SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
______________________________
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
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 0-14684
Ryan, Beck & Co., Inc.
(exact name of issuer as specified in its charter)
NEW JERSEY 22-1773796
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
220 S. Orange Ave., Livingston, NJ 07039-5817
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 597-6000
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of each exchange on which registered
________________________________
__________________________________
_
________________________________
__________________________________
_
________________________________
__________________________________
_
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
Title of Class
Indicate by check mark whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 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 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 the 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. [ X ]
The aggregate market value of the voting stock held by non-
affiliates computed by reference to the last sale price of such stock
as of February 27, 1998: $28,904,399
Number of shares of Common Stock outstanding as of February 27,
1998: 3,762,475
DOCUMENTS INCORPORATED BY REFERENCE
1. Part III - Proxy Statement for the Registrant's 1998 Annual
Meeting of Stockholders will be incorporated by reference when it is
filed, which will be within 120 days of the end of the Registrant's
fiscal year.
TABLE OF CONTENTS
Item No. Description Page
1 Description of Business 1 - 12
2 Description of Properties 12 - 13
3 Legal Proceedings 13 - 14
4 Submission of Matters to a Vote
of Shareholders 15
5 Market for the Registrant's Common
Equity and Related Shareholder Matters 15
6 Selected Financial Data 16
7 Management's Discussion and Analysis
of Financial Condition and Results
of Operations 17 - 23
8 Financial Statements and
Supplementary Data F1 - F19
9 Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosures 24
10 Directors and Executive Officers
of the Registrant 24
11 Executive Compensation 24
12 Security Ownership of Certain
Beneficial Owners and Management 24
13 Certain Relationships and Related
Transactions 24
14 Exhibits, Financial Statements,
Schedules and Reports on Form 8-K 24 - 27
Item 1. DESCRIPTION OF BUSINESS
General
Ryan, Beck & Co., Inc. (the "Company" or "Ryan, Beck") is a boutique
investment firm that is principally engaged in the underwriting,
distribution and trading of tax-exempt obligations and bank and thrift
equity and debt securities. The Company provides investment banking,
research and financial advisory services primarily to financial
services companies with a focus on corporate finance and merger-related
services. The Company offers a general securities brokerage business
with investment products for retail and institutional clients, as well
as life insurance and annuity products. The Company's retail and
institutional brokerage clients consist primarily of high net worth
individuals (primarily residents of New Jersey, other Mid-Atlantic and
Northeastern states and Florida), banking and thrift institutions
(primarily located in New Jersey, Pennsylvania and Florida) and, to a
much lesser extent, insurance companies and specialty finance
companies. The Company intends to continue to operate as a high
quality firm serving its market niche in the financial services
industry.
The Company was organized in New Jersey in 1965, under the name of John
J. Ryan & Co., Incorporated, as a successor to various entities dating
from 1946. The Company changed its name to Ryan, Beck & Co., Inc. in
1981. Unless the context otherwise requires, all references herein to
the "Company" include Ryan, Beck & Co., Inc. and its predecessors and
subsidiaries.
On February 9, 1998, the Company entered into a definitive agreement
with BankAtlantic Bancorp, Inc. ("BankAtlantic"), whereby all of the
Company's outstanding common shares would be acquired by BankAtlantic
in an exchange for BankAtlantic's Class A Common Stock. See "Business
Combination" in Management's Discussion and Analysis and Notes to the
Consolidated Financial Statements for further discussion therein.
The principal executive office of the Company is located at 220 South
Orange Avenue, Livingston, New Jersey 07039-5817 and its telephone
number is (973) 597-6000. The Company is registered as a broker-dealer
with the Securities and Exchange Commission ("SEC") and is a member of
the National Association of Securities Dealers, Inc. ("NASD") and the
Securities Investor Protection Corporation ("SIPC"). Accounts are
insured up to $75,000,000 per customer. The first $500,000 of
protection is provided by SIPC and the balance is provided by the
Company's clearing broker under a separate policy issued by a private
insurer. There is a limitation of $100,000 on claims for cash
balances. The Company is not a member of any securities exchange.
Brokerage services to retail and institutional customers are provided
through Ryan, Beck's sales force of approximately 86 sales account
executives located in the Livingston, New Jersey, Bala Cynwyd,
Pennsylvania, Shrewsbury, New Jersey and West Palm Beach, Florida
offices. The Company believes that its account executives are a key
factor to the success of its business. Over the last five years, the
number of full-time account executives has increased from approximately
71 to 86, some of whom joined Ryan, Beck after previous associations
with other brokerage firms.
The securities business is, by its nature, subject to various risks,
particularly in volatile or illiquid markets, including the risk of
losses resulting from the underwriting or ownership of securities,
customer fraud, employee errors and misconduct, failures in connection
with the processing of securities transactions and litigation. The
Company's business and its profitability are affected by many factors,
including the volatility and price level of the securities markets, the
volume, size and timing of securities transactions, the demand for
investment banking services, the level and volatility of interest
rates, the availability of credit, legislation affecting the business
and financial communities, and the economy in general. Markets
characterized by low trading volumes and depressed prices generally
result in reduced commissions and investment banking revenues as well
as losses from declines in the market value of securities positions.
Moreover, Ryan, Beck is likely to be adversely affected by negative
economic developments in New Jersey, the mid-Atlantic region or the
financial services industry in general.
On the other hand, as in the past, heavy trading volume has caused
clearance and processing problems for many securities firms, and this
could occur in the future. In addition, there is a risk of loss from
errors which can occur in the execution and settlement process. See
"Accounting, Administration and Operations."
The following table sets forth certain information regarding the
revenues of the Company by source:
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
Amount Percent Amount Percent Amount
Percent
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Principal transactions:
Tax-Exempt debt securities $ 3,055 8.1% $ 2,829 9.9% $ 4,940 19.8%
Taxable debt securities 1,537 4.0 775 2.7 2,302 9.2
Equity securities 11,420 30.3 6,242 21.9 5,982 23.9
Total 16,012 42.4 9,846 34.5 13,224 52.9
Investment banking <F1>
Tax-Exempt debt securities 1,298 3.4 1,047 3.7 913 3.7
Taxable debt securities 2,055 5.4 1,540 5.4 456 1.8
Equity securities 7,828 20.7 2,811 9.9 1,977 7.9
Consulting, placement
and valuation fees 3,743 10.0 7,424 26.0 4,494 18.0
Total 14,924 39.5 12,822 45.0 7,840 31.4
Commissions:
Equity securities 3,072 8.1 2,514 8.8 1,395 5.6
Mutual funds 2,130 5.7 1,777 6.2 1,407 5.6
Total 5,202 13.8 4,291 15.0 2,802 11.2
Interest and dividends 1,328 3.5 1,329 4.7 894 3.6
Other 277 .8 222 0.8 228 .9
Total $37,743 100.0% $28,510 100.0% $24,988 100.0%
<FN>
<F1>Investment banking revenue includes management fees and
underwriting fees earned in connection with all underwriting
participations and selling concessions earned in connection with the
Company's participation in tax-exempt debt, corporate debt and equity
underwritings.
</FN>
</TABLE>
In executing customers' orders to buy or sell listed securities and
securities in which it does not make a market, Ryan, Beck generally
acts as an agent and charges a commission.
Since the various activities of the Company are interdependent and
substantially the same sales personnel and office facilities are
engaged in the generation of the above revenues, the Company does not
believe that a meaningful allocation of expenses can be made among
these operations.
The following table sets forth, for the periods indicated, items in the
Company's Consolidated Statements of Income as percentages of total
revenue and the increase (or decrease) by item as a percentage of the
amount for the previous period:
<TABLE>
<CAPTION>
Percentage of Total Revenues Period to Period Change
Year Ended December 31, 1997 1996
1997 1996 1995 Compared With Compared With
1996 1995
Revenues:
<S> <C> <C> <C> <C> <C>
Principal transactions 42.4% 34.5% 52.9% 62.6% (25.5)%
Investment banking 39.5 45.0 31.4 16.4 63.5
Commissions 13.8 15.0 11.2 21.2 53.1
Interest and dividends 3.5 4.7 3.6 (.1) 48.7
Other .8 .8 .9 24.8 (2.6)
Total revenues 100.0 100.0 100.0 32.4 14.1
Interest expense 2.2 3.8 1.9 (25.5) 131.7
Net revenues 97.8 96.2 98.1 34.7 11.8
Non-interest expenses:
Compensation and benefits 56.6 66.1 61.0 13.4 23.6
Floor brokerage, exchange and clearing fees 5.9 7.3 6.9 7.0 20.5
Communications 4.7 4.9 5.1 25.2 9.3
Professional fees 4.1 3.8 3.1 43.1 41.9
Occupancy, equipment rental and depreciation 3.8 4.6 4.0 9.0 32.8
Advertising and market development 2.7 3.2 2.4 11.9 47.5
Other 3.8 5.0 4.1 .9 39.0
Total non-interest expenses 81.6 94.9 86.6 13.8 25.0
Income before provision for income taxes 16.2 1.3 11.5 1,619.6 (87.5)
Provision for income taxes 6.0 .3 4.3 2,244.3 (91.0)
Net income 10.2% 1.0% 7.2% 1,386.5% (85.5)%
</TABLE>
FIXED INCOME DIVISION
Tax-Exempt Bond Department
The Company maintains primary and secondary markets in tax-exempt
securities issued primarily by the State of New Jersey and its
political subdivisions. To a lesser extent, the Company also maintains
primary and secondary markets for tax-exempt securities issued by
municipalities located outside of New Jersey. Principal transactions
in tax-exempt securities accounted for 8.1% of the Company's revenues
during 1997, 9.9% of the Company's revenues during 1996 and 19.8%
during 1995.
The Company provides investment banking advice to, and raises capital
for, many types of issuers of tax-exempt securities, including
counties, cities, transportation authorities, sewer and water
authorities and housing, health and higher education agencies. Most of
these issuers are located in New Jersey. The Company arranges public
offerings of municipal securities and distributes these securities to
individual and institutional investors. In addition, the Company is
often included in national and regional syndications which underwrite
tax-exempt issues. Increasingly, underwritings of tax-exempt issues
are being conducted on a competitive, rather than negotiated, basis.
The impact of this change on future revenue is unclear.
The following tables set forth, for the periods indicated, (i) the
total number and dollar amount of municipal bond offerings managed or
co-managed by the Company and (ii) the total number and dollar amount
of the Company's underwriting participations in those offerings and in
offerings managed by others.
<TABLE>
<CAPTION>
Managed or Co-Managed Offerings
Number of Municipal
Issues Amount of Offerings
(In Thousands)
<S> <C> <C>
1995 59 $ 1,556,210
1996 75 923,943
1997 66 1,472,404
</TABLE>
<TABLE>
<CAPTION>
Underwriting Participations<F1>
Number of Municipal
Issues Amount of Participation
(In Thousands)
<S> <C> <C>
1995 161 $ 166,951
1996 248 269,984
1997 281 294,026
<FN>
<F1> Does not include those issues in which the Company participated as
a selling group member.
</FN>
</TABLE>
Trading revenues from tax-exempt debt securities were $3,055,000,
$2,829,000 and $4,940,000 for 1997, 1996 and 1995, respectively. The
increase from 1996 to 1997 primarily reflects improved interest rate
risk management strategies and favorable market conditions. The
decrease from 1995 to 1996 primarily reflects an extraordinarily
volatile bond market and the continued compression of underwriting
spreads in municipal securities. In addition, trading revenues were
adversely affected by costs associated with implementing an interest
rate risk management strategy.
Taxable Bond Department
The Company maintains secondary markets in corporate bonds, mortgage
backed securities and unit investment trusts. Ryan, Beck also executes
trades in Treasury Bonds, Treasury Notes, Treasury Bills and makes
markets in U.S. Government Guaranteed Securities. Trading revenues
relating to such transactions increased in 1997 to $1,537,000 from
$775,000 in 1996. The increase in trading revenues is attributable to
improved interest rate risk management strategies and favorable market
conditions. The decrease in trading revenues from 1995 to 1996
attributable to taxable debt securities reflected an extraordinarily
volatile bond market. In addition, trading revenues were adversely
affected by costs associated with implementing an interest rate risk
management strategy. Revenues in 1995 were $2,302,000. Principal
transactions in taxable securities accounted for 4.0% of the Company's
revenues during 1997, 2.7% of revenues during 1996 and 9.2% of revenues
during 1995.
FINANCIAL INSTITUTIONS DIVISION
Corporate Finance Department
The Company's Corporate Finance Department consists of 19 professionals
located primarily in Livingston, New Jersey with satellite offices in
Bala Cynwyd, Pennsylvania and Chicago, Illinois. Developments in the
banking and thrift industries, including the trend toward consolidation
of banking institutions, have led an increasing number of banks and
thrift institutions to seek advice from investment banking firms such
as the Company. The Corporate Finance Department provides financial
advisory services to financial services companies in connection with
capital formation, strategic planning, branch sales, mergers and
acquisitions (including appraisals and fairness opinions),
shareholder/investor issues and financial management issues.
Consulting, valuations and placement fees decreased to $3,743,000 in
1997 from $7,424,000 in 1996 and accounted for 10% of the Company's
revenues during 1997 and 26.0% during 1996. This decrease was primarily
due to a reduction in revenues related to thrift conversions and mutual
holding company formations and, to a lesser extent, a reduction in
merger and acquisition fees. Consulting, valuation and placement fees
amounted to $4,494,000 in 1995, or 18.0% of the Company's revenues.
Ryan, Beck serves the capital needs of community-oriented financial
institutions by managing "best-efforts" public offerings including
thrift conversions, mutual holding company formations (a partial
conversion of a thrift) and primary and secondary offerings by banks
and thrifts. The Company has played a significant role in the
development of thrift mutual holding companies and has raised
$86,505,000 in equity for thrifts in mutual holding company-related
transactions during the last three years. The Company also provides
financial advice, on-site administrative support and subscription
enhancement for public offerings conducted by banks and thrifts. This
has been, and is anticipated to be, a significant source of revenue for
the Company. The Company expects there to be greater volatility in the
future with respect to revenues resulting from thrift conversions and
mutual holding company formations because of increased competition and
a smaller universe of mutual institutions. These activities generated
gross revenues of $330,000 in 1997 as compared to $3,969,000 in 1996
and $3,369,000 in 1995. Such revenue is reflected in investment banking
revenue as consulting, placement and valuation fees. Although there can
be no assurances that it will be successful, the Company is attempting
to diversify its revenue sources into related financial service
companies.
Syndicate Department
The Syndicate Department coordinates the distribution of newly issued
securities to institutional and retail investors. The Syndicate
Department handles public offerings that are managed or co-managed by
Ryan, Beck as well as selling group and syndicate participations
managed by other firms. This department primarily deals with equity
and trust preferred underwritings.
Underwritings
The Company has participated as an underwriter in public offerings of
bank and thrift equity and debt issues, as a sole underwriter without a
syndicate, as a manager or co-manager of underwriting syndicates, as a
member of underwriting syndicates managed by others, and as a selling
group member in issues of others. During 1997, the Company acted as
manager or co-manager of ten trust preferred securities offerings,
which raised approximately $401,050,000 in new capital for financial
institutions. The Company managed or co-managed a total of twelve
public offerings and private placements which raised in excess of
$547,000,000 for bank and thrift clients. In addition, the Company
underwrote in excess of $33,600,000 for two Unit Investment Trusts.
Revenues from underwriting bank and thrift securities for 1997 were
$8,095,000, revenues for 1996 were $3,328,000 and revenues for 1995
were $1,988,000.
The following tables set forth, for the periods indicated, (i) the
total number and dollar amount of bank/thrift related equity and debt
offerings managed or co-managed by the Company and (ii) the total
number and dollar amount of the Company's underwriting participations
in those offerings and in offerings managed by others. The table below
also includes offerings, including thrift conversion and mutual holding
Company formations whereby the Company acted as selling agent.
<TABLE>
<CAPTION>
Managed or Co-Managed Offerings
Number of Bank/Thrift
Issues Amount of Offerings
(In Thousands)
<S> <C> <C>
1995 13 $ 221,114
1996 12 340,594
1997 16 601,907
</TABLE>
<TABLE>
<CAPTION>
Underwriting Participations<F1>
Number of Bank/Thrift
Issues Amount of Participation <F2>
(In Thousands)
<S> <C> <C>
1995 16 $ 211,021
1996 13 326,569
1997 20 347,197
<FN>
<F1> Does not include those issues in which the Company participated as
a selling group member and non-bank issues in which the Company
participated as an underwriter or selling group member.
<F2> Includes standby commitments.
</FN>
</TABLE>
Participation in an underwriting syndicate or selling group involves
both economic and regulatory risks. An underwriter or selling group
member may incur losses if it is unable to resell the securities it is
committed to purchase, or if it is forced to liquidate its commitments
at less than the agreed purchase price. In addition, under the federal
securities laws, other statutes, and court decisions with respect to
underwriters' liabilities and limitations on indemnification of
underwriters by issuers, an underwriter is subject to substantial
potential liability for material misstatements or omissions in
prospectuses and other communications with respect to underwritten
offerings. In the last several years, investment banking firms,
including the Company, have increasingly participated in underwritten
offerings with fewer syndicate participants or without a syndicate. In
such cases, the underwriter assumes a larger part, or all, of the risk
of an underwriting transaction. Furthermore, because underwriting
commitments constitute a charge against net capital, the Company, as a
broker-dealer, could find it necessary to limit its underwriting
activities to remain in compliance with net capital requirements. See
"Regulation."
Research Department
The Company's Research Department, consisting of five equity analysts
and one research assistant, is dedicated primarily to bank and thrift
securities. To a lesser degree, the Research Department also provides
reports and analyses on the insurance industry. Its publications
include Bank Stock Annuals for New Jersey, Florida, New York,
Massachusetts, Maryland, Delaware and Pennsylvania, periodic updates on
the outlook for financial equities, reports on specific financial
institutions, and reports and analyses on general banking developments.
In addition, Ryan, Beck purchases outside research services including
economic reports, charts, and data bases.
Sales and Trading Department
Sales and trading activities are conducted both as principal and as
agent on behalf of individual and institutional investor clients.
Transactions as principal involve making markets in securities which
are held in inventory to facilitate sales to and purchases from
customers in an attempt to realize trading gains. When over-the-
counter ("OTC") transactions are executed by the Company as a dealer,
the Company receives, in lieu of commissions, mark-ups or mark-downs
which are included in revenues as principal transactions. As agent,
the Company effects brokerage transactions which generate commission
revenues. These commissions are charged on both exchange and OTC
transactions in accordance with a schedule which the Company has
formulated and may change from time to time. Discounts from the
schedule may be granted in certain cases. Total principal transactions
accounted for 42.4% of the Company's revenues in 1997, 34.5% during
1996 and 52.9% during 1995, while total commissions accounted for 13.8%
of revenues during 1997, 15.0% during 1996 and 11.2% during 1995.
The NASDAQ market has come under scrutiny in the media and political
arenas during the past few years and has been the subject of SEC
investigations into its operations. Concerns have been raised with
respect to the size of the spreads between the price paid by investors
purchasing NASDAQ-listed securities, with respect to whether NASDAQ's
listing requirements are sufficiently stringent and whether the NASD
carefully monitors NASDAQ-listed companies. More specifically, the
NASD has been hiring numerous enforcement aides to better monitor
trading activities among dealers and to scrutinize companies'
compliance with applicable listing standards. The effects of current
and proposed NASD reforms on the operations of brokerage firms,
especially those specializing in the securities of small capitalization
companies, cannot be fully anticipated. The cost of compliance with
any new rules, regulations and procedures instituted by the NASD could
be significant. Additionally, the implementation of stricter standards
for initial and continued inclusion of companies on the NASDAQ could
adversely affect the prospects of smaller capitalization companies, the
stock performance of such companies, and the liquidity of investors'
investments in such companies. Increased compliance costs or the
inability to attain or maintain the listing of underwriting clients on
the NASDAQ system, or a combination thereof, could adversely affect the
financial performance of the Company.
The NASD is currently in the process of determining new listing and
reporting requirements for all Electronic Bulletin Board traded stocks.
This could result in the delisting of some securities that cannot meet
the new requirements.
The Company is an active market maker and distributor of equity
securities issued by financial institutions throughout the country and
tax-exempt bonds, particularly bonds issued by governmental entities
located in the Mid-Atlantic region. As of December 31, 1997, the
Company made markets in 180 bank, thrift and other financial service
companies' stocks quoted on the NASDAQ system. Many of these are
companies with whom Ryan, Beck has an investment banking relationship
or companies whose securities are followed by Ryan, Beck's Research
Department. The Company also maintains quotations in 420 additional
bank and thrift stocks and distributes and makes markets in certain
issues of bank debt securities.
The Securities and Exchange Commission and NASD agreed to changes which
could impact the way stocks are traded. A new order display system has
been implemented which allows investors to place limit orders to buy or
sell a NASDAQ stock at a certain price and be matched with another
order. The system is designed to ensure that no market maker would be
able to execute trades at better prices before a specific limit order
was filled. This system has produced a new source of competition and
has also lead to the Company making markets in more select NASDAQ
stocks, because of a perceived lack of liquidity. Consequently, there
is potential for delisting of companies which trade infrequently due to
lack of market maker support. The Company, therefore, may reduce the
number of companies that it makes markets in and also realize lower
trading spreads, which could adversely affect the Company.
In making markets in equity and debt securities, the Company maintains
positions in such securities to service its customers and, accordingly,
has its own capital at risk in the event of a decline in the market
price of such securities or of a decrease in the liquidity of markets
(especially in the area of risk arbitrage, as described below), which
can limit the Company's ability to sell securities purchased or to
purchase securities sold in such transactions. Trading and investing in
corporate and municipal securities as principal and underwriting the
issuance of such securities represent an important part of the
Company's business and subjects the Company's capital to significant
risk. While the Company seeks to avoid market risk, it may,
nonetheless, realize profits and losses from market fluctuations.
Trading profits (or losses) depend upon the skills of the employees
engaged in market making, the amount of capital allocated to positions
in securities and the general level of activity and trend of prices in
the securities markets.
On December 11, 1997, the NASD Board of Governors solicited comments on
four proposals which would place restrictions on the sale of equity
securities listed on the OTC Bulletin Board (OTCBB) and in The Pink
Sheets (collectively, "OTC Securities"). Specifically, the proposals
would require broker-dealers to review current issuer financial
statements prior to recommending a transaction to a customer in an OTC
Security, and to deliver a disclosure statement to a customer prior to
an initial purchase of an OTC Security and annually thereafter.
Subject clients would be required to sign and return a copy of each
disclosure statement to the broker-dealer.
Ryan, Beck makes markets in over 400 equity securities that would be
subject to the proposed rules, and approximately 12 percent of the
Company's revenues in 1997 were derived from the trading of such
securities. The proposals, if adopted in their current form, would
place an increased burden on both the issuers of OTC Securities and the
Company due to the record-keeping requirements involved. Additionally,
many customers who would, under other circumstances, invest in OTC
Securities may choose not to do so in the future.
The Company also offers other financial instruments to its clients
which include U.S. Government and Agency obligations, zero coupon
bonds, collateralized mortgage obligations, utility and industrial
bonds, mutual funds, trust preferred securities and unit investment
trusts.
Although the Company presently maintains no discretionary accounts for
customers, it may do so in the future. The Company introduced margin
accounts during early 1991. Margin transactions are subject to credit
risks. To the extent that funds are advanced in a securities
transaction, payment may not be received. If the securities decline in
value, the Company may not recover the amounts advanced. At December
31, 1997, the Company had approximately $35,488,000 in customer margin
debits with its clearing broker.
On July 9, 1997, the Company acquired over 6,000 customer accounts from
First Interregional Equity Corporation, an insolvent brokerage company
which had been placed under the protection of the United States
Bankruptcy Court. This acquisition expanded the Company's retail
account base.
During 1997, the Company continued to maintain its salesforce by
recruiting and training both new and experienced sales personnel to
replace those who left during the period. The Company had 86 sales
account executives at December 31, 1997.
The following table shows, (i) for the year ended December 31, 1997,
the highest, lowest and average month-end inventories by type of
securities in which the Company trades as principal and (ii) the
inventories for these types of securities at December 31, 1997.
<TABLE>
<CAPTION>
Year Ended December 31, 1997
Highest Inventory Lowest Inventory Average Inventory
Long Short Long Short Long Short
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Type of Security:
Tax-Exempt Debt $32,549 $ 221 $5,417 $ 0 $10,374 $ 38
Taxable Debt 5,636 150 1,495 0 2,535 52
Equity 14,337 5,154 8,150 1,423 10,468 3,033
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1997
Long Short
(In Thousands)
<S> <C> <C>
Type of Security:
Tax-Exempt debt $ 32,549 $ -
Taxable Debt 1,765 3
Equity 9,675 3,117
Total $ 43,989 $ 3,120
</TABLE>
Other Services
The Company offers IRA and other retirement plans to its customers. In
1987, the Company began functioning as custodian and trustee for newly
opened IRA's and effective January 1, 1991 transferred these accounts
to its independent clearing broker as successor custodian and trustee.
Clients retain control over their own funds and may direct the purchase
and sale of a variety of investment instruments.
The Company has an arrangement with an independent investment manager
pursuant to which it offers various money market funds to its
customers. On a periodic basis, the Company's clearing broker sweeps
participating customers' free credit balances into a designated fund
and also withdraws funds to satisfy debit balances.
The Company's recent acquisition of Cumberland Advisors (see
"Subsequent Events"), a New Jersey based money manager with
approximately $400 million under management, will dramatically expand
the money management products the Company can offer its customers.
Accounting, Administration and Operations
Accounting, administration and operations personnel are responsible for
internal financial control, accounting functions, office services,
personnel services, and compliance with regulatory and legal
requirements. The Company clears all securities transactions through
another broker/dealer on a fully-disclosed basis.
There is a considerable fluctuation in the volume of transactions which
a securities firm must process. In the past, when the volume of
trading in securities reached record levels, the securities industry
has experienced operating problems. The Company has not experienced
any material operating difficulties during periods of heavy volume.
The Company believes that its internal controls and safeguards against
securities theft are adequate. The Company carries fidelity bonds
covering any loss or theft of securities, employee dishonesty, forgery
and alteration of checks and similar items, and securities forgery.
The amount of coverage provided by the bonds are believed to be
adequate.
The Company generally posts its books and records daily. Periodic
reviews of certain controls are conducted to assure compliance with
applicable laws, rules and regulations.
Competition
The Company is engaged in an extremely competitive business.
Competitors include, with respect to one or more aspects of its
business, all of the member organizations of the New York Stock
Exchange and other registered securities exchanges, all members of the
NASD, commercial banks, thrift institutions and financial consultants.
With respect to the Company's investment banking and merger-related
services, the Company also competes with many of the larger Wall Street
investment banking firms. Many of these organizations have
substantially more employees and greater financial resources than the
Company. The Company also competes for investment funds with banks,
insurance companies and investment companies. Discount brokerage firms
oriented to the retail market, including electronic brokers, on-line
trading firms and firms affiliated with commercial banks and thrift
institutions, are devoting substantial funds to advertising and direct
solicitation of customers in order to increase their share of
commission dollars and other securities-related income. The Company
typically has not engaged in extensive advertising programs for this
type of business. The Company believes that the principal competitive
factors relating to the Company's business are the quality of advice
and service provided to investors and financial institutions and the
competitive pricing of their products.
The securities industry has become considerably more concentrated and
more competitive in recent years as numerous securities firms have
either ceased operation or have been acquired by or merged into other
firms. In addition, companies not engaging primarily in the securities
business, but having substantial financial resources, have acquired
leading securities firms. These developments have increased
competition from firms with greater capital resources than those of the
Company. Furthermore, many commercial banks offer various securities
related activities and investment vehicles. While it is presently not
possible to predict the type and extent of competitive services which
other financial institutions may offer or the extent to which
administrative or legal barriers are repealed or modified, ultimately
these developments may lead to the creation 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.
Fixed minimum commissions for securities transactions were eliminated
in 1975. The elimination of fixed minimum commission rates has
resulted in substantial commission discounting by broker-dealers
competing for institutional and individual brokerage business. The
Company believes its commission structure compares favorably with firms
with which it competes. Nevertheless, the anticipated continuation of
such discounting and an increase in the number of new and existing
firms offering discounts could adversely affect the Company.
Regulation
The securities industry in the United States is subject to extensive
regulation under both federal and state laws. The SEC is the federal
agency charged with administration of the federal securities laws.
Much of the regulation of broker-dealers has been delegated to self-
regulatory authorities, principally the NASD and, in the case of
broker-dealers that are members of a securities exchange, the
securities exchanges. These self-regulatory organizations conduct
periodic examinations of member broker-dealers in accordance with rules
they have adopted and amended from time to time, subject to approval by
the SEC.
Securities firms are also subject to regulation by state securities
commissions in those states in which they do business. As of December
31, 1997, the Company was registered as a broker-dealer in 49 states
and the District of Columbia.
Broker-dealers are subject to regulations which cover all aspects of
the securities business, including sales methods, trade practices among
broker-dealers, uses and safekeeping of customers funds and securities,
capital structure of securities firms, record-keeping and the conduct
of directors, officers and employees. Additional legislation, changes
in rules promulgated by the SEC and self-regulatory authorities, or
changes in the interpretation or enforcement of existing laws and
rules, may directly affect the mode of operation and profitability of
broker-dealers. The SEC, self-regulatory authorities and state
securities commissions may conduct administrative proceedings which can
result in censure, fine, suspension or expulsion of a broker-dealer,
its officers or employees. Such administrative proceedings, whether or
not resulting in adverse findings, can require substantial
expenditures. The principal purpose of regulation and discipline of
broker/dealers is the protection of customers and the securities
market, rather than protection of creditors and shareholders of broker-
dealers.
