Exhibit 10.7
AGREEMENT dated as of November 1, 1996 by and between BANKERS TRUST
COMPANY, a New York banking corporation (the "Bank"), having an address at Xxx
Xxxxxxx Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and XXXXXXX CAPITAL MANAGEMENT,
INC., a District of Columbia corporation ("CCM"), having an address at World
Trade Center, 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000.
INTRODUCTION
The Bank is the trustee of the Minority Equity Trust Fund (the "MET"),
which was established effective as of January 1, 1991 as a fund within the BT
Pyramid Trust, a collective investment trust maintained by the Bank. The Bank
has heretofore entered into contracts with the corporate and government
retirement plan investors identified on Schedule A hereto for the investment of
designated portions of their assets in the MET (such investors as of the date
hereof being collectively referred to as the ("Investors"). The MET emphasizes
investment of corporate and government retirement plan assets in equities and
other securities using the services of minority (including, but not limited to,
women's)-owned investment advisory firms and minority-owned consultants to
advise the Bank in selecting investments and to provide certain services to the
MET. CCM is a minority-owned registered investment advisor which desires to
manage the assets of
the Investors now invested in the MET and of other retirement plans. The Bank
desires to discontinue the MET and is willing to cooperate with CCM in the
establishment of a group trust which may form an alternative to the MET for
those Investors and others similarly situated to pursue the objective of
directing management of a part of their portfolio to minority-owned businesses,
all subject to the terms and conditions hereof.
AGREEMENT
In consideration of the premises and other good and valuable
consideration, the receipt of which the parties hereto hereby acknowledge, the
parties hereby agree as follows:
1. Establishment of The CCM Trust. (a) Concurrent with the execution
hereof, CCM and the Bank are entering into that certain Declaration of Trust
dated as of the date hereof (the "CCM Trust Declaration") which establishes a
group trust known as the DEM-MET Group Trust for Employee Benefit Plans (the
"CCM Trust"), and which is intended to satisfy the requirements of Internal
Revenue Service ("IRS") Revenue Ruling 00-000 (xxx "Xxxxxxx Xxxxxx"). Pursuant
to the CCM Trust Declaration the Bank shall act as a fully directed trustee of
the CCM Trust for CCM as the sponsor of the CCM Trust and as its investment
advisor. The duties and obligations of the Bank as trustee of the CCM Trust
shall be
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solely as set forth in the CCM Trust Declaration, which agreement shall not be
subject to this Agreement in any respect.
(b) CCM shall at its sole cost and expense and within 15 days from
the date hereof prepare and file with the IRS an application for a favorable
determination letter under Section 14 of Rev. Proc. 96-6 (an "IRS Letter") with
respect to the status of the CCM Trust as a tax-exempt group trust as described
in the Revenue Ruling and as to the continued tax qualification of trusts
participating therein. The Bank agrees to cooperate in the preparation of such
application to the IRS as appropriate for a fully directed trustee and at the
cost of CCM. CCM shall, concurrent with such filing with the IRS, deliver a copy
of the final application to the Bank. CCM shall give the Bank prompt notice of
any written or oral response or comments of the IRS with respect to the
application and of any written or oral response of CCM thereto and of the
issuance of the IRS Letter and shall with any such notice furnish to the Bank a
copy of any such written responses or comments and of the IRS Letter.
2. Termination of the MET. (a) The Bank shall not later than 30 days from
the date hereof give the Investors appropriate notice under the MET and their
investment agreements that the Bank will: (i) terminate and commence winding up
the MET as of a date which shall be the later of six (6) months from the date
hereof or thirty (30) days after the Bank has received notice from the IRS or
CCM of the issuance of the IRS
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Letter; and (ii) coincident with the termination of the MET, terminate any
investment agreements with the Investors as and to the extent that they relate
to the MET.
