VALUE APPRECIATION INSTRUMENT AGREEMENT by and between BOND STREET HOLDINGS, INC. and FEDERAL DEPOSIT INSURANCE CORPORATION, RECEIVER OF SUNSHINE STATE COMMUNITY BANK, PORT ORANGE, FLORIDA Dated as of February 11, 2011
Exhibit 10.19
EXECUTION VERSION
by and between
BOND STREET HOLDINGS, INC.
and
FEDERAL DEPOSIT INSURANCE CORPORATION,
RECEIVER OF SUNSHINE STATE COMMUNITY BANK,
PORT ORANGE, FLORIDA
RECEIVER OF SUNSHINE STATE COMMUNITY BANK,
PORT ORANGE, FLORIDA
Dated as of February 11, 2011
This VALUE APPRECIATION AGREEMENT (this “Agreement”), dated as of February 11, 2011, is by and
between Bond Street Holdings, Inc., a Delaware corporation (the “Company”), and the Federal Deposit
Insurance Corporation, in its capacity as receiver (the “FDIC”).
1. Definitions. As used in this Agreement, the following terms shall have
the meanings indicated:
“Agreement” shall have the meaning set forth in the preamble.
“Business Day” means any day commencing at 9 A.M., New York City time and ending at 5 P.M.,
New York City Time, that is not a Saturday or Sunday or a legal holiday on which banks are
authorized or required by law to be closed.
“Buyer” shall have the meaning set forth in the recitals.
“Company” shall have the meaning set forth in the recitals.
“Determination Price” shall mean, in respect of each Unit:
(i) if a Public Float Event occurs, the Company’s two (2) day
volume weighted average price (“VWAP”) per Unit as of the date of the
Exercise Notice;
(ii) if a Sale Event occurs, the value of the consideration
received per Unit upon the closing of such Sale Event.
“Exercise Notice” shall have the meaning set forth in Section 3(d).
“Exercise Period” shall have the meaning set forth in Section 3(c).
“Exercise Price” means $19.86 per Unit subject to adjustment pursuant to Section
2(b).
“Failed Bank” shall have the meaning set forth in the preamble.
“FDIC” shall have the meaning set forth in the preamble.
“Initial Exercise Date” shall have the meaning set forth in Section 3(c).
“Initial Public Offering” shall mean the first underwritten public offering of common
stock of the Company after which it will both (i) trade on a national securities exchange (which
includes, but is not limited to, NYSE, NASDAQ and NYSE Amex Equities) and (ii) have a post-offering
public float in excess of Fifty Million United States Dollars ($50,000,000).
“Public Float Event” shall mean the increase of the Company’s public float to more
than Fifty Million United States Dollars ($50,000,000) for a consecutive 30-trading-day period by
means of either (i) an Initial Public Offering or (ii) appreciation of public market price of
shares of the Company.
“Sale Event” shall mean a business combination in which the Company is designated as the
selling entity or a disposition of all or substantially all of the Company’s assets.
“Settlement Price” means the Determination Price minus the Exercise Price.
“Tangible Book Value” shall mean the quotient of the Company’s tangible common
equity divided by the Company’s total common shares outstanding.
“Term” shall mean the period commencing on the Initial Exercise Date and ending on the earlier
of (i) the first anniversary of the Public Float Event or (ii) February 11, 2013.
“Transfer” shall mean any transfer, sale, exchange, assignment, pledge, or hypothecation of,
creation of a lien or other encumbrance or security interest in or upon, or other disposition of,
the VAI Right; provided, that such a Transfer shall be made pursuant to Section 4, and the
term “Transferred” shall have the meaning correlative to the foregoing.
“Trigger Event” shall have the meaning set forth in Section 3(a).
“Trigger Notice” shall have the meaning set forth in Section 3(b).
“Unit” shall mean an accounting device which mirrors one share of the Company’s
common stock.
“VAI Payment” shall have the meaning set forth in Section 2(a).
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“VAI Right” shall have the meaning set forth in Section 2(a).
