<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 24, 1994
Commission file number 33-4649
RODMAN & RENSHAW CAPITAL GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware 36-3111956
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
120 S. LaSalle Street, Chicago, Illinois 60603
(Address of principal executive offices ) ( Zip Code)
Registrant's telephone number, including area code (312) 977-7800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
Common Stock, par value $0.09 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by a check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES /X/ NO / /
Indicate by a check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. / /
As of August 31, 1994, 4,576,837 shares of Common Stock, par
value $0.09 per share, were outstanding, and the aggregate market value of the
shares of Common Stock of the Registrant held by non-affiliates (based upon the
closing price of the Registrant's shares on the New York Stock Exchange on
August 31, 1994, which was $5.625) was $11,908,000.
DOCUMENTS INCORPORATED BY REFERENCE
None
TOTAL PAGES IN THIS REPORT
<PAGE> 2
PART I
ITEM 1. BUSINESS.
Rodman & Renshaw Capital Group, Inc. (the "Company") is a holding
company which was incorporated in Delaware on November 20, 1980, as the
successor, through its subsidiaries, to the business of Rodman & Renshaw, a
partnership which commenced operations in Chicago in 1951. The Company,
through its principal subsidiary, Rodman & Renshaw, Inc. ("Rodman"), is a
full-service securities broker-dealer and commodities futures commission
merchant with memberships on the New York Stock Exchange ("NYSE") and other
principal stock and commodity exchanges. The Company offers a comprehensive
range of investor services to meet the needs of individual investors,
corporations and other business organizations, tax-exempt entities, financial
institutions and fiduciaries, and other securities and commodities dealers.
Rodman acts as a broker and dealer in the purchase or sale of listed,
preferred, and over-the-counter stocks, options, certificates of deposit,
mutual funds, taxable and tax-exempt debt instruments, commodities and
financial futures. Through the corporate finance, municipal finance, and
private placement departments, Rodman provides investment banking advice,
underwritings, merger and acquisition consulting, and can obtain funds for
leveraged acquisition purposes, corporate expansion or recapitalization
financings, municipality and other tax-exempt entity financings, and real
estate private placements.
Rodman provides financial institutions, fiduciaries and professional
investors with selected research. These entities, as well as other securities
and commodities dealers, are able to utilize Rodman's trade execution services
in equity securities, bonds and commodities. The Company, through its other
subsidiaries, provides investment advisory services, acts as general partner
for real estate limited partnerships, and acts as general partner and commodity
pool operator for commodity limited partnerships.
On December 21, 1993, the Mexican brokerage firm Abaco Casa del Bolsa,
S.A. de C.V., Abaco Grupo Financiero ("Abaco"), acquired 54% of the Company's
outstanding shares through a tender offer at a price of $10.50 per share.
Abaco is a brokerage subsidiary of Abaco Grupo Financiero, S.A. de C.V.
("Parent"), a multi-faceted financial services holding company based in
Monterrey, Mexico. In addition to Abaco, Parent owns a commercial bank,
leasing company, foreign exchange house, factoring firm and insurance company,
all based in Mexico. Parent's shares are traded on the Mexican Stock Exchange.
Since the acquisition, a substantially new senior management team has been put
in place. Abaco and Parent have also provided the Company with additional
funding through a $10,000,000 loan and a $15,000,000 purchase of preferred
stock from the Company. See Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources
and Item 12. Security Ownership of Certain Beneficial Owners and Management.
The Company's executive offices are located at 120 South
LaSalle Street, Chicago, Illinois 60603 and its principal telephone number is
(312) 977-7800. The Company also has offices in New York, Kansas City,
Cleveland, San Francisco, Milwaukee, San Diego, Dallas and Northbrook,
Illinois.
2
<PAGE> 3
REVENUES BY SOURCE
The following table sets forth certain information regarding the revenues of
the Company by source, for the three most recent fiscal years. See Note 2 to
the Consolidated Financial Statements enclosed herein for a discussion of
accounting changes in fiscal 1993.
Years Ended June 24, 1994
June 25, 1993 and June 26, 1992
(in thousands of dollars)
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
COMMISSIONS
Commodities $ 19,833 $ 26,031 $ 28,553
Listed securities 6,080 9,386 9,040
Over-the-counter securities 2,446 2,387 2,639
Options 799 914 1,009
--------- --------- ---------
TOTAL COMMISSIONS 29,158 38,718 41,241
PRINCIPAL
Institutional credits:
Bonds 13,117 17,382 11,709
Equity and debt underwritings 644 925 443
Over-the-counter stocks 575 202 287
Mutual funds 0 0 1
--------- --------- ---------
14,336 18,509 12,440
Retail credits:
Bonds 3,844 5,586 5,470
Equity and debt underwritings 2,724 3,479 2,309
Over-the-counter stocks 2,712 1,388 536
Mutual funds 1,811 1,533 995
--------- --------- ---------
11,091 11,986 9,310
--------- --------- ---------
Total credits 25,427 30,495 21,750
Market-making and dealer transactions:
Corporate fixed income and government
zero coupon bonds 500 408 2,864
Over-the-counter stocks 1,600 1,211 933
Other (214) 102 93
--------- --------- ---------
Total market-making and dealer transactions 1,886 1,721 3,890
--------- --------- ---------
TOTAL PRINCIPAL 27,313 32,216 25,640
INTEREST
Market-making; securities inventory 4,412 5,238 5,692
Margin accounts 2,420 3,452 3,786
Securities finder service 2,381 1,868 1,370
--------- --------- ---------
TOTAL INTEREST 9,213 10,558 10,848
FEE INCOME
Corporate and municipal finance 7,269 2,410 3,971
Limited partnerships 95 415 479
Advisory services 234 320 278
--------- --------- ---------
TOTAL FEE INCOME 7,598 3,145 4,728
OTHER 4,035 2,672 1,921
--------- --------- ---------
TOTAL REVENUES $ 77,317 $ 87,309 $ 84,378
========= ========= =========
</TABLE>
3
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COMMISSIONS
Commissions from securities and commodities brokerage activities represented
approximately 38% of the Company's revenue in the year ended June 24, 1994, and
44% and 49% in the years ended June 25, 1993 and June 26, 1992, respectively.
Commissions on commodity brokerage represented approximately 68% of the
Company's total commission revenue for the fiscal year ended June 24, 1994, and
67% and 69% in the years ended June 25, 1993 and June 26, 1992.
Rodman executes customer orders to buy and sell securities and commodity
futures contracts. Rodman charges commissions competitive within the industry.
PRINCIPAL TRANSACTIONS
Rodman acts as principal and agent to effect transactions in the equity,
fixed income and over-the-counter markets for institutional and retail
customers, as well as for other broker-dealers. Principal transactions,
including market making, require maintaining inventories of securities for
resale. These inventories are valued at market, and accordingly, gains and
losses are included in the results of operations. Rodman monitors its
inventory aging and turnover and employs various hedging strategies to mitigate
the effects of changing market conditions.
Institutional and Retail Credits. Rodman acts as principal in
executing trades in fixed income securities and in over-the-counter stocks for
institutional and individual customers, underwrites equity and debt securities,
and sells shares in mutual funds. In connection with these transactions,
Rodman receives, in lieu of commissions, credits in the form of mark-ups or
mark-downs from the price of the security.
Rodman employs traders and salespersons in its Chicago, Milwaukee,
and New York offices to service institutional clients such as insurance
companies, banks, state and municipal pension funds and investment counselors.
Market-making and Dealer Transactions. Rodman employs traders and
salespersons to make secondary markets in investment grade corporate fixed
income securities. Rodman employs over-the-counter traders to make secondary
markets in approximately 85 equity securities. Rodman maintains inventories of
over-the-counter stocks to facilitate sales, primarily for institutional and
individual customers. Rodman employs taxable and municipal bond traders and
salespersons and maintains inventories of municipal bonds to facilitate
transactions with its retail and institutional customers. See Note 8 to the
Consolidated Financial Statements for the market value of the Company's long
and short securities inventory positions at June 24, 1994.
INTEREST
Rodman earns interest revenue principally through financing
customers' purchases of securities, from securities inventories carried for
resale to customers, from securities finder services, and from short-term
investments.
Margin Accounts. Interest is charged to customers on the amount loaned to
finance margin transactions. Financing of margin purchases is an important
source of revenue and profits to Rodman since the interest rate paid by the
customer on the funds loaned to them exceeds Rodman's cost of short-term funds.
Interest rates charged to customers on such loans range from zero to two and
one-half percent over the broker call rate (the rate paid to banks by brokers
on loans collateralized by marketable securities) depending upon the average
net margin balance in the customer's account and the volume of the customer's
transactions.
Securities Finder Service. Rodman operates a securities finder service which
matches the specific needs of broker-dealers that must borrow securities to
make deliveries on short sales, or for other reasons, with organizations that
have excess securities legally available for lending. In performing this
service, Rodman assumes a principal position, recording funds received against
securities loaned as liabilities and funds advanced against securities borrowed
as assets. Such loans and borrowings are collateralized through initial cash
deposits and subsequent deposits made as a result of daily "marking-to-market"
of the underlying securities.
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FEE INCOME
Fee income represented approximately 10% of total revenue for the year ended
June 24, 1994, and continues to be an important component of the Company's
revenue.
Investment Banking. Rodman's investment banking division provides financial
advice to and raises capital for corporate clients. It also advises clients in
connection with mergers and acquisitions. This division arranges public
offerings and private placements of equity and debt securities directly with
institutional and individual investors. Rodman also provides advice to clients
with respect to matters such as acquisitions, financial planning, and corporate
recapitalizations.
Municipal Finance. Rodman acts as a manager or co-manager of negotiated
public offerings and private placements of tax-exempt securities issued by
state and municipal governments, power agencies, industrial development and
pollution control financing authorities, sewer and water authorities and state
and local housing authorities.
Limited Partnerships. Rodman markets limited partnership interests in real
estate, commodity pools, and other businesses.
Advisory Services. Rodman Advisory Services, Inc., a wholly owned
subsidiary of the Company, provides investment advisory services to
individuals, municipalities and employee benefit plans.
Other Services. Rodman assists in the design and development of corporate
benefit plans. In addition, it acts as a general insurance agent providing
insurance consultations and advice and represents a number of insurance
companies in the sale of a broad range of insurance products.
MARKET RESEARCH
Rodman provides investment recommendations and market information to its
securities and commodity futures customers. Rodman's research efforts are
supplemented by research services purchased from outside consultants.
COMPETITION
The Company competes for customers on the basis of price, range of services,
quality of services, financial resources and reputation. The Company encounters
intense competition in all aspects of the securities and commodities business
and competes for customers and personnel directly with other securities and
commodities firms, a number of which have greater resources and offer a wider
range of financial services. In addition, there is increasing competition from
other sources, such as commercial banks and insurance companies. Several
leading commercial banks have obtained approval from the Federal Reserve Board
to enter into various new business activities, such as underwriting certain
municipal securities, and pending legislative proposals would permit all
commercial banks to engage in similar activities. These developments may lead
to the creation of a greater number of integrated financial services firms that
may be able to compete more effectively than the Company for investment funds
by offering a greater range of financial services.
EMPLOYEES
As of August 31, 1994, the Company employed approximately 490 people,
including 84 retail securities representatives, 71 commodities associated
persons, and 47 institutional securities sales representatives. None of the
Company's employees are covered by a collective bargaining agreement. During
the past fiscal year the Company experienced significant turnover in its
personnel. However, the Company considers its relations with its current
employees to be good and regards compensation and employee benefits including
medical, life and disability plans to be competitive with those offered by
other firms. Competition for experienced financial services personnel is keen
in the securities and commodities industry and, from time to time, the Company
may experience additional losses of valuable personnel.
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<PAGE> 6
REGULATION
Rodman is registered as a broker-dealer in all 50 states and the District of
Columbia. Rodman also is registered as a futures commission merchant with the
Commodity Futures Trading Commission ("CFTC".) The securities and commodities
industry in the United States is subject to extensive regulation under both
federal and state laws. The Securities and Exchange Commission ("SEC") is the
federal agency responsible for the administration of the federal securities
laws. The CFTC is the federal agency responsible for the administration of
federal laws governing commodities transactions. Much of the regulation of
broker-dealers and futures commission merchants has been delegated to
self-regulatory organizations, principally the National Association of
Securities Dealers and national securities and commodities exchanges. The NYSE
and the Chicago Mercantile Exchange have been designated by the SEC and the
CFTC, respectively, as Rodman's primary regulators. These self-regulatory
organizations adopt rules (subject to approval by the SEC and the CFTC) that
govern the industry and the conduct of business. Rodman Advisory Services,
Inc. is registered as an investment adviser with the SEC.
Broker-dealers and futures commission merchants are subject to regulations
that cover all aspects of the securities and commodities business, including
sales methods, trade practices, use and safekeeping of customers' funds and
securities, capital structure, recordkeeping and the conduct of directors,
officers and employees. Under certain circumstances, these regulations could
limit the ability of the Company to make withdrawals of capital from Rodman.
Additional legislation, changes in rules promulgated by the SEC and CFTC and
self-regulatory organizations, or changes in the interpretation or enforcement
of existing legislation and rules may directly affect the method of operation
and profitability of broker-dealers and futures commission merchants. The SEC,
CFTC, self-regulatory organizations, and state securities commissions may
conduct audits and administrative proceedings which can result in censure,
fine, the issuance of cease-and-desist orders or the suspension or expulsion of
a broker-dealer or futures commission merchant, its officers or employees. The
principal purpose of regulation and discipline of broker-dealers and futures
commission merchants is the protection of customers and the securities and
commodities markets, rather than the protection of creditors and stockholders
of broker-dealers and futures commission merchants.
The Company is a member of the Securities Investor Protection Corporation
("SIPC"), which provides, in the event of the liquidation of a broker-dealer,
protection for customers' accounts held by the firm of up to $500,000 for each
customer, subject to a limitation of $100,000 for claims for cash balances.
SIPC is funded through assessments on registered broker-dealers, which may not
exceed 1% of a broker-dealer's gross revenues, SIPC assessments currently are
.054% of Rodman's gross revenues. In addition, the Company provides
additional protection through a private insurer of up to $9,500,000 for
securities of each customer, for a combined coverage of $10,000,000.
Additional protection may be purchased by individual customers subject to the
limitations of the contract.
NET CAPITAL REQUIREMENTS
As a registered broker-dealer and futures commission merchant, Rodman is
subject to SEC Rule 15c3-1, the Uniform Net Capital Rule, which is enforced by
the NYSE together with certain additional requirements set forth in the NYSE's
Rule 325. The Uniform Net Capital Rule is designed to measure the general
financial integrity and liquidity of a broker-dealer and requires that at least
a portion of its assets be kept in relatively liquid form. Rodman is also
subject to the net capital requirements of the CFTC and various commodity
exchanges. Both SEC and CFTC rules specify minimum net capital levels as
discussed below.
Rodman has elected to compute net capital under the alternative method of
calculation permitted by the Uniform Net Capital Rule. The Rule requires that
Rodman maintain minimum net capital, as defined, equal to the greater of (i) 2%
of aggregate debits arising from customer transactions, (ii) $1,000,000, or
(iii) 4% of the funds required to be segregated for customers pursuant to the
Commodity Exchange Act, exclusive of the market value of commodity options
purchased by option customers.
Failure to maintain the required net capital may subject a firm to
suspension or revocation of registration by the SEC and suspension or expulsion
by the NYSE and other regulatory bodies and ultimately may require its
liquidation. The Uniform Net Capital Rule also provides that the total
outstanding principal amounts of a broker-dealer's indebtedness under certain
subordination agreements, the proceeds of which are includible in its net
capital, may not exceed for a period in excess of 90 days 70% of the sum
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<PAGE> 7
of the total outstanding principal amounts of all subordinated indebtedness
included in net capital plus stockholder's equity. See Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources.
ITEM 2. PROPERTIES.
The headquarters of the Company are at 120 South LaSalle Street, Chicago,
Illinois. Branch offices are located in New York, Kansas City, Cleveland, San
Francisco, Milwaukee, San Diego, Dallas and Northbrook, Illinois. All of the
offices are leased on a long-term basis under leases which expire at various
dates from 1995 to 2001. See Note 15 to the Consolidated Financial Statements
for the minimum annual rentals in succeeding fiscal years under all
noncancellable leases with terms in excess of one year, as of June 24, 1994 .
The Company plans to move its office locations in Chicago and New
York within the next year. See Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Expenses. The Company
considers these new offices to be adequate for its future needs.
ITEM 3. LEGAL PROCEEDINGS.
Many aspects of the Company's business involve risk of liability. The
Company has been named as a defendant in civil actions arising in the ordinary
course of business out of its activities as a broker-dealer in securities and
as a futures commission merchant. The Company may also be required to
contribute to any adverse judgments or settlements in actions arising out of
its participation in various underwritten offerings. Although it is impossible
to predict with certainty the outcome of pending litigation, management of the
Company believes, after consultation with outside counsel, that the outcome of
pending litigation will not have a material adverse effect on the financial
condition or results of operations of the Company.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held an annual meeting of its stockholders on June 1,
1994. At the meeting the stockholders elected the following directors by the
number of votes indicated.
<TABLE>
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
Alexander C. Anderson 4,274,852 80,751
Paul C. Blackman 4,275,324 80,279
Eduardo Camarena Legaspi 4,275,071 80,532
Charles W. Daggs, III 4,274,752 80,851
Jorge Antonio Garcia Garza 4,275,071 80,532
Lawrence R. Helfand 4,274,245 81,358
Scott H. Lang 4,273,957 81,643
Jorge Lankenau Rocha 4,275,071 80,532
Thomas E. Meade 4,274,852 80,751
Mauricio Morales Sada 4,275,071 80,532
Richard Pigott 4,274,087 81,516
David S. Ruder 4,275,563 80,040
Peter J. Schild 4,275,104 80,499
Joseph P. Shanahan 4,274,783 80,850
Frederick G. Uhlmann 4,275,563 80,040
</TABLE>
Since the annual meeting, Mr. Schild has resigned as a director and
Francis L. Kirby has been appointed to serve the remainder of Mr. Schild's
term. Mr. Helfand also recently resigned as a director, but his replacement
has not yet been nominated.
The stockholders also approved the adoption of the Company's
Non-Employee Director Stock Option Plan and 1994 Stock Option Plan, approved
the terms of the performance goal pursuant to which its chief executive officer
would receive compensation and ratified the appointment of Deloitte & Touche as
independent auditors for the Company for the June 24, 1994 fiscal year by the
following votes:
<TABLE>
<CAPTION>
For Against Abstain Non-Vote
--- ------- ------- --------
<S> <C> <C> <C> <C>
Non-Employee Director Stock Option Plan 2,878,227 170,344 28,734 1,278,298
1994 Stock Option Plan 2,875,443 176,970 24,892 1,278,298
Chief Executive Officer Performance Goal 4,058,582 192,739 31,088 73,194
Ratification of Auditors 4,311,539 36,363 7,701 -0-
</TABLE>
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
SUPPLEMENTARY FINANCIAL DATA
QUARTERLY DATA (UNAUDITED)
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
INCOME (LOSS)
BEFORE
TAXES AND
CUMULATIVE
EFFECT OF CHANGE
IN INCOME
ACCOUNTING NET (LOSS) STOCK PRICE
FOR INCOME INCOME PER RANGE
REVENUES EXPENSES TAXES (LOSS) SHARE HIGH LOW
-------- -------- ----- ------ ----- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal year 1994
Quarter ended:
09/24/93 $26,355 $22,557 $ 3,798 $ 2,859 $ .61 $9.750 $5.375
12/31/93 23,441 25,469 (2,028) (1,643) (.38) 9.750 7.125
03/25/94 14,593 17,707 (3,114) (2,088) (.46) 7.875 5.750
06/24/94 12,928 29,015 (16,087) (15,629) (3.46) 6.875 5.000
----------------------------------------------------------------------------------------------
TOTAL YEAR $77,317 $94,748 $(17,431) $(16,501) $(3.69) $9.750 $5.000
==============================================================================================
Fiscal year 1993
Quarter ended:
09/25/92 $19,950 $19,880 $ 70 $ 51 $.01 $5.750 $4.500
12/31/92 21,950 21,323 627 318 .07 5.625 4.500
03/26/93 22,607 22,287 320 263 .06 6.625 5.000
06/25/93 22,802 23,271 (469) (376) (.08) 7.250 5.250
----------------------------------------------------------------------------------------------
TOTAL YEAR $87,309 $86,761 $548 $256 $.06 $7.250 $4.500
==============================================================================================
</TABLE>
The common stock of Rodman & Renshaw Capital Group, Inc. is listed on the NYSE.
The trading symbol is RR. At August 31, 1994, the approximate number of
stockholders of record was 240.
Information contained herein may not agree with information published in the
quarterly reports due to the change in accounting methods effective June 27,
1992. For fiscal 1993, total revenues and total expenses previously reported
in the first quarter were $21,458 and $21,388 respectively; and for the second
quarter were $23,377 and $22,750, respectively. There was no effect on net
income because of the accounting change for commission revenues and expenses on
customer transactions originated from introducing brokers discussed in Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Certain Accounting Matters.
No dividends were declared in fiscal 1994 or fiscal 1993. The Board of
Directors reviews its dividend policy periodically. However, there is no
assurance that dividends will be paid in the future since they are dependent
upon earnings, financial condition, and other factors. See Note 14 to the
Company's Consolidated Financial Statements for a discussion of potential
restrictions on the payment of dividends.
The cumulative effect of the accounting changes in fiscal 1993 on per share
amounts was zero.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FISCAL YEAR END
(in thousands of dollars except per share data)
1994 1993 1992 1991 1990
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues (1) $ 77,317 $ 87,309 $ 84,378 $ 76,590 $ 71,882
Expenses (1) 94,748 86,761 81,175 78,962 69,729
----------------------------------------------------------------
Income (loss) before income taxes (17,431) 548 3,203 (2,372) 2,153
Net income (loss) (16,501) 256 1,989 (1,595) 1,752
Net income (loss) per common share (3.69) 0.06 0.46 (0.37) 0.42
Cash dividends per share -0- -0- -0- -0- -0-
<CAPTION>
----------------------------------------------------------------
1994 1993 1992 1991 1990
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets (1) $ 300,664 310,198 321,890 242,563 315,941
Total liabilities (1) 263,325 271,288 282,772 205,434 287,244
Liabilities subordinated to the
claims of general creditors 6,750 8,000 8,500 8,500 10,000
Total stockholders' equity 30,589 30,910 30,618 28,629 28,697
Book value per common share (2) 6.68 7.07 7.01 6.56 6.92
</TABLE>
(1) See Note 2 to the Consolidated Financial Statements regarding accounting
changes.
(2) Abaco holds 150 shares of preferred stock convertible upon stockholder
approval into the Company's common stock. In the conversion, the $15,000,000
preferred stock purchase price will be divided by $7.25 to determine the number
of common shares to be issued. See Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and Capital
Resources. Prior to the sale of the preferred stock, the Company's book value
per common share was $3.41. After the sale, book value per common share was
$6.68. Assuming the conversion had taken place at June 24, 1994, the book
value per share as of that date would have been $4.60.
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<PAGE> 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
BUSINESS ENVIRONMENT
Rodman & Renshaw Capital Group, Inc. and its subsidiaries
(collectively referred to as the "Company") conduct their businesses in highly
volatile markets. Consequently, the Company's results of operations are
affected by many factors, including general market conditions, the liquidity of
secondary markets, the level and volatility of interest rates, currency and
security valuations, competitive conditions, and the size, number and timing of
transactions. In periods of unfavorable market activity, profitability can be
adversely affected because certain expenses remain relatively fixed. As a
result, revenues and net earnings can vary significantly from quarter to
quarter and year to year.
The period from June 26, 1993, through June 24, 1994, was one of
change and volatility in the financial services arena. Long-term interest
rates started to rise after several years of decline. This depressed the
performance of fixed income departments throughout the brokerage industry. For
the first six months of calendar 1994, the total volume of underwritings for
new equity and debt securities sold domestically decreased by 18% from a year
earlier.
Fiscal 1994 was also a year of substantial change for the Company.
During the first quarter of fiscal 1994 the Company completed the sales of the
London futures and option operations and the Chicago Stock Exchange specialist
operation. Further, as discussed in Item 1. Business, on December 21, 1993,
Abaco acquired approximately 54% of the Company's outstanding shares through a
tender offer. Although this transaction will benefit the Company's ability to
compete profitably in the future, the Company's earnings during fiscal 1994
were impacted negatively. The Company incurred significant costs as senior
management was replaced. Production was lost due to significant employee
turnover, thereby reducing revenues and earnings. The Company also incurred
several material nonrecurring expenses and a restructuring charge.
Since the acquisition, the Company substantially changed its senior
management team, conducted a review of the profitability of each of its core
businesses, and developed overall company and individual departmental business
plans. The Company has added a substantial number of producers -- both traders
and salespersons -- to its fixed income, retail sales and futures departments.
The Company expanded its investment banking and institutional equity
businesses. The Company also identified new geographical markets for expansion
and opened a new office in San Diego.
OUTLOOK
The Company is starting to experience positive contributions from the
institutional fixed income brokerage and trading, futures, and investment
banking departments. The Company continues to review its processing procedures
and cost structure and intends to implement changes to improve its profit
margins. In addition, new offices were opened in Dallas and San Francisco. The
Company is expanding its investment advisory services and money management
capabilities to benefit from the rapidly growing movement in the investment
industry toward fee-based income. The Company has identified and is pursuing
opportunities that will take advantage of its relationship with Abaco.
Potential areas of synergy between the Company and Abaco are the development of
investment and merchant banking opportunities in Mexico, making markets in
certain Mexican equity issues in the United States, and providing research and
trade execution on Mexican companies to domestic institutional and retail
customers.
11
<PAGE> 12
RESULTS OF OPERATIONS
The results of operations should be read in conjunction with the
Company's consolidated statements of operations and related notes.
During the fiscal year ended June 24, 1994, the Company's revenues
decreased approximately 11% to $77,317,000. This followed an increase of 4%
for fiscal year 1993 when revenues rose to $87,309,000 from $84,378,000 in
fiscal 1992.
The Company recorded a net loss of $16,501,000, or $3.69 per share,
compared with fiscal 1993 net income of $256,000, or $.06 per share, and fiscal
1992 net income of $1,989,000, or $.46 per share.
REVENUES
Commission revenue decreased 25% in fiscal 1994 to $29,158,000,
largely a function of the reduced volume in the securities and futures markets
and the aforementioned loss in personnel (as discussed in Item 1. - Employees).