(b) Notwithstanding anything to the contrary herein, CCM
acknowledges and agrees that any employee pension benefit plans (as defined in
Section 3(2)(A) of the Employee Retirement Income Security Act of 1974 as
amended) now existing or hereafter established or otherwise sponsored by (i) the
Chrysler Corporation (or any of its subsidiaries or affiliates) (collectively
"Chrysler") or to which Chrysler may contribute (collectively, "Chrysler Plans")
or (ii) the Bank (or any of its subsidiaries or affiliates) is not an "Investor"
for the purposes hereof and the relationship of the Bank with (i) Chrysler and
the Chrysler Plans or (ii) the employee pension benefit plans of the Bank (or
any of its subsidiaries or affiliates) shall not be covered by this Agreement
(including but not limited to Section 3(a) hereof).
(c) From and after the date hereof the Bank shall, at the request of
CCM, made from time to time, introduce CCM to Investors so that CCM may solicit
the transfer to the CCM Trust of the investment of the Investor in the MET;
provided, however, that the Bank shall not be required to furnish or make any
recommendation to the Investor with respect to an investment in the CCM Trust or
the prospects of the CCM Trust. CCM shall not make any statement or claim that
the Bank has recommended or otherwise endorsed the CCM Trust or its prospects.
CCM agrees to furnish to any Investor to which it shall be introduced by the
Bank the following
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forms: the complete and current Form ADV for CCM (including but not limited to
Schedule E thereof) and any additional document or information required under
the Investment Advisers Act of 1940 as amended (the "Act") or any applicable
state securities law. Nothing in the CCM Trust Declaration shall limit the
requirements of the preceding sentence. CCM acknowledges that the Bank may
disclose to Investors the consideration which it will receive from CCM for the
noncompetition covenant of the Bank herein.
(d) CCM acknowledges that any transfer of assets by an Investor from
the MET to the CCM Trust will require the proper written consent of, and
direction by, the Investor and that the Bank shall not be responsible for
obtaining any such consent or direction. The Bank agrees, to the extent
practicable and not otherwise in violation of any agreement, trust declaration
or applicable law, to effect in kind transfers of assets between the MET and the
CCM Trust for those Investors electing to convert all or a portion of their
investment in the MET to an investment in the CCM Trust. CCM acknowledges that
in accordance with, and subject to the MET and any investment agreement with an
Investor, the Bank shall cause the MET to distribute to each Investor its share
of the MET upon its request and/or upon final termination and winding up of MET
whether or not CCM has had an opportunity to discuss the CCM Trust with the
Investor.
3. No Solicitation Covenant. (a) The Bank covenants and agrees with CCM
that for a period of three (3) years commencing on the
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date on which it publicly announces the termination of the MET, the Bank shall
not solicit corporate or government retirement plans (other than from Chrysler
or Chrysler Plans) within the United States for the management of a portion of
their assets through a separate trust, separate pooled fund, subtrust or
separate subfund if such vehicle emphasizes the use by the Bank of the services
of minority-owned investment advisers and minority-owned consultants in managing
such assets and servicing such investment vehicle. As consideration for such
covenant, CCM shall: (i) pay the Bank the aggregate amount of THREE HUNDRED
THOUSAND ($300,000) DOLLARS (the "Lump Sum Payment"), payable ONE HUNDRED FIFTY
THOUSAND ($150,000) DOLLARS on June 30, 1997 and ONE HUNDRED FIFTY THOUSAND
($150,000) DOLLARS on June 30, 1998; and (ii) make certain payments for the
benefit of the Bank pursuant to the Consultant Termination Agreement (as defined
in Section 4 hereof).
(b) As security for its obligation to make the Lump Sum Payment, CCM
is delivering to the Bank on the date hereof a $300,000 standby irrevocable
letter of credit (the "Letter of Credit") issued to the Bank as obligee by
National Commerce Bank and in form and substance satisfactory to the Bank. CCM
agrees that the Bank may draw on the Letter of Credit if CCM fails to pay all or
any installment or other portion of the Lump Sum Payment as specified in Section
3(a)(i) or if there shall be commenced a voluntary or involuntary proceeding by
or in respect of CCM
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or any substantial portion of its property under any bankruptcy, insolvency,
receivership, reorganization or similar law now or hereafter in effect.
