SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 28, 2000
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Firebrand Financial Group, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-21105 13-3414302
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(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
One State Street Plaza, New York, New York 10004
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 208-6500
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Disposition of Assets
On November 28, 2000, Firebrand Financial Group, Inc. ("Firebrand"),
Firebrand's wholly owned subsidiary, GKN Securities Corp. ("GKN"), and Investec
Ernst & Company ("Investec"), entered into an agreement ("Agreement"). Under the
Agreement, certain brokers ("Brokers") employed by GKN were terminated by
GKN on or about December 18, 2000 ("Transfer Date"). In turn, on the Transfer
Date, these Brokers were offered employment by Investec and GKN effected an
electronic, negative transfer of these Brokers' client accounts to Investec. The
transfer is part of Firebrand's strategy to contract its full service retail
brokerage business.
Under the Agreement, GKN will receive certain percentages of the gross
commissions generated by these Brokers at Investec during the three-year period
beginning on the Transfer Date ("Override Fees"). These percentages are 6% in
the first year and 8% in each of the second and third years. Investec has
guaranteed that the Override Fees to be received by GKN shall be at least equal
to $500,000 in the first year, $400,000 in the second year and $300,000 in the
third year.
Under the Agreement, GKN has agreed to refrain from soliciting any Broker
or client account from Investec for 54 months, while Investec has agreed to
refrain from soliciting GKN employees, other than the Brokers, for a period of
180 days. The Agreement provides for customary indemnity obligations between
the parties.
In addition, GKN is entering into a number of other transactions with other
broker/dealer firms to transfer remaining (after the Investec transaction) GKN
accounts to these broker/dealer firms; as in the Investec transaction, these
firms are hiring the ex-GKN brokers that serviced those accounts. Going forward,
GKN expects to be paid an override on the production of these transferred
brokers. Two of the firms with which GKN is having negotiations are FFGI's other
partially-owned broker/dealers: Shochet Securities, Inc. and EarlyBirdCapital,
Inc.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(b) Pro Forma Financial Information*
(c) Exhibits
* To be filed by amendment not later than 60 days after the date this
Report must be filed.
Exhibit Number Description
2 Letter agreement between GKN Securities Corp.
and Investec Ernst & Company dated November 28,
2000
99 Firebrand Financial Group, Inc. Press Release
dated December 18, 2000
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 28, 2000 FIREBRAND FINANCIAL GROUP, INC.
By: /s/ John P. Margaritis
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John P. Margaritis
President and Chief
Executive Officer
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EXHIBIT INDEX
Exhibit Number Description
2 Letter agreement between GKN Securities Corp.
and Investec Ernst & Company dated November 28,
2000
99 Firebrand Financial Group, Inc. Press Release
dated December 18, 2000