Total fiscal 1993 commission revenues decreased from 1992 due to the accounting
change discussed in Note 2 to the Consolidated Financial Statements. Absent
this accounting change, commission revenues increased $1,249,000 in fiscal
1993 to $38,718,000.
Revenues from principal transactions, which include realized and
unrealized gains and losses on securities held for resale, decreased 15% to
$27,313,000 in fiscal 1994 primarily due to losses incurred as a result of
volatility in the debt markets. Principal revenues rose 26% in fiscal 1993 to
$32,216,000. The Company is aggressively hiring experienced traders and
salespersons in the institutional fixed income department. Specifically, the
department has expanded its expertise to include capabilities in the
mortgage-backed, tax-exempt and corporate bond areas.
Interest income decreased 13% in fiscal 1994 to $9,213,000 due to a
decrease in average customer margin receivables and a reduction of firm
inventory carried for sale to customers.
Fee income increased 142% in fiscal 1994 to $7,598,000, which followed
a 33% decrease in fiscal 1993 from $4,728,000 in fiscal 1992. The timing of
revenue recognition on investment banking transactions is a function of when
the transactions are completed. The Company completed 18 transactions during
fiscal 1994, as compared to 7 and 13 transactions during fiscal 1993 and 1992,
respectively.
The Company realized nonrecurring net gains of $2,551,000 in fiscal
1994 from the sales of its London futures and option operations and its Chicago
Stock Exchange specialist operation.
EXPENSES
NONRECURRING EXPENSES AND RESTRUCTURING CHARGE
As noted above, the Company incurred several material nonrecurring
expenses and a restructuring charge during fiscal 1994. These items are
recorded in various financial statement line items including Employee
Compensation and benefits, Professional Fees and Other Operating Expenses.
Such items are summarized below by the type of transaction which gave rise to
the expense or charge.
<TABLE>
<S> <C>
Ownership change transaction $ 6,401,000
Restructuring charge 3,815,000
Litigation and settlements 3,427,000
Employee related 1,178,000
Other 3,545,000
------------
Total nonrecurring expenses and restructuring charge $ 18,366,000
============
</TABLE>
12
<PAGE> 13
The Company incurred various expenses related to the ownership change
transaction totaling $6,401,000, which included the cost of the buyout of
employee stock options held by non-executive employees undertaken in connection
with the change of control, certain investment banking and professional fees,
and costs related to the aforementioned change in senior management.
The Company, as part of its long-term business plan, is moving its
Chicago and New York office locations. In Chicago, the Company is presently
negotiating lease terms for approximately 75,000 square feet in a nearby office
building, an increase from approximately 50,000 square feet in its present
location. In New York, the Company will be moving to Two World Financial
Center to share a floor with Abaco International Corporation, a wholly owned
subsidiary of Abaco, expanding its space by approximately 10,000 square feet.
The Company has recorded a restructuring charge totaling approximately
$3,815,000 related to these moves. This figure includes the costs of
abandoning certain leasehold improvements and certain lease obligations for
space which management believes it will be unable to sublet after the move.
Any sublease revenues realized in the future will be recorded as a reduction of
occupancy costs.
Rodman incurred expenses totaling $3,427,000 related to certain legal
settlements during the year ended June 24, 1994. This amount does not include
the costs of normal recurring litigation inherent in day-to-day operations.
Rodman incurred certain employee related expenses totaling $1,178,000
in connection with the severance of certain employees, employment fees and
other costs associated with the new hirings.
Other nonrecurring expenses totaling $3,545,000 include expenses and
allowances incurred in connection with the termination of Rodman's high-yield
fixed income securities business and liquidation of the related portfolio.
TOTAL EXPENSES
Total expenses increased $7,987,000 to $94,748,000 in fiscal 1994,
following an increase of $5,586,000 in fiscal 1993. The following discussion
focuses on the changes in expenses after excluding the nonrecurring expenses
discussed above. Those expenses were summarized above by transaction type, not
by financial statement line item. They are summarized by financial statement
line item below.
Employee compensation and benefit expense, excluding nonrecurring
expenses totaling $5,358,000 as discussed above, totaled $44,696,000, a
decrease of $5,392,000, or 11%, from 1993 amounts. This decrease is the net
effect of reduced variable compensation related to the decrease in commission
revenues and an increase in fixed compensation expense resulting from the
employment of new management and producers.
Commissions, floor brokerage, and clearing expenses decreased 18% to
$7,141,000 in fiscal 1994, commensurate with the decrease in commission
revenues. These expenses increased 4% in 1993.
Interest expense decreased 20% to $5,714,000 in fiscal 1994 from
$7,135,000 in 1993. This is a result of lower interest rates in the first half
of fiscal 1994 when customer balances were relatively unchanged from the prior
year and decreased customer balances during the second half of the year. This
followed an increase of 2% to $7,135,000 in fiscal 1993.
Communication expense decreased 11% to $6,063,000 from $6,803,000 due
to the reduction in customer and market trading activity, the sale of the
London futures and option operations and negotiated reductions with
13
<PAGE> 14
certain communication vendors. This followed an increase in fiscal 1993 of 7%
due to expansion in Cleveland and Milwaukee.
Occupancy and equipment expense decreased 8% to $5,949,000 in fiscal
1994, primarily due to the sale of the London futures and option operations in
August 1993. The increase in fiscal 1993 over 1992 of 6% was due to expansion
in Cleveland and Milwaukee.
Professional fees, excluding the certain nonrecurring expenses of
$3,384,000, as discussed above, decreased 32% to $1,843,000 in fiscal 1994 due
to a reduction in consulting projects.
Other operating expenses, excluding certain nonrecurring expenses of
$5,809,000, as discussed above, increased 3% to $4,976,000 in fiscal 1994.
The following table summarizes the changes in the major categories of
revenues and expenses (including the nonrecurring expenses and restructuring
charge) for the past two fiscal years:
<TABLE>
<CAPTION>
1994 vs 1993 1993 vs 1992
Increase (Decrease)
-------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Commissions $(9,560,000) (25%) $(2,523,000) (6%)
Principal (4,903,000) (15%) 6,576,000 26%
Interest (1,345,000) (13%) (290,000) (3%)
Fee income 4,453,000 142% (1,583,000) (33%)
Net gain on sales of exchange memberships
and related assets 2,551,000 100% N/A N/A
Other (1,188,000) (44%) 751,000 39%
----------- --- ----------- --
$(9,992,000) (11%) $ 2,931,000 4%
=========== === =========== ==
EXPENSES
Employee compensation and benefits $ (34,000) 0% $ 2,722,000 6%
Commissions, floor brokerage and clearing (1,580,000) (18%) 349,000 4%
Interest (1,421,000) (20%) 170,000 2%
Communication (740,000) (11%) 446,000 7%
Occupancy and equipment (512,000) (8%) 385,000 6%
Professional fees 2,517,000 93% 909,000 50%
Other operating expenses 5,942,000 82% 605,000 14%
Restructuring charge 3,815,000 100% N/A N/A
----------- --- ----------- --
$ 7,987,000 9% $ 5,586,000 7%
=========== === =========== ==
</TABLE>
The Company recorded a net tax benefit of $930,000 for fiscal 1994.
An additional benefit of $4,518,000, was offset by a valuation allowance
pursuant to Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." This valuation allowance has been recognized due to the
uncertainty of realizing the tax benefit of loss carryforwards and temporary
differences totaling $2,469,000 and $2,627,000, respectively, at June 24, 1994.
LIQUIDITY AND CAPITAL RESOURCES
Effective June 24, 1994, the Company issued to Abaco 150 shares of
nonvoting preferred stock convertible into the Company's common stock. In the
conversion, the $15,000,000 preferred stock purchase price will be divided by
$7.25 to determine the number of common stock to be issued (2,068,965). The
conversion remains subject to approval by the Company's stockholders, which is
expected at a special meeting to be held in the fall of 1994. Upon such
approval, the preferred stock held by Abaco will convert automatically without
any further payment or other action by Abaco.
14
<PAGE> 15
In spite of the loss reported for the year ended June 24, 1994, the
Company's Statement of Financial Condition at June 24, 1994 reflects a strong
and liquid financial position because of the $15,000,000 capital contribution
by Abaco. Stockholders' equity prior to the contribution was $3.41 per share.
Including the recent capital addition, the total capital was $30,589,000, or
$4.60 per share, assuming conversion of the preferred stock, and $6.68 per
share without assuming that conversion, as compared to $30,910,000, or $7.07
per share, at June 25, 1993. Subordinated liabilities of $6,750,000
represented 18% of capitalization as of June 24, 1994, as compared to 20% of
capitalization as of June 25, 1993.
On June 22, 1994, the Company borrowed $10,000,000 from Confia S.A.,
Institucion de Banca Multiple, Abaco Grupo Financiero ("Confia, S.A."), a
subsidiary of Parent. The stated due date of the loan is December 19, 1994,
but it is the non-binding intention of management of the Company and Confia,
S.A. to renew this borrowing at that time. Such renewal may be on different
terms than the original loan, depending upon market factors and Confia, S.A.'s
internal lending policies.
Rodman's various subordinated borrowings have maturities at dates
within the next twelve months, as follows:
<TABLE>
<S> <C>
September 30, 1994 $ 1,000,000
December 31, 1994 1,374,000
June 24, 1995 10,000,000
</TABLE>
On June 30, 1994, Rodman obtained regulatory approval to repay and
repaid $1,876,000 of a subordinated note pursuant to a termination agreement..
The scheduled repayments on September 30, 1994, and December 31, 1994, will be
funded from cash reserves. The $10,000,000 subordinated borrowing is part of a
senior subordinated revolving credit facility between Rodman and the Company
terminating on June 15, 1998, which facility is currently funded by the Company
loan from Confia, S.A. discussed above. It is the intention of management of
the Company and Rodman to extend this subordinated borrowing through June 1998.
To the extent that such subordinated borrowing is required for Rodman's
continued compliance with minimum net capital requirements, it may not be
repaid. If the subordinated debt is not repaid to the Company by Rodman and if
the borrowing between the Company and Confia, S. A. is not renewed, this would
require the Company to seek third party sources of funds. See Notes 11 and 14
to the Consolidated Financial Statements. All other subordinated borrowings
are from unrelated parties.
The Company's assets are substantially comprised of customer-related
receivables and securities inventory, both of which are highly liquid. The
principal sources of financing are stockholders' equity, customer payables,
proceeds from securities lending, short-term loans from banks and Confia, S.A.,
and other payables. Additionally, the Company maintains established lines of
credit with large financial institutions which include daily demand loans,
letters of credit and reverse repurchase agreements to meet financing needs.
The Company does not participate in domestic merchant banking activities or
bridge loans.
In fiscal 1994, the Company generated cash and cash equivalents of
$3,188,000 from operating activities. In fiscal 1993 and 1992, the Company's
operations used $7,270,000 and $12,106,000, respectively.
In fiscal 1994, the Company generated $3,732,000 from investing
activities, primarily the result of the sale of its London futures and option
operations and Chicago Stock Exchange specialist operation. In fiscal 1993 and
1992, investing activities used $926,000 and $724,000, respectively, primarily
for the purchase of furniture and equipment.
In fiscal 1994, the Company generated $5,957,000 from financing
activities, which represents debt and equity financing from Abaco and Confia,
S.A., net of reductions in short-term bank and subordinated
15
<PAGE> 16
borrowings. Financing activities provided $7,848,000 and $7,650,000 in fiscal
1993 and 1992, respectively, primarily through increases in short-term bank
borrowings.
Although the Company is anticipating two office relocations during the
next year, the Company is negotiating tenant build-out concessions to attempt
to minimize the impact on the Company's liquidity. The Company does not
anticipate any other major capital acquisitions or investments during the next
year. Future expenditures, if any, are expected to be funded by cash generated
from operations and other traditional means of financing.
As a registered broker-dealer and futures commission merchant, Rodman
is required by the SEC and CFTC to maintain specified amounts of net capital to
meet its customer obligations. See Note 14 to the Consolidated Financial
Statements. As of June 24, 1994, Rodman's net capital, as defined, was
$30,703,000, which was $25,327,000 in excess of required net capital. As of
June 25, 1993, Rodman's net capital was $15,843,000, which was $10,790,000 in
excess of required net capital.
INFLATION
The Company's assets are primarily monetary, consisting of cash,
securities inventory, and receivables. These monetary assets are generally
liquid and turn over rapidly and, consequently, are not significantly affected
by inflation. However, the rate of inflation affects various expenses of the
Company, such as employee compensation and benefits, communications, and
occupancy and equipment, which may not be readily recoverable in the price of
its services.
CERTAIN ACCOUNTING MATTERS
During fiscal year 1993 Rodman implemented three accounting changes:
1. Rodman changed its method of accounting for commission revenue and
expenses for commodity transactions executed for introducing brokers.
For 1993, the net commission retained by the Company was recorded as
revenue. In previous years, the entire amount of commissions charged
to customers on introducing brokers were recorded as commission
expense. See Note 2 for the effects on the Financial Statements.
2. Rodman changed its method of accounting for securities owned by
customers which are held as margin on future and options transactions.
These securities are netted against the offsetting liability to the
customer. Previously, the customer owned securities amounts were not
netted.
3. Rodman adopted SFAS No. 109, "Accounting for Income Taxes." The
cumulative effect of this change was an $18,000 benefit.
Rodman believes these accounting changes better reflect the economic service
and substance of the transactions.
In December 1990, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 106, "Accounting for Post retirement Benefits Other than
Pensions." In November 1992, the FASB issued SFAS No. 112, "Employers'
Accounting for Postemployement Benefits." The Company currently maintains no
plans which are subject to the provisions of SFAS No. 106 or SFAS No. 112.
Accordingly, the implementation of SFAS No. 106 and SFAS No. 112 are expected
to have no effect on the Company's financial statements.
In 1992 the FASB issued SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Effective for fiscal years
beginning after December 15, 1993, SFAS No. 115 will require the
16
<PAGE> 17
Company to classify its investments in debt and qualifying equity securities
into three categories: "trading," "available-for-sale" or "held-to-maturity."
Securities that are classified as trading and available-for-sale are required
to be recorded at fair value. The Company does not believe that the
implementation of SFAS No. 115 will have a material effect on the Company's
financial position or results of operations.
On April 11, 1994 the Board of Directors voted to change the
Company's fiscal year end to December 31. Accordingly, the Company's next
reporting period will be from June 25, 1994 through December 31, 1994.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is submitted as a separate
section of this report. (See Index on page 36)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
17
<PAGE> 18
PART III
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT
The following table sets forth for each of the Company's current directors and
executive officers his age, current positions with the Company, period of
service and business experience for the past five years:
<TABLE>
<S> <C>
Alexander C. Anderson Age 47; Director since April 11, 1994; Research Director of Abaco since 1989.
Paul C. Blackman Age 53; Director, Executive Vice President of the Company since April 11, 1994;
Senior Vice President of the Company since 1993; Senior Vice President of Dean
Witter Reynolds Inc., a financial services firm, from 1990 to 1993; General
Partner and National Sales Manager of Cowen & Co., a financial services firm,
from 1979 to 1990.
Eduardo Camarena Legaspi Age 44; Director since 1993; Chief Executive Officer of Abaco since 1991;
Director of Abaco since 1985, Director of Parent since 1992 and Director of
Confia, S.A., since 1991.
Charles W. Daggs, III Age 47; Director, President and Chief Executive Officer of the Company and
President of Rodman since April 11, 1994; Senior Managing Director, Bear
Stearns & Co., Incorporated, a financial services firm, from 1991 to 1994;
Chairman and Chief Executive Officer of Sutro & Co. Incorporated, a financial
services firm, from 1986 to 1990.
Jorge Antonio Garcia Garza Age 33; Director since 1993; General Counsel, Secretary of the Board of
Directors of Parent since 1992; General Counsel of Abaco since 1985 and
Secretary of Abaco's Board of Directors since 1986; General Counsel of Confia,
S.A. since 1992, Secretary of the Board of Directors of Confia, S.A. since 1993
and Director of Confia, S.A. since 1991.
John T. Hague Age 39; Executive Vice President and Chief Financial Officer of the Company
since June 28, 1994; Executive Vice President and Director of Internal Audit of
the Company from April 11, 1994 to June 28, 1994; Senior Manager with Deloitte
& Touche, a certified public accounting firm, from 1990 to April, 1994; partner
with Spicer & Oppenheim, a certified public accounting firm, from 1988 to 1990.
Francis L. Kirby Age 50; Director since September 8, 1994; Executive Vice President of the
Company since June 24, 1994; Senior Vice President of Oppenheimer & Co., Inc.,
a financial services firm, from May 1993 to June 1994; Director and Executive
Vice President of the Company prior thereto.
</TABLE>
18
<PAGE> 19
<TABLE>
<S> <C>
Scott H. Lang Age 48; Director since 1985; Executive Vice President of the Company and
Managing Director of Rodman's Investment Banking Department since 1986.
Mr. Lang also serves as a director of Pacific International Services Corp. and
of Thomas Group, Inc.
Jorge Lankenau Rocha Age 50; Chairman of the Board of the Company and Director since 1993; Chairman
of the Board of Parent since 1992 and of Abaco since 1985; Chief Executive
Officer of Abaco from 1985 to 1991; Chairman of the Board and Chief Executive
Officer of Confia S.A., since 1991.
Thomas E. Meade Age 53; Director since March 18, 1994; Founder and President of Private Capital
Management, Inc., an investment management firm, since 1993; President of
Fidelity Brokerage, a securities brokerage firm, from 1992 to 1993; President
of Kemper Securities/Boettcher, a securities brokerage firm, from 1988 to 1992.
Mauricio Morales Sada Age 33; Director since 1993; Vice President of Sales of Abaco since 1993;
securities broker for Abaco prior thereto.
Richard Pigott Age 54; Director since March 18, 1994; corporate merger and acquisition advisor
and private investor since 1988.
Keith F. Pinsoneault Age 47; Executive Vice President and Chief Operating Officer of the Company
since September 8, 1994; Executive Vice President of the Company since June 1,
1994; Senior Portfolio Manager for Harris Bretall Sullivan & Smith from 1991 to
June 1994; Portfolio Manager for McCullough Andrews & Cappiello from 1990 to
1991; President and Chief Operating Officer of Sutro & Co. Incorporated prior
thereto.
David S. Ruder Age 65; Director since 1993; Professor of Law, Northwestern University School of
Law; partner in the Chicago office of Baker & McKenzie, an international law
firm, from 1990 to June 1994 and Senior Counsel since June 1994; Chairman of
the Securities and Exchange Commission from 1987 to 1989; Member of the Board
of Governors of the National Association of Securities Dealers, Inc., from 1990
to 1993. Mr. Ruder also serves as a Director of Quixote Corporation.
Joseph P. Shanahan Age 47; Director since 1993; President since 1992 of Abaco International
Corporation, a wholly-owned subsidiary of Abaco and a registered broker-dealer
and member of the National Association of Securities Dealers, Inc., based in
New York City; Vice President of the Company and President of Rodman from
January to April, 1994; Treasurer/Managing Director of Keane Securities Co.,
from 1980 to 1990, and consultant to Excalibur Management, Ltd., from 1990 to
1992.
</TABLE>
19
<PAGE> 20
<TABLE>
<S> <C>
David H. Shulman Age 32; Managing Director of Rodman's Fixed Income Group since February 14,
1994; Rodman's First Vice President and Sales Manager for New York Taxable
Fixed Income from 1990 to February 14, 1994; Vice President of Institutional
Sales for Salomon Brothers, an investment banking firm, prior thereto.
Frederick G. Uhlmann Age 64; Director from 1989 to 1993 and since April 11, 1994; Executive Vice
President of the Company and Rodman since 1990; Senior Vice President of the
Company and Rodman from 1988 to 1990.
James D. Van De Graaff Age 34; Executive Vice President, General Counsel and Secretary of the Company
since March 14, 1994; Attorney with Baker & McKenzie, attorneys at law, since
1987.
</TABLE>
All directors of the Company will serve until the next annual meeting
of the stockholders and until their successors have been elected and have
qualified. All officers of the Company serve at the discretion of the Board of
Directors. Certain of the Company's executive officers serve as officers and
directors of other subsidiaries of the Company not specified in the preceding
discussion. There is no family relationship among any of the executive
officers or directors of the Company.
Pursuant to the Acquisition Agreement dated as of November 17, 1993
(the "Acquisition Agreement") among the Company, Abaco and Parent, the
Company's Board of Directors (i) amended the Company's by-laws to (A) provide
for not less than eleven and not more than 21 directors, (B) eliminate the
staggered board provisions, (C) provide that directors must be Independent
Directors (as defined below), Parent Directors (as defined below), or employees
of the company or its affiliates and (D) provide that the term of any director
who ceases to qualify as provided in clause (C) will terminate, and (ii)
reconstituted the Company's Board to consist of Parent Directors, Independent
Directors and Company Directors (as defined below).
An "Independent Director" means any person designated by Parent who
(i) is in fact independent and qualifies as an independent director in
accordance with the New York Stock Exchange Rules, (ii) is not connected with
Parent or the Company or any of their respective affiliates as an officer,
employee, trustee, partner, director (other than of the Company) or person
performing similar functions and (iii) has not been employed by the Company or
any of its subsidiaries during the preceding year. Messrs. Meade and Pigott
are the current Independent Directors. "Parent Directors" means such persons
as are designated by Parent. Messrs. Anderson, Camarena, Daggs, Garcia,
Lankenau, Morales, Ruder and Shanahan are the current Parent Directors.
"Company Directors" currently means the following persons: Messrs. Blackman,
Kirby, Lang and Uhlmann; provided that in the event that any of such directors
resigns or otherwise ceases to be a director for any reason, then, until
December 21, 1996, the other Company Directors will have the right, by majority
vote, to designate a replacement for such director except in situations
involving reduction of the number of directors, which during such period will
in no event reduce the number of Company Directors below three. There is
currently one vacancy among the directorships held by Company Directors. The
other Company Directors designated Messrs. Blackman, Kirby and Uhlmann
pursuant to this provision. The Acquisition Agreement provides that until
December 21, 1996, (i) the Board will consist of not less than eleven directors
and that the number of Parent Directors will be equal to one more than the
total number of other Directors, who will consist solely of two Independent
Directors and the Company Directors, and (ii) the Board's audit committee and
compensation committee shall consist solely of Independent Directors.
20
<PAGE> 21
STOCK OWNERSHIP AND TRADING REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than 10% of
the Company's common stock to file initial stock ownership reports and reports
of changes in ownership with the SEC and the NYSE. They also must furnish a
copy of these reports to the Company. Kurt B. Karmin, former chairman and
chief executive officer and a former director of the Company, informed the
Company that, in addition to delinquencies reported in the Company's proxy
statement dated April 25, 1994, during the Company's last fiscal year Mr.
Karmin filed two late Form 4s with respect to two transactions.
21
<PAGE> 22
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information concerning the
compensation for each of the Company's last three completed fiscal years for
the following persons (the "named executive officers"): each person serving as
the Company's chief executive officer during the last completed fiscal year,
the Company's four most highly compensated executive officers, other than the
chief executive officer, at the end of the last fiscal year, and one additional
individual who would have been among the four most highly compensated executive
officers but for the fact that he was not serving as an executive officer at
the end of the fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------------------------------------------------- ------------ All Other
Securities ------------
Other Annual Underlying Compensation
Name and Principal Position Year Salary($) Bonus ($)(1) Compensation($)(2) Options(#) ($)(3)
- - --------------------------- ---- --------- ------------ ------------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Charles W.Daggs III(4) 1994 68,269 500,000 -0- 100,000 10,000
President and Chief
Executive Officer
Scott H. Lang 1994 150,000 437,257 9,191 -0- 873
Executive Vice President 1993 150,000 -0- 3,089 8,500 8,441
1992 150,000 225,160 1,922 -0-
David H. Shulman(5) 1994 299,363 -0- 1,031,263 5,000 873
Managing Director,
Rodman Fixed Income
Group
Frederick G. Uhlmann 1994 153,333 100,000 153,893 -0- 873
Executive Vice President 1993 100,000 25,000 163,408 2,250 3,841
1992 100,000 25,000 105,708 -0-
Kurt B. Karmin(8) 1994 43,750 -0- 165,178 -0- -0-
Chairman of the Board of 1993 75,000 40,083 236,697 15,000 16,263
Directors and Chief 1992 75,000 72,000 294,769 -0-
Executive Officer
Victor C. Chigas(6) 1994 -0- 15,619 480,514 -0- -0-
Executive Vice President 1993 -0- 56,741 1,164,444 14,000 47,686
1992 -0- -0- 984,093 -0-
Lawrence R. Helfand(7) 1994 125,000 -0- 143,087 -0- -0-
Executive Vice President 1993 100,000 60,000 137,475 10,000 12,182
1992 100,000 50,000 115,912 -0-
</TABLE>
22
<PAGE> 23
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Norman E. Mains (8) 1994 275,000 -0- 29,915 -0- 873
President and Chief 1993 275,000 40,083 166 12,000 17,546
Executive Officer 1992 258,333 98,000 162 15,000
Joseph P. Shanahan (9) 1994 -0- -0- -0- -0- -0-
</TABLE>
(1) Except where otherwise noted in the footnotes, bonuses were based on
profitability of the specific department or area, or multiple departments or
areas, over which the executive had direct responsibility.
(2) These amounts primarily consist of commissions earned from securities
and commodities transactions, and include amounts voluntarily deferred under
the Company's Voluntary Deferred Compensation Plan.
(3) Amounts included under "All Other Compensation" consist of (i) Company
matching funds under the Company's Retirement and Savings Plan and (ii) in the
case of Mr. Daggs, $10,000 in relocation expenses. In accordance with the
transitional provisions of the rules on executive officer compensation adopted
by the SEC, "All Other Compensation" information is excluded for the Company's
1992 fiscal year.
(4) Mr. Daggs joined the Company as President and Chief Executive Officer
on April 11, 1994. The amount in the bonus column reflects a one-time signing
bonus that he received on May 13, 1994.
(5) Mr. Shulman became an executive officer of the Company on February 14,
1994.
(6) On January 10, 1994, Mr. Chigas was terminated as an officer of the
Company.
(7) Mr. Helfand resigned as an officer of the Company on September 16,
1994.
(8) Mr. Karmin was Chairman of the Board and Chief Executive Officer of
the Company during a portion of the 1994 fiscal year. On November 16, 1993, he
stepped down as Chief Executive Officer, while remaining as Chairman of the
Board, and Mr. Norman E. Mains, previously President and Chief Operating
Officer, was elected to the additional position of Chief Executive Officer. On
January 10, 1994, Mr. Karmin resigned as Chairman of the Board and Mr. Mains was
terminated as an officer of the Company. On January 23, 1994, Mr. Karmin
resigned as an employee of the Company.
