EXPENSES AND PRICES FOR CORPORATE LEVEL SERVICES
TO BE PROVIDED TO THE IA BUSINESS
EXHIBIT F - KOTOK EMPLOYMENT AGREEMENT
EXHIBIT F-1 - SECOND KOTOK EMPLOYMENT AGREEMENT
EXHIBIT G - GREENBERG EMPLOYMENT AGREEMENT
EXHIBIT H - GOLDBERG CONSULTING AGREEMENT
EXHIBIT I - FORM OF OPINION OF SELLERS' COUNSEL
EXHIBIT J - FORM OF OPINION OF PURCHASER'S COUNSEL
<PAGE>
EXHIBIT A
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
Directors (5):
David R. Kotok
Suzanne N. Greenberg
Leonard Stanley
Ben Plotkin or Larry Cohn (selection to be made by RBC)
Matthew Naula
Officers:
David R. Kotok President
Suzanne N. Greenberg Senior Vice President
Daisy Lopez Vice President
Other Officers are to be named later
<PAGE>
EXHIBIT D
TERMS AND CONDITIONS FOR REPAYMENT OF RETURNED AMOUNTS
a. None of the Returnable Amount of the Initial Cash Payment
must be repaid as a Returned Amount hereunder if cumulatively $1,500,000 of
pre-tax income (as the same may be adjusted as set forth below, the "Base Amount
of Income") is delivered during the three Years following the Closing. Pre-tax
income will be deemed to be delivered as follows:
(i) IA Income; plus
(ii) MMB Income; plus
(iii) $50,000 per Year (agreed upon net pre-tax income from rent
reduction on the Vineland Office)
(The calculation of cumulative pre-tax income delivery during the three
Years following the Closing is to be made without regard to whether either or
both of the IA Benchmark or the MMB Benchmark are met in any Year.)
b. If cumulatively less than the Base Amount of Income is
delivered during the three Years following the Closing, then a percentage of the
Returnable Amount will be repaid by the Sellers at the end of Year 3, with that
percentage equal to the percentage of the Base Amount of Income which was not
delivered. For example, assuming a $1,500,000 Base Amount of Income, if
$1,230,000 (i.e., 82% of $1,500,000) of pre-tax income is delivered during the
three Years, then 18% of the Returnable Amount (i.e.,, 18% of $600,000, or
$108,000) shall be repaid by the Sellers in equal shares to Purchaser (i.e.,
each of the three Sellers shall repay the Purchaser $36,000).
c. The Base Amount of Income shall be adjusted if the
employment or consultancy of any one or more Sellers is terminated by RBC or
Newco without "cause" or by voluntary resignation with "good reason" prior to
the end of Year 3. Upon such termination by RBC or Newco without cause or by
voluntary resignation with good reason, the Base Amount of Income shall be
adjusted by subtracting therefrom an amount equal to {$1,500,000, multiplied by
the number of days remaining from the date of termination to the end of Year 3,
divided by the total number of days in Years 1, 2 and 3}, multiplied by 50% if
Kotok's employment is so terminated, multiplied by 22% if Goldberg's employment
is so terminated, or multiplied by 28% if Greenberg's consultancy is so
terminated.
d. Notwithstanding the foregoing, and regardless of the
achievement of any benchmark, any Seller who dies or is disabled prior to the
end of Year 3 shall (or his or her estate or representative shall), at the end
of Year 3, repay that portion of his or her portion of the Returnable Amount
which is the lesser of (x) the amount such Seller is obligated to repay under
paragraphs (a) or (b) above, whichever is applicable, based on the actual net
pre-tax income delivered during the three Years following the Closing, or (y)
the amount such Seller would have been obligated to repay under paragraphs (a)
or (b) above, whichever is applicable, had the rate of net pre-tax income
delivery during the period between the Closing and such Seller's death or
disability continued through the remaining period between such death or
disability and the end of Year 3.
e. As used in this Exhibit, the terms "IA Income" and "MMB
Income" have the meanings given them in Section 1.6 of the Agreement to which
this Exhibit is attached.
f. Amounts due to be repaid hereunder shall be due and payable
immediately upon determination of the repayment requirement and written notice
thereof from Purchaser to the Seller(s). Purchaser shall be entitled to offset
any amounts otherwise due to any Seller who does not honor such repayment
obligation, and to retain any RBC Common Stock held by it for the benefit of
such Seller as collateral for such obligation. Purchaser may apply such retained
RBC Common Stock against such repayment obligations (with such RBC Common Stock
valued at its fair market value on the date of such application).
<PAGE>
EXHIBIT E
IDENTIFICATION OF EXPENSES AND PRICES
FOR
CORPORATE LEVEL SERVICES TO BE PROVIDED TO THE IA BUSINESS
Compliance Support will be provided on an as needed basis and will be
reviewed and agreed upon by both parties before billing.
Information Systems/Data Processing support will be provided on an as
needed basis and will be reviewed and agreed upon by both parties before
billing.
Accounting Support will be provided to include Accounts Payable, Account
Reconciliation, Bank Reconciliations, Financial Statement Preparation, and
Audit Review. The annual cost for these services will be $7,500 for 1998,
$12,000 for 1999 and $12,500 for 2000.
Human Resources Support will be provided to administer all of the
following items at a cost of $4,000 for 1998, $10,000 for 1999 and $10,400
for 2000, adjusted annually to reflect any increase or decrease in CAI's
staff. In addition, the actual costs for the following items will be billed
to CAI:
- Salary (all wages)
- Payroll taxes
- 401K
- Medical
- Dental
- Employee Assistance Program
- Life Insurance
- Short Term Disability
- Long Term Disability
Profit sharing costs will not be billed to CAI for purposes of calculating
"Business Expenses," as that term is used in this Agreement. However, the term
"Business Expenses" is used solely for the purpose of making the calculations
required by this Agreement and is not intended to affect the calculation of
profit and loss or any other financial accounting calculation to be made by RBC
or the Surviving Corporation with respect to their respective businesses
following the Closing. The parties understand that profit-sharing costs will be
billed to CAI for financial accounting purposes.
<PAGE>
EXHIBIT F
KOTOK EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
February 28, 1998, by and among David R. Kotok ("Executive"), Ryan, Beck & Co.,
Inc., a New Jersey corporation ("RBC"), and Cumberland Advisors, Inc. a New
Jersey corporation and wholly-owned subsidiary of RBC ("CAI").
1. CAI was formed by RBC to acquire by merger Cumberland Advisors, a
New Jersey general partnership ("Old CAI") pursuant to the Merger Agreement (the
"Merger Agreement") dated as of February 9, 1998, by and among Executive,
Suzanne N. Greenberg and Sheldon E. Goldberg (the "Sellers"), RBC, CAI and Old
CAI.
2. Through the date hereof, Executive has been a partner of Old CAI.
3. CAI wishes to assure itself of the continued services of Executive,
upon the terms and conditions set forth in this Agreement, and Executive is
willing to accept such employment and enjoy the benefits provided by this
Agreement.
4. Capitalized terms used but not otherwise defined herein shall have
the same meaning as set forth in the Merger Agreement.
Accordingly, the parties agree as follows:
1. Employment, Title, Duties and Term.
1.1 Employment; Title; Duties. Subject to the terms and conditions of
this Agreement, CAI agrees to employ Executive during the term of employment set
forth in Section 1.2 below. Executive shall serve as President of CAI, shall be
responsible for the day-to-day management and operations of CAI and shall have
such powers and perform such duties, consistent with such executive capacity, as
may be assigned or delegated to him from time to time by the Board of Directors
of CAI (the "Board of Directors"). Executive shall have the authority to hire
employees of CAI, set their salary and make purchases within the parameters of
CAI's annual operating and capital budget, which budget shall be subject to
review and approval by the Board of Directors and by RBC. Executive's primary
office shall be located in Vineland, New Jersey unless Executive, CAI and RBC
mutually agree to change such location. RBC shall cause Executive to be
nominated for election by RBC's shareholders to serve as a director of RBC
during the Employment Period. If elected, Executive shall serve as a director of
RBC. Executive shall not be entitled to receive any fees or other compensation
in addition to the compensation specifically set forth herein for serving as a
director, board committee member or officer of CAI, RBC or any of their
respective subsidiaries or affiliates. Executive accepts such employment and
agrees to perform all such services faithfully and diligently, and to discharge
the responsibilities thereof to the best of his ability. Executive shall devote
his full business time and attention and energies to the duties of his
employment, provided, that Executive may engage in one or more of the activities
described in Schedule 1 hereto during his term of employment hereunder.
Notwithstanding the foregoing, RBC and Executive may, by mutual agreement,
arrange for Executive to perform consulting or other services for entities other
than CAI in exchange for compensation other than that provided for hereunder.
1.2 Term. The term of employment of Executive under this Agreement (the
"Employment Period") shall begin on the first day of Year 1 and end on the last
day of Year 3, unless otherwise terminated in accordance with the provisions set
forth in Section 4 below. (A "Year" (when the term is capitalized) will have the
meaning given to it in the Merger Agreement.) Near the end of Year 3, the
parties will negotiate in good faith with respect to extending the term for a
fourth and fifth Year.
2. Base Salary. In consideration for the services to be rendered
hereunder, and subject to the terms and conditions of this Agreement, CAI will
pay Executive, in accordance with its normal practices, a Base Salary for each
Year (the "Base Salary"), which shall be $300,000 in Year 1. The Base Salary
will be readjusted following Year 1 so that for each successive Year the Base
Salary will equal $600,000 multiplied by a fraction the numerator of which is
the amount of IA Revenues attributed to Executive for the prior Year and the
denominator is the amount of IA Revenues attributable to the three Principals
(including Executive) for the prior Year. (In each instance in this Agreement
when a determination must be made as to the attribution of a percentage of IA
Revenues to Executive, such attribution shall be made by the Board of Directors
of CAI; provided, that the Board of Directors shall abide by any unanimous
agreement of the Sellers (or their respective estates) as to such attribution,
which agreement is evidenced by a writing signed by all Sellers (or their
respective estates) and delivered to the Board of Directors of RBC.)
3. Bonus Payment and Other Benefits.
3.1 Bonus Payment. In addition to the Base Salary provided for in
Section 2 above, CAI will pay to Executive, in accordance with its normal bonus
payment schedule (but in any event no later than 90 days after the Year for
which the Bonus is payable), a payment (a "Bonus Payment") equal to 35% of the
IA Revenues attributed to Executive above $850,000 (if any) during the Year for
which the Bonus is payable. If Executive's employment with CAI is terminated
(for any reason other than voluntary resignation or termination for cause) prior
to the end of the Year for which the Bonus is payable, Executive's Bonus Payment
for such Year will be equal to 35% of the IA Revenues attributed to Executive
above {$850,000 multiplied by a fraction, the numerator of which is the number
of days Executive was employed in such Year and the denominator of which is 365}
(if any) during the Year for which the Bonus is payable. In the event of
voluntary resignation or termination for "cause" (as defined in Section 4.4
hereof), Executive shall receive no Bonus Payment with respect to the Year in
which the termination occurs. Any Bonus Payment with respect to any Year in
which Executive's employment with CAI terminates and which Executive is entitled
to receive under this Section shall be paid in full in cash at the earlier of
(a) 90 days after such Year ends or (b) the same time that the remaining senior
executives of CAI receive their bonus payments with respect to such Year.
3.2 Other Benefits. During the Employment Period, Executive shall be
entitled to additional benefits (and participation in plans or policies) as
described on Schedule 4 hereto, which schedule also sets forth Executive's dates
of service for purposes the plans listed thereon.
3.3 Reasonable Business Expenses. Executive is expected and is
authorized to incur reasonable expenses in the performance of his duties
hereunder, including such expenses for the promotion of the business of CAI and
RBC as entertainment, travel, and similar business expenses incurred in the
performance of his duties as allowed in RBC's Expense Policy. CAI shall
reimburse the Executive for all such expenses promptly upon periodic
presentation by Executive of an itemized account with documentation of such
expenses.
3.4 Vacation. Executive shall be entitled to annual vacation (without
deduction of salary or other compensation) in accordance with RBC's vacation
policy for employees in effect from time to time, but in no event less than four
weeks, such vacation to be taken at such time or times during such Year as may
reasonably be mutually agreed upon between the Executive and the Board of
Directors.
