EX-10.8
STOCK PURCHASE AND RIGHT OF FIRST REFUSAL AGREEMENT
EXHIBIT 10.8
STOCK PURCHASE AND RIGHT OF FIRST REFUSAL AGREEMENT
Stock Purchase and Right of First Refusal Agreement
This Stock Purchase and Right of First Refusal Agreement (the "Agreement")
is made and entered into as of this 8th day of October, 2002, by and between
Steel Valley Bank, National Association, a national banking association (the
"Bank"), and First West Virginia Bancorp, Inc., a bank holding company organized
under the laws of the State of West Virginia ("Buyer").
Recitals
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A. Bank desires to sell and issue to Buyer 13,890 shares (the "Shares") of the
2,006,000 authorized shares of Bank's $0.25 par value common stock (the "Common
Stock") at a price of $3.60 per share, for an aggregate purchase price of
$50,004, and Buyer desires to purchase such Shares from the Bank for such price
subject to the additional terms and conditions set forth herein.
1. Although the Bank and Buyer have discussed a possible affiliation whereby the
Bank would become a part of Progressive Bank, N.A., Buyer's wholly owned
subsidiary bank ("Progressive Bank"), no agreement has been reached between the
parties in that regard.
2. The Buyer desires to obtain a right of first refusal to acquire all or
substantially all of the assets of Bank or the Shares of the Bank as more
particularly detailed herein.
Agreement
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Now, Therefore, in consideration of the foregoing and of the agreements
hereinafter contained, the parties agree as follows:
1. Purchase and sale of Shares. Buyer agrees to and does hereby purchase
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13,890 shares of Bank Common Stock from Bank for a per share price of
$3.60, for an aggregate price of $50,004, payable in cash simultaneous
with the execution of this Agreement. The Bank shall promptly seek
certification from the Office of the Comptroller of the Currency
("OCC") of the funds from Buyer as capital for the Bank and shall take
such funds into capital immediately upon receipt of such certification.
Upon such certification, the Bank shall issue to Buyer a stock
certificate representing the Shares. In the event that such
certification is rejected, Bank shall immediately notify Buyer and
Buyer shall then have the sole option to declare this agreement void,
in which event Bank agrees to refund the purchase price.
2. Representations and Warranties of the Bank. The Bank represents and
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warrants to Buyer as follows:
A. The capital structure of the Bank currently consists of
2,006,000 authorized non-convertible Shares of Common Stock,
$0.25 par value each, 1,003,000 of which are currently issued
and outstanding, 800 authorized shares of Class A Nonvoting
Variable Rate Perpetual non-convertible and non-cumulative
Preferred Stock with a par value of $500 per share, all of
which are issued and outstanding, and 125,000 shares of Class
B Nonvoting Convertible non-cumulative Preferred Stock with a
par value of $8.00 per shares, 99,375 of which are currently
issued and outstanding. Other than the right of the holders of
the Class B Preferred Stock to convert such shares into Shares
of Common Stock on a one to one basis until December 31, 2006,
as provided in the Bank's Articles of Association, there are
no options or other convertible securities outstanding to
purchase any additional shares of any class of the Bank.
B. The Bank is a national banking association validly existing
and subject to the requirements of a Memorandum of
Understanding with the OCC, is in good standing with the OCC.
The Bank has delivered to Buyer true and correct copies of its
Articles of Association and Bylaws, as amended, as of the date
hereof.
C. The Bank has provided to Buyer true and correct copies of the
Reports of Condition and Income for the Bank as filed with the
OCC for the periods ended December 31, 2001, March 31, 2002
and June 30, 2002.
D. Senior officers of the Bank have informed the Buyer that the
Bank intends to attempt to sell an additional 278,000 Shares
of Common Stock at $3.60 per Share to raise an additional
$1,000,800 in capital for the Bank. The Bank has made no
assurance to Buyer of its ability to accomplish such a sale,
notwithstanding the best efforts and current intent of the
Bank to do so.
3. Buyer Sophistication and Access to Information. Buyer represents that:
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(i) its officers and advisers have such knowledge and experience in
financial and business matters that they are capable, on behalf of
Buyer, of evaluating the merits and risks of the transactions
contemplated by this Agreement including the purchase of the Shares;
(ii) Buyer's officers have had access to all relevant books and
records, including but not limited to financial, banking, corporate,
employee and customer as they or their advisers have deemed necessary
before making the decision to enter into this Agreement and such
persons have had the opportunity to ask such questions of the senior
officers of the Bank as they have deemed necessary in order to make the
investment contemplated by this Agreement; (iii) Buyer is purchasing
the Shares for purposes of this agreement only and not with any view or
intent to sell or distribute the Shares to any other person; (iv) Buyer
understands that the Shares purchased hereunder are being sold under an
exemption from the registration requirements of federal and state
securities laws and will bear restrictions upon transfer. A legend in
substantially the form set forth below will be attached to the stock
certificate representing the Shares:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, nor
has a Registration Statement been declared effective by the
Office of the Comptroller of the Currency pursuant to 12
C.F.R. ss.16.3 and such Shares may not be sold, pledged,
hypothecated, donated, or otherwise transferred, whether or
not for consideration unless the Shares have been registered
under said Act (or a Registration Statement has been declared
effective by the Office of the Comptroller of the Currency) or
an exemption from such registration (or the Registration
Statement requirement of 12 C.F.R. ss.16.3) requirement is
available. If the Shares are to be sold or transferred
pursuant to an exemption from the registration requirements,
the Bank may require a written opinion of counsel,
satisfactory to counsel for Bank, to the effect that
registration is not required and that such transfer will not
violate said Act, any federal banking law or banking
regulations or applicable state securities laws. This
restriction may be removed upon petition by the holder one
year from the date of issuance, unless such holder is an
"affiliate" of the Bank.
