Exhibit 2.1
RYAN, BECK & CO., L.L.C.
Acquisition of Certain Assets of
GRUNTAL & CO., L.L.C.
AND
GRUNTAL FACILITIES MANAGEMENT L.L.C.
Amended and Restated Agreement
This Amended and Restated Agreement, dated April 20, 2002 (this "AGREEMENT"), by
and among Gruntal Financial, L.L.C., Gruntal & Co., L.L.C. and Gruntal
Facilities Management L.L.C. (together, the "SELLERS") and Ryan, Beck & Co.,
L.L.C. ("RYAN BECK") supersedes and replaces the Binding Agreement among the
Sellers and Buyer with respect to certain assets and liabilities of Sellers.
In consideration of the respective representations, warranties and covenants of
the parties contained herein, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. TRANSACTION TERMS
A. ACQUIRED ASSETS - On the Closing Date, Ryan Beck will acquire,
or will cause one of its affiliates to acquire, the following
assets from the Sellers:
1. customer accounts existing on the Closing Date and
attributed on the books and records of Sellers to
account executives assigned to the Ryan Beck
Locations (as that term is hereinafter defined)
("CUSTOMER ACCOUNTS"), and all assets in those
Customer Accounts, subject to the rights of customers
2. books and records relating to Customer Accounts
3. security deposits with respect to the Ryan Beck
Locations
4. the right to use the Gruntal name, trademarks and
intellectual property associated with the business
being acquired
5. forgivable loans made to account executives hired by
Ryan Beck hereunder
6. subject to the Tri-Party Agreement among the Sellers,
Ryan Beck and Ladenburg Thalmann & Co. Inc.
("Ladenburg"), dated the date hereof (the "TRI-PARTY
AGREEMENT"), the Amended And Restated Gruntal & Co.,
L.L.C. Deferred Compensation Plan, effective as of
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December 14, 2000 (the "PLAN"), and the assets
segregated for the Plan for employees of the Sellers
transferring to Ryan Beck and Ladenburg
7. prepaid rent on the Ryan Beck Locations
8. the rights and contracts described in Section 1.C
below
9. the furniture, fixtures and equipment ("FFE") which
are owned by the Sellers (whether or not subject to a
lien, pledge or encumbrance of any sort) which is
located at facilities at Ryan Beck Locations which
Ryan Beck determines are reasonably necessary to
service Customer Accounts
10. the right to use the compliance and procedure manuals
of Gruntal & Co., L.L.C. necessary to implement the
supervision, compliance and support services to
maintain and service Customer Accounts
11. documents, material, agreements, and information in
possession of the Sellers relating to the Acquired
Assets and Assumed Liabilities
12. certain other assets to be agreed upon by the
parties.
B. ASSUMED LIABILITIES -- On the Closing Date, Ryan Beck will
assume only those liabilities and contract obligations of the
Sellers described in Section 1.C below and those associated
with the Acquired Assets which are specified on the attached
Schedule of Assumed Liabilities, and no others. In further
limitation of the foregoing, Ryan Beck will not assume:
1. any liabilities which are not related to the Acquired
Assets
2. liabilities for litigation, arbitrations or other
claims relating to operations prior to the Closing
Date, whether instituted before or after the Closing
Date, or
3. liabilities to employees of any of the Sellers,
whether or not those employees are hired by Ryan Beck
or Ladenburg, other than liabilities under the Plan
to employees hired by Ryan Beck (except that Ryan
Beck will undertake those obligations to employees of
the Sellers specified in Section 3.C below and under
the Plan).
