MERGER AGREEMENT
THIS MERGER AGREEMENT is made as of February 9, 1998, by and
among Xxxx, Xxxx & Co., Inc., a New Jersey corporation ("RBC"), Cumberland
Advisors, Inc., a New Jersey corporation and wholly-owned subsidiary of RBC
("Newco" and, together with RBC, "Purchaser"), Cumberland Advisors, a New Jersey
general partnership ("Advisors"), Xxxxx X. Xxxxx ("Kotok"), Xxxxxxx X. Xxxxxxxxx
("Xxxxxxxxx") and Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx"). (Kotok, Xxxxxxxxx and
Xxxxxxxx are each a "Seller" and collectively the "Sellers"; Advisors and the
Sellers are each a "Cumberland Party" and collectively the "Cumberland Parties"
and Purchaser and the Cumberland Parties are collectively the "Parties".) Unless
otherwise indicated, capitalized terms used but not defined prior to their first
usage herein are defined in Section 1.6 and Article 9.
The Parties hereby agree as follows:
ARTICLE 1
ACQUISITION OF ADVISORS; CLOSING
1.1 The Merger; Effect of the Merger. Subject to the terms and
conditions of this Agreement, at the Effective Time (as hereinafter defined),
Advisors will be merged with and into Newco (the "Merger") in accordance with
the New Jersey Business Corporation Act (the "NJBCA"). Newco will be the
surviving corporation (the "Surviving Corporation") in the Merger, with the
initial corporate name of "Cumberland Advisors, Inc." and will continue to be
governed by the laws of the state of New Jersey as a wholly-owned subsidiary of
RBC. The Merger will have the effects specified in Section 10-6 of the NJBCA (as
made applicable to the Merger by Section 10-14 of the NJBCA).
1.2 Certificate of Incorporation. As of the Effective Time, the
certificate of incorporation of Newco as it exists at the Effective Time will be
the certificate of incorporation of the Surviving Corporation and will not be
amended by this Agreement or the Merger.
1.3 By-Laws. As of the Effective Time, the By-laws of Newco will be the
By-laws of the Surviving Corporation until otherwise amended as provided by law.
1.4 Directors and Officers. As of the Effective Time, the persons set
forth on Exhibit A hereto, as the same may be amended by mutual agreement of the
Parties prior to the Effective Time, will be the directors and officers of the
Surviving Corporation in the positions shown next to their names on Exhibit A.
1.5 Effective Time; Closing and Closing Date. The Merger will become
effective and be consummated upon the filing of a Certificate of Merger for the
Merger, in form and substance satisfactory to the Parties, with the Secretary of
State of the State of New Jersey (the "Certificate of Merger"). The "Effective
Time" will be the date and time specified in the Certificate of Merger as the
Effective Time, which will be 5:00 p.m. on the Closing Date, unless the Parties
agree to the contrary, which agreement the Parties will evidence by filing the
Certificate of Merger with the new agreed-upon Effective Time noted thereon. A
closing (the "Closing") of the Merger and the other transactions contemplated
hereby will take place at the offices of Pitney Xxxxxx Xxxx & Xxxxx, 000 Xxxxxx
Xxxxx, Xxxxxxx Xxxx, Xxx Xxxxxx, or at such other place as is mutually agreeable
to the Parties, commencing at 10:00 a.m. local time on February 27, 1998 or such
other date as the Parties may mutually determine (the "Closing Date"); provided,
that no Closing will occur until the satisfaction or waiver of all of the
conditions to the consummation of the Merger specified in Article 6 hereof
(other than the delivery of certificates, opinions and other instruments and
documents to be delivered at the Closing); and provided, further, that the
parties intend to close on the last business day of a month. Immediately
following the Closing, the Certificate of Merger will be filed with the New
Jersey Secretary of State.
1.6 Consideration; Method of Payment. The consideration to be paid by
Purchaser to the Sellers in connection with the Merger and the Purchaser's
acquisition thereby of the Sellers' interests in Advisors (the "Consideration")
will consist of the Initial Cash Payment, the Initial Stock Payment and the Earn
Outs (less the Penalties and the Returned Amount, if any) (as each such term is
defined below) and will be paid in accordance with this Section 1.6.
(a) Consideration Payable at Closing. At the Closing,
Purchaser will make the following payments and deliveries of Consideration
(collectively the "Initial Consideration") to the Sellers:
(i) Initial Cash Payment. Purchaser will pay
to the Sellers in immediately available funds the aggregate
amount of One Million Nine Hundred Thousand Dollars
($1,900,000) (the "Initial Cash Payment"), payable $720,000 to
Kotok, $720,000 to Xxxxxxxx and $460,000 to Xxxxxxxxx. Six
Hundred Thousand Dollars ($600,000) of the Initial Cash
Payment (the "Returnable Amount") will be subject to repayment
or partial repayment by Purchaser in accordance with the terms
and conditions set forth in Exhibit D hereto.
(ii) Initial Stock Payment. Purchaser will
deliver to the Sellers (the "Initial Stock Payment") 167,742
shares of Common Stock of RBC, $0.10 par value per share ("RBC
Common Stock") (based on an estimated per share value of $7.75
and an estimated aggregate value of $1,300,000), with 110,968
shares of such RBC Common Stock ($860,000 in estimated value)
to be held in the Escrow Account (as defined below) with
39,549 shares (20% of the Initial Stock Payment) subject to
forfeiture as a Penalty as provided in paragraph (a)(vii) and
paragraph (c) below and the remaining shares in the Escrow
Account subject to forfeiture upon non-payment when due of any
Returned Amount (as defined below) to Purchaser. The RBC
Common Stock will be divided among the Sellers as follows: 40%
to Kotok, 40% to Xxxxxxxx and 20% to Xxxxxxxxx.
(b) Earn Outs and Penalties Payable Following the Closing.
Following the Closing, Purchaser will deliver the additional consideration
specified in paragraphs (i) and (ii) below (the "Earn Outs") to the Sellers (all
Earn Outs are to be split among Kotok, Xxxxxxxxx and Xxxxxxxx as specified in
paragraphs (vi) and (viii) below), and the Sellers will redeliver the
consideration specified in paragraphs (iii) and (iv) below (the "Penalties") to
Purchaser (the payment obligations of Kotok, Xxxxxxxxx and Xxxxxxxx with respect
to Penalties are as specified in paragraphs (vii) and (viii) below):
(i) MMB Earn Outs. The "Year 1 MMB Earn Out"
will equal the positive amount, if any, obtained by taking 65%
of {Year 1 MMB Income - Year 1 MMB Benchmark}, and multiplying
by 7. The "Year 2 MMB Earn Out" will equal the positive
amount, if any, obtained by taking 65% of {Year 2 MMB Income -
Year 2 MMB Benchmark}, and multiplying by 7. The "Year 3 MMB
Earn Out" will equal the positive amount, if any, obtained by
taking 65% of {Year 3 MMB Income Year 3 MMB Benchmark}, and
multiplying by 7.
(ii) IA Earn Outs. Subject to the IA Earn
Out Cap described below: (x) the "Year 1 IA Earn Out" will
equal the positive amount, if any, obtained by taking 65% of
{Year 1 IA Income - Year 1 IA Benchmark}, and multiplying by
7; the "Year 2 IA Earn Out" will equal the positive amount, if
any, obtained by taking 65% of {Year 2 IA Income - Year 2 IA
Benchmark}, and multiplying by 7; and the "Year 3 IA Earn Out"
will equal the positive amount, if any, obtained by taking 65%
of {Year 3 IA Income - Year 3 IA Benchmark}, and multiplying
by 7. The IA Earn Outs will be subject to an aggregate cap of
$2,000,000 (the "IA Earn Out Cap") and each IA Earn Out
calculated as set forth above shall be reduced, if and to the
extent necessary, so that the aggregate amount of IA Earn Outs
does not exceed the IA Earn Out Cap.
(iii) MMB Penalty. The "Year 1 MMB Penalty"
will equal the positive amount, if any, obtained by taking 65%
of {Year 1 MMB Benchmark - Year 1 MMB Income}, and multiplying
by 7. The "Year 2 MMB Penalty" will equal the positive amount,
if any, obtained by taking 65% of {Year 2 MMB Benchmark - Year
2 MMB Income}, and multiplying by 7. The "Year 3 MMB Penalty"
will equal the positive amount, if any, obtained by taking 65%
of {Year 3 MMB Benchmark - Year 3 MMB Income}, and multiplying
by 7.
(iv) IA Penalty. The "Year 1 IA Penalty"
will equal the positive amount, if any, obtained by taking 65%
of {Year 1 IA Benchmark - Year 1 IA Income}, and multiplying
by 7. The "Year 2 IA Penalty" will equal the positive amount,
if any, obtained by taking 65% of {Year 2 IA Benchmark - Year
2 IA Income}, and multiplying by 7. The "Year 3 IA Penalty"
will equal the positive amount, if any, obtained by taking 65%
of {Year 3 IA Benchmark - Year 3 IA Income}, and multiplying
by 7.
(v) Netting of Earn Outs and Penalties. All
Earn Outs and Penalties for a particular Year will be netted
against each other before any Earn Out is Paid or any Penalty
is imposed with respect to that Year.
(vi) Payment of Earn Outs. Each Earn Out
will be paid 50% in cash and 50% in RBC Common Stock (with
such RBC Common Stock valued at the average reported closing
price of RBC Common Stock for the 10 trading day period ending
on (and including) the trading day immediately prior to the
Payment Date). All the RBC Common Stock delivered as an Earn
Out will be held in the Escrow Account and subject to
forfeiture as a Penalty as provided in paragraph (a)(vii) and
paragraph (c) below. Subject to paragraph (viii) below, all
MMB Earn Outs will be payable 40% to Kotok, 40% to Xxxxxxxx
and 20% to Xxxxxxxxx. Subject to paragraph (viii) below, all
IA Earn Outs will be payable to Kotok, Xxxxxxxxx and Xxxxxxxx
based upon the relative percentage of the IA Business
attributable to each of them in the Year with respect to which
the IA Earn Out is to be paid.
(vii) Payment of Penalties. Each Penalty
will be paid from the RBC Common Stock which has been
delivered to the Sellers under paragraph (vi) above as an Earn
Out hereunder (with such RBC Common Stock valued at the value
it was given under paragraph (vi) above on a last in first out
basis) and, to the extent that there is insufficient Earn Out
RBC Common Stock to pay the Penalty in full, then the
remainder of the Penalty will be paid from the RBC Common
Stock which has been delivered to the Sellers as Initial Stock
Payment hereunder (with such RBC Common Stock valued at the
average reported closing price of RBC Common Stock for the 10
trading day period ending on (and including) the trading day
immediately prior to the last day of the Year with respect to
which the Penalty is due). The aggregate Penalties payable
hereunder will be capped at 100% of the RBC Common Stock which
has been delivered to the Sellers as Earn Out hereunder and
20% of the RBC Common Stock which has been delivered to the
Sellers as Initial Stock Payment hereunder. All the RBC Common
Stock which remains subject to Penalty forfeiture will be held
in the Escrow Account as provided in paragraph (c) below.
Subject to paragraph (viii) below, the split among the Sellers
in payment of any Penalties with respect to any Year will be
as agreed to among all the Sellers and set forth in a writing
signed by each of the Sellers (or their respective estates)
and delivered to RBC, or if no such writing is delivered to
RBC prior to the time the Penalty is applied, the split shall
be determined as follows: first determine the split of any IA
Penalty based upon the split applicable in the issuance of RBC
Common Stock against which the IA Penalty is to be taken;
second, add in any MMB Penalty (or net out any MMB Earn Out),
on the basis of 40% for Kotok, 40% for Xxxxxxxx and 20% for
Xxxxxxxxx.
(viii) Death or Disability of a Seller.
Following the death or Disability of any Seller, the portion
of the Earn Outs (if any) payable with respect to the Year in
which such Seller dies or becomes Disabled will be paid to the
Seller or his or her estate proportionately to the portion of
the Year during which such person worked as an employee or
consultant for RBC. With respect to the remaining portion for
such Year and with respect to each subsequent Year, the Earn
Outs will be distributed among the remaining Sellers in a
manner agreed to among all the Sellers and set forth in a
writing signed by each of the Sellers (or their respective
estates) and delivered to RBC. RBC may refrain from paying any
Earn Outs until it receives such a writing evidencing the
agreement of the Sellers and their respective estates.
Penalties will continue to be payable by the Seller or his or
her estate following the death or Disability of the Seller, as
though the death or Disability had not occurred.
(ix) Determination of Attribution of
Business. In each instance in this Agreement when a
determination must be made as to the attribution of business
among the various Sellers, such attribution shall be made by
unanimous agreement of the Sellers (or their respective
estates), evidenced by a writing signed by all Sellers (or
their respective estates) and delivered to RBC.
(x) Earn Out and Penalty Definitions. The
following definitions will apply in this Section and elsewhere
in this Agreement:
"Business" means the IA Business and
the MMB Business.
"Business Day" means any day other
than a Saturday, Sunday or day which RBC has declared as a
holiday for its general staff.
"Business Expenses" mean those
expenses of the Surviving Corporation (or other successor to
the Business) during the period in question, including without
limitation (a) payouts to employees or others for the
Business, (b) salary, bonuses and benefits (including payments
to the Sellers as Executives under the Principal Agreements)
attributable to the Business, (c) actual expenses of the
Business, (d) those expenses for corporate parent level
services provided to the Business specified on Exhibit E
hereto, priced in accordance with Exhibit E hereto, (e) rent
(including any building maintenance costs, electric and
utilities payable by the lessee), for the offices of the
Business, including the Vineland office and other Business
offices, the locations of which are to be determined by the
President of the Surviving Corporation (and which may include
Livingston, New Jersey, Bala Cynwyd, Pennsylvania and/or
Portland, Maine); provided, however, Business Expense shall
exclude any general corporate parent level expenses or
overhead not specified above. Notwithstanding the foregoing,
all amounts paid out pursuant to the Surviving Corporation's
profit-sharing plan shall be excluded from Business Expense
for the Year for which they are paid. The term "Business
Expenses" is used solely for the purpose of making the
calculations required by this Agreement and is not intended to
affect the calculation of profit and loss or any other
financial accounting calculation to be made by RBC or the
Surviving Corporation with respect to their respective
businesses following the Closing. Further, "Business Expenses"
shall not include the deduction or amortization of any costs
or expenses associated with the Merger, amortization of good
will acquired by RBC or the Surviving Corporation in the
Merger or any other intangible or amortization of any amounts
assigned to the covenants not to compete in one or more of the
Principal Agreements.
"Consulting" means Cumberland
Consulting, a sole proprietorship owned by Kotok.
"Consulting Business" means the
business currently conducted by Consulting, as the same will
be conducted by the Surviving Corporation (or other successor
to the Business) following the Closing Date.
"Disability" means the determination
that a Seller is permanently disabled within the meaning of
any permanent disability insurance policy which may be
maintained by the Surviving Corporation or RBC for the benefit
of any of the Sellers.
"IA Benchmark" for Year 1, means
$300,000; for Year 2, means Year 1 IA Income; and, for Year 3,
means Year 2 IA Income.
"IA Business" means the investment
advisor business currently conducted by Advisors, as the same
will be conducted by the Surviving Corporation (or other
successor to the Business) following the Closing Date, whether
under the Cumberland Advisors name or any other name, and any
other related business conducted by the Surviving Corporation
(or other successor to the Business) following the Closing
Date. The term "IA Business" specifically excludes the
Consulting Business and the MMB Income.
"IA Income" for any Year means the
following amount (which may be a negative number), determined
on a pre-tax basis: the IA Revenues, less the Business
Expenses.
"IA Revenues" for any Year means the
gross fees attributable to the IA Business (excluding any fees
which are included in determining MMB Income), determined on a
pre-tax basis.
"MMB Benchmark" for Year 1, means
$150,000; for Year 2, means Year 1 MMB Income; and, for Year
3, means Year 2 MMB Income.
"MMB Business" means that portion of
the business currently conducted by Advisors which generates
money market fees and which will generate for RBC brokerage
commissions (net of out-of-pocket expenses, including
third-party charges, if any), as the same will be conducted by
the Surviving Corporation (or other successor to the Business)
following the Closing Date, whether under the Cumberland
Advisors name or any other name. The term "MMB Business"
specifically excludes the Consulting Business.
"MMB Income" for any Year means the
sum of the following two (2) components, determined on a
pre-tax basis for the Year (which sum may be a negative
number):
(i) The administrative fees (usually
up to sixty (60) basis points) paid during such Year by the
banks or funds holding the money-market accounts generated by
customers of the IA Business, regardless of whether such fees
are paid to RBC, the Surviving Corporation (or any successor
to the Surviving Corporation), or a custodian bank, less
third-party charges, if any, deducted from such payments; and
(ii) The commission income generated
from orders entered by employees of or consultants of the
Surviving Corporation on behalf of its clients to RBC during
such Year, less the amount of cash outlays incurred by RBC in
providing soft dollar research and other services requested by
the Surviving Corporation during such Year; provided that the
commission income derived from each transaction shall, if a
purchase or sale of equity securities, be determined; (x)
multiplying the number of shares purchased or sold by an
amount per share set forth on Schedule 1.6(b)(x) and (y)
subtracting therefrom the sum of Thirty-five Dollars ($35.00).
The Surviving Corporation and RBC
shall each maintain records of the MMB Income generated and
shall reconcile them monthly. The Surviving Corporation may
elect to carry forward a specified balance of MMB Income from
Year 1 or Year 2, and the amount of any such carryover shall
be considered MMB Income for the succeeding Year. Such
carryover shall be made only if Kotok recommends such
carryover to the Board of Directors of the Surviving
Corporation within 60 days after the end of the carryover Year
and the Board of Directors approves such carryover
The "Payment Date" for any Earn Out
or Penalty means the 90th day following the end of the Year to
which the Earn Out or Penalty relates, or if such day is not a
Business Day, then the Payment Date will be the next Business
Day. The "Final Payment Date" is the last date on which an
Earn Out or Penalty is scheduled to be paid hereunder.
"Returned Amount" means any amount
of Initial Cash Payment which any of the Sellers is required
to return to Purchaser in accordance with the terms and
conditions set forth on Exhibit D hereto.
"Year" (only when capitalized) means
the twelve full month period beginning with the first full
calendar month which follows the Closing Date (sometimes
called "Year 1"), and each successive twelve full month period
(sometimes called "Year 2," "Year 3" and so on). Thus,
assuming a February 27, 1998 Closing Date, "Year 1" would mean
the period beginning March 1, 1998 and ending February 28,
1999, "Year 2" would mean the period beginning March 1, 1999
and ending February 29, 2000, and "Year 3" would mean the
period beginning March 1, 2000 and ending February 28, 2001.
(c) Limitations on Transfer of RBC Common Stock Consideration.
The RBC Common Stock included within the Consideration will be delivered to the
Sellers in a private placement and will not be registered under federal or state
securities laws for resale by the Sellers. The Sellers will not sell, transfer
or otherwise dispose of ("transfer") any portion of such RBC Common Stock prior
to the Final Payment Date, except for transfers by will or under intestacy laws,
transfers in divorce or transfers to family members, in each case with the
transferee bound by all transfer restrictions contained herein and with all
transferred shares subject to forfeiture pursuant to the Penalty provisions
hereof. Following the Final Payment Date, no Seller will transfer or sell any
portion of such RBC Common Stock unless (i) such transfer is made in conformity
with the volume and other limitations of Rule 144 promulgated by the Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act"), (ii) in the opinion of RBC's counsel or counsel reasonably
acceptable to RBC, such transfer is otherwise exempt from registration under the
1933 Act or (iii) such transfer is registered under the 1933 Act. Stop transfer
instructions will be given to RBC's transfer agents with respect to such RBC
Common Stock and there will be placed on the certificates representing such RBC
Common Stock an appropriate legend with respect to such restrictions. Prior to
the Final Payment Date, all such RBC Common Stock which is subject to forfeiture
as a Penalty and all such RBC Common Stock which is to serve as collateral for
the obligation to repay any Returned Amount will be deposited into an escrow
account (the "Escrow Account") with an escrow agent mutually agreed upon between
Purchaser and Sellers. The RBC Common Stock held in the Escrow Account which is
subject to forfeiture as a Penalty will be delivered to Sellers upon the Final
Payment Date; provided, however, that if any Penalties are imposed hereunder,
that portion of such RBC Common Stock necessary for RBC to recover such
Penalties shall first be redelivered to RBC. The RBC Common Stock held in the
Escrow Account which is to serve as collateral for the obligation to repay any
Returned Amount will be delivered to Sellers upon the determination that no
Returned Amount is to be repaid to Purchaser hereunder, or the determination
that all such Returned Amounts have been paid in full; provided, however, that
if any Returned Amounts are required to be repaid hereunder and are not repaid
immediately upon written notice thereof from Purchaser to the Seller(s)
obligated to make such repayment, Purchaser may retain such escrowed RBC Common
Stock and apply it against such repayment obligations (with such RBC Common
Stock valued at its fair market value on the date of such application).
Dividends upon RBC Common Stock held in the Escrow Account shall be payable
directly to the Sellers and shall not be deposited in the Escrow Account.
(d) Certification of Earn Outs, Penalty and Returned Amounts.
RBC and Kotok (or such other person appointed by the majority of the Sellers)
will cooperate each Year to determine the amount of any Earn Out, Penalty or
Returned Amount. Prior to or contemporaneously with making or demanding any Earn
Out, Penalty or Returned Amount payment required hereunder, RBC will deliver to
each of the Sellers a certificate of RBC's Chief Financial Officer or Chief
Executive Officer which sets forth the calculations by which RBC derived the
amount of the payment due to or from each of the Sellers and certifies their
accuracy.
(e) Allocation of Consideration. Purchaser and the Sellers
shall agree upon an allocation of the Consideration and shall report the Merger
for all Federal, state and local tax purposes in a manner consistent with such
allocation.
1.7 Principal Agreements. As a condition to Purchaser's obligation to
consummate the transactions contemplated hereby: (a) Kotok will enter into an
employment and non-compete agreement with the Surviving Corporation
substantially in the form attached hereto as Exhibit F (the "Kotok Employment
Agreement"); (b) Xxxxxxxxx will enter into an employment and non-compete
agreement with the Surviving Corporation substantially in the form attached
hereto as Exhibit G (the "Xxxxxxxxx Employment Agreement"); and (c) Xxxxxxxx
will enter into a consulting and non-compete agreement with the Surviving
Corporation substantially in the form attached hereto as Exhibit H (the
"Xxxxxxxx Consulting Agreement"). The Kotok and Xxxxxxxxx Employment Agreements
and the Xxxxxxxx Consulting Agreement are each sometimes referred to herein as a
"Principal Agreement" and collectively as the "Principal Agreements."
1.8 Agreements Regarding Consulting. As a condition to Purchaser's
obligation to consummate the transactions contemplated hereby: (a) Kotok will
contribute the Consulting Business to the Surviving Corporation, and (b) Kotok
will enter into a separate employment and non-compete agreement with the
Surviving Corporation relating to the conduct of the Consulting Business,
substantially in the form attached hereto as Exhibit F-1 (the "Second Kotok
Employment Agreement"). The Surviving Corporation intends to operate the
Consulting Business as a division of the Surviving Corporation. Following the
Closing, the Surviving Corporation will keep its books and records so that the
financial results of the Consulting Business can be determined as though it were
a stand-alone business, and the revenues (or losses, if any) of the Consulting
Business shall not be counted in determining the revenues (or losses, if any) of
either the IA Business or the MMB Business for purposes of the calculations
called for by this Agreement.
Following the Closing, the allocation of expenses between the Surviving
Corporation and the Consulting Business, where such expenses have been jointly
incurred or where employees of the Consulting Business are requested to perform
services for the Surviving Corporation, or vice versa, shall be calculated in
good faith by the President of the Surviving Corporation based upon, and
consistent with, the past practices in allocating expenses between Advisors an
Consulting prior to the Closing Date. Such allocation shall be reported to, and
shall be subject to the approval of, the Board of Directors of the Surviving
Corporation. A report of the allocation, as approved by the Board of Directors
of the Surviving Corporation, shall be submitted promptly to the Cumberland
Parties, who shall have twenty (20) days from their receipt thereof to object in
writing. The Board of Directors of the Surviving Corporation shall consider any
such objections in good faith and determine whether to revise the allocation.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF RBC AND NEWCO
As a material inducement to the Cumberland Parties to enter into this
Agreement, each of RBC and Newco hereby jointly and severally represents and
warrants to each of the Cumberland Parties that:
2.1 Organization of RBC and Newco. RBC is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey.
RBC has the requisite corporate power and authority and all licenses, permits
and authorizations necessary to enter into, deliver and carry out its
obligations pursuant to, this Agreement. Newco is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey.
Newco has the requisite corporate power and authority and all licenses, permits
and authorizations necessary to enter into, deliver and carry out its
obligations pursuant to, this Agreement.
2.2 Authorization; Binding Effect; No Breach. Each of RBC's and Newco's
execution, delivery and performance of this Agreement has been duly and validly
authorized by all necessary corporate action on its part. This Agreement
constitutes a valid and binding obligation of each of RBC and Newco which is
enforceable against it in accordance with its terms, except as such
enforceability may be limited by (a) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and (b) applicable equitable principles (whether considered in a
proceeding at law or in equity). The execution and delivery of this Agreement by
each of RBC and Newco and the performance of its obligations hereunder are not
in violation or breach of, and do not conflict with or constitute a default
under, any law, rule or regulation of any Government Entity, or any of the terms
or provisions of its certificate of incorporation or by-laws or any material
agreement, license or other instrument to which it is a party. No consent,
approval, authorization or order of any Government Entity is required for the
execution and delivery of this Agreement by either RBC or Newco or for the
performance by either RBC or Newco of its obligations hereunder, other than such
consents, approvals, authorizations or orders as are required to continue,
renew, or reissue to the Surviving Corporation following the Merger those
licenses under which Advisors conducts its business prior to the Merger.
2.3 Brokerage. There is no claim for brokerage commissions, finders'
fees or similar compensation in connection with the Merger based on any
arrangement or agreement which is binding upon either RBC or Newco.
2.4 Certain Litigation. Except as set forth on Schedule 2.4 hereto,
there is no action, suit, proceeding, order, investigation or claim pending (or,
to the best of RBC's Knowledge, threatened) against or affecting RBC (or to the
best of RBC's Knowledge, pending or threatened against or affecting any partner,
officer or employee of RBC with respect to RBC's business), by or before any
court, other Governmental Entity or arbitrator, including, without limitation,
(a) with respect to the Merger, or (b) concerning any aspect of the conduct of
RBC's business, and, to the best of RBC's Knowledge, there is no basis for any
of the foregoing. Except as set forth in Schedule 2.4, there is no outstanding
order, writ, judgment, injunction, award or decree of any court, other
Governmental Entity or arbitrator against or affecting RBC or any of its
Affiliates.