As a broker-dealer, the Company is required by federal law to belong to
the Securities Investor Protection Corp. ("SIPC"). Currently, all
members, including the Company, pay a fixed annual assessment of $150.
However, should the SIPC fund falls below a certain minimum amount, as
it did in 1983, members are required to pay annual assessments in
amounts (based upon adjusted gross revenues) necessary to restore the
fund. The first $500,000 of insurance protection is provided by SIPC
and the balance to $75,000,000 is provided by the Company's clearing
broker under a separate policy issued by a private insurer. There is a
limitation of $100,000 on claims for cash balances.
Capital Funds and Net Capital Requirements
As a registered broker-dealer, the Company is also subject to the SEC's
Uniform Net Capital Rule (the "Rule"). The Rule specifies minimum net
capital requirements for registered brokers and dealers and is designed
to maintain the general financial integrity and liquidity of a broker-
dealer. Therefore, it imposes a minimum net capital requirement deemed
necessary to meet the broker-dealer's continuing commitments to its
customers The Rule provides that a broker-dealer doing business with
the public shall not permit its aggregate indebtedness to exceed 15
times its net capital or, alternatively, that it not permit its net
capital to be less than 2% of its aggregate debit balances (primarily
receivables from customers and broker-dealers) computed in accordance
with Rule 15c3-3. The Company's regulatory net capital has consistently
exceeded such minimum net capital requirements. At December 31, 1997,
the Company had aggregate net capital of $13,443,000, which exceeded
its minimum net capital requirements by $12,443,000.
Included in net capital is a $7,000,000 temporary subordinated loan
from a bank at an interest rate equal to the Federal funds rate plus
100 basis points. This loan represents the remaining outstanding
balance of a $20,000,000 facility which was required in order to
maintain sufficient net capital for open contractual commitments in
accordance with the Net Capital Rule to facilitate a public offering
which involved a $100 million debt issue and a $46 million equity
issue. Under applicable regulations, the Company is limited to three
temporary subordinated loans in any rolling 12 month period. This loan
was the second of such loans, and therefore, the Company is limited to
one additional temporary subordinated loan until after October 13,
1998. As part of the proposed merger agreement with BankAtlantic
Bancorp, BankAtlantic has agreed to provide the Company with additional
capital to expand its business (see Note 2 to the Consolidated
Financial Statements).
Compliance with the Rule could limit the Company's operations, such as
underwriting and trading activities which require the use of
significant amounts of capital. A significant operating loss or an
extraordinary charge against net capital could adversely affect the
ability of the Company to expand or even maintain its present levels of
business.
Several material transactions occurred in 1997 which both positively
and adversely affected net capital, such as the Employee Restricted
Stock Purchase Plan, the Redemption of the Cumulative Preferred Stock,
Series A and the purchase of 89,399 shares of common stock by the ESOP.
These transactions are discussed more fully in the Management's
Discussion and Analysis Section and Notes 9 and 13 to the Consolidated
Financial Statements.
Employees
At December 31, 1997, the Company had 194 full-time employees. None of
the Company's employees are covered by a collective bargaining
agreement. The Company considers its relations with its employees to
be satisfactory. However, competition for experienced financial
services personnel, especially account executives, is intense in the
securities industry. Accordingly, from time to time the Company may
experience the loss of valuable personnel which could adversely impact
revenues.
Executive Officers of the Registrant
<TABLE>
<CAPTION>
Name and Age Joined Firm Business Experience for Past Five Years
<S> <C> <C>
Ben A. Plotkin, 41 1987 President of the Company (January 1997 - Present); Senior
Executive Vice President (January 1996 - January 1997);
Executive Vice President (December 1990 - January 1996)
Matthew R. Naula, 55 1967 Executive Vice President of the Company (December 1990 -
Present)
Jack R. Rosenthal, 72 1963 Vice Chairman of the Board of the Company (January 1987 -
Present)
Leonard J. Stanley, 43 1994 Chief Financial Officer of the Company (November 1994 -
Present); Senior Vice President, Chief Administrative
Officer of the Company (January 1997 - Present); First Vice
President, Finance, Valley Savings Bank (1992 - 1994)
Jay Suskind, 33 1993 Senior Vice President, Director of Equity Trading of the
Company (1993 - Present); Trader, Sherwood Securities (1992
- 1993)
Jon Klausner, 54 1990 Senior Vice President and Sales Manager (December 1993 -
Present); First Vice President (December 1992 - December
1993); Vice President (December 1991 - December 1992); Sales
Manager (October 1990 - December 1991)
</TABLE>
Item 2. DESCRIPTION OF PROPERTIES
The Company's offices, including its trading operations, occupy an
aggregate of approximately 35,000 square feet in Livingston, New
Jersey. Such space is leased pursuant to a ten-year lease term, which
commenced July 1, 1997. The Company has two five-year renewal options
at the conclusion of the original term.
The Company also occupies approximately 4,800 square feet in
Shrewsbury, New Jersey. The lease term is for five years, and
commenced on April 1, 1997. The Company has a five-year renewal option
at the conclusion of the original term. In addition, the Company
occupies approximately 3,600 square feet of office space in Bala
Cynwyd, Pennsylvania under a five-year lease which commenced April 12,
1994. The Company has a five-year renewal option at the conclusion of
the original term. The Company also occupies approximately 3,500
square feet of office space in West Palm Beach, Florida under a four-
year lease which commenced May 1, 1995. The Company also occupies
approximately 1,200 square feet of office space in Chicago, Illinois
under a four year lease which commenced on May 16, 1997.
The Company believes that its current fire and casualty insurance
policies provide sufficient coverage to allow it to replace any of its
properties that might be damaged or destroyed.
Item 3. LEGAL PROCEEDINGS
From time to time, in the ordinary course of its business, the Company
is involved in disputes, litigation or arbitration with its customers.
In addition, the securities industry has experienced an increased
incidence of litigation, including class action suits that generally
seek substantial damages. Underwriters are subject to substantial
potential liability for material misstatements and omissions in
prospectuses and other communications with respect to underwritten
offerings of securities. The Company has also been involved, from time
to time, in proceedings with, and investigations by, governmental and
self-regulatory agencies. Both the SEC and the NASD have broad
investigative powers and the authority to impose significant sanctions
upon broker-dealers. See "Description of Business - Regulation."
Set forth below is information concerning certain litigation matters to
which the Company is a party and in which there have been developments
of a material nature during the year ended December 31, 1997.
The Company, Ryan Beck Financial Corp. ("RBFC"), a wholly-owned
subsidiary of the Company, and various current and former officers have
been named as third-party defendants in Inrevco Associates v. BDO
Seidman, et al., v. Ryan, Beck & Co., et al., Superior Court of New
Jersey, Law Division, No. MRS-L-2961-94. Inrevco is a New Jersey
limited partnership. RBFC is a special limited partner in the
partnership. Certain complaints are currently pending against the
Company only, which allege that the Company breached certain duties it
allegedly owed the partnership. Another complaint is pending against
the Company, RBFC and the individual defendants. All of the claims
asserted against the Company are for contribution. On October 15, 1995,
the Company, RBFC and all individual defendants named as third-party
defendants in the litigation entered into a settlement agreement with
Inrevco. The terms of the settlement agreement include a provision for
an automatic judgment reduction in the event any liability is
apportioned against the Company, RBFC or any individual third-party
defendant on the accountant-defendants' contribution claims. As a
result of this provision of the settlement agreement, the third-party
defendants, including the Company, have limited exposure on the
third-party claims which have been asserted to date. Inrevco also
released the Company and RBFC from any liability in the suit. The
Company is still technically a named third-party defendant in this
action and will be required to participate in the ongoing litigation.
Recently, the Company and RBFC argued a motion for summary judgment,
or, alternatively, to enforce the settlement agreement with Inrevco
whereby the third party defendants would be dismissed from the case.
After oral argument, the Court denied the motion, ruling that the third
party defendants are not entitled to be dismissed absent an agreement
with the accountant-defendants. The Court expressed no view on the
enforceability of the settlement agreement. Trial is currently
scheduled to commence in the Morris County Superior Court - Law
Division, on May 4, 1998.
On or about December 13, 1994, a class action complaint was filed in
the United States District Court for the Western District of
Pennsylvania against the Company, Northwest Savings Bank ("Northwest");
Northwest Bancorp, MHC; RP Financial, Inc. and certain of Northwest's
officers and directors. The complaint alleges violations of Sections
12(2) and 15 of the Securities Act of 1933, 15 U.S.C. Sections 771(2)
and 770; Section 10(b) and 20(a) of the Securities Exchange Act of
1934, 15 U.S.C. Sections 78j(b) and 78t(a); Rule lOb-5 promulgated by
the Securities and Exchange Commission (17 C.F.R- Section 240. 1 Ob-5);
as well as various state law securities and common law claims.
The complaint alleges that the Company was retained to consult with and
advise Northwest regarding its reorganization from a mutual state
savings bank to a stock mutual holding company. The complaint avers
that, in connection with the reorganization, Northwest and its Trustees
offered to sell a minimum of 2,000,000 shares and a maximum of
3,000,000 shares of common stock in an initial public offering at a
price of $20 per share. The complaint alleges that, the Company engaged
in the promotion and sale of the Northwest stock. The complaint further
alleges that after the offering was concluded, the appraised value of
Northwest was increased by 15 percent and the subscription offering was
diluted by an additional 450,000 shares. The complaint further avers
that between November 7, 1994, when Northwest stock began trading on
the Over-the-Counter market, and December 13, 1994, the price of
Northwest stock dropped by $5 per share, or 25 percent.
The complaint alleges that the Offering Circular prepared in connection
with the initial public offering and dated August 12, 1994, contained
misstatements of material facts and omitted to state material facts
necessary to make the statements contained in the Offering Circular not
misleading. The complaint avers that the purported misrepresentations
include false statements representing that the appraised valuation and
number of shares to be issued in the initial offering would be
increased only if market and economic conditions warranted such
increase. The complaint alleges that the increase in appraised value
was not warranted by market or economic conditions.
The complaint seeks unspecified monetary damages against the
defendants, including the Company, on behalf of all persons who
subscribed for and purchased shares of common stock in Northwest's
initial public offering.
By Order dated November 17, 1995, the Court dismissed the complaint
with prejudice against all defendants on the ground that plaintiff
failed to identify affirmative misrepresentations and material
omissions of fact in the Offering Circular. On December 14, 1995,
plaintiff filed an appeal with the United States Court of Appeals for
the Third Circuit and oral arguments were held on January 21, 1997. The
Court of Appeals affirmed the dismissal in February of 1997.
In November of 1997, the class counsel re-filed essentially the
identical class action in state court in Allegheny County,
Pennsylvania. In the new action, plaintiffs seek damages against the
Company for breach of contract, breach of fiduciary duty and
interference with contract. The Company and the other defendants have
filed preliminary objections seeking dismissal of the complaint and to
transfer the matter to Erie County, Pennsylvania.
The Company is entitled to a defense and to indemnification from the
issuer, Northwest. The Company believes that it possesses strong
defenses to the claims and intends to defend the case vigorously.
Given the recent filing of the suit, however, it is too soon to project
the likely outcome.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
None.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The Company's Common Stock is traded in the OTC market and quoted on
the National Market segment of the NASDAQ Stock Market under the symbol
"RBCO." The following table sets forth the high and low closing sales
prices of the common stock, as quoted by the NASDAQ Stock Market, and
dividends declared by the Company during the quarterly periods
indicated.
<TABLE>
<CAPTION>
Closing Market Price<F1><F2> Dividends Declared<F2>
High Low
<S> <C> <C> <C>
1997:
First Quarter $ 5.000 $ 4.125 $ .05
Second Quarter 5.250 4.000 .01
Third Quarter 7.250 4.500 .01
Fourth Quarter 8.125 6.500 .01
1996:
First Quarter $ 7.625 $ 6.750 $ .05
Second Quarter 7.500 6.625 .05
Third Quarter 7.000 5.375 .05
Fourth Quarter 5.625 3.750 .05
<FN>
<F1> The closing market prices are rounded to the nearest 1/8.
<F2> All share and per share data have been adjusted for a 5% stock
dividend declared on January 26, 1996 and paid on February 13, 1996.
</FN>
</TABLE>
Due to the volatile nature of the Company's business, it is the policy
of the Board of Directors to determine dividends individually for each
quarter. In the future, the Board of Directors may determine on an
annual basis if a dividend will be paid and the amount of the dividend.
In evaluating the possible distribution of dividends, the Board
considers, among other things, the level of the Company's earnings, its
operating capital requirements, the current and prospective business
and operating environment and alternative uses of any excess operating
capital. This policy is subject to change at any time.
The number of common shareholders of record as of February 27, 1998,
was 420.
Item 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Five Year Selected Financial Data
(In thousands except per share amounts)
At or for the years ended December 31, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues
Principal transactions $ 16,012 $ 9,846 $13,224 $11,770 $14,122
Investment banking 14,924 12,822 7,840 14,092 9,232
Commissions 5,202 4,291 2,802 2,362 3,456
Interest and dividends 1,328 1,329 894 641 675
Other 277 222 228 235 368
Total revenues 37,743 28,510 24,988 29,100 27,853
Interest expense 816 1,096 473 200 127
Net revenues 36,927 27,414 24,515 28,900 27,726
Non-interest expenses
Compensation and benefits 21,349 18,831 15,235 15,526 15,358
Floor brokerage, exchange
and clearing fees 2,230 2,085 1,730 1,131 1,737
Communications 1,763 1,408 1,288 1,074 1,174
Professional fees 1,571 1,098 774 1,020 568
Occupancy, equipment rental
and depreciation 1,435 1,316 991 822 883
Advertising and market development 1,015 907 615 437 477
Other 1,425 1,412 1,016 1,010 744
Total non-interest expenses 30,788 27,057 21,649 21,020 20,941
Income before provision
for income taxes 6,139 357 2,866 7,880 6,785
Provision for income taxes 2,274 97 1,078 3,114 2,631
Net income $ 3,865 $ 260 $ 1,788 $ 4,766 $4,154
Earnings per share
Basic $ 1.13 $ .02 $ .50 $ 1.37 $ 1.12
Diluted $ 1.09 $ .02 $ .50 $ 1.32 $ 1.12
Weighted average shares
Basic 3,304 3,197 3,250 3,296 3,701
Diluted 3,537 3,522 3,560 3,609 3,701
Selected Statement of Financial Condition Data:
Total assets $ 56,592 $ 36,947 $ 38,126 $20,396 $19,442
Total liabilities<F1> 41,931 25,778 26,040 7,915 7,248
Total stockholders' equity 14,661 11,169 12,086 12,481 12,194
Book value per share
- - fully diluted $ 4.09 $ 3.21 $ 3.40 $ 3.52 $ 3.29
Cash dividends declared $ .08 $ .20 $ .69 $ .91 $ .91
All share and per share information has been retroactively restated to reflect
a 5% stock dividend declared on January 26, 1996 and paid on February 13,
1996.
<FN>
<F1> Includes a subordinated loan with an outstanding balance of $7,000,000 at
December 31, 1997.
</FN>
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
This report on Form 10-K, including but not limited to the Description
of Business section, contains "forward-looking" statements. Ryan, Beck
& Co. ("the Company") is including this statement for the express
purpose of availing itself of the protections of the safe harbor
provided by the Private Securities Litigation Reform Act of 1995 with
respect to all such forward-looking statements. Examples of forward-
looking statements include, but are not limited to (a) projections of
revenues, income or loss, earnings or loss per share, capital
expenditures, growth prospects, dividends, capital structure and other
financial items, (b) statements of plans and objectives of the Company
or its management or Board of Directors, (c) statements of future
economic performance and (d) statements of assumptions underlying other
statements and statements about the Company or its business.
The Company's ability to predict projected results or to predict the
effect of certain events on the Company's operating results is
inherently uncertain. Therefore, the Company wishes to caution each
reader of this report to carefully consider certain factors, including
competition for clients; market conditions regarding buyers and sellers
of securities; legal and regulatory developments and market and
regulatory conditions relating to public offerings, underwritings,
mergers and acquisitions and municipal bonds and other factors
discussed herein, because such factors in some cases have affected and
in the future (together with other factors) could affect, the ability
of the Company to achieve its anticipated results and may cause actual
results to differ materially from those expressed herein.
Overview
The following discussion and analysis should be read in conjunction
with the Company's consolidated financial statements and the notes
related thereto presented elsewhere herein. The discussion of results,
causes and trends should not be construed to imply any conclusion that
such results, causes or trends will necessarily continue in the future.
Ryan, Beck & Co., Inc. is a boutique investment firm that is
principally engaged in the underwriting, distribution and trading of
tax-exempt, bank equity and debt securities. The Company provides
investment banking, research and financial advisory services to the
financial services industry, with a focus on corporate finance and
merger related services. The Company also offers a general securities
brokerage business with investment and insurance products for retail
and institutional clients. The Company operates on a fully-disclosed
basis through a clearing broker.
All aspects of the Company's business are highly competitive and
impacted by regulatory, economic and other factors outside of its
control, including, but not limited to, general economic and financial
conditions, the volume and price levels of securities markets, the
demand for investment banking services and interest rate changes and
volatility. In addition, a significant portion of the company's
expenses, including salaries and benefits, occupancy and
communications, are relatively fixed and do not vary with market
activity. Consequently, operating results of the Company fluctuate,
and therefore, the results of any individual period should not be
considered representative of future performance.
The last several years were highly profitable for the securities
industry and for many individual investors as well. Declining interest
rates, together with corporate profit growth, led to increased investor
activity, propelling stock prices to record highs. During 1997, the
Dow Jones Industrial Average ("DJIA") climbed 25.1% while the National
Association of Securities Dealers Automated Quotation System ("NASDAQ")
average added a 21.5% gain. Bank and thrift stocks, in particular, were
in favor with investors and participated in the increase as reflected
in the NASDAQ Bank Composite Index, which rose 63.9% in 1997. In
addition, for 1996 the DJIA rose 24.5% while the NASDAQ Bank Composite
Index rose 26.2%. Mutual funds continued to attract strong inflows of
cash, directed primarily at domestic equity funds. Bonds also provided
some of the highest returns on record to fixed-income investors owing
in part to declining interest rates.
Business Combination
On February 9, 1998, the Company entered into a definitive agreement
with BankAtlantic Bancorp, Inc. ("BankAtlantic"), whereby all of the
Company's outstanding common shares would be acquired by BankAtlantic
in an exchange for BankAtlantic's Class A Common Stock. The agreement
establishes a fixed exchange ratio of .761 shares of BankAtlantic Class
A Common Stock for each share of the Company's common stock. The
agreement, when consummated, also will establish an incentive and
retention pool, under which shares of BankAtlantic's Class A common
stock equal in the aggregate to approximately 20% of the aggregate
value of the shares of Class A Common Stock issued in the merger
(excluding options issued in the merger in exchange for other options
and excluding shares of Class A Common Stock issued in the merger in
exchange for shares of Company Common Stock which were issued by the
Company after February 9, 1998) and the value of the shares dedicated
to the retention pool will be allocated to key employees of the Company
and the allocated shares, subject to certain exceptions, will be
distributed after four years to an employee who remains with the
Company for that period.
The BankAtlantic agreement is subject to the receipt of all regulatory
approvals and approval of the stockholders of the Company at a
stockholders meeting. The Company expects that the transaction will be
closed during the second quarter of 1998, and thereafter, the Company
will operate as an autonomous independent subsidiary of BankAtlantic.
If consummated, the transaction would constitute a change in control
under certain Company stock plans and, as a result, under those plans
which mandate an acceleration of vesting in the event of a change of
control, all outstanding restricted stock grants of the Company will
become fully vested. In addition, it is anticipated that the merger
transaction would trigger a change in control provision in one
employment contract of a senior executive and board member which will
lead to a pre-tax charge to compensation expense of $780,000 upon
consummation of the transaction. The Long-Term Stock Incentive Plan,
adopted December 11, 1997 (see Note 13 to the Consolidated Financial
Statements), does not mandate acceleration of vesting and no such
acceleration will occur.
Statement of Financial Condition
Cash and cash equivalents increased by $7,393,000 to $7,406,000 from
$13,000. This increase reflects a $7,000,000 investment in a short
term money market fund. This investment represents the remaining
portion of a $20,000,000 subordinated loan. On January 2, 1998, this
investment was used to retire the then outstanding principal balance of
the subordinated loan (see Notes 1 and 8 to the Consolidated Financial
Statements).
Securities owned increased by $10,200,000 to $43,989,000 from
$33,789,000. This increase represents an increase in tax-exempt
securities of $14,588,000, which was partially offset by a decrease in
taxable securities of $3,803,000. The increase in tax-exempt securities
was primarily due to the Company's participation in several new
competitive underwritings issued by municipalities in the State of New
Jersey. It was the Company's strategy to increase its tax-exempt
portfolio to capitalize on anticipated strong demand for municipal
bonds in January of 1998 due to reinvestment money coming into the
marketplace. This overall increase in securities owned was largely
financed by the loan from the clearing broker (see Notes 3 and 5 to the
Consolidated Financial Statements).
Property and equipment, net, increased by $2,496,000 to $2,867,000 from
$371,000 due to purchases of furniture and equipment and leasehold
improvements at the Company's new headquarters in Livingston, New
Jersey and at its new satellite office in Shrewsbury, New Jersey.
These additions were largely financed by a bank note payable (see Note
7 to the Consolidated Financial Statements).
During 1997, the Company redeemed all of its outstanding Cumulative
Convertible Preferred, Series A stock. Proceeds to the ESOP from the
redemption of 76,554 shares were used to retire the then outstanding
ESOP loan balance (see Notes 9 and 13 to the Consolidated Financial
Statements).
Total stockholders' equity increased by $3,492,000 to $14,661,000 from
$11,169,000. This increase is primarily due to net income of
$3,865,000, proceeds from the Employee Restricted Stock Purchase Plan
of $951,000, and the purchase of $579,000 of common stock by the
Company's ESOP. These transactions were partially offset by the
redemption of its Cumulative Convertible Preferred stock of $2,018,000
(see Notes 9 and 13 to the Consolidated Financial Statements).
Results of Operations
For the year ended December 31, 1997, the Company reported net income
of $3,865,000, or $1.09 per diluted share, compared with net income of
$260,000, or $.02 per share, in 1996 and $1,788,000, or $.50 per share,
in 1995. Net income for the year ended December 31, 1996, exclusive of
one-time after-tax charges, was $1,341,000, or $.36 per share.
Revenues
Total revenues during 1997 increased $9,233,000, or 32.4%, to
$37,743,000 from $28,510,000 in 1996. Revenues were strong in 1997 with
individual record levels attained from investment banking and
commission income. Total revenues in 1996 increased $3,522,000, or
14.1%, to $28,510,000 in 1996 from $24,988,000 in 1995.
Revenues from Principal Transactions
The Company effects certain transactions with its clients by acting as
principal and, therefore, seeks to maintain inventories primarily of
bank and thrift equity securities and fixed income securities to
satisfy investor demand. Realized and unrealized gains and losses may
result from holding securities positions for resale to investors and
are included in principal transaction revenue.
Revenues from principal transactions increased by $6,166,000, or 62.6%,
to $16,012,000 for the year ended December 31, 1997 from $9,846,000 in
1996. This increase was primarily due to increases of $5,178,000 from
trading equity securities. The increase in trading revenue from equity
securities reflects the continued strong performance of bank and thrift
stocks. Revenues from the trading of taxable and tax-exempt debt
securities also increased by $762,000 and $226,000 respectively, due
primarily to improved interest rate risk management strategies and
favorable market conditions.
Revenues from principal transactions decreased $3,378,000, or 25.5%, to
$9,846,000 for the year ended December 31, 1996 from $13,224,000 in
1995. This decrease can be attributed to decreases of $2,111,000 from
trading tax-exempt securities and $1,527,000 from trading taxable debt
securities, which were partially offset by an increase of $260,000 from
trading equity securities. The decrease in trading revenues
attributable to tax-exempt and taxable debt securities reflected an
extraordinarily volatile bond market and the continued compression of
underwriting spreads in municipal securities. In addition, trading
revenues were adversely affected by costs associated with implementing
an interest rate risk management strategy.
Revenues from Investment Banking
The Company derives investment banking revenue by underwriting debt and
equity offerings of securities for banks and thrifts and underwriting
tax-exempt securities for governmental entities. The Company provides
financial advisory services to financial services companies in
connection with capital formation, strategic planning, branch sales,
mergers and acquisitions (including appraisals and fairness opinions),
shareholder/ investor issues and financial management.
Revenues from investment banking services rose $2,102,000, or 16.4%, to
a record of $14,924,000 for the year ended December 31, 1997 from
$12,822,000 in 1996. Fees from underwriting equity securities rose
$5,017,000 to $7,828,000, reflecting strong demand by banks and thrifts
seeking additional regulatory capital through the issuance of trust
preferred securities. During 1997, the Company acted as manager or co-
manager of ten trust preferred securities offerings, which raised
approximately $401,050,000 in new capital for financial institutions.
The Company managed or co-managed a total of twelve public offerings
and private placements which raised in excess of $547,000,000 for bank
and thrift clients. In addition, the Company underwrote over
$33,600,000 of Unit Investment Trusts. Revenue from tax-exempt
underwritings increased by $251,000 to $1,298,000, due to both an
increase in the size and number of offerings that the Company managed
or co-managed and due to a more favorable interest rate environment.
Fees from underwriting taxable debt securities increased by $515,000 to
$2,055,000, due to a large convertible debt offering completed in 1997.
Partially offsetting these increases was a decrease in consulting,
placement and valuation fees of $3,681,000 to $3,743,000. This
decrease was primarily due to a reduction in revenues related to thrift
conversions and mutual holding company formations and, to a lesser
extent, a reduction in merger and acquisition fees. The Company expects
future revenues resulting from thrift conversions and mutual holding
company formations could be volatile because of increased competition
and a smaller universe of mutual institutions. The Company expects
that 1998 underwriting revenue will decline from that recorded in 1997.
Although there can be no assurances that it will be successful, the
Company is attempting to diversify its revenue sources into related
financial service companies.
Revenues from investment banking services increased $4,982,000, or
63.5%, to $12,822,000 for the year ended December 31, 1996 from
$7,840,000 in 1995. This increase was due to a $2,930,000 increase in
revenues related to consulting, placement and valuation fees, an
increase in revenue from underwriting equity securities of $834,000 and
an increase in revenue from underwriting taxable and tax-exempt debt
securities of $1,084,000 and $134,000, respectively. The increase in
consulting, placement and valuation fees resulted from an increase in
revenues related to thrift conversions and merger and acquisition
advisory fees. The increase in revenues during 1996 from thrift
conversions, including mutual holding company formations, is a result
of the greater size of the transactions which closed during 1996 as
compared to 1995. Additionally, fee income from merger and acquisition
advisory services was significantly higher during 1996 as compared to
1995. This was a result of a larger number of merger and acquisition
transactions during the 1996 period and the greater size of the
transactions versus 1995.
Commission Income
Commission income increased $911,000, or 21.2%, to a record $5,202,000
for the year ended December 31, 1997 from $4,291,000 in 1996. The
increase in revenues is primarily due to an increase in equity
commissions of $558,000 and an increase of $353,000 in mutual fund
commissions. This increase is reflective of continued strong demand
for equity securities and mutual funds, as well as a larger sales
force. Additionally, the Company has established a number of strategic
alliances with mutual fund sponsors which has resulted in a larger
selection of mutual funds for its customers.
Commission revenue increased $1,489,000, or 53.1%, to $4,291,000 in
1996 from $2,802,000 in 1995. The increase in revenues was primarily
due to an increase in equity commissions of $1,119,000 and in mutual
fund commissions of $370,000. These increases were mainly attributable
to increased retail trading activity and higher mutual fund sales due
to greater investor demand and selection of mutual funds.
Expenses
Interest Expense
Interest expense decreased $280,000, or 25.5% to $816,000 for the year
ended December 31, 1997 from $1,096,000 in 1996. This decrease
reflects lower average borrowings from the Company's clearing broker,
as a result of lower inventory levels and lower average interest rates.
Interest expense increased $623,000 or 131.7% to $1,096,000 for the
year ended December 31, 1996 from $473,000 in 1995. This increase was
due to higher average borrowing levels from the Company's clearing
broker which were partially offset by lower interest rates.
Non-interest Expense
Total non-interest expenses increased $3,731,000, or 13.8%, to
$30,788,000 for the year ended December 31, 1997 from $27,057,000 in
1996. This increase is primarily attributed to an increase in
compensation and benefits of $2,518,000, an increase in professional
fees of $473,000 and an increase of $355,000 in communication expenses.
In addition, floor brokerage, exchange and clearance fees increased by
$145,000, and occupancy and equipment expense increased by $119,000.
The increase in compensation and benefits is mainly attributable to an
increase in commission expenses of $3,052,000 which were primarily
associated with the sale of equity and debt underwritings and the two
Unit Investment Trusts. In addition, an increase in staffing levels
and bonus expense related to increased incentive compensation payments,
reflecting the Company's 1997 performance partially offset the impact
of non-recurring pre-tax charges of $1,327,000 in 1996. In 1996, one-
time pre-tax charges of $1,327,000 were incurred as a result of
severance payments related to the resignation of two senior executives
and Board members. The increase in professional fees is due to
recruiting costs associated with the Company's plan of enhancing and
expanding its research and corporate finance departments, as well as
various other activities throughout the year. The increase in
communication expense is due to additional quotation, telephone and
postage expenses associated with a larger sales force. The increase in
floor brokerage, exchange and clearance fees is due to an increase in
trade volume. The increase in occupancy and equipment expense is due
to the Company moving to a larger and more modern headquarters, as well
as the opening of the Shrewsbury, NJ and Chicago, IL offices.
