-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N32SL/i/mRd55qJS2BTzT8UzBVlZksrvF8Kj1AN8UiYrieUoNBYf5PgLgoAO4Ycd Q8es5tKCc+iEGTEL3CWY0g== 0001068800-03-000704.txt : 20031204 0001068800-03-000704.hdr.sgml : 20031204 20031204123902 ACCESSION NUMBER: 0001068800-03-000704 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20031119 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIFIED FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0001033926 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES [6200] IRS NUMBER: 351797759 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22629 FILM NUMBER: 031037022 BUSINESS ADDRESS: STREET 1: 2353 ALEXANDRIA DRIVE CITY: LEXINGTON STATE: KY ZIP: 40504 BUSINESS PHONE: 859-514-3356 MAIL ADDRESS: STREET 1: 2353 ALEXANDRIA DRIVE CITY: LEXINGTON STATE: KY ZIP: 40504 FORMER COMPANY: FORMER CONFORMED NAME: UNIFIED HOLDINGS INC DATE OF NAME CHANGE: 19970218 8-K 1 uni8k.txt ============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): NOVEMBER 19, 2003 UNIFIED FINANCIAL SERVICES, INC. (Exact name of registrant as specified in its charter) DELAWARE 0-22629 35-1797759 (State or other (Commission File (I.R.S. Employer jurisdiction of Number) Identification organization) Number) 2353 ALEXANDRIA DRIVE LEXINGTON, KENTUCKY 40504 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (859) 514-3356 ============================================================================== ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On November 19, 2003, Unified Financial Services, Inc., a Delaware corporation (the "Company"), sold all of the outstanding capital stock of Unified Banking Company, a wholly owned subsidiary of the Company. The sale was effected pursuant to the terms and conditions of a Stock Purchase Agreement, dated as of June 9, 2003 (the "Stock Purchase Agreement"), by and between the Company and Blue River Bancshares, Inc., an Indiana corporation ("Blue River"). In connection with the sale, the Company received $8.2 million in cash in exchange for all of the outstanding capital stock of Unified Banking Company. The consideration paid pursuant to the Stock Purchase Agreement was determined through arms'-length negotiations between representatives of the Company and Blue River. Professional Bank Services, Inc., Louisville, Kentucky, served as the Company's financial advisor for the transaction, and was paid approximately $102,000 for its services. In connection with the execution of the Stock Purchase Agreement, the Company and Blue River also executed a Depository Agreement (the "Depository Agreement"). Pursuant to the Depository Agreement, the Company has agreed to maintain deposits solely with Shelby County Bank, a wholly owned subsidiary of Blue River, or Unified Banking Company until the Company and its subsidiaries have maintained with either or both of Unified Banking Company and Shelby County Bank an aggregate minimum deposit balance, computed quarterly, of $8.5 million. The Depository Agreement has a term of three years from November 19, 2003. The foregoing description is qualified in its entirety by the complete text of the Stock Purchase Agreement, included as Exhibit 2 to the Company's Current Report on Form 8-K, dated June 9, 2003, and the Depository Agreement, filed as Exhibit 10 to this Current Report on Form 8-K. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial statements of businesses acquired. Not applicable. ------------------------------------------- (b) Pro forma financial information. The following unaudited pro ------------------------------- forma consolidated financial statements of the Company, which give effect to the sale of Unified Banking Company, are filed herewith: Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2003 Unaudited Pro Forma Consolidated Statement of Operations for the Nine Months Ended September 30, 2003 Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2002 Notes to Unaudited Pro Forma Consolidated Financial Statements (c) Exhibits. See Exhibit Index. -------- -2- PRO FORMA FINANCIAL INFORMATION ------------------------------- On November 19, 2003, the Company sold all of the outstanding capital stock of Unified Banking Company. In connection with the sale, the Company received $8.2 million in cash. The sale of Unified Banking Company was in furtherance of the Company's strategy to focus on its core business - the managing and servicing of assets. The net proceeds from the sale of Unified Banking Company will be added to the Company's working capital and used for general corporate purposes. Additionally, such proceeds may be used for possible future investments in our subsidiaries to fund the anticipated growth of such subsidiaries, extinguishment of certain contractual obligations of the Company and the repurchase of outstanding shares of the Company's common stock. The Company organized Unified Banking Company on November 1, 1999, and capitalized Unified Banking Company with $7.3 million. During 2002, the Company contributed an additional $300,000 to Unified Banking Company as a capital contribution. As a result of the sale of the capital stock of Unified Banking Company, the Company has reported the results of Unified Banking Company as discontinued operations as defined in Accounting Principles Board Opinion No. 30. The pro forma financial information is not intended to be indicative of the actual results had this transaction occurred as of the dates