2.5 SEC Filings. RBC has filed all forms, reports and documents
required to be filed with the SEC since January 1, 1996 and has made available
to Sellers in the form filed with the SEC (i) its Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 and its Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31, 1997, June 30, 1997 and September 30,
1997, (ii) all proxy statements relating to RBC's meetings of shareholders held
since December 31, 1996, (iii) all other reports or registration statements
filed by RBC with the SEC since December 31, 1996 (not including Reports filed
on Forms 3, 4 or 5 by or on behalf of RBC's affiliates) and (iv) all amendments
and supplements to all such reports and registration statements (collectively,
the "SEC Reports"). The SEC Reports (i) were prepared in accordance with the
requirements of the 1933 Act or the Securities Exchange Act of 1934, as amended
(the "1934 Act"), as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such amending or superseding filing) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
2.6 Disclosure. Neither this Article 2 nor any certificate or other
item delivered to any Cumberland Party by or on behalf of RBC or Newco pursuant
to this Agreement contains any untrue statement of a material fact or omits a
material fact which is necessary to make any statement contained herein or
therein not misleading.
2.7 Accuracy on Closing Date. Each representation and warranty set
forth in this Article 2 and all information contained in any certificate
delivered by or on behalf of RBC or Newco pursuant to this Agreement will be
true and correct as of the time of the Closing as though then made, except (a)
as affected by the transactions expressly contemplated hereby and (b) to the
extent that such representation or warranty by its terms relates solely to an
earlier date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES REGARDING ADVISORS
As a material inducement to RBC and Newco to enter into and consummate
this Agreement, each of the Cumberland Parties hereby jointly and severally
represents and warrants to RBC and Newco that:
3.1 Organization and Power. Advisors is a general partnership duly
organized and validly existing under the laws of the State of New Jersey.
Advisors has the requisite partnership power necessary to own and operate its
respective properties, carry on its respective business and enter into and
deliver this Agreement and carry out the transactions contemplated hereby.
3.2 Partnership Interests. Advisors has heretofore delivered to
Purchaser a true and complete copy of the Advisors Partnership Agreement and any
other organization documents, in each case including all amendments thereto, of
Advisors (the "Advisors Governing Documents"). The interests of each of the
Sellers in Advisors (collectively the "Advisors Interests") are the only
existing interests of a partnership or equity nature in Advisors and are held by
the Sellers free and clear of any Liens. There are no outstanding or authorized
options, warrants, purchase rights, or other contracts or commitments that could
require Advisors to issue, sell or otherwise cause to become outstanding any of
its partnership interests. There are no voting trusts, proxies or other
agreements or understandings with respect to the voting of any of the Advisors
Interests. The capital contributed to Advisors by each Seller consists of the
amounts specified in Schedule 3.2 hereto. All such capital contributions have
been fully paid and no one is obligated to contribute any further amounts as
capital to Advisors.
3.3 Authorization; Binding Effect; No Breach. Advisors' execution,
delivery and performance of this Agreement has been duly authorized by all
necessary partnership action. This Agreement constitutes a valid and binding
obligation of Advisors which is enforceable against it in accordance with its
terms, except as such enforceability may be limited by (a) applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws
affecting creditors' rights generally and (b) applicable equitable principles
(whether considered in a proceeding at law or in equity). The execution and
delivery of this Agreement by Advisors and the performance of its obligations
hereunder are not in violation or breach of, and do not conflict with or
constitute a default under, any law, rule or regulation of any Government
Entity, or any of the terms or provisions of any Advisors Governing Document or
any material agreement, license or other instrument to which Advisors is a
party. No consent, approval, authorization or order of any Government Entity is
required for the execution and delivery of this Agreement by Advisors or, except
for the consents described on Schedule 3.3 hereto, for the performance by it of
its obligations hereunder. All consents described on Schedule 3.3 hereto will
have been obtained on or prior to the Closing Date.
3.4 Partnership Actions. All actions taken by Advisors have been duly
authorized, and no such actions have been taken in breach or violation of any
Advisors Governing Document.
3.5 Financial Statements. Attached as Schedule 3.5 to this Agreement
are true and complete copies of the Financial Statements. The Financial
Statements were prepared in accordance with GAAP consistently applied throughout
the periods involved, were prepared in accordance with the books and records of
Advisors, and present fairly, in all material respects, the financial position
of Advisors, as of the respective dates thereof and the results of operations of
Advisors, for the respective periods then ended.
3.6 Absence of Undisclosed Liabilities. Except as set forth on Schedule
3.6 hereto, as of the date hereof Advisors has not, and as of the Closing Date
will not have, any liability (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to Advisors, whether due or to
become due, and regardless of when asserted) other than: (a) the liabilities set
forth on the face of the Latest Balance Sheet, (b) liabilities pursuant to the
Contracts listed on Schedule 3.10, (c) current liabilities which have arisen
after the date of the Latest Balance Sheet in the ordinary course of business
and consistent with Advisors' past practice (none of which is a liability
resulting from breach of contract, breach of warranty, tort, infringement,
violation of law, claim or lawsuit) and (d) other liabilities and obligations
expressly disclosed in the other Schedules to this Agreement.
3.7 Title to Assets. Except as set forth on Schedule 3.7 hereto,
Advisors owns outright and has good and marketable title to all of its
respective assets and properties (including those reflected on the Latest
Balance Sheet), in each case free and clear of any Liens, except for (i) assets
and properties which have been disposed of in the ordinary course of business
since the date of the Latest Balance Sheet, (ii) lease obligations under
Contracts set forth on Schedule 3.10 entered into in the ordinary course of
business, and (iii) Liens which in the aggregate are not substantial in amount
and which do not materially detract from the value of the assets or properties
subject thereto (as carried on the Latest Balance Sheet) or interfere with the
present use of such assets or properties.
3.8 Absence of Certain Developments.
(a) Since the date of the Latest Balance Sheet, except for the
payment of $15,000 in professional fees, Advisors has operated the Business only
in the ordinary course of business consistent with past practice and with the
Advisors Governing Documents, and has not directly or indirectly:
(i) amended any Advisors Governing Document;
(ii) issued any partnership interest;
(iii) declared, paid or set aside any sum for any
distributions of any kind (including without
limitation cash, accounts receivable or leasehold
improvements) to any of its partners, or made any
direct or indirect redemption, retirement, purchase
or other acquisition of any partnership interest;
provided, however, that this clause (iii) will not be
deemed breached by Advisors' payment of rent in
accordance with the terms of its existing lease as
disclosed to Purchaser, nor by Advisors' distribution
of profits for 1997 and 1998 up to the Closing Date,
so long as Advisors retains at least $165,000 of
capital as of the Closing Date;
(iv) made any change in its
accounting methods or practices;
(v) made any loan or advance to any other Person
outside the ordinary course of business, or made any loan or
advance to any Affiliate;
(vi) acquired all or any substantial part of the
assets, securities or business of any other Person; or
(vii) entered into any Contract to do any of the
foregoing.
(b) Except as set forth on Schedule 3.8 hereto, since the
date of the Latest Balance Sheet there has been no material adverse change in
the financial condition, operating results, assets, customer relations, employee
relations or business prospects of the Business and, without limiting the
foregoing, Advisors has not directly or indirectly:
(i) incurred any Indebtedness or entered into any
commitment to borrow money or any contingent obligation, or
incurred or assumed any Liability or series of related
Liabilities not set forth in Schedule 3.10 and in excess of
$10,000 singly or $75,000 in the aggregate;
(ii) made any material change in any of its business
policies or practices, including, without limitation,
commission or fee structures;
(iii) suffered any damage, destruction, casualty or
loss, whether or not covered by insurance, affecting any of
its property;
(iv) allowed the creation of any Lien on any of its
tangible or intangible assets, or any sale, transfer,
assignment, lease or abandonment of any interest in any of
its tangible or intangible assets, other than sales,
transfers, assignments and leases in the ordinary course of
business consistent with past practice;
(v) terminated, failed to renew, received any written
notice (that was not subsequently withdrawn) to terminate or
fail to renew, amended, altered, modified, suffered the
occurrence of any default under, failed to perform any
Liabilities or obligations under, or waived or released any
rights under, any Contract which is material to the
Business;
(vii) forgiven or permitted any cancellation of any
claim, debt or account receivable, other than cancellations
in the ordinary course of business consistent with past
practice of any claim, debt or account receivable in an
amount below $1,000;
(viii) made any payment, discharge or satisfaction of
any Liability in excess of $5,000 before the same became due
in accordance with its terms;
(ix) hired any new employees, consultants, agents or
other representatives or entered into any employment or
consulting agreements, or terminated, or made any change in
the employment terms or conditions of, any officers,
directors, employees, consultants, agents or other
representatives, provided, however, that no disclosure need
be made hereunder if Advisors collectively have hired ten or
fewer such persons since the date of the Latest Balance
Sheet and none of them is being paid at a rate in excess of
$75,000 per year;
(x) increased or agreed to increase any salary,
wages, bonus, severance, compensation, pension or other
benefits payable or to become payable, or granted any
severance or termination payments or benefits, to any of its
current or former officers, directors, employees,
consultants, agents or other representatives, or amended any
Plan in any respect; or
(xi) entered into any Contract, commitment or
transaction to do any of the foregoing.
3.9 Employees.
(a) Continued Employment. Advisors does not have any Knowledge
that any of its executives or key employees plans to terminate his or her
employment.
(b) Compliance and Restrictions. Advisors has complied in all
substantial respects with all laws relating to the employment of labor in
connection with its business, including provisions of such laws relating to
wages, hours, equal opportunity, collective bargaining and the payment of social
security and other taxes, and it has no material labor relations problem
(including any union organization activities, threatened or actual strikes or
work stoppages or material grievances). Except as set forth in Schedule 3.9,
neither Advisors nor any of its employees are subject to any noncompete,
nondisclosure, confidentiality, employment, consulting or similar agreement
relating to, affecting, or in conflict with, the business activities as
presently conducted or as proposed to be conducted by Advisors. There are no
collective bargaining or other labor union contracts to which Advisors is a
party or which are applicable to any Person employed by Advisors. There is no
pending or, to the Knowledge of Advisors, threatened union organizational
effort, material labor dispute, strike or work stoppage against Advisors.
(c) Compensation. Advisors has previously provided to
Purchaser true and correct copies of the Financial Statements and its
year-to-date payroll registers. Such documents list (i) the name and total
compensation (payable by Advisors) of each partner and each employee of
Advisors, (ii) all bonuses and other incentive compensation received by such
Persons since January 1, 1997 and any accrual for such bonuses and incentive
compensation, and (iii) all Contracts or commitments by Advisors or any of its
Affiliates to increase the compensation or to modify the conditions or terms of
employment of any of their partners or employees, provided, however, that no
disclosure need be made with respect to persons hired by Advisors since the date
of the Latest Balance Sheet if Advisors has hired ten or fewer such persons
since the date of the Latest Balance Sheet and none of them is being paid at a
rate in excess of $75,000 per year. To the Knowledge of Advisors, except as set
forth in the Financial Statements or in Advisors' year-to-date payroll register
or on Schedule 3.10(d), none of the partners of Advisors, nor any relative of
any such partner, is directly or indirectly a party to any Contract or
arrangement with Advisors providing for the furnishing of services by, the
purchase, acquisition, lease or rental of property from, or otherwise requiring
payments to any such partner or relative (other than for service in such
capacity as a partner.
3.10 Contracts and Commitments.
(a) Contracts Schedule. Schedule 3.10 contains a true and
complete list of all written or oral contracts, agreements, understandings or
other binding arrangements (each a "Contract") to which Advisors is a party or
by or to which Advisors or its assets are or may be bound or subject, as each
such Contract may have been amended, modified or supplemented, which falls into
one or more of the following categories and is not listed in Schedule 3.9:
(i) brokerage, management, servicing, advisory or
consulting Contracts;
(ii) partnership or joint venture Contracts;
(iii) Contracts containing any covenant or provision
limiting the ability of any Person to engage in any line of
business, engage in business in any geographical area or
compete with any other Person;
(iv) Contracts relating to the borrowing of money or
other Indebtedness, or the direct or indirect guaranty of
any obligation for, or Contract to service the repayment of,
Indebtedness, or any other contingent obligation;
(v) lease, sublease, rental or other Contracts under
which Advisors is a lessor or lessee of any real Property;
(vi) lease, sublease, rental, licensing, use or
similar Contracts with respect to personal property used by
Advisors in the conduct of its business, operations or
affairs and providing for annual rental or use payments in
excess of $5,000;
(vii) Contracts for the purchase or sale of
materials, supplies or equipment (including, without
limitation, computer hardware and software), or the
provision of services (including, without limitation, data
processing services), provided, however, that disclosure
need not be made pursuant to this clause (viii) with respect
to Contracts entered into since the date of the Latest
Balance Sheet for the purpose of acquiring materials,
supplies and equipment necessary for Advisors' offices so
long as such Contracts, in the aggregate, require the
payment by Advisors of less than $250,000 and none of such
Contracts are with any of the Sellers or any Affiliates of
any of the Sellers;
(viii) Contracts relating to licenses of trademarks,
trade names, service marks or other similar rights;
(ix) Contracts between or among (A) Advisors, on the
one hand, and (B) any other Cumberland Party or any other
Affiliate of Advisors (or any officer, director, employee,
consultant, agent or representative of any such other
Affiliate), on the other hand ("Affiliate Agreements");
(x) Contracts under which Advisors agrees to
indemnify any Person;
(xi) any powers of attorney granted by Advisors to
any Person;
(xii) Contracts providing for any consequences upon
any sale of a interest in Advisors or other direct or
indirect change of control of Advisors; or
(xiii) any other Contracts which are material to
Advisors.
(b) Enforceability. Each Contract described on Schedule 3.10
is valid, binding and enforceable in accordance with its terms, except as such
enforceability may be limited by (i) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and (ii) applicable equitable principles (whether considered in a
proceeding at law or in equity).
(c) Compliance. Advisors has performed all obligations
required to be performed by it under each Contract, and it is not in default
under or in breach in any material respect of (nor is it in receipt of any claim
of default or breach under) any such obligation. No event has occurred which
with the passage of time or the giving of notice (or both) would result in a
default, breach or event of noncompliance in any material respect under any
obligation of Advisors pursuant to any Contract. Advisors has a present
expectation and intention of fully performing every one of its obligations
pursuant to each Contract to which it is a party, and Advisors has no Knowledge
of any breach or anticipated breach by any other party to any Contract.
(d) Affiliated Transactions. Except as disclosed in Schedule
3.10(d) pursuant to clause (ix) of Section 3.10(a), no Affiliate of any
Cumberland Party (and no individual related by blood or marriage to any such
Person, and no entity in which any such Person or individual owns any beneficial
interest) is a party to any Contract with Advisors (other than this Agreement)
or has any material interest in any material property used by Advisors.
(e) Copies. Except for Investment Management Agreements and
related documents entered into in the ordinary course of Advisors' business (the
forms of which are included in Schedule 3.10), Purchaser has been supplied with
a true and correct copy of each written Contract, each as currently in effect.
3.11 Intellectual Property; Software. The only name under which
Advisors has conducted business since its formation is "Cumberland Advisors."
Advisors has no other trademarks, service marks, copyrights, patents or similar
rights. The only trademarks, service marks, copyrights, patents, trade secrets,
computer software or other similar intellectual property rights ("Intellectual
Property") used by Advisors and material to the conduct of its business is
described on Schedule 3.11. Except as indicated in Schedule 3.11, Advisors owns,
or has registered or valid rights to use, free and clear of any Lien, all such
Intellectual Property. Advisors has received no written notice that, nor has any
Knowledge that, it is infringing or otherwise in conflict with the rights of any
other Person in respect of Intellectual Property. All software programs owned or
licensed by Advisors that are used in the operation of its business are in good
working order. Except as described on Schedule 3.11, the consummation of the
Merger will have no adverse effect on any Intellectual Property or Advisors'
rights therein, nor will it give rise to a right on the part of any owner or
licensor of such Intellectual Property to charge additional fees to Advisors or
otherwise increase the costs to Advisors of using such Intellectual Property.
3.12 Certain Litigation. Except as set forth on Schedule 3.12 hereto,
there is no action, suit, proceeding, order, investigation or claim pending (or,
to the best of Advisors' Knowledge, threatened) against or affecting Advisors
(or to the best of Advisors' Knowledge, pending or threatened against or
affecting any partner, officer or employee of Advisors with respect to the
Business), by or before any court, other Governmental Entity or arbitrator,
including, without limitation, (a) with respect to the Merger, or (b) concerning
any aspect of the conduct of the Business, and, to the best of Advisors'
Knowledge, there is no basis for any of the foregoing. Except as set forth in
Schedule 3.12, there is no outstanding order, writ, judgment, injunction, award
or decree of any court, other Governmental Entity or arbitrator against or
affecting Advisors or any of its Affiliates.
3.13 Brokerage. There is no claim for brokerage commissions, finders'
fees or similar compensation in connection with the Merger based on any
arrangement or agreement which may be binding upon any Cumberland Party or to
which any Cumberland Party or any assets of Advisors may be subject.
3.14 Insurance. Schedule 3.14 hereto contains a list of each insurance
policy maintained by Advisors with respect to its properties, assets or
business, and each such policy is in full force and effect. Advisors is not in
default of any obligation pursuant to any insurance policy maintained by it.
Except as set forth on Schedule 3.14, no such insurance policy contains any
provision providing that any other party thereto may terminate or cancel the
same by reason of the Merger, or any other provision which would be altered or
otherwise become inapplicable by reason of the Merger, and no party has given
notice of cancellation or non-renewal of any such insurance policy or that it
intends to cancel or fail to renew any such insurance policy as a result of the
Merger. Neither Advisors nor any of its Affiliates has failed to give any notice
or present any claim under any such insurance policy in due or timely fashion or
as required thereby in a manner which may jeopardize full recovery thereunder.
3.15 ERISA. Except as set forth on Schedule 3.15 hereto:
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(a) with respect to all current employees (including those on
lay-off, disability or leave of absence), former employees, and retired
employees of Advisors (the "Employees"), Advisors does not maintain or
contribute to any (i) employee welfare benefit plans (as defined in Section 3(1)
of ERISA) ("Employee Welfare Plans"), or (ii) any plan, policy or arrangement
which provides nonqualified deferred compensation, bonus or retirement benefits,
severance or "change of control" (as set forth in Code Section 280G) benefits,
or life, disability accident, vacation, tuition reimbursement or other material
fringe benefits ("Other Plans");
(b) Advisors does not maintain, contribute to, or participate
in any defined benefit plan or defined contribution plan which are employee
pension benefit plans (as defined in Section 3(2) of ERISA) ("Employee Pension
Plans");
(c) Advisors does not contribute to nor participate in any
multiemployer plan (as defined in Section 3(37) of ERISA) (a "Multiemployer
Plan");
(d) Advisors does not maintain nor have any obligation to
contribute to or provide any post-retirement health, accident or life insurance
benefits to any Employee, other than limited medical benefits required to be
provided under Code Section 4980B;
(e) all Plans (and all related trusts and insurance contracts)
comply in form and in operation in all respects with the applicable requirements
of ERISA and the Code;
(f) all required reports and descriptions (including all Form
5500 Annual Reports, Summary Annual Reports, PBGC-1s and Summary Plan
Descriptions) with respect to all Plans have been properly filed with the
appropriate government agency or distributed to participants, and each
Cumberland Party has complied with the requirements of Code Section 4980B;
(g) with respect to each Plan, all contributions, premiums or
payments which are due on or before the Closing Date have been paid to such
Plan; and
(h) Advisors has not incurred any liability to the Pension
Benefit Guaranty Corporation (the "PBGC"), the United States Internal Revenue
Service, any multiemployer plan or otherwise with respect to any employee
pension benefit plan or with respect to any employee pension benefit plan
currently or previously maintained by members of the controlled group of
companies (as defined in Sections 414(b) and (c) of the Code) that includes
Advisors that has not been satisfied in full, and no condition exists that
presents a material risk to Advisors or any member of such controlled group of
incurring such a liability (other than liability for premiums due the PBGC)
which could reasonably be expected to have any adverse effect on Purchaser,
Advisors or any of Advisor's assets after the Closing.
3.16 Real Estate and Personal Property. Schedule 3.16 hereto contains a
true and complete list (designating the relevant owners, lessors and lessees) of
(a) all real property owned, leased or subleased by Advisors and all buildings
and other structures located on such real property (including leasehold
improvements) , and (b) all vehicles, equipment, furniture, fixtures and other
personal property owned, leased, subleased or managed by Advisors which, in the
case of clause (b) only, is material to Advisors. The Properties owned, leased
or subleased by Advisors are sufficient to conduct its operations as currently
conducted, and the foregoing personal properties are in sound operating
condition and repair, normal wear and tear excepted. There has not been any
material interruption of the operations of Advisors due to inadequate
maintenance of any such properties. With respect to the leases under which
Advisors leases real property, each such lease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the Merger.
3.17 Advisors' Business. Advisors currently conducts, and has since its
inception conducted, no business other than the investment advisory and
consulting businesses.
3.18 Compliance with Laws.
(a) Generally. Subject to the qualifications contained in
Schedule 3.18(a), Advisors is in compliance with, and Advisors has not received
notice of any violation by it of, or default by it under any of: (i) the
Advisors Governing Documents, (ii) laws, statutes, ordinances, rules,
regulations or other Legal Requirements, whether federal, state, local or
foreign and (iii) orders, writs, judgments, injunctions, awards and decrees of
any court, other Governmental Entity or arbitrator.
(b) Industry Governing Laws. In furtherance and not in
limitation of the foregoing, except as set forth in Schedule 3.18(a), Advisors
is in compliance with, and has not received notice of any violation by it of, or
default by it under, any Industry Governing Law.
(c) Required Permits. Advisors (and to the extent set forth on
Schedule 3.18(c) hereto, its personnel) possesses all Permits necessary for the
ownership of its assets and the conduct of its business. Schedule 3.18(c) hereto
sets forth a true and complete list of all such Permits. Advisors has heretofore
delivered or made available to Purchaser true and complete copies of all such
Permits as currently in effect. All such Permits are valid and in full force and
effect, without any restriction or impairment, except as set forth in Schedule
3.18(c). There is no action, proceeding, inquiry or investigation pending or, to
the Knowledge of Advisors, threatened for the suspension, modification,
limitation, cancellation, revocation or nonrenewal of any such Permit, and
Advisors has no Knowledge of any existing fact or circumstance which (with or
without notice or lapse of time or both) is reasonably likely to result in the
suspension, modification, limitation, cancellation, revocation or nonrenewal of
any such Permit. Schedule 3.18(c) sets forth those Permits which, to the
Sellers' Knowledge, the Surviving Corporation will require in order to conduct
the Business following the Closing and which will not pass to the Surviving
Corporation by operation of law pursuant to the Merger (the "Required New
Permits"). Except for the Required New Permits and except for compliance with
periodic renewal procedures, no approvals or authorizations will be required to
permit the Surviving Corporation to continue conducting the Business presently
conducted by Advisors following the Closing, nor will the consummation of the
Merger result in the suspension, modification, cancellation, revocation or
nonrenewal of any Permit possessed by Advisors' personnel and necessary for the
Surviving Corporation's ownership of its assets or the conduct of its business.
Advisors is not engaged in nor has it engaged in any operations in any
jurisdiction in which it is not, and was not then, duly authorized or qualified
to transact such business, except for those jurisdictions specified on Schedule
3.18 as jurisdictions for which qualification is not required.. Advisors has not
been advised by any Person that any Permit will not in the ordinary course be
renewed upon its expiration or that the Merger will make it more difficult to
renew or obtain any Permit.
(d) Environmental and Safety Matters. Except as disclosed on
Schedule 3.18(d): (i) Advisors has no Knowledge that there has been any release,
spill, emission, leaking, deposit, disposal, discharge, dispersal or leaching
into the environment of any Hazardous Material at, in, on, under or from any
real property leased, used or managed by it ("Advisors Real Property"); (ii)
Advisors has no Knowledge that any Hazardous Materials are being stored or
otherwise are present at, in, on or under any Advisors Real Property where, to
the actual Knowledge of Advisors, such activity is not in compliance with
Environmental and Safety Requirement; (iii) Advisors has no Knowledge that it is
not in compliance with all Environmental and Safety Requirements, nor has
Advisors received notice of any violation or non-compliance by it with any
Environmental and Safety Requirement, nor does Advisors have any Knowledge of
any existing facts or circumstances that are likely to result in any such
violation or non-compliance; and (iv) there is no action or proceeding pending
or, to the Knowledge of Advisors, threatened against it or any of its Affiliates
that alleges or would allege any violation of or non-compliance with any
Environmental and Safety Requirement.
3.19 Regulatory Compliance. Except as set forth in Schedule 3.19
hereto, Advisors has filed all material reports, statements, registrations,
applications, filings or other documents and submissions required to be filed
with, or provided to, any Governmental Entity. Except as set forth in Schedule
3.19, all such reports, statements, registrations, applications, filings,
documents and submissions were in compliance in all material respects with all
applicable laws, statutes, ordinances, rules or regulations and were complete
and correct in all material respects when filed, and no material deficiencies
have been asserted by any Governmental Entity with respect thereto. Except as
set forth in Schedule 3.19, there is no action, proceeding, dispute,
controversy, inquiry or investigation pending or, to the Knowledge of Advisors,
threatened by any such Governmental Entity relating to Advisors.
3.20 Accounts Receivable. The accounts receivable of Advisors as
reflected in the Latest Balance Sheet, to the extent uncollected on the date
hereof, and the accounts receivable reflected on the books and records of
account of Advisors as of the date hereof and as of the Closing Date, are and
will be valid and existing and represent and will represent monies due, and
Advisors has established and will establish reserves reasonably considered
adequate for receivables not collectible in the ordinary course of business, and
(subject to the aforesaid reserves) no amounts are subject to refunds or other
adjustments or to any defenses, rights of setoff, assignments, restrictions,
encumbrances or conditions enforceable by third parties on or affecting it.
3.21 Investments; Bank Accounts. Schedule 3.21 hereto contains a true
and complete list of all securities and other investments owned by Advisors as
of the end of the most recent calendar month. Except as set forth in Schedule
3.21, no such security or other Investment is in default in the payment of
principal or interest or dividends. Schedule 3.21 hereto contains a true and
complete list of (i) the names and locations of all banks, trust companies,
securities brokers and other financial institutions at which Advisors has an
account, deposit, lock box or safety deposit box for its own benefit or
maintains a banking, custodial, trading or other similar relationship for its
own benefit, (ii) each such account, deposit, box or relationship and (iii) the
name of every Person authorized to draw thereon or having access thereto.