Total non-interest expenses increased $5,408,000, or 25.0%, to
$27,057,000 for the year ended December 31, 1996 from $21,649,000 in
1995. This increase is primarily attributed to an increase in
compensation and benefits of $3,596,000, an increase of $355,000 in
floor brokerage and clearing fees and an increase of $325,000 in
occupancy and equipment expense. In addition, increases in advertising
and market development, professional fees and other expenses of
$292,000, $324,000 and $396,000, respectively, contributed to the
overall increase in total non-interest expenses. The increase in
compensation and benefits is partially attributable to one-time pre-tax
charges of $1,327,000 as a result of severance payments related to the
resignation of two senior executives and Board members. In addition,
increases in commission expense, salary and bonus expense are
consistent with higher investment banking and commission revenues, as
well as an increase in the number of employees. The increase in
advertising and market development is primarily due to an increase in
printing and promotional expenses. The increase in professional fees
is due to expenses associated with a pre-tax charge of $83,000 for an
abandoned debt offering, as well as additional legal expenses and
consulting fees associated with the Company's relocation of its
headquarters in 1997. The increase in other operating expenses is
primarily the result of a one-time pre-tax charge of $200,000 for
incidental expenses related to the relocation of the Company's
headquarters and an increase in other expenses. The increase in floor
brokerage, exchange and clearance fees is a result of an increase in
trade volume. The increase in occupancy and equipment expense is mainly
attributed to a pre-tax charge of $192,000 to write off leasehold
improvements and equipment as part of the Company's plan to move its
headquarters.
Year 2000
The Company is aware of the Year 2000 challenges facing the securities
industry. The Company has begun identifying all internal and external
processes, services and vendors that will be impacted, and will develop
testing strategies and contingency plans. Management has not
determined what the cost associated with implementing all necessary
changes for the Year 2000 conversion will be, but it does not expect
the cost to be material to the Company's results of operations,
financial condition or cash flows.
Because of the critical nature of the relationship with the Company's
clearing broker, the Company will develop criteria for testing the
clearing broker's plans, contingencies and efforts towards Year 2000
compliance. The Company will design a method by which to evaluate the
clearing broker's readiness. Management has been informed by the
clearing broker that all applications will be year 2000 compliant by
December 31, 1998. User testing is scheduled for the first quarter of
1999.
Management believes that the Company has taken all reasonable
precautions to ensure a smooth transition. However, like all securities
firms, the Company's brokerage business is highly dependent on outside
service providers and, as such, any problems encountered could
potentially have a material adverse effect on the Company's activities
and, accordingly, its results of operations, financial condition and
cashflows.
Liquidity
As of December 31, 1997, the Company's Consolidated Statement of
Financial Condition reflects an essentially liquid financial position,
with most of the Company's assets consisting of assets which are
readily convertible into cash. The Company's securities positions in
its trading accounts (both long and short) are, in large part, readily
marketable.
The Company finances its business through the use of available capital
and short-term secured borrowings. The Company maintains a facility
pursuant to which it may borrow additional funds on a secured short-
term basis from its clearing broker. The amount available for
borrowing under this facility is related to the level of securities
inventory at the clearing broker which may be pledged as collateral.
At December 31, 1997, the interest rate for such funds was 7.25%.
On June 11, 1997, the Company secured a commitment for a $2,000,000
revolving credit facility to finance the Company's working capital
needs. The facility is secured by the Company's certificate of deposit
inventory maintained with its clearing broker in an amount which is at
least 105% of the outstanding loan amount. Loans under this facility
accrue interest at a rate equal to the LIBOR rate plus 100 basis points
(30, 60 and 90 day interest periods are available). At December 31,
1997, there were no borrowings under this facility.
Effects of Inflation
Because the Company's assets are largely liquid, and because securities
inventories are carried at current market values, the impact of
inflation is reflected in its consolidated financial statements.
However, the rate of inflation also affects expenses such as employee
compensation, rent, and communications, and such effects may not be
readily recoverable through increased commission rates, trading profits
or fees. To the extent that inflation has other adverse effects on
prices and activities in the securities markets and, in particular, on
interest rate conditions in the credit markets, it may adversely affect
the Company's financial position and results of operations.
Subsequent Events
On February 9, 1998, the Company entered into an agreement to acquire
for stock and cash Cumberland Advisors, a New Jersey based money
manager with approximately $400 million under management. In the
transaction, the Company also acquired Cumberland Consulting, a
financial advisor to state and local governmental units. The Company
paid approximately $1.3 million in cash and issued 167,742 shares of
common stock. The agreement contains provision for contingent
payments and future earn out payments should certain performance
goals be met over the next three years, as well as for recapture of a
portion of the shares issued if performance goals are not met. This
transaction was consummated on February 27, 1998.
On January 28, 1998, the Company made an investment of $1,861,000 in
8% Cumulative Convertible Preferred Stock, Series A of a New Jersey
based financial institution specializing in mortgage servicing. In
accordance with Rule 15c3-1, this investment is considered a non-
allowable asset and, as such, reduces net capital by the full amount
of the investment.
On January 2, 1998, the Company repaid the outstanding temporary
subordinated loan obligation of $7,000,000. On January 31, 1998, the
Company's regulatory net capital was approximately $7,363,000, which
exceeded minimum net capital rule requirements by $6,363,000.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Ryan, Beck & Co., Inc.
and subsidiaries:
We have audited the accompanying consolidated statements of financial
condition of Ryan, Beck & Co., Inc. and subsidiaries as of December 31,
1997 and 1996, and the related consolidated statements of income,
changes in stockholders' equity, and cash flows for the years then
ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
The consolidated financial statements of the Company for the year ended
December 31, 1995 were audited by other auditors whose report, dated
February 5, 1996, expressed an unqualified opinion on those
consolidated financial statements.
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 Ryan, Beck & Co.,
Inc. and subsidiaries at December 31, 1997 and 1996, and the results of
their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
February 20, 1998
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<CAPTION> December 31,
1997 1996
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 7,406 $ 13
Cash segregated under federal and other regulations 8 17
Receivable from:
Brokers and dealers 52 25
Accrued revenues 216 225
Other 366 371
Securities owned, at market value 43,989 33,789
Prepaid income taxes - 950
Deferred income taxes 1,056 830
Property and equipment, at cost, less
accumulated depreciation and amortization 2,867 371
Other assets 632 356
Total assets $ 56,592 $ 36,947
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Payable to clearing broker $ 22,874 $ 15,375
Securities sold, but not yet purchased,
at market value 3,120 5,424
Accrued employee compensation and benefits 3,381 2,249
Accounts payable and other accrued expenses 2,739 2,192
ESOP loan obligation - 538
Bank note payable 1,926 -
Income taxes payable 891 -
Total liabilities 34,931 25,778
Subordinated loan 7,000 -
Stockholders' equity:
Preferred stock - $.10 par value
Authorized: 2,000,000 shares
Issued: 0 and 397,948 shares in 1997 and 1996 - 40
Common stock - $.10 par value
Authorized: 30,000,000 shares
Issued: 3,676,691 and 3,253,695 shares
in 1997 and 1996 368 325
Additional paid-in capital 11,602 11,875
Retained earnings 3,724 246
Treasury stock, at cost, 88,000 common shares
in 1997 and 1996 (624) (624)
Unearned compensation - restricted stock grants (409) (173)
Unearned ESOP compensation - (520)
Total stockholders' equity 14,661 11,169
Total liabilities and stockholders' equity $ 56,592 $ 36,947
See notes to consolidated financial statements.
</TABLE>
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION> Year Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Revenues:
Principal transactions $ 16,012 $ 9,846 $ 13,224
Investment banking 14,924 12,822 7,840
Commissions 5,202 4,291 2,802
Interest and dividends 1,328 1,329 894
Other 277 222 228
Total revenues 37,743 28,510 24,988
Interest expense 816 1,096 473
Net revenues 36,927 27,414 24,515
Non-interest expenses:
Compensation and benefits 21,349 18,831 15,235
Floor brokerage, exchange and clearance fees 2,230
2,085 1,730
Communications 1,763 1,408 1,288
Professional fees 1,571 1,098 774
Occupancy, equipment rental
and depreciation 1,435 1,316 991
Advertising and market development 1,015 907 615
Other 1,425 1,412 1,016
Total non-interest expenses 30,788 27,057 21,649
Income before provision for income taxes 6,139 357 2,866
Provision for income taxes 2,274 97 1,078
Net income $ 3,865 $ 260 $ 1,788
Earnings per common share:
Basic $ 1.13 $ .02 $ .50
Diluted $ 1.09 $ .02 $ .50
Weighted average number of shares:
Basic 3,304 3,197 3,250
Diluted 3,537 3,522 3,560
See notes to consolidated financial statements.
</TABLE>
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE DATA)
<CAPTION>
Unearned Unearned Total
Additional Compensation ESOP Stock-
Common Preferred Paid-in Retained Restricted Compen- Treasury holders'
Stock Stock Capital Earnings Stock Grants sation Stock Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 $ 308 $ 44 $ 10,907 $ 2,547 $ (488) $ (837) $ - $12,481
Tax related benefit from stock
transactions with employees - - 16 - - - - 16
Unearned compensation
restricted stock grants - - - - (167) - - (167)
Amortization of restricted
stock grants - unearned
compensation - - - - 254 - - 254
Amortization of ESOP unearned
compensation - - 30 - - 180 - 210
Conversion of preferred stock
to common stock(33,325 shares) 3 (3) - - - - - -
Treasury stock purchases
(13,618 shares) - - - - - - (91) (91)
Net income - - - 1,788 - - - 1,788
Cash dividends declared: common - - - (2,226) - - - (2,226)
preferred - - - (179) - - - (179)
5% stock dividend declared on
January 26, 1996 16 - 1,096 (1,112) - - - -
Balance at December 31, 1995 327 41 12,049 818 (401) (657) (91) 12,086
Retirement of 19,393 shares of
common stock (2) - (127) - - - 129 -
Forfeiture of restricted
stock grants(10,347 shares) (1) - (58) - 59 - - -
Unearned compensation -
restricted stock grants - - - - (175) - - (175)
Amortization of restricted stock
grants unearned compensation - - - - 344 - - 344
Amortization of ESOP
unearned compensation - - 11 - - 137 - 148
Conversion of preferred stock
to common stock (12,907
shares) 1 (1) - - - - - -
Treasury stock purchases
(93,475 shares) - - - - - - (662) (662)
Net Income - - - 260 - - - 260
Cash dividends declared: common - - - (642) - - - (642)
preferred - - - (190) - - - (190)
Balance at December 31, 1996 325 40 11,875 246 (173) (520) (624) 11,169
Shares issued under Employee
Restricted Stock Purchase
Plan (221,038 shares) 22 - 1,166 - (237) - - 951
Shares issued under Discretionary
Incentive Bonus Program
(37,601 shares) 4 - 255 - - - - 259
Cancellation of restricted
stock grants (20,970 shares) (2) - (111) - 113 - - -
Unearned compensation -
restricted stock grants
(43,439 shares) 5 - 186 - (249) - - (58)
Amortization of restricted
stock grants - unearned
compensation - - - - 137 - - 137
Conversion of Preferred stock to
Common stock (33,660 shares) 3 (3) - - - - - -
Redemption of Preferred stock
(364,288 shares) - (37) (2,423) - - 442 - (2,018)
Amortization of ESOP
unearned compensation - - - - - 78 - 78
Shares purchased by ESOP
(89,399 shares) 9 - 570 - - - - 579
Shares issued through exercise
of stock options
(21,500 shares) 2 - 84 - - - - 86
Net Income - - - 3,865 - - - 3,865
Cash dividends declared: common - - - (258) - - - (258)
preferred - - - (129) - - - (129)
Balance at December 31,
1997 $ 368 $ - $11,602 $ 3,724 $ (409) $ - $(624) $14,661
See notes to consolidated financial statements.
</TABLE>
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<CAPTION>
Year Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,865 $ 260 $ 1,788
Noncash items included in net income:
Depreciation and amortization 413 575 289
Amortization of restricted stock grants 137 344 254
Amortization of ESOP unearned compensation 78 148 210
Deferred income taxes (226) (196) (201)
Increase (decrease) in allowance for doubtful accounts 60 - (10)
(Increase) decrease in operating assets:
Cash segregated under federal and other regulations 9 (6) -
Receivables:
Brokers and dealers (27) 884 (867)
Accrued revenues 9 (115) (59)
Other (55) (69) 66
Securities owned, at market value (10,200) 909 (16,010)
Prepaid income taxes 950 (722) (228)
Other assets (276) 104 (219)
Increase (decrease) in operating liabilities:
Payable to clearing broker 7,499 (805) 14,896
Securities sold, but not yet purchased, at market value (2,304) (385) 4,918
Accrued employee compensation and benefits 1,132 551 (465)
Accounts payable and other accrued expenses 547 514 218
Income taxes payable 891 - (1,271)
Net cash provided by operating activities 2,502 1,991 3,309
Cash flows from investing activities -
Capital expenditures, net (2,909) (243) (484)
Cash flows from financing activities:
Proceeds from bank note payable 2,000 - -
Principal repayments of bank note payable (74) - -
Proceeds from subordinated loans 25,000 - -
Principal repayments of subordinated loans (18,000) - -
Redemption of preferred stock,
net of unearned compensation (2,018) - -
Common stock repurchased for restricted stock grants (58) (175) (167)
Proceeds from shares issued under
Employee Restricted Stock Purchase Plan 951 - -
Purchase of common stock by ESOP 579 - -
Principal repayments of ESOP obligation (538) (137) (171)
Proceeds from the exercise of stock options 86 - -
Common stock issued under Discretionary Incentive
Bonus Program 259 - -
Purchase of Treasury Stock - (662) (91)
Tax related benefit from stock transactions with employees - - 16
Dividends paid: common (258) (642) (2,226)
preferred (129) (190) (179)
Net cash provided by (used in) financing activities 7,800 (1,806) (2,818)
Net increase (decrease) in cash 7,393 (58) 7
Cash and cash equivalents at beginning of year 13 71 64
Cash and cash equivalents at end of year $ 7,406 $ 13 $ 71
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 799 $ 1,043 $ 462
Income taxes 947 1,001 2,976
See notes to consolidated financial statements.
</TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
Note 1 - Summary of Significant Accounting Policies
Nature of Business
Ryan, Beck & Co., Inc. (the "Company") is a boutique investment firm
that is principally engaged in the underwriting, distribution and
trading of tax-exempt, bank equity and debt securities. The Company
provides investment banking, research and financial advisory services
to the financial services industry, with a focus on corporate finance
and merger related services. The Company also offers a general
securities brokerage business with investment and insurance products
for retail and institutional clients. The Company operates on a
fully-disclosed basis through a clearing broker.
The Company, like other securities firms, is affected by economic and
political conditions. Additionally, a substantial portion of the
operations of the Company is subject to developments affecting
financial institutions.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All intercompany
transactions and balances have been eliminated.
Recognition of Revenues
Securities transactions (and related revenues and expenses) are
recorded on a trade date basis. Selling concessions, consulting
fees, management fees and underwriting fees, less related expenses,
are recorded in income as earned. All securities owned and sold, but
not yet purchased by the Company are valued at market, which results
in unrealized gains and losses being reflected in current earnings.
Investment banking revenues include gains, losses and fees, net of
syndicate expense, arising from securities offerings in which the
Company acts as an underwriter or agent. Investment banking revenues
also include fees earned from providing merger and acquisition and
financial restructuring advisory services.
Income Taxes
The Company uses the asset and liability method in providing income
taxes on all transactions that have been recognized in the
consolidated financial statements. The asset and liability method
requires that deferred taxes be adjusted to reflect the tax rates at
which future taxable amounts will be settled or realized.
Cash Equivalents
Cash equivalents consist of highly liquid investments with a maturity
of less than three months when purchased. At December 31, 1997,
$7,000,000 is classified as cash and cash equivalents and is invested
in a short term money market fund. There were no money market
positions at December 31, 1996.
Property and Equipment
Depreciation of property and equipment is provided for either on a
straight-line or declining balance basis using estimated useful lives
of three to ten years for financial statement purposes. Accelerated
depreciation methods are generally used for federal income tax
purposes. Leasehold improvements are amortized over the lesser of
the economic useful life of the improvement or the term of the lease.
Use of Estimates
The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to prior years' consolidated
financial statements to conform with the current year's presentation.
Note 2 - Business Combination
On February 9, 1998, the Company entered into a definitive agreement
with BankAtlantic Bancorp, Inc. ("BankAtlantic"), whereby all of the
Company's outstanding common shares would be acquired by BankAtlantic
in an exchange for BankAtlantic's Class A Common Stock. The agreement
establishes a fixed exchange ratio of .761 shares of BankAtlantic
Class A Common Stock for each share of the Company's Common Stock.
Based upon the closing price of BankAtlantic Bancorp on February 9,
1998, the value of the agreement to stockholders of the Company was
$9.75 per share, for an aggregate consideration of approximately
$38.1 million. The agreement, when consummated, also will establish
an incentive and retention pool, under which shares of BankAtlantic's
Class A Common Stock equal in the aggregate to approximately 20% of
the total value of the shares of Class A Common Stock issued in the
merger (excluding options issued in the merger in exchange for other
options and excluding shares of Class A Common Stock issued in the
merger in exchange for shares of Company Common Stock which were
issued by the Company after February 9, 1998) and the value of the
shares dedicated to the retention pool will be allocated to key
employees of the Company and the allocated shares, subject to certain
exceptions, will be distributed after four years to an employee who
remains with the Company for that period.
The BankAtlantic agreement is subject to the receipt of all
regulatory approvals and approval of the stockholders of the Company
at a stockholders meeting. The Company expects that the transaction
will be closed during the second quarter of 1998 and thereafter the
Company will operate as an autonomous independent subsidiary of
BankAtlantic. If consummated, the transaction would constitute a
change in control under certain Company stock plans and, as a result,
under those plans which mandate an acceleration of vesting in the
event of a change of control, all outstanding restricted stock grants
of the Company will become fully vested. The Long-Term Stock
Incentive Plan, adopted December 11, 1997 (see Note 13), does not
mandate acceleration of vesting of options and no such acceleration
will occur.
Note 3 - Securities Owned, at Market Value
Securities in the Company's trading account consist of the following:
<TABLE>
<CAPTION>
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Debt obligations:
States and municipalities $32,549 $17,962
Corporations 1,368 5,195
U.S. Government and
agencies 372 2,035
Corporate equity 9,675 8,572
Other 25 25
Total $43,989 $33,789
</TABLE>
Note 4 - Property and Equipment
Property and equipment, stated at cost, consist of the following:
<TABLE>
<CAPTION>
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Office furniture and equipment $2,521 $2,543
Leasehold improvements 1,231 938
3,752 3,481
Less: Accumulated depreciation
and amortization 885 3,110
$2,867 $371
</TABLE>
Note 5 - Payable to Clearing Broker
In the ordinary course of business, primarily to finance its trading
inventories, the Company borrows under an agreement with its clearing
broker by pledging securities owned as collateral. At December 31,
1997 and 1996, the balances due the clearing broker were
approximately $22,874,000 and $15,375,000, respectively. At December
31, 1997, the interest rate paid on this borrowing was 7.25%.
Note 6 - Securities Sold, But Not Yet Purchased
Securities sold, but not yet purchased consist of the following:
<TABLE>
<CAPTION>
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Debt obligations:
States and municipalities $ - $ 128
Corporations 3 274
U.S. Government and agencies - 134
Corporate equity 3,117 4,888
Total $3,120 $ 5,424
</TABLE>
Securities sold, but not yet purchased are a part of the Company's
normal activities as a broker and dealer in securities and are
subject to off-balance-sheet market risk of loss should the Company
be unable to acquire the securities for delivery to the purchaser at
prices equal to or less than the current recorded amounts.
Note 7 - Bank Note Payable
On June 11, 1997, the Company entered into an agreement with a bank
for a $2,000,000 loan facility to finance construction, leasehold
improvements, furniture and telephone and computer equipment for its
Livingston and Shrewsbury offices. Beginning on November 1, 1997,
the outstanding balance is payable in 54 equal and consecutive
monthly payments of principal plus interest at a fixed rate of 7.56%.
The loan is collateralized by property and equipment with a net book
value of $2,758,000 at December 31, 1997. At December 31, 1997, the
balance due under this bank loan was $1,926,000.
Note 8 - Subordinated Borrowings
At December 31, 1997, the Company had outstanding a $7,000,000
temporary subordinated loan from a bank at the Federal funds rate
plus 100 basis points. This loan was required to maintain sufficient
net capital for open contractual commitments in accordance with the
Securities and Exchange Commission's ("SEC") Rule 15c3-1. Under
applicable regulations, the Company is limited to three temporary
subordinated loans in any rolling 12 month period. This loan was the
Company's second temporary subordinated loan since October 14, 1997
and, therefore, the Company is limited to one additional temporary
subordinated loan until after October 13, 1998. This loan matured
and was repaid on January 2, 1998.
Note 9 - Preferred Stock
On September 11, 1997, the Company redeemed all of its 364,288 shares
of outstanding Cumulative Convertible Preferred Stock, Series A (the
"Series A Preferred Shares") at a price per share of $6.75 plus
accrued dividends, for an aggregate cost of approximately $2,502,000.
The Company's Employee Stock Ownership Plan ("ESOP") held
approximately 73,339 allocated and 76,554 unallocated Series A
Preferred Shares. The ESOP used the proceeds upon redemption to
repay an outstanding loan of approximately $469,000, and to purchase
89,399 shares of newly issued common stock for approximately
$579,000. Of the 89,399 newly issued common shares, 77,005 were
allocated to participants based on their December 31, 1996 account
balance and the remaining shares were allocated based on 1997
compensation.
The Company has authorized 2,000,000 shares of Series A Preferred
Stock. At December 31, 1997, the Company had no Series A Preferred
Stock outstanding.
Note 10 - Income Taxes
The provision (benefit) for income taxes consists of:
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Current Provision:
Federal $ 1,860 $ 193 $ 929
State and local 640 100 350
2,500 293 1,279
Deferred Benefit:
Federal (171) (152) (152)
State and local (55) (44) (49)
(226) (196) (201)
Total $ 2,274 $ 97 $1,078
</TABLE>
The provision (benefit) for income taxes is reconciled to amounts
computed by applying the federal corporate tax rate of 34% to income
before income taxes as follows:
<TABLE>
<CAPTION> Year Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Tax provision at federal
statutory rate $ 2,087 $ 121 $ 974
State and local income taxes,
net of federal income
tax benefit 399 37 230
Net reduction relating to
interest income on state and
municipal government
obligations (99) (118) (135)
Other, net (113) 57 9
$ 2,274 $ 97 $ 1,078
</TABLE>
The tax effects of the principal temporary differences resulting in a
deferred income tax asset are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Deferred compensation -
Restricted stock grants $ (125) $ (204)
Postemployment benefits (339) (251)
Accrued expenses (687) (338)
Other, net 95 (37)
$(1,056) $ (830)
</TABLE>
Note 11 - Regulatory Requirements
The Company is subject to the net capital provision of Rule 15c3-1
under the Securities Exchange Act of 1934, which requires that the
Company's aggregate indebtedness shall not exceed 15 times net
capital as defined under such provision. Additionally, the
Company, as a market maker, is subject to supplemental requirements
of Rule 15c3-1(a)4; which provides for the computation of net capital
to be based on the number and price of issues in which markets are
made by the Company, not to exceed $1,000,000. At December 31, 1997
and 1996, the Company's regulatory net capital was approximately
$13,443,000 and $3,534,000, respectively, which exceeded minimum net
capital rule requirements by $12,443,000 and $2,534,000,
respectively.
The Company operates under the provisions of paragraph (K)(2)(ii) of
Rule 15c3-3 of the Securities and Exchange Commission as a fully-
disclosed broker and, accordingly, customer accounts are carried on
the books of the clearing broker. However, the Company safekeeps and
redeems municipal bond coupons for the benefit of its customers.
Accordingly, the Company is subject to the provisions of SEC Rule
15c3-3 relating to possession or control and customer reserve
requirements and was in compliance with such provisions at December
31, 1997.
Note 12 - Earnings per Common Share
In March 1997, the FASB issued Statement of Financial Accounting
Standard No. 128, "Earnings Per Share," which requires companies to
present basic and diluted earnings per share (EPS), instead of
primary and fully diluted EPS. Basic earnings per share are computed
by deducting preferred dividends from net income in order to
determine net income attributable to common stockholders. This
amount is then divided by the weighted average number of common
shares outstanding. Diluted earnings per share are computed by
dividing net income by the weighted average number of common shares
outstanding during the year after giving effect for common stock
equivalents arising from stock options and preferred stock assumed
converted to common stock. The new standard is required to be
adopted by all public companies for reporting periods ending after
December 15, 1997. The Company adopted this standard and restated
EPS for all prior periods reported.
The following table presents the computations of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net income $3,865 $ 260 $1,788
Preferred stock dividends (129) (190) (179)
Net income applicable to
common stockholders $3,736 $ 70 $1,609
(in thousands)
Weighted-average common shares
outstanding 3,304 3,197 3,250
Effect of dilutive equivalents
Preferred shares 233 320 303
Employee stock options - 5 7
Total weighted-average
diluted shares 3,537 3,522 3,560
Basic earnings per share $ 1.13 $ .02 $ .50
Diluted earnings per share $ 1.09 $ .02 $ .50
</TABLE>
Preferred stock shares of 99,263 and 125,851 in 1996 and 1995,
respectively, which were unallocated and unreleased issued shares
held by the ESOP trust (see Note 13), were excluded in computing
diluted earnings per share amounts.
Note 13 - Employee Benefit Plans
Employee Stock Ownership Plan
The Company maintains a tax-qualified Employee Stock Ownership Plan
(ESOP) for all nonexcluded employees who meet the Company's
eligibility and participation requirements. The ESOP purchased
150,000 shares of the Company's preferred stock at a cost of $994,000
using the proceeds of a loan utilizing the preferred shares as
collateral. On September 11, 1997, the Company completed the
redemption of the preferred stock and the proceeds from the
redemption of 76,554 shares were used to retire the then outstanding
ESOP loan. Preferred shares of 73,339 allocated to participants were
converted to common shares at a conversion rate of 1.05 to 1. The
Company made annual contributions to the ESOP equal to the ESOP's
debt service, which totaled $69,000 prior to the loan being repaid on
September 11, 1997 and $137,000 and $171,000 for the years ended
December 31, 1996 and 1995, respectively. For each plan year during
the duration of the loan, the number of shares committed to be
released was based on a predetermined formula tied to the Company's
debt service paid during the year.
Prior to the redemption of preferred shares, the debt of the ESOP was
recorded as a liability and the shares pledged as collateral were
reported as unearned ESOP shares in the statement of financial
condition. As shares were committed to be released from collateral,
the Company reported compensation expense equal to the current market
price of the shares, and the shares became outstanding for earnings
per share computations upon actual release and allocation to active
employees.
Dividends on allocated ESOP shares were recorded as a reduction of
retained earnings. ESOP related compensation expense for fiscal 1997,
1996 and 1995 was $78,000, $148,000 and $210,000, respectively.
Stock Option Plan
The Company has a Stock Option Plan under which 200,000 shares of
common stock are reserved for issuance to officers and other key
employees of the Company and are exercisable beginning one year from
date of grant at various percentages expiring ten years from such
date. The Stock Option Plan is administered by a committee of the
Board of Directors.
Stock option activity under the current and all predecessor plans is
as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Shares under options outstanding
January 1 210,765 137,090 9,515
Stock options granted at
$7.20 - $7.38 per share - - 127,575
Stock options granted at
$4.00 - $7.00 per share - 103,500 -
Stock options granted
at $4.13 - $7.50 per share 98,000 - -
Options exercised at
$4.00 per share (21,500) - -
Forfeited or canceled options
at $7.00 - $7.20 per share (64,312) (29,825) -
Shares under options outstanding and
exercisable at $3.02 -
$7.50 per share at December 31 222,953 210,765 137,090
</TABLE>
The Company applies the provisions of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB No.
25) in accounting for its stock option plans. Accordingly, as the
plans provide fixed-cost stock options, under APB No. 25 no
compensation cost has been recognized for the years ended December
31, 1997, 1996 and 1995. On a pro-forma basis, if the fair value of
options granted had been charged to earnings, net income as recorded
would have been reduced by $45,000, $33,000 and $5,000 in 1997, 1996
and 1995, respectively. Basic and diluted earnings per common share,
respectively, as reported would have been reduced by $.01 in 1997 and
1996 and there would have been no change in 1995.
The fair value of each option grant was estimated on the date of the
grant using a binomial option-pricing model with the following
weighted average assumptions in 1997: quarterly dividends of $.01;
expected volatility of 10%; risk-free interest rate of 5.78%; and,
expected life of seven years.
Long-Term Stock Incentive Plan
On December 11, 1997, the Board of Directors adopted, subject to
stockholder approval at the Company's annual meeting, a Long-Term
Stock Incentive Plan under which stock options for up to 400,000
shares of common stock are reserved for issuance to directors,
officers and other key employees of the Company. This plan replaced
substantially similar plans under which no future grants will be
made. Options for 203,000 shares have been allocated to certain
directors, officers and employees at $6.875 per share. In addition,
similar to predecessor plans, these options are exercisable beginning
one year from the date of allocation at various percentages expiring
ten years from such date. The Plan will be administered by a
committee of the Board of Directors. In conjunction with the
BankAtlantic transaction, it is anticipated that no additional
options will be granted under this plan and that granted options will
be converted to a proportionate amount of BankAtlantic options.
Additionally, the Plan provides for the award of up to 100,000 shares
of restricted common stock for issuance to directors, officers and
other key employees of the Company. No restricted stock grants have
been made under this Plan, and, in accordance with the BankAtlantic
merger agreement, it is anticipated that no shares will be granted
under this portion of the Plan.
