AMENDED SUBSCRIPTION AGREEMENT
EXECUTION
VERSION
FIRST
PACTRUST BANCORP, INC.
COMMON
STOCK
AMENDED
SUBSCRIPTION AGREEMENT
THIS AMENDED SUBSCRIPTION
AGREEMENT, dated as of
July 16, 2010, (this “Subscription
Agreement”) amends and restates in its entirety the subscription
agreement dated as of May 3, 2010 made by and among the undersigned subscriber
or subscribers (the “Subscriber”),
and First PacTrust Bancorp, Inc., a Maryland
corporation (the “Company”) that owns all of the issued and outstanding capital
stock of Pacific Trust Bank, a federally-chartered stock savings association
(the “Bank”) as follows:
RECITALS:
WHEREAS,
in connection with a contemplated recapitalization of the Company (the “Transaction”)
the Company intends to conduct a private placement (the “Offering”)
of newly issued shares of its common stock (as further described herein) to
certain accredited investors;
WHEREAS,
in order permit Subscriber and other subscribers in the Offering to structure
their respective investments in the Company to ensure compliance with regulatory
requirements and policies applicable to such Subscriber, the board of directors
of the Company (the “Board of
Directors”) intends to reclassify, pursuant to the Company’s Articles of
Incorporation, as amended, such number of shares of its common stock,
par value $.01 per share as necessary to carry out the purposes of this
Agreement (the “Voting Common
Stock”) into a new class of common stock (the “Class B
Non-Voting Common Stock” and, with the Voting Common Stock, the “Common
Stock”), such Class B Non-Voting Common Stock to possess identical
rights, preferences and privileges as the Voting Common Stock, except with
respect to voting rights and conversion;
WHEREAS,
the Company has engaged Xxxxx Securities, LLC as placement agent (the “Placement
Agent”) (and the Placement Agent has engaged Xxxxxxxx Capital Corp. to
assist it in its role as Placement Agent) in the Offering; and
WHEREAS,
Subscriber wishes to purchase, and the Company wishes to sell, upon the terms
and conditions stated in this
Agreement, shares of Voting Common Stock (the “Voting
Shares”) and Class B Non-Voting Common Stock (the “Class B
Shares”) in the aggregate numbers indicated below such Subscriber’s name
on the signature page of this agreement (and subject to Section 1 hereof);
and
NOW THEREFORE, in consideration of the
representations, warranties, covenants and agreements contained in this
Agreement, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE
I
PURCHASE
AND SALE OF SECURITIES
1.1 Sale of Securities. Subject to
the terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, the Company hereby agrees to issue and sell to
the Subscriber and the Subscriber agrees to purchase from the Company, upon
Closing (as such term is defined in Section 3 of this Article I), the Common
Stock as described herein for the for an aggregate purchase price (the “Purchase
Price”) all
as set forth by the Subscriber on the signature page hereto. To the extent that
the gross proceeds from the Offering are less than $60,000,000.00, or that the
Company has received executed counterparts to subscription agreements
representing subscriptions from subscribers in the Offering to purchase shares
of the Common Stock having an aggregate purchase price greater than
$60,000,000.00, the actual number of shares of Common Stock purchased and
received by the Subscriber may be different from the number subscribed for and,
in such event, the Company may amend this Agreement to reflect the actual number
so purchased and received by the Subscriber. This Offering is only being made to
the Subscriber on the condition that the Subscriber qualifies as an “accredited
investor” (as defined in Rule 501 under the Securities Act of 1933, as amended
(the “Securities
Act”)). To the extent that, as of and giving effect to the consummation
of the Offering on the terms described herein, Subscriber would own, control or
have the power to vote shares of Voting Stock (as such term is defined under the
Bank Holding Company Act of 1956, as amended (and any rules and regulations
promulgated thereunder, the “BHC Act”),
the Change in Bank Control Act of 1978, as amended (and any rules and
regulations promulgated thereunder, the “CIBC
Act”), or the Home Owners Loan Act, as amended (and any rules and
regulations promulgated thereunder, “HOLA”))
equal to or more than 5.0% of the aggregate number of outstanding shares of
Voting Stock (the “Voting Ownership
Limit”), Subscriber’s Subscription for Voting Shares in excess of the
Voting Ownership Limit, unless otherwise instructed by Subscriber, shall be
deemed to be, automatically and without further action on the part of Subscriber
or the Company, a Subscription for Class B Shares in an amount equal to such
excess. Notwithstanding anything contained in this Agreement to the
contrary, in no event shall the Company be obligated to issue and sell to
Subscriber any shares of Common Stock to the extent that, as of and giving
effect to the issuance and sale of such shares of Common Stock and the issuance
of the shares of Common Stock to all other investors in the Offering, Subscriber
would own or control 10.0% or more of the Company’s total stockholder’s
equity. Subscriber understands that, subject only to the provisions
of Articles 7 and 8 of this Agreement, Subscriber (i) is not entitled to cancel,
terminate or revoke this Agreement or any of the agreements, representations or
warranties of Subscriber hereunder, and (ii) acknowledges that this subscription
is irrevocable. The purchase of the Common Stock is referred to in this
Agreement as the “Purchase.”
1.2 Escrow of Deposit Pending Closing;
Disposition of Deposit Upon Closing. The Subscriber has provided or
immediately following the execution of this Agreement will provide to the
Company by wire transfer immediately available funds in the amount of two and
one half percent (2.5%) of the aggregate Purchase Price (the “Deposit”).
The Deposit, when received by the Company, shall be held by the Company in
escrow in a segregated deposit account maintained by an independent third-party
escrow agent to be designated by the Company (the “Escrow
Account”), which shall bear interest from the date of deposit until the
date of withdrawal at the Escrow Agent’s standard statement account savings rate
as in effect from time to time. At the Closing, upon receipt from Subscriber of
the Authorization pursuant to Section 1.3(a), the Company shall direct the
Escrow Agent to release the Deposit and any allocable interest earned thereon
from the Escrow Account to the Company. Except as otherwise provided in Sections
8.1(c) of this Agreement, if this Agreement is terminated without Closing
hereunder, the Company shall repay the Deposit to the Subscriber with all
interest earned thereon.
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1.3 Closing. Subject to receipt of
any required regulatory approvals and the other conditions to closing set forth
in Article VII of this Agreement, the closing of the transactions contemplated
hereunder (the “Closing”)
shall occur at such date and place as shall be designated by the Company by
reasonable prior written notice to the Subscriber (the “Closing
Date”). Closing may be conditioned upon Subscriber’s receipt of
regulatory approvals as more fully set forth in this Agreement. At the
Closing:
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(a)
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Subscriber
shall have delivered an amount equal to the Purchase Price but without
duplication of the Deposit and any interest thereon withdrawn from the
Escrow Account by the Company upon the Closing, in immediately available
United States funds, to an account or accounts designated in writing by
the Company; provided that such
delivery shall constitute Subscriber’s agreement and acknowledgement that
all of the conditions specified in Section 7.2 hereof shall have been
satisfied or waived by Subscriber and shall constitute authorization to
the Company to direct the Escrow Agent to release the Deposit as provided
in Section 1.2 hereof (the “Authorization”);
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(b)
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The
Company shall deliver one or more Voting Common Stock certificates and,
where applicable, Class B Non-Voting Common Stock certificates, as the
case may be, representing the Common Stock subscribed for by Subscriber;
and
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(c)
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The
representations and warranties of the Company and Subscriber set forth in
this Agreement shall be true and correct as though made on and as of the
Closing Date, except to the extent that failure of such representations
and warranties to be so true and correct, individually or in the
aggregate, does not and would not reasonably be expected to have a
Material Adverse Effect (as defined
below).
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1.4 Acceptance. This Agreement
shall be effective immediately upon acceptance by the Company of the
Subscriber’s fully completed and executed version
of the Investor Questionnaire attached hereto as Exhibit B (the “Investor
Questionnaire”) and executed
counterpart of this Agreement and shall thereupon be binding upon the Company
and thereupon Subscriber’s firm offer herein shall be deemed accepted. Such
acceptance by the Company shall be evidenced only by counter-execution and
delivery of this Agreement by the Company, and the Company shall have no
obligation hereunder until the Company shall have executed and delivered to the
Subscriber an executed counterpart of this Agreement.
1.5 Termination. Other
than pursuant to Article VIII hereof, this Agreement may not be terminated by
the Subscriber at any time following the Subscriber’s delivery of an executed
counterpart of this Agreement to the Company. Subscriber understands that,
subject only to the provisions of Articles VII and VIII of this Agreement,
Subscriber (i) is not entitled to cancel, terminate or revoke this Agreement or
any of the agreements, representations or warranties of Subscriber hereunder,
and (ii) acknowledges that this subscription is irrevocable.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES
2.1 Disclosure.
(a) “Material Adverse
Effect” means a material adverse effect on (1) the business, results
of operation or financial condition of the Company and the Bank taken as a
whole; provided that
Material Adverse Effect shall not be deemed to include the effects, to the
extent such effects do not have a disproportionate
impact on the Company as compared to other depository institution holding
companies, of (A) any facts, circumstances, events, changes or occurrences
generally affecting businesses and
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industries
in which the Company operates, companies engaged in such businesses or
industries or the economy, or the financial or securities markets and credit
markets in the United States or elsewhere in the world, including effects on
such businesses, industries, economy or markets resulting from any regulatory or
political conditions or developments, or any outbreak or escalation of
hostilities, declared or undeclared acts of war, terrorism, or work stoppages,
(B) changes or proposed changes in generally accepted accounting principles
in the United States (“GAAP”) or
regulatory accounting requirements applicable to depository institutions and
their holding companies generally (or authoritative interpretations thereof),
(C) changes or proposed changes in banking and other laws of general
applicability or related policies or interpretations of all United States
governmental or regulatory authorities (collectively, “Governmental
Entities”), or (D) changes in the market price or trading volume of
Common Stock (it being understood and agreed that the exception set forth in
this clause (D) does not apply to the underlying reason giving rise to or
contributing to any such change), or (2) a material and adverse effect on
the legality, validity or enforceability of this Subscription Agreement, or (3)
the ability of the Company or a Subscriber to consummate timely the Purchase and
the other transactions contemplated by this Subscription Agreement and any other
documents, agreements and instruments delivered in connection herewith,
(collectively, the “Transaction
Documents”).
(b) “Previously
Disclosed” information means (1) information contained in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2009, or its other reports and forms filed with the Securities
and Exchange Commission (the “SEC”)
under Sections 13(a), 14(a) or 15(d) of the Securities Exchange Act of 1934
(the “Exchange
Act”) on or after January 1, 2010 (the “SEC
Reports”) and prior to the execution and delivery of this Agreement, and
if applicable, (2) information provided pursuant to this
Agreement or any confidentiality agreement between the Company and the
Subscriber.