3.5 Directors' and Officers' Insurance. Executive shall be entitled to
coverage under any directors' and officers' insurance policy which RBC provides
for its own directors and officers.
4. Termination of Employment.
4.1 Death or Permanent Disability of Executive. Executive's employment
hereunder shall terminate upon his death. In addition, CAI shall have the right
to terminate Executive's employment hereunder if and when Executive becomes
permanently disabled within the meaning of any permanent disability insurance
policy which may be maintained by CAI or RBC for the benefit of Executive and
under which the Executive is entitled to benefits.
4.2 Termination Without Cause Or Termination by Voluntary Resignation
with Good Reason. CAI, by written notice to Executive at any time, shall also
have the right to terminate Executive's employment without cause for any reason,
subject to Section 4.6. If CAI assigns Executive to a primary office located
outside of Vineland New Jersey, and does so despite Executive's written
objection which is delivered to RBC and to the Board of Directors within ten
days of Executive's being informed of such assignment and which written
objection is not subsequently withdrawn, this shall be deemed "Good Reason" for
Executive to resign hereunder and any resignation by Executive within six months
after such written objection is delivered shall have the same effect as a
termination of Executive by CAI without cause under this Section 4.2.
4.3 Termination by Voluntary Resignation without Good Reason. The
parties agree that Executive has the right to resign voluntarily and that such
resignation shall not constitute a breach of this agreement.
4.4 Termination for Cause. CAI, by written notice to Executive,
specifying in reasonable detail the reasons therefor authorized by the Board of
Directors, may terminate Executive's employment for "cause". The term "cause"
shall include any of the following: (i) gross negligence, (ii) gross
insubordination, (iii) material violations of any regulatory compliance rules,
(iv) failure to diligently perform the duties of Executive specified hereunder
or specified by the Board of Directors, (v) misappropriation by Executive of
funds or property of any RBC Affiliate, (vi) any breach of any provision of
Section 5 or Section 6 of this Agreement; (vii) a felony conviction of
Executive, or (viii) failure of Executive to have all licenses and permits
necessary to act as an investment adviser. CAI shall not terminate Executive's
employment for "cause" under clauses (i), (ii), (iii) or (iv) above without
first giving the Executive written notice and a reasonable opportunity to take
corrective action; provided, that in no event will CAI be obligated to give the
Executive more than 30 days to take corrective action.
4.5 Compensation and Benefits Upon Death or Permanent Disability. In
the event of termination of Executive's employment pursuant to Section 4.1, CAI
shall pay to Executive (i) the unpaid salary and vacation earned by him before
the date of termination as provided for in this Agreement, computed pro rata up
to and including such date; and (ii) Executive's Bonus Payment calculated in
accordance with Section 3.1 above for the Year in which such termination occurs,
in lieu of any and all other compensation, benefits and claims of any kind,
excepting only such additional amounts as may be provided for under the express
terms of any applicable benefit plans or as may be required by law to be paid.
4.6 Compensation and Benefits Upon Termination without Cause or
Termination by Voluntary Resignation with Good Reason. In the event of
termination of Executive's employment pursuant to Section 4.2: (a) if the RBC
Common Stock which the Executive received in connection with the Merger
Agreement is not then freely tradeable by Executive without registration under
the Securities Act, then RBC shall provide Executive with the right (exercisable
for a period of five years) to demand registration of all, but not less than
all, the shares of RBC Common Stock which are not at the time of demand subject
to forfeiture pursuant to the Merger Agreement, on the terms and conditions set
forth on Schedule 3 hereto; and (b) CAI shall pay to Executive (i) the unpaid
salary and vacation earned by him before the date of termination as provided for
in this Agreement, computed pro rata up to and including such date; and (ii)
Executive's Bonus Payment calculated in accordance with Section 3.1 above for
the Year in which such termination occurs, in lieu of any and all other
compensation, benefits and claims of any kind, excepting only such additional
amounts as may be provided for under the express terms of any applicable benefit
plans or as may be required by law to be paid.
4.7 Compensation and Benefits Upon Voluntary Resignation without Good
Reason or Termination for Cause . In the event of termination of Executive's
employment pursuant to Sections 4.3 or 4.4, CAI shall pay to Executive the
unpaid salary and vacation earned by him before the date of termination as
provided for in this Agreement, computed pro rata up to and including such date,
in lieu of any and all other compensation, benefits and claims of any kind,
excepting only such additional amounts as may be provided for under the express
terms of any applicable benefit plans or as may be required by law to be paid.
4.8 Payments after Termination or Resignation. In the event that
Executive's employment with CAI terminates for any reason, any Bonus Payment
which Executive is entitled to receive pursuant to either Section 4.5 or 4.6
with respect to the Year in which Executive's employment with CAI terminates
shall be paid in full in cash at the earlier of (a) 90 days after such Year ends
or (b) the same time that the remaining senior executives of CAI receive their
bonus payments with respect to such Year. All other payments which Executive is
entitled to receive pursuant to either Section 4.5, 4.6 or 4.7 shall be made
within 45 days after the date of termination or resignation.
5. Confidential Information. During the term of employment under this
Agreement, Executive will have access to and become acquainted with confidential
proprietary information of CAI, including without limitation, compilations of
information and records (including client information and records), owned by CAI
(collectively, "Confidential Information"). Executive shall not, directly or
indirectly, disclose to any other person or entity or use for the benefit of any
other person or entity, any of CAI's Confidential Information (including without
limitation any client lists or other confidential information relating to CAI's
business), either during the term of this Agreement or at any time thereafter,
except as required in the course of his employment by CAI. In furtherance and
not in limitation of the foregoing, during the term of employment under this
Agreement, Executive will abide by all policies and procedures of CAI regarding
use of confidential information. All files, records, documents, equipment and
similar items relating to the business of CAI, whether prepared by Executive or
otherwise coming into his possession, shall remain the exclusive property of
CAI, and if removed from the premises of CAI shall be immediately returned to
CAI upon any termination of his employment. In this Section 5, the term "CAI"
shall include any firm or corporation directly or indirectly controlling or
controlled by CAI or under common control with CAI.
6. Agreement Not to Solicit or Compete.
6.1 Nonsolicitation and Noncompetition. Except as specifically provided
on Schedule 2 hereto, and subject to the following sentence, Executive will not,
individually or through an agent, for himself or on behalf of another, as an
employee, director, owner, partner, sole proprietor, consultant, agent,
representative, shareholder, or in any other manner or capacity whatsoever,
during the Non-Compete Period (as defined below): (a) solicit or induce any
clients of CAI to terminate or reduce their respective relationships with RBC or
CAI, (b) accept any Business from any clients of CAI, or enter into a Business
relationship with any such clients unless (i) Executive continues to be employed
by CAI during the Non-Compete Period; and (ii) all compensation from such
clients during the Non-Compete Period shall accrue to CAI; (c) solicit any
person then employed by CAI to terminate such employment; or (d) permit
Executive's name to be used by or participate (other than through ownership of
less than five percent of the stock of a publicly-held corporation whose stock
is traded on a national securities exchange or on NASDAQ) in any business or
enterprise which is competitive with the Business (as determined on the date of
this Agreement and the Closing Date) and which is located in the United States.
Notwithstanding the foregoing, the restrictions in clauses (a), (b) and (d) of
the preceding sentence shall not apply after the earlier to occur of (i) the
fifth anniversary of the Closing Date or (ii) the termination of Executive's
employment by CAI without cause or by voluntary resignation with Good Reason.
Any written notice or oral presentation made jointly by CAI and the Executive
during the Non-Compete Period shall not be deemed to violate any provision of
this Section 6.1. In this Section 6.1 the term "Non-Compete Period" means the
period beginning on the date hereof and ending on the later to occur of (x) the
fifth anniversary of the Closing Date or (y) the second anniversary of the
termination (for any reason) of Executive's employment with the RBC Affiliates;
provided, however, that if at the end of Year 3 Executive is employed hereunder
and RBC has not offered to extend this Agreement for Year 4 and Year 5 on terms
substantially as favorable to Executive as the terms herein, then the
Non-Compete Period shall end at the end of Year 3. In this Section 6.1 the term
"Business" means the IA Business. In this Section 6.1 the term "CAI" shall
include CAI, any successor in interest to the business of CAI, and any firm or
corporation directly or indirectly controlling or controlled by CAI (or such
successor in interest) or under common control with CAI (or such successor in
interest) and engaged in the investment management or investment advisory
business. Executive agrees that the covenants set forth in this Section 6.1 are
reasonable with respect to duration, geographical area and scope.
6.2 Independent Covenants. The covenants of Executive set forth in this
Section 6 shall be construed as independent covenants and the existence of any
claim, demand, action, or cause of action of Executive against CAI or any other
RBC Affiliate, whether predicated upon this Agreement or otherwise, other than
the failure of RBC to pay amounts due and owing to Executive hereunder or under
the Merger Agreement for a period of 30 days following written notice from
Executive to RBC specifying such amounts due and specifically referring to this
Section 6.2, shall not constitute a defense to the enforcement by CAI or RBC of
any of the covenants contained in this Section 6.
6.3 Severability. In the event that any of the subsections of this
Section 6 shall be deemed by any court of competent jurisdiction to be in
violation of applicable law for any reason whatsoever, then any such subsection
or subsections shall not be deemed to be void, but shall be deemed to be
automatically amended so as to comply with applicable law. In the event that any
of the subsections of this Section 6 shall be deemed by any court of competent
jurisdiction to be wholly or partially invalid, such determination shall not
affect the binding effect of the other subsections of this Section 6 or of any
of the other provisions of this Agreement.
7, Injunctive Relief Executive acknowledges that the damage to CAI
resulting from a breach of the obligations of trust and confidence set forth in
Sections 5 and 6 hereof may cause irreparable injury to CAI, and Executive
hereby agrees and consents to the entry of an injunction by any court of
competent jurisdiction, enjoining him from violating any term or terms of this
Agreement, and such injunctive relief may be granted without the necessity of
proving actual damages. Such injunctive relief, however, shall be in addition to
any other remedies provided by law, in equity or otherwise, to CAI.
8. Entire Agreement. Except as otherwise provided in this Agreement and
the separate employment agreement between Executive, RBC and CAI with respect to
Consulting, this Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and all prior understandings, whether
written or oral are superseded by this Agreement. Specifically, Executive
acknowledges that no commitment has been made by RBC or CAI to him with respect
to any employment beyond the term of this Agreement (whether ending by lapse of
time or earlier termination pursuant to its terms) or with respect to any
benefits not expressly set forth in this Agreement.
9. Notices. All demands, notices and communications provided for in
this Agreement will be in writing and will be either personally delivered,
mailed by first class mail (postage prepaid) or sent by reputable overnight
courier service (delivery charges prepaid) to any party at the address specified
below, or at such address, to the attention of such other person, and with such
other copy, as the recipient party has specified by prior written notice to the
sending party pursuant to the provisions of this Section 9. Any such demand,
notice, communication or report will be deemed to have been given pursuant to
this Agreement when delivered personally, on the third business day after
deposit in the U.S. mail or on the business day after deposit with a reputable
overnight courier service, as the case may be.
If to Executive: David R. Kotok
2991 East Chestnut Avenue, Apt. B-19
Vineland, NJ 08361
Tel.: (609) 794-2213 or
Tel.: (609) 692-6690
Fax: (609) 692-1379
and to David R. Kotok
614 Landis Avenue
Vineland, NJ 08360
with a copy to: Richard N. Weiner, Esq.
Pelino & Lentz
One Liberty Place, 32nd Floor
1650 Market Street
Philadelphia, PA 19103-7393
Tel.: (215) 246-3135
Fax: (215) 665-1536
If to CAI or RBC: Ryan, Beck & Co.
220 South Orange Avenue
Livingston, NJ 07039-5817
Tel.: (973) 597-6000
Fax: (973) 597-6414
Attn.: Leonard Stanley
with a copy to: Ronald H. Janis , Esq.