indicated below nor do they purport to indicate results that may be attained in the future. The pro forma financial statements should be read in conjunction with the historical consolidated financial statements of the Company, including its consolidated financial statements as of and for the year ended December 31, 2002, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002 filed with the Securities and Exchange Commission. The Unaudited Pro Forma Consolidated Balance Sheet gives effect to the sale of Unified Banking Company and related transactions as if they had been completed on September 30, 2003. The Unaudited Pro Forma Consolidated Statements of Operations for the nine months ended September 30, 2003 and the year ended December 31, 2002 give effect to the sale of Unified Banking Company and related transactions as if they had been completed on January 1, 2003 and January 1, 2002, respectively. -3- UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2003 (UNAUDITED) ASSETS ------
HISTORICAL PRO FORMA NOTES TO PRO FORMA COMPANY ADJUSTMENTS ADJUSTMENTS COMPANY ----------- ------------ ----------- ----------- (1), (2) Current Assets Cash and cash equivalents..................... $ 4,889,557 $ 8,200,000 (3) $13,089,557 Investments in securities and non-affiliated mutual funds................................ 212,977 -- -- 212,977 Accounts receivable (net of allowance for doubtful accounts).......................... 2,192,368 -- -- 2,192,368 Receivable from premium financings............ 4,117,944 -- -- 4,117,944 Prepaid assets and deposits................... 236,639 -- -- 236,639 Total assets of discontinued operations....... 84,197,479 (84,197,479) (4) -- Deferred income taxes......................... 449,204 -- -- 449,204 ----------- ------------ ----------- Total current assets...................... 96,296,168 (75,997,479) -- 20,298,689 ----------- ------------ ----------- Fixed Assets, at cost Equipment and furniture (net of accumulated depreciation)............................... 1,065,558 -- -- 1,065,558 ----------- ------------ ----------- Non-Current Assets Investment in affiliates...................... 1,010 -- -- 1,010 Goodwill (net of accumulated amortization).... 1,006,061 -- -- 1,006,061 Other non-current assets...................... 112,060 -- -- 112,060 ----------- ------------ ----------- Total non-current assets.................. 1,119,131 -- -- 1,119,131 ----------- ------------ ----------- TOTAL ASSETS ..................................... $98,480,857 $(75,997,479) -- $22,483,378 =========== ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ HISTORICAL PRO FORMA NOTES TO PRO FORMA COMPANY ADJUSTMENTS ADJUSTMENTS COMPANY ----------- ------------ ----------- ----------- (1), (2) Current Liabilities: Borrowing under line of credit................ $ 2,355,000 $ -- -- $ 2,355,000 Total liabilities of discontinued operations.. 78,610,531 (78,610,531) (3), (4) -- Accounts payable and accrued expenses......... 1,345,122 -- -- 1,345,122 Accrued compensation and benefits............. 531,055 -- -- 531,055 Payable to broker-dealers..................... 43,769 -- -- 43,769 Income taxes payable.......................... 37,489 192,640 (3) 230,129 Other liabilities............................. 409,944 500,000 (3) 909,944 ----------- ------------ ----------- Total current liabilities................. 83,332,910 (77,917,891) -- 5,577,528 ----------- ------------ ----------- Long-Term Liabilities Other long-term liabilities................... 162,509 -- -- 162,509 ----------- ------------ ----------- Total long-term liabilities............... 162,509 -- -- 162,509 ----------- ------------ ----------- Total liabilities.................... 83,495,419 (77,917,891) -- 5,611,959 ----------- ------------ ----------- Commitments and Contingencies...................... -- -- -- -- Stockholders' Equity Common stock, par value $.01 per share........ 32,791 -- -- 32,791 Additional paid-in capital.................... 15,703,815 -- -- 15,703,815 Retained earnings (deficit)................... (1,055,264) 2,224,508 (3), (4) 1,169,244 Accumulated other comprehensive income........ 304,096 (304,096) (3), (4) -- ----------- ------------ ----------- Total stockholders' equity........... 14,985,438 1,920,412 -- 16,905,850 ----------- ------------ ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY......... $98,480,857 $(75,997,479) -- $22,483,378 =========== ============ ===========
-4- UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED)
HISTORICAL PRO FORMA NOTES TO PRO FORMA COMPANY ADJUSTMENTS ADJUSTMENTS COMPANY ----------- ------------ ------------- ----------- (1), (2) REVENUE: Gross revenue................................... $10,657,502 $ -- -- $10,657,502 COST OF SALES: Cost of sales................................... 1,587,012 -- -- 1,587,012 ----------- ---------- ----------- Gross profit.............................. 9,070,490 -- -- 9,070,490 ----------- ---------- ----------- EXPENSES: Employee compensation........................... 5,171,933 -- -- 5,171,933 Employee insurance and benefits................. 833,494 -- -- 833,494 Data processing................................. 601,747 -- -- 601,747 Mail and courier................................ 79,190 -- -- 79,190 Telephone....................................... 115,505 -- -- 115,505 Equipment rental and maintenance................ 388,373 -- -- 388,373 Occupancy....................................... 