3.22 Clients and Fees. Schedule 3.22 hereto sets forth (i) a correct
list of the names and addresses of all Current Clients, and (ii) a correct list
of the names and addresses of all Clients that have been gained or lost since
January 1, 1997, and (iii) a copy of the form of contract currently in effect
with, and the brochure most recently distributed to, the Current Clients.
Schedule 3.22 includes a summary of all revenues earned by Advisors from each
Current Client during 1997. To the Knowledge of Advisors, none of the Current
Clients intends to cease doing business with Advisors, or to materially alter
the amount of the business that such Client is presently doing with Advisors.
Schedule 3.22 identifies each Current Client which is (i) an employee benefit
plan subject to Title I of ERISA, or Section 4975 of the Code, or (ii) a Person
whose assets are treated as assets of such a plan under ERISA or applicable
regulations, and Advisors is in compliance in all material respects with the
provisions of ERISA and Section 4975 of the Code applicable to its relationships
with those Current Clients.
3.23 Disclosure. Neither this Article 3 nor any schedule, attachment,
written statement, document, certificate or other item supplied to Purchaser by
or on behalf of Advisors with respect to the transactions contemplated hereby
contains any untrue statement of a material fact or omits a material fact
necessary to make each statement contained herein or therein not misleading.
There is no fact which Advisors has not disclosed to Purchaser in writing and of
which Advisors has Knowledge (other than matters of a general economic nature)
and which has had or could reasonably be expected to have a material adverse
effect upon the financial condition, operating results, assets, customer
relations, employee relations or business prospects of Advisors.
3.24 Accuracy on the Closing Date. Each representation and warranty set
forth in this Article 3 and all information contained in any exhibit, schedule
or attachment to this Agreement or in any certificate or other writing delivered
by, or on behalf of, Advisors to Purchaser will be true and correct as of the
time of the Closing as though then made, except (a) as affected by the
transactions expressly contemplated hereby and (b) to the extent that such
representation or warranty by its terms relates solely to an earlier date.
ARTICLE 3A
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As a material inducement to Purchaser to enter into this Agreement and
acquire Advisors, each of the Sellers hereby severally (and not jointly)
represents and warrants to Purchaser, as to himself only and not as to the other
Sellers, that:
3A.1 Power and Capacity. The Seller has the requisite power and
capacity to enter into and deliver this Agreement and carry out the transactions
contemplated hereby.
3A.2 Partnership Interests; Capital. All of the partnership interests
shown next to the Seller's name on Schedule 3.2(a) are held of record and
beneficially by the Seller free and clear of any Liens. The capital contributed
to Advisors by the Seller consists of the amounts specified in Schedule 3.2(b)
hereto. Such capital contributions have been fully paid and the Seller is not
obligated to contribute any further amounts as capital to Advisors.
3A.3 Authorization; Binding Effect; No Breach. This Agreement
constitutes a valid and binding obligation of the Seller which is enforceable
against the Seller in accordance with its terms, except as such enforceability
may be limited by (a) applicable insolvency, bankruptcy, reorganization,
moratorium or other similar laws affecting creditors' rights generally and (b)
applicable equitable principles (whether considered in a proceeding at law or in
equity). The execution and delivery of this Agreement by the Seller and the
performance of the Seller's obligations hereunder are not in violation or breach
of, and do not conflict with or constitute a default under, any law, rule or
regulation of any Government Entity, or any material agreement, license or other
instrument to which the Seller is a party. No consent, approval, authorization
or order of any Government Entity or any other Person is required for the
execution and delivery by the Seller of this Agreement or any other agreement
entered into in connection herewith or, except for the consents described on
Schedule 3.3 hereto, for the performance by the Seller of his obligations
hereunder or under any other agreement entered into in connection herewith.
3A.4 Affiliated Transactions. Except as set forth on Schedule 3.10(d)
hereto, neither the Seller nor any individual related by blood or marriage to
the Seller, nor any entity in which the Seller or any such related individual
owns any beneficial interest, is a party to any Contract with Advisors (other
than this Agreement) or has any material interest in any material property used
by Advisors.
3A.5 Certain Litigation. Except as set forth on Schedule 3.12 hereto,
there is no action, suit, proceeding, order, investigation or claim pending (or,
to the best of the Seller's Knowledge, threatened) against or affecting the
Seller, by or before any court, other Governmental Entity or arbitrator (a) with
respect to the Merger, or (b) concerning any aspect of the conduct of the
Business, and, to the best of the Seller's Knowledge, there is no basis for any
of the foregoing. Except as set forth in Schedule 3.12, there is no outstanding
order, writ, judgment, injunction, award or decree of any court, other
Governmental Entity or arbitrator against or affecting the Seller (a) with
respect to the Merger, or (b) concerning any aspect of the conduct of the
Business.
3A.6 Brokerage. There is no claim for brokerage commissions, finders'
fees or similar compensation in connection with the Merger based on any
arrangement or agreement which may be binding upon the Seller or to which the
Seller may be subject.
3A.7 Investments; Bank Accounts. Other than as set forth on Schedule
3.21 hereto, the Seller has no Knowledge of any account, deposit, lock box,
safety deposit box, banking, custodial, trading or other similar relationship of
Advisors.
3A.8 Private Placement Representations and Warranties
(a) Acquisition for Investment Only. The shares of RBC Common
Stock which are to be received by the Seller as Consideration hereunder (the
"Securities") will be acquired for investment for the Seller's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof; the Seller has no present intention of selling, granting any
participation in, or otherwise distributing the same; and the Seller does not
presently have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any third
person, with respect to any of the Securities.
(b) Disclosure of Information. The Seller believes he or she
has received all the information he or she considers necessary or appropriate
for deciding whether to acquire the Securities. The Seller has had an
opportunity to ask questions and receive answers from RBC regarding the terms
and conditions of the offering of the Securities and the business, properties,
prospects and financial condition of RBC.
(c) Investment Experience. The Seller is able to fend for him
or herself, can bear the economic risk of his or her investment in the
Securities, and has such knowledge and experience in financial or business
matters that he or she is capable of evaluating the merits and risks of the
investment in the Securities.
(d) Accredited Investor. The Seller is an "accredited
investor" within the meaning of SEC Rule 501 of Regulation D, as presently in
effect.
(e) Restricted Securities. The Seller understands that the
Securities are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from RBC in a transaction
not involving a public offering and that under such laws and applicable
regulations the Securities may be resold without registration under the 1933 Act
only in certain limited circumstances. The Seller is familiar with SEC Rule 144,
as presently in effect, and understands the resale limitations imposed thereby
and by the 1933 Act.
(f) Legends. It is understood that the Securities, and any
securities issued in respect thereof or exchange therefor, may bear the
following legends, as well as any legend required by the Blue Sky laws of any
state to the extent such laws are applicable to the shares represented by the
certificate so legended:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT."
3A.9 Accuracy on the Closing Date. Each representation and warranty of
the Seller set forth in this Article 3A will be true and correct as of the time
of the Closing as though then made, except (a) as affected by the transactions
expressly contemplated hereby and (b) to the extent that such representation or
warranty by its terms relates solely to an earlier date.
ARTICLE 4
CERTAIN COVENANTS OF ADVISORS
Advisors covenants and agrees with Purchaser as follows:
4.1 Conduct of Business.
(a) From the date hereof to and including the Closing Date
(the "Interim Period"), Advisors will (i) conduct its operations in the ordinary
course of business consistent with past practice and use its best efforts to
preserve intact its business organizations, goodwill and Permits, to keep
available the services of its officers and employees and to maintain existing
relationships with Clients, customers, accounts, managers, agents, distributors,
suppliers and others having business dealings with it, (ii) maintain insurance
coverages and its books, records and accounts in the usual manner consistent
with prior practice, (iii) comply in all material respects with all laws,
statutes, ordinances, rules and regulations of Governmental Entities applicable
to it, (iv) maintain and keep its Properties and equipment in good repair,
working order and condition, normal wear and tear excepted, and (v) perform in
all material respects its obligations under all Contracts and commitments to
which it is a party or by or to which it is bound or subject.
(b) During the Interim Period, Advisors will not, directly or
indirectly (i) amend or modify any of its Advisors Governing Documents, (ii)
issue, sell, deliver or agree or commit to issue, sell or deliver any
partnership interest, (iii) declare, pay or set aside any sum for any
distribution in respect of the partnership interests, or redeem, purchase or
otherwise acquire (or agree to redeem, purchase or otherwise acquire) any
partnership interest, provided, that this clause (iii) will not be deemed
breached by Advisors' payment of rent in accordance with the terms of its
existing lease as disclosed to Purchaser, nor by Advisors' distribution of
profits for 1997 and for 1998 up to the Closing Date, so long as Advisors
retains at least $165,000 of capital as of the Closing Date, (iv) adopt a plan
of complete or partial liquidation, dissolution, rehabilitation, merger,
consolidation, restructuring, recapitalization or other reorganization, (v) make
any material change in any financial reporting, Tax or accounting methods or
practices, (vi) make any Tax election or settle or compromise any federal,
state, local or foreign income Tax liability, (vii) purchase or sell securities
or other investments, or invest or reinvest income and proceeds in respect
thereof, other than in the ordinary course of business consistent with past
practice, or (viii) without the prior written consent of Purchaser, take any of
the other actions described in Section 3.8 hereof or take any action, or omit to
do any act, that individually or in the aggregate would, or would be reasonably
likely to, result in (A) any of the representations and warranties set forth in
Article 3 of this Agreement not being true in all respects or (B) any of the
conditions set forth in Article 6 not being satisfied or (C) any breach of any
covenant or obligation hereunder.
4.2 Access to Information; Consultation; Updated Schedules. During the
Interim Period, Advisors will (i) allow Purchaser and its officers, employees,
counsel, accountants, consultants and other authorized representatives
("Representatives") to have reasonable access to its books, records, Contracts,
facilities, management and personnel, (ii) furnish promptly to Purchaser and its
Representatives all information and documents concerning it as Purchaser or its
Representatives may reasonably request, and (iii) cause its officers, employees
and Representatives and those of its Affiliates to cooperate in good faith with
Purchaser and its Representatives in connection with all such access. In
addition, Advisors will consult with Purchaser a reasonable period of time prior
to entering into any transaction or arrangement or taking any action which is
material to it, in a manner which will allow Purchaser a reasonable opportunity
to evaluate and present its views to them regarding such transaction,
arrangement or action.
4.3 Interim Financial Statements. During the Interim Period, as soon as
practicable after they become available (and in any event within 15 business
days after the end of each calendar month), Advisors will deliver to Purchaser
true and complete copies of (i) its balance sheet as at the end of each month
and the related statements of income for such month and (ii) to the extent
prepared, any and all other financial statements of Advisors covering any date
or period during the period from the date hereof to the Closing Date (the
"Interim Financial Statements"). In addition, during the Interim Period, if and
when available, Advisors will deliver to Purchaser true and complete copies of
any budgets, business plans and financial projections, or modifications thereof,
prepared by or on behalf of it or its Affiliates. The Interim Financial
Statements with respect to Advisors, if any, will be prepared on a basis
consistent with the accounting principles and practices used in the preparation
of the Financial Statements and in accordance with the books and records of
Advisors, and will present fairly, in all material respects, the financial
condition of Advisors as of the dates thereof and the results of operations of
Advisors for the respective periods then ended, subject to normal recurring
year-end audit adjustments.
ARTICLE 4A
CERTAIN COVENANTS OF THE SELLERS
Each of the Sellers hereby severally (and not jointly) covenants and
agrees with Purchaser, as to himself only and not as to the other Sellers:
4A.1 Access to Information; Consultation; Updated Schedules. From time
to time prior to the Closing Date, and on and as of the Closing Date, the Seller
will promptly supplement or amend (by written notice to Purchaser) any Schedule
delivered pursuant hereto with respect to which the Seller has made a
representation or warranty hereunder (a "Seller Schedule"), with respect to any
matter hereafter arising which, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or described in such
Seller Schedule or which is necessary to correct any information in such Seller
Schedule which had been rendered inaccurate thereby.
4A.2 Cumberland Name. From and after the Closing, the Seller will not,
and will cause his or her Affiliates not to, use the name "Cumberland" or any
name or other Intellectual Property of any type which is confusingly similar to
such name or any Intellectual Property of the Surviving Corporation or RBC,
other than in the operation of a business owned, directly or indirectly, by RBC.
Notwithstanding the foregoing, Xxxxxxxx can continue to use the name "Cumberland
Brokerage" for his independent business ("Cumberland Brokerage"); provided, that
if (a) the Surviving Corporation determines in its sole discretion that the use
of such name by Xxxxxxxx or his Affiliates has caused or is reasonably likely to
cause confusion among one or more Clients, or (b) Xxxxxxxx increases the net
number of registered representatives working in his brokerage business in a
building which also houses a business operated by the Surviving Corporation,
then promptly upon written notice from the Purchaser, Xxxxxxxx will, and will
cause his Affiliates to, cease using the name "Cumberland" in connection with
their business.
4A.3 Instruments. Any monies, checks, drafts, money orders, postal
notes and other instruments received after the Closing by the Seller or any of
his Affiliates (other than the Surviving Corporation or any of the other
Sellers) in payment of any amounts due Advisors will be forthwith after receipt
by the Seller or any of such Affiliates be transferred and delivered by the
Seller and such Affiliates to the Surviving Corporation (or other designee of
Purchaser), and any such instruments made payable to the Seller or any of such
Affiliates when so delivered will bear all endorsements required to effectuate
the transfer of the same to the Surviving Corporation (or any such other
designee).
4A.4 Further Assurances. The Seller, for himself and his successors and
assigns, hereby covenants and agrees that, at Purchaser's sole expense and
without the assumption of any additional liability therefor, upon the reasonable
written request of Purchaser within 90 days after the Closing Date, the Seller
will execute and deliver to Purchaser and its successors and assigns such
further instruments of sale, conveyance, assignment and transfer, and take such
other action in order more effectively to sell, convey, grant, assign, transfer
and deliver the Advisors Interests to Purchaser, and to permit Purchaser to
exercise any of the rights or privileges intended to be conveyed, assigned,
transferred and delivered by such Seller to Purchaser pursuant to this
Agreement.
4A.5 Principal Agreement. At the Closing, the Seller will enter into
the Principal Agreement in the form attached hereto bearing the Seller's name.
4A.6 Limitations on Disposition of Securities. Without limiting any
other restrictions on transfer of the Securities contained herein, and other
than transfers by will or under intestacy laws, transfers in divorce or
transfers to family members, in each case with the transferee having agreed in
writing for the benefit of RBC to be bound in writing by all transfer
restrictions contained in this Merger Agreement and with all transferred shares
subject to forfeiture pursuant to the Penalty provisions hereof, the Seller
shall not make any disposition of all or any portion of the Securities until and
unless: (a) there is then in effect a registration statement under the 1933 Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or (b) (i) The Seller shall have notified RBC
of the proposed disposition and shall have furnished RBC with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by RBC, the Seller shall have furnished RBC with an opinion
of counsel, reasonably satisfactory to RBC, that such disposition will not
require registration under the 1933 Act. It is agreed that RBC will not require
opinions of counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
ARTICLE 4B
CERTAIN COVENANTS OF THE CUMBERLAND PARTIES
Each of the Cumberland Parties covenants and agrees with Purchaser as
follows:
4B.1 No Solicitation. The Cumberland Parties and their Representatives
will immediately cease any existing communications or negotiations with any
Persons other than Purchaser and its Representatives with respect to any
acquisition of any material portion of the assets of, or any interest in,
Advisors, or any business combination with Advisors or any other transaction
inconsistent with consummation of the Merger (an "Alternative Transaction"), and
will not, directly or indirectly, solicit, encourage or participate in
discussions or negotiations with, or provide any information or documents to, or
otherwise cooperate in any way with, any Person other than Purchaser and its
Representatives concerning any Alternative Transaction. If any Cumberland Party
receives any oral or written proposal relating to an Alternative Transaction,
such Cumberland Party will (i) inform the Person proposing such Alternative
Transaction that the Cumberland Parties are required by contract to refrain from
discussing any Alternative Transaction, (ii) not make any other statement or
engage in any other discussions with such Person concerning any Alternative
Transaction, and (iii) immediately notify Purchaser of the Alternative
Transaction proposal.
4B.2 Inter-Affiliate Accounts; Affiliate Agreements. Each of the
Cumberland Parties will cause all accounts receivable or payable (whether or not
currently due or payable) between (i) Advisors on the one hand, and (ii) the
Sellers or any of their Affiliates, or any of the directors, officers, employees
or relatives of any of the same, on the other hand, to be settled in full
(without any premium or penalty, and at values mutually agreed upon by the
parties hereto) at or prior to the Closing. Except as set forth on Schedule 4B.2
or as otherwise agreed to in writing by Purchaser, all Affiliate Agreements will
be terminated without any further Liability or obligation thereunder effective
at or prior to the Closing, upon terms and pursuant to instruments reasonably
satisfactory to Purchaser.
4B.3 Partnership Records. At or prior to the Closing, the Cumberland
Parties will deliver to Purchaser (or its designee) originals or, with
Purchaser's consent which shall not be unreasonably withheld, copies of all
ledgers, books, records, files and Properties of Advisors that are in the
possession or. control of it or its Affiliates.
4B.4 Confidentiality. Each Cumberland Party will keep confidential and
will not divulge to any party, without the prior written consent of Purchaser,
any confidential information with respect to Purchaser, or any of the terms of
this Agreement, including without limitation, the Consideration paid by
Purchaser, unless any such information or documents (i) is or becomes generally
available to the public (other than as a result of a disclosure by any
Cumberland Party or any of its or his Representatives) , (ii) was already known
by or available on a non-confidential basis to the Cumberland Parties prior to
being furnished hereunder, (iii) is or becomes available to the Cumberland
Parties from a third party not bound by any contractual obligation to keep such
information confidential or (iv) upon advice of counsel, is required to be
disclosed in order to comply with applicable law or regulatory authority
(provided that the disclosing party will use reasonable good faith efforts to
notify Purchaser, and attempt to obtain the reasonable approval of Purchaser,
prior to such disclosure). In the event of the termination of this Agreement in
accordance with its terms, each of the Cumberland Parties will, upon request of
Purchaser, promptly deliver to Purchaser all written information and documents
with respect to Purchaser provided to them by Purchaser or its Representative in
the possession of such Cumberland Party or any personnel thereof, including all
copies, reproductions, summaries, analyses and extracts thereof or based
thereon.
4B.5 Vineland Lease Amendment. Prior to the Closing, the Cumberland
Parties will cause the lease agreement (the "Vineland Lease") governing
Advisors' principal office in Vineland, New Jersey (the "Vineland Office") to be
amended in form and substance satisfactory to RBC so that the annual rent
thereunder is reduced by $50,000 for at least five years, with building cost
allocations unchanged. The Parties understand that this will result in an annual
rent of $24,000, plus all building maintenance costs and all electric and
utilities, but that the lessee will not be responsible for structural costs.
ARTICLE 4C
CERTAIN COVENANTS OF ALL THE PARTIES
Each of the Parties covenants and agrees with the other as follows:
4C.1 Cooperation and Reasonable Best Efforts. Subject to the terms and
conditions hereof: (a) each of the Parties will cooperate with the other in
connection with consummating the transactions contemplated by this Agreement and
(b) each of the Parties will use commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
For purposes of this Agreement, the covenant of the Parties to use their
"commercially reasonable efforts" will not require any party to (i) incur any
unreasonable expenses, (ii) agree to materially limit the conduct of its
business or (iii) divest itself of any material assets or Properties, in each
case except as otherwise contemplated hereunder.
4C.2 Consents and Approvals; Required New Permits. As soon as
practicable after the execution of this Agreement, each of the Parties will
obtain any necessary Consents of, and make any filing with or give any notice
to, any Governmental Entities and other Persons as are required to be obtained,
made or given by such Party to consummate the transactions contemplated by this
Agreement, including without limitation obtaining all Required New Permits on
behalf of Newco. The Parties will cooperate with one another in exchanging such
information and reasonable assistance as may be required by any such
Governmental Entity or as any other Party may request in connection with the
foregoing.
4C.3 Notification of Certain Matters. Each of the Parties will give
prompt notice to the other of (a) the occurrence or nonoccurrence of any event,
the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty of such Party contained in this Agreement to be
untrue or inaccurate at or prior to the Closing and (b) any material failure of
such Party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it or him hereunder; provided, however, that the
delivery of any notice pursuant to this Section 4C.3 will not cure such failure
or limit or otherwise affect the remedies available hereunder to the Parties
receiving such notice. Without limiting the generality of the foregoing, from
the date hereof through the Closing Date, each of the Parties will promptly
notify the others of any action, suit, claim, proceeding or investigation of the
type required to be described in Schedule 3.12 hereof that is commenced or, to
its or his Knowledge, threatened, and of any request for additional information
or documentary materials by any Governmental Entity in connection with the
Merger.
4C.4 Client Notices. The Parties will cooperate with each other in
causing notices in form and substance satisfactory to each of them ("Client
Notices") to be sent to Current Clients advising them with respect to the Merger
and providing an opportunity for them to elect not to continue as clients of the
Surviving Corporation following the Merger. The Cumberland Party shall promptly
inform Purchaser with respect to Current Clients who make such an election.
ARTICLE 5
CERTAIN COVENANTS OF THE PURCHASER
Each of RBC and Newco covenants and agrees with each Cumberland
Party as follows:
5.1 Inspection by the Sellers. After the Closing Date, each Seller, at
such Seller's expense, will have the continuing right to use, inspect, and make
extracts from or copies of any documents or records delivered to Purchaser under
this Agreement. Before destruction or disposition of any documents or files
transferred hereunder, Purchaser will give reasonable notice to each Seller and
will allow each Seller, at its own expense, to recover the same from Purchaser.
5.2 Confidentiality. Purchaser will keep confidential and will not
divulge to any party, without the prior written consent of the Sellers, any
confidential information with respect to any of the Cumberland Parties, or any
of the terms of this Agreement, including without limitation, the Consideration
paid by Purchaser, unless any such information or documents (i) is or becomes
generally available to the public (other than as a result of a disclosure by any
Cumberland Party or any of its or his Representatives) , (ii) was already known
by or available on a non-confidential basis to Purchaser prior to being
furnished hereunder, (iii) is or becomes available to Purchaser from a third
party not bound by any contractual obligation to keep such information
confidential or (iv) upon advice of counsel, is required to be disclosed in
order to comply with applicable law or regulatory authority (provided that
Purchaser will use reasonable good faith efforts to notify the party who
furnished such information and documents, and attempt to obtain the reasonable
approval of the latter party, prior to such disclosure). In the event of the
termination of this Agreement in accordance with its terms, Purchaser will, upon
request of the Sellers, promptly deliver to the Sellers all written information
and documents with respect to any of the Cumberland Parties provided to it by
any Cumberland Party or its Representative in the possession of Purchaser, or
any personnel thereof, including all copies, reproductions, summaries, analyses
and extracts thereof or based thereon. Upon consummation of the transactions
contemplated hereby, all rights to the confidential information of Advisors will
remain with Advisors, and Purchaser will have no continuing obligations to the
Sellers with respect to keeping such information confidential.
5.3 Reports Under the 1934 Act. With a view to making available to the
Sellers the benefits of Rule 144 promulgated under the 1933 Act and any other
rule or regulation of the SEC that may at any time permit a Seller to sell RBC
Common Stock to the public without registration (when such sale is permitted
hereunder), RBC will: (a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times; (b) file with
the SEC in a timely manner all reports and other documents required of RBC under
the 1934 Act; and (c) furnish to each Seller forthwith upon such Seller's
request (at any time when sale of RBC Common Stock by such Seller is permitted
hereunder) (i) a written statement by RBC that it has complied with the
reporting requirements of XXX Xxxx 000 xxx xxx 0000 Xxx, (xx) a copy of the most
recent annual or quarterly report of RBC and such other reports and documents so
filed by RBC, and (iii) such other information as may be reasonably requested in
availing such Seller of any rule or regulation of the SEC which permits the
selling of such securities without registration.
5.4 Payments of Advisors' Payable to Principals. On or before March 15,
1998, RBC shall cause the Surviving Corporation to pay to the Principals all
amounts remaining due to them with respect to Advisors' distribution of profits
for 1998 up to the Closing Date in accordance with Section 4.1(b), which amounts
shall be calculated during the 15-day period following the Closing.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions of the Cumberland Parties to Close. The obligations of
the Cumberland Parties to consummate the Merger and the other transactions
contemplated hereby at the Closing will be subject to the satisfaction or, if
permitted by law, waiver of the following conditions at or prior to the Closing.
(a) Representations and Warranties. Each representation and
warranty set forth in Article 2 will be true and correct in all material
respects at and as of the Closing as though then made, except to the extent of
any change solely caused by the transactions expressly contemplated hereby.
(b) Covenants. Each of RBC and Newco will have performed in
all material respects each covenant or other obligation required to be performed
by it pursuant hereto prior to the Closing.
(c) Compliance with Applicable Laws. The consummation of the
Merger will not be prohibited by any Legal Requirement or subject any Seller to
any penalty or liability arising under any Legal Requirement or imposed by any
Government Entity. Newco shall have all Required New Permits.
(d) Proceedings. No action, suit or proceeding will be pending
or threatened before any Government Entity the result of which could prevent or
prohibit the consummation of the Merger, cause such transactions to be rescinded
following such consummation or adversely affect Purchaser's performance of its
obligations pursuant hereto, and no judgment, order, decree, stipulation,
injunction or charge having any such effect will exist.
(e) Certificates. Each of RBC and Newco will have delivered to
the Sellers a copy of the resolutions adopted by their respective Board of
Directors, certified by their respective corporate Secretary, authorizing and
approving this Agreement and the Merger.
(f) Principal Agreements. At the Closing, the Surviving
Corporation will enter into each of the Principal Agreements.
(g) Opinion of Counsel. The Sellers will have received from
Pitney, Xxxxxx, Xxxx & Xxxxx, legal counsel for RBC and Newco, an opinion with
respect to the matters set forth in Exhibit J attached hereto addressed to the
Sellers. Such opinion will be dated the Closing Date and will be in form
satisfactory to the Sellers' legal counsel.
(h) No Material Adverse Change. There will have been no
material adverse change in the business, operations or condition (financial or
otherwise), results of operations, or prospects of either RBC or Newco between
December 31, 1997 and the Closing Date.
(i) Client Rescission. Current Clients, in their responses to
the Client Notices, shall not have indicated that they would terminate or reduce
their business dealings with the Surviving Corporation after the Merger such
that an aggregate reduction of more than $168,000 in annual IA Revenues would be
likely to result from such terminations and reductions (without giving effect to
any offsetting increases in IA Revenues which might be anticipated).
