SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) November 4, 1998
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Research Partners International, Inc.
(Exact name of Registrant as specified in Charter)
Delaware 0-21105 31-3414302
- ---------------------------- ---------------- -----------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
One State Street Plaza, 24th Fl., New York, NY 10004
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 509-3800
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N/A
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
On November 4, 1998, Research Partners International, Inc. (the
"Company" or "Holding") and a wholly-owned subsidiary of the Company, RPII
Acquisition Corporation ("Newco" and together with Holding, the "RPII Parties"),
entered into an Agreement and Plan of Merger (the "Merger Agreement") with
Gaines, Berland Inc. ("GBI" or "Surviving Corporation") and the principal
shareholders of GBI ("Shareholders" and together with GBI, the "GBI Parties").
The Merger Agreement provides for the merger (the "Merger") of Newco with and
into GBI, for the separate corporate existence of Newco to cease and for GBI to
be the Surviving Corporation, continuing after the Merger as a wholly-owned
subsidiary of Holding.
The Merger is expected to be consummated in the first quarter of 1999.
Upon consummation of the Merger, the name of the Surviving Corporation shall
change to "Research Partners International, Inc." and the name of Holding shall
change to "Research Partners International Group Ltd."
The following summary of the terms of the Merger Agreement and certain
related agreements is qualified in its entirety by the actual agreements, copies
of which are filed as exhibits to this report.
Merger Consideration
Under the terms of the Merger Agreement, upon consummation of the
Merger, all 100 shares of common stock of Newco ("Newco Stock") outstanding
immediately prior to the time which the Merger shall become effective
("Effective Time") shall be converted into and exchanged for 100 shares of
common stock of the Surviving Corporation, which shall represent all the issued
and outstanding shares of capital stock of the Surviving Corporation immediately
after the Effective Time.
Each share of common stock of GBI outstanding immediately prior to the
Effective Time (such common stock representing the only outstanding securities
of GBI) shall be converted into the right to receive its pro rata portion of (i)
6,000,000 shares of Common Stock of Holding ("Holding Stock") and (ii) warrants
to purchase an aggregate of 2,000,000 shares of Holding Stock at $3.50 per share
("Holding Warrants" and, together with the Holding Stock, the "Merger
Consideration"). Such 6,000,000 shares of Holding Stock would represent, on an
after issued basis, approximately 42% of the outstanding Holding Stock and 41%
of the voting power of all outstanding securities of Holding (which includes
shares of Holding's preferred stock).
The Holding Warrants may be exercised as follows:
(i) If the Company generates gross "retail commissions" (as defined
therein) of at least $100,000,000 during the first twelve commission months
beginning after the three month anniversary of the date GBI and Holding commence
sharing facilities ("Initial Commission Period"), up to an aggregate of one-half
of the total shares of Holding Stock issuable upon the exercise of the Holding
Warrants ("Warrant Shares") may be purchased at any time commencing on the first
business day after the last day of the Initial Commission Period and ending on
the six-year anniversary of the last day of the Initial Commission Period;
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(ii) If the Company generates gross retail commissions of at least
$130,000,000 during the twelve commission months immediately following the
Initial Commission Period ("Second Commission Period"), up to an aggregate of
one-half of the total Warrant Shares may be purchased at any time commencing on
the first business day after the last day of the Second Commission Period and
ending on the five-year anniversary of the last day of the Second Commission
Period; and
(iii) If the Company does not generate the threshold retail commissions
in either the First Commission Period or Second Commission Period, but does
generate total retail commissions of at least $230,000,000 in the combined
periods, any Warrant Shares which have not yet become purchasable shall become
purchasable at any time commencing on the first business day after the last day
of the Second Commission Period and ending on the five-year anniversary of the
last day of the Second Commission Period.
The Holding Warrants have a cashless exercise provision and a provision
whereby, if any portion of the Holding Warrants become exercisable, Holding
would be obligated to file a registration statement with the Securities and
Exchange Commission ("Commission") to register the resale of the Warrant Shares
upon the request of the holders of Holding Warrants to purchase at least
1,000,000 Warrant Shares.
The shareholders of GBI immediately prior to the Merger are entitled to
appraisal rights pursuant to Sections 623 and 912 of the New York Business
Corporation Law ("BCL"). The Merger Consideration will be reduced, on a pro rata
basis, if any such shareholder votes against the Merger and seeks appraisal
rights ("Dissenter"). If after the Effective Time, a Dissenter loses the right
to receive payment pursuant to Section 623 of the BCL, the securities held by
the Dissenter will be treated as if they had been converted as of the Effective
Time into the Merger Consideration.
Management
The following persons shall be the executive officers of Holding after
the Merger:
Name Title
David M. Nussbaum Co-Chairman of the Board of Directors
Joseph Berland Co-Chairman of the Board of Directors
Roger N. Gladstone Vice Chairman of the Board of Directors
Richard J. Rosenstock President
Peter R. Kent Chief Executive Officer
David Thalheim Chief Operating Officer
Mark Zeitchick Executive Vice President
Vincent Mangone Executive Vice President
Robert T. McAleer Executive Vice President
Peter R. McMullin Executive Vice President
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David M. Nussbaum, Roger N. Gladstone, Robert T. McAleer, Peter R. McMullin and
Peter R. Kent are currently executive officers and/or directors of Holding.
Joseph Berland, Richard Rosenstock, Mark Zeitchick and Vincent Mangone are
currently executive officers of GBI and David Thalheim is currently a consultant
to GBI.
Concurrently with the execution of the Merger Agreement, each of David
M. Nussbaum, Joseph Berland, Roger N. Gladstone, Richard J. Rosenstock, Peter R.
Kent, David Thalheim, Mark Zeitchick and Vincent Mangone entered into a one-year
employment agreement with Holding, to commence at the Effective Time.
Additionally, Mr. Robert H. Gladstone, currently Executive Vice President of
Holding and GKN Securities Corp., a wholly-owned subsidiary of Holding ("GKN"),
entered into an employment agreement with GKN for his continued employment with
GKN, for the one-year period commencing at the Effective Time. The employment
agreements with all of the foregoing persons provide that Holding shall offer
the employee the right to remain employed as a registered representative of a
broker-dealer subsidiary of Holding at all times during the five-year period
commencing at the Effective Time. The employment agreements with Joseph Berland,
Richard Rosenstock, David Thalheim, Mark Zeitchick and Vincent Mangone provide
for the payment to each of them of an "override" (i.e., a pre-determined
percentage) on the gross retail commissions generated by the Company.
The directors of Holding after the Merger will be (i) David M.
Nussbaum, Roger N. Gladstone, Peter R. Kent, Robert T. McAleer, Peter R.
McMullin and Richard Y. Roberts, all currently directors of Holding, (ii) David
Thalheim, Joseph Berland, Richard J. Rosenstock, Mark Zeitchick and Vincent
Mangone and (iii) three independent directors to be mutually agreed upon by GBI
and Holding. Upon consummation of the Merger, the by-laws of Holding will be
amended to eliminate the requirement that Holding's Board of Directors be
classified. Accordingly, all the foregoing directors are expected to hold office
until the next annual meeting of Holding's stockholders.
Covenants
The Merger Agreement contains usual and customary covenants with
respect to the operation of the business of the RPII Parties and the GBI Parties
until the closing, including the requirements that the RPII Parties and the GBI
Parties conduct their operations in the normal course; use their best efforts to
keep available the services of the current employees and preserve the current
relationships with their customers and other persons with which they have
significant business relations; permit reasonable access to the other party for
due diligence purposes; and hold in confidence all information received from the
other party, subject to customary exceptions.
Conditions to Merger
The Merger is subject to a number of conditions including the
requirement that the Merger be approved by Holding's stockholders and by the
shareholders of GBI and that Holding and GBI receive all necessary regulatory
approvals, including the approval of the National Association of Securities
Dealers, Inc. ("NASD").
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Holding intends to call a special meeting of stockholders at which the
stockholders will be asked to (a) approve the issuance of the Merger
Consideration in the Merger, (b) authorize a proposed amendment to the Restated
Certificate of Incorporation of Holding that would change the name of Holding to
Research Partners International Group Ltd., and (c) elect the directors referred
to above under "Management." The Company expects to file a proxy statement
("Proxy Statement") with the Commission with respect to such matters in late
November 1998.
Concurrently with the execution of the Merger Agreement, each of David
M. Nussbaum, Roger N. Gladstone, Robert H. Gladstone and Peter R. Kent, who
collectively own approximately 33% of the outstanding voting shares of the
Company, executed a Voting Agreement whereby he agreed to vote all the shares of
Holding Stock over which he has voting control in favor of the issuance of the
Merger Consideration at the special meeting of stockholders.
GBI intends to obtain the requisite approval of the Merger and the
Merger Agreement by its shareholders at a special meeting of its shareholders or
by unanimous written consent. Pursuant to the Merger Agreement, the
Shareholders, who own approximately 73% of the outstanding shares of GBI, agreed
that they will vote "for" the adoption of the Merger Agreement and the Merger at
any meeting of the shareholders of GBI and execute any written consent of
shareholders in favor of the Merger if shareholder approval is obtained other
than at a meeting. Even if the requisite approval of the GBI shareholders is
obtained, the RPII Parties are not obligated to consummate the Merger and the
other transactions contemplated by the Merger Agreement if the holders of more
than three percent of the shares of GBI outstanding immediately prior to the
Effective Time exercise their right to appraisal.
The Merger Agreement also provides, as conditions to closing, that (i)
Holding shall have received from an investment banking firm reasonably
acceptable to Holding and GBI, prior to the mailing of the Proxy Statement, a
fairness opinion in customary form stating that, in substance, the terms of the
Merger are fair, from a financial point of view, to the stockholders of Holding;
(ii) the "Liquid Net Worth" (as defined) of Holding, as of a date prior to the
closing, shall not be less than 75% of the Liquid Net Worth of Holding as of
August 31, 1998; and (iii) that the Liquid Net Worth of GBI, as of a date prior
to the closing, shall not be less than 75% of the Liquid Net Worth of GBI as of
August 31, 1998.
There are a number of other usual and customary conditions that must be
satisfied before the Merger can occur.
Exclusivity
Under the terms of the Merger Agreement, Holding cannot, except in the
limited circumstances described below, (a) solicit, encourage, directly or
indirectly, any inquiries, discussions or proposals for, (b) continue, propose
or enter into any negotiations or discussions looking toward, or (c) enter into
any agreement or understanding providing for, any acquisition of any of its
capital stock or assets ("Other Transaction"). The Merger Agreement also
provides that Holding shall not provide any information to any person for the
purpose of evaluating or determining whether to make or pursue any such
inquiries or proposals with respect to any such Other Transaction.
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Notwithstanding the foregoing, in the event that Holding receives an
unsolicited proposal for, or indication of interest in, entering into an Other
Transaction, Holding will be entitled to communicate with such party all
publicly available information requested by such party. Holding will not be
entitled to give such party any non-public information about Holding or
otherwise negotiate with such party unless (A) two business days' prior written
notice shall have been given to GBI and (B) Holding's Board of Directors shall
have been advised by outside counsel to Holding that the failure to provide such
non-public information to such party would be reasonably likely to constitute a
breach of the fiduciary responsibilities of the Board of Directors to Holding's
stockholders. In addition, the Board of Directors of Holding shall be permitted
to modify or withdraw any recommendation previously made in the Proxy Statement
if the Board of Directors of Holding, in good faith, after being advised by
outside counsel, determines that to not withdraw such recommendation would be
reasonably likely to constitute a breach of the fiduciary responsibilities of
the Board of Directors to Holdings' stockholders.
Under the terms of the Merger Agreement, none of the GBI Parties shall
(a) solicit, encourage, directly or indirectly, any inquiries, discussions or
proposals for, (b) continue, propose or enter into any negotiations or
discussions looking toward, or (c) enter into any agreement or understanding
providing for, any acquisition of any capital stock of GBI or of any part of its
assets, nor shall any of the GBI Parties provide any information to any person
for the purpose of evaluating or determining whether to make or pursue any such
inquiries or proposals with respect to any such acquisition.
Indemnity
Pursuant to the terms of the Merger Agreement, all of the shareholders
of GBI (severally, in proportion to their ownership of shares of GBI), on the
one hand, and Holding , on the other hand (each of Holding and the GBI
shareholders (as a group) being referred to herein as an "Indemnitor"), have
agreed to indemnify the other for breach of the representations, warranties and
covenants of the GBI Parties and the RPII Parties, respectively, under the
Merger Agreement. Any claim for indemnity must be made on or prior to April 30,
2000. Except in limited circumstances, no indemnity payment shall be made
unless, after the resolution of all claims for indemnity (the date on which the
last claim is resolved being referred to herein as "Judgment Date"), the
aggregate of all amounts for which indemnity would otherwise be owed by such
Indemnitor, net of any amounts for which indemnity would otherwise be owed to
such Indemnitor, exceeds $1,250,000, in which event the amount for which
indemnity shall be due shall be calculated from the first dollar. An Indemnitor
may pay its indemnity obligations in shares of Holding Stock, valued for this
purpose at the last sale price of the Holding Stock on the last business day
prior to the Judgment Date. The maximum amount that any Indemnitor shall pay the
other is 3,000,000 shares of Holding Stock, or the equivalent monetary value
thereof.
Termination
The transactions contemplated by the Merger may be terminated under the
following limited circumstances:
1. By mutual written consent of Holding and GBI;
2. By either Holding or GBI if, without fault of such terminating
party, the Merger is not consummated on or prior to May 31, 1999;
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3. By either Holding or GBI (if the terminating party is not then in
material breach of its obligations hereunder) if (i) a material default or
breach is made by the other party with respect to the due and timely performance
of any of its obligations contained under the Merger Agreement and such default
cannot be cured within a reasonable period of time, or (ii) if any of the other
party's representations and warranties (x) made without any materiality
standard, are not true and correct in all material respects as of the date the
Merger Agreement was executed and as of the closing date or (y) made with any
materiality standard, are not true and correct in all respects as of the date
the Merger Agreement was executed and as of the closing date; or
4. By either Holding or GBI if, (i) the Board of Directors of Holding
withdraws, modifies or changes its recommendation so that it is not in favor of
the Merger Agreement or the Merger or resolves to do any of the foregoing or
(ii) the Board of Directors of Holding recommends or resolves to recommend to
its stockholders a transaction other than the Merger.
If the Merger Agreement is terminated because there has been a material
default or breach by one of the parties with respect to the due and timely
performance of any of its obligations which cannot be cured within a reasonable
amount of time, or there has been may breach of any representation or warranty
in a material respect, then the non-terminating party shall, within five days of
termination, pay or reimburse the terminating party for all the documented
out-of-pocket reasonable fees and expenses incurred by the terminating party
(including the reasonable fees and expenses of its counsel, accountants,
consultants and advisors) in connection with the Merger Agreement and the
transactions contemplated by the Merger Agreement. Unless such termination is
with respect to a breach of a representation or warranty deemed to be made at
the closing (as opposed to upon execution of the Merger Agreement) and such
breach was caused by factors outside the control of the non-terminating party,
the non-terminating party shall, within five days of termination, also pay the
terminating party a fee of $300,000.
If the Merger Agreement is terminated by either party because the Board
of Directors of Holding withdraws, modifies or changes its recommendation so
that it is not in favor of the Merger Agreement or the Merger or the Board of
Directors recommends or resolves to recommend a transaction other than the
Merger, it will be deemed to be a termination by GBI due to a breach by Holding
of its covenants under the Merger Agreement and the provisions of the prior
paragraph will apply.
Lock-Up Agreements
Concurrently with the execution of the Merger Agreement, David
Thalheim, Joseph Berland, Richard J. Rosenstock, Mark Zeitchick, Vincent
Mangone, David M. Nussbaum, Roger N. Gladstone, Peter R. Kent and Robert H.
Gladstone executed Lock-Up Agreements with the Company whereby they each agreed
that, without Holding's prior written consent, for a period of twenty-four
months from the Effective Time, they will not offer, sell, give away, pledge,
hypothecate or otherwise dispose of any shares of Holding Stock now owned by
them or hereafter acquired, whether beneficially or of record.
GBI shall cause each shareholder of GBI who will be receiving Holding
Stock and Holding Warrants in the Merger to execute an agreement with Holding
and GBI pursuant to which he shall agree not to sell his Holding Stock, Holding
Warrants or Warrant Shares for a period of 24 months after the closing.
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Operating Agreement
Concurrently with the execution of the Merger Agreement, Holding and
GBI entered into an Operating Agreement which governs: (i) the parties' intent
to seek NASD approval to share facilities in advance of the closing; (ii) if
NASD approval is obtained, the separation of their shared operations in the
event that the Merger Agreement is terminated prior to the Merger becoming
effective; and (iii) the management of the combined operations from and after
the Effective Time.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(a) Financial Statements
The Company will file the required financial statements within
60 days of the last date on which its report on Form 8-K is required to
be filed.
(b) Pro Forma Financial Statements
The Company will file the required pro forma financial
statements within 60 days of the last date on which its report on Form
8-K is required to be filed.
(c) Exhibits
Exhibit Number Description
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2.1 Agreement and Plan of Merger dated as of November 4, 1998 by
and among the Company, RPII Acquisition Corporation, the
Shareholders party thereto and Gaines, Berland Inc., with
all Exhibits thereto.
10.1 Form of Voting Agreement, by and among the Company, RPII
Acquisition Corporation, Gaines, Berland Inc., and each of
David M. Nussbaum, Roger N. Gladstone, Robert H. Gladstone
and Peter R. Kent
10.2 Form of Lock-Up Agreement, dated November 4, 1998, between
the Company and each of David Thalheim, Joseph Berland,
Richard J. Rosenstock, Mark Zeitchick, Vincent Mangone,
David M. Nussbaum, Roger N. Gladstone, Peter R. Kent and
Robert H. Gladstone
10.3 Employment Agreement, dated November 4, 1998, between David
M. Nussbaum and the Company
10.4 Employment Agreement, dated November 4, 1998, between Joseph
Berland and the Company
10.5 Employment Agreement, dated November 4, 1998, between Roger
N. Gladstone and the Company
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Exhibit Number Description
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10.6 Employment Agreement, dated November 4, 1998, between
Richard J. Rosenstock and the Company
10.7 Employment Agreement, dated November 4, 1998, between Peter
R. Kent and the Company
10.8 Employment Agreement, dated November 4, 1998, between David
Thalheim and the Company
10.9 Employment Agreement, dated November 4, 1998, between Mark
Zeitchick and the Company
10.10 Employment Agreement, dated November 4, 1998, between
Vincent Mangone and the Company
10.11 Employment Agreement, dated November 4, 1998, between
Robert H. Gladstone and GKN Securities Corp.
10.12 Operating Agreement, dated November 4, 1998, between the
Company and Gaines, Berland Inc.
99.1 Press release of the Company dated November 5, 1998.
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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 hereunto duly authorized.
Dated: November 13, 1998 RESEARCH PARTNERS INTERNATIONAL, INC
------------------------------------
(Registrant)
/s/ Peter R. Kent
_____________________________________
Peter R. Kent,
Executive Vice President and
Chief Operating Officer
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EXHIBIT INDEX
Exhibit Number Description
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2.1 Agreement and Plan of Merger dated as of November 4, 1998 by
and among the Company, RPII Acquisition Corporation, the
Shareholders party thereto and Gaines, Berland Inc., with
all Exhibits thereto.
10.1 Form of Voting Agreement, by and among the Company, RPII
Acquisition Corporation, Gaines, Berland Inc., and each of
David M. Nussbaum, Roger N. Gladstone, Robert H. Gladstone
and Peter R. Kent
10.2 Form of Lock-Up Agreement, dated November 4, 1998, between
the Company and each of David Thalheim, Joseph Berland,
Richard J. Rosenstock, Mark Zeitchick, Vincent Mangone,
David M. Nussbaum, Roger N. Gladstone, Peter R. Kent and
Robert H. Gladstone
10.3 Employment Agreement, dated November 4, 1998, between David
M. Nussbaum and the Company
10.4 Employment Agreement, dated November 4, 1998, between Joseph
Berland and the Company
10.5 Employment Agreement, dated November 4, 1998, between Roger
N. Gladstone and the Company
10.6 Employment Agreement, dated November 4, 1998, between
Richard J. Rosenstock and the Company
10.7 Employment Agreement, dated November 4, 1998, between Peter
R. Kent and the Company
10.8 Employment Agreement, dated November 4, 1998, between David
Thalheim and the Company
10.9 Employment Agreement, dated November 4, 1998, between Mark
Zeitchick and the Company
10.10 Employment Agreement, dated November 4, 1998, between
Vincent Mangone and the Company
10.11 Employment Agreement, dated November 4, 1998, between
Robert H. Gladstone and GKN Securities Corp.
10.12 Operating Agreement, dated November 4, 1998, between the
Company and Gaines, Berland Inc.
99.1 Press release of the Company dated November 5, 1998.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
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TABLE OF CONTENTS
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ARTICLE I THE MERGER..................................................................................1
Section 1.1 Definitions. .........................................................................1
Section 1.2 The Merger. ..........................................................................1
Section 1.3 Effective Time. ......................................................................2
Section 1.4 Effects of the Merger. ...............................................................2
Section 1.5 Certificate of Incorporation and By-Laws. ............................................2
Section 1.6 Directors and Officers of the Surviving Corporation and Holding........................2
Section 1.7 Tax Free Reorganization. .............................................................2
ARTICLE II CONVERSION OF BD2 STOCK AND RELATED MATTERS.................................................2
Section 2.1 Conversion of BD1 and BD2 Stock........................................................2
Section 2.2 Dissenters.............................................................................3
Section 2.3 The Closing............................................................................4
Section 2.4 Proper Endorsements, Etc. ............................................................4
Section 2.5 Surrender and Payment..................................................................5
Section 2.6 Adjustments. .........................................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BD2 PARTIES...........................................6
Section 3.1 Organization. ........................................................................6
Section 3.2 Authority and Corporate Action. ......................................................6
Section 3.3 Capitalization; Ownership of Securities................................................7
Section 3.4 Compliance with Law; Customer Complaints...............................................8
Section 3.5 Financial Statements. ................................................................9
Section 3.6 Licenses, Permits, Etc. .............................................................10
Section 3.7 Real Property. ......................................................................10
Section 3.8 Leased Properties; Contracts..........................................................10
Section 3.9 Litigation. .........................................................................11
Section 3.10 Taxes, Tax Returns and Audits. ......................................................11
Section 3.11 Consents and Approvals. .............................................................12
Section 3.12 Absence of Certain Changes. .........................................................12
Section 3.13 Employment Agreements and Bonus Plans. ..............................................13
Section 3.14 Employee Plans........................................................................14
Section 3.15 Insurance Policies. .................................................................15
Section 3.16 Intangible Rights. ..................................................................15
Section 3.17 Title to Properties. ................................................................15
Section 3.18 Year 2000 Compliance. ...............................................................16
Section 3.19 No Guarantees. ......................................................................16
Section 3.20 [Intentionally Omitted]...............................................................16
Section 3.21 Labor Matters. ......................................................................16
Section 3.22 Brokers. ............................................................................16
Section 3.23 Records. ............................................................................16
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Section 3.24 No Undisclosed Liabilities. .........................................................16
Section 3.25 No Illegal or Improper Transactions. ................................................17
Section 3.26 Related Transactions. ...............................................................17
Section 3.27 Disclosure. .........................................................................17
Section 3.28 Ownership of Holding Stock. .........................................................18
Section 3.29 Investment Representations. .........................................................18
Section 3.30 Restriction Letter and Form BD. .....................................................18
Section 3.31 Significant Inventory Positions. ....................................................18
Section 3.32 Disclosure Issues. ..................................................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BD1 PARTIES..........................................19
Section 4.1 Organization..........................................................................19
Section 4.2 Authority and Corporate Action........................................................20
Section 4.3 Capitalization; Ownership of Securities...............................................21
Section 4.4 Compliance with Law; Customer Complaints..............................................22
Section 4.5 Financial Statements. ...............................................................23
Section 4.6 SEC Reports. .........................................................................24
Section 4.7 Licenses, Permits, Etc. .............................................................24
Section 4.8 Real Property. ......................................................................25
Section 4.9 Contracts and Leases. ...............................................................25
Section 4.10 Litigation. .........................................................................25
Section 4.11 Taxes, Tax Returns and Audits. ......................................................25
Section 4.12 Consents and Approvals. .............................................................26
Section 4.13 Absence of Certain Changes. .........................................................26
Section 4.14 Employment Agreements and Bonus Plans. ..............................................28
Section 4.15 Employee Plans; Etc...................................................................28
Section 4.16 Intangible Rights. ..................................................................29
Section 4.17 Title to Properties. ................................................................30
Section 4.18 Year 2000 Compliance. ................................................................30
Section 4.19 No Guarantees. ......................................................................30
Section 4.20 Labor Matters. ......................................................................30
Section 4.21 Brokers. ............................................................................30
Section 4.22 Records. ............................................................................31
Section 4.23 No Undisclosed Liabilities. .........................................................31
Section 4.24 No Illegal or Improper Transactions. ................................................31
Section 4.25 Related Transactions. ...............................................................31
Section 4.26 Disclosure. .........................................................................32
Section 4.27 Holding Stock. ......................................................................32
Section 4.28 Restriction Letter and Form BD. .....................................................32
Section 4.29 Significant Inventory Positions. ....................................................32
ARTICLE V COVENANTS OF THE BD2 PARTIES...............................................................32
Section 5.1 Conduct of Business. ................................................................32
Section 5.2 Shareholder Meeting or Consent. .....................................................34
Section 5.3 Access to Information; Confidentiality................................................35
Section 5.4 Maintenance of Assets; Insurance. ...................................................36
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Section 5.5 No Other Negotiations. ..............................................................36
Section 5.6 Fulfillment of Conditions. ..........................................................36
Section 5.7 Disclosure of Certain Matters. ......................................................36
Section 5.8 Information for Proxy Statement. ....................................................37
Section 5.9 Cold Comfort Letter. ................................................................37
Section 5.10 Non-Use of Name. ....................................................................38
Section 5.11 No Securities Transactions. .........................................................38
Section 5.12 Energy Fund. ........................................................................39
Section 5.13 Old BD2 Plan. .......................................................................39
ARTICLE VI COVENANTS OF HOLDING AND BD1...............................................................39
Section 6.1 Conduct of Business. ................................................................39
Section 6.2 Stockholder Meeting. ................................................................41
Section 6.3 Access to Information; Confidentiality................................................41
Section 6.4 Maintenance of Assets; Insurance. ...................................................42
Section 6.5 No Other Negotiations. ..............................................................42
Section 6.6 Fulfillment of Conditions. ..........................................................43
Section 6.7 Disclosure of Certain Matters. ......................................................43
Section 6.8 Proxy Statement.......................................................................44
Section 6.9 Voting for the Merger. ..............................................................44
Section 6.10 Nasdaq Listing. .....................................................................45
ARTICLE VII JOINT COVENANTS OF THE PARTIES.............................................................45
Section 7.1 Further Action. .....................................................................45
Section 7.2 Schedules. ..........................................................................45
Section 7.3 Regulatory and Other Authorizations. ................................................45
Section 7.4 [Intentionally Omitted]...............................................................46
Section 7.5 Employees. ..........................................................................46
Section 7.6 Lock-Up Agreements....................................................................46
Section 7.7 Operating Agreement. ................................................................46
Section 7.8 Customer Complaints...................................................................46
ARTICLE VIII CONDITIONS TO CLOSING......................................................................47
Section 8.1 Conditions to Each Party's Obligations. .............................................47
Section 8.2 Conditions to Obligations of the BD2 Parties. .......................................47
Section 8.3 Conditions to Obligations of Holding and BD1. .......................................49
ARTICLE IX INDEMNIFICATION............................................................................51
Section 9.1 Indemnification by the Shareholders of BD2. .........................................51
Section 9.2 Indemnification by Holding. .........................................................51
Section 9.3 Procedure.............................................................................52
Section 9.4 Adjustment to Merger Consideration....................................................54
Section 9.5 Limitations. ........................................................................54
Section 9.6 Independent Committee Determination. ................................................54
Section 9.7 Representations and Warranties. .....................................................55
Section 9.8 Indemnity as Sole Recourse. .........................................................55
</TABLE>
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<TABLE>
Page
<S> <C> <C>
ARTICLE X TERMINATION AND ABANDONMENT................................................................56
Section 10.1 Methods of Termination. .............................................................56
Section 10.2 Effect of Termination. ..............................................................56
ARTICLE XI DEFINITIONS................................................................................57
Section 11.1 Certain Defined Terms. ..............................................................57
Section 11.2 "Knowledge". ........................................................................63
ARTICLE XII GENERAL PROVISIONS.........................................................................63
Section 12.1 Expenses. ...........................................................................63
Section 12.2 Notices. ............................................................................63
Section 12.3 Press Release; Public Announcements. ................................................64
Section 12.4 Amendment. ..........................................................................65
Section 12.5 Waiver. .............................................................................65
Section 12.6 Headings. ...........................................................................65
Section 12.7 Severability. .......................................................................65
Section 12.8 Entire Agreement. ...................................................................65
Section 12.9 Benefit. ............................................................................66
Section 12.10 Governing Law. ......................................................................66
Section 12.11 Counterparts. .......................................................................66
</TABLE>
SCHEDULES
BD2 Schedules
Schedule 1.6(a) Directors and Officers of Surviving Corporation
Schedule 1.6(b) Directors and Officers of Holding
Schedule 3.1 State Qualifications
Schedule 3.3 Capitalization
Schedule 3.4(a) Compliance with Law
Schedule 3.4(b) Customer Complaints
Schedule 3.5 BD2 FOCUS Reports
Schedule 3.6 Licenses and Permits
Schedule 3.8(a) Leases
Schedule 3.8(b) Contracts
Schedule 3.9 Litigation
Schedule 3.11 Consents and Approvals
Schedule 3.12 Absence of Certain Changes
Schedule 3.13 Employment Agreements
Schedule 3.14 Employee Plans
Schedule 3.15 Insurance
Schedule 3.16 Intangibles
Schedule 3.17 Tangible Properties
Schedule 3.24 Undisclosed Liabilities
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Schedule 3.28 Ownership of Holding Stock
Schedule 3.30 Restriction Letter
Schedule 3.31 Inventory Positions
Schedule 5.1 Conduct of Business
BD1 Schedules
Schedule 4.1(a) Other Subsidiaries
Schedule 4.1(b) State Qualifications (BD1)
Schedule 4.1(c) State Qualifications (other subsidiaries)
Schedule 4.3 Capitalization
Schedule 4.4(a) Compliance
Schedule 4.4(b) Customer Complaints
Schedule 4.5 FOCUS Reports
Schedule 4.7 Licenses and Permits
Schedule 4.10 Litigation
Schedule 4.12 Consents and Approvals
Schedule 4.13 Absence of Certain Changes
Schedule 4.14 Employment Agreements
Schedule 4.15 Employee Plans
Schedule 4.16 Intangibles
Schedule 4.19 Guarantees
Schedule 4.23 Undisclosed Liabilities
Schedule 4.25 Related Party Transactions
Schedule 4.28 Restriction Letters
Schedule 4.29 Inventory Positions
Schedule 6.1 Conduct of Business
Other Schedules
Schedule 6.9 Voting Agreements
Schedule 7.5 Employment Agreements
Schedule 7.6 Lock-Up Agreements
EXHIBITS
Exhibit A Holding Warrant
Exhibit B Legal Opinion of Counsel to the Holding Companies
Exhibit C Legal Opinion of Counsel to the BD2 Parties
Exhibit D Press Release
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated November 4, 1998, by and among RESEARCH
PARTNERS INTERNATIONAL, INC., a Delaware corporation ("Holding"), RPII
ACQUISITION CORP., a New York corporation ("BD1"), the PERSONS LISTED ON THE
SIGNATURE PAGE HERETO (the "Stockholders"), and GAINES, BERLAND INC., a New York
corporation ("BD2").
WHEREAS, BD2 is engaged in the institutional and retail sale of securities
and related securities activities; and
WHEREAS, BD1 is a wholly-owned subsidiary of Holding; and
WHEREAS, the Stockholders are the beneficial owners of a majority of the
issued and outstanding shares of Common Stock, no par value, of BD2 ("BD2
Stock"); and
WHEREAS, subject to the terms and conditions of this Agreement, the Parties
desire that BD1 be merged with and into BD2 (the "Merger");
IT IS AGREED:
ARTICLE I
THE MERGER
Section 1.1 Definitions. Certain capitalized terms used in this Agreement
shall have the meanings specified in Article XI.
Section 1.2 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the New York Business
Corporation Law ("BCL"), BD1 and BD2 shall consummate the Merger of BD1 with and
into BD2 at the Effective Time. Following the Merger, BD2 shall continue as the
surviving corporation (sometimes referred to herein as the "Surviving
Corporation") and shall continue its existence under the law of the State of New
York and the separate corporate existence of BD1 shall cease. Notwithstanding
the foregoing, BD1 and BD2 may mutually determine to amend this Agreement to
provide for the Surviving Corporation to be BD1 or a wholly-owned subsidiary of
Holding other than BD1.
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Section 1.3 Effective Time. As soon as practicable on or after the Closing
Date, after the satisfaction or waiver of all conditions to the Merger, BD1 and
BD2 shall file with the Department of State of New York a Certificate of Merger
reflecting the Merger in accordance with the BCL and providing for an amendment
to the Certificate of Incorporation of the Surviving Corporation to effect a
change in name to "Research Partners International, Inc." (the "Certificate of
Merger"). The Merger shall become effective at the time of such filing or such
later time as is specified in the Certificate of Merger (the "Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in Section 906 of the BCL.
Section 1.5 Certificate of Incorporation and By-Laws. The Certificate of
Incorporation as amended to effect the name change contemplated in Section 1.3
and By-Laws of BD2, as such Certificate of Incorporation and By-Laws may be
amended prior to the Effective Time with the mutual consent of Holding and BD2,
shall be the Certificate of Incorporation and By-Laws of the Surviving
Corporation at the Effective Time.
Section 1.6 Directors and Officers of the Surviving Corporation and
Holding. At the Effective Time, the Board of Directors and the officers of the
Surviving Corporation shall consist of the persons listed in Schedule 1.6(a).
The persons listed in Schedule 1.6(b) shall be elected as directors and officers
of Holding and the Other Holding Companies as set forth therein.
Section 1.7 Tax Free Reorganization. The parties intend to adopt this
Agreement as a tax-free plan of reorganization and to consummate the Merger in
accordance with the appropriate provisions of Section 368 of the Code, and shall
not take a position on any tax return inconsistent therewith.
ARTICLE II
CONVERSION OF BD2 STOCK AND RELATED MATTERS
Section 2.1 Conversion of BD1 and BD2 Stock.
(a) Upon consummation of the Merger, all 100 shares of the common
stock, no par value, of BD1 ("BD1 Stock") outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
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of the holder thereof, be converted into and exchanged for 100 shares of the
common stock, no par value, of the Surviving Corporation, which shall represent
all of the issued and outstanding shares of capital stock of the Surviving
Corporation immediately after the Effective Time. All such shares of Surviving
Corporation shall be fully paid and non-assessable. Promptly after the Effective
Time, the Surviving Corporation shall issue to Holding a stock certificate
representing such 100 shares of Surviving Corporation in exchange for the
certificate or certificates which formerly represented 100 shares of BD1 Stock,
which stock certificates shall be immediately canceled.
(b) Except as provided in Section 2.2, each share of BD2 Stock
outstanding immediately prior to the Effective Time shall be converted into the
right to receive its pro rata portion of (i) 6,000,000 shares of the Common
Stock, par value $.0001 per share, of Holding ("Holding Stock") and (ii)
warrants to purchase an aggregate of 2,000,000 shares of Holding Stock, in the
form annexed hereto as Exhibit A ("Holding Warrants" and, together with the
Holding Stock, the "Merger Consideration").
Section 2.2 Dissenters.
(a) The Merger Consideration will be reduced, on a pro rata basis, as
a result of any holder of BD2 Stock who votes against the Merger ("Dissenter")
and who seeks appraisal rights pursuant to Sections 623 and 912 of the BCL with
respect to his shares of BD2 Stock ("Dissenter Securities").
(b) If after the Effective Time a Dissenter loses the right to receive
payment pursuant to Section 623 of the BCL, the Dissenter Securities held by the
Dissenter will be treated as if they had been converted as of the Effective Time
into the Merger Consideration.
(c) BD2 will promptly provide Holding with copies of any written
demand for payment to be received by a Dissenter, and Holding will have the
right to participate in all negotiations and proceedings with respect to any
demand by a Dissenter. BD2 will not, except with the prior written consent of
Holding or as may be required by law, make any payment prior to the Effective
Time with respect to, or settle or offer to settle, any demand of a Dissenter.
All Dissenter Securities acquired by BD2 or by the Surviving Corporation will be
canceled after payment therefor has been made in accordance with the BCL.
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Section 2.3 The Closing.
(a) Subject to the terms and conditions of this Agreement, the
consummation of the Merger and the other transactions contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at 10:00
a.m., local time, on the first Business Day after the date on which the last of
the conditions to Closing set forth in Article VIII hereof is fulfilled, at the
offices of Graubard Mollen & Miller, 600 Third Avenue, New York, New York 10016,
or at such other time, date or place as the Parties may agree upon in writing.
The date on which the Closing occurs is referred to herein as the "Closing
Date."
(b) At the Closing, (i) the shareholders of BD2 shall deliver to the
Exchange Agent the certificates representing all the outstanding shares of the
BD2 Stock, free and clear of all Liens and (ii) the Stockholders and BD2 (the
"BD2 Parties") shall deliver to Holding and BD1 (the "BD1 Parties") the
certificates, opinions and other agreements and instruments contemplated by
Article VIII hereof and the other provisions of this Agreement.
(c) At the Closing, (i) Holding shall deliver to the Stockholders the
certificates representing the shares of Holding Stock and the Holding Warrants
constituting the Merger Consideration, free and clear of all Liens, and (ii) the
BD1 Parties shall deliver to the BD2 Parties the certificates, opinions and
other agreements and instruments contemplated by Article VIII hereof and the
other provisions of this Agreement. BD2 and the Stockholders acknowledge that
the certificates to be issued to the Stockholders and to the other shareholders
of BD2 representing their shares of Holding Stock to be issued in the Merger
will be legended to reflect (a) customary securities laws restrictions, and (b)
the transfer restrictions contained in the agreements referred to in Sections
5.2 and 7.6 hereof.
(d) The Stockholders irrevocably agree that they shall vote "for" the
adoption of this Agreement and the Merger at any meeting of the shareholders of
BD2 and execute any written consent of shareholders in favor of the Merger if
shareholder approval is obtained other than at a meeting.
Section 2.4 Proper Endorsements, Etc. If certificates representing any
portion of the Merger Consideration are to be issued to a person other than the
registered holder of the BD2 Stock formerly represented by the certificate or
certificates surrendered in exchange for the Merger Consideration, it shall be a
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condition to such issuance that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the person requesting such issuance shall pay to Continental Stock Transfer &
Trust Company, New York, New York (the "Exchange Agent") any transfer or other
Taxes required as a result of such issuance of certificates of Holding to a
person other than the registered holder of such BD2 Stock or establish to the
reasonable satisfaction of Holding and its counsel that such Tax has been paid
or is not payable.
Section 2.5 Surrender and Payment.
(a) Prior to the Effective Time, Holding shall appoint the Exchange
Agent as its agent for the purpose of exchanging certificates representing BD2
Stock for certificates representing the Holding Stock and Holding Warrants to be
issued with respect thereto as the Merger Consideration. Prior to the Effective
Time, Holding will send, or will cause the Exchange Agent to send, to each
holder of BD2 Stock at the Effective Time a letter of transmittal for use in
such exchange.
(b) Each holder of BD2 Stock that shall have been converted into the
right to receive Holding Stock and Holding Warrants, upon surrender to the
Exchange Agent of a certificate or certificates formerly representing such BD2
Stock, together with a properly completed letter of transmittal covering such
certificates, will be entitled to receive the certificates representing the
appropriate Holding Stock and Holding Warrants issuable in respect of such BD2
Stock. Until so surrendered, each such certificate shall, after the Effective
Time, represent for all purposes, the appropriate number of shares of Holding
Stock and Holding Warrants. In no event will a holder of BD2 Stock be entitled
to interest on the Merger Consideration issuable in respect of such BD2 Stock.
(c) After the Effective Time, there shall be no further registration
of transfers of BD2 Stock held prior to the Effective Time, except as may be
required by the BCL. If, after the Effective Time, certificates formerly
representing BD2 Stock are presented to the Surviving Corporation or the
Exchange Agent, they shall be canceled and exchanged for the consideration
provided for, and in accordance with, the procedures set forth, in this Section
2.
Section 2.6 Adjustments. If at any time during the period between the date
of this Agreement and the Effective Time, the outstanding shares of capital
stock of Holding shall have been changed into a different number of shares or a
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different class by reason of any stock dividend, subdivision, reclassification
or split (a "Stock Adjustment Event"), the Merger Consideration shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification or split; provided, however, Holding shall not take any action
in connection with a Stock Adjustment Event without the consent of BD2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BD2 PARTIES
The BD2 Parties, jointly and severally, represent and warrant to the BD1
Parties as follows:
Section 3.1 Organization. BD2 is a corporation duly organized, validly
existing and in good standing under the law of the State of New York. BD2 has no
subsidiaries and, other than in the ordinary course of its securities business,
BD2 does not own, directly or indirectly, any capital stock or any other
securities of any issuer or any equity interest in any other entity and is not a
party to any agreement to acquire any such securities or interest. BD2 is
qualified to do business in each state where the nature of the business it
conducts or the properties it owns, leases or operates requires it to so
qualify, which states are listed in Schedule 3.1, except where the failure to so
qualify would not reasonably be expected to have, either singly or in the
aggregate, a material adverse effect on the results of operations, financial
condition, business, assets or prospects of BD2 or materially impair either
BD2's or any Stockholder's ability to consummate the transactions contemplated
by this Agreement ("BD2 Material Adverse Effect"). BD2 has all requisite
corporate power to own, lease and operate its properties, leases or operations
and to carry on its business as now being conducted by the BD2 Parties.
Section 3.2 Authority and Corporate Action.
(a) Each of the BD2 Parties has all necessary power and authority to
enter into this Agreement and to consummate the Merger as contemplated hereby.
All corporate action necessary to be taken by BD2 to authorize the execution,
delivery and performance of this Agreement and all other agreements and
instruments delivered by BD2 in connection with the transactions contemplated
hereby has or will at Closing have been duly and validly taken. This Agreement
constitutes the valid, binding and enforceable obligation of each of the BD2
Parties, enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
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fraudulent transfer or similar laws of general application now or hereafter in
effect affecting the rights and remedies of creditors and by general principles
of equity (regardless of whether enforcement is sought in a proceeding at law or
in equity).
(b) Neither the execution and delivery of this Agreement or any of the
other documents contemplated hereby by the BD2 Parties nor the consummation of
the transactions contemplated hereby or thereby will (i) conflict with, result
in a breach or violation of or constitute (or with notice or lapse of time or
both constitute) a default under, (A) the Certificate of Incorporation or
By-Laws of BD2 or (B) any law, statute, regulation, order, judgment or decree or
any instrument, contract or other agreement to which any of the BD2 Parties (or
any of their respective properties or assets) is subject or bound, except where
any such conflict, breach, violation or default would not reasonably be expected
to have a BD2 Material Adverse Effect; (ii) result in the creation of, or give
any party the right to create, any lien, charge, option, security interest or
encumbrance of any kind, other than customary transfer restrictions under the
securities laws ("Lien"), upon the assets of BD2, except where such Lien would
not reasonably be expected to have a BD2 Material Adverse Effect; (iii)
terminate or modify, or give any third party the right to terminate or modify,
the provisions or terms of any contract to which BD2 is a party, except where
such termination or modification would not reasonably be expected to have a BD2
Material Adverse Effect; or (iv) result in any suspension, revocation,
impairment, forfeiture or nonrenewal of any material permit, registration,
license, qualification, authorization or approval applicable to BD2, except
where such suspension, revocation, impairment, forfeiture or nonrenewal would
not reasonably be expected to have a BD2 Material Adverse Effect (it being
understood that any action taken by any state regulatory agency after the
Effective Time to suspend, revoke, impair or refuse to renew any such material
permit, registration, license, qualification, authorization or approval shall be
deemed not to have a BD2 Material Adverse Effect).
Section 3.3 Capitalization; Ownership of Securities.
(a) Capitalization. The authorized capitalization of BD2 consists of
1,000 shares of BD2 Stock, of which 778 shares of BD2 Stock are issued and
outstanding, and 100,000 shares of preferred stock, $10.00 par value, of which
none is outstanding. All of the shares of BD2 Stock are duly and validly
authorized and issued, fully paid and non-assessable, except as set forth on
Schedule 3.3. Schedule 3.3 correctly lists the record owners of all of the BD2
Stock, the number of shares owned and each holder's address and social security
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number. Except where noncompliance would not have a BD2 Material Adverse Effect,
BD2 has complied with all applicable federal and state securities statutes and
regulations in connection with the offer and issuance of all of the BD2 Stock
and there are no rescission rights relating thereto.
(b) Ownership. The Stockholders are the record and beneficial owners
of an aggregate of 567 shares of BD2 stock, as set forth on the signature pages
hereto, free and clear of all Liens.
(c) No Options, etc. There are no options, warrants, calls,
commitments or other rights of any character (including conversion, exchange or
preemptive rights) which require, or give any person the right to require,
directly or indirectly, the issuance, sale or other transfer of any capital
stock of BD2, whether or not such rights are presently exercisable.
Section 3.4 Compliance with Law; Customer Complaints.
(a) *The business of BD2 has at all times been conducted, and is now
being conducted, in compliance with all applicable laws, rules, regulations and
court or administrative orders and processes (including, without limitation, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the Investment
Advisers Act of 1940, as amended, and any laws, rules, regulations and court or
administrative orders that relate to broker-dealer regulation (including
registration and licensing in all jurisdictions where BD2 engages in investment
advisory activities or the sale of securities), consumer protection, health and
safety, products and services, proprietary rights, anti-competitive practices,
collective bargaining, ERISA, equal opportunity, other aspects of labor or
employment law (including sexual harassment) improper payments and environmental
regulation), except where non-compliance would not reasonably be expected to
have a BD2 Material Adverse Effect. Except as set forth in Schedule 3.4(a), BD2
and its officers, directors and employees (i)* are not, and during the past six
years were not, in violation of, or not in compliance with, any such applicable
law, rule, regulation, order or process with respect to the conduct of BD2's
business; and (ii) have not received any notice from any governmental authority
or self-regulatory agency alleging that BD2 has violated, or not complied with,
any of the foregoing and, to the best of the knowledge of each of the BD2
Parties, none is threatened (and *no factual circumstances involving such
violation or failure to comply are being examined or investigated), except, in
case of either (i) or (ii), where such violations would not reasonably be
expected to have a BD2 Material Adverse Effect.
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(b) All customer complaints reportable pursuant to NASD Notice to
Members 95-81 (including all amendments thereto and NASD interpretations
thereof) ("95-81") which have been made against BD2 or any of its registered
representatives in writing since October 1, 1995, or which have been
communicated orally, but not in writing, since August 31, 1998, have been
reported in accordance with 95-81, all such complaints made prior to the close
of business on November 2, 1998 are set forth in Schedule 3.4(b), and copies of
each such complaint have been made available to Holding. Such complaints which
are pending as of the date of this Agreement are appropriately noted on Schedule
3.4(b). Except as noted on Schedule 3.4(b), none of such complaints which have
been disposed of requires any payment or other action to be made by BD2 after
the date of this Agreement.
(c) BD2 is in compliance with Environmental, Health and Safety
Requirements, except for such noncompliance as would not reasonably be expected
to have a BD2 Material Adverse Effect. BD2 has not received any written notice,
report or other information regarding any actual or alleged material violation
of Environmental, Health and Safety Requirements, or any material liabilities or
potential material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or corrective
obligations, relating to BD2 or its property arising under Environmental,
Health, and Safety Requirements, the subject of which would reasonably be
expected to have a BD2 Material Adverse Effect.