Restricted Stock Grant Plan
The Company's Restricted Stock Grant Plan provides for the award of
up to $2,000,000 of the Company's common stock to certain key
employees and directors pursuant to the Plan terms. Plan
participants are entitled to receive dividends and to vote their
respective shares. Upon issuance of restricted stock, unearned
compensation, equivalent to the market value of the shares awarded at
the time of the grant, is charged to stockholders' equity and is
amortized to expense over the periods until the restrictions lapse,
generally over three years. The Company derives a tax deduction
measured by the excess of the market value over the original cost of
the grants at the time of vesting. The related tax benefit is
credited to additional paid-in capital.
The Company awarded 43,439, 23,000 and 24,541 shares during the years
ended December 31, 1997, 1996 and 1995, respectively. Compensation
expense relating to this plan approximated $144,000, $344,000 (which
includes a one-time pre-tax charge of $102,000 as a result of
accelerated vesting upon the resignation of a former senior executive
and Board member) and $254,000 for the years ended December 31, 1997,
1996, and 1995, respectively.
Employee Restricted Stock Purchase Plan
Effective August 2, 1997, the Company implemented the Ryan, Beck &
Co., Inc. 1997 Employee Restricted Stock Purchase Plan (the
"Restricted Stock Purchase Plan"). Under the Restricted Stock
Purchase Plan, the Company matched 25% of all employee purchases.
Employees purchased 176,840 shares of Common Stock from the Company
and the Company received approximately $951,000 in cash proceeds from
such purchases. As part of the matching grant under the Restricted
Stock Purchase Plan, the Company also issued 44,198 shares of
restricted common stock. Such shares vest over a three year period.
Plan participants are entitled to receive dividends on and to vote
their restricted shares. The Company accrued approximately $237,000
in connection with the matching grant of shares under the Restricted
Stock Purchase Plan, which will be amortized over three years. The
Company derives a tax deduction measured by the excess of the market
value over the original cost of the grants at the time of vesting.
The related tax benefit is credited to additional paid-in capital.
Discretionary Incentive Bonus Program
The Company has a Discretionary Incentive Bonus Program which
provides for incentive compensation to salaried and hourly employees.
Compensation is based on the Company's pre-tax income and attaining
certain other performance goals. Beginning in December, 1997, if the
employee's bonus exceeded $7,500, then 15% of the entire bonus was
awarded in restricted shares of the Company's common stock. In
conjunction with this program, the Company issued 37,601 shares of
common stock.
Profit Sharing Plan/Savings Plan
The Company's qualified profit sharing plan includes a 401(k) savings
plan covering all eligible employees. The Company makes
contributions at its discretion within the allowable limits of the
Plan. The Company's discretionary profit sharing contributions were
$1,043,000, $929,000 and $629,000 for the years ended December 31,
1997, 1996 and 1995, respectively.
Postemployment Benefits
The Company records the costs of postemployment benefits paid before
retirement, principally severance benefits (including health care
coverage) provided under the terms of certain employment contracts
with key officers, over the service lives of such employees. These
contracts contain provisions that would entitle individual officers
to receive a minimum of $150,000 to a maximum of $780,000 plus
certain benefits (as applicable), depending on varying events such
as, death, disability, voluntary or involuntary termination, change
of control and liquidation.
Compensation expense charged to operations was $200,000, $1,270,000
and $47,000, for the years ended December 31, 1997, 1996 and 1995,
respectively. Included in the 1996 compensation expense are one-time
pre-tax charges of $1,225,000 resulting primarily from the
resignations of two former executives and board members. The largest
potential liability would be in the event of a change of control. In
conjunction with the BankAtlantic transaction, the change of control
provision of one of the contracts is anticipated to be triggered,
which will lead to a pre-tax charge to compensation expense of
$780,000 upon consummation of the transaction.
Note 14 - Commitments and Contingencies
Litigation
The Company is involved in various legal actions, some of which
involve claims for substantial amounts, arising in the normal course
of its operations. Although the ultimate outcome of these actions
cannot be ascertained at this time and the results of legal
proceedings cannot be predicted with certainty, it is the opinion of
management that the resolution of these matters will not have a
material adverse effect on the consolidated financial condition of
the Company, but may be material to the Company's operating results
for any particular period, depending upon the level of the Company's
income for such period.
Leases
The Company leases office space in various locations under
noncancellable operating leases. In 1996, the Company entered into a
new lease to relocate its headquarters in 1997. In connection
therewith, one-time pre-tax charges of $192,000 (included in
occupancy expense) and $200,000 (included in other expense),
respectively, were recorded for the write-off of property and
equipment and the incidental expenses related to abandonment and
relocation.
At December 31, 1997, the future minimum rental commitments were as
follows:
<TABLE>
<CAPTION>
Amount
Year (In Thousands)
<S> <C>
1998 $ 751
1999 690
2000 644
2001 631
2002 594
Thereafter 3,093
$ 6,403
</TABLE>
Certain leases contain renewal or purchase options, or escalation
clauses providing for increased rental payments based upon
maintenance, utility and tax increases. Total office rental expenses
charged to operations were approximately $886,000, $642,000 and
$587,000, for the years ended December 31, 1997, 1996, and 1995,
respectively.
Revolving Credit Facility
On June 11, 1997, the Company secured a commitment for a $2,000,000
revolving credit facility (from a bank) to finance the Company's
working capital needs. The facility is secured by the Company's
certificate of deposit inventory maintained with the clearing broker
in an amount which is at least 105% of the outstanding loan amount.
Loans under this facility accrue interest at a rate equal to the
LIBOR rate plus 100 basis points (30, 60 and 90 day interest periods
are available). At December 31, 1997, there were no borrowings under
this facility.
Note 15 - Financial Instruments
Off-Balance-Sheet Risk and Concentration of Credit Risk
The Company's customers' securities transactions are introduced on a
fully-disclosed basis to its clearing broker. The clearing broker
carries all of the accounts of the customers of the Company and is
responsible for execution, collection of and payment of funds and,
receipt and delivery of securities relative to customer transactions.
Customers' securities activities are transacted on a cash and margin
basis. These transactions may expose the Company to off-balance-sheet
risk, wherein the clearing broker may charge the Company for any
losses it incurs in the event that customers may be unable to fulfill
their contractual commitments and margin requirements are not
sufficient to fully cover losses. The Company seeks to minimize this
risk through procedures designed to monitor the creditworthiness of
its customers and that customer transactions are executed properly by
the clearing broker.
A significant portion of the Company's securities owned at market
value are state and municipal obligations issued by the State of New
Jersey or municipalities within that state. Substantially all of the
corporate equity securities owned are instruments issued by banking
and thrift institutions.
Fair Value
The financial instruments of the Company are reported in the
consolidated statement of financial condition at market or fair
value, or at carrying amounts that approximate fair value because of
the short maturity of the instruments.
Derivatives
Beginning in the third quarter of 1996, the Company began
implementing a hedging strategy in its fixed-income trading
activities as part of its overall interest rate risk management
strategy. The Company uses temporary positions in U.S. Treasury
futures as well as cash positions in U.S. Treasury securities sold,
but not yet purchased in an effort to manage its interest rate risk
and protect the profit margins associated with the trading of its
fixed-income securities owned. These contracts and short positions
expose the Company to off-balance-sheet risk of accounting loss in
the event that the changes in interest rates, and thus the value of
the futures contracts and short positions, do not closely correlate
with the changes in the value of the Company's fixed-income
securities owned. Gains and losses on the derivative futures
contracts used in trading activities are recognized currently in
principal transaction revenue. For 1997, the average for both the
asset and liability fair value approximated $3,000. For the four
months of 1996 in which the futures contracts were used, the average
asset and liability fair value of such instruments was $13,000 and
$37,000, respectively. At December 31, 1997 and 1996, the notional
value of open commitments under financial futures contracts was
$2,000,000 and $3,945,000 respectively, with a fair value liability
of $7,000 and a fair value asset of $34,000 respectively.
Note 16 - Subsequent Events
On February 9, 1998, the Company entered into an agreement to acquire
for stock and cash Cumberland Advisors, a New Jersey based money
manager with approximately $400 million under management. In the
transaction the Company also acquired Cumberland Consulting, a
financial advisor to state and local governmental units. The Company
paid approximately $1.3 million in cash and issued 167,742 shares of
common stock. The agreement also contains provision for contingent
payments and future earn out payments should certain performance
goals be met over the next three years.
On January 28, 1998, the Company made an investment of $1,861,000 in
8% Cumulative Convertible Preferred Stock of a New Jersey based
financial institution specializing in mortgage servicing. In
accordance with Rule 15c3-1, this investment is considered a non-
allowable asset and, as such, reduces net capital by the full amount
of the investment.
On January 2, 1998, the Company repaid the outstanding temporary
subordinated loan obligation of $7,000,000. On January 31, 1998, the
Company's regulatory net capital was approximately $7,363,000, which
exceeded minimum net capital rule requirements by $6,363,000.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company's Proxy Statement ("Proxy Statement"), to be filed
with the Securities and Exchange Commission in connection with
the Company's 1998 Annual Meeting of Shareholders, contains under
the caption "Proposal No. 2 -- Election of Directors" the
information required by Item 10 with respect to directors and
executive officers of Ryan, Beck and that information is
incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
The Proxy Statement contains under the caption "Executive
Compensation" the information required by Item 11 and that
information is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The Proxy Statement contains under the caption "Principal
Shareholders" the information required by Item 12 and that
information is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Proxy Statement contains under the caption "Certain
Relationship and Related Transactions" the information required
by Item 13 and that information is incorporated herein by
reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND
REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENTS
Page
All Consolidated Financial Statements
(a) Independent Auditors' Report F1
(b) Consolidated Statements of Financial Condition
at December 31, 1997 and 1996 F2
(c) Consolidated Statements of Income for the
years ended December 31, 1997, 1996 and 1995 F3
(d) Consolidated Statements of Changes in Stockholders'
Equity for the years ended December 31, 1997, 1996
and 1995 F4
(e) Consolidated Statements of Cash Flows for the
years ended December 31, 1997, 1996 and 1995 F5
(f) Notes to the Consolidated Financial Statements F6 - F19
All schedules have been omitted as the required information
is either inapplicable, immaterial or included in the Notes
to the Consolidated Financial Statements.
(b) REPORTS ON FORM 8-K
The Company's Report on Form 8-K filed with the Securities
and Exchange Commission on November 20, 1997 is incorporated
by reference herein.
The Company's Report on Form 8-K filed with the Securities
and Exchange Commission on February 17, 1998 is incorporated
by reference herein.
(c) EXHIBITS
3.1 Restated Certificate of Incorporation, as amended
(incorporated by reference to Exhibit 3.1 of the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994 (the "1994 Form 10-K")).
3.2 Bylaws, as amended and restated June 18, 1997.
10.1 1996 Stock Option Plan (incorporated by reference to
Exhibit 10.1 of the 1996 Form 10-K).
10.2 Employee Stock Ownership Plan dated May 15, 1994
(incorporated by reference to Exhibit 10.2 of the 1994
Form 10-K).
10.3 Ryan, Beck & Co., Inc. 1997 Restricted Stock Purchase
Plan (incorporated by reference to the Current Form S-8
filed with the SEC on August 12, 1997).
10.4 Employee Stock Ownership Plan Trust Agreement by and
between the Company and Matthew Naula as Trustee dated
May 15, 1994 (incorporated by reference to Exhibit 10.3
of the 1994 Form 10-K).
10.5 Lease with Ryan, Beck & Co. and Madison Plaza dated May
5, 1997 for 200 West Madison Street, Chicago, Illinois
60606.
10.6 Lease pertaining to the Company's Bala Cynwyd,
Pennsylvania offices effective as of April 12, 1994
(incorporated by reference to Exhibit 10.6 of the 1995
Form 10-K).
10.7 Lease pertaining to the Company's West Palm Beach,
Florida offices effective as of February 28, 1995
(incorporated by reference to Exhibit 10.7 of the 1995
Form 10-K).
10.8 Lease dated October 8, 1996 by and between Vincent J.
Russo Realty Company and Ryan, Beck & Co., Inc. for 746
Broad Street, Shrewsbury, New Jersey 07702
(incorporated by reference to Exhibit 10.8 of the 1996
Form 10-K).
10.9 Lease Agreement dated September 19, 1996 by and between
Ryan, Beck & Co., Inc. and Livingston Corporate Park
Associates, L.L.C. regarding 220 South Livingston
Avenue, Livingston, New Jersey 07039. Note: Address
in lease is incorrect, the correct address is 220 South
Orange Avenue (incorporated by reference to Exhibit
10.9 of the 1996 Form 10-K).
10.10 Employment Agreement, dated November 14, 1990, by
and between Jack R. Rosenthal and Ryan, Beck & Co.,
Inc. (incorporated by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1990).
10.11 Employment Agreement, dated April 7, 1997, by and
between Jay Suskind and Ryan, Beck & Co., Inc.
10.12 Amendment to the Amended and Restated Employment
Agreement, dated March 18, 1997 by and between Ben A.
Plotkin and Ryan, Beck & Co., Inc.
10.13 Employment Agreement dated September 25, 1996, by
and between Matthew R. Naula and Ryan, Beck & Co., Inc.
(incorporated by reference to Exhibit 10.13 of the 1996
Form 10-K).
10.14 Amended and Restated Employment Agreement dated June 3,
1997, by and between Fenwick H. Garvey and Ryan, Beck &
Co., Inc.
10.15 Membership Agreement with the National Association of
Securities Dealers, Inc.
("NASD") dated February 23, 1998.
10.16 Amended and Restated Employment Agreement, dated
December 14, 1995 by and between Ben A. Plotkin and
Ryan, Beck & Co., Inc. (incorporated by reference to
Exhibit 10.16 of the 1995 Form 10-K).
10.17 Amended and Restated Restricted Stock Grant Plan
dated July 16, 1993 (incorporated by reference to
Exhibit 10.12 of the 1994 Form 10-K).
10.18 Temporary Subordinated Loan Agreement dated November
13, 1997 between PNC Bank, National Association and
Ryan, Beck & Co., Inc. (incorporated by reference to
the Current Report on Form 8-K filed with the SEC on
November 20, 1997).
10.19 Acquisition Agreement, dated as of February 9, 1998,
between BankAtlantic Bancorp, Inc., BCP Acquisition
Corporation and Ryan, Beck & Co., Inc. (incorporated by
reference to the Current Report on Form 8-K filed with
the SEC on February 17, 1998).
10.20 Stock Option Agreement, dated as of February 9, 1998,
between BankAtlantic Bancorp, Inc. and Ryan, Beck &
Co., Inc. (incorporated by reference to the Current
Report on Form 8-K filed with the SEC on February 17,
1998)
10.21 Merger Agreement dated as of February 9, 1998, by
and among Ryan, Beck & Co., Inc., Cumberland Advisors,
Inc. and Cumberland Advisors. (incorporated by
reference to the Current Report on Form 8-K filed with
the SEC on February 17, 1998)
11. Computation of per share earnings may be clearly
determined from the consolidated financial statements
and notes thereto contained on pages F2 to F19 herein.
12. Statement re: computation of ratios.
21. Subsidiaries (incorporated by reference to Exhibit 21
of the 1994 Form 10-K).
23. Consent of Deloitte & Touche LLP.
27. Financial Data Schedule
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 by the undersigned,
thereunto duly authorized.
RYAN, BECK & CO., INC.
By: /s/ Richard B. Neff March 9, 1998
Richard B. Neff
Chairman of the Board
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 in the capacities indicated on the dates
indicated.
Signature Title Date
/s/ Richard B. Neff Chairman of the Board March 9, 1998
Richard B. Neff
/s/Ben A. Plotkin President, Chief March 9, 1998
Ben A. Plotkin Executive Officer
and Director
/s/Michael M. Horn Director March 9, 1998
Michael M. Horn
/s/Matthew R. Naula Vice Chairman, March 9, 1998
Matthew R. Naula Executive Vice President
and Director
/s/Peter W. Rodino, Jr. Director March 9, 1998
Peter W. Rodino, Jr.
/s/Jack R. Rosenthal Vice Chairman March 9, 1998
Jack R. Rosenthal Director
/s/Robert Pangia Director March 9, 1998
Robert Pangia
/s/Benjamin Perlmutter Director March 9, 1998
Benjamin Perlmutter
/s/Leonard J. Stanley Senior Vice President, March 9, 1998
Chief Financial and
Leonard J. Stanley Financial and Officer,
Director (Principal Financial
and Accounting Officer)
/s/Jay Suskind Senior Vice President March 9, 1998
Jay Suskind Director
EXHIBIT 3.2
AMENDED AND RESTATED
BY-LAWS
OF
RYAN, BECK & CO., INC.
As amended and restated June 18, 1997
ARTICLE I
OFFICES
1. Registered Office. -- The registered office of the
Corporation shall be at such location within the State of New
Jersey as shall be designated from time to time by the Board of
Directors.
2. Principal Place and Other Places of Business. -- The
principal place of business of the Corporation shall be at such
locations as shall be determined by the Board of Directors. Branch
or subordinate places of business or offices may be established at
any time by the Board at any place or places where the Corporation
is qualified to do business.
ARTICLE II
SHAREHOLDERS
1. Annual Meeting. -- The annual meeting of shareholders
shall be held upon not less than ten nor more than sixty days
written notice of the time, place, and purposes of the meeting at
such time and place as shall be fixed by the board of directors and
designated in the notice of meeting. At such annual meeting, the
shareholders shall elect directors and transact such other business
as may be brought before the meeting.
2. Special Meetings. -- Except as otherwise provided by
applicable law, a special meeting of shareholders may be called for
any purpose only by the Chairman of the Board, the Vice Chairman,
the President or the Board. A special meeting shall be held upon
not less than ten nor more than sixty days written notice of the
time, place, and purposes of the meeting.
3. Action Without Meeting. -- The shareholders may act
without a meeting by written consent or consents pursuant to N.J.S.
14A:5-6. The written consent or consents shall be filed in the
minute book.
4. Quorum. -- Except as otherwise provided in the certificate
of incorporation, the presence in person or by proxy of the holders of
a majority of any class or series voting separately at a meeting and a
majority of any two or more classes voting together as a class at such
meeting shall constitute a quorum for the transaction of business; if
any matter to come before the meeting requires a vote of less than all
the outstanding classes, then the presence in person or by proxy of
the holders of a majority of the class or classes or series having the
right to vote on such matter or matters shall constitute a quorum for
the transaction of such business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do
business until adjournment notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
ARTICLE III
BOARD OF DIRECTORS
1. Number and Term of Office. -- The Board shall consist of
not less than 5 nor more than 15 directors. The precise number of
directors may be fixed by the Board of Directors at any time. The
Board shall be divided into three classes (Class 1, Class 2 and Class
3), the respective terms of office of which shall end in successive
years. Unless they are elected to fill vacancies, the directors in
each class shall be elected to hold office until the third successive
annual meeting of shareholders after their election and until their
successors shall have been elected and shall have qualified. At each
annual meeting of shareholders, the directors of only one class shall
be elected, except directors who may be elected to fill vacancies.
2. Regular Meetings. -- A regular meeting of the Board shall
be held immediately following the annual shareholders' meeting for the
purposes of electing officers and conducting such other business as
may come before the meeting. The Board, by resolution, may provide
for additional regular meetings which may be held upon twenty-four
hours' prior notice (which notice may be written or oral). Such
notice shall specify the time and place of the meeting.
3. Special Meetings. -- A special meeting of the Board may be
called at any time by the Chairman of the Board, the Vice Chairman of
the Board, the President or by three directors for any purpose. Such
meeting shall be held upon twenty-four hours' prior notice (which
notice may be written or oral). Such notice shall specify the time
and place of the meeting.
4. Action Without Meeting. -- The Board may act without a
meeting if, prior or subsequent to such action, each member of the
Board shall consent in writing to such action. Such written consent
or consents shall be filed in the minute book.
5. Quorum. -- A majority of the entire Board shall constitute
a quorum for the transaction of business. All persons participating in
any meeting telephonically or through other appropriate communications
facilities shall be deemed present for purposes of determining whether
a quorum is present for the transaction of business.
6. Vacancies in Board of Directors.. -- Any vacancy in the
Board, including a vacancy caused by an increase in the number of
directors, may be filled by the affirmative vote of a majority of the
remaining directors, even though less than a quorum of the board, or
by a sole remaining director. As to any directorship to be filled by
reason of an increase in the number of directors, the Board of
Directors shall specify the class in which a director so elected shall
serve. Any director so elected by the Board of Directors shall hold
office only until the next annual meeting of the shareholders and
until his successor shall have been elected and qualified,
notwithstanding that the term of office of the other directors in the
class of which he is a member does not expire at the time of such
meeting. His successor shall be elected by the shareholders to a term
of office which shall expire at the same time as the term of office of
the other directors in the class to which he is elected.
7. Establishment of Committees. -- At any meeting of the Board
of Directors, an executive committee or such other committees as the
Board may deem necessary, consisting of one or more directors, may be
appointed by the Board, and such committees shall possess and exercise
such powers and authority as the directors shall specify in the
resolution appointing them. The Board shall have the power, with
respect to established committees, to
(a) fill any vacancy in any such committee;
(b) appoint one or more directors to serve as alternate
members of such committee to act in the absence or
disability of members of any such committee with all
the powers of such absent or disabled members;
(c) abolish any such committee at its pleasure, and
(d) remove any director from membership on such committee
at any time, with or without cause.
In no event shall any committee established by the Board of
Directors have the power to
(b) make, alter or repeal any by-law of the Corporation;
(c) elect or appoint any director, or remove any officer
or director;
(d) submit to shareholders any action that requires
shareholders' approval; or
(e) amend or repeal any resolution theretofore adopted by
the Board of Directors which by its terms is amendable
or repealable only by the Board of Directors.
8. Presiding Officer and Secretary of Committees. -- The Board
shall choose the chairman of each committee. The person chosen to act
as chairman may, at his option, appoint another member of the
committee to act as chairman. The Chairman and President shall serve
as chairman of each committee on which each of them serves in the
absence of any other person chosen as the chairman of such committee.
If the Chairman and the President serve on the same committee, the
Chairman shall serve as the chairman of such committee unless another
member of such committee is appointed to act as chairman. Each other
committee on which the Chairman or the President does not serve may,
subject to the Board's right to make such selection, choose one of its
members to act as chairman. Each committee shall from time to time
designate a secretary of the Committee, who shall either be a member
of the committee or the secretary or an assistant secretary of the
Corporation, to keep a record of its proceedings.
9. Meetings of Committees. -- Each committee shall adopt its
own rules of procedure and shall meet at such stated times as it may,
by resolution, appoint, and whenever called together by the Chairman
of each such committee. If the committee establishes regular meeting
dates, it shall not be necessary to give notice of any such regular
meeting. Notice of every special meeting shall be given in the manner
and within the time periods specified in Section 3 of this Article III
with respect to notices of special meetings of the Board of Directors.
Notice of any special meeting may be waived in writing by all of the
absent members of the committee either before or after the meeting.
10. Quorum for Committee Meeting. -- A quorum at any meeting of
any committee shall be a majority of the entire committee. Every act
or decision done or made by a majority of the directors present at a
committee meeting duly held at which a quorum is present shall be
regarded as the act of the committee. All persons participating in any
meeting telephonically or through other appropriate communications
facilities shall be deemed present for purposes of determining whether
a quorum is present for the transaction of business.
11. Action Without Committee Meeting. -- Any committee may act
without a meeting if, prior or subsequent to such action, each member
of the committee shall consent in writing to such action. Such
written consent or consents shall be filed in the minute book of the
Corporation.
12. Reports of Committee Actions. -- Actions taken by any
committee, whether at a committee meeting or by written consent, shall
be reported to the Board at the next Board meeting following such
action.
ARTICLE IV
NOMINATIONS AND PROPOSALS
Nominations for the election of directors ("Nominations") or
proposals for consideration by shareholders ("Proposals") may be made
by the Board of Directors or by any shareholder entitled to vote for
the election of directors. Such Nominations or Proposals, other than
those made by the Board of Directors, shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the secretary of the Corporation not less than 120
days prior to the first anniversary of the date of the notice of
meeting sent to shareholders of the Corporation in connection with the
last meeting of shareholders called for the election of directors.
Such notice shall contain the (i) name and address of the
shareholder who intends to make the Nomination or the Proposal, and
(ii) a representation that the shareholder is a beneficial or record
holder of stock entitled to vote at the meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons
specified in the notice, or to present such proposal.
With respect to any Nomination, each notice shall also set forth
(i) the name, age, business address and, if known, residence address
of each nominee proposed in such notice, (ii) the principal occupation
or employment of each such nominee, (iii) the number of shares of
stock of the Corporation which are beneficially owned by each such
nominee, and (iv) such other information as would be required by the
federal securities laws and the rules and regulations promulgated
thereunder in respect of an individual nominated as a director of the
Corporation and for whom proxies are solicited by the Board of
Directors of the Corporation. Each such notice shall be accompanied
by a letter to the Corporation, signed by each such nominee,
consenting to be named as a nominee in the Corporation's proxy
statement and to serve as a director if elected.
The form and content of any Proposals must conform in all
respects with the requirements of Rule 14a-8 of the Securities and
Exchange Act of 1934, as amended, or any successor rule thereto.
The Chairman of any meeting of shareholders may, if the facts
warrant, determine and declare to the meeting that a Nomination or
Proposal was not made in accordance with the foregoing procedures, and
if he should so determine, he shall so declare to the meeting and the
defective Nomination or Proposal shall be disregarded.
ARTICLE V
WAIVERS OF NOTICE
Any notice required by these by-laws, by the certificate of
incorporation or by the New Jersey Business Corporation Act may be
waived in writing by any person entitled to notice. The waiver or
waivers may be executed either before or after the event with respect
to which notice is waived. Each director or shareholder attending a
meeting without protesting, prior to its conclusion, the lack of
proper notice shall be deemed conclusively to have waived notice of
the meeting.
ARTICLE VI
OFFICERS
1. Election. -- At its regular meeting following the annual
meeting of shareholders, the Board shall elect a President, a
Treasurer, a Secretary, and may elect such other officers, including a
Chairman of the Board, a Vice Chairman of the Board, a Chief Executive
Officer, a Chief Administrative Officer, a Chief Operating Officer and
one or more Vice Presidents, as it shall deem necessary. The Board
may, from time to time, designate a committee or committees who shall
have such powers and duties as are delegated to it by the Board of
Directors. Any number of offices may be held by the same person.
Officers may, but need not, be directors.
2. Duties and Authority of the Chairman of the Board. -- The
Chairman of the Board shall preside at all meetings of the Board of
Directors. The Chairman of the Board shall have such other powers and
perform such further duties as may be delegated, from time to time, to
such officer by the Board of Directors. The Chairman of the Board
shall not be deemed to be an officer of the corporation for serving
solely in such capacity unless so designated by resolution duly
adopted by the Board of Directors.
3. Duties and Authority of Vice Chairman of the Board. -- The
Vice Chairman of the Board shall, in the absence of the Chairman of
the Board, preside at all meetings of the Board of Directors. The
Board may have one or more persons designated as Vice Chairman. The
Vice Chairman of the Board shall have such other powers and perform
such further duties as may be delegated, from time to time, to such
person by the Board of Directors. If there is more than one person
serving as Vice Chairman, the Board of Directors or the Chairman shall
assign the specific duties to be performed by each person serving as
Vice Chairman. The Vice Chairman of the Board shall not be deemed to
be an officer of the corporation for serving solely in such capacity
unless so designated by resolution duly adopted by the Board of
Directors.
4. Duties and Authority of the President. -- The President
shall have the usual duties and powers of such an executive officer
and, in such capacity, shall serve as the chief executive officer of
the corporation and shall be charged with general supervision over and
direction of the day-to-day affairs of the corporation. The President
shall have such additional powers and duties as from time to time may
be assigned to him by the Board of Directors and may enter into and
execute, in the name of and on behalf of the Corporation, contracts or
other instruments in the regular course of business or such other
contracts or instruments, not in the regular course of business, which
are authorized, either generally or specifically, by the Board. In
the absence of the Chairman of the Board, or the Vice Chairman of the
Board, or if no Chairman or Vice Chairman is elected by the Board, the
President shall preside at all meetings of the stockholders.
5. Duties and Authority of the Vice-Presidents. -- A Vice
President shall perform such duties and have such authority as from
time to time may be delegated to him by the President or by the Board.
In the absence of the President or in the event of his death,
inability, or refusal to act, an Executive Vice President designated
from time to time by the Board of Directors shall perform the duties
and be vested the authority of the President.
6. Duties and Authority of the Treasurer. -- The Treasurer
shall have custody of the funds and securities of the corporation and
shall keep or cause to be kept books of account for the corporation.
Whenever required by the Board of Directors, the Treasurer shall
render a statement of the financial condition of the corporation. The
Treasurer shall have such other powers and shall perform such other
duties as may be assigned to him from time to time by the Board of
Directors.
7. Duties and Authority of the Secretary. -- The Secretary
shall record all proceedings of the meetings of the corporation, the
Board of Directors and all committees, and shall attend to the giving
and serving of all notices for the corporation. The Secretary shall
have charge of the corporate seal, the certificate books, transfer
books and stock ledgers, and such other books and papers as the Board
of Directors may direct. The Secretary shall perform all other duties
ordinarily incident to the office of Secretary and shall have such
other powers and perform such other duties as may be assigned to him
by the Board of Directors.
8. Assistant Secretaries. -- Assistant Secretaries shall
perform all of the duties and responsibilities of the Secretary on
such occasions on which the Secretary shall be unavailable to perform
the duties of the office, and shall perform all other duties and
exercise all other powers as shall be assigned to them by the Board of
Directors or by the President with the approval of the Board of
Directors.
9. Assistant Treasurers. -- Assistant Treasurers shall perform
all of the duties and responsibilities of the Treasurer on such
occasions on which the Treasurer shall be unavailable to perform the
duties of the office, and shall perform all other duties and exercise
all other powers as shall be assigned to them by the Board of
Directors or by the President with the approval of the Board of
Directors.
