UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
(RULE 14d-100)
Tender Offer Statement Pursuant to Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
Siebert Financial Corp.
(Name of Subject Company)
Kennedy Cabot Acquisition, LLC
(Offeror)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
826176109
(Cusip Number of Class of Securities)
Gloria E. Gebbia
Kennedy Cabot Acquisition, LLC
Chief Executive Officer
24100 Calabasas Road
Calabasas, CA 91302
(212)514-8369
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons)
Copies to:
Lawrence G. Nusbaum, Esq.
Martin H. Kaplan, Esq.
Bryan S. Dixon, Esq.
Gusrae Kaplan Nusbaum PLLC
120 Wall Street, 25th Floor
New York, NY 10005
212-269-1400
CALCULATION OF FILING FEE
| Transaction Valuation* | Amount of Filing Fee* | |
| $3,330,151.20 | $335.35 |
| * | Estimated solely for purposes of calculating the filing fee pursuant to Rule 0-11(d) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The transaction valuation was calculated by multiplying (i) the 2,775,126 outstanding shares of common stock of Siebert Financial Corp. (“Siebert”), par value $0.01 per share (the “Shares”) which are subject to the Offer (as defined below), multiplied by the offer price of $1.20 per Share. The calculation of the filing fee is based on information provided by Siebert as of September 2, 2016. |
| ** | The filing fee was calculated in accordance with Rule 0-11 under the Exchange Act and Fee Rate Advisory #1 for fiscal year 2016, issued August 27, 2015, by multiplying the transaction value by 0.0001007. |
| o | Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| Amount Previously Paid: Not applicable. | Filing Party: Not applicable. | |
| Form or Registration No.: Not applicable. | Date Filed: Not applicable. |
| o | Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. |
Check the appropriate boxes below to designate any transactions to which the statement relates:
| x | third-party tender offer subject to Rule 14d-1. | |
| o | issuer tender offer subject to Rule 13e-4. | |
| o | going-private transaction subject to Rule 13e-3. | |
| o | amendment to Schedule 13D under Rule 13d-2. |
Check the following box if the filing is a final amendment reporting the results of the tender offer o
If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:
| o | Rule 13e-4(i) (Cross-Border Issuer Tender Offer) | |
| o | Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) |
This Tender Offer Statement on Schedule TO (this “Schedule TO”) relates to the offer (the “Offer”) by Kennedy Cabot Acquisition, LLC., a Nevada limited liability corporation (“Purchaser”), to purchase 2,775,126 shares of common stock of Siebert Financial Corp., a New York corporation (“Siebert”), par value $0.01 per share (each, a “Share”, and collectively, the “Shares”), that represent all of the issued and outstanding Shares other than the 19,310,000 Shares owned by the Estate of Muriel F. Siebert, at a purchase price of $1.20 per Share, net to the seller in cash, without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase dated September 6, 2016 (as it may be amended or supplemented from time to time, the “Offer to Purchase”), which is annexed to and filed with this Schedule TO as Exhibit (a)(1)(A), and in the related Letter of Transmittal (as it may be amended or supplemented from time to time, the “Letter of Transmittal” and, together with the Offer to Purchase, the “Offer”), which is annexed to and filed with this Schedule TO as Exhibit (a)(1)(B).
Items 1 through 9; Item 11.
All information contained in the Offer to Purchase and the accompanying Letter of Transmittal, including all schedules thereto, is hereby incorporated herein by reference in response to Items 1 through 9 and Item 11 in this Schedule TO.
Item 10. Financial Statements.
Not applicable.
Item 12. Exhibits.
See Exhibit Index.
Item 13. Information Required by Schedule 13E-3.
Not applicable.
| - 2 - |
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: September 6, 2016
| KENNEDY CABOT ACQUISITION, LLC | |||
| By: | /s/ Gloria E. Gebbia | ||
| Name: | Gloria E. Gebbia | ||
| Title: | Manager | ||
EXHIBIT INDEX
| Exhibit No. | Description | |
| (a)(1)(A) | Offer to Purchase, dated September 6, 2016 | |
| (a)(1)(B) | Form of Letter of Transmittal (including Guidelines for Certificate of Taxpayer Identification Number on IRS W-9) | |
| (a)(1)(C) | Form of Notice of Guaranteed Delivery | |
| (a)(1)(D) | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | |
| (a)(1)(E) | Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | |
| (a)(5)(A) | Joint press release issued by the Siebert Financial and Purchaser dated September 2, 2016* | |
| (a)(5)(B) | Form of communication to Siebert Financial's employees, first used or made available on September 2, 2016* | |
| (a)(5)(C) | Form of communication to Siebert Financial's customers, first used or made available on September 2, 2016* | |
| (a)(5)(D) | Form of summary advertisement, published in The New York Times on September 6, 2016 | |
| (b) | Not applicable | |
| (d)(1) | Acquisition Agreement between Siebert Financial Corp., The Estate of Muriel F. Siebert and Kennedy Cabot Acquisition, LLC dated as of September 1, 2016 | |
| (g) | Not applicable | |
| (h) | Not applicable |
* Previously filed
Exhibit (a)(1)(a)
Offer to Purchase for Cash
Up to 2,775,126 Shares of Common Stock
of
Siebert Financial Corp.
at
$1.20 Net Per Share
by
Kennedy Cabot Acquisition, LLC
| THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, AT THE END OF THE DAY ON OCTOBER 3, 2016, UNLESS THE OFFER IS EXTENDED OR EARLIER TERMINATED. |
Kennedy Cabot Acquisition, LLC., a Nevada limited liability company (“Purchaser”, “we”, “our” or “us”), is offering to purchase 2,775,126 Shares of common stock, par value $0.01 per share (the “Shares”) of Siebert Financial Corp., a New York corporation (“Siebert” or the “Company”), at a purchase price of $1.20 per Share, net to the seller in cash (the “Offer Price”), without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in this Offer to Purchase (as it may be amended or supplemented from time to time, the “Offer to Purchase”), and in the related Letter of Transmittal (as it may be amended or supplemented from time to time, the “Letter of Transmittal” and, together with this Offer to Purchase, the “Offer”). Siebert owns all of the issued and outstanding capital stock of (i) Muriel Siebert & Co., Inc., a Delaware corporation, a member of the Financial Industry Regulatory Authority (“FINRA”) and registered as a broker/dealer under Section 15 of the Securities Exchange Act of 1934, as amended (the “Broker/Dealer”), and (ii) Siebert Investment Advisors, Inc., a New York corporation and registered investment advisor under the Investment Advisor’s Act of 1940, as amended (the “Investment Advisor”). The Offer is being made by the Purchaser pursuant to the Acquisition Agreement, dated September 1, 2016, by and among, Siebert, the Estate of Muriel F. Siebert (the “Majority Shareholder”), and the Purchaser (as it may be amended or supplemented from time to time, the “Acquisition Agreement”). The 2,775,126 Shares covered by this Offer to Purchase represent all issued and outstanding Shares other than the 19,310,000 Shares owned by the Majority Shareholder which we will purchase from the Majority Shareholder immediately following consummation of the Offer pursuant to the terms and subject to the conditions in the Acquisition Agreement (the “Majority Share Purchase”).
Siebert’s board of directors (the “Company Board”) unanimously (i) determined that the Acquisition Agreement and the transactions contemplated thereby, including the Offer, are fair to, and in the best interests of Siebert shareholders, and (ii) approved the Acquisition Agreement and the transactions contemplated thereby, including the Offer, in accordance with the New York Business Corporation Law (the “BCL”), and (iii) resolved to remain neutral and not to make a recommendation regarding whether Siebert shareholders should accept the Offer.
The Offer is not conditioned upon the receipt of financing or upon any minimum number of Shares being tendered. The Offer is, however, subject to certain other conditions, including, among other things approval by FINRA, pursuant to FINRA Rule 1017 of the indirect change in control of the Broker/Dealer as a result of the Majority Share Purchase (“FINRA Approval”) by us. A summary of the principal terms of the Offer appears on pages (i) through (iv). You should read this entire document carefully before deciding whether to tender your Shares.
September 6, 2016
IMPORTANT
If you desire to tender all or any portion of your Shares in the Offer, you should either (a) complete and sign the Letter of Transmittal for the Offer (or a facsimile thereof), which is enclosed with this Offer to Purchase, in accordance with the instructions contained in the Letter of Transmittal, mail or deliver the Letter of Transmittal (or a manually executed facsimile thereof) and any other required documents to American Stock Transfer & Trust Company, LLC, the depositary for the Offer (the “Depositary”), and either (i) deliver the stock certificates for your Shares to the Depositary along with the Letter of Transmittal (or a manually executed facsimile thereof) or (ii) tender your Shares by book-entry transfer by following the procedures described in Section 3 — “Procedures for Tendering Shares” of this Offer to Purchase, in each case by the Expiration Time (as defined herein) or (b) request that your broker, dealer, commercial bank, trust company or other nominee effect the tender of your Shares for you. If you hold Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact that institution and give instruction that your Shares be tendered in the Offer.
If you desire to tender your Shares to the Purchaser pursuant to the Offer and the certificates representing your Shares are not immediately available, or you cannot comply in a timely manner with the procedures for tendering your Shares by book-entry transfer, or cannot deliver all required documents to the Depositary by the Expiration Time, you may tender your Shares to Purchaser in the Offer by following the procedures for guaranteed delivery described in Section 3 — “Procedures for Tendering Shares” of this Offer to Purchase. The method of delivery of Shares, the Letter of Transmittal and all other required documents, including delivery by book-entry transfer, is at the election and sole risk of the tendering shareholder.
Questions and requests for assistance may be directed to DF King & Co., Inc. (the” Information Agent”) at the telephone number and address set forth on the back cover of this Offer to Purchase. Requests for additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer materials may be directed to the Information Agent. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance. Copies of these materials may also be found at the website maintained by the Securities and Exchange Commission (the “SEC”) at www.sec.gov.
This Offer to Purchase and the related Letter of Transmittal contain important information and you should read both carefully and in their entirety before making a decision with respect to the Offer.
The Offer has not been approved or disapproved by the SEC or any state securities commission, nor has the SEC or any state securities commission passed upon the fairness or merits of the Offer or upon the accuracy or adequacy of the information contained in this Offer to Purchase. Any representation to the contrary is unlawful.
The Information Agent for the Offer is:
DF KING & CO., INC.
48 WALL STREET
22nd FLOOR
NEW YORK, NY 10005
Siebert Shareholders
Call Toll Free: (888) 540-8736
from the U.S. only
Banks and Brokers Call Collect: (212) 269-5550
TABLE OF CONTENTS
Kennedy Cabot Acquisition, LLC., a Nevada limited liability company (“Purchaser”, “we”, “our” or “us”), is offering to purchase 2,775,126 Shares of common stock, par value $0.01 per share (the “Shares”) of Siebert Financial Corp., a New York corporation (“Siebert” or the “Company”), at a purchase price of $1.20 per Share, net to the seller in cash (the “Offer Price”), without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in this Offer to Purchase (as it may be amended or supplemented from time to time, the “Offer to Purchase”), and in the related Letter of Transmittal (as it may be amended or supplemented from time to time, the “Letter of Transmittal” and, together with this Offer to Purchase, the “Offer”). Siebert owns all of the issued and outstanding capital stock of (i) Muriel Siebert & Co., Inc., a Delaware corporation, a member of the Financial Industry Regulatory Authority (“FINRA”) and registered as a broker/dealer under Section 15 of the Securities Exchange Act of 1934, as amended (the “Broker/Dealer”), and (ii) Siebert Investment Advisors, Inc., a New York corporation and registered investment advisor under the Investment Advisor’s Act of 1940, as amended (the “Investment Advisor”). The Offer is being made by the Purchaser pursuant to the Acquisition Agreement, dated September 1, 2016, by and among, Siebert, the Estate of Muriel F. Siebert (the “Majority Shareholder”), and the Purchaser (as it may be amended or supplemented from time to time, the “Acquisition Agreement”). The 2,775,126 Shares represent all issued and outstanding Shares other than the 19,310,000 Shares owned by the Majority Shareholder which we will purchase from the Majority Shareholder immediately following consummation of the Offer pursuant to the terms and subject to the conditions in the Acquisition Agreement (the “Majority Share Purchase”).
The information contained in this summary term sheet is a summary only and is not meant to be a substitute for the more detailed description and information contained in the remainder of this Offer to Purchase and in the Letter of Transmittal. You are urged to read carefully this Offer to Purchase and the Letter of Transmittal.
This summary term sheet includes cross-references to other sections of this Offer to Purchase where you will find more complete descriptions of the topics mentioned below.
The information concerning Siebert, the Broker/Dealer, the Investment Advisor, and the Majority Shareholder contained in this summary term sheet and elsewhere in this Offer to Purchase has been provided by Siebert, the Broker/Dealer and/or the Majority Shareholder or has been taken from, or is based upon, publicly available documents or records of Siebert, the Broker/Dealer and/or the Majority Shareholder on file with the U.S. Securities and Exchange Commission (“SEC”) or other public sources at the time of the Offer. The Purchaser has not independently verified the accuracy and completeness of such information.
As of the date of this Offer to Purchase, Siebert has issued and outstanding 22,085,126 Shares, of which (i) 19,310,000 Shares are owned by the Majority Shareholder, and which we will acquire in the Majority Share Purchase pursuant to the Acquisition Agreement, the consummation of which is a condition to the consummation of the Offer, and (ii) 2,775,126 Shares are owned by the other Company shareholders, all of which 2,775,126 Shares we are offering to purchase in the Offer.
| Securities Sought | 2,775,126 Shares of common stock, which represent all issued and outstanding Shares of Siebert not owned by the Majority Shareholder. |
| Price Offered Per Share | $1.20 net to the seller in cash, without interest thereon and subject to any required withholding taxes (the “Offer Price”). |
| Scheduled Expiration of the Offer | 12:00 Midnight, New York City time, on October 3, 2016, unless the Offer is extended or terminated (such time, as it may be extended, the “Expiration Time”). See Section 1 — “Terms of the Offer.” |
| Purchaser | Kennedy Cabot Acquisition, LLC, a Nevada limited liability company. |
| -i- |
Who is offering to purchase my Shares?
Kennedy Cabot Acquisition, LLC, a Nevada limited liability company is offering to purchase 2,775,126 issued and outstanding Shares, which constitute all of the issued and outstanding Shares of Siebert other than the 19,310,000 Shares owned by the Majority Shareholder, which 19,310,000 Shares we will purchase in the Majority Share Purchase pursuant to the Acquisition Agreement as a condition to the consummation of the Offer. We were formed for the purpose of purchasing all of the 19,310,000 Shares owned by the Majority Shareholder in the Majority Share Purchase, making the Offer and purchasing all 2,775,126 Shares validly tendered and not withdrawn in the Offer, and, thereafter, being the holding company of Siebert. See the “Introduction” and Section 9 — “Certain Information Concerning Purchaser.”
What are the classes and amounts of securities sought in the Offer?
We are offering to purchase all 2,775,126 shares of common stock, par value $.01 per share of Siebert issued and outstanding as of the date of this Offer to Purchase, other than the 19,310,000 Shares owned by the Majority Shareholder, which 19,310,000 Shares we are purchasing in the Majority Share Purchase as a condition to the consummation of the Offer, all on the terms and conditions of the Acquisition Agreement. See the “Introduction” and Section 1 — “Terms of the Offer.”
Why are you making the Offer?
As noted above, Siebert, the Majority Shareholder and we have entered into the Acquisition Agreement. We are making the Offer pursuant to the Acquisition Agreement and because we want to acquire control of Siebert in the Majority Share Purchase, while providing the other Siebert shareholders the opportunity to sell their Shares in the Offer at the Offer Price, which price is higher per Share than the per Share price we are paying to the Majority Shareholder (prior to certain adjustments) to acquire all 19,310,000 Shares owned by the Majority Shareholder in the Majority Share Purchase].
See Section 11 — “Purpose of the Offer and Plans for Siebert; Acquisition Agreement and Other Agreements” and Section 13 — “Conditions to the Offer.”
How much are you offering to pay and what is the form of payment? Will I have to pay any fees or commissions?
We are offering to pay $1.20 per Share, net to the seller in cash, without interest thereon and subject to any required withholding taxes (the “Offer Price”). If you are the record owner of your Shares and you tender your Shares to us in the Offer, you will not have to pay brokerage fees, commissions or similar expenses. If you own your Shares through a broker or other nominee and your broker or other nominee tenders your Shares on your behalf, your broker or nominee may charge you a fee for doing so. You should consult your broker or nominee to determine whether any charges will apply.
What does the Company Board think of the Offer?
Siebert’s board of directors (the “Company Board”) unanimously (i) determined that the Acquisition Agreement and the transactions contemplated thereby, including the Offer, are fair to, and in the best interests of the Company’s shareholders, and (ii) approved the Agreement and the transactions contemplated thereby, including the Offer, in accordance with the New York Business Corporation Law (the “BCL”), and (iii) resolved to remain neutral and not to make a recommendation regarding whether Company shareholders should accept the Offer.
See the “Introduction” and Section 10 —“Background of the Offer; Contacts with Siebert”, Section 11 - “Purpose of the Offer and Plans for Siebert; Acquisition Agreement and Other Agreements” below, and Siebert’s Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission (the “SEC”), in connection with the Offer, a copy of which (without certain exhibits) is being furnished to all Siebert shareholders.
Is there an agreement governing the Offer?
Yes. The Acquisition Agreement, which provides for, among other things, for the terms and conditions of the Offer and the Majority Share Purchase.
See Section 11 — “Purpose of the Offer and Plans for Siebert; Acquisition Agreement and Other Agreements” and Section 13 — “Conditions to the Offer.”
Is the Offer conditioned on you obtaining financing?
No. Consummation of the Offer is not subject to any financing condition. The total amount of funds required by us to consummate the purchase of all (i) 19,310,000 Shares owned by the Majority Shareholder in the Majority Share Purchase, and (ii) all 2,775,126 Shares in the Offer, is approximately $10 million, plus related fees and expenses. Such cash requirement will come from our available cash in our bank, brokerage and/or similar accounts.
| -ii- |
See Section 12 — “Source and Amount of Funds.”
Is your financial condition relevant to my decision to tender my Shares in the Offer?
We do not think our financial condition is relevant to your decision whether to tender your Shares and accept the Offer, because:
| • | Immediately following the consummation of the Offer, we are purchasing all 19,310,000 Shares owned by the Majority Shareholder in the Majority Share Purchase; |
| • | As a condition to the Majority Share Purchase, we are required under the Acquisition Agreement to consummate the Offer and purchase all of the 2,775,126 Shares owned by the Company’s other shareholders who validly tender and do not withdraw their Shares; |
| • | the Offer is being made for all such 2,775,126 Shares solely for cash; | |
| • | the Offer is not subject to any financing condition; | |
| • | our available cash in our bank, brokerage account or similar account is sufficient to purchase all Shares in the Majority Share Purchase and the Offer. |
How long do I have to decide whether to tender my Shares in the Offer?
You will have until 12:00 Midnight, New York City time, at the end of October 3, 2016, unless the Offer is extended or earlier terminated pursuant to the Acquisition Agreement (such time, as it may be so extended, the “Expiration Time”). If you cannot deliver everything required to make a valid tender to the Depositary (as defined below) prior to such time, you may be able to use a guaranteed delivery procedure that is described in Section 3 — “Procedures for Tendering Shares.” Please give your broker, dealer, commercial bank, trust company or other nominee instructions with sufficient time to permit such nominee to tender your Shares by the Expiration Time.
The date and time of the consummation of the Offer is the “Effective Time.”
See Section 1 — “Terms of the Offer” and Section 3 — “Procedures for Tendering Shares.”
Can the Offer be extended and under what circumstances?
Yes, the Offer can be extended. Specifically, we have agreed in the Acquisition Agreement that we (i) may, in our sole discretion, without consent of Siebert, extend the Offer on one or more occasions for any period, if on any then-scheduled Expiration Time any of the conditions to the consummation of the Offer shall not be satisfied or, in our sole discretion, waived, until such time as such condition or conditions are satisfied or waived, and (ii) shall extend the Offer for any period required by applicable law, any interpretation or position of the SEC, the staff thereof or the NASDAQ Stock Market (“NASDAQ”), applicable to the Offer. However, in no event shall we be required to extend the Offer (A) beyond February 28, 2017 (the “Outside Date”), or (B) at any time we are permitted to terminate the Acquisition Agreement pursuant to the terms thereof.
Except as described in the Acquisition Agreement or approved in writing by Siebert or required by any governmental entity or regulatory authority (including FINRA), we shall not extend or otherwise change any scheduled Expiration Time.
Although we have no current intention to do so, we expressly reserve the right to, in our sole discretion, following the consummation of the Majority Share Purchase, extend the Offer for a “subsequent offering period” (and one or more extensions thereof) in accordance with Rule 14d-11 under the Securities Exchange Act of 1934, as amended (the “Exchange Act).
If we extend the Offer, such extension will extend the time that you will have to tender (or withdraw) your Shares.
See Section 1 — “Terms of the Offer” of this Offer to Purchase for more details on our obligation and ability to extend the Offer.
| -iii- |
How will I be notified if the Offer is extended?
If we extend the Offer, we will inform the Depositary of any extension and will issue a press release announcing the extension not later than 9:00 A.M., New York City time, on the next business day after the previously scheduled date of the Expiration Time.
See Section 1 — “Terms of the Offer.”
What are the most significant conditions to the Offer?
Our obligation to accept for payment and pay for any issued and outstanding Shares (other than the Shares owned by the Majority Shareholder) validly tendered and not validly withdrawn pursuant to the Offer is subject to the satisfaction, or waiver by us as determined in our sole discretion, of various conditions, including, among other conditions, have received approval from the FINRA, pursuant to FINRA Rule 1017, to the indirect change of control of the Broker/Dealer as a result of the Majority Share Purchase.
The Offer is also subject to other conditions. A more detailed discussion of the conditions to consummation of the Offer is contained in the Introduction, Section 1 – “Terms of the Offer”, Section 11 — “Purpose of the Offer and Plans for Siebert; Acquisition Agreement and Other Agreements”” and Section 13 – “Conditions to the Offer”.
The Offer is not subject to any financing condition or any minimum number of Shares being tendered.
Section 13 – “Conditions to Offer”
How do I tender my Shares?
If you wish to accept the Offer and:
| • | you are a record holder (i.e., a stock certificate or book entry has been issued to or entered for you and registered in your name), you must deliver the stock certificate(s) representing your Shares (or follow the procedures described in this Offer to Purchase for book-entry transfer), together with a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, and any other documents required by the Letter of Transmittal, to the Depositary. These materials must reach the Depositary before the Offer expires. Detailed instructions are contained in the Letter of Transmittal and in Section 3 — “Procedures for Tendering Shares”; |
| • | you are a record holder, but your stock certificate or book entry is not available or you cannot deliver or transfer it to the Depositary before the Offer expires, you may be able to obtain three additional NASDAQ trading days to deliver or transfer your Shares by delivering the enclosed Notice of Guaranteed Delivery, properly completed and duly executed, to the Depositary before the Offer expires. See Section 3 — “Procedures for Tendering Shares” for more information; or |
| • | you hold your Shares through a broker, dealer, commercial bank, trust company or other nominee (i.e., your Shares are held in “street name”), you should promptly contact your broker, dealer, commercial bank, trust company or other nominee and give instructions that your Shares be tendered. |
How do I withdraw previously tendered Shares?
To withdraw previously tendered Shares, you must deliver a written notice of withdrawal, or a facsimile of one, with the required information to the Depositary while you still have the right to withdraw Shares. If you tendered Shares by giving instructions to a broker, dealer, commercial bank, trust company or other nominee, you must instruct the broker, dealer, commercial bank, trust company or other nominee to arrange for the withdrawal of your Shares. See Section 15 – “Conditions of the Offer”.
See Section 4 — “Withdrawal Rights.”
Following the consummation of the Offer, will Siebert continue as a public company?
If we consummate the (i) Majority Share Purchase, and (ii) the Offer and are able to purchase all 2,775,126 shares in the Offer, Siebert will no longer be publicly traded.
If, however, we consummate (i) the Majority Share Purchase, and (ii) the Offer, but are not able to purchase all 2,775,126 Shares in the Offer, such non-purchased Shares will remain issued and outstanding and publicly traded. However, depending on the number of Shares we are able to purchase in the Offering, there could be so few remaining shareholders of Siebert and/or publicly traded Shares that there could no longer be an active or liquid public trading market (or, possibly, any public trading market) for the Shares. We cannot predict how many Shares will be purchased in the Offer and/or whether the reduction in the number of Shares as a result of the consummation of the Offer and the Majority Share Purchase that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the non-purchased Shares.
| -iv- |
See Section 7 – “Possible Effects of the Offer on the Market for the Shares; NASDAQ Listing; Exchange Act Registration; Margin Regulations.”
If I decide not to tender, how will the Offer affect my Shares?
If you decide not to tender your Shares in the Offer and the Offer is consummated as described above, you will continue to own your Shares and neither us nor Siebert will have any obligation to purchase your Shares. However, following the Offer, your Shares may no longer constitute “margin securities” for purposes of the margin regulations of the Federal Reserve Board, in which case your Shares may no longer be used as collateral for loans made by brokers.
See Section 7 – “Possible Effects of the Offer on the Market for the Shares; NASDAQ Listing; Exchange Act Registration and Margin Regulations”.
What was the market value of my Shares as of a recent date?
On September 1, 2016, the last full trading day before the first public announcement of the Acquisition Agreement, the last reported sale price on the NASDAQ Capital Market was $1.16 per Share. Please obtain a recent quotation for your Shares prior to deciding whether or not to tender your Shares in the Offer.
See Section 6 — “Price Range of Shares; Dividends.”
Will I have appraisal rights in connection with the Offer?
No appraisal rights will be available to you in connection with the Offer.
What are the United States federal income tax consequences of tendering Shares?
The receipt of cash in exchange for your Shares pursuant to the Offer generally will be a taxable transaction for United States federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign income or other tax laws.
We recommend that you consult your own tax advisor to determine the tax consequences to you of participating in the Offer in light of your particular circumstances (including the application and effect of any state, local or non-U.S. income and other tax laws).
See Section 5 — “Certain United States Federal Income tax Consequences of the Offer” for a more detailed discussion of the tax consequences of the Offer.
Who should I call if I have questions about the Offer?
You should call DF King & Co., Inc., the Information Agent for the Offer, at (888) 540-8736 (toll-free), or if you are a bank or brokerage firm, at (212) 269-5550 (collect). Please see the back cover of this Offer to Purchase.
| -v- |
To All Holders of Shares of Common Stock of Siebert Financial Corp (other than the 19,310,000 Shares owned by the Majority Shareholder):
Kennedy Cabot Acquisition, LLC, a Nevada limited liability company (“Purchaser”, “we”, “our” or “us”), is offering to purchase 2,775,126 Shares of common stock, par value $0.01 per share (the “Shares”) of Siebert Financial Corp., a New York corporation (“Siebert” or the “Company”) at a purchase price of $1.20 per Share, net to the seller in cash (the “Offer Price”), without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in this Offer to Purchase (as it may be amended or supplemented from time to time, the “Offer to Purchase”), and in the related Letter of Transmittal (as it may be amended or supplemented from time to time, the “Letter of Transmittal” and, together with this Offer to Purchase, the “Offer”). Siebert owns all of the issued and outstanding capital stock of (i) Muriel Siebert & Co., Inc., a Delaware corporation, a member of the Financial Industry Regulatory Authority (“FINRA”) and registered as a broker/dealer under Section 15 of the Securities Exchange Act of 1934, as amended (the “Broker/Dealer”), and (ii) Siebert Investment Advisors, Inc., a New York corporation and registered investment advisor under the Investment Advisor’s Act of 1940, as amended (the “Investment Advisor”). The Offer is being made by the Purchaser pursuant to the Acquisition Agreement, dated September 1, 2016, by and among, Siebert, the Estate of Muriel F. Siebert (the “Majority Shareholder”), and the Purchaser (as it may be amended or supplemented from time to time, the “Acquisition Agreement”). The 2,775,126 Shares represent all issued and outstanding Shares other than the 19,310,000 Shares owned by the Majority Shareholder, which we are required to purchase from the Majority Shareholder pursuant to the terms and subject to the conditions in the Acquisition Agreement immediately following the consummation of the Offer (the “Majority Share Purchase”).
Pursuant to the Acquisition Agreement, prior to the closing of the Offer, Siebert will a pay a dividend to all shareholders (including the Majority Shareholder) in the aggregate amount of $4,492,735, or approximately $.20 per share. Shareholders who have previously tendered pursuant to the Offer will nonetheless continue to be deemed shareholders of record for purposes of such dividend. Immediately prior to the closing of the Offer, the Majority Shareholder will purchase from Siebert, Siebert’s right to receive deferred purchase price payments in connection with Siebert’s disposition of its capital markets business in 2014 and the $4,000,000 secured junior subordinated promissory note issued to Siebert in connection with the disposition of its minority interest in a former affiliate. The aggregate purchase price payable by the Majority Shareholder for these assets is $610,262, representing 10% of the projected carrying value of these assets as of the projected closing of the Offer. The Offer Price of $1.20 per share includes approximately $0.22 per share, or $610,262 in the aggregate, which is intended to provide shareholders tendering in the Offer with their proportional share of the payment by the Majority Shareholder for these assets. See Section 11 - “Purpose of the Offer and Plans for Siebert; Acquisition Agreement and Other Agreements” - “The Acquisition Agreement – The Majority Share Purchase.”
If your Shares are registered in your name and you tender directly to the Depositary (as defined below), you will not be obligated to pay brokerage fees or commissions or, subject to Instruction 5 of the Letter of Transmittal, transfer taxes on the purchase of your Shares by Purchaser. If you hold your Shares through a broker, dealer, commercial bank, trust company or other nominee you should check with your broker, dealer, commercial bank, trust company or other nominee as to whether they charge any service fees or commissions. If you do not complete and sign an IRS Form W-9, or a Form W-8 BEN or other Form W-8, as applicable, you may be subject to backup withholding on the gross proceeds payable to you. Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be refunded or credited against your U.S. federal income tax liability. See Section 5 - “Certain United States Federal Income tax Consequences of the Offer.” We will pay all charges and expenses of American Stock Transfer & Trust Company, LLC (the “Depositary”) and DF King & Co., Inc. (the “Information Agent”). See Section 16 – “Fees and Expenses”.
We are making the Offer pursuant to the Acquisition Agreement, dated September 1, 2016, by and among, Siebert, the Estate of Muriel F. Siebert (the “Majority Shareholder”), and us (as it may be amended or supplemented from time to time, the “Acquisition Agreement”).
Siebert’s board of directors (the “Company Board”) unanimously (i) determined that the Acquisition Agreement and the transactions contemplated thereby, including the Offer, are fair to, and in the best interests of the Company’s shareholders, and (ii) approved the Acquisition Agreement and the transactions contemplated thereby, including the Offer, in accordance with the New York Business Corporation Law (the “BCL”), and (iii) resolved to remain neutral and not to make a recommendation regarding whether Company shareholders should accept the Offer.
A more complete description of the Company’s Board’s reasons for authorizing and approving the Acquisition Agreement and the transactions contemplated thereby, including the Offer and the Majority Share Purchase, will be set forth in the Solicitation/Recommendation Statement on Schedule 14D-9 (the “Schedule 14D-9”) filed with the U.S. Securities and Exchange Commission (the “SEC”) in connection with the Offer, a copy of which (without certain exhibits) will be furnished to shareholders substantially concurrently with the Offer. Shareholders should carefully read the Schedule 14D-9 in its entirety, including, but not limited to, the information to be set forth in Item 4 – “The Solicitation and Recommendation”.
The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, at the end of October 3, 2016, unless the Offer is extended or earlier terminated in accordance with its terms (such time as extended, the “Expiration Time”). See Sections 1, 13, and 15 — “Terms of the Offer,” “Conditions to the Offer”, and “Certain Legal Matters; Regulatory Approvals.”
The Offer is not subject to any financing conditions or upon any minimum number of Shares being tendered but is subject to various conditions, including, among other things approval by FINRA, pursuant to FINRA Rule 1017, of the indirect change in control of the Broker/Dealer as a result of the Majority Share Purchase (“FINRA Approval”). These and other conditions to the consummation of the Offer are described in Section 13 – “Conditions to the Offer” and Section 15 – “Certain Legal Matters; Regulatory Approvals”.
According to Siebert, at the end of September 1, 2016, the most recent practicable date (i) the only securities of Siebert issued and outstanding were 22,085,125 Shares, and (ii) Siebert owned all of the issued and outstanding capital stock of its subsidiaries including the Broker/Dealer and the Investment Advisor. As of such date, of the 22,085,126 Shares issued and outstanding (i) the Majority Shareholder owned 19,310,000 Shares, all of which we will purchase in the Majority Share Purchase, and (ii) the remaining Siebert shareholders owned the remaining 2,775,126 Shares issued and outstanding, all of which we are offering to purchase in the Offer.
Pursuant to the Acquisition Agreement, we shall notify Siebert no later than ten (10) days prior to the consummation of the Majority Share Purchase of our designees to the Company Board and Siebert shall, subject to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder, take all actions necessary to effectuate the appointment of our designees to the Company. Our designees to the Company Board and the persons we intend to appoint as executive officers of Siebert following the consummation of the Offer and the Majority Share Purchase are set forth on Schedule A to this Offer to Purchase.
This Offer to Purchase does not constitute a solicitation of proxies and Purchaser is not soliciting proxies in connection with the Offer or otherwise.
If we consummate (i) the Majority Share Purchase, and (ii) the Offer, but are not able to purchase all 2,775,126 Shares in the Offer, any non-purchased Shares will remain issued and outstanding and publicly traded. However, depending on the number of Shares we are able to purchase in the Offering, there could be so few remaining shareholders of Siebert and/or publicly traded Shares that there could no longer be an active or liquid public trading market (or, possibly, any public trading market) for the Shares. We cannot predict how many Shares will be purchased in the Offer and/or whether the reduction in the number of Shares as a result of the consummation of the Offer and the Majority Share Purchase that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the non-purchased Shares. Also, Siebert, as a result of a reduction in the issued and outstanding Shares and the number of Siebert shareholders resulting from the Offer and the Majority Share Purchase, may no longer meet the continued listing requirements of the NASDAQ Capital Market be required to make filings with the SEC or otherwise may no longer be required to comply with the SEC rules relating to publicly held companies. These factors also could result in there no longer being an active or liquid public trading market (or possibly any market) or have an adverse or beneficial effect on the market price for or marketability of the non-purchased Shares.
See Section 7 – “Possible Effects of the Offer on the Market for the Shares; NASDAQ Listing; Exchange Act Registration and Margin Regulations”.
Following the consummation of the Offer, neither us nor Siebert have any obligation to purchase or provide the owner thereof with appraisal rights with respect to any non-tendered Shares.
We recommend that you consult your own (i) tax advisor to determine the tax consequences to you of participating in the Offer in light of your particular circumstances (including the application and effect of any state, local or non-U.S. income and other tax laws), and (ii) qualified representatives as to the effects of not tendering your Shares in the Offer.
This Offer to Purchase and the related Letter of Transmittal contain important information and each such document should be read carefully and in its entirety before you make any decision with respect to the Offer.
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| Section 1. | Terms of the Offer |
Upon the terms and subject to the conditions set forth in the Offer conditions, we will accept for payment and pay for all Shares validly tendered in accordance with the procedures set forth in Section 3 — “Procedures for Tendering Shares” and not validly withdrawn prior to the Expiration Time in accordance with the procedures set forth in Section 4 — “Withdrawal Rights.” The term Expiration Time means 12:00 Midnight, New York City time, at the end of October 3, 2016, unless Purchaser has extended the Offer, in which event the term Expiration Time shall mean the latest time and date at which the Offer, as so extended by Purchaser, will expire.
The Offer is subject to various conditions, including, among other things approval by FINRA pursuant to FINRA Rule 1017 of the indirect change in control of the Broker/Dealer as a result of the Majority Share Purchase (“FINRA Approval”). The Offer is not conditioned upon the receipt of financing or upon any minimum number of Shares being tendered in the Offer. A summary of the principal terms of the Offer appears on pages (i) through (iv). You should read this entire document carefully before deciding whether to tender your Shares.
In the Acquisition Agreement, we (i) may, in our sole discretion, without consent of Siebert, extend the Offer on one or more occasions for any period, if on any then-scheduled Expiration Time any of the conditions to the consummation of the Offer shall not be satisfied or, in our sole discretion, waived, until such time as such condition or conditions are satisfied or waived, (to the extent we are permitted under the Acquisition Agreement to waive any such conditions), and (ii) shall extend the Offer for any period required by applicable law, any interpretation or position of the SEC, the staff thereof or the NASDAQ Stock Market (“NASDAQ”), applicable to the Offer. However, in no event shall we be required to extend the Offer (A) beyond February 28, 2017 (the “Outside Date”), or (B) at any time that we are permitted to terminate the Acquisition Agreement pursuant to the terms thereof.
Except as described in the Acquisition Agreement or approved in writing by Siebert or required by any governmental entity or regulatory authority (including FINRA), we shall not extend or otherwise change any scheduled Expiration Time.
Prior to any Expiration Time, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to any withdrawal rights. See Section 4 — “Withdrawal Rights.”
If we extend the Offer, such extension will extend the time that you will have to tender (or withdraw) your Shares.
We expressly reserve the right in our sole discretion, to waive, in whole or in part, any Offer conditions, to increase the Offer Price or to make any changes in the terms and conditions of the Offer; provided, however, that unless otherwise provided in the Acquisition Agreement or as provided in writing by Seibert or may be required by a regulatory agency, we shall not (a) reduce the number of Shares subject to the Offer, (b) reduce the Offer Price, (c) add to the Offer conditions or modify or change any Offer conditions in a manner adverse in any material respect to shareholders of the Company, (d) extend or otherwise change the Expiration Time except as required or permitted by the Acquisition Agreement, (e) change the form of consideration payable in the Offer or (f) otherwise amend, modify or supplement any terms of the Offer in a manner adverse in any material respect to any Company shareholders.
We expressly reserve the right to, in our sole discretion, following the consummation of the Majority Share Purchase, extend the Offer for a “subsequent offering period” (and one or more extensions thereof) in accordance with Rule 14d-11 under the Exchange Act, and the Offer Documents.
Unless required by a regulatory agency, we shall not terminate the Offer prior to any scheduled Expiration Time without the prior written consent of Siebert except in the event that the Acquisition Agreement is terminated pursuant to its terms.
If, subject to the terms of the Acquisition Agreement, we make a material change in the terms of the Offer or the information concerning the Offer, or if we waive a material condition of the Offer, we will disseminate additional tender offer materials and extend the Offer if and to the extent required by Rules 14d-4(d), 14d-6(c) and l4e-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise. The minimum period during which a tender offer must remain open following material changes in the terms of the tender offer or the information concerning the tender offer, other than a change in the consideration offered or a change in the percentage of securities sought, will depend upon the facts and circumstances, including the relative materiality of such changes. With respect to a change in the consideration offered or a change in the percentage of securities sought, a tender offer generally must remain open for at least ten (10) business days following such change.
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We expressly reserve the right, in our sole discretion, subject to the terms and conditions of the Acquisition Agreement and the applicable rules and regulations of the SEC, to not accept for payment or pay for any Shares if, on any Expiration Time, any of the Offer conditions have not been satisfied or upon the occurrence of any of the events set forth in Section - Conditions to the Offer.” See Section 13 – “Conditions to the Offer”. Under certain circumstances, we may terminate the Acquisition Agreement and the Offer.
We expressly reserve the right, in our sole discretion, subject to the terms and conditions of the Acquisition Agreement and the applicable rules and regulations of the SEC, to delay acceptance of Shares and to delay payment for Shares pending receipt of any regulatory approvals specified in Section 15 - “Certain Legal Matters,” without prejudice to our rights and requirements set forth in Section 13 — “Conditions to the Offer.” See Section 13 - “Conditions to the Offer” and Section 15 - “Certain Legal Matters.” The reservation by us of the right to delay the acceptance for payment of or payment for Shares is subject to the provisions of Rule 14e-1(c) under the Exchange Act, which requires us to pay the consideration offered or to return Shares deposited by or on behalf of tendering shareholders promptly after the termination or withdrawal of the Offer.
Any extension or amendment of the Offer, waiver of a condition of the Offer, delay in acceptance for payment or payment, or termination of the Offer will be followed promptly by public announcement thereof, such announcement in the case of an extension to be issued not later than 9:00 A.M., Eastern Daylight Time, on the next business day after the date of the previously scheduled Expiration Time in accordance with the public announcement requirements of Rules 14d-4(d), 14d-6(c) and l4e-1 under the Exchange Act. Without limiting our obligation under such rules or the manner in which we may choose to make any public announcement, we currently intend to make announcements by issuing a press release and by making any appropriate filing with the SEC.
Subject to consummation of the Offer, we do not expect there will be a “subsequent offering period” (within the meaning of Rule 14d-11 promulgated under the Exchange Act) with regard to the Offer.
Siebert has provided us with its list of shareholders and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal and other related documents will be mailed to record holders of Shares whose names appear on Siebert’s shareholder list and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing, for subsequent transmittal to beneficial owners of Shares.
For purposes of waiting periods under the Offer and filings with the SEC pursuant to the Offer, “business day” means any day other than a Saturday, Sunday or a federal holiday determined under Rule 14d-1(g)(3) promulgated under the Exchange Act, and consists of the time period from 12:01 A.M. through 12:00 midnight, Eastern Daylight Time. For all other purposes in this Offer to Purchase, “business day” means any day other than a Saturday, Sunday or any day on which banking institutions located in the City New York are authorized or required by applicable law or other governmental action to close.
| Section 2. | Acceptance for Payment and Payment for Shares |
Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment) and the Acquisition Agreement, and subject to the satisfaction or waiver by us, as determined in our sole discretion, of the Offer conditions, Purchaser shall use its reasonable efforts to consummate the Offer in accordance with its terms and accept payment and pay for the Shares validly tendered and not validly withdrawn pursuant to the Offer as promptly as practicable after the Expiration Time.
In all cases, payment for any Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (a) certificates representing such Shares or confirmation of the book-entry transfer of such Shares into the Depositary’s account at The Depository Trust Company (“DTC”) pursuant to the procedures set forth in Section 3 — “Procedures for Tendering Shares,” (b) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message (as defined in Section 3 below) in lieu of the Letter of Transmittal), and (c) any other documents required by the Letter of Transmittal. See Section 3 — “Procedures for Tendering Shares.”
For purposes of the Offer, Purchaser will be deemed to have accepted for payment and thereby purchased Shares validly tendered and not validly withdrawn prior to the Expiration Time if and when Purchaser gives oral or written notice to the Depositary of its acceptance for payment of such Shares pursuant to the Offer. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for the tendering shareholders for purposes of receiving payments from Purchaser and transmitting such payments to the tendering shareholders.
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Under no circumstances will interest be paid on the Offer Price for Shares, regardless of any extension of the Offer or any delay in payment for Shares.
If any tendered Shares are not accepted for payment pursuant to the terms and conditions of the Offer for any reason, including if certificates are submitted for more Shares than are tendered, such unpurchased Shares will be returned or credited to the appropriate account, as applicable. Such unpurchased Shares will be returned or credited (or new certificates for Shares not tendered will be sent), without expense to the tendering stockholder promptly following expiration or termination of the Offer. In the case of Shares tendered by book-entry transfer into the Depositary’s account at DTC pursuant to the procedures set forth in Section 3 — “Procedures for Tendering Shares,” such Shares will be credited to an account maintained with DTC.
If, prior to the Expiration Time, Purchaser increases the consideration offered to holders of Shares pursuant to the Offer, such increased consideration will be paid to holders of all Shares that are purchased pursuant to the Offer, whether or not such Shares were tendered prior to such increase in consideration.
Purchaser reserves the right, subject to the provisions of the Acquisition Agreement, to assign in its sole discretion, any or all of its rights, interests or obligations under the Acquisition Agreement, to any affiliate including its obligation to purchase Shares validly tendered pursuant to the Offer, but any such transfer or assignment will not relieve Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering shareholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer and not validly withdrawn.
| Section 3. | Procedures for Tendering Shares |
Valid Tender of Shares. Except as set forth below, in order for you to validly tender Shares in the Offer, (a) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed in accordance with the instructions of the Letter of Transmittal, with any required signature guarantees, or an Agent’s Message (as defined below) in connection with a book-entry delivery of Shares through DTC, and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Time and either (i) certificates representing Shares tendered must be delivered to the Depositary or (ii) tendered Shares must be properly delivered pursuant to the procedures for book-entry transfer described below and a confirmation of such delivery received by the Depositary (which confirmation must include an Agent’s Message if the tendering stockholder has not delivered a Letter of Transmittal), in each case, prior to the Expiration Time, or (b) you must comply with the guaranteed delivery procedures set forth below. The term “Agent’s Message” means a message, transmitted by DTC to, and received by, the Depositary and forming a part of a Book-Entry Confirmation (as defined below), which states that DTC has received an express acknowledgment from the participant in DTC tendering Shares that are the subject of such Book-Entry Confirmation that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against the participant.