(9) Mr. Shanahan has been President of Abaco International Corporation
since 1992. Mr. Shanahan held the office of Executive Vice President of the
Company with powers of the Chief Executive Officer from January 10, 1994 to
April 11, 1994. During that time, he remained an employee of Abaco
International Corporation and received no compensation from the Company.
23
<PAGE> 24
The following table presents information as to stock option awards
to each of the named executive officers during the fiscal year ended June 24,
1994. No stock appreciation rights were granted.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term (1)
--------------------------------------------------------------------------- ---------------------------
% of Total
Number of Options
Securities Granted to
Underlying Employees Exercise
Options in Fiscal Price Expiration
Name Granted (#) Year ($/SH) Date 5% ($) 10% ($)
---- ----------- ----- -------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Daggs III 100,000 (2) 34.78% 6.50 04/11/04 78,187 167,272
Scott H. Lang - - - - - -
David H. Shulman 5,000 (3) 1.74% 5.625 08/30/98 33,831 72,377
Frederick G. Uhlmann - - - - - -
Victor C. Chigas (4) - - - - - -
Lawrence R. Helfand (4) - - - - - -
Kurt B. Karmin (4) - - - - - -
Norman E. Mains (4) - - - - - -
Joseph P. Shanahan - - - - - -
</TABLE>
(1) The dollar amounts in these columns project the amount that could be earned
if the common stock appreciates at the annual rates indicated from the date of
grant and if the options are held until the expiration dates shown. These
rates of appreciation are specified by the applicable rules of the SEC and are
not intended to forecast possible future actual appreciation, if any, in the
Company's stock prices.
(2) Fifty percent of the options vest on June 30, 1996, and the remaining
options vest on June 30, 1997. The options are exercisable upon vesting.
(3) Options vest at 20% per year cumulatively, and are exercisable upon
vesting.
(4) No longer employed by the Company.
24
<PAGE> 25
The following table provides information as to the value of the
options held by each named executive officer at June 24, 1994. The Company
has not granted stock appreciation rights.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Securities Unexercised
Underlying In-the-Money
Unexercised Options Options at
at FY-End (#) FY-End ($)(1)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- - ---- --------------- ------------------ ------------- -------------
<S> <C> <C> <C> <C>
Charles W. Daggs III - - -/100,000(2) -/-
Scott H. Lang 21,000 91,875 -/- -/-
David H. Shulman - - 1,400/13,800 150/2,100
Frederick G. Uhlmann 27,000 120,375 -/- -/-
Victor C. Chigas 16,720 75,085 -/- -/-
Lawrence R. Helfand 32,100 156,863 -/- -/-
Kurt B. Karmin 35,000 153,125 -/- -/-
Norman E. Mains 35,000 192,500 -/- -/-
Joseph P. Shanahan - - -/- -/-
</TABLE>
(1) Based on a closing stock price of $5.25 per share on June 24, 1994.
(2) Out-of-the-money options.
REMUNERATION OF DIRECTORS
Directors who are not otherwise employed by Parent, Abaco, the Company or a
subsidiary of the Company are entitled to receive:
. $2,500 for each meeting of the Board of Directors attended in
person;
. $500 for each meeting of the Board of Directors attended by
telephone;
. $2,500 for each meeting of a committee of the Board of Directors
attended in person (unless such meeting is on the same day as a
meeting of the Board of Directors); and
. $500 for each meeting of a committee of the Board of Directors
attended by telephone;
provided that such directors receive a minimum remuneration of $25,000 per
fiscal year. Directors who are otherwise employed by Parent, Abaco, the
Company or a subsidiary of the Company are not entitled to any additional
compensation for serving as directors.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
On June 28, 1993, the Company entered into a Change of Control
Employment Agreement with Norman E. Mains, who was its President and Chief
Operating Officer and a director at that time (the "Mains Agreement"). On
January 10, 1994, Mr. Mains was terminated as an officer of the Company and as
a result was
25
<PAGE> 26
ineligible to serve on its Board of Directors. The following, which is a
description of the Mains Agreement, does not constitute an admission by the
Company as to the enforceability of the Mains Agreement or the Company's
obligation to pay Mr. Mains pursuant to its terms. The Company has thus far
paid Mr. Mains certain sums while reserving all of its rights and defenses.
The Mains Agreement provided that following a Change of Control, as
defined therein (which Change of Control occurred upon the consummation of
Abaco's acquisition of a controlling interest in the Company), the Company
would employ Mr. Mains until June 30, 1995 (the "Employment Period"), and he
agreed to continue his employment with the Company until at least one year
after the Change of Control. During the Employment Period, the Company could
terminate him for "Cause," which included the commission of any felony, the
habitual neglect of duties (other than on account of disability), willful
breach of duty in the course of employment and inability to perform due to
habitual alcohol or drug addiction. Mr. Mains could terminate his employment
during the Employment Period for "Good Reason," which included the assignment
to him of duties other than senior executive and administrative duties at least
commensurate in all material respects with his experience and abilities or the
Company's requiring him to be based at a location which is more than 25 miles
from the location where he was employed before the Change of Control. If Mr.
Mains' employment were terminated without Cause or he were to terminate
employment for Good Reason, then he would be entitled to receive his base
salary, bonus and benefits described below as if he had remained employed
throughout the Employment Period (at the times he would have been entitled to
receive such amounts). Subject to the aforementioned reservation of rights and
defenses, the Company has paid Mr. Mains compensation pursuant to the Mains
Agreement as specified for a termination without cause.
The Mains Agreement provides that Mr. Mains would be paid an annual
base salary until June 30, 1995 ("during the Employment Period") in an amount
at least equal to twelve times his highest monthly base salary during the
twelve-month period before the Change of Control. (See "Summary Compensation
Table" for information concerning Mr. Mains' past compensation.) In addition
to the base salary, Mr. Mains would be entitled to a bonus for each fiscal year
within the Employment Period in an amount equal to 2% of Pre-Tax Income (as
defined in the Mains Agreement) of the Company.
The Company also entered into Change of Control Employment Agreements
with other officers of the Company prior to the Abaco acquistion.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Charles W.
Daggs, III, who was appointed Chief Executive Officer of the Company effective
April 11, 1994. Under the agreement, Mr. Daggs received a one-time signing
bonus of $500,000 on May 13, 1994. His base salary is $300,000 per year.
Further, as approved by the Company's stockholders at its June 1, 1994 meeting,
Mr. Daggs will receive performance-based compensation for each of the two
twelve-month periods commencing July 1, 1994 and July 1, 1995 as follows:
<TABLE>
<CAPTION>
Company's Income Before Taxes ("IBT") (Without Performance-Based Compensation
Giving Effect to Performance-Based Compensation)
<S> <C>
$0 - $5,000,000 5% of IBT
$5,000,000.01 - $10,000,000 $250,000 plus 7.5% of IBT exceeding $5,000,000
$10,000,000.01 - $15,000,000 $625,000 plus 10% of IBT exceeding $10,000,000
More than $15,000,000 $1,125,000 plus percentage of IBT exceeding
$15,000,000 to be determined by the Board of
Directors of the Company but not to exceed 5%.
</TABLE>
26
<PAGE> 27
Notwithstanding the foregoing, the performance-based compensation for each of
the two twelve-month periods will be no less than $600,000. Mr. Daggs will
receive no portion of the performance-based compensation for a period unless he
is employed by the Company at the end of the period.
Pursuant to the terms of his agreement, the Company also has granted
to Mr. Daggs options to purchase 100,000 shares of Common Stock at a price of
$6.50 per share, the fair market value of the Common Stock on his first day of
employment. 50% of such options will become exercisable on June 30, 1996, and
the remaining 50% will become exercisable on June 30, 1997, in each case
provided that Mr. Daggs is employed by the Company on such dates.
Mr. Daggs' agreement will be in effect through June 30, 1996, subject
to extension by mutual agreement and subject to earlier termination by the
Company for cause or upon Mr. Daggs' death or disability.
On February 14, 1994, Rodman also entered into an employment agreement
with David H. Shulman, previously a First Vice President of Rodman, pursuant to
which Mr. Shulman assumed the position of Managing Director of the Fixed Income
Group of Rodman. Under the agreement, Mr. Shulman will receive fixed
compensation of $1,300,000 per year, plus additional compensation equal to 15%
of the net pretax profits of the Fixed Income Group. The agreement is for a
term of three years commencing February 14, 1994, although Rodman may terminate
it for cause or upon Mr. Shulman's death or disability. In the event that
Rodman terminates Mr. Shulman without cause, Mr. Shulman will be entitled to
receive the fixed compensation plus all other employee benefits for the
remainder of the term of the agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since March 18, 1994, the sole members of the Company's Compensation
Committee have been the Company's Independent Directors, Thomas E. Meade and
Richard Pigott. Neither is or has been an officer or employee of the Company
or any of its subsidiaries. In January, 1994, prior to his appointment as a
Director of the Company, Mr. Meade entered into an arrangement with the Company
pursuant to which the Company paid Mr. Meade a fee of $225,000 for his
assistance to the Company in its search for a new chief executive officer.
Mr. Victor C. Chigas, Mr. Norman E. Mains, Mr. Frederick C. Uhlmann
and Mr. Mark G. Grant, who served during a portion of the fiscal year ended
June 24, 1994 as members of the Compensation Committee, were each, during a
portion of such year, executive officers of the Company. Mr. Gregory P.
Quinlivan, Mr. Lawrence R. Helfand, Mr. Kenneth M. Karmin and Mr. Francis L.
Kirby, who served during a portion of the fiscal year ended June 24, 1994 as
members of a Stock Option Committee appointed by the Company's Board of
Directors, were each, during a portion of such year, executive officers of the
Company.
Mr. Vaughan R. Blake, a director of the Company during the fiscal year
ended June 24, 1994, who served as a member of the Company's Compensation
Committee during a portion of such year, was during that time a managing
director for Creditanstalt International Advisers, Inc., an investment banking
subsidiary of Creditanstalt-Bankverein, which entered into a lease of office
space to the Company in November 1992 for a five-year term, at a monthly rental
of approximately $12,000 subject to certain escalation provisions.
Creditanstalt-Bankverein also made a $3.5 million subordinated loan to the
Company in 1990 (simultaneously with an equity investment that has since been
sold to an outside third party), bearing interest at a rate, at June 24, 1994,
6.375%. During the fiscal year ended June 24, 1994, Creditanstalt-Bankverein
received interest payments from the Company aggregating $464,673.
27
<PAGE> 28
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock by (i) each stockholder owning more
than 5% of the outstanding Common Stock, (ii) each director of the Company;
(iii) each person serving as the Company's chief executive officer during the
last completed fiscal year, the Company's four most highly compensated
executive officers, other than the chief executive officer, at the end of the
last fiscal year, and one additional individual who would have been among the
four most highly compensated executive officers but the for fact that he was
not serving as an executive officer at the end of the fiscal year and (iv) all
current directors and executive officers of the Company as a group. Messrs.
Chigas, Helfand, Karmin, and Mains are no longer employed by the Company and
all options granted to them by the Company have been cancelled. The
information for all persons listed on the table is as of August 31, 1994.
<TABLE>
<CAPTION>
Amount and Nature of
Identity of Holder Beneficial Ownership (1) Percent of Class (2)
------------------ ------------------------ --------------------
<S> <C> <C>
Abaco (3)
Montes Rocallosos
505 Sur, Residential San Agustin, 66260
Garza Garcia, N.L. Mexico 2,363,003 51.63%
Marshall S. Geller (4)
1875 Century Park East, Suite 1770
Los Angeles, California 90067 229,304 5.01%
Victor C. Chigas (5)
400 E. Randolph #3005
Chicago, IL 60601 16,720 *
Lawrence R. Helfand
860 N. Lake Shore Drive #7M
Chicago, IL 60611 46,751 1.02%
Kurt B. Karmin (5)
924 Fisher Lane
Winnetka, IL 60091 35,000 *
Norman E. Mains (5)
1065 Fisher Lane
Winnetka, IL 60091 35,000 *
The business address of each of the following persons is:
Rodman & Renshaw, Inc.
120 S. Lasalle St.
Chicago, IL 60603
Alexander Anderson (6) 0 -
Paul C. Blackman 2,575 *
eDUARDO cAMARENA lEGASPI (6) 0 -
Charles W. Daggs III 0 -
Jorge Antonio Garcia Garza (6) 0 -
Francis L. Kirby 0 -
Scott H. Lang 50,860 1.11%
Jorge Lankenau Rocha (6) 0 -
Thomas E. Meade 0 -
Mauricio Morales Sada (6) 0 -
Richard Pigott 500 *
</TABLE>
28
<PAGE> 29
<TABLE>
<S> <C> <C>
David S. Ruder 0 -
Joseph P. Shanahan (6) 0 -
David H. Shulman 7,800 *
Frederick G. Uhlmann 35,563 *
All current directors and executive officers as
a group (18 persons)
96,798 2.11%
* Less than 1%
</TABLE>
(1) Includes 22,025 shares of common stock of the Company subject to stock
options vested under the Company's Incentive Stock Option Plan adopted
in 1983, as amended and restated in 1988, and as amended in 1991, and
exercisable within 60 days after August 31, 1994. Of those, the
following numbers of shares are subject to stock options exercisable
within 60 days after August 31, 1994: Mr. Shulman 400. For each of
the following persons, the number of shares of common stock shown as
owned in the table includes shares, as follows, subject to a contract
with Abaco dated as of January 10, 1994, under which Abaco will
acquire such shares in January, 1995, at a purchase price of $10.50
per share plus interest at 4% per annum: Mr. Chigas, 16,720 shares;
Mr. Helfand, 32,100 shares; Mr. Karmin 35,000 shares; Mr. Lang, 21,000
shares; Mr. Mains 35,000 shares; and Mr. Uhlmann, 27,000 shares.
(2) Pursuant to the requirements of Rule 13d-3(d)(1) promulgated under the
Securities Exchange Act of 1934, percentage ownership is calculated as
if the shares subject to immediately exercisable stock options
(including options which become exercisable within 60 days) held by
the persons identified in the above table had been issued to them and
were outstanding, as of August 31, 1994, or within 60 days thereafter.
(3) Parent, Abaco Grupo Financiero, S.A. de C.V., also is deemed the
beneficial owner of Abaco's common stock. The figure in the table
does not include 2,068,965 shares of common stock that Abaco will
receive if the conversion of its preferred stock is approved. See
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources. Upon
such conversion, Abaco would own 4,431,968 shares, or approximately
67%, of the common stock then outstanding. Abaco also has the right
to acquire common stock from the Company if the Company issues stock
and the result is that Abaco beneficially owns less than 51% of the
total voting power of the Company's stock. See also Note 1, above.
(4) Based upon a Schedule 13D received from Mr. Geller.
(5) Based upon the records of the Company's transfer agent.
(6) Not included are 2,363,003 shares held by Abaco, of which the
referenced person is a director and/or officer.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 22, 1994, the Company borrowed $10,000,000 from Confia, S.A.,
a subsidiary of Parent. The stated due date of the indebtedness is December
19, 1994, but it is the non-binding intention of management of the Company and
Confia, S.A. to renew the borrowing at that time. See Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources. The principal amount bears interest at a rate
of 11.5% per year. The Company paid a commitment fee of $50,000 to Confia,
S.A. for the loan, which is Confia, S.A.'s standard fee for loans in such
amount.
In addition, effective June 24, 1994, the Company issued to Abaco for
$15,000,000 150 shares of nonvoting preferred stock convertible into the
Company's common stock at a rate of $7.25 of the preferred
29
<PAGE> 30
stock purchase price per share of common stock. The conversion remains subject
to approval by the Company's stockholders, which is expected at a special
meeting to be held in the fall of 1994. Upon such approval, the preferred
stock held by Abaco will automatically convert into 2,068,965 shares of common
stock without any further payment or other action by Abaco. Following the
conversion, Abaco would own 4,431,968 shares, or approximately 67%, of the
common stock then outstanding.
David S. Ruder, a Director of the Company, is Senior Counsel to Baker
& McKenzie. Baker & McKenzie performs legal services for the Company.
See also "Item 11 - Executive Compensation."
30
<PAGE> 31
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) The following are Consolidated Financial Statements of
Rodman & Renshaw Capital Group, Inc. and Subsidiaries:
Consolidated Statements of Financial Condition - June
24, 1994 and June 25, 1993.
Consolidated Statements of Operations - Years
ended June 24, 1994, June 25, 1993, and June 26, 1992.
Consolidated Statements of Stockholders' Equity -
Years ended June 24, 1994, June 25, 1993 and June 26,
1992.
Consolidated Statements of Cash Flows - Years ended June
24, 1994, June 25, 1993, and June 26, 1992.
Notes to Consolidated Financial Statements.
(2) Schedule IX Short Term Borrowings.
Schedules for which provision is made in the
applicable accounting regulations of the
Securities and Exchange Commission are not
required under the related instructions or are
inapplicable, and therefore have been omitted.
(b) Reports on Form 8-K
A report on Form 8-K dated March 13, 1994, was filed during the last
quarter of the period covered by this report. The filing reported
certain changes in the Board of Directors of the Registrant and a
change in the Registrant's fiscal year under Item 5 of Form 8-K.
(c) Exhibits - The following exhibits are included herein or are
incorporated herein by reference:
(3) Certificate of Incorporation and By-laws
3.1 Certificate of Incorporation
3.2 By-laws
(4) Instruments Defining the Rights of Security Holders
4.1 Certificate of Designations of Rights, Privileges and
Restrictions of Series A Non-Voting Convertible
Preferred Stock
(10) Material Contracts (Asterisk indicates management contracts or
compensatory plans or arrangements)
31
<PAGE> 32
10.1 Rodman & Renshaw Capital Group, Inc. Non-Employee
Director Stock Option Plan - incorporated by
reference to Exhibit A to the Company's Proxy
Statement dated April 25, 1994.*
10.2 Rodman & Renshaw Capital Group, Inc. 1994 Stock
Option Plan - incorporated by reference to Exhibit
B to the Company's Proxy Statement dated April 25,
1994.*
10.3 Lease Agreement dated October 20, 1980 -
incorporated by reference to Exhibit 10.3 to the
Company's Form S-1 Registration Statement (Reg.
No. 33-4649), which became effective on May 29,
1986.
10.4 Deferred Compensation Plan (dated January 1, 1993)
- incorporated by reference to Exhibit 10(b) of
the Company's Annual Report on Form 10-K for the
year ended June 25, 1993.*
10.5 Deferred Compensation Trust (dated January 1,
1993) - incorporated by reference to Exhibit 10(c)
of the Company's Annual Report on Form 10-K for
the year ended June 25, 1993.*
10.6 Supplemental Executive Retirement Plan (dated
January 1, 1993) - incorporated by reference to
Exhibit 10(d) of the Company's Annual Report on
Form 10-K for the year ended June 25, 1993.*
10.7 Supplemental Executive Retirement Trust (dated
January 1, 1993) - incorporated by reference to
Exhibit 10(e) of the Company's Annual Report on
Form 10-K for the year ended June 25, 1993.*
10.8 Stock Purchase Agreement dated June 24, 1994
between the Company and Abaco Casa de Bolsa, S.A.
de C.V., Abaco Grupo Financiero.
10.9 Loan agreement between the Company and Confia,
S.A. dated June 22, 1994.
10.10 Employment agreement between the Company and
Charles W. Daggs, III dated April 11, 1994.*
10.11 Employment agreement between Rodman & Renshaw,
Inc. and David H. Shulman dated February, 1994.*
10.12 Employment agreement between the Company and F.L.
Kirby dated June 20, 1994.*
(21) Subsidiaries of the Registrant
21.1 Subsidiaries of the Registrant.
(23) Consents of Experts and Counsel
23.1 Consent of Deloitte & Touche L.L.P.
32
<PAGE> 33
(27) Financial Data Schedule
27.1 Financial Data Schedule.
33
<PAGE> 34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf of the undersigned, thereunto duly authorized.
RODMAN & RENSHAW CAPITAL GROUP, INC.
By: /s/ Charles W. Daggs, III
------------------------------
Charles W. Daggs, III
President and Chief Executive Officer
Date: September 21, 1994
Pursuant to the requirements of the Securities Exchange act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/Charles W. Daggs, III Date: September 21, 1994
- - --------------------------
Charles W. Daggs, III
Director, Chief
Executive Officer
/s/John T. Hague Date: September 21, 1994
- - -------------------------
John T. Hague
Chief Financial Officer
/s/David J. Kenneth Date: September 21, 1994
- - ---------------------
David J. Kenneth
Treasurer
/s/Alexander C. Anderson Date: September 21 1994
- - --------------------------
Alexander C. Anderson
Director
/s/Paul C. Blackman Date: September 21, 1994
- - ------------------------------
Paul C. Blackman
Director
/s/Eduardo Camarena Legaspi Date: September 21, 1994
- - -----------------------------
Eduardo Camarena Legaspi
Director
/s/Jorge Antonio Garcia Garza Date: September 21, 1994
- - -------------------------------
Director
/s/Francis L. Kirby Date: September 21, 1994
- - --------------------
Francis L. Kirby
Director
34
<PAGE> 35
/s/Scott H. Lang Date: September 21, 1994
- - --------------------------
Scott H. Lang
Director
/s/Jorge Lankenau Rocha Date: September 21, 1994
- - --------------------------
Jorge Lankenau Rocha
Director
/s/ Thomas E. Meade Date: September 21, 1994
- - --------------------------
Thomas E. Meade
Director
/s/Mauricio Morales Sada Date: September 21, 1994
- - --------------------------
Mauricio Morales Sada
Director
/s/Richard Pigott Date: September 21, 1994
- - --------------------------
Richard Pigott
Director
/s/ David S. Ruder Date: September 21, 1994
- - --------------------------
David S. Ruder
Director
/s/ Joseph P. Shanahan Date: September 21, 1994
- - --------------------------
Joseph P. Shanahan
Director
/s/ Frederick G. Uhlmann Date: September 21, 1994
- - --------------------------
Frederick G. Uhlmann
Director
35
<PAGE> 36
RODMAN & RENSHAW CAPITAL GROUP, INC.
Report on FORM 10-K for the Fiscal Year ended June 24, 1994
FINANCIAL STATEMENT AND SCHEDULE INDEX
<TABLE>
<S> <C>
Independent Auditors' Report 37
Consolidated Statements of Financial Condition-June 24, 1994 and June 25, 1993 38
Consolidated Statements of Operations-Years ended June 24, 1994, June 25, 39
1993, and June 26, 1992
Consolidated Statements of Stockholders' Equity-Years ended June 24, 1994, 40
June 25, 1993 and June 26, 1992
Consolidated Statements of Cash Flows-Years ended June 24, 1994, June 25, 41
1993, and June 26, 1992
Notes to Consolidated Financial Statements 42
Schedule IX - Short Term Borrowings 54
</TABLE>
36
<PAGE> 37
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Rodman & Renshaw Capital Group, Inc.:
We have audited the accompanying consolidated statements of financial condition
of Rodman & Renshaw Capital Group, Inc. (the "Company," a majority-owned
subsidiary of Abaco Casa de Bolsa, S.A. de C.V.) and subsidiaries as of June
24, 1994 and June 25, 1993, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the three fiscal
years in the period ended June 24, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company and its subsidiaries
as of June 24, 1994 and June 25, 1993, and the results of their operations and
their cash flows for each of the three fiscal years in the period ended June
24, 1994, in conformity with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, in fiscal
1993, the Company and its subsidiaries changed its methods of accounting for
commission revenues and expenses for commodity transactions executed for
introducing brokers, for securities owned by customers held as margin on
futures and options on futures transactions, and for income taxes.
August 19, 1994
37
<PAGE> 38
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
JUNE 24, 1994 AND JUNE 25, 1993
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------
ASSETS 1994 1993
<S> <C> <C>
CASH AND CASH EQUIVALENTS-(including reverse repurchase agreements: 1994 - $13,423,000) $ 13,998,000 $ 1,121,000
CASH AND SHORT-TERM INVESTMENTS REQUIRED TO BE SEGREGATED UNDER FEDERAL
REGULATIONS (including reverse repurchase agreements: 1994 - $32,500,000;
1993 - $52,241,000) 36,837,000 62,799,000
RECEIVABLES:
Customers 57,254,000 56,097,000
Brokers, dealers, and clearing organizations 132,458,000 130,378,000
Miscellaneous 5,726,000 7,417,000
SECURITIES OWNED - At market 40,936,000 41,011,000
MEMBERSHIPS IN SECURITY AND COMMODITY EXCHANGES -
At cost (market value: 1994 - $7,000,000; 1993 - $5,735,000) 3,854,000 5,149,000
FURNITURE, FIXTURES, AND LEASEHOLD IMPROVEMENTS -
At cost, less accumulated depreciation and amortization (1994 - $7,408,000;
1993 - $5,816,000) 1,987,000 3,609,000
PREPAID EXPENSES AND OTHER ASSETS 5,057,000 5,534,000
RECOVERABLE INCOME TAXES 1,979,000 329,000
DEFERRED INCOME TAXES - Net of valuation allowance: 1994 - $4,518,000 578,000 407,000
---------- -----------
TOTAL ASSETS $300,664,000 $313,851,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
SHORT-TERM NOTES PAYABLE TO BANKS $ 23,242,000 $ 42,215,000
SHORT-TERM NOTE PAYABLE TO AFFILIATE 10,000,000 --
PAYABLES:
Customers 118,657,000 121,696,000
Brokers, dealers, and clearing organizations 79,828,000 83,127,000
Miscellaneous 1,082,000 3,098,000
SECURITIES SOLD BUT NOT YET PURCHASED - At market 13,788,000 15,751,000
ACCRUED COMMISSIONS 1,715,000 2,394,000
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 15,013,000 6,660,000
---------- -----------
263,325,000 274,941,000
LIABILITIES SUBORDINATED TO THE CLAIMS OF GENERAL CREDITORS 6,750,000 8,000,000
STOCKHOLDERS' EQUITY:
Convertible non-voting preferred stock, Series A, $.01 par value;
5,000,000 shares authorized; 150 shares issued in 1994
Common stock, $.09 par value; 20,000,000 shares authorized;
shares issued: 1994 - 4,577,000; 1993 - 4,372,000 412,000 393,000
Additional paid-in capital 30,935,000 14,774,000
Retained earnings (accumulated deficit) (758,000) 15,743,000
---------- -----------
30,589,000 30,910,000
---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $300,664,000 $313,851,000
============ ============
</TABLE>
See notes to consolidated financial statements.