Pitney Hardin Kipp & Szuch
By Mail:
P.O. Box 1945
Morristown, NJ 07962-1945
Delivery:
200 Campus Drive
Florham Park, NJ 07932-0950
Tel.: (973) 966-8263
Fax: (973) 966-1550
10. Amendment; Waiver. This Agreement may be amended and any right or
claim hereunder waived, only by a written instrument signed by Executive, CAI
and RBC. Nothing in this Agreement, express or implied, is intended to confer
upon any third person any rights or remedies under or by reason of this
Agreement. No amendment or waiver of this Agreement requires the consent of any
individual or entity not a party to this Agreement.
11. Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of New Jersey, without giving
effect to any choice of law or conflict provision or rule (whether of the State
of New Jersey or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of New Jersey to be applied. In furtherance of
the foregoing, the internal law of the State of New Jersey will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
12. Arbitration. Any controversy or claim, directly or indirectly,
arising out of or relating to this Agreement, will be submitted to and settled
by arbitration conducted in Morristown, New Jersey in accordance with the rules
and procedures then existing under the Commercial Arbitration Rules of the
American Arbitration Association, provided that notwithstanding anything to the
contrary contained in such Rules: (a) a panel of three arbitrators will be used,
with one arbitrator chosen by CAI and RBC, one arbitrator chosen by Executive
and the third arbitrator chosen by the other two arbitrators; (b) the decision
in writing of a majority of the arbitrators on the panel will be final,
conclusive, and binding on all parties hereto who had notice of such arbitration
and an opportunity to participate therein, whether or not such party so
participated; and (c) the arbitrators will not award any punitive damages except
in the case of intentional fraud. The determination of the panel of arbitrators
will be final, binding and nonappealable, except that any determination that
there has been intentional fraud, and any award of punitive damages, will be
appealable in any court having jurisdiction. Judgment upon any binding decision
rendered by such panel may be entered in any court having jurisdiction. Any and
all reasonable travel expenses incurred by Executive in connection with such
arbitration will be reimbursed by CAI and RBC. The Parties intend that the
arbitrators use reasonable efforts to limit the nature, scope and timing of any
discovery which they permit in connection with any arbitration so that neither
the duration nor the expense of the arbitration will be unduly burdensome on any
party. Notwithstanding the foregoing, any determination of the arbitrators with
respect to discovery will be binding on the parties.
13. Headings. The headings used in this Agreement are for the purpose
of reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
14. Assignment; Successors and Assigns. Neither this Agreement nor any
rights or obligations hereunder may be assigned by one party without the consent
of the others, except that (i) this Agreement shall be binding upon and inure to
the benefit of any successor or successors of CAI or RBC, whether by merger,
consolidation, sale of assets or otherwise, and reference herein to CAI and RBC
shall be deemed to include any such successor or successors, and (ii) this
Agreement is freely assignable by either CAI or RBC to any corporation or entity
controlling, controlled by, or under common control with, RBC.
15. Guarantee of Payment by RBC. RBC hereby agrees to guarantee all
payments due hereunder from CAI to Executive.
16. Counterparts; Facsimile Signatures. The parties may execute this
Agreement in separate counterparts (no one of which need contain the signatures
of all parties), each of which will be an original and all of which together
will constitute one and the same instrument. A facsimile, telecopy or photocopy
of an original signature of the any party appearing on this Agreement will be
valid and binding on such Party as if it were an original signature; provided,
that at the request of any party, all parties will exchange counterparts of this
Agreement which contain original signatures; and provided, further, that failure
to exchange original signatures will not in any way affect the validity and
binding nature of the facsimile, telecopy or photocopy of the original
signatures.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
DAVID R. KOTOK:
-----------------------------------------
CUMBERLAND ADVISORS, INC.
By:--------------------------------------
Name:
Title:
RYAN BECK & CO., INC.
By:--------------------------------------
Name:
Title:
Schedule 1 - Other activities which may be engaged in during the term of the
Agreement Schedule 2 - Specific exceptions to non-solicit and non-compete
covenants Schedule 3 - Terms and conditions of registration rights Schedule 4 -
Benefits and plans
<PAGE>
David R. Kotok
Employment Agreement
Schedule 1
Landis Sewage Authority - part-time staff advisor
Kotok Building Corp. - President - family business which owns and manages
commercial real estate in Vineland, New Jersey
Cumbernet News - Director and part owner - developing Internet newspaper
Cumberland News - weekly columnist
Various publishers - occasional contributor
<PAGE>
David R. Kotok
Employment Agreement
Schedule 2
Partner Contracts
List of Family-Related Accounts
Pearl C. & Charles J. Hacker
Rachel Prizant Kotok
David Kotok c/f Mitchell
Sarah Beth Kotok
David R. Kotok - IRA
Sharon Kotok - IRA
David R. Kotok
Kotok Building Corp.
Ethel Kesler
<PAGE>
EXHIBIT F-1
SECOND KOTOK EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
February 28, 1998, by and among David R. Kotok ("Executive"), Ryan, Beck & Co.,
Inc., a New Jersey corporation ("RBC"), and Cumberland Advisors, Inc. a New
Jersey corporation and wholly-owned subsidiary of RBC ("CAI").
1. CAI was formed by RBC to acquire by merger Cumberland Advisors, a
New Jersey general partnership ("Old CAI") pursuant to the Merger Agreement (the
"Merger Agreement") dated as of February 9, 1998, by and among Executive,
Suzanne N. Greenberg and Sheldon E. Goldberg (the "Sellers"), RBC, CAI and Old
CAI.
2. Pursuant to the Merger Agreement, Executive has contributed to CAI
the business (the "Consulting Business") formerly currently conducted by
Cumberland Consulting, a sole proprietorship owned by Executive ("Consulting")
and is entering into this Agreement.
3. Capitalized terms used but not otherwise defined herein shall have
the same meaning as set forth in the employment agreement between the parties
hereto relating to the businesses of CAI other than the Consulting Business (the
"Primary Agreement"), and if such terms are not defined therein, then the
meanings set forth in the Merger Agreement.
Accordingly, the parties agree as follows:
1. Operation of Consulting Business. CAI intends to operate the
Consulting Business as a division of CAI. CAI shall keep its books and records
so that the financial results of the Consulting Business can be determined as
though it were a stand-alone business, and the revenues (or losses, if any) of
either the IA Business or the MMB Business shall not be counted in determining
the revenues (or losses, if any) of the Consulting Business for purposes of the
calculations called for by this Agreement.
2. Employment; Duties. CAI shall employ Executive hereunder during the
term of employment set forth in the Primary Agreement. A termination of the
Primary Agreement shall be deemed a termination of this Agreement. Executive
shall have no additional title than the title he is given pursuant to the
Primary Agreement. Executive shall be responsible for the day-to-day management
and operations of the Consulting Business. Executive accepts such employment and
agrees to perform all such services faithfully and diligently, and to discharge
the responsibilities thereof to the best of his ability.
3. Bonus Payment. Except as set forth below, Executive shall receive no
compensation or benefits hereunder, but shall be compensated solely pursuant to
the Primary Agreement. CAI shall pay to Executive a payment (a "Bonus Payment")
equal to 35% of the Consulting Revenues during the Year for which the Bonus is
payable. The term "Consulting Revenues" means the revenues derived by CAI from
the Consulting Business, less the expenses of CAI attributable to the Consulting
Business, in each case as determined in good faith by Executive, with such
determination subject to review and revision by the Board of Directors of CAI.
If Executive's employment with CAI is terminated (for any reason other than
voluntary resignation or termination for cause) prior to the end of the Year for
which the Bonus is payable, Executive's Bonus Payment for such Year will be
equal to 35% of the Consulting Revenues attributed to Executive during the
(partial) Year for which the Bonus is payable. In the event of voluntary
resignation or termination for "cause" (as defined in Section 4.4 of the Primary
Agreement), Executive shall receive no Bonus Payment with respect to the Year in
which the termination occurs. All Bonus Payments hereunder, whether during or
after Executive's employment hereunder, shall be paid in accordance with the
provisions regarding timing of bonus payments set forth in the Primary
Agreement.
4. Entire Agreement. Except as otherwise provided in this Agreement and
the Primary Agreement, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
whether written or oral are superseded by this Agreement. Specifically,
Executive acknowledges that no commitment has been made by RBC or CAI to him
with respect to any employment beyond the term of this Agreement (whether ending
by lapse of time or earlier termination pursuant to its terms) or with respect
to any benefits not expressly set forth in this Agreement.
5. Miscellaneous. Sections 9 through 15 of the Primary Agreement are
incorporated by reference herein as though reproduced herein in full, with the
term "Agreement" used therein referring to this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
DAVID R. KOTOK:
-------------------------------------------
CUMBERLAND ADVISORS, INC.
By:----------------------------------------
Name:
Title:
RYAN BECK & CO., INC.
By:----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT G
GREENBERG EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
February 28, 1998, by and among Suzanne N. Greenberg ("Executive"), Ryan, Beck &
Co., Inc., a New Jersey corporation ("RBC"), and Cumberland Advisors, Inc. a New
Jersey corporation and wholly-owned subsidiary of RBC ("CAI").
1. CAI was formed by RBC to acquire by merger Cumberland Advisors, a
New Jersey general partnership ("Old CAI") pursuant to the Merger Agreement (the
"Merger Agreement") dated as of February 9, 1998, by and among Executive, David
R. Kotok and Sheldon E. Goldberg (the "Sellers"), RBC, CAI and Old CAI.
2. Through the date hereof, Executive has been a partner of Old CAI.
3. CAI wishes to assure itself of the continued services of Executive,
upon the terms and conditions set forth in this Agreement, and Executive is
willing to accept such employment and enjoy the benefits provided by this
Agreement.
4. Capitalized terms used but not otherwise defined herein shall have
the same meaning as set forth in the Merger Agreement.
Accordingly, the parties agree as follows:
1. Employment, Title, Duties and Term.
1.1 Employment; Title; Duties. Subject to the terms and conditions of
this Agreement, CAI agrees to employ Executive during the term of employment set
forth in Section 1.2 below. Executive shall serve as Senior Vice President of
CAI and shall have such powers and perform such duties, consistent with such
executive capacity, as may be assigned or delegated to her from time to time by
the President or by the Board of Directors of CAI (the "Board of Directors").
Executive shall not be entitled to receive any fees or other compensation in
addition to the compensation specifically set forth herein for serving as a
director, board committee member or officer of CAI, RBC or any of their
respective subsidiaries or affiliates. Executive accepts such employment and
agrees to perform all such services faithfully and diligently, and to discharge
the responsibilities thereof to the best of her ability. Executive shall devote
her full business time and attention and energies to the duties of her
employment, provided, that Executive may engage in one or more of the activities
described in Schedule 1 hereto during her term of employment hereunder.
Notwithstanding the foregoing, RBC and Executive may, by mutual agreement,
arrange for Executive to perform consulting or other services for entities other
than CAI in exchange for compensation other than that provided for hereunder.
1.2 Term. The term of employment of Executive under this Agreement (the
"Employment Period") shall begin on the first day of Year 1 and end on the last
day of Year 3, unless otherwise terminated in accordance with the provisions set
forth in Section 4 below. (A "Year" (when the term is capitalized) will have the
meaning given to it in the Merger Agreement.) Near the end of Year 3, the
parties will negotiate in good faith with respect to extending the term for a
fourth and fifth Year.
2. Base Salary. In consideration for the services to be rendered
hereunder, and subject to the terms and conditions of this Agreement, CAI will
pay Executive, in accordance with its normal practices, a Base Salary for each
Year (the "Base Salary"), which shall be $168,000 for Year 1. The Base Salary
will be readjusted following Year 1 so that for each successive Year the Base
Salary will equal $600,000 multiplied by a fraction the numerator of which is
the amount of IA Revenues attributed to Executive for the prior Year and the
denominator is the amount of IA Revenues attributable to the three Principals
(including Executive) for the prior Year. (In each instance in this Agreement
when a determination must be made as to the attribution of a percentage of IA
Revenues to Executive, such attribution shall be made by the Board of Directors
of CAI; provided, that the Board of Directors shall abide by any unanimous
agreement of the Sellers (or their respective estates) as to such attribution,
which agreement is evidenced by a writing signed by all Sellers (or their
respective estates) and delivered to the Board of Directors of RBC.)