648,247 -- -- 648,247 Travel and entertainment........................ 129,568 -- -- 129,568 Errors/(recovery) expense....................... (140,812) -- -- (140,812) Insurance....................................... 318,998 -- -- 318,998 Depreciation and amortization................... 268,748 -- -- 268,748 Professional fees............................... 387,278 -- -- 387,278 Interest........................................ 2,094 -- -- 2,094 Provision for bad debt.......................... 105,986 -- -- 105,986 Other operating expenses........................ 463,578 -- -- 463,578 ----------- ---------- ----------- Total expenses............................ 9,373,927 -- -- 9,373,927 ----------- ---------- ----------- Loss from operations................................. (303,437) -- -- (303,437) Other income......................................... 10,472 -- -- 10,472 Income tax benefit................................... 78,479 589,480 (5) 667,959 ----------- ---------- ----------- Net income (loss) from continuing operations......... (214,486) 589,480 (5) 374,994 Gain on sale of operations........................... 193,637 1,411,833 (3), (4) 1,605,470 Gain from discontinued operations.................... 80,099 (80,901) (3), (4) (802) ----------- ---------- ----------- Net income........................................... $ 59,250 $1,920,412 -- $ 1,979,662 =========== ========== =========== Per share income (loss) Basic and fully diluted common shares outstanding................................... 2,829,117 2,829,117 Net income (loss) from continuing operations.... $ (0.08) $ 0.13 Net income...................................... 0.02 0.70
-5- UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2002 (UNAUDITED)
HISTORICAL PRO FORMA NOTES TO PRO FORMA COMPANY ADJUSTMENTS ADJUSTMENTS COMPANY ----------- ------------ ------------- ----------- (1), (2) REVENUE: Gross revenue................................... $15,535,761 $ -- -- $15,535,761 COST OF SALES: Cost of sales................................... 3,321,511 -- -- 3,321,511 ----------- ---------- ----------- Gross profit.............................. 12,214,250 -- -- 12,214,250 ----------- ---------- ----------- EXPENSES: Employee compensation .......................... 7,710,047 -- -- 7,710,047 Employee insurance and benefits................. 1,202,179 -- -- 1,202,179 Data processing................................. 522,970 -- -- 522,970 Mail and courier................................ 128,298 -- -- 128,298 Telephone....................................... 225,771 -- -- 225,771 Equipment rental and maintenance................ 408,593 -- -- 408,593 Occupancy....................................... 814,658 -- -- 814,658 Travel and entertainment........................ 297,095 -- -- 297,095 Errors/(recovery) expense....................... 402,048 -- -- 402,048 Insurance....................................... 180,458 -- -- 180,458 Depreciation and amortization................... 241,385 -- -- 241,385 Professional fees............................... 1,021,698 -- -- 1,021,698 Interest........................................ (6,706) -- -- (6,706) Provision for bad debt.......................... 113,495 -- -- 113,495 Business development............................ 11,250 -- -- 11,250 Other operating expenses........................ 558,205 -- -- 558,205 ----------- ---------- ----------- Total expenses............................ 13,831,444 -- -- 13,831,444 ----------- ---------- ----------- Loss from operations................................. (1,617,194) -- -- (1,617,194) ----------- ---------- ----------- Other loss .......................................... (32,342) -- -- (32,342) Income tax benefit................................... 369,439 573,640 (5) 943,079 ----------- ---------- ----------- Loss from continuing operations...................... (1,280,097) 573,640 (5) (706,457) Gain on sale of operations........................... 637,681 538,931 (3), (4) 1,176,612 Loss from discontinued operations.................... (703,398) 626,369 (3), (4) (77,029) ----------- ---------- ----------- Net income (loss).................................... $(1,345,814) $1,738,940 -- $ 393,126 =========== ========== =========== Per share income (loss) Basic and fully diluted common shares outstanding................................... 2,844,246 2,844,246 Net loss from continuing operations............. $ (0.45) $ (0.25) Net income (loss)............................... (0.47) 0.14
-6- NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (1) The pro forma results for the nine months ended September 30, 2003 and for the year ended December 31, 2002 assume that the sale of Unified Banking Company occurred at the beginning of the periods presented. Accordingly, the gain on the sale of Unified Banking Company reflects the difference between the net proceeds and the historical recorded book values on those respective dates. (2) A portion of the $8.2 million cash proceeds received from the sale of Unified Banking Company is deposited in the Company's accounts at Unified Banking Company. Such proceeds will not be collateralized. The Unaudited Pro Forma Consolidated Statements of Operations do not include pro forma interest on the net proceeds for the periods presented. Management believes that such interest would be immaterial. (3) To record proceeds received from the sale of the outstanding capital stock of Unified Banking Company, net