(c) Each
party acknowledges that it is not relying upon any representation or warranty
not set forth in the Transaction Documents. The Subscriber is aware that it will
bear the economic risk of an investment in the Common Stock.
2.2 Representations
and Warranties of the Company. Except as Previously
Disclosed, the Company represents and warrants to the Subscriber that as of the
date hereof (or such other date specified herein):
(a) Organization, Authority and
Significant Subsidiary. The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Maryland, with corporate power and authority to own its properties and
conduct its business in all material respects as currently conducted, and,
except as has not had or would not reasonably be expected to have a Material
Adverse Effect, has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification; and the Bank, the only
subsidiary of the Company has been duly organized as a federally
chartered stock savings institution, and its deposit accounts are insured up to
applicable limits by the Federal Deposit Insurance Corporation (the “FDIC”).
(b) Authorization of Common
Stock. The Common Stock to be issued has been duly authorized
for issuance by the Company and, when duly issued and delivered by the Company
against payment therefor in accordance with this Agreement, will be duly and
validly issued, fully paid and nonassessable, and the issuance thereof will not
be subject to any preemptive or other similar rights.
(c) Company Stock
Options. As of the date of this Agreement, 482,396shares
of Common Stock are subject to outstanding options to acquire shares
of Common Stock from the Company (such options, together with any similar
options granted after the date hereof, “Company Stock
Options”).
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(d) Securities Laws. Assuming the accuracy of the representations and
warranties made by Subscriber contained herein and similar representations by
the other investors in the Offering, the offer and sale of the Common Stock to
Subscriber in the manner contemplated by this Agreement, are exempt from the
registration requirements of the Securities Act and any other applicable
laws.
(e) Authorization of this
Agreement. This Agreement has been duly authorized, executed
and delivered by the Company, and assuming due authorization, execution and
delivery of this Agreement by the Subscriber, this Agreement will constitute a
valid, legal and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except to the extent that enforceability
may be limited by (a) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect relating
to creditors’ rights generally or the rights of creditors of financial
institutions, the accounts of whose subsidiaries are insured by the FDIC and (b)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity) (collectively, the “Enforceability
Exceptions”).
(f) No Material Adverse
Effect. Since December 31, 2009, no fact, circumstance, event, change,
occurrence, condition or development has occurred that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect.
(g) Reports.
(1) Since
December 31, 2009, the Company has timely filed all SEC Reports and, as of
their respective filing dates, such reports did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading.
(2) Since
December 31, 2009, the Company and the Bank have filed all reports,
registrations and statements, together with any required amendments thereto,
that was required to be filed with the Office of Thrift Supervision (the “OTS”) and
any other applicable federal or state banking authorities, except where the
failure to file any such report, registration or statement, individually or in
the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect. As of their respective dates, each of the foregoing
reports complied with all applicable rules and regulations promulgated by the
OTS and any other applicable foreign, federal or state securities or banking
authorities, as the case may be, except for any failures that, individually or
in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect.
(h) No General Solicitation or
General Advertising. Neither the Company nor any person acting on its
behalf has engaged or will engage in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act)
in connection with any offer or sale of the Common Stock.
(i) Non-contravention. The
Company is not in violation of (i) any term of its Articles of Incorporation, as
amended, or its Amended and Restated Bylaws, (ii) any agreement or instrument to
which it is a party or by which it or any of its properties or assets is bound;
or (iii) of any applicable law, ordinance, rule or regulation or any applicable
order, judgment or decree of any court or governmental authority,
except, in the case of (ii) or (iii) above, for any violations that would not,
individually or in the aggregate, have a Material Adverse Effect.
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(j) Brokers. Except
as Previously Disclosed there are no contracts, agreements or understandings
between the Company and any person that would give rise to a valid claim against
the Company for a brokerage commission, finder’s fee or other like payment as a
result of the transactions contemplated by this Agreement.
(k) No Other
Agreements. Except
as Previously Disclosed or with respect to the investors designated on Schedule
I hereto, none of the terms of subscription in the
Offering offered to another investor therein is more favorable than any
provision of this Agreement, and no such other investor has been offered any
rights under any “side letter” which have not also been offered to
Subscriber.
2.3 Representations
And Warranties Of The Subscriber. The Subscriber hereby
represents and warrants to the Company that as of the date hereof (and, as
applicable, agrees):
(a) The
Subscriber understands and acknowledges that (i) the offering and sale of the
Common Stock is intended to be exempt from registration under the Securities
Act, (ii) the Common Stock has not been registered under the Securities
Act, and (iii) the Company has represented to the Subscriber that the
Common Stock has been offered and sold by the Company in reliance upon the
foregoing exemption from registration as well as corresponding exemptions from
registration under any applicable state securities laws and that the reliance on
such exemptions is predicated upon the accuracy of Subscriber’s representations
and warranties in this Agreement and the Investor
Questionnaire. Subscriber further understands that the shares of
Common Stock to be acquired hereunder are characterized as “restricted
securities” under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain limited
circumstances and in accordance with the terms and conditions set forth in the
legends described below. In this connection, Subscriber represents
that Subscriber is familiar with Securities and Exchange Commission Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act.
(b) Subscriber
understands and acknowledges that the certificates evidencing the Common Stock
to be purchased hereunder will bear substantially the following
legend:
THE
SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE AFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED.
(c) The
Subscriber is purchasing the Common Stock for its own account, for investment,
and not with a view to, or for offer or sale in connection with, any
distribution thereof in violation of the Securities Act or other applicable
securities laws, subject to any requirement of law that the disposition of its
property be at all times within its control and subject to its ability to resell
such Common Stock pursuant to an exemption from registration available under the
Securities Act or any other applicable securities law.
(d) The
Subscriber represents and warrants that neither the Company nor the Placement
Agent is acting as a fiduciary or financial or investment adviser for the
Subscriber.
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(e) The
Subscriber represents and warrants that it is not relying (for purposes of
making any investment decision or otherwise) upon any advice, counsel or
representations (whether written or oral) of the Company, the Placement Agent or
their respective legal counsel, advisors and agents and no independent counsel
has been retained to represent Subscriber or any other Subscriber.
(f) The
Subscriber acknowledges that it has conducted a review and analysis of the
business, assets, condition, operations and prospects of the Company, together
with the representations and warranties of the Company set forth in this
Agreement that the Subscriber considers sufficient for purposes of the
Purchase. The Subscriber represents and warrants that (i) it has
consulted with its own legal, regulatory, tax, business, investment, financial
and accounting advisers in connection herewith to the extent it has deemed
necessary, (ii) it has had a reasonable opportunity to ask questions of and
receive answers from officers of the Company concerning the Company’s financial
condition and results of operations and the purchase of the Common Stock, and
any such questions have been answered to its satisfaction, (iii) it has had
the opportunity to review all publicly available records and filings concerning
the Company and the Bank and it has carefully reviewed such records and filings
that it considers relevant to making an investment decision, and (iv) it
has made its own investment decisions based upon its own judgment, due diligence
and advice from such advisers as it has deemed necessary. The Subscriber further
represents and warrants that, except for the Company’s management, no person has
been authorized by the Company to make any representations or warranties
concerning the Company, including as to the accuracy or completeness of the
information contained in this Agreement or any Transaction
Document.
(g) The
Subscriber represents and warrants that it is an “accredited investor” within
the meaning of Rule 501 under Regulation D promulgated under the Securities Act,
and that:
(1) the
information contained in the Investor Questionnaire is complete, accurate, and
true in all respects, and agrees to notify and supply corrective information
promptly to the Company if any such information becomes inaccurate or
incomplete.
(2) the
Subscriber has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an investment in the
Common Stock.
(3) the
Subscriber understands that neither the SEC, OTS, FDIC nor any securities
administrator of any state has made any finding or determination relating to the
fairness of this investment or recommended or endorsed, or will recommend or
endorse, the offering of the securities purchased hereby.
(4) the
Subscriber acknowledges that no general solicitation or general advertising
(including communications published in any newspaper, magazine or other
broadcast) has been received by it and that no public solicitation or
advertisement with respect to the offering of the securities purchased hereby
has been made to it.
(5) no
person has made any direct or indirect representation or warranty of any kind to
the Subscriber with respect to the economic return which may accrue to the
Subscriber.
(6) the
Subscriber is not a participant-directed employee plan, such as a 401(k) plan,
or any other type of plan referred to in paragraph (a)(1)(i)(D) or
(a)(1)(i)(E) of Rule 144A promulgated under the Securities Act, or a trust
fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the
assets of
such a plan, unless investment decisions with respect to the plan are made
solely by the fiduciary, trustee or sponsor of such plan.
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(7) In
connection with the purchase of the Common Stock, Subscriber meets all
suitability standards imposed on him or her by any applicable state securities
or “blue sky” laws.
(h) The
Subscriber represents and warrants that on each day from the date on which it
acquires any Common Stock through and including the date on which it disposes of
all such interests, either (i) it is not (a) an “employee benefit
plan” (as defined in Section 3(3) of the United States Employee Retirement
Income Security Act of 1974, as amended (“ERISA”))
which is subject to the provisions of Part 4 of Subtitle B of
Title I of ERISA, or any entity whose underlying assets include the assets
of any such plan (an “ERISA
Plan”), (b) any other “plan” (as defined in Section 4975(e)(1)
of the United States Internal Revenue Code of 1986, as amended (the “Code”))
which is subject to the provisions of Section 4975 of the Code or any
entity whose underlying assets include the assets of any such plan (a “Plan”),
(c) an entity whose underlying assets include the assets of any such ERISA
Plan or other Plan by reason of Department of Labor regulation
section 2510.3-101 or otherwise, or (d) a governmental or church plan
that is subject to any federal, state or local law which is substantially
similar to the provisions of Section 406 of ERISA or Section 4975 of
the Code (a “Similar
Law”); or (ii) the purchase, holding and disposition of any such
Common Stock by it will satisfy the requirements for exemptive relief under
Prohibited Transaction Class Exemption (“PTCE”)
00-00, XXXX 00-0, XXXX 91-38, XXXX 00-00, XXXX 96-23 or a similar exemption, or,
in the case of a plan subject to a Similar Law, will not result in a non-exempt
violation of such Similar Law.
(i) The
Subscriber represents and warrants that the execution, delivery, and performance
by the Subscriber of this Agreement are within the powers of the Subscriber,
have been duly authorized by all necessary action on the part of the Subscriber,
and will not constitute or result in a breach or default under, or conflict
with, any order, ruling or regulation of any court or other tribunal or of any
governmental commission or agency, or any agreement or other undertaking, to
which the Subscriber is a party or by which the Subscriber is bound; and, if the
Subscriber is not an individual, will not violate any provision of the charter
documents, bylaws, indenture of trust, or partnership agreement, as applicable,
of the Subscriber. The signatures on the Agreement are genuine, and the
signatory, if the Subscriber is an individual, has legal competence and capacity
to execute the same, or, if the Subscriber is not an individual, the signatory
has been duly authorized to execute the same; and the Agreement constitutes the
legal, valid and binding obligations of the Subscriber, enforceable in
accordance with its terms (subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally and subject, as to
enforceability, to general principles of equity (whether applied in a proceeding
in equity or at law)). To the Subscriber’s Knowledge no notice to,
filing with, exemption or review by, or authorization, consent or approval of,
any Governmental Entity is required to be made or obtained by the Subscriber in
connection with the consummation by the Subscriber of the Purchase and the other
transactions contemplated by the Transaction Documents.