38
<PAGE> 39
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL YEARS ENDED JUNE 24, 1994, JUNE 25, 1993, AND JUNE 26, 1992
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Commissions $ 29,158,000 $38,718,000 $41,241,000
Principal 27,313,000 32,216,000 25,640,000
Interest 9,213,000 10,558,000 10,848,000
Fee Income 7,598,000 3,145,000 4,728,000
Net gain on sales of exchange memberships and 2,551,000 -- --
related assets
Other 1,484,000 2,672,000 1,921,000
------------ ----------- -----------
Total revenues 77,317,000 87,309,000 84,378,000
EXPENSES:
Employee compensation and benefits 50,054,000 50,088,000 47,366,000
Commissions, floor brokerage, and clearing 7,141,000 8,721,000 8,372,000
Interest 5,714,000 7,135,000 6,965,000
Communications 6,063,000 6,803,000 6,357,000
Occupancy and equipment 5,949,000 6,461,000 6,076,000
Professional fees 5,227,000 2,710,000 1,801,000
Other operating expenses 10,785,000 4,843,000 4,238,000
Restructuring charge 3,815,000 -- --
----------- ----------- -----------
Total expenses 94,748,000 86,761,000 81,175,000
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME TAXES (17,431,000) 548,000 3,203,000
INCOME TAX EXPENSE (BENEFIT) (930,000) 310,000 1,214,000
----------- ----------- -----------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING FOR INCOME
TAXES (16,501,000) 238,000 1,989,000
CUMULATIVE EFFECTIVE OF CHANGE IN
ACCOUNTING FOR INCOME TAXES -- 18,000 --
------------ ----------- -----------
NET INCOME (LOSS) $(16,501,000) $ 256,000 $ 1,989,000
============ =========== ===========
EARNINGS (LOSS) PER SHARE DATA:
INCOME (LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING FOR INCOME TAXES $ (3.69) $ 0.06 $ 0.46
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR
INCOME TAXES -- -- --
------------ ----------- -----------
NET INCOME (LOSS) PER COMMON SHARE $ (3.69) $ 0.06 $ 0.46
============ =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 4,472,000 4,366,000 4,365,000
============ =========== ===========
</TABLE>
See note to consolidted financial statements.
39
<PAGE> 40
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FISCAL YEARS ENDED JUNE 24, 1994, JUNE 25, 1993, AND JUNE 26, 1992
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------
RETAINED
ADDITIONAL EARNINGS
PREFERRED COMMON PAID-IN (ACCUMULATED
STOCK STOCK CAPITAL DEFICIT) TOTAL
<S> <C> <C> <C> <C> <C>
BALANCE, JULY 1, 1991 $393,000 $14,738,000 $13,498,000 $28,629,000
Net income for the year 1,989,000 1,989,000
--------- ---------- ------------ ----------- -----------
BALANCE, JUNE 26, 1992 393,000 14,738,000 15,487,000 30,618,000
Net income for the year 256,000 256,000
Proceeds from issuance of
7,200 shares of common
stock in connection with
employee stock option plan 36,000 36,000
--------- ---------- ------------ ----------- -----------
BALANCE, JUNE 25, 1993 393,000 14,774,000 15,743,000 30,910,000
Net loss for the year (16,501,000) (16,501,000)
Proceeds from issuance of
204,920 shares of common
stock in connection with
employee stock option plan 19,000 1,161,000 1,180,000
Proceeds from issuance of
150 shares of convertible
non-voting preferred
stock, Series A, $.01 par
value 15,000,000 15,000,000
--------- ---------- ------------ ----------- -----------
BALANCE, JUNE 24, 1994 $ - $412,000 $30,935,000 $ (758,000) $30,589,000
========== ========= =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
40
<PAGE> 41
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FISCAL YEARS ENDED JUNE 24, 1994, JUNE 25, 1993, AND JUNE 26, 1992
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(16,501,000) $ 256,000 $ 1,989,000
Adjustment to reconcile net income(loss) to
net cash flows from operating activities:
Write-off of furniture, fixtures and leasehold improvements 748,000
Gain on sale of exchange memberships and related assets (2,551,000) (172,000)
Depreciation and amortization 988,000 1,093,000 1,402,000
Net changes in certain assets and liabilities:
Cash and short-term investments required to be
segregated under federal regulations 25,962,000 (19,611,000) (27,938,000)
Receivables from and payables to customers, brokers,
dealers and clearing organizations (9,575,000) 16,192,000 11,166,000
Miscellaneous receivables 1,691,000 (4,962,000) 1,899,000
Recoverable income taxes and income taxes payable (1,617,000) (73,000) 897,000
Deferred income taxes (171,000) (686,000) (73,000)
Securities owned 75,000 (7,032,000) (12,035,000)
Prepaid expenses and other assets 477,000 3,185,000 (960,000)
Accounts payable and accrued expenses 8,320,000 1,685,000 1,575,000
Accrued commissions (679,000) 64,000 528,000
Miscellaneous payables (2,016,000) (2,657,000) 1,712,000
Securities sold but not yet purchased (1,963,000) 5,448,000 7,732,000
------------ ------------ ------------
Net cash flows from operating activities 3,188,000 (7,270,000) (12,106,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture, fixtures, and leasehold improvements (438,000) (1,302,000) (721,000)
Sale of furniture, fixtures and leasehold improvements 324,000
Purchase of memberships in security and commodity exchanges (11,000) (3,000)
Sale of exchange memberships and related assets 3,846,000 387,000
------------ ------------ ------------
Net cash flows from investing activities 3,732,000 (926,000) (724,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term notes payable to banks (18,973,000) 8,312,000 7,650,000
Proceeds from short-term note payable issued to affiliate 10,000,000
Proceeds from issuance of notes subordinated to claims of
general creditors 4,500,000
Payment of notes subordinated to claims of general creditors (1,250,000) (5,000,000)
Proceeds from issuance of common stock in connection with
stock option plan 1,180,000 36,000
Proceeds from issuance of convertible non-voting preferred
stock 15,000,000
------------ ------------ ------------
Net cash flows from financing activities 5,957,000 7,848,000 7,650,000
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,877,000 (348,000) (5,180,000)
CASH AND CASH EQUIVALENTS - Beginning of year 1,121,000 1,469,000 6,649,000
------------ ------------ ------------
CASH AND CASH EQUIVALENTS - End of year $ 13,998,000 $ 1,121,000 $ 1,469,000
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 5,720,000 $ 7,135,000 $ 7,252,000
============ ============ ============
Cash paid for income taxes $ 824,000 $ 1,006,000 $ 411,000
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
41
<PAGE> 42
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED JUNE 24, 1994, JUNE 25, 1993, AND JUNE 26, 1992
- - ------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts and transactions of Rodman & Renshaw Capital Group,
Inc. (the "Company") and its subsidiaries, all of which are wholly
owned, including Rodman & Renshaw, Inc. ("Rodman"), the Company's
principal subsidiary, which is a registered broker-dealer and futures
commission merchant. All significant intercompany balances and
transactions have been eliminated in consolidation. The Company's
majority stockholder, Abaco Casa de Bolsa, S.A. de C.V. ("Abaco"), is a
brokerage subsidiary of Abaco Grupo Financiero, S.A. de C.V. ("Abaco
Grupo"). Abaco Grupo is a multi-faceted financial services holding
company based in Monterey, Mexico. Abaco acquired its majority interest
in the Company through a tender offer of common shares completed on
December 21, 1993.
FISCAL YEAR - The Company's fiscal years are the 52/53-week accounting
periods ended the last Friday in June.
REVENUE RECOGNITION - Purchases and sales of securities and the related
commission revenue and expenses are recorded on a settlement date basis.
The effect of recording these transactions on a trade date basis would
not result in a material difference. Commodity transactions and
resulting gains and losses are recorded on a trade date basis.
Commission revenues and expenses related to customers' commodity
transactions are recognized on a half-turn transaction basis.
CASH AND CASH EQUIVALENTS - The Company considers unrestricted cash and
firm-owned investments with maturities of three months or less when
purchased to be cash and cash equivalents.
REVERSE REPURCHASE AGREEMENTS - Reverse repurchase agreements are
accounted for as collateralized financing transactions and are recorded
at their contractual amounts, including accrued interest.
SECURITIES OWNED - Securities owned and securities sold but not yet
purchased are recorded at market value. Unrealized gains and losses are
included in income. Investments in limited partnerships are recorded at
cost, except for those partnerships in which the Company exercises
significant influence. Such investments are recorded on the basis of
the Company's equity therein.
FURNITURE, FIXTURES AND LEASEHOLD IMPROVEMENTS - Furniture, fixtures and
leasehold improvements are reported at cost, net of accumulated
depreciation and amortization. Furniture and fixtures are depreciated
using the straight-line method over the estimated useful lives of the
assets. Leasehold improvements are amortized using the straight-line
method over the lesser of the estimated useful lives of the improvements
or the noncancelable period of the related lease.
INCOME TAXES - The Company and its subsidiaries file a consolidated
federal income tax return. In 1994 and 1993, provision for income taxes
includes deferred taxes resulting from temporary differences between the
financial statement and tax bases of assets and liabilities using the
liability method as required by Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." In
42
<PAGE> 43
1992, the provision for income taxes included deferred taxes based on
the provisions of Opinion No. 11 of the Accounting Principles Board.
EARNINGS (LOSS) PER SHARE - Earnings (loss) per share of common stock is
based on the weighted average number of shares outstanding of 4,472,000
in 1994, 4,366,000 in 1993 and 4,365,000 in 1992. The effect of stock
options is not material.
PRIOR YEAR RECLASSIFICATIONS - Certain reclassifications have been made
to prior years amounts to conform to current year presentations.
2. ACCOUNTING CHANGES
In the first quarter of fiscal 1993, the Company implemented the three
accounting changes described below:
The Company changed its method of accounting for commission revenue and
expenses for commodity transactions executed for introducing brokers.
For 1994 and 1993, the net commission retained by the Company was
recorded as revenue. Previously, the entire amount of commission
charged to customers on introducing broker transactions was recognized
as revenue, and amounts rebated to introducing brokers were recorded as
commission expense. The Company believes that the change better
reflects the economic services provided in introducing brokers'
activities. The change did not affect net income.
The second change was in the method of accounting for securities owned
by customers which are held as margin on futures and options
transactions. These securities are netted against the offsetting
liability to the customer. Previously, the customer-owned securities
amounts were not netted. The Company believes that the change better
reflects the substance of transactions with customers.
The third change was the adoption of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." A cumulative benefit
in 1993 of $18,000 resulted from this accounting change. Adoption of
this Standard did not have a material effect on 1993 results.
The following schedule reflects the reported and pro forma changes
related to the accounting for commission revenues and expenses on
customer transactions originated from introducing brokers.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
AS REPORTED PRO FORMA
YEAR ENDED YEAR ENDED
JUNE 26, 1992 JUNE 26, 1992
<S> <C> <C>
Revenues:
Total revenues $84,378,000 $80,606,000
Expenses:
Total expenses $81,175,000 $77,403,000
</TABLE>
43
<PAGE> 44
3. RESTRUCTURING CHARGE
In the fourth quarter of fiscal 1994, the Company recorded a
restructuring charge of $3,815,000 related to the Company's decision to
move from its office space at its Chicago and New York premises. This
nonrecurring charge includes write-off of leasehold improvements and
charges for future obligations on noncancelable occupancy leases (net of
rent abatement liability), lease termination penalties and anticipated
moving costs.
Included in the restructuring charge is the noncash write-off of
leasehold improvements totaling $568,000. Restructuring charges for
obligations on noncancelable occupancy leases, lease termination
penalties and anticipated moving costs relate to future cash outflows.
Accrued expenses at June 24, 1994 include $2,997,000 for lease
termination costs payable in future fiscal years as follows: 1995 -
$1,704,000; 1996 - $1,205,000; 1997 - $42,000; 1998 - $42,000; and 1999
- $4,000.
4. REVERSE REPURCHASE AGREEMENTS
The Company was a party to reverse repurchase agreements with various
financial institutions. These agreements were made to enhance yields on
amounts required to be segregated under federal regulations and to meet
the financing needs of certain short security positions. The Company's
risk under the agreements is that the market values of the underlying
assets become insufficient to protect the Company in the event of
default by the counterparty. This risk is mitigated by the short-term
nature of the agreements.
At June 24, 1994, reverse repurchase agreements totaling $32,500,000
earned interest at rates ranging from 4.07% to 4.20%, matured at dates
ranging from June 27, 1994 to June 30, 1994, and were collateralized by
U.S. Treasury notes and bonds with an approximate market value of
$32,397,000, held in a designated safekeeping account pursuant to
segregation requirements specified under Rule 1.26 of the Commodity
Futures Trading Commission (the "CFTC"). At June 25, 1993, reverse
repurchase agreements totaling $52,241,000 earned interest at rates
ranging from 2.85% to 3.15%, matured on June 28, 1993, and were
collateralized by U.S. Treasury bonds with an approximate market value
of $52,339,000.
At June 24, 1994, reverse repurchase agreements of $13,423,000, included
in cash and cash equivalents, earned interest at rates ranging from
2.37% to 3.76%, matured at dates ranging from June 27, 1994 to July 21,
1994, and were collateralized by U.S. Treasury notes with an approximate
market value of $13,162,000.
5. ASSETS SEGREGATED UNDER FEDERAL AND OTHER REGULATIONS
Rodman is required under the Commodity Exchange Act (the "Act") to
account for and segregate all customer assets, as defined by the Act, in
connection with transactions in regulated commodities. Rodman is
holding in safekeeping $46,580,000 and $66,461,000 of securities owned
by customers, as of June 24, 1994 and June 25, 1993, respectively.
These securities are not included in the statement of financial
condition. At June 24, 1994, Rodman was in compliance with the
segregation requirements of the Act and had total segregated funds in
excess of the aggregate required amount by $6,136,000.
44
<PAGE> 45
6. RECEIVABLES FROM AND PAYABLES TO CUSTOMERS
Rodman extends credit to its customers to finance their purchases of
securities on margin. Rodman receives income from interest charged on
such extension of credit. Customer receivables include amounts due on
margin balances. Securities owned by customers and held as collateral
by Rodman for these receivables are not included in the financial
statements.
Customer payables include customers' free credit balances. Under
certain circumstances, Rodman pays interest based on prevailing market
rates on these balances.
7. RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS, AND CLEARING
ORGANIZATIONS
The components of receivables from and payables to brokers, dealers, and
clearing organizations, as of June 24, 1994 and June 25, 1993, are as
follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Receivables:
Margin deposits with and receivables from
brokers and clearing organizations for
customer commodity transactions $ 67,807,000 $ 46,085,000
Securities borrowed 62,291,000 71,307,000
Securities failed to deliver 2,080,000 12,431,000
Clearing organizations 280,000 514,000
Free shipments 41,000
------------ ------------
Total $132,458,000 $130,378,000
============ ============
Payables:
Securities loaned $ 67,352,000 $ 71,017,000
Clearing organizations 1,002,000 1,022,000
Securities failed to receive 11,474,000 11,088,000
------------ ------------
Total $ 79,828,000 $ 83,127,000
============ ============
</TABLE>
45
<PAGE> 46
8. SECURITIES OWNED
Securities owned and securities sold but not yet purchased, are recorded
at quoted market prices except for limited partnerships, and comprise:
<TABLE>
<CAPTION>
1994 1993
------------------------------- ---------------------------------
Sold But Sold But
Not Yet Not Yet
Owned Purchased Owned Purchased
<S> <C> <C> <C> <C>
Corporate debt securities $18,029,000 $ 1,379,000 $18,548,000 $ 9,400,000
Corporate equity securities 3,935,000 498,000 4,409,000 1,322,000
State and municipal obligations 13,246,000 214,000 8,054,000 942,000
United States and Canadian
government and agency obligations 5,341,000 11,697,000 9,022,000 4,087,000
Limited partnerships 385,000 978,000
----------- ----------- ----------- ---------
Total $40,936,000 $13,788,000 $41,011,000 $15,751,000
=========== =========== =========== ===========
</TABLE>
Securities sold but not yet purchased commit the Company to deliver
specified securities at predetermined prices. To satisfy the
obligation, the Company must acquire the securities at market prices,
which may differ from the values on the statement of financial
condition.
9. SHORT-TERM NOTES PAYABLE TO BANKS
To finance the purchase of securities by customers on margin and
purchases for its own account, Rodman borrows from commercial banks.
Interest on the borrowings is paid at or below the broker call rate.
The borrowings were collateralized by approximately $30,062,000 of
Rodman-owned securities and $4,201,000 of other assets as of June 24,
1994, and $34,071,000 of Rodman-owned securities and $33,734,000 of
customer-owned securities as of June 25, 1993.
10. SHORT-TERM NOTE PAYABLE TO AFFILIATE
The Company entered into a note agreement with Confia, S.A., an
affiliate of Abaco, at an annual rate of interest of 11.50%. The
principal amount of $10,000,000 and interest on the principal amount is
due in full on December 19, 1994.
11. LIABILITIES SUBORDINATED TO THE CLAIMS OF GENERAL CREDITORS
As of June 24, 1994, the Company has the following subordinated notes
outstanding:
<TABLE>
<S> <C>
Subordinated note, interest payable semi-annually, based on LIBOR at
beginning of interest period plus 3.25% (7.44% at June 24, 1994),
due $1,000,000 on September 30, 1994 and $2,500,000 on
September 30, 1995 $3,500,000
Subordinated note, interest payable semi-annually at an annual rate of
6.375%, due $1,876,000 on June 30, 1994 and $1,374,000 on
December 31, 1994 3,250,000
----------
Total $6,750,000
==========
</TABLE>
46
<PAGE> 47
The subordinated notes are covered by agreements approved by the New
York Stock Exchange, Inc. (the "NYSE") and the Chicago Mercantile
Exchange, and are available in computing adjusted net capital under the
uniform net capital rule of the Securities and Exchange Commission
("SEC"). To the extent that such notes are required for Rodman's
continued compliance with minimum net capital requirements, they may not
be repaid. The rights of the note holders to receive any payment from
Rodman under the terms of the notes are subordinated to the claims of
all present and future creditors of Rodman which arise prior to
maturity. Under the terms of the note agreements, the Company must meet
various financial requirements specified in the agreements.
On December 31, 1993, Rodman entered into a termination agreement which
modified the original repayment terms of the $3,250,000 subordinated
note and fixed the interest rate at 6.375% annually.
12. PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of $0.01 par value
per share preferred stock. On June 24, 1994, the Company issued 150
shares of convertible nonvoting Preferred Stock, Series A (the
"Preferred Stock") at $100,000 per share issued to Abaco. The Preferred
Stock will be converted into 2,068,965 shares of common stock at $7.25
per share upon the approval of such conversion by the stockholders of
the Company. After December 30, 1994, if the conversion has not
occurred, each share is entitled to receive quarterly cash dividends at
a rate based on the Prime Rate plus two percent per annum. Dividends on
the Preferred Stock are cumulative and payable when declared by the
Company's Board of Directors. No cash dividends or distribution upon
liquidation may be paid on the Company's common stock if dividends or
required redemptions of Preferred Stock are in arrears.
47
<PAGE> 48
13. STOCK OPTIONS
The Company's stock option plans provide for the granting of options to
officers, directors, nonemployee directors, and employees to purchase
shares of common stock at not less than market value on the date of
grant. All options expire no later than ten years from the date of
grant. Prior to June 24, 1993, the Company had also granted
non-qualified stock options. A summary of stock option activity
follows:
<TABLE>
<CAPTION>
QUALIFIED NONQUALIFIED
------------------------------------- -------------------------------------------
NUMBER PER SHARE NUMBER PER SHARE
OF OPTION OF OPTION
SHARES PRICE SHARES PRICE
<S> <C> <C> <C> <C>
Outstanding at
June 30, 1991 952,880 $ 5.00 - 10.50 30,200 $ 5.00 - 6.13
Granted 111,950 5.00 - 6.00 35,800 5.00 - 7.50
Canceled (67,390) 5.00 - 10.50 (23,200) 5.00 - 7.50
--------- ---------
Outstanding at
June 26, 1992 997,440 5.00 - 8.00 42,800 5.00 - 7.50
Granted 311,775 5.00 - 6.38 71,275 5.00 - 6.38
Canceled (194,300) 5.00 - 8.00 (37,400) 5.00 - 7.50
Exercised (7,200) 5.00 - 5.00 -
--------- ---------
Outstanding at
June 25, 1993 1,107,715 5.00 - 7.00 76,675 5.00 - 6.38
Granted 121,500 5.00 - 6.92 166,050
Canceled (692,770) 5.00 - 7.00 (83,780) 5.00 - 6.13
Exercised (204,820) 5.00 - 6.38 (100) 5.00 - 5.00
--------- ---------
Outstanding at
June 24, 1994 331,625 5.00 - 6.50 158,845 5.00 - 6.38
========= =========
</TABLE>
Options outstanding at June 24, 1994 are exercisable at an average price
of $5.52.
Effective June 30, 1993, the Company granted an aggregate of 166,050
nonqualified stock options to certain employees, 106,900 of which
remained outstanding at June 24, 1994. These nonqualified options were
not granted pursuant to a stock option plan.
In fiscal 1994, the Company's Board of Directors and stockholders
approved the 1994 Stock Option Plan effective June 1, 1994, pursuant to
which the Company may issue nonqualified or qualified options. There
were 100,000 stock options granted under this plan for the year ended
June 24, 1994, and 900,000 unoptioned shares reserved and available for
grant as of June 24, 1994. Options granted under this plan expire no
later than ten years from the date of grant.
In fiscal 1994, the Company's Board of Directors and stockholders
approved the nonqualified Nonemployee Director Stock Option Plan
effective June 1, 1994. There were no stock options granted under this
plan for the fiscal year ended June 24, 1994, and 400,000 unoptioned
shares reserved and
48
<PAGE> 49
available for grant as of June 24, 1994. Options granted under this
plan expire ten years from the date of grant.
Pursuant to the Acquisition Agreement, certain employees canceled stock
options which were exercisable prior to the Tender Closing Date in
consideration of the payment by the Company of an amount equal to the
excess of $10.50 over the per share exercise price of such options,
multiplied by the number of options exercisable. The cancellation of
445,240 shares of stock options resulted in the payment of $2,027,000
which was recorded as employee compensation expense in the fiscal year
ended June 24, 1994.
14. NET CAPITAL REQUIREMENTS AND DIVIDEND RESTRICTIONS
As a registered broker-dealer and futures commission merchant, Rodman is
subject to the minimum net capital rules of the SEC (Rodman has elected
to use the alternative net capital method permitted by these rules), the
CFTC, and the capital rules of the NYSE, of which Rodman is a member.
These rules require that Rodman maintain minimum net capital, as
defined, equal to the greater of 2% of aggregate debits arising from
customer transactions or $1,000,000, or 4% of the funds required to be
segregated for customers pursuant to the Commodity Exchange Act,
exclusive of the market value of commodity options purchased by option
customers. The NYSE may require a member firm to reduce its business if
its net capital is less than the greater of $125,000 or 6% of the funds
required to be segregated and may prohibit a member firm from expanding
its business or paying cash dividends if resulting net capital would be
less than the greater of $150,000 or 7% of the funds required to be
segregated.
As of June 24, 1994, Rodman's net capital, as defined, of $30,703,000
was $25,327,000 in excess of the minimum required net capital.
15. COMMITMENTS AND CONTINGENCIES
Rodman leases office space and certain equipment under operating leases.
Leases for office facilities are subject to escalation factors based on
the operating experience of the lessor. Future minimum lease payments
under noncancelable operating leases with terms in excess of one year,
as of June 24, 1994, are as follows:
<TABLE>
<S> <C>
1995 $2,075,000
1996 1,800.000
1997 1,455,000
1998 987,000
1999 687,000
2000 and thereafter 1,301,000
---------
Total minimum lease payments $8,305,000
==========
</TABLE>
The aggregate annual rentals charged to operations were $2,656,000 in
fiscal 1994, $2,527,000 in fiscal 1993, and $2,456,000 in fiscal 1992.
Rodman had a letter of credit of $2,250,000 on deposit with a clearing
organization at June 24, 1994 and June 25, 1993. The letter of credit
satisfies a margin requirement and is collateralized by customer-owned
securities.
49
<PAGE> 50
Rodman, together with various other broker-dealers, corporations, and
individuals, has been named as a defendant in several class action
lawsuits that allege violations of federal and state securities laws,
and claim substantial damages. Rodman is also a defendant in other
civil actions, arbitration proceedings and claims pending incidental to
its securities and commodities business. Although the ultimate outcome
of these matters cannot be ascertained at this time, it is the opinion
of management of the Company, after consultation with outside counsel,
that the resolution of these matters will not result in any material
adverse effect on the Company's financial position or results of
operations.
16. BENEFIT PLANS
Rodman established a defined-contribution Retirement Savings Plan (the
"Savings Plan") on July 1, 1990, available to employees with one year
and a minimum of 1,000 hours of service. Under the Savings Plan, Rodman
matches employee contributions up to 25 percent of an employee's
before-tax contributions. Rodman's matching contributions were $153,000
in fiscal 1994, $145,000 in fiscal 1993, and $115,000 in fiscal 1992.
On January 1, 1993, Rodman adopted the Supplemental Executive Retirement
Plan (the "SERP") and the Deferred Compensation Plan (the "DCP"),
retroactively to June 27, 1992. The SERP and DCP cover designated
senior employees. Under the DCP, eligible employees may elect to defer
compensation up to a maximum of 60 percent of base compensation and 100
percent of annual bonus. The minimum contribution is $200 per month.
Contributions to the DCP are fully vested and nonforfeitable.
The SERP is a nonqualified, discretionary retirement plan. Company
contributions to the SERP are determined annually, at the Company's
discretion based upon eligibility and bonus formulas. Participants in
the SERP vest in accordance with a ten-year schedule, based upon the
annual eligibility. Benefits are payable upon retirement or death. The
Company has the right to terminate the SERP at any time. The SERP
assets consist of insurance annuity products.
17. INCOME TAXES
The components of the income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal $(942,000) $193,000 $1,028,000
State 183,000 214,000 259,000
Deferred federal (171,000) (97,000) (73,000)
--------- -------- ----------
Total income tax expense (benefit) $(930,000) $310,000 $1,214,000
========= ======== ==========
</TABLE>
A deferred federal tax benefit of $18,000 also was recorded in fiscal
1993 as the cumulative effect of the change in accounting for income
taxes.