3. Bonus Payment and Other Benefits.
3.1 Bonus Payment. In addition to the Base Salary provided for in
Section 2 above, CAI will pay to Executive, in accordance with its normal bonus
payment schedule (but in any event no later than 90 days after the Year for
which the Bonus is payable), a payment (a "Bonus Payment") equal to 35% of the
IA Revenues attributed to Executive above $476,000 (if any) during the Year for
which the Bonus is payable. If Executive's employment with CAI is terminated
(for any reason other than voluntary resignation or termination for cause) prior
to the end of the Year for which the Bonus is payable, Executive's Bonus Payment
for such Year will be equal to 35% of the IA Revenues attributed to Executive
above {$476,000 multiplied by a fraction, the numerator of which is the number
of days Executive was employed in such Year and the denominator of which is 365}
(if any) during the Year for which the Bonus is payable. In the event of
voluntary resignation or termination for "cause" (as defined in Section 4.4
hereof), Executive shall receive no Bonus Payment with respect to the Year in
which the termination occurs. Any Bonus Payment with respect to any Year in
which Executive's employment with CAI terminates and which Executive is entitled
to receive under this Section shall be paid in full in cash at the earlier of
(a) 90 days after such Year ends or (b) the same time that the remaining senior
executives of CAI receive their bonus payments with respect to such Year.
3.2 Other Benefits. During the Employment Period, Executive shall be
entitled to additional benefits (and participation in plans or policies) as
described on Schedule 4 hereto, which schedule also sets forth Executive's dates
of service for purposes the plans listed thereon.
3.3 Reasonable Business Expenses. Executive is expected and is
authorized to incur reasonable expenses in the performance of her duties
hereunder, including such expenses for the promotion of the business of CAI and
RBC as entertainment, travel, and similar business expenses incurred in the
performance of her duties as allowed in RBC's Expense Policy. CAI shall
reimburse the Executive for all such expenses promptly upon periodic
presentation by Executive of an itemized account with documentation of such
expenses.
3.4 Vacation. Executive shall be entitled to annual vacation (without
deduction of salary or other compensation) in accordance with RBC's vacation
policy for employees in effect from time to time, but in no event less than four
weeks, such vacation to be taken at such time or times during such Year as may
reasonably be mutually agreed upon between the Executive and the Board of
Directors.
3.5 Directors' and Officers' Insurance. Executive shall be entitled to
coverage under any directors' and officers' insurance policy which RBC provides
for its own directors and officers.
4. Termination of Employment.
4.1 Death or Permanent Disability of Executive. Executive's employment
hereunder shall terminate upon her death. In addition, CAI shall have the right
to terminate Executive's employment hereunder if and when Executive becomes
permanently disabled within the meaning of any permanent disability insurance
policy which may be maintained by CAI or RBC for the benefit of Executive and
under which the Executive is entitled to benefits.
4.2 Termination Without Cause Or Termination by Voluntary Resignation
with Good Reason. CAI, by written notice to Executive at any time, shall also
have the right to terminate Executive's employment without cause for any reason,
subject to Section 4.6. If CAI assigns Executive to a primary office located
outside of Vineland New Jersey, and does so despite Executive's written
objection which is delivered to RBC and to the Board of Directors within ten
days of Executive's being informed of such assignment and which written
objection is not subsequently withdrawn, this shall be deemed "Good Reason" for
Executive to resign hereunder and any resignation by Executive within six months
after such written objection is delivered shall have the same effect as a
termination of Executive by CAI without cause under this Section 4.2.
4.3 Termination by Voluntary Resignation without Good Reason. The
parties agree that Executive has the right to resign voluntarily and that such
resignation shall not constitute a breach of this agreement.
4.4 Termination for Cause. CAI, by written notice to Executive,
specifying in reasonable detail the reasons therefor authorized by the Board of
Directors, may terminate Executive's employment for "cause". The term "cause"
shall include any of the following: (i) gross negligence, (ii) gross
insubordination, (iii) material violations of any regulatory compliance rules,
(iv) failure to diligently perform the duties of Executive specified hereunder
or specified by the Board of Directors, (v) misappropriation by Executive of
funds or property of any RBC Affiliate, (vi) any breach of any provision of
Section 5 or Section 6 of this Agreement; (vii) a felony conviction of
Executive, or (viii) failure of Executive to have all licenses and permits
necessary to act as an investment adviser. CAI shall not terminate Executive's
employment for "cause" under clauses (i), (ii), (iii) or (iv) above without
first giving the Executive written notice and a reasonable opportunity to take
corrective action; provided, that in no event will CAI be obligated to give the
Executive more than 30 days to take corrective action.
4.5 Compensation and Benefits Upon Death or Permanent Disability. In
the event of termination of Executive's employment pursuant to Section 4.1, CAI
shall pay to Executive (i) the unpaid salary and vacation earned by her before
the date of termination as provided for in this Agreement, computed pro rata up
to and including such date; and (ii) Executive's Bonus Payment calculated in
accordance with Section 3.1 above for the Year in which such termination occurs,
in lieu of any and all other compensation, benefits and claims of any kind,
excepting only such additional amounts as may be provided for under the express
terms of any applicable benefit plans or as may be required by law to be paid.
4.6 Compensation and Benefits Upon Termination without Cause or
Termination by Voluntary Resignation with Good Reason. In the event of
termination of Executive's employment pursuant to Section 4.2: (a) if the RBC
Common Stock which the Executive received in connection with the Merger
Agreement is not then freely tradeable by Executive without registration under
the Securities Act, then RBC shall provide Executive with the right (exercisable
for a period of five years) to demand registration of all, but not less than
all, the shares of RBC Common Stock which are not at the time of demand subject
to forfeiture pursuant to the Merger Agreement, on the terms and conditions set
forth on Schedule 3 hereto; and (b) CAI shall pay to Executive (i) the unpaid
salary and vacation earned by her before the date of termination as provided for
in this Agreement, computed pro rata up to and including such date; and (ii)
Executive's Bonus Payment calculated in accordance with Section 3.1 above for
the Year in which such termination occurs, in lieu of any and all other
compensation, benefits and claims of any kind, excepting only such additional
amounts as may be provided for under the express terms of any applicable benefit
plans or as may be required by law to be paid.
4.7 Compensation and Benefits Upon Voluntary Resignation without Good
Reason or Termination for Cause. In the event of termination of Executive's
employment pursuant to Sections 4.3 or 4.4, CAI shall pay to Executive the
unpaid salary and vacation earned by her before the date of termination as
provided for in this Agreement, computed pro rata up to and including such date,
in lieu of any and all other compensation, benefits and claims of any kind,
excepting only such additional amounts as may be provided for under the express
terms of any applicable benefit plans or as may be required by law to be paid.
4.8 Payments after Termination or Resignation. In the event that
Executive's employment with CAI terminates for any reason, any Bonus Payment
which Executive is entitled to receive pursuant to either Section 4.5 or 4.6
with respect to the Year in which Executive's employment with CAI terminates
shall be paid in full in cash at the earlier of (a) 90 days after such Year ends
or (b) the same time that the remaining senior executives of CAI receive their
bonus payments with respect to such Year. All other payments which Executive is
entitled to receive pursuant to either Section 4.5, 4.6 or 4.7 shall be made
within 45 days after the date of termination or resignation.
5. Confidential Information. During the term of employment under this
Agreement, Executive will have access to and become acquainted with confidential
proprietary information of CAI, including without limitation, compilations of
information and records (including client information and records), owned by CAI
(collectively, "Confidential Information"). Executive shall not, directly or
indirectly, disclose to any other person or entity or use for the benefit of any
other person or entity, any of CAI's Confidential Information (including without
limitation any client lists or other confidential information relating to CAI's
business), either during the term of this Agreement or at any time thereafter,
except as required in the course of his employment by CAI. In furtherance and
not in limitation of the foregoing, during the term of employment under this
Agreement, Executive will abide by all policies and procedures of CAI regarding
use of confidential information. All files, records, documents, equipment and
similar items relating to the business of CAI, whether prepared by Executive or
otherwise coming into her possession, shall remain the exclusive property of
CAI, and if removed from the premises of CAI shall be immediately returned to
CAI upon any termination of her employment. In this Section 5, the term "CAI"
shall include any firm or corporation directly or indirectly controlling or
controlled by CAI or under common control with CAI.
6. Agreement Not to Solicit or Compete.
6.1 Nonsolicitation and Noncompetition. Except as specifically provided
on Schedule 2 hereto, and subject to the following sentence, Executive will not,
individually or through an agent, for herself or on behalf of another, as an
employee, director, owner, partner, sole proprietor, consultant, agent,
representative, shareholder, or in any other manner or capacity whatsoever,
during the Non-Compete Period (as defined below): (a) solicit or induce any
clients of CAI to terminate or reduce their respective relationships with RBC or
CAI, (b) accept any Business from any clients of CAI, or enter into a Business
relationship with any such clients unless (i) Executive continues to be employed
by CAI during the Non-Compete Period; and (ii) all compensation from such
clients during the Non-Compete Period shall accrue to CAI; (c) solicit any
person then employed by CAI to terminate such employment; or (d) permit
Executive's name to be used by or participate (other than through ownership of
less than five percent of the stock of a publicly-held corporation whose stock
is traded on a national securities exchange or on NASDAQ) in any business or
enterprise which is competitive with the Business (as determined on the date of
this Agreement and the Closing Date) and which is located in the United States.
Notwithstanding the foregoing, the restrictions in clauses (a), (b) and (d) of
the preceding sentence shall not apply after the earlier to occur of (i) the
fifth anniversary of the Closing Date or (ii) the termination of Executive's
employment by CAI without cause or by voluntary resignation with Good Reason.
Any written notice or oral presentation made jointly by CAI and the Executive
during the Non-Compete Period shall not be deemed to violate any provision of
this Section 6.1. In this Section 6.1 the term "Non-Compete Period" means the
period beginning on the date hereof and ending on the later to occur of (x) the
fifth anniversary of the Closing Date or (y) the second anniversary of the
termination (for any reason) of Executive's employment with the RBC Affiliates;
provided, however, that if at the end of Year 3 Executive is employed hereunder
and RBC has not offered to extend this Agreement for Year 4 and Year 5 on terms
substantially as favorable to Executive as the terms herein, then the
Non-Compete Period shall end at the end of Year 3. In this Section 6.1 the term
"Business" means the IA Business. In this Section 6.1 the term "CAI" shall
include CAI, any successor in interest to the business of CAI, and any firm or
corporation directly or indirectly controlling or controlled by CAI (or such
successor in interest) or under common control with CAI (or such successor in
interest) and engaged in the investment management or investment advisory
business. Executive agrees that the covenants set forth in this Section 6.1 are
reasonable with respect to duration, geographical area and scope.
6.2 Independent Covenants. The covenants of Executive set forth in this
Section 6 shall be construed as independent covenants and the existence of any
claim, demand, action, or cause of action of Executive against CAI or any other
RBC Affiliate, whether predicated upon this Agreement or otherwise, other than
the failure of RBC to pay amounts due and owing to Executive hereunder or under
the Merger Agreement for a period of 30 days following written notice from
Executive to RBC specifying such amounts due and specifically referring to this
Section 6.2, shall not constitute a defense to the enforcement by CAI or RBC of
any of the covenants contained in this Section 6.
6.3 Severability. In the event that any of the subsections of this
Section 6 shall be deemed by any court of competent jurisdiction to be in
violation of applicable law for any reason whatsoever, then any such subsection
or subsections shall not be deemed to be void, but shall be deemed to be
automatically amended so as to comply with applicable law. In the event that any
of the subsections of this Section 6 shall be deemed by any court of competent
jurisdiction to be wholly or partially invalid, such determination shall not
affect the binding effect of the other subsections of this Section 6 or of any
of the other provisions of this Agreement.
7, Injunctive Relief Executive acknowledges that the damage to CAI
resulting from a breach of the obligations of trust and confidence set forth in
Sections 5 and 6 hereof may cause irreparable injury to CAI, and Executive
hereby agrees and consents to the entry of an injunction by any court of
competent jurisdiction, enjoining her from violating any term or terms of this
Agreement, and such injunctive relief may be granted without the necessity of
proving actual damages. Such injunctive relief, however, shall be in addition to
any other remedies provided by law, in equity or otherwise, to CAI.
