EXECUTION COPY
EXHIBIT 10-X
STOCK PURCHASE AGREEMENT
by and among
STIFEL FINANCIAL CORP.
BUTLER WICK & CO., INC.
BUTLER WICK CORP.
and
UNITED COMMUNITY FINANCIAL CORP.
Dated
December 18, 2008
STOCK PURCHASE AGREEMENT
This STOCK
PURCHASE AGREEMENT is entered into as of this 18 th day
of December, 2008, by and among Stifel Financial Corp., a Delaware
corporation ("Parent"), Butler Wick & Co., Inc., an Ohio
corporation (the "Company"), United Community Financial
Corp., an Ohio corporation ("UCFC"), and Butler Wick Corp., an Ohio
corporation ("BWC", and, together with UCFC, "Sellers").
Parent, the Company, UCFC and BWC are each referred to herein
individually as a "Party" and collectively as the
"Parties". Capitalized terms are defined in Article
1.
RECITALS
A.
Parent desires to purchase, or to cause its
wholly-owned subsidiary Stifel, Nicolaus & Company,
Incorporated, a Missouri corporation ("Stifel Nicolaus"), to
purchase, from BWC and UCFC, on the following terms and conditions,
the Shares (as defined below), which comprise all of the issued and
outstanding capital stock of the Company; and
B.
UCFC desires to cause BWC to sell the Shares to Parent (or Stifel
Nicolaus, as assignee of Parent pursuant to Section 11.4),
on the following terms and conditions.
NOW,
THEREFORE, in consideration of the foregoing recitals and the
mutual covenants, representations, warranties, conditions, and
agreements contained herein and in the Related Agreements, and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally
bound, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
The following terms shall have the meanings set forth below in this
Article 1. 1.1 "Acquisition
Proposal" has the meaning set forth in Section 6.10.
1.2 "Advisers Act"
means the United States Investment Advisers Act of 1940, as
amended, and the rules and regulations promulgated thereunder by
the SEC.
1.3
"Affiliate" means with respect to any specified Person, any
other Person that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, such specified Person. If the Person referred to is a
natural person, the term "Affiliate" refers to any member of such
Person's immediate family. The term "control" (including, with
correlative meaning, the terms "controlled by" and "under common
control with") as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or
otherwise.
1.4 "Agreement"
means this Stock Purchase Agreement as executed on the date
hereof and as amended or supplemented in accordance with the terms
hereof, including the
Company Disclosure
Letter, the Parent Disclosure Letter and all Schedules, Annexes and
Exhibits hereto.
1.5 "Assets" has the meaning set
forth in Section 3.10.
1.6
"Assignment of Trademarks" means an agreement assigning all
right, title and interest in the Butler Wick Principal Marks to
Parent at Closing, in form and substance reasonably satisfactory to
Parent.
1.7
"Audited Financial Information" has the meaning set forth in
Section
3.9(a).
1.8 "Business" means the
business conducted by the Company and its
Controlled Affiliates on the date hereof.
1.9 "Business Day" means
any day which is not a Saturday, Sunday or legal
holiday in the State of Ohio, United States of America.
1.10
"Business Employee" means collectively the employees of the
Company, including, without limitation, Thomas J. Cavalier,
Franklin S. Bennett, Jr., Ralph T. Meacham and Michael Paterchak,
engaged in the Business on the date hereof and at any time prior to
Closing.
1.11 "Butler Wick Principal Marks"
includes any Trademarks that include the
term "Butler Wick" or any variation thereof or the Butler Wick or
BW design.
1.12 "Butler Wick Trust Company"
means Butler Wick Trust Company, an Ohio
corporation.
1.13 "BWC" has the meaning set forth
in the introductory paragraph.
1.14 "BWTC Subleased Property" has
the meaning set forth in Section 6.16.
1.15 "Closing" has the meaning set
forth in Section 2.2(c).
1.16 "Closing Date" has the meaning
set forth in Section 2.2(c).
1.17 "Code" means the Internal
Revenue Code of 1986, as amended from time to time.
1.18 "Company" has the meaning set
forth in the introductory paragraph hereof.
1.19
"Company Benefit Plan" means each Plan to which BWC, UCFC or
the Company has any obligation with respect to the Business
Employees, or that is sponsored, maintained or contributed to or
required to be contributed to by the Company with respect to the
Business Employees, or under which the Company has or may have any
Liability.
1.20 "Company Capital Stock" has the
meaning set forth in Section 3.18(a).
1.21
"Company Customer" means any Person to which the Company
provides investment advisory, investment subadvisory, wrap,
brokerage, financial planning or similar services pursuant to a
Company Customer Contract.
1.22
"Company Customer Contract" means each material Contract
pursuant to which the Company provides investment advisory,
investment subadvisory, wrap, brokerage, financial planning or
related services to any Person.
1.23
"Company Disclosure Letter" means the letter from the
Company to Parent, dated the date hereof and as amended or
supplemented from time to time in accordance with Section
6.12(b), of exceptions to the representations and warranties
made, and the listings of information provided, by the Company
pursuant to the terms and conditions hereof.
1.24 "Company Financial Information" has the meaning set
forth in Section 3.9(a).
1.25
"Company Lease" means any lease, sublease or license,
including any amendment with respect thereto, pursuant to which the
Company uses, leases, subleases, occupies or holds any material
Company Leased Real Property in connection with the Business.
1.26
"Company Leased Real Property" means the real property
leased, subleased, occupied and/or licensed by the Company or any
Controlled Affiliate of the Company, as tenant, subtenant or
licensee in connection with the Business, together with, to the
extent leased, subleased, occupied and/or licensed in connection
with the Business by the Company or any Controlled Affiliate of the
Company, all buildings and other structures, facilities or
improvements currently located thereon, all fixtures thereto, and
all easements, licenses, rights and other appurtenances relating to
the foregoing.
1.27
"Company Licensed Intellectual Property" means the
Intellectual Property used in the Business that is not Company
Owned Intellectual Property, excluding standard, commercially
available software licensed via "click-wrap" or "shrink-wrap"
license agreements.
1.28
"Company Owned Intellectual Property" means the Intellectual
Property solely or primarily related to the Business that is owned
by the Company.
1.29 "Company Qualified Plan" has the meaning set forth in
Section 3.11(d).
1.30 "Company Stock" means the Company's common shares, no
par value per share.
1.31
"Confidential Information" means any and all information not
publicly available or generally available to the industry, which
relates to specific matters concerning BWC, the Company's
Controlled Affiliates or the Business of the Company.
1.32
"Consent" means any consent, approval, authorization,
waiver, permit, license, grant, agreement, exemption or order of or
registration, declaration or filing with,
any Person, including any Governmental Authority, that is required
in connection with (a) the execution and delivery by UCFC, BWC, the
Company, Stifel Nicolaus (if applicable) and/or Parent of this
Agreement or any Related Agreement or (b) the consummation by UCFC,
BWC, Parent, Stifel Nicolaus and/or the Company of the transactions
contemplated hereby and thereby.
1.33
"Contract" means any written contract, agreement,
understanding, lease, indenture, mortgage, deed of trust, evidence
of indebtedness, binding commitment or instrument or offer to which
the Company or any Controlled Affiliate of the Company is a party
or by which any of their respective assets is bound.
1.34
"Controlled Affiliate" of any Person means a Person that is
directly or indirectly controlled by such other Person (it being
the intention of the parties that a Controlled Affiliate of the
Company means any direct or indirect subsidiary which is directly
or indirectly controlled by the Company).
1.35 "Disclosing Party" has the
meaning set forth in Section 6.1.
1.36 "Effective Time" means the
effective time of the Closing, which shall be
deemed to be as of 11:00 p.m. Central time on the Closing Date.
1.37 "ERISA" means the Employee
Retirement Income Security Act of 1974 and
regulations promulgated thereunder, as amended from time to
time.