Book-Entry Transfer for DTC Participants. The Depositary will establish an account with respect to Shares at DTC for purposes of the Offer within two (2) business days after the date of this Offer to Purchase. Any financial institution that is a participant in DTC’s systems may make a book-entry transfer of Shares by causing DTC to transfer such Shares into the Depositary’s account in accordance with DTC’s procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer, either the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent’s Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Time, or the tendering stockholder must comply with the guaranteed delivery procedures described below. The confirmation of a book-entry transfer of Shares into the Depositary’s account at DTC as described above is referred to herein as a “Book-Entry Confirmation.”
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Delivery of documents to DTC in accordance with DTC’s procedures does not constitute delivery to the Depositary.
Signature Guarantees and Stock Powers. Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a financial institution (which term includes most commercial banks, savings and loan associations and brokerage houses) that is a member in good standing of a recognized Medallion Program approved by The Securities Transfer Association, Inc., including the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program and the Stock Exchanges Medallion Program (each, an “Eligible Institution”). Signatures on a Letter of Transmittal need not be guaranteed (a) if the Letter of Transmittal is signed by the registered owner(s) (which term, for purposes of this section, includes any participant in any of DTC’s systems whose name appears on a security position listing as the owner of Shares) of Shares tendered therewith and such registered owner has not completed the box entitled “Special Payment Instructions” or the box entitled “Special Delivery Instructions” on the Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instructions 1 and 4 of the Letter of Transmittal. If the certificates for Shares are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made or certificates for Shares not tendered or not accepted for payment are to be returned to a person other than the registered owner of the certificates surrendered, then the tendered certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name or names of the registered owner(s) or holder(s) appear on the certificates, with the signatures on the certificates or stock powers guaranteed as described above. See Instructions 1 and 4 of the Letter of Transmittal.
If certificates representing Shares are forwarded separately to the Depositary, a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, must accompany each delivery of certificates.
Guaranteed Delivery. A stockholder who desires to tender Shares pursuant to the Offer and whose certificates for Shares are not immediately available, or who cannot comply with the procedures for book-entry transfer on a timely basis, or who cannot deliver all required documents to the Depositary prior to the Expiration Time, may tender such Shares by satisfying all of the requirements set forth below:
| • | such tender is made by or through an Eligible Institution; |
| • | a properly completed and duly executed Notice of Guaranteed Delivery, in the form provided by Purchaser, is received by the Depositary (as provided below) prior to the Expiration Time; and | ||
| • | the certificates for all tendered Shares, in proper form for transfer (or a Book-Entry Confirmation with respect to all such Shares), together with a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message in lieu of the Letter of Transmittal), and any other required documents, are received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery. A “trading day” is any day on which the Nasdaq is open for business. |
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. The Merger Agreement provides that Shares tendered pursuant to the guaranteed delivery procedures shall be deemed not to be validly tendered into the Offer unless and until Shares underlying such notices of guaranteed delivery are delivered to the Depositary.
The method of delivery of Shares, the Letter of Transmittal, the Notice of Guaranteed Delivery and all other required documents, including delivery through DTC, is at the election and sole risk of the tendering shareholder. Delivery of all such documents will be deemed made only when actually received by the Depositary (including, in the case of a book-entry transfer, by Book-Entry Confirmation). If such delivery is by mail, we recommend that all such documents be sent by properly insured registered mail with return receipt requested. In all cases, sufficient time should be allowed to ensure timely delivery.
Other Requirements. Notwithstanding any provision hereof, Purchaser will pay for Shares pursuant to the Offer only after timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message in lieu of the Letter of Transmittal), and (c) any other documents required by the Letter of Transmittal. Accordingly, tendering shareholders may be paid at different times depending upon when certificates for Shares, Letters of Transmittal or Book-Entry Confirmations with respect to Shares are actually received by the Depositary. Under no circumstances will interest be paid on the Offer Price for Shares, regardless of any extension of the Offer or any delay in payment for Shares.
Binding Agreement. The acceptance for payment by Purchaser of Shares tendered pursuant to one of the procedures described above will constitute a binding agreement between the tendering stockholder and Purchaser upon the terms and subject to the conditions of the Offer.
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Appointment as Proxy. By executing and delivering a Letter of Transmittal as set forth above (or, in the case of a book-entry transfer through DTC, by delivering an Agent’s Message in lieu of a Letter of Transmittal), the tendering stockholder irrevocably appoints designees of Purchaser as such stockholder’s attorneys-in-fact and proxies, each with full power of substitution, to the full extent of such stockholder’s rights with respect to Shares tendered by such stockholder and accepted for payment by Purchaser and with respect to any and all dividends, distributions, rights, other Shares or other securities issued or issuable in respect of such Shares after consummation of the Offer. All such proxies and powers of attorney will be considered coupled with an interest in the tendered Shares. Such appointment is effective when, and only to the extent that, Purchaser accepts for payment Shares tendered by such stockholder as provided herein. Upon the effectiveness of such appointment, all prior powers of attorney, proxies and consents given by such stockholder with respect to such dividends, distributions, rights, Shares and other securities will, without further action, be revoked, and no subsequent powers of attorney, proxies or consents may be given (and, if given, will be deemed not effective). Purchaser’s designees will, with respect to Shares or other securities and rights for which the appointment is effective, be empowered to exercise all voting and other rights of such stockholder as they, in their sole discretion, may deem proper at any annual, special, adjourned or postponed meeting of the shareholders of Siebert, by written consent in lieu of any such meeting or otherwise. Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon Purchaser’s payment for such Shares, Purchaser must be able to exercise full voting, consent and other rights to the extent permitted under applicable law with respect to such Shares and other securities, including voting at any meeting of shareholders or executing a written consent concerning any matter.
Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by Purchaser in its sole and absolute discretion, which determination shall be final and binding on all parties, subject to the right, to the extent required by applicable law, of any such party to dispute such determination in a court of competent jurisdiction. Purchaser reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of or payment for which may, in the opinion of Purchaser, be unlawful. Purchaser also reserves the absolute right to waive any defect or irregularity in the tender of any Shares of any particular stockholder whether or not similar defects or irregularities are waived in the case of any other stockholder. No tender of Shares will be deemed to have been validly made until all defects and irregularities relating thereto have been cured or waived. None of Siebert, Purchaser or any of their respective affiliates or assigns, the Depositary, the Information Agent, or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Purchaser’s interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the Instructions thereto and any other documents related to the Offer) shall be final and binding on all parties, subject to the right, to the extent required by applicable law, of any such party to dispute such interpretation in a court of competent jurisdiction.
| Section 4. | Withdrawal Rights |
Except as otherwise provided in this Section 4, tenders of Shares pursuant to the Offer are irrevocable. A stockholder may withdraw some or all of its Shares tendered pursuant to the Offer at any time on or prior to the Expiration Time and, thereafter, unless and until Purchaser has previously accepted them for payment as provided herein. Such Shares also may be withdrawn any time after November 5, 2016, which is 60 days from the date of commencement of the Offer.
If Purchaser extends the Offer, is delayed in its acceptance for payment of or payment for Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to Purchaser’s rights under the Offer, the Depositary may nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering shareholders exercise withdrawal rights as described in this Section 4.
For a withdrawal of Shares to be effective, a written notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any notice of withdrawal must specify the name of the person having tendered Shares to be withdrawn, the number of Shares to be withdrawn and the name of the record holder of Shares to be withdrawn, if different from that of the person who tendered such Shares. The signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as discussed above), unless such Shares have been tendered for the account of any Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer as set forth in Section 3 —“Procedures for Tendering Shares,” any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Shares. If certificates representing Shares have been delivered or otherwise identified to the Depositary, the name of the registered owner and the serial numbers shown on such certificates must also be furnished to the Depositary prior to the physical release of such certificates.
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All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by Purchaser, in its sole and absolute discretion, which determination shall be final and binding on all parties, subject to the right, to the extent required by applicable law, of any such party to dispute such determination in a court of competent jurisdiction. No withdrawal of Shares shall be deemed to have been properly made until all defects and irregularities have been cured or waived. None of Siebert, Purchaser or any of their respective affiliates or assigns, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give such notification. Withdrawals of tenders of Shares may not be rescinded, and any Shares properly withdrawn will be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by following one of the procedures for tendering Shares described in Section 3 — “Procedures for Tendering Shares” at any time prior to the Expiration Time.
| Section 5. | Certain United States Federal Income tax Consequences of the Offer |
The following is a summary of certain U.S. federal income tax consequences that may be relevant to you if you are a beneficial owner of Shares exchanged for cash pursuant to the Offer. We have not sought, and do not intend to seek, any ruling from the IRS or any opinion of counsel with respect to the statements made and the conclusions reached in the following summary, and no assurance can be given that the IRS will agree with the views expressed herein, or that a court will not sustain any challenge by the IRS in the event of litigation. This summary assumes that your Shares are held as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”), for U.S. federal income tax purposes. It is not a complete description of all the tax consequences of the Offer and the Merger and, in particular, may not address U.S. federal income tax considerations for you if you are subject to special treatment under U.S. federal income tax law (including, for example, financial institutions, dealers in securities or currencies, traders that mark to market, beneficial owners who own their Shares as part of a hedge, straddle or conversion transaction, insurance companies, tax-exempt entities, beneficial owners whose Shares were obtained through the exercise of options or through partnerships (or any other entity or arrangement treated as a partnership for U.S. federal income tax purposes) or from partners therein). In addition, this summary does not discuss any consequences for Non-U.S. Holders (as defined below) that have beneficially owned, directly or pursuant to attribution rules, more than five percent of Shares at any time during the five-year period ending on the date of the Offer. Finally, this summary does not discuss any aspect of state, local or foreign tax law that may be applicable to any beneficial owners of Shares, or any U.S. federal tax considerations other than U.S. federal income tax considerations.
For the purposes of this summary, you are a “U.S. Holder” if you are a beneficial owner of Shares that is a citizen or resident of the United States, a domestic corporation or otherwise subject to U.S. federal income tax on a net income basis in respect of Shares. You are a “Non-U.S. Holder” if you are a beneficial owner of Shares that is not a “U.S. Holder.”
This summary is based on the Code, Treasury regulations, administrative rulings and court decisions, all as in effect as of the date of this Offer to Purchase and all of which are subject to differing interpretations and/or change at any time (possibly with retroactive effect).
We recommend that you consult your own tax advisor to determine the tax consequences to you of participating in the Offer in light of your particular circumstances (including the application and effect of any other tax consequences arising under the U.S. federal tax rules, or any state, local or non-U.S. income and other tax laws, or any applicable tax treaty). The following discussion is for general informational purposes only and should not be construed as tax advice.
U.S. Holders
Payments with Respect to Shares
If you are a U.S. Holder that receives cash in exchange for Shares pursuant to the Offer, such exchange will be a taxable transaction to you for U.S. federal income tax purposes, and you will recognize gain or loss, if any, equal to the difference between the amount of cash received and your adjusted tax basis in Shares. Such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if your holding period for Shares is more than one year at the time you exchange Shares for cash. Long-term capital gains recognized by an individual holder generally are subject to tax at a lower rate than short-term capital gains or ordinary income. There are limitations on the deductibility of capital losses.
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Backup Withholding tax and Information Reporting
If you are a U.S. Holder, payments that you receive in exchange for Shares pursuant to the Offer or the Merger will be subject to information reporting and may be subject to U.S. federal backup withholding tax (currently at a rate of 28 percent) unless you (a) furnish an accurate tax identification number or otherwise comply with applicable U.S. information reporting or certification requirements (typically by completing and signing a Form W-9) or (b) are a corporation or other exempt recipient and, if required, demonstrate such fact. Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be refunded or credited against your U.S. federal income tax liability, if any, provided that you furnish the required information to the Internal Revenue Service in a timely manner.
Non-U.S. Holders
If you are a Non-U.S. Holder, you may be subject to U.S. federal income or withholding tax on payments received in exchange for Shares in the Offer if (a) you have not provided a complete and accurate IRS Form W-8 BEN or other applicable Form W-8 that is signed under penalties of perjury and establishes your status as a Non-U.S. Holder (in which event the Non-U.S. Holder will be subject to U.S. federal backup withholding tax (currently at a rate of 28 percent)) or (b) you are an individual who was present in the United States for 183 days or more in the taxable year and certain other conditions are met (in which event such Non-U.S. Holder will be subject to tax at a flat rate of 30 percent (or such lower rate as may be specified under an applicable income tax treaty) on the gain from the exchange of Shares which may be offset by applicable U.S. losses from sales or exchanges of other capital assets recognized during the year).
Non-U.S. Holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different rules.
| Section 6. | Price Range of Shares; Dividends |
According to Siebert’s filings with the SEC, the Shares are listed on the NASDAQ Capital Market under the symbol “SIEB.” See Section 7 – “Possible Effects of the Offer on the Market for the Shares; NASDAQ Listing; Exchange Act Registration and Margin Regulations”. The following table sets forth, for the periods indicated, the high and low closing sales prices per Share as reported in Siebert’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the “Siebert Form 10-K”), with respect to periods through December 31, 2015 and based on publicly available information with respect to the period starting January 1, 2016.
| Fiscal Year | High | Low | ||||||
| 2016: | ||||||||
| Third Quarter (through September 1, 2016) | $ | 1.65 | $ | 1.15 | ||||
| Second Quarter | $ | 1.33 | $ | 1.18 | ||||
| First Quarter | $ | 1.35 | $ | 1.15 | ||||
| 2015: | ||||||||
| Fourth Quarter | $ | 2.62 | $ | 1.44 | ||||
| Third Quarter | $ | 2.11 | $ | 1.45 | ||||
| Second Quarter | $ | 1.95 | $ | 1.35 | ||||
| First Quarter | $ | 1.56 | $ | 1.14 | ||||
| 2014: | ||||||||
| Fourth Quarter | $ | 2.90 | $ | 2.03 | ||||
| Third Quarter | $ | 2.85 | $ | 2.05 | ||||
| Second Quarter | $ | 3.44 | $ | 2.67 | ||||
| First Quarter | $ | 4.45 | $ | 1.61 | ||||
The Offer Price of $1.20 per Share represents a premium of approximately 3.4% to the last reported sale price of a Share on September 1, 2016 of $1.16 on the NASDAQ Capital Market, the last trading day prior to the public announcement of the Acquisition Agreement. Shareholders are urged to obtain a current market quotation for Shares.
According to the Siebert Form 10-K, Siebert’s Board periodically considers whether to declare dividends. In considering whether to pay such dividends, Siebert’s Board reviews Siebert’s earnings capital requirements, economic forecasts and such other factors as Siebert’s Board deems relevant. According to the Form 10-K, some portion of Siebert’s earnings are retained to provide capital for the operation and expansion of its business. Notwithstanding the immediately preceding sentence, Purchaser has been advised by Siebert that during 2015 and 2014, Siebert did not pay dividends on its Shares.
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| Section 7. | Possible Effects of the Offer on the Market for the Shares; NASDAQ Listing; Exchange Act Registration and Margin Regulations |
Market for Shares. If we consummate the Majority Share Purchase and all 2,775,126 issued and outstanding Shares, excluding the 19,310,000 Shares we are purchasing in the Majority Share Purchase, are validly tendered and not validly withdrawn and are purchased by us, we will own all of the issued and outstanding Shares and the Shares will no longer be publicly traded. If, however, we consummate the Majority Share Purchase and the Offer, but are unable to purchase all 2,775,126 Shares in the Offer, the Shares still in the hands of the public will continue to be publicly traded. However, the number of Shares we are unable to purchase in the Offer may be so small that there will no longer be an active or liquid public trading market (or possibly any public trading market) for such non-purchased Shares. We cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Shares, or whether such reduction would cause future market prices to be greater or less than the price paid in the Offer.
Stock Listing. Depending upon the number of Shares purchased pursuant to the Offer and/or the number of shareholders of the Company following the consummation of the Offer, the Shares may no longer meet the requirements of NASDAQ for continued listing on the NASDAQ Capital Market. The rules of NASDAQ establish certain criteria that, if not met, could lead to the delisting of the Shares from the NASDAQ Capital Market. Among such criteria are the number of shareholders, the number of Shares publicly held and the aggregate market value of the Shares publicly held. If, as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet the requirements of the NASDAQ Capital Market for continued listing and listing of the Shares is discontinued by NASDAQ, the market for the Shares could be adversely affected. If NASDAQ were to delist the Shares, it is possible that the Shares would continue to trade in the over-the-counter market or would qualify for listing on another securities exchange (although there can be no assurances that the Company would seek such a listing, even if it were available), and that price or other quotations would be reported by such exchange or through other sources. The extent of the public market for the Shares and the availability of any price or quotation information would depend upon such factors as the number of shareholders and/or the aggregate market value of the publicly traded Shares remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration under the Exchange Act, as described below, and other factors. We cannot predict whether delisting of the Shares from the NASDAQ Capital Market, and the listing or quotation of the Shares on another exchange or through another source (if any), would have an adverse or beneficial effect on the market price for or marketability of the Shares or whether it would cause future market prices to be greater or less than the Offer Price.
Exchange Act Registration. The Shares are currently registered under the Exchange Act. Following the consummation of the Majority Share Purchase and the Offer depending on the number of Shares we are able to purchase in the Offer, the purchase of the Shares pursuant to the Offer, may result in the Shares becoming eligible for deregistration under the Exchange Act. Registration of the Shares may be terminated upon application by Siebert to the SEC if the Shares are not listed on a “national securities exchange” and there are fewer than 300 record holders of Shares. Termination of registration of the Shares under the Exchange Act would substantially reduce the information that Siebert is required to furnish to its shareholders and would eliminate the Company’s obligation under Sections 13 and 15(d) of the Exchange Act to file periodic reports or other information with the SEC. It would also make certain other provisions of the Exchange Act no longer applicable to Siebert, such as (i) the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, (ii) the requirement to furnish a proxy statement in connection with shareholders’ meetings pursuant to Section 14(a) or 14(c) of the Exchange Act (and the related requirement to provide an annual report), and (iii) the requirements of Rule 13e-3 promulgated under the Exchange Act with respect to “going private” transactions. In addition, the ability of “affiliates” of Siebert and persons holding “restricted securities” of Siebert to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended, may be impaired or, with respect to certain persons, eliminated. If registration of the Shares under the Exchange Act were terminated, Shares would no longer be eligible for stock exchange listing. We currently have no plans to deregister the Shares under the Exchange Act, even if the Shares become eligible for deregistration.
Margin Regulations. The Shares currently qualify as “margin securities” under the regulations of the Board of Governors of the Federal Reserve System, which regulations have the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares for the purpose of buying, carrying or trading in securities (“Purpose Loans”). Depending upon factors such as the number of record holders of the Shares and the number and market value of publicly held Shares, following the purchase of Shares pursuant to the Offer, the Shares might no longer constitute “margin securities” for purposes of the Federal Reserve Board’s margin regulations and, therefore, could no longer be used as collateral for Purpose Loans made by brokers. In addition, if registration of the Shares under the Exchange Act were terminated, the Shares would no longer constitute “margin securities”.
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| Section 8. | Certain Information Concerning Siebert |
According to Siebert’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 (the “Siebert 10-Q”), Siebert’s principal executive offices are located at 885 Third Avenue, New York, NY 10022. The telephone number of Siebert’s principal executive office is (212) 644-2400. The following description of Siebert has been taken from the Siebert 10-Q, and is qualified in its entirety be reference to Siebert’s 10-Q and the Siebert Form 10-K. Siebert is a holding company that conducts its (i) retail discount brokerage business through its wholly-owned subsidiary, Muriel Siebert & Co., Inc., (the “Broker/Dealer”) a Delaware corporation, who is registered as a broker/dealer under Section 15 of the Exchange Act and is a FINRA member, and (ii) its investment advisory businesses through another wholly-owned subsidiary, Siebert Investment Advisors, Inc. (the “Investment Advisor”), a registered investment advisor under the Investment Advisor’s Act of 1940, as amended (the “Advisors Act”). Siebert’s principal activity is providing online and traditional discount brokerage and related services to retail investors.
Available Information. Siebert is subject to the information and reporting requirements of the Exchange Act and in accordance therewith is obligated to file periodic reports, proxy statements and other information with the SEC relating to its business, principal physical properties, capital structure, material pending litigation, operating results, financial condition and other matters. Certain information, as of particular dates, concerning Siebert’s directors and officers (including their remuneration and stock options granted to them), the principal holders of Siebert’s securities, any material interests of such persons in transactions with Siebert and other matters is required to be disclosed in Siebert’s proxy statements or annual reports on Form 10-K. Such reports and other information are available for inspection at the public reference room at the SEC’s office at 100 F Street, NE, Washington, DC 20549. Copies may be obtained by mail, upon payment of the SEC’s customary charges, by writing to its principal office at 100 F Street, NE, Washington, DC 20549. Further information on the operation of the SEC’s Public Reference Room in Washington, DC can be obtained by calling the SEC at 1 (800) SEC-0330. The SEC also maintains an Internet web site at http://www.sec.gov that contains reports, proxy statements and other information about issuers, such as Siebert, who file electronically with the SEC.
Sources of Information. Except as otherwise set forth herein, the information concerning and/or related to, directly and/or indirectly, Siebert, the Majority Shareholder, the Broker/Dealer, the Investment Advisor, the Siebert Foundation and their respective affiliates, representatives, agents and related persons contained in this Offer to Purchase has been based upon publicly available documents and records on file with the SEC, including the Siebert 10-K, the Siebert 10-Q and other public sources. The information concerning and/or related to, directly and/or indirectly, Siebert, the Majority Shareholder, the Broker/Dealer, the Investment Advisor, the Siebert Foundation and their respective affiliates, representatives, agents and related persons taken or derived from such documents and records is qualified in its entirety by reference to Siebert’s public filings with the SEC (which may be obtained and inspected as described above) and should be considered in conjunction with the more comprehensive financial and other information in such reports and other publicly available information. Although we have no knowledge that any such information contains any misstatements or omissions, none of Purchaser, or any of their respective affiliates or assigns, the Information Agent or the Depositary assumes responsibility for the accuracy or completeness of the information concerning Siebert contained in such documents and records or for any failure by Siebert to disclose events which may have occurred or may affect the significance or accuracy of any such information.
| Section 9. | Certain Information Concerning Purchaser |
Purchaser. Purchaser is a Nevada limited liability company and, to date, has engaged in no activities other than those incident to its formation, negotiating and entering into the Acquisition Agreement including, but not limited to, this Offer and the Majority Share Purchase and items related thereto. The principal executive offices of Purchaser are located at 24100 Calabasas Road, Calabasas, CA 91302 and Purchaser’s telephone number at such principal executive offices is (212) 514-8369.
Additional Information. The name, business address, citizenship, present principal occupation, and employment history for the past five years of each of the Manager and the members of the Purchaser and the other persons who following the consummation of the Offer and the Majority Share Purchase will become directors and executive officers of Siebert are set forth in Schedule A to this Offer to Purchase.
Except as set forth on Schedule A, none of the Purchaser or, to the knowledge of the Purchaser after reasonable inquiry, any of the persons listed in Schedule A, has during the last five years (a) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, U.S. federal or state securities laws or a finding of any violation of U.S. federal or state securities laws.
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Except as set forth on Schedule A and as described in Section 10 – “Background of the Offer; Contacts with Siebert”, none of the Purchaser or, to the knowledge of the Purchaser after reasonable inquiry, any of the persons listed in Schedule A or any associate or majority-owned subsidiary of the Purchaser or any of the persons so listed, (a) beneficially owns or has a right to acquire any Shares or any other equity securities of Siebert, (b) none of the, Purchaser or, to the knowledge of the Purchaser after reasonable inquiry, any of the persons referred to in clause (a) above or any of their executive officers, directors, affiliates or subsidiaries has effected any transaction in Shares or any other equity securities of Siebert during the past 60 days, (c) none of Purchaser, its subsidiaries or, to the knowledge of Purchaser after reasonable inquiry, any of the persons listed in Schedule A, has any agreement, arrangement or understanding, whether or not legally enforceable, with any other person with respect to any securities of Siebert (including, but not limited to, any agreement, arrangement or understanding concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations), (d) in the past two years, there have been no transactions that would require reporting under the rules and regulations of the SEC between any of Purchaser, their subsidiaries or, to the knowledge of Purchaser after reasonable inquiry, any of the persons listed in Schedule A, on the one hand, and Siebert or any of its executive officers, directors or affiliates, on the other hand, and (e) in the past two years, there have been no negotiations, transactions or material contacts between any of Purchaser, its subsidiaries or, to the knowledge of Purchaser after reasonable inquiry, any of the persons listed in Schedule A, on the one hand, and Siebert or any of its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of Siebert’s securities, an election of Siebert’s directors or a sale or other transfer of a material amount of assets of Siebert
| Section 10. | Background of the Offer; Contacts with Siebert |
The following chronology summarizes the key meetings and events that led to the signing of the Acquisition Agreement and commencement of the Offer. The following chronology does not purport to describe every conversation among the Purchaser, Siebert and the Majority Shareholder and their respective affiliates, representatives, directors and officers and other parties. Shareholders of Siebert should carefully read Item 4 – “The Solicitation or Recommendation contained in Siebert’s Solicitation/Recommendation Statement on Schedule 14D-9 for information which is not included in this Offer to Purchase.
According to the Company, the Majority Shareholder owns as of the date of this Offer to Purchase 19,310,000 Shares. Jane H. Macon, the Chairwoman of the Company Board and Patricia L. Francy, a member of the Company Board, are the executors of the Majority Shareholder, although only Ms. Macon possesses the power to control the voting and disposition of the Shares held by the Majority Shareholder. The Muriel F. Siebert Foundation (the “Siebert Foundation”) currently owns 568,700 Shares. Ms. Macon and Ms. Francy are two of the three trustees of the Siebert Foundation.
The Company Board began considering strategic alternatives for the Company in August 2013, after the passing of Muriel Siebert. At that time, the Company engaged Raymond James & Associates (“Raymond James”), as its financial advisor to assist in this process and to identify potential purchasers for of the Company’s businesses. With a view toward maximizing shareholder value, the Company Board explored both selling the Company as a whole and also selling the Company’s component businesses separately. During this process, non-disclosure agreements were signed with more than 50 potential purchasers, each of which was granted access to a due diligence data room set up by the Company with the assistance of Raymond James. Certain persons who may be deemed affiliates of the Purchaser (collectively, the “Purchaser Persons”), were among the potential purchasers that indicated interest at this time.
In October 2013, the Company began discussions with various potential purchasers. In April 2014, the Company received proposals from multiple parties, including Purchaser Persons, involving the acquisition of, or other strategic transactions with, the Company. The proposal from the Purchaser Persons was revised in May 2014. Soon thereafter, the Company Board determined to discontinue discussions with the Purchaser Persons in favor of a potential transaction with another interested party on more favorable terms.
In July 2014, the Company Board began considering the potential sale of substantially all of the Company’s assets relating to its retail brokerage business to an independent brokerage firm not affiliated with the Purchaser, any of its affiliated entities and/or the Purchaser Persons. During that month, a letter of intent was negotiated and signed between the parties and the parties began negotiating definitive documents relating to the proposed transaction. Ultimately, however, the parties were unable to reach agreement regarding transaction structure and negotiations were terminated in October 2014.
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As the Company evaluated various potential purchasers of the Company’s business, the Company entered into discussions with Siebert Brandford Shank & Co., LLC (“SBS”), an affiliate of the Company in which the Company held a 49% membership interest, regarding the sale to SBS of the Company’s capital markets business. On November 4, 2014, the Company and the other members of SBS contributed their SBS membership interests into Siebert Brandford Shank Financial. LLC (“SBSF”), a newly formed Delaware limited liability company, in exchange for the same percentage interests in SBSF. On the same day, the Company entered into an asset purchase agreement with SBS and SBSF, pursuant to which the Company sold substantially all of the assets of the Company’s capital markets business to SBSF.
In December 2014, while continuing to evaluate various potential purchasers, the Company Board began consideration of a proposed transaction pursuant to which one or more of the Purchaser Persons would acquire from the Majority Shareholder all of the Shares owned by the Majority Shareholder and would offer to purchase all of the publicly held Shares on equivalent terms. Such Purchaser Persons delivered an initial draft of a letter of intent on January 21, 2015. The parties negotiated the terms of a letter of intent from January 2015 until May 2015, during which time the letter of intent underwent over twenty different drafts. On May 6, 2015, the Company and one of the Purchaser Persons entered into a letter of intent regarding the proposed Majority Share Purchase. Thereafter, the parties negotiated the terms of definitive documentation for the transaction from May to July, 2015. In July 2015, the Board determined to discontinue negotiations with the Purchaser Persons and to pursue other strategic alternatives, because the parties were unable to come to agreement at this time regarding the purchase price and transaction structure.
In September 2015, the Company Board began considering the potential sale of substantially all of the Company’s assets relating to its retail brokerage business to a different independent brokerage firm also not affiliated with the Purchaser Persons. Ultimately, however, the parties were unable to reach agreement regarding transaction structure and negotiations were terminated in February 2016.
As the Company continued to evaluate various potential purchasers of the Company’s business, the Company entered into discussions with SBSF regarding a proposed sale of the Company’s 49% membership interest in SBSF. On November 9, 2015, the Company sold its 49% membership interest in SBSF back to SBSF for $8,000,000 of which $4,000,000 was paid in cash and the balance of which was paid in the form of a secured junior subordinated promissory note of $4,000,000.
In December 2015, while continuing to evaluate various potential purchasers, the Company renewed discussions with the Purchaser Persons regarding a proposed transaction pursuant to which the Purchaser Persons would acquire from the Majority Shareholder all of the Shares owned by the Majority Shareholder and would offer to purchase all of the publicly held Shares on equivalent or better terms. During January and February of 2016, the Company negotiated in parallel two letters of intent relating to proposed alternative transactions with the Purchaser Persons and with an independent asset management firm not affiliated with the Purchaser or the Purchaser Persons. On March 4, 2016, the Company and the Purchaser Persons entered into the Letter of Intent (as defined below), regarding the proposed transaction. From March through August 2016, the Company and the Purchaser Persons negotiated the Acquisition Agreement relating to the proposed transaction. At the end of this period, the Acquisition Agreement that is the subject of the Offer to Purchase was executed by the parties.
For information on the Acquisition Agreement and the other agreements between the Purchaser and Siebert and their respective related parties, see Section 11 — “Purpose of the Offer and Plans for Siebert; Acquisition Agreement and Other Agreements”.
| Section 11. | Purpose of the Offer and Plans for Siebert; Acquisition Agreement and Other Agreements |
Purpose of the Offer. The purpose of the Offer and the Majority Share Purchase by the Purchaser is to acquire control of Siebert, offer the other Siebert shareholders the right to sell to the Purchaser all of their respective Shares at a per Share price of $1.20, which represents a premium to the per Share price being paid to the Majority Shareholder in the Majority Shareholder Purchase. The Offer Price does not reflect Adjustments (as defined below) or reductions to the per Share purchase price being paid to the Majority Shareholder in the Majority Share Purchase. See Section 11 - “Purpose of the Offer and Plans for Siebert; Acquisition Agreement and Other Agreements” - “The Acquisition Agreement – The Majority Share Purchase.” Shareholders of Siebert who sell their Shares in the Offer will cease to have any equity interest in Siebert or any right to participate in its earnings and future growth. On the other hand, after selling their Shares in the Offer, shareholders of Siebert will not bear the risk of any decrease in the value of Shares.
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Plans for Siebert. We are conducting a detailed review of Siebert, the sectors of the financial industry it operates in, its assets, corporate structure, dividend policy, capitalization, operations, properties, policies, management and personnel and will consider what, if any, changes would be desirable in light of the circumstances that exist upon consummation of the Offer and the Majority Share Purchase. We will continue to evaluate the business and operations of Siebert during the pendency of the Offer and the Majority Share Purchase and after the consummation of the Offer and the Majority Share Purchase we will take such actions as we deem appropriate under the circumstances then existing. Thereafter, we intend to review such information as part of a comprehensive review of Siebert’s business, operations, capitalization and management with a view of optimizing development of Siebert’s potential in conjunction with its existing businesses. Possible changes could include changes in Siebert’s name, business, corporate structure, charter, bylaws, capitalization, board of directors, management and dividend policy, although, except as disclosed in this Offer to Purchase, Purchaser has no current plans with respect to any of such matters.
Except as disclosed in this Offer to Purchase, we do not have any current plans or proposals that would result in an extraordinary corporate transaction involving Siebert or any of its subsidiaries, such as a merger, reorganization, liquidation, relocation of operations, or sale or transfer of a material amount of assets, or any material changes in Siebert’s dividend policy, indebtedness, capitalization, corporate structure, business, management or board of directors.
The Acquisition Agreement
The following is a summary of certain provisions of the Acquisition Agreement. This summary is qualified in its entirety by reference to the full text of the Acquisition Agreement, which was filed as Exhibit (a)(1)(A) to the Schedule TO and is incorporated by reference herein. The Acquisition Agreement may also be examined and copies may be obtained in the manner set forth in Section 8 — “Certain Information Concerning Siebert.” You are encouraged to read the full text of the Acquisition Agreement because it is the legal document that governs, among other related items, the Majority Share Purchase and certain aspects of the Offer. The summary description of the Acquisition Agreement has been included in this Offer to Purchase to provide you with summary information regarding the terms of the Acquisition Agreement and is not intended to modify or supplement any rights or obligations of the parties under the Acquisition Agreement or any factual disclosures about Siebert or any of its subsidiaries or the transactions contemplated in the Acquisition Agreement contained in public reports filed by Siebert with the SEC.
The Offer. The Acquisition Agreement provides that Purchaser will commence the Offer and that, upon the terms and subject to prior satisfaction or waiver of the Offer conditions described in Section 13 — “Conditions to the Offer”, Purchaser shall use its reasonable efforts to consummate the Offer in accordance with the terms of the Acquisition Agreement and accept for payment and pay for all Shares validly tendered and not validly withdrawn in the Offer as promptly as practicable after the Expiration Time. The Offer Price payable in respect of each of the 2,775,126 Shares validly tendered and not validly withdrawn in the Offer shall be paid by the Purchaser net to each seller in cash, without interest, on the terms and subject to the conditions set forth in the Acquisition Agreement.
The Offer is initially scheduled to expire at 12:00 Midnight, New York City time, on October 3, 2016, which is the 20th business day following (and including the day of) commencement of the Offer. Pursuant to the Acquisition Agreement, we (i) may, in our sole discretion, without consent of Siebert, extend the Offer on one or more occasions for any period, if on any then-scheduled Expiration Time any of the conditions to the consummation of the Offer shall not be satisfied or, in our sole discretion, waived, until such time as such condition or conditions are satisfied or waived, and (ii) shall extend the Offer for any period required by applicable law, any interpretation or position of the SEC, the staff thereof or the NASDAQ Stock Market (“NASDAQ”), applicable to the Offer. However, in no event shall we be required to extend the Offer (A) beyond February 28, 2017 (the “Outside Date”), or (B) at any time we are permitted to terminate the Acquisition Agreement pursuant to the terms thereof.
Except as described in the Acquisition Agreement or approved in writing by Siebert or required by any governmental entity or regulatory authority (including FINRA), we shall not extend or otherwise change any scheduled Expiration Time.
Although we have no current intent to do so, we expressly reserve the right to, in our sole discretion, following the consummation of the Majority Share Purchase, extend the Offer for a “subsequent offering period” (and one or more extensions thereof) in accordance with Rule 14d-11 under the Securities Exchange Act of 1934, as amended (the “Exchange Act).
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If we extend the Offer, such extension will extend the time that you will have to tender (or withdraw) your Shares.
Prior to the Expiration Time, all Shares validly tendered and not validly withdrawn will remain subject to the Offer, subject to any withdrawal rights. See Section 4 — “Withdrawal Rights.” We expressly reserve the right in our sole discretion, to waive, in whole or in part, any Offer conditions, to increase the Offer Price or to make any changes in the terms and conditions of the Offer; provided, however, that unless otherwise provided in the Acquisition Agreement or as provided in writing by Seibert or may be required by a regulatory agency, we shall not (a) reduce the number of Shares subject to the Offer, (b) reduce the Offer Price, (c) add to the Offer conditions or modify or change any Offer conditions in a manner adverse in any material respect to shareholders of the Company, (d) extend or otherwise change the Expiration Time except as required or permitted by the Acquisition Agreement, (e) change the form of consideration payable in the Offer or (f) otherwise amend, modify or supplement any terms of the Offer in a manner adverse in any material respect to any Company shareholders. If at any time during the period between the date of this Offer to Purchase and the consummation of the Offer, any change in the outstanding Shares of the Company shall occur (other than the issuance of additional Shares as permitted by the Acquisition Agreement), including by reason of any reclassification, recapitalization, stock split (including reverse stock split) or combination, exchange or readjustment of Shares, or any stock dividend or distribution paid in stock, the Offer Price and any other amounts payable pursuant to the Acquisition Agreement shall be appropriately adjusted to reflect such change.
Majority Share Purchase. On the terms and subject to the conditions set forth in the Acquisition Agreement, the Majority Shareholder shall sell to Purchaser, and Purchaser shall purchase from the Majority Shareholder in the Majority Share Purchase, all 19,310,000 Shares owned by the Majority Shareholder for an aggregate purchase price of $12,650,000, which amount will be reduced by $3,600,378 to $9,049,622 following the payment by Siebert of the proposed $4,492,735 Pre-Closing Dividend (as defined below, See Section 11 – “Purpose of the Offer and Plans for Siebert; Acquisition Agreement and Other Agreements” - “The Acquisition Agreement – Additional Covenants of the Company”. Such purchase price shall be paid in cash and is subject to adjustments, which could result in an increase or decrease as a result of increases or decreases in the working capital of the Broker/Dealer during the period commencing on the date of the Acquisition Agreement through the date of the consummation of the Offer and the Majority Share Purchase and reduction for Siebert’s transaction expenses (the “Adjustments”). $1,000,000 (the “Escrow Funds”) of the purchase price being paid to the Majority Shareholder in the Majority Share Purchase shall be placed in escrow pursuant to an Escrow Agreement by and between TD Bank NA (the “Escrow Agent”), the Majority Shareholder and the Purchaser (the “Escrow Agreement”). The Escrow Funds shall be the sole and exclusive source for the payment of certain of the Majority Shareholder’s indemnification obligations to the Purchaser under the Acquisition Agreement. The Offer Price is greater than the per Share Price being paid to the Majority Shareholder in the Majority Share Purchase. The Offer Price is not subject to any Adjustments, reduction or escrow.
Pursuant to the Acquisition Agreement, the obligation of the Purchaser, the Majority Shareholder and Siebert to effectuate the Majority Share Purchase are subject to the satisfaction or written waiver, at or prior to the consummation of the Majority Share Purchase, of (a) the Offer conditions set forth under Section 13 – “Conditions to the Offer”; and (b) consummation of the Offer.
Recommendation. Siebert’s board of directors (the “Company Board”) unanimously (i) determined that the Acquisition Agreement and the transactions contemplated thereby, including the Offer, are fair to, and in the best interests of Siebert shareholders, and (ii) approved the Acquisition Agreement and the transactions contemplated thereby, including the Offer, in accordance with the New York Business Corporation Law (the “BCL”), and (iii) resolved to remain neutral and not to make a recommendation regarding whether Siebert shareholders should accept the Offer.
Board of Directors and Officers. No later than ten (10) days prior to the consummation of the Majority Share Purchase, Purchaser shall notify Siebert of Purchaser’s designees to the Company Board in accordance with the Company’s bylaws. The Company’s obligations to appoint Purchaser’s designees to the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions necessary to effect the appointment of Purchaser’s designees, including mailing to its shareholders information with respect to the Company and its officers and directors, as Section 14(f) and Rule 14f-1 require in order to fulfill its obligations under this paragraph.
Charter and Bylaws. The certificate of Incorporation and the By-Laws of Siebert as in effect on the date of this Offer to Purchase shall continue following the consummation of the Offer and the Majority Share Purchase to be the certificate of incorporation and by-laws of Siebert.
Representations and Warranties of Siebert, the Majority Shareholder and the Purchaser. In the Acquisition Agreement, Siebert and the Majority Shareholder each have made customary representations and warranties to Purchaser with respect to, among other matters (i) with regard to Siebert, Siebert has represented and warranted to the Purchaser as to its organization and qualification, subsidiaries, transactions with its affiliates and employees, authority, required consents and approvals in connection with the Acquisition Agreement and the transactions contemplated therein including the consummation of the Majority Share Purchase and the Offer, capitalization, public filings, financial statements and internal controls, undisclosed liabilities, the absence of any Company Material Adverse Effect (as defined below), legal actions, taxes and tax returns, benefit plans and employees, compliance with applicable laws, material, contracts, regulatory matters, derivative transactions, margin loans, listing and maintenance requirements on the NASDAQ Capital Market, broker/dealer and Advisor Act matters and brokers’ fees, and (ii) with regard to the Majority Shareholder, the Majority Shareholder has represented and warranted to the Purchaser, among other items, as to its ownership of the 19,310,000 Shares being purchased by us in the Majority Share Purchase, its authority, governmental consents and legal proceedings. In the Acquisition Agreement, the Purchaser has made customary representations and warranties to Siebert with respect to, among other matters, its authority to enter into the Acquisition Agreement and to consummate the transactions therein including the Offer, compliance with laws, governmental consents, information in the Offer documents, legal proceedings, BCL Section 912, its financial capability to consummate the Majority Share Purchase and the Offer and broker fees.
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Some of the representations and warranties in the Acquisition Agreement made by the parties are qualified by “materiality” or “Company Material Adverse Effect”, as the case may be. For purposes of the Acquisition Agreement, “Company Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or would reasonably be expected to become, individually or in the aggregate, materially adverse to (i) the business, results of operations, condition (financial or otherwise), or assets of the Company and its subsidiaries taken as a whole, or (ii) the ability of the Company to consummate the transactions contemplated in the Acquisition Agreement on a timely basis; provided, however, that, for the purposes of clause (i) of this paragraph, a Company Material Adverse Effect shall not be deemed to include events, occurrences, facts, conditions or changes arising out of, relating to or resulting from:
(a) changes generally affecting the economy, financial or securities markets;
(b) the negotiation, execution, announcement or consummation of the transactions contemplated by the Acquisition Agreement, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, licensors, distributors, partners, providers, employees, lenders or regulators;
(c) any outbreak or escalation of war or any act of terrorism;
(d) general conditions in the industry in which Siebert and its subsidiaries operate;
(e) any actions taken or omitted to be taken by Siebert in the course of complying with its obligations under the Acquisition Agreement or which are taken with Purchaser’s consent or not taken because Purchaser did not give its consent;
(f) any failure by Siebert or its subsidiaries to achieve any earnings or other financial projections or forecasts, or;
(g) the identity of, or the effects of any facts or circumstances relating to, Purchaser or any of its affiliates, including any communication by Purchaser or any of its affiliates regarding the plans or intentions of any such person with respect to the conduct of the business of the Purchaser or any such affiliate; provided further, however, that any event, change and Effect referred to in clauses (a), (c) or (d) above shall be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur to the extent that such event, change or effect has a disproportionate effect on Siebert and its subsidiaries, taken as a whole, compared to other participants in the industries in which Siebert and its subsidiaries conduct their businesses.
The Acquisition Agreement has been provided solely to inform investors of its terms. It is not intended to be, and should not be relied upon as, a source of financial, business or operational information about, among other related matters, Siebert, the Broker/Dealer, Siebert Investment Advisors, Inc., the Majority Shareholder, the Purchaser or their respective affiliates. The representations and warranties contained in the Acquisition Agreement are made only for purposes of the Acquisition Agreement and are made as of specific dates; are solely for the benefit of the parties thereto; may be subject to qualifications and limitations agreed upon by the parties to the Acquisition Agreement, including being qualified by confidential disclosures made for the purpose of allocating contractual risk between the parties instead of establishing matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors or security holders. Moreover, information concerning the subject matter of the representations, warranties, covenants and certain closing conditions may change after the date of the Acquisition Agreement, which subsequent information may or may not be fully reflected in public disclosures or disclosed in the future. The representations and warranties also may not be accurate or complete as of any specified date and may be subject to a contractual standard of materiality different from those generally applicable to shareholders. The representations and warranties contained in the Acquisition Agreement and incorporated by reference into this Offer to Purchase have been negotiated with the principal purpose of establishing the circumstances in which Purchaser may have the right not to consummate the Majority Share Purchase and/or the Offer, or a party to the Acquisition Agreement may have the right to terminate the Acquisition Agreement, if the representations and warranties of another party thereto prove to be untrue due to a change in circumstance or otherwise, and to allocate risk between the parties, rather than establish matters as facts. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this Offer to Purchase, may have changed since the date of the Acquisition Agreement and subsequent developments or new information qualifying a representation or warranty may have been included in this Offer to Purchase.