of selling expenses, including broker selling costs of approximately $102,000, and income tax expense and deferred tax expense (see note 5). (4) To eliminate the recorded balances of total assets and total liabilities of Unified Banking Company and elimination of accumulated other comprehensive income from discontinued operation. (5) To eliminate the previously recorded valuation allowance on the deferred income tax asset related to the net operating loss carryforward, to the extent of the deferred income tax expense recognized in the net gain on sale of discontinued operations. -7- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: December 1, 2003 UNIFIED FINANCIAL SERVICES, INC. By: /s/ John S. Penn -------------------------------------- John S. Penn President and Chief Executive Officer -8- EXHIBIT INDEX Exhibit Description - ------- ----------- 2 Stock Purchase Agreement, dated June 9, 2003, by and between the Company and Blue River Bancshares, Inc., filed as Exhibit 2 to the Company's Current Report on Form 8-K, dated June 9, 2003, is incorporated herein by reference. 10 Depository Agreement, dated June 9, 2003, by and between the Company and Blue River Bancshares, Inc., is filed herewith. 32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is filed herewith. -9- EX-10 3 exh10.txt Exhibit 10 DEPOSITORY AGREEMENT THIS DEPOSITORY AGREEMENT (the "Agreement") is made and entered into as of the 9th day of June, 2003, by and between Blue River Bancshares, Inc. ("Blue River") and Unified Financial Services, Inc. ("Unified"). WITNESSETH ---------- WHEREAS, Blue River is an Indiana corporation and a thrift holding company, with its principal office located in Shelbyville, Indiana; and WHEREAS, Blue River is the sole owner, directly or indirectly, of all of the outstanding capital stock of Shelby County Bank ("SCB"), a federal savings banking association located in Shelbyville, Indiana; and WHEREAS, Unified is a Delaware corporation and a thrift holding company, with its principal office located in Lexington, Kentucky; and WHEREAS, Unified is the sole owner, directly or indirectly, of all of the outstanding capital stock of Unified Banking Company ("UBC"), a federal savings bank located in Lexington, Kentucky; and WHEREAS, Blue River and Unified have entered into that certain Stock Purchase Agreement, dated as of the date hereof (the "Stock Purchase Agreement"), whereby Blue River will purchase from Unified, all of the outstanding capital stock of UBC; and WHEREAS, Blue River will, subsequent to the consummation of the Stock Purchase Agreement, operate SCB and UBC under separate charters; and WHEREAS, pursuant to the Stock Purchase Agreement, and as a condition precedent to and as a material inducement for Blue River to consummate the Stock Purchase Agreement, Unified has agreed to execute this Agreement and be bound by the provisions herein. NOW, THEREFORE, in consideration of the premises herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Blue River and Unified agree as follows: SECTION I. MINIMUM BALANCE REQUIREMENT --------------------------- 1.01. Minimum Balance. --------------- (a) During the Term (as defined in Section 2.01) Unified, together with its Affiliates (as defined in Section 1.02), shall not maintain a Deposit (as defined in Section 1.04) with any entity other than SCB or UBC until such time as Unified, together with its Affiliates, maintains an aggregate average daily minimum Deposit balance in Qualifying Accounts with -1- either or both of UBC and SCB, such average minimum daily Deposit balance in Qualifying Accounts to be computed on a quarterly basis, of Eight Million Five Hundred Thousand and No/100 Dollars ($8,500,000.00) (the "Minimum Deposit Balance"). (b) Notwithstanding anything to the contrary contained herein, Unified and/or its Affiliates shall not be required to maintain any Deposits at either SCB or UBC for any period during the Term in which (i) either SCB or UBC, under Federal banking regulations, is deemed to be other than "well capitalized" for purposes of its (A) total risk-based capital ratio, (B) Tier 1 risk-based capital ratio and (C) leverage ratio, (ii) UBC has a ratio of non-performing loans to total loans in excess of five percent (5.0%) or (iii) UBC has a total loan loss reserve less than the level of non-performing assets (the amount of the loan loss reserve is less than the amount of non-performing assets) (each, a "Capital Event"). Following the occurrence of a Capital Event, neither Unified nor any of its Affiliates shall be required to comply with the provisions of this Agreement until such time as Blue River shall certify to Unified that there no longer exists a Capital Event with respect to either SCB or UBC. Following receipt by Unified of such certifying notice from Blue River, Unified shall, as soon as commercially practicable, move all Deposits back to either SCB or UBC. 1.02. Affiliates. For purposes of this Agreement the term ---------- "Affiliates" shall mean and include any majority owned subsidiary or affiliate of Unified, whether a corporation, limited liability company, limited partnership or general partnership; provided, however, the term "Affiliates" shall not mean or include any corporation, limited liability company, limited partnership or general partnership in which Unified acquires a majority ownership interest after the date of this Agreement. 