MEMORANDUM OF UNDERSTANDING
Re: Proposed Merger between South Broward Board of Realtors, Inc. (“Broward”) and Realtors of the Palm Beaches and Greater Fort Lauderdale, Inc. (“PBGFL”).
This Memorandum of Understanding (this “MOU”) is intended to summarize the principal terms of a proposal being considered regarding the possible combination of Broward and PBGFL by merger, with the “surviving” association to operate through PBGFL’s existing not-for profit Florida corporation (the “Surviving Association”). The possible merger is referred to as the “Transaction,” and Broward and PBGFL are sometimes referred to collectively as the “Parties” and each, a “Party”).
1. Merger Transaction. Subject to the satisfaction of the conditions described in this MOU, and dependent upon the outcome of the financial and legal due diligence of the Parties, either: (i) (A) PBGFL will create Florida non-for-profit corporation as a wholly-owned subsidiary of PBGFL (the“Merger Sub”), (B) the Merger Sub will at the closing of the Transaction merge with and into Broward, and (C) the separate corporate existence of Merger Sub will cease and Broward will continue its corporate existence as the surviving corporation in the merger and a wholly-owned subsidiary of the Surviving Association; or (ii) Broward will merge with and into PBGFL and the separate corporate existence of Broward will cease and PBGFL will continue its corporate existence as the Surviving Association. Under either merger scenario, effective as of the closing of the Transaction (i) the members of each of PBGFL and Broward will become members of the Surviving Association to be renamed as agreed to by the Parties, and (ii) if not occurring as a function of the merger, as soon as is reasonably practicable all employees and independent contractors of Broward will become employees and independent contractors, as applicable, of the Surviving Association. Under merger scenario (i), Broward would be wound up and dissolved (or merged with and into the Surviving Association) within six (6) months of the closing date of the Transaction.
2. Proposed Definitive Agreements. As soon as reasonably practicable after the execution of this MOU, the Parties shall commence to negotiate a definitive plan of merger and merger agreement (together, the “Definitive Agreements”) relating to the Transaction, the initial drafts to be drafted by PBGFL’s counsel, Foster Pepper PLLC. The Definitive Agreements would include the terms summarized in this MOU and such other representations, warranties, conditions, covenants, indemnities and other terms that are customary for transactions of this kind and are not inconsistent with this MOU.
3. Conditions. The Parties’ obligation to close the proposed Transaction will be subject to customary conditions, including:
(a) Each Party’s satisfactory completion of due diligence;
(b) The Board of Directors and voting members of Broward, and the Board of Directors and members of PBGFL, approving the Transaction;
(c) the Parties’ execution of the Definitive Agreements and any and all ancillary agreements contemplated thereby;
(d) the receipt of any regulatory approvals and third party consents, on terms satisfactory to the Parties; and
(e) there being no material adverse change in the business, results of operations, prospects, condition (financial or otherwise) or assets of either of Broward and PBGFL.
4. Due Diligence Review. From and after the date of this MOU, subject to the terms and conditions under that certain Non-Disclosure Agreement dated [_______], 2017 (the “Confidentiality Agreement”) between the Parties, each Party will allow the other Party and its Representatives (as defined below), as appropriate, access to such Party’s contracts, records, key employees and advisors for the purpose of completing its due diligence review. The due diligence investigation will include, but is not limited to, a complete review of each Party’s financial, legal, tax, intellectual property and labor records and agreements, and any other matters as the Parties’ accountants, tax and legal counsel, and other advisors deem relevant.
5. Governance and Leadership of the Surviving Association. Following the Closing of the Transaction, the Parties intend to operate the Surviving Association generally in accordance with the terms and conditions set forth on Exhibit A to this MOU. The Surviving Association and Broward shall each amend and restate its organizational documents as necessary to be effective as of the closing of the Transaction in a manner consistent with Exhibit A.
6. Covenants of the Parties. During the period from the signing of this MOU through the execution of the Definitive Agreements, each of the respective Parties will: (a) conduct its business in the ordinary course in a manner consistent with past practice, (b) maintain its properties and other assets in good working condition, (c) use its best efforts to maintain its business and employees, customers, assets and operations as an ongoing concern in accordance with past practice and (d) not materially increase the amount of any staff compensation outside the normal course of business practices.