(j) Except
as set forth on Schedule II hereto, Subscriber hold no shares of Common Stock as
of the date hereof. The Subscriber certifies that, after giving
effect to the Purchase, as of the date hereof, the Subscriber and all of its
affiliates on an aggregate basis will not beneficially own, control or have the
power to vote 5.0% or more of the outstanding Common Stock. The
Subscriber does not have any agreement, arrangement or understanding with any
person (other than the Company) to acquire, dispose of or vote any securities of
the Company.
(k) The
Subscriber acknowledges and agrees that the Offering involves securities for
which only a limited trading market exists, thereby requiring any investment to
be maintained for an indefinite period of time. The purchase of the Common Stock
involves risks which the Subscriber has evaluated, and the
Subscriber is able to bear the substantial economic risk of the investment for
an indefinite period of time, has no need for liquidity in such investment and
can afford a complete loss of such investment. The Subscriber’s overall
commitment to investments that are not readily marketable is not, and its
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acquisition
of the Common Stock will not cause such overall commitment to become,
disproportionate to its net worth and the Subscriber has adequate means of
providing for its current needs and contingencies.
(l) The
Subscriber acknowledges and agrees that once funds are transferred in payment of
the Purchase Price and the other conditions to Closing are satisfied or, if
waivable, waived by the Company or the Subscriber, as applicable, the Company
may schedule Closing in its sole discretion and such will be immediately
released to the Company upon completion of Closing.
(m) The
Subscriber acknowledges and agrees that it never has been represented,
guaranteed or warranted by the Company, any of the officers, directors,
stockholders, partners, employees or agents of the Company, or any other
persons, whether expressly or by implication, that: (a) the Company or the
Subscriber will realize any given percentage of profits and/or amount or type of
consideration, profit or loss as a result of the Company’s activities or the
Subscriber’s investment in the Company; or (b) the past performance or
experience of the management of the Company, or of any other person, will in any
way indicate the predictable results of the ownership of the Common Stock or of
the Company’s activities.
(n) The
Subscriber acknowledges and agrees that it has received the Transaction
Documents, has read the Transaction Documents carefully, is fully familiar with
and understands the contents of the Transaction Documents and has not relied on
any representation or warranty in connection with the Offering other than those
contained in the Transaction Documents and this Agreement.
(o) The
Subscriber represents and warrants that it has been given access to information
regarding the Company (including the opportunity to meet with officers of the
Company) and have utilized such access to its satisfaction for the purpose of
obtaining such information concerning the Company and the Common Stock as the
Subscriber has deemed necessary to make an investment decision.
(p) The
Subscriber acknowledges, represents and warrants that Subscriber has been
informed of the FDIC Final Statement of Policy on Qualifications for Failed Bank
Acquisitions (the “Statement”)
and Subscriber has been advised to, and has had the opportunity to, review and
understand the Statement and to determine and evaluate its prospective effect on
the Purchase. Subscriber understands and acknowledges the terms of
the Statement, including the possible restrictions on transfer referred to in
Article IV, below, and the other restrictions and limitations set forth
therein. Subscriber represents and warrants that Subscriber is
purchasing the Common Stock subject to the effect of the Statement as it may be
interpreted and applied to the Common Stock after the date of purchase and to
cooperate with the Company in connection with providing such information and
undertakings as may be required in order to comply with any requirements
imposed.
(q) Subscriber
acknowledges and agrees that any dividends or other distributions paid to
Subscriber by the Company will be paid to, and any contributions made by it to
the Company will be made from, an account in Subscriber’s name unless the
Company, in its sole discretion, agrees otherwise.
(r) Subscriber
agrees to provide any information requested by the Company which the Company
reasonably believes will enable the Company to (i) comply with all applicable
laws, rules and regulations, including without limitation any anti-money
laundering and any other laws, rules and regulations
applicable to the Company or to any investment held or proposed to be held by
the Company, and (ii) determine whether or not
Subscriber is, or will be as of Closing, an “accredited investor” as defined in
Regulation D, promulgated under the Securities Act.
9
(s) Subscriber
acknowledges and agrees that: (i) neither the Company nor the Placement Agent
has provided legal or tax advice or acted as or is an agent or employee of or
has advised Subscriber in connection with the investment in the Company by
Subscriber; (ii) no federal, state, local or foreign agency has passed upon the
Common Stock or made any finding or determination as to the fairness of this
investment and (iii) the Common Stock is not a savings account, deposit or other
obligation of a depository institution and is not insured by the FDIC or any
other Governmental Entity (as defined herein).
(t) SUBSCRIBER
SHOULD CHECK THE OFFICE OF FOREIGN ASSETS CONTROL WEBSITE AT XXX.XXXXX.XXX/XXXX
BEFORE MAKING THE FOLLOWING REPRESENTATIONS:
(i) Subscriber
understands that federal regulations and executive orders administered by the
United States Department of the Treasury’s Office of Foreign Assets Control
(“OFAC”)
prohibit, among other things, the engagement in transactions with, and the
provision of services to, certain foreign countries, territories, entities and
individuals.
(ii) Subscriber
represents that no portion of the Purchase Price is, or will be, directly or
indirectly derived from activities that contravene federal, state or
international laws and regulations, including anti-money laundering laws and
regulations. Federal regulations and Executive Orders administered by OFAC
prohibit, among other things, the engagement in transactions with, and the
provision of services to, certain foreign countries, territories, entities and
individuals. The lists of OFAC prohibited countries, territories,
persons and entities can be found on the OFAC website at
xxx.xxxxx.xxx/xxxx. In addition, the programs administered by OFAC
(the "OFAC Program") prohibit dealing
with individuals1 or entities in
certain countries regardless of whether such individuals or entities appear on
the OFAC lists.
(iii) To
the best of Subscriber’s knowledge, none of: (1) Subscriber; (2) any person
controlling or controlled by Subscriber; (3) if Subscriber is a privately-held
entity, any person having a beneficial interest in Subscriber; or (4) any person
for whom Subscriber is acting as agent or nominee in connection with this
investment is a country, territory, individual or entity named on an OFAC list,
or a person or entity prohibited under the OFAC Programs. Please be advised that
the Company may not accept any amounts from a prospective Subscriber if such
prospective Subscriber cannot make the representation set forth in the preceding
paragraph. Subscriber agrees to promptly notify the Company should Subscriber
become aware of any change in the information set forth in these
representations. Subscriber understands and acknowledges that, by law, the
Company may be obligated to “freeze the account” of Subscriber, by segregating
the assets in the account in compliance with governmental regulations, and may
also be required to report such action and to disclose Subscriber’s identity to
OFAC.
(iv) To
the best of Subscriber’s knowledge, none of: (A) Subscriber; (B) any person
controlling or controlled by Subscriber; (C) if Subscriber is a privately-held
entity, any person having a beneficial interest in Subscriber; or (D) any person
for whom Subscriber is acting as agent or nominee in connection
with this investment is a senior foreign political figure2, or any immediate
family3 member or close
associate4 of a senior
foreign political figure, as such terms are defined in the footnotes below;
and
1 These
individuals include specially designated nationals, specially designated
narcotics traffickers and other parties subject to OFAC sanctions and embargo
programs.
2 A
“senior foreign political figure” is defined as a senior official in the
executive, legislative, administrative, military or judicial branches of a
foreign government (whether elected or not), a senior official of a major
foreign political party, or a senior executive of a foreign government-owned
corporation. In addition, a “senior foreign political figure” includes any
corporation, business or other entity that has been formed by, or for the
benefit of, a senior foreign political figure.
3 “Immediate
family” of a senior foreign political figure typically includes the figure’s
parents, siblings, spouse, children and
in-laws.
10
(v) If
Subscriber is affiliated with a non-U.S. banking institution (a “Foreign
Bank”), or if Subscriber receives deposits from, makes payments on behalf
of, or handles other financial transactions related to a Foreign Bank,
Subscriber represents and warrants to the Company that: (1) the Foreign Bank has
a fixed address, other than solely an electronic address, in a country in which
the Foreign Bank is authorized to conduct banking activities; (2) the Foreign
Bank maintains operating records related to its banking activities; (3) the
Foreign Bank is subject to inspection by the banking authority that licensed the
Foreign Bank to conduct banking activities; and (4) the Foreign Bank does not
provide banking services to any other Foreign Bank that does not have a physical
presence in any country and that is not a regulated affiliate.
(u) Subscriber
has reviewed the merits of investing in the Company and has reached its decision
to invest in the Company independently from any other investors in the
Company.
(v) Except
as disclosed in writing to the Company, Subscriber is not affiliated with any
other investor in the Company.
(w) Other
than this Agreement, Subscriber has no
agreement, arrangement or understanding with any other person for the purpose of
acquiring, holding, controlling, voting, distributing or disposing of any
securities of the Company. Any such agreement, arrangement or
understanding shall be subject to the prior written approval of the Company and
compliance with any applicable regulatory requirements.
(x) No
other person holding Common Stock or that, to the knowledge of Subscriber,
presently proposes to acquire shares of Common Stock is (i) under common
control with Subscriber, (ii) a controlling shareholder, partner, trustee,
officer, or director of Subscriber or has policy-making functions with respect
to Subscriber or (iii) advised by any investment advisor or manager who performs
substantially the same services to such person as provided to Subscriber,
unless, with regard to this clause (x), all such persons together with
Subscriber would (A) own, control or power to vote shares of Voting Common Stock
not in excess of the Voting Ownership Limit or (B) own or control no more than
24.99% of the Company’s total equity outstanding, in each case, determined
immediately after giving effect to the issuance of the shares of Common Stock to
all investors in the Offering.
(y) Subscriber
will not, without first determining whether the prior approval of any
Governmental Entity is required and, if such approval is required, obtaining
such approval, directly or indirectly seek to appoint any director or executive
officer to the Company or otherwise attempt to direct the management or policies
of the Company. Subscriber also represents that neither it nor any
Account has
discussed the Purchase or the Private Placement or the contents of this Agreement
with any other party or potential investors, except as expressly
permitted under the terms of this Agreement.
(z) Subscriber
has not engaged, and will not engage, as part of a group consisting of
substantially the same persons as the investors in the Company, in substantially
the same combination of interests, in any other banking or nonbanking activities
or business ventures in the United States.