1.03. Qualifying Accounts. The balances of the following types ------------------- of accounts may be aggregated in the calculation of the Minimum Deposit Balance and shall be referred to as "Qualifying Accounts": (i) non-interest bearing demand deposit accounts (DDA), and (ii) such other types of accounts as the parties may from time agree in writing. 1.04. Deposit. For purposes of this Agreement the term ------- "Deposit" shall mean and include any amount of money held by Unified and/or its Affiliates in (i) demand deposit accounts (DDA), (ii) NOW accounts, (iii) savings accounts, (iv) checking accounts, (v) money market deposit accounts, (vi) time deposits, (vii) sweep accounts, and (viii) any other such accounts as are of the same general type and character as the accounts listed in this Section 1.04, at any bank, brokerage house or other financial or depository entity other than SCB or UBC; provided, however, the term "Deposit" shall not include (i) any trading account of Unified Financial Securities, Inc. at any of its clearing broker-dealers, (ii) any deposit by Unified Financial Securities, Inc. at any broker-dealer that is required by such broker-dealer for Unified Financial Securities, Inc. to utilize such broker-dealer's clearing services, (iii) any deposit by any subsidiary or affiliate of Unified with the National Securities Clearing Corporation, (iv) any Deposit of Fiduciary Counsel, Inc., (v) any deposit of Unified Trust Company, National Association ("UTC") for which UTC is bound by a legal or fiduciary obligation to receive a -2- reasonable rate of interest, (vi) any account in the name of Unified Fund Services, Inc., or any successor thereto, for which Unified Fund Services, Inc. serves as an agent or fiduciary of another party, including, inter alia, mutual fund redemption accounts, control disbursement accounts, wire transfer accounts, concentration accounts and custody accounts, or (vii) any deposit of "seed" money by Unified Fund Services, Inc. or any successor thereto, into a registered investment company. 1.05. Trust Accounts. Subject to legal restrictions relating to, -------------- or the fiduciary duty of, UTC to its trust customers, UTC shall, at the option of Blue River, deposit the cash balance of its trust accounts in an interest bearing account of either SCB or UBC, which account shall pay a rate of interest sufficient to allow UTC to satisfy any legal or fiduciary obligation, until such time as the Minimum Deposit Balance has been satisfied. 1.06. Default. Each event of Unified maintaining a Deposit with ------- an entity other than SCB or UBC during a period in which the Minimum Deposit Balance in Qualifying Accounts at SCB and UBC is less than the amount of Eight Million Five Hundred Thousand and No/100 Dollars ($8,500,000.00) shall constitute a default ("Default") under this Agreement and entitle Blue River to Liquidated Damages as described in Section 5.01. 1.07. Terms of Account Relationship. The terms of the account ----------------------------- relationship between Unified or any of its Affiliates and UBC or SCB, as the case may be, shall be governed by the business deposit account agreement which Unified or any of its Affiliates and UBC or SCB, as the case may be, executes at the time the account is opened. 1.08. Quarterly Certification. ----------------------- (a) During the Term, Unified, upon the request of Blue River, shall deliver to Blue River, by January 15th, April 15th, July 15th and October 15th of each year, a certificate, substantially in the form attached hereto as Appendix A, of its chief financial officer (the "Certificate") certifying compliance by Unified with the terms of this Agreement during the preceding quarter. (b) During the Term, Blue River shall deliver to Unified, by January 15th, April 15th, July 15th and October 15th of each year, a certificate of its chief financial officer certifying to Unified that no Capital Event has occurred with respect to either SCB or UBC during the preceding quarter to the execution date of such certificate (the "Blue River Certificate"). In the event Blue River fails to timely deliver a Blue River Certificate, neither Unified nor any of its Affiliates shall be required to comply with the provisions of this Agreement until such time as Blue River shall deliver the required Blue River Certificate to Unified. 1.09. Right of Audit. Upon not less than fourteen (14) days' prior -------------- notice to Unified by Blue River, provided such notice is delivered by Blue River within thirty (30) days of its receipt of the Certificate contemplated in Section 1.07 hereof, Blue River shall have the right to inspect or cause an audit, to be conducted by an independent certified public accountant, of such of the books, accounts and records of Unified as are necessary to verify the information contained in -3- the Certificate. Such audit shall be conducted at the cost and expense of Blue River; provided, however, in the event that such audit determines that the Certificate is materially incorrect, Unified shall reimburse Blue River for all costs and expenses related to or arising out of such audit; provided, further, however, a Certificate shall not be deemed to be materially incorrect if it overstates the aggregate average daily Deposit balance in Qualifying Accounts for such quarter by an amount equal to or less than Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00). SECTION II. EFFECTIVE DATE; TERM -------------------- 2.01. Effective Date. This Agreement shall be effective as of the -------------- closing date of the Stock Purchase Agreement (the "Effective Date"). In the event the Stock Purchase Agreement is terminated prior to consummation of the Transaction (as defined in the Stock Purchase Agreement), this Agreement shall automatically terminate, without any action required by either party hereto. 