ARTICLE VII
AMENDMENTS TO AND EFFECT OF BY-LAWS
FISCAL YEAR
1. Force and Effect of By-Laws. -- These by-laws are subject
to the provisions of the New Jersey Business Corporation Act and the
Corporation's certificate of incorporation, as it may be amended from
time to time. If any provision in these by-laws is inconsistent with
a provision in that Act or the certificate of incorporation, the
provision of that Act or the certificate of incorporation shall
govern.
2. Amendments to By-laws. -- These by-laws may be amended by
the affirmative vote of a majority of the Board of Directors. The by-
laws of the Corporation may also be amended by the shareholders, but
only by an affirmative vote of the holders of at least two-thirds of
the shares entitled to vote thereon.
3. Fiscal Year. -- The fiscal year of the Corporation shall
begin on the first day of January of each year.
ARTICLE VIII
SHARE CERTIFICATES
1. Form of Signature. -- The certificates for shares of the
capital stock of the Corporation shall be in such form as shall be
determined by the Board of Directors and shall be numbered
consecutively and entered in the books of the Corporation as they are
issued. Each certificate shall exhibit the registered holder's name
and the number of shares, and shall be signed by the president or a
vice president and the treasurer or an assistant treasurer or the
secretary or an assistant secretary, and shall bear the seal of the
Corporation or a facsimile thereof. Where any such certificate is
countersigned by a transfer agent, or registered by a registrar, the
signature of any corporate officer may be a facsimile signature. In
case any officer who signed, or whose facsimile signature or
signatures were placed on, any such certificate shall have ceased to
be such officer before such certificate is delivered by the
Corporation, it may nevertheless be issued and delivered by the
Corporation with the same effect as if such person had not ceased to
be such officer of the Corporation.
2. Lost Certificates. -- The Board of Directors may direct a
new share certificate or certificates to be issued in place of any
certificate or certificates previously issued by the Corporation and
alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be
lost or destroyed. When authorizing such issue of a new certificate
or certificates, the Board of Directors may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of
such lost or destroyed certificate or certificates, or his legal
representative, to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost
or destroyed.
3. Registration of Transfer. -- The stock of the Corporation
shall be assignable and transferable on the books of the Corporation
only by the person in whose name it appears on said books or his legal
representative. Upon surrender to the Corporation or any transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority
to transfer, it shall be the duty of the Corporation or such transfer
agent to issue a new certificate to the person entitled thereto, to
cancel the old certificate and record the transaction upon its books.
Except as provided herein or by the laws of the State of New Jersey,
the Corporation shall be entitled to recognize the exclusive rights of
a person registered on its books as the owner of shares to receive
dividends and to vote as such owner.
ARTICLE IX
LOANS TO OFFICERS OR EMPLOYEES
The Corporation may lend money to, or guarantee any obligation
of, or otherwise assist, any. officer or other employee of the
Corporation or of any subsidiary, including any employee who is also a
director of the Corporation, whenever, in the judgment of the Board of
Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the Corporation.
EXHIBIT 10.5
MADISON PLAZA LEASE WITH RYAN, BECK & CO. INC., A NEW JERSEY
CORPORATION
MADISON PLAZA
200 WEST MADISON STREET
CHICAGO, IL 60606
TABLE OF CONTENTS
FOR
LEASE FOR MADISON PLAZA
PAGE
1. Lease of Premises ............ 1
2. Term 1
3. Rent 1
4. Rent Adjustment 2
5. Security Deposit 5
6. Use 6
7. Landlord's Services and Obligations 7
8. Repairs and Alterations by Tenant 9
9. Rights Reserved to Landlord 10
10. Telephone, Electric and Other Services 12
11. Landlord's Title 13
12. Quiet Enjoyment 13
13. Waiver of Certain Claims 13
14. Condition of Premises 14
15. Lease Termination 14
16. Assignment and Subletting 15
17. Untenantability 17
18. Rights and Remedies of Landlord 18
19. Eminent Domain 20
20. Subordination or Superiority of this Lease 21
21. Sprinklers 21
22. Prior Occupancy and Holding Over by Tenant 21
23. Notice 22
24. Successors and Assigns 22
25. Insurance 22
26. Miscellaneous 24
27. Cancellation Options 25
28. Exoneration Clause 25
EXHIBIT A (Plan of Premises) A-1
EXHIBIT B (Building Rules and Regulations) B-1
LEASE FOR MADISON PLAZA
THIS LEASE is made and entered into at Chicago, Illinois as of the
5th day of May, 1997, by and between COLE TAYLOR BANK, not
individually, but solely and only as Trustee under a certain Trust
Agreement dated the 10th day of September, 1980 and known as Trust
Number 40649 (the "Landlord") and RYAN, BECK & CO., a New Jersey
corporation (the "Tenant"), as follows:
1. Lease of Premises. The Landlord hereby leases to the Tenant and
the Tenant hereby accepts the lease of the premises consisting of
that certain office space shown outlined in red or a heavy line on
the plan attached hereto as Exhibit A and incorporated herein by
reference (the "Premises") situated on the thirty-sixth (36th) floor
of the office building (the "Building") located on the real estate
commonly known as 200 West Madison Street, Chicago, Illinois, and
more particularly described as follows:
The East one half of Lot 6 and all of Lots 7 and 8 (all taken as a
tract), excepting from said tract that part thereof taken for
widening of Madison Street, in Block 54 in original Town of Chicago,
in Section 9, Township 39 North, Range 14 East of the Third
Principal Meridian, in Cook County, Illinois,
(the "Real Estate"). The Building and the Real Estate are
hereinafter sometimes collectively referred to as the "Property").
It is mutually agreed that the Premises contain 1,233 rentable
square feet.
2. Term. The lease of the Premises is for a term of three (3) years
and one-half (1/2) month commencing on the 16th day of May, 1997,
and ending on the 31st day of May, 2000 (the "Term"), unless sooner
terminated as hereinafter provided.
3. Rent. Tenant shall pay to Landlord's rental agent (the "Rental
Agent") at the Office of the Building, or to such other persons or
at such other places as the Landlord may direct from time to time by
written notice to the Tenant, in coin or currency which at the time
of payment is legal tender for the payment of public and private
debts in the United States of America, the aggregate of the
following, all of which are hereby declared to be "Rent":
A. "Annual Base Rent - Monthly Base Rent". Annual base rent (the
"Annual Base Rent") in the amounts set forth below, payable in
advance in equal monthly installments in the amounts set forth below
(the "Monthly Base Rent") promptly on the first day of each and
every calendar month during the Term of this Lease:
Annual Monthly
Period Base Rent Base Rent
May 16, 1997 - May 15, 1998 $30,825.00 $2,568.75
May 16, 1998 - May 15, 1999 31,441.56 2,620.13
May 16, 1999 - May 31, 2000 32,058.00 2,671.50
B. "Rent Adjustment". The "Rent Adjustment" (hereinafter defined);
C. Other Sums. All other and further sums or amounts payable or to
become payable by the Tenant to the Landlord pursuant to the terms
and provisions of this Lease; and
D. Interest. Interest at the "Default Rate" from the due date of
each payment of Rent until paid. The term "Default Rate" means a
rate of interest equal to the sum of two percent (2%) plus the
"Prime Rate". The phrase "Prime Rate" means that rate of interest
per annum announced by First Chicago NBD Bank ("First Chicago") from
time to time as First National's corporate base or prime rate,
changing automatically and simultaneously with each change in the
Prime Rate made by First Chicago from time to time. Any publication
issued or published by First Chicago from time to time stating its
Prime Rate as of a specific date or dates shall be conclusive
evidence of the Prime Rate on that date or dates.
In the event the Term of this Lease commences on a day other than
the first (1st) day of a calendar month or ends on a day other than
the last day of a calendar month, the Rent for such month shall be
prorated. Tenant's covenant to pay Rent is independent of every
other covenant set forth in this Lease and Rent will be paid without
any setoff, deduction or abatement whatsoever, except for such
abatement as is provided for in Section 17 below.
4. Rent Adjustment.
A. Definitions. For the purpose of this Section 4, the following
terms, words or phrases shall have the meanings described in this
subsection 4.A.:
(i) "Base Year" means the calendar year 1997.
(ii) "Calculation Year" means the calendar year for which a "Rent
Adjustment" computation is being made.
(iii) "Expenses" means all costs, expenses and disbursements of
every kind, nature or description, paid or incurred by the Landlord
or its beneficiaries relating to the ownership, management,
operation, maintenance and repair of the Property and of the
personal property, fixtures, machinery, equipment, systems and
apparatus located therein or used in connection therewith,
including, but not limited to: the costs of electricity, steam,
water, fuel, heating, lighting, air conditioning, window cleaning,
janitorial services, insurance (including, but not limited to, fire,
extended coverage, liability, workmen's compensation, elevator or
any other insurance carried in good faith by the Landlord and
applicable to the Property or the said personal property); painting;
uniforms; customary management fees; supplies; sundries; sale or
.use taxes on supplies or services; costs of wages and salaries of
all persons engaged in the operation, maintenance and repair of the
Property and so-called "fringe benefits" (including, but not limited
to, social security taxes, unemployment insurance taxes, costs for
providing coverage for disability benefits, costs for any pensions,
hospitalization, welfare or retirement plans, vacation or severance
pay, or any other similar or like expense incurred under the
provisions of any collective bargaining agreement, or any costs or
expenses which the Landlord, or its beneficiaries, pays or incurs to
provide benefits for employees so engaged in the operation,
maintenance and repair of the Property); the charges of any
independent contractor who, under a contract with the Landlord, or
its representatives, does any of the work of operating, maintaining
or repairing of the Property; legal and accounting expenses; or any
other expense or charge, similar or dissimilar, whether or not
heretofore mentioned, which in accordance with generally accepted
management principles, would be considered as an expense of
maintaining, operating or repairing the Property or the said
personal property. Notwithstanding the foregoing, Expenses shall not
include costs and expenses incurred in connection with leasing space
in the Building, such as real estate brokers' leasing commissions
and tenant improvement costs.
If the Property is not fully occupied during all or any portion of
the Calculation Year, Landlord may elect to make an appropriate
adjustment of the "Expenses" for such year employing sound
management principles, to determine the amount of "Expenses" that
would have been paid or incurred by the Landlord had the Property
been fully occupied and the amount so determined shall be deemed to
have been the amount of "Expenses" for such Calculation Year. If any
Expenses, though paid in one year relates to more than one calendar
year, at the option of the Landlord, such expense may be allocated
among such related calendar years. If any Expense relates to more
than one parcel of property, at the option of the Landlord, such
expense may be allocated among all parcels of property to which it
relates. If Landlord is not furnishing any particular work or
service (the cost of which if performed by Landlord would constitute
an Expense) to a tenant who has undertaken to perform such work or
service in lieu of the performance thereof by Landlord, Expenses
shall be determined to be increased by an amount equal to the
additional Expense which reasonably would have been incurred during
such period by Landlord if it had at its own expense furnished such
work or service to such tenant.
(iv) "Taxes" means real estate taxes, assessments, sewer rents,
rates and charges; transit taxes, taxes based upon the receipt of
rent and any other federal, state or local governmental charge,
general, special, ordinary or extraordinary (but not including
income or franchise taxes or any other taxes imposed upon or
measured by Landlord's income or profits, unless the same shall be
imposed as a substitution or replacement in whole or in part for any
taxes which now or hereafter would constitute Taxes), which may now
or hereafter be levied or assessed against the Building or Real
Estate, or both. In the case of special taxes or assessments which
may be payable in installments, only the amount of each installment
(principal and interest) paid during a calendar year shall be
included in Taxes for that year. Taxes shall also include any
personal property taxes (attributable to the year in which paid)
imposed upon the furniture, fixtures, machinery, equipment,
apparatus, systems arid appurtenances used in connection with the
Property or the operation thereof. The amount of Taxes attributable
to any calendar year of the Lease term shall be the amount of Taxes
payable in such year, notwithstanding that in each case the
assessments for such Taxes may have been made for a different year
or years than the calendar year in which payable. Taxes also include
the Landlord's reasonable costs and expenses (including reasonable
attorneys' fees) in contesting or attempting to reduce any Taxes.
Taxes shall be reduced by any recovery or refund received of Taxes
previously paid by the Landlord, provided such refund relates to
taxes paid during the term of this Lease.
(v) "Rent Adjustment" means any amount owed by Tenant with respect
to Expenses or Taxes.
(vi) "Rent Adjustment Deposit" means that sum estimated from time to
time by the Landlord prior to the expiration of any calendar year
representing the anticipated Rent Adjustment to be owed by the
Tenant for that calendar year; provided, however, that the sum so
estimated shall in no event be less than the Rent Adjustment charged
for the calendar year next preceding increased by the Landlord's
reasonable estimates as to increases in Expenses and Taxes for the
calendar year for which the Rent Adjustment Deposit is estimated.
(vii) "Tenant's Proportionate Share" means 0. 1347 %.
B. Rent Adjustment. In addition to the Annual Base Rent and the
Monthly Base Rent, the Tenant agrees to pay to the Rental Agent the
"Rent Adjustment", being the aggregate of all of the following:
(i) The amount equal to Tenant's Proportionate Share of the amount,
if any, by which the Expenses for any Calculation Year exceed the
Expenses for the Base Year; and
(ii) The amount equal to Tenant's Proportionate Share of the
amount, if any, by which the Taxes for any Calculation Year exceed
the Taxes for the Base Year.
C. Rent Adjustment Deposit. Tenant shall pay to the Rental Agent
1/12th of the Rent Adjustment Deposit on the first day of each month
during the term of this Lease commencing January 1, 1998. The Rent
Adjustment Deposit shall be deposited against the Rent Adjustment
due or to become due for the calendar year during which such
deposits are required to be made. All Rent Adjustment Deposits may
be commingled and need not be segregated by the Landlord, and may be
held and utilized by the Landlord without payment to the Tenant of
interest or any sums for the use of the Rent Adjustment Deposit.
During the last complete calendar year or during any partial
calendar year during which this Lease terminates, Landlord may
include in the Rent Adjustment Deposit its estimate of Rent
Adjustment which may not be finally determined until after the
expiration or termination of this Lease. The Tenant's obligation to
pay the Rent Adjustment shall survive the expiration or termination
of this Lease.
D. Landlord's Statement. As soon as reasonably feasible after the
expiration of each calendar year of this Lease, the Landlord shall
cause to be furnished to the Tenant a statement showing the
following:
(i) Expenses and Taxes for the Calculation Year and the Base Year;
(ii) The amount of Rent Adjustment due Landlord for the Calculation
Year, less credit for Rent Adjustment Deposits both paid in and
allocable to the said Calculation Year, if any; and
(iii) The Rent Adjustment Deposit due for the calendar year next
following the Calculation Year for which the statement is given,
including the amount or revised amount for the months prior to the
rendition of the statement.
Within ten days after the receipt of such statement, the Tenant
shall pay to the Rental Agent the amount of Rent Adjustment due to
the Landlord for the Calculation Year, as reflected in said
statement and the amount of the Rent Adjustment Deposit due for the
months between the expiration of the Calculation Year described in
the statement to and including the month in which the statement is
furnished. If such statement shall reflect an amount due from the
Landlord to the Tenant, then Landlord shall first apply such amount
against the next due Rent Adjustment Deposit (to the extent
available) and, if not exhausted, then to the next ensuing Monthly
Base Rent, and if there is any remaining balance, and Tenant is not
in default hereunder, said remaining balance shall be paid to the
Tenant.
E. Allocation. If the Lease term commences on any day other than the
first day of January, or if the Lease term ends on any day other
than the last day of December, any Rent Adjustment payment due
Landlord shall be prorated, and the Tenant shall pay such amount
within ten (10) days after being billed. The Tenant's obligation to
pay the Rent Adjustment, as prorated, shall survive the expiration
or termination of this Lease.
F. Books and Records. Tenant, or its representative, shall have the
right to examine Landlord's books and records with respect to the
items in the statement of Expenses and Taxes during normal business
hours at any time within twenty (20) days following the furnishing
of the statement to Tenant. Unless Tenant takes written exception to
any item within thirty (30) days after the furnishing of the
statement (which shall be noted on the item as "paid under
protest"), such statement shall be considered as final and accepted
by Tenant.
5. Security Deposit As additional security for the faithful and
prompt performance of its obligation hereunder, Tenant has,
concurrently with the execution of this Lease, paid to the Rental
Agent the sum of Five Thousand One Hundred Thirty-Seven and
50/100ths Dollars ($5,137.50). Said security deposit need not be
segregated and may be applied by Landlord for the purpose of curing
any default or defaults of Tenant hereunder, in which event Tenant
shall replenish said deposit in full by promptly paying to Landlord
on demand the amount so applied. Landlord shall not pay any interest
on said deposit, except as may be required by law. If Tenant is not
then in default and Landlord has not applied said deposit to cure a
default, or if Landlord has applied said deposit to cure a default,
then said deposit, or such remaining portion thereof, shall be
returned to Tenant. Said deposit shall not be deemed an advance
payment of Rent or measure of Landlord's damages for any default
hereunder by Tenant.
6. Use. Tenant shall occupy and use the Premises for general office
purposes only. Tenant shall not occupy or use the Premises or permit
the Premises to be occupied or used for any purpose, act or thing
which is in violation of any public law, ordinance, or governmental
regulation, or which may be dangerous to persons or property, or
which may invalidate or be in conflict with fire or other insurance
policies covering the building or its operation or the Premises, or
part of either, or increase the amount of premiums for any policy of
insurance carried on the Building or covering its operation,
provided, however, that if any additional amounts of insurance
premiums are caused by Tenant's occupancy or use of the Premises,
Tenant shall pay to Landlord said additional amounts upon demand.
Tenant, at its sole expense, shall comply with all rules,
regulations and requirements of the Illinois Inspection and Rating
Bureau, the Chicago Fire Department, the Fire Insurance Rating
Organization and any other similar authority or organization having
jurisdiction over the Building and shall not bring upon the Premises
or keep thereon any inflammable oils, fluids or other materials, or
any explosive or other articles deemed hazardous to person or
property. Tenant shall not do or permit anything to be done upon the
Premises which in any way may create a nuisance, disturb any other
tenant of the Building or the occupants of neighboring property or
injure the reputation of the Building. Tenant shall not use the
Premises for housing accommodations, for lodging or sleeping
purposes or for any immoral or illegal purposes. Tenant shall not
advertise the business, profession or activities of Tenant in any
manner which violates the letter or spirit of any code of ethics
adopted by any recognized association or organization pertaining to
such business or profession, use the name of the Building for any
purpose other than that of the business address of Tenant, or use
any picture or likeness of the Building or "Madison Plaza" or any
other name by which the Building may from time to time be known, on
any letterhead, envelope, circular, notice, advertisement, container
or wrapping material, without the prior written consent of Landlord.
Tenant shall not exhibit, sell or offer for sale, rent or exchange
in the Premises or in the Building any article, thing or service
except those ordinarily embraced within the use of the Premises
specified in this Section 6, without the prior written consent of
Landlord. Tenant shall not install or operate any refrigerating,
heating or air conditioning apparatus or use the Premises for
housing, lodging or sleeping purposes; permit preparation or warming
of food in the Premises (warming of coffee and individual lunches of
employees excepted), or permit food to be brought into the Premises
for consumption therein without the prior written consent of
Landlord; or manufacture, sell or purchase, use, give or dispense
any spirituous, fermented, intoxicating or alcoholic beverages in or
from the Premises. Landlord may, in its sole discretion, refuse such
permission or impose any conditions in granting it, and revoke it at
will. Tenant covenants and agrees that at all times its use of
electrical energy shall never exceed the capacity of existing
feeders to the Building or of the risers or wiring installation
conducting electricity to the Premises.
Tenant agrees that it will not use, handle, generate, treat, store
or dispose of, or permit the handling, generation, treatment,
storage or disposal of any Hazardous Materials in, on, under, around
or above the Premises now or at any future time and will indemnify,
defend and save Landlord harmless from any and all actions,
proceedings, claims, costs, expenses and losses of any kind,
including, but not limited to, those arising from injury to any
person, including death, damage to or loss of use or value of real
or personal property, and costs of investigation and cleanup of
Hazardous Materials which were placed, or permitted to be placed, on
the Premises during the Term hereof by Tenant or any of its
employees, contractors, agents, servants or invitees. The term
"Hazardous Materials", when used herein, shall include, but shall
not be limited to, any substances, materials or wastes to the extent
quantities thereof are regulated by the City of Chicago or any other
local governmental authority, the State of Illinois, or the United
States of America because of toxic, flammable, explosive, corrosive,
reactive, radioactive or other properties that may be hazardous to
human health or the environment, including asbestos and including
any materials or substances that are listed in the United States
Department of Transportation Hazardous Materials Table, as amended,
49 C.F.R. 172. 101, or in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. subsections
9601 et seq., or the Resources Conservation and Recovery Act, as
amended, 42 U.S. C. subsections 6901 et seq., or any other
applicable governmental regulation imposing liability or standards
of conduct concerning any hazardous, toxic or dangerous substances,
waste or material, now or hereafter in effect. Tenant does hereby
indemnify, defend and hold harmless the Landlord and its agents and
their respective officers, directors, beneficiaries, shareholders,
partners, agents and employees from all fines, suits, procedures,
claims and actions of every kind, and all costs associated therewith
(including attorneys' and consultants' fees) arising by, through or
under Tenant, its agents, employees, contractors, servants and
invitees and out of or in any way connected with any deposit, spill,
discharge or other release of Hazardous Materials by Tenant or any
of its employees, contractors, agents, servants or invitees that
occurs during the Term of this Lease, at or from the Premises, or
which arises at any time from Tenant's use or occupancy of the
Premises, or from Tenant's failure to provide all information, make
all submissions, and take all steps required by all applicable
governmental authorities. Tenant's obligations and liabilities under
this paragraph shall survive the expiration of the Term of this
Lease.
7. Landlord's Services and Obligations.
A. Air Conditioning and Heating Landlord shall furnish, at its
expense (subject to the provisions of this Lease, relating to Rent
Adjustments), air conditioning and heating from 8:00 A.M. to 6:00
P.M. five days a week, that is, from Monday through Friday,
inclusive, and from 8:00 A.M. to 1:00 P.M. on Saturdays, exclusive
of holidays (for purposes of this Lease to be defined as New Year's
Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas). Upon reasonable advance request in writing by Tenant,
Landlord shall furnish air conditioning and heating at other times
(that is, at times other than the times specified above), at rates
to the Tenant fixed by the Landlord from time to time. Whenever heat
generating machines or equipment are used in the Premises which
affect the temperature otherwise maintained by the air conditioning
system, Landlord reserves the right to provide and install
supplementary air conditioning units in the Premises and the cost of
providing, installing, operating and maintaining the same shall be
paid by Tenant to the Rental Agent as Additional Rent.
B. Water. Landlord shall furnish cold water from City of Chicago
mains for drinking, lavatory and toilet purposes drawn through
fixtures installed by Landlord, or by Tenant with Landlord's prior
written consent, and hot water for lavatory purposes from the
regular supply of the Building. Tenant shall pay Landlord at rates
fixed by Landlord for water furnished for any other purpose, and
Landlord may install a water meter at Tenant's sole cost to measure
such usage. Tenant shall not waste or permit the waste of water. In
the event Tenant shall fail to make prompt payment to Landlord for
water furnished by Landlord, Landlord, upon ten days notice, may
discontinue furnishing such service and no such discontinuance shall
be deemed an eviction or disturbance of Tenant's use of the Premises
or render Landlord liable for damages or relieve Tenant from any
obligation under this Lease.
C. Window Washing. Landlord shall furnish window washing of all
windows in the Premises, both inside and out, weather permitting, at
intervals to be determined by the Landlord.
D. Janitor Service. Landlord shall furnish daily janitor service in
the Premises, Saturdays, Sundays and holidays excepted. Tenant shall
not provide janitor services without the prior written consent of
Landlord and then only subject to the supervision of the Landlord
and at Tenant's sole responsibility, cost and expense, by
contractors or employees at all times satisfactory to Landlord.
E. Elevator Service. Landlord shall furnish passenger elevator
service in common with Landlord and other tenants, daily from 8:00
A.M. to 6:00 P.M. (Saturdays to 1:00 P.M.), Sundays and holidays
excepted, and daily freight elevator service in common with Landlord
and other tenants at reasonable hours to be determined by Landlord,
Saturdays, Sundays and holidays excepted. Landlord, however, shall
provide limited passenger elevator service daily at all times during
which such normal passenger service is not furnished. Operatorless
automatic elevator service shall be deemed "elevator service" within
the meaning of this paragraph.
F. Window and Door Coverings. Landlord shall furnish blinds for all
exterior windows of standard type and color for the Building, which
Tenant agrees not to remove or alter. Tenant, at its own expense,
may install drapes, window or door coverings (and, if installed,
shall maintain them in an attractive and safe condition); provided,
however, that in the sole judgment of Landlord, they are in harmony
with the exterior and interior appearance of the Building, create no
safety or fire hazard and do not interfere with the HVAC system of
the Building.
G. Interruption of Services. Landlord does not warrant that any
service will be free from interruptions caused by repairs, renewals,
improvements, changes of service, alterations, strikes, lockouts,
labor controversies, accidents, inability to obtain fuel, steam,
water or supplies, governmental regulations, or any other causes
beyond the reasonable control of Landlord. No such interruption of
service shall be deemed an eviction (or a constructive eviction) or
disturbance of Tenant's use and possession of the Premises or any
part thereof, or render Landlord liable to Tenant for damages, by
abatement of rent or otherwise, or relieve Tenant from performance
of Tenant's obligations under this Lease. Tenant hereby waives and
releases all claims against Landlord for damages from interruption
or stoppage of service, except that if the Premises or any portion
thereof are rendered untenantable, inaccessible or impossible to
occupy, in each case due to interruption of such services or repairs
required to be made by Landlord under this Lease for a cause other
than (i) fire or casualty, (ii) default by Tenant, or (iii) a cause
beyond the reasonable control of Landlord, for in excess of ten (10)
consecutive business days, Rent shall abate for the portion of the
Premises affected thereby for the period of such untenantability,
inaccessibility or impossibility of occupancy.
8. Repairs and Alterations by Tenant.
A. Repairs. Except for ordinary wear and as otherwise provided in
this Lease, Tenant shall, at all times during the term hereof, at
its sole expense, keep the Premises and every part thereof in good
order, repair and condition, and Tenant shall promptly arrange with
Landlord, at Tenant's sole expense, for the repair of all damage to
the Premises and the replacement or repair of all damaged or broken
glass (including signs thereon), fixtures and appurtenances
(including hardware, heating, cooling, ventilating, electrical,
plumbing and other mechanical facilities in the Premises), with
materials equal in quality and class to the original materials
damaged or broken, within any reasonable period of time specified by
Landlord, all repairs and replacements to be made under the
supervision and with the prior written approval of Landlord, using
contractors or persons acceptable to Landlord. If Tenant does not
promptly make such arrangements, Landlord may, but need not, make
such repairs and replacements and the amount paid by Landlord for
such repairs and replacements shall be deemed additional rent
reserved under this Lease due and payable forthwith. Landlord may,
but shall not be required to do so, enter the Premises at all
reasonable times to make any repairs, alterations, improvements or
additions, including, but not limited to, ducts and all other
facilities for heating and air conditioning service, as Landlord may
desire or deem necessary for the safety, preservation or improvement
of the Building, or as Landlord may be required to do so by the
municipality in which the Building is located or by the order or
decree of any court or by any other proper authority. The cost of
all repairs made by Landlord to the Property which are made
necessary as a result of misuse or neglect by Tenant or Tenant's
employees, invitees or agents shall be immediately paid by Tenant to
Landlord upon being billed for same.
B. Alterations. Tenant shall not make installations, alterations or
additions in or to the Premises without submitting plans and
specifications to Landlord and securing the prior written consent of
Landlord in each instance. Such work shall be done at the sole cost
and expense of Tenant by employees of or contractors employed by
Landlord, or with Landlord's consent in writing given prior to
letting of contract, by contractors employed by Tenant, but in each
case, only under written contract previously approved in writing by
Landlord, and subject to all conditions Landlord may impose. All
installations, alterations and additions shall be constructed in a
good and workmanlike manner and only good grades of materials shall
be used, and shall comply with all insurance requirements, and with
all ordinances and regulations of the City of Chicago or any
department or agency thereof, and with the requirements of all
statutes and regulations of the State of Illinois or any department
or agency thereof. At Landlord's election, Landlord and Landlord's
architects shall have the right to supervise all construction
operations within the Premises, and Tenant shall promptly pay
Landlord the reasonable cost of such supervision. If, with
Landlord's prior written consent, alterations are made by Tenant's
contractors, Tenant shall furnish to Landlord prior to commencement
thereof, building permits and certificates of appropriate insurance
and payment, performance and other bonds, and upon completion of any
installation, alteration or addition, Contractor's affidavits and
full and final Waivers of Lien covering all labor and material
expended and used. Tenant shall hold Landlord harmless from all
claims, costs, damages, liens and expenses which may arise out of or
be connected in any way with said installations, alterations or
additions, provided that the same do not arise out of the negligence
or willful acts of Landlord or its contractors.
