UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
--------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _________________
Commission file number 1-9143
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RODMAN & RENSHAW CAPITAL GROUP, INC.
- - -------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-3111956
- - ----------------------------- --------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
233 S. Wacker Drive, Suite 4500, Chicago, IL 60606
- - -------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 312/526-2000
--------------
- - -------------------------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by 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
------- ------
Shares of common stock outstanding at May 1, 1996: 6,645,802
par value $.09.
<PAGE>
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements -
Condensed Consolidated Statements of Financial Condition
as of March 31, 1996 (unaudited) and December 31, 1995.
Condensed Consolidated Statements of Operations (unaudited)
for the three months ended March 31, 1996 and
March 31, 1995.
Condensed Consolidated Statements of Cash Flows (unaudited)
for the three months ended March 31, 1996 and
March 31, 1995.
Notes to Condensed Consolidated Financial Statements
(unaudited) - March 31, 1996.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands)
<CAPTION>
March 31
1996 December 31
(unaudited) 1995
</CAPTION>
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 10,976 $ 9,001
Securities purchased under agreements
to resell - 2,204
Cash and short-term investments required to
be segregated under federal regulations 8,673 7,398
Receivables:
Customers 16 49,544
Brokers, dealers, and clearing
organizations 10,093 16,298
Securities owned - at market 4,915 16,489
Memberships in securities and commodities
exchanges at cost(market value 03/31/96 -
$1,433; 12/31/95 - $1,219) 272 272
Furniture, fixtures and leasehold improvements,
at cost, less accumulated depreciation and
amortization (03/31/96 - $5,377; 12/31/95 -
$5,132) 8,256 8,560
Prepaid expenses and other assets 12,026 9,567
Deferred income taxes (Net of valuation
allowance: 03/31/96 - $18,844;
12/31/95 - $17,059) - -
__________ ___________
$ 55,227 $ 119,333
========== ===========
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings from banks $ - $ 30,672
Short-term note payable to affiliate 26,500 26,500
Payables:
Customers 7,535 18,914
Brokers, dealers, and clearing
organizations 34 13,549
Securities sold but not yet purchased,
at market 4,333 4,964
Accrued commissions 2,344 2,155
Accounts payable and accrued expenses 13,289 21,136
__________ ___________
54,035 117,890
Liabilities subordinated to the claims
of general creditors - -
Stockholders' equity:
Convertible non-voting preferred stock,
$.01 par value, 5,000,000 shares authorized;
50 shares Series C, issued at 03/31/96
and 50 shares Series B, issued
at 12/31/95 - -
Common stock, $.09 par value: 20,000,000
shares authorized; 6,646,000 issued at
03/31/96 and 12/31/95 598 598
Additional paid-in capital 40,749 35,749
Accumulated deficit (40,155) (34,904)
___________ ____________
1,192 1,443
__________ ____________
$ 55,227 $ 119,333
========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
<PAGE>
<TABLE>
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in thousands, except per share data)
<CAPTION>
Three Months Ended
March 31
1996 1995
</CAPTION>
<S> <C> <C>
REVENUES:
Commissions $ 5,239 $ 6,458
Principal 6,662 5,567
Interest 640 3,604
Fee income 1,817 1,132
Other 614 718
_________ _________
TOTAL REVENUES 14,972 17,479
EXPENSES:
Employee compensation
and benefits 12,815 11,524
Commissions, floor brokerage
and clearance 1,112 1,208
Interest 1,500 2,960
Communications 1,482 1,382
Occupancy and equipment 1,411 1,819
Professional fees 443 923
Other operating expense 1,460 888
_________ _________
TOTAL EXPENSES 20,223 20,704
_________ _________
Loss before taxes (5,251) (3,225)
Tax benefit - (1,019)
_________ _________
NET LOSS $ (5,251) $ (2,206)
========= =========
Earnings per share data:
NET LOSS PER COMMON SHARE $ (0.79) $ (0.37)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 6,646 5,933