(c) Without limiting the generality of Section 10 hereof, CCM
acknowledges and agrees that the Bank has made no representation or warranty as
to the prospects of the CCM Trust or the likelihood that any Investor will
invest in the CCM Trust or as to the performance by the Consultants of their
undertakings to CCM under the Consultant Termination Agreement and all of CCM's
payments, undertakings and other obligations hereunder and under the Consultant
Termination Agreement are independent of the success of the CCM Trust or of the
performance by the Consultants of their covenants to CCM under the Consultant
Termination Agreement.
4. Certain Other Agreements and Payments. On the date hereof and
concurrent herewith CCM, the Bank, Tremont Partners, Inc. ("Tremont") and
Xxxxxxxx Xxxxxxx Ltd. ("SPL") (Tremont and SPL being collectively referred to as
the "Consultants") and Moses & Singer LLP, as escrow agent, are entering into an
agreement (the "Consultant Termination Agreement"), pursuant to which CCM is, as
additional consideration for the noncompetition covenant of the Bank set forth
in Section 3(a) hereof, making certain payments concurrent with the execution
hereof aggregating $640,000 for the benefit of the Bank, which payments will be
held in escrow by the escrow agent pursuant to escrow provisions set forth in
the
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Consultant Termination Agreement and will be released by the escrow agent to the
Consultants in accordance with the Consultant Termination Agreement and the
escrow provisions thereof. The Consultant Termination Agreement also provides
for the delivery into escrow of releases by the Consultants of certain contracts
to which the Consultants are parties with the Bank in respect of the MET and
further provides for their agreement not to solicit certain business from the
Investors for a period of six (6) months from the date hereof, all as set forth
therein. CCM agrees and acknowledges that its full performance under the
Consultant Termination Agreement is a condition to the continued performance of
the Bank hereunder.
5. Use of Met Name. The Bank hereby grants and quitclaims to CCM any
right, title or interest which the Bank may have in the name "Minority Equity
Trust" (the "Name"); provided, however, that the Bank reserves the right to use
the Name or any derivative thereof: (i) in connection with the MET; (ii) as part
of and in connection with the Chrysler Minority Equity Trust; and (iii) to the
extent required by its duties as a directed trustee of the CCM Trust. CCM
acknowledges that the Bank has not filed any application for a state xxxx or
federal trademark or copyright for the Name or otherwise formally claimed such
an exclusive right.
6. Representations and Warranties of CCM. CCM hereby represents and
warrants to the Bank that: (i) it is a registered investment
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adviser under the Act and has complied in all material respects with all
applicable laws, regulations and orders has all appropriate Federal, state and
local permits, licenses or other authorities to conduct its current business and
as it intends to conduct the CCM Trust; (ii) it has disclosed to the Bank all
proceedings, civil suits or disciplinary actions by any person, including
without limitation, any regulatory body or authority, whether Federal, state,
local or securities industry association, to which CCM or its affiliates or any
of its or their shareholders, officers, directors, or employees have been a
party or to which any of them has been subject within the 10 year period
preceding the date hereof or which CCM knows to be currently pending or
threatened against CCM or any of its affiliates or any of its or their
shareholders, officers, directors or employees; (iii) it is a corporation duly
organized validly existing and in good standing under the laws of the District
of Columbia and this Agreement and the Consultant Termination Agreement have
been authorized by all necessary corporate and/or shareholder action and
constitute the binding obligations of CCM enforceable against it in accordance
with their terms; and (iv) no representation or warranty by CCM or any of its
affiliates or its or their officers, directors, shareholders or employees made
herein or in any other document, certificate or other writing heretofore
furnished to the Bank by any of them contains any misstatement of a material
fact necessary to make any statement contained herein or therein not misleading
or omits to state a material fact necessary to make any statement contained
herein or therein not misleading.