(j) Purchaser Closing Documents. Each of RBC and Newco will
have delivered to the Sellers an Officer's Certificate, dated the Closing Date,
stating that the conditions specified in Sections 6.1(a) through 6.1(b),
inclusive, have been fully satisfied, and such other documents relating to the
Merger to be consummated at the Closing as the Sellers reasonably request.
All corporate and other proceedings or actions taken or required to be taken by
each of RBC and Newco in connection with the Merger and the other transactions
contemplated hereby, and all documents incident thereto, must be reasonably
satisfactory in form and substance to the Sellers and their legal counsel.
6.2 Conditions of Purchaser to Close. The obligation of each of RBC and
Newco to consummate the Merger and the other transactions contemplated hereby at
the Closing will be subject to the satisfaction or, if permitted by law, waiver
of the following conditions at or prior to the Closing.
(a) Representations and Warranties. Each representation and
warranty set forth in Articles 3 and 3A will be true and correct in all
respects, at and as of the Closing as though then made, except to the extent of
any change solely caused by the transactions expressly contemplated hereby.
(b) Covenants; Cumberland Lease. Each Cumberland Party will
have performed and observed in all respects each covenant or other obligation
required to be performed or observed by such Person pursuant hereto prior to the
Closing. Without limiting the foregoing, the Cumberland Parties will have caused
the Vineland Lease to be amended in form and substance satisfactory to RBC as
set forth in Section 4B.5.
(c) Compliance with Applicable Laws. The consummation of the
Merger will not be prohibited by any Legal Requirement or subject Purchaser,
Advisors, or Advisors' assets to any penalty, liability or (in Purchaser's sole
judgment) other onerous condition arising under any applicable Legal Requirement
or imposed by any Government Entity. Without limiting the foregoing, it shall be
a condition to Purchaser's obligation to close that Purchaser shall be satisfied
that (x) Newco has all Required New Permits and (y) none of the Cumberland
Parties has taken any action or omitted to take any action (whether or not such
action or omission was permissible for such party at the time taken or omitted)
which would cause RBC or any of its Affiliates to be in violation of any
material legal requirement (such as the so-called "pay-to-play" rules)
applicable to RBC or any of its Affiliates following the Closing.
(d) Proceedings. No action, suit or proceeding will be pending
or threatened before any Government Entity the result of which could prevent or
prohibit the consummation of any transaction pursuant hereto, cause any such
transaction to be rescinded following consummation, or adversely affect
Purchaser's right to conduct the Business or any Cumberland Party's performance
or its obligations pursuant hereto, and no judgment, order, decree, stipulation,
injunction or charge having any such effect will exist. No Person will have
brought or threatened to bring, or notified any Cumberland Party in writing of a
claim which could result in, any action, suit or proceeding before any
Government Entity with respect to an alleged violation of any Industry Governing
Law.
(e) Consents. All filings, notices, licenses, consents,
authorizations, accreditation, waivers, approvals and the like of, to or with
any Government Entity or any other Person that are required for the consummation
of the Merger or the conduct of the Business by Purchaser thereafter (the
"Consents") will have been duly made or obtained, none of which will impose upon
Purchaser or Advisors any material condition, restriction or required
undertaking. Without limiting the foregoing, all consents, approvals,
authorizations and orders of any Government Entity required to continue, renew,
or reissue to Advisors following the Merger those licenses under which Advisors
conducts its Business prior to the Merger will have been obtained.
(f) Opinion of Counsel. Purchaser will have received from
Xxxxxx & Xxxxx, legal counsel for the Sellers, an opinion with respect to the
matters set forth in Exhibit I attached hereto addressed to Purchaser. Such
opinion will be dated the Closing Date and will be in form satisfactory to
Purchaser's legal counsel.
(g) Principal Agreements. Each of the Sellers will have
executed and delivered to Purchaser his or her respective Principal Agreement.
(h) Estoppel Letters. With respect to each parcel of real
estate which Advisors leases or subleases, Advisors will have initiated the
process of obtaining for Purchaser (and, with respect to the Vineland Office,
will have obtained and delivered to Purchaser) an estoppel letter from the
lessor under the related lease or sublease to the effect that: (i) the copy of
the lease or sublease attached to such estoppel letter is a true, correct and
complete copy of such lease or sublease and represents the entire agreement
between such lessor and Advisors, as to such parcel; (ii) Advisors is not in
breach or default under such lease or sublease, and no event has occurred which,
with the giving of notice or the passage of time, would constitute such a breach
or default, or permit termination, modification or acceleration under such lease
or sublease; (iii) such lessor has not repudiated any provision of such lease or
sublease; (iv) there are no disputes, oral agreements or forbearance programs in
effect as to such lease or sublease; (v) such lessor consents to the Merger (if
such consent is required by the terms of the lease), and (vi) such other matters
as Purchaser reasonably may request.
(i) No Material Adverse Change. There will have been no
material adverse change in the business, operations, assets, Properties,
Liabilities, condition (financial or otherwise) , results of operations,
prospects or Permits of Advisors between the date of the Latest Balance Sheet
and the Closing Date.
(j) Due Diligence. Purchaser will have completed to its
satisfaction the due diligence investigation and acquisition audit of Advisors.
(k) Client Rescission. Current Clients, in their responses to
the Client Notices, shall not have indicated that they would terminate or reduce
their business dealings with the Surviving Corporation after the Merger such
that an aggregate reduction of more than $168,000 in annual IA Revenues would be
likely to result from such terminations and reductions (without giving effect to
any offsetting increases in IA Revenues which might be anticipated).
(l) The Cumberland Parties Closing Documents. The Cumberland
Parties will have delivered to Purchaser the following documents:
(i) a certificate of each of the Sellers,
dated the Closing Date, stating that the conditions
specified in Sections 6.2(a) through 6.2(b), inclusive, have
been fully satisfied;
(ii) the Books and Records;
(iii) copies of the Consents; and
(iv) Such other documents relating to the
Merger as Purchaser reasonably requests.
All partnership and other proceedings or actions taken or required to be taken
by any Cumberland Party in connection with the Merger, and all documents
incident thereto, must be reasonably satisfactory in form and substance to
Purchaser and its legal counsel.
ARTICLE 7
SURVIVAL AND INDEMNIFICATION
7.1 Survival. The representations, warranties, covenants and agreements
of the Parties contained in this Agreement, or in any Schedule or Exhibit hereto
or any certificate delivered pursuant hereto, will survive for a period of 18
months following the Closing Date; provided, however, that (a) the
representations, warranties, covenants and agreements of the Parties contained
in Sections 3.10(a)(ix), 3.10(d), 3.18(b), 3.18(d), 3.19, 3A.4 and 4B.2 will
survive until the Final Payment Date, (b) the representations, warranties,
covenants and agreements of the Parties contained in Sections 3.15 will survive
until one year after the end of the applicable statute of limitations, and (c)
the representations, warranties, covenants and agreements of the Parties
contained in Sections 2.1, 2.2, 3.1, 3.2, 3A.1, 3A.2 4A.2, 4A.3, 4B.4 and 5.2
will survive forever. If an Indemnified Party gives notice to an Indemnifying
Party that the Indemnified Party has a claim for indemnification under Section
7.2, the giving of such notice will toll the period during which the applicable
representation, warranty, covenant or agreement survives until the claim is
resolved.
7.2 Indemnification; Deductible and Indemnification Cap.
(a) Each of the Sellers hereby severally (and not jointly)
agrees to indemnify, defend and hold harmless each of RBC and Newco and its
directors, officers, employees, Affiliates (including the Surviving
Corporation), successors and assigns (each, a "Purchaser Indemnitee") from and
against any losses, Liabilities, damages, costs or expenses, including, without
limitation, interest, penalties and reasonable fees and expenses of counsel
(collectively, "Losses"), based upon, arising out of or otherwise resulting from
(i) any inaccuracy in any representation or breach of any warranty of such
Seller (without regard to any qualification as to materiality) contained in this
Agreement or in any Seller Schedule or certificate of Seller delivered pursuant
hereto and (ii) the breach or nonfulfillment of any covenant, agreement or other
obligation of such Seller under this Agreement (other than the Seller's
Principal Agreement).
(b) Each of the Cumberland Parties hereby jointly and
severally agree to indemnify, defend and hold harmless each Purchaser Indemnitee
from and against any Losses (including Losses suffered indirectly through a
reduction in the earnings or value of Advisors) based upon, arising out of or
otherwise resulting from (i) any inaccuracy in any representation or breach of
any warranty of Advisors (without regard to any qualification as to materiality)
contained in this Agreement or in any schedule or certificate delivered pursuant
hereto, (ii) the breach or nonfulfillment of any covenant, agreement or other
obligation of Advisors under this Agreement, (iii) any compensation due or
payable to any officers, employees or agents of Advisors arising or related to
services or activities prior to the Closing, and (iv) any actual or alleged
violation by Advisors, prior to the Closing, of any Industry Governing Law.
(c) RBC and Newco jointly and severally hereby agrees to
indemnify, defend and hold harmless the Sellers from and against any Losses
based upon, arising out of or otherwise resulting from (i) any inaccuracy in any
representation or breach of any warranty of either RBC or Newco (without regard
to any qualification as to materiality) contained in this Agreement or in any
schedule or certificate delivered pursuant hereto or thereto, or (ii) the breach
or nonfulfillment of any covenant, agreement or other obligation of either RBC
or Newco under this Agreement (other than the Principal Agreements).
(d) Notwithstanding anything herein to the contrary, in the
event the Closing is consummated, each Seller hereby irrevocably and
unconditionally waives and agrees never to assert or exercise any rights of
contribution against Advisors in respect of his indemnification obligations or
any Liabilities for breach of any representation, warranty, covenant, agreement
or obligation hereunder.
(e) Promptly after the receipt by any party hereto of notice
of any third party claim or the commencement of any third party action, suit or
proceeding subject to indemnification hereunder (a "Third Party Claim"), such
party (the "Indemnified Party") will, if a claim in respect thereto is to be
made against any party obligated to provide indemnification hereunder (the
"Indemnifying Party"), give such Indemnifying Party reasonable written notice of
such Third Party Claim, provided, however, that the failure to provide such
notice will not relieve the Indemnifying Party of any of its or his obligations,
or impair the right of the Indemnified Party to indemnification, pursuant to
this Section 7.2 unless, and only to the extent that, such failure materially
prejudices the Indemnifying Party's opportunity to defend or compromise the
Third Party Claim. Such Indemnifying Party will have the right, at its or his
option, to defend at its or his own expense and by its or his own counsel any
Third Party Claim, provided that (i) the Indemnifying Party acknowledges in
writing (at the time such Indemnifying Party elects to assume such defense) its
or his obligation under this Section 7.2 to indemnify the Indemnified Party with
respect to such Third Party Claim, (ii) such counsel is reasonably satisfactory
to the Indemnified Party, (iii) the Indemnified Party is kept fully informed of
all developments, and is furnished with copies of all documents and papers,
related thereto and is given the right to participate in the defense and
investigation thereof as provided below, and (iv) such counsel proceeds with
diligence and in good faith with respect thereto. If any Indemnifying Party will
undertake to defend any Third Party Claim, such Indemnifying Party will notify
the Indemnified Party of its or his intention to do so promptly (and in any
event no later than 30 days) after receipt of notice of the Third Party Claim,
and the Indemnified Party agrees to cooperate in good faith with the
Indemnifying Party and its counsel in the defense of such Third Party Claim.
Notwithstanding the foregoing, the Indemnified Party will have the right to
participate in the defense and investigation of any Third Party Claim with its
own counsel at its or his own expense, except that the Indemnifying Party will
bear the expense of such separate counsel if (A) in the written opinion of
counsel to the Indemnified Party reasonably acceptable to the Indemnifying
Party, use of counsel of the Indemnifying Party's choice would be expected to
give rise to a conflict of interest, (B) there are or may be legal defenses
available to the Indemnified Party that are different from or additional to
those available to the Indemnifying Party, (C) the Indemnifying Party will not
have employed counsel to represent the Indemnified Party within a reasonable
time after notice of the Third Party Claim is given to the Indemnifying Party or
notice that the Indemnifying Party intends to assume the defense of the Third
Party Claim is given to the Indemnified Party or (D) the Indemnifying Party will
authorize the Indemnified Party to employ separate counsel at the expense of the
Indemnifying Party. The Indemnifying Party will not settle any Third Party Claim
without the prior written consent of the Indemnified Party, which will not be
unreasonably withheld; provided, however, that an Indemnified Party will not be
required to consent to any settlement involving the imposition of equitable
remedies.
(f) No Purchaser Indemnitee shall be entitled to
indemnification under this Article 7 unless and until the total of all Losses
suffered, sustained or incurred by all the Purchaser Indemnitees equals or
exceeds $10,000 in the aggregate (the "Deductible") and shall only be entitled
to indemnification hereunder for Losses in excess of the Deductible and up to a
maximum amount equal to the dollar value of the Consideration (the
"Indemnification Cap"). No Seller shall be entitled to indemnification under
this Article 7 unless and until the total of all Losses suffered, sustained or
incurred by all the Sellers equals or exceeds the Deductible and shall only be
entitled to indemnification hereunder for Losses in excess of the Deductible and
up to a maximum amount equal to the Indemnification Cap.
7.3 Right of Setoff. Purchaser is hereby authorized at any time and
from time to time, with prior notice to the affected Seller, to set off and
apply any and all of the Consideration at any time owing by Purchaser to any
Seller against any and all of the obligations of that Seller now or hereafter
existing under this Article 7, in each case irrespective of whether or not
Purchaser will have made any demand under the respective agreement and although
such obligations may be unmatured. Purchaser agrees promptly to notify such
Seller of any such setoff and application, provided that the failure to give
such notice will not affect the validity of such setoff and application. The
rights of Purchaser under this Section are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which Purchaser
may have.
7.4 Tax Indemnification. Notwithstanding anything in this Article 7 to
the contrary, the rights and obligations of the parties with respect to the
breach of representations, warranties, covenants, and agreements set forth in
Article 8 (concerning Tax Matters) and the indemnification for Taxes will be
governed by the provisions of Article 8.
ARTICLE 8
TAX MATTERS
8.1 Representations and Warranties. As a material inducement to RBC and
Newco to enter into this Agreement, each Cumberland Party hereby jointly and
severally represents and warrants to each of RBC and Newco as follows:
(a) Advisors is, and since its inception has been, a
partnership for federal income tax purposes.
(b) All of the partnership interests in Advisors are, and
since the inception of Advisors have been, owned by the Sellers, and no other
party has owned or has any right to acquire any interests in Advisors.
(c) All Tax Returns required to be filed by each Cumberland
Party for all Taxable Periods ending on or before the Closing Date have been or
will be timely filed. All such Returns (i) were prepared in the manner required
by applicable law, (ii) are true, correct and complete in all material respects,
and (iii) reflect the correct liability for Taxes of or relating to Advisors.
All Taxes shown to be payable on such Returns, and all assessments of Tax made
with respect to such Returns have been or will be paid when due, subject to the
right of the Cumberland Parties to obtain extensions and to contest in good
faith any assessment with which such Cumberland Parties do not agree. No
adjustment relating to such Returns has been proposed formally or informally by
or to any taxing authority and, to the Knowledge of Advisors, no basis exists
for any such adjustment.
(d) Advisors has paid, or has adequately provided, for the
payment of all Taxes with respect to all Taxable Periods, or portions thereof,
ending on or before the Closing Date.
(e) Advisors has withheld from its employees, customers, and
other payees (and timely paid to the appropriate Government Entity) all amounts
required by the Tax withholding provisions of applicable federal, state, local,
and foreign laws (including, without limitation, income, social security, and
employment Tax withholding for all types of compensation, and withholding on
payments to non-United States persons) for all periods, or portions thereof,
ending on or before the Closing Date.
(f) Except for Liens for real and personal property Taxes that
are not yet due and payable, there are no Liens for any Tax upon any asset of
Advisors.
(g) Except as set forth in Schedule 8.1, no power of attorney
that is currently in force with respect to Advisors has been granted to any
person with respect to any matter relating to Taxes.
(h) Advisors has not made any guaranty, indemnification or
similar agreement on or before the Closing Date relating to the sharing of
liability for, or payment of, any Taxes.
8.2 Filing of Tax Returns and Payment of Taxes.
(a) Advisors will timely file or cause to be timely filed all
Tax Returns that are required to be filed by it (with extensions) with respect
to any Tax periods ending on or before the Closing Date. Advisors will timely
pay or cause to be timely paid all Tax reported, or required to be reported, on
such Returns.
(b) At the Closing, Advisors will deliver to Purchaser a
schedule that lists all Tax Returns for it for all Taxable Periods ending on or
before the Closing Date.
(c) Purchaser will prepare and file all Tax Returns of
Advisors other than those described in Section 8.2(a). All Taxes shown on such
Tax Returns will be paid by Purchaser or Advisors, subject to the right of
indemnification of Purchaser against the Sellers for any Tax to the extent such
Seller is liable for such Tax pursuant to this Agreement.
(d) Each of the Parties will cooperate fully, as and to the
extent reasonably requested by the other Parties, in connection with the filing
of Tax Returns pursuant to this Section and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation will include the retention
and (upon the other Party's request) the provision of records and information
which are reasonably relevant to any such Tax Return, audit, litigation or other
proceeding.
8.3 Apportionment. The Parties hereby agree that for federal income tax
purposes, and for state and local income tax purposes, there will be a closing
of Advisors' books consistent with normal tax accounting rules as of the Closing
Date, and items of income, loss, deduction and credit will be allocated to the
Sellers, either directly or through Advisors, for all periods ending on or
before the Closing Date.
8.4 Indemnification by Sellers. Each of the Sellers hereby jointly and
severally agrees to indemnify, defend and hold harmless RBC and Newco and their
directors, officers, employees, Affiliates, successors and assigns harmless from
and against any Losses (including Losses suffered indirectly through a reduction
in the earnings or value of Advisors), based upon, arising out of or otherwise
resulting from:
(a) any and all Taxes incurred by Purchaser or Advisors in
connection with or arising from any inaccuracy, breach, or nonfulfillment of any
representation, warranty, covenant, or agreement of such Seller contained in or
made pursuant to this Article 8;
(b) any and all Taxes for any Taxable Period, or portion
thereof, ending on or before the Closing Date;
(c) any cost or expense (including, without limitation,
reasonable attorneys' and accountants' fees) incurred by Purchaser, Advisors, or
any of their successors or assigns in connection with any Tax described in this
Section 8.4.
8.5 Indemnification by Purchaser. Purchaser agrees to indemnify and
hold harmless the Sellers from and against (i) any and all unpaid federal,
state, local, and foreign Tax imposed for any Taxable Period or portion thereof
beginning after the Closing Date, and (ii) any cost or expense (including,
without limitation, reasonable attorneys' and accountants' fees) incurred by the
Sellers or any of their successors or assigns in connection with any such Tax
identified in this Section 8.5.
8.6 Gross Up. The amount of any Tax or other amount for which
indemnification is provided under any of Sections 7.2, 8.4 or 8.5 hereof will be
(i) increased to take account of any Tax incurred by the Indemnified Party
arising from the receipt or right to receive the indemnity payments hereunder
(increased by any Tax incurred with respect to such increased amount) and (ii)
reduced to take into account any reduction of Tax realized by the Indemnified
Party arising from the incurrence or payment of the amount for which
indemnification was provided.
8.7 Access to Information. From the date hereof, Advisors will provide
Purchaser with copies of all Tax Returns for Taxable Periods ended on or before
the Closing Date and any examination reports and statements of deficiencies
assessed against, proposed to be assessed against, or agreed to by Advisors for
such Taxable Periods, all within ten days after the filing or receipt, as the
case may be, of same.
8.8 Books and Records. Advisors will deliver to Purchaser, on or before
the Closing Date, originals or, with Purchaser's consent which shall not be
unreasonably withheld, copies of all books and records pertinent to Advisors for
each Taxable Period or portion thereof ending on or prior to the Closing Date.
Purchaser will retain such information until one year after the expiration of
the applicable statute of limitations (giving effect to any and all extensions
and waivers) for such Taxable Periods.
8.9 Notice of Audit. If any Party receives any written notice from any
taxing authority proposing an adjustment to any Tax for which any other Party
may be obligated, through indemnification or otherwise, under this Agreement,
such Party will give copies of such notice to such other Party immediately after
the receipt of such notice. The failure to provide such copies however, will not
reduce the obligations of a Party hereunder unless, and to the extent that, such
failure prejudices the rights of the other Party to contest such Tax.
8.10 Tax Contest. Purchaser will have the sole right to negotiate,
resolve, settle or contest any claim for Tax made by a taxing authority relating
to the income or liability of the Surviving Corporation. The Sellers will have
the sole right to negotiate, resolve, settle or contest any claim for Tax made
by a taxing authority relating to the income or liability of Advisors, provided,
that any such Tax would be borne by the Sellers.
8.11 Miscellaneous.
(a) All representations and warranties contained in this
Article 8 with respect to any Tax will survive the Closing and will terminate
and expire thereafter one year after the lapse of the applicable statute of
limitations with respect to the assessment or contesting of such Tax (including
any extensions thereof).
(b) For purposes of this Article 8, all Taxes for all
pre-Closing periods will be determined without regard to the carryback of any
net operating loss, capital loss, general business credit, or other tax
attribute from a post-Closing period.
(c) Any indemnification payment made to a Party pursuant to
this Agreement will be treated for federal income Tax purposes as an adjustment
to the Consideration unless otherwise required by applicable law.
(d) All references in this Article 8 to "Tax" or "Taxes" will
include, in addition to any taxes of Advisors, any Taxes with respect to items
of income, gain, credit, loss or deduction attributable to the Sellers and all
references to "Tax Returns" will include Tax Returns filed (or required to be
filed) by the Sellers with respect to any such Taxes.
ARTICLE 9
DEFINITIONS
9.1 Definitions. For purposes hereof, the following terms, when used
herein with initial capital letters, will have the respective meanings set forth
herein:
"Affiliate" of any Person means any other Person controlling,
controlled by or under common control with such first Person.
"Books and Records" means all lists, records and other
information pertaining to accounts, personnel and referral sources of Advisors,
all lists and records pertaining to suppliers and customers of Advisors, and all
other books, ledgers, files and business records of every kind relating or
pertaining to the Business, in each case whether evidenced in writing,
electronically (including by computer) or otherwise.
"Client" means any Person party to or bound by a Contract with
Advisors or its Affiliates pursuant to which Advisors provides or has agreed to
provide investment advice, management or servicing, consulting or other similar
services to such Person; provided, that the term "Client" shall not include any
client of Cumberland Brokerage unless such Person is also a client of Advisors.
"Code" means the United States Internal Revenue Code of 1986,
as amended.
"Current Clients" means those Clients from which Advisors
generated revenues in 1997.
"Environmental and Safety Requirements" means all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law, in each case
concerning public health and safety, worker health and safety and pollution or
protection of the environment (including, without limitation, all those relating
to the presence, use, production, generation, handling, transport, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
Release, threatened Release, control, or cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or by-products, asbestos,
polychlorinated biphenyls (or PCBs), noise or radiation).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Industry Governing Law" means without limitation, any
federal, state or local law or ordinance, and any rule, regulation or order
issued thereunder governing or pertaining to investment advisors or persons
associated with or employed by investment advisors, including without limitation
ERISA, the Investment Advisers Act of 1940, as amended, and the "blue sky" laws
of those states in which Advisors is registered.
"Financial Statements" means, collectively, the audited
balance sheet of Advisors as of December 31, 1997 and the audited statement of
income of Advisors for the years ended December 31, 1997 and December 31, 1996.
"GAAP" means, at a given time, United States generally
accepted accounting principles, consistently applied.
"Government Entity" means the United States of America or any
other nation, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of government.
"Hazardous Material" means any material or substance which is
deemed a "hazardous waste", "hazardous material", "hazardous substance", "solid
waste", "industrial waste", "contaminant", "pollutant", "toxic waste" or "toxic
substance" under any Environmental and Safety Requirement.
"Indebtedness" of any Person means, without duplication: (a)
indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor or otherwise (other than trade payables and other current
liabilities incurred in the ordinary course of business) and any commitment by
which such Person assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit; (b) indebtedness
guaranteed in any manner by such Person, including a guarantee in the form of an
agreement to repurchase or reimburse; (c) obligations under capitalized leases
in respect of which such Person is liable, contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such Person
assures a creditor against loss; and (d) any unsatisfied obligation of such
Person for "withdrawal liability" to a "multiemployer plan," as such terms are
defined under ERISA.
"Investment" means, with respect to any Person, any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or other ownership or beneficial interest
(including partnership interests and joint venture interests) of any other
Person, and any capital contribution by such Person to any other Person.
"Knowledge" means, with respect to an individual Person, the
actual knowledge of such Person or any Person who is his agent. "Knowledge"
means, with respect to a corporation or partnership, (a) the actual knowledge of
all officers, directors and executive employees of such Person or of any of its
partners and (b) the knowledge which a prudent business person in one of the
positions referenced in clause (a) above would have obtained in the conduct of
his or her business after making reasonable inquiry and reasonable diligence
with respect to the particular matter in question.
"Latest Balance Sheet" means the audited balance sheet of
Advisors as of December 31, 1997 included within the Financial Statements.
"Legal Requirement" means any requirement arising under any
action, law, treaty, rule or regulation, determination or direction of an
arbitrator or Government Entity, including any Environmental and Safety
Requirement.
"Liability" means any direct or indirect debt, obligation,
loss, damages, deficiency or other liability of any nature, whether absolute,
accrued, contingent or otherwise.
"Lien" means any mortgage, pledge, security interest,
encumbrance, easement, restriction, charge, or other lien.
"Permits" means all licenses, certificates of authority,
permits, orders, consents, approvals, registrations, authorizations,
qualifications and filings under any federal, state, local or foreign laws or
with any Government Entities.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Plans" means all Employee Pension Plans, Employee Welfare
Plans, Other Plans and Multiemployer Plans to which Advisors contributes or is a
party.
"Release" has the meaning set forth in CERCLA.
"Properties" means real, personal or mixed property, tangible
or intangible, of any Person.
"Taxes" means all income, profits, gains, gross receipts, net
worth, premium, value added, ad valorem, sales, use, excise, stamp, transfer,
franchise, withholding, payroll, employment, occupation, workers, compensation,
disability, severance, unemployment insurance, social security and Property
taxes, and all other taxes, duties, assessments, fees, levies, or similar
charges of any kind whatsoever, together with any interest, penalties and
additions thereto, required under any federal, state, local or foreign law or
imposed by any federal, state, local or foreign Government Entity, including all
amounts imposed as a result of being a member of an affiliated or combined
group.
"Tax Return" means all returns, reports, elections, estimates,
declarations, information statements and other forms and documents (including
all schedules, exhibits, and other attachments thereto) relating to any Taxes
and required to be filed under any federal, state, local or foreign law or with
any Government Entity.
