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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): May 25, 1995
STIFEL FINANCIAL CORP.
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(Exact Name of Registrant as specified in its Charter)
Missouri 1-9305 43-1273600
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(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
500 North Broadway
St. Louis, Missouri 63102
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(Address of principal executive offices including zip code)
(314) 342-2000
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
On May 25, 1995 (the "Closing Date"), Stifel, Nicolaus & Company,
Incorporated, a Missouri corporation ("Stifel"), a wholly-owned subsidiary of
Stifel Financial Corp. (the "Company"), sold the assets of its Oklahoma
division (including three Texas offices) to Capital West Financial Corporation,
an Oklahoma corporation ("CWFC"), pursuant to an Amended and Restated Asset
Purchase Agreement, dated May 25, 1995 (the "Purchase Agreement"), by and among
Stifel, CWFC and Capital West Securities, Inc., an Oklahoma corporation
("CWSI") and a wholly-owned subsidiary of CWFC.
The aggregate consideration to be delivered to Stifel pursuant to the
Purchase Agreement was (a) $150,000 in cash; (b) a $300,000 Senior Secured Note
due May 24, 1997, obligating payment from CWFC to Stifel; (c) a $1,550,000
Senior Secured Note due May 24, 2000 (the "Long-Term Note"), obligating payment
from CWFC to Stifel; (d) warrants of CWFC exercisable into common stock of CWFC
representing a fully diluted ownership interest in CWFC of 19.9% as of the
Closing Date, which warrants shall carry an exercise price equal to the fair
market value of such common stock at the Closing Date and expire on the later
of the five year anniversary of the Closing Date or 90 days after payment in
full of all amounts owing under the Long-Term Note; (e) payment (the "Municipal
Payments") to Stifel by CWSI of a portion of gross revenues net of third party
transaction-related expenses derived from the municipal finance, institutional
sales and trading functions of CWSI (collectively, the "Municipal Operations")
for the period beginning on the Closing Date and ending on the third
anniversary of the Closing Date calculated annually as follows: (i) 0% of the
first $500,000 of annual gross revenue net of third party transaction-related
expenses of CWSI derived from the Municipal Operations, (ii) 15% of the next
$750,000 of annual gross revenue net of third party transaction-related
expenses of CWSI derived from the Municipal Operations, plus (iii) 25% of the
annual gross revenue net of third party transaction-related expenses of CWSI in
excess of $1,250,000; (f) 20% of the 12b-1 fees ("12b-1 Portion") earned by
CWSI for the period beginning on the Closing Date and ending on the third
anniversary of the Closing Date; and (g) monthly payments (the "Investment
Executive Monthly Payments") to Stifel from CWSI, over the remaining terms of
the notes payable to Stifel from certain investment executives (the "Investment
Executives"), in an amount equal to 5.0% of each such Investment Executive's
gross sales commission for the prior month.
Stifel received cash, secured and subordinated notes, and warrants to
purchase a minority interest in CWFC. CWFC assumed certain office and
equipment lease obligations of Stifel. The sale resulted in the reduction of
approximately 70 investment executives and approximately 50 support staff
located in 26 branch offices.
Stifel will provide clearing services to CWSI, George H. Walker, III,
Stifel's chairman of the board, will serve on the board of directors of CWFC
and CWSI.
Item 5. Other Events.
On May 24, 1995, the Oklahoma Turnpike Authority (the "Authority")
filed an action against Stifel, Nicolaus & Company, Incorporated, the Company's
subsidiary, and two former officers, DeWayne Von Feldt and Robert Cochran. The
lawsuit was filed in the District Court in and for Oklahoma County, State of
Oklahoma and is styled "The Oklahoma Turnpike Authority v. Stifel, Nicolaus &
Company, Inc., Robert Cochran and DeWayne Von Feldt", Case number CJ 95 3472.
The Authority alleges that Stifel received an undisclosed payment of $6.5
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million in connection with a forward purchase contract executed between the
Authority and Sakura Global Capital for reinvesting proceeds from the
Authority's 1992 bond issue which was underwritten by Stifel and Merrill Lynch,
Pierce, Fenner & Smith. The Authority alleges that it received income of
$12,357,000 from Sakura Global Capital for the forward purchase contract. The
Authority also alleges that Stifel was not entitled to the $6.5 million payment
but that the $6.5 million, in addition to the $12,357,000, should have been
paid to the Authority or for its benefit. The Authority further alleges that
Robert Cochran was primarily responsible for the services provided by Stifel
for the 1992 Turnpike offering and that DeWayne Von Feldt, who also was a
director of Stifel Financial Corp., was responsible for supervising Mr.
Cochran's work.
The Authority's petition contains four counts: (1) Breach of Agency
and Fiduciary Duties; (2) Breach of Implied-in-Law Contractual Duties/Unjust
Enrichment; (3) Deceit by Non-Disclosure/Concealment; and (4) Negligence -
Failure to Supervise. The Authority seeks compensatory damages in the amount
of $6.5 million and an unspecified amount of punitive damages.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
None.
(b) Pro Forma Financial Information.
Pro forma information related to the sale of the assets of the
Oklahoma division and three Texas offices of Stifel, Nicolaus & Company,
Incorporated to Capital West Financial Corporation, an Oklahoma corporation, in
Note Q on page 50 of Stifel Financial Corp.'s Form 10-K for the year ended
December 31, 1994 and in Note D on page 9 of Stifel Financial Corp.'s Form 10-Q
for the quarter ended March 31, 1995, are incorporated herein by reference.
(c) Exhibits.
Exhibit 2(a): Amended and Restated Purchase Agreement, dated
May 25, 1995, by and among Stifel, Nicolaus & Company,
Incorporated, Capital West Financial Corporation and Capital
West Securities, Inc., a wholly-owned subsidiary of Capital
West Financial Corporation.
Exhibit 99(a): Press Release dated May 25, 1995 announcing
the sale of the assets of the Oklahoma division and three
Texas offices of Stifel, Nicolaus & Company, Incorporated to
Capital West Financial Corporation, an Oklahoma corporation.
Exhibit 99(b): Note Q on page 50 of Stifel Financial Corp.'s
Form 10-K for the year ended December 31, 1994.
Exhibit 99(c): Note D on page 9 of Stifel Financial Corp.'s
Form 10-Q for the quarter ended March 31, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
STIFEL FINANCIAL CORP.
Date June 9, 1995 By: /S/ MARK D. KNOTT
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Name: Mark D. Knott
Title: Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
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Exhibit 2(a) Amended and Restated Asset Purchase Agreement,
dated May 25, 1995
Exhibit 99(a) Press Release dated May 25, 1995
Exhibit 99(b) Note Q on page 50 of Stifel Financial Corp.'s Form 10-
K for the year ended December 31, 1994
Exhibit 99(c) Note D on page 9 of Stifel Financial Corp.'s Form 10-Q
for the quarter ended March 31, 1995