7. Exclusivity. In consideration of the expenses that the Parties have incurred and will incur in connection with the proposed Transaction, each Party agrees that until such time as this MOU has terminated in accordance with the provisions of paragraph 8 (such period, the “Exclusivity Period”), neither such Party nor any of its representatives, officers, employees, directors, duly-appointed agents, stockholders, subsidiaries or affiliates (collectively, the “Representatives”) shall initiate, solicit, entertain, negotiate or accept, directly or indirectly, any proposal or offer from any person or group of persons other than the other Party to this MOU and its affiliates (an “Acquisition Proposal”) to acquire all or any significant part of the business and properties, capital stock or capital stock equivalents of such Party, whether by merger, purchase of stock, purchase of assets, tender offer or otherwise, or provide any non-public information to any third party in connection with an Acquisition Proposal. During the Exclusivity Period, each Party agrees to notify the other Party if any of its Representatives receives any written offers in respect of an Acquisition Proposal, and will communicate to the other Party in reasonable detail the terms of any such written offer, and will provide the other Party with copies of all written communications relating to such written offer. Immediately upon execution of this MOU, each Party shall, and shall cause the Representatives to, terminate any and all existing discussions or negotiations with any person or group of persons other than the other Party to this MOU and its affiliates regarding an Acquisition Proposal.
8. Termination. This MOU will automatically terminate and be of no further force and effect upon the earlier of (a) execution of the Definitive Agreements by Broward and PBGFL and (b) upon receipt of written notice by either Party of the other Party’s intention to terminate the MOU. Notwithstanding anything in the previous sentence, paragraphs 9, 10, 11 and 12 shall survive the termination of this MOU and the termination of this MOU shall not affect any rights any Party has with respect to the breach of this MOU by another Party prior to such termination.
9. GOVERNING LAW. THIS MOU SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH INTERNAL LAWS OF THE STATE OF FLORIDA, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF FLORIDA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THOSE OF THE STATE OF FLORIDA.
10. Confidentiality. This MOU and its contents are confidential to the Parties and their representatives and subject to the Confidentiality Agreement, which continues in full force and effect.
11. No Third Party Beneficiaries. Except as specifically set forth or referred to herein, nothing herein is intended or shall be construed to confer upon any person or entity other than the Parties and their successors or assigns, any rights or remedies under or by reason of this MOU.
12. Expenses. The Parties will each pay their own transaction expenses, including the fees and expenses of attorneys and other advisors, incurred in connection with the proposed Transaction.
13. No Binding Agreement. This MOU reflects the intention of the Parties, but for the avoidance of doubt neither this MOU nor its acceptance shall give rise to any legally binding or enforceable obligation on any Party, except with regard to paragraphs 7 through 12 hereof. No contract or agreement providing for any transaction involving the Parties shall be deemed to exist between the Parties unless and until final Definitive Agreements have been executed and delivered. This MOU is a preliminary document and is not intended to be the basis upon which either party can assert against the other pecuniary or exemplary damage arising from perceived or actual breach thereof.
14. Miscellaneous. This MOU may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement. The headings of the various sections of this MOU have been inserted for reference only and shall not be deemed to be a part of this MOU.
Terms of Merger Discussions
Surviving Association Name
The surviving corporation will initially be named “Realtors® of the Palm Beaches & Greater Fort Lauderdale”.
- The MLS platforms will run parallel: Matrix and Flex
- South Broward currently shares a MLS server with Miami; staff will immediately begin working with Corelogic to move South Broward MLS to the Fort Lauderdale server.
- Strategically there are benefits to having multiple MLS Systems.
· Members receive IDX feeds from all MLS platforms
· There will be one set of MLS Rules to follow.
· Supra contracts will be dealt with later.
Contracts, Facilities & Equipment
- All 7 office locations will remain open.
· Contracts may be terminated or continued by the parent organization, in consultation with legal counsel. Contracts may also be re-negotiated.
· Assets become the property of the Surviving Association.
- Dionna Hall, current CEO of PBGFL will be the CEO of the Surviving Association.
- RAMCO will be the member management system.
- The South Broward building location will be retained for the current lease term plus the 3 year option will be extended or the current leased space will be purchased or the entire first floor will be purchased.