"Taxable Period" means any taxable year or any other period
that is treated as a taxable year (including any taxable period ending on the
Closing Date or beginning on the day immediately preceding the Closing Date)
with respect to which any Tax may be imposed under any applicable statute, rule,
or regulation.
9.2 Other Definition Provisions.
(a) Accounting Terms. Accounting terms which are not otherwise
defined in this Agreement have the meanings given to them under GAAP. To the
extent that the definition of accounting term that is defined in this Agreement
is inconsistent with the meaning of such term under GAAP, the definition set
forth in this Agreement will control.
(b) Successor Laws. Any reference to any particular Code
section or any other law or regulation will be interpreted to include any
revision of or successor to that section regardless of how it is numbered or
classified.
ARTICLE 10
OTHER AGREEMENTS
10.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual agreement of Purchaser and the Sellers,
(b) by Purchaser, at any time when any Cumberland Party is in
breach of any of its material obligations pursuant to this Agreement or if any
representation or warranty of any Cumberland Party is false or misleading in any
material respect (provided that such condition is not the result of any breach
of any covenant, representation or warranty of Purchaser set forth herein),
(c) by the Sellers, at any time when Purchaser is in breach of
any of its material obligations pursuant to this Agreement or if any
representation or warranty of Purchaser is false or misleading in any material
respect (provided that such condition is not the result of any breach of any
covenant, representation or warranty of any Cumberland Party set forth herein),
(d) by Purchaser or the Sellers if Current Clients accounting
for at least 10% of Advisors' 1997 revenues respond to the Client Notices
indicating that they will not, or are not likely to, continue substantially the
same business relationship with the Surviving Corporation after the Merger as
their business relationship with Advisors before the Merger, or
(e) by Purchaser or the Sellers, at any time after February
28, 1998, if the Closing has not then occurred; provided that such failure to
timely close is not the result of any breach of any covenant, representation or
warranty of the terminating Party.
Any termination of this Agreement pursuant to any of clauses 10.1(b) through (e)
will be effected by written notice from the terminating Party to Purchaser (if
the Sellers are the terminating Party) or the Sellers (if Purchaser is the
terminating Party). If this Agreement is terminated other than by a valid
termination pursuant to clause 10.1(a) or a valid termination by Sellers
pursuant to either clause 10(c) or 10(d) and, within six months following such
termination, Advisors merges with or is acquired by another entity or one or
more Cumberland Parties enters into an agreement or understanding pursuant to
which Advisors is to be merged with or acquired by another entity, then Advisors
shall pay RBC a termination fee of $250,000 (the "Termination Fee") prior to
consummation of such merger or acquisition. If any party (treating the
Cumberland Parties as one party and Purchaser as the other party) validly
terminates this Agreement based upon a material breach or default by the other
party, the non-terminating party shall pay to the terminating party liquidated
damages in the amount of $90,000 ("Liquidated Damages"). (Any Liquidated Damages
paid by Sellers shall be credited towards any Termination Fee which may become
due from Sellers.) If either a Termination Fee or Liquidated Damages become due
hereunder and the party which owes such Termination Fee or Liquidated Damages
fails to pay the amount owed in full upon demand by the other, then the party
which owes the Termination Fee or Liquidated Damages shall in addition reimburse
the other party for the legal fees and expenses incurred by it in seeking to
enforce and collect such amount.
10.2 Remedies. No failure to exercise, and no delay in exercising, any
right, remedy, power or privilege under this Agreement by any Party will operate
as a waiver of such right, remedy, power or privilege, nor will any single or
partial exercise of any right, remedy, power or privilege under this Agreement
preclude any other or further exercise of such right, remedy, power or privilege
or the exercise of any other right, remedy, power or privilege. Except as
expressly set forth herein, the rights, remedies, powers and privileges provided
pursuant to this Agreement are cumulative and not exhaustive of any other
rights, remedies, powers and privileges which may be provided by law.
10.3 Consent to Amendments. No waiver, amendment, modification or
supplement of this Agreement will be binding upon any Party unless such waiver,
amendment, modification or supplement is set forth in writing and is executed by
such Party. No other course of dealing between or among any of the Parties or
any delay in exercising any rights pursuant to this Agreement will operate as a
waiver of any rights of any Party.
10.4 Successors and Assigns. Except as otherwise expressly provided in
this Agreement, all covenants and agreements set forth in this Agreement by or
on behalf of the Parties will bind and inure to the benefit of the respective
successors and assigns of the Parties. Except as otherwise provided in this
Section 10.4, neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by any Party without the others' prior
written consent. Nothing in this Agreement shall be deemed to limit the ability
of RBC or its successors to cause the Surviving Corporation to merge with or
into another entity which is wholly-owned by RBC. Nothing in this Agreement
shall be deemed to limit the ability of RBC or its successors to merge with or
into another entity or transfer all or any portion of its assets (including the
Business) to another entity; provided, that the entity which succeeds to the
ownership of the Business shall, by operation of law or by written agreement,
undertake to perform the obligations of RBC hereunder. Should RBC enter into an
agreement to merge with another entity pursuant to which the shares of RBC
Common Stock outstanding prior to the effective time of such merger shall be
converted into cash or other securities, the Parties hereto agree, and RBC shall
cause adequate provisions to be made in such merger agreement so that following
the effective time of such merger, all provisions in this Agreement which
provide for delivery of RBC Common Stock to Sellers shall thereafter be
construed as providing for delivery of the equivalent amount of cash or other
securities into which such RBC Common Stock was converted pursuant to such
merger.
10.5 Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of New Jersey, without giving
effect to any choice of law or conflict provision or rule (whether of the State
of New Jersey or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of New Jersey to be applied. In furtherance of
the foregoing, the internal law of the State of New Jersey will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
10.6 Arbitration. Any controversy or claim, directly or indirectly,
arising out of or relating to this Agreement, will be submitted to and settled
by arbitration conducted in Morristown, New Jersey in accordance with the rules
and procedures then existing under the Commercial Arbitration Rules of the
American Arbitration Association, provided that notwithstanding anything to the
contrary contained in such Rules: (a) a panel of three arbitrators will be used,
with one arbitrator chosen by Purchaser, one arbitrator chosen by the Sellers
and the third arbitrator chosen by the other two arbitrators; (b) the decision
in writing of a majority of the arbitrators on the panel will be final,
conclusive, and binding on all Parties hereto who had notice of such arbitration
and an opportunity to participate therein, whether or not such Party so
participated; and (c) the arbitrators will not award any punitive damages except
in the case of intentional fraud. The determination of the panel of arbitrators
will be final, binding and nonappealable, except that any determination that
there has been intentional fraud, and any award of punitive damages, will be
appealable in any court having jurisdiction. Judgment upon any binding decision
rendered by such panel may be entered in any court having jurisdiction. Any and
all reasonable travel expenses incurred by any of the Sellers in connection with
such arbitration will be reimbursed by Purchaser. The Parties intend that the
arbitrators use reasonable efforts to limit the nature, scope and timing of any
discovery which they permit in connection with any arbitration so that neither
the duration nor the expense of the arbitration will be unduly burdensome on any
Party. Notwithstanding the foregoing, any determination of the arbitrators with
respect to discovery will be binding on the Parties.
10.7 Notices. All demands, notices, communications and reports provided
for in this Agreement will be in writing and will be either personally
delivered, mailed by first class mail (postage prepaid) or sent by reputable
overnight courier service (delivery charges prepaid) to any Party at the address
specified below, or at such address, to the attention of such other Person, and
with such other copy, as the recipient party has specified by prior written
notice to the sending Party pursuant to the provisions of this Section 10.7. Any
such demand, notice, communication or report will be deemed to have been given
pursuant to this Agreement when delivered personally, on the third business day
after deposit in the U.S. mail or on the business day after deposit with a
reputable overnight courier service, as the case may be.
If to any Cumberland Party Cumberland Advisors
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Each of the Sellers at their home address
and with a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxx
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
If to Purchaser: Xxxx, Xxxx & Co.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Attn.: Xxxxxxx Xxxxxxx
with a copy to: Xxxxxx X. Xxxxx , Esq.
Pitney Xxxxxx Xxxx & Xxxxx
By Mail:
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Delivery:
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
10.8 Severability of Provisions. If any covenant, agreement, provision
or term of this Agreement is held to be invalid for any reason whatsoever, then
such covenant, agreement, provision or term will be deemed severable from the
remaining covenants, agreements, provisions and terms of this Agreement and will
in no way affect the validity or enforceability of any other provision of this
Agreement.
10.9 Schedules and Exhibits. The Schedules and Exhibits constitute a
part of this Agreement and are incorporated into this Agreement for all
purposes.
10.10 Counterparts; Facsimile Signatures. The Parties may execute this
Agreement in separate counterparts (no one of which need contain the signatures
of all Parties), each of which will be an original and all of which together
will constitute one and the same instrument. A facsimile, telecopy or photocopy
of an original signature of the any Party appearing on this Agreement or any
document to be executed and delivered in connection herewith will be valid and
binding on such Party as if it were an original signature; provided, that at the
request of any Party, all Parties will exchange counterparts of this Agreement
and such other documents which contain original signatures; and provided,
further, that failure to exchange original signatures will not in any way affect
the validity and binding nature of the facsimile, telecopy or photocopy of the
original signatures.
10.11 No Third-Party Beneficiaries. Except as otherwise expressly
provided in this Agreement, no Person which is not a Party will have any right
or obligation pursuant to this Agreement.
10.12 Headings. The headings used in this Agreement are for the purpose
of reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
10.13 Merger and Integration. Except as otherwise provided in this
Agreement, this Agreement sets forth the entire understanding of the Parties
relating to the subject matter hereof, and all prior understandings, whether
written or oral are superseded by this Agreement.
10.14 Press Releases. No Party will issue any press releases or make
any public announcements of the transactions contemplated by this Agreement
except as may be mutually agreed to in writing by the Sellers and Purchaser;
except that each Party will in any event have the right to issue any such
release or statement upon advice of its counsel that such issuance is required
in order to comply with applicable law or stock exchange rules so long as such
party determines in good faith that it is necessary to do so and uses its
reasonable best efforts to agree upon the content of the proposed disclosure in
advance.
10.15 Expenses. The Purchaser will be solely responsible for and bear
all its own expenses (including the expenses of legal counsel, accountants and
other advisers), and the Sellers will jointly and severally be responsible for
and bear all expenses (including the expenses of legal counsel, accountants and
other advisers)of the Cumberland Parties incurred at any time in connection with
the pursuing, negotiating or consummating the transactions contemplated by, this
Agreement and any and all documents executed, delivered or filed in connection
herewith. None of the expenses of any Cumberland Parties (including Advisors)
will be borne by Advisors.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
The Sellers: XXXXXXX X. XXXXXXXX:
-------------------------------------
XXXXXXX X. XXXXXXXXX:
-------------------------------------
XXXXX X. XXXXX:
-------------------------------------
Advisors: CUMBERLAND ADVISORS
By:----------------------------------
By:----------------------------------
By:----------------------------------
Its General Partners
RBC: XXXX XXXX & CO., INC.
By:----------------------------------
Name:
Title:
Newco: CUMBERLAND ADVISORS, INC.
By:----------------------------------
Name:
Title:
INDEX TO EXHIBITS
EXHIBIT A - OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
EXHIBIT B - RESERVED
EXHIBIT C - RESERVED
EXHIBIT D - TERMS AND CONDITIONS FOR REPAYMENT OF RETURNED AMOUNTS
EXHIBIT E - IDENTIFICATION OF EXPENSES AND PRICES FOR CORPORATE LEVEL SERVICES
TO BE PROVIDED TO THE IA BUSINESS
EXHIBIT F - KOTOK EMPLOYMENT AGREEMENT
EXHIBIT F-1 - SECOND KOTOK EMPLOYMENT AGREEMENT
EXHIBIT G - XXXXXXXXX EMPLOYMENT AGREEMENT
EXHIBIT H - XXXXXXXX CONSULTING AGREEMENT
EXHIBIT I - FORM OF OPINION OF SELLERS' COUNSEL
EXHIBIT J - FORM OF OPINION OF PURCHASER'S COUNSEL
EXHIBIT A
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
Directors (5):
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxxx Xxxxxxx
Xxx Xxxxxxx or Xxxxx Xxxx (selection to be made by RBC)
Xxxxxxx Xxxxx
Officers:
Xxxxx X. Xxxxx President
Xxxxxxx X. Xxxxxxxxx Senior Vice President
Xxxxx Xxxxx Vice President
Other Officers are to be named later
EXHIBIT D
TERMS AND CONDITIONS FOR REPAYMENT OF RETURNED AMOUNTS
a. None of the Returnable Amount of the Initial Cash Payment
must be repaid as a Returned Amount hereunder if cumulatively $1,500,000 of
pre-tax income (as the same may be adjusted as set forth below, the "Base Amount
of Income") is delivered during the three Years following the Closing. Pre-tax
income will be deemed to be delivered as follows:
(i) IA Income; plus
(ii) MMB Income; plus
(iii) $50,000 per Year (agreed upon net pre-tax income from rent
reduction on the Vineland Office)
(The calculation of cumulative pre-tax income delivery during the three
Years following the Closing is to be made without regard to whether either or
both of the IA Benchmark or the MMB Benchmark are met in any Year.)
b. If cumulatively less than the Base Amount of Income is
delivered during the three Years following the Closing, then a percentage of the
Returnable Amount will be repaid by the Sellers at the end of Year 3, with that
percentage equal to the percentage of the Base Amount of Income which was not
delivered. For example, assuming a $1,500,000 Base Amount of Income, if
$1,230,000 (i.e., 82% of $1,500,000) of pre-tax income is delivered during the
three Years, then 18% of the Returnable Amount (i.e.,, 18% of $600,000, or
$108,000) shall be repaid by the Sellers in equal shares to Purchaser (i.e.,
each of the three Sellers shall repay the Purchaser $36,000).
c. The Base Amount of Income shall be adjusted if the
employment or consultancy of any one or more Sellers is terminated by RBC or
Newco without "cause" or by voluntary resignation with "good reason" prior to
the end of Year 3. Upon such termination by RBC or Newco without cause or by
voluntary resignation with good reason, the Base Amount of Income shall be
adjusted by subtracting therefrom an amount equal to {$1,500,000, multiplied by
the number of days remaining from the date of termination to the end of Year 3,
divided by the total number of days in Years 1, 2 and 3}, multiplied by 50% if
Kotok's employment is so terminated, multiplied by 22% if Xxxxxxxx'x employment
is so terminated, or multiplied by 28% if Xxxxxxxxx'x consultancy is so
terminated.
d. Notwithstanding the foregoing, and regardless of the
achievement of any benchmark, any Seller who dies or is disabled prior to the
end of Year 3 shall (or his or her estate or representative shall), at the end
of Year 3, repay that portion of his or her portion of the Returnable Amount
which is the lesser of (x) the amount such Seller is obligated to repay under
paragraphs (a) or (b) above, whichever is applicable, based on the actual net
pre-tax income delivered during the three Years following the Closing, or (y)
the amount such Seller would have been obligated to repay under paragraphs (a)
or (b) above, whichever is applicable, had the rate of net pre-tax income
delivery during the period between the Closing and such Seller's death or
disability continued through the remaining period between such death or
disability and the end of Year 3.
e. As used in this Exhibit, the terms "IA Income" and "MMB
Income" have the meanings given them in Section 1.6 of the Agreement to which
this Exhibit is attached.
f. Amounts due to be repaid hereunder shall be due and payable
immediately upon determination of the repayment requirement and written notice
thereof from Purchaser to the Seller(s). Purchaser shall be entitled to offset
any amounts otherwise due to any Seller who does not honor such repayment
obligation, and to retain any RBC Common Stock held by it for the benefit of
such Seller as collateral for such obligation. Purchaser may apply such retained
RBC Common Stock against such repayment obligations (with such RBC Common Stock
valued at its fair market value on the date of such application).
EXHIBIT E
IDENTIFICATION OF EXPENSES AND PRICES
FOR
CORPORATE LEVEL SERVICES TO BE PROVIDED TO THE IA BUSINESS
Compliance Support will be provided on an as needed basis and will be
reviewed and agreed upon by both parties before billing.
Information Systems/Data Processing support will be provided on an as
needed basis and will be reviewed and agreed upon by both parties before
billing.
Accounting Support will be provided to include Accounts Payable, Account
Reconciliation, Bank Reconciliations, Financial Statement Preparation, and
Audit Review. The annual cost for these services will be $7,500 for 1998,
$12,000 for 1999 and $12,500 for 2000.
Human Resources Support will be provided to administer all of the
following items at a cost of $4,000 for 1998, $10,000 for 1999 and $10,400
for 2000, adjusted annually to reflect any increase or decrease in CAI's
staff. In addition, the actual costs for the following items will be billed
to CAI:
- Salary (all wages)
- Payroll taxes
- 401K
- Medical
- Dental
- Employee Assistance Program
- Life Insurance
- Short Term Disability
- Long Term Disability
Profit sharing costs will not be billed to CAI for purposes of calculating
"Business Expenses," as that term is used in this Agreement. However, the term
"Business Expenses" is used solely for the purpose of making the calculations
required by this Agreement and is not intended to affect the calculation of
profit and loss or any other financial accounting calculation to be made by RBC
or the Surviving Corporation with respect to their respective businesses
following the Closing. The parties understand that profit-sharing costs will be
billed to CAI for financial accounting purposes.
EXHIBIT F
KOTOK EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
February 28, 1998, by and among Xxxxx X. Xxxxx ("Executive"), Xxxx, Xxxx & Co.,
Inc., a New Jersey corporation ("RBC"), and Cumberland Advisors, Inc. a New
Jersey corporation and wholly-owned subsidiary of RBC ("CAI").
1. CAI was formed by RBC to acquire by merger Cumberland Advisors, a
New Jersey general partnership ("Old CAI") pursuant to the Merger Agreement (the
"Merger Agreement") dated as of February 9, 1998, by and among Executive,
Xxxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxxx (the "Sellers"), RBC, CAI and Old
CAI.
2. Through the date hereof, Executive has been a partner of Old CAI.
3. CAI wishes to assure itself of the continued services of Executive,
upon the terms and conditions set forth in this Agreement, and Executive is
willing to accept such employment and enjoy the benefits provided by this
Agreement.
4. Capitalized terms used but not otherwise defined herein shall have
the same meaning as set forth in the Merger Agreement.
Accordingly, the parties agree as follows:
1. Employment, Title, Duties and Term.
1.1 Employment; Title; Duties. Subject to the terms and conditions of
this Agreement, CAI agrees to employ Executive during the term of employment set
forth in Section 1.2 below. Executive shall serve as President of CAI, shall be
responsible for the day-to-day management and operations of CAI and shall have
such powers and perform such duties, consistent with such executive capacity, as
may be assigned or delegated to him from time to time by the Board of Directors
of CAI (the "Board of Directors"). Executive shall have the authority to hire
employees of CAI, set their salary and make purchases within the parameters of
CAI's annual operating and capital budget, which budget shall be subject to
review and approval by the Board of Directors and by RBC. Executive's primary
office shall be located in Vineland, New Jersey unless Executive, CAI and RBC
mutually agree to change such location. RBC shall cause Executive to be
nominated for election by RBC's shareholders to serve as a director of RBC
during the Employment Period. If elected, Executive shall serve as a director of
RBC. Executive shall not be entitled to receive any fees or other compensation
in addition to the compensation specifically set forth herein for serving as a
director, board committee member or officer of CAI, RBC or any of their
respective subsidiaries or affiliates. Executive accepts such employment and
agrees to perform all such services faithfully and diligently, and to discharge
the responsibilities thereof to the best of his ability. Executive shall devote
his full business time and attention and energies to the duties of his
employment, provided, that Executive may engage in one or more of the activities
described in Schedule 1 hereto during his term of employment hereunder.
Notwithstanding the foregoing, RBC and Executive may, by mutual agreement,
arrange for Executive to perform consulting or other services for entities other
than CAI in exchange for compensation other than that provided for hereunder.
1.2 Term. The term of employment of Executive under this Agreement (the
"Employment Period") shall begin on the first day of Year 1 and end on the last
day of Year 3, unless otherwise terminated in accordance with the provisions set
forth in Section 4 below. (A "Year" (when the term is capitalized) will have the
meaning given to it in the Merger Agreement.) Near the end of Year 3, the
parties will negotiate in good faith with respect to extending the term for a
fourth and fifth Year.
2. Base Salary. In consideration for the services to be rendered
hereunder, and subject to the terms and conditions of this Agreement, CAI will
pay Executive, in accordance with its normal practices, a Base Salary for each
Year (the "Base Salary"), which shall be $300,000 in Year 1. The Base Salary
will be readjusted following Year 1 so that for each successive Year the Base
Salary will equal $600,000 multiplied by a fraction the numerator of which is
the amount of IA Revenues attributed to Executive for the prior Year and the
denominator is the amount of IA Revenues attributable to the three Principals
(including Executive) for the prior Year. (In each instance in this Agreement
when a determination must be made as to the attribution of a percentage of IA
Revenues to Executive, such attribution shall be made by the Board of Directors
of CAI; provided, that the Board of Directors shall abide by any unanimous
agreement of the Sellers (or their respective estates) as to such attribution,
which agreement is evidenced by a writing signed by all Sellers (or their
respective estates) and delivered to the Board of Directors of RBC.)
3. Bonus Payment and Other Benefits.
3.1 Bonus Payment. In addition to the Base Salary provided for in
Section 2 above, CAI will pay to Executive, in accordance with its normal bonus
payment schedule (but in any event no later than 90 days after the Year for
which the Bonus is payable), a payment (a "Bonus Payment") equal to 35% of the
IA Revenues attributed to Executive above $850,000 (if any) during the Year for
which the Bonus is payable. If Executive's employment with CAI is terminated
(for any reason other than voluntary resignation or termination for cause) prior
to the end of the Year for which the Bonus is payable, Executive's Bonus Payment
for such Year will be equal to 35% of the IA Revenues attributed to Executive
above {$850,000 multiplied by a fraction, the numerator of which is the number
of days Executive was employed in such Year and the denominator of which is 365}
(if any) during the Year for which the Bonus is payable. In the event of
voluntary resignation or termination for "cause" (as defined in Section 4.4
hereof), Executive shall receive no Bonus Payment with respect to the Year in
which the termination occurs. Any Bonus Payment with respect to any Year in
which Executive's employment with CAI terminates and which Executive is entitled
to receive under this Section shall be paid in full in cash at the earlier of
(a) 90 days after such Year ends or (b) the same time that the remaining senior
executives of CAI receive their bonus payments with respect to such Year.
3.2 Other Benefits. During the Employment Period, Executive shall be
entitled to additional benefits (and participation in plans or policies) as
described on Schedule 4 hereto, which schedule also sets forth Executive's dates
of service for purposes the plans listed thereon.
3.3 Reasonable Business Expenses. Executive is expected and is
authorized to incur reasonable expenses in the performance of his duties
hereunder, including such expenses for the promotion of the business of CAI and
RBC as entertainment, travel, and similar business expenses incurred in the
performance of his duties as allowed in RBC's Expense Policy. CAI shall
reimburse the Executive for all such expenses promptly upon periodic
presentation by Executive of an itemized account with documentation of such
expenses.
3.4 Vacation. Executive shall be entitled to annual vacation (without
deduction of salary or other compensation) in accordance with RBC's vacation
policy for employees in effect from time to time, but in no event less than four
weeks, such vacation to be taken at such time or times during such Year as may
reasonably be mutually agreed upon between the Executive and the Board of
Directors.
3.5 Directors' and Officers' Insurance. Executive shall be entitled to
coverage under any directors' and officers' insurance policy which RBC provides
for its own directors and officers.
4. Termination of Employment.
4.1 Death or Permanent Disability of Executive. Executive's employment
hereunder shall terminate upon his death. In addition, CAI shall have the right
to terminate Executive's employment hereunder if and when Executive becomes
permanently disabled within the meaning of any permanent disability insurance
policy which may be maintained by CAI or RBC for the benefit of Executive and
under which the Executive is entitled to benefits.
4.2 Termination Without Cause Or Termination by Voluntary Resignation
with Good Reason. CAI, by written notice to Executive at any time, shall also
have the right to terminate Executive's employment without cause for any reason,
subject to Section 4.6. If CAI assigns Executive to a primary office located
outside of Vineland New Jersey, and does so despite Executive's written
objection which is delivered to RBC and to the Board of Directors within ten
days of Executive's being informed of such assignment and which written
objection is not subsequently withdrawn, this shall be deemed "Good Reason" for
Executive to resign hereunder and any resignation by Executive within six months
after such written objection is delivered shall have the same effect as a
termination of Executive by CAI without cause under this Section 4.2.
4.3 Termination by Voluntary Resignation without Good Reason. The
parties agree that Executive has the right to resign voluntarily and that such
resignation shall not constitute a breach of this agreement.
4.4 Termination for Cause. CAI, by written notice to Executive,
specifying in reasonable detail the reasons therefor authorized by the Board of
Directors, may terminate Executive's employment for "cause". The term "cause"
shall include any of the following: (i) gross negligence, (ii) gross
insubordination, (iii) material violations of any regulatory compliance rules,
(iv) failure to diligently perform the duties of Executive specified hereunder
or specified by the Board of Directors, (v) misappropriation by Executive of
funds or property of any RBC Affiliate, (vi) any breach of any provision of
Section 5 or Section 6 of this Agreement; (vii) a felony conviction of
Executive, or (viii) failure of Executive to have all licenses and permits
necessary to act as an investment adviser. CAI shall not terminate Executive's
employment for "cause" under clauses (i), (ii), (iii) or (iv) above without
first giving the Executive written notice and a reasonable opportunity to take
corrective action; provided, that in no event will CAI be obligated to give the
Executive more than 30 days to take corrective action.
4.5 Compensation and Benefits Upon Death or Permanent Disability. In
the event of termination of Executive's employment pursuant to Section 4.1, CAI
shall pay to Executive (i) the unpaid salary and vacation earned by him before
the date of termination as provided for in this Agreement, computed pro rata up
to and including such date; and (ii) Executive's Bonus Payment calculated in
accordance with Section 3.1 above for the Year in which such termination occurs,
in lieu of any and all other compensation, benefits and claims of any kind,
excepting only such additional amounts as may be provided for under the express
terms of any applicable benefit plans or as may be required by law to be paid.