9. Rights Reserved to Landlord. Landlord shall have the following
rights exercisable without notice and without liability to Tenant
for damage or injury to property, person or business (all claims for
damage being hereby released), and without effecting an eviction or
disturbance of Tenant's use or possession or giving rise to any
claim for setoffs, or abatement of rent:
A. To change the name or street address of the Building;
B. To install and maintain signs on the exterior and interior of
the Building;
C. To designate all sources furnishing sign painting and lettering,
ice, mineral, or drinking water, beverages, foods, towels, vending
machines or toilet supplies used or consumed on the Premises;
D. To have passkeys to the Premises;
E. To decorate, remodel, repair, alter or otherwise prepare the
Premises for reoccupancy during the last six months of the term
hereof, if during or prior to such time Tenant vacates the Premises,
or any other time after Tenant abandons the Premises;
F. To enter the Premises at reasonable hours to make inspections, or
to exhibit the Premises to prospective tenants, purchasers or
others, or for other reasonable purposes;
G. To have access to all mail chutes according to the rules of the
United States Post Office;
H. To require all persons entering or leaving the Building during
such hours as Landlord may from time to time reasonably determine to
identify themselves to a watchman by registration or otherwise and
to establish their right to leave or enter, and to exclude or expel
any peddler, solicitor or beggar at any time from the Premises or
the Building;
I. To approve the weight, size and location of safes, computers,
and other heavy articles in and about the Premises and the Building
and to require all such items and other office furniture and
equipment to be moved in and out of the Building and Premises only
at such time and in such manner as Landlord shall direct and in all
events at Tenant's sole risk and responsibility;
J. To decorate and to make, at any time or times, at its own
expense, repairs, alterations, additions and improvements,
structural or otherwise, in or to the Premises, the Building or part
thereof, and to perform any acts related to the safety, protection
or preservation thereof, and during such operations to take into and
through the Premises or any part of the Building all material and
equipment required and to close or temporarily suspend operation of
entrances, doors, corridors, elevators or other facilities, provided
that Landlord shall cause as little inconvenience or annoyance to
Tenant as is reasonably necessary in the circumstances, and shall
not do any act which permanently reduces the size of the Premises.
Landlord may do any such work during ordinary business hours and
Tenant shall pay Landlord for overtime and for any other expenses
incurred if such work is done during other hours at Tenant's
request;
K. To do or permit to be done any work in or about any adjacent or
nearby building, land, street or alley;
L. To grant to any one the exclusive right to conduct any business
or render any service in the Building, provided such exclusive right
shall not operate to exclude Tenant from the use expressly permitted
by Section 6 of this Lease;
M. To close the Building at 8:00 P.M. or at such other reasonable
time as Landlord may determine, subject, however, to Tenant's right
to admittance under such regulations as shall be prescribed from
time to time by Landlord;
N. To prohibit the placing of vending or dispensing machines of any
kind in or about the Premises without the prior written permission
of the Landlord;
0. To require Tenant to move to equivalent space (the "New
Premises") on the same or another floor in the Building (provided
that [i] the New Premises are located above the nineteenth [19th]
floor of the Building, [ii] the quality of finish of the New
Premises shall be substantially the same as the Premises, and [iii]
the New Premises shall not be on any floor in the Building on which
any tenant whose primary business is investment banking or
investment brokerage is located) upon receipt of thirty (30) days
written notice from Landlord, in which event, Landlord shall pay all
moving costs, including the cost of moving and, installing Tenant's
phone system, and the cost of Tenant replacing any stationery, and
the Rent provided for herein shall remain the same;
P. To adopt the Rules and Regulations set forth as Exhibit B hereto
and from time to time to adopt such additional rules and regulations
and to amend all such rules and regulations as, in Landlord's
judgment, shall be desirable for the proper use, entry, operation
and management of the Premises and the Building, each of which shall
become a part of this Lease, and Tenant agrees to comply with all
such rules and regulations; and
Q. To exercise all other rights reserved by the Landlord pursuant
to the provisions of this Lease.
10. Telephone, Electric and Other Services.
A. Tenant shall make arrangements directly with the telephone
company servicing the Building for such telephone service in the
Premises as may be desired by Tenant. Tenant shall pay the entire
cost of all telephone charges, electricity consumed within the
Premises, maintenance of light fixtures and replacement of lamps,
bulbs, tubes, ballasts and starters.
B. If Tenant desires telegraphic, telephonic, burglar alarm,
computer installations or signal service (which service shall be at
Tenant's sole expense), Landlord shall, upon request, direct where
and how all connections and wiring for such service shall be
introduced and run. In the absence of such directions, Tenant shall
make no borings, cutting or install any wires or cables in or about
the Premises.
C. Tenant covenants and agrees that Landlord shall in no event be
liable or responsible to Tenant for any loss, damage or expense
which Tenant may sustain or incur if either the quality or character
of electrical service is changed or is no longer suitable for
Tenant's requirements. Tenant covenants and agrees that at all times
its use of electric current shall never exceed the capacity of
existing feeders to the Building or the Premises or wiring or
*installation; and also that it shall make no alterations or
additions to the electric equipment and/or appliances without the
prior written consent of Landlord in each instance.
11. Landlord's Title. Landlord's title is and always shall be
paramount to the title of Tenant. Nothing herein contained shall
empower Tenant to do any act which can, shall or may encumber the
title of Landlord.
12. Quiet Enjoyment. Subject to the provisions of this Lease,
Landlord covenants that Tenant, on paying the rent and performing
the covenants of this Lease on its part to be performed, shall and
may peaceably have, hold and enjoy the Premises for the Term of this
Lease.
13. Waiver of Certain Claims. To the fall extent now, or hereafter,
permitted by law, Tenant waives and releases all claims against
Landlord, its officers, directors, agents, employees and servants,
in respect of, and they shall not be liable for injury to person or
damage to property sustained by Tenant or by any occupant of the
Premises or the Building, or any other person, occurring in or about
the Building or the Premises resulting directly, or indirectly, from
any existing or future condition, defect, matter or thing in the
Premises, the Building or any part of it, or from equipment or
appurtenances therein, or from accident or from any occurrence, act,
or from negligence or omission of any tenant or occupant of the
Building, or of any other person other than the negligence or
willful misconduct of Landlord, its officers, directors, agents,
employees and servants. This section shall apply especially, but not
exclusively, to damage caused as aforesaid or by the flooding of
basements or other sub-surface areas or by refrigerators, sprinkling
devices, air conditioning apparatus, water, snow, frost, steam,
excessive heat or cold, falling plaster, broken glass, sewage, gas,
odors or noise or the bursting or leaking of pipes or plumbing
fixtures, and shall apply equally whether any such damage results
from the act or omission of other tenants, occupants or servants of
the Building or of any other persons other than the negligence or
willful misconduct of Landlord, its officers, directors, agents,
employees and servants, and whether such damage be caused by or
results from any thing or circumstance above mentioned, or any other
thing or circumstance whether alike or wholly different in nature.
If any such damage to the Premises or the Building or any equipment
or appurtenance therein, or to tenants thereof, results from any act
or omission or negligence of Tenant, its agents, employees or
invitees, Landlord may, at Landlord's option, repair such damage and
Tenant shall, upon demand by Landlord, reimburse Landlord forthwith
for all costs of such repairs and damages both to the Building and
to the tenants thereof, in excess of the amounts, if any, paid to
Landlord under insurance, if any, covering such damages. All
property in the Building or in the Premises belonging to Tenant, its
agents, employees or invitees, or to any occupant of the Premises
shall be there at the risk of Tenant or other person only, and
Landlord shall not be liable for damage thereto or theft,
misappropriation or loss thereof. Tenant agrees to hold Landlord
harmless and to indemnify it against claims and liability for
injuries to all persons and for the damage to, or the theft,
misappropriation or loss of all property occurring in or about the
Premises, or due to any act or omission of Tenant, its agents or
employees or invitees. Except to the extent covered by insurance
maintained by or for the benefit of Tenant, Landlord agrees to hold
Tenant harmless and indemnify it against claims and liability for
injury to persons or damage to property in or about the common areas
of the Building arising out of or in connection with Landlord's
ownership and operation of the Building or Landlord's activities in
the Building, or arising from any act or omission of Landlord, its
agents or employees.
14. Condition of Premises. Tenant accepts the Premises in its
"As-Is, Where-Is" condition. No promise of Landlord to alter,
remodel, improve, repair, decorate or clean the Premises or any part
thereof, and no representation respecting the condition of the
Premises or the Building has been made to Tenant by Landlord except
that Landlord shall paint the Premises on or before July 1, 1997
during normal business hours using building standard materials.
15. Lease Termination. At the termination of this Lease by lapse of
time or otherwise:
A. Surrender of Keys. Tenant shall surrender all keys of the
Premises to Landlord and make known to Landlord the explanation of
all combination locks remaining on the Premises.
B. Return of Premises. Tenant shall return to Landlord the Premises
and all equipment and fixtures of Landlord in as good a condition
and state of repair as when Tenant originally took possession
subject, however, to: (a) the provisions of Paragraphs C and D of
this Section 15; and (b) ordinary wear and loss or damage by fire,
or other casualty. In the event Tenant fails to comply with this
requirement, Landlord may restore the Premises, equipment and
fixtures to such condition and state of repair and Tenant shall,
upon demand, pay to Landlord the cost thereof.
C. Removal of Additions. All installations, additions, hardware,
non-trade fixtures and improvements, temporary or permanent, except
movable furniture and equipment belonging to Tenant, in or upon the
Premises, whether placed there by Tenant or Landlord, shall be
Landlord's property and shall remain upon the Premises, all without
compensation, allowance or credit to Tenant; provided, however, that
if prior to such termination or within ten (10) days thereafter
Landlord so directs by notice, Tenant shall promptly remove the
installations, additions, hardware, non-trade fixtures and
improvements, placed in or upon the Premises by Tenant which were
required by Landlord at the time of approval of the installation
thereof to be so removed and designated in the notice, failing which
Landlord may remove the same and Tenant shall, upon demand, pay to
Landlord the cost of such removal and of any necessary restoration
of the Premises.
D. Floor Covering. Tenant may remove any floor covering entirely
paid for and laid by Tenant provided Tenant (a) removes all
fastenings, paper, glue, bases and other vestiges thereof and
restores the floor surface to its previous condition or (b) pays to
Landlord, upon demand, the cost of restoring the floor surface to
such condition.
E. Property Presumed Abandoned. All fixtures, installations and
personal property belonging to Tenant not removed from the Premises
upon termination of this Lease and not required by Landlord to have
been removed as provided in Paragraph C of this Section 15, shall be
conclusively presumed to have been abandoned by Tenant and title
thereto shall pass to Landlord under this Lease as by a bill of
sale; Tenant agrees to indemnify, defend and save Landlord and its
agents and beneficiaries harmless of and from the claims of any
persons claiming any right, title, equity, interest or security
interest in and to any such property so abandoned by the Tenant.
16. Assignment and Subletting. Tenant shall not, without the prior
written consent of Landlord in each instance: (i) assign, transfer,
mortgage, pledge, hypothecate or encumber, or subject to or permit
to exist upon or be subjected to any lien or charge, this Lease or
any interest under it; (ii) allow to exist or occur any transfer of
or lien upon this Lease or the Tenant's interest herein by operation
of law; (iii) sublet the Premises or any part thereof; or (iv)
permit the use or occupancy of the Premises or any part thereof for
any purpose not provided for under Section 6 of this Lease or by
anyone other than the Tenant and Tenant's employees. In no event
shall this Lease be assigned or assignable by voluntary or
involuntary bankruptcy proceedings or other-wise, and in no event
shall this Lease or any rights or privileges hereunder be an asset
of Tenant under any bankruptcy, insolvency, or reorganization
proceedings.
Anything herein to the contrary notwithstanding, in no event shall
Tenant's interest in this Lease (i) be assigned to or held by a
"party in interest" within the meaning of the Employee Retirement
Income Security Act of 1974, as amended, or (ii) be assigned if such
assignment is otherwise prohibited under the applicable provisions
of such law.
Tenant shall, by notice in writing, advise Landlord of its intention
from, on and after a stated date (which shall not be less than sixty
[601 days after date of Tenant's notice), to assign or transfer its
interest as Tenant in this Lease, or sublet any part or all of the
Premises for the balance or any part of the Term, and in such event,
Landlord shall have the right, to be exercised by giving written
notice to Tenant not later than thirty (30) days after receipt of
Tenant's notice, to recapture the space described in Tenant's notice
and such recapture notice shall, if given, cancel and terminate this
Lease with respect to the space therein described as of the date
stated in Tenant's notice. Tenant's said notice shall state the name
and address of the proposed assignee, transferee or subtenant, as
the case may be, and a true and complete copy of the proposed
assignment, transfer or sublease, as the case may be, shall be
delivered to Landlord with said notice. If Tenant's notice shall
cover all the Premises, and Landlord shall give the aforesaid
recapture notice with respect thereto, the Term of this Lease shall
expire and end on the date stated in Tenant's notice as fully and
completely as if that date had been herein definitely fixed for the
expiration of the Tenn. If, however, this Lease be cancelled
pursuant to the foregoing with respect to less than the entire
Premises, then the Tenant shall pay to the Rental Agent Landlord's
reasonable cost to physically divide and separate the portion of the
Premises, and the Rent and the escalation percentage herein reserved
shall be adjusted on the basis of the number of square feet retained
by Tenant in proportion to the number of square feet contained in
the Premises, as described in this Lease, and this Lease as so
amended shall continue thereafter in fall force and effect. If so
requested by Landlord, Tenant shall promptly execute and deliver to
Landlord an instrument evidencing any such recapture and containing,
as appropriate, a definition (by way of diagram or otherwise) of the
portion of the Premises remaining subject to this Lease following
such recapture and the Rent to be paid by Tenant therefor. If
Landlord, upon receiving Tenant's said notice with respect to any
such space, shall not exercise its right to cancel as aforesaid,
Landlord will not unreasonably withhold its consent to Tenant's
assignment as aforesaid or subletting the space covered by its
notice.
Landlord's consent to any subletting or assignment shall not release
or discharge Tenant of or from any liability, whether past, present
or future, under this Lease, and Tenant shall continue fully liable
thereunder. The subtenant or subtenants, or assignee shall agree to
comply with and be bound by all of the terms, covenants, conditions,
provisions and agreements of this Lease to the extent of the space
sublet or assigned, and Tenant shall deliver to Landlord promptly
after execution, an executed copy of each such sublease or
assignment and an agreement of compliance by each such subtenant or
assignee.
Notwithstanding anything to the contrary in this Section 16, if
Tenant is a corporation whose shares of stock are not publicly
traded and if during the Term of this Lease, the ownership of the
shares of stock which constitutes control of Tenant changes by
reason of sale, gift or death, Tenant shall notify Landlord of such
change within five (5) days thereof, and Landlord, at its option,
may at any time thereafter terminate this Lease by giving Tenant
written notice of said termination at least sixty (60) days prior to
the date of termination stated in the notice. The term "control" as
used herein means the power to directly or indirectly direct or
cause the direction of the management or policies of the Tenant. A
change or series of changes in ownership of stock which would result
in direct or indirect change in ownership by the stockholders or an
affiliated group of stockholders of less than 50 % of the
outstanding stock shall not be considered a change of control.
If Tenant shall assign or transfer its interest in this Lease or
sublet the Premises having first obtained Landlord's consent at a
rental in excess of the rent due and payable or to become due or
payable by Tenant under the provisions of Sections 3 and 4 of this
Lease, said excess rent shall become the Landlord's property and
payable to the Landlord as additional rent.
Any sale, assignment, mortgage, transfer or subletting of this Lease
which is not in compliance with the provisions of this Section 16
shall be of no effect and void.
If Tenant's interest in this Lease is assigned in accordance with
the terms of this Lease, or is attempted to be assigned in violation
of any provision of this Lease, then Landlord may collect rent from
any such assignee (or any such named assignee in the case of any
attempted assignment in violation of any provision of this Lease);
or if the Premises or any part thereof are sublet or are attempted
to be sublet in violation of any provision of this Lease, or are
occupied by, or used by, any person other than Tenant, whether or
not in violation of this Lease, then Landlord may, after default by
Tenant under this Lease, collect rent from any such subtenant (or
any such named subtenant in the case of any attempted subletting in
violation of any provision of this Lease) or any such user or
occupant. In any such case, Landlord shall apply the net amount
collected to the rent reserved in this Lease, but neither any such
assignment, subletting, occupancy, or use, whether with or without
Landlord's prior consent or otherwise in violation of the provisions
of this Lease, nor any such collection or application, shall be
deemed a waiver of any term, covenant or condition of this Lease, or
the acceptance by Landlord of any such assignee, subtenant, occupant
or user as a tenant. Neither any such assignment or attempted
assignment of Tenant's interest in the Lease nor any such subletting
or attempted subletting, occupancy or use of the Premises or any
part thereof by any person other than Tenant, nor any collection of
rent by Landlord from any person other than Tenant as provided in
this subsection, nor any application of any such rent as provided in
this Section shall, in any circumstances, relieve Tenant of its
obligation fully to observe and perform the terms, covenants and
conditions of this Lease on Tenant's part to be observed and
performed.
The obligations of Landlord under this Lease shall not be binding
upon Landlord named herein after the sale, conveyance, assignment or
transfer by such Landlord (or upon any subsequent landlord after the
sale, conveyance, assignment or transfer by such subsequent
landlord) of its interest in the Property or the Building, and in
the event of any such sale, conveyance, assignment or transfer
(which right so to do is hereby expressly reserved) Landlord or such
subsequent landlord, as the case may be, shall be and hereby is
entirely freed and relieved of all covenants and obligations of
Landlord hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in
interest, or between the parties and the purchaser, grantee,
assignee or other transferee that such purchaser, grantee, assignee
or other transferee has assumed and agreed to carry out any and all
covenants and obligations of Landlord hereunder. Neither the
shareholders, officers, directors, trustees, individuals, joint
venturers or partners comprising Landlord, nor the beneficiaries of
the Trust under which legal title to the Building or the Real Estate
may be held from time to time, nor the shareholders (nor any of the
partners comprising same), directors, trustees or officers of any of
the foregoing (collectively, the "Parties") shall be liable for the
performance of Landlord's obligations under this Lease. Tenant shall
look solely to Landlord to enforce Landlord's obligations hereunder
and shall not seek any damages against any of the Parties. The
liability of Landlord for Landlord's obligations under this Lease
shall not exceed and shall be limited to the value of Landlord's
assets and Tenant shall not look to the property or assets of any of
the Parties in seeking either to enforce Landlord's obligations
under this Lease or to satisfy a judgment for Landlord's failure to
perform such obligations.
17. Untenantability. In the event (a) the Premises are made
untenantable by fire or other casualty and Landlord shall decide not
to restore or repair the same; or (b) the Building is so damaged by
fire or other casualty that Landlord shall decide to demolish or
rebuild the same, then, in any such event, Landlord shall have the
right to terminate this Lease by notice to Tenant within ninety (90)
days after the date of such fire or other casualty and the rent
shall be apportioned on a per them basis and paid to the date of
such fire or other casualty. In the event the Premises are made
untenantable by fire or other casualty and Landlord shall decide to
rebuild and restore the same, this Lease shall not terminate and
Landlord shall repair and restore the Premises at Landlord's expense
and with due diligence, subject, however (i) to reasonable delays
for insurance adjustments and (ii) delays caused by forces beyond
Landlord's control, and the rent shall abate on a per them basis
during the period of reconstruction and repair; but Landlord shall
not be liable to incur overtime, double time, or other premium
charges in order to expedite the work of repair or restoration.
In the event that the Premises are partially damaged by fire or
other casualty but are not made wholly untenantable, then Landlord
shall, except during the last year of the term hereof, proceed with
all due diligence to repair and restore the Premises, subject,
however, to (i) reasonable delays for insurance adjustments and (ii)
delays caused by forces beyond Landlord's control; but Landlord
shall not be liable to incur overtime, double time or other premium
charges in order to expedite the work of repair or restoration. In
such event, the rent shall abate in proportion to the non-useability
of the Premises during the period while repairs are in progress
unless such partial damages are due to the fault or neglect of
Tenant. If the partial damage is the result of the fault or neglect
of Tenant, rent shall not abate during said period. If the Premises
are made partially untenantable as aforesaid during the last year of
the term hereof, Landlord shall have the right to terminate this
Lease as of the date of fire or other casualty, in which event the
rent shall be apportioned on a per them basis and paid to the date
of such fire or other casualty.
18. Rights and Remedies of Landlord. All rights and remedies of
Landlord herein enumerated shall be cumulative and none shall
exclude any other right or remedy allowed by law.
A. If any voluntary or involuntary petition or similar pleading
under any section or sections of any bankruptcy act shall be filed
by or against Tenant, or any voluntary or involuntarily proceedings
in any court or tribunal shall be instituted to declare Tenant
insolvent or unable to pay Tenant's debts, or Tenant makes an
assignment for the benefit of its creditors, or a trustee or
receiver is appointed for Tenant or for the major part of Tenant's
property, then and in any such event, Landlord may, if Landlord so
elects, but not otherwise, and with or without notice of such
election, and with or without entry or other action by Landlord,
forthwith terminate this Lease, and notwithstanding any provisions
of this Lease, Landlord shall forthwith upon such termination be
entitled to recover damages in an amount equal to the then present
value of the rent specified in Sections 3 and 4 of this Lease for
the residue of the stated term hereof, less the fair rental value of
the Premises for the residue of the stated term.
B. If Tenant defaults in the prompt payment of rent and such default
shall continue for five (5) or more days after written notice
thereof shall have been given to Tenant or in the performance or
observance of any other provisions of this Lease and such other
default shall continue for thirty (30) or more days after notice
thereof shall have been given to Tenant, (provided, however, if such
default is not capable of being cured within said thirty [30] day
period and Tenant commences to cure within said thirty [30] day
period and diligently pursues such cure, Tenant shall have an
additional period of time as is reasonably necessary to cure such
default, but in no event in excess of sixty (60] additional days) or
if the leasehold interest of Tenant be levied upon under execution
or attached by process of law, or if Tenant vacates or .abandons the
Premises without continuing to pay Rent, then and in any such event
Landlord, if it so elects, with or without notice or demand,
forthwith, or at any time thereafter while such default continues,
either may terminate Tenant's right to possession, without
terminating this Lease, or may terminate this Lease. If the term of
any lease, other than this Lease, made by Tenant for any premises in
the Building shall be terminated or terminable after the making of
this Lease because of any default by Tenant under such other lease,
such fact shall empower Landlord, at Landlord's sole option, to
terminate this Lease by notice to Tenant.
C. Upon any termination of this Lease, whether by lapse of time or
otherwise, or upon any termination of Tenant's right to possession
without termination of this Lease, Tenant shall surrender possession
and vacate the Premises immediately and deliver possession thereof
to Landlord, and Tenant hereby grants to Landlord full and free
license to enter into and upon the Premises in such event with or
without process of law and to repossess Landlord of the Premises as
of Landlord's former estate and to expel or remove Tenant and any
other who may be occupying or within the Premises and to remove any
and all property therefrom, using such force as may be necessary,
without being deemed in any manner guilty of trespass, eviction,
forcible entry or detainer, or conversion of property, and without
relinquishing Landlord's right to rent or any other rights given to
Landlord hereunder or by operation of law. Tenant expressly waives
the service of any demand for payment of rent or for possession and
the service of any notice of Landlord's election to terminate this
Lease or to re-enter the Premises, any and every form of demand and
notice prescribed by any statute or other law, and agrees that the
simple breach of any covenant or provision of this Lease by Tenant
shall, of itself, without the service of any notice or demand
whatsoever, constitute a forcible detainer by Tenant of the Premises
within the meaning of the statutes of the State of Illinois.
D . If pursuant to the provisions of this Section 18, Landlord
elects to terminate Tenant's right to possession only, without
terminating this Lease, Landlord may, at Landlord's option, enter
upon the Premises, remove Tenant's signs and other evidences of
tenancy, and take and hold possession thereof as provided in
Paragraph C of this Section 18, without such entry and possession
terminating this Lease, or releasing Tenant, in whole or in part,
from Tenant's obligation to pay the rent hereunder for the full
term, and in any such case Tenant shall pay forthwith to Landlord a
sum equal to the entire amount of the rent specified in Section 3 of
this Lease for the residue of the stated term plus any other sums
then due hereunder. Upon and after entry into possession without
termination of this Lease, Landlord may, but need not, relet the
Premises or any part thereof for the account of Tenant to any
person, firm or corporation other than Tenant for such rent, for
such time and upon such terms as Landlord, in Landlord's sole
discretion, shall determine and Landlord shall not be required to
accept any tenant offered by Tenant or to observe any instructions
given by Tenant about such reletting. In any such case, Landlord may
make repairs, alterations and additions in or to the Premises, and
redecorate the same to the extent deemed by Landlord necessary or
desirable, and Tenant shall, upon demand, pay the cost thereof,
together with Landlord's expenses of the reletting. If the
consideration collected by Landlord upon any such reletting for
Tenant's account is not sufficient to pay the full amount of unpaid
rent reserved in this Lease, together with the cost of repairs,
alterations, additions, redecorating and Landlord's expenses, Tenant
shall pay to Landlord the amount of any deficiency, upon demand. If
the consideration so collected from any such reletting is more than
sufficient to pay the full amount of the rent reserved herein,
together with the costs and expenses of Landlord, Landlord, at the
end of the stated term of this Lease, shall account for the surplus
to Tenant. Notwithstanding any such election by Landlord to
terminate Tenant's right to possession only, without terminating
this Lease, Landlord may, at any time thereafter, terminate this
Lease as provided in Paragraph B of this Section 18.
E. Any and all property which may be removed from the Premises by
Landlord pursuant to the authority of this Lease or of law, to which
Tenant is or may be entitled, may be handled, removed or stored in a
commercial warehouse or otherwise by Landlord at the risk, cost and
expense of Tenant, and Landlord shall in no event be responsible for
the value, preservation or safekeeping thereof and Tenant, for
itself and for any party claiming by, through or under Tenant, and
for any party claiming any right in any personal property in the
Premises, hereby waives and releases all claims against Landlord
resulting from, or alleged to result from, Landlord's handling,
removal or storage of such property, as aforesaid; and further,
Tenant agrees to indemnify, defend and hold Landlord harmless from
all such claims resulting from or alleged to result from, such
activity by Landlord. Tenant shall pay to Landlord, upon demand, any
and all expenses incurred in such removal and all storage charges
against such property so long as the same shall be in Landlord's
possession or under Landlord's control. Any such property of Tenant
not removed from the Premises or retaken from storage by Tenant
within thirty (30) days after the end of the term, however
terminated, shall be conclusively deemed to have been forever
abandoned by Tenant.
F. The non-prevailing party shall pay all costs, charges and
expenses, including the fees of counsel, agents and others incurred
by the prevailing party in enforcing its obligations hereunder.
Tenant shall pay all such costs, charges and expenses incurred by
Landlord in any litigation, negotiation or transaction in which
Tenant causes Landlord, without Landlord's fault, to become involved
or concerned.
G. If Tenant violates any of the terms and provisions of this Lease,
or defaults in any of its obligations hereunder, other than the
payment of rent or other sums payable hereunder, such violations may
be restrained or such obligation enforced by injunction.
19. Eminent Domain. If the Building, or any portion thereof, which
includes a substantial part of the Premises, shall be taken or
condemned by any competent authority for any public use or purpose,
the term of this Lease shall end upon, and not before, the date when
the possession of the part so taken shall be required for such use
or purpose, and without apportionment of the award. Current rent
shall be apportioned as of the date of such termination. If any
condemnation proceeding shall be instituted in which it is sought to
take or damage any part of the Building, or the Real Estate, or if
the grade of any street or alley adjacent to the Building is changed
by any competent authority and such change of grade makes it
necessary or desirable to remodel the Building to conform to the
changed grade, Landlord shall have the right to cancel this Lease
upon not less than ninety (90) days notice prior to the date of
cancellation designated in the notice. No money or other
consideration shall be payable by Landlord to Tenant for the right
of cancellation, and the Tenant shall have no right to share in the
condemnation award or in any judgment for damages caused by the
change of grade.
20. Subordination or Superiority of this Lease. The rights and
interest of Tenant under this Lease shall be subject and subordinate
to any mortgage or trust deed that may hereafter be placed upon the
Building or Real Estate or Property and to any and all advances to
be made thereunder, and to the interest thereon, and to all
renewals, replacements and extensions thereof. Any mortgagee or
trustee may elect to give the rights and interest of Tenant under
this Lease priority over the lien of its mortgage or trust deed. In
the event of such election, and upon notification by such mortgagee
or trustee to Tenant to that effect, the rights and interest of
Tenant under this Lease shall be deemed to have priority over the
lien of said mortgage or trust deed, whether this Lease is dated
prior to or subsequent to the date of said mortgage or trust deed.
Tenant shall promptly execute and deliver whatever instruments may
be required for such purposes, and in the event Tenant fails so to
do within ten (10) days after demand in writing, Tenant does hereby
make, constitute and irrevocably appoint Landlord as its attorney in
fact and in its name, place and stead so to do.
21. Sprinklers. If there now is or shall be installed in the
Building a "sprinkler system" and such system or any of its
appliances shall be damaged or injured or not in proper working
order by reason of any act or omission of Tenant, Tenant's agents,
servants, employees, licensees or visitors, Tenant shall forthwith
restore the same to good working condition at its own expense, or if
the Board of Fire Underwriters or Fire Insurance Exchange or any
bureau, department or official of the state or city governments,
requires or recommends that any changes, modifications, alterations
or additional sprinkler heads or other equipment be made or supplied
by reason of Tenant's business or the location of partitions, trade
fixtures or other contents of the Premises, or for any other reason,
or if any such changes, modifications, alterations, additional
sprinkler heads or other equipment, become necessary to prevent the
imposition of a penalty or charge against the full allowance for a
sprinkler system in the fire insurance rate as fixed by said
Exchange, or by any fire insurance company, Tenant shall, at
Tenant's expense, promptly make and supply such changes,
modifications, alterations, additional sprinkler heads or other
equipment.
22. Prior Occupancy and Holding Over by Tenant. In the event Tenant
is permitted to occupy the Premises prior to commencement of the
Term, then all the provisions of this Lease shall be in full force
and effect commencing at such occupancy; such occupancy shall be on
the basis of a month-to-month tenancy, and rent for such period
shall be paid at the monthly rate set forth in Section 3. Tenant
shall pay to the Landlord for each day Tenant retains possession of
the Premises or any part thereof after termination hereof, by lapse
of time or otherwise, double the amount of the daily rent then
required by the terms hereof for the last monthly period prior to
the date of such termination and also pay all damages sustained by
Landlord by reason of such retention, or, if Landlord gives notice
in writing to Tenant of Landlord's election thereof (and not
otherwise), such holding over shall constitute renewal of this Lease
for one year, but acceptance by Landlord of rent after such
termination shall not constitute a renewal nor waive Landlord's
right of re-entry or any other right.