11
(aa) Subscriber
has not employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finder’s fees, and no
broker or finder has acted directly or indirectly for Subscriber, in connection
with the Purchase.
Subscriber
acknowledges and agrees that the executed Investor Questionnaire is an integral
part of this Agreement and shall be deemed incorporated by reference
herein.
Subscriber
agrees to promptly notify the Company should Subscriber become aware of any
change in the information set forth in this Section 2.3 which may make any such
representation contained therein to be untrue or incorrect in any material
respect.
Subscriber
authorizes the Placement Agent to rely on Subscriber’s representations and
warranties above and in the Investor Questionnaire.
ARTICLE
III
SURVIVAL
3.1 All
representations, warranties, and covenants contained in this Agreement shall
survive the delivery of the Common Stock to the Subscriber.
ARTICLE
IV
FDIC
POLICY STATEMENT RESTRICTION ON TRANSFER
4.1 The
Company has been advised that the FDIC may require certain of the Company’s
shareholders to agree to restrictions on the transfer of the Common Stock they
own or acquire as a condition to the Company’s participation in FDIC-assisted
transactions, on terms and conditions that may be comparable to those set forth
in the Statement (the “FDIC
Approvals”). In anticipation of that potential requirement, Subscriber
agrees, intending to be legally bound, to be bound by such restriction on
transfer as the FDIC may require, not to exceed three (3) years from the date of
the latest of any FDIC-assisted transactions in which the Company participates
(herein, the “FDIC
Restriction”).
4.2 In
the event that one or more FDIC Restrictions are imposed, Subscriber agrees (i)
that the transfer of any shares of Common Stock then owned by Subscriber may be
restricted by the Company in accordance with the terms of the FDIC Restriction,
(ii) that the Company may notify its transfer agent to refuse any attempted
transfer that would be inconsistent with the FDIC Restriction, (iii) that any
share certificates issued to Subscriber may be legended to reflect the FDIC
Restriction, and that Subscriber, on request, will surrender any share
certificates held by or for the benefit of Subscriber for purposes of addition
of such a legend to the certificate or certificates.
4.3 Legend. In
the event that one or more FDIC Restrictions are imposed, in addition to any
other legend required by applicable law or provisions of the Company’s Articles
of Incorporation or any agreement, each certificate for Common Stock shall bear
substantially the following legend:
12
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER SET FORTH IN ARTICLE IV OF THE CONFIDENTIAL SUBSCRIPTION AGREEMENT
BETWEEN THE COMPANY AND THE ORIGINAL SUBSCRIBER FOR SUCH SECURITIES
(“SUBSCRIPTION AGREEMENT ARTICLE IV”), RELATING TO RESTRICTIONS ON TRANSFER IN
CONNECTION WITH THE ISSUER’S PARTICIPATION IN FDIC-ASSISTED TRANSACTIONS. NO
TRANSFER OF THE SHARES EVIDENCED BY THIS CERTIFICATE IS PERMITTED WITHOUT
RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT
SUCH TRANSFER IS PERMITTED PURSUANT TO THE PROVISIONS OF SUBSCRIPTION AGREEMENT
ARTICLE IV AND ANY REQUIREMENTS OR CONDITIONS THEN IMPOSED BY THE FDIC. THE
ISSUER SHALL MAKE AVAILABLE UPON REQUEST, AT NO COST TO THE HOLDER OF THIS
CERTIFICATE, A COPY OF THE PROVISIONS OF SUBSCRIPTION AGREEMENT ARTICLE
IV.
4.4 The
provisions of this Article IV and any FDIC Restrictions shall be binding upon
any transferee of any of the Common Stock or any other shares of common stock
now or hereafter owned by Subscriber.
4.5 Subscriber
acknowledges and agrees that in connection with any FDIC Approvals the Company
may be obligated to obtain from the FDIC, to cooperate reasonably and in good
faith with the Company to provide the information required to obtain such FDIC
Approvals.
ARTICLE
V
COVENANTS
5.1 From the date hereof until the earlier of (i) the
Closing and (ii) such date that is one year from the date hereof, Subscriber
hereby agrees that neither it nor any of its affiliates will acquire, offer to
acquire, or agree to acquire, directly or indirectly, by purchase or otherwise,
any equity securities of the Company or any subsidiary thereof, including the
Bank, or any substantial portion of the assets of the Company or any subsidiary
thereof, including the Bank, or any such successor or controlling
person. This Section 5.1 shall survive any termination of this
Agreement.
5.2 From
and after the Closing, the Company shall not redeem or repurchase any shares of
its capital stock, or take or cause to be taken any action, nor shall the Board
of Directors authorize any of the foregoing, to the extent such action would, or
would be reasonably likely to, result in any Subscriber or any group of
Subscribers related to any Subscriber or persons acting in concert with any
Subscriber to control or be deemed to control (as “control” is defined in 12
C.F.R. Part 303, Subpart E, or 12 C.F.R. Part 574) the Company or the Bank unless the Company
shall have given Subscriber sixty (60) days’ prior written notice of such
action, during which time Subscriber may transfer to a third party its Common
Stock or otherwise restructure its investment as may be mutually agreed with the
Company, in each case to the extent necessary to ensure that such Subscriber or
any group of persons related to such Subscriber or persons acting in concert
with such Subscriber do not control or would not be deemed to control the
Company or the Bank.
5.3 As
promptly as practicable following the Closing, the Company shall use its
reasonable best efforts to redeem in full all of the issued and outstanding
shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock Series A
sold to the U.S. Treasury on November 21, 2008 (the “TARP
Redemption”).
13
5.4 As
promptly as practicable following the Closing, the Company shall take all
necessary and appropriate action to appoint Xxxxxx Xxxxxxxx (the “Investor
Nominee”) to the board of directors of the Company (the “Board”)
for a term of not less than three (3) years, subject to the receipt of approval or non-objection from
all requisite Governmental Entities. The Company hereby agrees that the
Investor Nominee meets all of the qualifications or criteria required by written
policies of the Company, including any reasonable criteria or qualifications
established by any committee of the Board, or any ethics and compliance program
of the Company, that apply to all nominees for the Board. The Investor Nominee
shall be entitled to the same indemnification in
connection with his or her role as a director as the other members of the Board,
and shall be entitled to reimbursement for documented, reasonable out-of-pocket
expenses incurred in attending meetings of the Board or any committees thereof,
to the same extent as the other members of the Board. The Company
shall notify the Investor Nominee of all
regular and special meetings of the Board and shall notify the Investor
Nominee of all regular and special meetings
of any committee of the Board of which the Investor Nominee is a member. The Company shall provide the
Investor Nominee with copies of all
notices, minutes, consents and other materials provided to any other members of
the Board concurrently as such materials are provided to the other
directors.
5.5 From
the date of this Agreement until the earlier of (a) the Closing and (b) a
termination of this Agreement in accordance with Article VIII hereof, the
Company shall not and shall cause the Bank and their respective representatives
not to, directly or indirectly, (i) solicit, initiate or knowingly encourage
(including by way of providing information) the submission of any inquiries,
proposals or offers that constitute or may reasonably be expected to lead to any
Competing Transaction, (ii) engage in any discussions or negotiations, or
provide or cause to be provided any non-public information or data relating to
the Company or any the Bank in connection with, or have any discussions with any
person relating to, an actual or proposed Competing Transaction, (iii) otherwise
cooperate with or assist or participate in, or facilitate any such inquiries,
proposals, offers, discussions or negotiations to make or implement any
Competing Transaction or (iv) execute or enter into, any letter of intent,
agreement in principle, merger agreement, acquisition agreement, option
agreement or other similar agreement relating to any Competing
Transaction. As used here, the term “Competing
Transaction” means any inquiry, proposal or offer, filing of any
regulatory application or notice (whether in draft or final form) or disclosure
of an intention to do any of the foregoing from any person relating to any
(v) direct or indirect acquisition or purchase of a business that
constitutes ten percent (10%) or more of the total revenues, net income, assets
or deposits of the Company and the Bank taken as a whole, (w) direct or
indirect acquisition or purchase of any class of debt or equity securities
representing five percent (5%) or more of the voting power of the Company or the
Bank, (x) issuance of any equity or debt securities by the Company or the Bank
to any person or group other than pursuant to Previously Disclosed benefit plans
as in effect as of the date hereof, (y) tender offer or exchange offer that
if consummated would result in any person beneficially owning ten percent (10%)
or more of any class of equity securities of the Company or (z) merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or the Bank, other than the
Offering and the transactions contemplated by this Agreement.
5.6 The
Company shall provide for the registration, offering and sale of the shares of
Common Stock purchased by Subscriber hereunder in accordance with the terms of
Schedule III to
this Agreement.
5.7 As
promptly as practicable following the TARP Redemption, the Bank shall use
reasonable best efforts to enter into an agreement with each of Messrs Ganz and
Xxxxxx, Xx. Xxxxxxxxx, Xx. Xxxxx, Xx. Xxxxxxxx and Xx. Xxxxxxx (each, an “Executive”)
providing for the Bank, immediately
14
following
the execution thereof, to pay to such Executive one half of the amount that
would have been due to such Executive pursuant to the severance agreement by and
between such Executive and the Bank (each, a “Change of Control
Agreement”) had the Offering constituted a “change of control” (as
defined in the applicable Change of Control Agreement) and the employment of
such Executive ceased (other than as a result of a “Termination for Cause,” as
defined in the applicable Change in Control Agreement), with the balance of such
amount payable if the employment of such Executive actually ceases (other than
as a result of a “Termination for Cause,” as defined in the applicable Change in
Control Agreement), in each case during the period beginning upon the Closing
and ending on the three (3) year anniversary thereof; provided that any such
Executive receiving payment pursuant to this Section 5.7 shall have executed a
customary waiver and release that, among other matters, provides for a waiver of
any right of payment, any claim or any other compensation relating to such
Executive’s Change of Control Agreement or similar agreement and with regard to
the Offering.
5.8 Subject
to regulatory approval, the Company shall use its reasonable best efforts to
enter into an employment agreement with Xxxxxxx Xxxxxxxx (“Xxxxxxxx”),
providing for Xxxxxxxx to be appointed Chief Executive Officer or President of
the Company, and to appoint Xxxxxxxx to the office of Chief Executive Officer or
President of the Company upon or promptly following the Closing.