1.38
"ERISA Affiliate" means with respect to any specified
Person, any other Person that is or has been treated as a single
employer with such specified Person for purposes of Section 414 of
the Code.
1.39 "Escrow Agent" means U.S. Bank
National Association, or an agent to be
mutually agreed to by Parent and UCFC.
1.40
"Escrow Agreement" means the escrow agreement to be entered
into among UCFC, BWC, Parent and the Escrow Agent relating to the
escrow of the Indemnification Escrow Amount, in a form mutually
agreeable to the Parties and otherwise on commercially reasonable
terms.
1.41 "Escrow Claim Notice" has the
meaning set forth in Section 9.6(c).
1.42 "Escrow Period" has the meaning
set forth in Section 9.6(c).
1.43 "Estimated Closing Date Balance
Sheet" has the meaning set forth in Section 2.3.
1.44 "Estimated Net Equity Value"
has the meaning set forth in Section 2.3.
1.45 "Exchange Act" means the United
States Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder by
the SEC.
1.46 "Filings" has the meaning set forth
in Section 3.7(j).
1.47 "Final Closing Date Balance
Sheet" has the meaning set forth in Section
2.4(a)(ii).
1.48
"FINRA" means the Financial Industry Regulatory Authority
(including any predecessor entity, including without limitation the
National Association of Securities Dealers, Inc., as applicable for
purposes of the Company's representations and warranties
herein).
1.49 "First Escrow Release Date" has the meaning set
forth in Section 9.6(c).
1.50 "GAAP" means the accounting principles generally
accepted in the U.S., including as set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, and
applied consistently throughout the periods involved.
1.51
"Governmental Authority" means any federal, national,
supranational, state, provincial, local, or similar government,
governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body,
including the SEC and any SRO within or outside the United
States.
1.52
"Income Tax" means any Tax imposed upon or measured by net
income or gross income (excluding any Tax based solely on gross
receipts) including any interest, penalty, or additions thereto,
whether disputed or not.
1.53
"Indebtedness" means, without duplication, (a) all
indebtedness for borrowed money or for the deferred purchase price
of property or services (other than current trade liabilities
incurred in the Ordinary Course), whether or not evidenced by a
writing, (b) any other indebtedness that is evidenced by a note,
bond, debenture, draft or similar instrument, (c) all obligations
under financing or capital leases, (d) all obligations in respect
of acceptances issued or created, (e) notes payable and drafts
accepted representing extensions of credit, (f) all liabilities
secured by any Lien on any property other than liens relating to
equipment leased by the Company not constituting a capital lease,
(g) letters of credit and any other agreements relating to the
borrowing of money or extension of credit and (h) any guarantee
(including by way of a "keep well" or other similar undertaking) of
any of the foregoing obligations.
1.54 "Indemnified Losses" has the
meaning set forth in Section 9.2.
1.55 "Indemnified Party" has the
meaning set forth in Section 9.4.
1.56 "Indemnifying Party" has the
meaning set forth in Section 9.4.
1.57
"Intellectual Property" means any of the following which is
material to the Business: all material patents, patent
applications, Trademarks, copyrights, copyright registrations and
applications for registration thereof, Internet domain names and
universal resource locators (URLs), trade secrets, inventions
(whether or not patentable), invention disclosures, moral and
economic rights of authors and inventors (however denominated),
technical data, customer lists, know-how, show-how, maskworks,
formulae, methods
(whether or not patentable), designs, processes, procedures,
technology, source codes, object codes, computer software programs,
databases, data collectors and other proprietary information or
material of any type, whether written or unwritten (and all good
will associated with, and all derivatives, improvements and
refinements of, any of the foregoing).
1.58 "Internal Controls"
has
the meaning set forth in Section 3.9(d).
1.59 "IRS" means the United States
Internal Revenue Service.
1.60 "Indemnification Escrow Amount"
has the meaning set forth in Section 9.6(c).
1.61 "Investment Company
Act"
means the United
States Investment Company Act of 1940, as amended, and the rules
and regulations promulgated thereunder by the SEC.
1.62
"Knowledge" or "knowledge" means, with respect to
Company, the actual knowledge of the individuals set forth in
Annex A hereto and, with respect to Parent, means the actual
knowledge of the individuals set forth in Annex B hereto,
which in each case shall be deemed to include the knowledge any
such person would have had if he or she had made a reasonable
investigation and due inquiry of those persons that such individual
would reasonably expect to have actual knowledge of the relevant
subject matter. The words "know," "knowing" and
"known" shall be construed accordingly.
1.63
"Liability" or "Liabilities" means all debts, adverse
claims, liabilities and/or obligations, direct, indirect, absolute
or contingent, whether accrued, vested or otherwise and whether or
not reflected or required to be reflected on the financial
statements of a Person.
1.64 "Lien" means any lien, security
interest, mortgage, indenture, deed of trust,
pledge, charge, adverse claim, easement, restriction or other
encumbrance.
1.65 "Losses" has the meaning set
forth in Section 9.2.
1.66 "Management Closing Bonus
Amount" has the meaning set forth in Section 6.5(d).
1.67 "Material Adverse Effect" means:
(a) with
respect to the Company and its Controlled Affiliates, a material
adverse effect on the assets, business, financial condition or
results of operations of the Company and its Controlled Affiliates
taken as a whole, but shall not be deemed to include (i) any
changes resulting from general economic, regulatory or political
conditions, (ii) circumstances that generally affect the industries
in which the Company and its Controlled Affiliates operate, (iii)
any changes resulting from the announcement, pendency or Closing of
the transactions provided for in this Agreement, including the
impact thereof on relationships with customers of the Company or
any of its Affiliates, suppliers, vendors,
lenders, joint venture participants or employees, (iv) disruptions
of supplies or acts of terrorism, war or acts of God, national or
international political or social conditions, including the
engagement by the United States in hostilities, whether or not
pursuant to the declaration of a national emergency or war, or (v)
any adverse effect that the Company, UCFC or BWC otherwise cures
prior to Closing; and
(b) with
respect to Parent, a material adverse effect on the assets,
business, financial condition or results of operations of Parent's
and its subsidiaries' businesses taken as a whole, but shall not be
deemed to include (i) any changes resulting from general economic,
regulatory or political conditions, (ii) circumstances that
generally affect the industries in which Parent and its
subsidiaries operate, (iii) any changes resulting from the
announcement, pendency or Closing of the transactions provided for
in this Agreement, including the impact thereof on relationships
with customers of the Company or any of its Affiliates, suppliers,
vendors, lenders, joint venture participants or employees, (iv)
disruptions of supplies or acts of terrorism, war or acts of God,
national or international political or social conditions, including
the engagement by the United States in hostilities, whether or not
pursuant to the declaration of a national emergency or war, or (v)
any adverse effect that the Parent otherwise cures prior to
Closing.
1.68 "Material Contract" has the
meaning set forth in Section 3.15.
1.69
"Net Equity Value" means (a) the total consolidated assets
of the Company less (b) the total consolidated liabilities of the
Company, in each case as reflected on the Estimated Closing Date
Balance Sheet or the Final Closing Date Balance Sheet, as the case
may be, in accordance with GAAP, and the accounting principles,
procedures, policies and methods used in the preparation of the
Reference Balance Sheet; provided that the liability for the
accrual for the payments contemplated by Section 6.5(d)
hereof (and any intercompany receivable for the Income Tax benefits
allocable to the Company due from UCFC in respect thereof) shall be
eliminated and disregarded in the preparation of the Estimated
Closing Date Balance Sheet and the Final Closing Date Balance
Sheet.
1.70 "Non-Competition Period" has
the meaning set forth in Section 6.3(a).
1.71 "Non-Income Taxes" means any
Taxes other than Income Taxes, including
any interest, penalties or additions thereto, whether or not
disputed.
1.72 "Non-Registered Fund" means any
pooled investment vehicle that is not
registered as an investment company under the Investment Company
Act.