23. Notice. In every instance where it shall be necessary or
desirable for Tenant to serve any notice or demand upon Landlord,
such notice or demand shall be sent by United States Registered or
Certified Mail, postage prepaid, addressed to Landlord in care of
the managing agent of the Building at the Office of the Building.
Any notice or demand to be given by Landlord to Tenant shall be
effective if given either by the Landlord or by the Rental Agent on
behalf of the Landlord when mailed or delivered to the Premises,
with a copy sent by United States Registered or Certified Mail,
postage prepaid, addressed to Mr. David P. Downs at Ryan, Beck &
Co., 80 Main Street, West Orange, New Jersey 07052-5414, or to such
other address as may appear on the records of Landlord. Notice
mailed as aforesaid shall be deemed to have been served at the time
the same is posted.
24. Successors and Assigns. Each provision hereof shall extend to
and shall, as the case may require, bind and inure to the benefit of
Landlord and Tenant and their respective heirs, legal
representatives, successors and assigns, provided that this Lease
shall not inure to the benefit of any heir, legal representative,
transferee or successor of Tenant except upon the prior written
consent or election of Landlord, as provided in Section 16.
The term "Landlord" as used in this Lease means only the owner or
the mortgagee in possession for the time being of the Real Estate
and the Building (or the owner of a lease of the Building or of the
Real Estate and the Building) of which the Premises form a part, so
that in the event of any sale or sales of the Real Estate and the
Building or of said lease, or in the event of a lease of the
Building, or the Real Estate and the Building, Landlord shall be and
hereby is entirely free and relieved of all covenants and
obligations of Landlord hereunder, and it shall be deemed and
construed without further agreement between or among any of the
parties hereto, their successors and assigns, or any purchaser or
lessee of the Building, or of the Building and Real Estate, that the
said purchaser or said lessee, as the case may be, has assumed and
agreed to carry out any and all covenants and obligations of
Landlord hereunder.
25. Insurance.
A. Waiver of Subrogation. Landlord and Tenant each hereby waive any
and every claim for recovery from the other for any and all loss of
or damage to the Building or Premises or to the contents thereof,
which loss or damage is covered by valid and collectible physical
damage insurance policies, to the extent that such loss or damage is
recoverable under said insurance policies. Inasmuch as this mutual
waiver will preclude the assignment of any such claim by subrogation
(or otherwise) to an insurance company (or any other person),
Landlord and Tenant each agree to give to each insurance company
which has issued, or in the future may issue, to it policies of
physical damage insurance, written notice of the terms of this
mutual waiver and to have said insurance policies properly endorsed,
if necessary, to prevent the invalidation of said insurance coverage
by reason of said waiver.
B. Coverage. Tenant shall purchase and maintain insurance during the
entire Term for the benefit of Tenant and Landlord (as their
interest may appear) with terms, coverage and in companies
reasonably satisfactory to Landlord, and with such reasonable
increases in limits as Landlord may from time to time request, but
initially Tenant shall maintain the following coverages in the
following amounts:
(i) Comprehensive General Liability Insurance covering the Tenant
and Landlord, Landlord's beneficiary and Landlord's Management Agent
for claims of bodily injury, personal injury and property damage
arising out of Tenant's operations, assumed liabilities or use of
the Premises for limits of liability not less than:
Bodily Injury Liability $3,000,000 each occurrence
$3,000,000 annual
aggregate
Personal Injury Liability $3,000,000 annual aggregate
0% Insured's participation
Property Damage Liability $2,000,000 each occurrence
$2,000,000 annual
aggregate
(ii) Physical Damage Insurance covering all additions, improvements
and alterations to the Premises and all office furniture, trade
fixtures, office equipment, merchandise and all other items of
Tenant's property on the Premises. Such insurance shall be written
on an "all risks" of physical loss or damage basis, for the full
replacement cost value of the covered items and in amounts that meet
any coinsurance clauses of the policies of insurance.
Tenant shall, prior to the commencement of the Term, furnish to
Landlord certificates evidencing such coverage, which certificates
shall state that such insurance coverage may not be changed or
cancelled without at least ten (10) days' prior written notice to
Landlord and Tenant and shall name Landlord and Landlord's
Management Agent as additional insureds.
C. Avoid Action Increasing Rates. Tenant shall comply with all
applicable laws and ordinances, all orders and decrees of court and
all requirements of other governmental authorities, and shall not,
directly or indirectly, make any use of the Premises which may
thereby be prohibited or be dangerous to person or property, which
may jeopardize any insurance coverage or may increase the cost of
insurance or require additional insurance coverage. If by reason of
the failure of Tenant to comply with the provisions of this
subparagraph 25. C., any insurance coverage is jeopardized or
insurance premiums are increased, Landlord shall have the option
either to terminate this Lease or to require Tenant to make
immediate payment of the increased insurance premium.
26. Miscellaneous.
A. Wherever there is provided in this Lease a time limitation for
performance by the Landlord of any construction, repair,
maintenance or service, the time provided for shall be extended for
as long as and to the extent that delay in compliance with such
limitation is due to an act of God, strikes, governmental control
or other factors beyond the reasonable control of the Landlord.
B. If any provision of this Lease or application to any party or
circumstances shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the
remainder of this Lease or the application of such provisions to
such person or circumstances, other than those as to which it is so
determined invalid or unenforceable to any extent, shall not be
affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
C. The headings of sections are for convenience only and do not
define, limit or construe the contents of such sections or
subsections. References made in this Lease to numbered sections and
subsections shall refer to numbered sections or subsections of this
Lease unless otherwise indicated.
D. This Lease is to be executed in counterpart, each of which
executed counterpart shall constitute an original.
E. Each of the parties agrees, at the request of the other to
execute such instruments or documents as any party may reasonably
request, acknowledging: the "Substantial Completion Date", the date
of commencement of rentals; the commencement and expiration dates
of this Lease; the Expenses and Taxes for any calendar year; the
Rent Adjustment for any calendar year; the Rent Adjustment Deposit;
the number of rentable square feet demised to the Tenant; the
Annual Base Rent; the Monthly Base Rent; and the compliance or
non-compliance by any party with any of the terms or provisions of
this Lease; and to evidence such other or further matters as may be
so reasonably requested.
F. Tenant represents that it has not dealt with any real estate
broker in connection with this Lease other than Miglin-Beitler
Management Corporation, and, to its knowledge, no other broker
initiated or participated in the negotiation of this Lease,
submitted or showed the Premises to Tenant or is entitled to any
commission in connection with this Lease. Tenant hereby agrees to
indemnify, defend, and hold Landlord harmless from and against any
and all claims of any other real estate broker alleging that Tenant
has retained such broker.
G. No receipt of money by Landlord from Tenant after the
termination of this Lease, the service of any notice, the
commencement of any suit or final judgment for possession shall
reinstate, continue or extend the term of this Lease or affect any
such notice, demand, suit or judgment.
H. No waiver of default of Tenant shall be implied, and no express
waiver shall affect any default other than the default specified in
such waiver and that only for the time and to the extent therein
stated. The invalidity or unenforceability of any provision of this
Lease shall not affect or impair any other provision.
1. Clauses, plats and riders, if any, signed by Landlord and Tenant
and endorsed on or affixed to this Lease are part hereof and in the
event of variation or discrepancy, the duplicate original hereof,
including such clauses, plats and riders, if any, held by Landlord
shall control.
1. Submission of this instrument for examination or signature by
Tenant does not constitute a reservation of or option for lease,
and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.
K. This Lease and Exhibits form an integral part hereof and set
forth all the covenants, promises, agreements, conditions or
understandings between the parties hereto concerning the Premises
and the subject matter of this Lease. There are no covenants,
promises, agreements, conditions or understandings, either oral or
written, between the parties hereto other than as herein set forth
and, in particular, no representations or warranties of the
Landlord not expressed herein are to be implied. Except as herein
otherwise provided, no alterations, amendment or change of, or
addition to this Lease shall be binding upon the parties hereto
unless in writing and signed by Landlord and Tenant.
27. Cancellation Options.
A. In the event Landlord is unable to deliver possession of the
Premises to Tenant on or before June 1, 1997, Tenant shall have the
right to terminate this Lease by giving written notice thereof to
Landlord prior to any such delivery of possession.
B. Provided that the existing tenant of the Building that has an
existing expansion option with respect to the Premises has
exercised such expansion option, Landlord shall have the right to
terminate this Lease effective as of July 31, 1998 by notifying
Tenant of its election in a written notice given to Tenant not
later than September 1, 1997.
28. Exoneration Clause. This Lease is executed by COLE TAYLOR BANK,
not personally, but as Trustee as aforesaid, in the exercise of the
power and authority conferred upon and vested in it as Trustee, and
under the express direction of the beneficiaries of the said Trust.
It is expressly understood and agreed that nothing herein shall be
construed as creating any liability whatsoever against said Trustee
personally; and in particular, without limiting the generality of
the foregoing, there shall be no personal liability to pay any
indebtedness accruing hereunder or to perform any covenant, either
express or implied, herein contained, or to keep, preserve, or
sequester any property of said Trust, and that all personal
liability of said Trustee of every sort, if any, is hereby
expressly waived by said Tenant, and by every person now or
hereafter claiming any right or security hereunder; and that so far
as the said Trustee is concerned, the owner of any indebtedness or
liability accruing hereunder, shall look solely to the assets of
said Trust and the proceeds thereof for the payment thereof.
It is further understood and agreed that the said Trustee merely
hold naked title to the Property herein described and has no
control over, and under this Lease and assumes no responsibility
for:
A. Management or control of such Property.
B. The upkeep, inspection, maintenance or repair of such Property.
C. The collection of rents or the rental of such Property.
D. The conduct of any business which is carried on upon such
Property.
IN WITNESS WHEREOF, this instrument has been duly executed by the
parties hereto, as of the date first above written.
LANDLORD:
COLE TAYLOR BANK, not individually or personally, but solely and
only as Trustee as aforesaid by:
TENANT: /s/ Kenneth E. Piekut, Vice President
RYAN BECK & CO., a New Jersey corporation: /s/ Leonard J. Stanley,
Senior Vice President and Chief Financial Officer
TENANT'S ACKNOWLEDGEMENT
STATE OF NEW JERSEY
COUNTY OF ESSEX SS:
I, the undersigned, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY THAT Leonard J. Stanley,
personally known to me to be the SVP/CFO/CAO of Ryan, Beck & Co.,
and personally known to me to be the same person whom name is
subscribed to the foregoing instrument, appeared before me this day
in person and acknowledged that as such in his capacity as CFO &
CAO he signed and delivered said instrument as his free and
voluntary act and as the free and voluntary act and deed of said
corporation, for the uses and purposes therein set forth.
GIVEN under my hand and Notarial seal this 5th day of May, 1997
/s/ Nora Castillo
Notary Public
LANDLORD'S ACKNOWLEDGEMENT
STATE OF ILLINOIS
SS:
COUNTY OF C O O K
I, the undersigned, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY THAT Kenneth E. Piekut of the
Cole Taylor Bank, Landlord, personally known to me to be the same
persons whose names are subscribed to the foregoing instrument as
such Vice President, appeared before me this day in person and
acknowledged that he signed and delivered said instrument as his
free and voluntary act and as the free and voluntary act and deed
of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and Notarial seal this 9th day of May, 1997
/s/ MARITZA CASTILLO
NOTARY PUBLIC STATE OF ILLINOIS
EXHIBIT A
MADISON PLAZA
PLAN OF PREMISES
EXHIBIT B
MADISON PLAZA
RULES AND REGULATIONS
1. Removal Permit. Tenant shall list all furniture, equipment and
similar articles Tenant desires to remove from the Premises or the
Building and deliver a copy to Landlord and procure a removal
permit from the Office of the Building authorizing Building
employees to permit such articles to be removed.
2. Doors to be Locked. Before leaving the Premises unattended,
Tenant shall close and securely lock all doors and transoms and
shut off all utilities in the Premises. Any damage resulting from
failure to do so shall be paid by Tenant.
3. Signs. Tenant shall not paint, display, inscribe or affix any
sign, trademark, picture, advertising, notice, lettering or
direction on any part of the outside or inside of the Building or
on the Premises, except on the public hallway doors of the
Premises, and then only such name or names or matter and of such
color, size, style, character and material as shall be first
approved by Landlord, in writing. Landlord reserves the right to
remove any other matter, without notice to Tenant and at the cost
and expense of Tenant.
4. Sound Devices. Tenant shall not place any radio or television
antenna on the roof or on or in any part of the inside or outside
of the Building other than the inside of the Premises, or operate
or permit to be operated any musical or sound producing instrument
or device inside or outside the Premises which may be heard outside
the Premises, or operate any electrical device from which may
emanate electrical waves which my interfere with or impair radio or
television broadcasting or reception from or in the Building or
elsewhere.
5. Nuisances. Tenant shall not bring or permit to be in the
Building any bicycle or other vehicle, or dog (except in the
company of a blind person) or other animal or bird; make or permit
any notice, vibration or odor to emanate from the Premises; or do
anything therein tending to create, or maintain, a nuisance; or
disturb, solicit or canvass any occupant of the Building, or do any
act tending to injure the reputation of the Building.
6. Cleanliness and Obstruction of Public Areas. Tenant shall not
place anything or allow anything to be placed near the glass of any
door, partition or window which may be unsightly from outside the
Premises; or take or permit to be taken in or out of other
entrances of the Building, or take or permit on other elevators,
any item normally taken in or out through the trucking concourse or
service doors or in or on freight elevators; or, whether
temporarily, accidentally, or otherwise, allow anything to remain
in place or store anything in, or obstruct in any way, any
passageway, exit, stairway, elevator, shipping platform or truck
concourse.
Tenant shall lend its full cooperation to keep such areas free from
all obstruction and in a clean and sightly condition and move all
supplies, furniture and equipment as soon as received directly -to
the Premises and move all such items and waste, other than waste
customarily removed by employees of the Building, being taken from
the Premises, directly to the shipping platform at or about the
time arranged for removal therefrom.
7. Additional Locks. Tenant shall not attach or permit to be
attached additional locks or similar devices to any door, transom
or window, or change existing locks or the mechanism thereof; or
make or permit to be made any keys for any door other than those
provided by Landlord. (If more than two keys for one lock are
desired, Landlord will provide them upon payment therefor by
Tenant.)
8. Overload Any Floor. Tenant shall not overload any- floors.
9. Defacing Premises. Tenant shall not do any painting or
decorating in the Premises; or mark, paint, cut or drill into,
drive nails or screws into, or in any way deface any part of the
Premises or the Building, outside or inside, without the prior
written consent of Landlord. (If Tenant desires signal,
communication, alarm or other utility or service connections
installed or changed, the same shall be made by and at the expense
of Tenant, with the approval and under direction of Landlord.)
10. Special Freight Elevator Service for Tenant. Upon written
application by Tenant, and approval thereof by Landlord, Landlord
shall furnish freight elevator service for Tenant at times other
than those times provided for in the Lease at rates for such usage
from time to time maintained in effect by Landlord.
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
This AGREEMENT, made as of April 7, 1997, by and between RYAN, BECK
& CO., INC., a corporation organized under the laws of the State of
New Jersey, with its principal office at 80 Main Street, West
Orange, New Jersey 07052 (the "Company") and JAY SUSKIND (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to employ the Executive as Senior Vice
President in charge of Equity Trading; and
WHEREAS, the Executive wishes to be employed by the Company in such
capacity;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties agree as follows:
1. Employment and Duties.
(a) The Company shall employ the Executive, during the term of
this Agreement and subject to the terms and conditions contained
herein, as Senior Vice President in charge of Equity Trading. The
Executive shall perform such duties and services and in such manner
as are customarily performed by persons in such position in the
securities brokerage business. In addition, the Executive shall
perform such duties and services as may from time to time be
determined and assigned to the Executive by the President or the
Board of Directors of the Company.
(b) The Executive shall devote sufficient time, attention, and
energies to properly perform his duties and services under this
Agreement (allowing for reasonable vacation periods as established
by the personnel policies of the Board of Directors) and shall not
during the term of this Agreement be engaged in any other business
activity which will impair his ability to properly perform his
duties and services hereunder.
(c) The Executive agrees that he will not, without the prior
approval of the Board of Directors, undertake any activity or
position of responsibility (i) which conflicts with or competes
with the business of the Company; or (ii) whether or not it is
related to the business of the Company, which will materially
inhibit the performance of his duties hereunder.
2. Term.
The Executive's employment under this Agreement shall be for a
period of one (1) year, commencing as of date hereof.
3. Compensation.
(a) During the term of this Agreement, subject to the provisions
herein regarding resignation, termination, death and disability,
the Executive shall be entitled to receive a salary in connection
with his services hereunder in the amount of $120,000 per annum
(including a bonus or bonuses if declared by the Board of Directors
in its discretion). Such salary shall be payable in such manner
and at such times as are consistent with the payroll practices of
the Company.
(b) The Company shall also cause the Executive to receive, in
addition to his salary, all other employee benefits offered to
employees of the Company of similar seniority, plus reimbursement
for ordinary and necessary expenses incurred while acting on behalf
of the Company.
4. Disability of the Executive.
If the Executive is unable to perform his regular duties and
services by reason of incapacity or illness for a period of sixty
(60) days during any twelve month period; this Agreement shall
terminate automatically; provided, however, the Company reserves
the right to otherwise terminate this Agreement in the event that
the Executive has multiple periods of disability which, in the
aggregate, total sixty (60) days. In the event of termination of
this Agreement pursuant to this Section 4, all rights of the
Executive under this Agreement shall terminate as of the effective
date of termination, other than the right to receive any salary
earned but unpaid as of such date.
5. Termination and Severance Pay.
This Agreement may be terminated during its term as follows:
(a) Involuntary Termination Without Cause.
(i) The Company may terminate this Agreement without cause upon
thirty (30) days' written notice to the Executive.
(ii) In such event, the Company shall pay severance pay to the
Executive in an amount equal to the amount of salary which would
otherwise be payable to Executive under this Agreement. The
severance pay shall be paid in a lump sum, within thirty (30) days
after the effective date of termination.
(iii) The notice period set forth in Section 5(a)(1) hereof is
intended solely as a convenience in order to provide for an orderly
transition and, at the Company's sole option, may be waived by the
Company; provided, however, that in the event of such waiver by the
Company, the Company shall pay to Executive an amount equal to
thirty (30) days compensation.
(b) Involuntary termination with Cause.
In the event that the Executive engages in conduct which, in the
sole determination of the Company, is contrary to the best
interests of the Company including, but not limited to the
commission of a felony or perpetration of a common law fraud, the
Company may terminate this Agreement for cause by giving written
notice to the Executive stating that it is the Company's intention
to terminate the Agreement effective immediately, and the Agreement
shall so terminate. All rights of Executive under this Agreement
shall terminate as of the effective date of such termination, other
than the right to receive any salary earned but unpaid as of such
date.
(c) Notice of Resignation.
Notwithstanding anything contained herein to the contrary, the
right of the Executive to receive any payment or benefit under
Sections 5(a)(ii) and (iii) shall be conditioned upon the execution
by the Executive of (i) a notice of resignation from any
position(s) he holds with the Company and (ii) a confidentiality
agreement and a mutual release with the Company (concerning its
subsidiaries and affiliates, and its present and former officers,
directors, and employees), in substantially the form attached
hereto as Attachment A, with blanks appropriately completed.
6. Notice.
Any notice to be given by either party under this Agreement shall
be in writing, mailed by certified mail with return receipt
requested, and addressed to the other party at the address stated
herein or such other address as may subsequently have been
furnished by such other party in writing. Any such notice shall be
deemed to have been given on the date of mailing. Notices to the
Company shall be sent to its National Headquarters/Northeast at:
80 Main Street
West Orange, New Jersey 07052;
and notices to the Executive shall be sent to him at:
116 Castlepointe Blvd.
Piscataway, New Jersey 08854
7. Governing Law.
This Agreement has been executed and delivered in the State of New
Jersey and shall in all respects be governed by and construed and
enforced in accordance with the laws of New Jersey, including all
matters of construction, validity, and performance.
8. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
respect to the Executive's employment and his compensation
therefor; provided, however, that this Agreement shall not limit or
in any way affect the rights, duties, or obligations that the
Executive may have under any benefit plan of the Company,
including, but not limited to, any pension plan, profit-sharing
plan, or medical or health plan, except as may specifically be set
forth herein.
9. Acknowledgment.
Executive acknowledges that he has read the terms of this
Agreement, that he has been offered the opportunity by the Company
to discuss it with an attorney of his choice, and that he
understands its terms and effects. Neither the Company, nor its
respective agents, representatives or attorneys have made any
representations to the Executive concerning the terms or effects of
this Agreement other than those contained herein.
10. Modifications, etc.
No modification, amendment, or waiver of any of the provisions of
this Agreement shall be effective unless in writing specifically
referring to this Agreement and signed by both parties.
11. Enforcement of Agreement.
The failure of either party at any time to enforce any of the
provisions of this Agreement or to require performance by the other
party of any of the provisions hereof shall not operate as or be
construed as a waiver of such provisions or to affect either the
validity of this Agreement, or any part hereof, or the right of
either party thereafter to enforce each and every provision in
accordance with the terms of this Agreement.
12. Severability.
The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects and to the
fullest extent permitted by law as if such invalid or unenforceable
provision were omitted.
13. Binding Agreement; Assignment.
This Agreement shall be binding upon and shall inure to the benefit
of the Company and any legal successor to the Company shall be
deemed to be substituted for the Company under the provisions
hereof.
This Agreement shall also be binding upon and shall inure to the
benefit of the Executive, his heirs, executors and legal
representatives. This Agreement may not be assigned by the
Executive. The Company shall have the right to assign this
Agreement and all of its rights hereunder to any subsidiary,
successor or affiliate.
14. Arbitration.
Any claims, controversies, demands, disputes or differences between
or among the parties hereto or any persons bound hereby arising out
of, or by virtue of, or in connection with, or otherwise relating
to this Agreement shall be submitted to and settled by arbitration
conducted in Newark, New Jersey before one or three arbitrators,
each of whom shall be knowledgeable in the fields of employment law
and investment banking. Such arbitration shall otherwise be
conducted in accordance with the rules then obtaining of the
American Arbitration Association. The parties hereto agree to
share equally the responsibility for all fees of the arbitrators,
abide by any decision rendered as final and binding, and waive the
right to appeal the decision or otherwise submit the dispute to a
court of law for a jury or non-jury trial. The parties hereto
specifically agree that neither party may appeal or subject the
award or decision of any such arbitrator(s) to appeal or review in
any court of law or in equity or by any other tribunal, arbitration
system or otherwise. Judgement upon any award granted by such an
arbitrator(s) may be enforced in any court having jurisdiction
thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and date first above written.
ATTEST: RYAN, BECK & CO., INC.
/s/ Lisa A. Willey By: /s/ Ben A. Plotkin
BEN A. PLOTKIN, President
WITNESS: /s/ Jay Suskind
/s/ Lisa A. Willey JAY SUSKIND
ATTACHMENT A
Ryan, Beck & Co., Inc.
80 Main Street
West Orange, NJ 07052
Re: Termination of Employment
Gentlemen:
Pursuant to the provisions of Section 5 of that certain employment
agreement (the "Agreement"), dated April 7, 1997, by and between
myself and Ryan, Beck & Co., Inc. (the "Company"), my employment
with the Company has been terminated as of _______. This letter is
the Notice of Resignation, Confidentiality Agreement and Mutual
Release (the "Release Agreement") described in Section 5(c) of the
Agreement.
In consideration of (i) the compensation payable to me pursuant to
Section 5 of the Agreement; (ii) other good and valid consideration
to which I would not otherwise be entitled ("Additional
Consideration"), the receipt and sufficiency of which is hereby
acknowledged; and (iii) the mutual covenants and premises contained
herein and intending to be legally bound hereby, I hereby:
1. Resign from all positions with the Company and its
subsidiaries (including, without limitation, as Senior Vice
President in Charge of Equity Trading and otherwise as an officer,
employee, representative or agent) effective immediately.
2. Release the Company from any and all obligations under the
Agreement, other than post-employment obligations, if any.
3. Release the Company (including its subsidiaries and affiliates
and its present and former officers, directors, employees and
agents), from all claims and rights which I may have against the
Company, including those of which I am not aware, except for claims
and rights arising from (i) the Company's obligations under the
terms of this letter, (ii) post-employment obligations, if any,
arising under the Agreement or (iii) obligations regarding the
benefit plans of the Company as to which I am a beneficiary. This
applies to claims, known or unknown, from the beginning of the
world to the date of this Release Agreement, including without
limitation claims under the Age Discrimination in Employment Act
(the "ADEA") and the Law Against Discrimination (New Jersey)
("LAD"). To the extent this release also covers all past and
present officers, directors, employees and agents of the Company,
it does so except for matters completely unrelated to the business
and operation of the Company. This release will bind anyone who
succeeds to my rights including, but not limited to, my heirs and
beneficiaries.
4. Acknowledge that I was advised in writing to consult with an
attorney before signing this Release Agreement, and that the
Company advised me that I had twenty-one (21) calendar days within
which to consider this Release Agreement before signing it.
5. Acknowledge that I understand that I have seven (7) calendar
days after executing this Release Agreement within which to revoke
the waiver and release of ADEA and LAD claims only. The waiver and
release of all other claims is effective immediately upon the
execution of this Agreement; provided, however, that payment of
severance, if any, shall not be made until such date and provided,
further that in the event of a revocation as provided below, I
shall not be entitled to receive the Additional Consideration.
6. Acknowledge that I have had the opportunity to investigate any
potential claims against the Company and that I am waiving any such
claims.
7. Acknowledge that I fully understand the terms of this
Agreement; that I am entering into it voluntarily without any
coercion on the part of any person; and that I was given adequate
time to consider all implications and to freely and fully consult
with and seek the advice of whomever I deemed appropriate.
8. Agree that for a period of two years from the date of
termination I will not (i) solicit or cause to be solicited the
employment of or employ, directly or indirectly, any person who is
now employed by the Company, (ii) at any time influence any
employee of the Company to give less than his/her undivided loyalty
to the Company or (iii) solicit or cause to be solicited any
current client of the Company.
9. Agree that I will not disclose any information about the
business or operation of the Company to any competitor, customer of
the Company, the public at large or any other third person and I
further agree that I will not speak badly of the Company or its
officers, directors, or employees.
10. Acknowledge that the provisions and restrictions set forth in
Paragraphs 7 and 8 hereof are reasonable and necessary for the
protection of the legitimate interests of the Company; that in the
event of a material breach or threatened breach of any of these
provisions or restrictions, the Company may have no adequate remedy
at law, and could result in irreparable harm to the Company; and
the Company shall be entitled, in addition to other remedies which
may be available to it, to institute and maintain proceeding at law
and/or in equity, to recover damages and/or to obtain specific
performance or an injunction.
11. Acknowledge that each provision hereof, including without
limitation the periods of time and types and scopes of restrictions
on the activities of such person specified herein are and are
intended to be divisible, and if any portion hereof (including any
sentence, clause or part) shall be held contrary to law or invalid
or unenforceable in any respect in any jurisdiction, or as to one
or more periods of time, areas or business activities or any part
thereto, the remaining provisions shall not be affected but shall
remain in full force and effect as to the other remaining parts,
and any such invalid or unenforceable provision shall be deemed,
without further action on the part of any person, modified, amended
and limited to the extent necessary to render the same valid and
enforceable in such jurisdiction.
Very truly yours,
AGREED AND ACCEPTED:
Ryan, Beck & Co., Inc. and Subsidiaries
Dated:
EXHIBIT 10.12
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to the Amended and Restated Employment Agreement
dated as of the 26th day of December 1995 (the "Employment
Agreement"), by and between Ryan, Beck & Co., 1nc. (the "Company")
and Ben A. Plotkin (the "Executive") is hereby made as of this 18th
day of March, 1997.
WHEREAS, the parties hereto desire to amend the Employment
Agreement upon the following terms and conditions:
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby and in consideration of the mutual covenants herein
contained, the Employment Agreement is hereby amended as follows:
1. The paragraph reading "WHEREAS, the Executive is currently
serving as an Executive Vice President of the Company" shall be
deleted in its entirety and in lieu thereof the following paragraph
shall be substituted "WHEREAS, the Executive has been appointed
President of the Company and Chairman of the Senior Management
- -Committee."
2. Paragraph 1(a) shall be deleted in its entirety and in lieu
thereof the following shall be substituted:
(a) The Company shall employ the Executive, during the term of this
Agreement and, subject to the terms and conditions contained
herein, in the position of President and Chairman of the Senior
Management Committee. During the term hereof. the Company shall
take such action as is necessary to nominate Executive to stand for
election as a director of the Company.
3. A new paragraph I (b) shall be inserted as follows and existing
paragraphs I (b)-(d) shall be relettered accordingly:
(b) As Chairman of the Senior Management Committee, the Executive
shall serve as the Chief Executive Officer of the Company with full
authorization to speak in the name and on behalf of the Company and
to enter into and execute documents on behalf of the Company as
Chief Executive Officer. The Executive, as President of the
Company, is authorized to delegate certain policy making functions
to members of the Senior Management Committee.
4. Any capitalized terms not otherwise defined herein shall have
the same meaning as is ascribed to such term in the Employment
Agreement.
5. Except as otherwise provided herein, all the terms and
conditions of the Employment Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first written above.
ATTEST: RYAN, BECK & CO., INC.