5.9
(a) For
three years following the closing of this Offering and so long as Subscriber
holds at least 90% of the Common Stock purchased hereunder (including for this
purpose shares of Common Stock issuable upon exercise of any warrant issued to
Subscriber in the Offering) if the Company makes any public or
nonpublic offering or sale of Common Stock, or securities convertible into
Common Stock (any such security, a “New
Security”), (other than (i) any Common Stock or other securities issuable
upon the exercise or conversion of any securities of the Company issued or
agreed or contemplated to be issued as of the date hereof; (ii) pursuant to the
granting or exercise of employee stock options or other stock incentives
pursuant to the Company’s stock incentive plans approved by the Board or similar
plan where stock is being issued or offered to a trust, other entity or
otherwise, for the benefit of any employees, officers or directors of the
Company, in each case in the ordinary course of providing incentive
compensation; or (iii) issuances of capital stock as full or partial
consideration for a merger, acquisition, joint venture, strategic alliance,
license agreement or other similar nonfinancing transaction), the
Company will use its commercially reasonable best efforts to give
Subscriber the opportunity to acquire from the Company for the same price (net
of any underwriting discounts or sales commissions) and on the same terms as
such securities are proposed to be offered to others, up to the amount of New
Securities in the aggregate required to enable it to maintain its proportionate
Common Stock-equivalent interest in the Company immediately prior to any such
issuance of New Securities. The amount of New Securities that the Subscriber
shall be entitled to purchase in the aggregate shall be determined by
multiplying (x) the total number or principal amount of such offered New
Securities by (y) a fraction, the numerator of which is the number of shares of
Common Stock held by the Subscriber, and the denominator of which is the number
of shares of Common Stock then outstanding immediately preceding any offering of
New Securities.
(b) Notwithstanding
anything herein to the contrary, in no event shall the Subscriber purchase
securities hereunder to the extent such purchase would result in such
Subscriber, together with its Affiliates (as defined under Rule 405 under the
Securities Act), owning a greater percentage interest in the Company than such
Subscriber held immediately prior to the issuance of the New Securities
(counting for such purposes all shares of Common Stock into or for which any
securities owned by the Subscriber
are directly or indirectly convertible or exercisable) and provided that such
acquisition would not result in Subscriber or its Affiliates (i) being
deemed to “control” the Company within the meaning of the BHC Act, the CIBC Act
or the HOLA, and any rules and regulations promulgated thereunder or
15
(ii)
(A) owning, controlling or having the power to vote, voting securities (under
the meaning of the HOLA or the BHC Act, whichever is applicable to the Company,
and the rules and regulations promulgated thereunder) equal to 5.0% or more than
of the aggregate number of outstanding shares of Voting Stock, or (B) owning or
controlling 10.0% or more of the Company’s total stockholder’s
equity. For purposes of calculating the beneficial ownership of
Subscriber and its Affiliates under this Section 5.9(b), (x) any security
that is convertible into, or exercisable for, any such voting securities or
Common Stock that is beneficially owned by Subscriber or its Affiliates shall be
treated as fully converted or exercised, as the case may be, into the underlying
voting securities or Common Stock, and (y) any security convertible into,
or exercisable for, the Common Stock that is beneficially owned by any person
other than Subscriber or any of its Affiliates shall not be taken into
account).
(c) The
Company will also use its commercially reasonable best efforts to give
Subscriber the opportunity to participate in any future public or private
offering of the Company’s debt, equity or trust preferred securities other than
a New Security (“Other
Securities”). The Company and the
Subscriber shall cooperate in good faith to facilitate the Subscriber’s
participation in any offering involving a New Security or Other Securities,
however, the Company will not be required to incur any expense, delay or risk
that the offering may not be completed related to the Subscriber’s proposed
participation in any such offering, including any required approvals or consents
Subscriber must obtain. The assurances given to Subscriber described herein
shall be personal to Subscriber and the transfer, assignment and/or conveyance
of any rights arising from such assurances from Subscriber to any other person
and/or entity is prohibited and shall be void and of no force or
effect.
5.10 The
Company shall use the proceeds from the Offering as set forth on Schedule
IV.
5.11 If
at anytime prior to the Closing, the Company becomes aware that any one or more
of the other subscribers in the Offering shall fail or refuse to purchase and
pay for any of shares of Common Stock which it or they have agreed to purchase
in the Offering (the “Defaulted
Shares”), and the failure or refusal of such subscriber or subscribers,
as the case may be, to purchase and pay for the Defaulted Shares would result in
aggregate gross proceeds from the sale of shares of Common Stock in the Offering
of less than $60,000,000.00, the Company shall promptly notify (the “Default
Notification”) Subscriber and each other non-defaulting subscriber in the
Offering (the “Remaining
Subscribers”). In such event, subject to the remainder of this
Section 5.11, each Remaining Subscriber shall have the right to purchase and pay
for at the Closing any or all of the Defaulted Shares at a purchase price of
$11.00 per Defaulted Share. Each Remaining Subscriber may elect (an
“Election”) to exercise the right to
purchase and pay for Defaulted Shares by delivering written notice (each, an
“Election
Notice”), specifying the number of Defaulted Shares such Remaining
Subscriber elects to purchase and pay for, to the Company within 24 hours after
receipt of the Default Notification (the “Election
Period”). Unless otherwise agreed by the Company, failure to
deliver in a timely manner an Election Notice to the Company shall be deemed to
be a waiver of any right to purchase any pay for Defaulted Shares. In
the event that the Remaining Subscribers timely deliver Election Notices
representing a number of shares of Common Stock greater than the number of
Defaulted Shares, the number of Defaulted Shares that shall be purchased and
paid for at the Closing by each Remaining Subscriber shall be reduced pro rata,
based on the number of shares sought to be purchased pursuant to each such
Remaining Subscriber’s Election Notice; provided, that the Company may
determine, in its sole discretion, to give complete or partial preference in
connection with any such pro ration to Elections made by Remaining Subscribers
who would not, after giving effect to the Offering (including, for the avoidance
of doubt, any purchases of Defaulted Shares), (i) own, control or have the power
to vote
16
shares of
Voting Stock in excess of the Voting Ownership Limit or (ii) own or control
10.0% or more of the Company’s total stockholder’s equity;
provided, further, that the Company may determine, in its sole discretion, to
reject any Elections made by Remaining Subscribers who would, after giving
effect to the Offering (including, for the avoidance of doubt, any purchases of
Defaulted Shares), (x) own, control or have the power to vote shares of Voting
Stock in excess of the Voting Ownership Limit or (y) own or control 10.0% or
more of the Company’s total stockholder’s equity. In the event that
Subscriber shall purchase any Defaulted Shares pursuant to the foregoing,
Subscriber’s subscription and Purchase (and related Purchase Price) shall be
deemed to be, automatically and without further action on the part of Subscriber
or the Company, amended accordingly for all purposes under this
Agreement Any action taken under this paragraph shall not
relieve any defaulting subscriber from liability in respect of any default or
breach of any such subscriber under its respective subscription
agreement.
ARTICLE
VI
REGULATORY
APPROVALS
6.1 If
approval or nonobjection of any federal or state banking regulator is required
for Subscriber's purchase under this Agreement, Subscriber will deliver to the
Company, as promptly as practicable following the date hereof, a copy of the
current version of the federal Interagency Biographical and Financial Report for
submission to bank regulatory agencies in connection with applications for prior
approval of Subscriber’s acquisition of the Common Stock, appropriately
completed and duly executed by the Subscriber. The Interagency Biographical and
Financial Report will be accurate and complete in all respects and will not omit
any fact required to make it accurate and complete in all respects.
6.2 Subscriber acknowledges
and agrees that Subscriber may be obligated to obtain prior approvals (the
“Regulatory
Approvals”) from the OTS and the Board of Governors of the Federal
Reserve System (the “Federal
Reserve” and, with the OTS, the “Bank
Regulators”) for the acquisition of the Common Stock pursuant to this
Agreement. The parties agree to cooperate reasonably and in good faith to file
the applications and seek the Regulatory Approvals.
6.3 Upon
the Closing, the Company pay to the Subscriber, by wire transfer of immediately
available funds, an amount equal to $350,000.00, as full and final reimbursement
for all fees and out-of-pocket expenses of Subscriber in connection with the
Transaction, including without limitation, outside counsel and due diligence
fees and expenses, whether incurred by Subscriber or its affiliates, consultants
or agents.
ARTICLE
VII
CLOSING
CONDITIONS
7.1 The
obligation of the Company to consummate the Purchase is subject to the following
conditions:
(a) the
representations and warranties of Subscriber contained in Section 2.3 of this
Agreement shall be true and correct on and as of Closing in all material
respects (except for those representations and warranties which are qualified by
materiality, which shall be true and correct in all respects) with the same
effect as though such representations and warranties had been made on and as of
Closing (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specified date);
17
(b) at
or simultaneously with the Closing, the Company shall have raised gross proceeds
from the sale of shares of its Common Stock in the Offering at least equal to
$60,000,000.00 in the aggregate;
(c) requisite
shareholder approval required, if any, in connection with the shares of Common
Stock to be sold in the Offering, including without limitation the Common Stock,
for the purposes of Nasdaq Rule 5635 or any successor rule thereto shall have
been obtained;
(d) the
Company shall have received all approvals, consents or non-objections of all
applicable governmental agencies, authorities or instrumentalities having
supervisory or regulatory authority with respect to the Company or the Bank
(each, a “Governmental
Entity”), including but not limited to the Bank Regulators and the FDIC,
that are required prior to the Closing Date for the consummation of the
Offering;
(e) the
full Purchase Price shall have been received by the Company;
(f) Subscriber
shall have duly executed the Investor Questionnaire;
(g) no
proceedings shall have been initiated or threatened by any Governmental Entity
or other governmental authority seeking to enjoin or otherwise restrain or to
obtain an award for damages in connection with the consummation of Transaction,
including without limitation the Offering and the Purchase contemplated hereby,
or which would reasonably be expected to result in a Material Adverse Effect;
and
(h) no
Governmental Entity shall have imposed any conditions or restrictions on the
Company or the Bank that would materially adversely impact the business
activities of the Company or the Bank or materially impair, impede or delay
certification by the FDIC of the Bank as being eligible to bid in connection
with the sale of failed depository institutions by the FDIC; and
(i) any
Interagency Notice of Change in Control with respect to the Company or the Bank
required to be submitted by Subscriber or any affiliate of Subscriber pursuant
to 12 U.S.C. § 1817(j) and 12 C.F.R. Part 303 required to consummate the
Offering shall have received the approval or non-objection of the Bank
Regulators and/or FDIC and the OTS, as applicable, to the reasonable
satisfaction of the Company.