C. SUBLEASES; ASSIGNMENT - On the Closing Date, Ryan Beck and the
Sellers shall enter into one or more subleases (each a
"SUBLEASE") pursuant to which, for a period of 90 days
following the Closing Date, the Sellers shall provide to Ryan
Beck the benefits of, and Ryan Beck shall perform on the
Sellers' behalf the Sellers' obligations arising during the
sublease period
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(but specifically excluding any obligations which arose prior
to the Closing Date and any penalties or other obligations
arising from the failure of the other party to consent to the
sublease) under: (i) the third party vendor contracts which
Ryan Beck determines are reasonably necessary to maintain and
service Customer Accounts ("SELECTED VENDOR CONTRACTS"), (ii)
the real property leases ("SELECTED REAL PROPERTY LEASES") on
facilities which Ryan Beck determines are reasonably necessary
to service Customer Accounts, and (iii) the contracts by which
the Sellers have rights in the FFE which is not owned outright
by the Sellers (whether it is leased or pledged) and located
at facilities at Ryan Beck Locations which Ryan Beck
determines are reasonably necessary to service Customer
Accounts (the "SELECTED FFE CONTRACTS", and together with the
Selected Vendor Contracts and the Selected Real Property
Leases, the "SELECTED CONTRACTS"). Each Sublease shall provide
that upon notice from Ryan Beck during the 90 days following
the Closing Date (a "TERMINATION NOTICE"), the Sublease shall
terminate with respect to the Selected Contracts identified by
Ryan Beck in such Termination Notice, and Ryan Beck shall have
no obligation to assume such underlying Selected Contracts;
PROVIDED, HOWEVER, that no such termination shall take effect
until the end of such 90 day period with respect to any
Special Vendor Contract, a Special Real Property Lease or a
Special FFE Contract. Ryan Beck shall have the right to send
multiple Termination Notices at any time or from time to time
during the 90 day period. Each Sublease shall also provide
that upon notice from Ryan Beck during the 90 day period (an
"ASSIGNMENT NOTICE"), the Sellers shall assign to Ryan Beck
the underlying Selected Contracts identified by Ryan Beck in
such Assignment Notice, and Ryan Beck shall assume the
Sellers' obligations under those underlying Selected
Contracts. Ryan Beck shall have the right to send multiple
Assignment Notices at any time or from time to time during the
90 day period. Notwithstanding the foregoing, each Sublease
shall provide that Ryan Beck is obligated to deliver an
Assignment Notice within the 90 day period with respect to
those Selected Contracts which relate to a specific branch
office at a Ryan Beck Location if, at any date within ten
business days prior to the end of the 90 day period, all of
the following conditions are met with respect to such branch
office location:
(i) substantially all (measured in number and value as of the
date hereof) of the Customer Accounts for such location have
been transferred to Ryan Beck and not subsequently closed,
(ii) substantially all of the account executives having
primary responsibility for those Customer Accounts have
accepted employment offers from Ryan Beck, and
(iii) Ryan Beck and the Sellers have received consents from
non-governmental third parties to the assignment and
assumption of all
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contracts which relate to the operation of the business at the
branch office location, except to the extent that the absence
of such consents, taken in the aggregate would not reasonably
be expected to materially adversely affect Ryan Beck's
operation of the business at the location, and
(iv) Ryan Beck has not reasonably determined that the terms
and conditions of the Real Property Lease relating to the
branch office are materially less favorable than terms and
conditions which Ryan Beck could obtain for comparable
property usable for a branch office at a nearby location.
D. EXCLUDED ASSETS - Ryan Beck will not acquire any asset which
is not an Acquired Asset, and will not acquire any employees,
contracts, leases, personal property, furniture, fixtures,
equipment, or books and records not associated with the
maintenance or service of the Customer Accounts and not
associated with investment banking or capital markets
activities deemed by Ryan Beck to be compatible with its
business.
E. GMS GROUP - Ryan Beck will also acquire all of the issued and
outstanding equity interests of The GMS Group, L.L.C. ("GMS")
Upon the request of GMS following the Closing Date, Ryan Beck
will promptly contribute up to $1.25 million to the capital of
GMS.
F. AGREEMENT WITH RESPECT TO PLAN. Further terms and agreements
with respect to the Plan are set forth in the Tri-Party
Agreement and such terms and agreements shall control.
2. PURCHASE PRICE
In exchange for the Acquired Assets, Ryan Beck will assume the Assumed
Liabilities and pay to the Sellers an amount equal to the excess net capital of
GMS at the Closing Date. As additional consideration, Ryan Beck will make the
"PLAN FORFEITURE PAYMENTS" to the Sellers as set forth in the Tri-Party
Agreement.
3. OTHER MATERIAL TERMS
A. INSURANCE -- Ryan Beck will keep in effect all SIPC and other
insurance required by law or governmental authorities to be
maintained with regard to the Customer Accounts.
B. CAPITAL -- Ryan Beck will receive an infusion, as needed, of
$15 million of capital during the 90 day period following
execution of this Agreement in order to facilitate the
transaction. The capital will not come from the Sellers,
Zurich Global Assets LLC, Orange Stone LLC, or any affiliate
of any of them.
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C. PERSONNEL AND PROCEDURES - As promptly as practicable after
the date hereof, and in any event prior to the Closing Date,
Ryan Beck will make offers of employment to all account
executives employed as of the Closing Date who are servicing
Customer Accounts, those personnel necessary to provide
supervision, compliance and support services to maintain and
service those Customer Accounts, and those employees of the
Sellers involved in capital markets activities deemed by Ryan
Beck to be compatible with Ryan Beck. Ryan Beck will continue
the compensation arrangements currently in effect for account
executives who accept employment with Ryan Beck, whether such
arrangements are based on the current Gruntal grid or
otherwise, it being understood that Ryan Beck will combine the
grids of the two firms approximately 180 days after the
Closing Date. Branch managers will be offered compensation
arrangements for at least 180 days subsequent to the Closing
Date which are substantially the same as what they now have.