</TABLE>
See Notes to Condensed Consolidated Financial Statements<PAGE>
<TABLE>
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (in thousands)
<CAPTION>
THREE MONTHS ENDED
March 31 March 31
1996 1995
</CAPTION>
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,251) $ (2,206)
Adjustments to reconcile net loss to
net cash flows provided by (used in)
operating activities:
Gain on sales of exchange memberships - (190)
Deferred income taxes - (1,019)
Depreciation and amortization 245 180
Net changes in operating assets
and liabilities:
Securities purchased under
agreements to resell 2,204 (42,479)
Cash and short-term
investments required to be
segregated under federal
regulations (1,275) (44,838)
Receivables from and payables
to customers, brokers, dealers
and clearing organizations 30,839 14,411
Securities owned 11,574 77,120
Prepaid expenses and other assets (2,459) (354)
Recoverable income taxes and
income taxes payable - 1,286
Securities sold but not yet purchased (631) 11,115
Accrued commissions 189 1,011
Accounts payable and accrued expenses (7,847) 4,551
NET CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES 27,588 18,588
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) sale of furniture, fixtures and
leasehold improvements 59 (609)
Sales of exchange memberships - 710
NET CASH FLOWS PROVIDED BY
INVESTING ACTIVITIES 59 101
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in short-term
borrowings from banks (30,672) (23,954)
Payment of notes subordinated to
claims of general creditors - (1,374)
Proceeds from issuance of convertible
non-voting preferred stock 5,000 -
NET CASH FLOWS USED IN
FINANCING ACTIVITIES (25,672) (25,328)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,975 (6,639)
Cash and cash equivalents at beginning
of period 9,001 7,011
Cash and cash equivalents at end
of period $ 10,976 $ 372
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
<PAGE>
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
- - ------------------------------
The unaudited condensed consolidated financial statements of Rodman
& Renshaw Capital Group, Inc. and subsidiaries (collectively, the
"Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management of the
Company, all adjustments considered necessary for a fair
presentation of the financial condition and results of operations of
the Company for the periods presented have been included. Although the
Company has stock options outstanding, such stock options do not have
a dilutive effect on earnings per share; accordingly, the primary and
fully diluted loss per share calculations are not different. For
further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Report on Form 10-K
for the year ended December 31, 1995.
NOTE B - ASSETS SEGREGATED UNDER FEDERAL AND OTHER REGULATIONS
- - --------------------------------------------------------------
The Company was holding in safekeeping $1,829,000 and $1,664,000 of
securities owned by customers as of March 31, 1996 and December 31,
1995, respectively. In accordance with applicable regulations, these
securities are not included in the Condensed Consolidated Statement of
Financial Condition.
NOTE C - NET CAPITAL REQUIREMENT AND DIVIDEND RESTRICTIONS
- - ----------------------------------------------------------
The Company's primary subsidiary, Rodman & Renshaw, Inc.("Rodman"),
a registered broker-dealer and futures commission merchant, is
subject to the minimum net capital rules of the Securities and
Exchange Commission (the "SEC") (Rodman has elected to use the
alternative net capital method permitted by the SEC rule), Commodity
Futures Trading Commission (the "CFTC"), and the capital rules of
the New York Stock Exchange, Inc. (the "NYSE"), of which Rodman is a
member. At December 31, 1995, these rules required that Rodman
maintain minimum net capital, as defined in such rules, equal to
the greater of 2% of aggregate debits arising from customer securities
transactions or $1,000,000, or 4% of the funds required to be
segregated for customers pursuant to the Commodity Exchange Act.