50
<PAGE> 51
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. The following is a summary of the significant components of
the Company's deferred tax assets and liabilities as of June 24, 1994
and June 25, 1993:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward $2,469,000
Restructuring charges 1,297,000
Employee compensation and benefits 806,000 197,000
Allowance for bad debts 248,000 136,000
Other 861,000 695,000
---------- ----------
Total assets 5,681,000 1,028,000
---------- ----------
Deferred tax liabilities:
Partnership interests 542,000 553,000
Prepaid insurance 43,000 68,000
---------- ----------
Total liabilities 585,000 621,000
---------- ----------
Net deferred tax asset 5,096,000 407,000
Valuation allowance 4,518,000
---------- ----------
Deferred income taxes $ 578,000 $ 407,000
========== ==========
</TABLE>
The valuation allowance has been recognized due to the uncertainty of
realizing the benefit of the loss carryforwards and temporary
differences. The net deferred tax asset balance of $578,000 is expected
to be realized in connection with the Company's intended tax strategies.
A reconciliation of the effective income tax rate to the statutory
federal income tax rate is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Statutory rate (34.0) % 34.0 % 34.0 %
City and state income taxes, net of federal benefit:
New York City 0.5 15.2 3.5
Other 0.2 10.6 1.8
Goodwill amortization 9.7 2.8
Nondeductible interest 0.2 10.7 2.0
Tax-exempt interest (0.8) (31.7) (5.3)
Net cash surrender value of keyman life insurance (0.5) (18.4) (2.6)
Political contributions 0.1 4.4 0.4
Travel and entertainment 0.2 6.3 2.0
Valuation allowance 25.9
Other 2.9 15.8 (0.7)
---- ----- ----
Effective rate (5.3)% 56.6 % 37.9 %
==== ===== ====
</TABLE>
51
<PAGE> 52
18. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATION OF
CREDIT RISK
In the normal course of business, the Company enters into transactions
in financial instruments with off-balance sheet risk in order to meet
the financing and hedging needs of its customers and to facilitate its
normal principal trading activities. These financial instruments
include forward and futures contracts on domestic and foreign exchanges,
option contracts, security transactions and other contracts committing
the Company to purchase or deliver other instruments at specified future
dates and prices, or to make or receive payments based on notional
amounts and specific rates.
The financial instruments involve varying degrees of off-balance sheet
market risk. Market risk is the potential change in value of the
financial instrument caused by unfavorable changes in interest rates,
foreign currency exchange rates or the market values of the securities
underlying the instruments. The Company monitors its exposure to market
risk through a variety of control procedures, including daily review of
trading positions.
Counterparties to the Company include domestic and foreign corporations,
governments and institutional and individual investors. Counterparty
credit risk is measured by the loss the Company would record if its
counterparties failed to perform pursuant to terms of their obligations
to the Company. The exposure to credit risk associated with the
nonperformance of these counterparties in fulfilling their contractual
obligations pursuant to securities and commodities transactions can be
directly impacted by volatile trading markets which may impair the
counterparties' ability to satisfy their obligations. The Company
controls such risks by requiring minimum margins for open positions in
accordance with regulatory and Company guidelines. The Company subjects
minimum margin levels to daily monitoring procedures and may require
additional collateral to be deposited with or returned to the Company
when deemed necessary. Market declines could, however, reduce the value
of any collateral below the principal amount loaned, plus accrued
interest, before the collateral can be sold.
The Company's customer financing and securities settlement activities
permit it to pledge customer margin securities as collateral in support
of various secured financial sources such as bank loans and securities
loaned. Additionally, the Company pledges customer securities as
collateral to satisfy margin deposit requirements of various exchanges.
In the event the counterparty is unable to meet its contracted
obligation to return customer securities pledged as collateral, the
Company may be exposed to the risk of acquiring the securities at
prevailing market prices in order to satisfy its customer obligations.
The Company seeks to control this risk by monitoring the market value of
securities pledged on a daily basis and by requiring adjustments of
collateral levels in the event of excess market exposure. Credit limits
are also established for such activities and compliance is monitored on
a daily basis.
The Company's counterparties primarily consist of domestic and foreign
corporations, governments, and institutional and individual investors.
Concentrations of credit risk can be affected by change in economic,
industry or geographic factors. The Company seeks to control the
potential for risk concentration through a variety of control procedures
described above.
19. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company believes that the carrying amount of its financial
instruments is a reasonable estimate of fair value. Assets, including
cash and cash equivalents, cash and short-term investments required to
be segregated under federal regulations, and certain receivables are
carried at fair value or contracted
52
<PAGE> 53
amounts which approximate fair value. Similarly, liabilities including
short-term notes payable to banks and certain payables are carried at
amounts approximating fair value.
Securities owned and commitments for securities sold but not yet
purchased are carried at fair value. Fair value for these instruments
is estimated using available market quotations for traded instruments.
Market quotations for traded instruments are obtained from various
sources, including the major securities exchanges and dealers.
The estimated fair value of the Company's liabilities subordinated to
the claims of general creditors, determined using discounted cash flow
analysis based upon borrowing rates for similar types of borrowing
arrangements, approximates carrying value.
20. ACCOUNTING PRONOUNCEMENTS TO BE IMPLEMENTED
In 1992, the Financial Accounting Standards Board ("FASB") issued
Statement of financial Accounting Standard ("SFAS") No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." Effective for
fiscal years beginning after December 15, 1993, SFAS No. 115 will
require the Company to classify its investments in debt and qualifying
equity securities into three categories: "trading,"
"available-for-sale" or "held-to-maturity." Securities that are
classified as trading and available-for-sale are required to be recorded
at fair value.
The Company does not believe that the implementation of SFAS No. 115
will have a material effect on the Company's financial position or
results of its operations as the Company's debt and equity securities
are currently recorded at fair value.
21. SUBSEQUENT EVENT
On June 30, 1994, the Company obtained regulatory approval to repay
$1,876,000 of a subordinated note pursuant to a termination agreement.
*****
53
<PAGE> 54
SCHEDULE IX
SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
Maximum Weighted
Weighted Amount Average Amount Average Interest
Category of Aggregate Balance at Average Outstanding Outstanding Rate During
Short-Term Borrowings (1) End of Period Interest Rate During Period During Period (2) Period (3)
--------------------------- ------------- ------------- ------------- ------------------- ------------------
<S> <C> <C> <C> <C> <C>
Year Ended June 24, 1994 $23,242,000 5.2% $72,765,000 $36,706,000 4.6%
Year Ended June 25, 1993 42,215,000 4.2% 79,878,000 52,239,000 4.2%
Year Ended June 26, 1992 30,250,000 5.9% 71,000,000 39,786,000 4.9%
</TABLE>
(1) Represents borrowings under line of credit arrangements that
have no termination date but are reviewed annually. These
borrowings are secured by customer and firm-owned securities.
(2) The average amount outstanding during each period was
computed by dividing the total of month-end outstanding principal
balances by 12.
(3) The weighted average interest rate during the period was
computed by dividing the actual interest expense by the average
short-term borrowings outstanding during the period.
54
<PAGE> 55
EXHIBIT INDEX
Exhibit Page Number
- - ------- -----------
3.1 Certificate of Incorporation
3.2 By-laws
4.1 Certificate of Designations of Rights,
Privileges and Restrictions of Series A
Non-Voting Convertible Preferred Stock
10.1 Rodman & Renshaw Capital Group, Inc. *
Non-Employee Director Stock Option Plan
10.2 Rodman & Renshaw Capital Group, Inc. *
1994 Stock Option Plan
10.3 Lease Agreement dated October 20, 1980 *
10.4 Deferred Compensation Plan *
(dated January 1, 1993)
10.5 Deferred Compensation Trust *
(dated January 1, 1993)
10.6 Supplemental Executive Retirement Plan *
(dated January 1, 1993)
10.7 Supplemental Executive Retirement Trust *
(dated January 1, 1993)
10.8 Stock Purchase Agreement dated June 24, 1994
between the Company and Abaco Casa de Bolsa,
S.A. de C.V., Abaco Grupo Financiero
10.9 Loan agreement between the Company
and Confia, S.A. dated June 22, 1994
10.10 Employment agreement between the Company
and Charles W. Daggs, III
dated April 11, 1994
10.11 Employment agreement between
Rodman & Renshaw, Inc. and David H.
Shulman dated February, 1994
10.12 Employment agreement between the Company
and F.L. Kirby dated June 20, 1994
21.1 Subsidiaries of the Registrant
23.1 Consent of Deloitte & Touche L.L.P.
27.1 Financial Data Schedule
* Incorporated by reference
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
RODMAN & RENSHAW CAPITAL GROUP, INC.
In accordance with the provisions of Sections 242 and 245 of the
General Corporation Law of the State of Delaware, Rodman & Renshaw Capital
Group, Inc. does hereby amend and restate its Certificate of Incorporation.
Rodman & Renshaw Capital Group, Inc. was incorporated under the name R&R
Holding, Inc., and the original Certificate of Incorporation was filed with the
Secretary of State on November 20, 1980. This Restated Certificate of
Incorporation was duly adopted by the Board of Directors of the Corporation in
accordance with Sections 242 and 245 of the Delaware General Corporation Law,
as amended. This Restated Certificate of Incorporation was duly adopted by the
stockholders of the Corporation by written consent pursuant to Section 228 and
in accordance with Sections 242 and 245 of the Delaware General Corporation
Law, as amended.
The text of the Restated Certificate of Incorporation reads as
hereafter set forth in full.
ARTICLE I
The name of the corporation (hereinafter called the "Corporation") is
Rodman & Renshaw Capital Group, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at such address is The
Corporation Trust Company.
ARTICLE III
SECTION 1. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 25,000,000 consisting of
(1) 5,000,000 shares of Preferred Stock, par value $.01 per share ("Preferred
Stock") and (2) 20,000,000 shares of Common Stock, par value $.09 per share
("Common Stock").
SECTION 2. The Board of Directors is hereby expressly authorized
by resolution or resolutions, to provide, out of the unissued Preferred Stock,
for series of Preferred Stock. Before any shares of any such series are
issued, the Board of Directors shall fix, and hereby is expressly empowered to
fix, by resolution or resolutions, the following provisions of the shares
thereof:
(a) the designation of such series, the number of shares
to constitute such series and the stated value thereof if different
from the par value thereof;
<PAGE> 2
(b) whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law, and, if so,
the terms of such voting rights, which may be general or limited;
(c) the dividends, if any, payable on such series,
whether any such dividends shall be cumulative, and if so, from what
dates, the conditions and dates upon which such dividends shall be
payable, the preference or relation which such dividends shall bear to
the dividends payable on any shares of stock of any other class or any
other series of this class;
(d) whether the shares of such series shall be subject to
redemption by the Corporation, and if so, the times, prices and other
conditions of such redemption;
(e) the amount or amounts payable upon shares of such
series upon, and the rights of the holders of such series in, the
voluntary and involuntary liquidation, dissolution or winding up, or
upon any distribution of the assets, of the Corporation;
(f) whether the shares of such series shall be subject to
the operation of a retirement or sinking fund and, if so, the extent
to and manner in which any such retirement or sinking fund shall be
applied to the purchase or redemption of the shares of such series for
retirement or other corporate purposes and the terms and provisions
relative to the operation thereof;
(g) whether the shares of such series shall be
convertible into, or exchangeable for, shares of stock of any other
class or any other series of this class or any other securities and,
if so, the price or prices or the rate or rates of conversion or
exchange and the method, if any, of adjusting the same, and any other
terms and conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be
effective while any shares of such series are outstanding upon the
payment of dividends or the making of other distributions on, and upon
the purchase, redemption or other acquisition of any other class or
any other series of this class;
(i) the conditions or restrictions, if any, upon the
creation of indebtedness of the Corporation or upon the issue of any
additional stock, including additional shares of such series or of any
other series of this class or any other class; and
(j) any other powers, preferences and relative,
participating, optional and other special rights, and any
qualifications, limitations and restrictions thereof.
-2-
<PAGE> 3
The powers, preferences and relative, participating, optional
and other special rights of each series of Preferred Stock and the
qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other series at any time outstanding. All shares of any
one series of Preferred Stock shall be identical in all respects with all other
shares of such series, except that shares of any one series issued at different
times may differ as to the dates from which dividends thereon shall be
cumulative.
SECTION 3. Each holder of Common Stock shall be entitled to one
vote for each share of Common Stock held of record on all matters on which
stockholders generally are entitled to vote. Subject to the provisions of law
and the rights of Preferred Stock and any other class or series of stock having
a preference as to dividends over the Common Stock then outstanding, dividends
may be paid on the Common Stock at such times and in such amounts as the Board
of Directors shall determine. Upon the dissolution, liquidation or winding up
of the Corporation, after any preferential amounts to be distributed to the
holders of the Preferred Stock and any other class or series of stock having a
preference over the Common Stock then outstanding have been paid or declared
and set apart for payment, the holders of the Common Stock shall be entitled to
receive all the remaining assets of the Corporation available for distribution
to its stockholders ratably in proportion to the number of shares held by them
respectively.
ARTICLE IV
The nature of the Corporation's business, and the object or purpose to
be transacted, promoted or carried on by the Corporation, is to engage in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of the State of Delaware, including, without in any way
limiting the generality of the foregoing:
(a) To purchase, own, and hold the stock of other
corporations, and to do every act and thing covered generally by the
denomination "holding corporation", and to direct the operations of
other corporations through the ownership of stock therein; to
purchase, subscribe for, acquire, own, hold, sell, exchange, assign,
transfer, create security interests in, pledge, or otherwise dispose
of shares or voting trust certificates for shares of the capital
stock, or any bonds, notes, securities or evidences of indebtedness
created by any other corporation or corporations organized under the
laws of the State of Delaware or any other state or district or
country, nation, or government and also bonds or evidences of
indebtedness of the United States or of any state, district,
territory, dependency or country or subdivision or municipality
thereof; to issue in exchange therefor shares of the capital stock,
bonds, notes, or other obligations of the Corporation and while the
owner thereof to exercise all the rights, powers, and privileges of
ownership including the right to
- 3 -
<PAGE> 4
vote on any shares of stock or voting trust certificates so owned; to
promote, lend money to, and guarantee the dividends, stocks, bonds,
notes, evidences of indebtedness, contracts, or other obligations of,
and otherwise aid in any manner which shall be lawful, any corporation
or association of which any bonds, stocks, voting trust certificates,
or other securities or evidences of indebtedness shall be held by or
for the Corporation, or in which, or in the welfare of which, the
Corporation shall have any interest, and to do any acts and things
permitted by law and designed to protect, preserve, improve, or
enhance the value of any such bonds, stocks, or other securities or
evidences of indebtedness or the property of the Corporation.
(b) To borrow money for any business, object or purpose
of the Corporation from time to time, without limit as to amount; to
issue any kind of evidence of indebtedness, whether or not in
connection with borrowing money, including evidence of indebtedness
convertible into shares of capital stock of the Corporation; to secure
the payment of any evidence of indebtedness by the creation of any
interest in any of the property or rights of the Corporation, or in
any property owned by others when the Corporation has the right so to
do, whether owned by or subject to such right of the Corporation at
the time such indebtedness is incurred or thereafter; to accept
secured demand notes.
(c) To lend to any person, corporation, trust, fiduciary,
firm, public authority or organization of any kind any of the
Corporation's funds or property, with or without security, and to
guarantee the loans of any of the foregoing.
(d) To purchase, borrow, acquire, hold, exchange, sell,
distribute, assign, transfer, lend, mortgage, pledge, hypothecate,
convert, redeem, escrow, reissue or cancel shares of its own capital
stock or instruments evidencing its indebtedness or any other
securities issued by it.
(e) To engage in any financial, commercial, mercantile,
manufacturing, industrial, trading, mining, petroleum or petroleum
products business or venture of any kind, character or description
whatsoever, either by itself or jointly with others, and to do any and
all things which may be useful in connection with or incidental to the
conduct of such business or venture.
(f) To engage in a commercial finance business, including
the factoring of commercial paper, either by itself or jointly with
others, and to do any and all things which may be useful in connection
with or incidental to the conduct of such business.
(g) To acquire all or any part of the property and
business, including good will, of any person, corporation, trust, firm,
- 4 -
<PAGE> 5
fiduciary, public authority or organization of any kind, to pay as
consideration therefor cash or property, including securities issued
by the Corporation, to assume in connection therewith by the
Corporation, to assume in connection therewith any liabilities or
obligations of any such person, corporation, trust, firm, fiduciary,
public authority or organization of any kind, and to hold, conduct,
use or dispose of the whole or any part of the property and business,
including any good will, so acquired.
(h) To acquire and hold real, personal and mixed property
of any and all kinds.
(i) To exercise and enjoy all powers, rights and
privileges, in any part of the world, which may be exercised and
enjoyed by any corporation organized under the General Corporation Law
of the State of Delaware.
ARTICLE V
A director of the Corporation shall not, in the absence of fraud, be
disqualified by his office from dealing or contracting with the Corporation,
either as a vendor, purchase or otherwise, nor in the absence of fraud shall,
insofar as permitted by statute, any transaction or contract of the Corporation
be void or voidable or affected by reason of the fact that any director, or any
firm of which any director is a member, or any corporation of which any
director is an officer, director, or shareholder, is any way interested in such
transaction or contract; provided that, at the meeting of the Board of
Directors or of a committee thereof having authority in the premises to
authorize or confirm such contract or transaction, the interest of such
director, firm, or corporation is disclosed or made known, and there shall be
present a quorum of the Board of Directors or of the directors constituting
such committee, and such contract or transaction shall be approved by a
majority of such quorum, which majority shall consist of directors not so
interested or connected. Nor shall any director be liable to account to the
Corporation for any profit realized by him from or through any such transaction
or contract of the Corporation, ratified or approved as herein provided, by
reason of the fact that he or any firm of which he is a member, or any
corporation of which he is a shareholder, director, or officer, was interested
in such transaction or contract. Directors so interested may be counted when
present at meetings of the Board of Directors or of such committee for the
purpose of determining the existence of a quorum. Each and every person who is
or may become a director of the Corporation is hereby relieved from any
liability that might otherwise exist from those contracting with the
Corporation for the benefit of himself or any firm, association, or corporation
in which he may be in any wise interested.
ARTICLE VI
- 5 -
<PAGE> 6
In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly authorized
and empowered to adopt, amend or repeal the By-laws of the Corporation.
ARTICLE VII
Elections of directors of the Corporation need not be by written
ballot unless the By-laws of the Corporation shall so provide.
IN WITNESS WHEREOF, RODMAN & RENSHAW CAPITAL GROUP, INC. has caused
this Restated Certificate of Incorporation to be signed by Bruce J. Young, its
President, and attested by Thomas V. Hendricks, its Secretary, this 15th day of
April, 1986.
RODMAN & RENSHAW CAPITAL
GROUP, INC.
By: /s/ Bruce J. Young
------------------
Bruce J. Young
President
ATTEST:
/s/Thomas V. Hendricks
- - ----------------------
Thomas V. Hendricks
Secretary
- 6 -
<PAGE> 7
CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
RODMAN & RENSHAW CAPITAL GROUP, INC.
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
We, Bruce Jay Young, President, and Thomas V. Hendricks, Secretary, of
Rodman & Renshaw Capital Group, Inc., a corporation existing under the laws of
the State of Delaware, do hereby certify as follows:
FIRST: That the name of the corporation is Rodman & Renshaw Capital
Group, Inc., which was formed under the original name of R&R Holding, Inc.
SECOND: That the original Certificate of Incorporation of the
corporation was filed by the Secretary of State of Delaware on the 20th day of
November, 1980.
THIRD: That the Restated Certificate of Incorporation of the
corporation was filed by the Secretary of State of Delaware on the 30th day of
May, 1986.
FOURTH: That ARTICLE V of the Restated Certificate of Incorporation of
the Corporation has been amended to add the following as the second and third
paragraphs of said ARTICLE V:
A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director for acts or
omissions occurring on or after November 24, 1986, except for
liability (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived any improper
personal benefit. Any repeal or modification of the foregoing
sentence by the stockholders of the Corporation shall not
adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or
modification.
- 7 -
<PAGE> 8
Notwithstanding the foregoing, the indemnification
provided for in this Article V shall not be deemed exclusive
of any other rights to which those entitled to receive
indemnification or reimbursement hereunder may be entitled
under any by-law of this Corporation, agreement, vote or
consent of stockholders or disinterested directors or
otherwise.
FIFTH: That such amendment has been duly adopted in accordance with
the provisions of the General Corporation Law of the State of Delaware by the
affirmative vote of the holders of a majority of all outstanding stock entitled
to vote at a meeting of stockholders.
IN WITNESS WHEREOF, we have signed this certificate this 25th day of
November, 1986.
RODMAN & RENSHAW CAPITAL GROUP, INC.
By: /s/ Bruce J. Young
------------------
President
ATTEST:
/s/ Thomas V. Hendricks
- - ----------------------
Secretary
- 8 -
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED
BY-LAWS
OF
RODMAN & RENSHAW CAPITAL GROUP, INC.
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office shall be
established and maintained at the office of The Corporate Trust Company, in the
City of Wilmington, in the County of New Castle, in the State of Delaware, and
said Company shall be the registered agent of this corporation in charge
thereof.
SECTION 2. OTHER OFFICES. The corporation may have other
offices, either within or outside of the State of Delaware, at such place or
places as the Board of Directors may from time to time appoint or the business
of the corporation may require.
ARTICLE II
STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. The annual meeting of stockholders
of the corporation for the election of directors and the transaction of other
business shall be held, in each year, on the date and at the time as shall be
fixed by the Board of Directors and stated in the notice of said meeting. Such
annual meetings shall be general meetings open for the transaction of any
business within the powers of the corporation without special notice of such
business, except in cases in which special notice is required by statute, by
the certificate of incorporation or by these by-laws.
SECTION 2. SPECIAL MEETINGS. Unless otherwise prescribed by
statute, special meetings of the stockholders shall be called by the Chairman
of the Board upon receipt of a written request therefor, stating the purpose
thereof and signed by a majority of the directors. No business other than that
stated in the notice described in the next succeeding section shall be
transacted at any special meeting without the unanimous consent of all of the
stockholders entitled to vote thereat.
SECTION 3. NOTICE OF MEETINGS. (a) Except as otherwise provided
by law, and as set forth in subsection (b) hereof, written or printed notice
stating the place, date and hour of the meeting and, in the case of a special
meeting, a brief statement of the purpose or purposes for which the meeting is
called, shall be
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delivered not less than ten (10) nor more than sixty (60) days before the date
of every meeting of stockholders, either personally or by mail, by or at the
direction of the President and Chief Operating Officer or the Secretary, to
each stockholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
addressed to the stockholder at his address as it appears on the records of the
corporation, with postage thereon prepaid. Whenever any notice is required to
be given under the provisions of Delaware law, the certificate of incorporation
or these by-laws, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether it be before or after the time stated therein,
shall be deemed equivalent to the giving of such notice. It shall not be
requisite to the validity of any meeting of stockholders that notice thereof,
whether prescribed by law, by the certificate of incorporation or by these
by-laws, shall have been given to any stockholder who attends in person or by
proxy. No notice other than by verbal announcement need be given of any
adjourned meetings of stockholders.
(a) Stockholders intending to nominate directors for
election must deliver written notice thereof to the Secretary of the
corporation not later than (i) with respect to an election to be held at an
annual meeting of stockholders, ninety (90) days prior to the anniversary date
of the immediately preceding annual meeting of stockholders, and (ii) with
respect to an election to be held at a special meeting of stockholders, the
close of business on the tenth day following the date on which notice of such
meeting is first given to stockholders. The notice shall set forth certain
information concerning such stockholder and his nominee(s), including their
names and addresses, a representation that the stockholder is entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice, a description of all
arrangements or understandings between the stockholder and each nominee, such
other information as would be required to be included in a proxy statement
soliciting proxies for the election of the nominees of such stockholder and the
consent of each nominee to serve as a director of the Company if so elected.
The chairman of the annual or special meeting of the corporation may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
SECTION 4. PLACE OF MEETINGS. Annual and special meetings of
stockholders may be held at one of the corporation's offices or at such place
or places within or without the State of Delaware as shall be determined by the
Board of Directors.
SECTION 5. QUORUM. Except as otherwise required by law, the
certificate of incorporation or these by-laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock
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of the corporation entitled to vote shall constitute a quorum at all meetings
of the stockholders. In case a quorum shall not be present at any meeting, a
majority in interest of the stockholders entitled to vote thereat, present in
person or by proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until the requisite
amount of stock entitled to vote shall be present. If upon the reconvening of
any such adjourned meeting a majority of the stock entitled to vote shall be
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed, but only those stockholders entitled to vote
at the meeting as originally noticed shall be entitled to vote at such time as
it is reconvened.
SECTION 6. VOTING. Each stockholder entitled to vote in
accordance with the terms of the certificate of incorporation or these by-laws
shall be entitled to one (1) vote for each share of stock entitled to vote held
by such stockholder. Shares of its own stock belonging to the corporation
shall not be voted, directly or indirectly, at any meeting and shall not be
counted in determining the total number of outstanding shares at any given
time, but shares of its own stock held by the corporation in a fiduciary
capacity may be voted and shall be counted in determining the total number of
outstanding shares at any given time. When a quorum is present or represented
at any meeting of stockholders, the vote of the holders of a majority of the
shares present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which a different
vote is required by virtue of an express provision of law, the certificate of
incorporation or another section of these by-laws.
SECTION 7. PROXIES. Any stockholder entitled to vote at a
meeting of stockholders may vote either in person or by proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact.
SECTION 8. LIST OF STOCKHOLDERS. At least ten (10) days prior
to each meeting of stockholders at which directors are to be elected, the
Secretary shall make or cause to be made a complete list of the stockholders
entitled to vote at the ensuing election, arranged in alphabetical order,
showing the mailing address of each according to the records of the corporation
and the number of voting shares held by each. Such list shall be kept on file
at the office of the corporation for a period of ten (10) days prior to such
meeting, and shall at all times during the usual hours for business be open to
the examination of any stockholder, and also shall be produced and kept at the
time and place of such election for the inspection of any stockholder during
the whole time thereof.
The original stock ledger or transfer book, or a duplicate
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thereof, kept at the principal office of the corporation, shall be prima facie
evidence as to the stockholders who are entitled to examine such list or stock
ledger or transfer book or to vote at any meeting of stockholders.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the corporation
shall be managed by or under the direction of a Board of Directors, which may
exercise all of the powers of the corporation except such as are by law, the
certificate of incorporation or these by-laws conferred upon or reserved to the
stockholders. Continuing and exclusive authority to fix, supervise and control
the professional business and other affairs of the corporation shall be wholly
vested in the Board of Directors.