Section 3.5 Financial Statements.
(a) The BD2 Parties have delivered to Holding a balance sheet of BD2
at August 31, 1998 (the "BD2 Balance Sheet") and statements of income and source
and application of funds for the year then ended, all certified by BD2's
Accountants, and the notes, comments, schedules and supplemental data therein
(the "BD2 Financial Statements"). The BD2 Financial Statements have been
prepared in accordance with generally accepted accounting principles applied in
the United States ("GAAP") and fairly present the financial condition of BD2 at
August 31, 1998 and the results of the operations of BD2 for the year ended
August 31, 1998. Notwithstanding the foregoing, prior to the Closing, BD2
intends to sell certain artwork purchased in 1984, 1985 and 1986 and valued on
the BD2 Balance Sheet at approximately $236,000 ("Old Artwork"). The purchase
price obtained by GBI could be less than $236,000.
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(b) Attached as Schedule 3.5 hereto is BD2's FOCUS Report, as amended,
for the period ended August 31, 1998. The Focus Report has been prepared and
filed in compliance with the rules and regulations of the NASD.
Section 3.6 Licenses, Permits, Etc. *Except as set forth on Schedule 3.6,
BD2 and its officers, directors and employees have at all times possessed and
now possess all governmental registrations, licenses, permits, authorizations
and approvals, including those necessary to enable them to sell securities in
any jurisdiction in which BD2 engages in the sale of securities (collectively
referred to herein as "Permits"), necessary to own and operate the business of
BD2, which necessary Permits are set forth on Schedule 3.6 hereto, and true,
complete and correct copies of which Permits have previously been delivered to
Holding. *All such Permits are in full force and effect and BD2 and its
officers, directors and employees have complied and BD2 will comply, and shall
cause its officers, directors and employees to comply, in all material respects
with all terms of such Permits and will take any and all actions necessary to
ensure that all such Permits remain in full force and effect and that the terms
of such Permits are not violated through the Closing Date. *BD2 and its
officers, directors and employees are not in default in any material respect
under any of such Permits and no event has occurred and no condition exists
which, with the giving of notice, the passage of time, or both, would constitute
a material default thereunder. Schedule 3.6 includes a listing of all branch
offices of BD2, including their addresses and dates of commencement of
operations. BD2 obtained all necessary permission from the NASD and appropriate
state regulatory authorities to operate such branch offices from and after such
dates. Schedule 3.6 also includes a list of all jurisdictions in which BD2 is
licensed to do business as a broker-dealer.
Section 3.7 Real Property. BD2 does not own any real property.
Section 3.8 Leased Properties; Contracts.
(a) All leases for the real property (the "Leases") leased by BD2 are
listed on Schedule 3.8(a), and true and complete copies thereof have been
furnished to Holding.
(b) All material leases for personal property and all material
contracts and commitments (the "Contracts") to which BD2 is a party are listed
on Schedule 3.8(b). For purposes of this Section 3.8, a material lease, contract
or commitment requiring the payment of money means any lease, contract or
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commitment pursuant to which the unliquidated amount required to be paid by BD2
or which BD2 is entitled to receive, as of the date hereof, is $25,000 or more.
True and complete copies of the Contracts have been furnished to Holding.
(c) *All Contracts and Leases are valid and binding, enforceable in
accordance with their terms and are in full force and effect and there is no
default by BD2 or any other party thereto under any such Contract or Lease,
except for such defaults which, singly or in the aggregate, would not reasonably
be expected to have a BD2 Material Adverse Effect. BD2 has not received notice
from any other party to any Contract that BD2 is in default thereunder. None of
the other parties to the Contracts or Leases has notified any of the BD2 Parties
of any intention to terminate its Contract or Lease.
Section 3.9 Litigation. **Except as set forth on Schedule 3.9, there are no
actions, suits, arbitrations, formal inquiries, investigations or other
proceedings ("Proceedings") (including arbitrations with any registered
representative or customer of BD2) pending or threatened against BD2 at law or
in equity before any court, federal, state, municipal or other governmental
department or agency or other regulatory authority or other tribunal, except for
such Proceedings which, if determined adversely, would not reasonably be
expected to have a BD2 Material Effect. Neither BD2 nor its property is subject
to any order, judgment, injunction or decree which would reasonably be expected
to have a BD2 Material Adverse Effect.
Section 3.10 Taxes, Tax Returns and Audits. (a) All federal, state, local
and foreign Taxes due and payable by BD2 and by any other person, firm or
corporation which will or may be liabilities of BD2, for all periods ending on
or before August 31, 1998, have been paid in full or have been fully reserved
against on the BD2 Balance Sheet; (b) BD2 has filed all federal, state, local
and foreign income, excise, property, sales, withholding, social security,
information returns, and other tax returns, reports and related information
("Returns") required to have been filed by it to the date hereof, and no
extension of the time for filing a Return is presently in effect; the Returns
that have been filed have been accurately prepared and have been duly and timely
filed; (c) BD2's federal income tax returns have not been audited by the
Internal Revenue Service for any fiscal year; (d) there are no agreements,
waivers or other arrangements providing for an extension of time with respect to
the filing of any Return, or payment of any Tax, by BD2; and (e) there are no
actions, suits, proceedings, investigations or claims now pending or, to the
knowledge of the BD2 Parties, threatened, against BD2 in respect of Taxes or any
matter under discussion with any governmental authority relating to Taxes
asserted by any such authority.
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Section 3.11 Consents and Approvals. Except as set forth in Schedule 3.11,
the execution and delivery of this Agreement by the BD2 Parties do not, and the
performance of this Agreement by the BD2 Parties will not, require any consent,
approval, authorization or other action by, or filing with or notification to,
any governmental or regulatory authority or other third party, except where
failure to obtain any such consent, approval, authorization or action, or to
make any such filing or notification, would not reasonably be expected to have a
BD2 Material Adverse Effect.
Section 3.12 Absence of Certain Changes. Except as set forth in Schedule
3.12 or as otherwise contemplated in this Agreement, BD2 has not, since August
31, 1998:
(a) issued, delivered or agreed to issue any stock, bonds or other
corporate securities (whether authorized and unissued or held in the treasury),
or granted or agreed to grant any options (including employee stock options),
warrants, calls, commitments or other rights (including conversion or exchange
rights) for the issue thereof;
(b) except to the extent it has utilized margin credit provided by its
clearing broker, borrowed or agreed to borrow any funds;
(c) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities incurred in the ordinary course of business and consistent with
prior practice;
(d) discharged or satisfied any encumbrance (as hereinafter defined)
other than those then required to be discharged or satisfied, or paid any
obligation or liability other than current liabilities shown on the BD2 Balance
Sheet and liabilities incurred since August 31, 1998 in the ordinary course of
business and consistent with prior practice;
(e) sold, transferred, pledged, hypothecated, leased to others or
otherwise disposed of any assets (except for the disposition of assets in the
ordinary course of business) or canceled or compromised any debt or claim, or
waived or released any right of substantial value;
(f) received any notice of termination of any Contract, Lease or other
agreement, or suffered any damage, destruction or loss (whether or not covered
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by insurance) which, in any case or in the aggregate, has had, or might
reasonably be expected to have, a BD2 Material Adverse Effect;
(g) encountered any labor union organizing activity labor disputes or
had any material change in its relations with its employees or agents, clients
or insurance carriers;
(h) made any accrual or arrangement for any payment of any bonus, or
any increase in compensation or any severance or termination pay to (i) any
present or former officer or employee of BD2; or (ii) any person, firm or
corporation which is or was furnishing professional or consulting services to
BD2 (other than routine payments made in the ordinary course of business,
consistent with past practices);
(i) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to any of its
shareholders or any affiliate of any of its shareholders, or (except for the
repurchase of four shares of BD2 Stock at $11,300 per share in accordance with
pre-existing agreements) purchased or redeemed, or agreed to purchase or redeem,
any of its capital stock, or made or agreed to make any payment to any of its
shareholders or any affiliate of any of its shareholders, whether on account of
debt, management fees or otherwise;
(j) suffered any material adverse change, in any case or in the
aggregate, in its assets, liabilities, financial condition, results of
operations or business (it being understood that losses from operations incurred
in the ordinary course of BD2's business shall not be deemed to be, or to result
in, a material adverse change); or
(k) entered into any agreement or made any commitment to take any of
the types of action described in any of the foregoing clauses (other than
clauses (f), (g) or (j)).
Section 3.13 Employment Agreements and Bonus Plans. Except as set forth on
Schedule 3.13, there are no employment agreements or bonus or other benefit
plans, arrangements or policies (written or unwritten) between BD2 and any of
its employees, including but not limited to any thereof relating to sick pay,
vacations and severance.
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Section 3.14 Employee Plans.
(a) Except as set forth on Schedule 3.14, BD2 does not maintain or
contribute to, or is a party to or a participating employer in, any "employee
pension benefit plan," as defined in Section 3(2) of ERISA (collectively, the
"Employee Benefit Plans"). BD2, at all times, has complied in all material
respects with the provisions of the Employee Benefit Plans. BD2 is not a party
to any multiemployer plan as defined in Section 3(37) of ERISA. The termination
of the BD2 Retirement Trust Profit Sharing Plan ("Old BD2 Plan") will not result
in any liability to BD2.
(b) Each Employee Benefit Plan (i) except with respect to any Employee
Benefit Plan not intended to qualify under Section 401(a) of the Code, has
received a determination letter from the Internal Revenue Service to the effect
that such plan satisfies the requirements of Section 401(a) of the Code and that
any related trust is exempt from tax pursuant to Section 501(a) of the Code;
(ii)* has been operated in all material respects in accordance with ERISA, the
Code and all other applicable law; (iii)* has not engaged in any prohibited
transactions (as such term is defined for purposes of ERISA and the Code) (other
than those that are exempt pursuant to statute, regulation or otherwise) which
would subject BD2 to an excise tax under Section 4975 of the Code or a penalty
under Section 502(i) of ERISA; (iv)* has not, since the last annual report
filed, been amended so as to materially increase benefits thereunder (other than
as a direct or indirect result of changes in applicable law or regulations) or
experienced a material increase (more than 20%) in the number of participants
covered thereunder; and (v)* if terminated on the date hereof, would not subject
BD2 to liability to the PBGC pursuant to the provisions of Title IV of ERISA.
(c) Except as set forth in Schedule 3.14, there are no "employee
welfare benefit plans" (as defined in Section 3(1) of ERISA) (the "Employee
Welfare Plans") maintained by BD2 or to which BD2 contributes or is required to
contribute.
(d) The BD2 Parties have furnished to Holding true and complete copies
of the following items with respect to each Employee Benefit Plan and each
Employee Welfare Plan (i) each plan document; (ii) each related trust document;
(iii) each determination letter issued by the Internal Revenue Service relating
to qualification of the respective plans under the Code; (iv) the most recently
filed annual reports; and (v) the most recent actuarial valuation, if any.
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(e) BD2 has filed all reports and other documents required to be filed
with any governmental agency with respect to the Employee Benefit Plans and
Employee Welfare Plans or has received currently effective extensions for any
such reports and other documents which have not been filed.
Section 3.15 Insurance Policies. Schedule 3.15 sets forth a complete list
of all insurance policies maintained by BD2 and which are in force as of the
date hereof.
Section 3.16 Intangible Rights. Set forth on Schedule 3.16 is a list and
brief identification of all trademarks, trade names, copyrights and applications
therefor owned by or registered in the name of BD2 or in which BD2 has any
rights as licensee or otherwise, and which are presently used in the operation
of BD2's business. Except as disclosed in Schedule 3.16, no interest in any of
such trademarks, trade names, copyrights or applications therefor, or any trade
secrets owned or used by BD2, has been assigned, transferred or licensed to any
third party by BD2, and to the best of the BD2 Parties' knowledge there is no
and has not been any infringement or asserted infringement by BD2 of any
trademarks, trade names, copyrights or application therefor of another. Except
as disclosed in Schedule 3.16, (i) no claim is pending by BD2 against others to
the effect that the present or past operations of such parties infringe upon or
conflict with the rights of BD2, and, to the best of the BD2 Parties' knowledge,
no reasonable grounds for such action exist, and (ii) the BD2 Parties are not
aware of any pending or threatened cancellation or revocation of any agreement
granting to BD2 rights under trademarks, trade names, copyrights or "know-how"
of others.
Section 3.17 Title to Properties. BD2 has good and marketable title to all
its properties and assets which are material to the business of BD2. None of
such properties and assets is subject to any Lien or adverse claim of any nature
whatsoever, direct or indirect, whether accrued, absolute, contingent or
otherwise, other than (i) any Lien for Taxes not yet due or delinquent or being
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with GAAP and set forth on the BD2 Balance
Sheet, (ii) any statutory Lien arising in the ordinary course of business by
operation of law with respect to a liability that is not yet due or delinquent
and (iii) any minor imperfection in title or similar Lien which individually or
in the aggregate with such other Liens could not reasonably be expected to have
a BD2 Material Adverse Effect. All the material tangible properties and assets
owned or leased by BD2 are in good operating condition and repair, are suitable
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for the purposes used, and have been adequate and sufficient for their
operations prior to the date hereof. A true and complete list of all such
material tangible properties and assets is set forth in Schedule 3.17.
Section 3.18 Year 2000 Compliance. BD2 completed its Form BD-Y2K in
accordance with NASD rules and regulations and the instructions to such Form and
filed such Form in a timely manner. The information contained therein is
accurate and complete. True and correct copies of the Form have been provided to
Holding.
Section 3.19 No Guarantees. *Except in connection with securities offerings
in which BD2 participates and customary clearing relationships, BD2 is not a
party to or bound by any agreement of guarantee, indemnification, assumption, or
endorsement or any other like commitment of the obligations, liabilities
(contingent or otherwise) or indebtedness of any other person, firm or
corporation.
Section 3.20 [Intentionally Omitted]
Section 3.21 Labor Matters. BD2 is not a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by it in
connection with the operation of its business.
Section 3.22 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the BD2 Parties.
Section 3.23 Records. *The books of account, minute books, stock
certificate books and stock transfer ledgers of BD2 are complete and correct in
all material respects, and there have been no material transactions involving
BD2 which are required to be set forth therein and which have not been so set
forth.
Section 3.24 No Undisclosed Liabilities. **Except as set forth in Schedule
3.24 and pursuant to executory provisions under the Contracts and Leases to
which BD2 is a party, BD2 has no liabilities, absolute, accrued, contingent or
otherwise, except (a) as and to the extent reflected or reserved against on the
BD2 Balance Sheet, and (b) those incurred since August 31, 1998 in the ordinary
course of business and consistent with prior practice.
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Section 3.25 No Illegal or Improper Transactions. No Stockholder or, to the
knowledge of the BD2 Parties, any officer, director or employee, of BD2 has,
directly or indirectly, offered, paid or agreed to pay to any person or entity
(including any governmental official) or solicited, received or agreed to
receive from any such person or entity, directly or indirectly, any money or
anything of value for the purpose or with the intent of (i) obtaining or
maintaining business for BD2, (ii) facilitating the purchase or sale of any
product or service, or (iii) avoiding the imposition of any fine or penalty, in
any manner which is in violation of any applicable ordinance, regulation or law.
Section 3.26 Related Transactions. Except for compensation to employees or
consultants for services rendered and except with respect to the "Energy Fund,"
as hereafter defined, no Stockholder nor, to the knowledge of the BD2 Parties,
any current or former director, officer, employee or shareholder or any
associate (as defined in the rules promulgated under the 1934 Act) of BD2 is
presently, or during the last three fiscal years has been, (a) a party to any
transaction with BD2 (including, but not limited to, any contract, agreement or
other arrangements providing for the furnishing of services by or to, or rental
of real or personal property to or from, or otherwise requiring payments to or
from, any such director, officer, employee or shareholder or such associate), or
(b) the direct or indirect owner of an interest in any corporation, firm,
association or business organization which is a present competitor, supplier or
customer of BD2 nor does any such person receive income from any source other
than BD2 which relates to the business of, or should properly accrue to, BD2.
Section 3.27 Disclosure. *No representation or warranty (including the
Schedules related thereto) by the BD2 Parties contained in this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading. Any furnishing of information to the
BD1 Parties by the BD2 Parties pursuant to, or otherwise in connection with,
this Agreement, including, without limitation, any information contained in any
document, contract, book or record of BD2 to which the BD1 Parties shall have
access or any information obtained by, or made available to, the BD1 Parties as
a result of any investigation made by or on behalf of the BD1 Parties prior to
or after the date of this Agreement, shall not affect the BD1 Parties' right to
rely on any representation, warranty, covenant or agreement made or deemed made
by the BD2 Parties in this Agreement and shall not be deemed a waiver thereof.
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Section 3.28 Ownership of Holding Stock. Except as set forth on Schedule
3.28, no BD2 Party owns, directly or indirectly, any Holding Stock, or options
or other rights to acquire Holding Stock or securities convertible into Holding
Stock.
Section 3.29 Investment Representations.
(a) All shares of Holding Stock and Holding Warrants to be acquired by
any of the Stockholders pursuant to this Agreement will be acquired for such
Stockholder's account and not with a view towards distribution thereof. Each
Stockholder understands that it must bear the economic risk of the investment in
the Holding Stock and the Holding Warrants and the Holding Stock issuable upon
exercise of the Holding Warrants, which cannot be sold by such Stockholder
unless registered under the Securities Act of 1933, as amended (the "1933 Act"),
or an exemption therefrom is available thereunder. Each Stockholder has had both
the opportunity to ask questions and receive answers from the officers and
directors of Holding and all persons acting on its behalf concerning the
business and operations of Holding and BD1 and to obtain any additional
information to the extent Holding possesses or may possess such information or
can acquire it without unreasonable effort or expense necessary to verify the
accuracy of such information. Each Stockholder acknowledges receiving copies of
the SEC Filings referred to in Section 4.6. The certificates representing the
Holding Stock and Holding Warrants to be received by the Stockholders as part of
the Merger Consideration shall bear a legend to the effect that the shares
represented thereby may not be transferred except upon compliance with the
registration requirements of the 1933 Act (or an exemption therefrom) and the
provisions of this Agreement.
(b) At the Effective Time, the Stockholders will not constitute a
"group" under Section 13(d) of the 1933 Act and the rules and regulations
promulgated thereunder with respect to their ownership of Holding Stock.
Section 3.30 Restriction Letter and Form BD. Attached as Schedule 3.30 is
BD2's Form BD, as amended, and its current NASD "Restriction Letter" (or
Continuing Membership Agreement), with which BD2 is in full compliance.
Section 3.31 Significant Inventory Positions. Except as set forth on
Schedule 3.31, as of the date hereof, BD2 does not have any ownership interest
(long or short) in the securities of any publicly-held company valued (without
netting) in excess of $50,000.
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Section 3.32 Disclosure Issues. None of the Stockholders is or has been the
subject of any of the events described in Item 401(f) of Regulation S-K,
promulgated under the 1933 Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BD1 PARTIES
The BD1 Parties, jointly and severally, represent and warrant to the BD2
Parties as follows:
Section 4.1 Organization.
(a) Holding. Holding is a corporation duly organized, validly existing
and in good standing under the law of Delaware. Except for BD1 and the other
corporations listed in Schedule 4.1(a) (the "Other Holding Subsidiaries"),
Holding does not own, directly or indirectly, any capital stock or other
securities of any issuer or any equity interest in any other entity and is not a
party to any agreement to acquire any such securities or interest. All the Other
Holding Subsidiaries are engaged in the securities brokerage business, except
(i) Dalewood Associates, Inc., which manages Dalewood Associates, L.P., (ii) GKN
Realty Corp. and GKN Fund Management, Inc., which are inactive, and (iii) GKN
Property Management Corp., which manages one piece of commercial property.
Holding is a holding company and does not conduct any business except through
BD1 and the Other Holding Subsidiaries.
(b) BD1. BD1 is a corporation duly organized, validly existing and in
good standing under the law of New York. Other than in the ordinary course of
its securities business, BD1 does not own, directly or indirectly, any capital
stock or other securities of any issuer or any equity interest in any other
entity and is not a party to any agreement to acquire any such securities or
interest. BD1 is qualified to do business in each state where the nature of the
business it conducts or the properties it owns, leases or operates requires it
to so qualify, which states are listed in Schedule 4.1(b), except where the
failure to so qualify would not reasonable be expected to have, either singly or
in the aggregate, a material adverse effect on the results of operations,
financial condition, business, assets or prospects of BD1, Holding, Southeast
Research Partners Inc. ("SERP"), Shochet Securities, Inc. ("Shochet") or GKN
Securities Corp. ("GKN") (either singly or on a consolidated basis), or
materially impair Holding's or BD1's ability to consummate the transactions
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contemplated by this Agreement ("BD1 Material Adverse Effect"). BD1 has all
requisite corporate power to own, lease and operate its properties, leases or
operations and to carry on its business as now being conducted.
(c) The Other Holding Subsidiaries. Each of the Other Holding
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the law of its state of incorporation, which states are listed in
Schedule 4.1(c). Other than in the ordinary course of its securities business,
none of the Other Holding Subsidiaries owns, directly or indirectly, any capital
stock or other securities of any issuer or any equity interest in any other
entity and is not a party to any agreement to acquire any such securities or
interest. Each of the Other Holding Subsidiaries is qualified to do business in
each state where the nature of the business it conducts or the properties it
owns, leases or operates requires it to so qualify, which states are listed in
Schedule 4.1(c), except where the failure to so qualify would not reasonably be
expected to have a BD1 Material Adverse Effect. Each of the Other Holding
Subsidiaries has all requisite corporate power to own, lease and operate its
properties and to carry on its business as now being conducted by Holding.
Section 4.2 Authority and Corporate Action.
(a) Holding and BD1 each has all necessary corporate power and
authority to enter into this Agreement and to consummate the Merger as
contemplated hereby. All corporate action necessary to be taken by Holding and
BD1 to authorize the execution, delivery and performance of this Agreement and
all other agreements delivered in connection with this transaction has been duly
and validly taken. This Agreement constitutes the valid, binding and enforceable
obligation of each of Holding and BD1, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general
application now or hereafter in effect affecting the rights and remedies of
creditors and by general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).
(b) Neither the execution and delivery of this Agreement or any of the
other documents contemplated hereby by Holding and BD1 nor the consummation of
the transactions contemplated hereby or thereby will (i) conflict with, result
in a breach or violation of or constitute (or with notice or lapse of time or
both constitute) a default under, (A) the Certificate of Incorporation or
By-Laws of Holding, BD1 or the Other Holding Subsidiaries or (B) any law,
statute, regulation, order, judgment or decree or any instrument, contract or
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other agreement to which Holding, BD1 or the Other Holding Subsidiaries is a
party or by which Holding, BD1 or the Other Holding Subsidiaries (or any of
their properties) is subject or bound, except where any such conflict, breach,
violation or default would not reasonably be expected to have a BD1 Material
Adverse Effect; (ii) result in the creation of, or give any party the right to
create, any Lien upon the assets of Holding, BD1 or the Other Holding
Subsidiaries, except where such Lien would not reasonably be expected to have a
BD1 Material Adverse Effect; (iii) terminate or modify, or give any third party
the right to terminate or modify, the provisions or terms of any contract to
which Holding, BD1 or the Other Holding Subsidiaries is a party, except where
such transaction or modification would not reasonably be expected to have a BD1
Material Adverse Effect; or (iv) result in any suspension, revocation,
impairment, forfeiture or nonrenewal of any material Permit applicable to
Holding, BD1 or the Other Holding Subsidiaries, except where any such
suspension, revocation, impairment, forfeiture or nonrenewal would not
reasonably be expected to have a BD1 Material Adverse Effect (it being
understood that any action taken by any state regulatory agency after the
Effective Time to suspend, revoke, impair or refuse to renew any such material
Permit shall be deemed not to have a BD1 Material Adverse Effect).
Section 4.3 Capitalization; Ownership of Securities.
(a) Capitalization. The capitalization of Holding, BD1 and each of the
Other Holding Subsidiaries is set forth in Schedule 4.3. All of the outstanding
shares of Holding Stock are duly and validly authorized and issued, fully paid
and non-assessable. Except where noncompliance would not have a BD1 Material
Adverse Effect, Holding has complied with all applicable federal and state
securities statutes and regulations in connection with the offer and issuance of
all of the outstanding shares of Holding Stock and there are no rescission
rights relating thereto.
(b) Ownership. Except for the shares of Other Holding Subsidiaries
incorporated in foreign jurisdictions which are held by foreign nationals who
are directors of such companies (and noted on Schedule 4.3), Holding is the
direct or indirect record and beneficial owner of all of the outstanding shares
of capital stock of BD1 and each of the Other Holding Subsidiaries, free and
clear of all Liens. There are no options, warrants, calls, commitments or other
rights of any character (including conversion, exchange or preemptive rights)
which require, directly or indirectly, or give any person the right to require,
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the issuance of any capital stock of BD1 or any of the Other Holding
Subsidiaries whether or not such rights are presently exercisable.
(c) No Options, etc. Except as set forth on Schedule 4.3, there are no
options, warrants, calls, commitments or other rights of any character
(including conversion, exchange or preemptive rights) which require, or give any
person the right to require, directly or indirectly, the issuance, sale or other
transfer of any capital stock of Holding, whether or not such rights are
presently exercisable.
Section 4.4 Compliance with Law; Customer Complaints.
(a) *The businesses of Holding, BD1 and the Other Holding Subsidiaries
(collectively, the "Holding Companies") have at all times been conducted, and
are now being conducted, in compliance with all applicable laws, rules,
regulations and court or administrative orders and processes (including, without
limitation, the 1934 Act, the Investment Advisers Act of 1940, as amended, and
any laws, rules, regulations and court or administrative orders that relate to
broker-dealer regulation (including registration and licensing in all
jurisdictions where any of the Holding Companies engages in the investment
advisory activities or the sale of securities), consumer protection, health and
safety, products and services, proprietary rights, anti- competitive practices,
collective bargaining, ERISA, equal opportunity, other aspects of labor or
employment law (including sexual harassment) improper payments and environmental
regulation), except where noncompliance would not reasonably be expected to have
a BD1 Material Adverse Effect. Except as set forth in Schedule 4.4(a), the
Holding Companies and their officers, directors and employees (i) *are not, and
during the past six years were not, in violation of, or not in compliance with,
any such applicable law, rule, regulation, order or process with respect to the
conduct of their respective businesses; and (ii) have not received any notice
from any governmental authority or self-regulatory agency alleging that any of
the Holding Companies has violated, or not complied with, any of the foregoing
and, to the best of the knowledge of each of Holding and BD1, none is threatened
(and *no factual circumstances involving such violation or failure to comply are
being examined or investigated), except, case of either (i) or (ii), where such
violations would not reasonably be expected to have a BD1 Material Adverse
Effect.
(b) All customer complaints reportable pursuant to 95-81 which have
been made against any of the Holding Companies or any of their registered
representatives in writing since October 1, 1995, or which have been
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communicated orally, but not in writing, since August 31, 1998, have been
reported in accordance with 95-81, all such complaints made prior to the close
of business on November 2, 1998 are set forth in Schedule 4.4(b), and copies of
each such complaint have been made available to the BD2 Parties. Such complaints
which are pending as of the date of this Agreement are appropriately noted on
Schedule 4.4(b). Except as noted in Schedule 4.4(b), none of such complaints
which have been disposed of requires any payment or other action to be made by
the Holding Companies after the date of this Agreement.
(c) Each of the Holding Companies is in compliance with Environmental,
Health and Safety Requirements, except for such noncompliance as would not
reasonably be expected to have a BD1 Material Adverse Effect. None of the
Holding Companies has received any written notice, report or other information
regarding any actual or alleged material violation of Environmental, Health and
Safety Requirements, or any material liabilities or potential material
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, relating to any
of the Holding Companies or their respective properties arising under
Environmental, Health, and Safety Requirements, the subject of which would
reasonably be expected to have a BD1 Material Adverse Effect.
Section 4.5 Financial Statements.
(a) Holding has delivered to the BD2 Parties (i) Holding's balance
sheet at January 31, 1998 and statements of income and source and application of
funds for the year then ended, all certified by BD1's Accountants, together with
the notes, comments, schedules and supplemental data therein, and (ii) Holdings'
unaudited consolidated balance sheet at August 31, 1998 ("Holding Balance
Sheet") and statement of income for the seven months then ended (all of the
foregoing referred to herein as the "Holding Financial Statements"). The Holding
Financial Statements have been prepared in accordance with GAAP and fairly
present the financial condition of Holding and its subsidiaries at their
respective dates and the results of the operations of Holding and its
subsidiaries for the periods covered thereby, subject, in the case of interim
statements, to normal year-end adjustments and the absence of footnotes.
(b) Attached hereto as Schedule 4.5 are the FOCUS Reports for the
period ended August 31, 1998, for GKN, Shochet and SERP. The FOCUS Reports have
been prepared and filed in compliance with the rules and regulations of the
NASD.
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Section 4.6 SEC Reports. Holding has delivered to the BD2 Parties its
Annual Report on Form 10-K for the fiscal year ended January 31, 1998 ("10-K"),
its Quarterly Reports on Form 10-Q for the quarters ended April 30, 1997 and
July 31, 1998 (the "10-Qs"), its Proxy Statement for its Annual Meeting of
Stockholders held on July 15, 1998, and its Current Report on Form 8-K for event
dated July 15, 1998 (collectively, the "SEC Filings"). The 10-K and the 10-Qs
and 8-K, as of their filing dates, complied as to form in all material respects
with the requirements of the rules and regulations promulgated by the Securities
and Exchange Commission (the "Commission") with respect thereto. Holding has
filed all reports under the 1934 Act that were required to be filed as of the
date hereof and has otherwise complied with all material requirements of the
1933 Act and the 1934 Act. The financial statements of Holding included in the
10-K and the 10-Qs comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission with respect thereto, have been prepared in accordance with GAAP
applied on a consistent basis during the periods covered and fairly present, in
all material respects, the financial position of Holding as of the dates thereof
and the results of operations and changes in financial position for the periods
then ended.
Section 4.7 Licenses, Permits, Etc. *Except as set forth on Schedule 4.7,
the Holding Companies and their officers, directors and employees have at all
times possessed and now possess all Permits, including those necessary to enable
them to sell securities in any jurisdiction in which any of the Holding
Companies engages in the sale of securities, necessary to own and operate the
business of the Holding Companies, which necessary Permits are set forth on
Schedule 4.7 hereto, and true, complete and correct copies of which Permits have
previously been delivered to the BD2 Parties. *All such Permits are in full
force and effect and the Holding Companies and their officers, directors and
employees have complied and the Holding Companies will comply, and shall cause
their officers, directors and employees to comply, in all material respects with
all terms of such Permits and will take any and all actions necessary to ensure
that all such Permits remain in full force and effect and that the terms of such
Permits are not violated through the Closing Date. *The Holding Companies and
their officers, directors and employees are not in default in any material
respect under any of such Permits and no event has occurred and no condition
exists which, with the giving of notice, the passage of time, or both, would
constitute a material default thereunder. Neither the execution and delivery of
this Agreement or any of the other documents contemplated hereby nor the
consummation of the transactions contemplated hereby or thereby nor compliance
by the Holding Companies with any of the provisions hereof or thereof will
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result in any suspension, revocation, impairment, forfeiture or nonrenewal of
any Permit applicable to their businesses, except where any such suspension,
revocation, impairment, forfeiture or nonrenewal would not reasonably be
expected to have a BD1 Material Adverse Effect. Schedule 4.7 includes a listing
of all branch offices of the Holding Companies, including their addresses and
dates of commencement of operations. The appropriate Holding Company obtained
all necessary permission from the NASD and appropriate state regulatory
authorities to operate such branch offices from and after such dates. Schedule
4.7 also includes a list of all jurisdictions in which each of GKN, Shochet and
SERP is licensed to do business as a broker-dealer .
Section 4.8 Real Property. None of the Holding Companies owns any real
property.
Section 4.9 Contracts and Leases. *All Contracts and Leases referred to in,
or filed as an exhibit to, any of the SEC Filings, or entered into after the
date of the most recent SEC Filing, to which a Holding Company is a party and
which are in effect on the date hereof are valid and binding, enforceable in
accordance with their terms and are in full force and effect and there is no
default by any of the Holding Companies or any other party thereto under any
such Contract or Lease, except for such defaults which, singly or in the
aggregate, would not reasonably be likely to have a BD1 Material Adverse Effect.
No Holding Company has received notice from any other party to any Contract that
such Holding Company is in default thereunder. None of the other parties to such
Contracts or Leases has notified any of the Holding Parties of any intention to
terminate its Contract or Lease.
Section 4.10 Litigation. **Except as set forth in Schedule 4.10, there are
no Proceedings (including arbitrations, actions, suits or other proceedings with
any registered representative or customer of any Holding Company) pending or, to
the best knowledge of Holding and BD1, threatened against any Holding Company at
law or in equity before any court, federal, state, municipal or other
governmental department or agency or other regulatory authority or other
tribunal, except for such Proceedings which, if adversely determined, would not
reasonably be expected to have a BD1 Material Adverse Effect. Except as set
forth in Schedule 4.10, none of the Holding Companies or their property is
subject to any order, judgment, injunction or decree which would reasonably be
expected to have a BD1 Material Adverse Effect.
Section 4.11 Taxes, Tax Returns and Audits. (a) All federal, state, local
and foreign Taxes due and payable by the Holding Companies and by any other
person, firm or corporation which will or may be liabilities of the Holding
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Companies, for all periods ending on or before August 31, 1998, have been paid
in full or have been fully reserved against on the Holding Balance Sheet; (b)
the Holding Companies have filed all Returns required to have been filed by them
to the date hereof, and no extension of the time for filing a Return is
presently in effect; the Returns that have been filed have been accurately
prepared and have been duly and timely filed; (c) the Holding Companies' federal
income tax returns have not been audited by the Internal Revenue Service for any
fiscal year, but Holding's return for the year ended January 31, 1998 is subject
to mandatory audit under law as a result of the magnitude of the refund; (d)
there are no agreements, waivers or other arrangements providing for an
extension of time with respect to the filing of any Return, or payment of any
Tax, by any of the Holding Companies; and (e) there are no actions, suits,
proceedings, investigations or claims now pending or, to Holding's knowledge,
threatened, against any Holding Company in respect of Taxes or any matter under
discussion with any governmental authority relating to Taxes asserted by any
such authority.
Section 4.12 Consents and Approvals. The execution and delivery of this
Agreement by Holding and BD1 do not, and the performance of this Agreement by
Holding and BD1 will not, require Holding or BD1 to obtain any consent,
approval, authorization or other action by, or to make any filing with or
notification to, any governmental or regulatory authority or other third party,
except (i) as described in Schedule 4.12, and (ii) where failure to obtain such
consents, approvals, authorizations or actions, or to make such filings or
notifications, would not reasonably be expected to have a BD1 Material Adverse
Effect.
Section 4.13 Absence of Certain Changes. Except as set forth in Schedule
4.13 or as otherwise contemplated by this Agreement, none of the Holding
Companies has, since August 31, 1998:
(a) issued, delivered or agreed to issue any stock, bonds or other
corporate securities (whether authorized and unissued or held in the treasury),
or granted or agreed to grant any options (including employee stock options),
warrants, calls, commitments or other rights (including conversion or exchange
rights) for the issue thereof, except for the issuance of Holding Stock upon the
exercise of options, warrants and other convertible or exercisable securities
outstanding on the date hereof;
(b) borrowed or agreed to borrow any funds except to the extent it
utilized margin credit provided by its clearing broker;
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(c) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities incurred in the ordinary course of business and consistent with
prior practice;
(d) discharged or satisfied any Lien other than those then required to
be discharged or satisfied, or paid any obligation or liability other than
current liabilities shown on the Holding Balance Sheet and liabilities incurred
since August 31, 1998 in the ordinary course of business and consistent with
prior practice;
(e) sold, transferred, pledged, hypothecated, leased to others or
otherwise disposed of any assets (except for the disposition of assets in the
ordinary course of business) or canceled or compromised any debt or claim, or
waived or released any right of substantial value;
(f) received any notice of termination of any Contract, Lease or other
agreement, or suffered any damage, destruction or loss (whether or not covered
by insurance) which, in any case or in the aggregate, has had, or might
reasonably be expected to have, a BD1 Material Adverse Effect;
(g) encountered any labor union organizing activity labor disputes or
had any material change in its relations with its employees or agents, clients
or insurance carriers;
(h) made any accrual or arrangement for any payment of any bonus, or
any increase in compensation or any severance or termination pay to (i) any
present or former officer or employee of any of the Holding Companies; or (ii)
any person, firm or corporation which is or was furnishing professional or
consulting services to any of the Holding Companies (other than routine payments
made in the ordinary course of business, consistent with past practice);
(i) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to any of its
shareholders or any affiliate of any of its shareholders, or purchased or
redeemed, or agreed to purchase or redeem, any of its capital stock, or made or
agreed to make any payment to any of its shareholders or any affiliate of any of
its shareholders, whether on account of debt, management fees or otherwise;
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(j) suffered any material adverse change, in any case or in the
aggregate, in its assets, liabilities, financial condition, results of
operations or business (it being understood that losses from operations incurred
in the ordinary course of the Holding Companies' business shall not be deemed to
be, or to result in, a material adverse change); or
(k) entered into any agreement or made any commitment to take any of
the types of action described in any of the foregoing clauses (other than
clauses (f), (g) or (j)).
Section 4.14 Employment Agreements and Bonus Plans. Except as set forth on
Schedule 4.14, there are no employment agreements or bonus or other benefit
plans, arrangements or policies (written or unwritten) between any of the
Holding Companies and any of their employees, including but not limited to any
thereof relating to sick pay, vacations and severance.
Section 4.15 Employee Plans; Etc.
(a) Except as set forth on Schedule 4.15, none of the Holding
Companies maintains or contributes to, or is a party to or a participating
employer in, any Employee Benefit Plan. The Holding Companies, at all times,
have complied in all material respects with the provisions of the Employee
Benefit Plans. None of the Holding Companies is a party to any multiemployer
plan as defined in Section 3(37) of ERISA.
(b) Each Employee Benefit Plan (i) except with respect to any Employee
Benefit Plan not intended to qualify under Section 401(a) of the Code, has
received a determination letter from the Internal Revenue Service to the effect
that such plan satisfies the requirements of Section 401(a) of the Code and that
any related trust is exempt from tax pursuant to Section 501(a) of the Code;
(ii)* has been operated in all material respects in accordance with ERISA, the
Code and all other applicable law; (iii)* has not engaged in any prohibited
transactions (as such term is defined for purposes of ERISA and the Code) (other
than those that are exempt pursuant to statute, regulation or otherwise) which
would subject any of the Holding Companies to a material liability under Section
4975 of the Code or a penalty under Section 502(i) of ERISA; (iv)* has not,
since the last annual report filed, been amended so as to materially increase
benefits thereunder (other than as a direct or indirect result of changes in
applicable law or regulations) or experienced a material increase (more than
20%) in the number of participants covered thereunder; and (v)* if terminated on
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the date hereof, would not subject any of the Holding Companies to liability to
the PBGC pursuant to the provisions of Title IV of ERISA.
(c) Except as set forth in Schedule 4.15, there are no Employee
Welfare Plans maintained by any of the Holding Companies or to which any of the
Holding Companies contributes or is required to contribute.
(d) Holding and BD1 have furnished to the BD2 Parties true and
complete copies of the following items with respect to each Employee Benefit
Plan and each Employee Welfare Plan (i) each plan document; (ii) each related
trust document; (iii) each determination letter issued by the Internal Revenue
Service relating to qualification of the respective plans under the Code; (iv)
the most recently filed annual reports, if any; and (v) the most recent
actuarial valuation, if any.
(e) Each of the Holding Companies has filed all reports and other
documents required to be filed with any governmental agency with respect to the
Employee Benefit Plans and Employee Welfare Plans or has received currently
effective extensions for any such reports and other documents which have not
been filed.
Section 4.16 Intangible Rights. Set forth on Schedule 4.16 is a list and
brief identification of all trademarks, trade names, copyrights and applications
therefor owned by or registered in the name of GKN, Shochet or SERP or in which
GKN, Shochet or SERP has any rights as licensee or otherwise, and which are
presently used in the operation of its respective business. Except as disclosed
in Schedule 4.16, no interest in any of such trademarks, trade names, copyrights
or applications therefor, or any trade secrets owned or used by GKN, Shochet or
SERP, has been assigned, transferred or licensed to any third party by GKN,
Shochet or SERP, and to the best of the BD1 Parties' knowledge there is no and
has not been any infringement or asserted infringement by GKN, Shochet or SERP
of any trademarks, trade names, copyrights or application therefor of another.
Except as disclosed in Schedule 4.16, (i) no claim is pending by GKN, Shochet or
SERP against others to the effect that the present or past operations of such
parties infringe upon or conflict with the rights of GKN, Shochet or SERP, and,
to the best of the BD1 Parties' knowledge, no reasonable grounds for such action
exist, and (ii) the BD1 Parties are not aware of any pending or threatened
cancellation or revocation of any agreement granting to GKN, Shochet or SERP
rights under trademarks, trade names, copyrights or "know-how" of others.
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Section 4.17 Title to Properties. Each of the Holding Companies has good
and marketable title to all its properties and assets material to the business
of Holding, BD1, GKN, Shochet or SERP. None of such properties and assets is
subject to any Lien or adverse claim of any nature whatsoever, direct or
indirect, whether accrued, absolute, contingent or otherwise, other than (i) any
Lien for Taxes not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP and set forth on the Holding Balance Sheet, (ii) any
statutory Lien arising in the ordinary course of business by operation of law
with respect to a liability that is not yet due or delinquent and (iii) any
minor imperfection in title or similar Lien which individually or in the
aggregate with such other Liens could not reasonably be expected to have a BD1
Material Adverse Effect. All the material tangible properties and assets owned
or leased by the Holding Companies are, in all material respects, in good
operating condition and repair, suitable for the purposes used, and have been
adequate and sufficient for their operations prior to the date hereof.
Section 4.18 Year 2000 Compliance. Each of GKN, Shochet and SERP completed
its Form BD-Y2K in accordance with NASD rules and regulations and the
instructions to such Form and filed such Form in timely manner. The information
contained therein is accurate and complete. True and correct copies of the Forms
have been provided to Holding.
Section 4.19 No Guarantees. *Except as set forth on Schedule 4.19 or in
connection with securities offerings in which any Holding Company participates
and customary clearing relationships, no Holding Company is a party to or bound
by any agreement of guarantee, indemnification, assumption, or endorsement or
any other like commitment of the obligations, liabilities (contingent or
otherwise) or indebtedness of any other person, firm or corporation.
Section 4.20 Labor Matters. No Holding Company is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by it in connection with the operation of its business.
Section 4.21 Brokers. Except for the fees to be paid for the fairness
opinion referred to in Section 8.3(j) hereof, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transaction contemplated by this Agreement based upon
arrangements made by or on behalf of any Holding Company.
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Section 4.22 Records. *The books of account, minute books, stock
certificate books and stock transfer ledgers of the Holding Companies are
complete and correct in all material respects, and there have been no material
transactions involving a Holding Company which are required to be set forth
therein and which have not been so set forth.
Section 4.23 No Undisclosed Liabilities. **Except as set forth in Schedule
4.23 and the SEC Filings and pursuant to executory provisions under the
Contracts and Leases to which any Holding Company is a party, none of the
Holding Companies has any liabilities, absolute, accrued, contingent or
otherwise, except (a) as and to the extent reflected or reserved against on the
Holding Balance Sheet and (b) those incurred since August 31, 1998 in the
ordinary course of business and consistent with prior practice.
Section 4.24 No Illegal or Improper Transactions. None of the Holding
Companies or any officer, director or employee of the Holding Companies has,
directly or indirectly, offered, paid or agreed to pay to any person or entity
(including any governmental official) or solicited, received or agreed to
receive from any such person or entity, directly or indirectly, any money or
anything of value for the purpose or with the intent of (i) obtaining or
maintaining business for any of the Holding Companies, (ii) facilitating the
purchase or sale of any product or service, or (iii) avoiding the imposition of
any fine or penalty, in any manner which is in violation of any applicable
ordinance, regulation or law.
Section 4.25 Related Transactions. Except as set forth in Schedule 4.25 and
except for compensation to employees or consultants for services rendered,
neither Holding nor, to the knowledge of Holding and BD1, any current or former
director, officer, employee or shareholder holding beneficially at least 5% of
the outstanding Holding Stock, or any associate (as defined in the rules
promulgated under the 1934 Act) of any of the Holding Companies is presently, or
during the last three fiscal years has been, (a) a party to any transaction with
any of the Holding Companies (including, but not limited to, any contract,
agreement or other arrangements providing for the furnishing of services by or
to, or rental of real or personal property to or from, or otherwise requiring
payments to or from, any such director, officer, employee or shareholder or such
associate), or (b) the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a present
competitor, supplier or customer of any of the Holding Companies nor does any
such person receive income from any source other than the Holding Companies
which relates to the business of, or should properly accrue to, the Holding
Companies.
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Section 4.26 Disclosure. *No representation or warranty (including the
Schedules related thereto) by Holding and BD1 contained in this Agreement, when
taken together with the SEC Filings, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. Any furnishing of information to the BD2 Parties by Holding and BD1
pursuant to, or otherwise in connection with, this Agreement, including, without
limitation, any information contained in any document, contract, book or record
of any of the Holding Companies to which the BD2 Parties shall have access or
any information obtained by, or made available to, the BD2 Parties as a result
of any investigation made by or on behalf of the BD2 Parties prior to or after
the date of this Agreement, shall not affect the BD2 Parties' right to rely on
any representation, warranty, covenant or agreement made by Holding and BD1 in
this Agreement and shall not be deemed a waiver thereof.
Section 4.27 Holding Stock. The Holding Stock and Holding Warrants to be
issued to the Stockholders as part of the Merger Consideration, and the Holding
Stock which may be issued upon exercise of the Holding Warrants, will, when
issued, be validly issued, fully paid and non-assessable.
Section 4.28 Restriction Letter and Form BD. Attached as Schedule 4.28 is
the Form BD, as amended, and the current NASD "Restriction Letter" (or
Continuing Membership Agreement) for each of GKN, Shochet and SERP. GKN, Shochet
and SERP is each in full compliance with its "Restriction Letter."
Section 4.29 Significant Inventory Positions. Except as set forth on
Schedule 4.29, as of the date hereof, none of the Holding Companies has any
ownership interest (long or short) in the securities of any publicly-held
company valued (without netting) in excess of $50,000.
ARTICLE V
COVENANTS OF THE BD2 PARTIES
Section 5.1 Conduct of Business. The BD2 Parties covenant and agree that,
from the date hereof through the Closing Date, except as disclosed on Schedule
5.1 or as otherwise set forth in this Agreement, they shall:
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(a) conduct the business of BD2 only in the ordinary course and in a
manner consistent with the current practice of such business, preserve
substantially intact the business organization of BD2; use their best efforts to
keep available the services of the current employees of BD2, preserve the
current relationships of BD2 with customers and other persons with which BD2 has
significant business relations; and comply with all requirements of law the
violation of which would have a BD2 Material Adverse Effect;
(b) not pledge, sell, lease, transfer, dispose of or otherwise
encumber any property or assets of BD2 (except the Old Artwork) other than
consistent with past practices and in the ordinary course of business or enter
into any discussions or negotiations with any other party to do so (it being
understood by the parties hereto that there exist certain warrants and options
issued to BD2 in connection with its investment banking activities which are
held by BD2 as nominee for others, that such warrants and options are not
included on the BD2 Balance Sheet, and that such warrants and options may be
transferred of record by BD2 to the accounts of the beneficial holders thereof
at any time, before or after the Merger);
(c) except as provided herein, not amend the Certificate of
Incorporation or By-laws of BD2;
(d) not issue any shares of capital stock of BD2 (other than up to 70
shares of BD2 Stock which can be issued to employees of BD2 if and only if such
shares are repurchased from other employees after the date hereof), any
securities convertible or exercisable into or exchangeable for capital stock of
BD2, or any other class of securities, whether debt (other than debt incurred in
the ordinary course of business and consistent with past practice) or equity, of
BD2;
(e) not pledge, sell, transfer, dispose of or otherwise encumber or
grant any rights or interests to others of any kind (including, without
limitation, any voting rights) with respect to all or any part of the capital
stock or substantial assets of BD2 or enter into any discussions or negotiations
with any other party to do so;
(f) not declare any dividend or make any distribution in cash,
securities or otherwise on the outstanding shares of capital stock of BD2 or
(except for the repurchase of 12 shares of BD2 Stock for $11,300 per share)
directly or indirectly redeem or purchase any such capital stock;
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(g) not, in any manner whatsoever, advance, transfer (other than in
payment for goods received or services rendered in the ordinary course of
business, consistent with prior practice), or distribute to a shareholder of BD2
or any of his or her affiliates or otherwise withdraw, cash or cash equivalents
in any manner inconsistent with established cash management practices, except to
pay existing indebtedness of BD2;
(h) not make, agree to make or announce any general wage or salary
increase or enter into or amend any employment contract or, unless provided for
on or before the date of this Agreement, increase the compensation payable or to
become payable to any officer or employee of BD2 or adopt or increase the
benefits of any bonus, insurance, pension or other employee benefit plan,
payment or arrangement, except for those increases, consistent with past
practices, normally occurring as the result of regularly scheduled salary
reviews and increases, and except for increases directly or indirectly required
as a result of changes in applicable law or regulations;
(i) not make any capital expenditures in excess of $100,000 in the
aggregate;
(j) not merge or consolidate with, or acquire all or substantially all
of the assets of, or otherwise acquire any business operations of, any person or
entity; and
(k) not enter into any agreement with respect to any of the foregoing.