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7. Representations and Warranties of the Bank. The Bank hereby represents
and warrants to CCM that this Agreement has been authorized by all necessary
corporate action and represents the binding agreement of the Bank enforceable
against it in accordance with its terms.
8. Survival of Representations and Warranties. The representations and
warranties of the parties made herein shall survive for a period of three years
from the date hereof.
9. Certain Indemnifications. (a) Except as otherwise provided herein, each
of the parties hereby agrees to pay, defend, indemnify and hold the other and
its stockholders, affiliates, officer, directors, employees and representatives
harmless from and against, for and in respect to:
(i) any damages, liabilities, losses and expenses of any kind or
nature whatsoever which may be asserted against, or be incurred, sustained
or suffered by a party hereto, by virtue of a breach by the other party
hereto of, any representation, warranty, covenant, undertaking, agreement,
or indemnification made by such party in this Agreement or in the
Consultant Termination Agreement, or by virtue of any claim (including any
action, proceeding or demand) against a party hereto by a third person
(which term includes an individual, trust or any other entity) (a "third
party claim") made or brought against
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such party by reason of, or attributable to, or arising, directly or
indirectly, from any act or omission of the other party hereto which
constitutes a non-performance or breach by such other party hereto of any
representation, warranty, covenant, undertaking, agreement or other
obligation made by or incurred by such other party in this Agreement or in
the Consultant Termination Agreement; and
(ii) all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred by a party in connection
with any action, suit, proceeding, demand, claim, assessment or judgment
incident to any of the matters set forth in Section 9(a)(i).
(b) If a claim for indemnification hereunder does not relate to a
third party claim, the party claiming indemnification shall make a demand
therefor against the other party hereto and if it shall not have received the
full amount demanded from such other party within 30 days, the claiming party
may thereafter bring suit or commence an action against the party from which
indemnification is sought in accordance with applicable law and Section 14
hereof at any time within four years from the date hereof and such claiming
party shall with any recovery also be entitled to its reasonable attorneys' fees
and expenses incurred in prosecuting such indemnification action.
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(c) The procedures to be followed by the parties hereto with respect
to indemnification hereunder regarding third party claims shall be as follows:
(i) Promptly after receipt by a party hereto of the assertion of any
claim against such party by a third party which the party hereto receiving
such assertion has reason to believe may result in a claim by it against
the other party hereto for indemnity pursuant to this Agreement, such
receiving party shall give a written notice of such third party claim to
the other party hereto setting forth the nature of claim, including copies
of any written correspondence from such third party to the party seeking
indemnification hereunder. The party hereto against which indemnification
is sought for such third party claim shall be entitled, at its own cost
and expense, to participate in the defense of such claim, unless: (A) the
third party claim involved seeks (and continues to seek) solely monetary
damages, (B) within 45 days after notice of the claim the indemnifying
party fully and without reservation acknowledges in writing its obligation
to indemnify and hold harmless the other party with respect to such
damages in their entirety pursuant hereto, and (C) within 45 days after
notice of the claim the party hereto against which indemnification is
brought shall have made written provision satisfactory to the party hereto
which is to be indemnified to satisfy any adverse judgment or settlement
as a result of such party's
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indemnification obligation with respect to such third party claim, in
which case, if each of the requirements of (A), (B), and (C) is satisfied
and continues at all times thereafter to be satisfied, then such
indemnifying party shall thereafter be entitled to assume and control such
defense with counsel chosen by such party and approved by the party hereto
seeking indemnification. The party hereto entitled to such indemnification
shall be entitled to copies of all pleadings or other papers filed with
the court or served on any litigant and to written progress and status
reports promptly on request. Any settlement of a third party claim for
which indemnification is sought hereunder shall require the consent of
each of the parties hereto, which consent shall not be unreasonably
withheld.