7.2 The
obligation of Subscriber to deliver the Authorization and the balance of the
Purchase Price to the Company pursuant to Section 1.3(a) hereof is subject to
the following conditions:
(a) the
representations and warranties of the Company contained in Section 2.2 of this
Agreement shall be true and correct on and as of Closing in all material
respects (except for those representations and warranties which are qualified by
materiality, which shall be true and correct in all respects) with the same
effect as though such representations and warranties had been made on and as of
Closing (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specified date);
(b) requisite
shareholder approval required, if any, in connection with the shares of Common
Stock to be sold in the Offering, including without limitation the Common Stock,
for the purposes of Nasdaq Rule 5635 or any successor rule thereto shall have
been obtained;
(c) The
Class B Non-Voting Common Stock shall have been authorized under the Articles of
Incorporation, as amended, of the Company prior to the Closing;
18
(d) As
of and giving effect to the Closing and the consummation of the Offering on the
terms described herein, and assuming that no person or entity affiliated with
Subscriber or deemed to be acting in concert with Subscriber pursuant to 12
C.F.R. Part 303, Subpart E, or 12 C.F.R. Part 574 (or any other applicable
banking regulation) has subscribed for any shares of Common Stock in the
Offering (except to the extent that Subscriber has previously provided notice of
such subscription to the Company in writing), (i) Subscriber shall not own,
control or have the power to vote, shares of Voting Stock equal to 10.0% or
more of the aggregate number of outstanding shares of Voting Stock;
and (ii) Subscriber shall not own or control in excess of 24.99% of the total
stockholder’s equity of the Company;
(e) the
consummation of the Offering would not result in Subscriber or any of its
affiliates being deemed to have a direct or indirect controlling interest in the
Company or the Bank or otherwise require any of them to register as a savings
and loan holding company under the Savings and Loan Holding Company provisions
of the Home Owners’ Loan Act, as amended, and Subscriber shall have received a
written non-control determination from the Office of Thrift Supervision in form
and substance reasonably satisfactory to Subscriber to such effect;
(f) no
proceedings shall have been initiated or threatened by any Governmental Entity
or other governmental authority seeking to enjoin or otherwise restrain or to
obtain an award for damages in connection with the consummation of Transaction,
including without limitation the Offering and the Purchase contemplated
hereby;
(g) at
or simultaneously with the Closing, the Company shall have raised gross proceeds
from the sale of shares of its Common Stock in the Offering at least equal to
$40,000,000.00 in the aggregate;
(h) any
Interagency Notice of Change in Control with respect to the Company or the Bank
required to be submitted by Subscriber or any affiliate of Subscriber pursuant
to 12 U.S.C. § 1817(j) and 12 C.F.R. Part 303 required to consummate the
Offering shall have received the approval or non-objection of the Bank
Regulators and/or FDIC and the OTS, as applicable, to the reasonable
satisfaction of Subscriber ;
(i) since
the date of this Agreement, there shall not have been any Material Adverse
Effect; and
(j) no
Governmental Entity shall have imposed any conditions or restrictions on the
Company or the Bank that would materially adversely impact the business
activities of the Company or the Bank or materially impair, impede or delay
certification by the FDIC of the Bank as being eligible to bid in connection
with the sale of failed depository institutions by the FDIC; and
(k) since
the date of this Agreement, there shall have been no grants or awards of Company
Stock Options by the Company and the Company shall have cancelled or otherwise
terminated (or shall, as soon as permitted under applicable law following the
Closing Date, cancel or otherwise terminate) all Company Stock Options and the
consideration paid by the Company in respect of such cancellation and/or
termination shall be equal to $3.00 per Company Stock Option.
19
ARTICLE
VIII
TERMINATION
8.1 Termination;
Certain Fees.
(a) This
Agreement may be terminated prior to the Closing:
(i) By
mutual written agreement of the Company and
Subscriber;
(ii) by
the Company or Subscriber, upon 15 days’ written notice to the other party, in
the event that the Closing Date does not occur on or before December 31, 2010 or
such later date, if any, as Subscriber and the Company agree upon in writing (as
such date may be extended, the “Outside
Date”); provided, however, that the right to terminate this Agreement
pursuant to this Section 8.1(a)(ii) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the cause
of, or shall have resulted in, the failure of the Closing Date to occur on or
prior to the Outside Date; or
(iii) by
the Company or Subscriber, upon written notice to the other party, in the event
that any Governmental Entity shall have issued any order, decree or injunction
or taken any other action restraining, enjoining or prohibiting any of the
transactions contemplated by this Agreement, and such order, decree, injunction
or other action shall have become final and nonappealable; or
(iv) by
the Company, in its sole discretion, if on June 17, 2010 (the “Measurement
Date”), other than as a result, directly or indirectly, of any actions or
failures to act of the Company, the Company has not received executed
counterparts to subscription agreements representing subscriptions from
subscribers in the Offering to purchase shares of the Common Stock having an
aggregate purchase price of at least $15,000,000.00 (the “Measurement
Condition”); provided that if the Company
has not provided the Subscriber with written notice of such termination within
five (5) business days of the Measurement Date, the Company shall be deemed to
have irrevocably waived its termination right pursuant to this clause (iv); and
provided, further that upon any
termination by the Company pursuant to this clause (iv), the Company must also
so terminate the subscription agreements of all other subscribers with respect
to the Offering concurrently with such termination.
(b) In
the event of any termination of this Agreement by the Company pursuant to clause
(iv) of Section 8.1(a), the Escrow Agent shall, in accordance with the terms of
the Escrow Agreement, release to the Company the full amount of the Deposit and
any interest earned thereon as of such date (the “Threshold
Liquidated Damages Amount”). The parties hereto acknowledge and agree
that the Threshold Liquidated Damages Amount shall constitute the Company’s sole
remedy in the event that the Measurement Condition is not satisfied on or prior
to the Measurement Date.
(c) Prior
to the date on which the Company has received executed counterparts to this
Agreement representing subscriptions from investors in the Offering to purchase
shares of the Common Stock having an aggregate Purchase Price of at least
$40,000,000.00 (the “Commitment
Date”), in the event that the Offering is not consummated as a
result, directly or indirectly, of a breach of this Agreement by Subscriber that
causes or results in a failure of any of the conditions specified in Article VII
hereof to be satisfied as of the Outside Date, and the Company has terminated
this Agreement pursuant to Section 8.1(a)(ii) hereof, the Escrow Agent shall, in
accordance with the terms of the Escrow Agreement, release to the Company from
the Escrow Account, the full amount of the Deposit (the “Investor
Liquidated Damages Amount”, which, for the avoidance of doubt, shall be
without duplication of any amounts paid to the Company in respect of the
Threshold Liquidated Damages Amount). The parties hereto acknowledge and agree
that the Investor Liquidated Damages Amount shall constitute the Company’s sole
remedy in the event that any of the provisions of this Agreement are
not
20
performed
in accordance with their specific terms or are otherwise breached by Subscriber
prior to the Commitment Date.
(d) In
the event that the Offering is not consummated as a result, directly or
indirectly, of the breach of this Agreement by the Company that causes or
results in a failure of any of the conditions specified in Article VII hereof to
be satisfied as of the Outside Date, and Subscriber has terminated this
Agreement pursuant to Section 8.1(a)(ii) hereof, the Company shall pay
Subscriber an aggregate fee equal to $2,000,000.00 (the “Company
Termination Fee”) by wire transfer of
same-day funds on the first business day following the date of such
termination.
(e) In
the event of any termination of this Agreement as provided in Section 8.1(a),
this Agreement (other than Sections 8.1(b), 8.1(c), 8.1(d), 8.1(e) and Article
IX and Article X, which shall remain in full force and effect) shall forthwith
become wholly void and of no further force and effect; provided that nothing
herein shall relieve any party from liability for breach of this Agreement prior
to such termination.
ARTICLE
IX
CONFIDENTIALITY
9.1 Each
party agrees to keep all information furnished by another party pursuant to this
Agreement confidential (“Confidential
Information”) except such information that (i) is or becomes generally
available to the public (other than as a result of a disclosure by the receiving
party in violation of this Agreement), (ii) was available to the receiving
party on a non-confidential basis prior to its disclosure by the disclosing
party, (iii) becomes available to the receiving party on a non-confidential
basis from a person other than the disclosing party who is not known by the
receiving party to be otherwise bound by a confidentiality agreement with the
disclosing party, or is not known by the receiving party to be otherwise
prohibited from transmitting the information to the receiving party, (iv) the
disclosing party agrees may be disclosed or (v) the receiving party is requested
pursuant to, or required by, law, regulation, legal process or regulatory
authority to disclose, and neither party hereto shall release or disclose such
information to any other person, except its auditors, attorneys, financial
advisors, or other consultants and advisors. In the event that any party is
requested pursuant to, or required by, law, regulation, legal process or
regulatory authority to disclose any Confidential Information, such party agrees
that it will provide the other party with prompt notice of such request(s) or
requirement(s) (to the extent legally permitted) to enable the non-disclosing
party to seek an appropriate protective order (at the non-disclosing party’s
sole cost and expense), waive compliance with the provisions of this Agreement
or take other appropriate action. Each party agrees to use its good
faith efforts to assist the other party in obtaining such a protective
order. If, in the absence of a protective order or the receipt of a
waiver hereunder, the disclosing party is nonetheless, in the opinion of its
counsel, compelled to disclose the Confidential Information or else stand liable
for contempt or suffer other censure or significant penalty, such party, after
notice to the non-disclosing party (to the extent legally permitted), may
disclose such Confidential Information that the disclosing party is compelled to
disclose and shall exercise all reasonable efforts to obtain reasonable
assurances that confidential treatment will be accorded to such disclosed
Confidential Information. For the avoidance of doubt, the Company may present
this Agreement and the information provided in the Investor Questionnaire to
such parties as it deems advisable if compelled by law or called upon to
establish the availability under any Federal or state securities laws of an
exemption from registration of the Offering.
21
ARTICLE
X
MISCELLANEOUS
10.1 Any
notice or other communication given hereunder shall be deemed sufficient if in
writing and sent by registered or certified mail, return receipt requested,
international courier or delivered by hand against written receipt therefor, or
by confirmed facsimile transmission, to the following addresses, or such other
address as may be furnished to the other parties as herein
provided:
To the
Bank: First
PacTrust Bancorp, Inc.
000 Xxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx
00000
Attention: Xxxx
Xxxx
President
and Chief Executive Officer
Fax: (000)
000-0000
To the
Subscriber: At the address set
forth on the signature page hereto.
Unless
otherwise expressly provided herein, notices shall be deemed to have been given
on the date of mailing, except notice of change of address, which shall be
deemed to have been given when received.
10.2 This
Agreement shall not be changed, modified or amended except in writing and signed
by the parties to be charged, and this Agreement may not be discharged except by
performance in accordance with its terms or by a writing signed by the party
to be
charged.
10.3 Except
as otherwise provided herein, this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and assigns. If the Subscriber is more than
one person, the obligation of such Subscriber shall be joint and several and the
agreements, representations, warranties, covenants and acknowledgments herein
contained shall be deemed to be made by and be binding upon each such person and
his or her heirs, executors, administrators, successors and legal
representatives. The obligations of the parties may not be assigned
except in the event of a merger, consolidation or other reorganization
undertaken for a reason other than to assign a party’s obligation, under this
Agreement, provided, that the Subscriber may assign a portion or portions of the
Purchase (and related obligations) to one or more of its Affiliates, provided,
further, that, at or prior to any such assignment, any such assignee shall
execute a joinder to this Agreement, agreeing to be bound by the terms
hereof.