Section 5.2 Shareholder Meeting or Consent. BD2 shall cause a meeting of
its shareholders (the "BD2 Shareholder Meeting") to be duly called and held as
soon as reasonably practicable for the purpose of voting on the adoption of this
Agreement and the Merger or, in lieu thereof, shall cause all of its
shareholders to sign a unanimous written consent with respect thereto. BD1 shall
comply with all legal requirements applicable to such meeting or consent. In
connection with the BD2 Shareholder Meeting or such unanimous consent, BD2 shall
cause each shareholder of BD2 who will be receiving Holding Stock and Holding
Warrants in the Merger to execute an agreement with Holding and BD2 (which shall
be in form reasonably satisfactory to Holding and delivered to Holding at the
Closing) pursuant to which he shall (i) acknowledge that he is subject to and
bound by, the indemnity provisions contained in Article IX of this Agreement as
fully as if he were a party hereto; (ii) agree not to sell his Holding Stock
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or Holding Warrants or shares of Holding Stock underlying the Holding Warrants,
for a period of 24 months after the Closing (and acknowledge that the
certificates for the Holding Stock they receive in the Merger will be legended
to reflect that restriction as well as customary securities laws restrictions);
(iii) agree to the termination of the existing agreement between him and BD2
regarding the repurchase of his shares of BD2 Stock in the event of termination
of his employment; (iv) agree that his Association Agreement with BD2 shall
continue after the Merger to inure to the benefit of the Surviving Corporation;
(v) release BD2 from all obligations of any kind owed to him arising on or
before the Closing Date; (vi) agree that he shall not utilize the name "Gaines,"
"Berland," or any variation thereof in connection with the securities business;
and (vii) make such acknowledgments and representations as the parties
reasonably determine are necessary to comply with the securities laws, including
representations that they will not constitute a "group" under Section 13(d) of
the 1933 Act and the rules and regulations promulgated thereunder with respect
to their ownership of Holding Stock.
Section 5.3 Access to Information; Confidentiality.
(a) Between the date of this Agreement and the Closing Date, the BD2
Parties will (i) permit Holding and its Representatives reasonable access to all
of the books, records, reports and other related materials, offices and other
facilities and properties of BD2; (ii) permit Holding and its Representatives to
make such inspections thereof as Holding may reasonably request; and (iii)
furnish Holding and its Representatives with such financial and operating data
(including without limitation the work papers of BD2's Accountants) and other
information with respect to BD2 as Holding may from time to time reasonably
request.
(b) The BD2 Parties shall hold and shall cause their Representatives
to hold in strict confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all documents and
information concerning the Holding Companies furnished to them by the Holding
Companies or their Representatives in connection with the transactions
contemplated by this Agreement (except to the extent that such information can
be shown to have been (i) previously known by any BD2 Party, (ii) in the public
domain through no fault of a BD2 Party or (iii) later lawfully acquired from
other sources, which source is not the agent of a Holding Company, by the BD2
Party to which it was furnished), and, except as otherwise required by
applicable law, rule or regulation, no BD2 Party shall release or disclose such
information to any other person, except its Representatives in connection with
this Agreement. Each BD2 Party shall be deemed to have satisfied its obligations
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to hold confidential information concerning or supplied by the Holding Companies
if it exercises the same care as it takes to preserve confidentiality for its
own similar information.
Section 5.4 Maintenance of Assets; Insurance. The BD2 Parties shall
continue to maintain and service the assets of BD2 consistent with past
practice. Through the Closing Date, the BD2 Parties shall cause BD2 to maintain
insurance policies providing insurance coverage for the business and the assets
of BD2 of the kinds, in the amounts and against the risks as are commercially
reasonable for the businesses and risks covered.
Section 5.5 No Other Negotiations. Until the earlier of the Closing or the
termination of this Agreement, none of the BD2 Parties shall (a) solicit,
encourage, directly or indirectly, any inquiries, discussions or proposals for,
(b) continue, propose or enter into any negotiations or discussions looking
toward or (c) enter into any agreement or understanding providing for any
acquisition of any capital stock of BD2 or of any part of its assets, nor shall
any of the BD2 Parties provide any information to any Person for the purpose of
evaluating or determining whether to make or pursue any such inquiries or
proposals with respect to any such acquisition. Each BD2 Party shall immediately
notify Holding of any such inquiries or proposals or requests for information
for such purpose. The BD2 Parties shall use their best efforts to cause the
directors, officers, employees, agents and Representatives of BD2 to comply with
the provisions of this Section.
Section 5.6 Fulfillment of Conditions. The BD2 Parties shall use their best
efforts to cause the conditions specified in Article VIII to be fulfilled to the
extent that the fulfillment of such conditions is within their control. The
foregoing obligation includes taking or refraining from such actions as may be
necessary to fulfill such conditions (including using their best efforts to
conduct the business of BD2 in such manner that on the Closing Date the
representations and warranties of the BD2 Parties contained herein shall be
accurate as though then made, except as contemplated by the terms hereof).
Section 5.7 Disclosure of Certain Matters. During the period from the date
hereof through the Closing Date, the BD2 Parties shall give Holding prompt
written notice (a) if they believe that any representation or warranty of the
BD1 Parties is or has become untrue or inaccurate in any material respect; (b)
of any event or development that occurs that (i) had it existed or been known on
the date hereof would have been required to be disclosed under this Agreement,
(ii) would cause any of the representations and warranties of the BD2 Parties
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contained herein to be inaccurate or otherwise misleading, (iii) gives the BD2
Parties any reason to believe that any of the conditions set forth in Article
VIII will not be satisfied or (iv) is of a nature that has or may have a BD2
Material Adverse Effect.
Section 5.8 Information for Proxy Statement. The BD2 Parties will cooperate
with Holding in the preparation of the Proxy Statement referred to in Section
6.8 and furnish to Holding all information concerning themselves as Holding or
its counsel may reasonably request and that is required or customary for
inclusion in the Proxy Statement. All written information furnished by the BD2
Parties for inclusion in the Proxy Statement will comply in all material
respects with the applicable provisions of the 1934 Act and will not at the time
of the mailing of the Proxy Statement and any amendments thereof or supplements
thereto or at the time of the Holding Stockholders Meeting contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein and necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading or
necessary to correct any statement or any amendment thereof or any supplement
thereto.
Section 5.9 Cold Comfort Letter. The BD2 Parties shall cause to be
delivered to Holding a letter of BD2's Accountants, dated the date of the Proxy
Statement, and addressed to Holding, in form and substance reasonably
satisfactory to Holding, to the effect that:
(a) they are independent certified public accountants with respect to
BD2 within the meaning of the 1934 Act, including the applicable published
regulations thereunder;
(b) the financial statements of BD2 certified by them and included in
the Proxy Statement comply as to form in all material respects with the
applicable accounting requirements of the 1934 Act, including the published
regulations thereunder; and
(c) they have carried out procedures to a specified date not more than
five Business Days prior to the date of the Proxy Statement that do not
constitute an audit in accordance with GAAP of the financial statements of BD2,
as follows: (i) read the unaudited financial statements of BD2 included in the
Proxy Statement, (ii) read the unaudited financial statements of BD2 for the
period from the date of the most recent financial statements included in the
Proxy Statement through the date of the latest available interim financial
statements, (iii) read the minutes of the meetings of stockholders and Boards of
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Directors of BD2 from the date of the most recent financial statements of BD2
included in the Proxy Statement to such date not more than five Business Days
prior to the date of the Proxy Statement and (iv) consulted with certain
officers of BD2 responsible for financial and accounting matters as to whether
any of the changes or decreases referred to below has occurred, and based on
such procedures, nothing has come to their attention which would cause them to
believe that (A) any unaudited financial statements of BD2 included in the Proxy
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the 1934 Act and of the published regulations
thereunder; (B) such unaudited financial statements are not fairly presented in
conformity with GAAP applied on a basis substantially consistent with that of
the audited financial statements of BD2 included in the Proxy Statement; (C) as
of such date not more than five Business Days prior to the date of the Proxy
Statement, there was not, except as set forth in such letter, any (1) change in
capital stock, treasury stock or long-term debt of BD2 or (2) any decrease in
capital in excess of par value, retained earnings, net assets, net current
assets or investments of BD2, in each case as compared with the amounts shown in
the most recent balance sheet of BD2 included in the Proxy Statement or (D) for
the period from the date of such balance sheet to the end of the month
immediately preceding the date of the Proxy Statement, there were not, except as
set forth in such letter, any decreases, as compared with the corresponding
period in the preceding year, in revenues or in the total or per share amounts
of income before extraordinary items, income before income taxes or net income
of BD2.
Section 5.10 Non-Use of Name. From and after the Closing Date, no
Stockholder shall establish or otherwise be associated with, as an owner,
partner, shareholder, employee or otherwise, any firm engaged in any aspect of
the securities business which utilizes the name "Gaines," "Berland" or any
variant thereof as part of its business name or grant to any other person or
entity the right to use any such name or any variant thereof in connection with
any aspect of the securities business.
Section 5.11 No Securities Transactions. No BD2 Party shall engage in any
transactions involving the securities of Holding prior to the consummation of
the Merger, except that, after the full dissemination of the press release
referred to in Section 12.3 hereof, BD2 may act as agent for customers who place
unsolicited orders for Holding Stock. BD2 shall not sell or offer to sell the
11,776 shares of Holding Stock it currently owns and shall vote them in favor of
the Merger. The BD2 Parties shall use their best efforts to cause the officers,
directors, employees, agents and Representatives of BD2 to comply with the
foregoing requirement.
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Section 5.12 Energy Fund. As soon as reasonably practicable, the BD2
Parties shall cause to be terminated, liquidated and dissolved the Gaines,
Berland Energy Fund L.P., such that such fund shall not be in operation from and
after the Closing.
Section 5.13 Old BD2 Plan. As soon as reasonably practicable, the BD2
Parties shall cause the Old BD2 Plan to be terminated.
ARTICLE VI
COVENANTS OF HOLDING AND BD1
Section 6.1 Conduct of Business. Holding and BD1 covenant and agree that,
from the date hereof through the Closing Date, except as set forth on Schedule
6.1 or as otherwise set forth in this Agreement, they shall, and shall cause the
other Holding Companies to:
(a) conduct the businesses of the Holding Companies only in the
ordinary course and in a manner consistent with the current practice of such
businesses, preserve substantially intact the business organizations of the
Holding Companies; use their best efforts to keep available the services of the
current employees of the Holding Companies, preserve the current relationships
of the Holding Companies with customers and other persons with which the Holding
Companies have significant business relations; and comply with all requirements
of law the violation of which would have a BD1 Material Adverse Effect;
(b) not pledge, sell, lease, transfer, dispose of or otherwise
encumber any property or assets of any of the Holding Companies other than
consistent with past practices and in the ordinary course of business or enter
into any discussions or negotiations with any other party to do so;
(c) Except as provided herein, not amend the Certificate of
Incorporation or By-laws of Holding;
(d) not issue any shares of capital stock of any Holding Company, any
securities convertible or exercisable into or exchangeable for capital stock of
any Holding Company, or any other class of securities, whether debt (other than
debt incurred in the ordinary course of business and consistent with past
practice) or equity, of any Holding Company, except that this shall not prohibit
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Holding from: (i) granting options to purchase up an aggregate of 200,000 shares
of Holding Stock to officers of any Holding Company; (ii) granting options to
purchase up to an aggregate of 100,000 shares of Holding Stock to persons
mutually agreed upon by BD1 and BD2; and (iii) issuing shares of Holding Stock
upon the exercise or conversion of securities outstanding on the date hereof or
entered into after the date hereof not in contravention of this Agreement. The
options referred to in (i) and (ii) above shall have terms and conditions
consistent with other options customarily granted by Holding under its employee
benefit plans, with an exercise price equal to the last sale price of the
Holding Stock on the date prior to the consummation of the Merger.
(e) except as provided in (d) above, not pledge, sell, transfer,
dispose of or otherwise encumber or grant any rights or interests to others of
any kind (including, without limitation, any voting rights) with respect to all
or any part of the capital stock or substantial assets of any of the Holding
Companies or enter into any discussions or negotiations with any other party to
do so;
(f) not declare any dividend or make any distribution in cash,
securities or otherwise on the outstanding shares of capital stock of Holding or
directly or indirectly redeem or purchase any such capital stock except shares
which it is required to redeem or purchase pursuant to outstanding rights of
holders of shares of Holding's Preferred Stock and Contracts in effect on the
date hereof;
(g) not, in any manner whatsoever, advance, transfer (other than in
payment for goods received or services rendered in the ordinary course of
business, consistent with past practice), or distribute to a stockholder of any
of the Holding Companies or any of their affiliates or otherwise withdraw, cash
or cash equivalents in any manner inconsistent with established cash management
practices, except to pay existing indebtedness of the Holding Companies;
(h) not make, agree to make or announce any general wage or salary
increase or enter into or amend any employment contract or, unless provided for
on or before the date of this Agreement, increase the compensation payable or to
become payable to any officer or employee of any of the Holding Companies or
adopt or increase the benefits of any bonus, insurance, pension or other
employee benefit plan, payment or arrangement, except for those increases,
consistent with past practices, normally occurring as the result of regularly
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scheduled salary reviews and increases, and except for increases directly or
indirectly required as a result of changes in applicable law or regulations;
(i) not make any capital expenditures in excess of $100,000 in the
aggregate;
(j) except for mergers of wholly-owned subsidiaries of Holding with
each other, not merge or consolidate with, or acquire all or substantially all
of the assets of, or otherwise acquire any business operations of, any person or
entity; and
(k) not enter into any agreement with respect to any of the foregoing.
Section 6.2 Stockholder Meeting. Holding shall cause a meeting of its
stockholders (the "Holding Stockholder Meeting") to be duly called and held as
soon as reasonably practicable for the purpose of voting on the adoption of (a)
this Agreement and the Merger and (b) a proposed amendment to the Certificate of
Incorporation of Holding (the "Charter Amendment") that would change the name of
Holding to Research Partners International Group, Ltd. and eliminate the
requirement that Holding's Board of Directors be classified. In connection with
such meeting, Holding (i) will mail to its stockholders as promptly as
practicable the Proxy Statement and all other proxy materials for such meeting,
(ii) will use its best efforts to obtain the necessary approvals by its
stockholders of the matters presented to them and (iii) will otherwise comply
with all legal requirements applicable to such meeting. The obligations of
Holding herein are subject to Section 6.8(c) hereof.
Section 6.3 Access to Information; Confidentiality.
(a) Between the date of this Agreement and the Closing Date, Holding
and BD1 will (i) permit the BD2 Parties and their Representatives reasonable
access to all of the books, records, reports and other related materials,
offices and other facilities and properties of the Holding Companies; (ii)
permit the BD2 Parties and their Representatives to make such inspections
thereof as they may reasonably request; and (iii) furnish the BD2 Parties and
their Representatives with such financial and operating data (including without
limitation the work papers of Holding's Accountants) and other information with
respect to the Holding Companies as the BD2 Parties may from time to time
reasonably request.
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(b) Holding and BD1 shall hold and shall cause their Representatives
to hold in strict confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all documents and
information concerning BD2 furnished to them by the BD2 Parties or their
Representatives in connection with the transactions contemplated by this
Agreement (except to the extent that such information can be shown to have been
(i) previously known by Holding or BD1, (ii) in the public domain through no
fault of Holding or BD1 or (iii) later lawfully acquired from other sources,
which source is not the agent of a BD2 Party), and, except as otherwise required
by applicable law, rule or regulation, Holding and BD1 shall not release or
disclose such information to any other person, except their Representatives in
connection with this Agreement. Holding and BD1 shall be deemed to have
satisfied its obligations to hold confidential information concerning or
supplied by the BD2 Parties if they exercise the same care as it takes to
preserve confidentiality for their own similar information.
Section 6.4 Maintenance of Assets; Insurance. Holding and BD1 shall, and
shall cause the Other Holding Subsidiaries to, continue to maintain and service
the assets of the Holding Companies consistent with past practice. Through the
Closing Date, Holding and BD1 shall cause the Holding Companies to maintain
insurance policies providing insurance coverage for the business and the assets
of the Holding Companies of the kinds, in the amounts and against the risks as
are commercially reasonable for the businesses and risks covered.
Section 6.5 No Other Negotiations.
(a) Except as specifically permitted in this Section 6.5, until the
earlier of the Closing or the termination of this Agreement, none of the Holding
Companies shall (a) solicit, encourage, directly or indirectly, any inquiries,
discussions or proposals for, (b) continue, propose or enter into any
negotiations or discussions looking toward or (c) enter into any agreement or
understanding providing for any acquisition of any capital stock of any of the
Holding Companies or of any part of its assets ("Other Transaction"), nor shall
any of the Holding Companies provide any information to any Person for the
purpose of evaluating or determining whether to make or pursue any such
inquiries or proposals with respect to any such acquisition. Holding shall use
its best efforts to cause the directors, officers, employees, agents and
Representatives of the Holding Companies to comply with the provisions of this
Section.
(b) Notwithstanding anything herein to the contrary, in the event that
there is an unsolicited proposal for or an unsolicited indication of a serious
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interest in entering into, an Other Transaction, Holding, at its discretion,
shall be permitted to furnish to and communicate with any such party all
publicly available information requested by such party. In the event that such
party requests information in addition to that which is publicly available, the
Company may furnish to and communicate with such third party non-public
information and otherwise negotiate with such party, only if (i) two (2)
business days prior written notice shall have been given to BD2 and (ii)
Holding's Board of Directors shall, in good faith, after being advised by
outside counsel to Holding, determine that any failure to provide such
non-public information to such party would be reasonably likely to constitute a
breach of the fiduciary responsibilities of the Board of Directors to Holding's
stockholders. Notwithstanding anything herein to the contrary, nothing shall
prohibit the Board of Directors of Holding from responding to a tender offer or
complying with its obligations under Rules 14d-9 or 14e-2 of the Exchange Act.
Section 6.6 Fulfillment of Conditions. From the date hereof to the Closing,
Holding and BD1 shall use their best efforts to cause the conditions specified
in Article VIII to be fulfilled to the extent that the fulfillment of such
conditions is within their control. The foregoing obligation includes taking or
refraining from such actions as may be necessary to fulfill such conditions
(including conducting the business of each of the Holding Companies in such
manner that on the Closing Date the representations and warranties of Holding
and BD1 contained herein shall be accurate as though then made).
Section 6.7 Disclosure of Certain Matters. During the period from the date
hereof through the Closing Date, Holding shall give the BD2 Parties prompt
written notice (a) if it believes that any representation or warranty of the BD2
Parties is or has become untrue or inaccurate in any material respect; and (b)
of any event or development that occurs that (i) had it existed or been known on
the date hereof would have been required to be disclosed under this Agreement,
(ii) would cause any of the representations and warranties of Holding and BD1
contained herein to be inaccurate or otherwise misleading, (iii) gives the BD1
Parties any reason to believe that any of the conditions set forth in Article
VIII will not be satisfied, (iv) is of a nature that has or may have a BD1
Material Adverse Effect or, (v) would require any amendment or supplement to the
Proxy Statement. Holding acknowledges that the Old Artwork, which is valued on
the BD2 Balance Sheet at approximately $236,000, will be sold by BD2 prior to
the Closing and that the purchase price to be obtained by BD2 in connection with
such sale could be less than $236,000.
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Section 6.8 Proxy Statement.
(a) Holding will prepare and file with the Commission as soon as
reasonably practicable after the date hereof a proxy statement to be filed under
the 1934 Act by Holding and to be distributed by Holding in connection with the
Holding Stockholder Meeting (the "Proxy Statement"). During the course of the
preparation of the Proxy Statement, the BD2 Parties will be given reasonable
opportunity to review and comment upon drafts of the Proxy Statement and the
comments of the Commission thereon and responses thereto.
(b) Holding covenants to the BD2 Parties that the Proxy Statement will
comply in all material respects with the applicable provisions of the 1934 Act
and will not at the time of the mailing of the Proxy Statement and any
amendments thereof or supplements thereto and at the time of the Holding
Stockholder Meeting contain any untrue statement of a material fact or omit to
state any 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 or necessary to correct any statement in any earlier filing
with the Commission of such Proxy Statement or any amendment thereof or any
supplement thereto or any earlier communication to the stockholders of Holding
with respect to the transactions contemplated by this Agreement; provided,
however, that no representation, covenant or agreement is made by Holding with
respect to information relating to the BD2 Parties or which is supplied in
writing by or on behalf of the BD2 Parties for inclusion in the Proxy Statement.
The Proxy Statement shall contain statements, where appropriate, to the effect
that the Board of Directors of Holding has approved the Merger and recommends
that the stockholders of Holding vote in favor of the proposals presented in the
Proxy Statement.
(c) Notwithstanding the foregoing, the obligations set forth in the
last sentence of Section 6.8(b) and in Section 6.2 hereof shall not apply (and
the Board of Directors shall be permitted to modify or withdraw any such
recommendation previously made) if the Board of Directors of Holding shall, in
good faith, after being advised by outside counsel (who may be Holding's regular
legal counsel), determine that to not withdraw such recommendation would be
reasonably likely to constitute a breach of the fiduciary responsibilities of
the Board of Directors to Holdings' stockholders.
Section 6.9 Voting for the Merger. Simultaneously with the execution of
this Agreement, BD1 is delivering to BD2 agreements signed by the persons listed
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on Schedule 6.9 pursuant to which such persons irrevocably agree to vote for the
approval of this Agreement and the Merger at the Holding Stockholders Meeting.
Section 6.10 Nasdaq Listing. Holding shall use its best efforts to cause
the shares of Holding Stock to be issued in the Merger in accordance with this
Agreement (including those issuable on exercise of the Holding Warrants) to be
approved for listing or admitted for trading on Nasdaq, subject to official
notice of issuance, prior to the Closing Date.
ARTICLE VII
JOINT COVENANTS OF THE PARTIES
Section 7.1 Further Action. Each of the Parties shall execute such
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby. Upon the terms and subject to the conditions hereof, each
of the Parties shall use its best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
Section 7.2 Schedules. The Parties shall have the obligation to supplement
or amend the Schedules being delivered concurrently with the execution of this
Agreement and annexed hereto with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in the Schedules. The obligations of
the Parties to amend or supplement the Schedules being delivered herewith shall
terminate on the Closing Date. Notwithstanding any such amendment or
supplementation, for purposes of Sections 8.2(a) and 8.3(a), the representations
and warranties of the Parties shall be made with reference to the Schedules as
they exist at the time of execution of this Agreement.
Section 7.3 Regulatory and Other Authorizations. The Parties will promptly
make all necessary filings and use their best efforts to obtain all
authorizations, consents, orders and approvals of all federal, state and other
regulatory bodies and officials that are required for the consummation of the
transactions contemplated by this Agreement, including but not limited to the
Commission, the NASD, the Department of Justice and the Federal Trade Commission
and self-regulatory agencies, and will cooperate fully with each other in
connection therewith.
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Section 7.4 [Intentionally Omitted]
Section 7.5 Employees. Concurrently with the execution of this Agreement,
Holding is entering into employment agreements with the persons listed on
Schedule 7.5 hereto ("Employment Agreements"), to take effect at the Effective
Time. Between the date hereof and the Closing Date, Holding and the Stockholders
may meet with and interview all employees of the BD2 Companies and the Holding
Companies at reasonable times during business hours as they may mutually arrange
to assist them in making mutual determinations as to the status of the various
employees after the Closing Date.
Section 7.6 Lock-Up Agreements. Concurrently with the execution of this
Agreement, the Stockholders and the stockholders of Holding listed in Schedule
7.6 are entering into agreements with Holding ("Lock-Up Agreements"), which
shall become effective at the Effective Time, pursuant to which they shall agree
not to sell, give away, transfer or otherwise dispose of any of their Holding
Stock or Holding Warrants or Holding Stock underlying the Holding Warrants for a
period of 24 months from the Closing.
Section 7.7 Operating Agreement. Simultaneously with the execution of this
Agreement, BD1 and BD2 are entering into an agreement ("Operating Agreement"),
pursuant to which they will share certain leased space commencing promptly after
the date hereof.
Section 7.8 Customer Complaints. Customer complaints reportable pursuant to
95-81 made against any BD2 Party or BD1 Party after November 2, 1998 shall be
reported to the other Parties on or prior to the 15th of each month after the
execution of this Agreement; and two business days prior to the Closing, the BD1
Parties and the BD2 Parties shall each deliver to the other an updated schedule
of such customer complaints through the close of business on the business day
prior to the delivery of such schedule.
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ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions to Each Party's Obligations. The respective
obligations of each Party to consummate the Merger and the other transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions:
(a) Approval by Stockholders. The Merger and the Charter Amendment
shall have been approved by the stockholders of Holding.
(b) Regulatory Approvals. The NASD and any other federal, state or
local governmental agency or self-regulatory agency whose approval or consent is
required for the consummation of the transactions contemplated by the Agreement
each shall have unconditionally approved such transactions and the Commission
shall not have raised any unresolved objection to such transactions.
(c) Directors and Officers of the Surviving Corporation and Holding.
The persons listed in Schedule 1.6(a) shall have been elected directors and
officers of the Surviving Corporation and the persons listed in Schedule 1.6(b)
shall have been elected as directors and officers of the Holding Companies.
(d) No Governmental Order or Regulation. There shall not be in effect
any order, decree or injunction (whether preliminary, final or appealable) of a
United States federal or state court of competent jurisdiction, and no
regulation shall have been enacted or promulgated by any governmental authority
or agency, that prohibits consummation of the Merger.
Section 8.2 Conditions to Obligations of the BD2 Parties. The obligations
of the BD2 Parties to consummate the Merger and the other transactions
contemplated by this Agreement shall be subject to the fulfillment, at or prior
to the Closing, of each of the following conditions:
(a) Representations and Warranties; Covenants. Without supplementation
after the date hereof, the representations and warranties of Holding and BD1
contained in this Agreement shall be, with respect to those representations and
warranties qualified by any materiality standard, true and correct in all
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respects as of the Closing, and with respect to all other representations and
warranties, true and correct as of the Closing in all material respects, with
the same force and effect as if made as of the Closing, and all the covenants
contained in this Agreement to be complied with by Holding and BD1 on or before
the Closing Date shall have been complied with, and the BD2 Parties shall have
received a certificate of Holding to such effect signed by a duly authorized
officer thereof;
(b) Legal Opinion. The BD2 Parties shall have received from Squadron
Ellenoff Plesent & Sheinfeld, LLP, counsel to the Holding Companies, a legal
opinion addressed to the BD2 Parties and dated the Closing Date, in form of
Exhibit B annexed hereto;
(c) Consents. The BD1 Parties shall have obtained and delivered to
Holding consents of all third parties required by the Leases, Contracts and
Permits set forth on Schedule 4.12;
(d) Performance of Agreements. (i) All covenants, agreements and
obligations required by the terms of this Agreement to be performed by the BD1
Parties at or prior to the Closing shall have been duly and properly performed
or fulfilled in all material respects, and (ii) the Holding Companies shall have
received resignations from such officers and directors of any Holding Company as
may be necessary to effectuate the purposes of Section 1.6;
(e) Supplemental Disclosure. If the BD1 Parties shall have
supplemented or amended any Schedule pursuant to their obligations set forth in
Section 7.2 in any material respect, the BD2 Parties shall not have given notice
to Holding that, as a result of information provided to BD2 in connection with
any or all of such amendments or supplements, BD2 has determined not to proceed
with the consummation of the transactions contemplated hereby;
(f) Necessary Proceedings. All proceedings, corporate or otherwise, to
be taken by Holding and BD1 in connection with the consummation of the
transactions contemplated by this Agreement shall have been duly and validly
taken, and copies of all documents, resolutions and certificates incident
thereto, duly certified by officers of Holding and BD1 as of the Closing, shall
have been delivered to the BD2 Parties;
(g) Holding Companies Liquid Net Worth. The Liquid Net Worth of the
Holding Companies, on a consolidated basis, as of the close of business (i) on
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the last day of the month prior to the month preceding the Closing if the
Closing Date is prior to the 25th of any month; or (ii) on the last day of the
month prior to the Closing if the Closing Date is after the 24th of any month,
in either case, as determined from Holding's balance sheet (which balance sheet
shall be consistent with the FOCUS Reports last filed by BD1, Shochet and SERP,
prior to the Closing Date), shall not be less than 75% of the Liquid Net Worth
of the Holding Companies, on a consolidated basis, as determined from the
Holding Balance Sheet; and
(h) Employment and Lock-Up Agreements. The Employment Agreements and
Lock-Up Agreements with the persons listed on Schedules 7.5 and 7.6 hereto,
respectively, who are current employees of BD1 shall be in full force and
effect.
Section 8.3 Conditions to Obligations of Holding and BD1. The
obligations of Holding and BD1 to consummate the Merger and the other
transactions contemplated by this Agreement shall be subject to the fulfillment,
at or prior to the Closing, of each of the following conditions:
(a) Representations and Warranties; Covenants. Without supplementation
after the date hereof, the representations and warranties of the BD2 Parties
contained in this Agreement shall be, with respect to those representations and
warranties qualified by any materiality standard, true and correct in all
respects as of the Closing, and with respect to all other representations and
warranties, true and correct as of the Closing in all material respects, with
the same force and effect as if made as of the Closing, and all the covenants
contained in this Agreement to be complied with by the BD2 Parties on or before
the Closing Date shall have been complied with, and Holding and BD1 shall have
received a certificate of the BD2 Parties to such effect;
(b) Legal Opinion. Holding shall have received from Gusrae Kaplan &
Bruno, counsel to the BD2 Parties, a legal opinion addressed to Holding, dated
the Closing Date, in form of Exhibit C annexed hereto;
(c) Consents. The BD2 Parties shall have obtained and delivered to
Holding consents of all third parties required by the Leases, Contracts and
Permits set forth in Schedule 3.11;
(d) Performance of Agreements. (i) All covenants, agreements and
obligations required by the terms of this Agreement to be performed by the BD2
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Parties at or prior to the Closing shall have been duly and properly performed
or fulfilled in all material respects, and (ii) BD2 shall have received
resignations from such officers and directors of BD2 as may be necessary to
effectuate the purposes of Section 1.6;
(e) Supplemental Disclosure. If the BD2 Parties shall have
supplemented or amended any Schedule pursuant to their obligations set forth in
Section 7.2 in any material respect, Holding shall not have given notice to BD2
that, as a result of information provided to Holding in connection with any or
all of such amendments or supplements, Holding has determined not to proceed
with the consummation of the transactions contemplated hereby;
(f) Necessary Proceedings. All proceedings, corporate or otherwise, to
be taken by the BD2 Parties in connection with the consummation of the
transactions contemplated by this Agreement shall have been duly and validly
taken, and copies of all documents, resolutions and certificates incident
thereto, duly certified by the officers of BD2 as appropriate, as of the
Closing, shall have been delivered to Holding;
(g) BD2 Liquid Net Worth. The Liquid Net Worth of BD2, as determined
from the FOCUS Report last filed by BD2 prior to the Closing Date, shall not be
less than 75% of the Liquid Net Worth of BD2, as determined from the BD2 Balance
Sheet;
(h) Employment and Lock-Up Agreements. The Employment Agreements and
Lock-Up Agreements with the persons listed on Schedules 7.5 and 7.6 hereto,
respectively, who are current employees of BD2 shall be in full force and
effect;
(i) Resignations and Releases. The BD2 Parties shall have delivered to
Holding (i) resignations executed by each officer, director and attorney-in-fact
of BD2 and Employee Benefit Plan or Employee Welfare Plan trustee or
administrator from all of his or her offices and positions and (ii) a general
release executed by the Stockholders in favor of BD2 relating to all obligations
of BD2 to the Stockholders arising on or before the Closing Date;
(j) Fairness Opinion. Holding shall have received from an investment
banking firm reasonably acceptable to Holding and BD2, prior to the mailing of
the Proxy Statement, a fairness opinion in customary form stating that, in
substance, the terms of the Merger are fair, from a financial point of view, to
the holders of Holding Stock;
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(k) Stockholder Approval. The Merger shall have been approved by the
shareholders of BD2 and persons who are Dissenters shall have elected to
exercise their appraisal rights with respect to no more than an aggregate of
three percent of the BD2 Stock outstanding immediately prior to the Effective
Time; and
(l) Subscriptions Receivable. All monies owed to BD2 for the purchase
of BD2 Stock and reflected as a subscription receivable on the BD2 Balance Sheet
shall have been paid in full.
ARTICLE IX
INDEMNIFICATION
Section 9.1 Indemnification by the Shareholders of BD2. The Stockholders
and all the other shareholders of BD2 being issued Holding Stock in the Merger
(collectively, the "BD2 Indemnification Parties") shall severally (in proportion
to their ownership of BD2 Stock) indemnify and hold harmless Holding and the
Surviving Corporation from and against, and shall reimburse Holding and the
Surviving Corporation for, any Damages which may be sustained, suffered or
incurred by them, whether as a result of any Third Party Claim or otherwise, and
which arise from or in connection with or are attributable to the breach of any
of the covenants, representations, warranties, agreements, obligations or
undertakings of the BD2 Parties contained in this Agreement. Except as provided
below, this indemnity shall survive the Closing only through April 30, 2000;
provided, however, that (i) any claim for indemnity asserted on or prior to
April 30, 2000 shall survive until resolved; and (ii) any claim for indemnity
("Old BD2 Plan Claim") based on breach of the representation in the last
sentence of Section 3.14(a) shall survive without limitation as to time.
Section 9.2 Indemnification by Holding. Holding shall indemnify and hold
harmless the BD2 Indemnification Parties from and against, and shall reimburse
the BD2 Indemnification Parties for, any Damages which may be sustained,
suffered or incurred by the BD2 Indemnification Parties, whether as a result of
Third Party Claims or otherwise, and which arise or result from or in connection
with or are attributable to the breach of any of the BD1 Parties' covenants,
representations, warranties, agreements, obligations or undertakings contained
in this Agreement. This indemnity shall survive the Closing through April 30,
2000; provided, however, that any claim for indemnity asserted on or prior to
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April 30, 2000 shall survive until resolved. All indemnification payments to the
BD2 Indemnification Parties shall be made pro rata, in proportion to their
ownership of BD2 Stock.
Section 9.3 Procedure.
(a) A Party required to make an indemnification payment pursuant to
this Agreement ("Indemnifying Party") shall have no liability with respect to
any Third Party Claim or otherwise with respect to any covenant, representation,
warranty, agreement, undertaking or obligation under this Agreement unless the
Party entitled to receive such indemnification payment ("Indemnified Party")
gives notice to the Indemnifying Party specifying (i) the covenant,
representation or warranty, agreement, undertaking or obligation contained
herein which it asserts has been breached, (ii) in reasonable detail, the nature
and, to the extent determinable, the estimated dollar amount (which estimate
shall not be conclusive) of any claim the Indemnified Party may have against the
Indemnifying Party by reason thereof under this Agreement, and (iii) whether or
not the claim is a Third Party Claim.
(b) Third Party Claims. In the event that an Indemnified Party becomes
aware of a Third Party Claim for which an Indemnifying Party would be liable to
an Indemnified Party hereunder, the Indemnified Party shall with reasonable
promptness notify (the "Claim Notice") in writing the Indemnifying Party of such
claim, identifying the basis for such claim or demand, and the amount or the
estimated amount thereof to the extent then determinable (which estimate shall
not be conclusive of the final amount of such claim and demand); provided,
however, that any failure to give such Claim Notice will not be deemed a waiver
of any rights of the Indemnified Party, except to the extent the rights of the
Indemnifying Party are actually prejudiced by such failure. The Indemnifying
Party, upon request of the Indemnified Party, shall retain counsel (who shall be
reasonably acceptable to the Indemnified Party) to represent the Indemnified
Party and shall pay the reasonable fees and disbursements of such counsel with
regard thereto; provided, however, that any Indemnified Party is hereby
authorized, prior to the date on which it receives written notice from the
Indemnifying Party designating such counsel, to retain counsel, whose fees and
expenses shall be at the expense of the Indemnifying Party, to file any motion,
answer or other pleading and take such other action which it reasonably shall
deem necessary to protect its interests or those of the Indemnifying Party until
the date on which the Indemnified Party receives such notice from the
Indemnifying Party. After the Indemnifying Party shall retain such counsel, the
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
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unless (x) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (y) the named parties of any such
proceeding (including any impleaded parties) include both the Indemnifying Party
and the Indemnified Party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The Indemnifying Party shall not, in connection with any proceedings or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one such firm for the Indemnified Party (except to the
extent the Indemnified Party retained counsel to protect its (or the
Indemnifying Party's) rights prior to the selection of counsel by the
Indemnifying Party). If requested by the Indemnifying Party, the Indemnified
Party agrees to cooperate with the Indemnifying Party and its counsel in
contesting any claim or demand which the Indemnifying Party defends. A claim or
demand may not be settled by either party without the prior written consent of
the other party (which consent will not be unreasonably withheld) unless, as
part of such settlement, the Indemnified Party shall receive a full and
unconditional release reasonably satisfactory to the Indemnified Party.
Notwithstanding the foregoing, the Indemnifying Party shall not settle any claim
without the prior written consent of the Indemnified Party if such claim is not
exclusively for monetary Damages.
(c) Direct Claims. In the event any Indemnified Party shall have a
Direct Claim against any Indemnifying Party hereunder, the Indemnified Party
shall send a Claim Notice with respect to such Claim to the Indemnifying Party.
(d) Books and Records. After delivery of a Claim Notice, so long as
any right to indemnification exists pursuant to this Article IX, the affected
Parties each agree to retain all books and records related to such Claim Notice.
In each instance, the Indemnified Party shall have the right to be kept fully
informed by the Indemnifying Party and its legal counsel with respect to any
legal proceedings. Any information or documents made available to any Party
hereunder and designated as confidential by the Party providing such information
or documents and which is not otherwise generally available to the public and
not already within the knowledge of the Party to whom the information is
provided (unless otherwise covered by the confidentiality provisions of any
other agreement among the Parties hereto, or any of them), and except as may be
required by applicable law, shall not be disclosed to any third party (except
for the Representatives of the Party being provided with the information, in
which event the Party being provided with the information shall request its
Representatives not to disclose any such information which it otherwise required
hereunder to be kept confidential).
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Section 9.4 Adjustment to Merger Consideration. Any indemnification
payments made pursuant to this Article IX shall be deemed to be an adjustment to
the Merger Consideration.
Section 9.5 Limitations.
(a) No Party shall be required to indemnify another Party under this
Article IX for claims (other than an Old BD2 Plan Claim) unless, after the
resolution of all claims which are the subject of Claim Notices hereunder (the
date on which the last of such claims is resolved being referred to herein as
the "Judgment Date"), the aggregate of all amounts for which indemnity would
otherwise be due against it, net of any amounts for which indemnity would
otherwise be owed to it hereunder, exceeds $1,250,000 ("Basket"), in which case,
the amount for which indemnity will be due shall be calculated from the first
dollar. The BD2 Indemnification Parties shall not be required to indemnify
Holding or the Surviving Corporation for an Old BD2 Plan Claim under this
Article IX unless (and only to the extent) the amount of Damages exceeds
$10,000.
(b) An Indemnifying Party may, in its discretion, pay any amount owed
hereunder to an Indemnified Party by the delivery to the Indemnified Party of
shares of Holding Stock (free and clear of all Liens), valued for this purpose
at the last sale price of the Holding Stock on the last business day prior to
the Judgment Date, except with respect to Old BD2 Plan Claims, which amounts
must be paid in cash.
(c) Neither the BD2 Indemnification Parties, as a group, nor Holding,
shall be obligated to make any indemnification payment hereunder to the other of
more than 3,000,000 shares of Holding Stock (or the equivalent value thereof, as
determined as set forth in (b), above), as appropriately adjusted for any Stock
Adjustment Event.
Section 9.6 Independent Committee Determination. Whether any claim for
indemnification is brought pursuant to Section 9.1, or any decision is required
to be made on behalf of Holding or the Surviving Corporation in connection with
a claim or action for indemnification under Sections 9.1 or 9.2, shall be
determined by a committee of the Board of Directors of Holding comprised solely
of the independent directors of Holding.
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Section 9.7 Representations and Warranties.
(a) For purposes of indemnity under this Article IX for breach of a
representation and warranty of a Party under this Agreement, (i) the
representations and warranties shall be the representations and warranties of a
Party made herein, as supplemented, modified or amended by any Schedule thereto
as of the Closing Date in accordance with Section 7.2, without regard to any
materiality qualifications or standards otherwise contained therein.
(b) To the extent any representation and warranty (or clause or
sentence thereof) is preceded with an asterisk (*), then, only for purposes of
determining whether there has been a breach of such representation and warranty
which could be indemnified under this Article IX, the words "to the knowledge of
the BD2 Parties" or "to the knowledge of the BD1 Parties," as the case may be,
shall be substituted for such asterisk.
(c) To the extent any representation and warranty (or clause or
sentence thereof) is preceded with two asterisks (**), then, only for purposes
of determining whether there has been a breach of such representation and
warranty which could be indemnified under this Article IX, the words "to the
actual knowledge of the BD2 Parties" or "to the actual knowledge of the BD1
Parties," as the case may be, shall be substituted for such asterisks.
(d) For purposes of indemnity under this Article IX for breach of a
representation and warranty of a Party under this Agreement, the Indemnified
Party shall not be deemed to have incurred any Damages in connection with a
claim arising from the resolution of a customer complaint (by arbitration,
settlement or otherwise) unless and until the amount of Damages for all such
claims exceeds the amount reserved by BD2 or Holding, as the case may be, and
reflected on the BD2 Balance Sheet or Holding Balance Sheet (or notes thereto or
work papers in connection therewith), respectively, for all such claims.
Section 9.8 Indemnity as Sole Recourse. After the Closing Date, a Party may
seek remedy against any other Party for breach of a representation, warranty or
covenant hereunder only under and in accordance with the terms of this Article
IX.
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ARTICLE X
TERMINATION AND ABANDONMENT
Section 10.1 Methods of Termination. The transactions contemplated herein
may be terminated and/or abandoned at any time but not later than the Closing:
(a) By mutual written consent of Holding and BD2;
(b) By either Holding or BD2 if, without fault of such terminating
party, the Merger shall not have been consummated on or prior to May 31,1999;
(c) By either Holding or BD2 (if the terminating Party is not then in
material breach of its obligations hereunder) if (i) a material default or
breach shall be made by the other Party with respect to the due and timely
performance of any of its obligations contained herein and such default cannot
be cured within a reasonable period of time, or (ii) if any of the other Party's
representations and warranties (x) made without any materiality standard, are
not true and correct in all material respects as of the date hereof and as of
the Closing Date or (y) made with any materiality standard, are not true and
correct in all respects as of the date hereof and as of the Closing Date; or
(d) By either Holding or BD2 if, pursuant to Section 6.8(c) hereof,
(i) the Board of Directors of Holding shall withdraw, modify or change its
recommendation so that it is not in favor of this Agreement or the Merger or
shall have resolved to do any of the foregoing or (ii) the Board of Directors of
Holding shall have recommended or resolved to recommend to its stockholders a
transaction other than the Merger.
Section 10.2 Effect of Termination. In the event of termination by Holding
or BD2, or both, pursuant to Section 10.1 hereof, written notice thereof shall
forthwith be given to the other Party and, except as set forth in this Section
10.2, all obligations of the Parties hereunder shall terminate, no Party shall
have any right against the other Party hereto, each Party shall bear its own
costs and expenses, and Holding and BD2 shall each be responsible for (i) 50% of
the fees and expenses of Graubard Mollen & Miller ("GMM") incurred in connection
with the transactions contemplated hereby ("GMM Costs"); and (ii) 50% of the
fees of Goldstein Golub Kessler, L.L.P. ("GGK") incurred by BD2 in connection
with the audit of the BD2 Financial Statements ("GGK Fees") in excess of $15,000
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(the balance being paid by BD2). Notwithstanding the foregoing, (a) if this
Agreement is terminated by either Party under Section 10.1(c), then (x) the
non-terminating party shall, within five days of termination, pay or reimburse
the terminating party for (A) all the documented out-of-pocket reasonable fees
and expenses incurred by the terminating party (including the reasonable fees
and expenses of its counsel, accountants, consultants and advisors) in
connection with this Agreement and the transactions contemplated hereby; (B) all
of the GMM Costs; and (C) 100% of the GGK Fees in excess of $15,000 (the balance
being paid by BD2); and (y) unless such termination is with respect to a breach
of a representation or warranty deemed to be made at the Closing (as opposed to
upon execution of this Agreement) and such breach was caused by factors outside
the control of the non-terminating party, the non-terminating party shall,
within five days of termination, also pay the terminating party a fee of
$300,000; and (b) if this Agreement is terminated by either Party under Section
10.1(d), it shall be deemed to be a termination by BD2 under 10.1(c) and the
provisions of paragraph (a) above shall control.
(a) Each Party hereto will return all documents, work papers and other
material (and all copies thereof) of the other Party relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to the Party furnishing the same;
(b) All confidential information received by either Party hereto with
respect to the business of the other Party shall be treated in accordance with
Sections 5.3(b) and 6.3(b) hereof.
ARTICLE XI
DEFINITIONS
Section 11.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Basket" has the meaning specified in Section 9.5(a).
"BCL" has the meaning specified in Section 1.2.
"BD1" has the meaning specified in the heading to this Agreement.
"BD1 Material Adverse Effect" has the meaning specified in Section
4.1(b).
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"BD1 Parties" has the meaning specified in Section 2.3(b).
"BD1 Stock" has the meaning specified in Section 2.1(a).
"BD1's Accountants" means KPMG Peat Marwick, LLP.
"BD2" has the meaning specified in the heading to this Agreement.
"BD2 Balance Sheet" has the meaning specified in Section 3.5(a).
"BD2 Financial Statements" has the meaning specified in Section
3.5(a).
"BD2 Indemnification Parties" has the meaning specified in Section
9.1.
"BD2 Material Adverse Effect" has the meaning specified in Section
3.1.
"BD2 Parties" has the meaning specified Section 2.3(b).
"BD2's Accountants" means Goldstein Golub & Kessler, L.L.P.
"BD2 Shareholder Meeting" has the meaning specified in Section 5.2.
"BD2 Stock" has the meaning specified in the Recitals.
"Business Day" means a day of the year on which banks are not required
or authorized to be closed in the City of New York.
"Certificate of Merger" has the meaning specified in Section 1.3.
"Charter Amendment" has the meaning specified in Section 6.2.
"Claim Notice" has the meaning specified in Section 9.3(b).
"Closing" has the meaning specified in Section 2.3(a).