4.6 Compensation and Benefits Upon Termination without Cause or
Termination by Voluntary Resignation with Good Reason. In the event of
termination of Executive's employment pursuant to Section 4.2: (a) if the RBC
Common Stock which the Executive received in connection with the Merger
Agreement is not then freely tradeable by Executive without registration under
the Securities Act, then RBC shall provide Executive with the right (exercisable
for a period of five years) to demand registration of all, but not less than
all, the shares of RBC Common Stock which are not at the time of demand subject
to forfeiture pursuant to the Merger Agreement, on the terms and conditions set
forth on Schedule 3 hereto; and (b) CAI shall pay to Executive (i) the unpaid
salary and vacation earned by him before the date of termination as provided for
in this Agreement, computed pro rata up to and including such date; and (ii)
Executive's Bonus Payment calculated in accordance with Section 3.1 above for
the Year in which such termination occurs, in lieu of any and all other
compensation, benefits and claims of any kind, excepting only such additional
amounts as may be provided for under the express terms of any applicable benefit
plans or as may be required by law to be paid.
4.7 Compensation and Benefits Upon Voluntary Resignation without Good
Reason or Termination for Cause . In the event of termination of Executive's
employment pursuant to Sections 4.3 or 4.4, CAI shall pay to Executive the
unpaid salary and vacation earned by him before the date of termination as
provided for in this Agreement, computed pro rata up to and including such date,
in lieu of any and all other compensation, benefits and claims of any kind,
excepting only such additional amounts as may be provided for under the express
terms of any applicable benefit plans or as may be required by law to be paid.
4.8 Payments after Termination or Resignation. In the event that
Executive's employment with CAI terminates for any reason, any Bonus Payment
which Executive is entitled to receive pursuant to either Section 4.5 or 4.6
with respect to the Year in which Executive's employment with CAI terminates
shall be paid in full in cash at the earlier of (a) 90 days after such Year ends
or (b) the same time that the remaining senior executives of CAI receive their
bonus payments with respect to such Year. All other payments which Executive is
entitled to receive pursuant to either Section 4.5, 4.6 or 4.7 shall be made
within 45 days after the date of termination or resignation.
5. Confidential Information. During the term of employment under this
Agreement, Executive will have access to and become acquainted with confidential
proprietary information of CAI, including without limitation, compilations of
information and records (including client information and records), owned by CAI
(collectively, "Confidential Information"). Executive shall not, directly or
indirectly, disclose to any other person or entity or use for the benefit of any
other person or entity, any of CAI's Confidential Information (including without
limitation any client lists or other confidential information relating to CAI's
business), either during the term of this Agreement or at any time thereafter,
except as required in the course of his employment by CAI. In furtherance and
not in limitation of the foregoing, during the term of employment under this
Agreement, Executive will abide by all policies and procedures of CAI regarding
use of confidential information. All files, records, documents, equipment and
similar items relating to the business of CAI, whether prepared by Executive or
otherwise coming into his possession, shall remain the exclusive property of
CAI, and if removed from the premises of CAI shall be immediately returned to
CAI upon any termination of his employment. In this Section 5, the term "CAI"
shall include any firm or corporation directly or indirectly controlling or
controlled by CAI or under common control with CAI.
6. Agreement Not to Solicit or Compete.
6.1 Nonsolicitation and Noncompetition. Except as specifically provided
on Schedule 2 hereto, and subject to the following sentence, Executive will not,
individually or through an agent, for himself or on behalf of another, as an
employee, director, owner, partner, sole proprietor, consultant, agent,
representative, shareholder, or in any other manner or capacity whatsoever,
during the Non-Compete Period (as defined below): (a) solicit or induce any
clients of CAI to terminate or reduce their respective relationships with RBC or
CAI, (b) accept any Business from any clients of CAI, or enter into a Business
relationship with any such clients unless (i) Executive continues to be employed
by CAI during the Non-Compete Period; and (ii) all compensation from such
clients during the Non-Compete Period shall accrue to CAI; (c) solicit any
person then employed by CAI to terminate such employment; or (d) permit
Executive's name to be used by or participate (other than through ownership of
less than five percent of the stock of a publicly-held corporation whose stock
is traded on a national securities exchange or on NASDAQ) in any business or
enterprise which is competitive with the Business (as determined on the date of
this Agreement and the Closing Date) and which is located in the United States.
Notwithstanding the foregoing, the restrictions in clauses (a), (b) and (d) of
the preceding sentence shall not apply after the earlier to occur of (i) the
fifth anniversary of the Closing Date or (ii) the termination of Executive's
employment by CAI without cause or by voluntary resignation with Good Reason.
Any written notice or oral presentation made jointly by CAI and the Executive
during the Non-Compete Period shall not be deemed to violate any provision of
this Section 6.1. In this Section 6.1 the term "Non-Compete Period" means the
period beginning on the date hereof and ending on the later to occur of (x) the
fifth anniversary of the Closing Date or (y) the second anniversary of the
termination (for any reason) of Executive's employment with the RBC Affiliates;
provided, however, that if at the end of Year 3 Executive is employed hereunder
and RBC has not offered to extend this Agreement for Year 4 and Year 5 on terms
substantially as favorable to Executive as the terms herein, then the
Non-Compete Period shall end at the end of Year 3. In this Section 6.1 the term
"Business" means the IA Business. In this Section 6.1 the term "CAI" shall
include CAI, any successor in interest to the business of CAI, and any firm or
corporation directly or indirectly controlling or controlled by CAI (or such
successor in interest) or under common control with CAI (or such successor in
interest) and engaged in the investment management or investment advisory
business. Executive agrees that the covenants set forth in this Section 6.1 are
reasonable with respect to duration, geographical area and scope.
6.2 Independent Covenants. The covenants of Executive set forth in this
Section 6 shall be construed as independent covenants and the existence of any
claim, demand, action, or cause of action of Executive against CAI or any other
RBC Affiliate, whether predicated upon this Agreement or otherwise, other than
the failure of RBC to pay amounts due and owing to Executive hereunder or under
the Merger Agreement for a period of 30 days following written notice from
Executive to RBC specifying such amounts due and specifically referring to this
Section 6.2, shall not constitute a defense to the enforcement by CAI or RBC of
any of the covenants contained in this Section 6.
6.3 Severability. In the event that any of the subsections of this
Section 6 shall be deemed by any court of competent jurisdiction to be in
violation of applicable law for any reason whatsoever, then any such subsection
or subsections shall not be deemed to be void, but shall be deemed to be
automatically amended so as to comply with applicable law. In the event that any
of the subsections of this Section 6 shall be deemed by any court of competent
jurisdiction to be wholly or partially invalid, such determination shall not
affect the binding effect of the other subsections of this Section 6 or of any
of the other provisions of this Agreement.
7, Injunctive Relief Executive acknowledges that the damage to CAI
resulting from a breach of the obligations of trust and confidence set forth in
Sections 5 and 6 hereof may cause irreparable injury to CAI, and Executive
hereby agrees and consents to the entry of an injunction by any court of
competent jurisdiction, enjoining him from violating any term or terms of this
Agreement, and such injunctive relief may be granted without the necessity of
proving actual damages. Such injunctive relief, however, shall be in addition to
any other remedies provided by law, in equity or otherwise, to CAI.
8. Entire Agreement. Except as otherwise provided in this Agreement and
the separate employment agreement between Executive, RBC and CAI with respect to
Consulting, this Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and all prior understandings, whether
written or oral are superseded by this Agreement. Specifically, Executive
acknowledges that no commitment has been made by RBC or CAI to him with respect
to any employment beyond the term of this Agreement (whether ending by lapse of
time or earlier termination pursuant to its terms) or with respect to any
benefits not expressly set forth in this Agreement.
9. Notices. All demands, notices and communications provided for in
this Agreement will be in writing and will be either personally delivered,
mailed by first class mail (postage prepaid) or sent by reputable overnight
courier service (delivery charges prepaid) to any party at the address specified
below, or at such address, to the attention of such other person, and with such
other copy, as the recipient party has specified by prior written notice to the
sending party pursuant to the provisions of this Section 9. Any such demand,
notice, communication or report will be deemed to have been given pursuant to
this Agreement when delivered personally, on the third business day after
deposit in the U.S. mail or on the business day after deposit with a reputable
overnight courier service, as the case may be.
If to Executive: Xxxxx X. Xxxxx
2991 East Chestnut Avenue, Apt. B-19
Xxxxxxxx, XX 00000
Tel.: (000) 000-0000 or
Tel.: (000) 000-0000
Fax: (000) 000-0000
and to Xxxxx X. Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
with a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxx
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
If to CAI or RBC: Xxxx, Xxxx & Co.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Attn.: Xxxxxxx Xxxxxxx
with a copy to: Xxxxxx X. Xxxxx , Esq.
Pitney Xxxxxx Xxxx & Xxxxx
By Mail:
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Delivery:
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
10. Amendment; Waiver. This Agreement may be amended and any right or
claim hereunder waived, only by a written instrument signed by Executive, CAI
and RBC. Nothing in this Agreement, express or implied, is intended to confer
upon any third person any rights or remedies under or by reason of this
Agreement. No amendment or waiver of this Agreement requires the consent of any
individual or entity not a party to this Agreement.
11. Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of New Jersey, without giving
effect to any choice of law or conflict provision or rule (whether of the State
of New Jersey or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of New Jersey to be applied. In furtherance of
the foregoing, the internal law of the State of New Jersey will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
12. Arbitration. Any controversy or claim, directly or indirectly,
arising out of or relating to this Agreement, will be submitted to and settled
by arbitration conducted in Morristown, New Jersey in accordance with the rules
and procedures then existing under the Commercial Arbitration Rules of the
American Arbitration Association, provided that notwithstanding anything to the
contrary contained in such Rules: (a) a panel of three arbitrators will be used,
with one arbitrator chosen by CAI and RBC, one arbitrator chosen by Executive
and the third arbitrator chosen by the other two arbitrators; (b) the decision
in writing of a majority of the arbitrators on the panel will be final,
conclusive, and binding on all parties hereto who had notice of such arbitration
and an opportunity to participate therein, whether or not such party so
participated; and (c) the arbitrators will not award any punitive damages except
in the case of intentional fraud. The determination of the panel of arbitrators
will be final, binding and nonappealable, except that any determination that
there has been intentional fraud, and any award of punitive damages, will be
appealable in any court having jurisdiction. Judgment upon any binding decision
rendered by such panel may be entered in any court having jurisdiction. Any and
all reasonable travel expenses incurred by Executive in connection with such
arbitration will be reimbursed by CAI and RBC. The Parties intend that the
arbitrators use reasonable efforts to limit the nature, scope and timing of any
discovery which they permit in connection with any arbitration so that neither
the duration nor the expense of the arbitration will be unduly burdensome on any
party. Notwithstanding the foregoing, any determination of the arbitrators with
respect to discovery will be binding on the parties.
13. Headings. The headings used in this Agreement are for the purpose
of reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
14. Assignment; Successors and Assigns. Neither this Agreement nor any
rights or obligations hereunder may be assigned by one party without the consent
of the others, except that (i) this Agreement shall be binding upon and inure to
the benefit of any successor or successors of CAI or RBC, whether by merger,
consolidation, sale of assets or otherwise, and reference herein to CAI and RBC
shall be deemed to include any such successor or successors, and (ii) this
Agreement is freely assignable by either CAI or RBC to any corporation or entity
controlling, controlled by, or under common control with, RBC.
15. Guarantee of Payment by RBC. RBC hereby agrees to guarantee all
payments due hereunder from CAI to Executive.
16. Counterparts; Facsimile Signatures. The parties may execute this
Agreement in separate counterparts (no one of which need contain the signatures
of all parties), each of which will be an original and all of which together
will constitute one and the same instrument. A facsimile, telecopy or photocopy
of an original signature of the any party appearing on this Agreement will be
valid and binding on such Party as if it were an original signature; provided,
that at the request of any party, all parties will exchange counterparts of this
Agreement which contain original signatures; and provided, further, that failure
to exchange original signatures will not in any way affect the validity and
binding nature of the facsimile, telecopy or photocopy of the original
signatures.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
XXXXX X. XXXXX:
-----------------------------------------
CUMBERLAND ADVISORS, INC.
By:--------------------------------------
Name:
Title:
XXXX XXXX & CO., INC.
By:--------------------------------------
Name:
Title:
Schedule 1 - Other activities which may be engaged in during the term of the
Agreement Schedule 2 - Specific exceptions to non-solicit and non-compete
covenants Schedule 3 - Terms and conditions of registration rights Schedule 4 -
Benefits and plans
Xxxxx X. Xxxxx
Employment Agreement
Schedule 1
Xxxxxx Sewage Authority - part-time staff advisor
Kotok Building Corp. - President - family business which owns and manages
commercial real estate in Vineland, New Jersey
Cumbernet News - Director and part owner - developing Internet newspaper
Cumberland News - weekly columnist
Various publishers - occasional contributor
Xxxxx X. Xxxxx
Employment Agreement
Schedule 2
Partner Contracts
List of Family-Related Accounts
Pearl C. & Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxx Xxxxx
Xxxxx Xxxxx c/f Xxxxxxxx
Xxxxx Xxxx Xxxxx
Xxxxx X. Xxxxx - XXX
Xxxxxx Xxxxx - XXX
Xxxxx X. Xxxxx
Xxxxx Building Corp.
Xxxxx Xxxxxx
EXHIBIT F-1
SECOND KOTOK EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
February 28, 1998, by and among Xxxxx X. Xxxxx ("Executive"), Xxxx, Xxxx & Co.,
Inc., a New Jersey corporation ("RBC"), and Cumberland Advisors, Inc. a New
Jersey corporation and wholly-owned subsidiary of RBC ("CAI").
1. CAI was formed by RBC to acquire by merger Cumberland Advisors, a
New Jersey general partnership ("Old CAI") pursuant to the Merger Agreement (the
"Merger Agreement") dated as of February 9, 1998, by and among Executive,
Xxxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxxx (the "Sellers"), RBC, CAI and Old
CAI.
2. Pursuant to the Merger Agreement, Executive has contributed to CAI
the business (the "Consulting Business") formerly currently conducted by
Cumberland Consulting, a sole proprietorship owned by Executive ("Consulting")
and is entering into this Agreement.
3. Capitalized terms used but not otherwise defined herein shall have
the same meaning as set forth in the employment agreement between the parties
hereto relating to the businesses of CAI other than the Consulting Business (the
"Primary Agreement"), and if such terms are not defined therein, then the
meanings set forth in the Merger Agreement.
Accordingly, the parties agree as follows:
1. Operation of Consulting Business. CAI intends to operate the
Consulting Business as a division of CAI. CAI shall keep its books and records
so that the financial results of the Consulting Business can be determined as
though it were a stand-alone business, and the revenues (or losses, if any) of
either the IA Business or the MMB Business shall not be counted in determining
the revenues (or losses, if any) of the Consulting Business for purposes of the
calculations called for by this Agreement.
2. Employment; Duties. CAI shall employ Executive hereunder during the
term of employment set forth in the Primary Agreement. A termination of the
Primary Agreement shall be deemed a termination of this Agreement. Executive
shall have no additional title than the title he is given pursuant to the
Primary Agreement. Executive shall be responsible for the day-to-day management
and operations of the Consulting Business. Executive accepts such employment and
agrees to perform all such services faithfully and diligently, and to discharge
the responsibilities thereof to the best of his ability.
3. Bonus Payment. Except as set forth below, Executive shall receive no
compensation or benefits hereunder, but shall be compensated solely pursuant to
the Primary Agreement. CAI shall pay to Executive a payment (a "Bonus Payment")
equal to 35% of the Consulting Revenues during the Year for which the Bonus is
payable. The term "Consulting Revenues" means the revenues derived by CAI from
the Consulting Business, less the expenses of CAI attributable to the Consulting
Business, in each case as determined in good faith by Executive, with such
determination subject to review and revision by the Board of Directors of CAI.
If Executive's employment with CAI is terminated (for any reason other than
voluntary resignation or termination for cause) prior to the end of the Year for
which the Bonus is payable, Executive's Bonus Payment for such Year will be
equal to 35% of the Consulting Revenues attributed to Executive during the
(partial) Year for which the Bonus is payable. In the event of voluntary
resignation or termination for "cause" (as defined in Section 4.4 of the Primary
Agreement), Executive shall receive no Bonus Payment with respect to the Year in
which the termination occurs. All Bonus Payments hereunder, whether during or
after Executive's employment hereunder, shall be paid in accordance with the
provisions regarding timing of bonus payments set forth in the Primary
Agreement.
4. Entire Agreement. Except as otherwise provided in this Agreement and
the Primary Agreement, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
whether written or oral are superseded by this Agreement. Specifically,
Executive acknowledges that no commitment has been made by RBC or CAI to him
with respect to any employment beyond the term of this Agreement (whether ending
by lapse of time or earlier termination pursuant to its terms) or with respect
to any benefits not expressly set forth in this Agreement.
5. Miscellaneous. Sections 9 through 15 of the Primary Agreement are
incorporated by reference herein as though reproduced herein in full, with the
term "Agreement" used therein referring to this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
XXXXX X. XXXXX:
-------------------------------------------
CUMBERLAND ADVISORS, INC.
By:----------------------------------------
Name:
Title:
XXXX XXXX & CO., INC.
By:----------------------------------------
Name:
Title:
EXHIBIT G
XXXXXXXXX EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
February 28, 1998, by and among Xxxxxxx X. Xxxxxxxxx ("Executive"), Xxxx, Xxxx &
Co., Inc., a New Jersey corporation ("RBC"), and Cumberland Advisors, Inc. a New
Jersey corporation and wholly-owned subsidiary of RBC ("CAI").
1. CAI was formed by RBC to acquire by merger Cumberland Advisors, a
New Jersey general partnership ("Old CAI") pursuant to the Merger Agreement (the
"Merger Agreement") dated as of February 9, 1998, by and among Executive, Xxxxx
X. Xxxxx and Xxxxxxx X. Xxxxxxxx (the "Sellers"), RBC, CAI and Old CAI.
2. Through the date hereof, Executive has been a partner of Old CAI.
3. CAI wishes to assure itself of the continued services of Executive,
upon the terms and conditions set forth in this Agreement, and Executive is
willing to accept such employment and enjoy the benefits provided by this
Agreement.
4. Capitalized terms used but not otherwise defined herein shall have
the same meaning as set forth in the Merger Agreement.
Accordingly, the parties agree as follows:
1. Employment, Title, Duties and Term.
1.1 Employment; Title; Duties. Subject to the terms and conditions of
this Agreement, CAI agrees to employ Executive during the term of employment set
forth in Section 1.2 below. Executive shall serve as Senior Vice President of
CAI and shall have such powers and perform such duties, consistent with such
executive capacity, as may be assigned or delegated to her from time to time by
the President or by the Board of Directors of CAI (the "Board of Directors").
Executive shall not be entitled to receive any fees or other compensation in
addition to the compensation specifically set forth herein for serving as a
director, board committee member or officer of CAI, RBC or any of their
respective subsidiaries or affiliates. Executive accepts such employment and
agrees to perform all such services faithfully and diligently, and to discharge
the responsibilities thereof to the best of her ability. Executive shall devote
her full business time and attention and energies to the duties of her
employment, provided, that Executive may engage in one or more of the activities
described in Schedule 1 hereto during her term of employment hereunder.
Notwithstanding the foregoing, RBC and Executive may, by mutual agreement,
arrange for Executive to perform consulting or other services for entities other
than CAI in exchange for compensation other than that provided for hereunder.
1.2 Term. The term of employment of Executive under this Agreement (the
"Employment Period") shall begin on the first day of Year 1 and end on the last
day of Year 3, unless otherwise terminated in accordance with the provisions set
forth in Section 4 below. (A "Year" (when the term is capitalized) will have the
meaning given to it in the Merger Agreement.) Near the end of Year 3, the
parties will negotiate in good faith with respect to extending the term for a
fourth and fifth Year.
2. Base Salary. In consideration for the services to be rendered
hereunder, and subject to the terms and conditions of this Agreement, CAI will
pay Executive, in accordance with its normal practices, a Base Salary for each
Year (the "Base Salary"), which shall be $168,000 for Year 1. The Base Salary
will be readjusted following Year 1 so that for each successive Year the Base
Salary will equal $600,000 multiplied by a fraction the numerator of which is
the amount of IA Revenues attributed to Executive for the prior Year and the
denominator is the amount of IA Revenues attributable to the three Principals
(including Executive) for the prior Year. (In each instance in this Agreement
when a determination must be made as to the attribution of a percentage of IA
Revenues to Executive, such attribution shall be made by the Board of Directors
of CAI; provided, that the Board of Directors shall abide by any unanimous
agreement of the Sellers (or their respective estates) as to such attribution,
which agreement is evidenced by a writing signed by all Sellers (or their
respective estates) and delivered to the Board of Directors of RBC.)
3. Bonus Payment and Other Benefits.
3.1 Bonus Payment. In addition to the Base Salary provided for in
Section 2 above, CAI will pay to Executive, in accordance with its normal bonus
payment schedule (but in any event no later than 90 days after the Year for
which the Bonus is payable), a payment (a "Bonus Payment") equal to 35% of the
IA Revenues attributed to Executive above $476,000 (if any) during the Year for
which the Bonus is payable. If Executive's employment with CAI is terminated
(for any reason other than voluntary resignation or termination for cause) prior
to the end of the Year for which the Bonus is payable, Executive's Bonus Payment
for such Year will be equal to 35% of the IA Revenues attributed to Executive
above {$476,000 multiplied by a fraction, the numerator of which is the number
of days Executive was employed in such Year and the denominator of which is 365}
(if any) during the Year for which the Bonus is payable. In the event of
voluntary resignation or termination for "cause" (as defined in Section 4.4
hereof), Executive shall receive no Bonus Payment with respect to the Year in
which the termination occurs. Any Bonus Payment with respect to any Year in
which Executive's employment with CAI terminates and which Executive is entitled
to receive under this Section shall be paid in full in cash at the earlier of
(a) 90 days after such Year ends or (b) the same time that the remaining senior
executives of CAI receive their bonus payments with respect to such Year.
3.2 Other Benefits. During the Employment Period, Executive shall be
entitled to additional benefits (and participation in plans or policies) as
described on Schedule 4 hereto, which schedule also sets forth Executive's dates
of service for purposes the plans listed thereon.
3.3 Reasonable Business Expenses. Executive is expected and is
authorized to incur reasonable expenses in the performance of her duties
hereunder, including such expenses for the promotion of the business of CAI and
RBC as entertainment, travel, and similar business expenses incurred in the
performance of her duties as allowed in RBC's Expense Policy. CAI shall
reimburse the Executive for all such expenses promptly upon periodic
presentation by Executive of an itemized account with documentation of such
expenses.
3.4 Vacation. Executive shall be entitled to annual vacation (without
deduction of salary or other compensation) in accordance with RBC's vacation
policy for employees in effect from time to time, but in no event less than four
weeks, such vacation to be taken at such time or times during such Year as may
reasonably be mutually agreed upon between the Executive and the Board of
Directors.
3.5 Directors' and Officers' Insurance. Executive shall be entitled to
coverage under any directors' and officers' insurance policy which RBC provides
for its own directors and officers.
4. Termination of Employment.
4.1 Death or Permanent Disability of Executive. Executive's employment
hereunder shall terminate upon her death. In addition, CAI shall have the right
to terminate Executive's employment hereunder if and when Executive becomes
permanently disabled within the meaning of any permanent disability insurance
policy which may be maintained by CAI or RBC for the benefit of Executive and
under which the Executive is entitled to benefits.
4.2 Termination Without Cause Or Termination by Voluntary Resignation
with Good Reason. CAI, by written notice to Executive at any time, shall also
have the right to terminate Executive's employment without cause for any reason,
subject to Section 4.6. If CAI assigns Executive to a primary office located
outside of Vineland New Jersey, and does so despite Executive's written
objection which is delivered to RBC and to the Board of Directors within ten
days of Executive's being informed of such assignment and which written
objection is not subsequently withdrawn, this shall be deemed "Good Reason" for
Executive to resign hereunder and any resignation by Executive within six months
after such written objection is delivered shall have the same effect as a
termination of Executive by CAI without cause under this Section 4.2.
4.3 Termination by Voluntary Resignation without Good Reason. The
parties agree that Executive has the right to resign voluntarily and that such
resignation shall not constitute a breach of this agreement.
4.4 Termination for Cause. CAI, by written notice to Executive,
specifying in reasonable detail the reasons therefor authorized by the Board of
Directors, may terminate Executive's employment for "cause". The term "cause"
shall include any of the following: (i) gross negligence, (ii) gross
insubordination, (iii) material violations of any regulatory compliance rules,
(iv) failure to diligently perform the duties of Executive specified hereunder
or specified by the Board of Directors, (v) misappropriation by Executive of
funds or property of any RBC Affiliate, (vi) any breach of any provision of
Section 5 or Section 6 of this Agreement; (vii) a felony conviction of
Executive, or (viii) failure of Executive to have all licenses and permits
necessary to act as an investment adviser. CAI shall not terminate Executive's
employment for "cause" under clauses (i), (ii), (iii) or (iv) above without
first giving the Executive written notice and a reasonable opportunity to take
corrective action; provided, that in no event will CAI be obligated to give the
Executive more than 30 days to take corrective action.
4.5 Compensation and Benefits Upon Death or Permanent Disability. In
the event of termination of Executive's employment pursuant to Section 4.1, CAI
shall pay to Executive (i) the unpaid salary and vacation earned by her before
the date of termination as provided for in this Agreement, computed pro rata up
to and including such date; and (ii) Executive's Bonus Payment calculated in
accordance with Section 3.1 above for the Year in which such termination occurs,
in lieu of any and all other compensation, benefits and claims of any kind,
excepting only such additional amounts as may be provided for under the express
terms of any applicable benefit plans or as may be required by law to be paid.
4.6 Compensation and Benefits Upon Termination without Cause or
Termination by Voluntary Resignation with Good Reason. In the event of
termination of Executive's employment pursuant to Section 4.2: (a) if the RBC
Common Stock which the Executive received in connection with the Merger
Agreement is not then freely tradeable by Executive without registration under
the Securities Act, then RBC shall provide Executive with the right (exercisable
for a period of five years) to demand registration of all, but not less than
all, the shares of RBC Common Stock which are not at the time of demand subject
to forfeiture pursuant to the Merger Agreement, on the terms and conditions set
forth on Schedule 3 hereto; and (b) CAI shall pay to Executive (i) the unpaid
salary and vacation earned by her before the date of termination as provided for
in this Agreement, computed pro rata up to and including such date; and (ii)
Executive's Bonus Payment calculated in accordance with Section 3.1 above for
the Year in which such termination occurs, in lieu of any and all other
compensation, benefits and claims of any kind, excepting only such additional
amounts as may be provided for under the express terms of any applicable benefit
plans or as may be required by law to be paid.
4.7 Compensation and Benefits Upon Voluntary Resignation without Good
Reason or Termination for Cause. In the event of termination of Executive's
employment pursuant to Sections 4.3 or 4.4, CAI shall pay to Executive the
unpaid salary and vacation earned by her before the date of termination as
provided for in this Agreement, computed pro rata up to and including such date,
in lieu of any and all other compensation, benefits and claims of any kind,
excepting only such additional amounts as may be provided for under the express
terms of any applicable benefit plans or as may be required by law to be paid.