1.73 "Order" means an order, writ,
injunction, or decree of any court or
Governmental Authority.
1.74
"Ordinary Course" means, with respect to the Business, only
the ordinary course of commercial operations customarily engaged in
by the Company and its Controlled Affiliates consistent with prior
practices. For purposes hereof, Ordinary Course shall not include
(a) any material violation or material default under any applicable
Requirement of Law or (b) any activity which the Company has
expressly agreed not to undertake pursuant to this Agreement.
1.75 "Parent"
has
the meaning set forth in the introductory paragraph hereof.
1.76 "Parent Common Stock" means the
common stock, par value $0.15 per
share, of Parent.
1.77 "Parent Disclosure Letter"
means the letter from Parent to UCFC, dated the date hereof and as
amended or supplemented from time to time in accordance with
Section 6.12(b), of exceptions to the representations and
warranties made, and the listings of information provided, by
Parent pursuant to the terms and conditions hereof.
1.78 "Parent Indemnified Persons"
has the meaning set forth in Section 9.2.
1.79
"Party" or "Parties" has the meaning set forth in the
first paragraph hereof.
1.80 "PBGC" means the Pension
Benefit Guaranty Corporation.
1.81 "Pension Plan"
means an employee pension benefit plan (within the meaning of ERISA
Section 3(2)).
1.82 "Permits" means all material
licenses, registrations, franchises, permits,
certificates, approvals, accreditations, or other similar
authorizations.
1.83
"Permitted Liens" means, collectively, (a) Liens that are
disclosed in the Company Disclosure Letter or identified in the
Company Financial Information, (b) liens for Taxes, fees, levies,
duties or other governmental charges of any kind which are not yet
delinquent or are being contested in good faith by appropriate
proceedings, (c) liens for mechanics, materialmen, laborers,
employees, suppliers or similar liens arising by operation of law
for amounts which are owed, but not yet delinquent, (d) in the case
of real property, any matters, restrictions, covenants, conditions,
limitations, rights, rights of way, encumbrances, encroachments,
reservations, easements, agreements and other matters of record,
such state of facts of which an accurate survey or title search of
the property would reveal and (e) other minor encumbrances in
property that do not materially impair the use of such property in
the normal operation of the Business or the value of such property
for the purpose of such Business.
1.84
"Person" means and shall include a natural person, a
partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity (or any
department, agency or political subdivision thereof).
1.85
"Plan" means any agreement, arrangement, plan, or policy, qualified
or non-qualified, whether or not considered legally binding and
whether or not written, that involves any (a) pension, retirement,
profit sharing, savings, deferred compensation, stock option, stock
purchase, phantom stock, or incentive plan; (b) welfare or "fringe"
benefits, including
without limitation vacation, holiday, severance, disability,
medical, hospitalization, dental, life and other insurance,
tuition, company car, club dues, sick leave, maternity, paternity
or family leave, health care reimbursement, dependent care
assistance, cafeteria plan, regular in-kind gifts or other
benefits; or (c) any employment, consulting, engagement, retainer
or golden parachute agreement or arrangement, including without
limitation any "employee benefit plan" as defined in ERISA Section
3(3) (together "Plans" and each item thereunder a
"Plan").
1.86
"Post-Closing Periods" means all taxable periods commencing
after the Effective Time and the portion of any Straddle Period
commencing after the Effective Time.
1.87 "Pre-Closing Periods" means all
taxable periods ending as of or prior to the
Effective Time and the portion of any Straddle Period ending as of
the Effective Time.
1.88 "Proceeding" has the meaning
set forth in Section 3.7(k).
1.89 "Purchase Price" has the
meaning set forth in Section 2.2.
1.90 "Receiving Party" has the
meaning set forth in Section 6.1.
1.91 "Records" has the meaning set
forth in Section 6.7.
1.92 "Reference Balance Sheet" has
the meaning set forth in Section 3.9(a).
1.93 "Reference Income
Statement"
has the meaning set forth in Section
3.9(a).
1.94 "Registered Investment Company" means any pooled
investment vehicle that is registered or required to be registered
as an investment company under the Investment Company Act.
1.95 "Related. Agreements" means the
Escrow Agreement and any other
certificate or document to be delivered by the parties pursuant to
this Agreement.
1.96 "Requested Indemnification Escrow
Amount" has the meaning set forth in
Section 9.6(c).
1.97
"Requirement of Law" means, with respect to any Person, any
domestic or foreign federal or state statute, law, ordinance, rule,
administrative code, administrative interpretation, regulation,
order, consent, writ, injunction, directive, judgment, decree,
policy, ordinance, decision, guideline or other requirement of (or
agreement with) any Governmental Authority (including any
memorandum of understanding or similar arrangement with any
Governmental Authority), in each case binding on that Person or its
property or assets.
1.98
"Revenue Sharing Agreements" means those certain revenue
sharing agreements between the Company and Butler Wick Trust
Company, as set forth in Section 1.98 of the Company Disclosure
Letter.
1.99 "SEC" means the Securities and Exchange Commission.
1.100 "Second Escrow Release Date" has the meaning set forth
in Section 9.6(c). 1.101 "Securities Act"
means the United States Securities Act of
1933, as amended, and the rules and regulations promulgated
thereunder by the SEC.
1.102 "Seller Indemnified Persons" has the meaning set forth
in Section 9.3. 1.103 "Sellers" has the meaning set
forth in the introductory paragraph. 1.104 "September 30, 2008
Financial Information"
has the meaning set
forth in Section 3.9(a).
1.105 "Shares" means the 1,030 shares of Company Stock to be
sold by Sellers to Parent (or Stifel Nicolaus, as assignee of
Parent pursuant to Section 11.4) hereunder.
1.106
"SRO" means FINRA, the National Futures Association, each
national securities exchange in the United States and each other
board or body, whether United States or foreign, that is charged
with the supervision or regulation of brokers, dealers, commodity
pool operators, commodity trading advisors, futures commission
merchants, securities underwriting or trading, stock exchanges,
commodities exchanges, insurance companies or agents, investment
companies or investment advisers.
1.107 "Stifel Nicolaus" has the meaning set forth in the
recitals of this Agreement. 1.108 "Straddle Period" has the
meaning set forth in Section 1.1(c).
1.109 "Subsidiary" means, with respect to any specified
Person, any other Person of which such specified Person (either
alone or through or together with any other Subsidiary) owns,
directly or indirectly, twenty percent (20%) or more of the
outstanding equity securities or securities carrying a majority of
the voting power in the election of the board of directors or other
governing body of such Person.
1.110
"Tax Returns" means all reports, estimates, declarations,
claims for refund, information statements and returns relating to
or required by Requirements of Law to be filed in connection with
any Taxes, and reports relating to Taxes payable by, pursuant to or
in connection with any Plans, including any amendment or supplement
thereof. Any one of the foregoing Tax Returns shall be referred to
sometimes as a "Tax Return."
1.111 "
Taxes" means all taxes, charges, fees, levies, or other like
assessments, including without limitation, all federal, possession,
state, city, county and foreign (or govermental unit, agency, or
political subdivision of any foregoing) income, profits,
employment (including Social Security, unemployment insurance and
employee income tax withholding), franchise, gross receipts, sales,
use, transfer, stamp, occupation, property, capital, severance,
premium, windfall profits, customs, duties, ad valorem, value added
and excise taxes; PBGC premiums and any other charges of any
Governmental Authority of the same or similar nature, including any
interest, penalty or addition thereto, whether disputed or not and
including any obligations to indemnify or otherwise assume or
succeed to the Tax liability of any other Person. Any one of the
foregoing Taxes shall be referred to sometimes as a "Tax."
1.112 "Territory" has the meaning set forth in
Section 6.3(a).
1.113 "Third Person" has the meaning set forth
in Section 9.5.
1.114 "Third Person Claim" has the meaning set
forth in Section 9.5.