“VWAP” means the Volume Weighted Average Price displayed under the heading “Bloomberg VWAP” on
the Bloomberg Page for the Company (or its equivalent successor page if such page is not available)
for the two (2) trading days immediately prior to the day of FDIC’s delivery of the Exercise Notice
to the Company.
| 2. | VAI Right. |
(a) Upon the occurrence of a Trigger Event (as defined below), FDIC will
have the right (the “VAI Right”), which may be exercised, in whole or in part, at any time
during the Term in accordance with the provisions of Section 3, to receive a payment in cash or in
stock (the “VAI Payment”) in respect of twenty-five thousand (25,000) Units, in the aggregate, as
follows: (1) if payment in cash is elected, the VAI Payment shall be equal to the product of
(i) the Settlement Price per Unit and (ii) the number of Units in respect of which the VAI
Right is being exercised as set forth in the applicable Exercise Notice, or (2) if payment in stock is
elected, the VAI Payment shall be the number of shares of the Company’s common stock equal
to (X) the product of (i) the number of Units in respect of which the VAI Right is being
exercised as set forth in the applicable Exercise Notice and (ii) the Settlement Price per
Unit, divided by (Y) the Determination Price.
(b) Adjustments for Stock Splits, etc. The number of Units to which the VAI
Right relates shall be appropriately adjusted, as determined by the managing board of the
Company, to reflect fully the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into Units),
reclassification, reorganization, recapitalization or similar transaction occurring after the date hereof and
prior to the expiration of the Term.
(a) Conditions to Exercise. The VAI Right shall become exercisable, in whole or
in part, only upon the earlier of (i) the occurrence of a Public Float Event, or (ii) the closing
of a Sale Event (any such event in clause (i) or (ii), a “Trigger Event”).
(b) Trigger Notice. Within five (5) Business Days of the occurrence of a
Trigger Event, the Company shall send FDIC a written notice stating that a Trigger Event has
occurred (a “Trigger Notice”). Such Trigger Notice shall be delivered pursuant to Section 7 below.
(c) Exercise Period. The VAI Right may be exercised in whole or in part at
any time commencing on the delivery date of the Trigger Notice (the “Initial Exercise Date”)
and
continuing until the expiration of the Term at which time the VAI Right or any unexercised
portion thereof shall be extinguished.
(d) Manner of Exercise. In order to exercise the VAI Right, FDIC shall
deliver to the Company a written notice in the form of Exhibit A hereto (the “Exercise
Notice”),
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at any time on or after the date on which the VAI Right becomes exercisable as provided in
Section 3(c). Such Exercise Notice shall be delivered pursuant to Section 7 below.
(e) Settlement of Right; Payment by Company. After receipt of the Exercise
Notice in the manner set forth above, on the first Business Day following the Company’s
receipt of the Exercise Notice, the Company shall deliver to the FDIC or any other holder of the VAI
Right as a result of a Transfer, the VAI Payment in the form that such holder may elect
pursuant to Section 2(a).
(f) Alternative Consideration Fee. In the event that a Trigger Event does not
occur prior to the expiration of the Term or a Trigger Event occurs but the FDIC does not
exercise fully the VAI Right, then upon the expiration of the Term the Company shall pay to
the FDIC a cash fee equal to the product of (1) the number of Units attributable to the
unexercised VAI Right and (2) the per Unit price equal to the product of (x) the Company’s Tangible Book
Value per common share as of the most recent quarter prior to the expiration of the Term and
(y) the prevailing average price to tangible book multiple of the components underlying the Nasdaq
Bank Index at such date.
4. Transfers Prior to the Expiration of the Term. FDIC may Transfer its right,
title and interest in and to all or part of the VAI Right without the consent of the Company
(provided that FDIC shall notify the Company pursuant to Section 7 below prior to any such
Transfer) at any time prior to the expiration of the Term, so long as such Transfer does not
violate any applicable law, rule or regulation.
5. Binding Effect. This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by the parties hereto and their respective heirs, personal representatives,
legatees, successors and permitted assigns.
6. No Impairment. The Company will not, by amendment of its operating
agreement or through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Agreement, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of FDIC against impairment.