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Covenants. The parties to the Acquisition Agreement have agreed to a number of customary covenants in the Acquisition Agreement, including among others the covenants described below.
Conduct of Business of Siebert. Siebert shall and shall cause each of its subsidiaries to, during the period from the date of the Acquisition Agreement until the earlier of (i) the termination of the Acquisition Agreement pursuant to its terms, and (ii) the consummation of the Majority Share Purchase (such period being the “Pre-Closing Period”), except as expressly contemplated by the Acquisition Agreement or as required by applicable law or with the prior written consent of Purchaser (x) conduct its business in the ordinary course of business consistent with past practice and in compliance in all material respects with the Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act and the rules and regulations of any securities broker-dealer or other financial services industry, self-regulatory authority (an “SRO”), and, to the extent consistent therewith, Siebert shall; (y) and shall cause each of its subsidiaries to, use its best efforts to preserve substantially intact its and its subsidiaries’ business organization, to keep available the services of its and its subsidiaries’ current officers and employees, to preserve its and its subsidiaries’ present relationships with customers, suppliers, distributors, licensors, licensees and other persons having business relationships with it; and (z) confer with representatives of the Purchaser to keep them informed with respect to the operational matters and to report the general status of the ongoing operations of the business of the company and its subsidiaries. In addition, the Acquisition Agreement also contains specific restriction and covenants as to certain activities of Siebert and its subsidiaries during the Pre-Closing Period, subject to certain exemptions including the assignment of the SBSF Note to the Majority Shareholder, the Dividend Payment or as required by law without the prior written consent of Purchaser (which consent shall not be unreasonably withheld or delayed). These restrictions include, among other things:
(i) amend or propose to amend its certificate of incorporation or by-laws (or other comparable organizational documents);
(ii) (A) split, combine or reclassify any Company securities or Company subsidiary securities, (B) repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any Company securities or Company subsidiary securities, (C) declare, set aside or pay any dividend or distribution (whether in cash, stock, property or otherwise) in respect of, or enter into any contract with respect to the voting of, any Shares of its capital stock (other than dividends from its direct or indirect wholly-owned subsidiaries);
(iii) issue, sell, pledge, dispose of or encumber any Company securities or Company subsidiary securities, other than (A) the issuance of Shares upon the exercise of any Company equity award outstanding as of the date of the Acquisition Agreement in accordance with its terms, (B) the issuance of Shares in respect of other equity compensation awards outstanding under Company stock plans as of the date of the Acquisition Agreement in accordance with their terms, or (C) the issuance of Company equity awards and the issuance of Shares upon the exercise of such Company equity awards (other than directors or executive officers of the Company) in accordance with their terms in the ordinary course of business consistent with past practice;
(iv) (A) increase the compensation payable or that could become payable by the Company or any of its subsidiaries to directors, officers or employees, other than increases in compensation made in the ordinary course of business consistent with past practice, (B) enter into any new or amend in any material respect, any existing employment, severance, retention or change in control agreement with any of its past or present officers or employees, (C) promote any officers or employees, except in connection with the Company’s annual or quarterly compensation review cycle or as the result of the termination or resignation of any officer or employee, or (D) establish, adopt, enter into, amend, terminate, exercise any discretion under, or take any action to accelerate rights under any Company employee plans or any plan, agreement, program, policy, trust, fund or other arrangement that would be a Company employee plan if it were in existence as of the date of this Agreement, or make any contribution to any Company employee plan, other than contributions required by law, the terms of such Company employee plans as in effect on the date hereof or that are made in the ordinary course of business consistent with past practice;
(v) acquire, by merger, consolidation, acquisition of stock or assets, or otherwise, any business or person or division thereof or make any loans, advances or capital contributions to or investments in any person;
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(vi) (A) transfer, license, sell, lease or otherwise dispose of any assets (whether by way of merger, consolidation, sale of stock or assets, or otherwise), including the capital stock or other equity interests in any subsidiary of the Company, provided that the foregoing shall not prohibit the Company and its subsidiaries from transferring, licensing, selling, leasing or disposing of obsolete equipment or assets being replaced, in each case in the ordinary course of business consistent with past practice, or (B) adopt or effect a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
(vii) repurchase, prepay or incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company or any of its subsidiaries, guarantee any debt securities of another person, enter into any “keep well” or other contract to maintain any financial statement condition of any other person (other than any wholly-owned subsidiary of it) or enter into any arrangement having the economic effect of any of the foregoing, other than in connection with the financing of ordinary course trade payables consistent with past practice;
(viii) enter into or amend or modify in any material respect, or consent to the termination of (other than at its stated expiry date), any Company material contract or any other contract that, if in effect as of the date hereof would constitute a Company material contract under the Acquisition Agreement;
(ix) institute, settle or compromise any legal actions pending or threatened before any arbitrator, court or other governmental entity involving the payment of monetary damages by the Company or any of its subsidiaries, other than (A) any legal action brought against Purchaser arising out of a breach or alleged breach of the Acquisition Agreement by the Purchaser, and (B) the settlement of claims, liabilities or obligations reserved against on the balance sheet of the Company for the period ended December 31, 2016, provided that the amount of any such settlement of a claim, liability or obligation shall not exceed the amount reserved for that particular claim, liability or obligation; and, provided further, that neither the Company nor any of its subsidiaries shall settle or agree to settle any legal action which settlement involves a conduct remedy or injunctive or similar relief or has a restrictive impact on the Company’s business;
(x) make any change in any method of financial accounting principles or practices, in each case except for any such change required by a change in GAAP or applicable law;
(xi) (A) settle or compromise any material tax claim, audit or assessment, (B) make or change any material tax election, change any annual tax accounting period, adopt or change any method of tax accounting, (C) amend any material tax Returns or file claims for material tax refunds, or (D) enter into any material closing agreement, surrender in writing any right to claim a material tax refund, offset or other reduction in tax liability or consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment relating to the Company or its subsidiaries;
(xii) enter into any material agreement, agreement in principle, letter of intent, memorandum of understanding or similar contract with respect to any joint venture, strategic partnership or alliance;
(xiii) take any action to exempt any person from, or make any acquisition of securities of the Company by any person not subject to, any state takeover statute or similar statute or regulation that applies to Company with respect to a takeover proposal or otherwise, including the restrictions on “business combinations” set forth in Section 912 of the BCL, except for Purchaser or any of Purchaser’s subsidiaries or affiliates, or the transactions contemplated by the Acquisition Agreement;
(xiv) incur any debt, liability or obligation, direct or indirect, whether accrued, absolute, contingent or otherwise, other than current liabilities incurred in the ordinary and usual course of its business, or pay any debt, liability or obligation of any kind other than such current liabilities and current maturities of existing long-term debt;
(xv) Assume, guarantee, endorse or otherwise become responsible for the obligations of any other individual, firm or corporation or make any loans or advances to any individual, firm or corporation, other than loans and advances made in the ordinary and usual course of its business whether or not for the purposes of meeting the Broker/Dealer’s net capital requirements under SEC’s Rule 15c3-1;
(xvi) enter into any transaction with the Majority Shareholder, or any director, officer, shareholder or affiliate of the Company or any subsidiary, except as contemplated by the Acquisition Agreement;
(xvii) elect, appoint or designate any new officers or directors of the Company or any subsidiary; or
(xviii) agree or commit to do any of the foregoing.
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Registration and Regulatory Matters. Pursuant to the Acquisition Agreement, during the Pre-Closing Period, Siebert shall (i) maintain (a) the Broker/Dealer’s registration as a registered “broker-dealer” under the Exchange Act and under the laws of each state in which the Broker/Dealer is registered as a broker-dealer and, (b) the Broker/Dealer’s membership in FINRA and each other SRO necessary for the operation of its business; (ii) cause the Broker/Dealer (a) to take all action to maintain all rights, privileges, broker-dealer licenses and memberships, broker-dealer registrations necessary or desirable in the normal conduct of its business, (b) to comply with all rules and regulations of the SEC and FINRA applicable to it (including such rules and regulations dealing with net capital requirements) and, to the extent applicable, all similar, equivalent or comparable state or foreign statutes, rules, regulations and other regulatory requirements, including all state “blue-sky” laws, (c) to deliver to Purchaser’s Representative a copy of each Focus Report of the Broker/Dealer filed with the SEC and (d) to promptly deliver copies of each notice or other correspondence received from the SEC, FINRA or other SRO (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation by such agency regarding financial or other operational results of the Broker/Dealer; (iii) maintain the Investment Advisor’s status as registered “investment adviser” under the Advisers Act; (iv) cause the Investment Advisor to (a) take all action to maintain all rights, privileges and investment adviser registrations necessary or desirable in the normal conduct of its business, (b) to comply with all rules and regulations of the SEC applicable to it and, to the extent applicable, all similar, equivalent or comparable foreign statutes, rules, regulations, and other regulatory requirements, and (c) unless previously delivered, to promptly deliver to the Purchaser’s representative copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation by such agency regarding financial or other operational results of the Investment Advisor; (v) if consent is required by applicable law or by any advisory agreement between the Investment Advisor and any client of the Investment Advisor for the deemed assignment of any such advisory agreement with any such client, then as promptly as practicable following the date of the Acquisition Agreement, Siebert shall cause the Investment Advisor to prepare and deliver to each such client a written notice (a “Client Notice”) informing such Investment Advisor client of such deemed assignment and of the transactions contemplated by the Acquisition Agreement and requesting such consent in writing to such deemed assignment; and (vi) cause the Investment Advisor to provide the Purchaser a reasonable opportunity prior to distribution of the Client Notices to review and comment on the Client Notices (with such comments to be considered for inclusion in good faith). In the Acquisition Agreement, the Company and the Purchaser agreed that any consent required for the deemed assignment of any advisory agreement with an Investment Advisor client shall be deemed given for all purposes under the Acquisition Agreement (i) if written consent from a client is expressly required under the respective advisory agreement, upon receipt of the written consent requested in the Client Notice or (ii) if consent other than written consent is permitted under applicable law and the respective advisory agreement, (x) upon receipt of a written consent requested in the Client Notice or (y) if no such written consent is received, if thirty (30) days shall have passed since the sending of a written notice (the “Negative Consent Notice”) to such Investment Advisor client (which Negative Consent Notice may be included in the Client Notice) informing such Investment Advisor client: (A) of the intention to complete the transactions contemplated by the Acquisition Agreement, which will result in a deemed assignment of the advisory agreement for such Investment Advisor client; (B) of the intention of the Investment Advisor to continue to provide the advisory services pursuant to the existing advisory agreement with such Investment Advisor client after the consummation of the Majority Share Purchase and the Offer if such Investment Advisor client does not terminate such agreement prior to the consummation of the Majority Share Purchase and the Offer; and (C) that the consent of such Investment Advisor client will be deemed to have been granted if such Investment Advisor client continues to accept such advisory services for a period of at least thirty (30) days after the sending of the Negative Consent Notice without termination; provided that, in any case under clause (i) or (ii) above of this sentence, no consent shall be deemed to have been given by an Investment Advisor client for any purpose under the Acquisition Agreement if at any time prior to the consummation of the Majority Share Purchase and the Offer such Investment Advisor client notifies the Investment Advisor in writing that such Investment Advisor client has not so consented or has terminated its advisory agreement (and such notice is not withdrawn or superseded).
Not Impede Offer. During the Pre-Closing Period, Siebert and the Purchaser agreed that they shall not, and shall not permit any of their respective subsidiaries to, take, or agree or commit to take, any action that would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the consummation of the Offer or the other transactions contemplated by the Acquisition Agreement.
Access to Information. During the Pre-Closing Period, Siebert shall, and shall cause its subsidiaries to, afford to Purchaser and its representatives access, at reasonable times and in a manner as shall not unreasonably interfere with the business or operations of Siebert or any subsidiary of Siebert, to the officers, employees, accountants, agents, properties, offices and other facilities and to all books, records, customer accounts, contracts and other assets of Siebert and its subsidiaries, and Siebert shall, and shall cause its subsidiaries to, furnish promptly to Purchaser such other information concerning the business and properties of Siebert and its subsidiaries as Purchaser may reasonably request from time to time. Neither Siebert nor any of its subsidiaries shall be required to provide access to or disclose information where such access or disclosure would jeopardize the protection of attorney-client privilege or contravene any law (it being agreed that the parties to the Acquisition Agreement shall use their reasonable best efforts to cause such information to be provided in a manner that would not result in such jeopardy or contravention). No investigation shall affect Siebert’s representations and warranties contained herein, or limit or otherwise affect the remedies available to Purchaser pursuant to the Acquisition Agreement.
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No Solicitation. Under the Acquisition Agreement and except as expressly permitted by its terms, during the Pre-Closing Period, the Majority Shareholder shall not, and shall cause Siebert and its subsidiaries not to, and shall not authorize or permit Siebert and its subsidiaries’ directors, officers, employees, advisors and investment bankers (with respect to any person, the foregoing persons are referred to herein as such person’s “Representatives”) to, directly or indirectly, solicit, initiate or knowingly take any action to facilitate or encourage the submission of any Takeover Proposal (as defined below) or the making of any proposal that could reasonably be expected to lead to any Takeover Proposal, or subject to the paragraph below (i) conduct or engage in any discussions or negotiations with, disclose any non-public information relating to the Company or any of its subsidiaries to, afford access to the business, properties, assets, books or records of the Company or any of its subsidiaries to, or knowingly assist, participate in, facilitate or encourage any effort by, any third party that is seeking to make, or has made, any Takeover Proposal, (ii) (A) amend or grant any waiver or release under any standstill or similar agreement with respect to any class of equity securities of the Company or any of its subsidiaries or (B) approve any transaction under, or any third party becoming an “interested shareholder” under, Section 912 of the BCL, or (iii) enter into any agreement in principle, letter of intent, term sheet, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other contract relating to any Takeover Proposal (each, a “Company Acquisition Agreement”). Subject to the paragraph below, neither the Company Board nor any committee thereof shall fail to make, withdraw, amend, modify or materially qualify, in a manner adverse to Purchaser, the Company Board Recommendation, or recommend a Takeover Proposal, or make any public statement inconsistent with the Company Board Recommendation, or resolve or agree to take any of the foregoing actions (any of the foregoing, a “Company Adverse Recommendation Change”). Upon execution of the Acquisition Agreement, the Majority Shareholder was required to cease immediately, and cause the Company, its subsidiaries and their Representatives to cease immediately and cause to be terminated, and not authorize or knowingly permit any of its or their Representatives to continue, any and all existing activities, discussions or negotiations, if any, with any third party conducted prior to the date thereof with respect to any Takeover Proposal and use its reasonable best efforts to cause any such third party (or its agents or advisors) in possession of non-public information in respect of the Company or any of its subsidiaries that was furnished by or on behalf of the Company and its subsidiaries to return or destroy (and confirm destruction of) all such information.
Notwithstanding the provisions in the immediately preceding paragraph, during the Pre-Offer Period, the Company Board, directly or indirectly through any Representative, may, subject to the paragraph below (i) participate in negotiations or discussions with any third party that has made (and not withdrawn) after the date of the Acquisition Agreement a bona fide, unsolicited Takeover Proposal in writing, that the Company Board believes in good faith, after consultation with outside legal counsel and the Company’s financial advisor, constitutes or would reasonably be expected to result in a Superior Proposal, (ii) thereafter furnish to such third party non-public information relating to the Company or any of its subsidiaries pursuant to an executed confidentiality agreement that constitutes an Acceptable Confidentiality Agreement (as defined below), (iii) following receipt of and on account of a Superior Proposal, make a Company Adverse Recommendation Change, and/or (iv) take any action that any court of competent jurisdiction orders the Company to take (which order remains unstayed), but in each case referred to in the foregoing clauses (i) through (iv) of this paragraph, only if the Company Board determines in good faith, after consultation with outside legal counsel, that the failure to take such action would reasonably be expected to cause the Company Board to be in breach of its fiduciary duties under applicable law. Nothing contained in this paragraph shall prevent the Company Board from disclosing to the Company’s shareholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act with regard to a Takeover Proposal, if the Company determines, after consultation with outside legal counsel, that failure to disclose such position would constitute a violation of applicable law.
The Company Board shall not take any of the actions referred to in clauses (i) through (iv) in the above paragraph unless the Company shall have delivered to the Purchaser a prior written notice advising the Purchaser that it intends to take such action. The Company shall notify Purchaser promptly (but in no event later than forty-eight (48) hours) after it obtains of the receipt by the Company (or any of its Representatives) of any Takeover Proposal, any inquiry that would reasonably be expected to lead to a Takeover Proposal, any request for non-public information relating to the Company or any of its subsidiaries or for access to the business, properties, assets, books or records of the Company or any of its subsidiaries by any third party. In such notice, the Company shall identify the details of the material terms and conditions of, any such Takeover Proposal, indication or request, if and to the extent such disclosure is permitted in accordance with any applicable confidentiality obligations. The Company shall keep Purchaser fully informed, on a current basis, of the status and material terms of any such Takeover Proposal, indication or request, including any material amendments or proposed amendments as to price and other material terms thereof.
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Under the Acquisition Agreement:
| • | “Acceptable Confidentiality Agreement” means a confidentiality and standstill agreement that contains confidentiality and standstill provisions that are no less favorable to Siebert than those contained in the Confidentiality Agreement (as defined below). |
| • | “Superior Proposal” means a bona fide written Takeover Proposal involving the direct or indirect acquisition pursuant to a tender offer, exchange offer, merger, consolidation or other business combination, of all or substantially all of Siebert’s consolidated assets or a majority of the outstanding Shares, that the Company Board determines in good faith (after consultation with outside legal counsel and the Company financial advisor) is more favorable from a financial point of view to the holders of Shares than the transactions contemplated by the Acquisition Agreement, taking into account (a) all financial considerations, (b) the identity of the third party making such Takeover Proposal, (c) the anticipated timing, conditions (including any financing condition or the reliability of any debt or equity funding commitments) and prospects for completion of such Takeover Proposal, and (d) the other terms and conditions of such Takeover Proposal and the implications thereof on the Company, including relevant legal, regulatory and other aspects of such Takeover Proposal deemed relevant by the Company Board. |
| • | “Takeover Proposal” means a proposal or offer from, or indication of interest in making a proposal or offer by, any Person (other than Purchaser and its subsidiaries) relating to any (a) direct or indirect acquisition of assets of the Company or its Subsidiaries (including any voting equity interests of subsidiaries, but excluding sales of assets in the ordinary course of business) equal to fifteen percent (15%) or more of the fair market value of the Company’s consolidated assets or to which fifteen percent (15%) or more of the Company’s net revenues or net income on a consolidated basis are attributable, (b) direct or indirect acquisition of fifteen percent (15%) or more of the voting equity interests of the Company, (c) tender offer or exchange offer that if consummated would result in any person beneficially owning (within the meaning of Section 13(d) of the Exchange Act) fifteen percent (15%) or more of the voting equity interests of the Company, (d) merger, consolidation, other business combination or similar transaction involving the Company or any of its subsidiaries, pursuant to which such person would own fifteen percent (15%) or more of the consolidated assets, net revenues or net income of the Company, taken as a whole, or (e) liquidation or dissolution (or the adoption of a plan of liquidation or dissolution) of the Company or the declaration or payment of an extraordinary dividend (whether in cash or other property) by the Company. |
Notices of Certain Events. The Company shall notify Purchaser, and Purchaser shall notify the Company, promptly of (i) any notice or other communication from any person alleging that the consent of such person is or may be required in connection with the transactions contemplated by the Acquisition Agreement, (ii) any notice or other communication from any governmental entity in connection with the transactions contemplated by the Acquisition Agreement, and (iii) any legal actions commenced, or to such party’s knowledge, threatened, against the Company or any of its subsidiaries or Purchaser or any of its subsidiaries, as applicable, that are related to the transactions contemplated by the Acquisition Agreement, in each case such that the Offer conditions would not be satisfied or would give rise to a right of termination under certain provisions of the Acquisition Agreement. In addition, in no event shall (x) the delivery of any notice by a party pursuant to this paragraph limit or otherwise affect the respective rights, obligations, representations, warranties, covenants or agreements of the Purchaser, Siebert or the Majority Shareholder or the conditions to the obligations of the such under the Acquisition Agreement, or (y) disclosure by the Company or Purchaser be deemed to amend or supplement the Acquisition Agreement or constitute an exception to any representation or warranty under the disclosure schedule to the Acquisition Agreement.
Benefit Plans; Employees. Commencing upon the consummation of the Offer and the Majority Share Purchase, the Purchaser shall cause the Company and each of its subsidiaries, as applicable, to provide the employees of the Company and its subsidiaries to whom the Purchaser has extended offers of continued employment after consummation of the Offer and who have elected to remain employed immediately after the Closing, (collectively, the “Company Continuing Employees”) with (i) base salary that is no less favorable than the base salary provided by the Company and its subsidiaries on the date of the Acquisition Agreement, (ii) employee benefits that are no less favorable than benefits provided by the Purchaser to its similarly situated employees, and (iii) discretionary bonus opportunities, which shall be payable, if at all, in Company’s sole discretion; provided, however, that the Company and its subsidiaries shall have the right to terminate any Company Continuing Employee after the consummation of the Majority Share Purchase if such termination is for cause as customarily defined or as may otherwise be set forth in such terminated Company Continuing Employee’s employment agreement.
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Under the Acquisition Agreement with respect to any “employee benefit plan” as defined in Section 3(3) of ERISA maintained by Purchaser or any of its subsidiaries, excluding both any retiree healthcare plans or programs maintained by Purchaser or any of its subsidiaries and any equity compensation arrangements maintained by Purchaser or any of its subsidiaries (collectively, “Purchaser Benefit Plans”) in which any Company Continuing Employees will participate effective as of the consummation of the Offer and the Majority Share Purchase, Purchaser shall, or shall cause Siebert to, recognize all service of the Company Continuing Employees with the Company or any of its subsidiaries, as the case may be as if such service were with Purchaser, for vesting and eligibility purposes (but not for (i) purposes of early retirement subsidies under any Purchaser Benefit Plan that is a defined benefit pension plan or (ii) benefit accrual purposes, except for vacation, if applicable) in any Purchaser Benefit Plan in which such Company Continuing Employees may be eligible to participate after the consummation of the Offer and the Majority Share Purchase; provided that such service shall not be recognized to the extent that (x) such recognition would result in a duplication of benefits or (y) such service was not recognized under the corresponding Company employee plan;
The above two (2) paragraphs as provided in the Acquisition Agreement shall be binding upon and inure solely to the benefit of each of the parties to the Acquisition Agreement, and nothing in such paragraphs, express or implied, shall confer upon any other person any rights or remedies of any nature whatsoever under or by reason in such paragraphs. Nothing contained in the Acquisition Agreement, express or implied (i) shall be construed to establish, amend or modify any benefit plan, program, agreement or arrangement or (ii) shall alter or limit the ability of the Company, Purchaser or any of their respective affiliates to amend, modify or terminate any benefit plan, program, agreement or arrangement at any time assumed, established, sponsored or maintained by any of them. The parties to the Acquisition Agreement agree that the terms set forth in the above 2 paragraphs shall not create any right in any Company employee or any other person to any continued employment with the Company, Purchaser or any of their respective subsidiaries or compensation or benefits of any nature or kind whatsoever. With respect to matters described in the above 2 paragraphs, the Company will not send any written notices or other written communication materials to Company employees without the prior written consent of Purchaser.
Regulatory Consents; Authorizations, Etc. The Acquisition Agreement provides that during the Pre-Closing Period, each of the parties to the Acquisition Agreement will use its commercially reasonable efforts to obtain all consents, authorizations, orders and approvals of, and to make all filings and registrations with, any regulatory agency or any other person which is required for or in connection with the consummation by it of the transactions contemplated in the Acquisition Agreement and will cooperate fully with the other parties in assisting them to obtain such consents, authorizations, orders and approvals and to make such filings and registrations. No party to the Acquisition Agreement will take or omit to take any action for the sole purpose of delaying, impairing or impeding the receipt of any required consent, authorization, order or approval or the making of any required filing or registration.
Directors’ and Officers’ Indemnification and Insurance. The Acquisition Agreement provides that Purchaser agrees that all rights to indemnification, advancement of expenses and exculpation by the Company existing as of the date of the Acquisition Agreement in favor of each person who was then, or has been at any time prior to the date of the Acquisition Agreement or who becomes prior to the consummation of the Offer and the Majority Share Purchase an officer or director of the Company and its subsidiaries (each a “D&O Indemnified Party”) as provided in the Company’s certificate of incorporation (including any certificate of designation), bylaws or like organizational documents, in each case as in effect on the date of the Acquisition Agreement, shall survive the consummation of the Offer and the Majority Share Purchase and shall remain in full force and effect in accordance with their terms, and, in the event that any proceeding is pending or asserted or any claim made during such period, until the final disposition of such proceeding or claim.]
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Reasonable Best Efforts. Upon the terms and subject to the conditions set forth in the Acquisition Agreement, each of Siebert, the Majority Shareholder and the Purchaser shall, and shall cause its subsidiaries to, use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties to the Acquisition Agreement in doing, all things necessary, proper or advisable to consummate and make effective, and to satisfy all conditions to, in the most expeditious manner practicable, the Offer and the transactions contemplated in the Acquisition Agreement, including (i) the obtaining of all necessary consents from governmental entities, (ii) the obtaining of all necessary consents from third parties, and (iii) the execution and delivery of any additional instruments necessary to consummate the Offer and to fully carry out the purposes of the Acquisition Agreement. Siebert and Purchaser shall, subject to applicable law, promptly (x) cooperate and coordinate with the other in the taking of the actions contemplated by clauses (i), (ii) and (iii) of this paragraph and (y) supply the other with any information that may be reasonably required in order to effectuate the taking of such actions. Each of Siebert, the Majority Shareholder and the Purchaser hereto shall promptly inform the other party or parties to the Acquisition Agreement, as the case may be, of any communication from any governmental entity regarding any of the transactions contemplated by the Acquisition Agreement. If Siebert or Purchaser receives a request for additional information or documentary material from any governmental entity with respect to the transactions contemplated by the Acquisition Agreement, then it shall use reasonable best efforts to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compliance with such request, and, if permitted by applicable law and by any applicable governmental entity, provide the other party’s counsel with advance notice and the opportunity to attend and participate in any meeting with any governmental entity in respect of any filing made thereto in connection with the transactions contemplated by the Acquisition Agreement. In the event that any administrative or judicial action or proceeding is instituted (or threatened to be instituted) by a governmental entity or private party challenging the Offer, or any other transaction contemplated by the Acquisition Agreement, or any other agreement contemplated thereby, Siebert shall cooperate in all respects with Purchaser and shall use their reasonable best efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by the Acquisition Agreement. Notwithstanding anything in the Acquisition Agreement to the contrary, none of Purchaser or any of its affiliates shall be required to defend, contest or resist any action or proceeding, whether judicial or administrative, or to take any action to have vacated, lifted, reversed or overturned any order, in connection with the transactions contemplated by the Acquisition Agreement. Notwithstanding anything to the contrary set forth in the Acquisition Agreement, Purchaser shall be responsible for ensuring that Siebert and its subsidiaries are sufficiently capitalized as of the consummation of the Offer and the Majority Share Purchase to operate Siebert’s and its subsidiaries businesses in accordance with applicable regulatory requirements after giving effect to the Majority Share Purchase.
In the Acquisition Agreement, Siebert agreed to purchase “tail” coverage with respect to the Company’s directors and officers policies in effect prior to the consummation of the Offer and the Majority Share Purchase in an amount of $15,000,000 of coverage (the “D&O Coverage”).
The obligations of Purchaser and the Company in the above 2 paragraphs in the Acquisition Agreement shall survive the consummation of the Offer and the Majority Share Purchase and shall not be terminated or modified in such a manner as to adversely affect any D&O Indemnified Party to whom in the above 2 paragraphs applies without the consent of such affected Indemnified Party (it being expressly agreed that the D&O Indemnified Parties to whom the above 2 paragraphs applies shall be third party beneficiaries of the above 2 paragraphs, each of whom may enforce the provisions of the above 2 paragraphs).
In the event that, after the consummation of the Offer and the Majority Share Purchase, Purchaser, the Company or any of their respective successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then, and in either such case, proper provision shall be made so that the successors and assigns of Purchaser or Company, as the case may be, shall assume all of the obligations set forth in the above 3 paragraphs. The agreements and covenants contained in the above 3 paragraphs shall not be deemed to be exclusive of any other rights to which any D&O Indemnified Party is entitled, whether pursuant to law, contract or otherwise. Nothing in the Acquisition Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company or its officers, directors and employees, it being understood and agreed that the indemnification provided for in the above 3 paragraphs is not prior to, or in substitution for, any such claims under any such policies.
Public Announcements. In the Acquisition Agreement, the parties agreed that the initial press release with respect to the Acquisition Agreement and the transactions contemplated thereby shall be a release mutually agreed to by the Company and Purchaser. Following the initial press release, each of the Company and Purchaser agreed that no public release or announcement concerning the Offer and the other transactions contemplated by the Acquisition Agreement shall be issued by any party without the prior written consent of the Company and Purchaser (which consent shall not be unreasonably withheld or delayed), except as such release or announcement may be permitted by the Acquisition Agreement or required by applicable law or the rules or regulations of any applicable governmental agency or SRO to which the relevant party is subject, wherever situated, in which case the party required to make the release or announcement shall consult with the other party about, and allow the other party reasonable time to comment on such release or announcement in advance of such issuance.
Takeover Statutes. If any “control share acquisition,” “fair price,” “moratorium” or other anti-takeover law becomes or is deemed to be applicable to the Company, Purchaser, the Offer, the acquisition of Shares in the Offer or any other transaction contemplated by the Acquisition Agreement, then each of the Company, Purchaser and their respective board of directors shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to render such anti-takeover law inapplicable to the foregoing.
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Section 16 Matters. The Acquisition Agreement provides that during the Pre-Closing Period, the Company shall take all such steps as may be required to cause to be exempt under Rule 16b-3 promulgated under the Exchange Act any dispositions of Shares (including derivative securities with respect to such Shares) that are treated as dispositions under such rule and result from the Offer and the other transactions contemplated by the Acquisition Agreement by each director or officer of the Company who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company.
Rule 14d-10(d) Matters. The Acquisition Agreement provides that during the Pre-Closing Period, the Company (acting through the compensation committee of the Company Board) shall take all such steps as may be required to cause each agreement, arrangement or understanding entered into by the Company or a subsidiary of the Company on or after the date of the Acquisition Agreement with any of its officers, directors or employees pursuant to which consideration is paid to such officer, director or employee to be approved as an “employment compensation, severance or other employee benefit arrangement” within the meaning of Rule 14d-10(d)(1) under the Exchange Act and to satisfy the requirements of the non-exclusive safe harbor set forth in Rule 14d-10(d) under the Exchange Act.
Restrictive Covenants. In the Acquisition Agreement, the Purchaser acknowledges and agrees that SBS and SBSF shall continue to be entitled to use the “Seibert” name from and after the date of the Acquisition Agreement in connection with the Capital Markets Purchase Agreement in connection with the names of such entities and in accordance with the license granted by the Broker/Dealer to SBS and SBSF. Notwithstanding the foregoing, Purchaser shall, and shall cause its affiliates, Siebert and Siebert’s subsidiaries to refrain from using the “Muriel Siebert & Co.” or “Siebert” names or any derivations thereof, other than (A) in connection with the Company’s retail brokerage business name during a transition period after the consummation of the Offer and the Majority Share Purchase, and (B) use the “Siebert” name as part of a d/b/a designation or trade name solely in connection with the Company’s retail brokerage business; provided, that in no event shall Purchaser, and Purchaser shall cause its affiliates, the Company and the Company’s subsidiaries not to, use the “Muriel Siebert & Co.” or “Siebert” names or any derivations thereof (1) in connection with the conduct or operation of any municipal underwritings business, or (2) for any purpose after the second (2nd) anniversary of the Majority Share Purchase. Purchaser shall, and shall cause the Company and its subsidiaries, to use best efforts to cease using the “Siebert” as soon as practicable after consummation of the Majority Share Purchase, except as expressly provided in this paragraph. SBS and SBSF shall be third party beneficiaries of the covenants and agreements set forth in this paragraph.
From and after the consummation of the Offer and the Majority Share Purchase, Purchaser shall use best efforts to preserve and avoid damaging the “Siebert” name and legacy of Muriel F. Siebert. Without limiting the generality of the foregoing, Purchaser agrees that, from and after the consummation of the Offer and the Majority Share Purchase, neither it nor any of its affiliates will, and it will cause each of its affiliates not to, directly or indirectly, in any capacity or manner, make, express, transmit, speak, write, verbalize or otherwise communicate in any way (or cause, further, assist, solicit, encourage, support or participate in any of the foregoing), any remark, comment, message, information, declaration, communication or other statement of any kind, whether verbal, in writing, electronically transferred or otherwise, that might reasonably be construed to be derogatory or critical of, or negative toward, Muriel F. Siebert.
The Acquisition Agreement provides that the restrictive covenants set forth in the above 2 paragraphs were separately bargained for by the Company and the Majority Shareholder. If after the consummation of the Offer and the Majority Share Purchase, Purchaser or any of its affiliates breaches, or threatens to commit a breach of, any of the provisions of the above 2 paragraphs, the Majority Shareholder shall have, in addition to, and not in lieu of, any other rights and remedies available to it under law or in equity, the right to have the covenants contemplated by the above 2 paragraphs in the Acquisition Agreement specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of such covenants would cause irreparable injury to the Majority Shareholder and that money damages would not provide an adequate remedy. In the Acquisition Agreement, Purchaser covenants and agrees not, or permit any of its Affiliates, to oppose any demand for specific performance and injunctive and other equitable relief in case of any such breach or attempted breach.
Additional Covenants of the Company. Pursuant to the Acquisition Agreement,
(a) The Company shall use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to cause to take place prior to consummation of the Majority Shares Purchase the sale, transfer and assignment by the Broker/Dealer to the Majority Shareholder of (i) a $4,000,000 aggregate principal amount junior subordinated note issued by SBSF to Siebert as partial consideration for the November 2015 buy back by SBSF of Siebert's 49% member interest in SBSF (the "November 2015 SBSF Equity Disposition"), and (ii) all of Siebert's rights to receive deferred purchase price payments of $2,507,265 resulting from the November 2014 sale by Siebert to SBSF of substantially all of the assets of Siebert's capital market business (collectively, the "November 2014 SCM Asset Sale"), in consideration for the payment by the Majority Shareholder to the Broker/Dealer of $610,262;
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(b) The Company shall act in good faith and use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to cause the Pre-Closing Dividend (as defined below) to be paid no later than as soon as reasonably practicable after the satisfaction of certain regulatory approvals. "Pre-Closing Dividend" shall mean a cash dividend in respect of all outstanding Company Common Stock in an aggregate amount of up to $4,492,735, comprised of (i) the cash proceeds in the aggregate amount of $4,000,000 received by the Broker/Dealer in connection with the November 2015 SBSF Equity Disposition, and (ii) approximately $492,735 representing the cash proceeds received by the Broker/Dealer in connection with the disposition by the Broker/Dealer from SBSF in connection with the November 2014 SCM Asset Sale.
Confidentiality. Under the Acquisition Agreement, the Purchaser agrees that all information furnished to the Purchaser, its Affiliates or their respective Representatives by the Company, its Affiliates or their respective Representatives, whether before or after the date of the Acquisition Agreement, together with any reports, analyses, compilations, memoranda, notes and any other writings prepared by Purchaser, its Affiliates or their respective Representatives which contain, reflect or are based upon such information (collectively, the “Confidential Information”), will be kept confidential and shall not be disclosed and shall not be used by Purchaser, its Affiliates or their Representatives for any purpose other than evaluating the transactions contemplated by the Acquisition Agreement. Confidential Information includes not only written information, but information transferred orally, visually, electronically, or by any other means. The term “Confidential Information” shall not include any information which: (i) is or becomes generally available to the public other than as a result of any breach of this Agreement by Purchaser, its Affiliates or their respective Representatives, (ii) become available to Purchaser on a non-confidential basis from a source (other than the Company, any of its Subsidiaries or their respective Representatives) which has represented to us that such source is entitled to disclose it, or (iii) were known to Purchaser on a non-confidential basis prior to its disclosure to you by the Company, its Affiliates or their respective Representatives. In the event that Purchaser, its Affiliates or their respective Representatives are required to disclose any Confidential Information in connection with any judicial or administrative proceedings (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigation demand or similar process) Purchaser shall in advance of such disclosure provide the Company with prompt notice of such requirement(s). Purchaser shall, to the extent legally permissible, provide the Company, in advance of any such disclosure, with copies of any Confidential Information Purchaser intends to disclose (and, if applicable, the text of the disclosure language itself) and to cooperate with the Company to the extent it may seek to limit such disclosure. If, in the absence of a protective order or the receipt of a waiver from the Company after a request in writing therefor is made by Purchaser (such request to be made as soon as practicable to allow the Company a reasonable amount of time to respond thereto), Purchaser, its Affiliates or their respective Representatives are legally required to disclose Confidential Information to any tribunal or in order to comply with the federal securities laws, Purchaser may disclose such information without liability hereunder. This Confidentiality provisions survive the termination of the Acquisition Agreement.
Conditions to the Offer. Conditions to the Offer are described below under Section 13 — “Conditions to the Offer.”
Termination.
· The Acquisition Agreement may be terminated, and the transactions contemplated by the Acquisition Agreement may be abandoned (including the Offer and the Majority Share Purchase), at any time prior to the consummation of the Offer and the Majority Share Purchase (notwithstanding any approval of the Acquisition Agreement by the Siebert shareholders) by:
(a) mutual written consent of Purchaser, the Majority Shareholder and Siebert; or
(b) either the Purchaser or the Majority Shareholder and Siebert if:
(i) the Offer and the Majority Share Purchase are not consummated in accordance with their terms and the Acquisition Agreement on or before February 28, 2017 (the “Outside Date”); or (ii) if any regulatory agency, governmental agency or governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law or order making illegal, permanently enjoining or otherwise permanently prohibiting the consummation of the Offer or the other transactions contemplated by the Acquisition Agreement, and such law or order shall have become final and nonappealable. However, the right to terminate the Acquisition Agreement pursuant to this clause (i) of this paragraph is not available to Purchaser on the one hand, or the Majority Shareholder and Siebert on the other hand, if such party’s breach of any representation, warranty, covenant or agreement set forth in the Acquisition Agreement has been the cause of, or resulted in, the failure of the consummation of the Offer or the Majority Share Purchase to have occurred on or before the Outside Date.
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(c) This Agreement may be terminated by the Purchaser and the transactions contemplated by the Acquisition Agreement may be abandoned (including the Offer and the Majority Share Purchase), at any time prior to the consummation of the Offer:
(i) if, prior to the consummation of the Offer, a Company Adverse Recommendation Change shall have occurred,(ii) the Company shall have entered into, or publicly announced its intention to enter into, an agreement in principle, letter of intent, term sheet, acquisition agreement, merger agreement, option agreement, joint venture or partnership agreement or other contract (a “Company Acquisition Agreement”) (other than a confidentiality and standstill agreement that contains confidentiality and standstill provisions that are no less favorable to Siebert than those contained in the Letter of Intent. (an “Acceptable Confidentiality Agreement”), (iii) the Company shall have breached or failed to perform in any material respect any of its covenants and agreements set forth in the Acquisition Agreement, (iv) the Company Board fails to reaffirm (publicly, if so requested by Purchaser) the Company Board Recommendation within ten (10) Business Days after the date any Takeover Proposal (or material modification thereto) is first publicly disclosed by the Company or the Person making such Takeover Proposal, (v) a tender offer or exchange offer relating to the Shares shall have been commenced by a person unaffiliated with Purchaser and the Company shall not have sent to its shareholders pursuant to Rule 14e-2 under the Securities Act, within ten (10) Business Days after such tender offer or exchange offer is first published, sent or given, a statement reaffirming the Company Board Recommendation and recommending that shareholders reject such tender or exchange offer, or (vi) the Company or the Company Board (or any committee thereof) shall publicly announce its intentions to do any of actions specified in this paragraph in the Acquisition Agreement;
(ii) if, prior to the consummation of the Majority Share Purchase, the Company shall have breached or failed to perform any its representations, warranties, covenants or other agreements set forth in the Acquisition Agreement, which breach or failure to perform would give rise to the failure of certain conditions to the consummation of the Offer as provided in the Acquisition Agreement (and in each case such breach or failure to perform is incapable of being cured by the Outside Date); provided that Purchaser shall have given the Company at least 30 days written notice prior to such termination stating Purchaser’s intention to terminate the Acquisition Agreement pursuant to this paragraph.
(d) This Agreement may be terminated by the Majority Shareholder and Siebert at any time prior to the consummation of the Majority Share Purchase if:
(i) if, prior to the consummation of the Offer, the Company Board authorizes the Company, in full compliance with the terms of the Acquisition Agreement, to enter into a Company Acquisition Agreement (other than an Acceptable Confidentiality Agreement), in respect of a Superior Proposal; provided that in the event of such termination, the Company substantially concurrently enters into such Company Acquisition Agreement; or
(ii) if, prior to the consummation of the Offer, Purchaser shall have breached or failed to perform any of its representations, warranties, covenants or other agreements set forth in the Acquisition Agreement and in each case such breach or failure to perform is incapable of being cured by the Outside Date); provided that the Company shall have given Purchaser at least 30 days written notice prior to such termination stating the Company’s intention to terminate this Agreement pursuant to this paragraph.
Fees and Expenses Following Termination in Certain Situations. If the Acquisition Agreement is terminated pursuant to paragraph (c) under “Termination” above, then Siebert shall pay to Purchaser (by wire transfer of immediately available funds), within three (3) business days after such termination, $850,000 (the “Termination Fee”), plus, all Expenses (as defined below) actually incurred by Purchaser on or prior to termination of the Acquisition Agreement. “Expenses” are defined in the Acquisition Agreement with respect to any person as all reasonable and documented out-of-pocket fees and expenses (including all fees and expenses of counsel, accountants, financial advisors and investment bankers of such person and its affiliates), incurred by such person or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of the Acquisition Agreement and any transactions related thereto, any litigation with respect thereto, or in connection with other regulatory approvals, and all other matters related to transactions contemplated by the Acquisition Agreement.
If the Acquisition Agreement is terminated by the Company and the Majority Shareholder pursuant to paragraph (d) under “Termination” above, then the Company shall pay to Purchaser (by wire transfer of immediately available funds), at or prior to such termination, the Termination Fee, plus, all Expenses actually incurred by Purchaser on or prior to the termination of the Acquisition Agreement.
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If the Acquisition Agreement is terminated (i) prior to the consummation of the Offer, by Purchaser pursuant to paragraph (c) (ii) under “Termination” above, or (ii) by the Company or Purchaser pursuant to paragraph (b)(i)(A) under “Termination” above and, in the case of clauses (i) and (ii) above in this paragraph, (A) prior to such termination, a Takeover Proposal shall (1) in the case of a termination pursuant to paragraph (b)(i)(A) under “Termination” above, have been publicly disclosed and not withdrawn or (2) in the case of a termination pursuant to paragraph (c) under Termination above, have been publicly disclosed or otherwise made or communicated to the Company or the Company Board, and not withdrawn, and (B) within one (1) year following the date of such termination of the Acquisition Agreement any Takeover Proposal shall have been consummated (whether or not such Takeover Proposal is the same as the original Takeover Proposal made, communicated or publicly disclosed), then in any such event the Company shall pay to Purchaser (by wire transfer of immediately available funds), immediately prior to and as a condition to consummating such transaction, the Termination Fee, plus, all Expenses actually incurred by Purchaser on or prior to the termination of the Acquisition Agreement (it being understood for all purposes of this paragraph, all references in the definition of Takeover Proposal to 15% shall be deemed to be references to “more than 50%” instead). If a person (other than Purchaser) makes a Takeover Proposal that has been publicly disclosed and subsequently withdrawn prior to such termination, as applicable, and, within one (1) year following the date of the termination of the Acquisition Agreement, such person or any of its controlled affiliates makes a Takeover Proposal that is publicly disclosed, such initial Takeover Proposal shall be deemed to have been “not withdrawn” for purposes of clauses (1) and (2) of this paragraph.