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"Closing Date" means the date specified in Section 2.3(a) on which the
Closing shall take place.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" has the meaning specified in Section 4.6.
"Contracts" has the meaning specified in Section 3.8(b).
"Damages" means the dollar amount of any loss, damage, expense or
liability, including, without limitation, reasonable attorneys' fees and
disbursements incurred by a Party, which is determined to have been sustained,
suffered or incurred by a Party and to have arisen from or in connection with a
breach of this Agreement by the other Party; the amount of Damages shall be the
amount finally determined by a court of competent jurisdiction or in
arbitration, or appropriate governmental administrative agency (after the
exhaustion of all appeals), or the amount agreed to in writing by the
appropriate Parties upon settlement.
"Direct Claim" means a claim, demand, suit, proceeding or action by
one Party hereto against another.
"Dissenter" has the meaning specified in Section 2.2(a).
"Dissenter Securities" has the meaning specified in Section 2.2(a).
"Effective Time" has the meaning specified in Section 1.3.
"Employee Benefit Plans" has the meaning specified in Section 3.14(a).
"Employee Welfare Plans" has the meaning specified in Section 3.14(c).
"Employment Agreements" has the meaning specified in Section 7.5.
"Environmental, Health and Safety Requirements" means all federal,
state, local and foreign statutes, regulations, and ordinances concerning public
health and safety, worker health and safety, and pollution or protection of the
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environment, including without limitation, all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, as such requirements are enacted and in effect on or prior to the
Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Agent" means Continental Stock Transfer & Trust Company, New
York, New York.
"GAAP" has the meaning specified in Section 3.5(a).
"GGK" means Goldstein Golub Kessler, L.L.P.
"GGK Fees" has the meaning specified in Section 10.2.
"GKN" means GKN Securities Corp.
"GMM" means Graubard Mollen & Miller.
"GMM Costs" has the meaning specified in Section 10.2.
"Holding" has the meaning specified in the heading to this Agreement.
"Holding Balance Sheet" has the meaning specified in Section 4.5(a).
"Holding Companies" has the meaning specified in Section 4.4(a).
"Holding Financial Statements" has the meaning specified in Section
4.5(a).
"Holding's Accountants" means KPMG Peat Marwick LLP or any successor
firm appointed by Holding.
"Holding Stock" has the meaning specified in Section 2.1(b).
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"Holding Stockholder Meeting" has the meaning specified in Section
6.2.
"Holding Warrants" has the meaning specified in Section 2.1(b).
"Indemnified Party" has the meaning specified in Section 9.3(a).
"Indemnifying Party" has the meaning specified in Section 9.3(a).
"Judgment Date" has the meaning specified in Section 9.5(a).
"Leases" has the meaning specified in Section 3.8(a).
"Lien" has the meaning specified in Section 3.2(b).
"Liquid Net Worth" means a Party's Stockholder's Equity, plus (i)
subordinated indebtedness; (ii) restructuring charges incurred since August 31,
1998 up to a maximum of $750,000; and (iii) subscriptions receivable; and less
(a) furniture, fixtures, leasehold improvements and other fixed assets; (b) good
will and other intangibles; (c) 50% of any monies owed by employees under loans
from the Party; and (d) 50% of any cash derived from the exercise of Unit
Purchase Options between August 31, 1998 and the date of determination.
"Lock-Up Agreements" has the meaning specified in Section 7.6.
"Merger" has the meaning specified in the Recitals.
"Merger Consideration" has the meaning specified in Section 2.1(b).
"1933 Act" has the meaning specified in Section 3.29.
"1934 Act" has the meaning specified in Section 3.4.
"Old BD2 Plan" has the meaning specified in Section 3.14(a).
"Old BD2 Plan Claim" has the meaning specified in Section 9.1
"Operating Agreement" has the meaning specified in Section 7.7.
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"Other Holding Subsidiaries" has the meaning specified in Section
4.1(a).
"Other Transaction" has the meaning specified in Section 6.5(a).
"Party" means Holding and BD1, on the one hand, and each of the BD2
Parties, on the other hand (collectively, "Parties").
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permits" has the meaning specified in Section 3.6.
"Proceedings" has the meaning specified in Section 3.9.
"Proxy Statement" has the meaning specified in Section 6.8(a).
"Representatives"of either Party means such Party's employees,
accountants, auditors, actuaries, counsel, financial advisors, bankers,
investment bankers and consultants.
"Returns" has the meaning specified in Section 3.10.
"SEC Filings" has the meaning specified in Section 4.6.
"SERP" means Southeast Research Partners, Inc.
"Shochet" means Shochet Securities, Inc.
"Stock Adjustment Event" has the meaning specified in Section 2.6.
"Stockholders" has the meaning specified in the heading to this
Agreement.
"Surviving Corporation" has the meaning specified in Section 1.2.
"Tax" or "Taxes" means all income, gross receipts, sales, stock
transfer, excise, bulk transfer, use, employment, franchise, profits, property
or other taxes, fees, stamp taxes and duties, assessments, levies or charges of
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any kind whatsoever (whether payable directly or by withholding), together with
any interest and any penalties, additions to tax or additional amounts imposed
by any taxing authority with respect thereto.
"10-K" has the meaning specified in Section 4.6.
"10-Qs" has the meaning specified in Section 4.6.
"Third Party Claim" means a claim, demand, suit, proceeding or action
by a person, firm, corporation or government entity other than a Party hereto or
any affiliate of such party.
Section 11.2 "Knowledge". Anywhere in the this Agreement that the
phrase "to the knowledge" or "to the best knowledge" is used, including pursuant
to Section 9.7(b) hereof, it shall refer to things (a) actually known by the
person making the representation or warranty and (b) which should have been
known by the person making the representation and warranty if such person had
actually made a reasonable investigation of the facts and circumstances about
which the representation and warranty is made. Anywhere in this Agreement that
the phrase "to the actual knowledge" is used, including pursuant to Section
9.7(c) hereof, it shall refer only to things actually known by the person making
the representation or warranty.
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Expenses. Except as otherwise provided herein, all costs and
expenses, including, without limitation, fees and disbursements of
Representatives, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such costs and
expenses, whether or not the Closing shall have occurred. Except as otherwise
provided herein, BD2 shall pay all such expenses incurred by the BD2 Parties.
Section 12.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered personally or by nationally
recognized courier or three Business Days after mailing if mailed by registered
mail (postage prepaid, return receipt requested) or by telecopy to the Parties
at the following addresses (or at such other address for a Party as shall be
specified by like notice, except that notices of changes of address shall be
effective upon receipt):
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If to the BD1 Parties:
Research Partners International Inc.
One State Street Plaza
New York, New York 10004
Attention: David M. Nussbaum and Peter R. Kent
with a copy to:
Squadron Ellenoff Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
Attention: Kenneth R. Koch, Esq.
If to the BD2 Parties:
Gaines, Berland Inc.
1055 Stewart Avenue
Bethpage, New York 11714
Attention: Richard Rosenstock and David Thalheim
with a copy to:
Gusrae Kaplan & Bruno
120 Wall Street
New York, New York 10005
Attention: Martin H. Kaplan, Esq.
and, in either case, with a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Attention: David Alan Miller, Esq.
Section 12.3 Press Release; Public Announcements. Promptly after execution
of this Agreement, the Parties shall issue a press release in the form of
Exhibit D annexed hereto. The Parties shall not make any other public
announcements in respect of this Agreement or the transactions contemplated
herein without prior consultation and approval as to the form and content
thereof, except to the extent required by law. Notwithstanding the foregoing,
Holding may make any disclosure which its counsel advises is required by
applicable law or regulation, in which case the BD2 Parties shall be given such
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reasonable advance notice as is practicable in the circumstances and the Parties
shall use their best efforts to cause a mutually agreeable release or
announcement to be issued. The Parties may also make appropriate disclosure of
the transactions contemplated by this Agreement to their executive officers,
directors and professional advisors.
Section 12.4 Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by the Parties.
Section 12.5 Waiver. At any time prior to the Closing, either Party may (a)
extend the time for the performance of any of the obligations or other acts of
the other Party, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the Party to be bound thereby.
Section 12.6 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 12.7 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 adverse to
any Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
Section 12.8 Entire Agreement. This Agreement, the Schedules and Exhibits
hereto, and the other agreements, including the Operating Agreement, executed
concurrently herewith, constitute the entire agreement and supersede all prior
agreements and undertakings, both written and oral, between the Parties with
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respect to the subject matter hereof and, except as otherwise expressly provided
herein, are not intended to confer upon any other person any rights or remedies
hereunder.
Section 12.9 Benefit. A Party may not assign his rights and obligations
hereunder without the written consent of all the other Parties. This Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the Parties.
Section 12.10 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
Section 12.11 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
as of the date first written above.
RESEARCH PARTNERS INTERNATIONAL, INC. RPII ACQUISITION CORP.
/s/ Peter R. Kent /s/ David M. Nussbaum
By:________________________________ By:___________________________
Name: Peter R. Kent Name: David M. Nussbaum
Title: Chief Operating Officer Title: President
GAINES, BERLAND INC.
/s/ Richard J. Rosenstock
By:________________________________
Name: Richard J. Rosenstock
Title: President
STOCKHOLDERS Number of BD2 Shares Owned
/s/ Joseph Berland 180
_______________________________________
Joseph Berland
/s/ Vincent Mangone 69
_______________________________________
Vincent Mangone
/s/ Richard Rosenstock 180
_______________________________________
Richard Rosenstock
/s/ David Thalheim 69
_______________________________________
David Thalheim
/s/ Mark Zeitchick 69
_______________________________________
Mark Zeitchick
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EXHIBIT A
THE REGISTERED HOLDER OF THIS WARRANT IS SUBJECT TO THE TERMS OF A "LOCKUP"
AGREEMENT WITH THE COMPANY PURSUANT TO WHICH HE CANNOT SELL OR OTHERWISE
TRANSFER THIS WARRANT OR THE SHARES OF COMMON STOCK UNDERLYING IT UNTIL
_____________, 2001.
THE REGISTERED HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT
WILL NOT SELL, TRANSFER OR ASSIGN THIS WARRANT EXCEPT AS HEREIN PROVIDED.
FORM OF WARRANT
For the Purchase of
[insert total number] Shares of Common Stock
of
RESEARCH PARTNERS INTERNATIONAL GROUP LTD.
1. Warrant.
THIS CERTIFIES THAT, in consideration of $10.00 and other good and valuable
consideration, duly paid by or on behalf of ________________ ("Holder"), as
registered owner of this Warrant, to Research Partners International Group Ltd.
("Company"), Holder is entitled, at any time or from time to time, as
hereinafter set forth, to subscribe for, purchase and receive, in whole or in
part, up to [insert total number] shares of common stock of the Company, $.0001
par value ("Common Stock"). This Warrant is initially exercisable at $3.50 per
share of Common Stock purchased; provided, however, that upon the occurrence of
any of the events specified in Section 6 hereof, the rights granted by this
Warrant, including the exercise price and the number of shares of Common Stock
to be received upon such exercise, shall be adjusted as therein specified. The
term "Exercise Price" shall mean the initial exercise price or the adjusted
exercise price, depending on the context, of a share of Common Stock. The term
"Warrant Shares" shall mean the shares of Common Stock issuable upon exercise of
this Warrant.
2. Exercise.
2.1 Exercise Form. In order to exercise this Warrant, the Exercise Notice
(in the form attached) must be duly executed and completed and delivered to the
Company, together with this Warrant and payment of the Exercise Price for the
Warrant Shares being purchased. If the subscription rights represented hereby
shall not be exercised at or before 5:00 p.m., Eastern time, on the last date on
which this Warrant may be exercised, as described below, the Warrant shall
become and be void without further force or effect, and all rights represented
hereby shall cease and expire.
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2.2 Legend. Each certificate for Warrant Shares purchased under this
Warrant shall bear a legend as follows, unless such Warrant Shares have been
registered under the Securities Act of 1933, as amended ("Securities Act"):
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act") or
applicable state law. The securities may not be offered for sale, sold
or otherwise transferred except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from registration
under the Act and applicable state law. The Securities may not be
offered for sale, sold or otherwise transferred prior to
______________, 2001 without the Company's prior written consent.
2.3 Exercise Schedule. The Warrant may be exercised as follows:
(i) If the Company generates "retail commissions" (as defined
below) of at least $100,000,000 during the twelve commission month period
described below ("Initial Commission Period"), up to an aggregate of [insert 1/2
of total] Warrant Shares may be purchased at any time commencing on the first
business day after the last day of the Initial Commission Period and ending on
the six-year anniversary of the last day of the Initial Commission Period.
(ii) If the Company generates retail commissions of at least
$130,000,000, during the twelve commission month period immediately following
the Initial Commission Period ("Final Commission Period") up to an aggregate of
[insert 1/2 of total] Warrant Shares may be purchased at any time commencing on
the first business day after the last day of the Final Commission Period and
ending on the five-year anniversary of the last day of the Final Commission
Period.
(iii) If the Company does not generate the threshold retail
commissions in either the First Commission Period or Final Commission Period
("Non-Vesting Commission Period"), but does generate retail commissions in the
other commission period which, when added to the retail commissions generated in
the Non-Vesting Commission Period results in aggregate retail commissions
equaling or exceeding $230,000,000, then the Holder may purchase the additional
Warrant Shares of the Non-Vesting Commission Period at any time commencing on
the first business day after the last day of the Final Commission Period and
ending on the five-year anniversary of the last day of the Final Commission
Period. For example, if the Company generates retail commissions of only
$80,000,000 in the Initial Commission Period, but generates retail commissions
of $150,000,000 in the Final Commission Period, in addition to the Warrant
Shares which may be purchased as a result of exceeding the Final Commission
Period threshold, the number of Warrant Shares subject to the Non-Vesting
Commission Period (i.e., the Initial Commission Period), may then also be
purchased.
(iv) As used herein, the term "retail commissions" shall mean
all commissions and sales credits generated from customers of any person who is
employed as a retail broker by any wholly owned subsidiary ("RPI Broker Dealer")
of the Company (including, but not limited to, sales credits and commissions
generated from initial public offerings and private placements); provided,
however, that retail commissions shall not include those commissions generated
by any brokers who (i) were all working at the same firm prior to employment by
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an RPI Broker Dealer; (ii) become employed by an RPI Broker Dealer as a group,
on or about the same date; (iii) do not relocate to one of the Company's offices
located in New York, New York on State Street, Boca Raton, Florida or Bethpage,
New York; and (iv) as a group, generated retail commissions of $10,000,000 or
more during the last 12 full commission months prior to being employed by an RPI
Broker Dealer.
2.4 Determination of Commencement of Commission Period. The Initial
Commission Period will commence on the first day of the first full commission
month beginning after the earlier of (i) the three month anniversary of the
consummation of the merger between RPII Acquisition Corp. ("Newco") and Gaines,
Berland Inc. ("GBI") pursuant to the terms of the Agreement and Plan of Merger,
dated November 4, 1998 among the Company, Newco, GBI and those persons named on
signature page thereof, or (ii) the three month anniversary of the "Sharing
Commencement Date," as such term is defined in the Operating Agreement dated
November 4, 1998 between GKN Securities Corp. and GBI.
2.5 Conversion Right.
2.5.1 Determination of Amount. In lieu of the payment of the
Exercise Price in cash, the Holder shall have the right (but not the obligation)
to convert any portion of this Warrant which becomes exercisable pursuant to
Section 2.3, in whole or in part, into Common Stock ("Conversion Right"), as
follows: upon exercise of the Conversion Right, the Company shall deliver to the
Holder (without payment by the Holder of any of the Exercise Price) that number
of shares of Common Stock equal to the quotient obtained by dividing (x) the
"Value" (as defined below) of the portion of the Warrant being converted
pursuant to Section 2.5.2 by (y) the "Market Price" (as defined below).
2.5.2 Definitions. The "Value" of the portion of the Warrant
being converted shall equal the remainder derived from subtracting (a) the
Exercise Price multiplied by the number of shares of Common Stock underlying the
portion of the Warrant being converted from (b) the Market Price of the Common
Stock multiplied by the number of shares of Common Stock underlying the portion
of the Warrant being converted. As used herein, the term "Market Price" shall be
the average of the last reported sale price of the Common Stock for the five
business day period ending on the day prior to the "Conversion Date" (as defined
below), as officially reported by the principal securities exchange on which the
Common Stock is listed or admitted to trading, or, if the Common Stock is not
listed or admitted to trading on any national securities exchange or if any such
exchange on which the Common Stock is listed is not its principal trading
market, the average of the last reported sale price during such five day period
as furnished by the National Association of Securities Dealers, Inc. through the
Nasdaq National Market or SmallCap Market (in either case, "Nasdaq"), or, if
applicable, the OTC Bulletin Board, or if the Common Stock is not listed or
admitted to trading on any of the foregoing markets or similar organizations, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.
2.5.3 Exercise of Conversion Right. The Conversion Right may
be exercised by the Holder by delivering the Warrant with a duly executed
Exercise Notice (in the form annexed) with the conversion section completed to
the Company, exercising the Conversion Right and specifying the total number of
shares of Common Stock the Holder will purchase pursuant to such conversion.
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The date on which the Warrant is so delivered shall be referred to herein as the
Conversion Date.
3. Transfer.
3.1 General Restrictions. The registered Holder of this Warrant, by its
acceptance hereof, agrees that it will not sell, transfer or assign or
hypothecate this Warrant to anyone except upon compliance with, or pursuant to
exemptions from, applicable securities laws. In order to make any permitted
assignment, the Holder must deliver to the Company the Assignment Notice (in the
form annexed) duly executed and completed, together with this Warrant and
payment of all transfer taxes, if any, payable in connection therewith. The
Company shall immediately transfer this Warrant on the books of the Company and
shall execute and deliver a new Warrant or Warrants of like tenor to the
appropriate assignee(s) expressly evidencing the right to purchase the aggregate
number of shares of Common Stock purchasable hereunder or such portion of such
number as shall be contemplated by any such assignment.
3.2 Restrictions Imposed by the Securities Act. This Warrant and the
Securities underlying this Warrant shall not be transferred unless and until (i)
the Company has received the opinion of counsel for the Holder that such
securities may be sold pursuant to an exemption from registration under the
Securities Act, and applicable state law, the availability of which is
established to the reasonable satisfaction of the Company, or (ii) a
registration statement relating to such Securities has been filed by the Company
and declared effective by the Securities and Exchange Commission and compliance
with applicable state law.
4. New Warrants to be Issued.
4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3
hereof, this Warrant may be exercised or assigned in whole or in part. In the
event of the exercise or assignment hereof in part only, upon surrender of this
Warrant for cancellation, together with the duly executed Exercise Notice or
Assignment Notice and funds (or conversion equivalent) sufficient to pay any
Exercise Price and/or transfer tax, the Company shall cause to be delivered to
the Holder without charge a new Warrant of like tenor to this Warrant in the
name of the Holder evidencing the right of the Holder to purchase the aggregate
number of shares of Common Stock and Warrants purchasable hereunder as to which
this Warrant has not been exercised or assigned.
4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant and of
reasonably satisfactory indemnification, the Company shall execute and deliver a
new Warrant of like tenor and date. Any such new Warrant executed and delivered
as a result of such loss, theft, mutilation or destruction shall constitute a
substitute contractual obligation on the part of the Company.
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5. Registration Rights.
5.1 Required Registration. If any portion of this Warrant becomes
exercisable, the Company shall, upon the written request ("Registration
Request") of the Holders of Warrants to purchase at least 1,000,000 shares (as
adjusted) of Common Stock ("Majority Holders"), file an appropriate registration
statement ("Registration Statement") with the Securities and Exchange Commission
to register for resale by the Holder, under the Securities Act, all of the
Warrant Shares which may be purchased by the Holder in accordance with Section
2.3 hereof ("Registrable Securities").
5.2 Terms. The Company shall file the Registration Statement within 60 days
after receipt of the Registration Request and use its best efforts to have the
Registration Statement declared effective as soon thereafter as practicable. The
Company shall bear all fees and expenses attendant to registering the
Registrable Securities, but the Holders shall pay any and all underwriting and
brokerage commissions and the expenses of any legal counsel selected by the
Holders to represent them in connection with the sale of the Registrable
Securities. The Company shall cause any registration statement filed pursuant to
the above to remain effective until the earlier of the date all the Registrable
Securities are sold or may be sold without registration under the Securities
Act. The Company may suspend its obligations under this Section 5.2 for up to 90
days in any calendar year if the Board of Directors of the Company reasonably
determines that the disclosure of information necessitated by the filing of the
Registration Statement and/or having it declared or remain effective would
materially and adversely affect the Company.
5.3 Holder Information. It shall be a condition precedent to the Company's
obligation to register the Registrable Securities, that the Holder furnish to
the Company in writing any such information regarding the Holder and the
distribution proposed by the Holder as the Company may reasonably request
("Holder Information").
5.4 Indemnification.
5.4.1 General. The Company shall indemnify the Holder(s) of
the Registrable Securities to be sold pursuant to any registration statement
hereunder and each person ("controlling person"), if any, who controls such
Holders within the meaning of Section 15 of the Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), against all loss,
claim, damage, expense or liability (including all reasonable attorneys' fees
and other expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, arising from such registration
statement, other than with respect to the Holder Information. Each Holder of the
Registrable Securities to be sold pursuant to such registration statement, and
his successors and assigns, shall severally, and not jointly, indemnify the
Company and each controlling person thereof against all loss, claim, damage,
expense or liability (including all reasonable attorneys' fees and other
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which they may become subject under the Act, the
Exchange Act or otherwise, arising from his Holder Information.
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5.4.2 Procedure. If any action is brought against a party
hereto, ("Indemnified Party") in respect of which indemnity may be sought
against the other party ("Indemnifying Party"), such Indemnified Party shall
promptly notify Indemnifying Party in writing of the institution of such action
and Indemnifying Party shall assume the defense of such action, including the
employment and fees of counsel reasonably satisfactory to the Indemnified Party,
and the payment of actual expenses. Such Indemnified Party shall have the right
to employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless (i) the
employment of such counsel shall have been authorized in writing by Indemnifying
Party in connection with the defense of such action, or (ii) Indemnifying Party
shall not have employed counsel to defend such action, or (iii) such Indemnified
Party shall have been advised by counsel that there may be one or more legal
defenses available to it which may result in a conflict between the Indemnified
Party and Indemnifying Party (in which case Indemnifying Party shall not have
the right to direct the defense of such action on behalf of the Indemnified
Party), in any of which events, the reasonable fees and expenses of not more
than one additional firm of attorneys designated in writing by the Indemnified
Party shall be borne by Indemnifying Party. Notwithstanding anything to the
contrary contained herein, if Indemnified Party shall assume the defense of such
action as provided above, Indemnifying Party shall not be liable for any
settlement of any such action effected without its written consent.
5.4.3 Contribution. If the indemnification or reimbursement
provided for hereunder is finally judicially determined by a court of competent
jurisdiction to be unavailable to an Indemnified Party (other than as a
consequence of a final judicial determination of willful misconduct, bad faith
or gross negligence of such Indemnified Party), then Indemnifying Party agrees,
in lieu of indemnifying such Indemnified Party, to contribute to the amount paid
or payable by such Indemnified Party (i) in such proportion as is appropriate to
reflect the relative benefits received, or sought to be received, by
Indemnifying Party on the one hand and by such Indemnified Party on the other or
(ii) if (but only if) the allocation provided in clause (i) of this sentence is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in such clause (i) but also the
relative fault of Indemnifying Party and of such Indemnified Party; provided,
however, that in no event shall the aggregate amount contributed by a Holder
exceed the profit, if any, earned by such Holder as a result of the exercise by
him of the Warrants and the sale by him of the underlying shares of Common
Stock.
5.4.4 Remedies. The rights accorded to Indemnified Parties
hereunder shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise.
5.5 Exercise of Warrants. Nothing contained in this Warrant shall be
construed as requiring the Holder(s) to exercise their Warrants prior to or
after the initial filing of any registration statement or the effectiveness
thereof.
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6. Adjustments.
6.1 Adjustments to Exercise Price and Number of Securities. The Exercise
Price and the number of shares of Common Stock underlying this Warrant shall be
subject to adjustment from time to time as hereinafter set forth:
6.1.1 Stock Dividends - Recapitalization, Reclassification,
Split-Ups. If, after the date hereof, and subject to the provisions of Section
6.2 below, the number of outstanding shares of Common Stock is increased by a
stock dividend on the Common Stock payable in shares of Common Stock or by a
split-up, recapitalization or reclassification of shares of Common Stock or
other similar event, then, on the effective date thereof, the number of shares
of Common Stock issuable on exercise of this Warrant shall be increased in
proportion to such increase in outstanding shares.
6.1.2 Aggregation of Shares. If after the date hereof, and
subject to the provisions of Section 6.3, the number of outstanding shares of
Common Stock is decreased by a reverse stock split, consolidation, combination
or reclassification of shares of Common Stock or other similar event, then, upon
the effective date thereof, the number of shares of Common Stock issuable on
exercise of this Warrant shall be decreased in proportion to such decrease in
outstanding shares.
6.1.3 Adjustments in Exercise Price. Whenever the number of
shares of Common Stock purchasable upon the exercise of this Warrant is
adjusted, as provided in this Section 6.1, the Exercise Price shall be adjusted
(to the nearest cent) by multiplying such Exercise Price immediately prior to
such adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of this Warrant immediately
prior to such adjustment, and (y) the denominator of which shall be the number
of shares of Common Stock so purchasable immediately thereafter.
6.1.4 Replacement of Securities upon Reorganization, etc. In
case of any reclassification or reorganization of the outstanding shares of
Common Stock (other than a change covered by Sections 6.1.1 or 6.1.2 hereof or
which solely affects the par value of such shares of Common Stock), or in the
case of any merger or consolidation of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification or
reorganization of the outstanding shares of Common Stock), or in the case of any
sale or conveyance to another corporation or entity of the property of the
Company as an entirety or substantially as an entirety in connection with which
the Company is dissolved, the Holder of this Warrant shall have the right
thereafter (until the expiration of the right of exercise of this Warrant as set
forth in Sections 2.3(i) and (ii), except in the event of a merger,
consolidation or dissolution in which the consideration received by the holders
of the Company's Common Stock consists of cash and/or cash equivalents, in which
event this Warrant shall expire 90 days after consummation of such merger or
consolidation) to receive upon the exercise hereof, for the same aggregate
Exercise Price payable hereunder immediately prior to such event, the kind and
amount of shares of stock or other securities or property (including cash)
receivable upon such reclassification, reorganization, merger or consolidation,
or upon a dissolution following any such sale or other transfer, by a Holder of
the number of shares of Common Stock of the Company obtainable upon exercise of
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this Warrant immediately prior to such event. The provisions of this Section
6.1.4 shall similarly apply to successive reclassifications, reorganizations,
mergers or consolidations, sales or other transfers.
6.1.5 Changes in Form of Warrant. This form of Warrant need
not be changed because of any change pursuant to this Section 6, and Warrants
issued after such change may state the same Exercise Price and the same number
of shares of Common Stock and Warrants as are stated in the Warrants initially
issued pursuant to this Agreement. The acceptance by any Holder of the issuance
of new Warrants reflecting a required or permissive change shall not be deemed
to waive any rights to a prior adjustment or the computation thereof.
6.2 Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock upon the
exercise of this Warrant, nor shall it be required to issue scrip or pay cash in
lieu of any fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up or down to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.
7. Reservation and Listing. The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of this Warrant, such number of shares of Common Stock
or other securities, properties or rights as shall be issuable upon the exercise
thereof. The Company covenants and agrees that, upon exercise of the Warrants
and payment of the Exercise Price therefor, all shares of Common Stock and other
securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any stockholder.
As long as the Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon exercise of the
Warrants to be listed (subject to official notice of issuance) on all securities
exchanges (or, if applicable on Nasdaq) on which the Common Stock is then listed
and/or quoted.
8. Certain Notice Requirements.
8.1 Holder's Right to Receive Notice. Nothing herein shall be construed as
conferring upon the Holders the right to vote or consent or to receive notice as
a stockholder for the election of directors or any other matter, or as having
any rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the
Company shall give written notice of such event at least five days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of the closing of the transfer books, as
the case may be.
8.2 Events Requiring Notice. The Company shall be required to give the
notice described in this Section 8 upon one or more of the following events: (i)
if the Company shall take a record of the holders of its shares of Common Stock
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for the purpose of entitling them to receive a dividend or distribution other
than a dividend payable solely in shares of Common Stock, or (ii) the Company
shall offer to all the holders of its Common Stock any additional shares of
capital stock of the Company or securities convertible into or exchangeable for
shares of capital stock of the Company, or any option, right or warrant to
subscribe therefor, or (iii) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business shall be proposed.
8.3 Notice of Change in Exercise Price. The Company shall, promptly after
an event requiring a change in the Exercise Price pursuant to Section 6 hereof,
send notice to the Holders of such event and change ("Price Notice"). The Price
Notice shall describe the event causing the change and the method of calculating
same and shall be certified as being true and accurate by the Company's
President and Chief Financial Officer.
8.4 Transmittal of Notices. All notices, requests, consents and other
communications under this Warrant shall be in writing and shall be deemed to
have been duly made on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgment of receipt to the party to which notice
is given, or on the fifth day after mailing if mailed to the party to whom
notice is to be given, by registered or certified mail, return receipt
requested, postage prepaid and properly addressed as follows: (i) if to the
registered Holder of this Warrant, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, to its principal executive
office.
9. Miscellaneous.
9.1 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Warrant.
9.2 Entire Agreement. This Warrant (together with the other agreements and
documents being delivered pursuant to or in connection with this Warrant)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.
9.3 Binding Effect. This Warrant shall inure solely to the benefit of and
shall be binding upon, the Holder and the Company and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Warrant or any provisions herein contained.
9.4 Governing Law; Submission to Jurisdiction. This Warrant shall be
governed by and construed and enforced in accordance with the law of the State
of New York, without giving effect to conflict of laws. The Company hereby
agrees that any action, proceeding or claim against it arising out of, or
relating in any way to this Warrant shall be brought and enforced in the courts
of the State of New York or of the United States of America for the Southern
District of New York, and irrevocably submits to such jurisdiction, which
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jurisdiction shall be exclusive. The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum. Any
process or summons to be served upon the Company may be served by transmitting a
copy thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 8 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the
Company in any action, proceeding or claim. The Company agrees that the
prevailing party(ies) in any such action shall be entitled to recover from the
other party(ies) all of its reasonable attorneys' fees and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
9.5 Waiver, Etc. The failure of the Company or the Holder to at any time
enforce any of the provisions of this Warrant shall not be deemed or construed
to be a waiver of any such provision, nor to in any way affect the validity of
this Warrant or any provision hereof or the right of the Company or any Holder
to thereafter enforce each and every provision of this Warrant. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Warrant shall be effective unless set forth in a written instrument executed by
the party or parties against whom or which enforcement of such waiver is sought;
and no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
9.6 Amendment. Modifications and amendments to this Warrant may be made by
the Company and the Majority Holders; provided, however, that, except as
otherwise provided herein, no such modification or amendment may, without the
consent of each Holder affected thereby, (i) change the period during which this
Warrant may be exercised, or (ii) increase the Exercise Price.
9.7 Exchange Agreement. As a condition of the Holder's receipt and
acceptance of this Warrant, Holder agrees that, at any time prior to the
complete exercise of this Warrant by Holder, if the Company and the Majority
Holders enter into an agreement ("Exchange Agreement") pursuant to which they
agree that all outstanding Warrants will be exchanged for securities or cash or
a combination of both, then Holder shall agree to such exchange and become a
party to the Exchange Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer as of the ____ day of ______________, 199___.
RESEARCH PARTNERS INTERNATIONAL GROUP LTD.
By:___________________________________________
Name:
Title:
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EXERCISE NOTICE
Form to be used to exercise Warrant
Research Partners International Group Ltd.
One State Street Plaza
New York, New York 10004
Date:
The undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase ____ shares of Common Stock of Research Partners International
Group Ltd. and hereby makes payment of $____________ (at the rate of $_________
per share of Common Stock) in payment of the Exercise Price pursuant thereto.
Please issue the Common Stock as to which this Warrant is exercised in
accordance with the instructions given below.
or
The undersigned hereby elects irrevocably to convert its right to purchase
___________ shares of Common Stock purchasable under the within Warrant into
_________ shares of Common Stock of Research Partners International Group Ltd.
(based on a "Market Price" of $______ per share of Common Stock). Please issue
the Common Stock in accordance with the instructions given below.
------------------------------
Signature
- ------------------------------
Signature Guaranteed
NOTICE: The signature to this form must correspond with the name as written
upon the face of the within Warrant in every particular without alteration or
enlargement or any change whatsoever, and must be guaranteed by a bank, other
than a savings bank, or by a trust company or by a firm having membership on a
registered national securities exchange.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name ________________________________________________________
(Print in Block Letters)
Address ________________________________________________________
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ASSIGNMENT NOTICE
Form to be used to assign Warrant
(To be executed by the registered Holder to effect a transfer of the within
Warrant):
FOR VALUE RECEIVED,____________________________________ does hereby sell,
assign and transfer unto_______________________ the right to purchase
_______________________ shares of Common Stock of Research Partners
International Group Ltd. ("Company") evidenced by the within Warrant and does
hereby authorize the Company to transfer such right on the books of the Company.
Dated:___________________, 19__
------------------------------
Signature
NOTICE: The signature to this form must correspond with the name as written
upon the face of the within Warrant in every particular without alteration or
enlargement or any change whatsoever.
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EXHIBIT B
__________, 199__
Gaines, Berland Inc.
1055 Stewart Avenue
Bethpage, New York 11714
Gentlemen:
We have acted as special counsel to Research Partners International, Inc.,
a Delaware corporation ("RPII") and its wholly owned subsidiary, RPII
Acquisition Corp., a New York corporation ("Newco"), in connection with the
merger ("Merger") of Gaines, Berland Inc., a New York corporation ("GBI"), with
Newco, with GBI being the surviving corporation, pursuant to the Agreement and
Plan of Merger dated November ___ 1998 ("Merger Agreement') among RPII, Newco,
GBI and those persons named on the signature page thereof, and certain other
matters described therein. Capitalized terms used herein without definition are
used as defined in the Merger Agreement.
In connection with our role as special counsel and this opinion, we have
examined the Merger Agreement and the Exhibits and Schedules thereto. We have
also examined the originals, or copies certified or otherwise identified to our
satisfaction, of (i) the Certificate of Incorporation and By-laws of each of
RPII and Newco and the minutes of meetings of Stockholders and Board of
Directors of both corporations, and (ii) such other corporate records,
certificates of public officials, certificates of officers of RPII and Newco and
other documents and agreements and made such other investigations as in our
judgment are necessary or appropriate to enable us to render the opinion
hereinafter expressed, however we are not passing upon and do not assume
responsibility for the accuracy, completeness or fairness of the representations
or warranties of RPII and Newco in the Merger Agreement. In such examination we
have assumed that the forms of the documents examined by us are identical to
those executed by the parties thereto, that all such documents have been duly
executed by such parties, the authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
certified copies or photocopies and the authenticity of the originals of such
latter documents. We have also made such examinations of law as we have deemed
relevant.
We have assumed for the purposes of the opinions expressed herein, (i) that
the Merger Agreement and the other agreements contemplated by the Merger
Agreement were duly authorized, executed and delivered by all parties thereto
<PAGE>
Gaines, Berland Inc.
____________, 199___
Page 2
(other than RPII and Newco), (ii) that the Merger Agreement and the other
agreements contemplated by the Merger Agreement were the legal, valid and
binding obligation of such parties, enforceable against such parties in
accordance with their terms, and (iii) that the parties to the Merger Agreement
and the other agreements contemplated by the Merger Agreement (other than RPII
and Newco) have the corporate power and authority or personal capacity to enter
into and perform the Merger Agreement and the other agreements contemplated by
the Merger Agreement.
Where we have made statements as to the "our knowledge," it is intended to
mean the actual knowledge of attorneys within our firm based on (i) work
performed on substantive aspects of this transaction or other matters which have
come to our attention in the course of our representation of RPII and Newco,
(ii) inquiries of, and consultations with executive officers of RPII and Newco
and (iii) our review of the documents and agreements referred to herein.
In rendering this opinion as to factual matters not directly within our
knowledge, we have relied upon and have assumed the accuracy, completeness and
genuineness of oral and written representations made to us by officers and/or
representatives of RPII and Newco, including without limitation, the
representations of RPII and Newco set forth in the Merger Agreement, and such
certificates of public officials as we have deemed necessary, and we have
undertaken no independent investigation with respect to any such factual matter.
Nothing has come to our attention which leads us to question the accuracy of any
information provided to us by RPII or Newco.
On the basis of the preceding and such other investigations as we have
deemed necessary, we are of the opinion that:
1. Each of RPII and Newco is a corporation duly incorporated, validly
existing and in good standing under the law of the State of its incorporation.
Each of RPII and Newco has all requisite corporate power to own, lease and
operate its properties and to carry on its business as now being conducted.
2. Each of RPII and Newco has all necessary corporate power and authority
to enter into the Merger Agreement and the other agreements contemplated by the
Merger Agreement to which it is a party, and to consummate the transactions
<PAGE>
Gaines, Berland Inc.
____________, 199___
Page 3
contemplated thereby. All director and stockholder action by the board of
directors and stockholders of RPII and Newco necessary to authorize the
execution, delivery and performance of the Merger Agreement and all other
agreements and instruments delivered by RPII or Newco in connection with the
transactions contemplated by the Merger Agreement have been duly and validly
taken. The Merger Agreement and all other agreements contemplated by the Merger
Agreement constitute the legal, valid and binding obligations of each of RPII
and Newco, enforceable in accordance with their respective terms, except as the
same may be limited (i) by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or similar laws of general application now or hereafter in
effect affecting the rights and remedies of creditors and by general principles
of equity (regardless of whether enforcement is sought in a proceeding at law or
in equity) and (ii) by the applicability of the federal and state securities
laws and public policy as to the enforceability of the indemnification
provisions.
3. The execution and delivery of the Merger Agreement and the other
agreements contemplated thereby by each of RPII and Newco and the performance by
it of its respective obligations under the Merger Agreement and the other
agreements contemplated thereby will not conflict with or violate its
Certificate of Incorporation or By-laws, any federal or state law or, to our
knowledge, any administrative or judicial order judgment, injunction or decree
applicable to it or any of its property or assets.
4. To our knowledge, no approval or consent of any court, board or
governmental agency, instrumentality or authority of the United States or any
state having jurisdiction over any Holding Company, is required for the
consummation of the transactions contemplated by the Merger Agreement or the
agreements to which RPII or Newco is a party which are contemplated by the
Merger Agreement, except (i) as described in Schedule 4.12 to the Merger
Agreement, and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
have, either singly or in the aggregate, a BD1 Material Adverse Effect.
5. The Holding Stock and Holding Warrants comprising the Merger
Consideration and the Holding Stock issuable upon exercise of the Holding
Warrants have been duly authorized and, when issued in accordance with the
Merger Agreement and the Holding Warrants, will be validly issued, fully paid
and non-assessable and not subject to preemptive rights.
<PAGE>
Gaines, Berland Inc.
____________, 199___
Page 4
The Holding Warrants constitute the valid and binding obligations of RPII
in accordance with their terms.
No opinion is expressed herein other than as to the law of the State of New
York, the federal law of the United States of America and the General
Corporation Law of the State of Delaware.
No opinion is expressed herein on any contractual choice of law provision
or the application of conflicts of law rules or principles or the enforceability
of any choice of jurisdiction provision.
This opinion is given as of the date hereof and we assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may thereafter occur.
This opinion is rendered solely for your benefit in connection with the
transactions described above and may be relied upon only by you.
We advise you that we are not currently engaged by any Holding Company in
any claim, action, suit, arbitration or proceeding.
Very truly yours,
<PAGE>
EXHIBIT C
__________ 199_
Research Partners International, Inc.
One State Street Plaza
New York, New York 10004
Gentlemen:
We have acted as special counsel to Gaines, Berland Inc., a
New York corporation ("GBI"), in connection with the merger ("Merger") of GBI
with RPII Acquisition Corp. ("Newco"), a wholly owned subsidiary of Research
Partners International, Inc. ("RPII"), a Delaware corporation, with GBI being
the surviving corporation, pursuant to the Agreement and Plan of Merger dated
November ___ 1998 ("Merger Agreement") among GBI, RPII, Newco, and those persons
named on the signature page thereof, and certain other matters described
therein. Capitalized terms used herein without definition are used as defined in
the Merger Agreement.
In connection with our role as special counsel and this
opinion, we have examined such questions of law, and original documents or
copies certified of all such records, certificates of public officials,
certificates of officers of GBI and other documents and agreements and made such
other investigations as in our judgment are necessary to enable us to render the
opinions hereinafter expressed, however we are not passing upon and do not
assume responsibility for the accuracy, completeness or fairness of the
representations or warranties of GBI in the Merger Agreement. In such
examination we have assumed that the forms of the documents examined by us are
identical to those executed by the parties thereto, that all such documents have
been duly executed by such parties, the authenticity of all documents submitted
to us as originals, the conformity to originals of all documents submitted to us
as certified copies or photocopies and the authenticity of the originals of such
latter documents.
We have assumed for the purposes of the opinions expressed
herein, (i) that the Merger Agreement and the other agreements contemplated by
the Merger Agreement were duly authorized, executed and delivered by all parties
thereto (other than GBI), (ii) that the Merger Agreement and the other
agreements contemplated by the Merger Agreement were the legal, valid and
binding obligation of such parties, enforceable against such parties in
accordance with their terms, and (iii) that the parties to the Merger Agreement
and the other agreements contemplated by the Merger Agreement (other than GBI)
have the corporate power and authority or personal capacity to enter into and
perform the Merger Agreement and the other agreements contemplated
<PAGE>
Research Partners International, Inc.
__________, 199_
Page 2
by the Merger Agreement.
Where we have made statements as to "our knowledge," it is
intended to mean the actual knowledge of attorneys within our firm based on (i)
work performed on substantive aspects of this transaction or other matters which
have come to our attention in the course of our representation of GBI, (ii)
inquiries of, and consultations with executive officers of GBI, and (iii) our
review of the documents and agreements referred to herein.
In rendering this opinion as to factual matters not directly
within our knowledge, we have relied upon and have assumed the accuracy,
completeness and genuineness of oral and written representations made to us by
officers and/or representatives of GBI, including without limitation, the
representations of GBI set forth in the Merger Agreement, and such certificates
of public officials as we have deemed necessary, and we have undertaken no
independent investigation with respect to any such factual matter. Furthermore,
with respect to the opinions expressed in the second sentence of paragraph 2, as
to the identity and per share ownership of GBI's shareholders, we have relied
solely upon the accuracy of Schedule 3.3 to the Merger Agreement. Nothing has
come to our attention which leads us to question the accuracy of any information
provided to us by GBI.
On the basis of the preceding and such other investigations as
we have deemed necessary, we are of the opinion that:
1. GBI is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of New York. GBI has all
requisite corporate power to own, lease and operate its properties and to carry
on its business as now being conducted.
2. GBI has all necessary corporate power and authority to
enter into the Merger Agreement and the other agreements contemplated by the
Merger Agreement to which it is a party, and to consummate the transactions
contemplated thereby. All director and stockholder action by the board of
directors and stockholders of GBI necessary to authorize the execution, delivery
and performance of the Merger Agreement and all other agreements and instruments
delivered by GBI in connection with the transactions contemplated by the Merger
Agreement have been duly and validly taken. The Merger Agreement and all other
agreements contemplated by the Merger
<PAGE>
Research Partners International, Inc.
__________, 199_
Page 3
Agreement constitute the legal, valid and binding obligations of GBI,
enforceable in accordance with their respective terms, except as the same may be
limited (i) by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar laws of general application now or hereafter in effect
affecting the rights and remedies of creditors and by general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity) and (ii) by the applicability of the federal and state securities laws
and public policy as to the enforceability of the indemnification provisions.
3. The execution and delivery of the Merger Agreement and the
other agreements contemplated thereby by GBI and the performance by GBI of its
obligations under the Merger Agreement and the other agreements contemplated
thereby will not conflict with or violate the Certificate of Incorporation or
By-laws of GBI, any federal or state law or, to our knowledge, any
administrative or judicial order, judgment, injunction or decree applicable to
GBI or any of the property or assets of GBI.
4. To our knowledge, no approval or consent of any court,
board or governmental agency, instrumentality or authority of the United States
or any state having jurisdiction over GBI, is required for the consummation of
the transactions contemplated by the Merger Agreement or the agreements to which
GBI is a party which are contemplated by the Merger Agreement, except (i) as
described in Schedule 3.11 to the Merger Agreement, and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not have, either singly or in the aggregate, a
BD2 Material Adverse Effect.
No opinion is expressed herein other than as to the law of the
State of New York and the federal law of the United States of America.
No opinion is expressed herein on any contractual choice of
law provision or the application of conflicts of law rules or principles or the
enforceability of any choice of jurisdiction provision.
This opinion is given as of the date hereof and we assume no
obligation to update or supplement this opinion to reflect any facts or
circumstances which may thereafter occur.
<PAGE>
Research Partners International, Inc.
__________, 199_
Page 4
This opinion is rendered solely for your benefit in connection
with the transactions described above and may be relied upon only by you.
We advise you that we are not currently engaged by GBI in any
claim, action, suit, arbitration or proceeding that is not identified in
Schedule 3.9 of the Merger Agreement.
Very truly yours,
<PAGE>
EXHIBIT 10.1
FORM OF VOTING AGREEMENT
AGREEMENT ("Agreement"), dated November 4, 1998, by and among Research
Partners International, Inc. ("Company"), RPII Acquisition Corp. ("Newco"),
Gaines, Berland Inc. ("GBI") and the undersigned stockholder, officer and/or
director ("Undersigned") of the Company.
WHEREAS, the Company, GBI, Newco and certain stockholders of GBI have
executed that certain Agreement and Plan of Merger, dated the date hereof
("Merger Agreement");
WHEREAS, the Merger is contingent upon the approval of the Merger and the
Merger Agreement by the Company's stockholders, and the Undersigned desires to
facilitate the Merger by agreeing to vote the Undersigned's shares of the Common
Stock of the Company, par value $.0001 per share ("Company Common Stock"), and
any Company Common Stock over which the Undersigned has voting control in favor
of the Merger and the Merger Agreement; and
WHEREAS, pursuant to Section 6.10 of the Merger Agreement, the Undersigned
desires to confirm his agreement to irrevocably agree to vote in favor of the
Merger and the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants set forth in the Merger Agreement and hereinafter in this Agreement,
the Undersigned represents and agrees as follows:
1. Transfer Restriction. The Undersigned will not sell, transfer or otherwise
dispose of, or reduce his interest in any shares of Company Common Stock
currently owned or hereafter acquired by him prior to the earlier of the
termination of the Merger Agreement in accordance with the terms thereof or the
consummation of the Merger ("Termination Date").
2. Voting Agreement. At the special meeting of the stockholders of the Company
to be called for the purpose of considering the approval of the Merger and the
Merger Agreement (and at all adjournments thereof), the Undersigned irrevocably
agrees to vote all of the Company Common Stock owned by the Undersigned or over
which the Undersigned has voting control (collectively, the "Controlled
Shares"), in favor of the Merger and the Merger Agreement.
3. Miscellaneous.
3.1 Authority. The Undersigned represents and warrants that the Undersigned
has all necessary power and authority to execute this Agreement and to cause the
Controlled Shares to be voted as provided herein, and the Undersigned has duly
executed and delivered this Agreement.
3.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
principles of conflict of laws thereof.
<PAGE>
3.3 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any and all of the parties hereto may execute this Agreement by
signing any such counterpart.
3.4 Termination. This Agreement shall terminate upon the Termination Date.
3.5 Successors. This Agreement shall be binding on the Undersigned's'
successors and assigns, including his heirs, executors and administrators.
3.6 Understanding. The Undersigned has carefully read this Agreement and
discussed its requirements, to the extent the Undersigned believed necessary,
with its counsel or counsel for the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
RESEARCH PARTNERS INTERNATIONAL, INC. RPII ACQUISITION CORP.