In January 1996, Rodman changed its business operation from a
securities clearing broker to a non-clearing securities broker
whereby Rodman's customer accounts are introduced and cleared by
a contracted clearing broker on a fully disclosed basis. As a
result of this conversion, Rodman's net capital requirement
pursuant to these rules was reduced to the greater of $250,000
or 4% of the funds required to be segregated for commodities
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. At March 31, 1996, and December 31, 1995, Rodman had net
capital, as defined, of $13.81 million and $15.40 million,
respectively, or $13.46 million and $14.29 million, respectively, in
excess of required net capital.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The results of operations should be read in conjunction with the
Company's condensed consolidated statements of income. The
Company's principal activities -- securities and commodities
brokerage, principal trading for servicing its customers, and
investment banking services -- are highly competitive and extremely
volatile. The earnings of the Company are subject to wide
fluctuations since many factors over which the Company has little or
no control -- such as the overall volume of activity in the
securities, futures and options markets and the volatility and
general level of market prices and interest rates -- may affect its
operations. In addition, results of operations for any particular
interim period may not be indicative of results to be expected for
the year ending December 31, 1996.
Revenues for the quarter ended March 31, 1996 totalled $14.97 million,
a 14% decrease from $17.48 million for the previous year's comparative
quarter. For the most recent quarter, the Company recorded a net loss
of $5.25 million, or $0.79 cents per common share. For the quarter
ended March 31, 1995, the Company reported a net loss of $2.21 million,
or $0.37 per common share.
REVENUES
During the quarter ended June 30, 1995, the Company decided to change
its status in the commodities and financial futures business from that
of a clearing to a non-clearing futures commission merchant. As a
result of this change, commission revenue decreased 19% to $5.24
million for the quarter ended March 31, 1996, from $6.46 million in
the corresponding 1995 calendar quarter.
<PAGE>
Revenues from principal transactions include mark-ups and realized
and unrealized gains and losses on securities held for resale.
Principal transaction revenues increased 20% to $6.66 million for
the quarter ended March 31, 1996, as compared to the corresponding
1995 calendar quarter.
Interest revenue is derived primarily from financing customer
security purchases, securities inventories carried for resale
to customers, and from investments which are maintained
pursuant to the rules and regulations of the SEC and the CFTC
pertaining to segregation of customer funds. Interest revenue
decreased by 82% to $0.64 million for the quarter ended March 31,
1996, as compared to the quarter ended March 31, 1995, due principally
to decreases in security inventory positions and the conversion to
a non-clearing broker-dealer and futures commission merchant.
Fee income, which includes the activities of Rodman's investment
banking department, increased 61% for the quarter ended March 31, 1996.
Included in these increases are the closing of three public offerings
and financial advisory fees for two private transactions.
EXPENSES
Employee compensation and benefit expense increased by 11%
for the quarter ended March 31, 1996. This change is attributable
to the variable nature of certain compensation related to increases
in principal revenues and fee income.
As a result of the change from a clearing to a non-clearing futures
commission merchant, clearance and floor brokerage expense decreased
8% from the corresponding 1995 calendar quarter period.
Interest expense decreased 49% to $1.5 million for the quarter
ended March 31, 1996, due to lower balances of short-term notes
payable to banks related to the decrease in security inventory
positions.
LIQUIDITY AND CAPITAL RESOURCES
The Company's assets are substantially comprised of receivables and
securities inventory, both of which are highly liquid. The
principal sources of financing are stockholders' equity, customer
payables, short-term loans from banks and affiliates and other
payables. Additionally, the Company maintains lines of credit with
large financial institutions which include daily demand loans, letters
of credit and reverse repurchase agreements to meet financing needs.
All of these lines of credit require collateral to be pledged, and
the borrowings may not exceed the value of the collateral. The
Company believes that such lines will be available as long as
collateral is available.
As a registered broker-dealer and futures commission merchant,
Rodman is required by the SEC and CFTC to maintain specific amounts
of net capital to meet its customers' obligations. As of March 31,
1996, Rodman's net capital, as defined, was $13.81 million, which was
$13.46 million in excess of the required net capital.
