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Item 1.01
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Entry into a Material Definitive Agreement.
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On October 31, 2019, Morgan Group Holding Co. (the “Company”) entered into and concurrently closed the transaction governed by, an agreement and plan of
merger, dated as of such date (the “Merger Agreement”), by and among the Company, G.R. Acquisition, LLC, a wholly owned subsidiary of the Company (“Merger Sub”), G.research, LLC (“G.research”), Institutional Services Holdings, LLC, the sole member
of G.research (“ISH”), and Associated Capital Group, Inc., parent of ISH (“AC”).
The Company and AC are affiliates under the common control of Mario J. Gabelli.
Acquisition of G.research; Acquisition Consideration
Upon the closing of the transactions contemplated in the Merger Agreement (the “Closing”), Merger Sub was merged with and into G.research (the “Merger”),
resulting in G.research becoming a wholly owned subsidiary of the Company. G.research is an SEC registered broker-dealer and member of Finra which operates an institutional research and securities brokerage business.
As a result of the Merger, an aggregate of 50,000,000 shares of common stock, par value $0.01 per share (“Common Stock”), of the Company were issued to ISH
upon the conversion of the limited liability company interest in G.research held by ISH immediately prior to the effective time of the Merger.
The parties agreed that the Company would cause the Company’s board of directors to consist of three directors designated by G.research immediately after the
Merger, the Company’s incumbent directors and officers would resign effective as of the Merger and the Company’s officers immediately after the Merger would be appointed by the board of directors in office after the Merger.
Representations and Warranties
In the Merger Agreement, G.research makes certain representations and warranties (with certain exceptions set forth in the disclosure schedule to the Merger
Agreement) relating to, among other things: (a) proper corporate organization of G.research and its subsidiaries and similar corporate matters; (b) authorization, execution, delivery and enforceability of the Merger Agreement; (c) absence of
conflicts; (d) capitalization; (e) financial statements; (f) absence of undisclosed liabilities; (g) accuracy of books and records; (h) absence of certain changes or events; (i) affiliate transactions; (j) title to assets and properties; (k)
ownership of intellectual property; (l) material contracts; (m) litigation; (n) compliance with laws; (o) licenses and permits; (p) taxes and audits; (q) employment and labor matters; (r) environmental matters; (s) brokers and finders; and (t)
other customary representations and warranties.
In the Merger Agreement, the Company makes certain representations and warranties relating to, among other things: (a) proper corporate organization of the
Company and Merger Sub and similar corporate matters; (b) authorization, execution, delivery and enforceability of the Merger Agreement; (c) absence of conflicts; (d) capitalization; (e) SEC filings and financial statements; (f) absence of
undisclosed liabilities; (g) absence of certain changes or events; (h) material contracts; (i) litigation (j) validity of share issuance; and (k) brokers and finders.
Conduct Prior to Closing; Covenants
The Merger Agreement contains certain customary covenants of the Company and G.research, including, among other things, the following:
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G.research agreed to operate its business in the ordinary course prior to the closing of the Merger (with certain exceptions) and not to take certain specified actions without the prior written consent of the Company.
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The Company agreed to operate its business in the ordinary course prior to the closing of the Merger (with certain exceptions) and not to take certain specified actions without the prior written consent of AC.
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In addition, Company agreed to a covenant obligating it to refrain from pursuing alternative acquisition proposals. The parties agreed to take commercially
reasonable efforts to undertake the actions necessary to consummate the Merger.
Conditions to Closing
The obligation of the Company and G.research to consummate the Merger was conditioned on, among other things, (a) all necessary governmental approvals having
been obtained; and (b) the absence of any order, stay, judgment or decree by any government agency restraining or prohibiting or imposing any condition on the closing of the Merger. The obligations of G.research to consummate the transactions
contemplated by the Merger Agreement, in addition to the foregoing conditions, were conditioned upon, among other things, (x) the representations and warranties of the Company being true and correct and (y) the Company complying in all material
respects with all of its covenants and obligations under the Merger Agreement. The obligations of the Company to consummate the transactions contemplated by the Merger Agreement, in addition to the foregoing conditions, were conditioned upon, among
other things, (i) the representations and warranties of the G.research being true and correct and (ii) G.research complying in all material respects with all of its covenants and obligations under the Merger Agreement.
On October 31, 2019, immediately prior to the Closing, the Company entered into and concurrently closed the purchase and sale of Common Stock (the “Private
Placement”) governed by, a securities purchase agreement, dated as of such date (the “Securities Purchase Agreement”), by and among the Company and the investors signatory thereto (the “Investors”). Pursuant to the Securities Purchase Agreement,
the Company issued and sold 5,150,000 shares of Common Stock at $0.10 per share for total proceeds of $515,000. The Securities Purchase Agreement contained customary representations, warranties and agreements.
The foregoing descriptions of the Merger Agreement and the Securities Purchase Agreement are not complete and are qualified in their entirety by reference to
the full text of such agreements, a copies of which are attached hereto as Exhibits 2.1 and 10.1, and are incorporated into this Item 1.01 by reference.