8. Entire Agreement. Except as otherwise provided in this Agreement,
this Agreement sets forth the entire understanding of the parties relating to
the subject matter hereof, and all prior understandings, whether written or oral
are superseded by this Agreement. Specifically, Executive acknowledges that no
commitment has been made by RBC or CAI to her with respect to any employment
beyond the term of this Agreement (whether ending by lapse of time or earlier
termination pursuant to its terms) or with respect to any benefits not expressly
set forth in this Agreement.
9. Notices. All demands, notices and communications provided for in
this Agreement will be in writing and will be either personally delivered,
mailed by first class mail (postage prepaid) or sent by reputable overnight
courier service (delivery charges prepaid) to any party at the address specified
below, or at such address, to the attention of such other person, and with such
other copy, as the recipient party has specified by prior written notice to the
sending party pursuant to the provisions of this Section 9. Any such demand,
notice, communication or report will be deemed to have been given pursuant to
this Agreement when delivered personally, on the third business day after
deposit in the U.S. mail or on the business day after deposit with a reputable
overnight courier service, as the case may be.
If to Executive: Suzanne N. Greenberg
510 South 20th Street
Philadelphia, PA 19146
Tel.: (215) 735-3162 or
Tel.: (609) 692-6690
Fax: (609) 692-1379
and to Suzanne N. Greenberg
614 Landis Avenue
Vineland, NJ 08360
with a copy to: Richard N. Weiner, Esq.
Pelino & Lentz
One Liberty Place, 32nd Floor
1650 Market Street
Philadelphia, PA 19103-7393
Tel.: (215) 246-3135
Fax: (215) 665-1536
If to CAI or RBC: Ryan, Beck & Co.
220 South Orange Avenue
Livingston, NJ 07039-5817
Tel.: (973) 597-6000
Fax: (973) 597-6414
Attn.: Leonard Stanley
with a copy to: Ronald H. Janis , Esq.
Pitney Hardin Kipp & Szuch
By Mail:
P.O. Box 1945
Morristown, NJ 07962-1945
Delivery:
200 Campus Drive
Florham Park, NJ 07932-0950
Tel.: (973) 966-8263
Fax: (973) 966-1550
10. Amendment; Waiver. This Agreement may be amended and any right or
claim hereunder waived, only by a written instrument signed by Executive, CAI
and RBC. Nothing in this Agreement, express or implied, is intended to confer
upon any third person any rights or remedies under or by reason of this
Agreement. No amendment or waiver of this Agreement requires the consent of any
individual or entity not a party to this Agreement.
11. Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of New Jersey, without giving
effect to any choice of law or conflict provision or rule (whether of the State
of New Jersey or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of New Jersey to be applied. In furtherance of
the foregoing, the internal law of the State of New Jersey will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
12. Arbitration. Any controversy or claim, directly or indirectly,
arising out of or relating to this Agreement, will be submitted to and settled
by arbitration conducted in Morristown, New Jersey in accordance with the rules
and procedures then existing under the Commercial Arbitration Rules of the
American Arbitration Association, provided that notwithstanding anything to the
contrary contained in such Rules: (a) a panel of three arbitrators will be used,
with one arbitrator chosen by CAI and RBC, one arbitrator chosen by Executive
and the third arbitrator chosen by the other two arbitrators; (b) the decision
in writing of a majority of the arbitrators on the panel will be final,
conclusive, and binding on all parties hereto who had notice of such arbitration
and an opportunity to participate therein, whether or not such party so
participated; and (c) the arbitrators will not award any punitive damages except
in the case of intentional fraud. The determination of the panel of arbitrators
will be final, binding and nonappealable, except that any determination that
there has been intentional fraud, and any award of punitive damages, will be
appealable in any court having jurisdiction. Judgment upon any binding decision
rendered by such panel may be entered in any court having jurisdiction. Any and
all reasonable travel expenses incurred by Executive in connection with such
arbitration will be reimbursed by CAI and RBC. The Parties intend that the
arbitrators use reasonable efforts to limit the nature, scope and timing of any
discovery which they permit in connection with any arbitration so that neither
the duration nor the expense of the arbitration will be unduly burdensome on any
party. Notwithstanding the foregoing, any determination of the arbitrators with
respect to discovery will be binding on the parties.
13. Headings. The headings used in this Agreement are for the purpose
of reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
14. Assignment; Successors and Assigns. Neither this Agreement nor any
rights or obligations hereunder may be assigned by one party without the consent
of the others, except that (i) this Agreement shall be binding upon and inure to
the benefit of any successor or successors of CAI or RBC, whether by merger,
consolidation, sale of assets or otherwise, and reference herein to CAI and RBC
shall be deemed to include any such successor or successors, and (ii) this
Agreement is freely assignable by either CAI or RBC to any corporation or entity
controlling, controlled by, or under common control with, RBC.
15. Guarantee of Payment by RBC. RBC hereby agrees to guarantee all
payments due hereunder from CAI to Executive.
16. Counterparts; Facsimile Signatures. The parties may execute this
Agreement in separate counterparts (no one of which need contain the signatures
of all parties), each of which will be an original and all of which together
will constitute one and the same instrument. A facsimile, telecopy or photocopy
of an original signature of the any party appearing on this Agreement will be
valid and binding on such Party as if it were an original signature; provided,
that at the request of any party, all parties will exchange counterparts of this
Agreement which contain original signatures; and provided, further, that failure
to exchange original signatures will not in any way affect the validity and
binding nature of the facsimile, telecopy or photocopy of the original
signatures.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
SUZANNE N. GREENBERG:
------------------------------------------
CUMBERLAND ADVISORS, INC.
By:---------------------------------------
Name:
Title:
RYAN BECK & CO., INC.
By:---------------------------------------
Name:
Title:
Schedule 1 - Other activities which may be engaged in during the term of the
Agreement Schedule 2 - Specific exceptions to non-solicit and non-compete
covenants Schedule 3 - Terms and conditions of registration rights Schedule 4 -
Benefits and plans
<PAGE>
Suzanne N. Greenberg
Employment Agreement
Schedule 1
None.
<PAGE>
Suzanne N. Greenberg
Employment Agreement
Schedule 2
Partner Contracts
List of Family-Related Accounts
Suzanne N. Greenberg - IRA
Charles R. Greenberg
Theodore N. Greenberg
Nona W. Wolf
<PAGE>
EXHIBIT H
GOLDBERG CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of
February 28, 1998, by and among Sheldon E. Goldberg ("Goldberg"), Ryan, Beck &
Co., Inc., a New Jersey corporation ("RBC"), and Cumberland Advisors, Inc. a New
Jersey corporation and wholly-owned subsidiary of RBC ("CAI").
1. CAI was formed by RBC to acquire by merger Cumberland Advisors, a
New Jersey general partnership ("Old CAI") pursuant to the Merger Agreement (the
"Merger Agreement") dated as of February 9, 1998, by and among Goldberg, Suzanne
N. Greenberg and David R. Kotok (the "Sellers"), RBC, CAI and Old CAI.
2. Through the date hereof, Goldberg has been a partner of Old CAI.
3. CAI wishes to assure itself of the services of Goldberg as a
consultant, upon the terms and conditions set forth in this Agreement, and
Goldberg is willing to provide such services and enjoy the benefits provided by
this Agreement.
4. Capitalized terms used but not otherwise defined herein shall have
the same meaning as set forth in the Merger Agreement.
Accordingly, the parties agree as follows:
1. Consulting Duties and Term.
1.1 Consulting Duties. Subject to the terms and conditions of this
Agreement, CAI shall have the services of Goldberg as a consultant during the
term set forth in Section 1.2 below. The parties acknowledge and agree that in
performing services hereunder, Goldberg is and shall be treated as an
independent contractor. Goldberg shall serve as a consultant to CAI and shall
provide such consulting services and have such powers, consistent with his
consulting capacity, as may be assigned to him from time to time by the
President or the Board of Directors of CAI (the "Board of Directors"). Goldberg
agrees to perform all such services faithfully and diligently, and to discharge
the responsibilities thereof to the best of his ability. Goldberg is not
required to devote his full business time and attention and energies to the
duties of his consultancy, it being understood that Goldberg will be engaging in
one or more of the activities described in Schedule 1 hereto during the term of
his consultancy for CAI. Notwithstanding the foregoing, RBC and Goldberg may, by
mutual agreement, arrange for Goldberg to perform consulting or other services
for entities other than CAI in exchange for compensation other than that
provided for hereunder.
1.2 Term. The term of this Agreement (the "Consulting Period") shall
begin on the first day of Year 1 and end on the last day of Year 3, unless
otherwise terminated in accordance with the provisions set forth in Section 4
below. (A "Year" (when the term is capitalized) will have the meaning given to
it in the Merger Agreement.) Near the end of Year 3, the parties will negotiate
in good faith with respect to extending the term for a fourth and fifth Year.
2. Base Compensation. In consideration for the services to be rendered
hereunder, and subject to the terms and conditions of this Agreement, CAI will
pay Goldberg a Base Compensation for each Year (the "Base Compensation"), which
shall be $132,000 for Year 1. The Base Compensation will be readjusted following
Year 1 so that for each successive Year the Base Compensation will equal
$600,000 multiplied by a fraction the numerator of which is the amount of IA
Revenues attributed to Goldberg for the prior Year and the denominator is the
amount of IA Revenues attributable to the three Principals (including Goldberg)
for the prior Year. (In each instance in this Agreement when a determination
must be made as to the attribution of a percentage of IA Revenues to Goldberg,
such attribution shall be made by the Board of Directors of CAI; provided, that
the Board of Directors shall abide by any unanimous agreement of the Sellers (or
their respective estates) as to such attribution, which agreement is evidenced
by a writing signed by all Sellers (or their respective estates) and delivered
to the Board of Directors of RBC.)
3. Bonus Payment and Business Expenses.
3.1 Bonus Payment. In addition to the Base Compensation provided for in
Section 2 above, CAI will pay to Goldberg, in accordance with its normal
schedule for payment of bonuses to its senior executives (but in any event no
later than 90 days after the Year for which the Bonus is payable), an annual
payment (a "Bonus Payment") equal to 35% of the IA Revenues attributed to
Goldberg above $374,000 (if any) during the Year for which the Bonus is payable.
If Goldberg's consultancy with CAI is terminated (for any reason other than
including voluntary resignation or termination for cause) prior to the end of
the Year for which the Bonus is payable, Goldberg's Bonus Payment for such Year
will be equal to 35% of the IA Revenues attributed to Goldberg above {374,000
multiplied by a fraction, the numerator of which is the number of days Goldberg
was a consultant hereunder in such Year and the denominator of which is 365} (if
any) during the Year for which the Bonus is payable. In the event of voluntary
resignation or termination for "cause" (as defined in Section 4.4 hereof),
Goldberg shall receive no Bonus Payment with respect to the Year in which the
termination occurs. Any Bonus Payment with respect to any Year in which
Goldberg's consultancy with CAI terminates and which Goldberg is entitled to
receive under this Section shall be paid in full in cash at the earlier of (a)
90 days after such Year ends or (b) the same time that the senior executives of
CAI receive their bonus payments with respect to such period.
3.2 Reasonable Business Expenses. Goldberg is expected and is
authorized to incur reasonable expenses in the performance of his consulting
duties hereunder, including such expenses for the promotion of the business of
CAI and RBC as entertainment, travel, and similar business expenses incurred in
the performance of his consulting duties as allowed in RBC's Expense Policy. CAI
shall reimburse Goldberg for all such expenses promptly upon periodic
presentation by Goldberg of an itemized account with documentation of such
expenses.
4. Termination of Consultancy.
4.1 Death or Permanent Disability of Goldberg. Goldberg's consultancy
hereunder shall terminate upon his death. In addition, CAI shall have the right
to terminate Goldberg's consultancy hereunder if and when Goldberg becomes
permanently disabled within the meaning of any permanent disability insurance
policy which may be maintained by CAI or RBC for the benefit of its senior
executives.