On June 22, 1994, the Company borrowed $10 million from Confia, S.A.,
Institucion de Banca Multiple, Abaco Grupo Financiero ("Confia, S.A."),
an affiliated company of the Company's majority stockholder, Abaco Casa
de Bolsa, S.A. de C.V., Abaco Grupo Financiero ("Abaco"). During 1995,
the Company obtained additional loans from Confia, S.A.
in an aggregate amount of $16.5 million. The Company required the
additional loans in order to continue to conduct its business because
its losses were eroding its net capital. On December 4, 1995, the
Company paid all interest due on the loans and consolidated the
principal amounts, totaling $26.5 million, into a single note due
June 3, 1996 and bearing interest at an annual rate of 12%. On
February 9, 1996, the Company also received a letter from Abaco Grupo
Financiero, S.A. de C.V. ("Parent") whereby Parent agreed to continue
to unconditionally support the Company and Rodman for the next year,
up to and including March 31, 1997 ("Letter of Support"). Based
upon the Letter of Support, management believes that
it is the intention of Confia, S.A. to renew the loan when it
becomes due. A renewal may be on different terms than the original
loan, depending upon market conditions and Confia, S.A.'s internal
lending policies at the time of renewal.
The Company entered into a Note Conversion Agreement with Confia, S.A.
dated September 29, 1995 and amended November 10, 1995, pursuant to
which Confia, S.A. has the right to convert all or a portion of the
Company's outstanding indebtedness to equity in the Company. The
number of shares of common stock to be issued upon a conversion would
be determined by dividing the amount of indebtedness to be converted
by the book value per share of common stock as of the end of the
Company's most recent fiscal quarter (provided, however, that if
such book value per share were equal to or less than $.09, which is
the par value per share of the common stock, the denominator would
be $.09). Indebtedness is convertible only if the conversion receives
stockholder approval or if the conversion is made in connection
with a rights offering to all stockholders at the same effective
per share price for a number of shares proportional to the number
to be issued upon the conversion. Confia, S.A. may transfer the
conversion right to Abaco or another corporation within the group
of affiliated companies.
In addition, in December 1995, the Company issued to Abaco 50 shares
of non-voting preferred stock at a price per share of $100,000, which
shares are convertible into Company common stock. In a conversion,
the $5 million preferred stock purchase price would be divided by the
book value per share of common stock as of the end of the most
recent month to determine the number of shares of common stock to be
issued (provided, however, that if such book value per share were
equal to or less than $.09, which is the par value per share of the
common stock, the denominator would be $.09). The preferred stock
is convertible only in connection with a rights offering to all
stockholders at the same effective per share price of a number of
shares proportional to the number to be issued upon conversion at a
price per share equal to such book value per share or par value, as
the case may be.
The support referred to in the February 9, 1996 letter may include,
with previous receipt of requisite approvals from Mexican governmental
authorities, infusions of capital, conversion of short-term debt
to long-term debt or conversion of short or long-term debt to equity,
if required, to continue to sustain Rodman's operations and allow it
to maintain the required net capital pursuant to the SEC's Uniform
Net Capital Rule 15c3-1. To that end, Parent had agreed to provide
the Company with a total of $9.5 million in equity capital in March
and April, 1996. On March 29, 1996, Parent provided $5 million of
that total through the purchase by Abaco of 50 additional shares of
non-voting preferred stock at a price per share of $100,000. On
April 30, 1996, Abaco provided $4.5 million through the purchase
of 45 additional shares of non-voting preferred stock at a price
per share of $100,000. The terms of such shares are substantially
identical to those of the preferred stock issued in December, 1995,
as discussed above.
The Company currently has subordinated loans outstanding to Rodman,
its broker-dealer subsidiary, in an aggregate amount of $26.5 million.
The loans are funded by the Company's borrowing from Confia, S.A.
discussed above. It is the intention of management of the Company
and Rodman to extend these subordinated borrowings through June, 1998.
To the extent that such subordinated borrowings are required for
Rodman's continued compliance with minimum net capital requirements,
they may not be repaid. In the event that the borrowing between the
Company and Confia, S.A. is not renewed or converted, Rodman will be
required to curtail its business activities substantially in order to
reduce its minimum net capital requirements, then it would seek
regulatory approval to repay its subordinated debt to the Company.