1.115
"Trademarks" means all registered and unregistered
trademarks, service marks, trade names, corporate and business
names, brand names, designs, logos, emblems, signs or insignia,
slogans, Internet domain names, other similar designations of
source or origin and general intangibles of like nature, including
registrations and applications for registration for any of the
foregoing, together with the goodwill symbolized by any of the
foregoing.
1.116 "Treasury Regulations" means the rules and
regulations under the Code
issued by the U.S. Department of Treasury.
1.117 "UCFC" has the meaning set forth in the
introductory paragraph.
1.118
"UCFC Benefit Plan" means each Plan, other than a Company
Benefit Plan, to which UCFC or any of its ERISA Affiliates
sponsors, maintains or contributes to, or is required to contribute
to, or under which UCFC or any of its ERISA Affiliates has or may
have any Liability.
1.119 "UCFC Disclosure Letter" means the letter from
UCFC and BWC to Parent, dated the date hereof and as amended or
supplemented from time to time in accordance with Section
6.12(b), of exceptions to the representations and warranties
made, and the listings of information provided, by UCFC and BWC
pursuant to the terms and conditions hereof.
1.120 "Unaudited
Financial Information" has the meaning set forth in Section
3.9(a) .
ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1
Transfer of Shares. Upon the terms and subject to the
conditions of this Agreement, at the Closing on the Closing Date
and as of the Effective Time, BWC shall, and UCFC shall cause BWC
to, sell, assign, transfer and convey to Parent (or if Parent shall
so elect, Stifel Nicolaus, as assignee of Parent pursuant to
Section 11.4), and Parent (or if Parent shall so elect,
Stifel Nicolaus, as assignee of Parent pursuant to Section
11.4) shall
purchase, acquire and
accept from BWC, all of BWC's right, title and interest in and to
the Shares free and clear of all Liens.
2.2 Consideration.
(a) Subject
to adjustment pursuant to Section 2.4 hereof, in
consideration for the sale of the Shares, the aggregate purchase
price payable by Parent (or if Parent shall so elect, Stifel
Nicolaus, as assignee of Parent pursuant to Section 11.4) to
the Sellers shall be $12,000,000 (the "Purchase Price"). The
Purchase Price shall be reduced on a dollar-for-dollar basis to the
extent that the Net Equity Value at Closing (determined in
accordance with Section 2.4 hereof) is less than
$9,900,000.
(b) At Closing, Parent (or if Parent shall so elect, Stifel
Nicolaus, as assignee of Parent pursuant to Section 11.4)
shall deliver, by wire transfer of immediately available funds (A)
an amount equal to (w) the Purchase Price, less (x) the
Indemnification Escrow Amount, less (y) the Tax Benefit Escrow
Amount, and less (z) if the Estimated Net Equity Value is less than
$9,900,000, the difference between $9,900,000 and such Estimated
Net Equity Value, to an account designated by UCFC not less than
two Business Days prior to Closing, (B) the Indemnification Escrow
Amount to the Escrow Agent pursuant to the terms of the Escrow
Agreement and (C) the Tax Benefit Escrow Amount to the Escrow Agent
pursuant to the terms of the Escrow Agreement, or otherwise
pursuant to a separate escrow agreement with a separate escrow
agent as the parties may agree.
(c) Subject
to the provisions of Article 7 and Article 8, the closing of
the purchase and sale of the Shares and the transactions
contemplated hereby (the "Closing") shall take place at 9:00
a.m. Central Time at the offices of Bryan Cave LLP, One
Metropolitan Square, Suite 3600, St. Louis, Missouri 63102 on
December 31, 2008, or otherwise as soon as possible, but in any
event no later than two (2) Business Days, after the date the last
of the conditions set forth in Articles 7 and 8 (other than
conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or, to the extent permissible,
waiver of those conditions at the Closing) has been satisfied or,
to the extent permissible, waived by the Party or Parties entitled
to the benefit of such conditions, or at such other place, at such
other time or on such other date as Parent, on the one hand, and
UCFC, BWC and the Company, on the other hand, may mutually agree
(the date on which the Closing actually occurs being herein
referred to as the "Closing Date").
2.3
Preliminary Information. UCFC shall cause to be delivered to
Parent, at least two Business Days prior to the Closing Date, an
estimated Closing Date balance sheet of the Company as of
immediately prior to the Closing (the "Estimated Closing Date
Balance Sheet"), substantially in the form of the Reference
Balance Sheet, prepared in accordance with GAAP and otherwise using
the accounting principles, procedures, policies and methods used by
the Company in preparing the Reference Balance Sheet and (B) a
calculation, in reasonable detail based upon such Estimated Closing
Date Balance Sheet, setting forth , the estimated amount
of the Net Equity Value (the "Estimated Net Equity
Value").
2.4 Net Equity Value Purchase Price
Adjustment.
(a) (i) Not later than 60 days after the
Closing Date or such other time as is mutually agreed by the
Parties, Parent shall cause to be prepared and delivered to UCFC
the Final Closing Date Balance Sheet prepared in accordance with
Section 2.4(a)(ii), and a calculation, in reasonable detail
based upon such Final Closing Date Balance Sheet, setting forth the
amount of the Net Equity Value.
(ii) Parent shall prepare or cause to be prepared the final balance
sheet of the Company, as of immediately prior to the Closing, in
accordance with GAAP and otherwise using the accounting principles,
procedures, policies and methods used by the Company in preparing
the Reference Balance Sheet, which shall be based on the audit of
the financial statements of the Company conducted with respect to
the period ending December 31, 2008 (the "Final Closing Date
Balance Sheet"). From and after the Closing, in connection with the
preparation and delivery of the Final Closing Date Balance Sheet
and calculation of Net Equity Value as set forth therein and during
the period of any dispute contemplated by this Section 2.4, Parent
shall give, and use its reasonable best efforts to cause its
advisors to give, UCFC and its authorized representatives
reasonable access to the relevant books and records, facilities and
employees of the Company, subject to the confidentiality and
indemnity agreements as executed by the parties contemporaneously
herewith, as may be necessary to enable UCFC and its advisers to
review and analyze the Final Closing Date Balance Sheet and such
calculations based thereon.
(b) (i) Within 60 days following its
receipt of the Final Closing Date Balance Sheet, UCFC shall deliver
to Parent either (i) its agreement as to the calculation of the Net
Equity Value as set forth therein or (ii) a written dispute notice,
specifying in reasonable detail the nature of its dispute of
the calculation of the Net Equity Value as set forth therein. In
the event that UCFC does not deliver to Parent a written dispute
notice within 60 days following its receipt of the Final Closing
Date Balance Sheet, as set forth above, then UCFC shall be deemed
to agree to the calculation of the Net Equity Value as set forth in
the Final Closing Date Balance Sheet. During the 30 days after the
delivery of a dispute notice to Parent, if applicable, Parent and
UCFC shall attempt in good faith to resolve any such dispute and
finally determine the Net Equity Value set forth in the Final
Closing Date Balance Sheet. If at the end of such 30-day period,
Parent and UCFC have failed to reach agreement with respect to such
dispute, the matter shall be submitted to a nationally recognized
accounting firm that is not the principal independent auditor for
either Parent or UCFC and is otherwise neutral and impartial;
provided, however, that if Parent and UCFC are unable to
select such other accounting firm within 45 days after delivery of
a dispute notice to Parent, either party may request the American
Arbitration Association to appoint, within 20 Business Days from
the date of such request, an independent public accountant with
significant relevant experience and that is not the principal
independent auditor for either Parent or UCFC. The accounting firm
or accountant so selected shall be referred to herein as the
"Accountant." The Accountant shall act as arbitrator and
resolve the disputed portions of the calculation of the Net Equity
Value set forth in the Final Closing Date Balance Sheet in
accordance with the terms and conditions of this Agreement. In
making such determination, the Accountant may only consider those
items and amounts as to which Parent and UCFC have disagreed within
the time periods and on the terms specified above and must resolve
the matter in accordance with the terms and provisions of this
Agreement; provided that the determination of the Accountant
will neither be more favorable to Parent than reflected in the
Final Closing Date Balance Sheet nor more
favorable to UCFC than reflected in UCFC's dispute notice. The
Accountant shall deliver to UCFC and Parent, as promptly as
practicable after its appointment, a written report setting forth
the resolution of each disputed matter and its determination of the
Net Equity Value set forth in the Final Closing Date Balance Sheet
as determined in accordance with the terms of this Agreement. Such
report shall be final and binding upon the Parties to the fullest
extent permitted under applicable Requirements of Laws and may be
enforced in any court having jurisdiction. Each of Parent and UCFC
shall bear all the respective fees and costs incurred by it in
connection with this arbitration, and Parent and UCFC shall equally
bear all fees and expenses relating to the foregoing work by the
Accountant.