/s/ Peter R. Kent /s/ David M. Nussbaum
By:______________________________ By:________________________
Name: Peter R. Kent Name: David M. Nussbaum
Title: Chief Operating Officer Title: President
GAINES, BERLAND INC. Stockholder, Officer and/or Director
/s/ Richard J. Rosenstock
By:______________________________ ____________________________________
Name: Richard J. Rosenstock Name:
Title: President
2
<PAGE>
EXHIBIT 10.2
FORM OF LOCK-UP AGREEMENT
November 4, 1998
Research Partners International, Inc.
One State Street Plaza
New York, New York 10004
Gentlemen:
The undersigned stockholder, officer and/or director of Research Partners
International, Inc. ("Company"), in consideration of the merger ("Merger")
contemplated by that Agreement and Plan of Merger of even date herewith among
the Company, RPII Acquisition Corp., a wholly owned subsidiary of the Company,
Gaines, Berland Inc. and those persons named on the signature page thereof
("Merger Agreement"), hereby agrees that, without the Company's written consent,
for a period of 24 months from the Effective Time of the Merger (as such term is
defined in the Merger Agreement), the undersigned will not offer, sell, give
away, pledge, hypothecate or otherwise dispose of any shares of Common Stock of
the Company now owned or hereafter acquired, whether beneficially* or of record,
by the undersigned, including, but not limited to shares of Common Stock
acquired upon exercise of options or warrants or acquired upon conversion of any
other securities owned by the undersigned (collectively, the "Shares").
Notwithstanding the foregoing, the undersigned shall be entitled to transfer
Shares to members of his immediate family and trusts formed for their benefit if
the transferee agrees to be bound by the terms hereof.
This agreement shall terminate and be of no further force or effect upon
the termination of the Merger Agreement in accordance with its terms.
The undersigned will cause:
1. A copy of this Agreement to be available from the Company or the
Company's transfer agent upon request and without charge;
2. A notice to be placed on the face of each stock certificate for Shares
stating that the transfer of the Shares is restricted in accordance with the
conditions set forth on the reverse side of the certificate; and
- --------
* It is agreed that, for purposes of this letter, the undersigned (a)
beneficially owns, among other shares, any shares owned by (i) members
of his immediate family under the age of 21 or residing in the same
primary residence as the undersigned and (ii) any person or entity
controlled by the undersigned or under common control with the
undersigned; but (b) does not beneficially own any shares owned by any
"private charitable foundation" formed under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
<PAGE>
3. A typed legend to be placed on the reverse side of each stock
certificate representing Shares which states that the sale or transfer of the
Shares is subject to certain restrictions pursuant to an agreement between the
stockholder and the Company, which agreement is on file with the Company and the
stock transfer agent from which a copy is available upon request and without
charge.
Very truly yours,
-----------------------------------
Signature
-----------------------------------
Print Name
<PAGE>
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 4, 1998, between DAVID M. NUSSBAUM,
residing at 83 Village Road, Roslyn Heights, New York 11577 ("Executive"), and
RESEARCH PARTNERS INTERNATIONAL, INC., a Delaware corporation having its
principal office at One State Street Plaza, New York, New York 10004
("Company").
WHEREAS, the Company is engaged through its subsidiary corporations (each
an "RPI Broker Dealer") primarily in the business of investment banking and
securities brokerage; and
WHEREAS, concurrently herewith the Company is entering into an Agreement
and Plan of Merger with Gaines, Berland Inc. ("GBI"), RPII Acquisition Corp.
("Newco"), a wholly-owned subsidiary of the Company, and those persons named on
the signature page thereof ("Merger Agreement"), pursuant to which Newco will
merge with and into GBI and GBI will become a wholly-owned subsidiary of the
Company ("Merger"); and
WHEREAS, the Company and the Executive desire that the Executive's
employment continue with the Company after the Merger pursuant to the terms and
conditions hereinafter set forth;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 Employment. The Company hereby employs Executive as
Co-Chairman of the Board of Directors. All of Executive's powers and authority
in any capacity shall at all times be subject to the direction and control of
the Company's Board of Directors. Executive accepts such employment and agrees
to devote substantially all of his business time, energies and attention to the
performance of his duties hereunder. Nothing herein shall be construed as
preventing Executive from making and supervising personal investments, provided
they will not interfere with the performance of Executive's duties hereunder or
violate the provisions of Section 5.4 hereof.
1.2 Duties. The Board may assign to Executive such general
management and executive duties for the Company or any subsidiary of the Company
as are consistent with Executive's status as Co- Chairman of the Board of
Directors. The Company and Executive acknowledge that Executive's primary
1
<PAGE>
functions and duties as Co-Chairman of the Board of Directors shall be, together
with the Company's other Co-Chairman, Vice Chairman and President, to establish
policies and strategies for the Company's overall business and operations,
including plans for growth and strategic partnerships.
1.3 Location. Executive shall be based in the New York
Metropolitan area, and shall undertake such occasional travel, within or without
the United States, as is reasonably necessary in the interests of the Company.
1.4 Attendance at Board Meetings. If, during the term hereof,
Executive is nominated to serve as a director of the Company but fails to be
elected, he shall nonetheless be invited to attend each meeting of the Board of
Directors of the Company through the remainder of the term hereof.
2. Compensation and Benefits.
2.1 Base Salary. The Company shall pay to Executive a salary
at the minimum annual rate of $240,000 during the term hereof (i.e., $20,000 per
month). Executive's compensation shall be paid in equal, periodic installments
in accordance with the Company's normal payroll procedures.
2.2 Commissions. Executive shall be entitled to receive,
together with the Joint Reps referred to below, an aggregate of 60% of the gross
brokerage commissions on customers' stock brokerage accounts with the Company or
any RPI Broker Dealer which are serviced by Executive or jointly serviced by
Executive and other registered representatives of the Company ("Joint Reps").
2.3 Bonus. Executive shall participate in the "Pool," as
defined in the Company's 1996 Incentive Compensation Plan ("Plan"), for the year
ending January 31, 2000 in the following manner. Executive, Roger N. Gladstone,
Peter R. Kent and Robert H. Gladstone (collectively, "GKN Executives"), as a
group, shall be paid an aggregate amount from the Pool for such fiscal year
("2000 Pool") equal to the "Overrides" payable for such year to Joseph Berland,
Richard Rosenstock, Mark Zeitchick, Vincent Mangone and David Thalheim
(collectively, "GBI Executives") under the terms of their Employment Agreements
with the Company (all of which are being executed simultaneously herewith), less
162/3% of all commissions payable to GKN Executives during such year. The amount
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<PAGE>
to be paid to each of the GKN Executives shall be determined by the Company's
Compensation Committee. The balance of the 2000 Pool shall be paid 50% to the
GKN Executives, as a group, and 50% to the GBI Executives, as a group, with the
amount to be paid to each such person being determined by the Compensation
Committee. The foregoing bonuses shall be payable as soon as practicable after
January 31, 2000, as determined under the terms of the Plan. It is understood
and agreed that the amount of the 2000 Pool will be calculated after deducting
Overrides and bonuses for Company personnel.
2.4 Benefits. Executive shall be entitled to such medical,
life, disability and other benefits as are generally afforded to other senior
executives of the Company, subject to applicable waiting periods and other
conditions.
2.5 Vacation. Executive shall be entitled to four weeks of
vacation in each calendar year and to a reasonable number of other days off for
religious and personal reasons.
2.6 Automobile Reimbursement. Executive shall maintain a
suitable automobile for business use. The Company shall reimburse Executive for
the costs of leasing such automobile and for all other costs associated with the
use of the vehicle, including insurance costs, repairs and maintenance, up to
the maximum deductible amount allowable by law.
2.7 Business Expenses. The Company will pay or reimburse
Executive for all transportation, hotel and other expenses reasonably incurred
by Executive on business trips and for all other ordinary and reasonable
out-of-pocket expenses actually incurred by him in the conduct of the business
of the Company against itemized vouchers submitted with respect to any such
expenses and approved in accordance with customary procedures.
3. Term and Termination.
3.1 Initial Term. The term of Executive's employment under
this Agreement shall commence ("Commencement Date") on the Effective Time (as
such term is defined in the Merger Agreement) and shall continue until the one
year anniversary thereof, unless sooner terminated as herein provided. From and
after the Commencement Date, Executive's current employment agreement with the
Company will be null and void and of no further force or effect. If the Merger
3
<PAGE>
is not consummated in accordance with the terms of the Merger Agreement, this
Agreement shall be null and void and of no further force or effect.
3.2 Termination Due to Death. If Executive dies during the
term of this Agreement, Executive's employment under this Agreement shall
thereupon terminate, except that the Company shall pay to the legal
representative of Executive's estate (i) the base salary and commissions due
Executive pursuant to Sections 2.1 and 2.2 hereof through the date of
Executive's death, (ii) a pro rata allocation of bonus payments under Section
2.3 during the year of death through the date of Executive's death, (iii) all
valid expense reimbursements through the date of the termination of this
Agreement, (iv) all accrued but unused vacation pay, and (v) all costs
associated with terminating the lease for Executive's automobile.
3.3 Termination Due to Disability. The Company, by notice to
Executive, may terminate Executive's employment under this Agreement if
Executive shall fail because of illness or incapacity to render, for six
consecutive months, services of the character contemplated by this Agreement.
Notwithstanding such termination, the Company shall pay to Executive (i) the
base salary and commissions due Executive pursuant to Sections 2.1 and 2.2
hereof through the date of such notice, less any amount Executive receives for
such period from any Company-sponsored or Company-paid source of insurance,
disability compensation or government program, (ii) a pro rata allocation of
bonus payments under Section 2.3 during the year in which the disability
commenced through the date of such notice, (iii) all valid expense
reimbursements through the date of the termination of this Agreement, (iv) all
accrued but unused vacation pay, and (v) all costs associated with terminating
the lease for Executive's automobile.
3.4 Termination by Company For Cause. The Company, by notice
to Executive, may terminate Executive's employment under this Agreement for
"Cause". As used herein, "Cause" shall mean: (i) the refusal or failure by
Executive to carry out specific directions of the Board which are of a material
nature and consistent with his status as Co-Chairman of the Board of Directors,
or the refusal or failure by Executive to perform a material part of Executive's
duties hereunder; (ii) the commission by Executive of a material breach of any
of the provisions of this Agreement; (iii) fraud or dishonest action by
Executive in his relations with the Company or any of its subsidiaries or
4
<PAGE>
affiliates ("dishonest" for these purposes shall mean Executive's knowingly or
recklessly making of a material misstatement or omission for his personal
benefit); or (iv) the conviction of Executive of any crime involving an act of
moral turpitude, or the imposition against Executive of a permanent bar from
association with a securities firm by any Federal, state or regulatory agency or
self-regulatory body after the exhaustion of all judicial and administrative
appeals therefrom. Notwithstanding the foregoing, no "Cause" for termination
shall be deemed to exist with respect to Executive's acts described in clauses
(i) or (ii) above, unless the Company shall have given written notice to
Executive specifying the "Cause" with reasonable particularity and, within
thirty calendar days after such notice, Executive shall not have cured or
eliminated the problem or thing giving rise to such "Cause;" provided, however,
that a repeated breach after notice and cure of any provision of clauses (i) or
(ii) above involving the same or substantially similar actions or conduct, shall
be grounds for termination for "Cause" without any additional notice from the
Company.
3.5 Termination and Resignation as Director. If Executive's
employment hereunder is terminated for any reason, then Executive shall, at the
Company's request, resign as a director of the Company and all of its
subsidiaries, effective upon the occurrence of such termination.
3.6 Termination by Executive For "Good Reason". The Executive,
by notice to the Company, may terminate Executive's employment under this
Agreement if a "Good Reason" exists. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following circumstances without
the Executive's prior express written consent: (i) a substantial and material
adverse change in the nature of Executive's title, duties or responsibilities
with the Company that represents a demotion from his title, duties or
responsibilities as in effect immediately prior to such change; (ii) Executive
is not nominated to serve as a director by the Company or is removed from
service as a director of the Company; (iii) a substantial and material breach of
this Agreement by the Company; (iv) a failure by the Company to make any payment
to Executive when due, unless the payment is not material and is being contested
by the Company, in good faith; (v)(a) any person or entity other than the
Company and/or any officers or directors of the Company as of the date of this
Agreement acquires securities of the Company (in one or more transactions)
having 25% or more of the total voting power of all the Company's securities
then outstanding and (b) the Board of Directors of the Company does not
authorize or otherwise approve such acquisition; or (vi) a liquidation,
bankruptcy or receivership of the Company. Notwithstanding the foregoing, no
Good Reason shall be deemed to exist with respect to the Company's acts
described in clauses (i), (ii), (iii) or (iv) above, unless Executive shall have
5
<PAGE>
given written notice to the Company specifying the Good Reason with reasonable
particularity and, within thirty calendar days after such notice, the Company
shall not have cured or eliminated the problem or thing giving rise to such Good
Reason; provided, however, that a repeated breach after notice and cure of any
provision of clauses (i), (ii), (iii) or (iv) above involving the same or
substantially similar actions or conduct, shall be grounds for termination for
Good Reason without any additional notice from Executive.
3.7 Compensation Upon Termination With Good Reason or Without
Cause. In the event that Executive terminates employment under this Agreement
for Good Reason, pursuant to the provisions of Section 3.6, or the Company
terminates employment under this Agreement without "Cause," as defined in
Section 3.4, the Company shall continue to pay to Executive (or in the case of
his death, the legal representative of Executive's estate or such other person
or persons as Executive shall have designated by written notice to the Company),
all payments, compensation and benefits required under Section 2 hereof through
the one-year anniversary of the Commencement Date; provided, however, that
Executive's insurance coverage shall terminate upon the Executive becoming
covered under a similar program by reason of employment elsewhere.
3.8 Employment as Registered Representative. If, at any time,
prior to the five-year anniversary of the Commencement Date, Executive's
employment as an executive officer of the Company is terminated (other than as a
result of termination under Sections 3.2, 3.3 or 3.4), then, notwithstanding
such termination, at Executive's request, the Company will cause an RPI Broker
Dealer to employ Executive as a registered representative and pay Executive
commissions in accordance with its commission "grid" then in effect.
Additionally, during such period of time as Executive is employed as a
registered representative, the Company will make available to him the use of a
sales assistant and such amenities as is customary for registered
representatives with a similar level of commission business.
3.9 Continuation of GKN Securities Corp. The Company agrees
that, until the five-year anniversary of the Commencement Date, it shall not
take any steps to dissolve or liquidate GKN Securities Corp. or otherwise
voluntarily withdraw GKN Securities Corp.'s membership with the National
Association of Securities Dealers, Inc. or qualification to act as a broker
dealer in any state without Executive's prior written consent; provided,
however, that such steps may be taken without Executive's consent if and only if
Executive is afforded the opportunity to become associated as a registered
representative with another RPI Broker Dealer without losing his ability to do
6
<PAGE>
business in New York, Florida and substantially all of the other states in which
Executive is then currently authorized to do business.
4. Indemnification.
(i) The Company agrees to indemnify Executive and hold Executive
harmless against all costs, expenses (including, without limitation, reasonable
attorneys' fees) and liabilities (other than settlements to which the Company
does not consent, which consent shall not be unreasonably withheld)
(collectively, "Losses") reasonably incurred by Executive in connection with any
claim, action, proceeding or investigation brought against or involving
Executive with respect to, arising out of or in any way relating to Executive's
employment with, or service as a director of, the Company or any subsidiary of
the Company; provided, however, that the Company shall not be required to
indemnify Executive for Losses incurred as a result of Executive's intentional
misconduct or gross negligence (other than matters where Executive acted in good
faith and in a manner he reasonably believed to be in and not opposed to the
Company's best interests). Executive shall promptly notify the Company of any
claim, action, proceeding or investigation under this Section and the Company
shall be entitled to participate in the defense of any such claim, action,
proceeding or investigation and, if it so chooses, to assume the defense with
counsel selected by the Company; provided that Executive shall have the right to
employ counsel to represent him (at the Company's expense) if Company counsel
would have a "conflict of interest" in representing both the Company and
Executive. The Company shall not settle or compromise any claim, action,
proceeding or investigation without Executive's consent, which consent shall not
be unreasonably withheld; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and the Company
fully indemnifies Executive in connection therewith. The Company further agrees
to advance any and all expenses (including, without limitation, the fees and
expenses of counsel) reasonably incurred by the Executive in connection with any
such claim, action, proceeding or investigation, provided Executive first enters
into an appropriate agreement for repayment of such advances if indemnification
is found not to have been available. The provisions of this Section 4 shall
survive the termination of this Agreement for any reason, except in the event
Executive's employment is terminated under Section 3.4(iii) or (iv) hereof, in
which event, this Section 4 shall be null and void and of no further force or
effect.
7
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(ii) As a material inducement to Executive entering into this
Agreement, the Company agrees that, during the term of Executive's employment
hereunder, it shall maintain directors and officers liability insurance coverage
at a level at least as favorable to the Executive as such insurance which the
Company currently maintains.
5. Protection of Confidential Information; Non-Competition.
5.1 Acknowledgments. Executive acknowledges that:
(i) As a result of his current and prior involvement with the
Company, Executive has obtained and will obtain secret and confidential
information concerning the business of the Company and its subsidiaries and
affiliates (referred to collectively in this Section 5 as the "Company"),
including, without limitation, financial information, proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information");
(ii) The Company will suffer substantial damage which will be
difficult to compute if, during the period of his employment with the Company or
thereafter, Executive should enter a business competitive with the Company or
divulge Confidential Information; and
(iii) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Company.
5.2 Nondisclosure. Executive agrees that he will not at any
time, either during the term of this Agreement or thereafter, divulge to any
person or entity any Confidential Information obtained or learned by him as a
result of his employment with the Company, except (i) in the course of
performing his duties hereunder, (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
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expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
5.3 Return of Confidential Materials. Upon termination of his
employment with the Company, Executive will promptly deliver to the Company all
memoranda, notes, records, reports, manuals, drawings, blueprints and other
documents (and all copies thereof) relating to the business of the Company and
all property associated therewith, which he may then possess or have under his
control; provided, however, that Executive shall be entitled to retain copies of
such documents reasonably necessary to document his financial relationship with
the Company.
5.4 Non-Competition.
(i) During the period commencing on the Commencement Date
and ending on the date Executive's employment hereunder is terminated (and, if
Executive's employment is terminated by the Company for "Cause" or by Executive
without "Good Reason," until the one-year anniversary of the Commencement Date),
Executive, without the prior written permission of the Company, shall not,
anywhere in the world, (i) be employed by, or render any services to, any
person, firm or corporation engaged in any business which is competitive with
the business being conducted by the Company or any of its subsidiaries at the
time Executive's employment is terminated ("Competitive Business"); (ii) engage
in any Competitive Business for his or its own account; (iii) be associated with
or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; or (iv) solicit,
interfere with, or endeavor to entice away from the Company, for the benefit of
a Competitive Business, any of its customers or other persons with whom the
Company has a contractual relationship. Notwithstanding the foregoing, nothing
in this Agreement shall preclude Executive from investing his personal assets in
any manner he chooses, provided, however, that Executive may not, during the
period referred to in this Section 5.4, own more than 4.9% of the equity
securities of any Competitive Business.
(ii) During the period commencing on the Commencement Date
and ending on the one-year anniversary of the date Executive's employment
hereunder is terminated, Executive, without the prior written permission of the
Company, shall not, directly or indirectly, employ or retain, or have, assist or
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or cause any other person or entity to employ or retain, any person who was
employed or retained by the Company during the 60-day period prior to the date
Executive's employment is terminated.
5.5 Remedies. If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company
shall have the right and remedy:
(i) to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed by Executive that the services being rendered hereunder to the Company
are of a special, unique and extraordinary character and that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company; and
(ii) to require Executive to account for and pay over to the
Company all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections 5.2 or
5.4, and Executive hereby agrees to account for and pay over such damages to the
Company.
Each of the rights and remedies enumerated in this Section 5.5
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of or relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to be reimbursed by the other party for the
reasonable attorneys' fees and costs incurred by the prevailing party.
5.6 Unenforceability. If any provision of Sections 5.2 or 5.4
is held to be unenforceable because of the scope, duration or area of its
applicability, the tribunal making such determination shall have the power to
modify such scope, duration, or area, or all of them, and such provision or
provisions shall then be applicable in such modified form.
5.7 Survival. The provisions of this Section 5 shall survive
the termination of this Agreement for any reason, except in the event
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Executive's employment is terminated by the Company without "Cause" in breach of
this Agreement, or by Executive with "Good Reason," in either of which events,
this Section 5 shall be null and void and of no further force or effect.
6. Miscellaneous Provisions.
6.1 Notices. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class
postage prepaid, by certified mail, return receipt requested, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given as of the date of personal delivery or mailing
thereof.
If to Executive:
David M. Nussbaum
83 Village Road
Roslyn Heights, New York 11577
If to the Company:
Research Partners International, Inc.
One State Street Plaza
New York, New York 10004
Attn: Chief Operating Officer
6.2 Entire Agreement. This Agreement sets forth the entire
agreement of the parties relating to the employment of Executive from and after
the Effective Time and is intended to supersede all prior negotiations,
understandings and agreements. No provisions of this Agreement, may be waived or
changed except by a writing by the party against whom such waiver or change is
sought to be enforced. The failure of any party to require performance of any
provision hereof or thereof shall in no manner affect the right at a later time
to enforce such provision.
6.3 Governing Law. All questions with respect to the
construction of this Agreement, and the rights and obligations of the parties
hereunder, shall be determined in accordance with the law of the State of New
York applicable to agreements made and to be performed entirely in New York.
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6.4 Successors; Assignability. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the Company.
This Agreement shall not be assignable by Executive, but shall inure to the
benefit of and be binding upon Executive's heirs and legal representatives.
6.5 Severability. Should any provision of this Agreement
become legally unenforceable, no other provision of this Agreement shall be
affected, and this Agreement shall continue as if the Agreement had been
executed absent the unenforceable provision.
6.6 Arbitration. Any claim or controversy arising out of or
related to this Agreement or its interpretation will be settled by arbitration
before the National Association of Securities Dealers, Inc. Judgment based upon
the decision of the arbitrators may be entered in any court having jurisdiction.
The governing law of this Agreement shall be the substantive and procedural law
of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ David M. Nussbaum
____________________________________
DAVID M. NUSSBAUM
RESEARCH PARTNERS INTERNATIONAL, INC.
/s/ Peter R. Kent
By:__________________________________
Name: Peter R. Kent
Title: Chief Operating Officer
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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 4, 1998, between JOSEPH
BERLAND, residing at 221 East 31st Street, New York, New York 10016
("Executive"), and RESEARCH PARTNERS INTERNATIONAL, INC., a Delaware corporation
having its principal office at One State Street Plaza, New York, New York 10004
("Company").
WHEREAS, the Company is engaged through its subsidiary
corporations (each an "RPI Broker Dealer") primarily in the business of
investment banking and securities brokerage; and
WHEREAS, concurrently herewith the Company is entering into an
Agreement and Plan of Merger with Gaines, Berland Inc. ("GBI"), RPII Acquisition
Corp. ("Newco"), a wholly-owned subsidiary of the Company, and those persons
named on the signature page thereof ("Merger Agreement"), pursuant to which
Newco will merge with and into GBI and GBI will become a wholly-owned subsidiary
of the Company ("Merger"); and
WHEREAS, the Company and the Executive desire that the
Executive commence employment with the Company after the Merger pursuant to the
terms and conditions hereinafter set forth;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 Employment. The Company hereby employs Executive as
Co-Chairman of the Company's Board of Directors. All of Executive's powers and
authority in any capacity shall at all times be subject to the direction and
control of the Company's Board of Directors. Executive accepts such employment
and agrees to devote substantially all of his business time, energies and
attention to the performance of his duties hereunder. Nothing herein shall be
construed as preventing Executive from making and supervising personal
investments, provided they will not interfere with the performance of
Executive's duties hereunder or violate the provisions of Section 5.4 hereof.
1.2 Duties. The Board may assign to Executive such general
management and executive duties for the Company or any subsidiary of the Company
as are consistent with Executive's status as Co- Chairman of the Board of
Directors. The Company and Executive acknowledge that Executive's primary
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functions and duties as Co-Chairman of the Board of Directors shall be, together
with the Company's other Co-Chairman, Vice Chairman and President, to establish
policies and strategies for the Company's overall business and operations,
including plans for growth and strategic partnerships.
1.3 Location. Executive shall be based in the New York
Metropolitan area, and shall undertake such occasional travel, within or without
the United States, as is reasonably necessary in the interests of the Company.
1.4 Attendance at Board Meetings. If, during the term hereof,
Executive is nominated to serve as a director of the Company but fails to be
elected, he shall nonetheless be invited to attend each meeting of the Board of
Directors of the Company through the remainder of the term hereof.
2. Compensation and Benefits.
2.1 Base Salary. The Company shall pay to Executive a salary
at the minimum annual rate of $200,000 during the term hereof (i.e., $16,667 per
month). Executive's compensation shall be paid in equal, periodic installments
in accordance with the Company's normal payroll procedures.
2.2 Commissions. Executive shall be entitled to receive,
together with the Joint Reps referred to below, an aggregate of 50% of the gross
brokerage commissions on customers' stock brokerage accounts with the Company or
any RPI Broker Dealer which are serviced by Executive or jointly serviced by
Executive and other registered representatives of the Company ("Joint Reps").
Additionally, the Company will pay to Executive 0.65% ("Override") of all
commissions and sales credits generated from customers of any person who is
employed as a retail broker by any RPI Broker Dealer other than Shochet
Securities, Inc. (including, but not limited to, sales credits and commissions
generated for initial public offerings and private placements) during the term
of Executive's employment hereunder. Notwithstanding the foregoing, (i) no
Override will be payable on commissions or sales credits generated by any of the
GBI Executives or GKN Executives (as each term is defined below); (ii) with
respect to any registered representative who commences employment with an RPI
Broker Dealer after the date hereof and prior to the Commencement Date with a
"payout" greater than 55%, the Override payable to Executive on commissions
generated by such registered representative shall be reduced by 10% for each
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full percentage point that such registered representative's payout is greater
than 55%; and (iii) with respect to any registered representative who commences
employment with an RPI Broker Dealer after the Commencement Date with a payout
greater than 50%, the Override payable to Executive on commissions generated by
such registered representative shall be reduced 10% for each full percentage
point that such registered representative's payout exceeds 50%. All Overrides
will be paid at least monthly, on or before the 15th day of each month.
2.3 Bonus. Executive shall participate in the "Pool," as
defined in the Company's 1996 Incentive Compensation Plan ("Plan"), for the year
ending January 31, 2000 ("2000 Pool") in the following manner. After the initial
payments to David Nussbaum, Roger Gladstone, Robert Gladstone and Peter Kent
(collectively, "GKN Executives") under the terms of their Employment Agreements
with the Company (all of which are being executed simultaneously herewith), the
balance of the Pool for such fiscal year shall be paid 50% to the GKN
Executives, as a group, and 50% to Executive and David Thalheim, Richard J.
Rosenstock, Mark Zeitchick and Vincent Mangone (collectively, "GBI Executives"),
as a group. The amount to be paid to each such person shall be determined by the
Company's Compensation Committee. The foregoing bonuses shall be payable as soon
as practicable after January 31, 2000, as determined under the terms of the
Plan. It is understood and agreed that the amount of the 2000 Pool will be
calculated after deducting all Overrides and bonuses for Company personnel.
2.4 Benefits. Executive shall be entitled to such medical,
life, disability and other benefits as are generally afforded to other senior
executives of the Company, subject to applicable waiting periods and other
conditions.
2.5 Vacation. Executive shall be entitled to four weeks of
vacation in each calendar year and to a reasonable number of other days off for
religious and personal reasons.
2.6 Automobile Reimbursement. Executive shall maintain a
suitable automobile for business use. The Company shall reimburse Executive for
the costs of leasing such automobile and for all other costs associated with the
use of the vehicle, including insurance costs, repairs and maintenance, up to
the maximum deductible amount allowable by law.
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2.7 Business Expenses. The Company will pay or reimburse
Executive for all transportation, hotel and other expenses reasonably incurred
by Executive on business trips and for all other ordinary and reasonable
out-of-pocket expenses actually incurred by him in the conduct of the business
of the Company against itemized vouchers submitted with respect to any such
expenses and approved in accordance with customary procedures.
3. Term and Termination.
3.1 Initial Term. The term of Executive's employment under
this Agreement shall commence ("Commencement Date") on the Effective Time (as
such term is defined in the Merger Agreement) and shall continue until the one
year anniversary thereof, unless sooner terminated as herein provided. If the
Merger is not consummated in accordance with the terms of the Merger Agreement,
this Agreement shall be null and void and of no further force or effect.
3.2 Termination Due to Death. If Executive dies during the
term of this Agreement, Executive's employment under this Agreement shall
thereupon terminate, except that the Company shall pay to the legal
representative of Executive's estate (i) the base salary, Overrides and
commissions due Executive pursuant to Sections 2.1 and 2.2 hereof through the
date of Executive's death, (ii) a pro rata allocation of bonus payments under
Section 2.3 during the year of death through the date of Executive's death,
(iii) all valid expense reimbursements through the date of the termination of
this Agreement, (iv) all accrued but unused vacation pay, and (v) all costs
associated with terminating the lease for Executive's automobile.
3.3 Termination Due to Disability. The Company, by notice to
Executive, may terminate Executive's employment under this Agreement if
Executive shall fail because of illness or incapacity to render, for six
consecutive months, services of the character contemplated by this Agreement.
Notwithstanding such termination, the Company shall pay to Executive (i) the
base salary, Overrides and commissions due Executive pursuant to Sections 2.1
and 2.2 hereof through the date of such notice, less any amount Executive
receives for such period from any Company-sponsored or Company-paid source of
insurance, disability compensation or government program, (ii) a pro rata
allocation of bonus payments under Section 2.3 during the year in which the
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disability commenced through the date of such notice, (iii) all valid expense
reimbursements through the date of the termination of this Agreement, (iv) all
accrued but unused vacation pay, and (v) all costs associated with terminating
the lease for Executive's automobile.
3.4 Termination by Company For Cause. The Company, by notice
to Executive, may terminate Executive's employment under this Agreement for
"Cause". As used herein, "Cause" shall mean: (i) the refusal or failure by
Executive to carry out specific directions of the Board which are of a material
nature and consistent with his status as Co-Chairman of the Board of Directors,
or the refusal or failure by Executive to perform a material part of Executive's
duties hereunder; (ii) the commission by Executive of a material breach of any
of the provisions of this Agreement; (iii) fraud or dishonest action by
Executive in his relations with the Company or any of its subsidiaries or
affiliates ("dishonest" for these purposes shall mean Executive's knowingly or
recklessly making of a material misstatement or omission for his personal
benefit); or (iv) the conviction of Executive of any crime involving an act of
moral turpitude, or the imposition against Executive of a permanent bar from
association with a securities firm by any Federal, state or regulatory agency or
self-regulatory body after the exhaustion of all judicial and administrative
appeals therefrom. Notwithstanding the foregoing, no "Cause" for termination
shall be deemed to exist with respect to Executive's acts described in clauses
(i) or (ii) above, unless the Company shall have given written notice to
Executive specifying the "Cause" with reasonable particularity and, within
thirty calendar days after such notice, Executive shall not have cured or
eliminated the problem or thing giving rise to such "Cause;" provided, however,
that a repeated breach after notice and cure of any provision of clauses (i) or
(ii) above involving the same or substantially similar actions or conduct, shall
be grounds for termination for "Cause" without any additional notice from the
Company.
3.5 Termination and Resignation as Director. If Executive's
employment hereunder is terminated for any reason, then Executive shall, at the
Company's request, resign as a director of the Company and all of its
subsidiaries, effective upon the occurrence of such termination.
3.6 Termination by Executive For "Good Reason". The Executive,
by notice to the Company, may terminate Executive's employment under this
Agreement if a "Good Reason" exists. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following circumstances without
the Executive's prior express written consent: (i) a substantial and material
adverse change in the nature of Executive's title, duties or responsibilities
with the Company that represents a demotion from his title, duties or
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responsibilities as in effect immediately prior to such change; (ii) Executive
is not nominated to serve as a director by the Company or is removed from
service as a director of the Company; (iii) a substantial and material breach of
this Agreement by the Company; (iv) a failure by the Company to make any payment
to Executive when due, unless the payment is not material and is being contested
by the Company, in good faith; (v)(a) any person or entity other than the
Company and/or any officers or directors of the Company as of the date of this
Agreement acquires securities of the Company (in one or more transactions)
having 25% or more of the total voting power of all the Company's securities
then outstanding and (b) the Board of Directors of the Company does not
authorize or otherwise approve such acquisition; or (vi) a liquidation,
bankruptcy or receivership of the Company. Notwithstanding the foregoing, no
Good Reason shall be deemed to exist with respect to the Company's acts
described in clauses (i), (ii), (iii) or (iv) above, unless Executive shall have
given written notice to the Company specifying the Good Reason with reasonable
particularity and, within thirty calendar days after such notice, the Company
shall not have cured or eliminated the problem or thing giving rise to such Good
Reason; provided, however, that a repeated breach after notice and cure of any
provision of clauses (i), (ii), (iii) or (iv) above involving the same or
substantially similar actions or conduct, shall be grounds for termination for
Good Reason without any additional notice from Executive.
3.7 Compensation Upon Termination With Good Reason or Without
Cause. In the event that Executive terminates employment under this Agreement
for Good Reason, pursuant to the provisions of Section 3.6, or the Company
terminates employment under this Agreement without "Cause," as defined in
Section 3.4, the Company shall continue to pay to Executive (or in the case of
his death, the legal representative of Executive's estate or such other person
or persons as Executive shall have designated by written notice to the Company),
all payments, compensation and benefits required under Section 2 hereof through
the one-year anniversary of the Commencement Date; provided, however, that
Executive's insurance coverage shall terminate upon the Executive becoming
covered under a similar program by reason of employment elsewhere.
3.8 Employment as Registered Representative. If, at any time,
prior to the five-year anniversary of the Commencement Date, Executive's
employment as an executive officer of the Company is terminated (other than as a
result of termination under Sections 3.2, 3.3 or 3.4), then, notwithstanding
such termination, at Executive's request, the Company will cause an RPI Broker
Dealer to employ Executive as a registered representative and pay Executive
commissions in accordance with its commission "grid" then in effect.
Additionally, during such period of time as Executive is employed as a
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registered representative, the Company will make available to him the use of a
sales assistant and such amenities as is customary for registered
representatives with a similar level of commission business.
4. Indemnification.
(i) The Company agrees to indemnify Executive and hold
Executive harmless against all costs, expenses (including, without limitation,
reasonable attorneys' fees) and liabilities (other than settlements to which the
Company does not consent, which consent shall not be unreasonably withheld)
(collectively, "Losses") reasonably incurred by Executive in connection with any
claim, action, proceeding or investigation brought against or involving
Executive with respect to, arising out of or in any way relating to Executive's
employment with, or service as a director of, the Company or any subsidiary of
the Company; provided, however, that the Company shall not be required to
indemnify Executive for Losses incurred as a result of Executive's intentional
misconduct or gross negligence (other than matters where Executive acted in good
faith and in a manner he reasonably believed to be in and not opposed to the
Company's best interests). Executive shall promptly notify the Company of any
claim, action, proceeding or investigation under this Section and the Company
shall be entitled to participate in the defense of any such claim, action,
proceeding or investigation and, if it so chooses, to assume the defense with
counsel selected by the Company; provided that Executive shall have the right to
employ counsel to represent him (at the Company's expense) if Company counsel
would have a "conflict of interest" in representing both the Company and
Executive. The Company shall not settle or compromise any claim, action,
proceeding or investigation without Executive's consent, which consent shall not
be unreasonably withheld; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and the Company
fully indemnifies Executive in connection therewith. The Company further agrees
to advance any and all expenses (including, without limitation, the fees and
expenses of counsel) reasonably incurred by the Executive in connection with any
such claim, action, proceeding or investigation, provided Executive first enters
into an appropriate agreement for repayment of such advances if indemnification
is found not to have been available. The provisions of this Section 4 shall
survive the termination of this Agreement for any reason, except in the event
Executive's employment is terminated under Section 3.4(iii) or (iv) hereof, in
which event, this Section 4 shall be null and void and of no further force or
effect.
(ii) As a material inducement to Executive entering into
this Agreement, the Company agrees that during the term of Executive's
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employment hereunder, it shall maintain directors and officers liability
insurance coverage at a level at least as favorable to the Executive as such
insurance which the Company currently maintains.
5. Protection of Confidential Information; Non-Competition.
5.1 Acknowledgments. Executive acknowledges that:
(i) As a result of his current and prior involvement with
the Company, Executive has obtained and will obtain secret and confidential
information concerning the business of the Company and its subsidiaries and
affiliates (referred to collectively in this Section 5 as the "Company"),
including, without limitation, financial information, proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information");
(ii) The Company will suffer substantial damage which will
be difficult to compute if, during the period of his employment with the Company
or thereafter, Executive should enter a business competitive with the Company or
divulge Confidential Information; and
(iii) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Company.
5.2 Nondisclosure. Executive agrees that he will not at any
time, either during the term of this Agreement or thereafter, divulge to any
person or entity any Confidential Information obtained or learned by him as a
result of his employment with the Company, except (i) in the course of
performing his duties hereunder, (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
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court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
5.3 Return of Confidential Materials. Upon termination of his
employment with the Company, Executive will promptly deliver to the Company all
memoranda, notes, records, reports, manuals, drawings, blueprints and other
documents (and all copies thereof) relating to the business of the Company and
all property associated therewith, which he may then possess or have under his
control; provided, however, that Executive shall be entitled to retain copies of
such documents reasonably necessary to document his financial relationship with
the Company.
5.4 Non-Competition.
(i) During the period commencing on the Commencement Date
and ending on the date Executive's employment hereunder is terminated (and, if
Executive's employment is terminated by the Company for "Cause" or by Executive
without "Good Reason," until the one-year anniversary of the Commencement Date),
Executive, without the prior written permission of the Company, shall not,
anywhere in the world, (i) be employed by, or render any services to, any
person, firm or corporation engaged in any business which is competitive with
the business being conducted by the Company or any of its subsidiaries at the
time Executive's employment is terminated ("Competitive Business"); (ii) engage
in any Competitive Business for his or its own account; (iii) be associated with
or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; or (iv) solicit,
interfere with, or endeavor to entice away from the Company, for the benefit of
a Competitive Business, any of its customers or other persons with whom the
Company has a contractual relationship. Notwithstanding the foregoing, nothing
in this Agreement shall preclude Executive from investing his personal assets in
any manner he chooses, provided, however, that Executive may not, during the
period referred to in this Section 5.4, own more than 4.9% of the equity
securities of any Competitive Business.
(ii) During the period commencing on the Commencement Date
and ending on the one-year anniversary of the date Executive's employment
hereunder is terminated, Executive, without the prior written permission of the
Company, shall not, directly or indirectly, employ or retain, or have, assist or
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cause any other person or entity to employ or retain, any person who was
employed or retained by the Company during the 60-day period prior to the date
Executive's employment is terminated.
5.5 Remedies. If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company
shall have the right and remedy:
(i) to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed by Executive that the services being rendered hereunder to the Company
are of a special, unique and extraordinary character and that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company; and
(ii) to require Executive to account for and pay over to the
Company all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections 5.2 or
5.4, and Executive hereby agrees to account for and pay over such damages to the
Company.
Each of the rights and remedies enumerated in this Section 5.5
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of or relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to be reimbursed by the other party for the
reasonable attorneys' fees and costs incurred by the prevailing party.
5.6 Unenforceability. If any provision of Sections 5.2 or 5.4
is held to be unenforceable because of the scope, duration or area of its
applicability, the tribunal making such determination shall have the power to
modify such scope, duration, or area, or all of them, and such provision or
provisions shall then be applicable in such modified form.
5.7 Survival. The provisions of this Section 5 shall survive
the termination of this Agreement for any reason, except in the event
Executive's employment is terminated by the Company without "Cause" in breach of
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this Agreement, or by Executive with "Good Reason," in either of which events,
this Section 5 shall be null and void and of no further force or effect.
6. Miscellaneous Provisions.
6.1 Notices. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class
postage prepaid, by certified mail, return receipt requested, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given as of the date of personal delivery or mailing
thereof.
If to Executive:
Joseph Berland
221 East 31st Street
New York, New York 10016
If to the Company:
Research Partners International, Inc.
One State Street Plaza
New York, New York 10004
Attn: Chief Operating Officer
6.2 Entire Agreement. This Agreement sets forth the entire
agreement of the parties relating to the employment of Executive from and after
the Effective Time and is intended to supersede all prior negotiations,
understandings and agreements. No provisions of this Agreement, may be waived or
changed except by a writing by the party against whom such waiver or change is
sought to be enforced. The failure of any party to require performance of any
provision hereof or thereof shall in no manner affect the right at a later time
to enforce such provision.
6.3 Governing Law. All questions with respect to the
construction of this Agreement, and the rights and obligations of the parties
hereunder, shall be determined in accordance with the law of the State of New
York applicable to agreements made and to be performed entirely in New York.
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6.4 Successors; Assignability. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the Company.
This Agreement shall not be assignable by Executive, but shall inure to the
benefit of and be binding upon Executive's heirs and legal representatives.
6.5 Severability. Should any provision of this Agreement
become legally unenforceable, no other provision of this Agreement shall be
affected, and this Agreement shall continue as if the Agreement had been
executed absent the unenforceable provision.
6.6 Arbitration. Any claim or controversy arising out of or
related to this Agreement or its interpretation will be settled by arbitration
before the National Association of Securities Dealers, Inc. Judgment based upon
the decision of the arbitrators may be entered in any court having jurisdiction.
The governing law of this Agreement shall be the substantive and procedural law
of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ Joseph Berland
_____________________________________
JOSEPH BERLAND
RESEARCH PARTNERS INTERNATIONAL, INC.
/s/ Peter R. Kent
By:__________________________________
Name: Peter R. Kent
Title: Chief Operating Officer
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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 4, 1998, between ROGER N.
GLADSTONE, residing at 8563 Horseshoe Lane, Boca Raton, Florida 33496
("Executive"), and RESEARCH PARTNERS INTERNATIONAL, INC., a Delaware corporation
having its principal office at One State Street Plaza, New York, New York 10004
("Company").
WHEREAS, the Company is engaged through its subsidiary
corporations (each an "RPI Broker Dealer") primarily in the business of
investment banking and securities brokerage; and
WHEREAS, concurrently herewith the Company is entering into an
Agreement and Plan of Merger with Gaines, Berland Inc. ("GBI"), RPII Acquisition
Corp. ("Newco"), a wholly-owned subsidiary of the Company, and those persons
named on the signature page thereof ("Merger Agreement"), pursuant to which
Newco will merge with and into GBI and GBI will become a wholly-owned subsidiary
of the Company ("Merger"); and
WHEREAS, the Company and the Executive desire that the
Executive's employment continue with the Company after the Merger pursuant to
the terms and conditions hereinafter set forth;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 Employment. The Company hereby employs Executive as Vice
Chairman of the Board of Directors. All of Executive's powers and authority in
any capacity shall at all times be subject to the direction and control of the
Company's Board of Directors. Executive accepts such employment and agrees to
devote substantially all of his business time, energies and attention to the
performance of his duties hereunder. Nothing herein shall be construed as
preventing Executive from making and supervising personal investments, provided
they will not interfere with the performance of Executive's duties hereunder or
violate the provisions of Section 5.4 hereof.
1.2 Duties. The Board may assign to Executive such general
management and executive duties for the Company or any subsidiary of the Company
as are consistent with Executive's status as Vice Chairman of the Board of
Directors. The Company and Executive acknowledge that Executive's primary
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functions and duties as Vice Chairman of the Board of Directors shall be,
together with the Company's Co- Chairmen and President, to establish policies
and strategies for the Company's overall business and operations, including
plans for growth and strategic partnerships.
1.3 Location. Executive shall be based in the Boca Raton
Metropolitan area, and shall undertake such occasional travel, within or without
the United States, as is reasonably necessary in the interests of the Company.
1.4 Attendance at Board Meetings. If, during the term hereof,
Executive is nominated to serve as a director of the Company but fails to be
elected, he shall nonetheless be invited to attend each meeting of the Board of
Directors of the Company through the remainder of the term hereof.
2. Compensation and Benefits.
2.1 Base Salary. The Company shall pay to Executive a salary
at the minimum annual rate of $240,000 during the term hereof (i.e., $20,000 per
month). Executive's compensation shall be paid in equal, periodic installments
in accordance with the Company's normal payroll procedures.
2.2 Commissions. Executive shall be entitled to receive,
together with the Joint Reps referred to below, an aggregate of 60% of the gross
brokerage commissions on customers' stock brokerage accounts with the Company or
any RPI Broker Dealer which are serviced by Executive or jointly serviced by
Executive and other registered representatives of the Company ("Joint Reps").
2.3 Bonus. Executive shall participate in the "Pool," as
defined in the Company's 1996 Incentive Compensation Plan ("Plan"), for the year
ending January 31, 2000 in the following manner. Executive, David M. Nussbaum,
Peter R. Kent and Robert H. Gladstone (collectively, "GKN Executives"), as a
group, shall be paid an aggregate amount from the Pool for such fiscal year
("2000 Pool") equal to the "Overrides" payable for such year to Joseph Berland,
Richard Rosenstock, Mark Zeitchick, Vincent Mangone and David Thalheim
(collectively, "GBI Executives") under the terms of their Employment Agreements
with the Company (all of which are being executed simultaneously herewith), less
162/3% of all commissions payable to GKN Executives during such year. The amount
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to be paid to each of the GKN Executives shall be determined by the Company's
Compensation Committee. The balance of the 2000 Pool shall be paid 50% to the
GKN Executives, as a group, and 50% to the GBI Executives, as a group, with the
amount to be paid to each such person being determined by the Compensation
Committee. The foregoing bonuses shall be payable as soon as practicable after
January 31, 2000, as determined under the terms of the Plan. It is understood
and agreed that the amount of the 2000 Pool will be calculated after deducting
Overrides and bonuses for Company personnel.
2.4 Benefits. Executive shall be entitled to such medical,
life, disability and other benefits as are generally afforded to other senior
executives of the Company, subject to applicable waiting periods and other
conditions.
2.5 Vacation. Executive shall be entitled to four weeks of
vacation in each calendar year and to a reasonable number of other days off for
religious and personal reasons.
2.6 Automobile Reimbursement. Executive shall maintain a
suitable automobile for business use. The Company shall reimburse Executive for
the costs of leasing such automobile and for all other costs associated with the
use of the vehicle, including insurance costs, repairs and maintenance, up to
the maximum deductible amount allowable by law.
2.7 Business Expenses. The Company will pay or reimburse
Executive for all transportation, hotel and other expenses reasonably incurred
by Executive on business trips and for all other ordinary and reasonable
out-of-pocket expenses actually incurred by him in the conduct of the business
of the Company against itemized vouchers submitted with respect to any such
expenses and approved in accordance with customary procedures.
3. Term and Termination.
3.1 Initial Term. The term of Executive's employment under
this Agreement shall commence ("Commencement Date") on the Effective Time (as
such term is defined in the Merger Agreement) and shall continue until the one
year anniversary thereof, unless sooner terminated as herein provided. From and
after the Commencement Date, Executive's current employment agreement with the
Company will be null and void and of no further force or effect. If the Merger
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is not consummated in accordance with the terms of the Merger Agreement, this
Agreement shall be null and void and of no further force or effect.
3.2 Termination Due to Death. If Executive dies during the
term of this Agreement, Executive's employment under this Agreement shall
thereupon terminate, except that the Company shall pay to the legal
representative of Executive's estate (i) the base salary and commissions due
Executive pursuant to Sections 2.1 and 2.2 hereof through the date of
Executive's death, (ii) a pro rata allocation of bonus payments under Section
2.3 during the year of death through the date of Executive's death, (iii) all
valid expense reimbursements through the date of the termination of this
Agreement, (iv) all accrued but unused vacation pay, and (v) all costs
associated with terminating the lease for Executive's automobile.