4.8 Payments after Termination or Resignation. In the event that
Executive's employment with CAI terminates for any reason, any Bonus Payment
which Executive is entitled to receive pursuant to either Section 4.5 or 4.6
with respect to the Year in which Executive's employment with CAI terminates
shall be paid in full in cash at the earlier of (a) 90 days after such Year ends
or (b) the same time that the remaining senior executives of CAI receive their
bonus payments with respect to such Year. All other payments which Executive is
entitled to receive pursuant to either Section 4.5, 4.6 or 4.7 shall be made
within 45 days after the date of termination or resignation.
5. Confidential Information. During the term of employment under this
Agreement, Executive will have access to and become acquainted with confidential
proprietary information of CAI, including without limitation, compilations of
information and records (including client information and records), owned by CAI
(collectively, "Confidential Information"). Executive shall not, directly or
indirectly, disclose to any other person or entity or use for the benefit of any
other person or entity, any of CAI's Confidential Information (including without
limitation any client lists or other confidential information relating to CAI's
business), either during the term of this Agreement or at any time thereafter,
except as required in the course of his employment by CAI. In furtherance and
not in limitation of the foregoing, during the term of employment under this
Agreement, Executive will abide by all policies and procedures of CAI regarding
use of confidential information. All files, records, documents, equipment and
similar items relating to the business of CAI, whether prepared by Executive or
otherwise coming into her possession, shall remain the exclusive property of
CAI, and if removed from the premises of CAI shall be immediately returned to
CAI upon any termination of her employment. In this Section 5, the term "CAI"
shall include any firm or corporation directly or indirectly controlling or
controlled by CAI or under common control with CAI.
6. Agreement Not to Solicit or Compete.
6.1 Nonsolicitation and Noncompetition. Except as specifically provided
on Schedule 2 hereto, and subject to the following sentence, Executive will not,
individually or through an agent, for herself or on behalf of another, as an
employee, director, owner, partner, sole proprietor, consultant, agent,
representative, shareholder, or in any other manner or capacity whatsoever,
during the Non-Compete Period (as defined below): (a) solicit or induce any
clients of CAI to terminate or reduce their respective relationships with RBC or
CAI, (b) accept any Business from any clients of CAI, or enter into a Business
relationship with any such clients unless (i) Executive continues to be employed
by CAI during the Non-Compete Period; and (ii) all compensation from such
clients during the Non-Compete Period shall accrue to CAI; (c) solicit any
person then employed by CAI to terminate such employment; or (d) permit
Executive's name to be used by or participate (other than through ownership of
less than five percent of the stock of a publicly-held corporation whose stock
is traded on a national securities exchange or on NASDAQ) in any business or
enterprise which is competitive with the Business (as determined on the date of
this Agreement and the Closing Date) and which is located in the United States.
Notwithstanding the foregoing, the restrictions in clauses (a), (b) and (d) of
the preceding sentence shall not apply after the earlier to occur of (i) the
fifth anniversary of the Closing Date or (ii) the termination of Executive's
employment by CAI without cause or by voluntary resignation with Good Reason.
Any written notice or oral presentation made jointly by CAI and the Executive
during the Non-Compete Period shall not be deemed to violate any provision of
this Section 6.1. In this Section 6.1 the term "Non-Compete Period" means the
period beginning on the date hereof and ending on the later to occur of (x) the
fifth anniversary of the Closing Date or (y) the second anniversary of the
termination (for any reason) of Executive's employment with the RBC Affiliates;
provided, however, that if at the end of Year 3 Executive is employed hereunder
and RBC has not offered to extend this Agreement for Year 4 and Year 5 on terms
substantially as favorable to Executive as the terms herein, then the
Non-Compete Period shall end at the end of Year 3. In this Section 6.1 the term
"Business" means the IA Business. In this Section 6.1 the term "CAI" shall
include CAI, any successor in interest to the business of CAI, and any firm or
corporation directly or indirectly controlling or controlled by CAI (or such
successor in interest) or under common control with CAI (or such successor in
interest) and engaged in the investment management or investment advisory
business. Executive agrees that the covenants set forth in this Section 6.1 are
reasonable with respect to duration, geographical area and scope.
6.2 Independent Covenants. The covenants of Executive set forth in this
Section 6 shall be construed as independent covenants and the existence of any
claim, demand, action, or cause of action of Executive against CAI or any other
RBC Affiliate, whether predicated upon this Agreement or otherwise, other than
the failure of RBC to pay amounts due and owing to Executive hereunder or under
the Merger Agreement for a period of 30 days following written notice from
Executive to RBC specifying such amounts due and specifically referring to this
Section 6.2, shall not constitute a defense to the enforcement by CAI or RBC of
any of the covenants contained in this Section 6.
6.3 Severability. In the event that any of the subsections of this
Section 6 shall be deemed by any court of competent jurisdiction to be in
violation of applicable law for any reason whatsoever, then any such subsection
or subsections shall not be deemed to be void, but shall be deemed to be
automatically amended so as to comply with applicable law. In the event that any
of the subsections of this Section 6 shall be deemed by any court of competent
jurisdiction to be wholly or partially invalid, such determination shall not
affect the binding effect of the other subsections of this Section 6 or of any
of the other provisions of this Agreement.
7, Injunctive Relief Executive acknowledges that the damage to CAI
resulting from a breach of the obligations of trust and confidence set forth in
Sections 5 and 6 hereof may cause irreparable injury to CAI, and Executive
hereby agrees and consents to the entry of an injunction by any court of
competent jurisdiction, enjoining her from violating any term or terms of this
Agreement, and such injunctive relief may be granted without the necessity of
proving actual damages. Such injunctive relief, however, shall be in addition to
any other remedies provided by law, in equity or otherwise, to CAI.
8. Entire Agreement. Except as otherwise provided in this Agreement,
this Agreement sets forth the entire understanding of the parties relating to
the subject matter hereof, and all prior understandings, whether written or oral
are superseded by this Agreement. Specifically, Executive acknowledges that no
commitment has been made by RBC or CAI to her with respect to any employment
beyond the term of this Agreement (whether ending by lapse of time or earlier
termination pursuant to its terms) or with respect to any benefits not expressly
set forth in this Agreement.
9. Notices. All demands, notices and communications provided for in
this Agreement will be in writing and will be either personally delivered,
mailed by first class mail (postage prepaid) or sent by reputable overnight
courier service (delivery charges prepaid) to any party at the address specified
below, or at such address, to the attention of such other person, and with such
other copy, as the recipient party has specified by prior written notice to the
sending party pursuant to the provisions of this Section 9. Any such demand,
notice, communication or report will be deemed to have been given pursuant to
this Agreement when delivered personally, on the third business day after
deposit in the U.S. mail or on the business day after deposit with a reputable
overnight courier service, as the case may be.
If to Executive: Xxxxxxx X. Xxxxxxxxx
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Tel.: (000) 000-0000 or
Tel.: (000) 000-0000
Fax: (000) 000-0000
and to Xxxxxxx X. Xxxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
with a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxx
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
If to CAI or RBC: Xxxx, Xxxx & Co.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Attn.: Xxxxxxx Xxxxxxx
with a copy to: Xxxxxx X. Xxxxx , Esq.
Pitney Xxxxxx Xxxx & Xxxxx
By Mail:
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Delivery:
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
10. Amendment; Waiver. This Agreement may be amended and any right or
claim hereunder waived, only by a written instrument signed by Executive, CAI
and RBC. Nothing in this Agreement, express or implied, is intended to confer
upon any third person any rights or remedies under or by reason of this
Agreement. No amendment or waiver of this Agreement requires the consent of any
individual or entity not a party to this Agreement.
11. Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of New Jersey, without giving
effect to any choice of law or conflict provision or rule (whether of the State
of New Jersey or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of New Jersey to be applied. In furtherance of
the foregoing, the internal law of the State of New Jersey will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
12. Arbitration. Any controversy or claim, directly or indirectly,
arising out of or relating to this Agreement, will be submitted to and settled
by arbitration conducted in Morristown, New Jersey in accordance with the rules
and procedures then existing under the Commercial Arbitration Rules of the
American Arbitration Association, provided that notwithstanding anything to the
contrary contained in such Rules: (a) a panel of three arbitrators will be used,
with one arbitrator chosen by CAI and RBC, one arbitrator chosen by Executive
and the third arbitrator chosen by the other two arbitrators; (b) the decision
in writing of a majority of the arbitrators on the panel will be final,
conclusive, and binding on all parties hereto who had notice of such arbitration
and an opportunity to participate therein, whether or not such party so
participated; and (c) the arbitrators will not award any punitive damages except
in the case of intentional fraud. The determination of the panel of arbitrators
will be final, binding and nonappealable, except that any determination that
there has been intentional fraud, and any award of punitive damages, will be
appealable in any court having jurisdiction. Judgment upon any binding decision
rendered by such panel may be entered in any court having jurisdiction. Any and
all reasonable travel expenses incurred by Executive in connection with such
arbitration will be reimbursed by CAI and RBC. The Parties intend that the
arbitrators use reasonable efforts to limit the nature, scope and timing of any
discovery which they permit in connection with any arbitration so that neither
the duration nor the expense of the arbitration will be unduly burdensome on any
party. Notwithstanding the foregoing, any determination of the arbitrators with
respect to discovery will be binding on the parties.
13. Headings. The headings used in this Agreement are for the purpose
of reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
14. Assignment; Successors and Assigns. Neither this Agreement nor any
rights or obligations hereunder may be assigned by one party without the consent
of the others, except that (i) this Agreement shall be binding upon and inure to
the benefit of any successor or successors of CAI or RBC, whether by merger,
consolidation, sale of assets or otherwise, and reference herein to CAI and RBC
shall be deemed to include any such successor or successors, and (ii) this
Agreement is freely assignable by either CAI or RBC to any corporation or entity
controlling, controlled by, or under common control with, RBC.
15. Guarantee of Payment by RBC. RBC hereby agrees to guarantee all
payments due hereunder from CAI to Executive.
16. Counterparts; Facsimile Signatures. The parties may execute this
Agreement in separate counterparts (no one of which need contain the signatures
of all parties), each of which will be an original and all of which together
will constitute one and the same instrument. A facsimile, telecopy or photocopy
of an original signature of the any party appearing on this Agreement will be
valid and binding on such Party as if it were an original signature; provided,
that at the request of any party, all parties will exchange counterparts of this
Agreement which contain original signatures; and provided, further, that failure
to exchange original signatures will not in any way affect the validity and
binding nature of the facsimile, telecopy or photocopy of the original
signatures.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
XXXXXXX X. XXXXXXXXX:
------------------------------------------
CUMBERLAND ADVISORS, INC.
By:---------------------------------------
Name:
Title:
XXXX XXXX & CO., INC.
By:---------------------------------------
Name:
Title:
Schedule 1 - Other activities which may be engaged in during the term of the
Agreement Schedule 2 - Specific exceptions to non-solicit and non-compete
covenants Schedule 3 - Terms and conditions of registration rights Schedule 4 -
Benefits and plans
Xxxxxxx X. Xxxxxxxxx
Employment Agreement
Schedule 1
None.
Xxxxxxx X. Xxxxxxxxx
Employment Agreement
Schedule 2
Partner Contracts
List of Family-Related Accounts
Xxxxxxx X. Xxxxxxxxx - XXX
Xxxxxxx X. Xxxxxxxxx
Xxxxxxxx X. Xxxxxxxxx
Xxxx X. Xxxx
EXHIBIT H
XXXXXXXX CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of
February 28, 1998, by and among Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx"), Xxxx, Xxxx &
Co., Inc., a New Jersey corporation ("RBC"), and Cumberland Advisors, Inc. a New
Jersey corporation and wholly-owned subsidiary of RBC ("CAI").
1. CAI was formed by RBC to acquire by merger Cumberland Advisors, a
New Jersey general partnership ("Old CAI") pursuant to the Merger Agreement (the
"Merger Agreement") dated as of February 9, 1998, by and among Xxxxxxxx, Xxxxxxx
X. Xxxxxxxxx and Xxxxx X. Xxxxx (the "Sellers"), RBC, CAI and Old CAI.
2. Through the date hereof, Xxxxxxxx has been a partner of Old CAI.
3. CAI wishes to assure itself of the services of Xxxxxxxx as a
consultant, upon the terms and conditions set forth in this Agreement, and
Xxxxxxxx is willing to provide such services and enjoy the benefits provided by
this Agreement.
4. Capitalized terms used but not otherwise defined herein shall have
the same meaning as set forth in the Merger Agreement.
Accordingly, the parties agree as follows:
1. Consulting Duties and Term.
1.1 Consulting Duties. Subject to the terms and conditions of this
Agreement, CAI shall have the services of Xxxxxxxx as a consultant during the
term set forth in Section 1.2 below. The parties acknowledge and agree that in
performing services hereunder, Xxxxxxxx is and shall be treated as an
independent contractor. Xxxxxxxx shall serve as a consultant to CAI and shall
provide such consulting services and have such powers, consistent with his
consulting capacity, as may be assigned to him from time to time by the
President or the Board of Directors of CAI (the "Board of Directors"). Xxxxxxxx
agrees to perform all such services faithfully and diligently, and to discharge
the responsibilities thereof to the best of his ability. Xxxxxxxx is not
required to devote his full business time and attention and energies to the
duties of his consultancy, it being understood that Xxxxxxxx will be engaging in
one or more of the activities described in Schedule 1 hereto during the term of
his consultancy for CAI. Notwithstanding the foregoing, RBC and Xxxxxxxx may, by
mutual agreement, arrange for Xxxxxxxx to perform consulting or other services
for entities other than CAI in exchange for compensation other than that
provided for hereunder.
1.2 Term. The term of this Agreement (the "Consulting Period") shall
begin on the first day of Year 1 and end on the last day of Year 3, unless
otherwise terminated in accordance with the provisions set forth in Section 4
below. (A "Year" (when the term is capitalized) will have the meaning given to
it in the Merger Agreement.) Near the end of Year 3, the parties will negotiate
in good faith with respect to extending the term for a fourth and fifth Year.
2. Base Compensation. In consideration for the services to be rendered
hereunder, and subject to the terms and conditions of this Agreement, CAI will
pay Xxxxxxxx a Base Compensation for each Year (the "Base Compensation"), which
shall be $132,000 for Year 1. The Base Compensation will be readjusted following
Year 1 so that for each successive Year the Base Compensation will equal
$600,000 multiplied by a fraction the numerator of which is the amount of IA
Revenues attributed to Xxxxxxxx for the prior Year and the denominator is the
amount of IA Revenues attributable to the three Principals (including Xxxxxxxx)
for the prior Year. (In each instance in this Agreement when a determination
must be made as to the attribution of a percentage of IA Revenues to Xxxxxxxx,
such attribution shall be made by the Board of Directors of CAI; provided, that
the Board of Directors shall abide by any unanimous agreement of the Sellers (or
their respective estates) as to such attribution, which agreement is evidenced
by a writing signed by all Sellers (or their respective estates) and delivered
to the Board of Directors of RBC.)
3. Bonus Payment and Business Expenses.
3.1 Bonus Payment. In addition to the Base Compensation provided for in
Section 2 above, CAI will pay to Xxxxxxxx, in accordance with its normal
schedule for payment of bonuses to its senior executives (but in any event no
later than 90 days after the Year for which the Bonus is payable), an annual
payment (a "Bonus Payment") equal to 35% of the IA Revenues attributed to
Xxxxxxxx above $374,000 (if any) during the Year for which the Bonus is payable.
If Xxxxxxxx'x consultancy with CAI is terminated (for any reason other than
including voluntary resignation or termination for cause) prior to the end of
the Year for which the Bonus is payable, Xxxxxxxx'x Bonus Payment for such Year
will be equal to 35% of the IA Revenues attributed to Xxxxxxxx above {374,000
multiplied by a fraction, the numerator of which is the number of days Xxxxxxxx
was a consultant hereunder in such Year and the denominator of which is 365} (if
any) during the Year for which the Bonus is payable. In the event of voluntary
resignation or termination for "cause" (as defined in Section 4.4 hereof),
Xxxxxxxx shall receive no Bonus Payment with respect to the Year in which the
termination occurs. Any Bonus Payment with respect to any Year in which
Xxxxxxxx'x consultancy with CAI terminates and which Xxxxxxxx is entitled to
receive under this Section shall be paid in full in cash at the earlier of (a)
90 days after such Year ends or (b) the same time that the senior executives of
CAI receive their bonus payments with respect to such period.
3.2 Reasonable Business Expenses. Xxxxxxxx is expected and is
authorized to incur reasonable expenses in the performance of his consulting
duties hereunder, including such expenses for the promotion of the business of
CAI and RBC as entertainment, travel, and similar business expenses incurred in
the performance of his consulting duties as allowed in RBC's Expense Policy. CAI
shall reimburse Xxxxxxxx for all such expenses promptly upon periodic
presentation by Xxxxxxxx of an itemized account with documentation of such
expenses.
4. Termination of Consultancy.
4.1 Death or Permanent Disability of Xxxxxxxx. Xxxxxxxx'x consultancy
hereunder shall terminate upon his death. In addition, CAI shall have the right
to terminate Xxxxxxxx'x consultancy hereunder if and when Xxxxxxxx becomes
permanently disabled within the meaning of any permanent disability insurance
policy which may be maintained by CAI or RBC for the benefit of its senior
executives.
4.2 Termination Without Cause. CAI, by written notice to Xxxxxxxx at
any time, shall also have the right to terminate Xxxxxxxx'x consultancy without
cause for any reason, subject to Section 4.6.
4.3 Termination by Voluntary Resignation. The parties agree that
Xxxxxxxx has the right to resign as a consultant hereunder voluntarily and that
such resignation shall not constitute a breach of this agreement.
4.4 Termination for Cause. CAI, by written notice to Xxxxxxxx,
specifying in reasonable detail the reasons therefor authorized by the Board of
Directors, may terminate Xxxxxxxx'x consultancy for "cause". The term "cause"
shall include any of the following: (i) gross negligence, (ii) gross
insubordination, (iii) material violations of any regulatory compliance rules,
(iv) failure to diligently perform the duties of Xxxxxxxx specified hereunder or
specified by the Board of Directors, (v) misappropriation by Xxxxxxxx of funds
or property of any RBC Affiliate, (vi) any breach of any provision of Section 5
or Section 6 of this Agreement; or (vii) a felony conviction of Xxxxxxxx. CAI
shall not terminate Xxxxxxxx'x consultancy for "cause" under clauses (i), (ii),
(iii) or (iv) above without first giving Xxxxxxxx written notice and a
reasonable opportunity to take corrective action; provided, that in no event
will CAI be obligated to give Xxxxxxxx more than 30 days to take corrective
action.
4.5 Compensation and Benefits Upon Death or Permanent Disability. In
the event of termination of Xxxxxxxx'x consultancy pursuant to Section 4.1, CAI
shall pay to Xxxxxxxx (i) the unpaid compensation earned by him before the date
of termination as provided for in this Agreement, computed pro rata up to and
including such date; and (ii) Xxxxxxxx'x Bonus Payment calculated in accordance
with Section 3.1 above for the Year in which such termination occurs, in lieu of
any and all other compensation, benefits and claims of any kind, excepting only
such additional amounts as may be required by law to be paid.
4.6 Compensation and Benefits Upon Termination without Cause. In the
event of termination of Xxxxxxxx'x consultancy pursuant to Section 4.2: (a) if
the RBC Common Stock which Xxxxxxxx received in connection with the Merger
Agreement is not then freely tradeable by Xxxxxxxx without registration under
the Securities Act, then RBC shall provide Xxxxxxxx with the right (exercisable
for a period of five years) to demand registration of all, but not less than
all, the shares of RBC Common Stock which are not at the time of demand subject
to forfeiture pursuant to the Merger Agreement, on the terms and conditions set
forth on Schedule 3 hereto; and (b) CAI shall pay to Xxxxxxxx (i) the unpaid
compensation earned by him before the date of termination as provided for in
this Agreement, computed pro rata up to and including such date; and (ii)
Xxxxxxxx'x Bonus Payment calculated in accordance with Section 3.1 above for the
Year in which such termination occurs, in lieu of any and all other
compensation, benefits and claims of any kind, excepting only such additional
amounts as may be required by law to be paid.
4.7 Compensation and Benefits Upon Voluntary Resignation or Termination
for Cause. In the event of termination of Xxxxxxxx'x consultancy pursuant to
Sections 4.3 or 4.4, CAI shall pay to Xxxxxxxx the unpaid compensation earned by
him before the date of termination as provided for in this Agreement, computed
pro rata up to and including such date, in lieu of any and all other
compensation, benefits and claims of any kind, excepting only such additional
amounts as may be required by law to be paid.
4.8 Payments after Termination or Resignation. In the event that
Xxxxxxxx'x consultancy with CAI terminates for any reason, any Bonus Payment
which Xxxxxxxx is entitled to receive pursuant to either Section 4.5 or 4.6 with
respect to the Year in which Xxxxxxxx'x consultancy with CAI terminates shall be
paid in full in cash at the earlier of (a) 90 days after such Year ends or (b)
the same time that the senior executives of CAI receive their bonus payments
with respect to such Year. All other payments which Xxxxxxxx is entitled to
receive pursuant to either Section 4.5, 4.6 or 4.7 shall be made within 45 days
after the date of termination or resignation.
5. Confidential Information. During the term of consultancy under this
Agreement, Xxxxxxxx will have access to and become acquainted with confidential
proprietary information of CAI, including without limitation, compilations of
information and records (including client information and records), owned by CAI
(collectively, "Confidential Information"). Xxxxxxxx shall not, directly or
indirectly, disclose to any other person or entity or use for the benefit of any
other person or entity, any of CAI's Confidential Information (including without
limitation any client lists or other confidential information relating to CAI's
business), either during the term of this Agreement or at any time thereafter,
except as required in the course of his consultancy hereunder. All files,
records, documents, equipment and similar items relating to the business of CAI,
whether prepared by Xxxxxxxx or otherwise coming into his possession, shall
remain the exclusive property of CAI, and if removed from the premises of CAI
shall be immediately returned to CAI upon any termination of his consultancy. In
this Section 5, the term "CAI" shall include any firm or corporation directly or
indirectly controlling or controlled by CAI or under common control with CAI.
6. Agreement Not to Solicit or Compete.
6.1 Nonsolicitation and Noncompetition. Except as specifically provided
on Schedule 2 hereto, and subject to the following sentence, Xxxxxxxx will not,
individually or through an agent, for himself or on behalf of another, as an
employee, director, owner, partner, sole proprietor, consultant, agent,
representative, shareholder, or in any other manner or capacity whatsoever,
during the Non-Compete Period (as defined below): (a) solicit or induce any
clients of CAI to terminate or reduce their respective relationships with RBC or
CAI, (b) accept any Business from any clients of CAI, or enter into a Business
relationship with any such clients unless (i) Xxxxxxxx continues to serve as a
consultant to CAI during the Non-Compete Period; and (ii) all compensation from
such clients during the Non-Compete Period shall accrue to CAI; (c) solicit any
person then employed by CAI to terminate such employment; or (d) permit
Xxxxxxxx'x name to be used by or participate (other than through ownership of
less than five percent of the stock of a publicly-held corporation whose stock
is traded on a national securities exchange or on NASDAQ) in any business or
enterprise which is competitive with the Business (as determined on the date of
this Agreement and the Closing Date) and which is located in the United States.
Notwithstanding the foregoing, the restrictions in clauses (a), (b) and (d) of
the preceding sentence shall not apply after the earlier to occur of (i) the
fifth anniversary of the Closing Date or (ii) the termination of Xxxxxxxx'x
consultancy by CAI without cause. Any written notice or oral presentation made
jointly by CAI and Xxxxxxxx during the Non-Compete Period shall not be deemed to
violate any provision of this Section 6.1. In this Section 6.1 the term
"Non-Compete Period" means the period beginning on the date hereof and ending on
the later to occur of (x) the fifth anniversary of the Closing Date or (y) the
second anniversary of the termination (for any reason) of Xxxxxxxx'x consultancy
with the RBC Affiliates; provided, however, that if at the end of Year 3
Xxxxxxxx is providing consulting services hereunder and RBC has not offered to
extend this Agreement for Year 4 and Year 5 on terms substantially as favorable
to Xxxxxxxx as the terms herein, then the Non-Compete Period shall end at the
end of Year 3. In this Section 6.1 the term "Business" means the IA Business. In
this Section 6.1 the term "CAI" shall include CAI, any successor in interest to
the business of CAI, and any firm or corporation directly or indirectly
controlling or controlled by CAI (or such successor in interest) or under common
control with CAI (or such successor in interest) and engaged in the investment
management or investment advisory business. Xxxxxxxx agrees that the covenants
set forth in this Section 6.1 are reasonable with respect to duration,
geographical area and scope. Nothing in this Section 6.1 shall be construed to
prohibit Xxxxxxxx, through Cumberland Brokerage, from continuing to provide
services to existing clients of Cumberland Brokerage following any termination
or expiration of his consultancy hereunder in substantially the same manner and
to the same extent as such services are provided during such consultancy in
compliance herewith. Nothing in this Section 6.1 shall be construed to prohibit
Xxxxxxxx, through Cumberland Brokerage, from continuing to provide services to
existing clients of Cumberland Brokerage during the term of this Agreement or
thereafter in substantially the same manner and to the same extent as such
services have been provided prior to the inception of his consulting hereunder.
RBC and CAI acknowledge that certain persons who have accounts with both
Cumberland Brokerage and Old CAI will be permitted to maintain their Cumberland
Brokerage accounts at all times.
6.2 Independent Covenants. The covenants of Xxxxxxxx set forth in this
Section 6 shall be construed as independent covenants and the existence of any
claim, demand, action, or cause of action of Xxxxxxxx against CAI or any other
RBC Affiliate, whether predicated upon this Agreement or otherwise, other than
the failure of RBC to pay amounts due and owing to Xxxxxxxx hereunder or under
the Merger Agreement for a period of 30 days following written notice from
Xxxxxxxx to RBC specifying such amounts due and specifically referring to this
Section 6.2, shall not constitute a defense to the enforcement by CAI or RBC of
any of the covenants contained in this Section 6.
6.3 Severability. In the event that any of the subsections of this
Section 6 shall be deemed by any court of competent jurisdiction to be in
violation of applicable law for any reason whatsoever, then any such subsection
or subsections shall not be deemed to be void, but shall be deemed to be
automatically amended so as to comply with applicable law. In the event that any
of the subsections of this Section 6 shall be deemed by any court of competent
jurisdiction to be wholly or partially invalid, such determination shall not
affect the binding effect of the other subsections of this Section 6 or of any
of the other provisions of this Agreement.
