SUBSCRIPTION AGREEMENT Coastal Bancshares Acquisition Corp. April 5, 2006
April
5,
2006
0000
Xxxx
Xxxxxxx
Xxxxx
000
Xxxxxxx,
Xxxxx 00000
Ladies
and Gentlemen:
The
undersigned (the “Subscriber”)
understands that Coastal Bancshares Acquisition Corp., a Delaware corporation
(the “Company”),
is
offering for sale to the Subscriber shares of its common stock, par value $0.01
per share (the “Shares”).
This
offer is being made in connection with and as a condition to that certain
Agreement and Plan of Merger (the “Merger
Agreement”),
dated
as of April 5, 2006, by and between the Company, Coastal Merger Corp., a Texas
corporation (the “Merger
Sub”),
and
Intercontinental Bank Shares Corporation, a Texas corporation (“Intercontinental”),
pursuant to which the Merger Sub will merge with and into Intercontinental
and
Intercontinental will be the surviving corporation and a wholly-owned subsidiary
of the Company (the “Merger”).
Terms
with their initial letter capitalized and not otherwise defined herein shall
have the meanings given them in the Merger Agreement. The Subscriber
acknowledges that it is not acting on the basis of any representations or
warranties other than those contained in Section 5 hereof and understands
that the offering of the Shares (the “Offering”)
is
being made without registration of the Shares under the Securities Act of 1933,
as amended (the “Securities
Act”),
or
any securities, “blue sky” or other similar laws of any state or foreign
jurisdiction (“State
Securities Laws”).
1. Subscription.
Subject
to the terms and conditions of this Subscription Agreement, the Subscriber
agrees to purchase the Shares in the amount and for the purchase price indicated
by the Subscriber’s name on the signature page of this Subscription Agreement
upon the Effective Time of the Merger (the “Effective
Date”).
The
Subscriber agrees that upon the Effective Date this Subscription Agreement
shall
be irrevocable and shall survive the death, dissolution or legal incapacity
of
the Subscriber.
2. Payment
for Shares.
Upon the
Effective Date, the Subscriber shall deliver to the Company the consideration
(“Purchase
Price”)
required to purchase the Shares subscribed for under this Subscription
Agreement. Payment of the Purchase Price shall be made by delivery to the
Company of a check made payable to the Company in the amount indicated by the
Subscriber’s name on the signature page of this Subscription
Agreement.
3. Funds.
If the
conditions of the sale of the Shares specified in Section
4
are not
timely satisfied in full (or waived), the subscription shall be void, all funds
received from the Subscriber shall be promptly returned to Subscriber, and
the
Subscriber shall not become a stockholder of the Company.
4. Acceptance
of Subscription.
The
Subscriber understands and acknowledges that (a) the subscription is subject
to
the Closing of the Merger, (b) the subscription shall not be valid unless
and until the Merger is consummated, and (c) notwithstanding anything in
this Subscription Agreement to the contrary, the Company shall have no
obligation to issue the Shares to the Subscriber if the issuance of the Shares
to the Subscriber would constitute a violation of the Securities Act or any
State Securities Laws.
5. Representations
and Warranties of the Company.
The
Company represents and warrants that:
(a) The
Company is duly organized, validly existing and in good standing under the
laws
of its state of organization, with full power and authority to conduct its
business as it is currently being conducted and to own its assets. The Company
is also duly qualified to do business, and in good standing as a foreign entity
authorized to do business, in all jurisdictions in which a failure to so qualify
would have a material adverse effect on the business condition (financial or
otherwise), earnings, properties, or results of operations of the Company,
taken
as a whole.
(b) The
Shares will have been duly authorized and, when issued and paid for in
accordance with the terms set out in this Subscription Agreement, will be duly
issued, fully paid and nonassessable.
(c) As
of the
date of this Subscription Agreement, the Company has issued and outstanding
(i)
4,447,833 shares of common stock par value $0.01 per share (“Company
Common Stock”),
(ii)
no shares of preferred stock, (iii) 2,072,167 units (each unit (“Unit”)
consisting of one share of common stock and two warrants (each warrant entitles
the holder to purchase one share of common stock at a price of $5.00 per share),
(iv) warrants
to purchase 6,895,666 shares
of
Company Common Stock and (v) an option granted to I-Bankers Securities
Incorporated and Newbridge Securities Corporation or their affiliates to
purchase 325,000 Units. Other than the foregoing units, Company Common Stock,
Units, warrants and option, the
Company has not issued any other shares of its capital stock and there are
no
outstanding options, warrants, subscriptions or other rights or obligations
to
purchase or acquire any of such shares, nor any outstanding securities
convertible into or exchangeable for such shares.