3.3 Termination Due to Disability. The Company, by notice to
Executive, may terminate Executive's employment under this Agreement if
Executive shall fail because of illness or incapacity to render, for six
consecutive months, services of the character contemplated by this Agreement.
Notwithstanding such termination, the Company shall pay to Executive (i) the
base salary and commissions due Executive pursuant to Sections 2.1 and 2.2
hereof through the date of such notice, less any amount Executive receives for
such period from any Company-sponsored or Company-paid source of insurance,
disability compensation or government program, (ii) a pro rata allocation of
bonus payments under Section 2.3 during the year in which the disability
commenced through the date of such notice, (iii) all valid expense
reimbursements through the date of the termination of this Agreement, (iv) all
accrued but unused vacation pay, and (v) all costs associated with terminating
the lease for Executive's automobile.
3.4 Termination by Company For Cause. The Company, by notice
to Executive, may terminate Executive's employment under this Agreement for
"Cause". As used herein, "Cause" shall mean: (i) the refusal or failure by
Executive to carry out specific directions of the Board which are of a material
nature and consistent with his status as Vice Chairman of the Board of
Directors, or the refusal or failure by Executive to perform a material part of
Executive's duties hereunder; (ii) the commission by Executive of a material
breach of any of the provisions of this Agreement; (iii) fraud or dishonest
action by Executive in his relations with the Company or any of its subsidiaries
or affiliates ("dishonest" for these purposes shall mean Executive's knowingly
or recklessly making of a material misstatement or omission for his personal
benefit); or (iv) the conviction of Executive of any crime involving an act of
moral turpitude, or the imposition against Executive of a permanent bar from
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association with a securities firm by any Federal, state or regulatory agency or
self-regulatory body after the exhaustion of all judicial and administrative
appeals therefrom. Notwithstanding the foregoing, no "Cause" for termination
shall be deemed to exist with respect to Executive's acts described in clauses
(i) or (ii) above, unless the Company shall have given written notice to
Executive specifying the "Cause" with reasonable particularity and, within
thirty calendar days after such notice, Executive shall not have cured or
eliminated the problem or thing giving rise to such "Cause;" provided, however,
that a repeated breach after notice and cure of any provision of clauses (i) or
(ii) above involving the same or substantially similar actions or conduct, shall
be grounds for termination for "Cause" without any additional notice from the
Company.
3.5 Termination and Resignation as Director. If Executive's
employment hereunder is terminated for any reason, then Executive shall, at the
Company's request, resign as a director of the Company and all of its
subsidiaries, effective upon the occurrence of such termination.
3.6 Termination by Executive For "Good Reason". The Executive,
by notice to the Company, may terminate Executive's employment under this
Agreement if a "Good Reason" exists. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following circumstances without
the Executive's prior express written consent: (i) a substantial and material
adverse change in the nature of Executive's title, duties or responsibilities
with the Company that represents a demotion from his title, duties or
responsibilities as in effect immediately prior to such change; (ii) Executive
is not nominated to serve as a director by the Company or is removed from
service as a director of the Company; (iii) a substantial and material breach of
this Agreement by the Company; (iv) a failure by the Company to make any payment
to Executive when due, unless the payment is not material and is being contested
by the Company, in good faith; (v)(a) any person or entity other than the
Company and/or any officers or directors of the Company as of the date of this
Agreement acquires securities of the Company (in one or more transactions)
having 25% or more of the total voting power of all the Company's securities
then outstanding and (b) the Board of Directors of the Company does not
authorize or otherwise approve such acquisition; or (vi) a liquidation,
bankruptcy or receivership of the Company. Notwithstanding the foregoing, no
Good Reason shall be deemed to exist with respect to the Company's acts
described in clauses (i), (ii), (iii) or (iv) above, unless Executive shall have
given written notice to the Company specifying the Good Reason with reasonable
particularity and, within thirty calendar days after such notice, the Company
shall not have cured or eliminated the problem or thing giving rise to such Good
Reason; provided, however, that a repeated breach after notice and cure of any
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provision of clauses (i), (ii), (iii) or (iv) above involving the same or
substantially similar actions or conduct, shall be grounds for termination for
Good Reason without any additional notice from Executive.
3.7 Compensation Upon Termination With Good Reason or Without
Cause. In the event that Executive terminates employment under this Agreement
for Good Reason, pursuant to the provisions of Section 3.6, or the Company
terminates employment under this Agreement without "Cause," as defined in
Section 3.4, the Company shall continue to pay to Executive (or in the case of
his death, the legal representative of Executive's estate or such other person
or persons as Executive shall have designated by written notice to the Company),
all payments, compensation and benefits required under Section 2 hereof through
the one-year anniversary of the Commencement Date; provided, however, that
Executive's insurance coverage shall terminate upon the Executive becoming
covered under a similar program by reason of employment elsewhere.
3.8 Employment as Registered Representative. If, at any time,
prior to the five-year anniversary of the Commencement Date, Executive's
employment as an executive officer of the Company is terminated (other than as a
result of termination under Sections 3.2, 3.3 or 3.4), then, notwithstanding
such termination, at Executive's request, the Company will cause an RPI Broker
Dealer to employ Executive as a registered representative and pay Executive
commissions in accordance with its commission "grid" then in effect.
Additionally, during such period of time as Executive is employed as a
registered representative, the Company will make available to him the use of a
sales assistant and such amenities as is customary for registered
representatives with a similar level of commission business.
3.9 Continuation of GKN Securities Corp. The Company agrees
that, until the five-year anniversary of the Commencement Date, it shall not
take any steps to dissolve or liquidate GKN Securities Corp. or otherwise
voluntarily withdraw GKN Securities Corp.'s membership with the National
Association of Securities Dealers, Inc. or qualification to act as a broker
dealer in any state without Executive's prior written consent; provided,
however, that such steps may be taken without Executive's consent if and only if
Executive is afforded the opportunity to become associated as a registered
representative with another RPI Broker Dealer without losing his ability to do
business in New York, Florida and substantially all of the other states in which
Executive is then authorized to do business.
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4. Indemnification.
(i) The Company agrees to indemnify Executive and hold
Executive harmless against all costs, expenses (including, without limitation,
reasonable attorneys' fees) and liabilities (other than settlements to which the
Company does not consent, which consent shall not be unreasonably withheld)
(collectively, "Losses") reasonably incurred by Executive in connection with any
claim, action, proceeding or investigation brought against or involving
Executive with respect to, arising out of or in any way relating to Executive's
employment with, or service as a director of, the Company or any subsidiary of
the Company; provided, however, that the Company shall not be required to
indemnify Executive for Losses incurred as a result of Executive's intentional
misconduct or gross negligence (other than matters where Executive acted in good
faith and in a manner he reasonably believed to be in and not opposed to the
Company's best interests). Executive shall promptly notify the Company of any
claim, action, proceeding or investigation under this Section and the Company
shall be entitled to participate in the defense of any such claim, action,
proceeding or investigation and, if it so chooses, to assume the defense with
counsel selected by the Company; provided that Executive shall have the right to
employ counsel to represent him (at the Company's expense) if Company counsel
would have a "conflict of interest" in representing both the Company and
Executive. The Company shall not settle or compromise any claim, action,
proceeding or investigation without Executive's consent, which consent shall not
be unreasonably withheld; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and the Company
fully indemnifies Executive in connection therewith. The Company further agrees
to advance any and all expenses (including, without limitation, the fees and
expenses of counsel) reasonably incurred by the Executive in connection with any
such claim, action, proceeding or investigation, provided Executive first enters
into an appropriate agreement for repayment of such advances if indemnification
is found not to have been available. The provisions of this Section 4 shall
survive the termination of this Agreement for any reason, except in the event
Executive's employment is terminated under Section 3.4(iii) or (iv) hereof, in
which event, this Section 4 shall be null and void and of no further force or
effect.
(ii) As a material inducement to Executive entering into
this Agreement, the Company agrees that, during the term of Executive's
employment hereunder, it shall maintain directors and officers liability
insurance coverage at a level at least as favorable to the Executive as such
insurance which the Company currently maintains.
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5. Protection of Confidential Information; Non-Competition.
5.1 Acknowledgments. Executive acknowledges that:
(i) As a result of his current and prior involvement with
the Company, Executive has obtained and will obtain secret and confidential
information concerning the business of the Company and its subsidiaries and
affiliates (referred to collectively in this Section 5 as the "Company"),
including, without limitation, financial information, proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information");
(ii) The Company will suffer substantial damage which will
be difficult to compute if, during the period of his employment with the Company
or thereafter, Executive should enter a business competitive with the Company or
divulge Confidential Information; and
(iii) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Company.
5.2 Nondisclosure. Executive agrees that he will not at any
time, either during the term of this Agreement or thereafter, divulge to any
person or entity any Confidential Information obtained or learned by him as a
result of his employment with the Company, except (i) in the course of
performing his duties hereunder, (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
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5.3 Return of Confidential Materials. Upon termination of his
employment with the Company, Executive will promptly deliver to the Company all
memoranda, notes, records, reports, manuals, drawings, blueprints and other
documents (and all copies thereof) relating to the business of the Company and
all property associated therewith, which he may then possess or have under his
control; provided, however, that Executive shall be entitled to retain copies of
such documents reasonably necessary to document his financial relationship with
the Company.
5.4 Non-Competition.
(i) During the period commencing on the Commencement Date
and ending on the date Executive's employment hereunder is terminated (and, if
Executive's employment is terminated by the Company for "Cause" or by Executive
without "Good Reason," until the one-year anniversary of the Commencement Date),
Executive, without the prior written permission of the Company, shall not,
anywhere in the world, (i) be employed by, or render any services to, any
person, firm or corporation engaged in any business which is competitive with
the business being conducted by the Company or any of its subsidiaries at the
time Executive's employment is terminated ("Competitive Business"); (ii) engage
in any Competitive Business for his or its own account; (iii) be associated with
or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; or (iv) solicit,
interfere with, or endeavor to entice away from the Company, for the benefit of
a Competitive Business, any of its customers or other persons with whom the
Company has a contractual relationship. Notwithstanding the foregoing, nothing
in this Agreement shall preclude Executive from investing his personal assets in
any manner he chooses, provided, however, that Executive may not, during the
period referred to in this Section 5.4, own more than 4.9% of the equity
securities of any Competitive Business.
(ii) During the period commencing on the Commencement Date
and ending on the one-year anniversary of the date Executive's employment
hereunder is terminated, Executive, without the prior written permission of the
Company, shall not, directly or indirectly, employ or retain, or have, assist or
cause any other person or entity to employ or retain, any person who was
employed or retained by the Company during the 60-day period prior to the date
Executive's employment is terminated.
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5.5 Remedies. If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company
shall have the right and remedy:
(i) to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed by Executive that the services being rendered hereunder to the Company
are of a special, unique and extraordinary character and that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company; and
(ii) to require Executive to account for and pay over to the
Company all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections 5.2 or
5.4, and Executive hereby agrees to account for and pay over such damages to the
Company.
Each of the rights and remedies enumerated in this Section 5.5
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of or relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to be reimbursed by the other party for the
reasonable attorneys' fees and costs incurred by the prevailing party.
5.6 Unenforceability. If any provision of Sections 5.2 or 5.4
is held to be unenforceable because of the scope, duration or area of its
applicability, the tribunal making such determination shall have the power to
modify such scope, duration, or area, or all of them, and such provision or
provisions shall then be applicable in such modified form.
5.7 Survival. The provisions of this Section 5 shall survive
the termination of this Agreement for any reason, except in the event
Executive's employment is terminated by the Company without "Cause" in breach of
this Agreement, or by Executive with "Good Reason," in either of which events,
this Section 5 shall be null and void and of no further force or effect.
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6. Miscellaneous Provisions.
6.1 Notices. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class
postage prepaid, by certified mail, return receipt requested, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given as of the date of personal delivery or mailing
thereof.
If to Executive:
Roger N. Gladstone
8563 Horseshoe Lane
Boca Raton, Florida 33496
If to the Company:
Research Partners International, Inc.
One State Street Plaza
New York, New York 10004
Attn: Chief Operating Officer
6.2 Entire Agreement. This Agreement sets forth the entire
agreement of the parties relating to the employment of Executive from and after
the Effective Time and is intended to supersede all prior negotiations,
understandings and agreements. No provisions of this Agreement, may be waived or
changed except by a writing by the party against whom such waiver or change is
sought to be enforced. The failure of any party to require performance of any
provision hereof or thereof shall in no manner affect the right at a later time
to enforce such provision.
6.3 Governing Law. All questions with respect to the
construction of this Agreement, and the rights and obligations of the parties
hereunder, shall be determined in accordance with the law of the State of New
York applicable to agreements made and to be performed entirely in New York.
6.4 Successors; Assignability. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the Company.
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This Agreement shall not be assignable by Executive, but shall inure to the
benefit of and be binding upon Executive's heirs and legal representatives.
6.5 Severability. Should any provision of this Agreement
become legally unenforceable, no other provision of this Agreement shall be
affected, and this Agreement shall continue as if the Agreement had been
executed absent the unenforceable provision.
6.6 Arbitration. Any claim or controversy arising out of or
related to this Agreement or its interpretation will be settled by arbitration
before the National Association of Securities Dealers, Inc. Judgment based upon
the decision of the arbitrators may be entered in any court having jurisdiction.
The governing law of this Agreement shall be the substantive and procedural law
of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ Roger N. Gladstone
_____________________________________
ROGER N. GLADSTONE
RESEARCH PARTNERS INTERNATIONAL, INC.
/s/ Peter R. Kent
By:_________________________________
Name: Peter R. Kent
Title: Chief Operating Officer
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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 4, 1998, between RICHARD J.
ROSENSTOCK, residing at 78 Tammy's Lane, Muttontown, New York 11791
("Executive"), and RESEARCH PARTNERS INTERNATIONAL, INC., a Delaware corporation
having its principal office at One State Street Plaza, New York, New York 10004
("Company").
WHEREAS, the Company is engaged through its subsidiary
corporations (each an "RPI Broker Dealer") primarily in the business of
investment banking and securities brokerage; and
WHEREAS, concurrently herewith the Company is entering into
(i) an Agreement and Plan of Merger with Gaines, Berland Inc. ("GBI"), RPII
Acquisition Corp. ("Newco"), a wholly-owned subsidiary of the Company, and those
persons named on the signature page thereof ("Merger Agreement"), pursuant to
which Newco will merge with and into GBI and GBI will become a wholly-owned
subsidiary of the Company ("Merger"); and (ii) an Operating Agreement with GBI
("Operating Agreement"), governing certain pre- and post-Merger activities of
the combined companies; and
WHEREAS, the Company and the Executive desire that the
Executive commence employment with the Company after the Merger pursuant to the
terms and conditions hereinafter set forth;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 Employment. The Company hereby employs Executive as its
President. All of Executive's powers and authority in any capacity shall at all
times be subject to the direction and control of the Company's Board of
Directors. Executive accepts such employment and agrees to devote substantially
all of his business time, energies and attention to the performance of his
duties hereunder. Nothing herein shall be construed as preventing Executive from
making and supervising personal investments, provided they will not interfere
with the performance of Executive's duties hereunder or violate the provisions
of Section 5.4 hereof.
1.2 Duties. The Board may assign to Executive such general
management and executive duties for the Company or any subsidiary of the Company
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as are consistent with Executive's status as President. The Company and
Executive acknowledge that Executive's primary functions and duties as President
shall be, together with the Company's Co and Vice Chairmen of the Board, to
establish policies and strategies for the Company's overall business and
operations, including plans for growth and strategic partnerships.
1.3 Location. Executive shall be based in the New York
Metropolitan area, and shall undertake such occasional travel, within or without
the United States, as is reasonably necessary in the interests of the Company.
1.4 Attendance at Board Meetings. If, during the term hereof,
Executive is nominated to serve as a director of the Company but fails to be
elected, he shall nonetheless be invited to attend each meeting of the Board of
Directors of the Company through the remainder of the term hereof.
2. Compensation and Benefits.
2.1 Base Salary. The Company shall pay to Executive a salary
at the minimum annual rate of $200,000 during the term hereof (i.e., $16,667 per
month). Executive's compensation shall be paid in equal, periodic installments
in accordance with the Company's normal payroll procedures.
2.2 Commissions. Executive shall be entitled to receive,
together with the Joint Reps referred to below, an aggregate of 50% of the gross
brokerage commissions on customers' stock brokerage accounts with the Company or
any RPI Broker Dealer which are serviced by Executive or jointly serviced by
Executive and other registered representatives of the Company ("Joint Reps").
Additionally, the Company will pay to Executive 0.65% ("Override") of all
commissions and sales credits generated from customers of any person who is
employed as a retail broker by any RPI Broker Dealer other than Shochet
Securities, Inc. (including, but not limited to, sales credits and commissions
generated for initial public offerings and private placements) during the term
of Executive's employment hereunder. Notwithstanding the foregoing, (i) no
Override will be payable on commissions or sales credits generated by any of the
GBI Executives or GKN Executives (as each term is defined below); (ii) with
respect to any registered representative who commences employment with an RPI
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Broker Dealer after the date hereof and prior to the Commencement Date with a
"payout" greater than 55%, the Override payable to Executive on commissions
generated by such registered representative shall be reduced by 10% for each
full percentage point that such registered representative's payout is greater
than 55%; and (iii) with respect to any registered representative who commences
employment with an RPI Broker Dealer after the Commencement Date with a payout
greater than 50%, the Override payable to Executive on commissions generated by
such registered representative shall be reduced 10% for each full percentage
point that such registered representative's payout exceeds 50%. All Overrides
will be paid at least monthly, on or before the 15th day of each month.
2.3 Bonus. Executive shall participate in the "Pool," as
defined in the Company's 1996 Incentive Compensation Plan ("Plan"), for the year
ending January 31, 2000 ("2000 Pool") in the following manner. After the initial
payments to David Nussbaum, Roger Gladstone, Robert Gladstone and Peter Kent
(collectively, "GKN Executives") under the terms of their Employment Agreements
with the Company (all of which are being executed simultaneously herewith), the
balance of the Pool for such fiscal year shall be paid 50% to the GKN
Executives, as a group, and 50% to Executive and David Thalheim, Joseph Berland,
Mark Zeitchick and Vincent Mangone (collectively, "GBI Executives"), as a group.
The amount to be paid to each such person shall be determined by the Company's
Compensation Committee. The foregoing bonuses shall be payable as soon as
practicable after January 31, 2000, as determined under the terms of the Plan.
It is understood and agreed that the amount of the 2000 Pool will be calculated
after deducting all Overrides and bonuses for Company personnel.
2.4 Benefits. Executive shall be entitled to such medical,
life, disability and other benefits as are generally afforded to other senior
executives of the Company, subject to applicable waiting periods and other
conditions.
2.5 Vacation. Executive shall be entitled to four weeks of
vacation in each calendar year and to a reasonable number of other days off for
religious and personal reasons.
2.6 Automobile Reimbursement. Executive shall maintain a
suitable automobile for business use. The Company shall reimburse Executive for
the costs of leasing such automobile and for all other costs associated with the
use of the vehicle, including insurance costs, repairs and maintenance, up to
the maximum deductible amount allowable by law.
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2.7 Business Expenses. The Company will pay or reimburse
Executive for all transportation, hotel and other expenses reasonably incurred
by Executive on business trips and for all other ordinary and reasonable
out-of-pocket expenses actually incurred by him in the conduct of the business
of the Company against itemized vouchers submitted with respect to any such
expenses and approved in accordance with customary procedures.
3. Term and Termination.
3.1 Initial Term. The term of Executive's employment under
this Agreement shall commence ("Commencement Date") on the Effective Time (as
such term is defined in the Merger Agreement) and shall continue until the one
year anniversary thereof, unless sooner terminated as herein provided. If the
Merger is not consummated in accordance with the terms of the Merger Agreement,
this Agreement shall be null and void and of no further force or effect.
3.2 Termination Due to Death. If Executive dies during the
term of this Agreement, Executive's employment under this Agreement shall
thereupon terminate, except that the Company shall pay to the legal
representative of Executive's estate (i) the base salary, Overrides and
commissions due Executive pursuant to Sections 2.1 and 2.2 hereof through the
date of Executive's death, (ii) a pro rata allocation of bonus payments under
Section 2.3 during the year of death through the date of Executive's death,
(iii) all valid expense reimbursements through the date of the termination of
this Agreement, (iv) all accrued but unused vacation pay, and (v) all costs
associated with terminating the lease for Executive's automobile.
3.3 Termination Due to Disability. The Company, by notice to
Executive, may terminate Executive's employment under this Agreement if
Executive shall fail because of illness or incapacity to render, for six
consecutive months, services of the character contemplated by this Agreement.
Notwithstanding such termination, the Company shall pay to Executive (i) the
base salary, Overrides and commissions due Executive pursuant to Sections 2.1
and 2.2 hereof through the date of such notice, less any amount Executive
receives for such period from any Company-sponsored or Company-paid source of
insurance, disability compensation or government program, (ii) a pro rata
allocation of bonus payments under Section 2.3 during the year in which the
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disability commenced through the date of such notice, (iii) all valid expense
reimbursements through the date of the termination of this Agreement, (iv) all
accrued but unused vacation pay, and (v) all costs associated with terminating
the lease for Executive's automobile.
3.4 Termination by Company For Cause. The Company, by notice
to Executive, may terminate Executive's employment under this Agreement for
"Cause". As used herein, "Cause" shall mean: (i) the refusal or failure by
Executive to carry out specific directions of the Board which are of a material
nature and consistent with his status as President, or the refusal or failure by
Executive to perform a material part of Executive's duties hereunder; (ii) the
commission by Executive of a material breach of any of the provisions of this
Agreement; (iii) fraud or dishonest action by Executive in his relations with
the Company or any of its subsidiaries or affiliates ("dishonest" for these
purposes shall mean Executive's knowingly or recklessly making of a material
misstatement or omission for his personal benefit); or (iv) the conviction of
Executive of any crime involving an act of moral turpitude, or the imposition
against Executive of a permanent bar from association with a securities firm by
any Federal, state or regulatory agency or self-regulatory body after the
exhaustion of all judicial and administrative appeals therefrom. Notwithstanding
the foregoing, no "Cause" for termination shall be deemed to exist with respect
to Executive's acts described in clauses (i) or (ii) above, unless the Company
shall have given written notice to Executive specifying the "Cause" with
reasonable particularity and, within thirty calendar days after such notice,
Executive shall not have cured or eliminated the problem or thing giving rise to
such "Cause;" provided, however, that a repeated breach after notice and cure of
any provision of clauses (i) or (ii) above involving the same or substantially
similar actions or conduct, shall be grounds for termination for "Cause" without
any additional notice from the Company.
3.5 Termination and Resignation as Director. If Executive's
employment hereunder is terminated for any reason, then Executive shall, at the
Company's request, resign as a director of the Company and all of its
subsidiaries, effective upon the occurrence of such termination.
3.6 Termination by Executive For "Good Reason". The Executive,
by notice to the Company, may terminate Executive's employment under this
Agreement if a "Good Reason" exists. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following circumstances without
the Executive's prior express written consent: (i) a substantial and material
adverse change in the nature of Executive's title, duties or responsibilities
with the Company that represents a demotion from his title, duties or
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responsibilities as in effect immediately prior to such change; (ii) Executive
is not nominated to serve as a director by the Company or is removed from
service as a director of the Company; (iii) a substantial and material breach of
this Agreement by the Company; (iv) a failure by the Company to make any payment
to Executive when due, unless the payment is not material and is being contested
by the Company, in good faith; (v)(a) any person or entity other than the
Company and/or any officers or directors of the Company as of the date of this
Agreement acquires securities of the Company (in one or more transactions)
having 25% or more of the total voting power of all the Company's securities
then outstanding and (b) the Board of Directors of the Company does not
authorize or otherwise approve such acquisition; or (vi) a liquidation,
bankruptcy or receivership of the Company. Notwithstanding the foregoing, no
Good Reason shall be deemed to exist with respect to the Company's acts
described in clauses (i), (ii), (iii) or (iv) above, unless Executive shall have
given written notice to the Company specifying the Good Reason with reasonable
particularity and, within thirty calendar days after such notice, the Company
shall not have cured or eliminated the problem or thing giving rise to such Good
Reason; provided, however, that a repeated breach after notice and cure of any
provision of clauses (i), (ii), (iii) or (iv) above involving the same or
substantially similar actions or conduct, shall be grounds for termination for
Good Reason without any additional notice from Executive.
3.7 Compensation Upon Termination With Good Reason or Without
Cause. In the event that Executive terminates employment under this Agreement
for Good Reason, pursuant to the provisions of Section 3.6, or the Company
terminates employment under this Agreement without "Cause," as defined in
Section 3.4, the Company shall continue to pay to Executive (or in the case of
his death, the legal representative of Executive's estate or such other person
or persons as Executive shall have designated by written notice to the Company),
all payments, compensation and benefits required under Section 2 hereof through
the one-year anniversary of the Commencement Date; provided, however, that
Executive's insurance coverage shall terminate upon the Executive becoming
covered under a similar program by reason of employment elsewhere.
3.8 Employment as Registered Representative. If, at any time,
prior to the five-year anniversary of the Commencement Date, Executive's
employment as an executive officer of the Company is terminated (other than as a
result of termination under Sections 3.2, 3.3 or 3.4), then, notwithstanding
such termination, at Executive's request, the Company will cause an RPI Broker
Dealer to employ Executive as a registered representative and pay Executive
commissions in accordance with its commission "grid" then in effect.
Additionally, during such period of time as Executive is employed as a
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registered representative, the Company will make available to him the use of a
sales assistant and such amenities as is customary for registered
representatives with a similar level of commission business.
4. Indemnification.
(i) The Company agrees to indemnify Executive and hold
Executive harmless against all costs, expenses (including, without limitation,
reasonable attorneys' fees) and liabilities (other than settlements to which the
Company does not consent, which consent shall not be unreasonably withheld)
(collectively, "Losses") reasonably incurred by Executive in connection with any
claim, action, proceeding or investigation brought against or involving
Executive with respect to, arising out of or in any way relating to Executive's
employment with, or service as a director of, the Company or any subsidiary of
the Company; provided, however, that the Company shall not be required to
indemnify Executive for Losses incurred as a result of Executive's intentional
misconduct or gross negligence (other than matters where Executive acted in good
faith and in a manner he reasonably believed to be in and not opposed to the
Company's best interests). Executive shall promptly notify the Company of any
claim, action, proceeding or investigation under this Section and the Company
shall be entitled to participate in the defense of any such claim, action,
proceeding or investigation and, if it so chooses, to assume the defense with
counsel selected by the Company; provided that Executive shall have the right to
employ counsel to represent him (at the Company's expense) if Company counsel
would have a "conflict of interest" in representing both the Company and
Executive. The Company shall not settle or compromise any claim, action,
proceeding or investigation without Executive's consent, which consent shall not
be unreasonably withheld; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and the Company
fully indemnifies Executive in connection therewith. The Company further agrees
to advance any and all expenses (including, without limitation, the fees and
expenses of counsel) reasonably incurred by the Executive in connection with any
such claim, action, proceeding or investigation, provided Executive first enters
into an appropriate agreement for repayment of such advances if indemnification
is found not to have been available. The provisions of this Section 4 shall
survive the termination of this Agreement for any reason, except in the event
Executive's employment is terminated under Section 3.4(iii) or (iv) hereof, in
which event, this Section 4 shall be null and void and of no further force or
effect.
(ii) As a material inducement to Executive entering into
this Agreement, the Company agrees that, during the term of Executive's
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employment hereunder, it shall maintain directors and officers liability
insurance coverage at a level at least as favorable to the Executive as such
insurance which the Company currently maintains.
5. Protection of Confidential Information; Non-Competition.
5.1 Acknowledgments. Executive acknowledges that:
(i) As a result of his current and prior involvement with
the Company, Executive has obtained and will obtain secret and confidential
information concerning the business of the Company and its subsidiaries and
affiliates (referred to collectively in this Section 5 as the "Company"),
including, without limitation, financial information, proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information");
(ii) The Company will suffer substantial damage which will
be difficult to compute if, during the period of his employment with the Company
or thereafter, Executive should enter a business competitive with the Company or
divulge Confidential Information; and
(iii) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Company.
5.2 Nondisclosure. Executive agrees that he will not at any
time, either during the term of this Agreement or thereafter, divulge to any
person or entity any Confidential Information obtained or learned by him as a
result of his employment with the Company, except (i) in the course of
performing his duties hereunder, (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
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required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
5.3 Return of Confidential Materials. Upon termination of his
employment with the Company, Executive will promptly deliver to the Company all
memoranda, notes, records, reports, manuals, drawings, blueprints and other
documents (and all copies thereof) relating to the business of the Company and
all property associated therewith, which he may then possess or have under his
control; provided, however, that Executive shall be entitled to retain copies of
such documents reasonably necessary to document his financial relationship with
the Company.
5.4 Non-Competition.
(i) During the period commencing on the Commencement Date
and ending on the date Executive's employment hereunder is terminated (and, if
Executive's employment is terminated by the Company for "Cause" or by Executive
without "Good Reason," until the one-year anniversary of the Commencement Date),
Executive, without the prior written permission of the Company, shall not,
anywhere in the world, (i) be employed by, or render any services to, any
person, firm or corporation engaged in any business which is competitive with
the business being conducted by the Company or any of its subsidiaries at the
time Executive's employment is terminated ("Competitive Business"); (ii) engage
in any Competitive Business for his or its own account; (iii) be associated with
or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; or (iv) solicit,
interfere with, or endeavor to entice away from the Company, for the benefit of
a Competitive Business, any of its customers or other persons with whom the
Company has a contractual relationship. Notwithstanding the foregoing, nothing
in this Agreement shall preclude Executive from investing his personal assets in
any manner he chooses, provided, however, that Executive may not, during the
period referred to in this Section 5.4, own more than 4.9% of the equity
securities of any Competitive Business.
(ii) During the period commencing on the Commencement Date
and ending on the one-year anniversary of the date Executive's employment
hereunder is terminated, Executive, without the prior written permission of the
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Company, shall not, directly or indirectly, employ or retain, or have, assist or
cause any other person or entity to employ or retain, any person who was
employed or retained by the Company during the 60-day period prior to the date
Executive's employment is terminated.
5.5 Remedies. If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company
shall have the right and remedy:
(i) to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed by Executive that the services being rendered hereunder to the Company
are of a special, unique and extraordinary character and that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company; and
(ii) to require Executive to account for and pay over to the
Company all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections 5.2 or
5.4, and Executive hereby agrees to account for and pay over such damages to the
Company.
Each of the rights and remedies enumerated in this Section 5.5
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of or relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to be reimbursed by the other party for the
reasonable attorneys' fees and costs incurred by the prevailing party.
5.6 Unenforceability. If any provision of Sections 5.2 or 5.4
is held to be unenforceable because of the scope, duration or area of its
applicability, the tribunal making such determination shall have the power to
modify such scope, duration, or area, or all of them, and such provision or
provisions shall then be applicable in such modified form.
5.7 Survival. The provisions of this Section 5 shall survive
the termination of this Agreement for any reason, except in the event
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Executive's employment is terminated by the Company without "Cause" in breach of
this Agreement, or by Executive with "Good Reason," in either of which events,
this Section 5 shall be null and void and of no further force or effect.
6. Miscellaneous Provisions.
6.1 Notices. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class
postage prepaid, by certified mail, return receipt requested, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given as of the date of personal delivery or mailing
thereof.
If to Executive:
Richard J. Rosenstock
78 Tammy's Lane
Muttontown, New York 11791
If to the Company:
Research Partners International, Inc.
One State Street Plaza
New York, New York 10004
Attn: Chief Operating Officer
6.2 Entire Agreement. This Agreement sets forth the entire
agreement of the parties relating to the employment of Executive from and after
the Effective Time and is intended to supersede all prior negotiations,
understandings and agreements. No provisions of this Agreement, may be waived or
changed except by a writing by the party against whom such waiver or change is
sought to be enforced. The failure of any party to require performance of any
provision hereof or thereof shall in no manner affect the right at a later time
to enforce such provision.
6.3 Governing Law. All questions with respect to the
construction of this Agreement, and the rights and obligations of the parties
hereunder, shall be determined in accordance with the law of the State of New
York applicable to agreements made and to be performed entirely in New York.
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6.4 Successors; Assignability. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the Company.
This Agreement shall not be assignable by Executive, but shall inure to the
benefit of and be binding upon Executive's heirs and legal representatives.
6.5 Severability. Should any provision of this Agreement
become legally unenforceable, no other provision of this Agreement shall be
affected, and this Agreement shall continue as if the Agreement had been
executed absent the unenforceable provision.
6.6 Arbitration. Any claim or controversy arising out of or
related to this Agreement or its interpretation will be settled by arbitration
before the National Association of Securities Dealers, Inc. Judgment based upon
the decision of the arbitrators may be entered in any court having jurisdiction.
The governing law of this Agreement shall be the substantive and procedural law
of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ Richard J. Rosenstock
____________________________________
RICHARD J. ROSENSTOCK
RESEARCH PARTNERS INTERNATIONAL, INC.
/s/ Peter R. Kent
By:__________________________________
Name: Peter R. Kent
Title: Chief Operating Officer
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EXHIBIT 10.7 EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 4, 1998, between PETER R.
KENT, residing at 50 Corn Lane, Shrewsbury, New Jersey 07702 ("Executive"), and
RESEARCH PARTNERS INTERNATIONAL, INC., a Delaware corporation having its
principal office at One State Street Plaza, New York, New York 10004
("Company").
WHEREAS, the Company is engaged through its subsidiary
corporations (each an "RPI Broker Dealer") primarily in the business of
investment banking and securities brokerage; and
WHEREAS, concurrently herewith the Company is entering into an
Agreement and Plan of Merger with Gaines, Berland Inc. ("GBI"), RPII Acquisition
Corp. ("Newco"), a wholly-owned subsidiary of the Company, and those persons
named on the signature page thereof ("Merger Agreement"), pursuant to which
Newco will merge with and into GBI and GBI will become a wholly-owned subsidiary
of the Company ("Merger"); and
WHEREAS, the Company and the Executive desire that the
Executive's employment continue with the Company after the Merger pursuant to
the terms and conditions hereinafter set forth;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 Employment. The Company hereby employs Executive as its
Chief Executive Officer. All of Executive's powers and authority in any capacity
shall at all times be subject to the direction and control of the Company's
Board of Directors. Executive accepts such employment and agrees to devote
substantially all of his business time, energies and attention to the
performance of his duties hereunder. Nothing herein shall be construed as
preventing Executive from making and supervising personal investments, provided
they will not interfere with the performance of Executive's duties hereunder or
violate the provisions of Section 5.4 hereof.
1.2 Duties. The Board may assign to Executive such general
management and executive duties for the Company or any subsidiary of the Company
as are consistent with Executive's status as Chief Executive Officer. The
Company and Executive acknowledge that Executive's primary functions and duties
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as Chief Executive Officer shall be to manage and oversee (subject to the
employees of the Company who report to the Executive remaining primarily for
supervision of then designated divisions and functions) of the day-to-day
operations of the Company and its subsidiaries and to act as the Company's
principal executive officer.
1.3 Location. Executive shall be based in the New York
Metropolitan area, and shall undertake such occasional travel, within or without
the United States, as is reasonably necessary in the interests of the Company.
1.4 Attendance at Board Meetings. If, during the term hereof,
Executive is nominated to serve as a director of the Company but fails to be
elected, he shall nonetheless be invited to attend each meeting of the Board of
Directors of the Company through the remainder of the term hereof.
2. Compensation and Benefits.
2.1 Base Salary. The Company shall pay to Executive a salary
at the minimum annual rate of $240,000 during the term hereof (i.e., $20,000 per
month). Executive's compensation shall be paid in equal, periodic installments
in accordance with the Company's normal payroll procedures.
2.2 Commissions. Executive shall be entitled to receive,
together with the Joint Reps referred to below, an aggregate of 60% of the gross
brokerage commissions on customers' stock brokerage accounts with the Company or
any RPI Broker Dealer which are serviced by Executive or jointly serviced by
Executive and other registered representatives of the Company ("Joint Reps").
2.3 Bonus. Executive shall participate in the "Pool," as
defined in the Company's 1996 Incentive Compensation Plan ("Plan"), for the year
ending January 31, 2000 in the following manner. Executive, David M. Nussbaum,
Roger N. Gladstone and Robert H. Gladstone (collectively, "GKN Executives"), as
a group, shall be paid an aggregate amount from the Pool for such fiscal year
("2000 Pool") equal to the "Overrides" payable for such year to Joseph Berland,
Richard Rosenstock, Mark Zeitchick, Vincent Mangone and David Thalheim
(collectively, "GBI Executives") under the terms of their Employment Agreements
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with the Company (all of which are being executed simultaneously herewith), less
162/3% of all commissions payable to GKN Executives during such year. The amount
to be paid to each of the GKN Executives shall be determined by the Company's
Compensation Committee. The balance of the 2000 Pool shall be paid 50% to the
GKN Executives, as a group, and 50% to the GBI Executives, as a group, with the
amount to be paid to each such person being determined by the Compensation
Committee. The foregoing bonuses shall be payable as soon as practicable after
January 31, 2000, as determined under the terms of the Plan. It is understood
and agreed that the amount of the 2000 Pool will be calculated after deducting
Overrides and bonuses for Company personnel.
2.4 Benefits. Executive shall be entitled to such medical,
life, disability and other benefits as are generally afforded to other senior
executives of the Company, subject to applicable waiting periods and other
conditions.
2.5 Vacation. Executive shall be entitled to four weeks of
vacation in each calendar year and to a reasonable number of other days off for
religious and personal reasons.
2.6 Automobile Reimbursement. Executive shall maintain a
suitable automobile for business use. The Company shall reimburse Executive for
the costs of leasing such automobile and for all other costs associated with the
use of the vehicle, including insurance costs, repairs and maintenance, up to
the maximum deductible amount allowable by law.
2.7 Business Expenses. The Company will pay or reimburse
Executive for all transportation, hotel and other expenses reasonably incurred
by Executive on business trips and for all other ordinary and reasonable
out-of-pocket expenses actually incurred by him in the conduct of the business
of the Company against itemized vouchers submitted with respect to any such
expenses and approved in accordance with customary procedures.
3. Term and Termination.
3.1 Initial Term. The term of Executive's employment under
this Agreement shall commence ("Commencement Date") on the Effective Time (as
such term is defined in the Merger Agreement) and shall continue until the one
year anniversary thereof, unless sooner terminated as herein provided. From and
after the Commencement Date, Executive's current employment agreement with the
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Company will be null and void and of no further force or effect. If the Merger
is not consummated in accordance with the terms of the Merger Agreement, this
Agreement shall be null and void and of no further force or effect.
3.2 Termination Due to Death. If Executive dies during the
term of this Agreement, Executive's employment under this Agreement shall
thereupon terminate, except that the Company shall pay to the legal
representative of Executive's estate (i) the base salary and commissions due
Executive pursuant to Sections 2.1 and 2.2 hereof through the date of
Executive's death, (ii) a pro rata allocation of bonus payments under Section
2.3 during the year of death through the date of Executive's death, (iii) all
valid expense reimbursements through the date of the termination of this
Agreement, (iv) all accrued but unused vacation pay, and (v) all costs
associated with terminating the lease for Executive's automobile.
3.3 Termination Due to Disability. The Company, by notice to
Executive, may terminate Executive's employment under this Agreement if
Executive shall fail because of illness or incapacity to render, for six
consecutive months, services of the character contemplated by this Agreement.
Notwithstanding such termination, the Company shall pay to Executive (i) the
base salary and commissions due Executive pursuant to Sections 2.1 and 2.2
hereof through the date of such notice, less any amount Executive receives for
such period from any Company-sponsored or Company-paid source of insurance,
disability compensation or government program, (ii) a pro rata allocation of
bonus payments under Section 2.3 during the year in which the disability
commenced through the date of such notice, (iii) all valid expense
reimbursements through the date of the termination of this Agreement, (iv) all
accrued but unused vacation pay, and (v) all costs associated with terminating
the lease for Executive's automobile.
3.4 Termination by Company For Cause. The Company, by notice
to Executive, may terminate Executive's employment under this Agreement for
"Cause". As used herein, "Cause" shall mean: (i) the refusal or failure by
Executive to carry out specific directions of the Board which are of a material
nature and consistent with his status as Chief Executive Officer, or the refusal
or failure by Executive to perform a material part of Executive's duties
hereunder; (ii) the commission by Executive of a material breach of any of the
provisions of this Agreement; (iii) fraud or dishonest action by Executive in
his relations with the Company or any of its subsidiaries or affiliates
("dishonest" for these purposes shall mean Executive's knowingly or recklessly
making of a material misstatement or omission for his personal benefit); or (iv)
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the conviction of Executive of any crime involving an act of moral turpitude, or
the imposition against Executive of a permanent bar from association with a
securities firm by any Federal, state or regulatory agency or self-regulatory
body after the exhaustion of all judicial and administrative appeals therefrom.
Notwithstanding the foregoing, no "Cause" for termination shall be deemed to
exist with respect to Executive's acts described in clauses (i) or (ii) above,
unless the Company shall have given written notice to Executive specifying the
"Cause" with reasonable particularity and, within thirty calendar days after
such notice, Executive shall not have cured or eliminated the problem or thing
giving rise to such "Cause;" provided, however, that a repeated breach after
notice and cure of any provision of clauses (i) or (ii) above involving the same
or substantially similar actions or conduct, shall be grounds for termination
for "Cause" without any additional notice from the Company.
3.5 Termination and Resignation as Director. If Executive's
employment hereunder is terminated for any reason, then Executive shall, at the
Company's request, resign as a director of the Company and all of its
subsidiaries, effective upon the occurrence of such termination.
3.6 Termination by Executive For "Good Reason". The Executive,
by notice to the Company, may terminate Executive's employment under this
Agreement if a "Good Reason" exists. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following circumstances without
the Executive's prior express written consent: (i) a substantial and material
adverse change in the nature of Executive's title, duties or responsibilities
with the Company that represents a demotion from his title, duties or
responsibilities as in effect immediately prior to such change; (ii) Executive
is not nominated to serve as a director by the Company or is removed from
service as a director of the Company; (iii) a substantial and material breach of
this Agreement by the Company; (iv) a failure by the Company to make any payment
to Executive when due, unless the payment is not material and is being contested
by the Company, in good faith; (v)(a) any person or entity other than the
Company and/or any officers or directors of the Company as of the date of this
Agreement acquires securities of the Company (in one or more transactions)
having 25% or more of the total voting power of all the Company's securities
then outstanding and (b) the Board of Directors of the Company does not
authorize or otherwise approve such acquisition; or (vi) a liquidation,
bankruptcy or receivership of the Company. Notwithstanding the foregoing, no
Good Reason shall be deemed to exist with respect to the Company's acts
described in clauses (i), (ii), (iii) or (iv) above, unless Executive shall have
given written notice to the Company specifying the Good Reason with reasonable
particularity and, within thirty calendar days after such notice, the Company
shall not have cured or eliminated the problem or thing giving rise to such
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Good Reason; provided, however, that a repeated breach after notice and cure of
any provision of clauses (i), (ii), (iii) or (iv) above involving the same or
substantially similar actions or conduct, shall be grounds for termination for
Good Reason without any additional notice from Executive.
3.7 Compensation Upon Termination With Good Reason or Without
Cause. In the event that Executive terminates employment under this Agreement
for Good Reason, pursuant to the provisions of Section 3.6, or the Company
terminates employment under this Agreement without "Cause," as defined in
Section 3.4, the Company shall continue to pay to Executive (or in the case of
his death, the legal representative of Executive's estate or such other person
or persons as Executive shall have designated by written notice to the Company),
all payments, compensation and benefits required under Section 2 hereof through
the one-year anniversary of the Commencement Date; provided, however, that
Executive's insurance coverage shall terminate upon the Executive becoming
covered under a similar program by reason of employment elsewhere.
3.8 Employment as Registered Representative. If, at any time,
prior to the five-year anniversary of the Commencement Date, Executive's
employment as an executive officer of the Company is terminated (other than as a
result of termination under Sections 3.2, 3.3 or 3.4), then, notwithstanding
such termination, at Executive's request, the Company will cause an RPI Broker
Dealer to employ Executive as a registered representative and pay Executive
commissions in accordance with its commission "grid" then in effect.
Additionally, during such period of time as Executive is employed as a
registered representative, the Company will make available to him the use of a
sales assistant and such amenities as is customary for registered
representatives with a similar level of commission business.
4. Indemnification.
(i) The Company agrees to indemnify Executive and hold
Executive harmless against all costs, expenses (including, without limitation,
reasonable attorneys' fees) and liabilities (other than settlements to which the
Company does not consent, which consent shall not be unreasonably withheld)
(collectively, "Losses") reasonably incurred by Executive in connection with any
claim, action, proceeding or investigation brought against or involving
Executive with respect to, arising out of or in any way relating to Executive's
employment with, or service as a director of, the Company or any subsidiary of
the Company; provided, however, that the Company shall not be required to
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indemnify Executive for Losses incurred as a result of Executive's intentional
misconduct or gross negligence (other than matters where Executive acted in good
faith and in a manner he reasonably believed to be in and not opposed to the
Company's best interests). Executive shall promptly notify the Company of any
claim, action, proceeding or investigation under this Section and the Company
shall be entitled to participate in the defense of any such claim, action,
proceeding or investigation and, if it so chooses, to assume the defense with
counsel selected by the Company; provided that Executive shall have the right to
employ counsel to represent him (at the Company's expense) if Company counsel
would have a "conflict of interest" in representing both the Company and
Executive. The Company shall not settle or compromise any claim, action,
proceeding or investigation without Executive's consent, which consent shall not
be unreasonably withheld; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and the Company
fully indemnifies Executive in connection therewith. The Company further agrees
to advance any and all expenses (including, without limitation, the fees and
expenses of counsel) reasonably incurred by the Executive in connection with any
such claim, action, proceeding or investigation, provided Executive first enters
into an appropriate agreement for repayment of such advances if indemnification
is found not to have been available. The provisions of this Section 4 shall
survive the termination of this Agreement for any reason, except in the event
Executive's employment is terminated under Section 3.4(iii) or (iv) hereof, in
which event, this Section 4 shall be null and void and of no further force or
effect.
(ii) As a material inducement to Executive entering into
this Agreement, the Company agrees that during the term of Executive's
employment hereunder, it shall maintain directors and officers liability
insurance coverage at a level at least as favorable to the Executive as such
insurance which the Company currently maintains.
5. Protection of Confidential Information; Non-Competition.
5.1 Acknowledgments. Executive acknowledges that:
(i) As a result of his current and prior involvement with
the Company, Executive has obtained and will obtain secret and confidential
information concerning the business of the Company and its subsidiaries and
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affiliates (referred to collectively in this Section 5 as the "Company"),
including, without limitation, financial information, proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information");
(ii) The Company will suffer substantial damage which will
be difficult to compute if, during the period of his employment with the Company
or thereafter, Executive should enter a business competitive with the Company or
divulge Confidential Information; and
(iii) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Company.
5.2 Nondisclosure. Executive agrees that he will not at any
time, either during the term of this Agreement or thereafter, divulge to any
person or entity any Confidential Information obtained or learned by him as a
result of his employment with the Company, except (i) in the course of
performing his duties hereunder, (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
5.3 Return of Confidential Materials. Upon termination of his
employment with the Company, Executive will promptly deliver to the Company all
memoranda, notes, records, reports, manuals, drawings, blueprints and other
documents (and all copies thereof) relating to the business of the Company and
all property associated therewith, which he may then possess or have under his
control; provided, however, that Executive shall be entitled to retain copies of
such documents reasonably necessary to document his financial relationship with
the Company.
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5.4 Non-Competition.
(i) During the period commencing on the Commencement Date
and ending on the date Executive's employment hereunder is terminated (and, if
Executive's employment is terminated by the Company for "Cause" or by Executive
without "Good Reason," until the one-year anniversary of the Commencement Date),
Executive, without the prior written permission of the Company, shall not,
anywhere in the world, (i) be employed by, or render any services to, any
person, firm or corporation engaged in any business which is competitive with
the business being conducted by the Company or any of its subsidiaries at the
time Executive's employment is terminated ("Competitive Business"); (ii) engage
in any Competitive Business for his or its own account; (iii) be associated with
or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; or (iv) solicit,
interfere with, or endeavor to entice away from the Company, for the benefit of
a Competitive Business, any of its customers or other persons with whom the
Company has a contractual relationship. Notwithstanding the foregoing, nothing
in this Agreement shall preclude Executive from investing his personal assets in
any manner he chooses, provided, however, that Executive may not, during the
period referred to in this Section 5.4, own more than 4.9% of the equity
securities of any Competitive Business.