(c) On the
second Business Day after the later of (x) the date UCFC and Parent
agree to the calculation of the Net Equity Value as set forth in
the Final Closing Date Balance Sheet and (y) if UCFC and Parent are
unable to agree on such calculation of the Net Equity Value, the
date that UCFC and Parent receive notice from the Accountant, of
the final determination of the amount(s) being so disputed, the
Purchase Price shall be adjusted as follows:
(i) If the Net Equity Value is equal to or greater than
$9,900,000, no adjustment will be made, and Parent will pay to UCFC
the difference, if any, between $9,900,000 and the Estimated Net
Equity Value, if the latter is lower than $9,900,000 (provided
that the aggregate Purchase Price shall not exceed
$12,000,000).
(ii) If the
Net Equity Value is less than $9,900,000, the Purchase Price shall
be reduced dollar-for-dollar by the amount of such difference, and
either (A) UCFC shall pay to Parent the difference between the
Estimated Net Equity Value and the Net Equity Value (if the
Estimated Net Equity Value is higher than the Net Equity Value) or
(B) Parent shall pay to UCFC the difference between the Net Equity
Value and the Estimated Net Equity Value (if the Net Equity Value
is higher than the Estimated Net Equity Value, but less than
$9,900,000).
(iii) Any payment so required
to be made by UCFC or Parent pursuant to this Section 2.4(c)
shall be by transfer of immediately available funds to an account
or accounts specified in writing by UCFC or Parent (as the case may
be) and shall bear interest from the Closing Date through the date
of payment at the prime lending rate as reported in The Wall
Street Journal.
2.5
Additional Actions. If, at any time after the Effective
Time, Parent shall reasonably determine that any deeds, bills of
sale, stock powers, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of
record or otherwise in Parent (or Stifel Nicolaus, as assignee of
Parent pursuant to Section 11.4) its right, title or
interest in, to or under any of the Shares or otherwise to carry
out this Agreement, the officers and directors of Parent (or Stifel
Nicolaus, as assignee of Parent pursuant to Section 11.4)
shall be authorized to execute and deliver, in the name and on
behalf of Parent (or Stifel Nicolaus, as assignee of Parent
pursuant to Section 11.4) or the Company, as the case may
be, all such deeds, bills of sale, assignments and assurances and
to take and do, in the name and on behalf of Parent or the Company,
as the case may be, all such other actions and things as may be
reasonably necessary or desirable to vest, perfect or confirm any
and all right, title and interest in, to and under such Shares
consistent with the terms of this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The
Company hereby makes the following representations and warranties
to Parent as of the date hereof and as of the Closing.
3.1
Organization and Good Standing; No Subsidiaries. The Company
is a corporation duly organized, validly existing and in good
standing under the laws of Ohio with full power and authority to
own, operate and lease its assets and to carry on its business as
currently conducted. The Company is duly qualified to do business
and is in good standing (where applicable) as a foreign corporation
in each jurisdiction where the ownership, operation or leasing of
its assets or the conduct of its business as currently conducted
requires such qualification, except for those jurisdictions where
the failure to be so qualified or to be in good standing,
individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. The Company has made available
to Parent true and complete copies of its certificate of
incorporation and bylaws. The Company does not own, directly or
indirectly, any equity or other interest in any Subsidiary.
3.2
Other Interests.Section 3.2 of the Company Disclosure Letter
sets forth a true and complete list of any material interest or
investment in (whether equity or debt) any corporation,
partnership, limited liability company, joint venture, business,
trust or other Person owned, directly or indirectly, by the
Company, other than (i) interests or investments held by the
Company for the account of clients as of the date hereof and Liens
on interests or investments securing Indebtedness of such, clients
or (ii) securities, interests and investments maintained by the
Company in the Ordinary Course.
3.3
Authorization; Binding Obligations. The Company has all
necessary power and authority to make, execute and deliver this
Agreement and the Related Agreements to which it is a party and to
perform all of the obligations to be performed by it hereunder and
thereunder. The making, execution, delivery and performance by the
Company of this Agreement and the Related Agreements and the
consummation by it of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary
corporate action on the part of the Company. This Agreement has
been and, as of the Closing Date, the Related Agreements will be,
duly and validly executed and delivered by the Company, and
assuming the due authorization, execution and delivery by Parent,
each of this Agreement and the Related Agreements will constitute
the valid, legal and binding obligation of the Company, enforceable
against it in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium or other similar Requirements of Law, now or hereafter
in effect, relating to or affecting the rights of creditors
generally and the availability of specific remedies may be limited
by legal and equitable principles of general applicability.
3.4
No Conflicts. Except as set forth in Section 3.4 of the
Company Disclosure Letter, the execution, delivery and
performance by the Company of this Agreement and each of the
Related Agreements to which it is a party, and the fulfillment of
and compliance with the respective terms hereof and thereof by the
Company, do not and will not (a) conflict with or result in a
breach of the terms, conditions or provisions of, (b) constitute a
default or event of default under (whether with or without due
notice, the passage of time or both), (c)
result in the creation of any Lien upon the shares of Company Stock
to, (d) give any third party the right to modify, terminate or
accelerate any obligation under, (e) result in a violation of or
(f) require any Consent or other action by, notice to, or filing
with, any third party or Governmental Authority pursuant to, the
charter or bylaws of the Company, or any applicable Requirements of
Law or Material Contract to which the Company, or its properties or
the shares of Company Stock are subject except for such conflicts,
violations, Liens, contraventions, cancellations, defaults or
Consents, the failure of which to obtain or violation of which will
not individually or in the aggregate reasonably be expected to have
a Material Adverse Effect.
3.5
Approvals. There are no notices, reports or other filings
required to be made by the Company, or Consents required to be
obtained by the Company from, any Governmental Authority or other
third party in order for the Company to execute, deliver or perform
this Agreement and the Related Agreements and to consummate the
transactions contemplated hereby and thereby, except (a) as set
forth in Section 3.5 of the Company Disclosure Letter, (b)
Consents as may be required by FINRA, or (c) where the failure to
make such notices, reports or other filings or the failure to
obtain such Consents, individually or in the aggregate, would not
reasonably be expected to (i) prevent, impair or delay the
consummation of the transactions contemplated by this Agreement and
the Related Agreements, or (ii) have or cause a Material Adverse
Effect.