2.02. Term. This Agreement shall be in continuous and uninterrupted ---- effect for a term (the "Term") commencing on the Effective Date and ending on the third anniversary of the Effective Date. SECTION III. REPRESENTATIONS AND WARRANTIES OF BLUE RIVER -------------------------------------------- 3.01. Corporate Power; Authorization; and Enforceability. Blue -------------------------------------------------- River is a corporation duly organized and validly existing under and by virtue of the laws of the State of Indiana. Blue River has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. This Agreement and its execution and delivery by Blue River have been duly authorized and approved by the Board of Directors of Blue River and constitutes a valid and binding obligation of Blue River, enforceable in accordance with its terms, except to the extent limited by general principles of equity and public policy and by bankruptcy, insolvency, reorganization, liquidation, moratorium, readjustment of debt or other laws of general application relating to or affecting the enforcement of creditors' rights. 3.02. No Violations. Neither the execution of this Agreement nor ------------- the consummation of the transactions contemplated hereby (a) conflicts with or violates Blue River's Articles of Incorporation or By-Laws; (b) conflicts with or violates any local, state or federal law, statute, ordinance, rule or regulation or any court or administrative judgment, order, injunction, writ or decree applicable to Blue River; or (c) conflicts with, results in a breach of or constitutes a default under any note, bond, indenture, mortgage, deed of trust, license, agreement, contract, arrangement, commitment or other instrument or obligation to which Blue River is a party or by which Blue River is subject or bound. 3.03. Survival of Representations and Warranties. All of the ------------------------------------------ representations and warranties made by Blue River in this Agreement shall survive the Effective Date. -4- SECTION IV. REPRESENTATIONS AND WARRANTIES OF UNIFIED ----------------------------------------- Unified hereby represents and warrants to Blue River as follows: 4.01. Corporate Power; Authorization; and Enforceability. Unified -------------------------------------------------- is a corporation duly organized and validly existing under and by virtue of the laws of the State of Delaware. Unified has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. This Agreement and its execution and delivery by Unified have been duly authorized and approved by the Board of Directors of Unified and constitutes a valid and binding obligation of Unified, enforceable in accordance with its terms, except to the extent limited by general principles of equity and public policy and by bankruptcy, insolvency, reorganization, liquidation, moratorium, readjustment of debt or other laws of general application relating to or affecting the enforcement of creditors' rights. 4.02. No Violations. Neither the execution of this Agreement nor ------------- the consummation of the transactions contemplated hereby (a) conflicts with or violates Unified's Amended and Restated Certificate of Incorporation, as amended, or By-Laws; (b) conflicts with or violates any local, state or federal law, statute, ordinance, rule or regulation or any court or administrative judgment, order, injunction, writ or decree applicable to Unified; or (c) conflicts with, results in a breach of or constitutes a default under any note, bond, indenture, mortgage, deed of trust, license, agreement, contract, arrangement, commitment or other instrument or obligation to which Unified is a party or by which Unified is subject or bound. 4.03. Litigation and Pending Proceedings. Except as set forth on ---------------------------------- Schedule 4.03 hereto, there are no claims, actions, suits, proceedings, arbitrations or investigations pending or, to Unified's best knowledge, threatened in any court or before any government agency or authority, arbitration panel or otherwise (nor does Unified have any knowledge of a basis for any claim, action, suit, proceeding, arbitration or investigation) which could prevent the performance of this Agreement by Unified. 