(ii) During the period commencing on the Commencement Date
and ending on the one-year anniversary of the date Executive's employment
hereunder is terminated, Executive, without the prior written permission of the
Company, shall not, directly or indirectly, employ or retain, or have, assist or
cause any other person or entity to employ or retain, any person who was
employed or retained by the Company during the 60-day period prior to the date
Executive's employment is terminated.
5.5 Remedies. If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company
shall have the right and remedy:
(i) to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed by Executive that the services being rendered hereunder to the Company
are of a special, unique and extraordinary character and that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company; and
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(ii) to require Executive to account for and pay over to the
Company all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections 5.2 or
5.4, and Executive hereby agrees to account for and pay over such damages to the
Company.
Each of the rights and remedies enumerated in this Section 5.5
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of or relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to be reimbursed by the other party for the
reasonable attorneys' fees and costs incurred by the prevailing party.
5.6 Unenforceability. If any provision of Sections 5.2 or 5.4
is held to be unenforceable because of the scope, duration or area of its
applicability, the tribunal making such determination shall have the power to
modify such scope, duration, or area, or all of them, and such provision or
provisions shall then be applicable in such modified form.
5.7 Survival. The provisions of this Section 5 shall survive
the termination of this Agreement for any reason, except in the event
Executive's employment is terminated by the Company without "Cause" in breach of
this Agreement, or by Executive with "Good Reason," in either of which events,
this Section 5 shall be null and void and of no further force or effect.
6. Miscellaneous Provisions.
6.1 Notices. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class
postage prepaid, by certified mail, return receipt requested, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given as of the date of personal delivery or mailing
thereof.
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If to Executive:
Peter R. Kent
50 Corn Lane
Shrewsbury, New Jersey 07702
If to the Company:
Research Partners International, Inc.
One State Street Plaza
New York, New York 10004
Attn: Chief Operating Officer
6.2 Entire Agreement. This Agreement sets forth the entire
agreement of the parties relating to the employment of Executive from and after
the Effective Time and is intended to supersede all prior negotiations,
understandings and agreements. No provisions of this Agreement, may be waived or
changed except by a writing by the party against whom such waiver or change is
sought to be enforced. The failure of any party to require performance of any
provision hereof or thereof shall in no manner affect the right at a later time
to enforce such provision.
6.3 Governing Law. All questions with respect to the
construction of this Agreement, and the rights and obligations of the parties
hereunder, shall be determined in accordance with the law of the State of New
York applicable to agreements made and to be performed entirely in New York.
6.4 Successors; Assignability. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the Company.
This Agreement shall not be assignable by Executive, but shall inure to the
benefit of and be binding upon Executive's heirs and legal representatives.
6.5 Severability. Should any provision of this Agreement
become legally unenforceable, no other provision of this Agreement shall be
affected, and this Agreement shall continue as if the Agreement had been
executed absent the unenforceable provision.
6.6 Arbitration. Any claim or controversy arising out of or
related to this Agreement or its interpretation will be settled by arbitration
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before the National Association of Securities Dealers, Inc. Judgment based upon
the decision of the arbitrators may be entered in any court having jurisdiction.
The governing law of this Agreement shall be the substantive and procedural law
of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ Peter R. Kent
______________________________________
PETER R. KENT
RESEARCH PARTNERS INTERNATIONAL, INC.
/s/ David M. Nussbaum
By:__________________________________
Name: David M. Nussbaum
Title: Chief Executive Officer
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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 4, 1998, between DAVID THALHEIM, residing
at 6 Trusdale Drive, Old Westbury, New York 11568 ("Executive"), and RESEARCH
PARTNERS INTERNATIONAL, INC., a Delaware corporation having its principal office
at One State Street Plaza, New York, New York 10004 ("Company").
WHEREAS, the Company is engaged through its subsidiary corporations (each
an "RPI Broker Dealer") primarily in the business of investment banking and
securities brokerage; and
WHEREAS, concurrently herewith the Company is entering into an Agreement
and Plan of Merger with Gaines, Berland Inc. ("GBI"), RPII Acquisition Corp.
("Newco"), a wholly-owned subsidiary of the Company, and those persons named on
the signature page thereof ("Merger Agreement"), pursuant to which Newco will
merge with and into GBI and GBI will become a wholly-owned subsidiary of the
Company ("Merger"); and
WHEREAS, the Company and the Executive desire that the Executive commence
employment with the Company after the Merger pursuant to the terms and
conditions hereinafter set forth;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 Employment. The Company hereby employs Executive as its
Chief Operating Officer. All of Executive's powers and authority in any capacity
shall at all times be subject to the direction and control of the Company's
Board of Directors. Executive accepts such employment and agrees to devote
substantially all of his business time, energies and attention to the
performance of his duties hereunder. In Executive's discretion, up to 50% of the
services to be rendered hereunder may be rendered by Executive through Imperial
International Group, Inc. ("Imperial"), his wholly-owned consultation firm (in
which event a pro rata portion of Executive's salary shall be paid as consulting
fees to Imperial). Nothing herein shall be construed as preventing Executive
from making and supervising personal investments, provided they will not
interfere with the performance of Executive's duties hereunder or violate the
provisions of Section 5.4 hereof.
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1.2 Duties. The Board may assign to Executive such general
management and executive duties for the Company or any subsidiary of the Company
as are consistent with Executive's status as Chief Operating Officer. The
Company and Executive acknowledge that Executive's primary functions and duties
as Chief Operating Officer shall be to manage and oversee (subject to the
employees of the Company who report to the Executive remaining primarily
responsible for supervision of their designated divisions and functions) of the
day-to-day operations of the Company and its subsidiaries.
1.3 Location. Executive shall be based in the New York
Metropolitan area, and shall undertake such occasional travel, within or without
the United States, as is reasonably necessary in the interests of the Company.
1.4 Attendance at Board Meetings. If, during the term hereof,
Executive is nominated to serve as a director of the Company but fails to be
elected, he shall nonetheless be invited to attend each meeting of the Board of
Directors of the Company through the remainder of the term hereof.
2. Compensation and Benefits.
2.1 Base Salary. The Company shall pay to Executive a salary
at the minimum annual rate of $200,000 during the term hereof (i.e., $16,667 per
month). Executive's compensation shall be paid in equal, periodic installments
in accordance with the Company's normal payroll procedures.
2.2 Commissions. Executive shall be entitled to receive,
together with the Joint Reps referred to below, an aggregate of 50% of the gross
brokerage commissions on customers' stock brokerage accounts with the Company or
any RPI Broker Dealer which are serviced by Executive or jointly serviced by
Executive and other registered representatives of the Company ("Joint Reps").
Additionally, subject to the last sentence of this Section 2.2, the Company will
pay to Executive 0.4% ("Override") of all commissions and sales credits
generated from customers of any person who is employed as a retail broker by any
RPI Broker Dealer other than Shochet Securities, Inc. (including, but not
limited to, sales credits and commissions generated for initial public offerings
and private placements) during the term of Executive's employment hereunder.
Notwithstanding the foregoing, (i) no Override will be payable on commissions or
sales credits generated by any of the GBI Executives or GKN Executives (as each
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term is defined below); (ii) with respect to any registered representative who
commences employment with an RPI Broker Dealer after the date hereof and prior
to the Commencement Date with a "payout" greater than 55%, the Override payable
to Executive on commissions generated by such registered representative shall be
reduced by 10% for each full percentage point that such registered
representative's payout is greater than 55%; and (iii) with respect to any
registered representative who commences employment with an RPI Broker Dealer
after the Commencement Date with a payout greater than 50%, the Override payable
to Executive on commissions generated by such registered representative shall be
reduced 10% for each full percentage point that such registered representative's
payout exceeds 50%. The Overrides will be paid to Executive only if, and to the
extent, the Company has, on a consolidated basis, pre-tax income for the fiscal
year ending January 31, 2000.
2.3 Bonus. Executive shall participate in the "Pool," as
defined in the Company's 1996 Incentive Compensation Plan ("Plan"), for the year
ending January 31, 2000 ("2000 Pool") in the following manner. After the initial
payments to David Nussbaum, Roger Gladstone, Robert Gladstone and Peter Kent
(collectively, "GKN Executives") under the terms of their Employment Agreements
with the Company (all of which are being executed simultaneously herewith), the
balance of the Pool for such fiscal year shall be paid 50% to the GKN
Executives, as a group, and 50% to Executive and Joseph Berland, Richard J.
Rosenstock, Mark Zeitchick and Vincent Mangone (collectively, "GBI Executives"),
as a group. The amount to be paid to each such person shall be determined by the
Company's Compensation Committee. The foregoing bonuses shall be payable as soon
as practicable after January 31, 2000, as determined under the terms of the
Plan. It is understood and agreed that the amount of the 2000 Pool will be
calculated after deducting all Overrides and bonuses for Company personnel.
2.4 Benefits. Executive shall be entitled to such medical,
life, disability and other benefits as are generally afforded to other senior
executives of the Company, subject to applicable waiting periods and other
conditions.
2.5 Vacation. Executive shall be entitled to four weeks of
vacation in each calendar year and to a reasonable number of other days off for
religious and personal reasons.
2.6 Automobile Reimbursement. Executive shall maintain a
suitable automobile for business use. The Company shall reimburse Executive for
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the costs of leasing such automobile and for all other costs associated with the
use of the vehicle, including insurance costs, repairs and maintenance, up to
the maximum deductible amount allowable by law.
2.7 Business Expenses. The Company will pay or reimburse
Executive for all transportation, hotel and other expenses reasonably incurred
by Executive on business trips and for all other ordinary and reasonable
out-of-pocket expenses actually incurred by him in the conduct of the business
of the Company against itemized vouchers submitted with respect to any such
expenses and approved in accordance with customary procedures.
3. Term and Termination.
3.1 Initial Term. The term of Executive's employment under
this Agreement shall commence ("Commencement Date") on the Effective Time (as
such term is defined in the Merger Agreement) and shall continue until the one
year anniversary thereof, unless sooner terminated as herein provided. If the
Merger is not consummated in accordance with the terms of the Merger Agreement,
this Agreement shall be null and void and of no further force or effect.
3.2 Termination Due to Death. If Executive dies during the
term of this Agreement, Executive's employment under this Agreement shall
thereupon terminate, except that the Company shall pay to the legal
representative of Executive's estate (i) the base salary, Overrides and
commissions due Executive pursuant to Sections 2.1 and 2.2 hereof through the
date of Executive's death, (ii) a pro rata allocation of bonus payments under
Section 2.3 during the year of death through the date of Executive's death,
(iii) all valid expense reimbursements through the date of the termination of
this Agreement, (iv) all accrued but unused vacation pay, and (v) all costs
associated with terminating the lease for Executive's automobile.
3.3 Termination Due to Disability. The Company, by notice to
Executive, may terminate Executive's employment under this Agreement if
Executive shall fail because of illness or incapacity to render, for six
consecutive months, services of the character contemplated by this Agreement.
Notwithstanding such termination, the Company shall pay to Executive (i) the
base salary, Overrides and commissions due Executive pursuant to Sections 2.1
and 2.2 hereof through the date of such notice, less any amount Executive
receives for such period from any Company-sponsored or Company-paid source of
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insurance, disability compensation or government program, (ii) a pro rata
allocation of bonus payments under Section 2.3 during the year in which the
disability commenced through the date of such notice, (iii) all valid expense
reimbursements through the date of the termination of this Agreement, (iv) all
accrued but unused vacation pay, and (v) all costs associated with terminating
the lease for Executive's automobile.
3.4 Termination by Company For Cause. The Company, by notice
to Executive, may terminate Executive's employment under this Agreement for
"Cause". As used herein, "Cause" shall mean: (i) the refusal or failure by
Executive to carry out specific directions of the Board which are of a material
nature and consistent with his status as Chief Operating Officer, or the refusal
or failure by Executive to perform a material part of Executive's duties
hereunder; (ii) the commission by Executive of a material breach of any of the
provisions of this Agreement; (iii) fraud or dishonest action by Executive in
his relations with the Company or any of its subsidiaries or affiliates
("dishonest" for these purposes shall mean Executive's knowingly or recklessly
making of a material misstatement or omission for his personal benefit); or (iv)
the conviction of Executive of any crime involving an act of moral turpitude, or
the imposition against Executive of a permanent bar from association with a
securities firm by any Federal, state or regulatory agency or self-regulatory
body after the exhaustion of all judicial and administrative appeals therefrom.
Notwithstanding the foregoing, no "Cause" for termination shall be deemed to
exist with respect to Executive's acts described in clauses (i) or (ii) above,
unless the Company shall have given written notice to Executive specifying the
"Cause" with reasonable particularity and, within thirty calendar days after
such notice, Executive shall not have cured or eliminated the problem or thing
giving rise to such "Cause;" provided, however, that a repeated breach after
notice and cure of any provision of clauses (i) or (ii) above involving the same
or substantially similar actions or conduct, shall be grounds for termination
for "Cause" without any additional notice from the Company.
3.5 Termination and Resignation as Director. If Executive's
employment hereunder is terminated for any reason, then Executive shall, at the
Company's request, resign as a director of the Company and all of its
subsidiaries, effective upon the occurrence of such termination.
3.6 Termination by Executive For "Good Reason". The Executive,
by notice to the Company, may terminate Executive's employment under this
Agreement if a "Good Reason" exists. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following circumstances without
the Executive's prior express written consent: (i) a substantial and material
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adverse change in the nature of Executive's title, duties or responsibilities
with the Company that represents a demotion from his title, duties or
responsibilities as in effect immediately prior to such change; (ii) Executive
is not nominated to serve as a director by the Company or is removed from
service as a director of the Company; (iii) a substantial and material breach of
this Agreement by the Company; (iv) a failure by the Company to make any payment
to Executive when due, unless the payment is not material and is being contested
by the Company, in good faith; (v)(a) any person or entity other than the
Company and/or any officers or directors of the Company as of the date of this
Agreement acquires securities of the Company (in one or more transactions)
having 25% or more of the total voting power of all the Company's securities
then outstanding and (b) the Board of Directors of the Company does not
authorize or otherwise approve such acquisition; or (vi) a liquidation,
bankruptcy or receivership of the Company. Notwithstanding the foregoing, no
Good Reason shall be deemed to exist with respect to the Company's acts
described in clauses (i), (ii), (iii) or (iv) above, unless Executive shall have
given written notice to the Company specifying the Good Reason with reasonable
particularity and, within thirty calendar days after such notice, the Company
shall not have cured or eliminated the problem or thing giving rise to such Good
Reason; provided, however, that a repeated breach after notice and cure of any
provision of clauses (i), (ii), (iii) or (iv) above involving the same or
substantially similar actions or conduct, shall be grounds for termination for
Good Reason without any additional notice from Executive.
3.7 Compensation Upon Termination With Good Reason or Without
Cause. In the event that Executive terminates employment under this Agreement
for Good Reason, pursuant to the provisions of Section 3.6, or the Company
terminates employment under this Agreement without "Cause," as defined in
Section 3.4, the Company shall continue to pay to Executive (or in the case of
his death, the legal representative of Executive's estate or such other person
or persons as Executive shall have designated by written notice to the Company),
all payments, compensation and benefits required under Section 2 hereof through
the one-year anniversary of the Commencement Date; provided, however, that
Executive's insurance coverage shall terminate upon the Executive becoming
covered under a similar program by reason of employment elsewhere.
3.8 Employment as Registered Representative. If, at any time,
prior to the five-year anniversary of the Commencement Date, Executive's
employment as an executive officer of the Company is terminated (other than as a
result of termination under Sections 3.2, 3.3 or 3.4), then, notwithstanding
such termination, at Executive's request, the Company will cause an RPI Broker
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Dealer to employ Executive as a registered representative and pay Executive
commissions in accordance with its commission "grid" then in effect.
Additionally, during such period of time as Executive is employed as a
registered representative, the Company will make available to him the use of a
sales assistant and such amenities as is customary for registered
representatives with a similar level of commission business.
4. Indemnification.
(i) The Company agrees to indemnify Executive and hold Executive
harmless against all costs, expenses (including, without limitation, reasonable
attorneys' fees) and liabilities (other than settlements to which the Company
does not consent, which consent shall not be unreasonably withheld)
(collectively, "Losses") reasonably incurred by Executive in connection with any
claim, action, proceeding or investigation brought against or involving
Executive with respect to, arising out of or in any way relating to Executive's
employment with, or service as a director of, the Company or any subsidiary of
the Company; provided, however, that the Company shall not be required to
indemnify Executive for Losses incurred as a result of Executive's intentional
misconduct or gross negligence (other than matters where Executive acted in good
faith and in a manner he reasonably believed to be in and not opposed to the
Company's best interests). Executive shall promptly notify the Company of any
claim, action, proceeding or investigation under this Section and the Company
shall be entitled to participate in the defense of any such claim, action,
proceeding or investigation and, if it so chooses, to assume the defense with
counsel selected by the Company; provided that Executive shall have the right to
employ counsel to represent him (at the Company's expense) if Company counsel
would have a "conflict of interest" in representing both the Company and
Executive. The Company shall not settle or compromise any claim, action,
proceeding or investigation without Executive's consent, which consent shall not
be unreasonably withheld; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and the Company
fully indemnifies Executive in connection therewith. The Company further agrees
to advance any and all expenses (including, without limitation, the fees and
expenses of counsel) reasonably incurred by the Executive in connection with any
such claim, action, proceeding or investigation, provided Executive first enters
into an appropriate agreement for repayment of such advances if indemnification
is found not to have been available. The provisions of this Section 4 shall
survive the termination of this Agreement for any reason, except in the event
Executive's employment is terminated under Section 3.4(iii) or (iv) hereof, in
which event, this Section 4 shall be null and void and of no further force or
effect.
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(ii) As a material inducement to Executive entering into this
Agreement, the Company agrees that during the term of Executive's employment
hereunder, it shall maintain directors and officers liability insurance coverage
at a level at least as favorable to the Executive as such insurance which the
Company currently maintains.
5. Protection of Confidential Information; Non-Competition.
5.1 Acknowledgments. Executive acknowledges that:
(i) As a result of his current and prior involvement with the
Company, Executive has obtained and will obtain secret and confidential
information concerning the business of the Company and its subsidiaries and
affiliates (referred to collectively in this Section 5 as the "Company"),
including, without limitation, financial information, proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information");
(ii) The Company will suffer substantial damage which will be
difficult to compute if, during the period of his employment with the Company or
thereafter, Executive should enter a business competitive with the Company or
divulge Confidential Information; and
(iii) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Company.
5.2 Nondisclosure. Executive agrees that he will not at any
time, either during the term of this Agreement or thereafter, divulge to any
person or entity any Confidential Information obtained or learned by him as a
result of his employment with the Company, except (i) in the course of
performing his duties hereunder, (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
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expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
5.3 Return of Confidential Materials. Upon termination of his
employment with the Company, Executive will promptly deliver to the Company all
memoranda, notes, records, reports, manuals, drawings, blueprints and other
documents (and all copies thereof) relating to the business of the Company and
all property associated therewith, which he may then possess or have under his
control; provided, however, that Executive shall be entitled to retain copies of
such documents reasonably necessary to document his financial relationship with
the Company.
5.4 Non-Competition.
(i) During the period commencing on the Commencement Date
and ending on the date Executive's employment hereunder is terminated (and, if
Executive's employment is terminated by the Company for "Cause" or by Executive
without "Good Reason," until the one-year anniversary of the Commencement Date),
Executive, without the prior written permission of the Company, shall not,
anywhere in the world, (i) be employed by, or render any services to, any
person, firm or corporation engaged in any business which is competitive with
the business being conducted by the Company or any of its subsidiaries at the
time Executive's employment is terminated ("Competitive Business"); (ii) engage
in any Competitive Business for his or its own account; (iii) be associated with
or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; or (iv) solicit,
interfere with, or endeavor to entice away from the Company, for the benefit of
a Competitive Business, any of its customers or other persons with whom the
Company has a contractual relationship. Notwithstanding the foregoing, nothing
in this Agreement shall preclude Executive from investing his personal assets in
any manner he chooses, provided, however, that Executive may not, during the
period referred to in this Section 5.4, own more than 4.9% of the equity
securities of any Competitive Business.
(ii) During the period commencing on the Commencement Date
and ending on the one-year anniversary of the date Executive's employment
hereunder is terminated, Executive, without the prior written permission of the
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Company, shall not, directly or indirectly, employ or retain, or have, assist or
cause any other person or entity to employ or retain, any person who was
employed or retained by the Company during the 60-day period prior to the date
Executive's employment is terminated.
5.5 Remedies. If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company
shall have the right and remedy:
(i) to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed by Executive that the services being rendered hereunder to the Company
are of a special, unique and extraordinary character and that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company; and
(ii) to require Executive to account for and pay over to the
Company all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections 5.2 or
5.4, and Executive hereby agrees to account for and pay over such damages to the
Company.
Each of the rights and remedies enumerated in this Section 5.5
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of or relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to be reimbursed by the other party for the
reasonable attorneys' fees and costs incurred by the prevailing party.
5.6 Unenforceability. If any provision of Sections 5.2 or 5.4
is held to be unenforceable because of the scope, duration or area of its
applicability, the tribunal making such determination shall have the power to
modify such scope, duration, or area, or all of them, and such provision or
provisions shall then be applicable in such modified form.
5.7 Survival. The provisions of this Section 5 shall survive
the termination of this Agreement for any reason, except in the event
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Executive's employment is terminated by the Company without "Cause" in breach of
this Agreement, or by Executive with "Good Reason," in either of which events,
this Section 5 shall be null and void and of no further force or effect.
6. Miscellaneous Provisions.
6.1 Notices. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class
postage prepaid, by certified mail, return receipt requested, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given as of the date of personal delivery or mailing
thereof.
If to Executive:
David Thalheim
6 Trusdale Drive
Old Westbury, New York 11568
If to the Company:
Research Partners International, Inc.
One State Street Plaza
New York, New York 10004
Attn: Chief Operating Officer
6.2 Entire Agreement. This Agreement sets forth the entire
agreement of the parties relating to the employment of Executive from and after
the Effective Time and is intended to supersede all prior negotiations,
understandings and agreements. No provisions of this Agreement, may be waived or
changed except by a writing by the party against whom such waiver or change is
sought to be enforced. The failure of any party to require performance of any
provision hereof or thereof shall in no manner affect the right at a later time
to enforce such provision.
6.3 Governing Law. All questions with respect to the
construction of this Agreement, and the rights and obligations of the parties
hereunder, shall be determined in accordance with the law of the State of New
York applicable to agreements made and to be performed entirely in New York.
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6.4 Successors; Assignability. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the Company.
This Agreement shall not be assignable by Executive, but shall inure to the
benefit of and be binding upon Executive's heirs and legal representatives.
6.5 Severability. Should any provision of this Agreement
become legally unenforceable, no other provision of this Agreement shall be
affected, and this Agreement shall continue as if the Agreement had been
executed absent the unenforceable provision.
6.6 Arbitration. Any claim or controversy arising out of or
related to this Agreement or its interpretation will be settled by arbitration
before the National Association of Securities Dealers, Inc. Judgment based upon
the decision of the arbitrators may be entered in any court having jurisdiction.
The governing law of this Agreement shall be the substantive and procedural law
of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ David Thalheim
____________________________________
DAVID THALHEIM
RESEARCH PARTNERS INTERNATIONAL, INC.
/s/ Peter R. Kent
By:___________________________________
Name: Peter R. Kent
Title: Chief Operating Officer
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EXHIBIT 10.9
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 4, 1998, between MARK
ZEITCHICK, residing at 2738 Claudia Court, Bellmore, New York 11710
("Executive"), and RESEARCH PARTNERS INTERNATIONAL, INC., a Delaware corporation
having its principal office at One State Street Plaza, New York, New York 10004
("Company").
WHEREAS, the Company is engaged through its subsidiary
corporations (each an "RPI Broker Dealer") primarily in the business of
investment banking and securities brokerage; and
WHEREAS, concurrently herewith the Company is entering into an
Agreement and Plan of Merger with Gaines, Berland Inc. ("GBI"), RPII Acquisition
Corp. ("Newco"), a wholly-owned subsidiary of the Company, and those persons
named on the signature page thereof ("Merger Agreement"), pursuant to which
Newco will merge with and into GBI and GBI will become a wholly-owned subsidiary
of the Company ("Merger"); and
WHEREAS, the Company and the Executive desire that the
Executive commence employment with the Company after the Merger pursuant to the
terms and conditions hereinafter set forth;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 Employment. The Company hereby employs Executive as an
Executive Vice President. All of Executive's powers and authority in any
capacity shall at all times be subject to the direction and control of the
Company's Board of Directors. Executive accepts such employment and agrees to
devote substantially all of his business time, energies and attention to the
performance of his duties hereunder. Nothing herein shall be construed as
preventing Executive from making and supervising personal investments, provided
they will not interfere with the performance of Executive's duties hereunder or
violate the provisions of Section 5.4 hereof.
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1.2 Duties. The Board may assign to Executive such general
management and executive duties for the Company or any subsidiary of the Company
as are consistent with Executive's status as Executive Vice President. The
Company and Executive acknowledge that Executive's primary functions and duties
as Executive Vice President shall be to help establish, coordinate and implement
the Company's general corporate and business strategies, including without
limitation, those relating to retail operation and expansion.
1.3 Location. Executive shall be based in the New York
Metropolitan area, and shall undertake such occasional travel, within or without
the United States, as is reasonably necessary in the interests of the Company.
1.4 Attendance at Board Meetings. If, during the term hereof,
Executive is nominated to serve as a director of the Company but fails to be
elected, he shall nonetheless be invited to attend each meeting of the Board of
Directors of the Company through the remainder of the term hereof.
2. Compensation and Benefits.
2.1 [Intentionally Omitted.]
2.2 Commissions. Executive shall be entitled to receive,
together with the Joint Reps referred to below, an aggregate of 50% of the gross
brokerage commissions on customers' stock brokerage accounts with the Company or
any RPI Broker Dealer which are serviced by Executive or jointly serviced by
Executive and other registered representatives of the Company ("Joint Reps").
Additionally, the Company will pay to Executive 1.35% ("Override") of all
commissions and sales credits generated from customers of any person who is
employed as a retail broker by any RPI Broker Dealer other than Shochet
Securities, Inc. (including, but not limited to, sales credits and commissions
generated for initial public offerings and private placements) during the term
of Executive's employment hereunder. Notwithstanding the foregoing, (i) no
Override will be payable on commissions or sales credits generated by any of the
GBI Executives or GKN Executives (as each term is defined below); (ii) with
respect to any registered representative who commences employment with an RPI
Broker Dealer after the date hereof and prior to the Commencement Date with a
"payout" greater than 55%, the Override payable to Executive on commissions
generated by such registered representative shall be reduced by 10% for each
full percentage point that such registered representative's payout is greater
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than 55%; and (iii) with respect to any registered representative who commences
employment with an RPI Broker Dealer after the Commencement Date with a payout
greater than 50%, the Override payable to Executive on commissions generated by
such registered representative shall be reduced 10% for each full percentage
point that such registered representative's payout exceeds 50%. All Overrides
will be paid at least monthly, on or before the 15th day of each month.
2.3 Bonus. Executive shall participate in the "Pool," as
defined in the Company's 1996 Incentive Compensation Plan ("Plan"), for the year
ending January 31, 2000 ("2000 Pool") in the following manner. After the initial
payments to David Nussbaum, Roger Gladstone, Robert Gladstone and Peter Kent
(collectively, "GKN Executives") under the terms of their Employment Agreements
with the Company (all of which are being executed simultaneously herewith), the
balance of the Pool for such fiscal year shall be paid 50% to the GKN
Executives, as a group, and 50% to Executive and David Thalheim, Joseph Berland,
Richard J. Rosenstock and Vincent Mangone (collectively, "GBI Executives"), as a
group. The amount to be paid to each such person shall be determined by the
Company's Compensation Committee. The foregoing bonuses shall be payable as soon
as practicable after January 31, 2000, as determined under the terms of the
Plan. It is understood and agreed that the amount of the 2000 Pool will be
calculated after deducting all Overrides and bonuses for Company personnel.
2.4 Benefits. Executive shall be entitled to such medical,
life, disability and other benefits as are generally afforded to other senior
executives of the Company, subject to applicable waiting periods and other
conditions.
2.5 Vacation. Executive shall be entitled to four weeks of
vacation in each calendar year and to a reasonable number of other days off for
religious and personal reasons.
2.6 Automobile Reimbursement. Executive shall maintain a
suitable automobile for business use. The Company shall reimburse Executive for
the costs of leasing such automobile and for all other costs associated with the
use of the vehicle, including insurance costs, repairs and maintenance, up to
the maximum deductible amount allowable by law.
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2.7 Business Expenses. The Company will pay or reimburse
Executive for all transportation, hotel and other expenses reasonably incurred
by Executive on business trips and for all other ordinary and reasonable
out-of-pocket expenses actually incurred by him in the conduct of the business
of the Company against itemized vouchers submitted with respect to any such
expenses and approved in accordance with customary procedures.
3. Term and Termination.
3.1 Initial Term. The term of Executive's employment under
this Agreement shall commence ("Commencement Date") on the Effective Time (as
such term is defined in the Merger Agreement) and shall continue until the one
year anniversary thereof, unless sooner terminated as herein provided. If the
Merger is not consummated in accordance with the terms of the Merger Agreement,
this Agreement shall be null and void and of no further force or effect.
3.2 Termination Due to Death. If Executive dies during the
term of this Agreement, Executive's employment under this Agreement shall
thereupon terminate, except that the Company shall pay to the legal
representative of Executive's estate (i) Overrides and commissions due Executive
pursuant to Section 2.2 hereof through the date of Executive's death, (ii) a pro
rata allocation of bonus payments under Section 2.3 during the year of death
through the date of Executive's death, (iii) all valid expense reimbursements
through the date of the termination of this Agreement, (iv) all accrued but
unused vacation pay, and (v) all costs associated with terminating the lease for
Executive's automobile.
3.3 Termination Due to Disability. The Company, by notice to
Executive, may terminate Executive's employment under this Agreement if
Executive shall fail because of illness or incapacity to render, for six
consecutive months, services of the character contemplated by this Agreement.
Notwithstanding such termination, the Company shall pay to Executive (i)
Overrides and commissions due Executive pursuant to Section 2.2 hereof through
the date of such notice, less any amount Executive receives for such period from
any Company-sponsored or Company-paid source of insurance, disability
compensation or government program, (ii) a pro rata allocation of bonus payments
under Section 2.3 during the year in which the disability commenced through the
date of such notice, (iii) all valid expense reimbursements through the date of
the termination of this Agreement, (iv) all accrued but unused vacation pay, and
(v) all costs associated with terminating the lease for Executive's automobile.
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3.4 Termination by Company For Cause. The Company, by notice
to Executive, may terminate Executive's employment under this Agreement for
"Cause". As used herein, "Cause" shall mean: (i) the refusal or failure by
Executive to carry out specific directions of the Board which are of a material
nature and consistent with his status as Executive Vice President, or the
refusal or failure by Executive to perform a material part of Executive's duties
hereunder; (ii) the commission by Executive of a material breach of any of the
provisions of this Agreement; (iii) fraud or dishonest action by Executive in
his relations with the Company or any of its subsidiaries or affiliates
("dishonest" for these purposes shall mean Executive's knowingly or recklessly
making of a material misstatement or omission for his personal benefit); or (iv)
the conviction of Executive of any crime involving an act of moral turpitude, or
the imposition against Executive of a permanent bar from association with a
securities firm by any Federal, state or regulatory agency or self-regulatory
body after the exhaustion of all judicial and administrative appeals therefrom.
Notwithstanding the foregoing, no "Cause" for termination shall be deemed to
exist with respect to Executive's acts described in clauses (i) or (ii) above,
unless the Company shall have given written notice to Executive specifying the
"Cause" with reasonable particularity and, within thirty calendar days after
such notice, Executive shall not have cured or eliminated the problem or thing
giving rise to such "Cause;" provided, however, that a repeated breach after
notice and cure of any provision of clauses (i) or (ii) above involving the same
or substantially similar actions or conduct, shall be grounds for termination
for "Cause" without any additional notice from the Company.
3.5 Termination and Resignation as Director. If Executive's
employment hereunder is terminated for any reason, then Executive shall, at the
Company's request, resign as a director of the Company and all of its
subsidiaries, effective upon the occurrence of such termination.
3.6 Termination by Executive For "Good Reason". The Executive,
by notice to the Company, may terminate Executive's employment under this
Agreement if a "Good Reason" exists. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following circumstances without
the Executive's prior express written consent: (i) a substantial and material
adverse change in the nature of Executive's title, duties or responsibilities
with the Company that represents a demotion from his title, duties or
responsibilities as in effect immediately prior to such change; (ii) Executive
is not nominated to serve as a director by the Company or is removed from
service as a director of the Company; (iii) a substantial and material breach of
this Agreement by the Company; (iv) a failure by the Company to make any payment
to Executive when due, unless the payment is not material and is being contested
by the Company, in good faith; (v)(a) any person or entity other than the
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Company and/or any officers or directors of the Company as of the date of this
Agreement acquires securities of the Company (in one or more transactions)
having 25% or more of the total voting power of all the Company's securities
then outstanding and (b) the Board of Directors of the Company does not
authorize or otherwise approve such acquisition; or (vi) a liquidation,
bankruptcy or receivership of the Company. Notwithstanding the foregoing, no
Good Reason shall be deemed to exist with respect to the Company's acts
described in clauses (i), (ii), (iii) or (iv) above, unless Executive shall have
given written notice to the Company specifying the Good Reason with reasonable
particularity and, within thirty calendar days after such notice, the Company
shall not have cured or eliminated the problem or thing giving rise to such Good
Reason; provided, however, that a repeated breach after notice and cure of any
provision of clauses (i), (ii), (iii) or (iv) above involving the same or
substantially similar actions or conduct, shall be grounds for termination for
Good Reason without any additional notice from Executive.
3.7 Compensation Upon Termination With Good Reason or Without
Cause. In the event that Executive terminates employment under this Agreement
for Good Reason, pursuant to the provisions of Section 3.6, or the Company
terminates employment under this Agreement without "Cause," as defined in
Section 3.4, the Company shall continue to pay to Executive (or in the case of
his death, the legal representative of Executive's estate or such other person
or persons as Executive shall have designated by written notice to the Company),
all payments, compensation and benefits required under Section 2 hereof through
the one-year anniversary of the Commencement Date; provided, however, that
Executive's insurance coverage shall terminate upon the Executive becoming
covered under a similar program by reason of employment elsewhere.
3.8 Employment as Registered Representative. If, at any time,
prior to the five-year anniversary of the Commencement Date, Executive's
employment as an executive officer of the Company is terminated (other than as a
result of termination under Sections 3.2, 3.3 or 3.4), then, notwithstanding
such termination, at Executive's request, the Company will cause an RPI Broker
Dealer to employ Executive as a registered representative and pay Executive
commissions in accordance with its commission "grid" then in effect.
Additionally, during such period of time as Executive is employed as a
registered representative, the Company will make available to him the use of a
sales assistant and such amenities as is customary for registered
representatives with a similar level of commission business.
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4. Indemnification.
(i) The Company agrees to indemnify Executive and hold
Executive harmless against all costs, expenses (including, without limitation,
reasonable attorneys' fees) and liabilities (other than settlements to which the
Company does not consent, which consent shall not be unreasonably withheld)
(collectively, "Losses") reasonably incurred by Executive in connection with any
claim, action, proceeding or investigation brought against or involving
Executive with respect to, arising out of or in any way relating to Executive's
employment with, or service as a director of, the Company or any subsidiary of
the Company; provided, however, that the Company shall not be required to
indemnify Executive for Losses incurred as a result of Executive's intentional
misconduct or gross negligence (other than matters where Executive acted in good
faith and in a manner he reasonably believed to be in and not opposed to the
Company's best interests). Executive shall promptly notify the Company of any
claim, action, proceeding or investigation under this Section and the Company
shall be entitled to participate in the defense of any such claim, action,
proceeding or investigation and, if it so chooses, to assume the defense with
counsel selected by the Company; provided that Executive shall have the right to
employ counsel to represent him (at the Company's expense) if Company counsel
would have a "conflict of interest" in representing both the Company and
Executive. The Company shall not settle or compromise any claim, action,
proceeding or investigation without Executive's consent, which consent shall not
be unreasonably withheld; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and the Company
fully indemnifies Executive in connection therewith. The Company further agrees
to advance any and all expenses (including, without limitation, the fees and
expenses of counsel) reasonably incurred by the Executive in connection with any
such claim, action, proceeding or investigation, provided Executive first enters
into an appropriate agreement for repayment of such advances if indemnification
is found not to have been available. The provisions of this Section 4 shall
survive the termination of this Agreement for any reason, except in the event
Executive's employment is terminated under Section 3.4(iii) or (iv) hereof, in
which event, this Section 4 shall be null and void and of no further force or
effect.
(ii) As a material inducement to Executive entering into
this Agreement, the Company agrees that during the term of Executive's
employment hereunder, it shall maintain directors and officers liability
insurance coverage at a level at least as favorable to the Executive as such
insurance which the Company currently maintains.
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5. Protection of Confidential Information; Non-Competition.
5.1 Acknowledgments. Executive acknowledges that:
(i) As a result of his current and prior involvement with
the Company, Executive has obtained and will obtain secret and confidential
information concerning the business of the Company and its subsidiaries and
affiliates (referred to collectively in this Section 5 as the "Company"),
including, without limitation, financial information, proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information");
(ii) The Company will suffer substantial damage which will
be difficult to compute if, during the period of his employment with the Company
or thereafter, Executive should enter a business competitive with the Company or
divulge Confidential Information; and
(iii) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Company.
5.2 Nondisclosure. Executive agrees that he will not at any
time, either during the term of this Agreement or thereafter, divulge to any
person or entity any Confidential Information obtained or learned by him as a
result of his employment with the Company, except (i) in the course of
performing his duties hereunder, (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
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5.3 Return of Confidential Materials. Upon termination of his
employment with the Company, Executive will promptly deliver to the Company all
memoranda, notes, records, reports, manuals, drawings, blueprints and other
documents (and all copies thereof) relating to the business of the Company and
all property associated therewith, which he may then possess or have under his
control; provided, however, that Executive shall be entitled to retain copies of
such documents reasonably necessary to document his financial relationship with
the Company.
5.4 Non-Competition.
(i) During the period commencing on the Commencement Date
and ending on the date Executive's employment hereunder is terminated (and, if
Executive's employment is terminated by the Company for "Cause" or by Executive
without "Good Reason," until the one-year anniversary of the Commencement Date),
Executive, without the prior written permission of the Company, shall not,
anywhere in the world, (i) be employed by, or render any services to, any
person, firm or corporation engaged in any business which is competitive with
the business being conducted by the Company or any of its subsidiaries at the
time Executive's employment is terminated ("Competitive Business"); (ii) engage
in any Competitive Business for his or its own account; (iii) be associated with
or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; or (iv) solicit,
interfere with, or endeavor to entice away from the Company, for the benefit of
a Competitive Business, any of its customers or other persons with whom the
Company has a contractual relationship. Notwithstanding the foregoing, nothing
in this Agreement shall preclude Executive from investing his personal assets in
any manner he chooses, provided, however, that Executive may not, during the
period referred to in this Section 5.4, own more than 4.9% of the equity
securities of any Competitive Business.
(ii) During the period commencing on the Commencement Date
and ending on the one-year anniversary of the date Executive's employment
hereunder is terminated, Executive, without the prior written permission of the
Company, shall not, directly or indirectly, employ or retain, or have, assist or
cause any other person or entity to employ or retain, any person who was
employed or retained by the Company during the 60-day period prior to the date
Executive's employment is terminated.
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5.5 Remedies. If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company
shall have the right and remedy:
(i) to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed by Executive that the services being rendered hereunder to the Company
are of a special, unique and extraordinary character and that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company; and
(ii) to require Executive to account for and pay over to the
Company all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections 5.2 or
5.4, and Executive hereby agrees to account for and pay over such damages to the
Company.
Each of the rights and remedies enumerated in this Section 5.5
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of or relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to be reimbursed by the other party for the
reasonable attorneys' fees and costs incurred by the prevailing party.
5.6 Unenforceability. If any provision of Sections 5.2 or 5.4
is held to be unenforceable because of the scope, duration or area of its
applicability, the tribunal making such determination shall have the power to
modify such scope, duration, or area, or all of them, and such provision or
provisions shall then be applicable in such modified form.
5.7 Survival. The provisions of this Section 5 shall survive
the termination of this Agreement for any reason, except in the event
Executive's employment is terminated by the Company without "Cause" in breach of
this Agreement, or by Executive with "Good Reason," in either of which events,
this Section 5 shall be null and void and of no further force or effect.
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6. Miscellaneous Provisions.
6.1 Notices. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class
postage prepaid, by certified mail, return receipt requested, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given as of the date of personal delivery or mailing
thereof.
If to Executive:
Mark Zeitchick
2738 Claudia Court
Bellmore, New York 11710
If to the Company:
Research Partners International, Inc.
One State Street Plaza
New York, New York 10004
Attn: Chief Operating Officer
6.2 Entire Agreement. This Agreement sets forth the entire
agreement of the parties relating to the employment of Executive from and after
the Effective Time and is intended to supersede all prior negotiations,
understandings and agreements. No provisions of this Agreement, may be waived or
changed except by a writing by the party against whom such waiver or change is
sought to be enforced. The failure of any party to require performance of any
provision hereof or thereof shall in no manner affect the right at a later time
to enforce such provision.
6.3 Governing Law. All questions with respect to the
construction of this Agreement, and the rights and obligations of the parties
hereunder, shall be determined in accordance with the law of the State of New
York applicable to agreements made and to be performed entirely in New York.
6.4 Successors; Assignability. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the Company.
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This Agreement shall not be assignable by Executive, but shall inure to the
benefit of and be binding upon Executive's heirs and legal representatives.
6.5 Severability. Should any provision of this Agreement
become legally unenforceable, no other provision of this Agreement shall be
affected, and this Agreement shall continue as if the Agreement had been
executed absent the unenforceable provision.
6.6 Arbitration. Any claim or controversy arising out of or
related to this Agreement or its interpretation will be settled by arbitration
before the National Association of Securities Dealers, Inc. Judgment based upon
the decision of the arbitrators may be entered in any court having jurisdiction.
The governing law of this Agreement shall be the substantive and procedural law
of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ Mark Zeitchick
______________________________________
MARK ZEITCHICK
RESEARCH PARTNERS INTERNATIONAL, INC.
/s/ Peter R. Kent
By:___________________________________
Name: Peter R. Kent
Title: Chief Operating Officer
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EXHIBIT 10.10
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 4, 1998, between VINCENT
MANGONE, residing at 143 Whitewood Drive, Massapequa Park, New York 11710
("Executive"), and RESEARCH PARTNERS INTERNATIONAL, INC., a Delaware corporation
having its principal office at One State Street Plaza, New York, New York 10004
("Company").
WHEREAS, the Company is engaged through its subsidiary
corporations (each an "RPI Broker Dealer") primarily in the business of
investment banking and securities brokerage; and
WHEREAS, concurrently herewith the Company is entering into an
Agreement and Plan of Merger with Gaines, Berland Inc. ("GBI"), RPII Acquisition
Corp. ("Newco"), a wholly-owned subsidiary of the Company, and those persons
named on the signature page thereof ("Merger Agreement"), pursuant to which
Newco will merge with and into GBI and GBI will become a wholly-owned subsidiary
of the Company ("Merger"); and
WHEREAS, the Company and the Executive desire that the
Executive commence employment with the Company after the Merger pursuant to the
terms and conditions hereinafter set forth;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 Employment. The Company hereby employs Executive as an
Executive Vice President. All of Executive's powers and authority in any
capacity shall at all times be subject to the direction and control of the
Company's Board of Directors. Executive accepts such employment and agrees to
devote substantially all of his business time, energies and attention to the
performance of his duties hereunder. Nothing herein shall be construed as
preventing Executive from making and supervising personal investments, provided
they will not interfere with the performance of Executive's duties hereunder or
violate the provisions of Section 5.4 hereof.
1.2 Duties. The Board may assign to Executive such general
management and executive duties for the Company or any subsidiary of the Company
as are consistent with Executive's status as Executive Vice President. The
Company and Executive acknowledge that Executive's primary functions and duties
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as Executive Vice President shall be to help establish, coordinate and implement
the Company's general corporate and business strategies, including without
limitation, those relating to retail operation and expansion.
1.3 Location. Executive shall be based in the New York
Metropolitan area, and shall undertake such occasional travel, within or without
the United States, as is reasonably necessary in the interests of the Company.
1.4 Attendance at Board Meetings. If, during the term hereof,
Executive is nominated to serve as a director of the Company but fails to be
elected, he shall nonetheless be invited to attend each meeting of the Board of
Directors of the Company through the remainder of the term hereof.
2. Compensation and Benefits.
2.1 [Intentionally Omitted.]
2.2 Commissions. Executive shall be entitled to receive,
together with the Joint Reps referred to below, an aggregate of 50% of the gross
brokerage commissions on customers' stock brokerage accounts with the Company or
any RPI Broker Dealer which are serviced by Executive or jointly serviced by
Executive and other registered representatives of the Company ("Joint Reps").
Additionally, the Company will pay to Executive 1.35% ("Override") of all
commissions and sales credits generated from customers of any person who is
employed as a retail broker by any RPI Broker Dealer other than Shochet
Securities, Inc. (including, but not limited to, sales credits and commissions
generated for initial public offerings and private placements) during the term
of Executive's employment hereunder. Notwithstanding the foregoing, (i) no
Override will be payable on commissions or sales credits generated by any of the
GBI Executives or GKN Executives (as each term is defined below); (ii) with
respect to any registered representative who commences employment with an RPI
Broker Dealer after the date hereof and prior to the Commencement Date with a
"payout" greater than 55%, the Override payable to Executive on commissions
generated by such registered representative shall be reduced by 10% for each
full percentage point that such registered representative's payout is greater
than 55%; and (iii) with respect to any registered representative who commences
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employment with an RPI Broker Dealer after the Commencement Date with a payout
greater than 50%, the Override payable to Executive on commissions generated by
such registered representative shall be reduced 10% for each full percentage
point that such registered representative's payout exceeds 50%. All Overrides
will be paid at least monthly, on or before the 15th day of each month.
2.3 Bonus. Executive shall participate in the "Pool," as
defined in the Company's 1996 Incentive Compensation Plan ("Plan"), for the year
ending January 31, 2000 ("2000 Pool") in the following manner. After the initial
payments to David Nussbaum, Roger Gladstone, Robert Gladstone and Peter Kent
(collectively, "GKN Executives") under the terms of their Employment Agreements
with the Company (all of which are being executed simultaneously herewith), the
balance of the Pool for such fiscal year shall be paid 50% to the GKN
Executives, as a group, and 50% to Executive and David Thalheim, Joseph Berland,
Richard J. Rosenstock and Mark Zeitchick (collectively, "GBI Executives"), as a
group. The amount to be paid to each such person shall be determined by the
Company's Compensation Committee. The foregoing bonuses shall be payable as soon
as practicable after January 31, 2000, as determined under the terms of the
Plan. It is understood and agreed that the amount of the 2000 Pool will be
calculated after deducting all Overrides and bonuses for Company personnel.
2.4 Benefits. Executive shall be entitled to such medical,
life, disability and other benefits as are generally afforded to other senior
executives of the Company, subject to applicable waiting periods and other
conditions.
2.5 Vacation. Executive shall be entitled to four weeks of
vacation in each calendar year and to a reasonable number of other days off for
religious and personal reasons.