3.6
Litigation. Except as set forth in Section 3.6 of the
Company Disclosure Letter, there is no investigation,
action, suit, proceeding, claim, arbitration or other litigation
pending or, to the Knowledge of the Company, threatened, nor to the
Knowledge of the Company has any event occurred or circumstance
exist that may give rise to or serve as a basis for the
commencement of any of the same, against or affecting the Company
or the Business (including any claim involving a Company Customer
Contract or a Company Customer or any Company Leased Real Property)
that, individually or in the aggregate, (a) as of the date of this
Agreement, involves a claim against, or is reasonably likely to
result in a liability of the Business in excess of $50,000 net of
existing reserves and after application of available insurance
proceeds, if any, provided that multiple claims or causes of
action arising out of a single circumstance or a collection of
circumstances based on the same related set of facts shall be
deemed to be a single claim or cause of action for purposes of this
determination; (b) would reasonably be expected to have a Material
Adverse Effect; or (c) would affect the legality, validity or
enforceability of this Agreement or any Related Agreement or
prevent or materially impair or delay the consummation of the
transactions contemplated hereby or thereby. Except as set forth in
Section 3.6 of the Company Disclosure Letter, there are no
judgments, injunctions, writs, orders or decrees of any
Governmental Authority binding or, to the Knowledge of the Company,
threatened to be imposed upon the Company that would (A) be binding
upon Parent or its subsidiaries (other than the Company) following
consummation of such transactions contemplated by this Agreement
and the Related Agreements and which would reasonably be expected
to have a Material Adverse Effect on the Parent and its
subsidiaries (taken as a whole) or their businesses following
Closing on an aggregate basis, or (B) individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
3.7 Compliance with
Requirements of Law, Regulatory Matters. Except as set forth in
Section 3.7 of the Company Disclosure Letter:
(a) The Company
is, and since January 1, 2005 the Business has been operated, in
compliance in all material respects with all material Requirements
of Law. Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, since
January 1, 2005, neither UCFC, BWC nor the Company has received any
written, or, to the Knowledge of the Company, oral notice from (and
otherwise does not have any Knowledge of) any Governmental
Authority that alleges any noncompliance (or that the Company is
under any investigation by any such Governmental Authority for such
alleged noncompliance) with any Requirement of Law relating to the
Business.
(b) (i) The Company holds all Permits that are required in
order to conduct the Business in the manner presently conducted
under and pursuant to all Requirements of Law in all material
respects; (ii) all such Permits are in full force and effect and
are not subject to any suspension, cancellation, modification,
revocation or any proceedings or investigations related thereto,
and, to the Knowledge of the Company, no such suspension,
cancellation, modification, revocation, proceeding or investigation
is threatened, nor do facts exist which would reasonably form the
basis for any such suspension, cancellation, modification,
revocation, proceeding or investigation that, individually or in
the aggregate, would reasonably be expected to have a Material
Adverse Effect; and (iii) the Company is not in default, and no
condition exists that with notice or lapse of time or otherwise
would constitute a default, under any such Permit that,
individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect.
(c)
The Company is not subject to or bound by any Requirement of Law
other than Requirements of Law imposed on similarly situated
broker-dealers, that restricts the Business or relates to its
capital adequacy, credit policies or management.
(d)
The Company is duly registered as an investment adviser under the
Advisers Act and is registered, licensed or qualified as an
investment adviser in each state or any other jurisdiction where
the conduct of its business required such registration, licensing
or qualification, except where the failure to be so registered,
licensed or qualified, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. To the
extent that the Company relies on any statutory or regulatory
exemption to avoid registration as an investment adviser with any
Governmental Authority, the Company has taken all actions required
pursuant to the Requirements of Law to claim and maintain such
exemption, except where the failure to claim or maintain such
exemption, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect. A correct and
complete list of each such current registration, license or
qualification is set forth in Section 3.7(d) of the Company
Disclosure Letter. Except as set forth in Section 3.7(d) of
the Company Disclosure Letter, the Company (i) is not and has
not been an "investment adviser" within the meaning of the Advisers
Act or any other applicable Requirements of Law and (ii) to the
Knowledge of the Company, is not subject to any material liability
by reason of any failure to be so registered, licensed or
qualified.
(e) The
Company is duly registered as a broker-dealer under the Exchange
Act, except where the failure to be so registered, individually or
in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. The Company is
registered, licensed or qualified as a broker-dealer in each state
or any other jurisdiction where the conduct of its business
required such registration, licensing or qualification, except
where the failure to be so registered, licensed or qualified,
individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. To the extent that the Company
relies on any statutory or regulatory exemption to avoid
registration as a broker-dealer with any Governmental Authority,
the Company has taken all actions required pursuant to the
Requirements of Law to claim and maintain such exemption, except
where the failure to claim or maintain such exemption, individually
or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. A correct and complete list of each such
current registration, license or qualification is set forth in
Section 3.7(e) of the Company Disclosure Letter.
Except as set forth in Section 3.7(e) of the Company Disclosure
Letter, the Company (i) is not and has not been a "broker" or
"dealer", and is not and has not been required to be registered as
a "broker" or "dealer", within the meaning of the Exchange Act or
any other applicable Requirements of Law and (ii) to the Knowledge
of the Company, is not subject to any material liability or
disability by reason of any failure to be so registered, licensed
or qualified.
(f) The Company is not and has not been (i) a commodity
pool operator, futures commission merchant, commodity trading
advisor, trust company, real estate broker, introducing broker,
insurance company, insurance broker, insurance agent or transfer
agent within the meaning of any Requirement of Law or (ii) required
to be registered, licensed or qualified as a commodity pool
operator, futures commission merchant, commodity trading advisor,
trust company, real estate broker, introducing broker, insurance
company, insurance broker, insurance agent, transfer agent or in
any other capacity under any Requirement of Law.
(g) Neither
the Company nor any "affiliated person" (as defined in the
Investment Company Act) of the Company is ineligible or
disqualified pursuant to Section 9(a) or 9(b) of the Investment
Company Act to serve as an investment adviser (or in any other
capacity contemplated in the Investment Company Act) to any
Registered Investment Company for which it currently serves as
investment adviser, nor is there any proceeding or investigation
pending or, to the Knowledge of the Company, threatened, by, any
Governmental Authority, which would reasonably be expected to
result in any such ineligibility or disqualification. Neither the
Company nor any person "associated" (as defined in the Advisers
Act) with the Company is ineligible or disqualified pursuant to
Section 203 of the Advisers Act to serve as a registered investment
adviser or person "associated" (as defined in the Advisers Act)
with a registered investment adviser, nor is there any proceeding
or investigation pending or, to the Knowledge of the Company,
threatened, by, any Governmental Authority, which would reasonably
be expected to result in any such ineligibility or
disqualification. Neither the Company nor any of its "associated
persons of a broker or dealer" are ineligible or disqualified
pursuant to Section 15, Section 15B or Section 15C of the Exchange
Act to serve as a broker-dealer or as an "associated person of a
broker or dealer" (as defined in the Exchange Act), nor is there
any proceeding or investigation pending or, to the Knowledge of the
Company, threatened, by, any Governmental Authority, which would
reasonably be expected to result in any such ineligibility or
disqualification.
(h) The officers and
employees of the Company who are required to be licensed or
registered for the activities conducted by them in respect of the
Business are, and at all times since January 1, 2005 have been,
duly licensed or registered in each state or jurisdiction in which,
and with each Governmental Authority with whom, such licensing or
registration is so required except where the failure to be so
licensed would not have or cause a Material Adverse Effect. Each
such registration or license is in full force and effect, except
where the failure to be so licensed or registered, individually or
in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. To the Knowledge of the Company, none of
the officers or employees of the Company is or, since January 1,
2005, has been subject to any material disciplinary or other
material regulatory compliance action or material complaint by a
Governmental Authority.
(i) All material
registrations (including Forms BD and ADV), reports, prospectuses,
proxy statements, statements of additional information, financial
statements, sales literature, statements, notices and other filings
required to be filed with any Governmental Authority, including all
amendments or supplements to any of the above (the
"Filings") required to be filed by the Company since January
1, 2005 related to the Business have been filed in compliance in
all material respects with all Requirements of Law and the
information contained therein was true and correct in all material
respects.
(j) Section 3.70) of the
Company Disclosure Letter sets forth a complete list of all
securities exchanges, commodities exchanges, clearing corporations
and similar organizations in which the Company holds memberships or
has been granted trading privileges.