Beginning 90 days after the Closing Date, Ryan Beck will use
good faith efforts to reach agreement with each branch manager
to establish a compensation package which will become
effective following that 180 day period.
D. CONDITIONS -
1. Each party's obligation to close the transactions
contemplated hereby on the Closing Date is
conditioned upon the review and non-objection (or
approval if required) of applicable regulatory
authorities and self-regulatory organizations. If a
regulatory authority or self-regulatory organization
will permit the transactions to proceed subject to
subsequent compliance with conditions, such
permission shall not be deemed to comply with this
provision if the subsequent conditions would create a
substantial burden for Ryan Beck which is not
otherwise contemplated by this Agreement.
2. Ryan Beck's obligation to consummate the transactions
contemplated hereby on the Closing Date is also
conditioned upon: (i) execution of an amended
clearing agreement between Pershing and Ryan Beck
that contemplates the proposed transaction and is
acceptable to Ryan Beck, (ii) the accuracy as of the
Closing Date of the representations and warranties of
the Sellers contained herein, and (iii) there having
been no material adverse change in the financial
condition and business operations of GMS since March
31, 2002 (excluding the $1.25 million paid by GMS and
previously disclosed to Ryan Beck).
3. The Sellers' obligation to consummate the
transactions contemplated hereby on the Closing Date
is also conditioned upon the accuracy as of the
Closing Date of the representations and warranties of
Ryan Beck contained herein.
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E. COOPERATION - The Sellers will cooperate in the transfer of
Customer Accounts, employees and account executive
registrations to Ryan Beck. Ryan Beck will make transferred
employees and books and records relating to Customer Accounts
and other Acquired Assets reasonably available to the Sellers
after the Closing Date in connection with the defense of
litigation and arbitration not being assumed by Ryan Beck.
This paragraph E is not intended to obligate Ryan Beck to make
available to the Sellers the legal services of any attorneys
hired by Ryan Beck in connection with this transaction. The
Sellers will cooperate with Ryan Beck to facilitate the
acquisition by Ryan Beck of the existing investment banking,
institutional sales, and other relationships of the Sellers.
Upon execution of this Agreement, the Sellers hereby consent
that Ryan Beck may employ certain employees of the Sellers who
Ryan Beck reasonably believes may be essential to facilitate
the transactions contemplated herein. The cooperation required
under this paragraph shall be provided without charge, except
for out-of-pocket expenses.
4. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
A. The Sellers hereby represent and warrant to Ryan Beck:
(i) they have full limited liability company power and
authority to execute and deliver this Agreement and
to perform their obligations hereunder and to
consummate the transactions contemplated hereby;
(ii) the execution and delivery by them of this Agreement,
and the performance by them of their obligations
hereunder, including the authority to sell, assign
and transfer to Ryan Beck all of the equity interests
of GMS free of any lien or encumbrance, have been
duly and validly authorized by their respective
Executive Committees, no other action on their part
being necessary;
(iii) The GMS Group, L.L.C. is a limited liability company
duly organized, validly existing and in good standing
under the laws of the state of Delaware and the sole
member of GMS has authorized the sale of its entire
equity interest in GMS to Ryan Beck as contemplated
herein;
(iv) the Sellers have title to all of the Acquired Assets,
free and clear of any lien, except that some of the
real property leases, furniture, fixture and
equipment, and third party vendor contracts may be
subject to non-assignment or non-sublet provisions or
be subject to leases, liens or other encumbrances.
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(v) the Termination and Settlement Agreement, dated the
date hereof, among Sellers, Ryan Beck and Ladenburg
has been executed and is effective.
(vi) There is not a material level of deficit Customer
Accounts.
B. Ryan Beck hereby represents and warrants to the Sellers:
(i) after the Closing Date, Ryan Beck will be solvent and
able to meet all obligations in the ordinary course
of its business;
(ii) after the Closing Date, Ryan Beck will meet all
regulatory capital requirements;
(iii) after the Closing Date, Ryan Beck will be financially
able to, and will, perform the obligations assumed by
it hereunder in accordance with their terms;
(iv) Ryan Beck has full limited liability company power
and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to
consummate the transactions contemplated hereby;
(v) Ryan Beck is a limited liability company duly
organized, validly existing and in good standing
under the laws of the state of New Jersey; and
(vi) the execution and delivery by it of this Agreement,
and the performance by it of its obligations
hereunder, have been duly and validly authorized by
its Executive Management Committee and its sole
member, no other action on its part being necessary.
C. the Sellers shall jointly and severally indemnify Ryan Beck
and its affiliates for any losses any of them sustains arising
from or in connection with (i) a breach of any of the
representations and warranties of the Sellers, (ii) other
costs or losses in connection with the operation of the
business prior to the Closing Date that do not constitute an
Assumed Liability, or (iii) any Liabilities of the Sellers
which are not expressly assumed by Ryan Beck.