4.2 Termination Without Cause. CAI, by written notice to Goldberg at
any time, shall also have the right to terminate Goldberg's consultancy without
cause for any reason, subject to Section 4.6.
4.3 Termination by Voluntary Resignation. The parties agree that
Goldberg has the right to resign as a consultant hereunder voluntarily and that
such resignation shall not constitute a breach of this agreement.
4.4 Termination for Cause. CAI, by written notice to Goldberg,
specifying in reasonable detail the reasons therefor authorized by the Board of
Directors, may terminate Goldberg's consultancy for "cause". The term "cause"
shall include any of the following: (i) gross negligence, (ii) gross
insubordination, (iii) material violations of any regulatory compliance rules,
(iv) failure to diligently perform the duties of Goldberg specified hereunder or
specified by the Board of Directors, (v) misappropriation by Goldberg of funds
or property of any RBC Affiliate, (vi) any breach of any provision of Section 5
or Section 6 of this Agreement; or (vii) a felony conviction of Goldberg. CAI
shall not terminate Goldberg's consultancy for "cause" under clauses (i), (ii),
(iii) or (iv) above without first giving Goldberg written notice and a
reasonable opportunity to take corrective action; provided, that in no event
will CAI be obligated to give Goldberg more than 30 days to take corrective
action.
4.5 Compensation and Benefits Upon Death or Permanent Disability. In
the event of termination of Goldberg's consultancy pursuant to Section 4.1, CAI
shall pay to Goldberg (i) the unpaid compensation earned by him before the date
of termination as provided for in this Agreement, computed pro rata up to and
including such date; and (ii) Goldberg's Bonus Payment calculated in accordance
with Section 3.1 above for the Year in which such termination occurs, in lieu of
any and all other compensation, benefits and claims of any kind, excepting only
such additional amounts as may be required by law to be paid.
4.6 Compensation and Benefits Upon Termination without Cause. In the
event of termination of Goldberg's consultancy pursuant to Section 4.2: (a) if
the RBC Common Stock which Goldberg received in connection with the Merger
Agreement is not then freely tradeable by Goldberg without registration under
the Securities Act, then RBC shall provide Goldberg with the right (exercisable
for a period of five years) to demand registration of all, but not less than
all, the shares of RBC Common Stock which are not at the time of demand subject
to forfeiture pursuant to the Merger Agreement, on the terms and conditions set
forth on Schedule 3 hereto; and (b) CAI shall pay to Goldberg (i) the unpaid
compensation earned by him before the date of termination as provided for in
this Agreement, computed pro rata up to and including such date; and (ii)
Goldberg's Bonus Payment calculated in accordance with Section 3.1 above for the
Year in which such termination occurs, in lieu of any and all other
compensation, benefits and claims of any kind, excepting only such additional
amounts as may be required by law to be paid.
4.7 Compensation and Benefits Upon Voluntary Resignation or Termination
for Cause. In the event of termination of Goldberg's consultancy pursuant to
Sections 4.3 or 4.4, CAI shall pay to Goldberg the unpaid compensation earned by
him before the date of termination as provided for in this Agreement, computed
pro rata up to and including such date, in lieu of any and all other
compensation, benefits and claims of any kind, excepting only such additional
amounts as may be required by law to be paid.
4.8 Payments after Termination or Resignation. In the event that
Goldberg's consultancy with CAI terminates for any reason, any Bonus Payment
which Goldberg is entitled to receive pursuant to either Section 4.5 or 4.6 with
respect to the Year in which Goldberg's consultancy with CAI terminates shall be
paid in full in cash at the earlier of (a) 90 days after such Year ends or (b)
the same time that the senior executives of CAI receive their bonus payments
with respect to such Year. All other payments which Goldberg is entitled to
receive pursuant to either Section 4.5, 4.6 or 4.7 shall be made within 45 days
after the date of termination or resignation.
5. Confidential Information. During the term of consultancy under this
Agreement, Goldberg will have access to and become acquainted with confidential
proprietary information of CAI, including without limitation, compilations of
information and records (including client information and records), owned by CAI
(collectively, "Confidential Information"). Goldberg shall not, directly or
indirectly, disclose to any other person or entity or use for the benefit of any
other person or entity, any of CAI's Confidential Information (including without
limitation any client lists or other confidential information relating to CAI's
business), either during the term of this Agreement or at any time thereafter,
except as required in the course of his consultancy hereunder. All files,
records, documents, equipment and similar items relating to the business of CAI,
whether prepared by Goldberg or otherwise coming into his possession, shall
remain the exclusive property of CAI, and if removed from the premises of CAI
shall be immediately returned to CAI upon any termination of his consultancy. In
this Section 5, the term "CAI" shall include any firm or corporation directly or
indirectly controlling or controlled by CAI or under common control with CAI.
6. Agreement Not to Solicit or Compete.
6.1 Nonsolicitation and Noncompetition. Except as specifically provided
on Schedule 2 hereto, and subject to the following sentence, Goldberg will not,
individually or through an agent, for himself or on behalf of another, as an
employee, director, owner, partner, sole proprietor, consultant, agent,
representative, shareholder, or in any other manner or capacity whatsoever,
during the Non-Compete Period (as defined below): (a) solicit or induce any
clients of CAI to terminate or reduce their respective relationships with RBC or
CAI, (b) accept any Business from any clients of CAI, or enter into a Business
relationship with any such clients unless (i) Goldberg continues to serve as a
consultant to CAI during the Non-Compete Period; and (ii) all compensation from
such clients during the Non-Compete Period shall accrue to CAI; (c) solicit any
person then employed by CAI to terminate such employment; or (d) permit
Goldberg's name to be used by or participate (other than through ownership of
less than five percent of the stock of a publicly-held corporation whose stock
is traded on a national securities exchange or on NASDAQ) in any business or
enterprise which is competitive with the Business (as determined on the date of
this Agreement and the Closing Date) and which is located in the United States.
Notwithstanding the foregoing, the restrictions in clauses (a), (b) and (d) of
the preceding sentence shall not apply after the earlier to occur of (i) the
fifth anniversary of the Closing Date or (ii) the termination of Goldberg's
consultancy by CAI without cause. Any written notice or oral presentation made
jointly by CAI and Goldberg during the Non-Compete Period shall not be deemed to
violate any provision of this Section 6.1. In this Section 6.1 the term
"Non-Compete Period" means the period beginning on the date hereof and ending on
the later to occur of (x) the fifth anniversary of the Closing Date or (y) the
second anniversary of the termination (for any reason) of Goldberg's consultancy
with the RBC Affiliates; provided, however, that if at the end of Year 3
Goldberg is providing consulting services hereunder and RBC has not offered to
extend this Agreement for Year 4 and Year 5 on terms substantially as favorable
to Goldberg as the terms herein, then the Non-Compete Period shall end at the
end of Year 3. In this Section 6.1 the term "Business" means the IA Business. In
this Section 6.1 the term "CAI" shall include CAI, any successor in interest to
the business of CAI, and any firm or corporation directly or indirectly
controlling or controlled by CAI (or such successor in interest) or under common
control with CAI (or such successor in interest) and engaged in the investment
management or investment advisory business. Goldberg agrees that the covenants
set forth in this Section 6.1 are reasonable with respect to duration,
geographical area and scope. Nothing in this Section 6.1 shall be construed to
prohibit Goldberg, through Cumberland Brokerage, from continuing to provide
services to existing clients of Cumberland Brokerage following any termination
or expiration of his consultancy hereunder in substantially the same manner and
to the same extent as such services are provided during such consultancy in
compliance herewith. Nothing in this Section 6.1 shall be construed to prohibit
Goldberg, through Cumberland Brokerage, from continuing to provide services to
existing clients of Cumberland Brokerage during the term of this Agreement or
thereafter in substantially the same manner and to the same extent as such
services have been provided prior to the inception of his consulting hereunder.
RBC and CAI acknowledge that certain persons who have accounts with both
Cumberland Brokerage and Old CAI will be permitted to maintain their Cumberland
Brokerage accounts at all times.
6.2 Independent Covenants. The covenants of Goldberg set forth in this
Section 6 shall be construed as independent covenants and the existence of any
claim, demand, action, or cause of action of Goldberg against CAI or any other
RBC Affiliate, whether predicated upon this Agreement or otherwise, other than
the failure of RBC to pay amounts due and owing to Goldberg hereunder or under
the Merger Agreement for a period of 30 days following written notice from
Goldberg to RBC specifying such amounts due and specifically referring to this
Section 6.2, shall not constitute a defense to the enforcement by CAI or RBC of
any of the covenants contained in this Section 6.
6.3 Severability. In the event that any of the subsections of this
Section 6 shall be deemed by any court of competent jurisdiction to be in
violation of applicable law for any reason whatsoever, then any such subsection
or subsections shall not be deemed to be void, but shall be deemed to be
automatically amended so as to comply with applicable law. In the event that any
of the subsections of this Section 6 shall be deemed by any court of competent
jurisdiction to be wholly or partially invalid, such determination shall not
affect the binding effect of the other subsections of this Section 6 or of any
of the other provisions of this Agreement.
7, Injunctive Relief Goldberg acknowledges that the damage to CAI
resulting from a breach of the obligations of trust and confidence set forth in
Sections 5 and 6 hereof may cause irreparable injury to CAI, and Goldberg hereby
agrees and consents to the entry of an injunction by any court of competent
jurisdiction, enjoining him from violating any term or terms of this Agreement,
and such injunctive relief may be granted without the necessity of proving
actual damages. Such injunctive relief, however, shall be in addition to any
other remedies provided by law, in equity or otherwise, to CAI.
8. Entire Agreement. Except as otherwise provided in this Agreement,
this Agreement sets forth the entire understanding of the parties relating to
the subject matter hereof, and all prior understandings, whether written or oral
are superseded by this Agreement. Specifically, Goldberg acknowledges that no
commitment has been made by RBC or CAI to him with respect to any consultancy
beyond the term of this Agreement (whether ending by lapse of time or earlier
termination pursuant to its terms) or with respect to any benefits not expressly
set forth in this Agreement.
9. Notices. All demands, notices and communications provided for in
this Agreement will be in writing and will be either personally delivered,
mailed by first class mail (postage prepaid) or sent by reputable overnight
courier service (delivery charges prepaid) to any party at the address specified
below, or at such address, to the attention of such other person, and with such
other copy, as the recipient party has specified by prior written notice to the
sending party pursuant to the provisions of this Section 9. Any such demand,
notice, communication or report will be deemed to have been given pursuant to
this Agreement when delivered personally, on the third business day after
deposit in the U.S. mail or on the business day after deposit with a reputable
overnight courier service, as the case may be.
If to Goldberg: Sheldon E. Goldberg
Academy House
1420 Locust Street, Apt. 25-K
Philadelphia, PA 19102
Tel.: (215) 546-7494 or
Tel.: (609) 692-5360
Fax: (609) 692-1379
and to Sheldon E. Goldberg
614 Landis Avenue
Vineland, NJ 08360
with a copy to: Richard N. Weiner, Esq.
Pelino & Lentz
One Liberty Place, 32nd Floor
1650 Market Street
Philadelphia, PA 19103-7393
Tel.: (215) 246-3135
Fax: (215) 665-1536
If to CAI or RBC: Ryan, Beck & Co.
220 South Orange Avenue
Livingston, NJ 07039-5817
Tel.: (973) 597-6000
Fax: (973) 597-6414
Attn.: Leonard Stanley
with a copy to: Ronald H. Janis , Esq.
Pitney Hardin Kipp & Szuch
By Mail:
P.O. Box 1945
Morristown, NJ 07962-1945
Delivery:
200 Campus Drive
Florham Park, NJ 07932-0950
Tel.: (973) 966-8263
Fax: (973) 966-1550
10. Amendment; Waiver. This Agreement may be amended and any right or
claim hereunder waived, only by a written instrument signed by Goldberg, CAI and
RBC. Nothing in this Agreement, express or implied, is intended to confer upon
any third person any rights or remedies under or by reason of this Agreement. No
amendment or waiver of this Agreement requires the consent of any individual or
entity not a party to this Agreement.
11. Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of New Jersey, without giving
effect to any choice of law or conflict provision or rule (whether of the State
of New Jersey or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of New Jersey to be applied. In furtherance of
the foregoing, the internal law of the State of New Jersey will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
12. Arbitration. Any controversy or claim, directly or indirectly,
arising out of or relating to this Agreement, will be submitted to and settled
by arbitration conducted in Morristown, New Jersey in accordance with the rules
and procedures then existing under the Commercial Arbitration Rules of the
American Arbitration Association, provided that notwithstanding anything to the
contrary contained in such Rules: (a) a panel of three arbitrators will be used,
with one arbitrator chosen by CAI and RBC, one arbitrator chosen by Goldberg and
the third arbitrator chosen by the other two arbitrators; (b) the decision in
writing of a majority of the arbitrators on the panel will be final, conclusive,
and binding on all parties hereto who had notice of such arbitration and an
opportunity to participate therein, whether or not such party so participated;
and (c) the arbitrators will not award any punitive damages except in the case
of intentional fraud. The determination of the panel of arbitrators will be
final, binding and nonappealable, except that any determination that there has
been intentional fraud, and any award of punitive damages, will be appealable in
any court having jurisdiction. Judgment upon any binding decision rendered by
such panel may be entered in any court having jurisdiction. Any and all
reasonable travel expenses incurred by Goldberg in connection with such
arbitration will be reimbursed by CAI and RBC. The Parties intend that the
arbitrators use reasonable efforts to limit the nature, scope and timing of any
discovery which they permit in connection with any arbitration so that neither
the duration nor the expense of the arbitration will be unduly burdensome on any
party. Notwithstanding the foregoing, any determination of the arbitrators with
respect to discovery will be binding on the parties.
13. Headings. The headings used in this Agreement are for the purpose
of reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
14. Assignment; Successors and Assigns. Neither this Agreement nor any
rights or obligations hereunder may be assigned by one party without the consent
of the others, except that (i) this Agreement shall be binding upon and inure to
the benefit of any successor or successors of CAI or RBC, whether by merger,
consolidation, sale of assets or otherwise, and reference herein to CAI and RBC
shall be deemed to include any such successor or successors, and (ii) this
Agreement is freely assignable by either CAI or RBC to any corporation or entity
controlling, controlled by, or under common control with, RBC.
15. Guarantee of Payment by RBC. RBC hereby agrees to guarantee all
payments due hereunder from CAI to Goldberg.
16. Counterparts; Facsimile Signatures. The parties may execute this
Agreement in separate counterparts (no one of which need contain the signatures
of all parties), each of which will be an original and all of which together
will constitute one and the same instrument. A facsimile, telecopy or photocopy
of an original signature of the any party appearing on this Agreement will be
valid and binding on such Party as if it were an original signature; provided,
that at the request of any party, all parties will exchange counterparts of this
Agreement which contain original signatures; and provided, further, that failure
to exchange original signatures will not in any way affect the validity and
binding nature of the facsimile, telecopy or photocopy of the original
signatures.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
SHELDON E. GOLDBERG:
--------------------------------------------
CUMBERLAND ADVISORS, INC.
By:-----------------------------------------
Name:
Title:
RYAN BECK & CO., INC.
By:-----------------------------------------
Name:
Title:
Schedule 1 - Other activities which may be engaged in during the term of the
Agreement Schedule 2 - Specific exceptions to non-solicit and non-compete
covenants Schedule 3 - Terms and conditions of registration rights
<PAGE>
Sheldon E. Goldberg
Consulting Agreement
Schedule 1
Cumberland Brokerage Corp. - President and principal of shareholder - registered
broker/dealer
First Republic Bank - member, Board of Directors, Executive Committee and Loan
Committee
Republic First Corporation - member, Board of Directors and Executive Committee
Matterhorn Asset Management Corporation - Chairman and part owner -- fund
manager for Matterhorn Growth Fund
National CD Sales, Inc. - a principal shareholder and Chairman - places jumbo
certificates of deposit
<PAGE>
Sheldon E. Goldberg
Consulting Agreement
Schedule 2
Partner Contracts
List of Family-Related Accounts
Dr. Albert Goldberg - IRA
Leslie J. Saunders - IRA
Susan Prizant Schmid - IRA
Elizabeth, David, Judith Alperin - TTEES Childrens
Goldberg A.A.G. Marital Trust
Ruth Prizant - IRA
Albert & Linda Goldberg MD - Special Valuation Acct.
<PAGE>
EXHIBIT I
FORM OF OPINION OF SELLERS' COUNSEL
[Closing Date]
Ryan, Beck & Co., Inc.
Cumberland Advisors, Inc.
220 South Orange Avenue
Livingston, New Jersey 07039
Ladies and Gentlemen:
We have acted as counsel to Cumberland Advisors, a New Jersey
general partnership ("Advisors"), David R. Kotok ("Kotok"), Suzanne N. Greenberg
("Greenberg") and Sheldon E. Goldberg ("Goldberg") (Kotok, Greenberg and
Goldberg are each a "Seller" and collectively the "Sellers"; Advisors and
Sellers are collectively the "Cumberland Parties") in connection with the Merger
Agreement (the "Merger Agreement") dated as of February 9, 1998, by and among
Ryan, Beck & Co., Inc., a New Jersey corporation ("RBC"), Cumberland Advisors,
Inc., a New Jersey corporation and wholly-owned subsidiary of RBC ("Newco" and
together with RBC, "Purchaser") and the Cumberland Parties. This letter is
furnished to you pursuant to Section 6.2(f) of the Merger Agreement. Capitalized
terms not otherwise defined herein shall have the respective meanings set forth
in the Merger Agreement.
In rendering the opinions set forth below, we have reviewed
the Merger Agreement and originals or copies, certified or otherwise identified
to our satisfaction, of the Partnership Agreement of Advisors (the "Partnership
Agreement"), such partnership records of the Advisors, communications or
certifications of public officials, certificates of the Cumberland Parties, and
such other documents, instruments and agreements, and we have conducted such
other inquiries and examinations of law, as we have deemed necessary as a basis
for the opinions set forth below.
In rendering the opinions set forth below we have, with your
consent, assumed:
(i) the genuineness of all signatures, the authenticity of all
documents and records submitted to us as originals, the conformity to originals
of all documents and records submitted to us as copies and the authenticity of
the originals of such copies;
(ii) the due adoption, promulgation, issuance and validity of
the laws, regulations, rules, licenses, approvals and permits which we have
reviewed for purposes of this opinion;
(iii) that the Merger Agreement and any agreement executed in
connection with the Merger are valid and binding obligations of any parties to
such agreement other than Cumberland Parties; and
(iv) as to facts, the correctness and accuracy of the
representations and warranties made by Cumberland Parties in the Merger
Agreement and the certificates of public officials and of the Cumberland
Parties.
Based on the foregoing, and subject to the qualifications and
limitations hereinafter set forth, we are of the opinion that:
(a) Advisors is a validly existing general
partnership under the laws of the State of New Jersey.
(b) Advisors has the full power to carry out the
transactions contemplated in the Merger Agreement. The execution and delivery
and the performance as of the date hereof of the Merger Agreement and the
consummation of the transactions contemplated thereunder have been duly and
validly authorized by all necessary partnership action on the part of the
Cumberland Parties. The Merger Agreement constitutes the valid and legally
binding obligations of the Cumberland Parties enforceable against each of them
in accordance with its terms, except that the enforceability of such obligations
may be limited by bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship, and other laws affecting creditors' rights
generally and by the exercise of judicial discretion in applying principles of
equity.
(c) Subject to the satisfaction of the conditions set forth in
the Merger Agreement, neither the transactions contemplated in the Merger
Agreement, nor compliance by the Cumberland Parties with any of the provisions
thereof, will (A) conflict with or result in a breach or default under the
Partnership Agreement, or (B) violate in any material respect any order, writ,
injunction, or decree known to us, or any statute, rule or regulation applicable
to any of the Cumberland Parties. We express no opinion regarding whether, and
to what extent, Newco as a successor to Advisors, will be permitted to continue
to conduct its investment advisory business or engage in any other activity
requiring a license or permit from any federal or state regulatory authority.
(d) All actions required by law and by the Partnership
Agreement to be taken by the Cumberland Parties to authorize the execution,
delivery and performance of the Merger Agreement and consummation of the Merger
have been duly taken.
(e) All approvals, authorizations, consents or other actions
and all filings under federal law and state law required to be obtained by the
Cumberland Parties in order to permit the execution and delivery by them of the
Merger Agreement and the performance by them of the transactions contemplated
therein have been obtained and no consent of any other party or entity is
required in connection with the execution, delivery and performance by any of
the Cumberland Parties of such Cumberland Party's obligations under the Merger
Agreement. We note, however, that the consents of each investment advisory
client of Advisors is required for the assignment of that client's investment
management agreement by Advisors to Newco.
The foregoing opinions are limited to the laws of the State of
New Jersey and the federal laws of the United States of America, and we express
no opinion with respect to the laws of any other jurisdiction. We have made no
independent review of the laws of any state or jurisdiction other than the State
of New Jersey and federal law.
Where the phrases "to our actual knowledge" or "known to us"
or similar phrases are used in this opinion, such phrases refer only to the
actual knowledge or awareness of the attorneys in this firm who have been
directly involved in acting as counsel to the Cumberland Parties in connection
with the Merger or for whom we have billed time charges for legal services
rendered to the Cumberland Parties during the past twelve months.
This opinion is issued as of the date hereof and is
necessarily limited to laws now in effect and to facts and circumstances
currently brought to our attention and is not intended to cover laws, facts or
circumstances in existence as of any other date. There is no commitment or
undertaking on our part to advise you or anyone else as to any changes in laws
or of any facts or circumstances brought to our attention after the date of this
opinion.
This opinion and advice is not to be quoted or otherwise
referred to in any document or filed with any entity, person, or governmental
agency, or relied upon by any entity, person, or governmental agency, other than
the addressees, without the written consent of this firm. This opinion has been
rendered to you solely for the purpose of satisfying the requirement contained
in Section 6.2(f) of the Merger Agreement and may not be relied upon for any
other purpose.
Very truly yours,
PELINO & LENTZ
<PAGE>
EXHIBIT J
FORM OF OPINION OF PURCHASER'S COUNSEL
[Closing Date]
David R. Kotok
Suzanne N. Greenberg
Sheldon E. Goldberg
Lady and Gentlemen:
We have acted as counsel to Ryan, Beck & Co., Inc., a New
Jersey corporation ("RBC"), Cumberland Advisors, Inc., a New Jersey corporation
and wholly-owned subsidiary of RBC ("Newco" and, together with RBC,
"Purchaser"), in connection with the Merger Agreement (the "Merger Agreement")
dated as of February 9, 1998, by and among Purchaser, Cumberland Advisors, a New
Jersey general partnership ("Advisors"), David R. Kotok ("Kotok"), Suzanne N.
Greenberg ("Greenberg") and Sheldon E. Goldberg ("Goldberg") (Kotok, Greenberg
and Goldberg are each a "Seller" and collectively the "Sellers"; Advisors and
Sellers are collectively the "Cumberland Parties"). This letter is furnished to
you pursuant to Section 6.1(g) of the Merger Agreement. Capitalized terms not
otherwise defined herein shall have the respective meanings set forth in the
Merger Agreement.
In rendering the opinions set forth below, we have reviewed
the Merger Agreement and originals or copies, certified or otherwise identified
to our satisfaction, of all such corporate records of RBC and Newco,
communications or certifications of public officials, certificates of officers
and representatives of RBC and Newco, and such other documents, instruments and
agreements, and we have conducted such other inquiries and examinations of law,
as we have deemed necessary as a basis for the opinions set forth below.
In rendering the opinions set forth below we have, with your
consent, assumed:
(i) the genuineness of all signatures, the authenticity of all
documents and records submitted to us as originals, the conformity to originals
of all documents and records submitted to us as copies and the authenticity of
the originals of such copies;
(ii) the due adoption, promulgation, issuance and validity of
the laws, regulations, rules, licenses, approvals and permits which we have
reviewed for purposes of this opinion;
(iii) that the Merger Agreement and any agreement executed in
connection with the Merger are valid and binding obligations of any parties to
such agreement other than RBC and Newco; and
(iv) as to facts, the correctness and accuracy of the
representations and warranties made by RBC and Newco in the Merger Agreement and
the certificates of public officials and of officers and representatives of RBC
and Newco.