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 of the total outstanding principal amounts of all subordinated
indebtedness included in net capital plus stockholders' equity (the
"debt/equity ratio"). At December 31, 1995, Rodman's debt/equity ratio
was 78.2%. In January 1996, the Company and Rodman converted
$5 million from short-term to long-term subordinated debt, which
is treated as equity for purposes of the Uniform Net Capital Rule,
thereby reducing the debt/equity ratio to 60%.
In the quarter ended March 31, 1996, the Company provided cash and
cash equivalents of $27.59 million from operating activities
primarily related to the decrease in security inventory positions.
In the quarter ended March 31, 1995, the Company's operations used
$18.59 million.
<PAGE>
RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - The following exhibits are included
herein or are incorporated by reference
(10.1) Stock Purchase Agreement dated
March 29, 1996 between the Company
and Abaco Casa de Bolsa, S.A. de C.V.,
Abaco Grupo Financiero.
(27.1) Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the
quarter ended March 31, 1996.<PAGE>
SIGNATURES
----------
Pursuant to the requirement of Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
RODMAN & RENSHAW CAPITAL GROUP, INC.
(Registrant)
Date: May 8, 1996 By: /s/ John T. Hague
---------------------------------
John T. Hague
Chief Financial Officer
Date: May 8, 1996 By: /s/ Charles W. Daggs, III
----------------------------------
Charles W. Daggs, III
President and Chief Executive
Officer
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
This Agreement is entered into as of the 29th day of March, 1996,
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 50 shares of Series C, non-voting
preferred stock, $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 at the Closing by bank check or
wire transfer the aggregate amount of U.S.$5,000,000.
3. Closing. The purchase and sale of the Shares shall take
place at the offices of the Company, on March 29th, 1996, 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 be delivered
to the Company, the purchase price as provided in Section 2.
<PAGE>
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.
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, 6,645,802 of which are
presently issued and outstanding and 5,000,000 shares of preferred
stock, $0.01 par value, 50 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
Abaco the financial statements for the Company as of December 31, 1995,
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:
<PAGE>
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 Abaco and such execution, delivery or performance will not
conflict with or result in a breach of Abaco'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 date of the Closing, 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 have
filed 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. Rights Offering. The Company agrees to commence a rights
offering in accordance with Section 6(a) of Exhibit A as soon as
practicable after the stockholders of the Company approve an amendment
to the Company's Certificate of Incorporation increasing its authorized
shares of common stock to a number sufficient to allow such an
offering, which offering will effect the conversion of the Shares into
shares of common stock of the Company in accordance with the terms of
said Section 6(a). The Company further agrees to promptly thereafter
cause such common shares to be listed on the New York Stock Exchange.
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>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
ATTEST: RODMAN & RENSHAW CAPITAL
GROUP, INC.
By: By: /s/ Charles W. Daggs, III
Title: Title: President and Chief
Executive Officer
ATTEST: ABACO CASA DE BOLSA, S.A. DE C.V.,
ABACO GRUPO FINANCIERO
By: By: /s/ Gerardo Santos
Title: Title: Director of Administration
Monterrey Office
<TABLE> <S> <C>
<ARTICLE> BD
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 19,649,000
<RECEIVABLES> 10,109,000
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 4,915,000
<PP&E> 8,256,000
<TOTAL-ASSETS> 55,227,000
<SHORT-TERM> 26,500,000
<PAYABLES> 23,202,000
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 4,333,000
<LONG-TERM> 0
<COMMON> 598,000
0
0
<OTHER-SE> 594,000
<TOTAL-LIABILITY-AND-EQUITY> 55,227,000
<TRADING-REVENUE> 6,662,000
<INTEREST-DIVIDENDS> 640,000
<COMMISSIONS> 5,239,000
<INVESTMENT-BANKING-REVENUES> 1,817,000
<FEE-REVENUE> 0
<INTEREST-EXPENSE> 1,500,000
<COMPENSATION> 12,815,000
<INCOME-PRETAX> (5,251,000)
<INCOME-PRE-EXTRAORDINARY> (5,251,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,251,000)
<EPS-PRIMARY> (0.79)
<EPS-DILUTED> (0.79)
</TABLE>