Siebert acknowledged and agreed in the Acquisition Agreement that if it fails to pay in a timely manner the amounts due pursuant to this Fees and Expenses section, and, in order to obtain such payment, Purchaser makes a claim against Siebert that results in a judgment against Siebert, Siebert will pay to Purchaser the reasonable costs and expenses of Purchaser (including its reasonable attorneys’ fees and expenses) incurred or accrued in connection with such suit, together with interest on the amounts set forth in the Fees and Expenses section at the prime lending rate prevailing during such period as published in The Wall Street Journal. Any interest payable thereunder will be calculated on a daily basis from the date such amounts were required to be paid until (but excluding) the date of actual payment, and on the basis of a 360-day year. The parties to the Acquisition Agreement acknowledged and agreed that in no event will Siebert be obligated to pay the Termination Fee on more than one occasion.
Except as expressly set forth in this Fees and Expenses section, all expenses incurred in connection with the Acquisition Agreement and the transactions contemplated thereby will be paid by the party incurring such expenses.
Amendment. Subject to applicable law, the Acquisition Agreement may be amended or supplemented in any and all respects by written agreement signed by each of Siebert, the Majority Shareholder and the Purchaser.
Extension; Waiver. At any time prior to the consummation of the Offer, Purchaser or, on the one hand, or the Majority Shareholder and the Company, on the other hand, may, subject to the “Amendment” paragraph above (a) extend the time for the performance of any of the obligations of the other party or parties, (b) waive any inaccuracies in the representations and warranties of the other party or parties contained in the Acquisition Agreement or in any document delivered under the Acquisition Agreement, or waive compliance with any of the covenants, agreements or conditions contained in the Acquisition Agreement. Any agreement on the part of a party to the Acquisition Agreement to any extension or waiver will be valid only if set forth in an instrument in writing signed by such party. The failure of any party to assert any of its rights under the Acquisition Agreement or otherwise will not constitute a waiver of such rights.
| Section 12. | Source and Amount of Funds |
Purchaser has sufficient funds to pay for all Shares purchased in the Majority Share Purchase and validly tendered and not withdrawn in the Offer. We estimate that the total amount of funds necessary to purchase all issued and outstanding Shares of Siebert pursuant to the Offer and the Majority Share Purchase will be approximately $10 million. These funds have been contributed to the Purchaser as capital by Gloria E. Gebbia, the owner of all of the voting member interests in the Purchaser. Such funds were personal funds of Ms. Gebbia. Purchaser does not have any alternative financing plans or arrangements. The Offer is not conditioned upon any financing arrangements.
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| Section 13. | Conditions to the Offer |
The consummation of the Offer is conditioned upon the satisfaction or written waiver (to the extent permitted by applicable law and as provided in the Acquisition Agreement) of the following conditions:
| • | The Siebert Foundation shall have validly tendered and not withdrawn all Shares owned by the Siebert Foundation which shall in no event be less than 568,700 Shares; | |
| • | FINRA has approved pursuant to FINRA Rule 1017 the indirect change of control of the Broker/Dealer as a result of consummation by us of the Majority Share Purchase; and |
| • | Each regulatory approval required to consummate the Offer by Siebert and the Purchaser shall have been obtained and shall remain in full force and effect or, in the case of waiting periods, shall have expired or been terminated; |
| • | No order issued by any governmental entity of competent jurisdiction preventing or materially restraining or making illegal the consummation of the transactions contemplated by the Acquisition Agreement in connection with the Offer or the Majority Share Purchase shall be in effect, and there shall be no proceedings pending by any Governmental Entity of competent jurisdiction seeking such an order; |
| • | Each of the representations and warranties of Siebert and the Majority Shareholder in the Acquisition Agreement that are expressly qualified by a reference to materiality or Material Adverse Effect shall be true and correct in all respects as so qualified, each of the representations and warranties of Siebert in the Acquisition Agreement that is not so qualified shall be true and correct in all material respects, each as of the date when made and at and as of the consummation of the Offer, except for such changes as are permitted by the Acquisition Agreement and except to the extent a representation or warranty speaks only as of an earlier date, in which case it shall be true and correct as of such date (the “Representation Condition”); |
| • | The Company and the Majority Shareholder shall have performed and complied in all material respects with all covenants, obligations and conditions of the Acquisition Agreement required to be performed and complied with by each of such person as of the consummation of the Offer (the “Covenant Condition”); |
| • | Purchaser shall have received certificates executed on behalf of the Company by the chief executive officer or chief financial officer of the Company and the Majority Shareholder by any authorized representative thereof certifying that the conditions set forth in the Representation Condition and the Covenant Condition have been satisfied; |
| • | Each of the representations and warranties of the Purchaser in the Acquisition Agreement that is expressly qualified by a reference to materiality or material adverse effect shall be true and correct in all respects as so qualified, and each of the representations and warranties of Purchaser in the Acquisition Agreement that is not so qualified shall be true and correct in all material respects, each as of the date when made and at and as of the consummation of the Offer, except for such changes as are permitted by this Agreement and except to the extent a representation or warranty speaks only as of an earlier date, in which case it shall be true and correct as of such date (“Purchaser Representation Condition”); |
| • | Purchaser shall have performed and complied in all material respects with all covenants, obligations and conditions of the Acquisition Agreement required to be performed and complied by it as of the consummation of the Offer (“Purchaser Covenant Condition”); and |
| • | The Company shall have received a certificate executed on behalf of Purchaser by its president or chief financial officer certifying that the Purchaser Covenant Condition have been satisfied. |
| Section 14. | Dividends and Distributions |
The Acquisition Agreement provides that, between the date of the Acquisition Agreement and the consummation of the Offer and the Majority Share Purchase, except as expressly contemplated by the Acquisition Agreement (including without limitation in connection with the SBSF Note Disposition and the Pre-Closing Dividend or as required by applicable law, Siebert shall not, nor shall it permit any of its subsidiaries to, without the prior written consent of the Purchaser (which consent shall not be unreasonably withheld or delayed), declare, set aside or pay any dividend or distribution (whether in cash, stock, property or otherwise) in respect of, or enter into any contract with respect to the voting of, any shares of its capital stock (other than dividends from direct or indirect wholly-owned subsidiary). See Section 11 — “Purpose of the Offer and Plans for Siebert; Acquisition Agreement and Other Agreements.”
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| Section 15. | Certain Legal Matters |
General. Except as otherwise set forth in this Offer to Purchase, based on our review of Siebert’s publicly available SEC filings and other information regarding Siebert, we are not aware of any licenses or other regulatory permits that appear to be material to the business of Siebert and that might be adversely affected by the acquisition of Shares by us pursuant to the Offer or, except as set forth below, of any approval or other action by any governmental, administrative or regulatory agency or authority that would be required for the acquisition or ownership of Shares by us pursuant to the Offer. Except as otherwise set forth in this Offer to Purchase, we are not aware of any filings, approvals or other actions by or with any governmental authority or administrative or regulatory agency that would be required for our acquisition or ownership of Shares. Should any such approval or other action be required, we currently expect that such approval or action, except as described below under “State Takeover Laws,” would be sought or taken. There can be no assurance that any such approval or action, if needed, would be obtained or, if obtained, that it would be obtained without substantial conditions, and there can be no assurance that, in the event that such approvals were not obtained or such other actions were not taken, adverse consequences might not result to Siebert’s or our business or that certain parts of Siebert’s or our business might not have to be disposed of or held separately. In such an event, we may not be required to purchase any Shares in the Offer. See Section 13 — “Conditions to the Offer.”
State Takeover Laws. A number of states (including New York, where Siebert is incorporated) have adopted takeover laws and regulations which purport, to varying degrees, to be applicable to attempts to acquire securities of corporations which are incorporated in such states or which have substantial assets, shareholders, principal executive offices or principal places of business therein. In the Acquisition Agreement, the parties agreed that if any “control share acquisition,” “fair price,” “moratorium” or other anti-takeover law becomes or is deemed to be applicable to Siebert, the Purchaser, the Offer, the acquisition of Shares pursuant to the Offer or any other transaction contemplated by this Agreement, then each of Siebert, Purchaser and their respective board of directors shall grant such approvals and take such actions as are necessary so that the transactions contemplated in the Acquisition Agreement including the Offer and the Majority Share Purchase may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to render such anti-takeover law inapplicable to the foregoing. Accordingly, no New York statute should have the effect of precluding the Offer or the Majority Share Purchase. Purchaser has not attempted to comply with any other state takeover laws in connection with the Offer or the Majority Share Purchase. To the extent that the provisions of other state takeover statutes purport to apply to the Offer or the Majority Share Purchase, Purchaser believes that such laws conflict with federal law and constitute an unconstitutional burden on interstate commerce. Purchaser reserves the right to challenge the validity or applicability of any state law allegedly applicable to the Offer, the Majority Share Purchase, the Acquisition Agreement or the transactions contemplated by the Acquisition Agreement and nothing in this Offer to Purchase nor any action taken in connection herewith is intended as a waiver of that right. In the event that it is asserted that one or more takeover statutes apply to the Offer or the Majority Share Purchase, and it is not determined by an appropriate court that such statute or statutes do not apply or are invalid as applied to the Offer, the Majority Share Purchase or the Acquisition Agreement, as applicable, Purchaser may be required to file certain documents with, or receive approvals from, the relevant state authorities, and Purchaser might be unable to accept for payment or purchase Shares tendered pursuant to the Offer or be delayed in continuing or consummating the Offer and/or the Majority Share Purchase. In such case, Purchaser may not be obligated to accept for purchase, or pay for, any Shares tendered. See Section 13 — “Conditions to the Offer.”
Stockholder Approval Not Required. The Purchaser does not believe the consummation of the Offer, the Majority share Purchase or the other transactions contemplated in the Acquisition Agreement require shareholder approval.
Appraisal Rights. No appraisal rights are available to the holders of Shares in connection with the Offer.
Anti-Trust Laws. The Purchaser does not believe the consummation of the Majority Share Purchase, the Offer and/or any of the other transactions contemplated by the Acquisition Agreement are subject to any state or federal anti-trust or similar laws.
Litigation. None.
| Section 16. | Interest in Securities of Siebert |
As of the date of this Offer to Purchase, Purchaser Persons and certain persons who may be deemed affiliates of certain of the Purchaser Persons owned in the aggregate 145,337 Shares, less than one (1%) percent of the issued and outstanding Shares. It is currently being contemplated by the Purchaser that following the consummation of the Offer and the Majority Share Purchase, subject to compliance with all regulatory rules and regulations including FINRA, the Purchaser will agree to contribute, loan or otherwise make arrangements so that the Broker/Dealer has a source of funding if it requires further net capital for compliance with the SEC’s and FINRA’s net capital rule requirements. In consideration for the Purchaser entering into any such agreement, it is currently being contemplated that Siebert would issue to the Purchaser common stock purchase warrants to purchase approximately 3,000,000 Shares approximately at an exercise price of $1.20 per Share (the same price as the Offer Price) on terms and conditions to be determined. No assurances can be given, however, when, if ever, following the consummation of the Offer and the Majority Share Purchase, an agreement(s) relating to the above will be entered into or, the final terms thereof.
| - 29 - |
| Section 17. | Fees and Expenses |
We have retained the Depositary and the Information Agent in connection with the Offer. Each of the Depositary and the Information Agent will receive customary compensation, reimbursement for reasonable out-of-pocket expenses and indemnification against certain liabilities in connection with the Offer, including liabilities under the federal securities laws.
As part of the services included in such retention, the Information Agent may contact holders of Shares by personal interview, mail, electronic mail, telephone and other methods of electronic communication and may request brokers, dealers, commercial banks, trust companies and other nominees to forward the Offer materials to beneficial holders of Shares.
Except as set forth above, we will not pay any fees or commissions to any broker or dealer or other person for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks, trust companies and other nominees will upon request be reimbursed by us for customary mailing and handling expenses incurred by them in forwarding the offering material to their customers.
| Section 18. | Miscellaneous |
We are not aware of any jurisdiction where the making of the Offer is prohibited by any administrative or judicial action pursuant to any valid state statute. If we become aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares, we will make a good faith effort to comply with that state statute or seek to have such statute declared inapplicable to the Offer. If, after a good faith effort, we cannot comply with the state statute, we will not make the Offer to, nor will we accept tenders from or on behalf of, the holders of Shares in that state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction.
We have filed with the SEC the Schedule TO (including exhibits) in accordance with the Exchange Act, furnishing certain additional information with respect to the Offer and may file amendments thereto. In addition, Siebert substantially concurrently is filing the Schedule 14D-9 (including exhibits) in accordance with the Exchange Act setting forth its recommendation and furnishing certain additional related information. The Schedule TO and the Schedule 14D-9, and any amendments thereto, including exhibits, may be examined and copies may be obtained from the SEC in the manner set forth in Section 8 — “Certain Information Concerning Siebert — Available Information.”
No person has been authorized to give any information or make any representation on behalf of the Purchaser not contained in this Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery and, if given or made, such information or representation must not be relied upon as having been authorized. No broker, dealer, commercial bank, trust company or other nominee shall be deemed to be the agent of Siebert, us or the Majority Shareholder, the Information Agent or the Depositary or any of their affiliates for the purpose of the Offer. Neither delivery of this Offer to Purchase nor any purchase pursuant to the Offer will, under any circumstances, create any implication that there has been no change in the affairs of Siebert, us or the Majority Shareholder or any of their respective subsidiaries since the date as of which information is furnished or the date of this Offer to Purchase.
Neither the Offer, nor this Offer to Purchase, nor the Letter of Transmittal, nor the Notice of Guaranteed Delivery constitutes a solicitation of proxies for any meeting of Siebert’s shareholders.
Kennedy Cabot Acquisition, LLC.
September 6, 2016
| - 30 - |
SCHEDULE A
INFORMATION CONCERNING THE MANAGING MEMBER, THE OTHER MEMBERS OF THE PURCHASER
AND CERTAIN OTHER PERSONS WHO IT IS CURRENTLY CONTEMPLATED WILL BECOME EXECUTIVE OFFICERS AND DIRECTORS OF SIEBERT FOLLOWING THE CLOSING:
The following table sets forth information about the Purchaser’s Managing Member, other Members and certain other persons who it is currently contemplated will become executive officers and directors of Siebert following the consummation of the Offer and the Majority Share Purchase as of September 1, 2016. For all occupation or employment at the Purchaser, the business address is 24100 Calabasas Road, Calabasas, CA 91302. Purchaser’s telephone number at such address is (212) 514-8369.
| Name | Citizenship | Principal Occupation or Employment and Five-Year Employment History |
| Gloria E. Gebbia | USA |
Gloria Gebbia, age 74, is the manager and owner of all of the issued and outstanding voting member interests of Kennedy Cabot Acquisition, LLC. It is currently anticipated that Ms. Gebbia will become a director of Siebert following the closing of the Acquisition Agreement and the Offer. Ms. Gebbia is an owner of Stockcross Financial Services, Inc., a global financial services company (“Stockcross”). Additionally, Mrs. Gebbia also serves as the President of Associates for Breast and Prostate Cancer Research, a non-profit that raises funds for the John Wayne Cancer Institute, which has under Ms. Gebbia’s leadership raised over $14 million for breast and prostate cancer research. It is currently anticipated that Ms. Gebbia will become the Chairwoman of Siebert following the closing of the Acquisition Agreement and the Offer (the “Closing”).
|
| Andrew H. Reich | USA |
Andrew H. Reich, age 61, is the Chairman of Stockcross and has served as Chairman since 2015 and from 2002 he held various executive positions. Additionally, Mr. Reich is the owner of Aarianna Realty Inc., a real estate company, has previously served as the CFO of Gebbia Holding Co., a holding company for Ms. Gebbia’s family since 2013 and as CFO of Park Wilshire Insurance Company, a privately held insurance company since 2010. Mr. Reich has more than 20 years of experience in the financial industry, including more than fourteen years as senior management of Stockcross. Mr. Reich holds a holds an MBA from the University of Southern California and a BBA from the Bernard Baruch College. It is currently anticipated that Mr. Reich will become a director of Siebert and an Executive Officer at Muriel Siebert & Co., Inc. following the Closing.
|
| Charles A. Zabatta | USA |
Charles A. Zabatta, age 74, has been for the past five years, the head of Corporate Development at Stockcross. Mr. Zabatta has and continues to have a distinguished and successful career, predominately in the financial service industry, including holding various positions with the New York Stock Exchange, Paine Webber, Securities Settlement Corp., Josephthal Lyon & Ross, Kennedy Cabot Financial, and TD Waterhouse. Mr. Zabatta’s creative business skills have been instrumental in several acquisitions of small to midsize companies, in various industries. Mr. Zabatta currently advises on capital raising, general business structure and management. Previously, Mr. Zabatta has served as a member of the board of Knight Capital and Kennedy Cabot Financial. Currently Mr. Zabatta serves on the board of Paraco Gas Corporation, a large privately held independent energy company in the northeast. Mr. Zabatta holds a holds a BA in industrial psychology from Iona College. It is currently anticipated that Mr. Zabatta will become a director of Siebert following the Closing.
|
| Francis Cuttita | USA |
Francis V. Cuttita, age 48, is a Senior Partner of Cuttita, LLP, a New York based law firm. Mr. Cuttita has over 23 years of practicing law, and in the areas of real estate and business transactions, media, sports and entertainment. Mr. Cuttita’s list of clients include Fortune 100 corporations, CEOs, hedge fund managers, legendary professional athletes, entertainment icons and Grammy award winning musicians. Mr. Cuttita also serves as an advisor to several national financial, insurance and sports businesses and is an active supporter and member of various nonprofit organizations. Mr. Cuttita graduated from Swarthmore College and received his law degree from Fordham University School of Law. It is currently anticipated that Mr. Cuttita will become a director of Siebert following the Closing.
|
| - 31 - |
Manually signed facsimiles of the Letter of Transmittal, properly completed and duly executed, will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent by each shareholder of Siebert or such shareholder’s broker, dealer, commercial bank, trust company or other nominee to the Depositary as follows:
| If delivering by first class, registered or certified mail: | If
delivering by hand or courier (until 5:00 P.M.
| |
American Stock Transfer & Trust Company, LLC Operations Center Attn: Reorganization Department P.O. Box 2042 New York, New York 10272-2042 |
American Stock Transfer & Trust Company, LLC Operations Center Attn: Reorganization Department 6201 15th Avenue Brooklyn, New York 11219 |
| - 32 - |
Exhibit (a)(1)(B)
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
LETTER OF TRANSMITTAL
to Tender Shares of Common Stock
of
Siebert Financial Corp.
at
$1.20 Net per Share
Pursuant to the Offer to Purchase Dated as of September 6, 2016
by
Kennedy Cabot Acquisition, LLC
| THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, AT THE END OF THE DAY ON OCTOBER 3, 2016, UNLESS THE OFFER IS EXTENDED OR EARLIER TERMINATED. |
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
| If delivering by first class, registered or certified mail: | If delivering by hand, courier or overnight to (until 5:00 P.M.New York City time on October 3, 2016):
| |
American Stock Transfer & Trust Company, LLC Operations Center Attn: Reorganization Department P.O. Box 2042 New York, New York 10272-2042 |
American Stock Transfer & Trust Company, LLC Operations Center Attn: Reorganization Department 6201 15th Avenue Brooklyn, New York 11219 |
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
| DESCRIPTION OF SHARES TENDERED | ||||||
| Name(s)
and Address(es) of Registered Holder(s) (Please fill in, if blank, exactly as name(s) appear(s) on Share Certificate(s)) |
Shares
Tendered (Attach additional list if necessary) | |||||
| Certificate Number(s)* |
Total
Number of Shares Represented by Certificate(s)* |
Number
of Shares Tendered (1)(2) | ||||
| Total Shares (Including Shares held electronically through the Direct Registration System at the Transfer Agent (DRS)) | ||||||
(1) If Shares are held in book-entry form, you must indicate the number of Shares you are tendering. (2) Unless otherwise indicated, all Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered. | ||||||
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND OBTAIN AND COMPLETE AN IRS FORM W-9 IF YOU ARE A U.S. HOLDER OR A W-8BEN OR OTHER APPLICABLE IRS FORM W-8 IF YOU ARE A NON-U.S. HOLDER. IRS FORMS W-9, W-8BEN AND OTHER IRS FORMS W-8 ARE AVAILABLE FROM THE DEPOSITARY OR FROM THE INTERNAL REVENUE SERVICE WEB SITE, AT HTTP://WWW.IRS.GOV.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES OF THE OFFER TO PURCHASE AND THIS LETTER OF TRANSMITTAL MAY BE MADE TO OR OBTAINED FROM THE INFORMATION AGENT AT ITS ADDRESS OR TELEPHONE NUMBER SET FORTH BELOW.
If the certificate(s) representing Shares (as defined below) to be tendered have been mutilated, lost, stolen or destroyed, stockholders should contact Siebert Financial Corp.’s transfer agent, American Stock Transfer & Trust Company, LLC, immediately by calling (800) 937-5449. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing such certificate(s) have been followed. See Instruction 9.
You must sign this Letter of Transmittal in the appropriate space provided below, with signature guarantee if required, and complete the enclosed Internal Revenue Services (“IRS”) Form W-9 or provide the applicable IRS Form W-8, as appropriate.
You have received this Letter of Transmittal (as it may be amended or supplemented from time to time, this “Letter of Transmittal”) in connection with the offer by Kennedy Cabot Acquisition, LLC, a Nevada limited liability company (“Purchaser”), to purchase 2,775,126 Shares of common stock, par value $0.01 per share (the “Shares”) of Siebert Financial Corp., a New York corporation (“Siebert” or the “Company”), at a purchase price of $1.20 per Share, net to the seller in cash (the “Offer Price”), without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase (as it may be amended or supplemented from time to time, the “Offer to Purchase”).
You should use this Letter of Transmittal to deliver to American Stock Transfer & Trust Company, LLC (the “Depositary”) Shares represented by stock certificates for tender. If you are delivering your Shares by book-entry transfer to an account maintained by the Depositary at The Depository Trust Company (“DTC”), you may use this Letter of Transmittal or you may use an Agent’s Message (as defined in Instruction 2 below). In this document, shareholders who deliver certificates representing their Shares are referred to as “Certificate Shareholders” and shareholders who deliver their Shares through book-entry transfer are referred to as “Book-Entry Shareholders.”
If certificates for your Shares are not immediately available or you cannot deliver your certificates and all other required documents to the Depositary prior to the Expiration Time (as defined in Section 1 of the Offer to Purchase), or you cannot comply with the book-entry transfer procedures on a timely basis, you may nevertheless tender your Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents to DTC will not constitute delivery to the Depositary.
| o | CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC AND COMPLETE THE FOLLOWING (ONLY FINANCIAL INSTITUTIONS THAT ARE PARTICIPANTS IN DTC MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER THROUGH DTC): |
| Name of Tendering Institution: |
| DTC Participant Number: | Transaction Code Number: |
| o | CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY. |
| Name(s) of Registered Owner(s): |
|
| Window Ticket Number (if any) or DTC Participant Number: |
|
| Date of Execution of Notice of Guaranteed Delivery: |
|
| Name of Institution which Guaranteed Delivery: |
|
| - 2 - |
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Kennedy Cabot Acquisition, LLC, a Nevada limited liability company (“Purchaser”) the above-described shares of common stock, par value $0.01 per share (the “Shares”), of Siebert Financial Corp., a New York corporation (“Siebert” or the “Company”), who owns all of the issued and outstanding capital stock of (i) Muriel Siebert & Co., Inc., a Delaware corporation, a member of the Financial Industry Regulatory Authority and registered as a broker/dealer under Section 15 of the Securities Exchange Act of 1934, as amended, and (ii) Siebert Investment Advisors, Inc., a New York corporation and registered investment advisor under the Investment Advisor’s Act of 1940, as amended, at a purchase price of $1.20 per Share, net to the seller in cash (the “Offer Price”), without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase dated as of September 6, 2016 (together with any amendments or supplements thereto, the “Offer to Purchase”), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the “Offer”). The Offer expires at 12:00 Midnight, New York City time, at the end of the day on October 3, 2016, unless extended by Purchaser as described in the Offer to Purchase (as it may be extended, the “Expiration Time”).
Upon the terms and subject to the conditions of the Offer and effective upon acceptance for payment for the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser all right, title and interest in and to all the Shares that are being tendered hereby and any and all cash dividends, distributions, rights, other Shares or other securities issued or issuable in respect of such Shares after the consummation of the Offer (collectively, “Distributions”). In addition, the undersigned hereby irrevocably appoints American Stock Transfer & Trust Company, LLC, as the depositary for the Offer (the “Depositary”) the true and lawful agent and attorney-in-fact and proxy of the undersigned with respect to such Shares and any Distributions with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest in the Shares tendered by this Letter of Transmittal) to the fullest extent of such stockholder’s rights with respect to such Shares and any Distributions (a) to deliver certificates representing Shares (the “Share Certificates”) and any Distributions, or transfer ownership of such Shares and any Distributions on the account books maintained by DTC, together, in either such case, with all accompanying evidence of transfer and authenticity, to or upon the order of, the Purchaser, (b) to present such Shares and any Distributions for transfer on the books of the Company and (c) to receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and any Distributions, all in accordance with the terms and subject to the conditions of the Offer.
The undersigned hereby irrevocably appoints each of the designees of Purchaser as the attorney-in-fact and proxy of the undersigned, each with full power of substitution, to the full extent of such stockholder’s rights with respect to Shares tendered hereby which have been accepted for payment and with respect to any Distributions. The designees of Purchaser will, with respect to Shares and any associated Distributions for which the appointment is effective, be empowered to exercise all voting and any other rights of such stockholder, as they, in their sole discretion, may deem proper at any annual, special, adjourned or postponed meeting of Siebert’s shareholders, by written consent in lieu of any such meeting or otherwise. This proxy and power of attorney shall be irrevocable and coupled with an interest in the tendered Shares. Such appointment is effective when, and only to the extent that, Purchaser accepts Shares tendered with this Letter of Transmittal for payment pursuant to the Offer. Upon the effectiveness of such appointment, without further action, all prior powers of attorney, proxies and consents given by the undersigned with respect to such Shares and any associated Distributions will be revoked and no subsequent powers of attorney, proxies, consents or revocations may be given (and, if given, will not be deemed effective). Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon Purchaser’s acceptance for payment of such Shares, Purchaser must be able to exercise full voting, consent and other rights, to the extent permitted under applicable law, with respect to such Shares and any associated Distributions, including voting at any meeting of shareholders or executing a written consent concerning any matter.
| - 3 - |
The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer Shares and any Distributions tendered hereby and, when any of the same are accepted for payment by Purchaser, Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and the same will not be subject to any adverse claim. The undersigned hereby represents and warrants that the undersigned is the registered owner of Shares or the Share Certificate(s) have been endorsed to the undersigned in blank or the undersigned is a participant in DTC whose name appears on a security position listing participant as the owner of Shares. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of Shares and any Distributions tendered hereby and accepted for payment. In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of Purchaser any and all Distributions in respect of Shares tendered hereby and accepted for payment, accompanied by appropriate documentation of transfer and, pending such remittance or appropriate assurance thereof, Purchaser shall be entitled to all rights and privileges as owner of any such Distributions and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by Purchaser in its sole and absolute discretion.
It is understood that the undersigned will not receive payment for Shares unless and until Shares are accepted for payment and until the Share Certificate(s) owned by the undersigned are received by the Depositary at the address set forth above, together with such additional documents as the Depositary may require, or, in the case of Shares held in book-entry form through DTC, ownership of Shares is validly transferred on the account books maintained by DTC, and until the same are processed for payment by the Depositary. It is understood that the method of delivery of Shares, the Share Certificate(s) and all other required documents (including delivery through DTC) is at the option and sole risk of the undersigned and that the risk of loss of such Shares, Share Certificate(s) and other documents shall pass only after the Depositary has actually received Shares or Share Certificate(s) (including, in the case of a book-entry transfer through DTC, by Book-Entry Confirmation (as defined below)). It is further understood that, for purposes of determining the shareholders of record of the Company in connection with the declaration and payment by the Company of any dividend or distribution on the Shares prior to the consummation of the Offer, the undersigned shall continue to be deemed the record holder of tendered Shares.
All authority conferred or agreed to be conferred pursuant to this Letter of Transmittal shall not be affected by, and shall survive, the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, trustees in bankruptcy, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that the acceptance for payment by Purchaser of Shares tendered pursuant to one of the procedures described in Section 3 of the Offer to Purchase will constitute a binding agreement between the undersigned and Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under “Special Payment Instructions,” please issue the check for the purchase price in the name(s) of, and/or return any Share Certificate(s) representing Shares not tendered or accepted for payment to, the registered owner(s) appearing under “Description of Shares Tendered.” Similarly, unless otherwise indicated under “Special Delivery Instructions,” please mail the check for the purchase price and/or return any Share Certificate(s) representing Shares not tendered or accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered owner(s) appearing under “Description of Shares Tendered.” In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or issue any Share Certificate(s) representing Shares not tendered or accepted for payment (and any accompanying documents, as appropriate) in the name of, and deliver such check and/or return such Share Certificate(s) (and any accompanying documents, as appropriate) to, the person or persons so indicated. The undersigned recognizes that Purchaser has no obligation pursuant to the Special Payment Instructions to transfer any Shares from the name of the registered owner thereof if Purchaser does not accept for payment any of Shares so tendered.
| - 4 - |
SPECIAL PAYMENT INSTRUCTIONS (See Instructions 1, 4, 5 and 6) | ||||
To be completed ONLY if Share Certificate(s) not tendered or not accepted for payment and/or the check for the purchase price of Shares accepted for payment are to be issued in the name of someone other than the undersigned or if Shares tendered by book-entry transfer which are not accepted for payment are to be returned by credit to an account other than that designated above.
Issue to:
| ||||
| Name: | ||||
| (Please Print) | ||||
| Address: | ||||
| (Include Zip Code) | ||||
PLEASE OBTAIN AND COMPLETE AN IRS FORM W-9, IF YOU ARE A U.S. HOLDER, OR A W-8BEN OR OTHER APPLICABLE IRS FORM W-8, IF YOU ARE A NON-U.S. HOLDER. IRS FORMS W-9, W-8BEN AND OTHER IRS FORMS W-8 ARE AVAILABLE FROM THE DEPOSITARY OR FROM THE INTERNAL REVENUE SERVICE WEB SITE, AT HTTP://WWW.IRS.GOV. | ||||
| - 5 - |
SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 4, 5 and 6) | ||||
To be completed ONLY if Share Certificate(s) not tendered or not accepted for payment and/or the check for the purchase price of Shares accepted for payment are to be sent to someone other than the undersigned or to the undersigned at an address other than that shown in the box titled “Description of Shares Tendered” above.
Deliver to:
| ||||
| Name: | ||||
| (Please Print) | ||||
| Address: | ||||
| (Include Zip Code) | ||||
| - 6 - |
| IMPORTANT | ||
| SIGN HERE |
| AUTHORIZED SIGNATURE | ||
| AUTHORIZED SIGNATURE | ||
| (Signature(s) of All Owner(s)) |
| Dated: , 2016 |
| (Must be signed by holder(s) exactly as name(s) appear(s) on certificate(s) evidencing the share(s) or by person(s) to whom such share(s) have been assigned and transferred, as evidenced by endorsement, stock powers and other documents transmitted herewith. If signatures by any trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 4.) |
| Name(s): | ||
| (Please Type or Print) |
| Name of Firm: | ||
| Capacity (full title): | ||
| (See Instructions) |
| Address: | ||
| (Include Zip Code) |
| Daytime Area Code and Telephone No.: | ||
| Email: | ||
| GUARANTEE OF SIGNATURE(S) |
| (For use by Eligible Institutions only; |
| see Instructions 1 and 4) |
| Place medallion guarantee in space below: |
| - 7 - |
INSTRUCTIONS
Forming Part of the Terms and Conditions to the Offer
1. Guarantee of Signatures. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (which term includes most commercial banks, savings and loan associations and brokerage houses) that is a member in good standing of a recognized Medallion Program approved by The Securities Transfer Association, Inc., including the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program and the Stock Exchanges Medallion Program (each, an “Eligible Institution”). Signatures on this Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed by the registered owner(s) (which term, for purposes of this document, includes any participant in DTC whose name appears on a security position listing as the owner of Shares) of Shares tendered herewith and such registered owner has not completed the box titled “Special Payment Instructions” or the box titled “Special Delivery Instructions” on this Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instruction 4.
2. Delivery of Letter of Transmittal and Certificates or Book-Entry Shares. This Letter of Transmittal is to be completed by shareholders if Share Certificate(s) are to be forwarded herewith or, unless an Agent’s Message is utilized, if tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. A manually signed facsimile of this document may be used in lieu of the original. If tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase, in order to validly tender your Shares, confirmation of any book-entry transfer into the Depositary’s account at DTC of Shares tendered by book-entry transfer (“Book-Entry Confirmation”), as well as this Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees, unless an Agent’s Message is utilized, and any other required documents must be received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase prior to the Expiration Time, or you must comply with the guaranteed delivery procedures described below. Any other documents required by this Letter of Transmittal, including, in the case of certificated Shares, any Share Certificate(s) to be forwarded herewith, must also be received by the Depositary at one of its addresses set forth herein prior to the Expiration Time. Please do not send your Share Certificate(s) directly to Purchaser or Siebert.
Shareholders whose Share Certificate(s) are not immediately available or who cannot deliver all other required documents to the Depositary prior to the Expiration Time or who cannot comply with the procedures for book-entry transfer on a timely basis, may nevertheless tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such procedures: (a) a properly completed and duly executed Notice of Guaranteed Delivery in the form provided by Purchaser must be received by the Depositary prior to the Expiration Time and (b) Share Certificate(s) representing all tendered Shares, in proper form for transfer (or a Book-Entry Confirmation with respect to such Shares), as well as a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed with any required signature guarantees (unless, in the case of a book-entry transfer, an Agent’s Message is utilized), and all other documents required by this Letter of Transmittal, must be received by the Depositary within three NASDAQ Capital Market trading days after the date of execution of such Notice of Guaranteed Delivery.
A Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, must accompany each delivery of Share Certificate(s) to the Depositary.
The term “Agent’s Message” means a message, transmitted by DTC to, and received by, the Depositary and forming part of a Book-Entry Confirmation, which states that DTC has received an express acknowledgment from the participant in DTC tendering Shares which are the subject of such Book-Entry Confirmation that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT THE ELECTION AND SOLE RISK OF THE TENDERING STOCKHOLDER. DELIVERY OF ALL SUCH DOCUMENTS WILL BE DEEMED MADE AND RISK OF LOSS OF THE SHARE CERTIFICATE(S) SHALL PASS ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF SUCH DELIVERY IS BY MAIL, WE RECOMMEND THAT ALL SUCH DOCUMENTS BE SENT BY PROPERLY INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
| - 8 - |
No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering shareholders, by execution of this Letter of Transmittal (or a manually signed facsimile thereof), waive any right to receive any notice of the acceptance of their Shares for payment.
The undersigned understands and acknowledges that all questions as to validity, form, eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by Purchaser (which may delegate power in whole or in part to the Depositary) in its sole and absolute discretion, and such determination shall be final and binding on all parties, subject to the right to the extension required by applicable laws of any such party to dispute such determination in a court of competent jurisdiction. Purchaser reserves the right to waive any irregularities or defects in the surrender of any Shares or Share Certificate(s) whether or not similar defects or irregularities are waived in the case of any other stockholder or Shares. A tender will not be deemed to have been made until all irregularities have been cured or waived. None of Purchaser or any of its respective affiliates or assigns, the Depositary, the Information Agent, Siebert or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Purchaser’s interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the Instructions thereto and any other documents related to the Offer) shall be final and binding on all parties, subject to the right, to the extent required by applicable law, of any such party to dispute such interpretation in a court of competent jurisdiction.
3. Inadequate Space. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto and separately signed on each page thereof in the same manner as this Letter of Transmittal is signed.
4. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered owner(s) of Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the Share Certificate(s) without alteration or any other change whatsoever.
If any Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in the names of different holder(s), it will be necessary to complete, sign and submit as many separate Letters of Transmittal (or manually signed facsimiles thereof) as there are different registrations of such Shares.
If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to Purchaser of their authority so to act must be submitted, or in lieu of evidence the signatures must be guaranteed by an Eligible Institution noted; see Instruction 1.
If this Letter of Transmittal is signed by the registered owner(s) of Shares listed and transmitted hereby, no endorsements of any Share Certificate(s) or separate stock powers are required unless payment is to be made to, or Share Certificate(s) representing Shares not tendered or accepted for payment are to be issued in the name of, a person other than the registered owner(s). Signatures on such Share Certificate(s) or stock powers must be guaranteed by an Eligible Institution.
| - 9 - |
If this Letter of Transmittal is signed by a person other than the registered owner(s) of the Share(s) listed, the Share Certificate(s) must be endorsed or accompanied by the appropriate stock powers, in either case, signed exactly as the name or names of the registered owner(s) or holder(s) appear(s) on the Share Certificate(s). Signatures on such Share Certificate(s) or stock powers must be guaranteed by an Eligible Institution.
5. Transfer taxes. Purchaser will pay any transfer taxes with respect to the transfer and sale of Shares to it or to its order pursuant to the Offer (for the avoidance of doubt, transfer taxes do not include United States federal income or backup withholding taxes). If, however, payment of the purchase price is to be made to, or (in the circumstances permitted hereby) if Share Certificate(s) not tendered or accepted for payment are to be registered in the name of, any person other than the registered owner(s), or if tendered Share Certificate(s) are registered in the name of any person other than the person signing this Letter of Transmittal, the amount of any transfer taxes (whether imposed on the registered owner(s) or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted.
6. Special Payment and Delivery Instructions. If a check is to be issued in the name of, and/or Share Certificate(s) representing Shares not tendered or accepted for payment are to be issued or returned to, a person other than the signer(s) of this Letter of Transmittal or if a check and/or such certificates are to be mailed to a person other than the signer(s) of this Letter of Transmittal or to an address other than that shown in the box titled “Description of Shares Tendered” above, the appropriate boxes on this Letter of Transmittal must be completed. Shareholders delivering Shares tendered hereby or by Agent’s Message by book-entry transfer may request that Shares not purchased be credited to an account as such stockholder may designate in the box titled “Special Payment Instructions” herein. If no such instructions are given, all such Shares not purchased will be returned by crediting the same account as the account from which such Shares were delivered.
7. Requests for Assistance or Additional Copies. Questions or requests for assistance may be directed to the Information Agent at its address and telephone number set forth below or to your broker, dealer, commercial bank, trust company or other nominee. Additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer materials may be obtained from the Information Agent as set forth below, and will be furnished at Purchaser’s expense.
8. Backup Withholding. In order to avoid U.S. federal “backup withholding,” currently at a rate of twenty-eight percent with respect to cash received in exchange for Shares in the Offer, a stockholder submitting Shares must (a) provide the Depositary with a properly completed IRS Form W-9 indicating an exemption from backup withholding and sign such form under penalties of perjury or (b) provide the Depositary with a properly completed IRS Form W-8BEN or other applicable IRS Form W-8, and sign such form under penalties of perjury. IRS Forms W-9, W-8BEN and other IRS Forms W-8 are available from the Depositary or from the Internal Revenue Service web site, at http://www.irs.gov.
9. Lost, Destroyed, Mutilated or Stolen Share Certificate(s). If any Share Certificate has been lost, destroyed, mutilated or stolen, the stockholder should promptly notify Siebert’s share transfer agent, American Stock Transfer & Trust Company, LLC, at (800) 937-5449 or (718) 921-8124 . The stockholder will then be instructed as to the steps that must be taken in order to replace the Share Certificate. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, mutilated, destroyed or stolen Share Certificate(s) have been followed. You may be required to post a bond to secure against the risk that the Share Certificates may be subsequently recirculated. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen Share Certificates have been followed.
10. Waiver of Conditions. Subject to the terms and conditions of the Offer and the Acquisition Agreement (each as defined in the Offer to Purchase) and the applicable rules and regulations of the Securities and Exchange Commission, the conditions of the Offer may be waived by Purchaser in whole or in part at any time and from time to time in its sole discretion.
| - 10 - |
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE THEREOF) OR AN AGENT’S MESSAGE, TOGETHER WITH SHARE CERTIFICATE(S) OR BOOK-ENTRY CONFIRMATION OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION TIME.
The Depositary for the Offer Is:
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
| If delivering by first class, registered or certified mail: | If delivering by hand, courier or overnight to (until 5:00 P.M.New York City time on October 3, 2016):
| |
American Stock Transfer & Trust Company, LLC Operations Center Attn: Reorganization Department P.O. Box 2042 New York, New York 10272-2042 |
American Stock Transfer & Trust Company, LLC Operations Center Attn: Reorganization Department 6201 15th Avenue Brooklyn, New York 11219 |
Any questions or requests for assistance may be directed to either the Information Agent at the telephone number and address set forth below. Requests for additional copies of the Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
48 Wall Street. 22nd Floor
New York, New York 10005
Banks and Brokers call: (212) 269 5550
All others call toll free (U.S. only): (888) 540-8736
Email: sieb@dfking.com
| - 11 - |
Exhibit (a)(1)(C)
Notice of Guaranteed Delivery
for
Offer to Purchase for Cash
Up to 2,775,126 Shares of Common Stock
of
Siebert Financial Corp.
at
$1.20 Net Per Share
by
Kennedy Cabot Acquisition, LLC
| THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, AT THE END OF THE DAY ON OCTOBER 3, 2016, UNLESS THE OFFER IS EXTENDED OR EARLIER TERMINATED. |
Do not use for signature guarantees
This form of notice of guaranteed delivery must be used to accept the Offer (as defined below) pursuant to the Offer to Purchase, dated September 6, 2016 (as it may be amended or supplemented from time to time, the “Offer to Purchase”) of Kennedy Cabot Acquisition, LLC., a Nevada limited liability company (“Purchaser”) to purchase 2,775,126 Shares of common stock, par value $0.01 per share (the “Shares”) of Siebert Financial Corp., a New York corporation (“Siebert” or the “Company”), owns all of the issued and outstanding capital stock of (i) Muriel Siebert & Co., Inc., a Delaware corporation, a member of the Financial Industry Regulatory Authority and registered as a broker/dealer under Section 15 of the Securities Exchange Act of 1934, as amended, and (ii) Siebert Investment Advisors, Inc., a New York corporation and registered investment advisor under the Investment Advisor’s Act of 1940, as amended, at a purchase price of $1.20 per Share, net to the seller in cash (the “Offer Price”), without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase, and in the related Letter of Transmittal (as it may be amended or supplemented from time to time, the “Letter of Transmittal” and, together with this Offer to Purchase, the “Offer”) enclosed herewith, if certificates for Shares and all other required documents cannot be delivered to American Stock Transfer & Trust Company, LLC (the “Depositary”) prior to the Expiration Time (as defined in Section 1 of the Offer to Purchase), if the procedure for delivery by book-entry transfer cannot be completed prior to the Expiration Time, or if time will not permit all required documents to reach the Depositary prior to the Expiration Time.
Such form may be delivered by hand or transmitted by facsimile transmission or mailed to the Depositary and must include a guarantee by an Eligible Institution (as defined below). See Section 3 of the Offer to Purchase.
The Depositary for the Offer Is:
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
| If delivering by first class, registered or certified mail: | If delivering by hand, courier or overnight to (until 5:00 P.M.New York City time on October 3, 2016):
| |
American Stock Transfer & Trust Company, LLC Operations Center Attn: Reorganization Department P.O. Box 2042 New York, New York 10272-2042 |
American Stock Transfer & Trust Company, LLC Operations Center Attn: Reorganization Department 6201 15th Avenue Brooklyn, New York 11219 |
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal and must be mailed (not faxed) to the Depositary in accordance with the instructions contained in the Letter of Transmittal.
The guarantee on page 3 must be completed.