4. Right of First Refusal. In consideration of the agreement of Buyer to
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purchase the Shares upon the terms detailed herein, and to potentially
facilitate further negotiations toward an affiliation between the Bank
and Buyer, which each party believes could be in its respective best
interest and that of the shareholders of each entity, the Bank does
hereby irrevocably grant to Buyer a right of first refusal in the event
that the Bank enters into any written agreement, including a letter of
intent, to: (i) sell all or substantially all of its assets; (ii)
affiliate by merger, consolidation or other reorganization with another
entity; or (iii) sell additional shares of any class of its stock,
except the proposed sale of approximately 278,000 Shares of Common
Stock at $3.60 per Share that the Bank intends to attempt to sell
between the date hereof and December 31, 2002; or the Bank receives a
written offer from any third party including a letter of intent, to:
(i) purchase all or substantially all of Bank's assets; or (ii)
affiliate by merger, consolidation or other reorganization with another
entity. In the event that the Bank shall engage in any of the
transactions mentioned above in this Section 4 (a "Transaction") from
the date hereof through September 30, 2007, the Buyer shall have the
following rights:
A. In the event of any proposed bona fide Transaction, the Bank
shall offer to Buyer the opportunity to complete the proposed
Transaction on substantially the same terms and conditions
offered to any other party to a Transaction. The Bank shall
give to the Buyer written notice, delivered to the President
or Secretary of the Buyer, designating: (i) the specific terms
and conditions of the proposed Transaction; (ii) the name and
address of any proposed third party to be involved in such
Transaction; and (iii) a copy of any letter of intent, stock
purchase agreement, merger, consolidation or reorganization
agreement, or other document evidencing the proposed
Transaction.
B. The Buyer shall within sixty (60) days after receipt of the
notice of a proposed Transaction notify the Bank in writing
whether it desires to engage in the proposed Transaction on
substantially the terms and conditions, including the proposed
purchase price, set forth in the notice to the Buyer. During
such 60-day period, Buyer shall be permitted to engage in all
necessary due diligence inquiries of Bank, including inquiries
at Bank's premises, as it deems necessary to evaluate the
Transaction, subject to a reasonable confidentiality Agreement
with Bank. In the event that the Buyer notifies the Bank of
its desire to engage in the proposed Transaction, such notice
from Buyer shall specify a date not less than five (5) nor
more than ten (10) days after the date of such notice (but not
more than 70 days after receiving the initial notice from
Bank) as the date on which the Buyer shall be prepared to
execute documents in substantially the same form as presented
regarding the proposed Transaction, or, if the proposed
Transaction involves the sale of stock, to deliver payment for
the stock to be purchased. In any future Transaction involving
a right of refusal to purchase stock, upon the consummation of
the purchase of shares of Bank by Buyer and the payment of the
price therefor, and certification by the OCC of the new
capital, the Bank shall deliver to Buyer a certificate for the
stock purchased. If within the time frame set forth above, the
Buyer shall not purchase and pay for all of the shares so
offered for sale in the case of the issuance of shares by the
Bank, or execute the documents regarding a proposed
Transaction if the proposed Transaction involves a transaction
other than a sale of stock, the Buyer shall be deemed to have
rejected said offer to engage in the proposed Transaction.
C. If the proposed Transaction involves a transaction other than
the purchase of shares from the Bank, immediately after the
execution of the documents regarding such Transaction, Buyer
shall use its best efforts, noting that time is of the
essence, to apply for such regulatory approval, and take any
and all additional actions, as may be necessary or appropriate
to consummate the proposed Transaction. The Bank agrees that
it shall provide its full cooperation in the effort to obtain
such regulatory approval and consummate any such Transaction.
D. In the event that Buyer fails to properly and timely exercise
its rights under this Section 4, the Bank shall be free to
engage in the proposed Transaction under substantially the
same terms and conditions as specified in the notice to Buyer.
E. Buyer recognizes and acknowledges that in the event that the
OCC or Federal Deposit Insurance Corporation ("FDIC") places
the Bank into receivership, the right of first refusal of
Buyer set forth in this Section 4 shall cease to exist and
shall in no way prohibit the OCC, FDIC or any other regulatory
agency from taking such actions as they may deem necessary or
appropriate to protect the depositors and customers of the
Bank, the bank insurance fund, and other interests that such
regulatory agencies feel require such protection.