6. Representations
and Warranties of the Subscriber.
The
Subscriber represents and warrants to and covenants with the Company and each
officer, director, stockholder and agent of the Company as follows:
(a) General.
(i) The
Subscriber has all requisite authority to enter into this Subscription Agreement
and to perform all of the obligations required to be performed by the Subscriber
under this Subscription Agreement.
(ii) The
Subscriber is the sole party in interest and is not acquiring the Shares as
an
agent or otherwise for any other person. The Subscriber is a resident of the
jurisdiction set forth opposite its name on the signature page of this
Subscription Agreement and (A) if a corporation, partnership, trust or
other form of business organization, it has its principal office within that
jurisdiction, (B) if an individual, he or she has his or her principal
residence in that jurisdiction, and (C) if a corporation, partnership,
trust or other form of business organization that was organized for the specific
purpose of acquiring the Shares, all of the beneficial owners are residents
of
that jurisdiction.
2
(iii) The
Subscriber acknowledges that there are no consents or approvals of governmental
authorities or third parties that are required for the execution and delivery
of
this Subscription Agreement by him; the execution of this Subscription Agreement
by the Subscriber shall not constitute a default under any material contract
or
agreement to which the Subscriber is bound; and no agreement or obligation
exists that affects the Subscriber that has the effect of restricting the
ability of the Subscriber to perform its obligations under this Subscription
Agreement.
(iv) The
Subscriber acknowledges that there is no litigation, action, suit, arbitration,
governmental investigation or other proceeding pending or, to the best knowledge
of the Subscriber threatened, to which the Subscriber is party that, if
adversely determined, could have a material adverse effect on, or enjoin,
restrict or otherwise prevent, the consummation of any of the transactions
contemplated by this Subscription Agreement or the ability of the Subscriber
to
perform its obligations under this Subscription Agreement.
(v) The
Subscriber acknowledges that this Subscription Agreement and all agreements,
instruments and documents executed by the Subscriber or to be caused to be
executed by the Subscriber in connection therewith will be duly authorized,
executed and delivered by, are binding upon the Subscriber and are enforceable
against the Subscriber in accordance with their terms.
(vi) The
Subscriber acknowledges that (A) it has the authority to enter into this
Subscription Agreement and consummate the transactions provided herein, and
(B)
nothing prohibits or restricts the right or ability of the Subscriber to close
the transactions contemplated by this Subscription Agreement and carry out
the
terms hereof. The Subscriber acknowledges that neither this Subscription
Agreement, nor any agreement, document or instrument executed or to be executed
in connection with the same, nor anything provided in or contemplated by this
Subscription Agreement or any such other agreement, document or instrument,
does
now or shall hereafter breach, invalidate, cancel, make inoperative or interfere
with, or result in the acceleration or maturity of, any contract, agreement,
lease, easement, right or interest, affecting or relating to the Subscriber.
(vii) The
Subscriber acknowledges that there are no bankruptcy or insolvency proceedings
pending or contemplated by or against him.
3
(b) Information
Concerning the Company.
(i) The
Subscriber understands that the Company is a special purpose acquisition company
and has no current business or material assets other than cash, its rights
and
obligations under the Merger Agreement and the capital stock of its
subsidiaries. The Subscriber is the Chief Executive Officer of Intercontinental,
is familiar with the proposed business, properties, operations and prospects
of
Intercontinental and, at a reasonable time prior to the execution of this
Subscription Agreement, has been afforded the opportunity to ask questions
of
and received satisfactory answers from the Company’s officers and directors, or
other persons acting on the Company’s behalf, concerning the proposed business,
properties, operations and prospects of the Company subsequent to the Merger
and
concerning the terms and conditions of the offering of the Shares and has asked
any questions it desires to ask and all such questions have been answered to
the
full satisfaction of the Subscriber. The Subscriber acknowledges that,
subsequent to the Merger, other than the cash of the Company remaining after
the
Merger, substantially all of the business properties and assets of the Company
will be those of Intercontinental.
(ii) The
Subscriber understands that the purchase of the Shares involves various risks,
including, but not limited to, those outlined in this Subscription
Agreement.
(iii) The
Subscriber acknowledges and agrees that no representations or warranties have
been made to the Subscriber by the Company as to the tax consequences of this
investment, or as to profits, losses or cash flow that may be received or
sustained as a result of this investment.
(iv) All
documents, records and books pertaining to a proposed investment in the Shares
which the Subscriber has requested have been made available to the
Subscriber.
(c) Status
of the Subscriber.