Ladies and Gentlemen:
The undersigned hereby tenders to Kennedy Cabot Acquisition, LLC., a Nevada limited liability company (“Purchaser”), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated as of September 6, 2016 (the “Offer to Purchase”), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the “Offer”), receipt of which is hereby acknowledged, the number of Shares of common stock, par value $0.01 per share (the “Shares”) of Siebert Financial Corp., a New York corporation (“Siebert” or the “Company”), indicated below pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
| Number of Shares Tendered: |
| Share Certificate Number(s) (if available): |
If Shares will be delivered by book-entry transfer:
Name of Tendering Institution: |
| DTC Participant Number: |
| Transaction Code Number: |
| Date: __, 2016 |
|
| Name(s) of Record Owner(s): |
| (Please Type or Print) |
| Address(es): |
| (Including Zip Code) |
| Area Code and Telephone Number: |
| Signature(s): |
| - 2 - |
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member in good standing of a recognized Medallion Program approved by the Securities Transfer Association Incorporated, including the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program and the Stock Exchanges Medallion Program (each, an “Eligible Institution”), hereby guarantees that either the certificates representing Shares tendered hereby, in proper form for transfer or timely confirmation of a book-entry transfer of such Shares into the Depositary’s account at The Depository Trust Company (pursuant to the procedures set forth in Section 3 of the Offer to Purchase), together with a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message (as defined in the Offer to Purchase)) and any other documents required by the Letter of Transmittal, will be received by the Depositary at one of its addresses set forth above within three NASDAQ Capital Market trading days after the date of execution hereof.
The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal, Share Certificate(s) and/or any other required documents to the Depositary within the time period shown above. Failure to do so could result in a financial loss to such Eligible Institution.
| Name of Firm: | ||
| Address: | ||
| (Including Zip Code) | ||
Area Code and Telephone Number: |
||
| Authorized Signature: | ||
| Name: | ||
| (Please Type or Print) | ||
| Title: | ||
| Dated: | ||
NOTE: DO NOT SEND SHARE CERTIFICATE(S) WITH THIS NOTICE OF GUARANTEED DELIVERY. SHARE CERTIFICATE(S) ARE TO BE DELIVERED WITH THE LETTER OF TRANSMITTAL.
| - 3 - |
Exhibit (a)(1)(D)
Offer to Purchase for Cash
Up to 2,775,126 Shares of Common Stock
of
Siebert Financial Corp.
at
$1.20 Net Per Share
by
Kennedy Cabot Acquisition, LLC
| THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, AT THE END OF THE DAY ON OCTOBER 3, 2016, UNLESS THE OFFER IS EXTENDED OR EARLIER TERMINATED. |
September 6, 2016
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We have been engaged by Kennedy Cabot Acquisition, LLC., a Nevada limited liability company (“Purchaser”), to act as Information Agent in connection with Purchaser’s offer to purchase 2,775,126 Shares of common stock, par value $0.01 per share (the “Shares”) of Siebert Financial Corp., a New York corporation (“Siebert” or the “Company”), a purchase price of $1.20 per Share, net to the seller in cash (the “Offer Price”), without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase dated as of September 6, 2016 (as it may be amended or supplemented from time to time, the “Offer to Purchase”) and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the “Offer”) enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whom you hold Shares registered in your name or in the name of your nominee. Terms not defined herein shall have the meanings ascribed in the Offer to Purchase.
The Offer is not conditioned upon the receipt of financing or upon any minimum number of Shares being tendered. The Offer is, however, subject to certain other conditions, including, among other things approval by FINRA, pursuant to FINRA Rule 1017 of the indirect change in control of the Broker/Dealer as a result of the Majority Share Purchase (“FINRA Approval”) by the Purchaser. A summary of the principal terms of the Offer appears on pages (i) through (iv) of the Offer to Purchase.
Enclosed herewith for your information and forwarding to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee are copies of the following documents:
1. Offer to Purchase, dated September 6, 2016;
2. Siebert’s Solicitation/Recommendation Statement on Schedule 14D-9;
3. Letter of Transmittal to be used by shareholders of Siebert in accepting the Offer and tendering Shares;
4. Notice of Guaranteed Delivery; and
5. A printed letter that may be sent to your clients for whose accounts you hold Shares in your name or in the name of your nominee, with space provided for obtaining such clients’ instructions with regard to the Offer.
The Offer is being made by the Purchaser pursuant to the Acquisition Agreement, dated as of September 1, 2016, by and among, Siebert, the Estate of Muriel F. Siebert (the “Majority Shareholder”), and the Purchaser (as it may be amended or supplemented from time to time, the “Acquisition Agreement”). The 2,775,126 Shares covered by the Offer to Purchase represent all issued and outstanding Shares other than the 19,310,000 Shares owned by the Majority Shareholder which the Purchaser is required to purchase from the Majority Shareholder pursuant to the terms and subject to the conditions in the Acquisition Agreement immediately following the consummation of the Offer (the “Majority Share Purchase”).
Siebert’s board of directors (the “Company Board”) unanimously (i) determined that the Acquisition Agreement and the transactions contemplated thereby, including the Offer, are fair to, and in the best interests of Siebert shareholders, and (ii) approved the Acquisition Agreement and the transactions contemplated thereby, including the Offer, in accordance with the New York Business Corporation Law (the “BCL”), and (iii) resolved to remain neutral and not to make a recommendation regarding whether Siebert shareholders should accept the Offer. For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not properly withdrawn if and when Purchaser gives oral or written notice to American Stock Transfer & Trust Company, LLC (the “Depositary”) of its acceptance for payment of such Shares pursuant to the Offer. In all cases, payment for any Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (a) certificates for such Shares or a Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to such Shares pursuant to the procedures set forth in the Offer to Purchase, (b) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message (as defined in the Offer to Purchase) in lieu of the Letter of Transmittal), and (c) any other documents required by the Letter of Transmittal. Accordingly, tendering shareholders may be paid at different times depending upon when certificates for Shares or Book-Entry Confirmations with respect to Shares are actually received by the Depositary. Under no circumstances will interest be paid on the Offer Price for Shares, regardless of any extension of the Offer or any delay in payment for Shares.
Purchaser is not aware of any state where the making of the Offer is prohibited by any administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares, Purchaser will make a good faith effort to comply with that state statute or seek to have such statute declared inapplicable to the Offer. If, after a good faith effort, Purchaser cannot comply with the state statute, Purchaser will not make the Offer to, nor will tenders be accepted from or on behalf of, the holders of Shares in that state. In any jurisdiction where the securities, “blue sky” or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers that are licensed under the laws of such jurisdiction.
In order to tender Shares pursuant to the Offer, a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of any book-entry transfer, an Agent’s Message), and any other documents required by the Letter of Transmittal, should be sent to and timely received by the Depositary, and either certificates representing the tendered Shares or confirmation of the book-entry transfer of such Shares into the Depositary’s account should be delivered, all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase.
Neither Siebert nor Purchaser will pay any fees or commissions to any broker or dealer or other person (other than the Information Agent or as otherwise described in Section 16 the Offer to Purchase) in connection with the solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed upon request for customary mailing and handling expenses incurred by you in forwarding the enclosed offering materials to your clients.
Your prompt action is requested. We urge you to contact your clients as promptly as possible. The Offer and withdrawal rights will expire at 12:00 Midnight, Eastern Daylight Time, at the end of October 3, 2016, unless the Offer is extended or earlier terminated.
If holders of Shares wish to tender their Shares, but it is impracticable for them to deliver their certificates representing tendered Shares or other required documents or to complete the procedures for delivery by book-entry transfer prior to the Expiration Time, a tender may be effected by following the guaranteed delivery procedures specified in the Offer to Purchase and the Letter of Transmittal.
Questions and requests for assistance or for additional copies of the enclosed materials may be directed to the Information Agent at the address and telephone number set forth below and in the Offer to Purchase. Additional copies of the enclosed materials will be furnished at Purchaser’s expense.
Very truly yours,
D.F. King & Co., Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY PERSON THE AGENT OF THE PURCHASER OR SIEBERT, THE INFORMATION AGENT, THE DEPOSITARY OR ANY OF THEIR AFFILIATES, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OTHER THAN THE ENCLOSED DOCUMENTS OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
48 Wall Street. 22nd Floor
New York, New York 10005
Banks and Brokers call: (212) 269 5550
All others call toll free (U.S. only): (888) 540-8736
Email: sieb@dfking.com
| - 2 - |
Exhibit (a)(1)(E)
Offer to Purchase for Cash
Up to 2,775,126 Shares of Common Stock
of
Siebert Financial Corp.
at
$1.20 Net Per Share
by
Kennedy Cabot Acquisition, LLC
| THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, AT THE END OF THE DAY ON OCTOBER 3, 2016, UNLESS THE OFFER IS EXTENDED OR EARLIER TERMINATED. |
September 6, 2016
To Our Clients:
Enclosed for your information is an Offer to Purchase, dated September 6 (as it may be amended or supplemented from time to time, the “Offer to Purchase”), and the related Letter of Transmittal (which, together with the Offer to Purchase, as each may be amended or supplemented from time to time, collectively constitute the “Offer”), relating to the offer by Kennedy Cabot Acquisition, LLC., a Nevada limited liability company (“Purchaser”), to purchase 2,775,126 Shares of common stock, par value $0.01 per share (the “Shares”) of Siebert Financial Corp., a New York corporation (“Siebert” or the “Company”), at a purchase price of $1.20 per Share, net to the seller in cash (the “Offer Price”), without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchaser.
Siebert’s board of directors (the “Company Board”) unanimously (i) determined that the Acquisition Agreement and the transactions contemplated thereby, including the Offer, are fair to, and in the best interests of Siebert shareholders, and (ii) approved the Acquisition Agreement and the transactions contemplated thereby, including the Offer, in accordance with the New York Business Corporation Law (the “BCL”), and (iii) resolved to remain neutral and not to make a recommendation regarding whether Siebert shareholders should accept the Offer.
We are the holder of record of Shares held by us for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal accompanying this letter is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account.
We request instructions as to whether you wish to tender any or all of Shares held by us for your account, pursuant to the terms and conditions set forth in the Offer.
Your attention is directed to the following:
1. The Offer Price is $1.20 per Share, net to the seller in cash, without interest thereon and subject to any required withholding taxes, upon the terms and subject to the conditions of the Offer.
2. The Offer is being made for all Shares.
3. The Offer is being made by the Purchaser pursuant to the Acquisition Agreement, dated as of September 1, 2016, by and among, Siebert, the Estate of Muriel F. Siebert (the “Majority Shareholder”), and the Purchaser (as it may be amended or supplemented from time to time, the “Acquisition Agreement”). The 2,775,126 Shares covered by this Offer to Purchase represent all issued and outstanding Shares other than the 19,310,000 Shares owned by the Majority Shareholder which we are required to purchase from the Majority Shareholder pursuant to the terms and subject to the conditions in the Acquisition Agreement immediately following consummation of the Offer (the “Majority Share Purchase”)
4. The Offer is not conditioned upon the receipt of financing or upon any minimum number of Shares being tendered. The Offer is, however, subject to certain other conditions, including, among other things approval by FINRA (as defined in the Offer to Purchase), pursuant to FINRA Rule 1017 of the indirect change in control of the Broker/Dealer as a result of the Majority Share Purchase (“FINRA Approval”).
5. The Offer and withdrawal rights will expire at 12:00 Midnight, Eastern Daylight Time, at the end of September 6, 2016, unless the Offer is extended or earlier terminated.
6. Any transfer taxes applicable to the sale of Shares to Purchaser pursuant to the Offer will be paid by Purchaser, except as otherwise provided in Instruction 5 of the Letter of Transmittal.
If you wish to have us tender any or all of Shares held by us for your account, please so instruct us by completing, executing and returning to us in the enclosed envelope the instruction form set forth below. Please forward your instructions to us in ample time to permit us to submit a tender on your behalf prior to the Expiration Time. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified on the instruction form set forth below.
In all cases, payment for any Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by American Stock Transfer & Trust Company, LLC (the “Depositary”) of (a) certificates representing such Shares or confirmation of the book-entry transfer of such Shares into the Depositary’s account at The Depository Trust Company pursuant to the procedures set forth in the Offer to Purchase, (b) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message (as defined in the Offer to Purchase) in lieu of the Letter of Transmittal), and (c) any other documents required by the Letter of Transmittal. Accordingly, tendering shareholders may be paid at different times depending upon when certificates for Shares or book-entry confirmations with respect to Shares are actually received by the Depositary. Under no circumstances will interest be paid on the Offer Price for Shares, regardless of any extension of the Offer or any delay in payment for Shares.
Purchaser is not aware of any state where the making of the Offer is prohibited by any administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares, Purchaser will make a good faith effort to comply with that state statute or seek to have such statute declared inapplicable to the Offer. If, after a good faith effort, Purchaser cannot comply with the state statute, Purchaser will not make the Offer to, nor will tenders be accepted from or on behalf of, the holders of Shares in that state. In any jurisdiction where the securities, “blue sky” or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers that are licensed under the laws of such jurisdiction.
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Instructions with Respect to the
Offer to Purchase for Cash
Up to 2,775,126 Shares of Common Stock
of
Siebert Financial Corp.
at
$1.20 Net Per Share
by
Kennedy Cabot Acquisition, LLC
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated September 6, 2016 (as it may be amended or supplemented from time to time, the “Offer to Purchase”), and the related Letter of Transmittal (which, together with the Offer to Purchase, as each may be amended or supplemented from time to time, collectively constitute the “Offer”), relating to the offer by Kennedy Cabot Acquisition, LLC., a Nevada limited liability company (“Purchaser”), to purchase 2,775,126 Shares of common stock, par value $0.01 per share (the “Shares”) of Siebert Financial Corp., a New York corporation (“Siebert” or the “Company”), at a purchase price of $1.20 per Share, net to the seller in cash (the “Offer Price”) without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase.
This will instruct you to tender the number of Shares indicated on the reverse (or if no number is indicated on the reverse, all Shares) that are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer.
The undersigned understands and acknowledges that all questions as to validity, form, eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by Purchaser (which may delegate power in whole or in part to the Depositary) in its sole and absolute discretion, and such determination shall be final and binding on all parties, subject to the right to the extension required by applicable laws of any such party to dispute such determination in a court of competent jurisdiction. Purchaser reserves the right to waive any irregularities or defects in the surrender of any Shares or Share Certificate(s) whether or not similar defects or irregularities are waived in the case of any other stockholder or Shares. A tender will not be deemed to have been made until all irregularities have been cured or waived. None of the Purchaser or any of its respective affiliates or assigns, the Depositary, the Information Agent, Siebert or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Purchaser’s interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the Instructions thereto and any other documents related to the Offer) shall be final and binding on all parties, subject to the right, to the extent required by applicable law, of any such party to dispute such interpretation in a court of competent jurisdiction.
| - 3 - |
Dated: , 2016
Number of Shares to Be Tendered: Shares*
| Sign Below | ||||
| Account Number: | Signature(s): | |||
| Dated: , 2016 |
Please Type or Print Name(s)
Please Type or Print Address(es) Here
Area Code and Telephone Number
Taxpayer Identification or Social Security Number(s)
| * | Unless otherwise indicated, you are deemed to have instructed us to tender all Shares held by us for your account. |
Please return this form to the brokerage firm or other nominee maintaining your account.
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Exhibit (a)(5)(D)
TOMBSTONE SUMMARY ADVERTISEMENT
This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made solely by the Offer to Purchase (defined below), dated September 6, 2016, and the related Letter of Transmittal (defined below), and any amendments or supplements thereto, and is being made to the holders of Shares named therein. The Offer, however, is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares residing in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. However, the Purchaser (as defined below) may, in its discretion, take such action as it may deem necessary to make the Offer in any jurisdiction and to extend the Offer to holders of Shares in such jurisdiction. In those jurisdictions where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
Up to 2,775,126 Shares of Common Stock
of
Siebert Financial Corp.
at
$1.20 Net Per Share
by
Kennedy Cabot Acquisition, LLC
Kennedy Cabot Acquisition, LLC, a Nevada limited liability company (the “Purchaser”), is offering to purchase up to 2,775,126 Shares of common stock, par value $0.01 per share (the “Shares”) of Siebert Financial Corp., a New York corporation (“Siebert”), at a purchase price of $1.20 per Share, net to the seller in cash (the “Offer Price”), without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated September 6, 2016 (as it may be amended or supplemented from time to time, the “Offer to Purchase”), and in the related Letter of Transmittal (as it may be amended or supplemented from time to time, the “Letter of Transmittal” and, together with the Offer to Purchase, the “Offer”). Siebert owns all of the issued and outstanding capital stock of (i) Muriel Siebert & Co., Inc., a Delaware corporation, a member of the Financial Industry Regulatory Authority (“FINRA”) and registered as a broker/dealer under Section 15 of the Securities Exchange Act of 1934, as amended (the “Broker/Dealer”), and (ii) Siebert Investment Advisors, Inc., a New York corporation and registered investment advisor under the Investment Advisor’s Act of 1940, as amended. Tendering shareholders who have Shares registered in their names and who tender directly to the American Stock Transfer & Trust Company, LLC (the “Depositary”), will not be obligated to pay brokerage fees or commissions or, subject to Instruction 5 of the Letter of Transmittal, transfer taxes on the purchase of their Shares by Purchaser. Shareholders who hold their Shares through a broker, dealer, commercial bank, trust company or other nominee should check with their broker, dealer, commercial bank, trust company or other nominee as to whether they charge any service fees or commissions.
| THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON OCTOBER 3, 2016, UNLESS THE OFFER IS EXTENDED. |
The Offer is being made pursuant to the Acquisition Agreement, dated September 1, 2016, by and among, Siebert, the Estate of Muriel F. Siebert (the “Majority Shareholder”), and the Purchaser (as it may be amended or supplemented from time to time, the “Acquisition Agreement”). The 2,775,126 Shares covered by the Offer to Purchase represent all issued and outstanding Shares other than the 19,310,000 Shares owned by the Majority Shareholder which Purchaser will purchase from the Majority Shareholder immediately following consummation of the Offer pursuant to the terms and subject to the conditions in the Acquisition Agreement (the “Majority Share Purchase”).
Pursuant to the Acquisition Agreement, prior to the closing of the Offer, Siebert will a pay a dividend to all shareholders (including the Majority Shareholder) in the aggregate amount of $4,492,735, or approximately $.20 per share. Immediately prior to the closing of the Offer, the Majority Shareholder will purchase from Siebert, Siebert’s right to receive deferred purchase price payments in connection with Siebert’s disposition of its capital markets business in 2014 and the $4,000,000 secured junior subordinated promissory note issued to Siebert in connection with the disposition of its minority interest in a former affiliate. The aggregate purchase price payable by the Majority Shareholder for these assets is $610,262, representing 10% of the projected carrying value of these assets as of the projected closing of the Offer. The Offer Price of $1.20 per share includes approximately $0.22 per share, or $610,262 in the aggregate, which is intended to provide shareholders tendering in the Offer with their proportional share of the payment by the Siebert Estate for these assets.
The Offer is not conditioned upon the receipt of financing or upon any minimum number of Shares being tendered. The Offer is, however, subject to certain other conditions, including, among other things (i) approval by FINRA, pursuant to FINRA Rule 1017 of the indirect change in control of the Broker/Dealer as a result of the Majority Share Purchase (“FINRA Approval”), and (ii) the Muriel F. Seibert Foundation (which owns approximately 2.6% of the outstanding Shares) tendering and not withdrawing all of the Shares it owns pursuant to the Offer. The principal terms of the Offer are more fully described in the Offer to Purchase.
Siebert’s board of directors (the “Siebert Board”) unanimously (i) determined that the Acquisition Agreement and the transactions contemplated thereby, including the Offer, are fair to, and in the best interests of Siebert shareholders, and (ii) approved the Acquisition Agreement and the transactions contemplated thereby, including the Offer, in accordance with the New York Business Corporation Law, and (iii) resolved to remain neutral and not to make a recommendation regarding whether Siebert shareholders should accept the Offer.
| - 2 - |
For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, the Shares validly tendered and not properly withdrawn, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser’s acceptance of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares so accepted for payment will be made by deposit of the Offer Price for such Shares with the Depositary, which shall act as agent for tendering stockholders for the purpose of receiving payments from the Purchaser and transmitting such payments to the tendering stockholders whose Share have been accepted for payment. Payment for any Shares tendered in the Offer will be made only after timely receipt by the Depositary of (i) certificates evidencing such Shares or a Book-Entry Confirmation (as defined in the Offer to Purchase) of a book-entry transfer of such Shares into the Depositary’s account at the Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant to the procedures set forth in the Offer to Purchase, (ii) the Letter of Transmittal (manually-signed or facsimile thereof) properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer, an Agent’s Message (as defined in the Offer to Purchase) in lieu of a Letter of Transmittal and (iii) any other documents required by the Letter of Transmittal. Under no circumstances will interest be paid on the Offer Price for Shares tendered in the Offer, regardless of any extension of the Offer or any delay in making such payment.
The term “Expiration Time” means 12:00 Midnight, New York City time, at the end of October 3, 2016, unless the Purchaser, in accordance with the Agreement, extends the Offer, in which event the term “Expiration Time” shall mean the latest time and date at which the Offer, as so extended by the Purchaser (other than any extension with respect to any subsequent offering period described below), expires.
Under the terms of the Acquisition Agreement the Purchaser may, without Siebert’s consent, extend the Expiration Time of the Offer on one or more occasions for any period, if on any then-scheduled Expiration Time any of the Offer conditions shall not be satisfied or, in Purchaser’s sole discretion, waived, until such time as such condition or conditions are satisfied or waived and (ii) shall extend the Expiration Time of the Offer for any period required by applicable law, any interpretation or position of the Securities and Exchange Commission, the staff thereof or the NASDAQ Stock Market applicable to the Offer; provided, however, that in no event shall Purchaser be required to extend the Expiration Time of the Offer beyond February 28, 2017.
Any extension of the Expiration Time during will be followed promptly by public announcement thereof, not later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Time.
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Except as otherwise provided in the Offer to Purchase, tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Time and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after November 5, 2016. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover page of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder if different from the name of the person who tendered such Shares. If certificates for Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Shares have been tendered for the account of an Eligible Institution (as defined in the Offer to Purchase), the signature on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in the Offer to Purchase). If Shares have been tendered pursuant to the procedures for book-entry transfer as described in the Offer to Purchase, the notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with withdrawn Shares. All questions as to the form and validity (including time of receipt) of a notice of withdrawal will be determined by the Purchaser, in its sole discretion, and its determination shall be final and binding on all parties. If the Purchaser elects to provide a subsequent offering period, Shares tendered in such subsequent offering period may not be withdrawn.
The information required to be disclosed by paragraph (d)(1) of Rule14d-6 of the General Rules and Regulations under the Exchange Act is contained in the Offer to Purchase and is incorporated herein by reference.
Pursuant to the Acquisition Agreement, Siebert has agreed to provide to the Purchaser its list of stockholders and security position listings for the purpose of disseminating the Offer to holders of the Shares. The Offer to Purchase, the Letter of Transmittal and other related tender offer materials are being mailed to record holders of Shares and will also be mailed to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholders list or, if applicable, who are listed as participants in a clearing agency’s security position listing, for subsequent transmittal to beneficial owners of Shares.
The receipt of cash in exchange for your Shares pursuant to the Offer generally will be a taxable transaction for United States federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign income or other tax laws. For a summary of the tax consequences of the Offer, see the Offer to Purchaser. Each holder of Shares should consult its own tax advisor to determine the tax consequences of participating in the Offer in light of each such holder’s particular circumstances (including the application and effect of any state, local or non-U.S. income and other tax laws).
| - 4 - |
The Offer to Purchase and the related Letter of Transmittal contain important information that should be read in their entirety before any decision is made with respect to the Offer.
Any questions or requests for assistance may be directed to DF King & Co., Inc. (the “Information Agent”) as set forth below. Requests for copies of the Offer to Purchase, the Letter of Transmittal and other related tender offer materials may be directed to the Information Agent as set forth below, and copies will be furnished promptly at the Purchaser’s expense. The Purchaser will pay all charges and expenses of the Depositary and the Information Agent. No fees or commissions will be payable to brokers, dealers or other persons (other than the Depositary and the Information Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
DF KING & CO., INC.
48 WALL STREET
22nd FLOOR
NEW YORK, NY 10005
Siebert Shareholders
Call Toll Free: (888) 540-8736
from the U.S. only
Banks and Brokers Call Collect: (212) 269-5550
September 6, 2016
| - 5 - |
Exhibit (d)(1)
EXECUTION COPY
ACQUISITION AGREEMENT
between
SIEBERT FINANCIAL CORP.,
THE ESTATE OF MURIEL F. SIEBERT
and
KENNEDY CABOT ACQUISITION, LLC
dated
September 1, 2016
TABLE OF CONTENTS
| -i- |
TABLE OF CONTENTS
(continued)
| -ii- |
TABLE OF CONTENTS
(continued)
| -iii- |
This ACQUISITION AGREEMENT (this “Agreement”), is entered into on September 1, 2016, by and among SIEBERT FINANCIAL CORP., a New York corporation (the “Company”), THE ESTATE OF MURIEL F. SIEBERT (the “Majority Shareholder”) and KENNEDY CABOT ACQUISITION, LLC a Nevada limited liability company (the “Buyer”). Capitalized terms used herein (including in the immediately preceding sentence) and not otherwise defined herein shall have the meanings set forth in Section 1.01 hereof.
RECITALS
WHEREAS, Buyer desires to acquire a controlling position in the outstanding capital stock of the Company on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof and pursuant to this Agreement, Buyer has agreed to (a) purchase the 19,310,000 shares the common stock, par value $.01 per share, of the Company (the “Company Common Stock”), owned beneficially and of record by the Majority Shareholder, representing approximately 87.4% of the total number of outstanding shares of Company Common Stock on a fully diluted basis as of the date hereof (the “Majority Shares”), and (b) commence a tender offer (as it may be amended from time to time as permitted under this Agreement, the “Minority Offer”) to purchase any and all of the outstanding shares of Company Common Stock other than the Majority Shares (the “Minority Shares”) on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the board of directors of the Company (the “Company Board”) has, on the terms and subject to the conditions set forth herein, unanimously (a) determined that the transactions contemplated hereby are fair to and in the best interests of the Company and its shareholders, (b) approved this Agreement and the transactions contemplated hereby, and (c) resolved to remain neutral and not to recommend whether Company shareholder should accept the Minority Offer;
WHEREAS, the board of directors of Buyer, on the terms and subject to the conditions set forth herein, unanimously approved this Agreement and the transactions contemplated hereby, including the Minority Offer;
WHEREAS, the parties desire to make certain representations, warranties, covenants and agreements in connection with the Minority Offer and the other transactions contemplated hereby and also to prescribe certain conditions to the Minority Offer and the other transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and of the representations, warranties, covenants and agreements contained in this Agreement, the parties, intending to be legally bound, agree as follows:
Section 1.01 Definitions. For purposes of this Agreement, the following terms will have the following meanings when used herein with initial capital letters:
“Acceptable Confidentiality Agreement” means a confidentiality and standstill agreement that contains confidentiality and standstill provisions that are no less favorable to the Company than those contained in the Confidentiality Agreement.
“Adjusted Majority Shares Purchase Price” has the meaning set forth in Section 2.02(a).
“Adjustment Calculation Example” means the illustrative calculation set forth on Exhibit A of the Majority Shares Closing Date Working Capital, Transaction Expenses and the Adjusted Majority Shares Purchase Price as if the Majority Shares Closing took place on May 21, 2016.
“Adjustment Report” has the meaning set forth in Section 2.03(b)(v).
“Advisory Agreements” has the meaning set forth in Section 3.28(e).
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with, such first Person. For the purposes of this definition, “control” (including, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by Contract or otherwise.
“Agreement” has the meaning set forth in the Preamble.
“Balance Sheet” has the meaning set forth in Section 3.08(a).
“Balance Sheet Date” has the meaning set forth in Section 3.08(a).
“Base Working Capital” means $4,996,139.
“BCL” means the New York Business Corporation Law, as amended.
“Business Day” means any day, other than Saturday, Sunday or any day on which banking institutions located in the City of New York are authorized or required by Law or other governmental action to close.
“Buyer” has the meaning set forth in the Preamble.
“Buyer Benefit Plans” has the meaning set forth in Section 6.06(b).
“Buyer Indemnified Parties” has the meaning set forth in Section 9.02.
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“Cap” has the meaning set forth in Section 9.06(b).
“Capital Markets Purchase Agreement” means that certain Asset Purchase Agreement, dated as of November 4, 2014, by and between MS&Co., SBSF and SBS, as assigned by MS&Co. to the Company as of August 9, 2016.
“Charter Documents” of any Person means the certificate of incorporation (including any certificate of designations), bylaws or like organizational documents of such Person.
“Claim” has the meaning set forth in Section 9.02(c).
”Code” has the meaning set forth in Section 2.08.
“Company” has the meaning set forth in the Preamble.
“Company Acquisition Agreement” has the meaning set forth in Section 6.05(a).
“Company Adverse Recommendation Change” has the meaning set forth in Section 6.05(a).
“Company Board” has the meaning set forth in the Recitals.
“Company Board Fee” means a fee payable by the Company to the members of the Company Board in connection with services rendered to the Company relating to the evaluation and negotiation of strategic alternatives for the Company, including without limitation the transactions contemplated by this Agreement.
“Company Board Recommendation” has the meaning set forth in Section 3.04(c).
“Company Common Stock” has the meaning set forth in the Recitals.
“Company Continuing Employees” has the meaning set forth in Section 6.06(a).
“Company Employee” has the meaning set forth in Section 3.13(a).
“Company Employee Plans” has the meaning set forth in Section 3.13(a).
“Company Equity Award” means a Company Stock Option or a Company Stock Award or a phantom stock award, as the case may be.
“Company Financial Advisor” has the meaning set forth in Section 3.20.
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“Company Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or would reasonably be expected to become, individually or in the aggregate, materially adverse to (i) the business, results of operations, financial condition, or assets of the Company and its Subsidiaries, taken as a whole, or (ii) the ability of the Company to consummate the transactions contemplated hereby on a timely basis; provided, however, that, for the purposes of clause (i), a Company Material Adverse Effect shall not be deemed to include events, occurrences, facts, conditions or changes arising out of, relating to or resulting from: (a) changes generally affecting the economy, financial or securities markets; (b) the negotiation, execution, announcement or consummation of the transactions contemplated by this Agreement, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, licensors, distributors, partners, providers, employees, lenders or regulators; (c) any outbreak or escalation of war or any act of terrorism; (d) general conditions in the industry in which the Company and its Subsidiaries operate, (e) any actions taken or omitted to be taken by any Company in the course of complying with its obligations hereunder or which are taken with Buyer ’s consent or not taken because Buyer did not give its consent, (f) any failure by any Company or its Subsidiaries to achieve any earnings or other financial projections or forecasts, or (g) the identity of, or the effects of any facts or circumstances relating to, Buyer or any of its Affiliates, including any communication by Buyer or any of its Affiliates regarding the plans or intentions of any such Person with respect to the conduct of the business of the Buyer or any such Affiliate; provided further, however, that any event, change and effect referred to in clauses (a), (c) or (d) immediately above shall be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur to the extent that such event, change or effect has a disproportionate effect on the Company and its Subsidiaries, taken as a whole, compared to other participants in the industries in which the Company and its Subsidiaries conduct their businesses.
“Company Material Contract” has the meaning set forth in Section 3.15(a).
“Company SEC Documents” has the meaning set forth in Section 3.07.
“Company Securities” has the meaning set forth in Section 3.06.
“Company Stock Award” means each restricted stock unit award and other right, contingent or accrued, to acquire or receive shares of Company Common Stock or benefits measured by the value of such shares, and each award of any kind consisting of shares of Company Common Stock that may be held, awarded, outstanding, payable or reserved for issuance under any Company Employee Plan, other than Company Stock Options.
“Company Stock Option” means an option to acquire shares of Company Common Stock.
“Confidential Information” has the meaning set forth in Section 6.04(b).
“Confidentiality Agreement” means the Confidentiality Agreement, dated October 15, 2015, between StockCross Financial Services, Inc. and the Company.
“Consent” has the meaning set forth in Section 3.05.
“Contracts” means any contracts, agreements, licenses, notes, bonds, mortgages, indentures, leases or other binding instruments or binding commitments, whether written or oral.
“Derivative Transactions” shall mean any swap transaction, option, warrant, forward purchase or sale transaction, futures transaction, cap transaction, floor transaction or collar transaction relating to one or more currencies, commodities, bonds, equity securities, loans, interest rates, prices, values, or other financial or non-financial assets, credit-related events or conditions or any indexes, or any other similar transaction or combination of any of these transactions, including any collateralized debt or equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral or other similar arrangements related to such transactions.
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“Disclosure Schedule” has the meaning set forth in the introductory language in Article III.
“Dispute Notice” has the meaning set forth in Section 2.03(b)(ii).
“D&O Coverage” has the meaning set forth in Section 6.08(b).
“D&O Indemnified Party” has the meaning set forth in Section 6.08(a).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Escrow Agent” means TD Bank, N.A.
“Escrow Agreement” means the escrow agreement by and among the Majority Shareholder, Buyer and the Escrow Agent, substantially in the form of Exhibit B.
“Escrow Amount” has the meaning set forth in Section 2.02(b)(ii)(A).
“Escrow Funds” means the Escrow Amount, together with any earnings or interest thereon, as contemplated by the Escrow Agreement.
“Estate Organizational Documents” means Certificate of Appointment of Executors for the Majority Shareholder, issued by the Surrogates Court of the State of New York, New York County, attached as Section 1.01 of the Disclosure Schedule.
“Estimated Transaction Expenses” has the meaning set forth in Section 2.02(a).
“Estimated Working Capital” means Working Capital as of the last day of the most recent calendar month preceding the Majority Shares Closing Date for which the Company’s financial statements are available and Working Capital can be determined.
“Exchange Act” has the meaning set forth in Section 2.04(a).
“Expenses” means, with respect to any Person, all reasonable and documented out-of-pocket fees and expenses (including all fees and expenses of counsel, accountants, financial advisors and investment bankers of such Person and its Affiliates), incurred by such Person or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement and any transactions related thereto, any litigation with respect thereto, or in connection with other regulatory approvals, and all other matters related to transactions contemplated hereby.
“Expiration Time” has the meaning set forth in Section 2.04(d).
“Final Balance Sheet” has the meaning set forth in Section 2.03(b)(viii).
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“Finally Determined” has the meaning set forth in Section 9.05(e).
“Final Majority Share Closing Working Capital” has the meaning set forth in Section 2.03(b)(viii).
“Final Transaction Expenses.” has the meaning set forth in Section 2.03(b)(viii).
“Financial Statements” has the meaning set forth in Section 3.08(a).
“FINRA” shall mean the Financial Industry Regulatory Authority.
“Form ADV” has the meaning set forth in Section 3.28(b).
“Form BD” has the meaning set forth in Section 3.19(b).
“Final Adjustment Amount” means an amount equal the Reduction, if any, or the Increase, calculated in accordance with Section 2.03.
“Final Adjustment Statement” has the meaning set forth in Section 2.03(a).
“Following Month-End Working Capital” means Working Capital as of the last day of the calendar month in which the Majority Share Closing Date takes place plus the amount of Transaction Expenses, if any, paid by the Company before or after the Majority Shares Closing; provided, however, any expenses incurred or paid by the Company after the Majority Shares Closing Date that are outside the ordinary course of business of the Company or are otherwise inconsistent with past practices of the Company prior to the Majority Shares Closing shall be added back to Working Capital on the last day of the calendar month in which the Majority Share Closing Date takes place for the purposes of determining Following Month-End Working Capital.
“GAAP” means United States generally accepted accounting principles applied on a consistent basis with the preparation of the Financial Statements.
“Governmental Entity” means any supranational, national, state, municipal, local or foreign government, any instrumentality, subdivision, court, administrative agency or commission or other governmental authority, or any quasi-governmental or private body exercising any regulatory or other governmental or quasi-governmental authority.
“Independent Accounting Firm” has the meaning set forth in Section 2.03(b)(iv).
“Initial Expiration Time” has the meaning set forth in Section 2.04(d).
“IRS” means the United States Internal Revenue Service.
“Investment Company Act” has the meaning set forth in Section 3.28(e).
“Knowledge” means (a) when used with respect to the Company, the actual knowledge of Joseph Ramos, after due inquiry, (b) when used with respect to the Majority Shareholder, the actual knowledge of Jane Macon and Patricia Francy, without inquiry, and (c) when used with respect to Buyer, the actual knowledge of Andrew Reich, after due inquiry; provided that the qualification of any representation and warranty hereunder by Knowledge shall in no event give rise to any personal liability on the part the individual whose knowledge is contemplated by this definition or any other officer, employee, executor or trustee of any of the parties hereto, on account of any breach or alleged breach of any such representation or warranty.
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“Laws” means any domestic or foreign laws, common law, statutes, ordinances, rules, regulations, codes, Orders or legally enforceable requirements enacted, issued, adopted, promulgated, enforced, ordered or applied by any Regulatory Agency.
“Legal Action” means any regulatory, federal, state, local or foreign or any other suit, claim, action, demand, examination, investigation, complaint, allegation, assertion, proceeding or audit, whether judicial, arbitral, administrative or other.
“Liability” shall mean any liability, indebtedness or obligation of any kind (whether accrued, absolute, contingent, matured, unmatured or otherwise, and whether or not required to be recorded or reflected on a balance sheet under GAAP).
“Liens” means, with respect to any property or asset, all pledges, liens, mortgages, charges, encumbrances, hypothecations, options, rights of first refusal, rights of first offer and security interests of any kind or nature whatsoever.
“Losses” has the meaning set forth in Section 9.02.
“Majority Shareholder” has the meaning set forth in the Preamble.
“Majority Shareholder Percentage” means 90.0%.
“Majority Purchase Price” means $12,650,000.
“Majority Shares” has the meaning set forth in the Recitals.
“Majority Shares Closing” has the meaning set forth in Section 2.01(b).
“Majority Shares Closing Date” has the meaning set forth in Section 2.01(b).
“Majority Share Closing Date Balance Sheet” has the meaning set forth Section 2.03(a).
“Majority Shares Closing Date Working Capital” means Working Capital as of the Majority Shares Closing Date, provided that, if the Majority Share Closing Date takes place on any day other than the last day of a calendar month, then the Majority Share Closing Date Working Capital shall be based on the change between the Estimated Working Capital and the Following Month-End Working Capital, pro-rated based on the number of days from the date of the calculation of the Estimated Working Capital to the Majority Shares Closing Date as compared to the number of days between the dates of calculation of the Estimated Working Capital and the Following Month End Working Capital.
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“Minority Offer” has the meaning set forth in the Recitals.
“Minority Offer Conditions” has the meaning set forth in Section 2.04(b).
“Minority Offer Documents” has the meaning set forth in Section 2.04(h).
“Minority Offer Price” means an amount payable in cash equal $1.20 per Minority Share.
“Minority Shares” has the meaning set forth in the Recitals.
“Minority Shares Closing” has the meaning set forth in Section 2.04(f).
“Minority Shares Closing Date” has the meaning set forth in Section 2.04(f).
“MS&Co.” means Muriel Siebert & Co., Inc., a Delaware corporation and wholly owned subsidiary of the Company.
“NASDAQ” has the meaning set forth in Section 2.04(e).
“Negative Consent Notice” has the meaning set forth in Section 6.02(g).
“Offer to Purchase” has the meaning set forth in Section 2.04(c).
“Order” means any order, writ, assessment, decision, injunction, decree, ruling or judgment of a Governmental Entity
“PCAOB” means the Public Company Accounting Oversight Board.
“Permit” has the meaning set forth in Section 3.14(a).
“Permitted Liens” means (a) statutory Liens for current Taxes or other governmental charges not yet due and payable or the amount or validity of which is being contested in good faith (provided appropriate reserves required pursuant to GAAP have been made in respect thereof), (b) mechanics’, carriers’, workers’, repairers’ and similar statutory Liens arising or incurred in the ordinary course of business for amounts which are not delinquent or which are being contested by appropriate proceedings (provided appropriate reserves required pursuant to GAAP have been made in respect thereof), (c) zoning, entitlement, building and other land use regulations imposed by Governmental Entities having jurisdiction over such Person’s owned or leased real property, which are not violated by the current use and operation of such real property, (d) covenants, conditions, restrictions, easements and other similar non-monetary matters of record affecting title to such Person’s owned or leased real property, which do not materially impair the occupancy or use of such real property for the purposes for which it is currently used in connection with such Person’s businesses, (e) any right of way or easement related to public roads and highways, which do not materially impair the occupancy or use of such real property for the purposes for which it is currently used in connection with such Person’s businesses, and (f) Liens arising under workers’ compensation, unemployment insurance, social security, retirement and similar legislation.
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“Person” means any individual, corporation, limited or general partnership, limited liability company, limited liability partnership, trust, association, joint venture, Governmental Entity and other entity and group (which term will include a “group” as such term is defined in Section 13(d)(3) of the Exchange Act).
“Post-Closing Review Period” has the meaning set forth in Section 2.03(b).
“Purchase Price Statement” has the meaning set forth in Section 2.02(a).
“Regulatory Agencies” has the meaning set forth in Section 3.07.
“Regulatory Agreement” has the meaning set forth in Section 3.16(a).
“Representatives” means, in respect of any Person, such Person’s directors, officers, employees, agents, advisors, consultants and investment bankers.
“Sarbanes-Oxley Act” has the meaning set forth in Section 3.07.
“SBS” means Siebert, Brandford, Shank & Co., L.L.C., a Delaware limited liability company and wholly owned subsidiary of SBSF.
“SBS Capital Markets Proceeds” means the proceeds of any payments made to the Company or any of its Subsidiaries pursuant to Section 2.5 of the Capital Markets Purchase Agreement.
“SBSF” means Siebert, Brandford, Shank Financial, L.L.C., a Delaware limited liability company.
“SBSF Disposition Agreement” means that certain Purchase Agreement, dated as of November 9, 2015, by and between MS&Co. and SBSF.
“SBSF Disposition Note” means that certain Junior Subordinated Note issued by SBSF to MS&Co. in accordance with Section 2.2 of the SBSF Disposition Agreement, as assigned by MS&Co. to the Company as of August 9, 2016.
“SBSF Disposition Proceeds” has the meaning set forth in Section 6.15(b).
“Schedule 14D-9” has the meaning set forth in Section 2.05(a).
“Schedule TO” has the meaning set forth in Section 2.04(h).
“SEC” has the meaning set forth in Section 2.04(e).
“Second Payment Date” means the date that is the one (1) year anniversary of the Majority Shares Closing Date.
“Securities Act” has the meaning set forth in Section 3.07.
“Seller Indemnified Parties” has the meaning set forth in Section 9.03.
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“SIA” means Siebert Investment Advisors, Inc., a Delaware corporation and wholly owned subsidiary of the Company.
“SIA Clients” has the meaning set forth in Section 3.28(a).
“SIPC” means the Securities Investor Protection Corporation
“SRO” shall mean any domestic or foreign securities, broker-dealer or other financial services industry self-regulatory organization, including FINRA.
“Subsidiary” means, when used with respect to any party, any corporation or other organization, whether incorporated or unincorporated, a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its subsidiaries, or by such party and one or more of its subsidiaries.
“Superior Proposal” means a bona fide written Takeover Proposal involving the direct or indirect acquisition pursuant to a tender offer, exchange offer, merger, consolidation or other business combination, of all or substantially all of the Company’s consolidated assets or a majority of the outstanding Company Common Stock, that the Company Board determines in good faith (after consultation with outside legal counsel and the Company Financial Advisor) is more favorable from a financial point of view to the holders of Company Common Stock than the transactions contemplated by this Agreement, taking into account (a) all financial considerations, (b) the identity of the third party making such Takeover Proposal, (c) the anticipated timing, conditions (including any financing condition or the reliability of any debt or equity funding commitments) and prospects for completion of such Takeover Proposal, and (d) the other terms and conditions of such Takeover Proposal and the implications thereof on the Company, including relevant legal, regulatory and other aspects of such Takeover Proposal deemed relevant by the Company Board.
“Takeover Proposal” means a proposal or offer from, or indication of interest in making a proposal or offer by, any Person (other than Buyer and its Subsidiaries) relating to any (a) direct or indirect acquisition of assets of the Company or its Subsidiaries (including any voting equity interests of Subsidiaries, but excluding sales of assets in the ordinary course of business) equal to fifteen percent (15%) or more of the fair market value of the Company’s consolidated assets or to which fifteen percent (15%) or more of the Company’s net revenues or net income on a consolidated basis are attributable, (b) direct or indirect acquisition of fifteen percent (15%) or more of the voting equity interests of the Company, (c) tender offer or exchange offer that if consummated would result in any Person beneficially owning (within the meaning of Section 13(d) of the Exchange Act) fifteen percent (15%) or more of the voting equity interests of the Company, (d) merger, consolidation, other business combination or similar transaction involving the Company or any of its Subsidiaries, pursuant to which such Person would own fifteen percent (15%) or more of the consolidated assets, net revenues or net income of the Company, taken as a whole, or (e) liquidation or dissolution (or the adoption of a plan of liquidation or dissolution) of the Company or the declaration or payment of an extraordinary dividend (whether in cash or other property) by the Company.