F. During the term of this Agreement Bank shall promptly notify
Buyer if Bank enters into any written agreement, including a
letter of intent, (i) to purchase all or substantially all of
the assets of a third party entity; (ii) to affiliate by
merger, consolidation or other reorganization with another
entity; or (iii) to purchase 5% or more of the issued and
outstanding shares of any class of stock of any third party
entity.
G. Bank warrants and represents that it shall notify all third
parties interested in a Transaction (as defined above) of the
existence of this Right of First Refusal and Bank shall make
the fulfillment of the rights of Buyer under this Right of
First Refusal a contingency to Bank's acceptance of any such
proposed Transaction.
H. In the event that Bank offers to sell additional shares in a
transaction, (except for the 278,000 Common Shares as detailed
in Section 4(i)above)and in the event Buyer does not exercise
its rights described herein as to that Transaction, Buyer
shall not have waived its rights hereunder to subsequent
Transactions.
5. Captions; Counterparts. The captions in this Agreement are for
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convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. This
Agreement may be executed in several counterparts, each of which shall
constitute one and the same instrument.
6. Waivers; Amendments. Any of the provisions of this Agreement may be
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waived at any time by the party that is entitled to the benefit
thereof. This Agreement may be amended or modified in whole or in part
by an agreement in writing executed in the same manner (but not
necessarily by the same person) as this Agreement and which makes
reference to this Agreement.
7. Entire Agreement. This Agreement supersedes any other agreement,
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whether written or oral, that may have been made or entered into by the
parties relating to the matters set forth herein, provided that the
terms and conditions of the Confidentiality Agreement dated January 4,
2002 between the Bank and Progressive Bank (which is deemed binding
upon Buyer, as Progressive Bank's parent corporation) shall survive the
execution of this Agreement, except as specifically otherwise provided
herein. This Agreement constitutes the entire agreement by the parties,
and there are no agreements or commitments except as set forth herein.
8. Disclosure. The Bank and Buyer agree that neither shall disclose the
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existence of this Agreement to any person without the prior consent of
the other party hereto. Notwithstanding the prior sentence, it is
acknowledged that the Bank shall describe this Agreement and make a
copy available to interested potential investors in connection with its
proposed offering of shares of its Common Stock described above, and
further that Buyer shall disclose the existence of this Agreement and
file a copy of it with the Securities and Exchange Commission and
American Stock Exchange and make public disclosure of this Agreement in
an 8-K report to be filed upon the execution of this Agreement in the
event that it deems such action prudent under the federal securities
laws or otherwise advisable without consent of the Bank.
9. Notices. All notices and other communications hereunder shall be deemed
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to have been duly given if forwarded by United States Mail, or via a
nationally recognized overnight courier service. Notices shall be
deemed to have been received the second day after mailing by United
States Mail and the next day after sending by overnight courier. All
notices and other communications hereunder given to any party shall be
communicated to the remaining party to this Agreement in the same
manner as herein provided.
(a) If to the Bank, to:
Xx. Xxxxxx X. Xxxxxxx
President
Steel Valley Bank, N.A.
00000 Xxxxxxx Xxxxx
Xx. Xxxxxxxxxxx, Xxxx 00000
With copies to:
Xxxxxx X. Xxxxx, Esq.
Xxxxxx & Blank, LLC
0000 X. Xxxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
(b) If to Buyer, to:
Xx. Xxxxxxx X. Xxxxxx
President
First West Virginia Bancorp, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxx Xxxxxxxx 00000
With copies to:
Xxxxxxx X. Xxxxxxxxx, Esq.
Petroplus & Gaudino
00 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxx Xxxxxxxx 00000
Bank agrees to promptly notify Buyer of any future memorandum of
understanding, cease and desist order or other agreement with the OCC,
FDIC or any other regulatory agencies regarding the Bank unless
disclosure of such item is prohibited by law or regulation. Further,
the Bank agrees to promptly notify Buyer of any claims, demands,
lawsuits or other material liabilities not incurred in the ordinary
course of business which may arise on or after the date of this
Agreement.
10. Governing Law. This agreement shall be governed by, construed and
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enforced in accordance with the banking laws of the United States,
where applicable, and the general laws of the State of Ohio, without
regard to conflicts of law principles.
11. Construction. The parties have participated jointly in the negotiation
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and drafting of this Agreement. In the event that an ambiguity or
question of intent or interpretation arises, the 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 of the provisions of this Agreement.
{Signatures Contained on Following Page}
IN WITNESS WHEREOF, the parties have executed this Stock Purchase and Right of
First Refusal Agreement on the date first written above.
Attest: Steel Valley Bank, National Association
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxxx
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By: Xxxxxx X. Xxxxxxx
Its: President
Attest: First West Virginia Bancorp, Inc.
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxx
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By: Xxxxxxx X. Xxxxxx
Its: President