By: Name: Fenwick H. Garvey
Title: Chairman of the Board
[Corporate Seal]
WITNESS: EXECUTIVE
/s/ Mildred Santillo By: /s/ Ben A. Plotkin
Ben A. Plotkin
EXHIBIT 10.14
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AGREEMENT, made as of the 3rd day of June 1997, shall
constitute an amendment and restatement of that certain amended and
restated employment agreement (the "Original Agreement"), dated
September 26, 1994, as amended on December 14, 1995, by and between
RYAN, BECK & CO., INC., a corporation organized under the laws of
the State of New Jersey, with its principal office at 80 Main
Street, West Orange, New Jersey 07052 (hereinafter the "Company"),
and FENWICK H. GARVEY, whose address is 80 Tulip Road, Llewellyn
Park, West Orange, New Jersey 07052 (hereinafter the "Executive").
W I T N E S S E T H:
WHEREAS, pursuant to the Original Agreement, Executive currently
serves as the Chairman of the Board of Directors of the Company
(the "Board"); and
WHEREAS, it is the desire of the Executive and the Company to amend
the terms and provisions of the Original Agreement as hereinafter
provided.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties agree as follows:
1. Employment and Duties.
(a) The Company has received a letter of resignation dated May 14,
1997, a copy of which is attached hereto as Exhibit A, from
Executive resigning from the positions of Chairman of the Board of
the Company and all committees thereof and Director of the Company,
which resignation the Board may accept "as appropriate." Pursuant
to such letter of resignation, the Board has accepted Executive's
resignation as Chairman of the Board and Chairman of all committees
thereof and will accept Executive's resignation as a Director of
the Company on the date on which one or more additional outside
directors of the Company is or are appointed by the Board and such
director or directors accepts such appointment. During the term of
this Agreement and subject to the terms and conditions contained
herein, the Company shall continue to employ Executive as Senior
Advisor to the Board.
(b) If and when reasonably requested by the Chairman of the Board,
any committee of the Board or the Board, Executive shall provide
consulting services based on Executive's current knowledge and
experience to the Chairman of the Board, such committee of the
Board or the Board, as the case may be, of such character and in
such manner as are usually and customarily performed by persons in
such positions in the securities, investment banking and bank
consulting businesses. The Executive's duties and services shall
be performed under the general supervision of the Board in
accordance with Company's policies, as established by the Board.
(c) The Executive shall devote sufficient time, attention and
energies to properly perform his duties and services under this
Agreement and shall not be required to be physically present at the
Company's offices on any predetermined schedule or for any required
minimum number of hours per week or month and shall not during the
Term be engaged in any other business activity which will impair
his ability to properly perform his duties and services hereunder.
(d) The Executive agrees that he will not, without the prior
written approval of the Board, undertake any employment with any
other firm, corporation or entity, that competes with the business
of the Company, during the Term. It is agreed that the foregoing
shall not restrict Executive's ability to act as an employee of any
entity for the conduct of his personal or family financial affairs
which is controlled by Executive.
(e) Subsequent to the Term, the Executive will continue to provide
to the Company the services provided hereunder; provided, however,
he shall not be obligated to spend more than two hours per month
providing such services.
2. Term.
The term of this Agreement shall be for ten (10) years commencing
on the date hereof (the "Term"). The Term shall be comprised of
three sub-terms, the first of which shall be for two (2) years,
commencing on the date hereof (the "Initial Term"); the second of
which shall be for three (3) years, commencing on the second
anniversary of the date hereof (the "Second Term"); and the third
of which shall be for five (5) years, commencing on the fifth
anniversary of the date hereof (the "Third Term").
3. Compensation.
(a) During the Initial Term, the Company shall pay to the
Executive, in accordance with its payroll practices, a guaranteed
salary in the amount of $125,000 per annum.
(b) During the Second Term, the Company shall pay to the
Executive, in accordance with its payroll practices, a guaranteed
salary in the amount of $115,000 per annum.
(c) During the Third Term, the Company shall pay to the Executive,
in accordance with its payroll practices, a guaranteed salary in
the amount of $50,000 per annum.
(d) The termination of this Agreement for any reason shall not
relieve the Company of its obligations to pay the guaranteed salary
payments provided for in sections 3(a), 3(b) and 3(c) hereof to the
Executive (or to the Executive's estate or his designated
beneficiaries in the event of the death of the Executive);
provided, however, that (i) upon the death of or voluntary
resignation (in accordance with the provisions of Section 4(a)
hereof) by the Executive, the Company's obligation to pay the
guaranteed salary payments provided for in Section 3(c) hereof to
the Executive shall immediately terminate; (ii) upon the
termination of this Agreement for cause (in accordance with the
provisions of Section 4(b) hereof), the Company's obligation to pay
the guaranteed salary payments provided for in Section 3(c) hereof
to the Executive shall immediately terminate and the Company shall
instead be required to pay to Executive after the Executive
executes a notice of resignation from any position(s) he holds with
the Company, a confidentiality agreement, and a mutual release with
the Company (concerning its subsidiaries and affiliates, and its
present and former officers, directors, and employees), in the form
attached hereto as Exhibit B with blanks appropriately completed, a
maximum of $50,000 for the remaining unexpired portion (if any) of
the Third Term; and (iii) if this Agreement is terminated in
accordance with the provisions of Section 4(c) hereof, all of the
Company's obligations to be performed during the Term shall
immediately terminate and the Company shall be required to,
concurrent with effectiveness of such termination, pay all
guaranteed salary payments provided for in Sections 3(a), 3(b) and
3(c) hereof to the Executive in one lump sum payment.
(e) During the Term, the Company shall also cause the Executive to
receive, in addition to his salary, all other employee benefits
(including contributions to any profit-sharing plan) in effect or
hereafter to be offered by the Company, plus reimbursement for
ordinary and necessary expenses incurred while acting on behalf of
the Company. The Company shall provide health related benefits to
Executive, at least in the amount presently provided (subject to
any non-discriminatory, Company-wide, changes in the terms and
conditions of health benefits provided by the Company (including
co-payment) to its employees as the Company may institute from time
to time), and, at Executive's election, to his spouse and/or
children until the death of Executive and any such spouse, whether
or not Executive is during such continuance of benefits employed by
the Company. Such continuation of benefits shall survive the
termination of this Agreement whether or not this Agreement is
terminated upon the resignation of Executive, by the Company with
or without cause, upon disability of Executive or pursuant to
Section 4(c) hereof. Notwithstanding the foregoing, such benefits
shall cease (i) as to the Executive and his spouse upon the
commencement of Executive's employment or (ii) as to his spouse
only, upon the commencement of his spouse's employment, by another
company or other entity (not including self employment) which
actually provides comparable medical benefits for which the
Executive and/or the spouse, as may be applicable, is eligible at
such other company's expense.
(f) During the Term and subject to Section 3(g) below, Executive
shall be entitled to receive incentive bonuses (the "Bonuses")
payable concurrent with and in similar form as the bonuses payable
to senior executives of the Company. The amount of the annual
Bonus shall equal the product of thirty three percent (33%)
multiplied by the Net Trading Income. "Net Trading Income" means
the gross income realized in any fiscal year (or such lesser period
for the first and last Bonuses based on the commencement date of
this Agreement and the termination date of this Agreement,
respectively) ("Fiscal Year") by the Company as a result of the
trading activities of Executive for the account of the Company as
determined on a mark to market basis in accordance with the
Company's accounting practices and procedures, less all (i) gross
losses realized in such Fiscal Year by the Company as a result of
the trading activities of Executive for the account of the Company
as determined on a mark to market basis in accordance with the
Company's accounting practices and procedures; and (ii) expenses
incurred by the Company in such Fiscal Year for establishing and
maintaining appropriate equipment for the use by Executive at a
location other than the Company's principal headquarters. The
Company shall not be obligated to pay any other bonuses to
Executive.
(g) Notwithstanding anything to the contrary contained in Section
3(f) above, in the event the Company pays bonuses to its senior
executives on a semi-annual basis, the Company may, in the sole and
absolute discretion of the Board, pay to Executive an advance on
the Bonus. The parties acknowledge and agree that the Bonus shall
be calculated on a Fiscal Year basis and any amounts paid on a
semi-annual basis shall be deemed an advance on amounts due and
owing based upon such Fiscal Year calculation.
(h) All cash payments to Executive in accordance with the
provisions of this Section 3 shall be reported to the Internal
Revenue Service on Form W-2. The parties acknowledge and agree
that the services and equipment to be provided for the benefit of
Executive pursuant to Section 5 hereof are necessary and required
for the employment of Executive during the term hereof and for the
services and equipment to be provided thereafter pursuant to
Section 1(e), and that value of such services shall not be reported
by the Company, unless legally required, to the Internal Revenue
Service on Form W-2.
4. Termination.
This Agreement may be terminated during its term as follows:
(a) Voluntary Resignation. The Executive may terminate this
Agreement without cause by voluntary resignation upon thirty (30)
days' written notice to the Company.
(b) Involuntary termination for cause. In the event that the
Executive (i) engages in willful misconduct or gross negligence in
his performance of the services contemplated by this Agreement
(after Executive's receipt of written notice from and the
opportunity to be heard by the Board), or (ii) (a) is convicted of
a crime of the first or second degree as defined by relevant New
Jersey law or (b) otherwise commits a crime which results in the
revocation of or otherwise prevents Executive from maintaining any
current or appropriate securities or regulatory licenses, the
Company may terminate this Agreement, for cause, upon the unanimous
vote of the members of the Board present, in person or by
telephone, at a meeting of the Board held upon not less than 24
hours confirmed notice to all Board members, by giving written
notice to the Executive stating that the Company elects to
terminate the Agreement effective immediately, and the Agreement
shall so terminate.
(c) Termination by Board. The Company may, at any time, terminate
this Agreement upon the unanimous vote of the members of the Board
present, in person or by telephone, at a meeting of the Board held
upon not less than 24 hours confirmed notice to all Board members.
Upon a termination of this Agreement in accordance with the
provisions of this Section 4(c), Executive shall be entitled to the
rights enumerated in Section 3(d)(iii) hereof.
(d) Liquidation of the Company. In the event that (i) the Board
of Directors votes to liquidate the Company, (ii) the Company sells
twenty five percent (25%) or more of the assets of the Company on a
consolidated basis, as determined in accordance with generally
accepted accounting principles, to a third party or (iii) the
equity capital of the Company, as determined in accordance with
generally accepted accounting principles (but not as determined for
regulatory accounting purposes), shall be less than five million
dollars ($5,000,000), then this Agreement shall terminate and the
Company shall purchase an annuity from a mutually acceptable
Company for the benefit of the Executive in an amount sufficient to
pay the remaining (if any) guaranteed salary payments to Executive
during the Term. The Company shall also make provisions for the
continuation of Executive's and/or Executive's spouse's health
benefits as contemplated by Section 3(e) hereof.
5. Additional Matters.
(a) For the term hereof, and for so long as Executive desires, the
Company shall continue to provide part-time secretarial support to
Executive. Notwithstanding the foregoing, the Company shall,
during the Term hereof, hire on a part-time basis any secretary
designated by Executive. Executive shall designate the
compensation to be received by such secretary; provided, however,
such compensation shall not be greater than the compensation to be
received by Executive hereunder and any and all compensation to be
received by such secretary shall be deducted (in the same pay
cycle) from the compensation payable by the Company to Executive
hereunder.
(b) For the Term hereof, and for so long as Executive desires
thereafter, the Company shall provide to Executive a seat on the
firm's equity trading desk, with direct access to appropriate
equipment, for purposes of giving Executive the ability to buy,
sell and trade securities for his personal purposes, at the direct
cost of such securities, plus $50 per ticket, payable to the
Company. During such period, Executive agrees to act in accordance
with all applicable laws, regulations and rules and shall follow
all applicable procedures. Notwithstanding the foregoing, the
Company shall not be obligated to provide Executive with a seat on
the firm's equity trading desk during any period during which
Executive does not maintain any appropriate licenses or
registrations, but shall permit Executive to make trades and place
orders for his own or family accounts through the firm's equity
trading desk, at the direct cost of such securities, plus $50 per
ticket, payable to the Company. In the event that Executive
desires to conduct trading activities from a location other than at
the Company's offices, the Company, at its sole expense, shall
during the Term and as long as Executive desires thereafter
(whether or not Executive maintains appropriate licenses or
registrations), provide and maintain, to the extent permitted by
relevant regulatory authorities, comparable equipment at such
location to enable Executive to conduct such trading activities.
(c) For the Term hereof, and for so long thereafter as Executive
desires, the Company shall cooperate and assist Executive to
maintain his securities licenses and registrations as well as his
membership in the New York Society of Securities Analysts and such
other similar professional organizations as Executive shall
reasonably desire, and shall pay any reasonable costs and fees
related thereto.
(d) Notwithstanding anything to the contrary contained herein,
Executive's trading activities, other than those for his own
account, will be subject to the direction and supervision of the
Board pursuant to the guidelines attached as Exhibit C hereto,
which guidelines are those guidelines in effect as of April 1, 1997
(the "Guidelines") and any applicable rules and regulations. The
Guidelines may only be amended upon the unanimous vote of the
members of the Board present, in person or by telephone, at a
meeting of the Board held upon not less than 24 hours confirmed
notice to all Board members or upon Executive's written consent.
(e) For the Term hereof, and for so long thereafter as Executive
desires, the Company shall reimburse Executive for the reasonable
costs of annual physical examinations and the services of a CPA to
prepare Executive's federal and state tax returns.
(f) The parties acknowledge and agree that they intend that the
obligations contained in Sections 3(e), 5(a), 5(b), 5(c) and 5(e)
hereof shall, except as expressly provided to the contrary in such
sections, survive the termination of this Agreement.
6. Notice.
Any notice to be given by either party under this Agreement shall
be in writing, mailed by certified mail and return receipt
requested or U.S. nationally recognized overnight courier service,
and addressed to the other party at the address stated herein or
such other address as may subsequently have been furnished by such
other party in writing. Any such notice shall be deemed to have
been given on the date of mailing. Notices to the Company shall be
sent as follows:
80 Main Street
West Orange, New Jersey 07052
Attn: Chairman of the Board
and notices to the Executive shall be sent to him at:
54 Tulip Road, Llewellyn Park
West Orange, New Jersey 07052
Each party shall provide notice to the other party of any change in
address.
7. Governing Law.
This Agreement has been executed and delivered in the State of New
Jersey and shall in all respects be governed by and construed and
enforced in accordance with the laws of New Jersey, including all
matters of construction, validity, and performance.
8. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
respect to the Executive's employment and his compensation
therefor; provided, however, that this Agreement shall not limit or
in any way affect the rights, duties or obligations that the
Executive may have under any benefit plan of the Company,
including, but not limited to, any pension plan, profit-sharing
plan, or medical or health plan, except as may specifically be set
forth herein.
9. Modifications, etc.
No modification, amendment or waiver of any of the provisions of
this Agreement shall be effective unless in writing specifically
referring to this Agreement and signed by both parties.
10. Enforcement of Agreement.
The failure of either party at any time to enforce any of the
provisions of this Agreement or to require performance by the other
party of any of the provisions hereof shall not operate as or be
construed as a waiver of such provisions or to affect either the
validity of this Agreement, or any part hereof, or the right of
either party thereafter to enforce each and every provision in
accordance with the terms of this Agreement.
11. Severability.
The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects and to the
fullest extent permitted by law as if such invalid or unenforceable
provision were omitted.
12. Binding Agreement; Assignment.
This Agreement shall be binding upon and shall inure to the benefit
of the Company and any legal successor to the Company shall be
deemed to be substituted for the Company under the provisions
hereof.
This Agreement shall also be binding upon and shall inure to the
benefit of the Executive, his heirs, executors, legal
representatives and assigns.
Other than as set forth above in this Section 12, neither the
Company nor Executive shall have the right to assign its or his
obligations or duties hereunder. However, notwithstanding anything
to the contrary contained in Section 4 hereof, in the event that
the Company proposes to Executive, in connection with a sale of all
or a substantial portion of the assets of the Company to an entity
with tangible net equity equal to or greater than that of the
Company as of such date, that the Executive consent to the
assignment of the Company's obligations and duties hereunder (and
the right to Executive's services hereunder) to such purchaser, and
Executive does not give such consent, then the Company shall have
the right in its discretion, effective upon the consummation of the
above-referenced sale, to terminate this Agreement. If the Company
so terminates, the Executive shall have such rights as provided for
in Section 4(c) above.
13. Arbitration.
Any claims, controversies, demands, disputes or differences between
or among the parties hereto or any persons bound hereby arising out
of, or by virtue of, or in connection with, or otherwise relating
to this Agreement shall be submitted to and settled by arbitration
conducted in Newark, New Jersey before one or three arbitrators,
each of whom shall be knowledgeable in the fields of employment law
and investment banking. Such arbitration shall otherwise be
conducted in accordance with the rules then obtaining of the
American Arbitration Association. The parties hereto agree to
share equally the responsibility for all fees of the arbitrators,
abide by any decision rendered as final and binding, and waive the
right to appeal the decision or otherwise submit the dispute to a
court of law for a jury or non-jury trial. Notwithstanding the
foregoing, the successful party to the arbitration shall be
entitled to reimbursement of fees and expenses from the losing
party in an amount not to exceed $50,000.00. The parties hereto
specifically agree that neither party may appeal or subject the
award or decision of any such arbitrator(s) to appeal or review in
any court of law or in equity or by any other tribunal, arbitration
system or otherwise. Judgement upon any award granted by such an
arbitrator(s) may be enforced in any court having jurisdiction
thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives on the day and
date first above written.
ATTEST: RYAN, BECK & CO., INC.
/s/ David P. Downs By: /s/ Matthew R. Naula
MATTHEW R. NAULA
Executive Vice President
WITNESS:
/s/ Anne Marie Garvey /s/ Fenwick H.
Garvey
FENWICK H. GARVEY
EXHIBIT B
Ryan, Beck & Co., Inc.
80 Main Street
West Orange, NJ 07052
Re: Termination of Employment
Gentlemen:
Pursuant to the provisions of Section 3(d) of that certain
employment agreement (the "Agreement"), dated May ___, 1997, by and
between myself and Ryan, Beck & Co., Inc. (the "Company"), my
employment with the Company has been terminated as of _______.
This letter is the Notice of Resignation, Confidentiality Agreement
and Mutual Release (the "Release Agreement") described in Section
3(d) of the Agreement.
In consideration of (i) the compensation payable to me pursuant to
Section 3 of the Agreement; (ii) other good and valid consideration
to which I would not otherwise be entitled ("Additional
Consideration"), the receipt and sufficiency of which is hereby
acknowledged; and (iii) the mutual covenants and premises contained
herein and intending to be legally bound hereby, I hereby:
1. Resign from all positions with the Company and its
subsidiaries (including, without limitation, as Senior Advisor to
the Board of Directors of the Company and otherwise as an officer,
employee, representative or agent) effective immediately.
2. Release the Company from any and all obligations under the
Agreement, other than post-employment obligations, if any.
3. Release the Company (including its subsidiaries and affiliates
and its present and former officers, directors and employees),
other than (i) from its obligations under the terms of this letter,
(ii) from post-employment obligations arising under the Agreement
or (iii) from obligations regarding the benefit plans of the
Company as to which I am a beneficiary, from all claims and rights
which I may have against the Company, including those of which I am
not aware. This applies to claims which now exist or may exist in
the future, including but not limited to, those related to my
employment. To the extent this release also covers all past and
present officers, directors, employees and agents of the Company,
it does so except for matters completely unrelated to the business
and operation of the Company. This release will bind anyone who
succeeds to my rights. Notwithstanding the foregoing, the release
shall not affect the Company's obligations regarding
indemnification and/or advancement of expenses arising under New
Jersey statute law, the Articles of Incorporation or Bylaws of the
Company or any other agreement regarding such matters existing
between the Company and me.
4. Agree that I will not influence any employee(s) of the Company
to leave the employ of the Company or at any time influence any
employee of the Company to give less than his/her undivided loyalty
to the Company.
5. Agree that I will not disclose any information about the
business or operation of the Company to any competitor, customer of
the Company, the business public at large or any other third person
the disclosure of which might reasonably be construed as contrary
to the best interest of the Company and I further agree that I will
not speak badly of the Company or its officers or employees.
6. Acknowledge that I was advised in writing to consult with an
attorney before signing this Release Agreement, and that the
Company advised me that I had twenty-one (21) calendar days within
which to consider this Release Agreement before signing it.
7. Acknowledge that I understand that I have seven (7) calendar
days after executing this Release Agreement within which to revoke
the waiver and release of claims under the Age Discrimination in
Employment Act and the Law Against Discrimination (New Jersey)
only.
8. Acknowledge that I have had the opportunity to investigate any
potential claims against the Company and that I am waiving any such
claims.
9. Acknowledge that I fully understand the terms of this Release
Agreement; that I am entering into it voluntarily without any
coercion on the part of any person; and that I was given adequate
time to consider all implications and to freely and fully consult
with and seek the advice of whomever I deemed appropriate.
10. Acknowledge that each provision hereof, including without
limitation the periods of time and types and scopes of restrictions
on the activities of such person specified herein are and are
intended to be divisible, and if any portion hereof (including any
sentence, clause or part) shall be held contrary to law or invalid
or unenforceable in any respect in any jurisdiction, or as to one
or more periods of time, areas or business activities or any part
thereto, the remaining provisions shall not be affected but shall
remain in full force and effect as to the other remaining parts,
and any such invalid or unenforceable provision shall be deemed,
without further action on the part of any person, modified, amended
and limited to the extent necessary to render the same valid and
enforceable in such jurisdiction.
In consideration for the above terms and conditions of the Company
will:
1. Release me, other than from obligations under the terms of
this letter or my post-employment obligations under the Agreement,
from all claims and rights which it may have against me including
those of which it is not aware. This applies to claims which may
exist or may exist in the future, including, but not limited to,
those relating to my employment; and
2. [severance payments].
You may accept the terms on this letter by executing a copy and
returning it to me within five days from the date of this letter.
Very truly yours,
AGREED TO AND ACCEPTED:
Ryan, Beck & Co., Inc. and Subsidiaries
By:
Dated:
EXHIBIT C
FHG
OVERNIGHT POSITION
TRADING LIMITS
I) Overall Limit Long: $1,500,000
Overall Limit Short: $ 750,000
Overall Combined: $2,000,000
II) Types of Securities
1. Listed and NASDAQ National Market
2. Covered Options
III) Per Issue
1. $500,000 - long
2. $500,000 - short
IV) Cannot exceed volume limit that would trigger market maker status.
V) Two members of Senior Management Group may approve increase in
overnight position trading limit.
VI) If not physically at trading position either on or off site or
otherwise unavailable by telephone or beeper, management has authority to
trade or liquidate a position or positions.
VII) All trading must be in compliance with and subject to all regulatory
agency rules.
EXHIBIT 10.15
MEMBERSHIP AGREEMENT
The continued membership of Ryan Beck & Co., Inc. ("Ryan Beck") in the
National Association of Securities Dealers, Inc. ("NASD") is contingent
upon the execution of this Membership Agreement ("Agreement") and its
submission to the New York District Office, located at 33 Whitehall
Street, New York, NY 10004-2193.
This Agreement shall remain in effect and bind Ryan Beck and all of its
successors to ownership or control unless this Agreement is changed,
removed, or modified pursuant to applicable NASD rules.
A. Undertakings
Ryan Beck undertakes to: (1) engage only in the business set forth in this
Agreement; (2) abide by any restriction specified in Section C below; (3)
obtain the prior approval of NASD Regulation pursuant to Rule 1017 before
removing or modifying any restrictions imposed; and (4) notify and obtain
the prior approval of NASD Regulation pursuant to Rule 1018 before
effecting a change in ownership or control, or a material change in
business operations.
B. Business Activities
The activities in which Ryan Beck may engage are based on its business
plan together with the information provided during or subsequent to the
membership application process. Ryan Beck represents that it will not
engage in any activities which were not proposed during or subsequent to
the membership application process, and consequently, were not reviewed by
NASD Regulation during that process or subsequent thereto. In this regard,
Ryan Beck represents that it will o perate within the scope of the
following business activities:
(1) Maintain a minimum net capital requirement of $250,000 pursuant to SEC
Rule 15c3-1 (a)(2)(i);
(2) The Finn will operate under the full provisions of SEC Rule 15c3-3 for
the redemption of customer municipal coupons. The Firm will hold future
interest only coupons and will not hold customer funds or safekeep
customer securities. All other general securities transactions will be
cleared on a fully-disclosed basis with Pershing;
(3) A. Broker or dealer retailing corporate equity securities
over-the-counter;
B. Broker or dealer selling corporate debt securities;
C. Underwriter or selling group participant;
D. Municipal securities dealer;
E. Municipal securities broker;
F. Put and call broker or dealer or option writer;
G. Mutual fund retailer on a wire-order and fully-disclosed basis;
H. Broker or dealer selling variable life insurance or annuities;
I. Broker or dealer making inter-dealer markets in corporate securities
over-the-counter;
J. Trading securities for own account; and
K. Operate three (3) OSJ Branch Offices located as follows: Bala Cynwyd,
Pennsylvania, conducting retail sales and corporate finance advisory
services; West Palm Beach, Florida, conducting retail sales; Shrewsbury,
New Jersey, conducting retail sales; and one (1) non-OSJ Branch Office
located at Chicago Illinois, conducting corporate finance advisory
services.
C. Restrictions
The following restrictions have been previously imposed on Ryan Beck,
and shall remain in effect until modified or removed by NASD Regulation in
accordance with Rule 1017 and the application process outlined therein:
None.
D. Notifications
Ryan Beck will promptly notify NASD Regulation through the District
Office where it maintains its principal place of business in the event of
(1) changing its: (a) clearing entity or service bureau, or method of
clearance (b) method of bookkeeping or recordkeeping, i.e. computer to
manual or utilizing an outside computer service;
(2) the Firm's intent to open a branch office and obtain prior
approval from the District Office; and
(3) any significant change of the firm's key personnel, including but not
limited to, change or loss of the (General, DPP, etc.) Securities
Principal, Chief Compliance Officer, and/or Financial and Operations
Principal.
E. Certification
Pursuant to Article III, Section 1, of the NASD By-Laws, Ryan Beck
agrees:
(1) to comply with the federal securities laws, the rules and regulations
thereunder, the rules of the Municipal Securities Rulemaking Board and the
Treasury Department, the By-Laws of the NASD, NASD Regulation, and Nasdaq,
the Rules of the Association, and all rulings, orders, directions, and
decisions issued and sanctions imposed under the Rules of the Association;
(2) to pay such dues, assessments, and other charges in the manner and
amount as from time to time shall be fixed pursuant to the NASD By-Laws,
Schedules to the NASD ByLaws, and the Rules of the Association; and
(3) that this Agreement has been executed on behalf of, and with the
authority of, said Applicant. The undersigned and Applicant represent that
the information and statements contained within the application and other
information filed are current, true, and complete. The undersigned and
Applicant further represent that to the extent any information previously
submitted is not amended, such information is currently accurate and
complete and agree that the information contained in Form BD will be kept
current and accurate by proper amending the form as changes occur.
Any activity that does not conform to the provisions set forth in this
Agreement may form the basis for disciplinary action by the Association
against Ryan Beck, its owners, or associated persons.
Signature:
/s/ Ben A. Plotkin
Ben Plotkin, President & Chief Executive Officer
2/27/98
Date
EXHIBIT 12
<TABLE>
RYAN, BECK & CO. INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
<CAPTION>
YEARS ENDED DECEMBER 31
PRO-FORMA 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before
provision (benefit)
for income taxes $6,739 $6,139 $357 $2,866 $7,880 $6,785 $5,586
Add:
Interest expense 774 816 1,096 473 200 127 107
Rental expense
representative of
interest factor 249 295 214 196 172 193 197
Earnings for
computation purposes $7,762 $7,250 $1,667 $3,535 $8,252 $7,105 $5,890
Fixed charges:
Interest expense-net $774 $816 $1,096 $473 $200 $127 $107
Rental expense
representative of
interest factor 249 295 214 196 172 193 197
Pretax effect of
dividends on
preferred stock 0 223 317 299 435 - -
Combined fixed charges $1,023 $1,334 $1,627 $968 $807 $320 $304
Ratio of earnings to
combined fixed charges 7.6 5.4 1.0 3.7 10.2 22.2 19.4
</TABLE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration
Statement No. 333-33427 of the Ryan, Beck & Co., Inc. (the "Company")
1997 Employee Restricted Stock Purchase Plan on Form S-8 of our report
dated February 20, 1998, appearing in the Annual Report on Form 10-K of
Ryan, Beck & Co., Inc. for the year ended December 31, 1997. We also
consent to the incorporation by reference in the Registration Statement
No. 333-30325 of the Company for the 1996 Stock Option Plan and the
Amended and Restated Ryan, Beck & Co., Inc. Restricted Stock Grant Plan
on Form S-8 of our report dated February 20, 1998, appearing in the
Annual Report on Form 10-K of Ryan, Beck & Co., Inc. for the year ended
December 31, 1997.
New York, New York
March 11, 1998
THIS DOCUMENT CONTAINS AUTOMATIC PARAGRAPH NUMBERING.
3
1
F20
29
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the December 31, 1997
10-K and is qualified in it's entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 7415
<SECURITIES> 43989
<RECEIVABLES> 1793
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 527
<PP&E> 3752
<DEPRECIATION> 884
<TOTAL-ASSETS> 56592
<CURRENT-LIABILITIES> 34931
<BONDS> 0
0
0
<COMMON> 368
<OTHER-SE> 21293
<TOTAL-LIABILITY-AND-EQUITY> 56592
<SALES> 37743
<TOTAL-REVENUES> 37743
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 30788
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 816
<INCOME-PRETAX> 6139
<INCOME-TAX> 2274
<INCOME-CONTINUING> 3865
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3865
<EPS-PRIMARY> 1.13
<EPS-DILUTED> 1.09
</TABLE>