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“Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.
“Tax Returns” means any return, declaration, report, claim for refund, information return or statement or other document required to be filed with or provided to any taxing authority in respect of Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Third Party Claim” has the meaning set forth in Section 9.04.
“Termination Fee” means $850,000.
“Threshold” has the meaning set forth in Section 9.06(a).
“Transaction Expenses” means the (a) Majority Shareholder Percentage of Expenses incurred or paid to the Company Financial Advisor and legal counsel to the Company in connection with the transactions contemplated by this Agreement during the period between the date as of which the Estimated Working Capital as calculated and the Majority Shares Closing Date up to an aggregate amount of $1,400,000, (b) all Expenses incurred or paid to the Company Financial Advisor and legal counsel to the Company in connection with the transactions contemplated by this Agreement during the period between the date as of which the Estimated Working Capital as calculated and the Majority Shares Closing Date in excess of $1,400,000, (c) the Majority Shareholder Percentage of premiums allocable to the first $10,000,000 of D&O Coverage, (d) all premiums allocable to the D&O Coverage in excess of $10,000,000, (e) any severance obligation referenced in Section 9.02(b) of the Disclosure Schedule, and (f) the Company Board Fee.
“Treasury Regulations” means the Treasury regulations promulgated under the Code.
“Working Capital” means, with respect to the Company, the sum of the Company’s consolidated current assets, which for this purpose include cash and cash equivalents (other than SBS Capital Markets Proceeds and proceeds of the SBSF Disposition Note), receivables from brokers (other than receivables from brokers comprising SBS Capital Markets Proceeds and proceeds of the SBSF Disposition Note), securities owned at market value, prepaid expenses and investments in and advances to equity investee, less the Company’s consolidated current liabilities, which for this purpose include accounts payable and accrued liabilities (other than liabilities constituting Transaction Expenses), in each case calculated on a basis consistent with GAAP on a consistent basis with the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015 and with the methods and assumptions set forth on the Adjustment Calculation Example.
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Section 1.02 Interpretation; Construction.
(a) The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section, Exhibit or Schedule, such reference shall be to a Section of, Exhibit to or Schedule of this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” A reference in this Agreement to $ or dollars is to U.S. dollars. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to “this Agreement” shall include the Disclosure Schedule. Unless the context of this Agreement clearly requires otherwise, the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.
(b) The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
(c) The Recitals to this agreement are a material part of this Agreement and are hereby incorporated by reference and made a part of this Agreement.
Article
II
PURCHASE OF MAJORITY SHARES; MINORITY OFFER
Section 2.01 Purchase of Majority Shares.
(a) On the terms and subject to the conditions set forth herein, at the Majority Shares Closing, the Majority Shareholder shall sell to Buyer, and Buyer shall purchase from the Majority Shareholder, the Majority Shares, free and clear of all Liens, other than restrictions on transfer of securities pursuant to state or federal securities Laws. The aggregate purchase price for the Majority Shares shall equal the Majority Purchase Price, subject to adjustment pursuant to Section 2.02, Section 2.03 and Section 6.15(b).
(b) The closing of the purchase and sale of the Majority Shares pursuant to this Section 2.01 is referred to in this Agreement as the “Majority Shares Closing”, and the date on which the Majority Shares Closing occurs is referred to in this Agreement as the “Majority Shares Closing Date.”
Section 2.02 Payment at Majority Shares Closing.
(a) On or before the date that is five (5) days prior to the anticipated Majority Shares Closing Date, the Company shall prepare and deliver to the Buyer a statement, certified by the Company’s Chief Financial Officer (the “Purchase Price Statement”) prepared in good faith from the Books and Records on a basis consistent with GAAP and the assumptions and methods set forth in the Adjustment Calculation Example setting forth the Estimated Working Capital and the Company’s good faith calculation of Transaction Expenses included in amounts to be paid at the Majority Share Closing in accordance with Section 2.02(b)(i) (the “Estimated Transaction Expenses”), together with reasonable supporting detail for the calculations. At the Majority Share Closing, the Buyer shall pay to the Majority Shareholder an amount equal to the Majority Shares Purchase Price (reduced in accordance with Section 6.15(b) by the amount, if any, of the adjustment in respect of the Company’s dividend payment of the SBSF Disposition Proceeds prior to or contemporaneously with the Majority Shares Closing), (i) minus the amount of Estimated Transaction Expenses, (ii) minus the amount equal to the product of (A) Majority Shareholder Percentage, multiplied by (B) the amount, if any, by which the Base Working Capital exceeds the Estimated Working Capital, and (iii) plus the amount equal to the product of (A) the Majority Shareholder Percentage, multiplied by (B) the amount, if any, by which the Estimated Working Capital exceeds the Base Working Capital. The Majority Shares Purchase Price following such adjustment shall be referred to herein as the “Adjusted Majority Shares Purchase Price.”
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(b) At the Majority Share Closing, the Buyer shall pay:
(i) an aggregate amount, by wire transfer of immediately available funds to accounts designated by the Majority Shareholder, equal to the sum of (A) the Expenses incurred by the Company to the Company Financial Advisor and legal counsel to the Company in connection with the transactions contemplated by this Agreement during the period between the date as of which the Estimated Working Capital as calculated and the Majority Shares Closing Date that have not been previously paid by the Company, plus (B) the premiums due and payable in respect of D&O Coverage, (C) the severance obligation referenced in Section 9.02(b) of the Disclosure Schedule, and (D) the Company Board Fee; and
(ii) the Adjusted Majority Shares Purchase Price, by wire transfer of immediately available funds, as follows:
(A) $1,000,000 of the Adjusted Majority Shares Purchase Price (the “Escrow Amount”) shall be delivered to the Escrow Agent to be held in the Escrow Account in accordance with the terms and conditions of the Escrow Agreement; and
(B) the balance of the Adjusted Majority Shares Purchase Price shall be delivered to an account designated by the Majority Shareholder.
(c) Buyer, the Majority Shareholder and the Company expressly agree that the Escrow Funds shall be held in escrow with the Escrow Agent pursuant to the Escrow Agreement subject to and on the terms and conditions set forth in the Escrow Agreement as a fund representing the sole and exclusive source for the payment of the Majority Shareholder’s indemnification obligations under Article IX (other than any Claim pursuant to Section 9.02(a) in respect of the Majority Shareholder’s representations and warranties set forth in Section 4.01 and Section 4.02(a) or any Claim pursuant to Section 9.02(b)). The Escrow Funds shall be held and disbursed pursuant to the terms and conditions of the Escrow Agreement.
Section 2.03 Post Majority Closing Adjusted Majority Purchase Price Adjustment.
(a) No later than sixty (60) days after the last day of the month in which the Majority Shares Closing Date takes place, Buyer shall deliver to the Majority Shareholder a statement, certified by Buyer’s Chief Financial Officer (the “Final Adjustment Statement”) prepared in good faith from the Books and Records on a basis consistent with GAAP and the assumptions and methods set forth in the Adjustment Calculation Example setting forth (i) the consolidated balance sheet of the Company as of the last day of the month in which the Majority Shares Closing Date takes place, (the “Majority Share Closing Date Balance Sheet”), (ii) Buyer’s calculations of the Majority Shares Closing Date Working Capital; (iii) Buyer’s calculation of Transaction Expenses, and (iv) reasonable supporting documentation with respect to the calculation of the amounts set forth in the Final Adjustment Statement.
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(b) (i) The Majority Shareholder shall have forty-five (45) days from the date on which the Final Adjustment Statement is delivered to it (the “Post-Closing Review Period”) to review (A) the Final Adjustment Statement, (B) the Majority Share Closing Date Balance Sheet, (C) the calculations of the Majority Share Closing Date Working Capital, and (D) the calculations of Transaction Expenses. In furtherance of such review, Buyer shall, and shall cause the Company to, provide the Majority Shareholder with reasonable access during the Post-Closing Review Period to all documentation, records and other information of the Company as the Majority Shareholder may reasonably request; provided, that such access does not unreasonably interfere with the conduct of the business of the Buyer or the Company or require the disclosure of confidential information not previously known to the Majority Shareholder or the Company (unless such disclosure is material to such review).
(ii) If the Majority Shareholder disagrees with the Final Adjustment Statement (including any amount or computation set forth therein), the Majority Shareholder may, on or prior to the last day of the Post-Closing Review Period, deliver a written notice to Buyer setting forth, in reasonable detail, each disputed item or amount and the basis for the Majority Shareholder’s Representative’s disagreement therewith (the “Dispute Notice”). The Dispute Notice shall set forth, with respect to each disputed item, the Majority Shareholder’s position as to the correct amount or computation that should have been included in the Final Adjustment Statement and as to the Final Adjustment Amount.
(iii) If no Dispute Notice is received by Buyer with respect to any item in the Final Adjustment Statement on or prior to the last day of the Post-Closing Review Period, the amount or computation with respect to such item as set forth in the Final Adjustment Statement shall be deemed accepted by the Majority Shareholder, whereupon the amount or computation of such item or items shall be final and binding on the parties.
(iv) For a period of ten (10) Business Days beginning on the date that Buyer receives a Dispute Notice, if any, Buyer and the Majority Shareholder shall endeavor in good faith to resolve by mutual agreement all matters identified in the Dispute Notice. In the event that the parties are unable to resolve by mutual agreement any matter in the Dispute Notice within such ten (10) Business Day period, Buyer and the Majority Shareholder shall jointly engage a PCAOB registered independent certified public accounting firm of national recognition mutually acceptable to Buyer and the Majority Shareholder (the “Independent Accounting Firm”) to make a determination with respect to all matters in dispute.
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(v) Buyer and the Majority Shareholder will direct the Independent Accounting Firm to render a determination within thirty (30) days after its retention, and Buyer, the Majority Shareholder and their respective Representatives and agents will cooperate with the Independent Accounting Firm during its engagement. Buyer, on the one hand, and the Majority Shareholder, on the other hand, shall promptly (and in any event within ten (10) Business Days) after the Independent Accounting Firm’s engagement, each submit to the Independent Accounting Firm their respective computations of the disputed items identified in the Dispute Notice and information, arguments and support for their respective positions, and shall concurrently deliver a copy of such materials to the other party. Each party shall then be given an opportunity to supplement the information, arguments and support included in its initial submission with one additional submission to respond to any arguments or positions taken by the other party in such other party’s initial submission, which supplemental information shall be submitted to the Independent Accounting Firm (with a copy thereof to the other party) within five (5) Business Days after the first date on which both parties have submitted their respective initial submissions to the Independent Accounting Firm. The Independent Accounting Firm shall thereafter be permitted to request additional or clarifying information from the parties, and each of the parties shall cooperate and shall cause their Representatives to cooperate with such requests of the Independent Accounting Firm. The Independent Accounting Firm shall determine, based solely on the materials so presented by the parties and upon information received in response to such requests for additional or clarifying information and not by independent review, only those issues in dispute specifically set forth in the Dispute Notice and shall render a written report to Buyer and the Majority Shareholder (the “Adjustment Report”) in which the Independent Accounting Firm shall, after considering all matters set forth in the Dispute Notice, determine what adjustments, if any, should be made to the amounts and computations set forth in the Final Adjustment Statement solely as to the disputed items and shall determine the appropriate Final Adjustment Amount on that basis.
(vi) The Adjustment Report shall set forth, in reasonable detail, the Independent Accounting Firm’s determination with respect to each of the disputed items or amounts specified in the Dispute Notice, and the revisions, if any, to be made to the Final Adjustment Statement, together with supporting calculations. In resolving any disputed item, the Independent Accounting Firm (A) shall be bound to the principles of this Section 2.03 and the terms of this Agreement, (B) shall limit its review to matters specifically set forth in the Dispute Notice and (C) shall not assign a value to any item higher than the highest value for such item claimed by either party or less than the lowest value for such item claimed by either party.
(vii) The fees, costs and expenses of the Independent Accounting Firm shall be paid 50% by Buyer and 50% by the Majority Shareholder.
(viii) The final form of the balance sheet of the Company as of the Majority Shares Closing Date as finally determined pursuant to this Section 2.03 is referred to herein as the “Final Balance Sheet,” the amount of the Majority Share Closing Date Working Capital calculated therefrom is referred to as the “Final Majority Share Closing Working Capital” and the amount of Transaction Expenses is referred to as the “Final Transaction Expenses.” Notwithstanding anything to the contrary contained in this Agreement, the provisions of this Section 2.03 represent the sole and exclusive method for determining the Final Balance Sheet, the Final Majority Share Closing Working Capital and the Final Transaction Expenses.
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(c) After the determination of the Final Majority Shares Closing Working Capital and Final Transaction Expenses, the Adjusted Majority Purchase Price shall be further adjusted on a basis consistent with the assumptions and methods set forth in the Adjustment Calculation Example as follows:
(i) the Adjusted Majority Purchase Price shall be reduced (the “Reduction”) by the sum of:
(A) the amount, if any, by which Final Transaction Expenses exceed Estimated Transaction Expenses; plus
(B) if the Estimated Working Capital exceeds the Final Majority Shares Closing Working Capital, an amount equal to the product of (1) the Majority Shareholder Percentage, multiplied by (2) the amount that the Estimated Working Capital exceeds the Final Majority Shares Closing Working Capital; and
(ii) the Adjusted Majority Purchase Price shall be Increased (the “Increase”) by the sum of:
(A) the amount, if any, by which Estimated Transaction Expenses exceed Final Transaction Expenses; plus
(B) if the Final Majority Shares Closing Working Capital exceeds the Estimated Working Capital, an amount equal to the product of (1) the Majority Shareholder Percentage, multiplied by (2) the amount that the Final Majority Share Working Capital exceeds the Estimated Working Capital.
(d) On the date that is five (5) Business Days after the determination of the Final Majority Shares Closing Working Capital:
(i) the Majority Shareholder shall pay to the Buyer a cash amount equal to the amount, if any, by which the Reduction, if any, exceeds the Increase, if any, to such account or accounts designated in writing by the Buyer at least two (2) Business Days prior to the Second Payment Date; and
(ii) the Buyer shall pay to the Majority Shareholder a cash amount equal to the amount, if any, by which the Increase, if any, exceeds the Reduction, if any, to such account or accounts designated in writing by the Majority Shareholder at least two (2) Business Days prior to the Second Payment Date.
(e) The Majority Shareholder hereby covenants and agrees that (i) it shall retain, and shall not distribute or otherwise disburse, a portion of the proceeds paid to the Majority Shareholder pursuant to Section 2.02(b)(ii)(B) equal to $500,000 (the “Retained Proceeds”) until the date that is six (6) months after the Majority Shares Closing Date, and (ii) shall apply the Retained Proceeds to the satisfaction of the Majority Shareholders obligations pursuant to Section 2.03(d).
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Section 2.04 The Minority Offer.
(a) As promptly as practicable after the date of this Agreement, Buyer shall commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”)) the Minority Offer.
(b) The obligation of Buyer to accept for payment and pay for any Minority Shares validly tendered and not validly withdrawn pursuant to the Minority Offer shall be subject to the satisfaction, or waiver by Buyer, as determined in Buyer’s sole discretion, of the conditions and requirements set forth on Exhibit C (the “Minority Offer Conditions”). Subject to the prior satisfaction of the Minority Offer Conditions, Buyer shall use its reasonable efforts to consummate the Minority Offer in accordance with its terms and accept for payment and pay for all Minority Shares validly tendered and not validly withdrawn pursuant to the Minority Offer as promptly as practicable after the Expiration Time. The Minority Offer Price payable in respect of each share of Company Common Stock validly tendered and not validly withdrawn pursuant to the Minority Offer shall be paid net to the seller in cash, without interest, on the terms and subject to the conditions set forth in this Agreement.
(c) The Minority Offer shall be made by means of an offer to purchase (the “Offer to Purchase”) that describes the terms and conditions of the Minority Offer as set forth in this Agreement, including the Minority Offer Conditions. Buyer expressly reserves the right (in its sole discretion) to waive, in whole or in part, any Minority Offer Condition, to increase the Minority Offer Price or to make any other changes in the terms and conditions of the Minority Offer; provided, however, that unless otherwise provided by this Agreement or as previously approved in writing by the Company, or as may be required by any Regulatory Agency, Buyer shall not (i) reduce the number of shares of Company Common Stock subject to the Minority Offer, (ii) reduce the Minority Offer Price, (iii) add to the Minority Offer Conditions set forth Exhibit C or modify or change any Minority Offer Condition in a manner adverse in any material respect to any shareholders of the Company, (iv) except as otherwise provided in this Section 2.04, extend or otherwise change the expiration date of the Minority Offer, (v) change the form of consideration payable in the Minority Offer or (vi) otherwise amend, modify or supplement any of the terms of the Minority Offer in a manner adverse in any material respect to any shareholders of the Company.
(d) The Minority Offer shall expire at midnight (New York City time) on the date that is twenty (20) Business Days following the commencement (within the meaning of Rule 14d-2 under the Exchange Act) of the Minority Offer (the “Initial Expiration Time”) or, in the event the Initial Expiration Time has been extended pursuant to this Agreement, the date and time to which the Minority Offer has been so extended (the Initial Expiration Time, or such later date and time to which the Initial Expiration Time has been extended pursuant to this Agreement, is referred to as the “Expiration Time”).
(e) Notwithstanding anything in this Agreement to the contrary, and without limiting Buyer’s obligations under this Section 2.04, Buyer (i) may, in its sole discretion, without consent of the Company, extend the Minority Offer on one or more occasions for any period, if on any then-scheduled Expiration Time any of the Minority Offer Conditions shall not be satisfied or, in Buyer’s sole discretion, waived, until such time as such condition or conditions are satisfied or waived and (ii) shall extend the Minority Offer for any period required by applicable Law, any interpretation or position of the Securities and Exchange Commission (the “SEC”), the staff thereof or the NASDAQ Stock Market (“NASDAQ”) applicable to the Minority Offer; provided, however, that in no event shall Buyer be required to extend the Minority Offer (A) beyond February 28, 2017 (the “Outside Date”) or (B) at any time that Buyer is permitted to terminate this Agreement pursuant to ARTICLE VIII.
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(f) On the terms and subject to the conditions of this Agreement, Buyer shall accept and pay for (subject to any withholding of tax pursuant to Section 2.08) all Minority Shares validly tendered and not validly withdrawn pursuant to the Minority Offer as soon as practicable after the Expiration Time (as it may be extended and re-extended in accordance with Section 2.04(d)). Acceptance for payment of shares of Company Common Stock pursuant to and subject to the Minority Offer Conditions upon the Expiration Time is referred to in this Agreement as the “Minority Shares Closing”, and the date on which the Minority Shares Closing occurs is referred to in this Agreement as the “Minority Shares Closing Date”. Buyer expressly reserves the right to, in its sole discretion, following the Majority Shares Closing, extend the Minority Offer for a “subsequent offering period” (and one or more extensions thereof) in accordance with Rule 14d-11 under the Exchange Act, and the Minority Offer Documents (as defined below) may, Buyer’s sole discretion, provide for such a reservation of right. Nothing contained in this Section 2.04 shall affect any termination rights in Article VIII.
(g) Unless required by a Regulatory Agency, Buyer shall not terminate the Minority Offer prior to any scheduled Expiration Time without the prior written consent of the Company except in the event that this Agreement is terminated pursuant to Article VIII. If the Minority Offer is terminated or withdrawn by Buyer, or this Agreement is terminated pursuant to Article VIII, prior to the acceptance for payment of the Minority Shares tendered in the Minority Offer, Buyer shall promptly return, and shall cause any depository acting on behalf of Buyer to return, all tendered Minority Shares to the registered holders thereof.
(h) As soon as practicable on the date of the commencement of the Minority Offer, Buyer shall file with the SEC a Tender Offer Statement on Schedule TO with respect to the Minority Offer (together with all amendments, supplements and exhibits thereto, the “Schedule TO”). The Schedule TO shall include, as exhibits, the Offer to Purchase and a form of letter of transmittal and summary advertisement (such Schedule TO and the documents included therein pursuant to which the Minority Offer will be made, together with any amendments and supplements thereto, the “Minority Offer Documents”). The Company shall promptly furnish to Buyer all information concerning the Company required by the Exchange Act to be set forth in the Minority Offer Documents. Buyer agrees to take all steps reasonably necessary to cause the Minority Offer Documents to be filed with the SEC and disseminated to the shareholders of the Company, in each case as and to the extent required by the Exchange Act. Buyer, on the one hand, and the Company, on the other hand, agree to promptly correct any information provided by it for use in the Minority Offer Documents if and to the extent that such information shall have become false or misleading in any material respect or as otherwise required by applicable Law. Buyer further agrees to take all steps reasonably necessary to cause the Minority Offer Documents, as so corrected (if applicable), to be filed with the SEC and disseminated to the shareholders of the Company, in each case as and to the extent required by the Exchange Act. Buyer shall promptly notify the Company upon the receipt of any comments from the SEC, or any request from the SEC for amendments or supplements, to the Minority Offer Documents, and shall promptly provide the Company with copies of all correspondence between them and their representatives, on the one hand, and the SEC, on the other hand. Prior to the filing of the Minority Offer Documents (including any amendments or supplements thereto) with the SEC or dissemination thereof to the shareholders of the Company, or responding to any comments of the SEC with respect to the Minority Offer Documents, Buyer shall provide the Company and its counsel a reasonable opportunity to review and comment on such Offer Documents or response, and Buyer shall give reasonable consideration to any such comments.
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(i) Notwithstanding anything to the contrary in this Agreement, shareholders of record that tender Shares in the Minority Offer shall be deemed to be shareholders of record in respect of the Shares tendered as of the record date for the Pre-Closing Dividend regardless of whether such shareholders tender in the Minority Offer prior such record date.
(a) On the date the Minority Offer Documents are filed with the SEC, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Minority Offer (together with all amendments, supplements and exhibits thereto, the “Schedule 14D-9”) that shall contain the recommendation described in Section 3.04(c) in such form and substance as approved by the Buyer. The Company agrees to take all steps necessary to cause the Schedule 14D-9 to be prepared and filed with the SEC and disseminated to the shareholders of the Company, in each case as and to the extent required by the Exchange Act. Buyer shall promptly furnish to the Company all information concerning Buyer required by the Exchange Act to be set forth in the Schedule 14D-9. The Company, on the one hand, and Buyer, on the other hand, agree to promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect or as otherwise required by applicable Law. The Company further agrees to take all steps necessary to cause the Schedule 14D-9, as so corrected (if applicable), to be filed with the SEC and disseminated to the shareholders of the Company, in each case as and to the extent required by the Exchange Act. The Company shall promptly notify Buyer upon the receipt of any comments from the SEC, or any request from the SEC for amendments or supplements, to the Schedule 14D-9, and shall promptly provide Buyer with copies of all correspondence between it and its representatives, on the one hand, and the SEC, on the other hand. Prior to the filing of the Schedule 14D-9 (including any amendments or supplements thereto) with the SEC or dissemination thereof to the shareholders of the Company, or responding to any comments of the SEC with respect to the Schedule 14D-9, the Company shall provide Buyer and its counsel a reasonable opportunity to review and comment on such Schedule 14D-9 or response, and the Company shall give reasonable consideration to any such comments. The Company hereby consents to the inclusion in the Minority Offer Documents of the Company Board Recommendation contained in the Schedule 14D-9.
(b) In connection with the Minority Offer, the Company shall promptly (and no later than five Business Days after the date hereof) furnish or cause to be furnished to Buyer mailing labels, security position listings and any other available listings or computer files containing the names and addresses of the record holders or beneficial owners of the Minority Shares as of the most recent practicable date, and shall promptly furnish Buyer with such information and assistance (including lists of record holders or beneficial owners of the Minority, updated from time to time upon Buyer’s or its agent’s request, and the addresses, mailing labels and lists of security positions of such record holders or beneficial owners) as Buyer or its agent may reasonably request for the purpose of communicating the Minority Offer to the record holders and beneficial owners of the Minority Shares.
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(a) No later than ten (10) days prior to the Majority Shares Closing Date, Buyer shall notify the Company of Buyer’s designees to the Company Board in accordance with the Company’s bylaws.
(b) The Company’s obligations to appoint Buyer’s designees to the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions necessary to effect the appointment of Buyer’s designees, including mailing to its shareholders information with respect to the Company and its officers and directors, as Section 14(f) and Rule 14f-1 require in order to fulfill its obligations under this Section 2.06(b). Buyer shall supply to the Company in writing and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1 and the Company’s obligations under Section 2.06(a) hereof shall be subject to the receipt of such information.
Section 2.07 Adjustments. The Majority Purchase Price shall be subject to adjustment as set forth in Section 6.15(b). In addition, without limiting the other provisions of this Agreement, if at any time during the period between the date of this Agreement and the Closing, any change in the outstanding shares of capital stock of the Company shall occur (other than the issuance of additional shares of capital stock of the Company as permitted by this Agreement), including by reason of any reclassification, recapitalization, stock split (including reverse stock split) or combination, exchange or readjustment of shares, or any stock dividend or distribution paid in stock, the Minority Offer Price and any other amounts payable pursuant to this Agreement shall be appropriately adjusted to reflect such change.
Section 2.08 Withholding Rights. Buyer shall be entitled to deduct and withhold from the Minority Offer Price otherwise payable to any Person pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code of 1986, as amended, and applicable Treasury Regulations issued pursuant thereto (the “Code”), or any provision of state, local or foreign Tax Law. To the extent that amounts are so deducted and withheld by Buyer, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which Buyer made such deduction and withholding.
Section 2.09 Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Buyer, the posting by such Person of a bond, in such reasonable amount as Buyer may direct, as indemnity against any claim that may be made against it with respect to such Certificate, Buyer will cause to be issued, in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration to be paid in respect of the shares of Company Common Stock formerly represented by such Certificate as contemplated under this Article II.
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(a) Upon the terms and subject to the conditions set forth herein, the Minority Shares Closing will take place at 10:00 a.m., New York City time, as soon as practicable, but in no event later than the third (3rd) Business Day, after satisfaction or, to the extent permitted hereunder, waiver of all conditions to the Minority Shares Closing set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Minority Shares Closing, but subject to the satisfaction or, to the extent permitted hereunder, waiver of all such conditions), unless this Agreement has been terminated pursuant to its terms or unless another time or date is agreed to in writing by the parties hereto. The Minority Shares Closing shall take place remotely via the exchange of documents and signatures. Except as otherwise provided in this Agreement, all proceedings to be taken and all documents to be executed at the Minority Shares Closing shall be deemed to have been taken, delivered and executed simultaneously, and no proceeding shall be deemed taken nor documents deemed executed or delivered until all have been taken, delivered and executed. The effective time of the Minority Shares Closing shall be deemed to be as of 12:01 a.m., Eastern Time, on the Minority Shares Closing Date.
(b) Upon the terms and subject to the conditions set forth herein, the Majority Shares Closing will take place immediately following (and on the same day as) the Minority Shares Closing, after satisfaction or, to the extent permitted hereunder, waiver of all conditions to the Majority Shares Closing set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Majority Shares Closing, but subject to the satisfaction or, to the extent permitted hereunder, waiver of all such conditions), unless this Agreement has been terminated pursuant to its terms or unless another time or date is agreed to in writing by the parties hereto. The Majority Shares Closing shall take place remotely via the exchange of documents and signatures. Except as otherwise provided in this Agreement, all proceedings to be taken and all documents to be executed at the Majority Shares Closing shall be deemed to have been taken, delivered and executed simultaneously, and no proceeding shall be deemed taken nor documents deemed executed or delivered until all have been taken, delivered and executed. The effective time of the Majority Shares Closing shall be deemed to be immediately following the effective time of the Minority Shares Closing.
Article
III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed on the disclosure schedule, dated the date of this Agreement and delivered by the Company to Buyer prior to the execution of this Agreement (the “Disclosure Schedule”) (it being agreed that disclosure in any Section of the Disclosure Schedule shall apply only to the indicated Section of this Agreement and to such other Sections of this Agreement to the extent that it is readily apparent on the face of the disclosure (without need to examine underlying documentation) that such disclosure is relevant to such other Section), the Company hereby represents and warrants to the Buyer that the statements contained in this Article III are accurate, true and complete as of the date of this Agreement and, unless such statement is made as of a specific date.
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Section 3.01 Corporate Organization. The Company is a New York corporation and is validly existing and in good standing under the laws of New York. Each of the Company’s Subsidiaries is duly organized, validly existing and in good standing under the laws of its jurisdiction of formation, in each case as set forth in Section 3.01 of the Disclosure Schedule. Section 3.01 of the Disclosure Schedule includes a listing of each jurisdiction in which the Company and each Subsidiary is qualified, licensed or otherwise authorized to conduct business as a foreign corporation. Each of the Company and its Subsidiaries has the requisite corporate or other organizational power necessary to own or lease and operate their properties and assets and to carry on carry on the businesses in which they are engaged. Each of the Company and its Subsidiaries are duly licensed, qualified or authorized in accordance with applicable law in the relevant jurisdiction to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect.
Section 3.02 Subsidiaries. Except as set forth on Section 3.01 of the Disclosure Schedule, the Company has no Subsidiaries.
Section 3.03 Transactions with Affiliates and Employees. Except as described in Section 3.03 of the Disclosure Schedule, none of the Company, the Subsidiaries or their respective officers or directors and employees, has been or is presently a party to any transaction with any Affiliate of the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from providing for the borrowing of money from or lending of money to, or otherwise requiring payments to or from any officer, director or such employee or any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company or Subsidiary and (iii) other employee benefits.
Section 3.04 Authority; No Violation.
(a) The Company has full corporate power and authority and is duly authorized to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly approved by all necessary corporate action on the part of the Company. No other corporate proceedings on the part of the Company or its Subsidiaries are necessary to approve this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company. Assuming due authorization, execution and delivery by Buyer, this Agreement constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforcement may be limited by (i) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other laws affecting or relating to the rights of creditors generally, or (ii) the rules governing the availability of specific performance, injunctive relief or other equitable remedies and general principles of equity, regardless of whether considered in a proceeding in equity or at law.
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(b) Neither the execution and delivery of this Agreement by the Company nor the consummation by the Company of the transactions contemplated hereby, nor compliance by the Company with any of the terms or provisions hereof, will (i) violate any provision of the Charter Documents of the Company, or (ii) assuming that the Company Regulatory Approvals are duly obtained and/or made, violate any Law or Order applicable to the Company or its Subsidiaries or any of their respective properties or assets or (iii) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination, acceleration or cancellation under, or result in the creation of any Lien under any indenture, mortgage, Contract, leases, license, instrument or other arrangement to which any of the Company or its Subsidiaries is a party or by which they or any of their respective properties, assets or business activities may be bound or affected, except, in the case of clauses (ii) and (iii), as would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect.
(c) The Company Board, by resolutions duly adopted by unanimous vote at a meeting of all directors of the Company duly called and held and, as of the date hereof, not subsequently rescinded or modified in any way, has, as of the date hereof (i) determined that this Agreement and the transactions contemplated hereby, including the Minority Offer, are fair to, and in the best interests of, the Company’s shareholders, (ii) approved this Agreement and the transactions contemplated hereby, including the Minority Offer, in accordance with the BCL, and (iii) resolved to remain neutral and not to make a recommendation regarding whether Company shareholders accept the Minority Offer and tender their shares of Company Common Stock pursuant to the Minority Offer (collectively, the “Company Board Recommendation”).
Section 3.05 Consents and Approvals. Except for the notices, consents, approvals, waivers, authorizations, filings and registrations set forth in Section 3.05 of the Disclosure Schedule (collectively, the “Company Regulatory Approvals”), no notices to, consents or approvals of, waivers or authorizations by, or filings or registrations with (any of the foregoing being a “Consent”), any Regulatory Agency are necessary in connection with (i) the execution and delivery by the Company of this Agreement and (ii) the consummation by Company of the transactions contemplated by this Agreement, including the Majority Share Closing and the Minority Share Closing. Except as set forth in Section 3.05 of the Disclosure Schedule, there are no Consents of any other third party required to be obtained in connection with the execution and delivery by the Company of this Agreement and the consummation by the Company of the transactions contemplated by this Agreement.
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Section 3.06 Capitalization. The authorized capital stock of the Company consists of 49,000,000 shares of Company Common Stock, of which 22,085,126 shares are issued and outstanding as of the date of this Agreement. All of the issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued, and are fully paid and nonassessable. Except as set forth on Section 3.06 of the Disclosure Schedule, there are no outstanding subscriptions, options, warrants, commitments, preemptive rights, deferred compensation rights, agreements, arrangements or commitments of any kind to which the Company is a party relating to the issuance of, or outstanding securities convertible into or exercisable or exchangeable for, any shares of capital stock of any class or other equity interests of the Company (together with the Company Common Stock, collectively “Company Securities”). There are no agreements to which the Company is a party with respect to the voting of any shares of capital stock of the Company or which restrict the transfer of any such shares. There are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of capital stock, other equity interests or any other securities of the Company. The Company does not have any outstanding bonds, debentures, notes or other obligations, the holders of which have the right to vote with the holders of the capital stock of the Company on any matter.
Section 3.07 Reports. The Company has timely filed all reports, forms, correspondence, registrations and statements, together with any amendments required to be made with respect thereto (“Company SEC Documents”), that they were required to file since January 1, 2011 with (i) any SRO and (ii) any other Governmental Entity (the agencies and authorities identified in clauses (i) and (ii), inclusive, are, collectively, the “Regulatory Agencies”), and have paid all fees and assessments due and payable in connection therewith. As of their respective dates of filing or furnishing, or, if amended, as of the date of the last such amendment prior to the date of this Agreement, the Company SEC Documents complied in all material respects with all statutes and applicable rules and regulations of the applicable Regulatory Agencies. As of the date of this Agreement, there are no outstanding comments from the SEC or any other Regulatory Agency with respect to any such Company SEC Documents. In the case of each such Company SEC Documents filed with or furnished to the SEC pursuant to Section 13 or 15(d) of the Exchange Act, such Report did not, as of its date or if amended prior to the date of this Agreement, as of the date of such amendment, and any such Company SEC Documents filed with or furnished to the SEC subsequent to the date of this Agreement and prior to the Closing will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made in it, in light of the circumstances under which they were made, not misleading and complied as to form in all material respects with the applicable requirements of the U.S. Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act. With respect to all other Company SEC Documents filed since January 1, 2011 or to be filed subsequent to the date of this Agreement and prior to the Closing, the Company SEC Documents will be complete and accurate in all material respects as of their respective dates, or the dates of their respective amendments. No executive officer of the Company has failed in any respect to make the certifications required of him or her under Sections 302 or 906 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”). None of the Company’s Subsidiaries is required to file periodic reports with the SEC pursuant to Sections 13 or 15(d) of the Exchange Act.
Section 3.08 Financial Statements; Internal Controls.
(a) Section 3.08(a) of the Disclosure Schedule sets forth copies of the audited consolidated balance sheet and the audited consolidated statements of income, cash flows and shareholder’s equity and comprehensive income of the Company and its Subsidiaries as of and for the fiscal years ended December 31, 2015, 2014 and 2013 (collectively, the “Financial Statements”, the audited consolidated balance sheet as of December 31, 2015, the “Balance Sheet”; and December 31, 2015, the “Balance Sheet Date”). The Financial Statements fairly present in all material respects the consolidated financial position and results of operations and cash flows of the Company and its Subsidiaries as of the respective dates and for the respective periods therein set forth and have been prepared in accordance with GAAP consistently applied during the periods involved. The Financial Statements have been prepared from, and are in accordance with, the books and records of the Company and its Subsidiaries.
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(b) The records, systems, controls, data and information of the Company and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company or its Subsidiaries or accountants (including all means of access thereto and therefrom), except for any nonexclusive ownership and non-direct control that would not reasonably be expected to have a material adverse effect on the system of internal accounting controls described below in this Section 3.08(b). The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a 15(e) of the Exchange Act) to ensure that material information relating to the Company, including its consolidated Subsidiaries, is made known to the chief executive officer and the chief financial officer of the by others within those entities, and (ii) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and the audit committee of the Company Board (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a 15(f) of the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. These disclosures were made in writing by management to the Company’s auditors and audit committee and a copy has previously been made available to Buyer. To the Company’s Knowledge, as of the date hereof, there is no reason to believe that the Company’s outside auditors and its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act, without qualification, when next due.
(c) Since December 31, 2011 through the date hereof, (i) neither the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any Representative of the Company or any of its Subsidiaries, has received or otherwise had or obtained Knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) no attorney representing the Company or any of its Subsidiaries, whether or not employed by the Company or any of its Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by the Company, any of its Subsidiaries or any of their respective officers, directors, employees or agents to the Company Board or any committee thereof or to any director or officer of the Company.
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Section 3.09 Undisclosed Liabilities. Except for those Liabilities that are reflected or reserved against on the Balance Sheet, and except for Liabilities incurred since the Balance Sheet Date in the ordinary course of business consistent with past practice, neither the Company nor any of its Subsidiaries has any material Liability or obligation of any kind, that would have been required to be reflected on the Balance Sheet in accordance with GAAP if it had existed on the Balance Sheet Date.
Section 3.10 Absence of Certain Changes or Events. Since December 31, 2013: (a) the Company and its Subsidiaries have conducted their businesses in the ordinary course consistent with past practice; (b) there have been no events, circumstances, facts or occurrences that have had, or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; and (c) the Company and its Subsidiaries have not taken any of the actions set forth in Section 6.01(b).
Section 3.11 Legal Actions. Except as set forth in Section 3.11 of the Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to or subject of any, and there are no outstanding or pending or, to the Company’s Knowledge, threatened, Legal Actions of any nature against the Company or any of its Subsidiaries. Except as set forth in Section 3.11 of the Disclosure Schedule, there is no Order (other than those of general application that apply to similarly situated companies) imposed upon or, to the Company’s Knowledge, threatened to be imposed upon, the Company or its Subsidiaries.
Section 3.12 Taxes and Tax Returns.
(a) The Company and each of its Subsidiaries have (i) timely filed or caused to be filed (taking into account any valid extensions) all Tax Returns required to be filed by them, and (ii) paid, or have reserved in accordance with GAAP in the Company’s financial statements, all Taxes that are required to be paid. Neither the Company nor any of its Subsidiaries has incurred any material Liability for Taxes since the Balance Sheet Date outside the ordinary course of business or otherwise inconsistent with past practice.
(b) All Tax Returns required to be filed by the Company and the Subsidiaries have been accurately prepared and filed and neither the Company or any Subsidiary is a party to any pending action, proceeding or audit by any Governmental Entity for assessment or collection of any amount of Taxes for which it may be directly or indirectly liable, and there is no claim for assessment or collection of any amount of Taxes for which it may be directly or indirectly liable.
(c) The Company and each of its Subsidiaries have withheld and paid each material Tax required to have been withheld and paid in connection with amounts paid or owing to any Employee, independent contractor, creditor, customer, shareholder or other party, and materially complied with all information reporting and backup withholding provisions of applicable Law.
(d) There are no Liens for material Taxes upon the assets of the Company or any of its Subsidiaries other than for current Taxes not yet due and payable or for Taxes that are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP has been made in the Company’s financial statements.
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(e) No deficiency for any material amount of Taxes which has been proposed, asserted or assessed in writing by any taxing authority against the Company or any of its Subsidiaries remains unpaid. There are no waivers or extensions of any statute of limitations currently in effect with respect to Taxes of the Company or any of its Subsidiaries. There are no audits, suits, proceedings, investigations, claims, examinations or other administrative or judicial proceedings ongoing or pending with respect to any material Taxes of the Company or any of its Subsidiaries.
(f) Neither Company nor any of its Subsidiaries (i) has been a member of a group filing Tax Returns on a consolidated, combined, unitary or similar basis, (ii) has any material Liability for Taxes of any Person (other than the Company or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any comparable provision of local, state or foreign Law), as a transferee or successor, by Contract, or otherwise, or (iii) is a party to, bound by or has any material Liability under any Tax sharing, allocation or indemnification agreement or arrangement.
(g) Neither Company nor any of its Subsidiaries has agreed to make, nor is it required to make, any adjustment under Section 481(a) of the Code or any comparable provision of state, local or foreign Tax Laws by reason of a change in accounting method or otherwise.
(h) Neither Company nor any of its Subsidiaries has been a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(a) of the Code.
(i) Neither Company nor any of its Subsidiaries has been a “distributing corporation” or a “controlled corporation” in connection with a distribution described in Section 355 of the Code.
(j) Neither Company nor any of its Subsidiaries has engaged in a “listed transaction” as set forth in Treasury Regulation § 1.6011-4(b)(2).
Section 3.13 Benefit Plans; Employees.
(a) Section 3.13(a) of the Disclosure Schedule sets forth a true, correct and complete list of each employee benefit plan that the Company or any of its ERISA Affiliates maintains, or to which the Company or any of its ERISA Affiliates contributes or has an obligation to contribute, or with respect to which the Company or any of its ERISA Affiliates otherwise has or may have any Liability (each, a “Company Employee Plan” and, collectively, the “Company Employee Plans”), in each case for the benefit of any current or former employee, independent contractor, consultant, or director of the Company or any of its Subsidiaries (each, a “Company Employee”). No Company Employee Plan is maintained outside the United States.
(b) Each Company Employee Plan (and each related trust, insurance Contract or fund) has been maintained, funded and administered in all material respects in accordance with the terms of such Company Employee Plan and complies in form and in operation in all material respects with the applicable requirements of ERISA, the Code and any other applicable Law, and no event has occurred which will or would reasonably be expected to cause any such Company Employee Plan to fail to comply with such requirements and no notice has been issued by any Governmental Entity questioning or challenging such compliance.
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(c) Each Company Employee Plan that is intended to be qualified under § 401(a) of the Code is the subject of a favorable determination letter or opinion letter issued by the IRS with respect to the qualified status of such plan under § 401(a) of the Code and the tax-exempt status of any trust which forms a part of such plan under § 501(a) of the Code, and no event has occurred which would be reasonably likely to give rise to revocation of such qualified and tax-exempt status.
(d) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or in combination with any other event) obligate the Company or any of its Subsidiaries to pay any bonus, separation, severance, termination or similar benefit, accelerate any vesting schedule, increase any employee account balance, or alter or increase any benefits to any current or former employee. Without limiting the generality of the foregoing, no amount paid or payable (whether in cash, in property, or in the form of benefits) by the Company or any of its Subsidiaries in connection with the transactions contemplated hereby (either solely as a result thereof or as a result of such transactions in conjunction with any other event) will be an “excess parachute payment” within the meaning of Section 280G of the Code.
(e) None of the Company Employee Plans is subject to Title IV of ERISA, none of the Company Employee Plans is a Multiemployer Plan, and neither the Company nor any of its ERISA Affiliates contributes to, has contributed to, or has any Liability with respect to a Multiemployer Plan or a Benefit Plan subject to Title IV of ERISA. None of the Company or any of its Subsidiaries have any Liability for providing, under any Company Employee Plan or otherwise, any post-retirement medical or life insurance benefits, other than statutory liability for providing group health plan continuation coverage under Part 6 of Title I of ERISA and § 4980B of the Code. None of the Company Employee Plans is a multiple employer pension plan or a multiple employer welfare arrangement (within the meaning of § 3(40) of ERISA). There are no pending or, to the Company’s Knowledge, threatened Actions with respect to any Company Employee Plan (other than routine claims for benefits in the ordinary course of business) which could result in any material Liability to Buyer (whether direct or indirect) and, to the Company’s Knowledge, there are no facts or circumstances which could reasonably be expected to give rise to any such Actions.
(f) There have been no fiduciary failures, prohibited transactions or other acts or omissions by the Company or any of its Subsidiaries or, to the Company’s Knowledge, any other Person with respect to the Company Employee Plans that have given rise to or may give rise to material interest, fines, penalties, Taxes or related charges under ERISA, the Code or other applicable Law. Each Company Employee Plan has been operated in documentary and operational compliance with § 409A and § 457A of the Code.
(g) All contributions, insurance premiums and payments with respect to each Company Employee Plan have been timely made when due or, if not yet due, have been accrued in accordance with past custom and practice for the Company and its Subsidiaries.
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(h) Section 3.13(h) of the Disclosure Schedule sets forth a true and correct list of each employee of the Company and its Subsidiaries as of the date hereof.
Section 3.14 Compliance with Applicable Law.