Based on the foregoing, and subject to the qualifications and
limitations hereinafter set forth, we are of the opinion that:
(a) Each of RBC and Newco is a validly existing
corporation under the laws of the State of New Jersey.
(b) Each of RBC and Newco has the full power to carry out the
transactions contemplated in the Merger Agreement. The execution and delivery
and the performance as of the date hereof of the Merger Agreement and the
consummation of the transactions contemplated thereunder have been duly and
validly authorized by all necessary corporate action on the part of each of RBC
and Newco. The Merger Agreement constitutes the valid and legally binding
obligations of each of RBC and Newco enforceable against each of them in
accordance with its terms, except that the enforceability of such obligations
may be limited by bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship, and other laws affecting creditors' rights
generally and by the exercise of judicial discretion in applying principles of
equity.
(c) Subject to the satisfaction of the conditions set forth in
the Merger Agreement, neither the transactions contemplated in the Merger
Agreement, nor compliance by RBC and Newco with any of the provisions thereof,
will (A) conflict with or result in a breach or default under the Certificate of
Incorporation or Bylaws of either RBC or Newco or a breach or default by either
RBC or Newco under any of the agreements listed on Schedule 1 hereto, or (B)
violate in any material respect any order, writ, injunction, or decree known to
us, or any statute, rule or regulation applicable to either of RBC or Newco.
(d) All actions required by law and by the Certificates of
Incorporation or Bylaws of RBC and Newco to be taken by RBC and Newco to
authorize the execution, delivery and performance of the Merger Agreement and
consummation of the Merger have been duly taken.
(e) All approvals, authorizations, consents or other actions
and all filings under federal law and state law required to be obtained by RBC
and Newco in order to permit the execution and delivery by them of the Merger
Agreement and the performance by them of the transactions contemplated therein
have been obtained and no consent of any other party or entity is required in
connection with the execution, delivery and performance by either of RBC or
Newco of such party's obligations under the Merger Agreement.
(f) The authorized capital stock of RBC consists of __________
shares of common stock, $0.10 par value per share ("RBC Common Stock") and
___________ shares of [describe authorized preferred stock]. The RBC Common
Stock to be issued in connection with the Merger in accordance with Article 1 of
the Merger Agreement, when so issued in accordance therewith, will be duly
authorized, validly issued, fully paid and non-assessable, free of preemptive
rights and free and clear of all liens, encumbrances or restrictions created by
RBC.
The foregoing opinions are limited to the laws of the State of
New Jersey and the federal laws of the United States of America, and we express
no opinion with respect to the laws of any other jurisdiction. We have made no
independent review of the laws of any state or jurisdiction other than the State
of New Jersey and federal law.
Where the phrase "to our actual knowledge" or similar phrases
are used in this opinion, such phrases refer only to the actual knowledge or
awareness of the attorneys in this firm who have been directly involved in
acting as counsel to RBC and Newco in connection with the Merger or for whom we
have billed time charges for legal services rendered to RBC or Newco during the
past twelve months.
This opinion is issued as of the date hereof and is
necessarily limited to laws now in effect and to facts and circumstances
currently brought to our attention and is not intended to cover laws, facts or
circumstances in existence as of any other date. There is no commitment or
undertaking on our part to advise you or anyone else as to any changes in laws
or of any facts or circumstances brought to our attention after the date of this
opinion.
This opinion and advice is not to be quoted or otherwise
referred to in any document or filed with any entity, person, or governmental
agency, or relied upon by any entity, person, or governmental agency, other than
the addressees, without the written consent of this firm. This opinion has been
rendered to you solely for the purpose of satisfying the requirement contained
in Section 6.1(g) of the Merger Agreement and may not be relied upon for any
other purpose.
Very truly yours,
PITNEY, HARDIN, KIPP & SZUCH
<PAGE>
SCHEDULE 3 TO THE PRINCIPAL AGREEMENTS
TERMS AND CONDITIONS TO REGISTRATION RIGHTS
1 Definitions. As used herein:
(a) The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the 1933 Act and the subsequent
declaration or ordering of the effectiveness of such registration statement.
(b) The term "Registrable Securities" means:
(i) any RBC Common Stock issued pursuant to the
Merger Agreement, and any RBC Common Stock issued or issuable directly or
indirectly with respect to such securities by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when they
have been sold in any manner to any other Person.
(c) The term "Form S-3" means such form under the
1933 Act as in effect on the date hereof or any registration form under 1933 Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by RBC with the
SEC.
(d) The term "Holder" means the Principal and any
immediate family member of the Principal who acquired Registrable Securities
from the Principal in a transaction or series of transactions permitted under
the Merger Agreement and not involving any registered public offering.
2 Requested Registration.
(a) If RBC shall receive a valid written request to
file a registration statement under the 1933 Act, then RBC shall effect as soon
as practicable, and in any event within 90 days of the receipt of such request,
the registration under the 1933 Act of all Registrable Securities which the
Holder requests to be registered.
(b) Notwithstanding the foregoing, if RBC shall
furnish to the Holder a certificate signed by the President of RBC stating that
in the good faith judgment of the Board of Directors of RBC, it would be
seriously detrimental to RBC and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, RBC shall have the right to defer such filing for a
period of not more than 120 days after receipt of the request of the Holder;
provided, however, that RBC may not utilize this right more than once in any
twelve month period.
3 Obligations of RBC. Whenever required to effect the
registration of any Registrable Securities, RBC shall, as expeditiously as
reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holder, keep such registration statement effective for up to 120 days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as the Holder may
reasonably request in order to facilitate the disposition of Registrable
Securities.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holder, provided, that RBC shall not be required in connection therewith or as a
condition thereto to qualify to do business or, except as required under the
1933 Act, to file a general consent to service of process in any such states or
jurisdictions.
(e) Notify the Holder at any time of the happening of
any event as a result of which the prospectus included in the registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
(f) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange or automated
quotation system on which similar securities issued by RBC are then listed.
4 Furnish Information. It shall be a condition precedent to
the obligations of RBC to take any action pursuant hereto that the Holder shall
furnish to RBC such information regarding Holder, the Registrable Securities
held by Holder, and the intended method of disposition of such securities as
shall be required to effect the registration of the Holder's Registrable
Securities.
5 Expenses Of Registration. Each party shall bear its own
expenses in connection with registrations, filings or qualifications pursuant to
Section 2. Without limiting the foregoing, any underwriting discounts or
commissions, and any fees and disbursements of counsel for the Holder, shall be
borne by the Holder, and expenses in connection with registrations, filings or
qualifications pursuant to Section 2, including (without limitation), all
registration, filing and qualification fees, printers and accounting fees, and
fees and disbursements of counsel for RBC shall be borne by RBC; provided,
however, that RBC shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 2 if the registration request
is subsequently withdrawn at the request of the Holder (who shall bear such
expenses), unless the Holder agrees to forfeit the right to registration
pursuant to Section 2.
6 Delay of Registration. The Holder shall have no right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement.
7 Indemnification. In the event any Registrable Securities are
included in a registration statement hereunder:
(a) To the extent permitted by law, RBC will
indemnify and hold harmless the Holder, and each person, if any, who controls
such Holder within the meaning of the 1933 Act or the 1934 Act, against any
losses, claims, damages, or liabilities (joint or several) or related expenses
(including without limitation reasonable fees and expenses of counsel and
amounts paid in settlement effected with the consent of the indemnifying party)
which they may suffer or to which they may become subject under the 1933 Act,
the 1934 Act or other federal or state law or common law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof, whether
commenced or threatened) or expenses arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein, not misleading, or
(iii) any violation or alleged violation by RBC of the 1933 Act, the 1934 Act,
any state securities law or any rule or regulation promulgated under the 1933
Act, the 1934 Act or any state securities law; provided, however, that the
indemnity agreement contained in this subsection (a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of RBC, nor shall RBC be liable in
any such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished for use in
connection with such registration by any such Holder or controlling person.
(b) To the extent permitted by law, the Holder will
indemnify and hold harmless RBC, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls RBC
within the meaning of the 1933 Act, any other person selling securities in such
registration statement and any controlling person of any such other person,
against any losses, claims, damages, or liabilities (joint or several) or
related expenses (including without limitation reasonable fees and expenses of
counsel and amounts paid in settlement effected with the consent of the
indemnifying party) which any of the foregoing persons may suffer or to which
they may become subject under the 1933 Act, the 1934 Act or other federal or
state law or common law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof, whether commenced or threatened) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by the Holder for use in connection with such
registration; provided, however, that the indemnity agreement contained in this
subsection (b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld.
8 Reports Under the 1934 Act. With a view to making available
to the Holder the benefits of Rule 144 promulgated under the 1933 Act and any
other rule or regulation of the SEC that may at any time permit a Holder to sell
securities of RBC to the public without registration or pursuant to a
registration on Form S-3, RBC agrees to:
(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports
and other documents required of RBC under the 1933 Act and the 1934 Act; and
(c) furnish to the Holder forthwith upon request (i) a written statement by RBC
that it has complied with the reporting requirements of SEC Rule 144, the 1933
Act and the 1934 Act, or that it qualifies as a registrant whose securities may
be resold pursuant to Form S-3 (at any time that it so qualifies), (ii) a copy
of the most recent annual or quarterly report of RBC and such other reports and
documents so filed by RBC, and (iii) such other information as may be reasonably
requested in availing the Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
<PAGE>
SCHEDULE 4 TO THE PRINCIPAL AGREEMENTS
BENEFIT PLAN OFFERINGS and COSTS
DEFINED CONTRIBUTION PLANS
Profit Sharing & 401(k) Plan
Cumberland Advisors' 401(k) plan to be merged into, and CAI employees
become participants of, RBCO Profit Sharing Plan & 401(k) effective January
1, 1999.
CAI Plan assets/employees' account balances transferred to RBCO Plan.
CAI employees' credited service grandfathered for vesting purposes.
Expense for Profit Sharing contributions equal to 9% of eligible earnings
of CAI employees allocated to CAI for P&L purposes but excluded from
Earnout calculation.
Employee Stock Ownership Plan (ESOP)
CAI employees become participants in RBCO ESOP Plan effective January 1,
1999, if the Plan remains in effect.
CAI employees' credited service grandfathered for vesting purposes.
HEALTH BENEFITS
Medical Plan
CAI continues to offer medical coverage through BC/BS Medallion Plan at
current levels of cost sharing until 1/1/99.
After 1/1/99, CAI determines cost sharing scheme based on plan costs.
Employer portion of premium costs allocated to CAI. If CAI adopts RBCO cost
sharing scheme, employees may be provided with additional cash compensation
to offset any additional cost for medical coverage in the first year. BC/BS
Medallion Plan retained if network and perceived value are better than for
CIGNA or Aetna US HealthCare.
Dental Plan
CAI employees are offered RBCO dental plan through Delta Dental effective
as soon after the acquisition as administratively possible.
Plan offered based on RBCO current cost sharing scheme. Employee portion
of premium costs allocated to CAI.
Employee Assistance Plan
CAI employees offered MCC EAP Plan effective January 1, 1999. Employer
paid premium cost allocated to CAI.
LIFE INSURANCE
CAI employees convert to RBCO life insurance plan with the Hartford
effective as soon after the acquisition as administratively possible.
Company provides Basic Life and AD&D coverage. Employer portion of premium
costs allocated to CAI.
Employees may elect and pay full cost of Supplemental Life and AD&D
coverage.
Employees may elect and pay for full cost of dependent life insurance
coverage.
DISABILITY PLANS
Sick Leave
CAI adopts RBCO's sick leave/personal time off policy effective 1/1/99.
Short Term Disability
CAI added to RBCO private disability plan effective as soon after
acquisition as administratively possible. Employer portion of premium costs
allocated to CAI.
Long Term Disability
CAI employees offered RBCO's basic and supplemental LTD plans effective as
soon after acquisition as administratively possible.
Company pays full cost of basic plan. Employer portion of costs allocated
to CAI.
Employee pays cost of supplemental plan.