SECTION 2. QUALIFICATIONS. Directors of this corporation shall
be Independent Directors (as defined below), Parent Directors (as defined
below), or Company Directors (as defined below). "Company Directors" are
employees of the corporation or its affiliates. The term of any Company
Director who ceases to qualify as provided in the foregoing sentence shall
immediately and without any further action terminate forthwith. "Parent
Directors" means such persons as are designated by Abaco Grupo Financiero, S.A.
de C.V. ("Parent"), as such designation may change from time to time. An
"Independent Director" means any person designated by Parent who (i) is in fact
independent and qualifies as an independent director in accordance with New
York Stock Exchange rules, (ii) is not connected with Parent or the corporation
or any of their respective affiliates as an officer, employee, trustee,
partner, director (other than of the corporation) or person performing similar
functions and (iii) has not been employed by the corporation or any of its
subsidiaries during the preceding year.
SECTION 3. NUMBER, ELECTION AND REMOVAL OF DIRECTORS. The
number of directors which shall constitute the whole Board of Directors shall
be fixed from time to time by resolution of the Board of Directors, but shall
not be less than eleven (11) nor more than twenty-one (21). Except as provided
in Section 10 of this Article III, directors shall be elected by a plurality of
the votes cast at Annual Meetings of Stockholders. At each annual meeting of
stockholders, directors shall be elected for a term expiring at the next annual
meeting of stockholders and until their successors have been duly elected and
qualified. Any director may be removed, with or without cause, by the holders
of a majority of the shares then entitled to vote at an election of directors.
SECTION 4. MEETINGS. Regular meetings of the Board of Directors
shall be held at the time and place determined by the
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Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or by a majority of the Parent Directors on the written
request of any director and shall be held at such time and such place or places
as may be determined by the directors, or as shall be stated in the call of the
meeting.
SECTION 5. NOTICE OF MEETINGS. No notice of regular meetings of
the Board of Directors need be given. Notice of the place, day and hour of
every special meeting shall be given to each director at least one (1) day
before the meeting, by delivering the same to him personally, by sending the
same to him by telefax or by leaving the same at his residence or usual place
of business, or, in the alternative, upon seven (7) days' notice, by mailing
it, postage prepaid, and addressed to him at his last known mailing address, as
reflected in the records of the corporation. It shall not be requisite to the
validity of any meeting of the Board of Directors that notice thereof shall
have been given to any director who attends, except where a director attends
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened. No notice of adjourned
meetings of the Board of Directors need be specified in the notice or waiver of
notice of such meeting. All regular and special meetings of the Board of
Directors shall be open for the transaction of any business within the powers
of the corporation without special notice of such business, except in those
cases in which special notice is required by law, the certificate of
incorporation or by these by-laws.
SECTION 6. QUORUM. At all meetings of the Board of Directors, a
majority of the Board of Directors shall constitute a quorum. The act of the
majority of the whole Board of Directors shall be the act of the Board of
Directors, unless the act of a greater number is required by law, the
certificate of incorporation or these by-laws. In the absence of a quorum at a
meeting of the Board of Directors, a majority of those present may adjourn the
meeting from time to time until a quorum is obtained, and no notice thereof
need be given other than by announcement at the meeting which shall be
adjourned.
SECTION 7. INFORMAL ACTION. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of the Executive
Committee may be taken without a meeting, if a written consent to such action
is executed by all members of the Board of Directors or of the Executive
Committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or of the Executive Committee.
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SECTION 8. COMPENSATION. Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board of Directors a fixed fee and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
SECTION 9. RESIGNATIONS. Any director, member of the Executive
Committee or officer may resign at any time. Such resignation shall be made in
writing, and shall take effect at the time specified therein, and if no time be
specified, at the time of its actual receipt by the Chairman of the Board,
President or Secretary. The acceptance of a resignation shall not be necessary
to make it effective.
SECTION 10. VACANCIES. Vacancies in the Board of Directors,
through death, resignation or otherwise, and newly created directorships
resulting from an increase in the number of directors, may be filled by a
majority of the remaining directors in office, though less than a quorum, or by
the sole remaining director, provided, however, that in all events Parent shall
be entitled to designate the director or directors to fill vacancies in the
Board of Directors through death, resignation or otherwise of any Parent
Director, and provided further that until December 23, 1996, if a vacancy in
the Board of Directors exists through death, resignation or otherwise of any
Company Director, and the Board of Directors by a majority vote of the whole
Board of Directors determines to replace that Director, then the other Company
Directors shall have the right, by majority vote, to designate an employee of
the Company or one of its affiliates, as a replacement for that Company
Director. Directors elected to fill vacancies shall hold office for a term
expiring at the next annual meeting of stockholders and until their successors
have been duly elected and qualified, or until their earlier resignation or
removal.
SECTION 11. CHAIRMAN AND VICE CHAIRMAN; PRESIDING OFFICER. The
Board of Directors, by resolution adopted by a majority of the whole Board of
Directors, shall elect a Chairman of the Board of Directors, who shall preside
at all meetings of the stockholders of the corporation and at all meetings of
the Board of Directors. The Board of Directors, by resolution adopted by a
majority of the whole Board of Directors, also may elect a Vice Chairman of the
Board of Directors, who, in the absence of the Chairman of the Board of
Directors, shall preside at meetings of the stockholders of the corporation and
meetings of the Board of Directors. In the absence of the Chairman and Vice
Chairman of the Board of Directors, the Board of Directors, by resolution
adopted by a majority of the whole Board of Directors, may designate any Parent
Director to preside at a particular meeting of the stockholders of
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the corporation or of the Board of Directors.
ARTICLE IV
COMMITTEES
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors, by
resolution adopted by a majority of the whole Board of Directors, may designate
an Executive Committee consisting of three (3) or more directors. Except as
otherwise provided by law or by the Board of Directors, during the intervals
between the meetings of the Board of Directors the Executive Committee shall
have and may exercise all of the powers of the Board of Directors in the
management of the corporation. The Executive Committee shall keep regular
minutes of its proceedings and report the same to the Board of Directors at its
meeting next succeeding such action.
SECTION 2. MEETINGS OF EXECUTIVE COMMITTEE. The Executive
Committee shall fix its own rules of procedure and shall meet as provided by
such rules, and it also shall meet at the call of the Chairman of the Board of
Directors or a majority of the members of the Committee. A majority of the
members of the Executive Committee shall be necessary to constitute a quorum,
and the concurrence of a majority of the whole Executive Committee shall be
required in all matters to constitute the act of the Committee.
SECTION 3. EXECUTIVE COMMITTEE POWERS. For all purposes of
these by-laws, the words "Board of Directors," "directors," "Board" or any
equivalent term shall be construed to include "Executive Committee," it being
the intent that such Committee may, except as otherwise provided by law, have
and exercise all of the powers conferred upon the Board of Directors by law,
the certificate of incorporation and these by-laws.
SECTION 4. AUDIT COMMITTEE. The Board of Directors, by
resolution adopted by a majority of the whole Board of Directors, shall
designate an Audit Committee consisting of one (1) or both of the Independent
Directors. It shall be the Audit Committee's responsibility to:
- Recommend to the Board of Directors which accounting firm to
employ as the corporation's external auditor and review the
proposed discharge of any such firm.
- Review the external auditor's compensation, the proposed terms
of its engagement and its independence.
- Review the appointment and replacement of the corporation's
internal auditing personnel.
- Serve as a channel of communication between the external
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auditor and the Board of Directors and between the
corporation's internal auditing staff and the Board of
Directors.
- Review the results of each external audit of the corporation,
the report of the audit, any related management letter,
management's responses to recommendations made by the external
auditor in connection with the audit, reports of the internal
auditing staff that are material to the corporation as a
whole, and management's responses to those reports.
- Review the corporation's annual financial statements, any
certification, report, opinion, or review rendered by the
external auditor in connection with those financial
statements, and any significant disputes between management
and the external auditor that arose in connection with the
preparation of those financial statements.
- Consider, in consultation with the external auditor and the
internal auditing staff, the adequacy of the corporation's
internal controls.
- Consider significant changes and other significant questions
of choice regarding the appropriate auditing and accounting
principles and practices to be used in the preparation of the
corporation's financial statements.
The Audit Committee shall meet at such times during the year as to
properly perform its responsibilities. It shall keep regular minutes of its
proceedings and report the same to the Board of Directors when required. It
shall have authority to retain special counsel or experts as it deems
necessary.
SECTION 5. COMPENSATION COMMITTEE. The Board of Directors, by
resolution adopted by a majority of the whole Board of Directors, shall
designate a Compensation Committee consisting of one (1) or both of the
Independent Directors. It shall be the Compensation Committee's responsibility
to:
- Review and recommend to the Board of Directors the annual
salary, bonus, stock options and other benefits, direct and
indirect, of the corporation's officers.
- Review new executive compensation programs; review on a
periodic basis the operation of the corporation's executive
compensation programs to determine whether they are properly
coordinated; establish and periodically review policies for
the administration of executive compensation programs; and
take steps to modify any
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executive compensation programs that yield payments and
benefits that are not reasonably related to executive
performance.
- Establish and periodically review policies in the area of
management perquisites.
The Compensation Committee shall meet at such times during the year as
to properly perform its responsibilities. It shall keep regular minutes of its
proceeding and report the same to the Board of Directors when required.
SECTION 6. NOMINATING COMMITTEE. The Board of Directors, by
resolution adopted by a majority of the whole Board of Directors, shall
designate a Nominating Committee consisting of three (3) or more directors. It
shall be the Nominating Committee's responsibility to:
- Recommend to the Board of Directors the slate of nominees of
directors to be elected by the stockholders and any directors
to be elected by the Board of Directors, based upon a review
of the qualifications of such persons.
- Recommend to the Board of Directors the directors to be
selected for membership on the various committees of the Board
of Directors.
The Nominating Committee shall meet at such times during the year as
to properly perform its responsibilities. It shall keep regular minutes of its
proceedings and report the same to the Board of Directors when required.
SECTION 7. OTHER COMMITTEES. The Board of Directors, by
resolution adopted by the whole Board of Directors, may designate other
committees as it deems appropriate. Each such committee shall consist of one
(1) or more of the directors of the corporation, and to the extent provided by
the Board of Directors, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the corporation, and
may have power to authorize the seal of the corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be determined from time to time by the Board of Directors. The
committees shall keep regular minutes of their proceedings and report the same
to the Board of Directors when required.
SECTION 8. ABSENT MEMBERS. In the event a member of any
committee is absent or disqualified from any meeting thereof, the member or
members present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint a Parent Director to
sit at the meeting in the
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place of any such absent or disqualified member.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation, all of
whom shall be subject to the supervision and direction of the Board of
Directors, shall be a Chief Executive Officer, a President and Chief Operating
Officer, a Chief Financial Officer, one or more Vice Presidents, a Secretary
and a Treasurer. The Chief Executive Officer, the President and Chief
Operating Officer and the Chief Financial Officer shall be "executive
officers." None of the aforesaid officers except the Chief Executive Officer
need be directors of the corporation. The officers shall be elected by the
Board of Directors from time to time. Any two or more offices may be held by
the same person.
SECTION 2. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall have overall responsibility for the formulation of corporate policies and
purposes to be presented from time to time to the Board of Directors for
adoption on behalf of the corporation, shall have responsibility for
communicating said policies and purposes, as adopted, to the officers, staff
and employees of the corporation, and shall have power to supervise and direct
all officers and employees of the corporation in the exercise of their duties.
In the event that the Board of Directors shall, pursuant to the authority
granted by Article IV of these bylaws, designate an Executive Committee, the
Chief Executive Officer shall be one of the directors designated to serve on
such committee. The Chief Executive Officer also shall serve as an ex officio
member of each and every other committee of the Board of Directors established
pursuant to the provisions of Article IV of these by-laws, except for the Audit
and Compensation Committees.
SECTION 3. PRESIDENT AND CHIEF OPERATING OFFICER. Subject to
direction from the Chief Executive Officer, the President and Chief Operating
Officer shall have such general powers and duties of direction and control of
the business of the corporation as shall be necessary to carry out and give
effect to the corporate policies and purposes adopted by the Board of
Directors. The President and Chief Operating Officer shall report to the Board
of Directors through, and shall be responsible to, the Chief Executive Officer.
SECTION 4. CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall have overall responsibility for the financial affairs of the corporation,
including the preparation of all financial reports, audits and returns of the
corporation. He also shall have responsibility for making recommendations
concerning the corporation's fiscal policies and all financial matters
affecting
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the corporation. The Chief Financial Officer shall report to the Board of
Directors and the Chief Executive Officer through, and shall be responsible to,
the President and Chief Operating Officer.
SECTION 5. VICE PRESIDENTS. The Vice President or Vice
Presidents shall perform such duties as may be assigned to him or them by any
executive officer of the corporation acting at the direction of the Board of
Directors.
SECTION 6. SECRETARY. The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and directors, and all other
notices required by law or by these by-laws, and in case of his absence or
refusal or neglect so to do, any such notice may be given by any person so
directed by the Chief Executive Officer, the President and Chief Operating
Officer or the Board of Directors. He shall record all of the proceedings of
the meetings of the stockholders of the corporation and of the Board of
Directors in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him by the Board of Directors or any other
executive officer of the corporation acting at the direction of the Board of
Directors. He shall have the custody of the seal of the corporation and shall
affix the same to all instruments requiring it, when authorized by the Board of
Directors, and attest the same.
SECTION 7. TREASURER. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, or any other executive officer of the
corporation acting at the direction of the Board of Directors, taking proper
vouchers for such disbursements. He shall render to the Board of Directors, or
its designees (including the Chief Executive Officer, the President and Chief
Operating Officer and the Chief Financial Officer), whenever they may request
it, an account of all of his transactions as Treasurer and of the financial
condition of the corporation. If required by the Board of Directors, he shall
give the corporation a bond for the faithful discharge of his duties in such
amount and with such surety as the Board of Directors shall prescribe.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. If
desired, the Board of Directors may elect one or more Assistant Secretaries and
one or more Assistant Treasurers. The Assistant Secretaries and Assistant
Treasurers, if any, shall have such powers and shall perform such duties as
shall be assigned to them by the Board of Directors or any executive officer of
the corporation acting at the direction of the Board of Directors.
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SECTION 9. EXECUTION OF DOCUMENTS. Except as otherwise
authorized or directed by the Board of Directors, either of the Chief Executive
Officer and the President and Chief Operating Officer, or in their absence, a
Vice President, may execute stock certificates, bonds, mortgages and other
contracts on behalf or the corporation and shall cause the corporate seal to be
affixed to any instrument requiring it.
SECTION 10. REMOVAL OF OFFICERS. Any officer of the corporation
may be removed by the Board of Directors whenever in its judgment the best
interests of the corporation will be served thereby.
ARTICLE VI
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK. Certificates of stock,
numbered and with the seal of the corporation affixed, signed by the Chief
Executive Officer or the President and Chief Operating Officer and the
Treasurer or an Assistant Treasurer, or Secretary or Assistant Secretary, shall
be issued to each stockholder certifying the number of shares owned by him in
the corporation. If such certificate is countersigned by a transfer agent or
registrar other than the corporation or its employee, any other signature on
the certificate may be a facsimile.
SECTION 2. LOST CERTIFICATES. A new certificate of stock may be
issued in the place of any certificate theretofore issued by the corporation
and alleged to have been lost or destroyed. However, the directors may, in
their discretion, require the owner of the lost or destroyed certificate, or
his legal representative, to give the corporation a bond, in such sum as they
may direct, not exceeding double the value of the stock, to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss of the certificate, or the issuance of a new certificate.
SECTION 3. TRANSFER OF SHARES. The shares of stock of the
corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the corporation by
the delivery thereof to the person in charge of the stock and transfer books
and ledgers, by whom they shall be canceled, and new certificates shall
thereupon be issued.
SECTION 4. DIVIDENDS. Subject to the provisions of the
certificate of incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meetings, declare dividends upon
the capital stock of the
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corporation as and when they deem expedient. Before declaring any dividend
there may be set apart out of any funds of the corporation available for
dividends, such sum or sums as the directors from time to time in their
absolute discretion deem proper for working capital or as a reserve fund to
meet contingencies or for equalizing dividends or for such other purposes as
the Board of Directors shall deem conducive to the interests of the
corporation.
SECTION 5. SEAL. The corporate seal shall be circular in form
and shall contain the name of the corporation and the words "CORPORATE SEAL
DELAWARE." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise .
SECTION 6. FISCAL YEAR. The fiscal year of the corporation
shall be as determined by the Board of Directors.
SECTION 7. CHECKS. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name
of the corporation shall be signed by such officer or officers, agent or agents
of the corporation, in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 8. NOTICE AND WAIVER OF NOTICE. Whenever any notice is
required to be given by these by-laws, personal notice is not meant unless
expressly so stated, and any notice so required shall be deemed to be
sufficient if given by certified or registered mail, return receipt requested,
in a sealed post-paid wrapper, addressed to the person entitled thereto at his
last known address. Such notice shall be deemed to have been given on the day
of such mailing. Stockholders not entitled to vote shall not be entitled to
receive notice of any meetings except as otherwise provided by law.
Whenever any notice is required to be given under the provisions of
any law, the certificate of incorporation or these by-laws, a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent thereto.
SECTION 9. FIXING OF RECORD DATE. The Board of Directors may
fix in advance a date, not more than sixty (60) or less than ten (10) days
preceding the date of any meeting of stockholders, nor more than sixty (60)
days prior to the date for the payment of any dividend or the date for the
allotment of rights or the date when any change or conversion or exchange of
capital stock shall go into effect, as a record date for the determination of
the stockholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of any such dividends or to any such allotment of
rights or to exercise the rights in respect
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of any such change, conversion or exchange of capital stock, and in such case
such stockholders only as shall be stockholders of record on the date so fixed
shall be entitled to such notice of, and to vote at, such meeting, or to
receive such allotment of rights or to exercise such rights, as the case may
be, notwithstanding any transfer of any stock on the books of the corporation
after any such record date fixed as aforesaid.
ARTICLE VII
AMENDMENTS
These by-laws may be amended or repealed and new by-laws may be
adopted at any regular or special meeting of the Board of Directors by the
affirmative vote of a majority of the entire Board of Directors.
ARTICLE VIII
INDEMNIFICATION
The corporation shall indemnify its officers, directors, employees and
agents to the fullest extent permitted by the General Corporation Law of the
State of Delaware.
Adopted January 10, 1994
<PAGE> 1
EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS
OF
RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS
OF SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK
OF
RODMAN & RENSHAW CAPITAL GROUP, INC.
A DELAWARE CORPORATION
Charles W. Daggs, III and James D. Van De Graaff certify that:
A. They are the duly elected and acting President and Corporate
Secretary, respectively, of Rodman & Renshaw Capital Group, Inc., a Delaware
corporation (the "Corporation").
B. Pursuant to the authority given by the Corporation's
Certificate of Incorporation, the Board of Directors of the Corporation has
duly adopted the following recitals and resolutions:
WHEREAS, the Certificate of Incorporation of the Corporation provides
for a class of shares known as Preferred Stock, consisting of five
million (5,000,000) shares issuable from time to time in one or more
series; and
WHEREAS, the Board of Directors of the Corporation is authorized to
fix by resolution or resolutions the rights, preferences, privileges
and restrictions granted to or imposed upon the Preferred Stock or any
series thereof; and
WHEREAS, the Corporation has no issued or outstanding shares of
Preferred Stock; and
WHEREAS, the Board of Directors desires, pursuant to its authority as
aforesaid, to designate one hundred fifty (150) shares of the
Preferred Stock as "Series A Non-Voting Convertible Preferred Stock"
and to fix the rights, preferences, privileges and restrictions
relating to such series of Preferred Stock;
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NOW, WHEREFORE, BE IT RESOLVED, that the Board of Directors
hereby fixes the designation and the number of shares constituting,
and the rights, preferences, privileges and restrictions relating to,
the Series A Non-Voting Convertible Preferred Stock:
1. Designation. This series of Preferred Stock shall be
designated "Series A Non-Voting Convertible Preferred Stock" (the
"Series A Preferred Stock").
2. Number of Shares and Par Value. The number of shares
constituting the Series A Preferred Stock shall be one hundred fifty
(150). Each share of the Series A Preferred Stock shall have a par
value of one cent ($.01).
3. Certain Definitions. Unless the context otherwise requires,
the terms defined in this paragraph 3 shall have, for all purposes of
this resolution, the meanings herein specified.
Common Stock. The term "Common Stock" shall mean all shares
now or hereafter authorized of any class of Common Stock of the
Corporation and any other stock of the Corporation, howsoever
designated, authorized after the Issue Date, which has the right
(subject always to prior rights of any class or series of preferred
stock) to participate in the distribution of the assets and earnings
of the Corporation without limit as to per share amount.
Conversion Date. The term "Conversion Date" shall have the
meaning set forth in subparagraph 6(c) below.
Conversion Price. The term "Conversion Price" shall mean the
price per share of Common Stock used to determine the number of
shares of Common Stock deliverable upon conversion of a share of the
Series A Preferred Stock, which price shall initially be $7.25 per
share, subject to adjustment in accordance with the provisions of
paragraph 6 below.
Current Market Price. The term "Current Market Price" shall
have the meaning set forth in subparagraph 6(f) below.
Dividend Payment Date. The term "Dividend Payment Date" shall
have the meaning set forth in subparagraph 4(a) below.
Dividend Period. The term "Dividend Period" shall have the
meaning set forth in subparagraph 4(a) below.
Issue Date. The term "Issue Date" shall mean the date that
shares of Series A Preferred Stock are first issued by the
Corporation.
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Junior Stock. The term "Junior Stock" shall mean, for
purposes of paragraphs 4 and 8 below, the Common Stock and any other
class or series of stock of the Corporation issued after the Issue
Date not entitled to receive any dividends in any Dividend Period
unless all dividends required to have been paid or declared and set
apart for payment on the Series A Preferred Stock shall have been so
paid or declared and set apart for payment and, for purposes of
paragraphs 4 and 8 below, any class or series of stock of the
Corporation issued after the Issue Date not entitled to receive any
assets upon the liquidation, dissolution or winding up of the affairs
of the Corporation until the Series A Preferred Stock shall have
received the entire amount to which such stock is entitled upon such
liquidation, dissolution or winding up.
Parity Stock. The term "Parity Stock" shall mean, for
purposes of paragraphs 4 and 8 below, any other class or series of
stock of the Corporation issued after the Issue Date entitled to
receive payment of dividends on a parity with the Series A Preferred
Stock and, for purposes of paragraphs 4 and 8 below, any other class
or series of stock of the Corporation issued after the Issue Date
entitled to receive assets upon the liquidation, dissolution or
winding up of the affairs of the Corporation on a parity with the
Series A Preferred Stock.
Senior Stock. The term "Senior Stock" shall mean, for
purposes of paragraphs 4 and 8 below, any class or series of stock of
the Corporation issued after the Issue Date ranking senior to the
Series A Preferred Stock in respect of the right to receive dividends,
and, for purposes of paragraphs 4 and 8 below, any class or series of
stock of the Corporation issued after the Issue Date ranking senior to
the Series A Preferred Stock in respect of the right to receive assets
upon the liquidation, dissolution or winding up of the affairs of the
Corporation.
Subscription Price. The term "Subscription Price" shall mean
$100,000 per share.
Subsidiary. The term "Subsidiary" shall mean any corporation
of which shares of stock possessing at least a majority of the general
voting power in electing the board of directors are, at the time as of
which any determination is being made, owned by the Corporation,
whether directly or indirectly through one or more Subsidiaries.
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4. Dividends.
(a) Subject to the prior preferences and other rights of
any Senior Stock and restrictions imposed by the terms of any
indebtedness of the Corporation, the holders of Series A Preferred
Stock shall be entitled to receive, out of funds legally available for
the purpose, cash dividends at a per annum rate applied to the
Subscription Price as determined daily during each Dividend Period
equal to the then most recent "Prime Rate," as published in The Wall
Street Journal (or any successor publication) as the base rate on
corporate U.S. Dollar loans posted by at least 75% of the nation's 30
largest banks (or any publicly published comparable rate as determined
by the Board of Directors) plus two percent per annum; such rate to
change as and when such "Prime Rate" changes and such rate to be
determined on the basis of a 365 day year and the actual days elapsed
during a Dividend Period. Such dividends shall be cumulative from
October 1, 1994 and shall be payable in arrears, when and as declared
by the Board of Directors, on March 31, June 30, September 30 and
December 31 of each year (each such date being herein referred to as a
"Dividend Payment Date"), commencing on December 31, 1994. The period
from October 1, 1994 through December 31, 1994 and each quarterly
period between consecutive Dividend Payment Dates thereafter shall
hereinafter be referred to as a "Dividend Period." Each such dividend
shall be paid to the holders of record of the Series A Preferred Stock
as their names appear on the share register of the Corporation on the
corresponding Record Date. As used above, the term "Record Date"
means, with respect to the dividend payment on March 31, June 30,
September 30 and December 31, respectively, of each year, the
preceding March 30, June 29, September 29 and December 30, or such
other record date designated by the Board of Directors of the
Corporation with respect to the dividend payable on such respective
Dividend Payment Date. Dividends on account of arrears for any past
Dividend Periods may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on such
date, not exceeding 50 days preceding the payment date thereof, as may
be fixed by the Board of Directors. No dividends shall be payable in
respect of any period less than a full Dividend Period.
(b) In the event that full cash dividends are not paid or
made available to the holders of all outstanding shares of Series A
Preferred Stock and of any Parity Stock, and funds available shall be
insufficient to permit payment in full in cash to all such holders of
the preferential amounts to which they are then entitled, the entire
amount available for payment of cash dividends shall be distributed
among the holders of the Series A Preferred Stock and of any Parity
Stock ratably in proportion to the full amount to which they would
otherwise be respectively entitled, and any remainder not paid in cash
to the holders of the Series A Preferred Stock shall cumulate as
provided in subparagraph 4(c) below.
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(c) If, on any Dividend Payment Date, the holders of the
Series A Preferred Stock shall not have received the full dividends
provided for in the other provisions of this paragraph 4, then such
dividends shall cumulate, whether or not earned or declared, with
additional dividends thereon for each succeeding full Dividend Period
during which such dividends shall remain unpaid. Unpaid dividends for
any period less than a full Dividend Period shall cumulate on a day-
to-day basis and shall be computed on the basis of a 365 day year.
(d) So long as any shares of Series A Preferred Stock
shall be outstanding, the Corporation shall not declare or pay on any
Junior Stock any dividend whatsoever, whether in cash, property or
otherwise (other than dividends payable in shares of the class or
series upon which such dividends are declared or paid, or payable in
shares of Common Stock with respect to Junior Stock other than Common
Stock, together with cash in lieu of fractional shares), nor shall the
Corporation make any distribution on any Junior Stock, nor shall any
monies be paid or made available for a sinking fund for the purchase
or redemption of any Junior Stock, unless all dividends to which the
holders of Series A Preferred Stock shall have been entitled for all
previous Dividend Periods shall have been paid or declared and a sum
of money sufficient for the payment thereof set apart.