(k) Except for
routine examinations conducted by any Governmental Authority in the
regular course of the Business, since January 1, 2005 (i) no
Governmental Authority has initiated any proceeding, investigation,
examination, audit or review into the Business (a
"Proceeding") and, to the Knowledge of the Company, no such
Proceeding is ongoing, unresolved or threatened by any Governmental
Authority and (ii) the Company has not received any notice or
communication (A) of any unresolved violation or exception by any
Governmental Authority with respect to any report or statement by
any Governmental Authority relating to any examination of the
Company, (B) threatening to revoke or condition the continuation of
any Permit or (C) restricting or disqualifying their activities
(except for restrictions generally imposed by rule, regulation or
administrative policy on similarly regulated Persons generally),
which would have or cause a Material Adverse Effect.
(l)
The Company has implemented one or more formal codes of ethics,
insider trading policies, personal trading policies and other
material policies as may be required by Requirements of Law for
itself and a complete and correct copy of each of such policies has
been made available to Parent to the Knowledge of the Company. Such
codes of ethics, insider trading polices, personal trading policies
and other material policies comply in all material respects with
Requirements of Law. The policies of the Company respecting the
avoidance of conflicts of interest are as set forth in the most
recent policy manuals of the Company, which have been made
available to Parent. Since January 1, 2005, there have been no
violations by any officer or investment professional of the Company
of such code of ethics, insider trading polices and personal
trading policies which would reasonably be expected to have a
Material Adverse Effect.
(m) The Company has complied in all
material respects with all material Requirements of Laws regarding
the privacy of Company Customers and has established and complied
in all material respects with policies and procedures in this
regard reasonably designed to ensure compliance with Requirements
of Law.
(n) The Company, to the extent required by
Requirements of Law, has a written anti-money laundering program
and a written customer identification program in compliance with
Requirements of Law and has complied with the terms of such program
in all material respects.
3.8
Registered Investment Companies; Non-Registered Funds.
Except as set forth in Section 3.8 of the Company Disclosure
Letter, the Company does not serve, nor at any time has served,
as an investment adviser or sponsor to any Registered Investment
Company or Non-Registered Fund.
3.9 Financial Statements.
(a)
(i) The audited balance sheets at December 31 in each of the years
2005, 2006 and 2007, and the related audited statements of income,
changes in shareholder equity and cash flows and notes related
thereto of the Company on a consolidated basis for each of the
fiscal years then ended (the "Audited Financial
Information"), (ii) the unaudited consolidated balance sheet of
the Company at September 30, 2008 and related unaudited statements
of income, changes in shareholder equity and cash flows and notes
related thereto of the Company on a consolidated basis as of and
for the nine-month period then ended (the "September 30, 2008
Financial Information"), and (iii) an unaudited consolidated
balance sheet of the Company at November 30, 2008 (the
"Reference Balance Sheet" and together with the September
30, 2008 Financial Information, the "Unaudited Financial
Information") and related unaudited statements of income,
changes in shareholder equity and cash flows and notes related
thereto of the Company as of and for the ten-month period then
ended (the "Reference Income Statement"), including in each
case the notes thereto (such information in items (i), (ii) and
(iii) collectively, the "Company Financial Information")
have been delivered to Parent. The Reference Balance Sheet is
included as Exhibit 3.9(a) hereto. As of the date hereof,
the Company has not made or declared any dividends on the Company
Stock since the date of the Reference Balance Sheet.
(b) The
Company Financial Information has been (i) derived from the books
of account and other financial records of the Company and (ii)
prepared in accordance with GAAP consistently applied, subject only
to normal recurring year-end adjustments and the absence of notes
for the Unaudited Financial Information and except as otherwise
expressly provided in the Company Financial Information. The
Company Financial Information fairly presents in all material
respects the consolidated financial position of the Company as of
the respective dates thereof and their consolidated results of
operations and cash flows for the respective periods then ended
(subject, in the case of unaudited interim financial statements, to
the absence of notes and normal and recurring year-end audit
adjustments).
(c) The corporate minute
books of the Company that have been made available to the Parent
for inspection are complete and correct in all material respects.
A
true and complete
list of the incumbent directors and officers of the Company is
attached as Section 3.9(c) of the Company Disclosure
Letter.
(d)
The Company maintains in all material respects internal controls
over financial reporting ("Internal Controls") to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with GAAP, including policies and procedures
that (i) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and
dispositions of the assets of the Company, (ii) provides reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and
that receipts and expenditures of the Company are being made only
in accordance with authorizations of management and directors of
the Company and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or
disposition of the assets of the Company that could have a material
effect on the Company's financial statements.
3.10
Title; Sufficiency of Assets. Upon consummation of the
transactions contemplated by this Agreement and the Related
Agreements, Parent or one or more of its subsidiaries and
Controlled Affiliates (including the Company), taken together, will
own, possess, have a valid license to, have a valid lease in or
otherwise have the right to use all of the material rights,
properties and assets necessary to conduct the Business in all
material respects as currently conducted and as the same will be
conducted on the Closing Date, including all such assets reflected
in the Reference Balance Sheet or acquired since the date thereof
(collectively, the "Assets"). The Company has maintained in
all material respects all tangible Assets in good repair, working
order and operating condition, subject only to ordinary wear and
tear.
3.11 Employee Benefit Plans; Employee Matters.
(a) Section 3.11(a)(i) of the Company Disclosure Letter
lists each Company Benefit Plan. Section 3.11(a)(ii) of the
Company Disclosure Letter lists each Company Benefit Plan that
is sponsored, maintained or contributed to or required to be
contributed to by the Company or in connection with which the
Company has or may have any Liability. No employee or former
employee, including retirees, of the Company benefits by virtue of
employment or former employment with the Company under any Plan
other than the Plans set forth in Sections 3.11(a)(i) and (ii) of
the Company Disclosure Letter. Except as disclosed in Section
3.11(a) of the Company Disclosure Letter, (i) each Company
Benefit Plan is in writing and the Company has made available to
Parent a true and complete copy of each Company Benefit Plan and a
true and complete copy of the following items (in each case, only
if applicable) (A) each trust or other funding arrangement, (B)
each summary plan description and summary of material
modifications, (C) the three most recently filed annual reports on
the IRS Form 5500 for each such Company Benefit Plan, including
without limitation all schedules thereto, all financial statements
with attached opinions of independent accountants and all actuarial
reports, and (D) the most recently received IRS determination
letter for each such Company Benefit Plan and any outstanding
request for a determination letter, and (ii) the Company has no
express or implied commitment with respect to the Business to
create, incur any Liability with respect to or cause to exist any
other Plan or to modify, change or terminate any Company Benefit
Plan.
(b) Except
as disclosed in Section 3.11(b) of the Company Disclosure
Letter, (i) each of the Company Benefit Plans is, and has
always been, operated in accordance in all material respects with
all applicable provisions of ERISA, the Code, and all other
Requirements of Law and has in all material respects been
administered, operated and managed in accordance with its governing
documents, (ii) no prohibited transactions (as defined in ERISA
Section 406 or Code Section 4975), except any as to which an
exemption described in ERISA Section 408 applies, and no violations
of ERISA Section 407 have occurred with respect to any Company
Benefit Plan and (iii) each Company Benefit Plan (including any
Plan covering former employees and retirees of the Company) may be
amended or terminated by the Company or other applicable sponsor of
the Plan on or at any time after the Closing Date.
(c)
None of BWC, UCFC, the Company nor any of their ERISA Affiliates
has now or at any time contributed to or been required to
contribute to, sponsored, or maintained, or has any liability with
respect to, (i) a multiemployer plan (as defined in ERISA Section
3(37) or 4001(a)(3)) or (ii) any Pension Plan which is subject to
the provisions of Title IV of ERISA. For purposes of the foregoing,
the Company shall include each member of the controlled group of
which the Company is a member and which is under common control.