(a) The Company and each of its Subsidiaries and each of their employees hold all approvals, authorizations, consents, franchises, charters, licenses, permits or certificates that are required by any Regulatory Agency (each a “Permit”) for the lawful conduct of their respective businesses and are (and have been since January 1, 2011) in compliance with, and are not (and have not been since January 1, 2011) in violation of, any applicable Law or Order, except in each case where the failure to hold such Permit or such noncompliance or violation would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect, and the Company has no Knowledge of, or has received written notice of any violations of any of the above, except for such violations that would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect.
(b) To the Company’s Knowledge, the Company and each of its Subsidiaries have properly administered all accounts for which the Company or any of its Subsidiaries acts as a fiduciary, including accounts for which the Company or any of its Subsidiaries serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment adviser, in accordance with the terms of the governing documents and applicable Law, except as would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect.
Section 3.15 Material Contracts.
(a) Section 3.15(a) of the Disclosure Schedule sets forth a complete and accurate list of each Contract to which the Company or any of its Affiliates is a party or is bound and which is a: (i) Contract for the purchase or sale of any material assets by the Company or any of its Subsidiaries other than those entered into in the ordinary course of business; (ii) Contract that contains any (A) exclusive dealing obligation, (B) “clawback” or similar undertaking requiring the reimbursement or refund of any fees, (C) “most favored nation” or similar provision, (D) provision that grants any right of first refusal or right of first offer or similar right or (E) that limits or purports to limit the ability of the Company or its Subsidiaries to own, sell, transfer, pledge (other than pledges entered into in the ordinary course of business) or otherwise dispose of any assets or business; (iii) Contract materially limiting the ability of the Company or its Subsidiaries to engage in any lines of business or to compete with any other Person or prohibiting the Company or its Subsidiaries from soliciting customers, clients or employees, in each case whether in any specified geographic region or business or generally; (iv) lease or other Contract (whether real, personal or mixed, tangible or intangible) pursuant to which the annualized rent is in excess of $100,000; (v) Contract in respect of any partnership, limited liability company, joint venture or similar arrangement involving a sharing of profits or losses; (vi) Contract or instrument for the borrowing of money or the guaranty of any obligation, where the Company or its Subsidiaries is a lender, borrower or guarantor; (vii) Contract with any Governmental Entity; (viii) Contract with any Affiliate; (ix) Contract (other than a Company Employee Plan) under which the Company or its Subsidiaries will have an obligation with respect to an “earn-out,” contingent purchase price or similar contingent payment obligation; (x) Contract that provides for an increased payment or benefit, or acceleration of rights, upon the execution of this Agreement or in connection with the completion of the transactions contemplated hereby; (xi) Contract with any of the largest ten (10) vendors to the Company and its Subsidiaries by expenditure by the Company and its Subsidiaries, taken as a whole, during the fiscal year ended December 31, 2013; or (xii) Contract by which the Company or any of its Subsidiaries could reasonably be expected to be required to indemnify any current or former director, officer or employee of the Company or any of its Affiliates. Each Contract, arrangement or commitment of the types described in this Section 3.15(a), whether or not set forth in the Disclosure Schedule, is referred to herein as a “Company Material Contract.”
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(b) Each Company Material Contract is valid and binding on the Company or its applicable Subsidiary and, to the Company’s Knowledge, each other party thereto, and is in full force and effect, except as enforcement may be limited by (A) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other laws affecting or relating to the rights of creditors generally, or (B) the rules governing the availability of specific performance, injunctive relief or other equitable remedies and general principles of equity, regardless of whether considered in a proceeding in equity or at law. The Company and each of its applicable Subsidiaries has performed in all material respects all of the obligations required to be performed by it to date under each Company Material Contract. No event or condition exists that constitutes or, after notice or lapse of time or both, will constitute, a material default on the part of the Company or any of its Subsidiaries or, to the Company’s Knowledge, any other party thereto, under any Company Material Contract. Neither the Company nor any of its Subsidiaries knows of, or has received notice of, any violation of any Company Material Contract by any of the other parties thereto.
Section 3.16 Regulatory Matters.
(a) None of the Company or any of its Subsidiaries is subject to any cease-and-desist or other order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or since January 1, 2011 has been ordered to pay any civil penalty by, or is, or since January 1, 2011 has been, a recipient of any supervisory letter from, or has outstanding any board resolutions adopted at the request or suggestion of any Regulatory Agency or other Governmental Entity (each, whether or not set forth in the Disclosure Schedule, a “Regulatory Agreement”), nor has the Company nor any of its Subsidiaries been advised since January 1, 2013 by any Regulatory Agency or other Governmental Entity that it is considering issuing or requiring any such Regulatory Agreement.
(b) Except for normal examinations conducted by a Regulatory Agency in the ordinary course of the business of the Company and its Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the Company’s Knowledge, examination or investigation into the business or operations of the Company or any of its Subsidiaries since January 1, 2013 (excluding regulatory sweeps and investigations relating to activities of segments of broker-dealers of which the Company and its Subsidiaries are included and not targeted specifically at the Company or any of its Subsidiaries), and neither the Company nor any of its Subsidiaries has been advised by any Regulatory Agency that such Regulatory Agency is contemplating any such examination or investigation. There are no unresolved violations set forth in any report relating to any examinations or inspections by any Regulatory Agency of any of the Company and its Subsidiaries. The Company and its Subsidiaries have fully resolved all “matters requiring attention,” “matters requiring immediate attention” or similar items as identified by any such Regulatory Agency.
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Section 3.17 Derivative Transactions; Margin Loans.
(a) All Derivative Transactions, whether entered into for the account of the Company or any of its Subsidiaries or for the account of a customer of the Company or any of its Subsidiaries, were duly authorized by the Company or its Subsidiaries and entered into in the ordinary course of business consistent with past practice and in accordance with prudent practice and applicable Laws and in accordance with the investment, securities, commodities, risk management and other policies, practices and procedures employed by the Company and its Subsidiaries, and with counterparties believed at the time to be financially responsible and able to understand (either alone or in consultation with their advisers) and to bear the risks of such Derivative Transactions. All of such Derivative Transactions are legal, valid and binding obligations of the Company or one of its Subsidiaries enforceable against it in accordance with their terms (except as may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity), and are in full force and effect. The Company and each of its applicable Subsidiaries have duly performed their obligations under the Derivative Transactions to the extent that such obligations to perform have accrued and, to the Company’s Knowledge, there are no breaches, violations or defaults or allegations or assertions of such by any party thereunder.
(b) Except as set forth in Section 3.17(b) of the Disclosure Schedule, all margin loans (as such term is defined under the Exchange Act) are cleared through MS&Co.’s clearing firm, were duly authorized by the Company or its Subsidiaries and entered into in the ordinary course of business consistent with past practice and in accordance with prudent practice and applicable Law and in accordance with the policies, practices and procedures employed by the Company and its Subsidiaries.
Section 3.18 Listing and Maintenance Requirements. The Company Common Stock is registered pursuant to Section 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from NASDAQ or any trading market on which the Company Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of NASDAQ or any other trading market.
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Section 3.19 Broker-Dealer Matters.
(a) MS&Co. is duly registered under the Exchange Act as a broker-dealer with the SEC, and is in compliance in all material respects with the applicable provisions of the Exchange Act, including the net capital requirements, customer protection requirements, and books and records requirements thereof. MS&Co. is a member in good standing of any SRO of which it is required to be a member, and is in compliance in all material respects with all applicable rules and regulations of such SROs. MS&Co. and each of its associated persons is duly registered, licensed or qualified under, and is in compliance in all material respects with, the applicable Laws and regulations of all jurisdictions in which it is required to be so registered, and each such registration, license or qualification is, to the Company’s Knowledge, in full force and effect and in good standing. There is no action, suit, proceeding or investigation pending or, to the Company’s Knowledge, threatened, that would reasonably be expected to lead to the revocation, amendment, failure to renew, limitation, suspension or restriction of any such registrations, licenses and qualifications. Section 3.19(a) of the Disclosure Schedule sets forth a complete list of all securities exchanges, boards of trade, clearing organizations, trade associations and similar organizations in which MS&CO. holds a membership or has been granted trading privileges and which memberships or trading privileges are material to the Company and its Subsidiaries. MS&Co. is a member of SIPC. MS&Co. has paid or has made adequate provision for the payment of all SIPC assessments which are due and payable.
(b) Except as disclosed on a Uniform Application for Broker-Dealer Registration on Form BD (a “Form BD”) any amendment to Form BD or other filing with FINRA or other SRO (collectively, “Regulatory Filings”), filed prior to the date of this Agreement, none of MS&Co. or any of its directors, officers, employees or “associated persons” (as defined in the Exchange Act) has been the subject of any disciplinary proceedings or orders of any Regulatory Agency arising under applicable Laws which would be required to be disclosed in Regulatory Filings. No such disciplinary proceeding or order is pending or, to the Company’s Knowledge, threatened. Except as disclosed in Regulatory Filings prior to the date of this Agreement, none of MS&Co. or any of its directors, officers, employees or “associated persons has been permanently enjoined by the order of any Regulatory Agency from engaging or continuing any conduct or practice in connection with any activity or in connection with the purchase or sale of any security. Except as disclosed in a Regulatory Filing filed prior to the date of this Agreement, none of MS&Co. or any of its directors, officers, employees or associated persons (i) is or has been ineligible to serve as a broker-dealer or an associated person of a broker-dealer under Section 15(b) of the Exchange Act, (ii) is subject to a “statutory disqualification” as defined in Section 3(a)(39) of the Exchange Act, or (iii) is subject to a disqualification that would be a basis for censure, limitations on the activities, functions or operations of, or suspension or revocation of the registration of MS&Co. as a broker-dealer, municipal securities dealer, government securities broker or government securities dealer under Section 15, Section 15B or Section 15C of the Exchange Act, and there is no action, suit, proceeding investigation pending, or to the Company’s Knowledge, threatened, that is reasonably likely to result in any such person being deemed ineligible as described in clause (i), subject to a “statutory disqualification” as described in clause (ii) or subject to a disqualification as described in clause (iii).
(c) None of MS&Co., or any of its directors, officers, employees or associated persons is subject to a “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification Event”) except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3), is applicable.
(d) Neither the Company nor any of its Subsidiaries is required to be registered as a commodity trading advisor, commodity pool operator, futures commission merchant or introducing broker under any applicable Laws. Neither the Company nor any of its Subsidiaries is required to be registered under the Investment Company Act of 1940, as amended.
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(e) MS&Co. has duly adopted written supervisory procedures reasonably required under applicable Laws.
(f) MS&Co. has delivered to the Buyer a true and complete copy of the MS&Co.’s report pursuant to Rule 17a-5(a) under the Exchange Act for the period ended December 31, 2015, which included: (i) computation of net capital; (ii) computation for determination of reserve requirements for broker-dealers; (iii) information relating to possession or control requirements; and (iv) computation for determination of segregation requirements for MS&Co., all as at December 31, 2015, (the “2015 Annual Audited Report”). In addition, MS&Co., has delivered to the Buyer a true and complete copy of the Company’s report pursuant to the SEC’s Rule 17a-5(a) for the quarterly period ended March 31, 2016 (the “Interim Focus Report”). The 2015 Annual Audited Report and the Interim Focus Report are fairly stated in all material respects and were prepared in accordance with the applicable rules and regulations of the SEC.
Section 3.20 Broker’s Fees. Except for Raymond James & Associates (the “Company Financial Advisor”), the fees of which shall be included in the calculation of Transaction Expenses, none of the Company or any of its Affiliates has employed any broker or finder or incurred any Liability for any broker’s fees, commissions or finder’s fees in connection with the transactions contemplated by this Agreement.
Section 3.21 Net Capital. MS&Co. is not, at present nor has it been within the past five (5) years, in violation of the applicable net capital provisions of the Exchange Act, the rules and regulations promulgated thereunder and the rules and regulations of FINRA and the SEC.
Section 3.22 Books and Records. MS&Co. maintains all necessary books and records pertaining to its business and operations as are required to be maintained by the Exchange Act, the rules and regulations promulgated thereunder, and any state securities laws or rules or regulations of any state in which MS&Co. is a registered broker-dealer.
Section 3.23 Fees and Assessments. As of the date hereof there are no fees or assessments owed to FINRA or SIPC by MS&Co.
Section 3.24 State Broker-Dealer Registrations. MS&Co. is registered as a broker-dealer in all fifty (50) states of the United States of America and the District of Columbia, and all of such registrations are current, and MS&Co. is in good standing as a registered broker-dealer in each such state or jurisdiction. As of the date hereof, no renewal or registration fee is due or owing to any such state or jurisdiction.
Section 3.25 No-State Inquiries. There has not been, and there are no pending inquiry, investigation, or disciplinary proceedings undertaken by any state, including any of the foregoing relating to state “blue-sky” laws and regulations, concerning MS&Co., or any of its officers, directors, registered principals or registered representatives. To the Knowledge of the Company, there is no threatened inquiry, investigation, administrative proceeding, or civil action undertaken or initiated by such states or jurisdictions including any of the foregoing relating to state “blue-sky” laws and regulations, concerning MS&Co. or its officers, directors, registered representatives, affiliates or associates.
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Section 3.26 State Net Capital Compliance. MS&Co. is not in violation of the net capital provisions required to be maintained by any state or jurisdiction in which MS&Co. does business, except as would not reasonably be expected to have a Company Material Adverse Effect.
Section 3.27 Broker-Dealer Registration. MS&Co. is a broker-dealer having duly registered with the SEC pursuant to Section 15 of the Exchange Act, which registration is in full force and effect. Neither the application for registration nor any amendment thereto contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.
(a) SIA is duly and properly registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) and is duly authorized to perform investment advisory services on behalf of its clients (the “SIA Clients”) under any applicable federal or state law and in all states in which its clients reside and where it conducts its advisory business.
(b) SIA’s Uniform Application for Investment Adviser Registration on Form ADV, including Parts 1 and 2 and all amendments thereto filed with the SEC and currently made available to SIA’s clients (the “Form ADV”), complies in all material respects with the applicable requirements of the Advisers Act.
(c) Neither SIA nor any other Person “associated” (as defined under the Advisers Act) with SIA has been subject to disqualification pursuant to Section 203 of the Advisers Act to serve as an “investment adviser” (as defined under the Advisers Act) or as an associated person of an investment adviser, or subject to disqualification pursuant to Rule 206(4)-3, under the Advisers Act.
(d) Each of SIA’s officers and employees who are required to be registered, licensed or qualified as an investment adviser representative under the Advisers Act or any other applicable Law in each case for the activities conducted by such officer or employee in respect of SIA is, and has been at all times so required, duly registered as such, and such registrations are, in full force and effect, or such Person is in the process of being registered as such within the time period required by applicable Law.
(e) All investment advisory agreements between SIA and SIA Clients (the “Advisory Agreements”), and all fees charged by SIA pursuant to such agreements, comply in all material respects with the requirements of the Advisers Act, and SIA has no SIA Clients that are registered as investment companies under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
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Article
IV
REPRESENTATIONS AND WARRANTIES OF MAJORITY SHAREHOLDER
The Majority Shareholder hereby represent and warrant to the Buyer that the statements contained in this Article IV are accurate, true and complete as of the date of this Agreement and, unless such statement is made as of a specific date, will be accurate, true and correct as of the Closing Date.
Section 4.01 Ownership. The Majority Shareholder owns the Majority Shares of record and beneficially free and clear of Liens. The Majority Shareholder has not granted any option or right, and is not a party to or bound by any Contract that requires or, upon the passage of time, the payment of money or occurrence of any other event, would require, the Majority Shareholder to transfer any Majority Shares to anyone other than Buyer.
Section 4.02 Authority; Non-Contravention; Governmental Consents.
(a) The Majority Shareholder has all requisite estate power and authority to enter into and to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Majority Shareholder and the consummation by the Majority Shareholder of the transactions contemplated hereby have been duly authorized by all necessary estate action on the part of the Majority Shareholder and no other estate proceedings on the part of the Majority Shareholder are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Majority Shareholder and, assuming due execution and delivery by Buyer, constitutes the valid and binding obligation of the Majority Shareholder, enforceable against the Majority Shareholder in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar Laws affecting creditors rights generally and by general principles of equity.
(b) The execution, delivery and performance of this Agreement by the Majority Shareholder and the consummation by the Majority Shareholder of the transactions contemplated by this Agreement, including the Minority Offer, do not and will not: (i) contravene or conflict with, or result in any violation or breach of, the Estate Organizational documents of the Majority Shareholders; (ii) conflict with or violate any Law applicable to the Majority Shareholder or any of its properties or assets; (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation, or require any Consent under any Contract to which the Majority Shareholder is a party or otherwise bound; or (iv) result in the creation of any Lien (other than Permitted Liens) on any of the properties or assets of the Majority Shareholder, except, in the case of each of clauses (ii), (iii) and (iv), for any conflicts, violations, breaches, defaults, terminations, amendments, accelerations, cancellations or Liens, or where the failure to obtain any Consents, in each case, would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Majority Shareholder’s ability to consummate the transactions contemplated by this Agreement.
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(c) Except for Company Regulatory Approvals, no Consents of any Regulatory Agency are necessary in connection with (i) the execution and delivery by Buyer of this Agreement and (ii) the consummation by the Majority Shareholder of the transactions contemplated by this Agreement. There are no Consents of any other third party required to be obtained in connection with the execution and delivery by the Majority Shareholder of this Agreement and the consummation by the Majority Shareholder of the transactions contemplated by this Agreement.
Section 4.03 Legal Proceedings. As of the date hereof, there is no pending or, to the Knowledge of the Majority Shareholder, threatened, Legal Action against the Majority Shareholder, nor is there any injunction, order, judgment, ruling or decree imposed upon the Majority Shareholder, in each case, by or before any Regulatory Agency, that would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Majority Shareholder’s ability to consummate the transactions contemplated by this Agreement.
Article
V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Company as follows:
Section 5.01 Authority; Non-contravention; Governmental Consents.
(a) Buyer has all requisite power, authority and legal capacity to enter into and to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Buyer and the consummation by Buyer of the Minority Offer and the other transactions contemplated hereby have been duly authorized and no other proceedings on the part of Buyer are necessary to authorize the execution and delivery of this Agreement or to consummate the Minority Offer and the other transactions contemplated hereby. This Agreement has been duly executed and delivered by Buyer and, assuming due execution and delivery by the Company, constitutes the valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar Laws affecting creditors rights generally and by general principles of equity.
(b) The execution, delivery and performance of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated by this Agreement, including the Minority Offer, do not and will not: (i) conflict with or violate any Law applicable to Buyer or any of its properties or assets; (ii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation, or require any Consent under any Contract to which Buyer is a party or otherwise bound, except, in the case of each of clauses (i), (ii) and (iii), for any conflicts, violations, breaches, defaults, terminations, amendments, accelerations, cancellations or Liens, or where the failure to obtain any Consents, in each case, would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Buyer’s ability to consummate the transactions contemplated by this Agreement.
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(c) No Consents of any Regulatory Agency are necessary in connection with (i) the execution and delivery by Buyer of this Agreement and (ii) the consummation by Buyer of the transactions contemplated by this Agreement including the Minority Share Closing and the Majority Share Closing. There are no Consents of any other third party required to be obtained in connection with the execution and delivery by Buyer of this Agreement and the consummation by Buyer of the transactions contemplated by this Agreement.
Section 5.02 Information in the Minority Offer Documents. The Minority Offer Documents (and any amendment thereof or supplement thereto) will not, when filed with the SEC or at the time of distribution or dissemination thereof to the Company’s shareholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, no representation or warranty is made by Buyer with respect to statements made therein supplied by the Company or its Representatives expressly for inclusion in the Minority Offer Documents. The Minority Offer Documents will comply as to form in all material respects with applicable federal securities Laws and the rules and regulations thereunder.
Section 5.03 Financial Capability. Buyer has or will have at or prior to the Minority Shares Closing, sufficient funds to pay the Adjusted Majority Shares Purchase Price and the aggregate Minority Offer Price contemplated by this Agreement and to perform the other obligations of Buyer contemplated by this Agreement.
Section 5.04 Legal Proceedings. As of the date hereof, there is no pending or, to the Knowledge of Buyer, threatened, Legal Action against Buyer or any of its Subsidiaries, nor is there any injunction, order, judgment, ruling or decree imposed upon Buyer or any of its Subsidiaries, in each case, by or before any Regulatory Agency, that would, individually or in the aggregate, reasonably be expected to have a material adverse effect on Buyer’s ability to consummate the transactions contemplated by this Agreement.
Section 5.05 Ownership of Company Common Stock. As of the date hereof, Buyer and/or its Affiliates beneficially own (as defined in Rule 13d-3 of the Exchange Act) less than 5% of the issued and outstanding shares of Company Common Stock.
Section 5.06 BCL 912. Prior to the date hereof (a) Buyer was not an “interested shareholder” as defined in Section 912 of the BCL, and Buyer has taken, or authorized or permitted any Representatives of Buyer to take, any action that would cause Buyer to be deemed an “interested shareholder” as defined in Section 912 of the BCL.
Section 5.07 Broker-Dealer Matters. Each Affiliate of Buyer that is registered under the Exchange Act as a broker-dealer with the SEC is (a) in compliance in all material respects with the applicable provisions of the Exchange Act, including the net capital requirements and customer protection requirements thereof, and (b) a member in good standing of any SRO of which it is required to be a member, and is in compliance in all material respects with all applicable rules and regulations of such SROs. Each Affiliate of Buyer that is registered under the Exchange Act as a broker-dealer with the SEC (and each associated person thereof) is registered, licensed or qualified under, and is in compliance in all material respects with, the applicable Laws and regulations of all jurisdictions in which it is required to be so registered, and each such registration, license or qualification is in full force and effect and in good standing. There is no action, suit, proceeding or investigation pending, or to Buyer’s Knowledge, threatened, that would reasonably be expected to lead to the revocation, amendment, failure to renew, limitation, suspension or restriction of any such registrations, licenses and qualifications or any material delay in obtaining approvals of any Regulatory Agency for Buyer’s consummation of the transactions contemplated hereby. None of Buyer, any Affiliate of Buyer that is registered under the Exchange Act as a broker-dealer with the SEC, or any of their respective directors, officers, employees or associated persons is subject to a Disqualification Event except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3), is applicable.
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Article
VI
PRE AND POST CLOSING COVENANTS
Section 6.01 Conduct of Business of the Company.
(a) The Company shall, and shall cause each of its Subsidiaries to, during the period from the date of this Agreement until the Closing, except as expressly contemplated by this Agreement or as required by applicable Law or with the prior written consent of Buyer (i) conduct its business in the ordinary course of business consistent with past practice and in compliance in all material respects with the Securities Act, the Exchange Act and SRO rules and regulations, and, to the extent consistent therewith, the Company shall; (ii) cause each of its Subsidiaries to, use its best efforts to preserve substantially intact its and its Subsidiaries’ business organization, to keep available the services of its and its Subsidiaries’ current officers and employees, to preserve its and its Subsidiaries’ present relationships with customers, suppliers, distributors, licensors, licensees and other Persons having business relationships with it; and (iii) confer with Representatives of the Buyer to keep them informed with respect to the operational matters and to report the general status of the ongoing operations of the business of the Company and its Subsidiaries.
(b) Without limiting the generality of Section 6.01(a), between the date of this Agreement and the Closing, except as otherwise expressly contemplated by this Agreement (including without limitation in connection with the SBSF Disposition) or as set forth in Section 6.01 of the Disclosure Schedule or as required by applicable Law, the Company shall not, nor shall it permit any of its Subsidiaries to, without the prior written consent of Buyer (which consent shall not be unreasonably withheld or delayed):
(i) amend or propose to amend its certificate of incorporation or by-laws (or other comparable organizational documents);
(ii) (A) split, combine or reclassify any Company Securities or Company Subsidiary Securities, (B) repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any Company Securities or Company Subsidiary Securities, (C) declare, set aside or pay any dividend or distribution (whether in cash, stock, property or otherwise) in respect of, or enter into any Contract with respect to the voting of, any shares of its capital stock (other than dividends from its direct or indirect wholly-owned Subsidiary);
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(iii) issue, sell, pledge, dispose of or encumber any Company Securities or Company Subsidiary Securities, other than (A) the issuance of shares of Company Common Stock upon the exercise of any Company Equity Award outstanding as of the date of this Agreement in accordance with its terms, (B) the issuance of shares of Company Common Stock in respect of other equity compensation awards outstanding under Company Stock Plans as of the date of this Agreement in accordance with their terms, or (C) the issuance of Company Equity Awards and the issuance of shares of Company Common Stock upon the exercise of such Company Equity Awards (other than directors or executive officers of the Company) in accordance with their terms in the ordinary course of business consistent with past practice;
(iv) (A) increase the compensation payable or that could become payable by the Company or any of its Subsidiaries to directors, officers or employees, other than increases in compensation made in the ordinary course of business consistent with past practice, (B) enter into any new or amend in any material respect, any existing employment, severance, retention or change in control agreement with any of its past or present officers or employees, (C) promote any officers or employees, except in connection with the Company’s annual or quarterly compensation review cycle or as the result of the termination or resignation of any officer or employee, or (D) establish, adopt, enter into, amend, terminate, exercise any discretion under, or take any action to accelerate rights under any Company Employee Plans or any plan, agreement, program, policy, trust, fund or other arrangement that would be a Company Employee Plan if it were in existence as of the date of this Agreement, or make any contribution to any Company Employee Plan, other than contributions required by Law, the terms of such Company Employee Plans as in effect on the date hereof or that are made in the ordinary course of business consistent with past practice;
(v) acquire, by merger, consolidation, acquisition of stock or assets, or otherwise, any business or Person or division thereof or make any loans, advances or capital contributions to or investments in any Person;
(vi) (A) transfer, license, sell, lease or otherwise dispose of any assets (whether by way of merger, consolidation, sale of stock or assets, or otherwise), including the capital stock or other equity interests in any Subsidiary of the Company, provided that the foregoing shall not prohibit the Company and its Subsidiaries from transferring, licensing, selling, leasing or disposing of obsolete equipment or assets being replaced, in each case in the ordinary course of business consistent with past practice, or (B) adopt or effect a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
(vii) repurchase, prepay or incur any indebtedness for borrowed money or guarantee any such indebtedness of another Person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any debt securities of another Person, enter into any “keep well” or other Contract to maintain any financial statement condition of any other Person (other than any wholly-owned Subsidiary of it) or enter into any arrangement having the economic effect of any of the foregoing, other than in connection with the financing of ordinary course trade payables consistent with past practice;
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(viii) enter into or amend or modify in any material respect, or consent to the termination of (other than at its stated expiry date), any Company Material Contract or any other Contract that, if in effect as of the date hereof would constitute a Company Material Contract hereunder;
(ix) institute, settle or compromise any Legal Actions pending or threatened before any arbitrator, court or other Governmental Entity involving the payment of monetary damages by the Company or any of its Subsidiaries, other than (A) any Legal Action brought against Buyer arising out of a breach or alleged breach of this Agreement by Buyer, and (B) the settlement of claims, liabilities or obligations reserved against on the balance sheet of the Company for the period ended December 31, 2016, provided that the amount of any such settlement of a claim, liability or obligation shall not exceed the amount reserved for that particular claim, liability or obligation; and, provided further, that neither the Company nor any of its Subsidiaries shall settle or agree to settle any Legal Action which settlement involves a conduct remedy or injunctive or similar relief or has a restrictive impact on the Company’s business;
(x) make any change in any method of financial accounting principles or practices, in each case except for any such change required by a change in GAAP or applicable Law;
(xi) (A) settle or compromise any material Tax claim, audit or assessment, (B) make or change any material Tax election, change any annual Tax accounting period, adopt or change any method of Tax accounting, (C) amend any material Tax Returns or file claims for material Tax refunds, or (D) enter into any material closing agreement, surrender in writing any right to claim a material Tax refund, offset or other reduction in Tax Liability or consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment relating to the Company or its Subsidiaries;
(xii) enter into any material agreement, agreement in principle, letter of intent, memorandum of understanding or similar Contract with respect to any joint venture, strategic partnership or alliance;
(xiii) take any action to exempt any Person from, or make any acquisition of securities of the Company by any Person not subject to, any state takeover statute or similar statute or regulation that applies to Company with respect to a Takeover Proposal or otherwise, including the restrictions on “business combinations” set forth in Section 912 of the BCL, except for Buyer or any of its respective Subsidiaries or Affiliates, or the transactions contemplated by this Agreement;
(xiv) Incur any debt, liability or obligation, direct or indirect, whether accrued, absolute, contingent or otherwise, other than current liabilities incurred in the ordinary and usual course of its business, or pay any debt, liability or obligation of any kind other than such current liabilities and current maturities of existing long-term debt;
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(xv) Assume, guarantee, endorse or otherwise become responsible for the obligations of any other individual, firm or corporation or make any loans or advances to any individual, firm or corporation, other than loans and advances made in the ordinary and usual course of its business which are not for the purposes of meeting the Seller’s net capital requirements under the SEC’s Rule 15c3-1;
(xvi) Enter into any transaction with the Majority Shareholder, or any director, officer, shareholder or affiliate of the Company or any Subsidiary, except as contemplated by this Agreement;
(xvii) Elect, appoint or designate any new officers or directors of the Company or any Subsidiary; or
(xviii) agree or commit to do any of the foregoing.
Section 6.02 Registrations; Regulatory Matters.
(a) The Company shall maintain (i) MS&Co.’s registration as a registered “broker-dealer” under the Exchange Act and under the laws of each state in which MS&Co. is registered as a broker-dealer and, (ii) MS&Co.’s membership in FINRA and each other SRO necessary for the operation of its business.
(b) The Company shall cause MS&Co. (i) to take all action to maintain all rights, privileges, broker-dealer licenses and memberships, broker-dealer registrations necessary or desirable in the normal conduct of its business (ii) to comply with all rules and regulations of the SEC and FINRA applicable to it (including such rules and regulations dealing with net capital requirements) and, to the extent applicable, all similar, equivalent or comparable state or foreign statutes, rules, regulations and other regulatory requirements, including all state “blue-sky” laws, (iii) to deliver to Buyer’s Representative a copy of each Focus Report filed with the SEC and (iv) to promptly deliver copies of each notice or other correspondence received from the SEC, FINRA or other SRO (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation by such agency regarding financial or other operational results of MS&Co.
(c) The Company shall maintain SIA’s status as registered “investment adviser” under the Advisers Act.
(d) The Company shall cause SIA to (i) take all action to maintain all rights, privileges and investment adviser registrations necessary or desirable in the normal conduct of its business, (ii) to comply with all rules and regulations of the SEC applicable to it and, to the extent applicable, all similar, equivalent or comparable foreign statutes, rules, regulations, and other regulatory requirements, and (iii) unless previously delivered, to promptly deliver to Buyer copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation by such agency regarding financial or other operational results of SIA.
(e) If consent is required by applicable Law or by the Advisory Agreement of any SIA Client for the deemed assignment of the Advisory Agreement with such SIA Client, then as promptly as practicable following the date of this Agreement, the Company shall cause SIA to prepare and deliver to each such SIA Client a written notice (the “Client Notice”) informing such SIA Client of such deemed assignment and of the transactions contemplated by this Agreement and requesting such consent in writing to such deemed assignment.
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(f) The Company shall cause SIA to provide the Buyer a reasonable opportunity prior to distribution of the Client Notices to review and comment on the Client Notices (with such comments to be considered for inclusion in good faith).
(g) Buyer and the Company agree that any consent required for the deemed assignment of any Advisory Agreement with an SIA Client shall be deemed given for all purposes under this Agreement (i) if written consent is expressly required under the respective Advisory Agreement, upon receipt of the written consent requested in the Client Notice or (ii) if consent other than written consent is permitted under applicable Law and the respective Advisory Agreement, (x) upon receipt of a written consent requested in the Client Notice or (y) if no such written consent is received, if thirty (30) days shall have passed since the sending of a written notice (the “Negative Consent Notice”) to such SIA Client (which Negative Consent Notice may be included in the Client Notice) informing such Client: (A) of the intention to complete the transactions contemplated by this Agreement, which will result in a deemed assignment of the Advisory Agreement for such SIA Client; (B) of the intention of SIA to continue to provide the advisory services pursuant to the existing Advisory Agreement with such SIA Client after the Closing if such SIA Client does not terminate such agreement prior to the Closing; and (C) that the consent of such SIA Client will be deemed to have been granted if such SIA Client continues to accept such advisory services for a period of at least thirty (30) days after the sending of the Negative Consent Notice without termination; provided that, in any case under clause (i) or (ii), no consent shall be deemed to have been given by an SIA Client for any purpose under this Agreement if at any time prior to the Closing such SIA Client notifies SIA in writing that such SIA Client has not so consented or has terminated its Advisory Agreement (and such notice is not withdrawn or superseded).
Section 6.03 Other Actions. From the date of this Agreement until the earlier to occur of the Closing or the termination of this Agreement in accordance with the terms set forth in Article VIII, the Company and Buyer shall not, and shall not permit any of their respective Subsidiaries to, take, or agree or commit to take, any action that would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the consummation of the Minority Offer or the other transactions contemplated hereby.
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Section 6.04 Access to Information; Confidentiality.
(a) From the date of this Agreement until the earlier to occur of the Closing or the termination of this Agreement in accordance with the terms set forth in Article VIII, the Company shall, and shall cause its Subsidiaries to, afford to Buyer and Buyer’s Representatives access, at reasonable times and in a manner as shall not unreasonably interfere with the business or operations of the Company or any Subsidiary thereof, to the officers, employees, accountants, agents, properties, offices and other facilities and to all books, records, customer accounts, contracts and other assets of the Company and its Subsidiaries, and the Company shall, and shall cause its Subsidiaries to, furnish promptly to Buyer such other information concerning the business and properties of the Company and its Subsidiaries as Buyer may reasonably request from time to time. Neither the Company nor any of its Subsidiaries shall be required to provide access to or disclose information where such access or disclosure would jeopardize the protection of attorney-client privilege or contravene any Law (it being agreed that the parties shall use their reasonable best efforts to cause such information to be provided in a manner that would not result in such jeopardy or contravention). No investigation shall affect the Company’s representations and warranties contained herein, or limit or otherwise affect the remedies available to Buyer pursuant to this Agreement.
(b) Buyer hereby agrees that any and all information furnished to Buyer, its Affiliates or their respective Representatives by the Company, its Affiliates or their respective Representatives, whether before or after the date of this Agreement, together with any reports, analyses, compilations, memoranda, notes and any other writings prepared by Buyer, its Affiliates or their respective Representatives which contain, reflect or are based upon such information (collectively, the “Confidential Information”), will be kept confidential and shall not be disclosed and shall not be used by Buyer, its Affiliates or their respective Representatives for any purpose other than evaluating the transactions contemplated by this Agreement. The Confidential Information includes not only written information, but information transferred orally, visually, electronically, or by any other means. The term “Confidential Information” shall not include any information which: (i) is or becomes generally available to the public other than as a result of any breach of this Agreement by Buyer, its Affiliates or their respective Representatives, (ii) become available to Buyer on a non-confidential basis from a source (other than the Company, any of its Subsidiaries or their respective Representatives) which has represented to us that such source is entitled to disclose it, or (iii) were known to Buyer on a non-confidential basis prior to its disclosure to you by the Company, its Affiliates or their respective Representatives. In the event that Buyer, its Affiliates or their respective Representatives are required to disclose any Confidential Information in connection with any judicial or administrative proceedings (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigation demand or similar process) Buyer shall in advance of such disclosure provide the Company with prompt notice of such requirement(s). Buyer shall, to the extent legally permissible, provide the Company, in advance of any such disclosure, with copies of any Confidential Information Buyer intends to disclose (and, if applicable, the text of the disclosure language itself) and to cooperate with the Company to the extent it may seek to limit such disclosure. If, in the absence of a protective order or the receipt of a waiver from the Company after a request in writing therefor is made by Buyer (such request to be made as soon as practicable to allow the Company a reasonable amount of time to respond thereto), Buyer, its Affiliates or their respective Representatives are legally required to disclose Confidential Information to any tribunal or in order to comply with the federal securities laws, Buyer may disclose such information without liability hereunder. This Section 6.04(b) shall survive the termination of this Agreement in accordance with the terms set forth herein.
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(a) The Majority Shareholder shall not, and shall cause the Company and its Subsidiaries not to, and shall not authorize or permit the Company and its Subsidiaries Representatives to, directly or indirectly, solicit, initiate or knowingly take any action to facilitate or encourage the submission of any Takeover Proposal or the making of any proposal that could reasonably be expected to lead to any Takeover Proposal, or subject to Section 6.05(b) (i) conduct or engage in any discussions or negotiations with, disclose any non-public information relating to the Company or any of its Subsidiaries to, afford access to the business, properties, assets, books or records of the Company or any of its Subsidiaries to, or knowingly assist, participate in, facilitate or encourage any effort by, any third party that is seeking to make, or has made, any Takeover Proposal, (ii) (A) amend or grant any waiver or release under any standstill or similar agreement with respect to any class of equity securities of the Company or any of its Subsidiaries or (B) approve any transaction under, or any third party becoming an “interested shareholder” under, Section 912 of the BCL, or (iii) enter into any agreement in principle, letter of intent, term sheet, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other Contract relating to any Takeover Proposal (each, a “Company Acquisition Agreement”). Subject to Section 6.05(b), neither the Company Board nor any committee thereof shall fail to make, withdraw, amend, modify or materially qualify, in a manner adverse to Buyer, the Company Board Recommendation, or recommend a Takeover Proposal, or make any public statement inconsistent with the Company Board Recommendation, or resolve or agree to take any of the foregoing actions (any of the foregoing, a “Company Adverse Recommendation Change”). The Majority Shareholder shall, and shall cause the Company, its Subsidiaries and their Representatives to cease immediately and cause to be terminated, and shall not authorize or knowingly permit any of its or their Representatives to continue, any and all existing activities, discussions or negotiations, if any, with any third party conducted prior to the date hereof with respect to any Takeover Proposal and shall use its reasonable best efforts to cause any such third party (or its agents or advisors) in possession of non-public information in respect of the Company or any of its Subsidiaries that was furnished by or on behalf of the Company and its Subsidiaries to return or destroy (and confirm destruction of) all such information.
(b) Notwithstanding Section 6.05(a), prior to the Closing, the Company Board, directly or indirectly through any Representative, may, subject to Section 6.05(c) (i) participate in negotiations or discussions with any third party that has made (and not withdrawn) after the date of this Agreement a bona fide, unsolicited Takeover Proposal in writing, which did not result from a breach of Section 6.05(a), that the Company Board believes in good faith, after consultation with outside legal counsel and the Company Financial Advisor, constitutes or would reasonably be expected to result in a Superior Proposal, (ii) thereafter furnish to such third party non-public information relating to the Company or any of its Subsidiaries pursuant to an executed confidentiality agreement that constitutes an Acceptable Confidentiality Agreement, (iii) following receipt of and on account of a Superior Proposal, make a Company Adverse Recommendation Change, and/or (iv) take any action that any court of competent jurisdiction orders the Company to take (which order remains unstayed), but in each case referred to in the foregoing clauses (i) through (iv), only if the Company Board determines in good faith, after consultation with outside legal counsel, that the failure to take such action would reasonably be expected to cause the Company Board to be in breach of its fiduciary duties under applicable Law. Nothing contained herein shall prevent the Company Board from disclosing to the Company’s stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act with regard to a Takeover Proposal, if the Company determines, after consultation with outside legal counsel, that failure to disclose such position would constitute a violation of applicable Law.
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(c) The Company Board shall not take any of the actions referred to in clauses (i) through (iv) of Section 6.05(b) unless the Company shall have delivered to Buyer a prior written notice advising Buyer that it intends to take such action. The Company shall notify Buyer promptly (but in no event later than forty-eight (48) hours) after it obtains of the receipt by the Company (or any of its Representatives) of any Takeover Proposal, any inquiry that would reasonably be expected to lead to a Takeover Proposal, any request for non-public information relating to the Company or any of its Subsidiaries or for access to the business, properties, assets, books or records of the Company or any of its Subsidiaries by any third party. In such notice, the Company shall identify the details of the material terms and conditions of, any such Takeover Proposal, indication or request, if and to the extent such disclosure is permitted in accordance with any applicable confidentiality obligations. The Company shall keep Buyer fully informed, on a current basis, of the status and material terms of any such Takeover Proposal, indication or request, including any material amendments or proposed amendments as to price and other material terms thereof.
(d) Notices of Certain Events. The Company shall notify Buyer, and Buyer shall notify the Company, promptly of (i) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement, (ii) any notice or other communication from any Governmental Entity in connection with the transactions contemplated by this Agreement, and (iii) any Legal Actions commenced, or to such party’s Knowledge, threatened, against the Company or any of its Subsidiaries or Buyer or its Subsidiaries, as applicable, that are related to the transactions contemplated by this Agreement, in each case such that the conditions set forth in Section 7.02 or Section 7.03 would not be satisfied or would give rise to a right a termination set forth in Section 8.03(b) or Section 8.04(a), as the case may be. In no event shall (x) the delivery of any notice by a party pursuant to this Section 6.05(b) limit or otherwise affect the respective rights, obligations, representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement, or (y) disclosure by the Company or Buyer be deemed to amend or supplement the Disclosure Schedule or constitute an exception to any representation or warranty.
Section 6.06 Employees; Benefit Plans.
(a) Commencing at the Closing, Buyer shall cause the Company and each of its Subsidiaries, as applicable, to provide the Company Employees to whom the Buyer has extended offers of continued employment after the Minority Shares Closing (which, for avoidance of doubt, shall exclude the individuals listed Section 6.06(a) of the Disclosure Schedule) and who have elected to remain employed immediately after the Closing, (collectively, the “Company Continuing Employees”) with (i) base salary that is no less favorable than the base salary provided by the Company and its Subsidiaries on the date of this Agreement, (ii) employee benefits that are no less favorable than benefits provided by the Buyer to its similarly situated employees, and (iii) discretionary bonus opportunities, which shall be payable, if at all, in Company’s sole discretion; provided, however, that the Company and its Subsidiaries shall have the right to terminate any Company Continuing Employee after the Majority Shares Closing if such termination is for cause as customarily defined.
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(b) With respect to any “employee benefit plan” as defined in Section 3(3) of ERISA maintained by Buyer or any of its Subsidiaries, excluding both any retiree healthcare plans or programs maintained by Buyer or any of its Subsidiaries and any equity compensation arrangements maintained by Buyer or any of its Subsidiaries (collectively, “Buyer Benefit Plans”) in which any Company Continuing Employees will participate effective as of the Closing, Buyer shall, or shall cause the Surviving Corporation to, recognize all service of the Company Continuing Employees with the Company or any of its Subsidiaries, as the case may be as if such service were with Buyer, for vesting and eligibility purposes (but not for (i) purposes of early retirement subsidies under any Buyer Benefit Plan that is a defined benefit pension plan or (ii) benefit accrual purposes, except for vacation, if applicable) in any Buyer Benefit Plan in which such Company Continuing Employees may be eligible to participate after the Closing; provided that such service shall not be recognized to the extent that (y) such recognition would result in a duplication of benefits or (z) such service was not recognized under the corresponding Company Employee Plan.
(c) This Section 6.06 shall be binding upon and inure solely to the benefit of each of the parties to this Agreement, and nothing in this Section 6.06, express or implied, shall confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Section 6.06. Nothing contained herein, express or implied (i) shall be construed to establish, amend or modify any benefit plan, program, agreement or arrangement or (ii) shall alter or limit the ability of the Company, Buyer or any of their respective Affiliates to amend, modify or terminate any benefit plan, program, agreement or arrangement at any time assumed, established, sponsored or maintained by any of them. The parties hereto ac and agree that the terms set forth in this Section 6.06 shall not create any right in any Company Employee or any other Person to any continued employment with the Company, Buyer or any of their respective Subsidiaries or compensation or benefits of any nature or kind whatsoever.
(d) With respect to matters described in this Section 6.06, the Company will not send any written notices or other written communication materials to Company Employees without the prior written consent of Buyer.
Section 6.07 Regulatory Consents, Authorizations, Etc. Each party hereto will use its commercially reasonable efforts to obtain all consents, authorizations, orders and approvals of, and to make all filings and registrations with, any Regulatory Agency or any other Person which is required for or in connection with the consummation by it of the transactions contemplated hereby and will cooperate fully with the other parties in assisting them to obtain such consents, authorizations, orders and approvals and to make such filings and registrations. No party hereto will take or omit to take any action for the sole purpose of delaying, impairing or impeding the receipt of any required consent, authorization, order or approval or the making of any required filing or registration.
Section 6.08 Directors’ and Officers’ Indemnification and Insurance.