(ii) With respect to third party claims as to which the indemnifying
party: (A) does not have the right hereunder to assume the defense, or (B)
shall not have exercised or timely exercised its right to assume the
defense, the party seeking indemnification shall continue to control the
defense of and contest such action and the party seeking indemnification
shall have full and exclusive rights to dispose of the third party claim.
The indemnifying party shall in such case be obligated to make payment in
accordance with this Section 9 from time to time as the party to be
indemnified incurs an indemnifiable expense; provided that any suit or
action to compel such indemnification is commenced by the party seeking
indemnification in
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accordance with Section 14 (whether for actual recovery or a declaratory
judgment of its indemnification rights) and within four years from the
date hereof, and the party so seeking indemnification shall also be
entitled to its reasonable attorneys' fees and expenses incurred in
prosecuting such action or proceeding against the other party hereto for
such indemnification.
10. Entire Agreement. This Agreement and the Consultant Termination
Agreement represent the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede any prior undertakings,
inducements, agreements or understandings, express or implied, oral or written,
with respect hereto or thereto and CCM acknowledges that the Bank has made no
representations or warranties to CCM with respect to the subject matter hereof
or thereof except as expressly set forth herein or therein.
11. No Parol Modification. Neither this Agreement nor any term or
condition hereof may be discharged, terminated, modified, supplemented or
waived, except by a writing signed by the party against which the same is to be
enforced. A waiver by a party of a breach of a term or condition hereof shall
not be deemed to constitute a waiver of any other breach of the same term or
condition or of any other term or condition.
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12. Notices. All notices of or other communications given hereunder shall
be in writing and shall be deemed to been given when delivered in person or by
facsimile (directed to the actual fax number of the responsible officer to which
the same is directed and subject to oral or written confirmation of receipt) or,
if mailed, then 5 days after being deposited in the U.S. Mail, certified or
registered, postage prepaid, return receipt requested, and in each case
addressed to a responsible officer of the party to which the same is directed at
the address for such party first hereinabove set forth or at such other address
as such party shall have given notice hereunder.
13. No Assignment. Neither this Agreement nor any of the rights or
obligations of the parties hereunder shall be assigned or otherwise transferred
without the prior written consent of the other party.
14. Applicable Law. (a) This Agreement shall be governed by the law of the
State of New York applicable to agreements wholly to be performed therein.
(b) Each of the parties hereby consents to the personal jurisdiction
of the Supreme Court of the State of New York, County of New York, and of the
Federal District Court for the Southern District of New York in any action or
proceeding brought by a party with respect to any claim directly or indirectly
arising hereunder or in respect hereof, agrees that such
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courts shall have exclusive jurisdiction thereof and waives any claim of forum
non conveniens or improper venue to the fullest extent permitted by law.
15. No Joint Venture. This Agreement shall not be construed as creating
any partnership, joint venture or employment relationship between the parties.
16. Binding Effect. This Agreement and the terms and conditions hereof
shall bind and enure to the successors of the parties and their permitted
assigns.
17. No Third Party Beneficiaries. There shall be no third party
beneficiary of this Agreement or any term or condition hereof.
18. Captions. Captions herein are solely for use of reference and shall
not be used to interpret or construe this Agreement.
19. Counterparts. This Agreement may be executed in counterpart originals,
all of which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
by their duly authorized officers as of the date first hereinabove written.
BANKERS TRUST COMPANY
By: /s/ Xxxxxxx X. Xxxxxx, M.D.
--------------------------------
Name: XXXXXXX X. XXXXXX, M.D.
Title:
XXXXXXX CAPITAL MANAGEMENT, INC.
By:
--------------------------------
Name:
Title:
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
by their duly authorized officers as of the date first hereinabove written.
BANKERS TRUST COMPANY
By:
--------------------------------
Name:
Title:
XXXXXXX CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
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