- Storage Rental, Alarm, Security System, Janitorial Service, Multi-Function Color Printer Lease, Membership Backup System will be assessed.
· The following products and services will continue until the expiration date or they are renegotiated: CRS Tax, Supra, Corelogic, Property Panorama, Transaction Desk, ShowingTime, Announce My Listing, on-line floor plans. Services and product offering may vary as a result of contractual renegotiations.
- Board Forms will be maintained.
- Honor Society members will continue to be recognized.
- Existing computer networks and other technologies will be assessed to determine necessary upgrades.
- If the merger is complete by the end of 2017, the Surviving Association will assume responsibility for the audit and core standards requirement.
- Existing staff will be retained for at least one year.
Governance & Leadership – 2017 will be a 15 Member BOD
President, John Slivon
President Elect, Ron Lennen
First Vice President, Jeff Levine
First Vice President, Bonnie Metviner
Treasurer, Jarrod Lowe
Secretary, Robert Russotto
CEO, Dionna Hall
2017 Board of Directors
President, John Slivon
President Elect, Ron Lennen
First Vice President, Jeff Levine
First Vice President, Bonnie Metviner
Treasurer, Jarrod Lowe
Secretary, Robert Russotto
CEO, Dionna Hall
South Broward Regional Vice President, John Leto
Eastern Broward Regional Vice President, Richard Masterson, Jr.
Western Broward Regional Vice President, Ron Cika
Southern PBC Regional Vice President, Ben Schachter
Northern PBC Regional Vice President, Carlos Melendez
Treasure Coast Regional Vice President, Patty Renna
Past President, Judy Ramella
Past President, Howard Elfman
· The 2017 President Elect, Ron Lennen will be the 2018 President. The 2017 President, John Slivon will become the 2018 Past President.
· There will be two First Vice Presidents only in the 2017 stub year. In 2018 there will be one First Vice President.
· There will be 15 BOD members in 2018.
· 2018 Open executive positions are as follows:
o President Elect
o First Vice President
· 2018 Open BOD Positions are as follows:
o All Regional Vice President Positions (6 in total)
o Plus 4 BOD Positions
· Each Regional Board is comprised of 10 members. In the 2017 stub year, South Broward will have 13 Regional Board members.
· In 2018, Regional Vice Presidents, open Executive positions and BOD seats will go through the Nomination process. There will be a second round of Nominating Conducted to fill the 2018 South Broward Regional board members.
· Executive members and Regional Vice Presidents will have 1-year terms.
· In 2018, BOD members that are not Executive or Regional VP’s will be assigned 1 or 2-year terms randomly.
· In 2019, BOD members that are not Executive or Regional VP’s will be assigned 2-year staggered terms unless a vacancy arises and then a BOD member will be assigned to fulfill that 1-year term.
· Each Regional Board will have a RCA representative.
2017 Regional Board Members
- Carlos Melendez, Regional Vice President/Chair
- JD McClintock
- Jonathan Dolphus
- Alan Steinberg
- Brian Woods
- John Mike
- Darrell Bowen
- Joan Alipo
- John Kern
- Virginia Spencer
1. John Leto, Regional Vice President/Chair
2. Steven Cohen
3. Archie Grant
4. Diana Cronkhite
5. Jim Chinelly
6. Frank Gundlach
7. Fran Markowitz
8. Gina Rosenbaum
9. Warren Stein
10. Joan Tersigni
11. Deborah Gibes
12. John Gibes
13. Lisa Stewart
- Richard Masterson, Regional Vice President/Chair
- Kenny Silverman
- Alexander Escobar
- John Fitzgerald
- Gene Whiddon, III
- Monica Hands
- Christopher Krzemien
- Jim Heidisch
- Ron Cika
- Charles Bonfiglio, Jr.
- Michelle Guerra
- Karen Johnson
- Melanie Brownell
- Alexander Cika
- Andrew Gaskin
- Cynthia Benchick
- Anthony Cordileone
- Ben Schachter, Regional Vice President/Chair
- Teresita Reoyo
- Christina Morrison
- Scott Field- RCA Rep
- Joanne Mazzeo
- David Serle
- Ann DeFries
- Martin Cohen
- Bob Elliott
- Bill Richardson
- Patty Renna, Regional Vice President/Chair
- Jim Weix
- Jim Mitchem
- Donn Wonderling
- Doug Rooks- RCA Representative
- Geof Hoge
- Anthony Gambordella
- Julio Sanchez
- Debbi Jenson
- Christi Henendez
Regional Vice Presidents & Boards:
· The role of the Regional Board is to coordinate the region, be responsible for maintaining a local identity within the community and serve as an advocate on behalf of the Regional Board to the Board of Directors.