(i) The
Subscriber has such knowledge and experience in financial and business matters
that the Subscriber is capable of evaluating the merits and risks of an
investment in the Shares. The Subscriber is able to bear the economic risk
of
this investment. The Subscriber has had the opportunity to consult with the
Subscriber’s own attorney, accountant and/or purchaser representative regarding
this Subscriber’s investment in the Shares and their suitability for purchase by
the Subscriber, and to the extent necessary, the Subscriber has retained, at
the
Subscriber’s own expense, and relied upon, such attorney, accountant and/or
purchaser representative, or other appropriate professional advice, regarding
the investment, tax and legal merits, risks and consequences of this
Subscription Agreement and of purchasing and owning the Shares.
(ii) The
Subscriber represents that the Subscriber is (CHECK
EACH CATEGORY OF “ACCREDITED INVESTOR” BELOW, IF ANY, WHICH IS APPLICABLE TO THE
SUBSCRIBER):
(
) A.
a
natural person whose individual net worth, or joint net worth with that person's
spouse, at the time of his purchase exceeds $1,000,000;
4
(
) B.
a
natural person who had an individual income in excess of $200,000 in each of
the
two most recent years or joint income with that person's spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching
the
same income level in the current year;
(
) C.
an
organization described in Section 501(c)(3) of the Internal Revenue Code, a
corporation, Massachusetts or similar business trust, or a partnership, with
total assets in excess of $5,000,000, and which was not formed for the specific
purpose of acquiring the Shares;
(
) D.
a
trust, with total assets in excess of $5,000,000 not formed for the specific
purpose of acquiring the Shares whose purchase is directed by a person who
has
knowledge and experience in financial and business matters that he is capable
of
evaluating the merits and risks of an investment in Shares; or
(
) E.
an
entity in which all of the equity owners are Accredited Investors (as listed
in
categories (A)-(D)).
(iii) The
Subscriber agrees to furnish any additional information requested to assure
compliance with applicable Federal and State Securities Laws in connection
with
the purchase and sale of the Shares.
(d) Restrictions
on Transfer or Sale of the Shares.
(i) The
Subscriber is acquiring the Shares described solely for the Subscriber’s own
beneficial account, for investment purposes, and not with view to, or for resale
in connection with, any distribution of the Shares. The Subscriber understands
that the offer and the sale of the Shares has not been registered under the
Securities Act or any State Securities Law by reason of specific exemptions
under the provisions thereof that depend in part upon the investment intent
of
the Subscriber and of the other representations made by the Subscriber in this
Subscription Agreement. The Subscriber understands that the Company is relying
upon the representations, covenants and agreements contained in this
Subscription Agreement (and any supplemental information) for the purposes
of
determining whether this transaction meets the requirements for those
exemptions.
(ii) The
Subscriber understands that the Shares are “restricted securities” under
applicable federal securities laws and that the Securities Act and the rules
of
the Securities and Exchange Commission (the “Commission”)
provide in substance that the Subscriber may dispose of the Shares only pursuant
to an effective registration statement under the Securities Act or an exemption
therefrom, and the Subscriber understands that the Company has no obligation
or
intention to register any of the Shares purchased by the Subscriber or to take
action so as to permit sales pursuant to the Securities Act (including Rule
144). As a consequence, the Subscriber understands that there is no public
market for the Shares and the Subscriber therefore must bear the economic risks
of the investment in the Shares for an indefinite period of time. The Subscriber
understands that the Subscriber may not at any time demand the purchase by
the
Company of the Subscriber’s Shares.
5
(iii) The
Subscriber agrees: (A) that the Subscriber will not sell, assign, pledge,
give, transfer or otherwise dispose of the Shares or any interest therein,
or
make any offer or attempt to do any of the foregoing, except pursuant to a
registration of the Shares under the Securities Act and all applicable State
Securities Laws or in a transaction that is exempt from the registration
provisions of the Securities Act and all applicable State Securities Laws;
(B) that the Company and any transfer agent for the Shares shall not be
required to give effect to any purported transfer of any of the Shares except
upon compliance with the foregoing restrictions; and (C) that a legend in
substantially the following form will be placed on the certificates representing
the Shares, if any certificates are issued:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT
TO
RULE 144 OF SUCH ACT.”
(iv) The
Subscriber has not offered or sold any portion of the Shares subscribed for
and
has no present intention of dividing the Shares with others or of reselling
or
otherwise disposing of any portion of the Shares either currently or after
the
passage of a fixed or determinable period of time or upon the occurrence on
nonoccurrence of any predetermined event or circumstance.
7. Survival
and Indemnification.