10.4 This
Agreement contains the entire agreement of the parties with respect to the
matters set forth herein and there are no representations, covenants or other
agreements except as stated or referred to herein; provided, however, that, if
applicable, any confidentiality agreement between the Company and the Subscriber
shall remain in full force and effect except to the extent inconsistent with
this Agreement.
10.5 [Reserved.]
22
10.6 In
the event of a dispute regarding this Agreement that results in litigation or
arbitration, the prevailing party, as determined by the finder of facts, shall
be entitled to an award of reasonable attorneys’ fees.
10.7 Except
to the extent governed by federal law applicable to national savings
associations, all questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws of
the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
New York County, New York, of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding
is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any right to service process in any
manner permitted by law.
10.8 The
parties agree to execute and deliver all such further documents, agreements and
instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.
10.9 This
Agreement may be executed in one or more counterparts each of which shall be
deemed an original, but all of which shall together constitute one and the same
instrument. Electronic transmissions of
signature pages, whether via email, facsimile or other means, shall be effective
as original signatures for all purposes.
10.10 In
the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that the Company’s and the Subscriber’s rights and privileges shall be
enforceable to the fullest extent permitted by law.
10.11 Except
as may be required by applicable law, the Company shall not issue or make, or
cause to have issued or made, any public release or announcement concerning this
Agreement, including Subscriber’s identity, or the transactions contemplated
hereby, including but not limited to the offering of Common Stock to any other
subscriber, unless Subscriber shall have previously consented to such public
release or announcement in writing, which consent may be granted or withheld in
Subscriber’s sole discretion. Any such press release or public statement
required by applicable law naming Subscriber shall only be made by the Company
after reasonable notice and opportunity for review by Subscriber.
10.12 Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, including, with respect to the Company
to the extent shareholder approvals are required (including by virtue of Nasdaq
Rule 5635 or any successor rule thereto) to consummate the Offering, taking all
actions (including making all necessary filings in connection therewith)
necessary, in accordance with applicable law, regulation and its certificate of
incorporation and bylaws, to call and hold a shareholders meeting as promptly as
reasonably practicable following the date hereof, recommending that its
shareholders vote to approve the transactions contemplated by the offering at
such meeting, and using its reasonable best efforts to obtain such approvals, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement.
23
10.13 The
parties agree that irreparable damage would occur and that the parties would not
have any adequate remedy at law in the event that any of the provisions of this
Agreement were not performed
in accordance with their specific terms or were otherwise breached by the
Company. It is accordingly agreed that Subscriber shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement by the
Company and to enforce specifically the terms and provisions of this Agreement
against the Company, in addition to any other remedy to which it is entitled at
law or in equity.
NOTE:
YOU MUST COMPLETE AND SIGN THE INVESTOR QUESTIONNAIRE ATTACHED
HERETO.
Signatures
appear on the following page
24
IN WITNESS WHEREOF, the
undersigned has caused this Agreement to be executed by its duly authorized
representative as of the date set forth below.
/s/ Xxxxxx Xxxxxxxx, Managing Member ____________________________________________
Signature
of
Subscriber Signature
of Joint Subscriber, if applicable
COR Capital
LLC ____________________________________________
Name of
Subscriber (please
print) Name
of Joint Subscriber, if applicable (please print)
Please
indicate name and capacity of
person Please
indicate name and capacity of person
signing
above, if the Subscriber is not
a signing
above, if the joint Subscriber is not a
natural
person natural
person
______________________________________________ ____________________________________________
Name in
which shares are to be registered
Name of Joint Subscriber, if applicable
(if
different) (please
print)
Date: July
19, 2010
If the
Subscriber is a natural person, the Subscriber’s State of residence
is:
If there
are Joint Subscribers, please check one:
|
|
£
|
Joint
Tenants with Rights of Survivorship
|
|
|
£
|
Tenants-in-Common
|
|
|
£
|
Community
Property
|
If the
Subscriber is not a natural person, it:
· is
the following type of organization: limited liability company
· is
organized under the laws of: Delaware
· has
its principal place of business in: California
· was
formed for the purpose of: Investment
Advisor
Subscriber’s
Social Security Number or EIN:
|
000 Xxxxxxxx Xxxx, Xxx.
000
Business
Address - Street
Santa Monica, CA
90401
City State Zip
Code
Attn:
Xxxxxx
Xxxxxxxx
Telephone
No.:
Facsimile
No.:
Email
Address:
|
Mailing
Address - Street (if different)
City State Zip
Code
Attn:
Telephone
No.:
Facsimile
No.:
Email
Address:
|
25
Number of shares subscribed for:
438,689
Purchase Price: $4,825,579.00
You must
pay the Purchase Price pursuant to the instructions to be provided by
lender. THE
SUBSCRIBER IS RESPONSIBLE FOR ALL WIRE TRANSFER FEES IMPOSED BY THE SUBSCRIBER’S
BANK. Wire funds to:
Bank: The Bank of New York Mellon
ABA Number:
Account name to credit:
Account number to credit: First PacTrust Bancorp Subscription
NOTE:
THE FOLLOWING MUST BE COMPLETED
Name of
DTC Participant:
DTC
Participant Number:
Subscriber’s
Account Number with DTC Participant:
26
Accepted
as of the 27th day of July,
2010.
FIRST
PACTRUST BANCORP, INC.
By: /s/ Xxxx
Xxxx
Xxxx
Xxxx
President
and Chief Executive Officer
SCHEDULE
III
REGISTRATION
RIGHTS
Defined
terms used but not defined in this Schedule III shall have the meaning ascribed
to such terms in the agreement (including all schedules, annexes and exhibits
thereto, the “Agreement”) to which this Schedule III is attached.
(a) The
Company shall use its reasonable best efforts to, as soon as practicable
following the Closing Date, but in no event later than the 30th
business day following the Closing Date, but subject to delay as set forth in
paragraph (c) below (in which case as soon as possible after the lapse of such
postponement or suspension in accordance with the terms thereof) (the
“Registration Deadline’), file with the Securities and Exchange Commission
(“SEC”) a Shelf Registration Statement relating to the offer and sale from time
to time of all of the Registrable Securities by Subscriber and the other
subscribers in the Offering, and the direct and indirect transferees of
Subscriber and such other subscribers (Subscriber, such other subscribers and
such direct and indirect transferees, collectively, the “Holders”), and shall,
if such Shelf Registration Statement is not automatically effective, use its
reasonable best efforts to cause such Shelf Registration Statement to be
declared effective under the Securities Act as soon as possible after
filing. Notwithstanding anything to the contrary in this paragraph
(a), the Company shall not be required to register any Registrable Securities
pursuant to this paragraph (a) during any period (not to exceed 180 days)
following the closing of the completion of a distribution of securities offered
by the Company that would cause the Company to breach a lock-up provision
contained in the underwriting agreement for such distribution, and in such event
the “Registration Deadline” shall be deemed automatically extended for such
period.
(b) The
Company shall use its reasonable best efforts to keep such Shelf Registration
Statement continuously effective under the Securities Act in order to permit the
Shelf Prospectus forming a part thereof to be usable by Subscriber (including by
filing post-effective amendments to such Shelf Registration Statement (or a new
Shelf Registration Statement if the initial Shelf Registration Statement
expires)) until the earlier of (i) the date as of which all of Subscriber’s
Registrable Securities have been sold (A) pursuant to the Shelf Registration
Statement or another Registration Statement filed under the Securities Act (but
in no event prior to any applicable period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder) and/or (B) to the public in compliance
with Rule 144 under the Securities Act and (ii) the first anniversary of the
Closing (or, if Subscriber is or becomes an officer or member of the Board of
Directors of the Company, the fifth anniversary of the Closing) (such
period of effectiveness, the “Shelf Period”). The Company shall not
be deemed to have used its reasonable best efforts to keep the Shelf
Registration Statement effective during the Shelf Period if the Company
voluntarily takes any action or omits to take any action that would result in
Subscriber thereby not being able to offer and sell any Registrable Securities
pursuant to such Shelf Registration Statement during the Shelf Period, unless
such action or omission is required by applicable law and except as set forth in
paragraph (c) below. The Company shall use its reasonable best
efforts to meet (and continue to meet) the registrant eligibility requirements
of Form S-3 during the Shelf Period.
(c) The
Company shall not be required to effect a registration pursuant to
Schedule III with respect to securities that are not Registrable Securities
and shall be entitled to postpone the filing or initial effectiveness
of, or suspend the use of, a Shelf Registration Statement if the Company
notifies Subscriber in writing that in the good faith judgment of
the Chief Executive Officer or the Chief Financial Officer of the
Company such registration, offering or use would be materially
detrimental to the Company or any material transaction
under consideration by the Company or would require the disclosure of
information that has not been, and is not otherwise required to be, disclosed to
the public, the premature disclosure of which would materially
detrimental to the Company. No such postponement or
suspension shall exceed
60 consecutive
days, no subsequent such postponement or suspension shall commence fewer than 15
days following the expiration of any preceding period, and the aggregate of all
such postponements or suspensions shall not exceed 150 days in any 360-day
period. Notwithstanding any other provision of this Schedule III, but subject to
the obligations of the Company in paragraphs (a) and (b) above, the Registration
Deadline shall be extended if, for reasons beyond the reasonable control of the
Company, any of the following (an “Interruption Event”) shall occur: (i) the SEC
refuses to declare the applicable Registration Statement effective; (ii) if
after it has become effective, such Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the SEC such that
the Registration Statement shall not be effective; or (iii) if the conditions to
closing specified in the underwriting agreement, if any, entered into in
connection with such Registration Statement are not satisfied and are not
otherwise waived. If an Interruption Event occurs, the Registration Deadline
shall automatically be extended until thirty (30) days after all Interruption
Events shall have ceased.
(d) The
Company shall use its reasonable best efforts so long as a Holder owns any
Registrable Securities to file the reports required to be filed by it under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the rules and regulations adopted by the SEC thereunder,
and it will take such further action as Subscriber may reasonably request, all
to the extent required from time to time to enable Subscriber to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144 or 144A or Regulation
S under the Securities Act, as such Rules may be amended from time to time, or
(ii) any similar rule or regulation hereafter adopted by the
SEC. Upon the written request of Subscriber, the Company will deliver
to Subscriber a written statement as to whether it has complied with such
requirements and, if not, the specifics thereof.