(a) Buyer agrees that all rights to indemnification, advancement of expenses and exculpation by the Company now existing in favor of each Person who is now, or has been at any time prior to the date hereof or who becomes prior to the Closing an officer or director of the Company and its Subsidiaries (each an “D&O Indemnified Party”) as provided in the Company Charter Documents, in each case as in effect on the date of this Agreement, shall survive the Closing and shall remain in full force and effect in accordance with their terms, and, in the event that any proceeding is pending or asserted or any claim made during such period, until the final disposition of such proceeding or claim.
(b) The Company shall purchase “tail” coverage with respect to the Company’s directors and officers policies in effect prior to the Closing in an amount of $15,000,000 of coverage (the “D&O Coverage”). Buyer, the Company and the Majority Shareholder hereby acknowledge that the insurance quote obtained by the Company in connection with the D&O Coverage is attached hereto is as Exhibit D.
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(c) The obligations of Buyer and the Company under this Section 6.08 shall survive the Closing and shall not be terminated or modified in such a manner as to adversely affect any D&O Indemnified Party to whom this Section 6.08 applies without the consent of such affected Indemnified Party (it being expressly agreed that the D&O Indemnified Parties to whom this Section 6.08 applies shall be third party beneficiaries of this Section 6.08, each of whom may enforce the provisions of this Section 6.08).
(d) In the event that, after the Closing, Buyer, the Company or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in either such case, proper provision shall be made so that the successors and assigns of Buyer or Company, as the case may be, shall assume all of the obligations set forth in this Section 6.08. The agreements and covenants contained herein shall not be deemed to be exclusive of any other rights to which any D&O Indemnified Party is entitled, whether pursuant to Law, Contract or otherwise. Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company or its officers, directors and employees, it being understood and agreed that the indemnification provided for in this Section 6.08 is not prior to, or in substitution for, any such claims under any such policies.
Section 6.09 Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions set forth in this Agreement (including those contained in this Section 6.09), each of the parties hereto shall, and shall cause its Subsidiaries to, use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, and to satisfy all conditions to, in the most expeditious manner practicable, the Minority Offer and the transactions contemplated hereby, including (i) the obtaining of all necessary Consents from Governmental Entities, (ii) the obtaining of all necessary Consents from third parties, and (iii) the execution and delivery of any additional instruments necessary to consummate the Minority Offer and to fully carry out the purposes of this Agreement. The Company and Buyer shall, subject to applicable Law, promptly (x) cooperate and coordinate with the other in the taking of the actions contemplated by clauses (i), (ii) and (iii) immediately above and (y) supply the other with any information that may be reasonably required in order to effectuate the taking of such actions. Each party hereto shall promptly inform the other party or parties hereto, as the case may be, of any communication from any Governmental Entity regarding any of the transactions contemplated by this Agreement. If the Company or Buyer receives a request for additional information or documentary material from any Governmental Entity with respect to the transactions contemplated by this Agreement, then it shall use reasonable best efforts to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compliance with such request, and, if permitted by applicable Law and by any applicable Governmental Entity, provide the other party’s counsel with advance notice and the opportunity to attend and participate in any meeting with any Governmental Entity in respect of any filing made thereto in connection with the transactions contemplated by this Agreement.
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(b) In the event that any administrative or judicial action or proceeding is instituted (or threatened to be instituted) by a Governmental Entity or private party challenging the Minority Offer, or any other transaction contemplated by this Agreement, or any other agreement contemplated hereby, the Company shall cooperate in all respects with Buyer and shall use their reasonable best efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any Order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement. Notwithstanding anything in this Agreement to the contrary, none of Buyer or any of its Affiliates shall be required to defend, contest or resist any action or proceeding, whether judicial or administrative, or to take any action to have vacated, lifted, reversed or overturned any Order, in connection with the transactions contemplated by this Agreement.
(c) Notwithstanding anything to the contrary set forth in this Agreement, Buyer shall be responsible for ensuring that the Company and its Subsidiaries are sufficiently capitalized as of the Closing to operate Company’s and its Subsidiaries businesses in accordance with applicable regulatory requirements after giving effect to the Majority Share Closing.
Section 6.10 Public Announcements. The initial press release with respect to this Agreement and the transactions contemplated hereby shall be a release mutually agreed to by the Company and Buyer. Thereafter, each of the Company and Buyer agrees that no public release or announcement concerning the Minority Offer and the other transactions contemplated hereby shall be issued by any party without the prior written consent of the Company and Buyer (which consent shall not be unreasonably withheld or delayed), except as such release or announcement may be permitted by Section 6.05 or required by applicable Law or the rules or regulations of any applicable Regulatory Agency to which the relevant party is subject, wherever situated, in which case the party required to make the release or announcement shall consult with the other party about, and allow the other party reasonable time to comment on such release or announcement in advance of such issuance.
Section 6.11 Takeover Statutes. If any “control share acquisition,” “fair price,” “moratorium” or other anti-takeover Law becomes or is deemed to be applicable to the Company, Buyer, the Minority Offer, the acquisition of shares of Company Common Stock pursuant to the Minority Offer or any other transaction contemplated by this Agreement, then each of the Company, Buyer and their respective board of directors shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to render such anti-takeover Law inapplicable to the foregoing.
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Section 6.12 Section 16 Matters. Prior to the Closing, the Company shall take all such steps as may be required to cause to be exempt under Rule 16b-3 promulgated under the Exchange Act any dispositions of shares of Company Common Stock (including derivative securities with respect to such shares) that are treated as dispositions under such rule and result from the Minority Offer and the other transactions contemplated hereby by each director or officer of the Company who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company.
Section 6.13 Rule 14d-10(d) Matters. Prior to the Closing, the Company (acting through the compensation committee of the Company Board) shall take all such steps as may be required to cause each agreement, arrangement or understanding entered into by the Company or a Subsidiary of the Company on or after the date hereof with any of its officers, directors or employees pursuant to which consideration is paid to such officer, director or employee to be approved as an “employment compensation, severance or other employee benefit arrangement” within the meaning of Rule 14d-10(d)(1) under the Exchange Act and to satisfy the requirements of the non-exclusive safe harbor set forth in Rule 14d-10(d) under the Exchange Act.
Section 6.14 Restrictive Covenants.
(a) Buyer acknowledges and agrees that SBS and SBSF shall be continue to be entitled to use the “Seibert” name from and after the date hereof in connection with the names of such entities and in accordance with the license granted by MS&Co. to SBS and SBSF. Notwithstanding the foregoing, Buyer shall, and shall cause its Affiliates, the Company and the Company’s Subsidiaries to refrain from using the “Muriel Siebert & Co.” or “Siebert” names or any derivations thereof, other than (A) in connection with the Company’s retail brokerage business name during a transition period after the Closing, during which the Company’s retail brokerage business is consolidated and integrated with the Buyer’s retail brokerage business, and (B) use the “Siebert” name as part of a d/b/a designation or trade name solely in connection with the Company’s and Buyer’s retail brokerage business; provided, however, that in no event shall Buyer, and Buyer shall cause its Affiliates, the Company and the Company’s Subsidiaries not to, use the “Muriel Siebert & Co.” or “Siebert” names or any derivations thereof (1) in connection with the conduct or operation of any municipal underwritings business, or (2) for any purpose after the second (2nd) anniversary of the Majority Shares Closing. Buyer shall, and shall cause the Company and its Subsidiaries, to use best efforts to cease using the “Siebert” as soon as practicable after the Majority Shares Closing, except as expressly provided in this Section 6.14(a). SBS and SBSF shall be third party beneficiaries of the covenants and agreements of this Section 6.14(a).
(b) From and after the Closing, Buyer shall use best efforts to preserve and avoid damaging the “Siebert” name and legacy of Muriel F. Siebert. Without limiting the generality of the foregoing, Buyer hereby agrees that, from and after the Closing, neither it nor any of its Affiliates will, and it will cause each of its Affiliates not to, directly or indirectly, in any capacity or manner, make, express, transmit, speak, write, verbalize or otherwise communicate in any way (or cause, further, assist, solicit, encourage, support or participate in any of the foregoing), any remark, comment, message, information, declaration, communication or other statement of any kind, whether verbal, in writing, electronically transferred or otherwise, that might reasonably be construed to be derogatory or critical of, or negative toward, Muriel F. Siebert.
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(c) The restrictive covenants set forth in this Section 6.14 have been separately bargained for by the Company and the Majority Shareholder. If after the Closing Date, Buyer or any of its Affiliates breaches, or threatens to commit a breach of, any of the provisions of this Section 6.14, the Majority Shareholder shall have, in addition to, and not in lieu of, any other rights and remedies available to it under law or in equity, the right to have the covenants contemplated by this Section 6.14 specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of such covenants would cause irreparable injury to the Majority Shareholder and that money damages would not provide an adequate remedy. Buyer covenants and agrees not, or permit any of its Affiliates, to oppose any demand for specific performance and injunctive and other equitable relief in case of any such breach or attempted breach.
Section 6.15 Additional Covenants of the Company.
(a) The Company shall use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to cause to take place prior to the Majority Shares Closing the consummation and effectiveness of the sale, transfer and assignment by the Company to the Majority Shareholder of the SBSF Disposition Note and all of MS&Co.’s rights under the Capital Markets Purchase Agreement to receive the SBS Capital Markets Proceeds (the “Sale and Assignment”), in consideration for payment by the Majority Shareholder to MS&Co. of $610,262.
(b) The Company shall act in good faith and use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to cause the Pre-Closing Dividend to be paid no later than as soon as reasonably practicable after the satisfaction of the condition set forth in Section 7.01(a). For purposes of this Section 6.15(b), “Pre-Closing Dividend” shall mean a cash dividend in respect of all outstanding Company Common Stock in an aggregate amount of up to $4,492,735, comprised of (i) the cash proceeds in the aggregate amount of $4,000,000 received by MS&Co. in connection with the SBSF Disposition pursuant to Section 2.2 of the SBSF Disposition Agreement (the “SBSF Disposition Proceeds”), and (ii) the cash proceeds received by MS&Co. in connection with the disposition by MS&Co. of its capital markets business pursuant to the Capital Markets Purchase Agreement. The Adjusted Majority Shares Purchase Price shall be reduced by an amount equal to the product of (A) amount of the SBSF Disposition Proceeds actually distributed pursuant to this Section 6.15(b), multiplied by (B) a fraction the numerator of which is the number of Majority Shares and the denominator of which is the aggregate number of shares of Company Common Stock outstanding as of the Minority Shares Closing Date.
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Section 7.01 Conditions to Each Party’s Obligation to Effect the Minority Shares Closing. The respective obligation of each party to effect the Minority Shares Closing shall be subject to the satisfaction, or written waiver by each party, at or prior to the Closing of the following conditions:
(a) Regulatory Approvals. Each of the Company Regulatory Approvals shall have been obtained and shall remain in full force and effect or, in the case of waiting periods, shall have expired or been terminated.
(b) No Injunctions or Restraints. No Order issued by any Governmental Entity of competent jurisdiction preventing or materially restraining or making illegal the consummation of the transactions contemplated by this Agreement in connection with the Minority Offer or the Purchase of the Majority Shares shall be in effect, and there shall be no proceedings pending by any Governmental Entity of competent jurisdiction seeking such an Order.
Section 7.02 Conditions to Buyer’s Obligations to Effect the Minority Shares Closing. The obligations of Buyer to consummate and effect Minority Shares Closing shall be subject to the satisfaction at or prior to the Minority Shares Closing Date of each of the following conditions, any of which may be waived, in writing, by Buyer:
(a) Accuracy of Representations and Warranties. Each of the representations and warranties of the Company and the Majority Shareholder in this Agreement that is expressly qualified by a reference to materiality or Material Adverse Effect shall be true and correct in all respects as so qualified, each of the representations and warranties of the Company in this Agreement that is not so qualified shall be true and correct in all material respects, each as of the date when made and at and as of the Closing, except for such changes as are permitted by this Agreement and except to the extent a representation or warranty speaks only as of an earlier date, in which case it shall be true and correct as of such date.
(b) Performance of Obligations. The Company and the Majority Shareholder shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it as of the Minority Shares Closing.
(c) Certificate of Officers. Buyer shall have received certificates executed on behalf of the Company by the chief executive officer or chief financial officer of the Company and the Majority Shareholders by any authorized representative thereof certifying that the conditions set forth in Section 7.02(a) and Section 7.02(b) have been satisfied.
(d) Completion of Sale and Assignment. The Majority Shareholder and MS&Co. shall have performed and completed the Sale and Assignment pursuant to Section 6.15(a).
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(e) Tender of Foundation Shares. The Muriel F. Seibert Foundation shall have tendered and not withdrawn no less than 568,700 Shares pursuant to the Minority Offer.
Section 7.03 Conditions to Obligations of the Company to Effect the Minority Shares Closing. The obligations of the Company to effect the Minority Shares Closing shall be subject to the satisfaction at or prior to the Minority Shares Closing Date of each of the following conditions, any of which may be waived, in writing, by the Company:
(a) Accuracy of Representations and Warranties. Each of the representations and warranties of Buyer in this Agreement that is expressly qualified by a reference to materiality or material adverse effect shall be true and correct in all respects as so qualified, and each of the representations and warranties of Buyer in this Agreement that is not so qualified shall be true and correct in all material respects, each as of the date when made and at and as of the Closing, except for such changes as are permitted by this Agreement and except to the extent a representation or warranty speaks only as of an earlier date, in which case it shall be true and correct as of such date.
(b) Performance of Obligations. Buyer shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it as of the Closing.
(c) Certificate of Officers. The Company shall have received a certificate executed on behalf of Buyer by its president or chief financial officer certifying that the conditions set forth in Section 7.03(a) and Section 7.02(b) have been satisfied.
(d) Pre-Closing Dividend. The Pre-Closing Dividend shall have been paid.
Section 7.04 Conditions to Each Party’s Obligation to Effect the Majority Shares Closing. The respective obligation of each party to effect the Majority Shares Closing shall be subject to the satisfaction, or written waiver by each party, at or prior to the Majority Shares Closing of (a) the conditions set forth in Section 7.01, Section 7.02 and Section 7.03, as applicable, and (b) the condition that the Minority Shares Closing shall have taken place.
Article
VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.01 Termination by Mutual Consent. This Agreement may be terminated, and the transactions contemplated by this Agreement may be abandoned, at any time prior to the Closing (notwithstanding any approval of this Agreement by the shareholders of the Company) by mutual written consent of Buyer, the Majority Shareholder and the Company.
Section 8.02 Termination by Either Buyer or the Company. This Agreement may be terminated, and the transactions contemplated by this Agreement may be abandoned, at any time prior to the Closing (notwithstanding any approval of this Agreement by the shareholders of the Company) by either Buyer or the Majority Shareholder and the Company:
(a) if the Closing shall not have occurred on or before the Outside Date; provided, however, that the right to terminate this Agreement pursuant to this Section 8.02(a) shall not be available to Buyer, on the one hand, or the Majority Shareholder and the Company, on the other hand, if such party’s breach of any representation, warranty, covenant or agreement set forth in this Agreement has been the cause of, or resulted in, the failure of the Closing to have occurred on or before the Outside Date; or
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(b) if any Regulatory Authority or Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law or Order making illegal, permanently enjoining or otherwise permanently prohibiting the consummation of the Minority Offer or the other transactions contemplated hereby, and such Law or Order shall have become final and non-appealable.
Section 8.03 Termination by Buyer. This Agreement may be terminated, and the transactions contemplated by this Agreement may be abandoned, at any time prior to the Minority Shares Closing by Buyer:
(a) if, prior to the Closing (i) a Company Adverse Recommendation Change shall have occurred, (ii) the Company shall have entered into, or publicly announced its intention to enter into, a Company Acquisition Agreement (other than an Acceptable Confidentiality Agreement), (iii) the Company shall have breached or failed to perform in any material respect any of the covenants and agreements set forth in Section 6.05, (iv) the Company Board fails to reaffirm (publicly, if so requested by Buyer) the Company Board Recommendation within ten (10) Business Days after the date any Takeover Proposal (or material modification thereto) is first publicly disclosed by the Company or the Person making such Takeover Proposal, (v) a tender offer or exchange offer relating to Company Common Stock shall have been commenced by a Person unaffiliated with Buyer and the Company shall not have sent to its shareholders pursuant to Rule 14e-2 under the Securities Act, within ten (10) Business Days after such tender offer or exchange offer is first published, sent or given, a statement reaffirming the Company Board Recommendation and recommending that shareholders reject such tender or exchange offer, or (vi) the Company or the Company Board (or any committee thereof) shall publicly announce its intentions to do any of actions specified in this Section 8.03(a);
(b) if, prior to the Majority Shares Closing, the Company shall have breached or failed to perform any its representations, warranties, covenants or other agreements set forth in this Agreement, which breach or failure to perform would give rise to the failure of a condition set forth in Section 7.01 (and in each case such breach or failure to perform is incapable of being cured by the Outside Date); provided that Buyer shall have given the Company at least 30 days written notice prior to such termination stating Buyer’s intention to terminate this Agreement pursuant to this Section 8.03(b).
Section 8.04 Termination by the Majority Shareholder and the Company. This Agreement may be terminated by the Majority Shareholder and the Company at any time prior to the Majority Shares Closing:
(a) if, prior to the Minority Shares Closing, the Company Board authorizes the Company, in full compliance with the terms of this Agreement, including Section 6.05(b) hereof, to enter into a Company Acquisition Agreement (other than an Acceptable Confidentiality Agreement) in respect of a Superior Proposal; provided that in the event of such termination, the Company substantially concurrently enters into such Company Acquisition Agreement; or
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(b) if, prior to the Minority Shares Closing, Buyer shall have breached or failed to perform any of its representations, warranties, covenants or other agreements set forth in this Agreement and in each case such breach or failure to perform (i) is incapable of being cured by the Outside Date); provided that the Company shall have given Buyer at least 30 days written notice prior to such termination stating the Company’s intention to terminate this Agreement pursuant to this Section 8.04(b).
Section 8.05 Notice of Termination; Effect of Termination. The party desiring to terminate this Agreement pursuant to this Article VIII (other than pursuant to Section 8.01) shall deliver written notice of such termination to each other party hereto specifying with particularity the reason for such termination, and any such termination in accordance with Section 8.05 shall be effective immediately upon delivery of such written notice to the other party. If this Agreement is terminated pursuant to this Article VIII, it will become void and of no further force and effect, with no Liability on the part of any party to this Agreement (or any shareholder, director, officer, employee, agent or Representative of such party) to any other party hereto, except (i) with respect to Section 6.04(b), this Section 8.05, Section 8.06 and Article X (and any related definitions contained in any such Sections or Article), which shall remain in full force and effect and (ii) with respect to any liabilities or damages incurred or suffered by a party, to the extent such liabilities or damages were the result of fraud or the breach by another party of any of its representations, warranties, covenants or other agreements set forth in this Agreement.
Section 8.06 Fees and Expenses Following Termination.
(a) If this Agreement is terminated by Buyer pursuant to Section 8.03(a) or Section 8.03(b), then the Company shall pay to Buyer (by wire transfer of immediately available funds), within three (3) Business Days after such termination, a fee in an amount equal to the Termination Fee, plus, Buyer’s Expenses actually incurred by Buyer on or prior to the termination of this Agreement.
(b) If this Agreement is terminated by the Company and the Majority Shareholder pursuant to Section 8.04(a), then the Company shall pay to Buyer (by wire transfer of immediately available funds), at or prior to such termination, the Termination Fee, plus, Buyer’s Expenses actually incurred by Buyer on or prior to the termination of this Agreement.
(c) If this Agreement is terminated (i) prior to the Minority Shares Closing, by Buyer pursuant to Section 8.03(b) or (ii) by the Company or Buyer pursuant to Section 8.02(a) hereof and, in the case of clauses (i) and (ii) immediately above, (A) prior to such termination, a Takeover Proposal shall (1) in the case of a termination pursuant to Section 8.02(a), have been publicly disclosed and not withdrawn or (2) in the case of a termination pursuant to Section 8.03(b), have been publicly disclosed or otherwise made or communicated to the Company or the Company Board, and not withdrawn, and (B) within one (1) year following the date of such termination of this Agreement any Takeover Proposal shall have been consummated (whether or not such Takeover Proposal is the same as the original Takeover Proposal made, communicated or publicly disclosed), then in any such event the Company shall pay to Buyer (by wire transfer of immediately available funds), immediately prior to and as a condition to consummating such transaction, the Termination Fee, plus, Buyer’s Expenses actually incurred by Buyer on or prior to the termination of this Agreement (it being understood for all purposes of this Section 8.06(b), all references in the definition of Takeover Proposal to 15% shall be deemed to be references to “more than 50%” instead). If a Person (other than Buyer) makes a Takeover Proposal that has been publicly disclosed and subsequently withdrawn prior to such termination, as applicable, and, within one (1) year following the date of the termination of this Agreement, such Person or any of its controlled Affiliates makes a Takeover Proposal that is publicly disclosed, such initial Takeover Proposal shall be deemed to have been “not withdrawn” for purposes of clauses (1) and (2) of this paragraph (c).
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(d) The Company acknowledges and hereby agrees that the provisions of this Section 8.06 are an integral part of the transactions contemplated by this Agreement, and that, without such provisions, Buyer would not have entered into this Agreement. If the Company shall fail to pay in a timely manner the amounts due pursuant to this Section 8.06, and, in order to obtain such payment, Buyer makes a claim against the Company that results in a judgment against the Company, the Company shall pay to Buyer the reasonable costs and expenses of Buyer (including its reasonable attorneys’ fees and expenses) incurred or accrued in connection with such suit, together with interest on the amounts set forth in this Section 8.06 at the prime lending rate prevailing during such period as published in The Wall Street Journal. Any interest payable hereunder shall be calculated on a daily basis from the date such amounts were required to be paid until (but excluding) the date of actual payment, and on the basis of a 360-day year. The parties ac and agree that in no event shall the Company be obligated to pay the Termination Fee on more than one occasion.
(e) Except as expressly set forth in this Section 8.06, all Expenses incurred in connection with this Agreement and the transactions contemplated hereby will be paid by the party incurring such Expenses.
Section 8.07 Amendment. Subject to applicable Law, this Agreement may be amended or supplemented in any and all respects by written agreement signed by each of the parties hereto.
Section 8.08 Extension; Waiver. At any time prior to the Minority Shares Closing, Buyer or, on the one hand, or the Majority Shareholder and the Company, on the other hand, may, subject to Section 8.07 (a) extend the time for the performance of any of the obligations of the other party or parties, (b) waive any inaccuracies in the representations and warranties of the other party or parties contained in this Agreement or in any document delivered under this Agreement, or (c) waive compliance with any of the covenants, agreements or conditions contained in this Agreement. Any agreement on the part of a party to any extension or waiver will be valid only if set forth in an instrument in writing signed by such party. The failure of any party to assert any of its rights under this Agreement or otherwise will not constitute a waiver of such rights.
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Section 9.01 Survival of Indemnities. Subject to the limitations and other provisions of this Agreement, the representations and warranties of the parties hereto contained herein or in any closing certificate, as the case may be, and the right of a party hereto to bring an indemnifiable claim under this Article IX in respect of any breach thereof, shall survive the Closing and shall remain in full force and effect until the first (1st) anniversary of the Majority Shares Closing Date, except that the representations and warranties of the Majority Shareholder contained forth in Section 4.01 and Section 4.02(a) shall survive for the applicable statute of limitations under applicable Law. This Section 9.01 does not limit any covenant of the parties to this Agreement which, by its terms, contemplates performance after the Majority Shares Closing. The covenant of the Majority Shareholder pursuant to Section 9.02(b) and the covenant of Buyer pursuant to Section 9.03 shall terminate at the end of the statute of limitations applicable to such covenant or, if earlier, the date on which such covenant has been fully performed. The Confidentiality Agreement will (a) survive termination of this Agreement in accordance with its terms and (b) terminate as of the Majority Shares Closing. Except to the extent expressly provided herein, no Claim may be brought after such applicable survival period set forth in this Section 9.01.
Section 9.02 Indemnification of the Buyer. From and after the Closing and subject to this Article IX, the Majority Shareholder covenants and agrees to indemnify and hold harmless the Buyer (including, following the Closing, the Company and its Subsidiaries) and each of their respective successors, assigns, employees, Affiliates and Representatives (collectively, the “Buyer Indemnified Parties”), and hold them harmless from, against and in respect of the Majority Shareholder Percentage of any and all costs, losses, claims, liabilities, fines, penalties, damages and expenses (“Losses”) caused by, result from or arise out of:
(a) any breach or inaccuracy of the representations or warranties set forth in Article III or Article IV;
(b) the matters described on Section 9.02(b) of the Disclosure Schedule; and
(c) any and all actions, suits, proceedings, claims, demands, judgments, compromises, assessments, settlements, costs and expenses (including reasonable legal fees and disbursements of counsel and court costs) incident to any of the foregoing (each a “Claim”).
Section 9.03 Indemnification of the Majority Shareholder. From and after the Closing and subject to this Article IX, the Buyer covenants and agrees to indemnify and hold harmless the Majority Shareholder and each of its beneficiaries, successors and assigns (including without limitation the Muriel F. Siebert Foundation) and their respective employees, executors, trustees, Affiliates and Representatives (collectively, the “Seller Indemnified Parties”), and hold them harmless from, against and in respect of any and all Losses caused by, result from or arise out of the matters described on Section 9.03 of the Disclosure Schedule and any and all Claims incident to the foregoing.
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Section 9.04 Right to Defend, Etc.
(a) Any Buyer Indemnified Party may make Claims for indemnification hereunder by giving prompt written notice thereof to the Majority Shareholder, prior to the end of the applicable survival period. If indemnification is sought for a Claim by or in respect of any third party (a “Third Party Claim”), the Buyer Indemnified Party shall also give the Majority Shareholder written notice of such claim as to which such Buyer Indemnified Party may request indemnification hereunder or as to which the Threshold may be applied as soon as is practicable and in any event within twenty (20) days of the time that such Buyer Indemnified Party learns of such Claim; provided, however, that the failure to do so shall not relieve the Majority Shareholder from any liability except to the extent that it is materially prejudiced by the failure or delay in giving such notice. Such notice shall state in reasonable detail the basis and nature of such claim and shall specify the representation, warranty or covenant in this Agreement under which the liability or obligation is asserted. In the case of a Third Party Claim, provided that (i) such Third Party Claim does not seek to impose any Liability on the Buyer Indemnified Party other than money damages and (ii) the reasonably foreseeable Losses of such claim, together with all other claims for indemnification hereunder, exceed the Threshold but do not exceed the Cap, the Majority Shareholder shall have the right to direct, through counsel of its own choosing that is reasonably acceptable to the Buyer Indemnified Party, the defense or settlement of any such Third Party Claim (subject to the limitations set forth in this Article IX, including those in Section 9.06). If the Majority Shareholder elects not to defend or if, after commencing or undertaking any such defense, of any such Third Party Claim the Majority Shareholder fails to diligently prosecute or withdraws from such defense, the Buyer Indemnified Party shall have the right to undertake the defense. If the Majority Shareholder is not controlling such defense, the Majority Shareholder may participate therein at its own expense. Unless, in the reasonable opinion of competent counsel to the Buyer Indemnified Party, a conflict of interest exists between the interests of the Buyer Indemnified Party and the Majority Shareholder that requires representation by separate counsel, in which case the fees and expenses of one such separate counsel will be paid by the Majority Shareholder (subject to the limitations set forth in this Article IX, including those in Section 9.06). If the Majority Shareholder elects to assume the defense of any Third Party Claim, the Buyer Indemnified Party shall provide the Majority Shareholder and its outside counsel with access to their personnel relating to any such claim during normal business hours and shall otherwise reasonably cooperate with the Majority Shareholder in the defense or settlement thereof. The party controlling the defense of such Claim shall not consent to a settlement of, or the entry of any judgment arising from, any such Claim without the prior written consent of the party not controlling such defense (which consent shall not be unreasonably withheld, conditioned or delayed); provided, however, that the Majority Shareholder may consent to such a settlement or entry of judgment without the consent of the Buyer Indemnified Parties to the extent it (a) includes an express and unconditional release of the Buyer Indemnified Parties of all liability with respect to such Claim, except for payments that would be required to be paid by the Buyer Indemnified Parties representing the Threshold, and the amount payable thereunder does not exceed the Cap or the limitations contemplated by Section 9.06(c), as applicable, (b) imposes no injunctive or other equitable relief against any Buyer Indemnified Party and (c) does not involve a finding or admission of wrongdoing; and provided further, however, that if the Buyer Indemnified Parties refuse to consent to a bona fide offer of settlement that the Majority Shareholder wishes to accept and that (w) involves no payment of money by such Buyer Indemnified Parties (other than pursuant to the Threshold), (x) involves no material limitation on the future operation of the business of the Company and its Subsidiaries, (y) does not involve a finding or admission of wrongdoing and (z) releases such Buyer Indemnified Parties from all liability in connection with such Claim except for payments that would be required to be paid by the Buyer Indemnified Parties representing the Threshold, the Majority Shareholder may reassign the defense of such claim to such Buyer Indemnified Parties, who may then continue to pursue the defense of such matter, free of any participation by the Majority Shareholder, at the sole cost and expense of such Buyer Indemnified Parties. In such event, the obligation of the Majority Shareholder with respect thereto shall not exceed the lesser of (i) the amount of the offer of settlement that such Buyer Indemnified Parties refused to accept or (ii) the aggregate Losses of the Buyer Indemnified Parties with respect to such claim (including, for the avoidance of doubt, any costs and expenses incurred therewith).
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(b) Any Seller Indemnified Party may make Claims for indemnification hereunder by giving prompt written notice thereof to Buyer, prior to the end of the applicable survival period. If indemnification is sought for a Claim by or in respect of any Third Party Claim, the Seller Indemnified Party shall also give Buyer written notice of such claim as to which such Seller Indemnified Party may request indemnification hereunder as is practicable and in any event within twenty (20) days of the time that such Seller Indemnified Party learns of such Claim; provided, however, that the failure to do so shall not relieve Buyer from any liability except to the extent that it is materially prejudiced by the failure or delay in giving such notice. Such notice shall state in reasonable detail the basis and nature of such claim and shall specify the representation, warranty or covenant in this Agreement under which the liability or obligation is asserted. In the case of a Third Party Claim, provided that such Third Party Claim does not seek to impose any Liability on the Seller Indemnified Party other than money damages, Buyer shall have the right to direct, through counsel of its own choosing that is reasonably acceptable to the Seller Indemnified Party, the defense or settlement of any such Third Party Claim (subject to the limitations set forth in this Article IX, including those in Section 9.06). If Buyer elects not to defend or if, after commencing or undertaking any such defense, of any such Third Party Claim Buyer fails to diligently prosecute or withdraws from such defense, the Seller Indemnified Party shall have the right to undertake the defense. If Buyer is not controlling such defense, Buyer may participate therein at its own expense. Unless, in the reasonable opinion of competent counsel to the Seller Indemnified Party, a conflict of interest exists between the interests of the Seller Indemnified Party and Buyer that requires representation by separate counsel, in which case the fees and expenses of one such separate counsel will be paid by Buyer (subject to the limitations set forth in this Article IX, including those in Section 9.06). If Buyer elects to assume the defense of any Third Party Claim, the Seller Indemnified Party shall provide Buyer and its outside counsel with access to their personnel relating to any such claim during normal business hours and shall otherwise reasonably cooperate with Buyer in the defense or settlement thereof. The party controlling the defense of such Claim shall not consent to a settlement of, or the entry of any judgment arising from, any such Claim without the prior written consent of the party not controlling such defense (which consent shall not be unreasonably withheld, conditioned or delayed); provided, however, that Buyer may consent to such a settlement or entry of judgment without the consent of the Seller Indemnified Parties to the extent it (a) includes an express and unconditional release of the Seller Indemnified Parties of all liability with respect to such Claim, and the amount payable thereunder does not exceed the limitations contemplated by Section 9.06(c), (b) imposes no injunctive or other equitable relief against any Seller Indemnified Party and (c) does not involve a finding or admission of wrongdoing; and provided further, however, that if the Seller Indemnified Parties refuse to consent to a bona fide offer of settlement that Buyer wishes to accept and that (w) involves no payment of money by such Seller Indemnified Parties, (x) does not involve a finding or admission of wrongdoing and (y) releases such Seller Indemnified Parties from all liability in connection with such Claim, Buyer may reassign the defense of such claim to such Seller Indemnified Parties, who may then continue to pursue the defense of such matter, free of any participation by Buyer, at the sole cost and expense of such Seller Indemnified Parties. In such event, the obligation of Buyer with respect thereto shall not exceed the lesser of (i) the amount of the offer of settlement that such Seller Indemnified Parties refused to accept or (ii) the aggregate Losses of the Seller Indemnified Parties with respect to such claim (including, for the avoidance of doubt, any costs and expenses incurred therewith).
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Section 9.05 Exclusive Remedy.
(a) From and after the Majority Share Closing, except for the rights expressly provided in Section 2.03 and Section 10.10, the rights of the Indemnified Parties to indemnification relating to this Agreement or the transactions contemplated hereby shall be strictly limited to those contained in this Article IX, and such indemnification rights shall be the sole and exclusive remedies of the parties hereto and the Indemnified Parties subsequent to the Majority Shares Closing Date with respect to any matter in any way relating to this Agreement or its subject matter or arising in connection herewith, regardless of the Law or legal theory under which such Losses or obligation may be sought to be imposed, whether sounding in contract or tort, or whether at law or in equity, or otherwise. The Indemnified Parties hereby agree that they may not avoid the limitations on obligations set forth in this Article IX by seeking damages for breach of contract, tort or pursuant to any other theory of liability and, to the maximum extent permitted by Law. Notwithstanding anything to the contrary herein, the existence of this Article IX and of the rights and restrictions set forth herein do not limit any legal remedy against the parties hereto to claims based on willful misconduct or fraud.
(b) Subject in all instances to the limitations and provisions provided for in this Article IX, Buyer agrees that any and all amounts payable as a result of any Claim by any Buyer Indemnified Party for indemnification (other than any Claim pursuant to Section 9.02(a) in respect of the Majority Shareholder’s representations and warranties set forth in Section 4.01 and Section 4.02(a) or any Claim pursuant to Section 9.02(b)) shall be paid solely from the then-remaining Escrow Funds in accordance with the Escrow Agreement and neither the Majority Shareholder nor any of its Representatives shall have any other Liability therefor, whether in indemnity or otherwise.
(c) On the Second Payment Date, the Buyer and the Majority Shareholder shall jointly instruct the Escrow Agent, by wire transfer of immediately available funds, to:
(i) pay to the Buyer a cash amount equal to the aggregate amount of Claims for indemnification that have been Finally Determined on or before the Second Payment Date; and
(ii) pay to Majority Shareholder a cash amount equal to the Escrow Fund, if any; minus (A) the aggregate amount of Claims for indemnification that have been Finally Determined on or before the Second Payment Date and in respect of which the Buyer is entitled to indemnification pursuant to Section 9.02; and minus (B) the aggregate amount of all then pending claims on the Escrow Funds in respect of which the Buyer may be entitled to indemnification pursuant to Section 9.02 (for the avoidance of doubt, in no event will this clause be equal to less than zero dollars ($0.00)), to such account or accounts designated in writing by the Majority Shareholder at least two (2) Business Days prior to the Second Payment Date.
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(d) Following the Second Payment Date, no later than two (2) Business Days after each Claim for indemnification by the Buyer pursuant to Section 9.02 is Finally Determined, the Buyer and the Majority Shareholder shall jointly instruct the Escrow Agent to pay, by wire transfer of immediately available funds, pay to each Seller a cash amount equal to the Escrow Fund minus (i) the aggregate amount of Claims for indemnification that have been Finally Determined and in respect of which the Buyer is entitled to indemnification pursuant to Section 9.02; minus (ii) the aggregate amount of all then pending Claims in respect of which the Buyer may be entitled to indemnification pursuant to Section 9.02; minus (iii) the aggregate amount of all amounts that have been previously released from the Escrow Funds pursuant to this Section 9.04 (for the avoidance of doubt, in no event will this clause (3) be equal to less than zero dollars ($0.00)), to such account or accounts designated in writing by the Majority Shareholder’s Representative.
(e) For purposes of this Agreement a Claim for indemnification and the liability for and amount of damages therefor, shall be deemed to be “Finally Determined” when the parties hereto have so determined by mutual agreement or, if disputed, when a final, non-appealable decision of a Governmental Entity has been entered into with respect to such Claim.
Section 9.06 Limitations on Indemnification. The Indemnified Parties’ indemnification rights pursuant to Article IX shall be limited as follows:
(a) The Buyer Indemnified Parties shall not be entitled to any indemnification until the aggregate dollar amount of all Losses that would otherwise be indemnifiable pursuant to Article IX exceeds an amount equal to $50,000 (the “Threshold”).
(b) The Buyer Indemnified Parties shall not be able to seek or be entitled to indemnification under this Agreement for any dollar amount of Losses indemnifiable pursuant to Section 9.06(a) (individually or in the aggregate) in excess of the Escrow Funds, which for the avoidance of doubt excludes the Threshold (the “Cap”); provided, however, that the Cap shall not apply to, and the Buyer Indemnified Parties shall be entitled to indemnification under this Agreement for any indemnifiable Loss resulting from any Claim pursuant to Section 9.02(a) in respect of the Majority Shareholder’s representations and warranties set forth in Section 4.01 and Section 4.02(a) or any Claim pursuant to Section 9.02(b).
(c) Notwithstanding anything in this Agreement to the contrary, in no event shall the aggregate liability of the Buyer or the Majority Shareholder under this Article IX (including with respect any Claim pursuant to Section 9.02(a) in respect of the Majority Shareholder’s representations and warranties set forth in Section 4.01 and Section 4.02(a) and any Claims pursuant to Section 9.02(b) or Section 9.03) exceed the portion of the Adjusted Majority Purchase Price, as adjusted in accordance with Section 2.03, that is actually received by the Majority Shareholder in accordance with this Agreement (excluding for avoidance of doubt any Escrow Funds that are not ultimately disbursed to the Majority Shareholder in accordance with the Escrow Agreement).
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(d) The amount of any Losses subject to indemnification under this Section 9.06 shall be calculated net of (A) any indemnification paid by any third party (less the amount incurred by all applicable Indemnified Parties in connection with the enforcement of, or recovering, any such right to indemnification), and (B) any insurance proceeds actually recovered by the Indemnified Party on account of such Losses (including without limitation under the Insurance Policy), which amount shall be decreased by the amount of any specifically identifiable increase in insurance premiums as a result of, and the out-of-pocket costs incurred by the Indemnified in connection with, making and collecting an insurance claim for such Losses, as follows: The Indemnified Parties shall use commercially reasonable efforts to seek full recovery under all insurance policies covering any Loss. In the event that an insurance or other recovery is actually paid to any Indemnified Party with respect to any Loss for which any such Person has been indemnified hereunder such that an Indemnified Party actually recovered more than the covered Loss, the Indemnified Party shall promptly reimburse the Indemnifying Party the amount received by the Indemnified Party in excess of such covered Loss up to (but not in excess of) the amount such Person has been indemnified hereunder.
(e) Each Indemnified Party shall take all commercially reasonable steps to mitigate Losses for which indemnification may be claimed by them under this Agreement promptly upon and after becoming aware of any event that could reasonably be expected to give rise to any such Losses.
(f) No Indemnified Party shall be entitled to indemnification under this Agreement for any Loss (and the amount of any Loss incurred shall not be included in the calculation of any limitations on indemnification set forth herein) to the extent such Loss was already taken into account or otherwise reserved for in Closing Working Capital or Transaction Expenses as finally calculated pursuant to Section 2.03.
(g) Anything herein to the contrary notwithstanding, no Indemnified Party shall have the right to be indemnified for any Losses to the extent they are in the nature of consequential, incidental or indirect damages, diminution in value damages, lost profits or punitive, special or exemplary damages, and in particular, without limitation, no “multiple of profits” or “multiple of cash flow” or similar valuation methodology shall be used in calculating the amount of any Losses, except to the extent such Losses are required to be paid by the Indemnified Party to a third party.
Section 10.01 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of New York.
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Section 10.02 Submission to Jurisdiction. Each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by any other party hereto or its successors or assigns shall be brought and determined exclusively in the Supreme Court of the State of New York in the County of New York, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, in the United States District Court for the Southern District of New York located in Manhattan. Each of the parties hereto agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 10.04 or in such other manner as may be permitted by applicable Laws, will be valid and sufficient service thereof. Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court or tribunal other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder (i) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with this Section 10.02, (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (iii) to the fullest extent permitted by the applicable Law, any claim that (x) the suit, action or proceeding in such court is brought in an inconvenient forum, (y) the venue of such suit, action or proceeding is improper, or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 10.03 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 10.03.
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Section 10.04 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.04):
| If to Buyer, to: | Kennedy
Cabot Acquisition, LLC 24100 Calabasas Road Calabasas, CA 91302 Attn: Gloria Gebbia Fax: (212) 809-4147 E-Mail: mkaplan@gusraekaplan.com | |
| with a copy (which will not constitute notice to Buyer) to: | Gusrae
Kaplan Nusbaum PLLC 120 Wall Street, 25th Floor New York, NY 10005 Attn: Martin H. Kaplan, Esq. Fax: (212) 809-4147 E-Mail: mkaplan@gusraekaplan.com | |
| If to the Company, to: | Siebert
Financial Corp. 885 Third Avenue, Suite 3100 New York, New York 10022 Attn: Joseph Ramos Fax: (212)644-6896 E-Mail: jramos@siebertnet.com | |
| with a copy (which will not constitute notice to the Company) to: | Norton
Rose Fulbright US LLP 666 Fifth Avenue New York, New York 10103 Attn: Warren J. Nimetz, Esq. Fax: (212) 318-3400 E-Mail: warren.nimetz@nortonrosefulbright.com | |
| If to the Majority Shareholder , to: | The
Estate of Muriel F. Siebert c/o Patricia Francy New York, NY 10027 E-Mail: plf2@columbia.edu | |
| with a copy (which will not constitute notice to the Company) to: | Norton
Rose Fulbright US LLP 666 Fifth Avenue New York, New York 10103 Attn: Warren J. Nimetz, Esq. Fax: (212) 318-3400 E-Mail: warren.nimetz@nortonrosefulbright.com |
or to such other Persons, addresses or facsimile numbers as may be designated in writing by the Person entitled to receive such communication as provided above.
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Section 10.05 Entire Agreement. This Agreement (including the Exhibits to this Agreement), the Disclosure Schedule and Sections 3 and 5 of the Confidentiality Agreement constitute the entire agreement among the parties with respect to the subject matter of this Agreement and supersede all other prior agreements and understandings, both written and oral, among the parties to this Agreement with respect to the subject matter of this Agreement. In the event of any inconsistency between the statements in the body of this Agreement and the Disclosure Schedule (other than an exception expressly set forth as such in the Disclosure Schedule), the statements in the body of this Agreement will control.
Section 10.06 No Third Party Beneficiaries. Except as provided in Section 6.08, Section 6.14(a), Section 9.02 and Section 9.03 hereof (which shall be to the benefit of the parties referred to in such sections), this Agreement is for the sole benefit of the parties hereto and their permitted assigns and respective successors and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 10.07 Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
Section 10.08 Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.
Section 10.09 Remedies. Except as otherwise provided in this Agreement, any and all remedies expressly conferred upon a party to this Agreement will be cumulative with, and not exclusive of, any other remedy contained in this Agreement, at Law or in equity. The exercise by a party to this Agreement of any one remedy will not preclude the exercise by it of any other remedy.
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Section 10.10 Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal court located in the State of New York or any New York state court, in addition to any other remedy to which they are entitled at Law or in equity.
Section 10.11 Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts, all of which will be one and the same agreement. This Agreement will become effective when each party to this Agreement will have received counterparts signed by all of the other parties.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date first written above by their respective officers thereunto duly authorized.
| SIEBERT FINANCIAL CORP. | |||
| By: | /s/ Joseph M. Ramos, Jr. | ||
| Name: Joseph M. Ramos, Jr. | |||
| Title: Executive Vice President, Chief Operating Officer, Chief Financial Officer and Secretary | |||
| ESTATE OF MURIEL F. SIEBERT | |||
| By: | /s/ Jane H. Macon | ||
| Name: Jane H. Macon | |||
| Title: Co-Executor | |||
| KENNEDY CABOT ACQUISITION, LLC | |||
| By: | /s/ Gloria E. Gebbia | ||
| Name: Gloria Gebbia | |||
| Title: Managing Member | |||
[ACQUISITION AGREEMENT SIGNATURE PAGE]