All
representations, warranties and covenants contained in this Agreement and the
indemnification contained in this Section
7
shall
survive (a) the acceptance of this Subscription Agreement by the Company,
(b) changes in the transactions, documents and instruments described in
this Subscription Agreement that are not material or that are to the benefit
of
the Subscriber, and (c) the death or disability of the Subscriber. The
Subscriber acknowledges the meaning and legal consequences of the
representations, warranties and covenants in determining the Subscriber’s
qualification and suitability to purchase the Shares. The Subscriber agrees
to
indemnify, defend and hold harmless the Company, and its stockholders, officers,
directors, employees, agents and controlling persons, from and against any
and
all losses, claims, damages, liabilities, expenses (including attorneys’ fees
and disbursements), judgments or amounts paid in settlement of actions arising
out of or resulting from the untruth or any representation, or the breach of
any
warranty or covenant, made by the Subscriber in this Subscription Agreement.
Notwithstanding the foregoing, however, no representation, warranty, covenant
or
acknowledgment made by the Subscriber shall in any manner be deemed to
constitute a waiver of any rights granted to him under the Securities Act or
State Securities laws.
6
8. Notices.
All
notices and other communications provided for in this Subscription Agreement
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid, telecopier, overnight air courier guaranteeing next day
delivery, or electronic mail:
(a)
if
to the
Company, to it at the following address:
0000
Xxxx
Xxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Attn: Xxxx
X.
Xxxxxxxx, Co-Chief Executive Officer
(b)
if
to the
Subscriber, to the address set forth on the signature page hereto, or at such
other address as either party shall have specified by notice in writing to
the
other.
All
notices and communications shall be deemed to have been duly given: at the
time
delivered by hand, if personally delivered; when receipt acknowledged, if
mailed, telecopied, sent by electronic mail, or sent by overnight air courier.
If a notice or communication is mailed in the manner provided above within
the
time prescribed, it is duly given, whether or not the addressee receives
it.
9. Assignability.
This
Subscription Agreement is not assignable by the Subscriber, and may not be
modified, waived or terminated except by an instrument in writing signed by
the
party against whom enforcement of such modifications, waiver or termination
is
sought.
10. Binding
Effect.
Except
as otherwise provided in this Subscription Agreement, this Subscription
Agreement shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and
assigns, and the agreements, representations, warranties and acknowledgments
contained in this Subscription Agreement shall be deemed to be made by and
be
binding upon such heirs, executors, administrators, successors, legal
representatives and assigns. If the Subscriber is more than one person, the
obligation of the Subscriber shall be joint and several and the agreements,
representations, warranties and acknowledgments contained herein shall be deemed
to be made by and be binding upon each such person and his heirs, executors,
administrators and successors.
11. Entire
Agreement.
This
Subscription Agreement constitutes the entire agreement of the Subscriber and
the Company relating to the matters contained herein, superseding all prior
contracts or agreements, whether oral or written.
12. Governing
Law.
This
Subscription Agreement shall be governed and controlled as to the validity,
enforcement, interpretations, construction and effect and in all other aspects
by the substantive laws of the State of Delaware, without reference to conflicts
of laws principles.
7
13. Severability.
If any
provision of this Subscription Agreement or the application thereof to any
subscriber or circumstance shall be held invalid or unenforceable to any extent,
the remainder of this Subscription Agreement and the application of such
provision to other subscriptions or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
14. Headings.
The
headings in this Subscription Agreement are inserted for convenience and
identification only and are not intended to describe, interpret, define, or
limit the scope, extent or intent of this Subscription Agreement or any
provision of this Subscription Agreement.
15. Counterparts.
This
Subscription Agreement may be executed in any number of counterparts, each
of
which when so executed and delivered shall be deemed to be an original and
all
of which together shall be deemed to be one and the same
agreement.
[Signature
page follows.]
8
IN
WITNESS WHEREOF, the undersigned Subscriber has executed this Subscription
Agreement to be effective as of the date first above written.
Common
Stock: 74,075 Shares
Total
Purchase Price: $500,000
| Signature: | /s/ Xxxxxx X. Xxxxxxxxx | |
|
Xxxxxx X. Xxxxxxxxx |
||
| Address: |
__________________________________
|
|
| ______________________________ | ||
|
Federal Tax ID No.:
____________________________
|
||
| [Please also complete and return a Form W-9 with | ||
| this Subscription Agreement] | ||
[Signature
Page to Xxxxxx X. Xxxxxxxxx Subscription
Agreement]
AGREED
TO AND ACCEPTED BY:
|
By:
|
/s/Xxxx
X. Xxxxxxxx
|
|
|
Name:
|
Xxxx
X. Xxxxxxxx
|
|
|
Title:
|
Chief
Executive Officer
|
[Signature
Page to Xxxxxx X. Xxxxxxxxx Subscription Agreement]