4.04. Survival of Representations and Warranties. All of the ------------------------------------------ representations and warranties made by Unified in this Agreement or in any Certificate furnished hereunder shall survive the Effective Date. SECTION V. LIQUIDATED DAMAGES ------------------ 5.01. Liquidated Damages. The parties agree that, in the event of a ------------------ Default by Unified, as described in Section 1.06, actual damages suffered by Blue River would be difficult and impractical to quantify. The parties therefore agree that, in the event a Default by Unified for any quarterly period, Unified shall pay to Blue River an amount equal to (a) (i) the Minimum Deposit Balance less (ii) the aggregate average daily Deposit ---- balance in Qualifying Accounts with either or both of UBC and SCB for such quarter times (b) the Federal-funds target rate, as published from time to ----- time in The Wall Street Journal, Midwest Edition or, if the difference between ----------------------- (a)(i) and (a)(ii) is greater than Two Million and No/100 Dollars ($2,000,000.00) then the two year Treasury Rate, as published from time to time in The Wall Street Journal, Midwest ----------------------- -5- Edition, shall be substituted for the Federal-funds target rate in this calculation, times (c) (i) the number of days during the Term of this ----- Agreement in such quarter divided by (ii) 365. Unified specifically agrees ---------- that the amount of damages stipulated is not greatly disproportionate to the loss likely to occur upon a Default by Unified under this Agreement and that the sum is an adequate measure of damages, and not a penalty. SECTION VI. MISCELLANEOUS ------------- 6.01. Assignment. This Agreement shall be binding upon and inure to ---------- the benefit of the respective parties hereto and their respective successors and assigns; provided, however, that this Agreement may not be assigned by either party hereto without the prior written consent of the other party, which consent shall not be unreasonably withheld. 6.02. Amendment; Waiver. ----------------- (a) This Agreement may be amended from time to time only by a written instrument duly executed by the parties hereto. (b) Any term or provision of this Agreement may be waived at any time by the party entitled to the benefit thereof by a written instrument duly executed by such party. In the event that a party hereto shall waive a term or provision of this Agreement, such waiver shall be effective only with respect to the specific term or provision so waived and shall not be deemed a continuing waiver with respect thereto, a waiver of subsequent similar items or events or a waiver of any other term or provision of this Agreement. No delay or failure by either party to exercise any right under this Agreement and no partial or single exercise of that right shall constitute a waiver of that or any other right, unless expressly provided in writing by such party. 6.03. Notices. All notices, requests and other communications ------- hereunder shall be in writing (which shall include facsimile communication) and shall be deemed to have been duly given if delivered by hand and receipted for, sent by certified United States Mail, return receipt requested, first class postage pre-paid, delivered by overnight express receipted delivery service or faxed if confirmed immediately thereafter by also mailing a copy of such notice, request or other communication by certified United States Mail, return receipt requested, with first class postage pre-paid, as follows: -6- If to Blue River: with a copy to (which shall not constitute notice): Lawrence T. Toombs Michael J. Messaglia, Esq. President Krieg DeVault LLP Blue River Bancshares, Inc. One Indiana Square, Suite 2800 29 E. Washington Street Indianapolis, Indiana 46204 Shelbyville, Indiana 46176 Telephone: (317) 238-6249 Telephone: (317) 398-9721 Fax: (317) 636-1507 Fax: (317) 392-6208 If to Unified: with a copy to (which shall not constitute notice): John S. Penn David F. Morris, Esq. President and Chief Executive Officer c/o Thompson Coburn LLP Unified Financial Services, Inc. One US Bank Plaza c/o 2424 Harrodsburg Road St. Louis, Missouri 63101 Lexington, Kentucky 40504 Telephone: (314) 552-6179 Telephone: (859) 296-4407 Fax: (314) 552-7179 Fax: (859) 296-0880 or such substituted address or person as any of them have given to the other in writing. All such notices, requests or other communications shall be effective: (a) if delivered by hand, when delivered; (b) if mailed in the manner provided herein, three (3) business days after deposit with the United States Postal Service; (c) if delivered by overnight express delivery service, on the next business day after deposit with such service; and (d) if by facsimile, on the next business day if also confirmed by mail in the manner provided herein. 6.04. Headings. The headings in this Agreement have been inserted -------- solely for ease of reference and should not be considered in the interpretation or construction of this Agreement. 6.05. Severability. In case any one or more of the provisions ------------ contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision or provisions had never been contained herein. 6.06. Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which shall be an original, but such counterparts shall together constitute one and the same instrument. 6.07. Governing Law. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of Indiana, without reference to the choice of law principles thereof. The parties hereto hereby agree that all claims, actions, suits and proceedings between the parties hereto relating to this Agreement shall be filed, tried and litigated only in the -7- Circuit or Superior Courts of Marion County, Indiana or the United States District Court for the Southern District of Indiana - Southern Division. In connection with the foregoing, the parties hereto consent to the jurisdiction and venue of such courts and expressly waive any claims or defenses of lack of personal jurisdiction of or proper venue by such courts. 