7, Injunctive Relief Xxxxxxxx acknowledges that the damage to CAI
resulting from a breach of the obligations of trust and confidence set forth in
Sections 5 and 6 hereof may cause irreparable injury to CAI, and Xxxxxxxx hereby
agrees and consents to the entry of an injunction by any court of competent
jurisdiction, enjoining him from violating any term or terms of this Agreement,
and such injunctive relief may be granted without the necessity of proving
actual damages. Such injunctive relief, however, shall be in addition to any
other remedies provided by law, in equity or otherwise, to CAI.
8. Entire Agreement. Except as otherwise provided in this Agreement,
this Agreement sets forth the entire understanding of the parties relating to
the subject matter hereof, and all prior understandings, whether written or oral
are superseded by this Agreement. Specifically, Xxxxxxxx acknowledges that no
commitment has been made by RBC or CAI to him with respect to any consultancy
beyond the term of this Agreement (whether ending by lapse of time or earlier
termination pursuant to its terms) or with respect to any benefits not expressly
set forth in this Agreement.
9. Notices. All demands, notices and communications provided for in
this Agreement will be in writing and will be either personally delivered,
mailed by first class mail (postage prepaid) or sent by reputable overnight
courier service (delivery charges prepaid) to any party at the address specified
below, or at such address, to the attention of such other person, and with such
other copy, as the recipient party has specified by prior written notice to the
sending party pursuant to the provisions of this Section 9. Any such demand,
notice, communication or report will be deemed to have been given pursuant to
this Agreement when delivered personally, on the third business day after
deposit in the U.S. mail or on the business day after deposit with a reputable
overnight courier service, as the case may be.
If to Xxxxxxxx: Xxxxxxx X. Xxxxxxxx
Academy House
0000 Xxxxxx Xxxxxx, Xxx. 00-X
Xxxxxxxxxxxx, XX 00000
Tel.: (000) 000-0000 or
Tel.: (000) 000-0000
Fax: (000) 000-0000
and to Xxxxxxx X. Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
with a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxx
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
If to CAI or RBC: Xxxx, Xxxx & Co.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Attn.: Xxxxxxx Xxxxxxx
with a copy to: Xxxxxx X. Xxxxx , Esq.
Pitney Xxxxxx Xxxx & Xxxxx
By Mail:
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Delivery:
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
10. Amendment; Waiver. This Agreement may be amended and any right or
claim hereunder waived, only by a written instrument signed by Xxxxxxxx, XXX and
RBC. Nothing in this Agreement, express or implied, is intended to confer upon
any third person any rights or remedies under or by reason of this Agreement. No
amendment or waiver of this Agreement requires the consent of any individual or
entity not a party to this Agreement.
11. Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of New Jersey, without giving
effect to any choice of law or conflict provision or rule (whether of the State
of New Jersey or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of New Jersey to be applied. In furtherance of
the foregoing, the internal law of the State of New Jersey will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
12. Arbitration. Any controversy or claim, directly or indirectly,
arising out of or relating to this Agreement, will be submitted to and settled
by arbitration conducted in Morristown, New Jersey in accordance with the rules
and procedures then existing under the Commercial Arbitration Rules of the
American Arbitration Association, provided that notwithstanding anything to the
contrary contained in such Rules: (a) a panel of three arbitrators will be used,
with one arbitrator chosen by CAI and RBC, one arbitrator chosen by Xxxxxxxx and
the third arbitrator chosen by the other two arbitrators; (b) the decision in
writing of a majority of the arbitrators on the panel will be final, conclusive,
and binding on all parties hereto who had notice of such arbitration and an
opportunity to participate therein, whether or not such party so participated;
and (c) the arbitrators will not award any punitive damages except in the case
of intentional fraud. The determination of the panel of arbitrators will be
final, binding and nonappealable, except that any determination that there has
been intentional fraud, and any award of punitive damages, will be appealable in
any court having jurisdiction. Judgment upon any binding decision rendered by
such panel may be entered in any court having jurisdiction. Any and all
reasonable travel expenses incurred by Xxxxxxxx in connection with such
arbitration will be reimbursed by CAI and RBC. The Parties intend that the
arbitrators use reasonable efforts to limit the nature, scope and timing of any
discovery which they permit in connection with any arbitration so that neither
the duration nor the expense of the arbitration will be unduly burdensome on any
party. Notwithstanding the foregoing, any determination of the arbitrators with
respect to discovery will be binding on the parties.
13. Headings. The headings used in this Agreement are for the purpose
of reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
14. Assignment; Successors and Assigns. Neither this Agreement nor any
rights or obligations hereunder may be assigned by one party without the consent
of the others, except that (i) this Agreement shall be binding upon and inure to
the benefit of any successor or successors of CAI or RBC, whether by merger,
consolidation, sale of assets or otherwise, and reference herein to CAI and RBC
shall be deemed to include any such successor or successors, and (ii) this
Agreement is freely assignable by either CAI or RBC to any corporation or entity
controlling, controlled by, or under common control with, RBC.
15. Guarantee of Payment by RBC. RBC hereby agrees to guarantee all
payments due hereunder from CAI to Xxxxxxxx.
16. Counterparts; Facsimile Signatures. The parties may execute this
Agreement in separate counterparts (no one of which need contain the signatures
of all parties), each of which will be an original and all of which together
will constitute one and the same instrument. A facsimile, telecopy or photocopy
of an original signature of the any party appearing on this Agreement will be
valid and binding on such Party as if it were an original signature; provided,
that at the request of any party, all parties will exchange counterparts of this
Agreement which contain original signatures; and provided, further, that failure
to exchange original signatures will not in any way affect the validity and
binding nature of the facsimile, telecopy or photocopy of the original
signatures.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
XXXXXXX X. XXXXXXXX:
--------------------------------------------
CUMBERLAND ADVISORS, INC.
By:-----------------------------------------
Name:
Title:
XXXX XXXX & CO., INC.
By:-----------------------------------------
Name:
Title:
Schedule 1 - Other activities which may be engaged in during the term of the
Agreement Schedule 2 - Specific exceptions to non-solicit and non-compete
covenants Schedule 3 - Terms and conditions of registration rights
Xxxxxxx X. Xxxxxxxx
Consulting Agreement
Schedule 1
Cumberland Brokerage Corp. - President and principal of shareholder - registered
broker/dealer
First Republic Bank - member, Board of Directors, Executive Committee and Loan
Committee
Republic First Corporation - member, Board of Directors and Executive Committee
Matterhorn Asset Management Corporation - Chairman and part owner -- fund
manager for Matterhorn Growth Fund
National CD Sales, Inc. - a principal shareholder and Chairman - places jumbo
certificates of deposit
Xxxxxxx X. Xxxxxxxx
Consulting Agreement
Schedule 2
Partner Contracts
List of Family-Related Accounts
Xx. Xxxxxx Xxxxxxxx - XXX
Xxxxxx X. Xxxxxxxx - XXX
Xxxxx Xxxxxxx Xxxxxx - XXX
Elizabeth, David, Xxxxxx Xxxxxxx - TTEES Childrens
Xxxxxxxx A.A.G. Marital Trust
Xxxx Xxxxxxx - XXX
Xxxxxx & Xxxxx Xxxxxxxx MD - Special Valuation Acct.
EXHIBIT I
FORM OF OPINION OF SELLERS' COUNSEL
[Closing Date]
Xxxx, Xxxx & Co., Inc.
Cumberland Advisors, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel to Cumberland Advisors, a New Jersey
general partnership ("Advisors"), Xxxxx X. Xxxxx ("Kotok"), Xxxxxxx X. Xxxxxxxxx
("Xxxxxxxxx") and Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx") (Kotok, Xxxxxxxxx and
Xxxxxxxx are each a "Seller" and collectively the "Sellers"; Advisors and
Sellers are collectively the "Cumberland Parties") in connection with the Merger
Agreement (the "Merger Agreement") dated as of February 9, 1998, by and among
Xxxx, Xxxx & Co., Inc., a New Jersey corporation ("RBC"), Cumberland Advisors,
Inc., a New Jersey corporation and wholly-owned subsidiary of RBC ("Newco" and
together with RBC, "Purchaser") and the Cumberland Parties. This letter is
furnished to you pursuant to Section 6.2(f) of the Merger Agreement. Capitalized
terms not otherwise defined herein shall have the respective meanings set forth
in the Merger Agreement.
In rendering the opinions set forth below, we have reviewed
the Merger Agreement and originals or copies, certified or otherwise identified
to our satisfaction, of the Partnership Agreement of Advisors (the "Partnership
Agreement"), such partnership records of the Advisors, communications or
certifications of public officials, certificates of the Cumberland Parties, and
such other documents, instruments and agreements, and we have conducted such
other inquiries and examinations of law, as we have deemed necessary as a basis
for the opinions set forth below.
In rendering the opinions set forth below we have, with your
consent, assumed:
(i) the genuineness of all signatures, the authenticity of all
documents and records submitted to us as originals, the conformity to originals
of all documents and records submitted to us as copies and the authenticity of
the originals of such copies;
(ii) the due adoption, promulgation, issuance and validity of
the laws, regulations, rules, licenses, approvals and permits which we have
reviewed for purposes of this opinion;
(iii) that the Merger Agreement and any agreement executed in
connection with the Merger are valid and binding obligations of any parties to
such agreement other than Cumberland Parties; and
(iv) as to facts, the correctness and accuracy of the
representations and warranties made by Cumberland Parties in the Merger
Agreement and the certificates of public officials and of the Cumberland
Parties.
Based on the foregoing, and subject to the qualifications and
limitations hereinafter set forth, we are of the opinion that:
(a) Advisors is a validly existing general
partnership under the laws of the State of New Jersey.
(b) Advisors has the full power to carry out the
transactions contemplated in the Merger Agreement. The execution and delivery
and the performance as of the date hereof of the Merger Agreement and the
consummation of the transactions contemplated thereunder have been duly and
validly authorized by all necessary partnership action on the part of the
Cumberland Parties. The Merger Agreement constitutes the valid and legally
binding obligations of the Cumberland Parties enforceable against each of them
in accordance with its terms, except that the enforceability of such obligations
may be limited by bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship, and other laws affecting creditors' rights
generally and by the exercise of judicial discretion in applying principles of
equity.
(c) Subject to the satisfaction of the conditions set forth in
the Merger Agreement, neither the transactions contemplated in the Merger
Agreement, nor compliance by the Cumberland Parties with any of the provisions
thereof, will (A) conflict with or result in a breach or default under the
Partnership Agreement, or (B) violate in any material respect any order, writ,
injunction, or decree known to us, or any statute, rule or regulation applicable
to any of the Cumberland Parties. We express no opinion regarding whether, and
to what extent, Newco as a successor to Advisors, will be permitted to continue
to conduct its investment advisory business or engage in any other activity
requiring a license or permit from any federal or state regulatory authority.
(d) All actions required by law and by the Partnership
Agreement to be taken by the Cumberland Parties to authorize the execution,
delivery and performance of the Merger Agreement and consummation of the Merger
have been duly taken.
(e) All approvals, authorizations, consents or other actions
and all filings under federal law and state law required to be obtained by the
Cumberland Parties in order to permit the execution and delivery by them of the
Merger Agreement and the performance by them of the transactions contemplated
therein have been obtained and no consent of any other party or entity is
required in connection with the execution, delivery and performance by any of
the Cumberland Parties of such Cumberland Party's obligations under the Merger
Agreement. We note, however, that the consents of each investment advisory
client of Advisors is required for the assignment of that client's investment
management agreement by Advisors to Newco.
The foregoing opinions are limited to the laws of the State of
New Jersey and the federal laws of the United States of America, and we express
no opinion with respect to the laws of any other jurisdiction. We have made no
independent review of the laws of any state or jurisdiction other than the State
of New Jersey and federal law.
Where the phrases "to our actual knowledge" or "known to us"
or similar phrases are used in this opinion, such phrases refer only to the
actual knowledge or awareness of the attorneys in this firm who have been
directly involved in acting as counsel to the Cumberland Parties in connection
with the Merger or for whom we have billed time charges for legal services
rendered to the Cumberland Parties during the past twelve months.
This opinion is issued as of the date hereof and is
necessarily limited to laws now in effect and to facts and circumstances
currently brought to our attention and is not intended to cover laws, facts or
circumstances in existence as of any other date. There is no commitment or
undertaking on our part to advise you or anyone else as to any changes in laws
or of any facts or circumstances brought to our attention after the date of this
opinion.
This opinion and advice is not to be quoted or otherwise
referred to in any document or filed with any entity, person, or governmental
agency, or relied upon by any entity, person, or governmental agency, other than
the addressees, without the written consent of this firm. This opinion has been
rendered to you solely for the purpose of satisfying the requirement contained
in Section 6.2(f) of the Merger Agreement and may not be relied upon for any
other purpose.
Very truly yours,
XXXXXX & XXXXX
EXHIBIT J
FORM OF OPINION OF PURCHASER'S COUNSEL
[Closing Date]
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxx
Lady and Gentlemen:
We have acted as counsel to Xxxx, Xxxx & Co., Inc., a New
Jersey corporation ("RBC"), Cumberland Advisors, Inc., a New Jersey corporation
and wholly-owned subsidiary of RBC ("Newco" and, together with RBC,
"Purchaser"), in connection with the Merger Agreement (the "Merger Agreement")
dated as of February 9, 1998, by and among Purchaser, Cumberland Advisors, a New
Jersey general partnership ("Advisors"), Xxxxx X. Xxxxx ("Kotok"), Xxxxxxx X.
Xxxxxxxxx ("Xxxxxxxxx") and Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx") (Xxxxx, Xxxxxxxxx
and Xxxxxxxx are each a "Seller" and collectively the "Sellers"; Advisors and
Sellers are collectively the "Cumberland Parties"). This letter is furnished to
you pursuant to Section 6.1(g) of the Merger Agreement. Capitalized terms not
otherwise defined herein shall have the respective meanings set forth in the
Merger Agreement.
In rendering the opinions set forth below, we have reviewed
the Merger Agreement and originals or copies, certified or otherwise identified
to our satisfaction, of all such corporate records of RBC and Newco,
communications or certifications of public officials, certificates of officers
and representatives of RBC and Newco, and such other documents, instruments and
agreements, and we have conducted such other inquiries and examinations of law,
as we have deemed necessary as a basis for the opinions set forth below.
In rendering the opinions set forth below we have, with your
consent, assumed:
(i) the genuineness of all signatures, the authenticity of all
documents and records submitted to us as originals, the conformity to originals
of all documents and records submitted to us as copies and the authenticity of
the originals of such copies;
(ii) the due adoption, promulgation, issuance and validity of
the laws, regulations, rules, licenses, approvals and permits which we have
reviewed for purposes of this opinion;
(iii) that the Merger Agreement and any agreement executed in
connection with the Merger are valid and binding obligations of any parties to
such agreement other than RBC and Newco; and
(iv) as to facts, the correctness and accuracy of the
representations and warranties made by RBC and Newco in the Merger Agreement and
the certificates of public officials and of officers and representatives of RBC
and Newco.
Based on the foregoing, and subject to the qualifications and
limitations hereinafter set forth, we are of the opinion that:
(a) Each of RBC and Newco is a validly existing
corporation under the laws of the State of New Jersey.
(b) Each of RBC and Newco has the full power to carry out the
transactions contemplated in the Merger Agreement. The execution and delivery
and the performance as of the date hereof of the Merger Agreement and the
consummation of the transactions contemplated thereunder have been duly and
validly authorized by all necessary corporate action on the part of each of RBC
and Newco. The Merger Agreement constitutes the valid and legally binding
obligations of each of RBC and Newco enforceable against each of them in
accordance with its terms, except that the enforceability of such obligations
may be limited by bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship, and other laws affecting creditors' rights
generally and by the exercise of judicial discretion in applying principles of
equity.
(c) Subject to the satisfaction of the conditions set forth in
the Merger Agreement, neither the transactions contemplated in the Merger
Agreement, nor compliance by RBC and Newco with any of the provisions thereof,
will (A) conflict with or result in a breach or default under the Certificate of
Incorporation or Bylaws of either RBC or Newco or a breach or default by either
RBC or Newco under any of the agreements listed on Schedule 1 hereto, or (B)
violate in any material respect any order, writ, injunction, or decree known to
us, or any statute, rule or regulation applicable to either of RBC or Newco.
(d) All actions required by law and by the Certificates of
Incorporation or Bylaws of RBC and Newco to be taken by RBC and Newco to
authorize the execution, delivery and performance of the Merger Agreement and
consummation of the Merger have been duly taken.
(e) All approvals, authorizations, consents or other actions
and all filings under federal law and state law required to be obtained by RBC
and Newco in order to permit the execution and delivery by them of the Merger
Agreement and the performance by them of the transactions contemplated therein
have been obtained and no consent of any other party or entity is required in
connection with the execution, delivery and performance by either of RBC or
Newco of such party's obligations under the Merger Agreement.
(f) The authorized capital stock of RBC consists of __________
shares of common stock, $0.10 par value per share ("RBC Common Stock") and
___________ shares of [describe authorized preferred stock]. The RBC Common
Stock to be issued in connection with the Merger in accordance with Article 1 of
the Merger Agreement, when so issued in accordance therewith, will be duly
authorized, validly issued, fully paid and non-assessable, free of preemptive
rights and free and clear of all liens, encumbrances or restrictions created by
RBC.
The foregoing opinions are limited to the laws of the State of
New Jersey and the federal laws of the United States of America, and we express
no opinion with respect to the laws of any other jurisdiction. We have made no
independent review of the laws of any state or jurisdiction other than the State
of New Jersey and federal law.
Where the phrase "to our actual knowledge" or similar phrases
are used in this opinion, such phrases refer only to the actual knowledge or
awareness of the attorneys in this firm who have been directly involved in
acting as counsel to RBC and Newco in connection with the Merger or for whom we
have billed time charges for legal services rendered to RBC or Newco during the
past twelve months.
This opinion is issued as of the date hereof and is
necessarily limited to laws now in effect and to facts and circumstances
currently brought to our attention and is not intended to cover laws, facts or
circumstances in existence as of any other date. There is no commitment or
undertaking on our part to advise you or anyone else as to any changes in laws
or of any facts or circumstances brought to our attention after the date of this
opinion.
This opinion and advice is not to be quoted or otherwise
referred to in any document or filed with any entity, person, or governmental
agency, or relied upon by any entity, person, or governmental agency, other than
the addressees, without the written consent of this firm. This opinion has been
rendered to you solely for the purpose of satisfying the requirement contained
in Section 6.1(g) of the Merger Agreement and may not be relied upon for any
other purpose.
Very truly yours,
PITNEY, XXXXXX, XXXX & XXXXX
SCHEDULE 3 TO THE PRINCIPAL AGREEMENTS
TERMS AND CONDITIONS TO REGISTRATION RIGHTS
1 Definitions. As used herein:
(a) The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the 1933 Act and the subsequent
declaration or ordering of the effectiveness of such registration statement.
(b) The term "Registrable Securities" means:
(i) any RBC Common Stock issued pursuant to the
Merger Agreement, and any RBC Common Stock issued or issuable directly or
indirectly with respect to such securities by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when they
have been sold in any manner to any other Person.
(c) The term "Form S-3" means such form under the
1933 Act as in effect on the date hereof or any registration form under 1933 Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by RBC with the
SEC.
(d) The term "Holder" means the Principal and any
immediate family member of the Principal who acquired Registrable Securities
from the Principal in a transaction or series of transactions permitted under
the Merger Agreement and not involving any registered public offering.
2 Requested Registration.
(a) If RBC shall receive a valid written request to
file a registration statement under the 1933 Act, then RBC shall effect as soon
as practicable, and in any event within 90 days of the receipt of such request,
the registration under the 1933 Act of all Registrable Securities which the
Holder requests to be registered.
(b) Notwithstanding the foregoing, if RBC shall
furnish to the Holder a certificate signed by the President of RBC stating that
in the good faith judgment of the Board of Directors of RBC, it would be
seriously detrimental to RBC and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, RBC shall have the right to defer such filing for a
period of not more than 120 days after receipt of the request of the Holder;
provided, however, that RBC may not utilize this right more than once in any
twelve month period.
3 Obligations of RBC. Whenever required to effect the
registration of any Registrable Securities, RBC shall, as expeditiously as
reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holder, keep such registration statement effective for up to 120 days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as the Holder may
reasonably request in order to facilitate the disposition of Registrable
Securities.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holder, provided, that RBC shall not be required in connection therewith or as a
condition thereto to qualify to do business or, except as required under the
1933 Act, to file a general consent to service of process in any such states or
jurisdictions.
(e) Notify the Holder at any time of the happening of
any event as a result of which the prospectus included in the registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
(f) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange or automated
quotation system on which similar securities issued by RBC are then listed.
4 Furnish Information. It shall be a condition precedent to
the obligations of RBC to take any action pursuant hereto that the Holder shall
furnish to RBC such information regarding Holder, the Registrable Securities
held by Holder, and the intended method of disposition of such securities as
shall be required to effect the registration of the Holder's Registrable
Securities.
5 Expenses Of Registration. Each party shall bear its own
expenses in connection with registrations, filings or qualifications pursuant to
Section 2. Without limiting the foregoing, any underwriting discounts or
commissions, and any fees and disbursements of counsel for the Holder, shall be
borne by the Holder, and expenses in connection with registrations, filings or
qualifications pursuant to Section 2, including (without limitation), all
registration, filing and qualification fees, printers and accounting fees, and
fees and disbursements of counsel for RBC shall be borne by RBC; provided,
however, that RBC shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 2 if the registration request
is subsequently withdrawn at the request of the Holder (who shall bear such
expenses), unless the Holder agrees to forfeit the right to registration
pursuant to Section 2.
6 Delay of Registration. The Holder shall have no right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement.
7 Indemnification. In the event any Registrable Securities are
included in a registration statement hereunder:
(a) To the extent permitted by law, RBC will
indemnify and hold harmless the Holder, and each person, if any, who controls
such Holder within the meaning of the 1933 Act or the 1934 Act, against any
losses, claims, damages, or liabilities (joint or several) or related expenses
(including without limitation reasonable fees and expenses of counsel and
amounts paid in settlement effected with the consent of the indemnifying party)
which they may suffer or to which they may become subject under the 1933 Act,
the 1934 Act or other federal or state law or common law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof, whether
commenced or threatened) or expenses arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein, not misleading, or
(iii) any violation or alleged violation by RBC of the 1933 Act, the 1934 Act,
any state securities law or any rule or regulation promulgated under the 1933
Act, the 1934 Act or any state securities law; provided, however, that the
indemnity agreement contained in this subsection (a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of RBC, nor shall RBC be liable in
any such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished for use in
connection with such registration by any such Holder or controlling person.
(b) To the extent permitted by law, the Holder will
indemnify and hold harmless RBC, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls RBC
within the meaning of the 1933 Act, any other person selling securities in such
registration statement and any controlling person of any such other person,
against any losses, claims, damages, or liabilities (joint or several) or
related expenses (including without limitation reasonable fees and expenses of
counsel and amounts paid in settlement effected with the consent of the
indemnifying party) which any of the foregoing persons may suffer or to which
they may become subject under the 1933 Act, the 1934 Act or other federal or
state law or common law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof, whether commenced or threatened) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by the Holder for use in connection with such
registration; provided, however, that the indemnity agreement contained in this
subsection (b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld.
8 Reports Under the 1934 Act. With a view to making available
to the Holder the benefits of Rule 144 promulgated under the 1933 Act and any
other rule or regulation of the SEC that may at any time permit a Holder to sell
securities of RBC to the public without registration or pursuant to a
registration on Form S-3, RBC agrees to:
(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports
and other documents required of RBC under the 1933 Act and the 1934 Act; and
(c) furnish to the Holder forthwith upon request (i) a written statement by RBC
that it has complied with the reporting requirements of SEC Rule 144, the 1933
Act and the 1934 Act, or that it qualifies as a registrant whose securities may
be resold pursuant to Form S-3 (at any time that it so qualifies), (ii) a copy
of the most recent annual or quarterly report of RBC and such other reports and
documents so filed by RBC, and (iii) such other information as may be reasonably
requested in availing the Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
SCHEDULE 4 TO THE PRINCIPAL AGREEMENTS
BENEFIT PLAN OFFERINGS and COSTS
DEFINED CONTRIBUTION PLANS
Profit Sharing & 401(k) Plan
Cumberland Advisors' 401(k) plan to be merged into, and CAI employees
become participants of, RBCO Profit Sharing Plan & 401(k) effective January
1, 1999.
CAI Plan assets/employees' account balances transferred to RBCO Plan.
CAI employees' credited service grandfathered for vesting purposes.
Expense for Profit Sharing contributions equal to 9% of eligible earnings
of CAI employees allocated to CAI for P&L purposes but excluded from
Earnout calculation.
Employee Stock Ownership Plan (ESOP)
CAI employees become participants in RBCO ESOP Plan effective January 1,
1999, if the Plan remains in effect.
CAI employees' credited service grandfathered for vesting purposes.
HEALTH BENEFITS
Medical Plan
CAI continues to offer medical coverage through BC/BS Medallion Plan at
current levels of cost sharing until 1/1/99.
After 1/1/99, CAI determines cost sharing scheme based on plan costs.
Employer portion of premium costs allocated to CAI. If CAI adopts RBCO cost
sharing scheme, employees may be provided with additional cash compensation
to offset any additional cost for medical coverage in the first year. BC/BS
Medallion Plan retained if network and perceived value are better than for
CIGNA or Aetna US HealthCare.
Dental Plan
CAI employees are offered RBCO dental plan through Delta Dental effective
as soon after the acquisition as administratively possible.
Plan offered based on RBCO current cost sharing scheme. Employee portion
of premium costs allocated to CAI.
Employee Assistance Plan
CAI employees offered MCC EAP Plan effective January 1, 1999. Employer
paid premium cost allocated to CAI.
LIFE INSURANCE
CAI employees convert to RBCO life insurance plan with the Hartford
effective as soon after the acquisition as administratively possible.
Company provides Basic Life and AD&D coverage. Employer portion of premium
costs allocated to CAI.
Employees may elect and pay full cost of Supplemental Life and AD&D
coverage.
Employees may elect and pay for full cost of dependent life insurance
coverage.
DISABILITY PLANS
Sick Leave
CAI adopts RBCO's sick leave/personal time off policy effective 1/1/99.
Short Term Disability
CAI added to RBCO private disability plan effective as soon after
acquisition as administratively possible. Employer portion of premium costs
allocated to CAI.
Long Term Disability
CAI employees offered RBCO's basic and supplemental LTD plans effective as
soon after acquisition as administratively possible.
Company pays full cost of basic plan. Employer portion of costs allocated
to CAI.
Employee pays cost of supplemental plan.