5. Distributions Upon Liquidation, Dissolution or Winding Up. In
the event of any voluntary or involuntary liquidation, dissolution or
other winding up of the affairs of the Corporation, subject to the
prior preferences and other rights of any Senior Stock, but before any
distribution or payment shall be made to the holders of Junior Stock,
the holders of the Series A Preferred Stock shall be entitled to be
paid the Subscription Price of all outstanding shares of Series A
Preferred Stock as of the date of such liquidation or dissolution or
such other winding up, plus any accrued and unpaid dividends thereon
to such date, and no more, in cash or in property taken at its fair
value as determined by the Board of Directors. If such payment shall
have been made in full to the holders of the Series A Preferred Stock,
and if payment shall have been made in full to the holders of any
Senior Stock and Parity Stock of all amounts to which such holders
shall be entitled, the remaining assets and funds of the Corporation
shall be distributed among the holders of Junior Stock, according to
their respective shares and priorities. If, upon any such
liquidation, dissolution or other winding up of the affairs of the
corporation, the net assets of the Corporation distributable among the
holders of all outstanding shares of the Series A Preferred Stock and
of any Parity Stock shall be insufficient to permit the payment in
full to such holders of the preferential amounts to which they are
entitled, then the entire net assets of the Corporation remaining
after the distributions to holders of any Senior Stock of the full
amounts to which they may be entitled shall be distributed among the
holders of the Series A Preferred
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Stock and of any Parity Stock ratably in proportion to the full
amounts to which they would otherwise be respectively entitled.
Neither the consolidation or merger of the Corporation into or with
another corporation or corporations, nor the sale of all or
substantially all of the assets of the Corporation to another
corporation or corporations shall be deemed a liquidation, dissolution
or winding up of the affairs of the corporation within the meaning of
this paragraph 5.
6. Conversion Rights. The Series A Preferred Stock shall be
convertible into Common Stock as follows:
(a) Automatic Conversion. Each outstanding share of
Series A Preferred Stock shall automatically be converted, without any
further act of the Corporation or its stockholders, into fully paid
and nonassessable shares of Common Stock at the Conversion Price then
in effect upon the approval of such conversion by the stockholders of
the Corporation pursuant to the New York Stock Exchange shareholder
approval requirements. The Series A Preferred Stock shall not
otherwise be convertible.
(b) Conversion Price. Each share of Series A Preferred
Stock shall be converted into a number of shares of Common Stock
determined by dividing (i) the sum of (A) the Subscription Price plus
(B) any dividends on such share of Series A Preferred Stock which such
holder is entitled to receive, but has not yet received, by (ii) the
Conversion Price in effect on the Conversion Date. The Conversion
Price at which shares of Common Stock shall initially be issuable upon
conversion of the shares of Series A Preferred Stock shall be $7.25.
The Conversion Price shall be subject to adjustment as set forth in
subparagraph 6(e). No payment or adjustment shall be made for any
dividends on the Common Stock issuable upon such conversion.
(c) Mechanics of Conversion. Upon the occurrence of the
event specified in subparagraph 6(a), the outstanding shares of Series
A Preferred Stock shall be converted automatically without any further
action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the
Corporation or its transfer agent; provided that the Corporation shall
not be obligated to issue to any such holder certificates evidencing
the shares of Common Stock issuable upon such conversion unless
certificates evidencing the shares of Series A Preferred Stock are
either delivered to the Corporation or any transfer agent of the
Corporation. Conversion shall be deemed to have been effected on the
date of the occurrence of the event specified in subparagraph 6(a) and
such date is referred to herein as the "Conversion Date." Subject to
the provisions of subparagraph 6(e), as promptly as practicable
thereafter (and after surrender of the certificate or certificates
representing shares of Series A Preferred Stock to the Corporation or
any transfer agent of the Corporation) the Corporation shall issue and
deliver
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to or upon the written order of such holder a certificate or
certificates for the number of full shares of Common Stock to which
such holder is entitled and a check or cash with respect to any
fractional interest in a share of Common Stock as provided in
subparagraph 6(d). Subject to the provisions of subparagraph 6(e),
the person in whose name the certificate or certificates for Common
Stock are to be issued shall be deemed to have become a holder of
record of such Common Stock on the applicable Conversion Date.
(d) Fractional Shares. No fractional shares of Common
Stock or script shall be issued upon conversion of shares of Series A
Preferred Stock. Instead of any fractional shares of Common Stock
which would otherwise be issuable upon conversion of any shares of
Series A Preferred Stock, the Corporation shall pay a cash adjustment
in respect of such fractional interest in an amount equal to that
fractional interest of the then Current Market Price.
(e) Conversion Price Adjustments. The Conversion Price
shall be subject to adjustment from time to time as follows:
(i) Stock Dividends, Subdivisions,
Reclassifications or Combinations. If the Corporation shall (i)
declare a dividend or make a distribution on its Common Stock in
shares of its Common Stock, (ii) subdivide or reclassify the
outstanding shares of Common Stock into a greater number of shares, or
(iii) combine or reclassify the outstanding Common Stock into a
smaller number of shares, the Conversion Price in effect at the time
of the record date for such dividend or distribution or the effective
date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the holder of any shares of Series A
Preferred Stock surrendered for conversion after such date shall be
entitled to receive the number of shares of Common Stock which he
would have owned or been entitled to receive had such Series A
Preferred Stock been converted immediately prior to such date.
Successive adjustments in the Conversion Price shall be made whenever
any event specified above shall occur.
(ii) Other Distributions. In case the
Corporation shall fix a record date for the making of a distribution
to all holders of shares of its Common Stock (i) of shares of any
class other than its Common Stock, or (ii) of evidence of indebtedness
of the Corporation or any Subsidiary, or (iii) of assets (excluding
cash dividends or distributions, and dividends or distributions
referred to in subparagraph 6(e)(i) above), or (iv) of rights or
warrants, in each such case the Conversion Price in effect immediately
prior thereto shall be reduced immediately thereafter to the price
determined by dividing (1) an amount equal to the difference resulting
from (A) the number of shares of Common Stock outstanding on such
record date multiplied by the Conversion Price per share on such
record date, less (B) the fair market value (as
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determined by the Board of Directors, whose determination shall
be conclusive of said shares or evidences of indebtedness or assets or
rights or warrants to be so distributed, by (2) the number of shares
of Common Stock outstanding on such record date. Such adjustment
shall be made successively whenever such a record date is fixed. In
the event that such distribution is not so made, the Conversion Price
then in effect shall be readjusted, effective as of the date when the
Board of Directors determines not to distribute such shares, evidences
of indebtedness, assets, rights or warrants, as the case may be, to
the Conversion Price which would then be in effect if such record date
had not been fixed.
(iii) Consolidation, Merger, Sale, Lease or
Conveyance. In case of any consolidation with or merger of the
Corporation with or into another corporation, or in case of any sale,
lease or conveyance to another corporation of the assets of the
Corporation as an entirety or substantially as an entirety, each share
of Series A Preferred Stock shall after the date of such
consolidation, merger, sale, lease or conveyance be convertible into
the number of shares of stock or other securities or property
(including cash) to which the Common Stock issuable (at the time of
such consolidation, merger, sale, lease or conveyance) upon conversion
of such share of Series A Preferred Stock would have been entitled
upon such consolidation, merger, sale, lease or conveyance; and in any
such case, if necessary, the provisions set forth herein with respect
to the rights and interests thereafter of the holders of the shares of
Series A Preferred stock shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of stock or
other securities or property thereafter deliverable on the conversion
of the shares of Series A Preferred Stock.
(iv) Rounding of Calculations; Minimum
Adjustment. All calculations under this subparagraph (e) shall be
made to the nearest cent or to the nearest one hundredth (1/100th) of
a share, as the case may be. Any provision of this paragraph 6 to the
contrary notwithstanding, no adjustment in the Conversion Price shall
be made if the amount of such adjustment would be less than $0.05, but
any such amount shall be carried forward and an adjustment with
respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate $0.05 or more.
(v) Timing of Issuance of Additional Common
Stock Upon Certain Adjustments. In any case in which the provisions
of this subparagraph (e) shall require that an adjustment shall become
effective immediately after a record date for an event, the
Corporation may defer until the occurrence of such event (A) issuing
to the holder of any share of Series A Preferred Stock converted after
such record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such
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conversion by reason of the adjustment required by such event
over and above the shares of Common Stock issuable upon such
conversion before giving effect to such adjustment and (B) paying to
such holder any amount of cash in lieu of a fractional share of Common
Stock pursuant to subparagraph (d) of this paragraph 6; provided that
the Corporation upon request shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder's right to
receive such additional shares, and such cash, upon the occurrence of
the event requiring such adjustment.
(f) Current Market Price. The Current Market Price at
any date shall mean, in the event the Common Stock is publicly traded,
the average of the daily closing prices per share of Common Stock for
30 consecutive trading days ending no more than 15 business days
before such date (as adjusted for any stock dividend, split,
combination or reclassification that took effect during such 30
business day period). The closing price for each day shall be the
last reported sale price regular way or, in case no such reported sale
takes place on such day, the average of the last closing bid and asked
prices regular way, in either case on the principal national
securities exchange on which the Common Stock is listed or admitted to
trading, or if not listed or admitted to trading on any national
securities exchange, the closing sale price for such day reported by
NASDAQ, if the Common Stock is traded over-the-counter and quoted in
the National Market System, or if the Common Stock is so traded, but
not so quoted, the average of the closing reported bid and asked
prices of the Common Stock as reported by NASDAQ or any comparable
system or, if the Common Stock is not listed on NASDAQ or any
comparable system, the average of the closing bid and asked prices as
furnished by two members of the National Association of Securities
Dealers, Inc. selected from time to time by the Corporation for that
purpose. If the Common Stock is not traded in such manner that the
quotations referred to above are available for the period required
hereunder, Current Market Price per share of Common Stock shall be
deemed to be the fair value as determined by the Board of Directors,
irrespective of any accounting treatment.
(g) Statement Regarding Adjustments. Whenever the
Conversion Price shall be adjusted as provided in subparagraph 6(e),
the Corporation shall forthwith file, at the office of any transfer
agent for the Series A Preferred Stock and at the principal office of
the Corporation, a statement showing in detail the facts requiring
such adjustment and the Conversion Price that shall be in effect after
such adjustment, and the Corporation shall also cause a copy of such
statement to be sent by mail, first class postage prepaid, to each
holder of shares of Series A Preferred Stock at its address appearing
on the Corporation's records.
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(h) Treasury Stock. For the purposes of this paragraph
6, the sale or other disposition of any Common Stock theretofore held
in the Corporation's treasury shall be deemed to be an issuance
thereof.
(i) Costs. The Corporation shall pay all documentary,
stamp, transfer or other transactional taxes attributable to the
issuance or delivery of shares of Common Stock upon conversion of any
shares of Series A Preferred Stock; provided that the Corporation
shall not be required to pay any taxes which may be payable in respect
of any transfer involved in the issuance or delivery of any
certificate for such shares in a name other than that of the holder of
the shares of Series A Preferred Stock in respect of which such shares
are being issued.
(j) Reservation of Shares. The Corporation shall reserve
at all times so long as any shares of Series A Preferred Stock remain
outstanding, free from preemptive rights, out of its treasury stock
(if applicable) or its authorized but unissued shares of Common Stock,
or both, solely for the purpose of effecting the conversion of the
shares of Series A Preferred Stock, sufficient shares of Common Stock
to provide for the conversion of all outstanding shares of Series A
Preferred Stock.
(k) Approvals. If any shares of Common Stock to be
reserved for the purpose of conversion of shares of Series A Preferred
Stock require registration with or approval of any governmental
authority under any federal or state law before such shares may be
validly issued or delivered upon conversion, then the Corporation will
in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be. If, and so long as, any
Common Stock into which the shares of Series A Preferred Stock are
then convertible is listed on any national securities exchange, the
Corporation will, contemporaneously with the conversion, cause to be
listed and thereafter to keep listed on such exchange, upon official
notice of issuance, all shares of such Common Stock issuable upon
conversion.
(l) Valid Issuance. All shares of Common Stock which may
be issued upon conversion of the shares of Series A Preferred Stock
will upon issuance by the Corporation be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof, and the Corporation
shall take no action which will cause a contrary result (including
without limitation, any action which would cause the Conversion Price
to be less than the par value, if any, of the Common Stock).
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7. Voting Rights.
(a) The holders of the issued and outstanding shares of
Series A Preferred Stock have no voting rights except as set forth
herein and as required by law.
(b) Without the consent of the holders of at least
(i) a majority of the shares of Series A
Preferred Stock then outstanding, given in writing or by vote at a
meeting of holders of Series A Preferred Stock called for such
purpose, the Corporation will not (A) increase the authorized amount
of Series A Preferred Stock or (B) create any other class of Parity
Stock or Senior Stock or increase the authorized amount of any such
other class; and
(ii) a majority of the shares of Series A
Preferred Stock then outstanding, given in writing or by vote at a
meeting of holders of Series A Preferred Stock called for such
purpose, the Corporation will not (A) other than as set forth in (i)
above, amend, alter or repeal any provision of the Certificate of
Incorporation or this Certificate so as to adversely affect the
rights, preferences or privileges of the Series A Preferred Stock or
(B) merge or consolidate with or into any other person, or sell
substantially all of its assets or business to any other person,
except that the Corporation may merge with any person if the
corporation is the entity surviving such merger and such merger does
not adversely affect the rights, preferences and privileges of the
Series A Preferred Stock.
8. Covenants. In addition to any other rights provided by law,
so long as any Series A Preferred Stock is outstanding, the
Corporation, without first obtaining the affirmative vote or written
consent of the holders of not less than a majority of such outstanding
shares of Series A Preferred Stock, will not:
(a) amend or repeal any provision of, or add any
provision to, the Corporation's Certificate of Incorporation or
By-Laws or to these resolutions if such action would alter adversely
or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, any Series A Preferred
Stock, or increase or decrease the number of shares of Series A
Preferred Stock authorized hereby;
(b) authorize or issue shares of any class or series of
stock not expressly authorized herein having any preference or
priority as to dividends, assets or other rights superior to or on a
parity with any such preference or priority of the Series A Preferred
Stock, or authorize or issue shares of stock of any class or any
bonds, debentures, notes or other obligations convertible into
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or exchangeable for, or having option rights to purchase, any
shares of stock of the Corporation having any preference or priority
as to dividends, assets or other rights superior to or on a parity
with any such preference or priority of the Series A Preferred Stock;
(c) reclassify any class or series of any Junior Stock
into Parity Stock or Senior Stock or reclassify any series of Parity
Stock into Senior Stock; or
(d) pay or declare any dividend on any Junior Stock
(other than dividends payable in shares of the class or series upon
which such dividends are declared or paid, or payable in shares of
Common Stock with respect to Junior Stock other than Common Stock,
together with cash in lieu of fractional shares and dividends not in
excess of dividends paid to the Series A Preferred Stock) while the
Series A Preferred Stock remains outstanding, or apply any of its
assets to the redemption, retirement, purchase or acquisition,
directly or indirectly, through subsidiaries or otherwise, of any
Junior Stock, except from employees of the Corporation upon
termination of employment or otherwise pursuant to the terms of stock
purchase or option agreements providing for the repurchase of, or
right of first refusal with respect to, such Junior Stock entered into
with such employees.
9. Exclusion of Other Rights. Except as may otherwise be
required by law, the Series A Preferred Stock shall not have any
preferences or relative, participating, optional or other special
rights, other than those specifically set forth in this resolution (as
such resolution may be amended from time to time) and in the
Corporation's Certificate of Incorporation. The shares of Series A
Preferred Stock shall have no preemptive or subscription rights. The
Series A Preferred Stock shall not be subject to redemption or the
operation of a retirement or sinking fund.
10. Headings of Subdivisions. The headings of the various
subdivisions hereof are for convenience of reference only and shall
not affect the interpretation of any of the provisions hereof.
11. Severability of Provisions. If any right, preference or
limitation of the Series A Preferred Stock set forth in this
resolution (as such resolution may be amended from time to time) is
invalid, unlawful or incapable of being enforced by reason of any rule
of law or public policy, all other rights, preferences and limitations
set forth in this resolution (as so amended) which can be given effect
without the invalid, unlawful or unenforceable right, preference or
limitation shall, nevertheless, remain in full force and effect, and
no right, preference or limitation herein set forth shall be deemed
dependent upon any other such right, preference or limitation unless
so expressed herein.
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12. Status of Reacquired Shares. Shares of Series A Preferred
Stock which have been issued and converted or reacquired in any manner
shall (upon compliance with any applicable provisions of the laws of
the State of Delaware) have the status of authorized and unissued
shares of Preferred Stock issuable in series undesignated as to series
and may be redesignated and reissued.
C. The authorized number of shares of Series A Preferred Stock of
the Corporation is 5,000,000 and the number of shares constituting the Series A
Non-Voting Convertible Preferred Stock, consisting of the shares authorized
hereby, is 150.
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IN WITNESS WHEREOF, the undersigned have executed this certificate as
of June 24, 1994, on behalf of the Corporation, and certify under penalty of
perjury that this is the act and deed of the Corporation, and that the facts
stated herein are true.
/s/Charles W. Daggs, III
--------------------------------
Charles W. Daggs, III, President
/s/James D. Van De Graaff
---------------------------------
James D. Van De Graaff, Secretary
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EXHIBIT 10.8
STOCK PURCHASE AGREEMENT
This Agreement is entered into as of the 24th day of June, 1994 by and
between Rodman & Renshaw Capital Group, Inc., a Delaware corporation (the
"Company"), and Abaco Casa de Bolsa, S.A. de C.V., Abaco Grupo Financiero, a
corporation incorporated under the laws of the United Mexican States ("Abaco").
RECITALS
WHEREAS, Abaco owns a majority of the outstanding shares of capital
stock of the Company; and
WHEREAS, Abaco desires to invest additional funds in the Company in
consideration of additional shares of capital stock of the Company.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, the parties agree as follows:
1. PURCHASE AND SALE OF SHARES. At the Closing (as hereinafter
defined), the Company shall issue and sell to Abaco, and Abaco shall purchase
from the Company 150 shares of Series A, non-voting preferred, $0.01 par value,
of the Company as further described in Exhibit A hereto (the "Shares"). The
terms, conditions, and agreements relating to the Shares as set forth in
Exhibit A form a part of this Agreement and are binding upon the parties.
2. CONSIDERATION AND PAYMENT. In consideration for the Shares,
Abaco shall pay the Company by bank check or wire transfers the aggregate
amount of U.S.$15,000,000.
3. CLOSING. The purchase and sale of the Shares shall take place
at the offices of the Company, on June 24, 1994, at a mutually agreeable time
(the "Closing"). At the Closing, the Company shall deliver or cause to be
delivered to Abaco, certificates evidencing the Shares, duly issued to Abaco,
and any and all other documents necessary to issue the Shares, and Abaco shall
deliver or cause to deliver to the Company, the purchase price as provided in
Section 2.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Abaco as follows:
A. Corporate Organization. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware.
<PAGE> 2
- 2 -
B. Capitalization. The aggregate number of shares of
capital stock which the Company is authorized to issue is 20,000,000 shares of
common stock, $0.09 par value, __________ of which are presently issued and
outstanding and 5,000,000 shares of preferred stock, $0.01 par value, none of
which are issued or outstanding. The Shares have been duly authorized and when
issued and paid for in accordance with this Agreement will be validly issued,
fully-paid, and non-assessable. The shares of common stock of the Company into
which the Shares are convertible have been duly reserved for such conversion,
and when issued pursuant to such conversion such shares of common stock will be
validly issued, fully paid, and non-assessable.
C. Authority, Execution and Delivery. The Company has
all requisite power and authority to execute, deliver and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement and the consummation of the transaction contemplated hereby have
been duly authorized by all requisite corporate action on the part of the
Company. This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company
enforceable in accordance with its terms.
D. Financial Statements. The Company has furnished to
Purchaser the financial statements for the Company as of March 31, 1994, which
statements have been prepared in accordance with generally accepted accounting
principles consistently applied and present fairly the financial position of
the Company as of the date thereof and the results of operations for the
periods covered thereby. The Company further represents and warrants that
there has been no material change in the financial position of the Company
since such date.
E. No Conflict. Except for the authorization of the
listing of the shares of common stock into which the Shares are convertible
prior to such conversion, by the New York Stock Exchange and the filing of a
Certificate of Designations in respect of the Shares with the Secretary of
State of Delaware, no authorization or consent is required in connection with
the execution, delivery, or performance of this Agreement by the Company and
such execution, delivery or performance will not conflict with or result in a
breach of the Company's charter documents or any material instrument or
agreement.
5. REPRESENTATIONS AND WARRANTIES OF ABACO. Abaco hereby
represents and warrants to the Company as follows:
A. Corporate Organization. Abaco is a Mexican
corporation, duly organized, validly existing and in good standing under the
laws of the United Mexican States.
B. No Conflict. Except for approval by Mexican
regulatory authorities, no authorization or consent is required in connection
with the execution, delivery, or performance of this Agreement by the Company
and such execution, delivery or performance
<PAGE> 3
- 3 -
will not conflict with or result in a breach of the Company's charter documents
or any material instrument or agreement.
C. Authority, Execution and Delivery. Abaco has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement and the consummation of the transaction contemplated hereby have
been duly authorized by all requisite corporate action on the part of Abaco.
This Agreement has been duly executed and delivered by Abaco and constitutes
the legal, valid and binding obligation of Abaco enforceable in accordance with
its terms.
D. Investment Intent. The Shares acquired by Abaco
pursuant to this Agreement, and the shares of common stock which may be
acquired upon conversion of the Shares, will be acquired by Abaco for its own
account and not with a view to, or for resale in connection with, any
distribution of any of the Shares. Abaco acknowledges that it is aware of the
applicable limitations under the Securities Act of 1933, as amended, upon the
subsequent sale of the Shares, or such common shares, as the case may be, and
that accordingly, certificates representing the Shares, or such common shares,
as the case may be, may bear an appropriate legend.
6. CONDITIONS TO CLOSING. The obligations of each of the parties
to consummate the transactions contemplated by this Agreement shall be subject
to the following conditions:
A. Representations and Warranties True. The
representations and warranties of the other party shall be true and accurate in
all material respects as of the Closing Date, as if made on such date.
B. No Litigation. There shall be no order, and no
proceeding or investigation, pending or threatened, restricting or prohibiting
the transactions contemplated by this Agreement.
C. Certificate of Designations. The Company shall file
a Certificate of Designations in respect of the Shares with the Secretary of
State of Delaware.
D. Mexican Regulatory Approvals. All requisite
approvals by Mexican regulatory approvals shall have been obtained.
7. STOCKHOLDER APPROVAL. The Company agrees to call a special
meeting of its stockholders as soon as practicable after the availability of
the annual report for the Company's fiscal year ended June 24, 1994 to approve
the conversion of the Shares into shares of common stock of the Company in
accordance with the terms of the Shares and further agrees to promptly
thereafter cause such common shares to be listed on the New
<PAGE> 4
- 4 -
York Stock Exchange. Abaco agrees to vote all of the common shares of the
Company held by it for such approval.
8. MISCELLANEOUS PROVISIONS.
A. Amendment, Modification and Waiver. This Agreement
may be amended, modified and supplemented, in writing only, by mutual consent
of the parties hereto. No failure on the part of any party to exercise any
right, power or privilege hereunder shall operate as a waiver.
B. Assignment. The respective rights and obligations of
the Company and Abaco under this Agreement shall not be assignable by either
the Company or Abaco without the prior written consent of the other.
C. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but both of
which together shall constitute one and the same instrument.
D. Entire Agreement. This Agreement including the
exhibit hereto contains the entire understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, representations, warranties, covenants, or undertakings, other than
those expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
E. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Illinois.
<PAGE> 5
- 5 -
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ATTEST: RODMAN & RENSHAW CAPITAL GROUP, INC.
By: /s/ James D. Van De Graaff By: /s/ Charles W. Daggs, III
-------------------------- -------------------------
Title: General Counsel Title: CEO
----------------------- ------------------------
ATTEST: ABACO CASA DE BOLSA, S.A. DE C.V.,
ABACO GRUPO FINANCIERO
By: /s/ Jose Roble Flores By: /s/ Abaco Casa De Bolsa, S.A. DE C.V.
-------------------------- -------------------------------------
Title: Title:
----------------------- ------------------------------------
<PAGE> 1
EXHIBIT 10.9
Rodman & Renshaw Capital Group, Inc.
120 South LaSalle Street
Chicago, Illinois 60603
Attn: Charles W. Daggs/James D. Van De Graaff
This is to confirm to you our agreement between Confia, Grand Cayman Branch and
Rodman & Renshaw Capital Group, Inc. for a loan with the following terms and
conditions:
Principal Amount: $ 10,000,000.00 U.S.Dollars
Issue Date: June 22, 1994
Maturity Date: December 19, 1994
No. of Days: 180 Days
Interest Rate: 11.50%
Commitment Fee 0.50% Paid Up $ 50,000.00 U.S. Dollars Due June 22, 1994
Front on June 22, 1994
Payment Instructions: Swiss Bank Corporation, New York Branch
ABA No. 026 007 993
Account No. 101-WA-012297-000
Account Name: Confia, Grand Cayman Branch
Please sign this letter and the Promissory Note attached and return those
documents to my attention to my fax no. (011) -528-363-3728 in Monterrey,
Mexico.
Regards
/s/JAVIER CHAVEZ /S/CHARLES W. DAGGS
- - --------------------------- ------------------------
Javier Chavez Charles W. Daggs
Confia, Grand Cayman Branch Rodman & Renshaw Capital
Group, Inc.
<PAGE> 2
CONFIA, S.A., INSTITUCION DE BANCA MULTIPLE,
ABACO GRUPO FINANCIERO
PROMISSORY NOTE
By means of this PROMISSORY NOTE, the SUBSCRIBER unconditionally promises to
pay to the order of Confia, S.A., Institucion de Banca Multiple, Abaco Grupo
Financiero, Grand Cayman Branch (the "BANK"), the principal amount of
USD$10,000,000.00 (Ten Million 00/100 U.S. Dlls) lawful currency of the United
States of America precisely on December 19, 1994.
The SUBSCRIBER promises to pay on December 19, 1994 interest on the principal
amount hereof an annual rate of interest of 11.50%.