6.08. Entire Agreement. This Agreement together with the Stock ---------------- Purchase Agreement supersedes any other prior understanding, commitment, representation, negotiation or agreement, whether oral or written, between Unified and Blue River relating to the transactions contemplated hereby and constitutes the entire agreement between the parties hereto with respect to the subject matter hereof. 6.09. Expenses. Except as provided otherwise herein, Unified and -------- Blue River shall each pay their respective expenses incidental to the transactions contemplated hereby. 6.10. Enforcement. In the event either party shall file any suit or ----------- other claim to enforce any provision of this Agreement, the prevailing party shall be entitled to recover from the other party all of the prevailing party's costs and expenses (including reasonable attorney's fees and court costs) of such enforcement immediately upon final adjudication of the controversy. 6.11. Certain References. Whenever in this Agreement a singular ------------------ word is used, it also shall include the plural wherever required by the context and vice-versa. Except expressly stated otherwise, all references in this Agreement to periods of days shall be construed to refer to calendar, not business, days. 6.12. Drafter of the Agreement. For purposes of construing this ------------------------ Agreement, the parties agree that each has reviewed and had the opportunity to revise this Agreement, and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof. [remainder of page intentionally left blank] -8- IN WITNESS WHEREOF, the parties hereto have duly executed or caused to be executed this Agreement as of the day and year first above written. BLUE RIVER BANCSHARES, INC. By: /s/ Lawrence T. Toombs --------------------------------- Lawrence T. Toombs Its: President UNIFIED FINANCIAL SERVICES, INC. By: /s/ John S. Penn --------------------------------- John S. Penn Its: President and Chief Executive Officer -9- Appendix A UNIFIED FINANCIAL SERVICES, INC. ONE US BANK PLAZA, SUITE 2100 ST. LOUIS, MISSOURI 63101 QUARTERLY CERTIFICATE --------------------- The undersigned ________________, the duly appointed and acting Chief Financial Officer of Unified Financial Services, Inc. ("Unified") hereby certifies in accordance with Section 1.07 of the Depository Agreement, dated as of June ___, 2003 (the "Depository Agreement"), by and between Unified and Blue River Bancshares, Inc. ("Blue River"), as set forth below. Capitalized terms that are not otherwise defined herein shall have the meanings ascribed to them in the Depository Agreement. The aggregate average daily Deposit balance in Qualifying Account with either or both of UBC and SCB, computed on a quarterly basis, for the preceding quarter was ____________________; and (initial one) ____ During the quarter ended ____________, neither Unified, nor any of its Affiliates maintained a Deposit with any entity other than UBC or SCB (for any quarter during which Unified, together with its Affiliates, failed to maintain an aggregate average daily Deposit balance in Qualifying Accounts with either or both of UBC and SCB, for such quarter, of at least Eight Million Five Hundred Thousand and No/100 Dollars ($8,500,000.00)); or ____ During the quarter ended ____________, (i) Unified, and/or one of its Affiliates maintained a Deposit with any entity other than UBC or SCB and (ii) Unified, together with its Affiliates, failed to maintain an aggregate average daily Deposit balance in Qualifying Accounts with either or both of UBC and SCB for such quarter, of Eight Million Five Hundred Thousand and No/100 Dollars ($8,500,000.00). As a result, Unified shall pay Liquidated Damages to Blue River in an amount calculated pursuant to Section 5.01 of the Depository Agreement, which is _______________________________ ($____________); or ____ During the quarter ended _____________, Unified, together with its Affiliates, maintained an aggregate average daily Deposit balance in Qualifying Accounts with either or both of UBC and SCB of at least Eight Million Five Hundred Thousand and No/100 Dollars ($8,500,000.00). IN WITNESS WHEREOF, I have hereupon set my hand as the Chief Financial Officer of Unified as of this _____ day of _______________, 200__. -------------------------------------- Printed: ------------------------------ Chief Financial Officer -10- Schedule 4.03 Johnson v. Acceptance Insurance Company et al. (Case No.: 3:01 CV82 - ---------------------------------------------- (N.D. W.Va)) Martin and Diane Saniski v. Unified Financial Securities, Inc. Hackett - ---------------------------------------------------------------------- Associates, Inc., Donald - ------------------------ Friedman, Louis Aarons and Cliff Cardine (NASD Arbitration No. 01-05465) - ---------------------------------------- -11- EX-32 4 exh32.txt EXHIBIT 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 We hereby certify that this Current Report on Form 8-K, dated November 19, 2003, as filed with the Securities and Exchange Commission, to the best of our knowledge, complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Unified Financial Services, Inc. /s/ John S. Penn ---------------------------------------------------- John S. Penn President and Chief Executive Officer /s/ Thomas G. Napurano ---------------------------------------------------- Thomas G. Napurano Executive Vice President and Chief Financial Officer December 1, 2003 This certificate accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. -----END PRIVACY-ENHANCED MESSAGE-----