· Six Regional Boards will be formed: South Broward, Eastern Broward, Western Broward, Southern PBC, Northern PBC and the Treasure Coast.
· Regional Vice Presidents will report to the First Vice President. In the 2017 stub year, Regional Vice Presidents will report to both First Vice Presidents.
· 2017 BOD members from South Broward will be placed on the South Broward Regional Board for the ‘2017 Stub Year’. There will be 13 South Broward Regional board members in 2017. In 2018, the South Broward Regional Board will be comprised of 10 total members, consistent with the other Regional Boards.
· 2018 Regional Board members will go through the Nominating Process. 2018 Regional Board members will elect a Vice Chair of their Regional Board at the first meeting of the year from the members that sit on that Regional Board. There will be a total of 10 Regional Board members in 2018 and beyond.
· The 2018 Regional Board members will be assigned a 1 or 2-year term so the 2019 Regional Board members will have even staggered 2-year terms.
· In 2017 BOD & Regional Board may need to meet every month.
Each Regional Board Will Include:
- Regional VP as Chair of the Regional Board.
- Regional VP serves on the BOD.
- Regional VPs will report to First VP.
- A Vice Chair of each Regional Board will be appointed by a vote of that Regional Board at the first meeting of the year.
- Each Regional Board may have up to have 10 members. The Regional Board will take on the duties of vetting and recommending to the BOD: local motions, candidate screening recommendations, planning a minimal number of local events, granting local awards, overseeing localized committees.
- Local funding requests will be approved by the Regional Board and forwarded to the Finance Committee. There will be one Finance Committee for the Surviving Association.
- Each Regional VP is automatically a member of the Board of Directors who is to serve as a representative on the Board of Directors.
- Regional Board members are chosen through the nominating process.
- Regional Boards are not legal entities.
- Regional Boards may identify unique programs to service with the approval of the BOD.
- The decision to become a Regional Board will be made prior to the merger, as part of the merger discussions/negotiations.
- Additional Regional Boards may be created if another association merges into the body. That Regional Board will serve members in locations within the previous association's jurisdiction.
- Each Regional Board is a subgroup of the Surviving Association. No Regional Board is a separate legal entity.
- After a merger and/or establishment of the Regional Board, the Surviving Association's Errors & Omissions Insurance should be evaluated as well as any liability or other insurance policies to make certain coverages are complete and inclusive.
- Members join the Surviving Association, not individual Regional Boards.
· Members will initially be assigned a Regional Board based on geography. They may identify a Regional Board due to their locality, former association, or for other reasons.
· Regional Boards will have a standard name template (i.e. South Broward Board of the ABC REALTORS®).
· Regional Boards will have representation on the Surviving Association’s BOD.
· Regional Board endeavors such as special events and classes will be part of the overall budget.
· The CEO will assign appropriate staff support to Regional Boards.
· The Surviving Association enters all contracts. The Regional Board will not have authority to sign contracts or spend unbudgeted funds.
· A Regional Board may have an office but isn't required, the Regional Board office could be virtual, a separate structure, or a shared office (within an office of the Surviving Association).
Committees & Regional Board Committees:
2017 Committees of both organizations will continue for the stub year with the exception of the BOD, Exec, Finance, Nominating and MLS Committee/BOD.
The 2017 BOD & Exec has been stated above.
· 2017 Florida Realtor® Directors will continue till the end of their term.
· 2018 Florida Realtor® directorships will be assigned by the President through an open application process for all members to apply for.
· 2017 NAR Directors will continue till the end of their term.
· 2018 NAR Directors will be determined by the Surviving Association President.
- FR Directors will be reimbursed up to $1000 for each of the 2 main FR Meetings.
- NAR Directors and Exec will be funded for both NAR Meetings.
- Other travel funding will be decided by the merger transition team to be finalized by the BOD.