In the event the SUBSCRIBER shall fail to pay the principal amount hereof as
and when due hereunder, the unpaid amount shall bear interest from the date
such payment was due until payment in full calculated on a daily basis of a
rate per annum of 30%.
Interest hereunder shall be computed on the basis of a year of 360 days for the
actual number of days elapsed.
The principal amount hereof and interest thereon shall be payable to the BANK
in New York, New York, U.S.A., at the office of Swiss Bank, Co. of New York,
for the credit of BANK's account No. 101-WA-012297-000, in freely transferable
Dollars and in same day funds, no later than 12:00 noon (New York time), on the
date on which such payments are due.
Whenever any payment to be made hereunder shall be stated to be due on a day
which is not a business day, (meaning a day of the year on which banks in
London, England, carry on transactions in Dollars and banks in New York City,
U.S.A. and in Mexico City, United Mexican States ("Mexico") are not required or
authorized to close), such payment shall become due on the next following
business day.
The SUBSCRIBER agrees to make all payments in respect of principal and interest
free and clear of and without deduction, charge or withholding, or any tax
liabilities imposed on such amounts, actually or in the future payable in any
jurisdiction. If at any time Mexico (or any other country entitled to do so)
or any political subdivision or any taxing authority thereof or therein shall
impose, charge or collect any tax, charge, withholding, deduction, levy, or any
other fiscal liability together with interest, penalties, fines, or charges
thereof (the "Taxes"), on or with respect hereto or to any payment hereunder,
the SUBSCRIBER agrees to pay, immediately to the appropriate tax authority, on
behalf of the BANK the amount of any such additional amounts required to ensure
the BANK received the full amount that the BANK would have received had no such
payment of taxes been made.
The SUBSCRIBER hereby irrevocably submits to the jurisdiction of any New York
State court or any United States court sitting in New York City, New York,
United States or any competent court of Mexico City, Mexico or of the city of
Monterrey, N.L., Mexico, in any action or proceeding arising
<PAGE> 3
- 2 -
out of or relating to this PROMISSORY NOTE, as the plaintiff in such action or
proceeding may elect and the SUBSCRIBER hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
any of such courts. The SUBSCRIBER irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to laying of
venue of any suit, action or proceeding with respect to this PROMISSORY NOTE
brought in any court aforementioned, and the SUBSCRIBER further irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. The SUBSCRIBER hereby
expressly waives all rights to any other jurisdiction, which they may now or
hereafter have any reason of its present or subsequent domicile.
The SUBSCRIBER hereby consents to service of process upon them in any action or
proceeding arising out of or relating to this PROMISSORY NOTE: (i) if in the
State of New York, United States, at the address of CT Corporation System (the
"Process Agent"), (ii) and in the Federal District of Mexico or in Monterrey,
N.L., Mexico, at the domicile appearing under their respective name in this
signature page.
This PROMISSORY NOTE is executed in an English and Spanish version, both of
which shall bind the SUBSCRIBER and constitute one and the same PROMISSORY
NOTE, provided however, that in the case of doubt as to the proper
interpretation or construction of this PROMISSORY NOTE; the English text shall
be controlling in all cases, except that in the case of any legal proceeding
instituted in any court of Mexico the Spanish text shall be controlling.
This PROMISSORY NOTE is executed in Chicago, Illinois, USA, on June 22nd, 1994.
THE SUBSCRIBER
/s/Charles W. Daggs
- - -----------------------------------------
By: Rodman & Renshaw Capital Group, Inc.
represented by Mr. Charles W. Daggs
Address: 120 South LaSalle Street
Chicago, Illinois 60603, USA
<PAGE> 1
EXHIBIT 10.10
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("the Agreement") is made as of April 11,
1994, by and between Charles W. Daggs, III (the "Executive") and Rodman &
Renshaw Capital Group, Inc., (the "Company").
RECITALS:
A. The Company wishes to employ the Executive as President and
Chief Executive Officer of the Company on the terms and conditions set forth in
this Agreement.
B. The Executive wishes to be employed by the Company as
President and Chief Executive Officer of the Company on the terms and
conditions set forth in this Agreement.
AGREEMENTS
In consideration of the mutual covenants in this Agreement and other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the Company and the Executive agree as follows:
1. Employment of the Executive. The Company employs the
Executive as the Company's President and Chief Executive Officer, and the
Executive accepts such employment and agrees to act as an employee of the
Company, all in accordance with the terms and conditions of this Agreement.
2. Term of Employment. Subject to the provisions of Section 9,
the Executive's employment under this Agreement will begin on the date of this
Agreement and will continue until June 30, 1996, subject to extension by mutual
agreement.
3. Warrant of Authority. The Executive warrants and promises
that execution of this Agreement will not violate the terms of any other
contract or agreement to which he may be a party. The Executive warrants that
he is bound by no other employment agreement, restrictive covenant, or
confidentiality agreement with any other party at the time of execution of this
Agreement. Breach of this warranty will constitute "just cause" as defined in
Section 10 of this Agreement.
4. Offices and Duties. The Executive shall perform, subject to
the direction of the Company's Board of Directors, executive services for the
Company as may be consistent with his title, along with those other duties that
may be assigned from time to time by the Company's Board of Directors. During
this Agreement's term, the Executive's best efforts shall be devoted to the
affairs and business of the Company, as is customarily required for the
position of President and Chief Executive Officer. The services of the
Executive shall be rendered principally in Chicago, Illinois, but the Executive
shall do any travelling on behalf of the Company as may be reasonably required.
5. Compensation.
<PAGE> 2
(a) Base Salary. During the Employment Period, the Company
shall pay the Executive a base salary at a rate of Three
Hundred Thousand Dollars per year in equal bi-monthly
installments (the "Base Salary").
(b) Bonuses. (i) Signing Bonus. The Executive will receive
a one time signing bonus of $500,000 payable no later than
May ______, 1994.
(ii) Incentive Bonus. The Executive will
receive an incentive bonus for each of the two twelve month
periods commencing July 1, 1994 and July 1, 1995,
respectively, based on the Company's income before income
taxes ("IBT") and calculated as follows:
<TABLE>
<CAPTION>
IBT
(Without Giving
Effect to this Bonus) BONUS
--------------------- -----
<S> <C>
$0 - $5,000,000 5% of IBT
$5,000,000.01 - $250,000 plus 7.5% of IBT exceeding
$10,000,000 $5,000,000
$10,000,000.01 - $625,000 plus 10% of IBT exceeding
$15,000,000 $10,000,000
More than $15,000,000 $1,125,000 plus such percentage of
IBT exceeding $15,000,000 to be
determined by the Board of Directors
of the Company up to a maximum of 5%
</TABLE>
(iii) Guaranteed Bonus. Notwithstanding the
foregoing set forth in Section 5(b)(ii): (A) the incentive
bonus for each of the two twelve month periods commencing
July 1, 1994 and July 1, 1995 shall be no less than $600,000
and (B) no portion of the incentive bonus for either such
period shall be due to the Executive unless he is employed
by the Company at the end of the respective period.
(c) Stock Options. The Executive will be granted options to
purchase 100,000 common shares of the Company on the first
day of employment at the fair market value of the Company's
common stock on that date pursuant to the Company's stock
option plan. Fifty percent (50%) of such options will be
exercisable on June 30, 1996 and the remaining fifty percent
(50%) will become exercisable on June 30, 1997, in either
case exercisability shall be conditioned on the Executive's
continued employment by the Company on such dates. The
Board of Directors may grant the Executive additional stock
options in its discretion.
(d) Benefits. The Executive shall be entitled to participate in
any welfare and benefit plans relating to pension, profit
sharing, or other retirement benefits, along with any
medical, dental, life insurance coverage, disability
insurance coverage, or
-2-
<PAGE> 3
reimbursement plans that the Company may offer to
executive employees from time to time.
(e) Withholding. All compensation payable to the Executive
under this Agreement is stated in gross amounts and will be
subject to all applicable withholding taxes, other normal
payroll deductions, and any other amounts required by law to
be withheld.
(f) Expenses. The Company, in accordance with its policies,
shall pay or reimburse the Executive for all expenses
(including travel and entertainment expenses) reasonably
incurred by the Executive during the Employment Period in
connection with the performance of the Executive's duties
under this Agreement, provided that the Executive shall
provide to the Company documentation or evidence of expenses
for which the Executive seeks reimbursement. The Executive
will travel coach class for all domestic flights within the
United States. The Executive may, in his own discretion,
travel on business class for international flights.
6. Restricted Activities. The Executive agrees that during
employment, except with the express consent of the Company's Board of
Directors, the Executive will not, directly or indirectly, engage or
participate in, become a director of, or render advisory or other services for,
or in connection with, or become interested in, or make any financial
investment in any firm, corporation, business, entity, or business enterprise
competitive with any business of the Company, or to serve on any Board of
Directors of any other entity without the prior consent of the Company's Board
of Directors. This restriction does not prevent the Executive from purchasing
shares in publicly traded companies in amounts of less than $50,000 in any one
company. It also will not require the liquidation of the Bear Stearns stock
accumulated in the Partner's Capital Accumulation Plan.
7. Remedies. The Executive agrees and acknowledges that by
virtue of this employment, the Executive will obtain an intimate knowledge of
the Company's activities and affairs, including trade secrets and other
confidential matters. As a result, and also because of the special, unique,
and extraordinary services that the Executive is capable of performing for the
Company or one of its competitors, the Executive recognizes that the services
to be rendered are of a character giving them a peculiar value, the loss of
which cannot be adequately or reasonably compensated for by damages. The
Executive agrees that if the Executive fails to render to the Company the
services required, the Company shall be entitled to immediate injunctive or
other equitable relief to restrain the Executive, in addition to any other
remedies to which the Company may be entitled under law.
8. Regulatory Compliance. The Executive shall at all times act
in strict compliance with all applicable statutes, rules, and regulations of
any governmental entity, agency, or self-regulatory body governing the
Executive's activities. The Executive further agrees to act in accordance with
and subject to the policies and procedures adopted by the Company from time to
time as set forth in the Company's Compliance and Supervisory Procedures Manual
(the "Manual"), a copy of which the Executive hereby acknowledges having
received and read, and which, as amended from time to time, is incorporated
herein by reference in its entirety. The Executive agrees at any time upon the
Company's request to provide full information upon any subject which relates to
the Executive's or any other person's compliance with applicable
- 3 -
<PAGE> 4
securities laws and or the Manual, and to provide all business records relative
to the Company's inquiry. The Executive further agrees to inform the Company
immediately in writing in the event: (i) the Executive becomes a subject of
any formal or informal inquiry, investigation or order by any State, federal or
self-regulatory body; (ii) the Executive is notified of any threatened
litigation or arbitration; (iii) the Executive's registration or license to
sell or deal in securities or commodities is or may be refused, suspended, or
revoked; (iv) the Executive is or may be enjoined temporarily or otherwise from
selling or dealing in securities or commodities; (v) the Executive is summoned,
arraigned, arrested, or indicted for a criminal offense; or (vi) the Executive
becomes subject to bankruptcy proceedings.
9. Noncompetition, Nonsolicitation, and Confidentiality. The
Executive agrees that he will not, directly or indirectly (whether as owner,
partner, shareholder, agent, employee, independent contractor, consultant, or
otherwise), during the Employment Period and for a period of one year following
the termination or expiration of the Employment Period:
(a) solicit or attempt to solicit any person or entity, wherever
located, that was a customer of the Company during the
Employment period, for the purpose of soliciting business
for or on behalf of any person or entity (other than the
Company) engaged in a Company Business;
(b) employ, engage, or solicit for employment or engagement (or
encourage any other person or entity to take such action
regarding) any person who has been employed or engaged by
the Company during the preceding twelve months; or
(c) (i) disclose, divulge, or communicate, directly or
indirectly, any Confidential Information (as defined below)
to any person or entity not employed or engaged by the
Company, except as may be required to perform his duties
under this Agreement; or (ii) use, directly or indirectly
any Confidential Information for the benefit of any person
or entity other than the Company.
The Executive acknowledges and agrees that the provisions of this
Section 9 are reasonable in duration and scope and in all other respects. The
provisions of this Section 9 will survive termination or expiration of this
Agreement.
10. Termination
(a) Notwithstanding anything to the contrary in this Agreement,
the Company may terminate this Agreement for Just Cause (as
defined below) by providing to the Executive written notice
of termination; the notice of termination must state the
grounds for termination for Just Cause. Upon termination of
employment for Just Cause, the Employment Period will
immediately end and the Executive will not be entitled to
receive any further compensation, whether in the form of
Base Salary, Bonuses, or Benefits or otherwise.
(b) Notwithstanding anything to the contrary in this Agreement,
this Agreement, the Employment Period, and all obligations
of the Company to pay the Executive any further
compensation, whether in the form of Base Salary, Bonuses,
or Benefits (other than death and disability benefits, if
any) or otherwise, will terminate upon the death or
disability of the Executive. "Disability" will be deemed to
have
- 4 -
<PAGE> 5
occurred whenever the Executive has suffered physical
or mental illness, injury, or infirmity that prevents the
Executive from fulfilling his duties under this Agreement
for sixty (60) consecutive days and the Company's Board of
Directors determines, in good faith, that such illness or
other disability is likely to continue.
(c) Notwithstanding anything to the contrary in this Agreement,
the Company may elect not to utilize the Executive's
services during the remainder of the Employment Period and
relieve the Executive of any further obligation to perform
his duties under this Agreement. If the Company so elects,
then the Executive shall cease to occupy his office or
otherwise have access to the Company's premises, but the
Company will remain obligated to pay the Executive the Base
Salary and Benefits during the remainder of the Employment
Period (the "Remaining Compensation").
In such event, the Executive will not be required to
mitigate the amount of Remaining Compensation by seeking
other employment during the remainder of the Employment
Period, but if the Executive secures other employment during
such period, then the amount of gross compensation received
by the Executive from such other employment shall be offset
by the Company against compensation owed to the Executive.
11. Definitions. As used in this Agreement:
"Just Cause" means (a) an act of fraud or dishonesty by the Executive
that results directly or indirectly in gain or personal enrichment of the
Executive at the Company's expense, (b) an act by the Executive that the
Company's Board of Directors reasonably believe constitutes a felony, (c)
conduct on the Executive's part intended to or likely to injure the Company's
business or reputation, or (d) any material breach by the Executive of any of
the provisions of this Agreement.
"Confidential Information" means all customer lists, supplier lists,
and other information of a business or technical nature disclosed to, learned,
or developed by the Executive in the course of his employment by the Company,
relating to the Business, the business of any customer or supplier of the
Company, or the business of any other person or entity that consults with or is
in any way affiliated with the Company. "Confidential Information" does not
include information that is publicly available through no fault of the
Executive.
12. Remedies. Both parties recognize that a breach by the
Executive of the provisions of this Agreement would irreparably harm the
Company. Accordingly, if the Executive breaches or threatens to breach any of
the provisions of this Agreement, in addition to all other remedies available
to it in law or equity or under this Agreement, the Company will be entitled to
have an injunction issued by any court of competent jurisdiction enjoining and
restraining the Executive from doing any act in violation of any of the
provisions of this Agreement. The parties agree that the party at fault shall
reimburse the other party for all reasonable attorneys' fees that the other
party incurs in pursuing its remedies under this Agreement.
13. Miscellaneous
- 5 -
<PAGE> 6
(a) Notices. All notices and other communications between the
parties pursuant to this Agreement shall be in writing and
will be deemed given when delivered in person, one business
day after being dispatched by a nationally recognized
overnight courier service, or three business days after
being deposited in the U.S. Mail, registered or certified
mail, return receipt requested, addressed as follows:
If to the Company: Rodman & Renshaw Co., Inc.
120 South LaSalle Street
Chicago, Illinois 60603
Attn: General Counsel
If to the Executive: Charles W. Daggs, III
(b) Governing Law. This Agreement will be subject to and
governed by the laws of the State of Illinois, without
regard to principles of conflicts of laws.
(c) Binding Effect. This Agreement will be binding upon and
inure to the benefit of the parties and their respective
heirs, legal representatives, executors, administrators,
successors, and assigns, subject to the limitations or
assignment in Section 12(h).
(d) Entire Agreement. This Agreement constitutes the entire
Agreement between the parties with respect to the subject
matter of this Agreement and supersedes any other
agreements, whether oral or written, between the parties
with respect to the subject matter of this Agreement.
(e) Modification. No change or modification of this Agreement
will be valid unless it is in writing and signed by both of
the parties. No waiver of any provision of this Agreement
will be valid unless in writing and signed by the person or
party to be charged.
(f) Severability. If any provision of this Agreement is, for
any reason, invalid or unenforceable, the remaining
provisions of this Agreement will nevertheless be valid and
enforceable and will remain in full force and effect. Any
provisions of this Agreement that are held invalid or
unenforceable by a court of competent jurisdiction will be
deemed modified to the extent necessary to make them valid
and enforceable and as so modified will remain in full force
and effect.
(g) Headings. The headings of this Agreement are inserted for
convenience only and are not to be considered in the
interpretation of construction of the provisions of this
Agreement.
(h) Assignability. This Agreement may not be assigned by either
party without the prior written consent of the other party,
except that the Company may assign its
- 6 -
<PAGE> 7
rights to, and cause its obligations under this
Agreement to be assumed by, any person or entity to whom or
to which the Company simultaneously transfers by sale,
merger, or otherwise all or substantially all of its assets.
(i) No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the Executive
and the Company to express their mutual intent, and no rule
of strict construction will be applied against the Executive
or the Company.
(j) Non-Discrimination. The Company agrees to comply with all
applicable laws, regulations, or ordinance governing this
employment, including but not limited to the Civil Rights
Act of 1964 (Title VI), the Age Discrimination in Employment
Act (ADEA), the Americans With Disabilities Act (ADA), and
the Older Workers Benefit Protection Act, along with their
state or local counterparts. The Company agrees not to
discriminate against the Executive with regard to any term
or condition of employment on the basis of race, color,
national origin, religion, sex, age (40 and above), or
non-job related disability.
(k) Arbitration. All disputes arising out of or concerning the
interpretation or application of this Agreement, including
without being limited to any claims that the application of
this Agreement or the termination of the employment
relationship established by this Agreement violates any
federal, state, or local law, regulation, or ordinance
(including but not limited to those set forth in Section
12(j) above), shall be resolved timely and exclusively by
final and binding arbitration pursuant to the rules of
either the New York Stock Exchange or the National
Association of Securities Dealers, Inc. Arbitration must be
demanded within 20 calendar days of the time when the
demanding party knows or should have known of the event or
events giving rise to the claim. The arbitration opinion
and award shall be final and binding on the Company and the
Executive and shall be enforceable by any court. The
Company and the Executive shall share equally all costs of
arbitration excepting their own attorneys' fees, unless and
to the extent ordered by the arbitrators to pay the
attorneys' fees of the prevailing party.
This section is intended by the Company and the Executive to
be enforceable under the Federal Arbitration Act. Should it
be determined by any court that the act does not apply, then
it shall be enforceable under the arbitration statute of the
State of Illinois.
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/Charles W. Daggs, III
------------------------
Charles W. Daggs, III
RODMAN & RENSHAW CAPITAL GROUP, INC.
By: /s/Jorge Lankenau Rocha
-----------------------
- 8 -
<PAGE> 1
EXHIBIT 10.11
Mr. David H. Shulman
20 Beechcroft Road
Greenwich, Connecticut 06830
Dear Mr. Shulman
This will confirm our arrangements with respect to your employment as
Managing Director of the Fixed Income Group of Rodman & Renshaw, Inc.
As Managing Director of the Fixed Income Group, you will be the senior
officer in charge of the Group, responsible for the conduct and policies of the
Group, the employment, retention and compensation of its personnel, and other
administrative duties as the senior officer. The firm will commit capital to
the Group adequate to sustain its activities, but in an amount not less than
the 9,000,000 committed to the Group at the present time. You will devote your
full time and efforts to the business and affairs of the Group. The firm
recognizes that your administrative duties hereunder will restrict your
abilities to produce revenues directly and no minimum production shall be
required of you.
Your employment is for a term of three years commencing February 14, 1994.
Your compensation will consist of fixed compensation, at the rate of $1,300,000
per annum, payable monthly, plus additional compensation equal to 15% of the
net pretax profits of the Group. All production by you shall be included as
revenues of the Group. The additional compensation shall be paid promptly
after completion of the year-end financial statements of the firm, and shall
be appropriately adjusted in the first and third years of employment to reflect
the partial year. You shall also be entitled to receive all other employee
benefits generally made available to senior officers of Rodman & Renshaw, Inc.
and Rodman & Renshaw Capital Group, Inc., including the distribution of stock
options and participation in the SERP plan.
Your employment shall not be terminable by the firm except for (a) death,
(b) your inability because of permanent disability to perform your duties
hereunder for a period of 180 consecutive days, (c) cause, which shall mean
conviction for the wilful commission of a felony or persistent, wilful refusal
to conform to policies of the Board of Directors of the firm, after reasonable
time to remedy the failure to conform, or (d) without cause. In the event the
employment is terminated without cause, you will be entitled to receive the
fixed compensation hereunder, with no duty to mitigate the amount due to you,
plus all other employee benefits as if you were continued to be employed
hereunder. You shall be entitled to terminate your employment hereunder at any
time on 30 days' notice to the firm.
Although your employment shall be Rodman & Renshaw, Inc., this letter
agreement is signed by Rodman & Renshaw Capital Group, Inc., Abaco Casa de
Bolsa, S.A. de C.V. and Abaco Grupo Financiero, S.A. de C.V., each of which by
its execution of this agreement agrees to be bound by the terms hereof and
guarantees performance of this agreement, it being understood and agreed that
the obligations to you hereunder shall survive termination of the Fixed Income
Group or the sale or liquidation of Rodman & Renshaw, Inc.
<PAGE> 2
This agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to choice of law or
conflict of laws principles. This agreement may not be amended except by an
instrument in writing.
If this is in accordance with your understanding, please sign below,
whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
ABACO GRUPO FINANCIERO, S.A. de C.V.
By:/s/Jorge Lankenau Rocha
----------------------------------------------
Jorge Lankenau Rocha
Chairman of the Board of Grupo
Financiero and Casa de Bolsa
By:/s/Eduardo Camarena Legaspi
----------------------------------------------
Eduardo Camarena Legaspi
Director of Grupo Financiero and Casa de Bolsa
and President of Casa de Bolsa
RODMAN & RENSHAW, INC.
RODMAN & RENSHAW CAPITAL GROUP, INC.
By:/s/Joseph P. Shanahan
----------------------------------------------
Joseph P. Shanahan, Director,
Vice President and Acting Chief Executive
Officer of Rodman & Renshaw Capital Group, Inc.
Agreed and Accepted:
/s/David H. Shulman
- - -------------------
David H. Shulman
Dated: New York, N.Y.
February 14, 1994
<PAGE> 1
EXHIBIT 10.12
June 20, 1994
Mr. F.L. Kirby
1294 S. Fiore Dr.
Lake Forest, IL 60045
Dear F.L.:
Pursuant to our discussions, this letter summarizes our offer of employment
with Rodman & Renshaw.
1. You will be appointed as Chairman of the firm's Retail Sales Advisory
Committee, with the primary responsibility for coordinating efforts of
the firm's sales organization and senior management in developing and
executing a business strategy for maximizing the productivity of
individual registered representatives. You will receive an annual
salary of $25,000 for serving in this capacity.
2. During the first three months following your employment and the
obtaining of regulatory approvals, you will receive a guaranteed
payment of $20,000 per month and commission payouts on your gross
production based upon the standard commission grid. Thereafter, your
commission payout will be based upon the standard commission grid then
in effect.
3. Rodman agrees to assist you in resolving any contractual disputes you
might have with your current employer. Additionally, to the extent
that you are required to repay amounts to such employer pursuant to
the forgivable note you executed upon commencing your employment
there, Rodman agrees to pay such amounts on your behalf. Any amounts
so paid by Rodman will not include or take into account any monies set
off by your current employer relative to amounts owing to you in
connection with your acquisition of securities of such employer.
4. As Chairman of the Retail Sales Advisory Committee, at fiscal year end
you will be entitled to receive options to acquire Rodman common
stock. As required under Rodman's 1994 Stock Option Plan, the number
of such options and the vesting schedule thereof will be at the
discretion of the Compensation Committee, based upon your
contributions to the firm's success.
<PAGE> 2
5. If you agree to the foregoing, I will arrange for your nomination to
the Board of Directors at the next meeting of the Board.
F.L., I look forward to working with you for many successful years to come.
Please indicate your acceptance of the above by signing this letter where
indicated.
Sincerely,
/s/Charles W. Daggs, III
Charles W. Daggs, III
Agreed and accepted this 24th day of June, 1994.
/s/F.L. Kirby
- - -------------
F.L. Kirby
<PAGE> 1
EXHIBIT 21.1
RODMAN & RENSHAW CAPITAL GROUP, INC.
SUBSIDIARIES
COMPANY STATE OF INCORPORATION
- - ------- ----------------------
RODMAN & RENSHAW, INC. DELAWARE
RODMAN ADVISORY SERVICES, INC. DELAWARE
RODMAN & RENSHAW CHICAGO THEATRE LTD. DELAWARE
RODMAN & RENSHAW FUTURES MANAGEMENT INC. DELAWARE
RODMAN RIVER WEST, INC. DELAWARE
RODMAN SELF STORAGE, INC. DELAWARE
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement No. 33-73206 of Rodman & Renshaw Capital Group, Inc. on
Form S-8 of our report dated August 19, 1994, appearing in this
Annual Report on Form 10-K of Rodman & Renshaw Capital Group,
Inc. for the year ended June 24, 1994.
/s/ Deloitte & Touche LLP
Chicago, Illinois
September 21, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-24-1994
<PERIOD-START> JUN-26-1993
<PERIOD-END> JUN-24-1994
<CASH> 50,835,000
<SECURITIES> 40,936,000
<RECEIVABLES> 195,438,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 298,677,000
<PP&E> 1,987,000
<DEPRECIATION> 7,408,000
<TOTAL-ASSETS> 300,664,000
<CURRENT-LIABILITIES> 263,325,000
<BONDS> 0
<COMMON> 412,000
0
0
<OTHER-SE> 30,177,000
<TOTAL-LIABILITY-AND-EQUITY> 300,664,000
<SALES> 29,158,000
<TOTAL-REVENUES> 48,159,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 94,748,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,720,000
<INCOME-PRETAX> (17,431,000)
<INCOME-TAX> (930,000)
<INCOME-CONTINUING> (16,501,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,501,000)
<EPS-PRIMARY> (3.69)
<EPS-DILUTED> 0
</TABLE>