7. Notices. Any notice, demand or request which may be permitted, required or
desired to be given in connection with herewith shall be given in writing and directed to the
parties hereto as follows:
if to FDIC, to:
|
Manager, Special Programs | |
| Division of Resolutions and Receiverships | ||
| Federal Deposit Insurance Corporation | ||
| 000 00xx Xxxxxx, XX (Xxxx F-7028) | ||
| Xxxxxxxxxx, X.X. 00000-0000 | ||
| Attention: Xxxxxx Xxxxxxx | ||
| E-mail Address: XXxxxxxx@xxxx.xxx |
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with a copy to:
|
Senior Counsel | |
| FDIC Legal Division | ||
| Federal Deposit Insurance Corporation | ||
| Special Issues Xxxx | ||
| 0000 Xxxxxxx Xxxxx (Xxxx E-7056) | ||
| Xxxxxxxxx, Xxxxxxxx 00000 | ||
| Attention: Xxxxx Xxxxxx | ||
| E-mail Address: XXxxxxx@xxxx.xxx | ||
if to the Company, to:
|
President and COO | |
| Bond Street Holdings, Inc. | ||
| 0000 Xxxx Xxxxxx Xxxxx, Xxxxx 000 | ||
| Xxxxx, Xxxxxxx 00000 | ||
| Attention: Xxxx X. Xxxxxx | ||
| Fax: (000) 000-0000 | ||
| Phone: (000) 000-0000 | ||
| E-Mail Address: xxxxxxx@xxxxxxxxxxxxxxxxxx.xxx |
| Notices shall be deemed properly delivered and received when delivered to both the primary notice party and copied parties (i) if personally delivered, upon receipt or refusal to accept delivery, (ii) if sent by a commercial overnight courier for delivery on the next Business Day, on the first Business Day after deposit with such courier service (or the third Business Day if sent to an address not in the United States), or (iii) if sent by registered or certified mail, five (5) days after deposit thereof in the U.S. mail. Any party may change its address for delivery of notices by properly notifying the others pursuant to this Section 7. For the avoidance of doubt, e-mail notices and notices sent via facsimile shall not be deemed proper delivery for purposes of this Agreement. |
8. Amendment. This Agreement may be modified or amended only by an
instrument in writing, duly executed by the Company on the one hand, and the FDIC, on the
other hand.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the federal law of the United States if and to the extent such law is
applicable, and, insofar as there may be no applicable federal law, shall be governed in accordance with
the laws of the State of New York. Each of the Company and FDIC agrees (a) to submit to the
exclusive jurisdiction and venue of the federal courts located in the State of New York for
any civil action, suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby, and (b) that notice may be served upon the Company and FDIC at the
addresses in Section 7 above. To the extent permitted by applicable law, each of the Company
and FDIC hereby unconditionally waives trial by jury in any civil legal action or proceeding
relating to this Agreement or the transactions contemplated hereby.
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10. Severability. If any provision of this Agreement is found by a court of competent
jurisdiction to be invalid or unenforceable, such provision shall not affect the other
provisions, but such invalid or unenforceable provision shall be deemed modified to the extent necessary
to render it valid or enforceable, preserving to the fullest extent permissible the intent of the
parties set forth herein.
11. Headings. The headings in this Agreement are inserted for convenience only and
shall not constitute a part hereof.
12. Counterparts; Facsimile. For the convenience of the parties, any number of
counterparts hereof may be executed, each such executed counterpart shall be deemed an
original, and all such counterparts together shall constitute one and the same instrument.
Facsimile transmission or other electronic transmission of any signed original counterpart
and/or retransmission of any signed facsimile transmission or other electronic transmission shall be
deemed the same as the delivery of an original.
13. Entire Agreement. This Agreement and the P&A Agreement (including the
exhibits and schedules of each of the foregoing) contain the entire understanding of the
parties hereto with respect to the subject matter hereof.
[Remainder of page intentionally left blank]
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| BOND STREET HOLDINGS, INC. |
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| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name: | Xxxxxx X. Xxxxx | |||
| Title: | CEO | |||
| FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER XX XXXXXXXX XXXXX XXXXXXXXX XXXX, XXXX XXXXXX, XXXXXXX |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
[Signature Page to SSCB Value Appreciation Instrument Agreement]
| BOND STREET HOLDINGS, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| FEDERAL DEPOSIT INSURANCE CORPORATION, RECEIVER XX XXXXXXXX XXXXX XXXXXXXXX XXXX, XXXX XXXXXX, XXXXXXX |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | RECEIVER IN CHARGE | |||
[Signature Page to Value Appreciation Instrument Agreement]
Exhibit A
FORM OF EXERCISE NOTICE
To: Bond Street Holdings, Inc. (the “Company”):
The undersigned hereby gives notice pursuant to Section 3(d) of that certain Value
Appreciation Instrument Agreement by and between the Company and the undersigned of its election to
exercise its VAI Right, in whole or in part, such exercise to be consummated on the tenth business
day following delivery of this notice, all in accordance with the terms and provisions of the Value
Appreciation Instrument Agreement.
Number of Units to which this exercise applies:
| By: | ||||
| Name: | ||||
| Title: | ||||