The Company is not a party to any arrangement that has resulted or
would result in a payment that would not be fully deductible as a
result of Code Section 162(m) or Code Section 280G or any similar
provision of law. None of BWC, UCFC, the Company, the Subsidiaries
of the Company or any of their ERISA Affiliates has terminated or
taken action to terminate (in whole or in part) any Pension Plans
within the last six years that could result in any material
liability to the Company or the Subsidiaries of the Company.
(d) Except
as disclosed in Section 3.11(d) of the Company Disclosure
Letter, the IRS has issued a favorable determination letter
with respect to each of the Company Benefit Plans that is intended
to be qualified under Section 401(a) of the Code (a "Company
Qualified Plan") to the effect that such plan is qualified
under Section 401(a) of the Code. No circumstances exist that would
adversely affect the qualified status of any Company Qualified Plan
or that could be expected to result in the revocation of the
trust's exemption from United States federal income taxation under
Section 501(a) of the Code. Each Company Qualified Plan is
identified in Section 3.11(d) of the Company Disclosure
Letter.
(e)
Except as disclosed in Section 3.11(e) of the Company Disclosure
Letter, each of the Company Benefit Plans that is a
nonqualified deferred compensation arrangement is listed in
Section 3.11(e) of the Company Disclosure Letter, and each
such arrangement has been maintained, administered and operated in
material compliance with Code Section 409A and the regulations and
guidance thereunder, and each such Plan has been amended to comply
with Code Section 409A prior to the earlier of December 31, 2008 or
the Closing Date.
(f)
Except as disclosed in Section 3.11(f) of the Company
Disclosure Letter, there are no pending or, to the
Knowledge of the Company, threatened material claims (other than
claims for benefits in the ordinary course), lawsuits or
arbitrations which have been asserted or instituted against the
Company Benefit Plans, any fiduciaries thereof with respect to
their duties to the Company Benefit Plans or the assets of any of
the trusts
under any of the Company Benefit Plans, and the Company has no
liability with respect to a Plan by virtue of its being a member of
a controlled group with a Person who has liability under the Code
or ERISA.
(g) To the
Knowledge of the Company, no labor union, labor organization or
group of employees of the Company has made a pending demand for
recognition or certification with respect to the Business
Employees, there are no representation or certification proceedings
or petitions seeking a representation proceeding with respect to
the Business Employees presently pending or, to the Knowledge of
the Company, threatened to be brought or filed with the National
Labor Relations Board or any other labor relations tribunal or
authority and there have been no such actions, events or disputes
since January 1, 2005. There are no strikes, organized work
stoppages, organized slowdowns, lockouts or other material labor
disputes pending or, to the Knowledge of the Company, threatened
against or involving the Business Employees. The Company is not a
party to, bound by, or in the process of negotiating a collective
bargaining agreement or other agreement with a labor union or labor
organization covering any of the Business Employees.
(h) Except
as disclosed in Section 3.11(h) of the Company Disclosure
Letter and Section 6.5 of this Agreement, the
consummation of the transactions contemplated by this Agreement
will not (i) entitle any Business Employee to separation,
termination or severance pay, unemployment compensation or any
other similar-type benefit payment, (ii) result in the payment to
any present or former employee, officer, director or consultant of
the Company of any money or other property, (iii) accelerate the
time of payment or vesting, or increase the amount of compensation
due any such employee, or (iv) cause any amounts payable under the
Company Benefit Plans to fail to be deductible for United States
federal income tax purposes by virtue of Section 280G of the
Code.
(i) Except
to the extent required under ERISA Section 601 et. seq. and Code
Section 4980B, none of the Company Benefit Plans provides for or
promises medical, disability or life insurance or any other welfare
benefits after retirement or other termination of employment to any
current or former employee, officer, director or consultant of the
Company.
(j) To its
Knowledge, the Company is in compliance in all material respects
with all material Requirements of Law relating to the employment of
labor, including, without limitation, those related to wages,
hours, immigration and naturalization, collective bargaining and
the payment and withholding of taxes and other sums as required by
the appropriate Governmental Authority. The Company has paid in
full to all Business Employees or adequately accrued for all wages,
salaries, commissions, bonuses, benefits and other compensation due
to or on behalf of such Business Employees and there is no claim
with respect to payment of wages, salary or overtime pay that has
been asserted or is now pending or, to the Knowledge of the
Company, threatened before any Governmental Authority with respect
to any persons currently or formerly employed by the Company. The
Company is not a party to, or otherwise bound by, any consent
decree with, or citation by, any Governmental Authority relating to
employees or employment practices with respect to the Business
Employees. Except as disclosed in Section 3.11(j) of the Company
Disclosure Letter, there is no charge of discrimination in
employment or employment practices,
including, without limitation, for reasons of age, gender, race,
religion or other legally protected category, which has been
asserted or is now pending or, to the Knowledge of the Company,
threatened before the United States Equal Employment Opportunity
Commission, or any other Governmental Authority in any jurisdiction
in which the Company has employed or employs any person.
(k) Except as disclosed in Section 3.11(j) of the Company
Disclosure Letter, all individuals who are performing or
have performed consulting or other services for the Company,
whether as consultants, independent contractors, agents or
otherwise, are or were correctly classified by the Company as
either "independent contractors" or "employees," as the case may
be, and, at the Closing, will qualify for such classification under
all Requirements of Law; there are no pending or, to the Knowledge
of the Company, threatened claims against the Company by or on
behalf of any such individual relating to the classification of
such individual, or investigation, audit or other proceeding
relating to such an individual or individuals, by any Governmental
Authority with respect to the classification of such
individuals.
3.12
Absence of Undisclosed Liabilities. The Company is not
subject to any claims, liabilities or obligations (whether known,
unknown, absolute, accrued, contingent or otherwise) and, to the
Knowledge of the Company, there are no existing conditions,
situations or facts that could reasonably be expected to result in
any such claim, obligation or liability, except (a) as and to the
extent disclosed on, or as to which a reserve has been established
on, the Reference Balance Sheet, (b) claims, obligations and
liabilities that (i) are incurred after the date of the Reference
Balance Sheet in the Ordinary Course consistent with past practice
of the Company, and (ii) individually or in the aggregate, would
not reasonably be expected to have or result in a Material Adverse
Effect, or (c) as set forth in Section 3.12 of the Company
Disclosure Letter.
3.13
Absence of Certain Changes. Except for the matters
contemplated by this Agreement and as set forth in Section 3.13
of the Company Disclosure Letter, since November 30, 2008, the
Business has been conducted in the Ordinary Course and (a) there
has not been (i) any change in the business, operations,
properties, assets, condition (financial or otherwise) or results
of the Company taken as a whole which would have or cause a
Material Adverse Effect; (ii) any damage, destruction or loss,
whether or not covered by insurance, in an amount in excess of
$100,000, in existence as of the date of this Agreement; (iii) any
acquisition or disposition by the Company of any material asset or
material property other than in the Ordinary Course; (iv) any
declaration, setting aside or payment of any dividend or any other
distributions in respect of the Company's capital stock; (v) any
material increase in compensation payable to or to become payable
by the Company to its directors, officers or employees; (vi) any
entry by the Company into any material transaction other than in
the Ordinary Course or as contemplated herein; or (vii) any change
by the Company in accounting principles or methods, nor (b) has the
Company (i) made, changed or rescinded any Tax election, except as
required by applicable Requirements of Law; (ii) changed any annual
Tax accounting period; (iii) changed any method of Tax accounting
or filed any change in accounting method, except as required by
applicable Requirements of Law; (iv) settled any Tax claim or
assessment or surrender any right to claim a Tax refund; (v) failed
to timely file any Tax Return that relates in whole or in
part to the Company;
and (vi) waived or extended the statute of limitations in respect
of Taxes, other than the extension of the due date of a Tax
Return.
3.14 Company Real Property.
(a) Except as set forth in Section
3.14(a) of the Company Disclosure Letter, the Company does not
own or ground lease any real property. Section 3.14(a) of
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