D. Ryan Beck shall indemnify the Sellers and their affiliates for
any losses any of them sustains arising from or in connection
with (i) a breach of any of the representations and warranties
of Ryan Beck, (ii) other costs or losses in connection with
the operation of the business after the Closing Date, or (iii)
any Assumed Liabilities.
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E. Losses indemnifiable by either party under paragraphs C or D
above shall expressly exclude consequential damages, special
or incidental damages, punitive damages, exemplary damages,
enhanced damages, multiple damages, indirect damages and other
penalty or speculative damages, except to the extent such
damages are recovered by a third party against the party
entitled to indemnification hereunder.
5. CLOSING DATE
The transactions contemplated hereby shall close on that business day
(the "CLOSING DATE") which is the later of (i) one business day following the
satisfaction or waiver of all the conditions set forth in Section 3.D hereof or,
(ii) April 26, 2002, or such other date on which the parties shall mutually
agree. If the transactions contemplated hereby are not consummated on or before
May 10, 2002, either party may terminate this Agreement after which it shall be
of no further force or effect.
6. CONFIDENTIALITY
The parties shall mutually agree as to the timing and substance of the
public announcement of this Agreement. Except for such agreed-upon public
announcement, disclosures to Ladenburg and vendors and creditors of the Sellers,
the parties shall, and shall cause their affiliates to, maintain the
confidentiality of the terms and conditions of this Agreement, except where the
other parties have consented to the disclosure, and except as it may be
necessary to disclose pursuant to applicable securities laws, or to regulatory
authorities, SROs, the parties' employees and the parties' authorized
representatives.
7. PRIVATE CLIENT GROUP
Ryan Beck will provide the benefits set forth on Exhibit A to the
Private Client Group and GMS.
8. LADENBURG LOCATIONS AND RYAN BECK LOCATIONS
The parties acknowledge that one or more of the Sellers are
simultaneously herewith entering into an agreement with Ladenburg pursuant to
which Ladenburg is to acquire customer accounts and related assets and assume
certain liabilities with respect to the operations of the Sellers at the
following locations: Hewlett, New York, Syosset, New York, 650 Madison Avenue,
New York, New York and Chicago, Illinois (the "LADENBURG LOCATIONS"). As used
herein, the term "RYAN BECK LOCATIONS" means all office locations of the Sellers
where registered representatives conduct a retail brokerage other than the
Ladenburg Locations; PROVIDED, HOWEVER, that if the rights to acquire the
business at any one or more of the Ladenburg Locations is transferred to Ryan
Beck in accordance with the Tri-Party Agreement, then such transferred Ladenburg
Locations shall be deemed a Ryan Beck Location hereunder.
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9. GRUNTAL NAME.
Following the Closing Date, the Sellers and their affiliates shall use
reasonable efforts to promptly stop using the "Gruntal" name and trademarks and
shall change the names of their entities, with all use of the name terminating
and the name changes being accomplished within 180 days.
10. SPECIFIC PERFORMANCE.
In addition to all other remedies that may be available, the parties
shall be entitled to specific performance and injunctive or other equitable
relief as a remedy for any breach of this Agreement.
11. NOTICES
All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person or by
fax, addressed to the President, with a copy to the General Counsel and in the
case of the Sellers to Harvey Spear at Cadwalader, Wickersham & Taft.
12. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made in and to be
performed entirely within such state.
13. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
14. ENTIRE AGREEMENT; THIRD-PARTY RIGHTS
Except for the Tri-Party Agreement and the Termination and Settlement
Agreement dated the date hereof by and among the Sellers, Ryan Beck and
Ladenburg, this Agreement contains the entire agreement between the parties with
respect to the matters contemplated hereby and supersedes all prior arrangements
or understandings with respect thereof, written or oral. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors except as assignees, any rights,
remedies, obligations or liabilities under or by reason of this Agreement. This
Agreement may not be amended, superseded or rescinded except in a writing signed
by all parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on their respective behalf, by their respective officers thereunto duly
authorized, all as of the day and year first above written.
RYAN, BECK & CO., L.L.C. GRUNTAL FINANCIAL, L.L.C.
By: /s/ Robert M. Berson By: /s/ Donald N. Cohen
--------------------------- -------------------------------------
Name: Robert M. Berson Name: Donald N. Cohen
Title: President Title: Secretary
GRUNTAL & CO, L.L.C.
By: /s/ Donald N. Cohen
-------------------------------------
Name: Donald N. Cohen
Title: Senior Vice President
GRUNTAL FACILITIES
MANAGEMENT, L.L.C.
By: /s/ Donald N. Cohen
-------------------------------------
Name: Donald N. Cohen
Title: Secretary
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