Rooney Pace will merge with Sherwood Capital.

The agreement in principle calls for holders of Rooney Pace Group’s common stock to receive about one-sixth of the common stock of the combined company. Holders of the financially ailing brokerage firm’s notes and preferred stock that are convertible into common stock, assuming full conversion of those securities, would receive another one-sixth of the shares in the newly merged firm. Current shareholders of Sherwood Capital Group, a privately held securities firm based in Jersey City, N.J., would own the remaining two-thirds of the merged company.