(e) Subscriber
shall, promptly on the Company’s request, (i) furnish to the Company such
information regarding Subscriber, the Registrable Securities held by Subscriber,
the manner of holding any interests therein, and distribution of such
Registrable Securities, as the Company may from time to time reasonably request
in writing, and (ii) provide such consents as the Company may reasonably require
with respect to disclosure of the content of the disclosures and any
identification of Subscriber or its Registrable Securities or the circumstances
in which they are held. Subscriber shall, upon receipt of any notice from the
Company if (i) the SEC requests any amendment or supplement to, or
any additional information in respect of, any Registration Statement or related
prospectus, (ii) the SEC issues any stop order suspending the effectiveness of a
Registration Statement or initiates any proceedings for that purpose, (iii) the
Company receives any notice that the qualification of any Registrable Securities
for sale in any jurisdiction has been suspended or that any proceeding has been
initiated for the purpose of suspending such qualification, or (iv) upon the
discovery, or upon the occurrence of any event, which requires that any changes
be made in such Registration Statement or any related prospectus so that such
Registration Statement or prospectus will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, in light of the
circumstances under which they were made (provided, however, that in the case of
this subclause (iv), such notice need only state that an event of such nature
has occurred, without describing such event), suspend the disposition of any
Registrable Securities covered by such Registration Statement or prospectus
until Subscriber’s receipt of the copies of a supplemented or amended prospectus
or until it is advised in writing by the Company that the use of the
applicable prospectus may be resumed, and, if so directed by the Company
Subscriber will deliver to the Company all copies, other than permanent file
copies, then in Subscriber’s possession of any prospectus covering such
Registrable Securities. If the Company shall have given any such notice during a
period when a Registration Statement is effective, the Registration Deadline
shall be extended by the number of days of such suspension period.
(f) All
Registration Expenses incurred in connection with any registration,
qualification or compliance under this Schedule III shall be borne by the
Company. All Selling Expenses incurred in connection with any registrations of
its Registrable Securities hereunder, shall be borne by Subscriber. Subscriber
shall not use any free writing prospectus (as defined in Rule 405 under the
Securities Act) in connection with the sale of Registrable Securities without
the prior written consent of the Company.
(g) (i)
Notwithstanding anything to the contrary in the Agreement, in connection with
any registration under this Schedule III, the Company shall, without limitation
as to time, indemnify and hold harmless, to the fullest extent permitted by law,
Subscriber (and its officers, directors, agents, partners and employees, each
person who controls Subscriber (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), the officers, directors,
agents, partners and employees of each such controlling person and any financial
or investment adviser) (each, an “Registration Indemnified Party”), to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, actions or proceedings (whether commenced or threatened),
reasonable out-of-pocket costs (including, without limitation, reasonable costs
of preparation and reasonable attorneys’ fees) and reasonable out-of-pocket
expenses (including reasonable expenses of investigation) (collectively,
“Registration Losses”), as incurred, arising out of or based upon any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, prospectus (including the Shelf Prospectus) or form of
prospectus or in any amendment or supplements thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except to the extent that the same arise out
of or are based upon information furnished in writing to the Company by or on
behalf such Registration Indemnified Party or Subscriber expressly for use
therein; provided, that
the foregoing indemnity agreement contained in this paragraph (g) with respect
to such Registration Statement or any preliminary, final or summary
prospectus contained therein or furnished by the Company, or any amendment or
supplement thereto, shall not inure to the benefit of any Registration
Indemnified Party from whom the person asserting any such losses, claims,
damages or liabilities purchased Registrable Securities, where (A) prior to the
written confirmation of the sale of Registrable Securities to such person (the
“Applicable Time”), the Company shall have notified such Registration
Indemnified Party in writing that such Registration Statement or
prospectus contains an untrue statement of a material fact or omits to state
therein a material fact necessary in order to make the statements therein not
misleading, (B) such untrue statement or omission of a material fact was
corrected in a further amendment or supplement to such Registration Statement or
prospectus and such Registration Statement or prospectus was provided to such
Registration Indemnified Party prior to the Applicable Time, (C) such corrected
Registration Statement or prospectus (excluding any document incorporated by
reference therein) was not conveyed by the Registration Indemnified Party to
such person at or prior to the Applicable Time and (D) such loss, claim, damage
or liability would not have occurred had such corrected Registration Statement
or prospectus (excluding any document incorporated by reference therein) been
conveyed to such person as provided for in clause (C) above. Each indemnity and
reimbursement of costs and expenses shall remain in full force and effect
regardless of any investigation made by or on behalf of such Registration
Indemnified Party.
(ii) Subscriber
agrees to, and the Company may require, as a condition to including any
Registrable Securities of Subscriber in any Registration Statement filed
pursuant to this Schedule III or to entering into any underwriting agreement
with respect thereto, that the Company shall have received an undertaking
reasonably satisfactory to it from Subscriber and each underwriter named in any
such underwriting agreement (each a “Company Indemnifying Party”), severally and
not jointly, to indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed any Registration Statement and each person,
if any, who controls the Company within the meaning of the Securities Act and
all other Holders of Registrable Securities (each, a “Company Indemnitee”),
against any and all Registration Losses, insofar as such Registration Losses
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in such Registration Statement,
or any
preliminary, final or summary prospectus contained therein or furnished by the
Company to Company Indemnifying Party, or arise out of or are based upon the
omission or alleged omission to state therein a material fact necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company or its representative by or on behalf the
Company Indemnifying Party expressly for use therein.
(iii) Promptly
after receipt by a Registration Indemnified Party or Company Indemnitee (each,
an “Indemnified Party”) of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section, such Indemnified Party will, if a claim in respect
thereof is to be made against, respectively, Company, on the one hand, or
Subscriber, on the other hand (such person, the “Indemnifying Party”), give
written notice to the Indemnifying Party of the commencement of such action;
provided, however, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its or their
obligations under this Section, except to the extent that the Indemnifying Party
is actually materially prejudiced by such failure to give notice, and in no
event shall such failure relieve the Indemnifying Party from any other liability
which it may have to such Indemnified Party. If any such claim or action shall
be brought against an Indemnified Party, and it shall notify the Indemnifying
Party thereof, the Indemnifying Party shall be entitled to participate therein,
and, to the extent that it wishes, to assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Party, and after notice from the
Indemnifying Party to such Indemnified Party of its election to assume the
defense thereof, the Indemnifying Party shall not be liable to such Indemnified
Party under this Section for any legal or other expenses subsequently incurred
by such Indemnified Party in connection with the defense thereof, other than
reasonable cost of investigation; provided, further, that if, in the Indemnified
Party’s reasonable judgment, a conflict of interest between the Indemnified
Party and the Indemnifying Party exists in respect of such claim, then such
Indemnified Party shall have the right to participate in the defense of such
claim and to employ one firm of attorneys at the Indemnifying Party’s expense to
represent such Indemnified Party. No Indemnified Party will consent to entry of
any judgment or enter into any settlement without the Indemnifying Party’s
written consent to such judgment or settlement, which shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, consent to entry of any judgment or enter into any settlement
in respect of which the Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such claim or proceeding.
(iv) If
the indemnification provided for in this Schedule III is unavailable to an
Indemnified Party with respect to any Registration Losses or is insufficient to
hold such Indemnified Party harmless as contemplated therein, then the
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Registration Losses in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party in connection with the statements or omissions that resulted
in such Registration Losses, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Indemnifying Party or by such Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this Schedule III were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in this Schedule
III. Notwithstanding the provisions of this Schedule III ,
Subscriber shall not be required to contribute any amount in excess of the
amount by which the dollar amount of the proceeds received by it from the sale
of any Registrable Securities (after deducting Selling
Expenses) exceeds the amount of any
damages
which it has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Subscriber’s obligations in this
Schedule III to contribute shall be several in proportion to the principal
amount of Registrable Securities registered or underwritten, as the case may be,
by or on behalf of it, and not joint.
(h) The
agreements set forth in this Schedule III shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties to the Agreement,
including, without limitation and without the need for an express assignment or
assumption, direct and indirect transferees of Subscriber’s Registrable
Securities to whom the Registrable Securities have been validly transferred
under the terms of the Agreement. In furtherance, and not in
limitation, of the foregoing, the Company agrees that such direct and indirect
transferees shall be third party beneficiaries of the agreements set forth in
this Schedule III, and each such direct or indirect transferee shall have the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights hereunder; provided,
however, that such direct or indirect transferee fulfills all of its obligations
hereunder.
(i) The
agreements set forth in this Schedule III shall survive any post-Closing
termination of the Agreement until the earlier of (i) three years from the
Closing Date and (ii) the date on which Subscriber no longer owns any
Registrable Securities. The indemnification obligations under
paragraph (f) above shall survive any post-Closing termination of the Agreement
and/or this Schedule III.
As used
herein, the following terms have the following meanings:
“Registrable
Securities” means all shares of Voting Common Stock and Class B Non-Voting Stock
(including the shares of Voting Common Stock into which shares of Class B
Non-Voting Stock are convertible in the event of a Widely Disbursed Offering)
issued by the Company in the Offering and any securities which may be issued or
distributed in respect thereof by way of stock dividend or stock split or other
distribution, recapitalization or reclassification. As to any
particular Registrable Securities, such Registrable Securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale by a Holder thereof shall be or have been declared effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) such securities shall have been sold to
the public in compliance with Rule 144 under the Securities Act or (iii) such
securities shall have ceased to be outstanding.
“Registration
Expenses” means all expenses incurred by the Company in effecting any
registration pursuant to this Schedule III (whether or not any registration or
prospectus becomes effective or final) including all registration, filing and
listing fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, and expenses of the Company’s independent accountants (including a
commercially reasonable comfort letter to the extent the Registrable Securities
are sold in an underwritten public offering), but shall not include Selling
Expenses.
“Registration
Statement” means any registration statement of the Company under the Securities
Act that permits the public offering of any of the Registrable Securities and
the Shelf Prospectus, amendments and supplements to such registration statement,
including post-effective amendments, all exhibits and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement. No Registrable Securities may be registered under more than one
Registration Statement at any one time.
“Selling
Expenses” means all discounts, selling commissions, stock transfer taxes and
fees and disbursements of counsel for the Subscriber and/or any underwriter
applicable to the sale of Registrable Securities.
“Shelf
Prospectus” means the prospectus included in any Shelf Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Shelf Registration Statement and all other amendments and supplements to
such prospectus, including post-effective amendments, and all materials
incorporated by reference in such prospectus.
“Shelf
Registration Statement” means a Registration Statement of the Company filed with
the SEC on either (a) Form S-3 (or any successor form or other appropriate form
under the Securities Act) or (b) if the Company is not permitted to file a
Registration Statement on Form S-3, an evergreen Registration Statement on Form
S-1 (or any successor form or other appropriate form under the Securities Act),
in each case for an offering to be made on a continuous or delayed basis
pursuant to Rule 415 under the Securities Act covering Registrable
Securities. To the extent that the Company is a “well-known seasoned
issuer” (as defined in Rule 405 under the Securities Act), a “Shelf Registration
Statement” shall be deemed to refer to an automatic shelf registration statement
(as defined in Rule 405 under the Securities Act) on Form S-3.