2.6 Automobile Reimbursement. Executive shall maintain a
suitable automobile for business use. The Company shall reimburse Executive for
the costs of leasing such automobile and for all other costs associated with the
use of the vehicle, including insurance costs, repairs and maintenance, up to
the maximum deductible amount allowable by law.
2.7 Business Expenses. The Company will pay or reimburse
Executive for all transportation, hotel and other expenses reasonably incurred
by Executive on business trips and for all other ordinary and reasonable
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out-of-pocket expenses actually incurred by him in the conduct of the business
of the Company against itemized vouchers submitted with respect to any such
expenses and approved in accordance with customary procedures.
3. Term and Termination.
3.1 Initial Term. The term of Executive's employment under
this Agreement shall commence ("Commencement Date") on the Effective Time (as
such term is defined in the Merger Agreement) and shall continue until the one
year anniversary thereof, unless sooner terminated as herein provided. If the
Merger is not consummated in accordance with the terms of the Merger Agreement,
this Agreement shall be null and void and of no further force or effect.
3.2 Termination Due to Death. If Executive dies during the
term of this Agreement, Executive's employment under this Agreement shall
thereupon terminate, except that the Company shall pay to the legal
representative of Executive's estate (i) Overrides and commissions due Executive
pursuant to Section 2.2 hereof through the date of Executive's death, (ii) a pro
rata allocation of bonus payments under Section 2.3 during the year of death
through the date of Executive's death, (iii) all valid expense reimbursements
through the date of the termination of this Agreement, (iv) all accrued but
unused vacation pay, and (v) all costs associated with terminating the lease for
Executive's automobile.
3.3 Termination Due to Disability. The Company, by notice to
Executive, may terminate Executive's employment under this Agreement if
Executive shall fail because of illness or incapacity to render, for six
consecutive months, services of the character contemplated by this Agreement.
Notwithstanding such termination, the Company shall pay to Executive (i)
Overrides and commissions due Executive pursuant to Section 2.2 hereof through
the date of such notice, less any amount Executive receives for such period from
any Company-sponsored or Company-paid source of insurance, disability
compensation or government program, (ii) a pro rata allocation of bonus payments
under Section 2.3 during the year in which the disability commenced through the
date of such notice, (iii) all valid expense reimbursements through the date of
the termination of this Agreement, (iv) all accrued but unused vacation pay, and
(v) all costs associated with terminating the lease for Executive's automobile.
3.4 Termination by Company For Cause. The Company, by notice
to Executive, may terminate Executive's employment under this Agreement for
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"Cause". As used herein, "Cause" shall mean: (i) the refusal or failure by
Executive to carry out specific directions of the Board which are of a material
nature and consistent with his status as Executive Vice President, or the
refusal or failure by Executive to perform a material part of Executive's duties
hereunder; (ii) the commission by Executive of a material breach of any of the
provisions of this Agreement; (iii) fraud or dishonest action by Executive in
his relations with the Company or any of its subsidiaries or affiliates
("dishonest" for these purposes shall mean Executive's knowingly or recklessly
making of a material misstatement or omission for his personal benefit); or (iv)
the conviction of Executive of any crime involving an act of moral turpitude, or
the imposition against Executive of a permanent bar from association with a
securities firm by any Federal, state or regulatory agency or self-regulatory
body after the exhaustion of all judicial and administrative appeals therefrom.
Notwithstanding the foregoing, no "Cause" for termination shall be deemed to
exist with respect to Executive's acts described in clauses (i) or (ii) above,
unless the Company shall have given written notice to Executive specifying the
"Cause" with reasonable particularity and, within thirty calendar days after
such notice, Executive shall not have cured or eliminated the problem or thing
giving rise to such "Cause;" provided, however, that a repeated breach after
notice and cure of any provision of clauses (i) or (ii) above involving the same
or substantially similar actions or conduct, shall be grounds for termination
for "Cause" without any additional notice from the Company.
3.5 Termination and Resignation as Director. If Executive's
employment hereunder is terminated for any reason, then Executive shall, at the
Company's request, resign as a director of the Company and all of its
subsidiaries, effective upon the occurrence of such termination.
3.6 Termination by Executive For "Good Reason". The Executive,
by notice to the Company, may terminate Executive's employment under this
Agreement if a "Good Reason" exists. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following circumstances without
the Executive's prior express written consent: (i) a substantial and material
adverse change in the nature of Executive's title, duties or responsibilities
with the Company that represents a demotion from his title, duties or
responsibilities as in effect immediately prior to such change; (ii) Executive
is not nominated to serve as a director by the Company or is removed from
service as a director of the Company; (iii) a substantial and material breach of
this Agreement by the Company; (iv) a failure by the Company to make any payment
to Executive when due, unless the payment is not material and is being contested
by the Company, in good faith; (v)(a) any person or entity other than the
Company and/or any officers or directors of the Company as of the date of this
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Agreement acquires securities of the Company (in one or more transactions)
having 25% or more of the total voting power of all the Company's securities
then outstanding and (b) the Board of Directors of the Company does not
authorize or otherwise approve such acquisition; or (vi) a liquidation,
bankruptcy or receivership of the Company. Notwithstanding the foregoing, no
Good Reason shall be deemed to exist with respect to the Company's acts
described in clauses (i), (ii), (iii) or (iv) above, unless Executive shall have
given written notice to the Company specifying the Good Reason with reasonable
particularity and, within thirty calendar days after such notice, the Company
shall not have cured or eliminated the problem or thing giving rise to such Good
Reason; provided, however, that a repeated breach after notice and cure of any
provision of clauses (i), (ii), (iii) or (iv) above involving the same or
substantially similar actions or conduct, shall be grounds for termination for
Good Reason without any additional notice from Executive.
3.7 Compensation Upon Termination With Good Reason or Without
Cause. In the event that Executive terminates employment under this Agreement
for Good Reason, pursuant to the provisions of Section 3.6, or the Company
terminates employment under this Agreement without "Cause," as defined in
Section 3.4, the Company shall continue to pay to Executive (or in the case of
his death, the legal representative of Executive's estate or such other person
or persons as Executive shall have designated by written notice to the Company),
all payments, compensation and benefits required under Section 2 hereof through
the one-year anniversary of the Commencement Date; provided, however, that
Executive's insurance coverage shall terminate upon the Executive becoming
covered under a similar program by reason of employment elsewhere.
3.8 Employment as Registered Representative. If, at any time,
prior to the five-year anniversary of the Commencement Date, Executive's
employment as an executive officer of the Company is terminated (other than as a
result of termination under Sections 3.2, 3.3 or 3.4), then, notwithstanding
such termination, at Executive's request, the Company will cause an RPI Broker
Dealer to employ Executive as a registered representative and pay Executive
commissions in accordance with its commission "grid" then in effect.
Additionally, during such period of time as Executive is employed as a
registered representative, the Company will make available to him the use of a
sales assistant and such amenities as is customary for registered
representatives with a similar level of commission business.
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4. Indemnification.
(i) The Company agrees to indemnify Executive and hold
Executive harmless against all costs, expenses (including, without limitation,
reasonable attorneys' fees) and liabilities (other than settlements to which the
Company does not consent, which consent shall not be unreasonably withheld)
(collectively, "Losses") reasonably incurred by Executive in connection with any
claim, action, proceeding or investigation brought against or involving
Executive with respect to, arising out of or in any way relating to Executive's
employment with, or service as a director of, the Company or any subsidiary of
the Company; provided, however, that the Company shall not be required to
indemnify Executive for Losses incurred as a result of Executive's intentional
misconduct or gross negligence (other than matters where Executive acted in good
faith and in a manner he reasonably believed to be in and not opposed to the
Company's best interests). Executive shall promptly notify the Company of any
claim, action, proceeding or investigation under this Section and the Company
shall be entitled to participate in the defense of any such claim, action,
proceeding or investigation and, if it so chooses, to assume the defense with
counsel selected by the Company; provided that Executive shall have the right to
employ counsel to represent him (at the Company's expense) if Company counsel
would have a "conflict of interest" in representing both the Company and
Executive. The Company shall not settle or compromise any claim, action,
proceeding or investigation without Executive's consent, which consent shall not
be unreasonably withheld; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and the Company
fully indemnifies Executive in connection therewith. The Company further agrees
to advance any and all expenses (including, without limitation, the fees and
expenses of counsel) reasonably incurred by the Executive in connection with any
such claim, action, proceeding or investigation, provided Executive first enters
into an appropriate agreement for repayment of such advances if indemnification
is found not to have been available. The provisions of this Section 4 shall
survive the termination of this Agreement for any reason, except in the event
Executive's employment is terminated under Section 3.4(iii) or (iv) hereof, in
which event, this Section 4 shall be null and void and of no further force or
effect.
(ii) As a material inducement to Executive entering into
this Agreement, the Company agrees that during the term of Executive's
employment hereunder, it shall maintain directors and officers liability
insurance coverage at a level at least as favorable to the Executive as such
insurance which the Company currently maintains.
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5. Protection of Confidential Information; Non-Competition.
5.1 Acknowledgments. Executive acknowledges that:
(i) As a result of his current and prior involvement with
the Company, Executive has obtained and will obtain secret and confidential
information concerning the business of the Company and its subsidiaries and
affiliates (referred to collectively in this Section 5 as the "Company"),
including, without limitation, financial information, proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information");
(ii) The Company will suffer substantial damage which will
be difficult to compute if, during the period of his employment with the Company
or thereafter, Executive should enter a business competitive with the Company or
divulge Confidential Information; and
(iii) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Company.
5.2 Nondisclosure. Executive agrees that he will not at any
time, either during the term of this Agreement or thereafter, divulge to any
person or entity any Confidential Information obtained or learned by him as a
result of his employment with the Company, except (i) in the course of
performing his duties hereunder, (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
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5.3 Return of Confidential Materials. Upon termination of his
employment with the Company, Executive will promptly deliver to the Company all
memoranda, notes, records, reports, manuals, drawings, blueprints and other
documents (and all copies thereof) relating to the business of the Company and
all property associated therewith, which he may then possess or have under his
control; provided, however, that Executive shall be entitled to retain copies of
such documents reasonably necessary to document his financial relationship with
the Company.
5.4 Non-Competition.
(i) During the period commencing on the Commencement Date
and ending on the date Executive's employment hereunder is terminated (and, if
Executive's employment is terminated by the Company for "Cause" or by Executive
without "Good Reason," until the one-year anniversary of the Commencement Date),
Executive, without the prior written permission of the Company, shall not,
anywhere in the world, (i) be employed by, or render any services to, any
person, firm or corporation engaged in any business which is competitive with
the business being conducted by the Company or any of its subsidiaries at the
time Executive's employment is terminated ("Competitive Business"); (ii) engage
in any Competitive Business for his or its own account; (iii) be associated with
or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; or (iv) solicit,
interfere with, or endeavor to entice away from the Company, for the benefit of
a Competitive Business, any of its customers or other persons with whom the
Company has a contractual relationship. Notwithstanding the foregoing, nothing
in this Agreement shall preclude Executive from investing his personal assets in
any manner he chooses, provided, however, that Executive may not, during the
period referred to in this Section 5.4, own more than 4.9% of the equity
securities of any Competitive Business.
(ii) During the period commencing on the Commencement Date
and ending on the one-year anniversary of the date Executive's employment
hereunder is terminated, Executive, without the prior written permission of the
Company, shall not, directly or indirectly, employ or retain, or have, assist or
cause any other person or entity to employ or retain, any person who was
employed or retained by the Company during the 60-day period prior to the date
Executive's employment is terminated.
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5.5 Remedies. If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company
shall have the right and remedy:
(i) to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed by Executive that the services being rendered hereunder to the Company
are of a special, unique and extraordinary character and that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company; and
(ii) to require Executive to account for and pay over to the
Company all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections 5.2 or
5.4, and Executive hereby agrees to account for and pay over such damages to the
Company.
Each of the rights and remedies enumerated in this Section 5.5
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of or relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to be reimbursed by the other party for the
reasonable attorneys' fees and costs incurred by the prevailing party.
5.6 Unenforceability. If any provision of Sections 5.2 or 5.4
is held to be unenforceable because of the scope, duration or area of its
applicability, the tribunal making such determination shall have the power to
modify such scope, duration, or area, or all of them, and such provision or
provisions shall then be applicable in such modified form.
5.7 Survival. The provisions of this Section 5 shall survive
the termination of this Agreement for any reason, except in the event
Executive's employment is terminated by the Company without "Cause" in breach of
this Agreement, or by Executive with "Good Reason," in either of which events,
this Section 5 shall be null and void and of no further force or effect.
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6. Miscellaneous Provisions.
6.1 Notices. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class
postage prepaid, by certified mail, return receipt requested, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given as of the date of personal delivery or mailing
thereof.
If to Executive:
Vincent Mangone
143 Whitewood Drive
Massapequa Park, New York 11710
If to the Company:
Research Partners International, Inc.
One State Street Plaza
New York, New York 10004
Attn: Chief Operating Officer
6.2 Entire Agreement. This Agreement sets forth the entire
agreement of the parties relating to the employment of Executive from and after
the Effective Time and is intended to supersede all prior negotiations,
understandings and agreements. No provisions of this Agreement, may be waived or
changed except by a writing by the party against whom such waiver or change is
sought to be enforced. The failure of any party to require performance of any
provision hereof or thereof shall in no manner affect the right at a later time
to enforce such provision.
6.3 Governing Law. All questions with respect to the
construction of this Agreement, and the rights and obligations of the parties
hereunder, shall be determined in accordance with the law of the State of New
York applicable to agreements made and to be performed entirely in New York.
6.4 Successors; Assignability. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the Company.
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This Agreement shall not be assignable by Executive, but shall inure to the
benefit of and be binding upon Executive's heirs and legal representatives.
6.5 Severability. Should any provision of this Agreement
become legally unenforceable, no other provision of this Agreement shall be
affected, and this Agreement shall continue as if the Agreement had been
executed absent the unenforceable provision.
6.6 Arbitration. Any claim or controversy arising out of or
related to this Agreement or its interpretation will be settled by arbitration
before the National Association of Securities Dealers, Inc. Judgment based upon
the decision of the arbitrators may be entered in any court having jurisdiction.
The governing law of this Agreement shall be the substantive and procedural law
of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ Vincent Mangone
_____________________________________
VINCENT MANGONE
RESEARCH PARTNERS INTERNATIONAL, INC.
/s/ Peter R. Kent
By:___________________________________
Name: Peter R. Kent
Title: Chief Operating Officer
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EXHIBIT 10.11
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 4, 1998, between ROBERT H.
GLADSTONE, residing at 25 Evans Drive, Brookville, New York 11545 ("Executive"),
and GKN SECURITIES CORP., a New York corporation having its principal office at
One State Street Plaza, New York, New York 10004 ("Company").
WHEREAS, the Company is engaged primarily in the business of
investment banking and securities brokerage; and
WHEREAS, concurrently herewith the Company's sole shareholder,
Research Partners International, Inc. ("RPII) is entering into an Agreement and
Plan of Merger with Gaines, Berland Inc. ("GBI"), RPII Acquisition Corp.
("Newco"), a wholly-owned subsidiary of RPII, and those persons named on the
signature page thereof ("Merger Agreement"), pursuant to which Newco will merge
with and into GBI and GBI will become a wholly-owned subsidiary of the Company
("Merger"); and
WHEREAS, the Company and the Executive desire that the
Executive's employment continue with the Company after the Merger pursuant to
the terms and conditions hereinafter set forth;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 Employment. The Company hereby employs Executive as an
Executive Vice President. All of Executive's powers and authority in any
capacity shall at all times be subject to the direction and control of the
Company's Board of Directors. Executive accepts such employment and agrees to
devote substantially all of his business time, energies and attention to the
performance of his duties hereunder. Nothing herein shall be construed as
preventing Executive from making and supervising personal investments, provided
they will not interfere with the performance of Executive's duties hereunder or
violate the provisions of Section 5.4 hereof.
1.2 Duties. The Board may assign to Executive such general
management and executive duties for the Company or any subsidiary of the
Company, as are consistent with Executive's status as Executive Vice President.
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1.3 Location. Executive shall be based in the New York
Metropolitan area, and shall undertake such occasional travel, within or without
the United States, as is reasonably necessary in the interests of the Company.
2. Compensation and Benefits.
2.1 Base Salary. The Company shall pay to Executive a salary
at the minimum annual rate of $240,000 during the term hereof (i.e., $20,000 per
month). Executive's compensation shall be paid in equal, periodic installments
in accordance with the Company's normal payroll procedures.
2.2 Commissions. Executive shall be entitled to receive,
together with the Joint Reps referred to below, an aggregate of 60% of the gross
brokerage commissions on customers' stock brokerage accounts with the Company or
any other subsidiary of RPII (each an "RPI Broker Dealer") which are serviced by
Executive or jointly serviced by Executive and other registered representatives
of the Company ("Joint Reps").
2.3 Bonus. Executive shall participate in the "Pool," as
defined in RPII 1996 Incentive Compensation Plan ("Plan"), for the year ending
January 31, 2000 in the following manner. Executive, David M. Nussbaum, Roger N.
Gladstone and Peter R. Kent (collectively, "GKN Executives"), as a group, shall
be paid an aggregate amount from the Pool for such fiscal year ("2000 Pool")
equal to the "Overrides" payable for such year to Joseph Berland, Richard
Rosenstock, Mark Zeitchick, Vincent Mangone and David Thalheim (collectively,
"GBI Executives") under the terms of their Employment Agreements with RPII (all
of which are being executed simultaneously herewith), less 162/3% of all
commissions payable to GKN Executives during such year. The amount to be paid to
each of the GKN Executives shall be determined by RPII's Compensation Committee.
The balance of the 2000 Pool shall be paid 50% to the GKN Executives, as a
group, and 50% to the GBI Executives, as a group, with the amount to be paid to
each such person being determined by the Compensation Committee. The foregoing
bonuses shall be payable as soon as practicable after January 31, 2000, as
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determined under the terms of the Plan. It is understood and agreed that the
amount of the 2000 Pool will be calculated after deducting Overrides and bonuses
for Company personnel.
2.4 Benefits. Executive shall be entitled to such medical,
life, disability and other benefits as are generally afforded to other senior
executives of the Company, subject to applicable waiting periods and other
conditions.
2.5 Vacation. Executive shall be entitled to four weeks of
vacation in each calendar year and to a reasonable number of other days off for
religious and personal reasons.
2.6 Automobile Reimbursement. Executive shall maintain a
suitable automobile for business use. The Company shall reimburse Executive for
the costs of leasing such automobile and for all other costs associated with the
use of the vehicle, including insurance costs, repairs and maintenance, up to
the maximum deductible amount allowable by law.
2.7 Business Expenses. The Company will pay or reimburse
Executive for all transportation, hotel and other expenses reasonably incurred
by Executive on business trips and for all other ordinary and reasonable
out-of-pocket expenses actually incurred by him in the conduct of the business
of the Company against itemized vouchers submitted with respect to any such
expenses and approved in accordance with customary procedures.
3. Term and Termination.
3.1 Initial Term. The term of Executive's employment under
this Agreement shall commence ("Commencement Date") on the Effective Time (as
such term is defined in the Merger Agreement) and shall continue until the one
year anniversary thereof, unless sooner terminated as herein provided. From and
after the Commencement Date, Executive's current employment agreement with the
Company will be null and void and of no further force or effect. If the Merger
is not consummated in accordance with the terms of the Merger Agreement, this
Agreement shall be null and void and of no further force or effect.
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3.2 Termination Due to Death. If Executive dies during the
term of this Agreement, Executive's employment under this Agreement shall
thereupon terminate, except that the Company shall pay to the legal
representative of Executive's estate (i) the base salary and commissions due
Executive pursuant to Sections 2.1 and 2.2 hereof through the date of
Executive's death, (ii) a pro rata allocation of bonus payments under Section
2.3 during the year of death through the date of Executive's death, (iii) all
valid expense reimbursements through the date of the termination of this
Agreement, (iv) all accrued but unused vacation pay, and (v) all costs
associated with terminating the lease for Executive's automobile.
3.3 Termination Due to Disability. The Company, by notice to
Executive, may terminate Executive's employment under this Agreement if
Executive shall fail because of illness or incapacity to render, for six
consecutive months, services of the character contemplated by this Agreement.
Notwithstanding such termination, the Company shall pay to Executive (i) the
base salary and commissions due Executive pursuant to Sections 2.1 and 2.2
hereof through the date of such notice, less any amount Executive receives for
such period from any Company-sponsored or Company-paid source of insurance,
disability compensation or government program, (ii) a pro rata allocation of
bonus payments under Section 2.3 during the year in which the disability
commenced through the date of such notice, (iii) all valid expense
reimbursements through the date of the termination of this Agreement, (iv) all
accrued but unused vacation pay, and (v) all costs associated with terminating
the lease for Executive's automobile.
3.4 Termination by Company For Cause. The Company, by notice
to Executive, may terminate Executive's employment under this Agreement for
"Cause". As used herein, "Cause" shall mean: (i) the refusal or failure by
Executive to carry out specific directions of the Board which are of a material
nature and consistent with his status as Executive Vice President, or the
refusal or failure by Executive to perform a material part of Executive's duties
hereunder; (ii) the commission by Executive of a material breach of any of the
provisions of this Agreement; (iii) fraud or dishonest action by Executive in
his relations with the Company or any of its subsidiaries or affiliates
("dishonest" for these purposes shall mean Executive's knowingly or recklessly
making of a material misstatement or omission for his personal benefit); or (iv)
the conviction of Executive of any crime involving an act of moral turpitude, or
the imposition against Executive of a permanent bar from association with a
securities firm by any Federal, state or regulatory agency or self-regulatory
body after the exhaustion of all judicial and administrative appeals therefrom.
Notwithstanding the foregoing, no "Cause" for termination shall be deemed to
exist with respect to Executive's acts described in clauses (i) or (ii) above,
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unless the Company shall have given written notice to Executive specifying the
"Cause" with reasonable particularity and, within thirty calendar days after
such notice, Executive shall not have cured or eliminated the problem or thing
giving rise to such "Cause;" provided, however, that a repeated breach after
notice and cure of any provision of clauses (i) or (ii) above involving the same
or substantially similar actions or conduct, shall be grounds for termination
for "Cause" without any additional notice from the Company.
3.5 Termination and Resignation as Director. If Executive's
employment hereunder is terminated for any reason, then Executive shall, at the
Company's request, resign as a director of the Company and all of its
subsidiaries, effective upon the occurrence of such termination.
3.6 Termination by Executive For "Good Reason". The Executive,
by notice to the Company, may terminate Executive's employment under this
Agreement if a "Good Reason" exists. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following circumstances without
the Executive's prior express written consent: (i) a substantial and material
adverse change in the nature of Executive's title, duties or responsibilities
with the Company that represents a demotion from his title, duties or
responsibilities as in effect immediately prior to such change; (ii) Executive
is not nominated to serve as a director by the Company or is removed from
service as a director of the Company; (iii) a substantial and material breach of
this Agreement by the Company; (iv) a failure by the Company to make any payment
to Executive when due, unless the payment is not material and is being contested
by the Company, in good faith; (v)(a) any person or entity other than the
Company and/or any officers or directors of the Company as of the date of this
Agreement acquires securities of RPII (in one or more transactions) having 25%
or more of the total voting power of all the Company's securities then
outstanding and (b) the Board of Directors of RPII does not authorize or
otherwise approve such acquisition; or (vi) a liquidation, bankruptcy or
receivership of the Company. Notwithstanding the foregoing, no Good Reason shall
be deemed to exist with respect to the Company's acts described in clauses (i),
(ii), (iii) or (iv) above, unless Executive shall have given written notice to
the Company specifying the Good Reason with reasonable particularity and, within
thirty calendar days after such notice, the Company shall not have cured or
eliminated the problem or thing giving rise to such Good Reason; provided,
however, that a repeated breach after notice and cure of any provision of
clauses (i), (ii), (iii) or (iv) above involving the same or substantially
similar actions or conduct, shall be grounds for termination for Good Reason
without any additional notice from Executive.
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3.7 Compensation Upon Termination With Good Reason or Without
Cause. In the event that Executive terminates employment under this Agreement
for Good Reason, pursuant to the provisions of Section 3.6, or the Company
terminates employment under this Agreement without "Cause," as defined in
Section 3.4, the Company shall continue to pay to Executive (or in the case of
his death, the legal representative of Executive's estate or such other person
or persons as Executive shall have designated by written notice to the Company),
all payments, compensation and benefits required under Section 2 hereof through
the one-year anniversary of the Commencement Date; provided, however, that
Executive's insurance coverage shall terminate upon the Executive becoming
covered under a similar program by reason of employment elsewhere.
3.8 Employment as Registered Representative. If, at any time,
prior to the five-year anniversary of the Commencement Date, Executive's
employment as an executive officer of the Company is terminated (other than as a
result of termination under Sections 3.2, 3.3 or 3.4), then, notwithstanding
such termination, at Executive's request, the Company will cause an RPI Broker
Dealer to employ Executive as a registered representative and pay Executive
commissions in accordance with its commission "grid" then in effect.
Additionally, during such period of time as Executive is employed as a
registered representative, the Company will make available to him the use of a
sales assistant and such amenities as is customary for registered
representatives with a similar level of commission business.
3.9 Continuation of GKN Securities Corp. The Company agrees
that, until the five-year anniversary of the Commencement Date, it shall not
take any steps to dissolve or liquidate or otherwise voluntarily withdraw its
membership with the National Association of Securities Dealers, Inc. or
qualification to act as a broker dealer in any state without Executive's prior
written consent; provided, however, that such steps may be taken without
Executive's consent if and only if Executive is afforded the opportunity to
become associated as a registered representative with another RPI Broker Dealer
without losing his ability to do business in New York, Florida and substantially
all of the other states in which Executive is then currently authorized to do
business.
4. Indemnification.
(i) RPII agrees to indemnify Executive and hold Executive
harmless against all costs, expenses (including, without limitation, reasonable
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attorneys' fees) and liabilities (other than settlements to which RPII does not
consent, which consent shall not be unreasonably withheld) (collectively,
"Losses") reasonably incurred by Executive in connection with any claim, action,
proceeding or investigation brought against or involving Executive with respect
to, arising out of or in any way relating to Executive's employment with, or
service as a director of, the Company or any other subsidiary of RPII; provided,
however, that RPII shall not be required to indemnify Executive for Losses
incurred as a result of Executive's intentional misconduct or gross negligence
(other than matters where Executive acted in good faith and in a manner he
reasonably believed to be in and not opposed to RPII's best interests).
Executive shall promptly notify RPII of any claim, action, proceeding or
investigation under this Section and RPII shall be entitled to participate in
the defense of any such claim, action, proceeding or investigation and, if it so
chooses, to assume the defense with counsel selected by RPII; provided that
Executive shall have the right to employ counsel to represent him (at RPII's
expense) if RPII counsel would have a "conflict of interest" in representing
both RPII and Executive. RPII shall not settle or compromise any claim, action,
proceeding or investigation without Executive's consent, which consent shall not
be unreasonably withheld; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and RPII fully
indemnifies Executive in connection therewith. RPII further agrees to advance
any and all expenses (including, without limitation, the fees and expenses of
counsel) reasonably incurred by the Executive in connection with any such claim,
action, proceeding or investigation, provided Executive first enters into an
appropriate agreement for repayment of such advances if indemnification is found
not to have been available. The provisions of this Section 4 shall survive the
termination of this Agreement for any reason, except in the event Executive's
employment is terminated under Section 3.4(iii) or (iv) hereof, in which event,
this Section 4 shall be null and void and of no further force or effect.
(ii) As a material inducement to Executive entering into
this Agreement, RPII agrees to maintain directors and officers liability
insurance coverage at a level at least as favorable to the Executive as such
insurance which RPII currently maintains.
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5. Protection of Confidential Information; Non-Competition.
5.1 Acknowledgments. Executive acknowledges that:
(i) As a result of his current and prior involvement with
the Company, Executive has obtained and will obtain secret and confidential
information concerning the business of the Company and its subsidiaries and
affiliates (referred to collectively in this Section 5 as the "Company"),
including, without limitation, financial information, proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information");
(ii) The Company will suffer substantial damage which will
be difficult to compute if, during the period of his employment with the Company
or thereafter, Executive should enter a business competitive with the Company or
divulge Confidential Information; and
(iii) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Company.
5.2 Nondisclosure. Executive agrees that he will not at any
time, either during the term of this Agreement or thereafter, divulge to any
person or entity any Confidential Information obtained or learned by him as a
result of his employment with the Company, except (i) in the course of
performing his duties hereunder, (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
5.3 Return of Confidential Materials. Upon termination of his
employment with the Company, Executive will promptly deliver to the Company all
memoranda, notes, records, reports, manuals, drawings, blueprints and other
documents (and all copies thereof) relating to the business of the Company and
all property associated therewith, which he may then possess or have under his
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control; provided, however, that Executive shall be entitled to retain copies of
such documents reasonably necessary to document his financial relationship with
the Company.
5.4 Non-Competition.
(i) During the period commencing on the Commencement Date
and ending on the date Executive's employment hereunder is terminated (and, if
Executive's employment is terminated by the Company for "Cause" or by Executive
without "Good Reason," until the one-year anniversary of the Commencement Date),
Executive, without the prior written permission of the Company, shall not,
anywhere in the world, (i) be employed by, or render any services to, any
person, firm or corporation engaged in any business which is competitive with
the business being conducted by the Company or any of its subsidiaries at the
time Executive's employment is terminated ("Competitive Business"); (ii) engage
in any Competitive Business for his or its own account; (iii) be associated with
or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; or (iv) solicit,
interfere with, or endeavor to entice away from the Company, for the benefit of
a Competitive Business, any of its customers or other persons with whom the
Company has a contractual relationship. Notwithstanding the foregoing, nothing
in this Agreement shall preclude Executive from investing his personal assets in
any manner he chooses, provided, however, that Executive may not, during the
period referred to in this Section 5.4, own more than 4.9% of the equity
securities of any Competitive Business.
(ii) During the period commencing on the Commencement Date
and ending on the one-year anniversary of the date Executive's employment
hereunder is terminated, Executive, without the prior written permission of the
Company, shall not, directly or indirectly, employ or retain, or have, assist or
cause any other person or entity to employ or retain, any person who was
employed or retained by the Company during the 60-day period prior to the date
Executive's employment is terminated.
5.5 Remedies. If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company
shall have the right and remedy:
(i) to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
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agreed by Executive that the services being rendered hereunder to the Company
are of a special, unique and extraordinary character and that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company; and
(ii) to require Executive to account for and pay over to the
Company all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections 5.2 or
5.4, and Executive hereby agrees to account for and pay over such damages to the
Company.
Each of the rights and remedies enumerated in this Section 5.5
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of or relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to be reimbursed by the other party for the
reasonable attorneys' fees and costs incurred by the prevailing party.
5.6 Unenforceability. If any provision of Sections 5.2 or 5.4
is held to be unenforceable because of the scope, duration or area of its
applicability, the tribunal making such determination shall have the power to
modify such scope, duration, or area, or all of them, and such provision or
provisions shall then be applicable in such modified form.
5.7 Survival. The provisions of this Section 5 shall survive
the termination of this Agreement for any reason, except in the event
Executive's employment is terminated by the Company without "Cause" in breach of
this Agreement, or by Executive with "Good Reason," in either of which events,
this Section 5 shall be null and void and of no further force or effect.
6. Miscellaneous Provisions.
6.1 Notices. All notices provided for in this Agreement shall
be in writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class
postage prepaid, by certified mail, return receipt requested, addressed to the
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party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given as of the date of personal delivery or mailing
thereof.
If to Executive:
Robert H. Gladstone
25 Evans Drive
Brookville, New York 11545
If to the Company:
GKN Securities Corp.
One State Street Plaza
New York, New York 10004
Attn: Chief Operating Officer
6.2 Entire Agreement. This Agreement sets forth the entire
agreement of the parties relating to the employment of Executive from and after
the Effective Time and is intended to supersede all prior negotiations,
understandings and agreements. No provisions of this Agreement, may be waived or
changed except by a writing by the party against whom such waiver or change is
sought to be enforced. The failure of any party to require performance of any
provision hereof or thereof shall in no manner affect the right at a later time
to enforce such provision.
6.3 Governing Law. All questions with respect to the
construction of this Agreement, and the rights and obligations of the parties
hereunder, shall be determined in accordance with the law of the State of New
York applicable to agreements made and to be performed entirely in New York.
6.4 Successors; Assignability. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the Company.
This Agreement shall not be assignable by Executive, but shall inure to the
benefit of and be binding upon Executive's heirs and legal representatives.
6.5 Severability. Should any provision of this Agreement
become legally unenforceable, no other provision of this Agreement shall be
affected, and this Agreement shall continue as if the Agreement had been
executed absent the unenforceable provision.
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6.6 Arbitration. Any claim or controversy arising out of or
related to this Agreement or its interpretation will be settled by arbitration
before the National Association of Securities Dealers, Inc. Judgment based upon
the decision of the arbitrators may be entered in any court having jurisdiction.
The governing law of this Agreement shall be the substantive and procedural law
of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ Robert H. Gladstone
_______________________________________
ROBERT H. GLADSTONE
GKN SECURITIES CORP.
/s/ Peter R. Kent
By:____________________________________
Name: Peter R. Kent
Title: Chief Operating Officer
With respect to Paragraph 4 hereof,
RESEARCH PARTNERS INTERNATIONAL, INC.
/s/ Peter R. Kent
By:____________________________________
Name: Peter R. Kent
Title: Chief Operating Officer
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EXHIBIT 10.12
OPERATING AGREEMENT
AGREEMENT dated November 4, 1998, between RESEARCH PARTNERS INTERNATIONAL,
INC. ("RPII"), a Delaware corporation, and GAINES, BERLAND INC. ("GBI"), a New
York corporation. As used herein, the term "RPII" shall refer to Research
Partners International, Inc. and, as appropriate, each of its operating broker
dealer subsidiaries.
RECITALS:
A. RPII and GBI are each engaged in various aspects of the securities
industry, including retail brokerage;
B. Concurrently with the execution of this Agreement, RPII and GBI (and
certain of their other affiliates) are entering into an agreement ("Merger
Agreement") providing for the merger of GBI with a subsidiary of RPII (the
"Merger");
C. RPII and GBI desire to enter into this Agreement to provide for
consolidation of certain of their operations in advance of the Merger, the
management of their operations upon effectiveness of the Merger and the
separation of their consolidated operations in the event that an agreement
providing for the Merger is not entered into or is terminated prior to the
Merger becoming effective.
IT IS AGREED:
ARTICLE I
CONSOLIDATION OF OPERATIONS
1.1 Sharing of Office Space.
(a) Upon the mutual agreement of RPII and GBI at any time after execution
of this Agreement, RPII and GBI will prepare and file with NASD Regulation, Inc.
("NASDR") (and all other regulatory agencies having jurisdiction) all documents
necessary for them to obtain the consent of NASDR (and such other regulatory
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agencies) to enable them to share office space in the New York City and Boca
Raton (Mizner), Florida offices of RPII and the Bethpage, New York office of GBI
for the purpose of the retail sale of securities.
(b) If the consents of NASDR (and such other regulatory agencies) to the
sharing of office space (collectively, the "Sharing Consents") are obtained
prior to the effective date of the Merger (the "Effective Date") or if RPII and
GBI are advised that no Sharing Consents are necessary, RPII, as soon as
practicable thereafter, will close its Great Neck, New York office and the
registered representatives at such office will be offered the opportunity to
relocate to either RPII's New York City office or GBI's Bethpage office. If the
Sharing Consents are not obtained prior to the Effective Date, RPII shall
continue to operate its Great Neck office until the Effective Date, after which
it shall be closed as promptly as practicable; provided that RPII may close its
Great Neck office prior to the Sharing Consents being obtained with the consent
of GBI and after discussion with the employees located at the Great Neck office.
(c) RPII shall close its Connecticut office as promptly as practicable
after the execution of this Agreement. Registered representatives located at the
Connecticut office will be offered the opportunity to relocate to RPII's New
York City office or, if the Sharing Consents are obtained prior to the Effective
Date, to GBI's Bethpage office.
(d) As promptly as practicable after the date the Sharing Consents are
obtained or, if RPII and GBI are advised that no Sharing Consents are necessary,
the date on which RPII and GBI receive such advice (either such date being the
"Sharing Commencement Date"), GBI shall (i) relocate the registered
representatives located in its New York City office to RPII's New York City
office and (ii) designate one or more of its supervisors to relocate to RPII's
Boca Raton (Mizner) office.
1.2 Supervisory Responsibility. RPII and GBI shall jointly designate
registered representatives of GBI to become dually registered with NASDR (and
other regulatory agencies having jurisdiction) as registered representatives of
RPII and to have supervisory responsibility for the RPII New York City and Boca
Raton (Mizner) offices. All RPII and GBI registered representatives in such
offices shall report to such dually registered representatives. All RPII and GBI
registered representatives located in the GBI Bethpage office shall report to a
GBI supervisor in such office.
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1.3 Departmental Operation. Notwithstanding the provisions of Section 1.2,
until the Effective Date, all RPII registered representatives located in the
RPII New York City and Boca Raton (Mizner) offices and the GBI Bethpage office
will operate as separate departments in each of such offices and all GBI
registered representatives in such offices will similarly operate as separate
departments in each of such offices.
1.4 New Employees. From and after the Sharing Commencement Date, all newly
hired registered representatives and other employees who are to be located at
(a) RPII's New York City office shall be employees of either RPII or GBI as RPII
and GBI shall mutually agree, (b) GBI's Bethpage, New York office shall be
employees of GBI, and (c) RPII's Boca Raton (Mizner), Florida office shall be
employees of RPII.
1.5 Order Processing. From and after the Sharing Commencement Date until
the Effective Date, (a) all buy and sell orders from GBI registered
representatives shall be processed through the trading room at GBI's Bethpage
office and cleared by Bear, Stearns & Co., Inc. ("Bear Stearns") and (b) all buy
and sell orders from RPII registered representatives shall be processed through
the trading room at RPII's New York City office and cleared through Schroder &
Co., Inc. ("Schroder"). The parties shall make mutually satisfactory
arrangements with Bear Stearns, Schroder or another clearing company for
clearance of trades subsequent to the Effective Date.
1.6 Revenue Allocation; Telephone Services. All revenues generated between
the Sharing Commencement Date and the Effective Date by registered
representatives of each of RPII and GBI will be allocated to and accrue for the
benefit of the firm of the generating registered representative. GBI and RPII
shall mutually agree upon a method of allocation of expenses for employees of
one firm occupying space of the other firm.
ARTICLE II
POST-MERGER OPERATIONS
2.1 Executive Committee. The Board of Directors of RPII shall appoint an
Executive Committee initially consisting of the persons named in Schedule 2.1,
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which will report to the Board of Directors of RPII and shall be responsible for
the consolidated operations of RPII on a day-to-day basis.
2.2 Operating Committee. The Board of Directors of RPII shall appoint an
Operating Committee initially consisting of the persons named or holding the
offices listed in Schedule 2.2, which shall meet on a regularly scheduled basis
to review and make recommendations with respect to all aspects of the
consolidated operations of RPII and report to the Executive Committee.
2.3 Account Overlaps.
(a) A committee consisting of David Nussbaum, Roger Gladstone and Robert
Gladstone (collectively, the "NGG Group") and Richard Rosenstock and Joseph
Berland (together, the "RB Group") will review all customer accounts which, as
of the Sharing Commencement Date, are serviced by both the NGG Group and the RB
Group and shall allocate such accounts as follows:
(i) to the NGG Group;
(ii) to the RB Group; or
(iii)to a joint account to be shared equally by the NGG Group and the
RB Group.
(b) Customer accounts other than those referred to in Section 2.3(a) which,
as of the Sharing Commencement Date, are serviced by registered representatives
of both RPII and GBI shall be awarded to one or the other of such
representatives by a committee initially consisting of Mark Zeitchick, Vince
Mangone and Robert Gladstone, who shall make their determination in accordance
with current policies of GBI consistently applied.
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2.4 Commission and other Compensation Arrangements.
(a) The maximum percentage of gross commissions payable to registered
representatives of RPII shall be 50%, except as follows:
(i) the NGG Group shall receive 60%;
(ii) each of Richard Berland and Richard Sonkin shall receive 75% or
such lower payout as shall result in GBI not incurring losses as a result of his
respective activities; and
(iii)Oscar Sonkin will receive 100% of all commissions net after
allocation and deduction of expenses attributable to his activities.
(b) Notwithstanding the foregoing, the payouts to Richard Berland, Richard
Sonkin and Oscar Sonkin shall be reduced if the payouts referred to above are
required to be disclosed in RPII's regulatory and other filings.
(c) No advance (up front) payments shall be made to any registered
representative without the consent of the Executive Committee.
(d) At least 50% of any warrants received by RPII in connection with any
investment banking or financial advisory or consulting activities shall be
allocated to RPII and up to 50% of such warrants shall be allocated to
individuals based on their involvement with the transaction, as determined by a
committee consisting of one person selected by the RB Group and one person
selected by the NGG Group (initially, Joseph Berland and David Nussbaum). If
none of the members of either group is then employed by RPII, such allocation
shall be made by the Board of Directors of RPII. Such committee or the Board, as
the case may be, may, in its discretion, make any such allocation to an
individual subject to the recipient remaining in the employ of RPII for a
specified period of time.
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(e) "Overrides" on retail commissions generated by RPII of the following
aggregate percentages shall be payable to the following categories of employees,
as determined by the Executive Committee:
Office Sales Managers 2.0%
Office Assistant Sales Managers 0.5%
Managing Directors 2.0%
Southeast Research Partners, 1.0%
Inc. ("SERP") personnel
ARTICLE III
TERMINATION PROVISIONS
3.1 Relocation of Personnel. If the Merger Agreement is terminated prior to
the Effective Date ("Termination Event"), then:
(a) RPII registered representatives who have relocated to GBI's Bethpage
office shall relocate to RPII's New York City office;
(b) GBI's supervisory personnel who have relocated to RPII's Boca Raton
(Mizner) office shall relocate to GBI's Bethpage office; and
(c) GBI's registered representatives who have relocated to RPII's New York
City office will, as promptly as possible but in no event more than 120 days
after the occurrence of the Termination Event, relocate to alternative space in
New York City as determined by GBI. During the period from the date of the
occurrence of the Termination Event until the date of such relocation, GBI may
continue to occupy such space on a month-to-month basis and shall pay RPII the
fair rental value of the space occupied and services used by the GBI registered
representatives and other personnel in RPII's New York City office.
3.2 Non-Solicitation. For a period of one year following the date of
occurrence of a Termination Event, neither RPII nor GBI, or any of their
respective directors, officers, employees or agents, will, directly or
indirectly, (a) solicit or attempt to solicit any account executive, registered
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representative or other employee of the other firm, who was employed by the
other firm on the date of this Agreement or thereafter, to leave his or her
employment at the other firm, or (b) employ any such person. If a party violates
the preceding sentence, then the duration of the restriction contained therein
shall be automatically extended for a period of one year from the date on which
such violation occurs or the date of the entry by a court of competent
jurisdiction of a final order or judgment enforcing such restriction, whichever
is later. The parties acknowledge that, in the event of a breach of the terms of
this Section 3.2, the non- breaching party's remedy at law for monetary damages
will be inadequate and that the non- breaching party will be entitled to
injunctive relief.
ARTICLE IV
GENERAL
4.1 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered or mailed if delivered personally or by nationally
recognized courier or mailed by registered mail (postage prepaid, return receipt
requested) or by telecopy to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice, except that
notices of changes of address shall be effective upon receipt):
If to RPII:
Research Partners International, Inc.
One State Street Plaza
New York, New York 10004
Attention: Peter R. Kent
Telecopier: 212/363-4284
with a copy to:
Squadron Ellenoff Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
Attention: Kenneth R. Koch, Esq.
Telecopier: 212/697-6686
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If to GBI:
Gaines, Berland Inc.
1055 Stewart Avenue
Bethpage, New York 11714
Attention: David Thalheim
Telecopier: 516/470-1060
with a copy to:
Gusrae Kaplan & Bruno
120 Wall Street
New York, New York 10005
Attention: Martin H. Kaplan, Esq.
Telecopier: 212/809-4147
and, in either case, with a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Attention: David Alan Miller, Esq.
Telecopier: 212/818-8881
4.2 Amendment. This Agreement may not be amended or modified except by an
instrument in writing signed by the parties.
4.3 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
4.4 Entire Agreement. This Agreement and the Schedules hereto constitute
the entire agreement and supersede all prior agreements and undertakings, both
written and oral, between the parties with respect to the subject matter hereof
and, except as otherwise expressly provided herein, are not intended to confer
upon any other person any rights or remedies hereunder.
4.5 Benefit. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the Parties.
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4.6 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York.
4.7 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.
4.8 Decisions. Any determination or decision to be made hereunder by a
committee or other group consisting of at least two persons, shall be made by
the majority consent of such persons, except as otherwise provided herein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the date first written above.
RESEARCH PARTNERS INTERNATIONAL, INC.
/s/ Peter R. Kent
By: ____________________________________
Name: Peter R. Kent
Title: Chief Operating Officer
GAINES, BERLAND INC.
/s/ Richard J. Rosenstock
By:_______________________________________
Name: Richard J. Rosenstock
Title: President
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EXHIBIT 99.1
R E S E A R C H P A R T N E R S
--------------------------------
I N T E R N A T I O N A L, I N C.
FOR IMMEDIATE RELEASE Contact: Beth Musto
Vice President
Director of Corporate Communications
and Human Resources
(212) 208-6703
Research Partners International, Gaines, Berland to Merge
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New York, NY, November 5, 1998-- In a move designed to leverage its growing
research capabilities with additional retail brokerage capabilities, Research
Partners International, Inc. (NMS:RPII) announced today a planned merger with
Gaines, Berland Inc. The transaction, which is subject to shareholder and
regulatory approval, is expected to close during the first quarter of 1999.
Management of the combined firm will be shared by executives of both firms.
David Nussbaum and Joseph Berland, chairman of RPI and GBI, respectively, will
serve as co-chairmen, with Peter Kent, currently RPI's chief operating officer,
becoming chief executive officer of the combined firm. Gaines, Berland's Richard
Rosenstock will serve as president and David Thalheim will assume the position
of chief operating officer. Roger Gladstone, currently RPI's president, will
become the firm's vice chairman.
Shareholders of privately-held Gaines, Berland will receive six million shares
of RPI common stock, increasing the number of shares outstanding to 14.4
million, and performance-based warrants entitling them to purchase up to an
additional two million shares at $3.50 per share if certain objectives are
achieved over the two years after closing.
Messrs. Nussbaum and Berland stated that, "On a combined basis, the firm will
initially have in excess of 425 registered representatives, and will be
well-capitalized and positioned to grow. Today's environment for the brokerage
industry is leading to consolidation and should provide the combined firm with
tremendous opportunities to acquire other firms and recruit registered
representatives."
"RPI has nurtured a growing research capability in its highly-respected
Southeast Research Partners subsidiary, and has also invested to expand its
investment banking, syndicate, high yield and related capabilities. These
products and services will benefit Gaines, Berland's sales force by broadening
its offerings. The combined firm's scale will enhance our ability to serve
corporate and institutional as well as retail clients," they noted.
Research Partners International through its four primary operating subsidiaries,
GKN Securities Corp., Southeast Research Partners, Inc., Shochet Securities,
Inc. and Research Partners International AG is primarily engaged in
institutional research, investment banking, securities brokerage and securities
trading. Headquartered in New York City, the Company maintains operations in New
York, California, Connecticut, Florida, Massachusetts and Zurich, Switzerland.
Gaines, Berland Inc., based in Bethpage, NY, is primarily engaged in retail
brokerage and security trading and operates from two locations in the New York
metroplitan area.
This press release contains forward-looking statements by the Company that
involve risks and uncertainties that could cause actual results to differ
materially from those set forth in the forward-looking statements. Such risks
and uncertainties are described in the Company's filings with the SEC, including
its annual report on Form-10K for the fiscal year ended January 31, 1998 and its
Registration Statement on Form S-1, as amended.
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ONE STATE STREET PLAZA . NEW YORK . NY 10004 . 212 208-6500 . 800-338-8964
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