SUBSCRIPTION AGREEMENT
(COMMON STOCK)
THIS SUBSCRIPTION AGREEMENT (the "Agreement") is made and entered into as
of the 20th day of December, 1996, by and between Commerce Security Bancorp,
Inc., a Delaware corporation with its principal place of business located in
Huntington Beach, California (the "Company"), and the investor whose name
appears on the signature page hereto (the "Subscriber").
WHEREAS, the Company is seeking commitments from several accredited
investors through a private placement (the "Private Placement") of shares of its
common stock, par value $.01 (the "Common Stock"), and certain other securities
in connection with the proposed acquisition (the "Acquisition") by the Company
of the Target Company (as such term is used in the Company's December 18, 1996
Private Placement Memorandum pertaining to the Private Placement (together with
the December 20, 1996 Supplement and any other supplement, amendment or annex
thereof or any document incorporated by reference therein, the "Memorandum"));
WHEREAS, the Subscriber desires to commit irrevocably to purchase, subject
only to those certain limited conditions described hereinafter, specified
amounts of the Company's Common Stock and to subscribe for and purchase such
amounts (the "Subscription"), at a per share price of $4.81 (the "Subscription
Price"), all as is more particularly set forth herein;
WHEREAS, if the Company enters into a definitive acquisition agreement (the
"Acquisition Agreement") with the Target Company, certain events including the
Target Company Redemption as defined in the Memorandum (each a "Reduction
Event") could have the effect of reducing the number of Placement Shares (as
hereinafter defined) to be sold to the Subscriber; and
WHEREAS, in connection with the Private Placement, the Subscriber desires
to obtain and the Company is willing to grant to the Subscriber certain
registration rights with respect to the Placement Shares;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and other agreements set forth herein,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. PURCHASE AND DELIVERY OF PLACEMENT SHARES
(a) Subject to the terms and conditions herein set forth, the Subscriber
hereby irrevocably agrees and commits to purchase from the Company, at the
Subscription Price per share, up to the number of shares of Common Stock as are
specified on the signature page hereof (as the same may be reduced as a
consequence of a Reduction Event, the "Placement Shares").
(b) The Subscriber acknowledges and agrees that its Subscription is hereby
conditioned upon acceptance by the Company and may be accepted or rejected, in
whole (but not in part), by the Company in its sole discretion (the date on
which the Company accepts this Subscription Agreement being hereinafter called
the "Acceptance Date").
(c) The Subscriber and the Company hereby acknowledge and agree that (x)
the Company has entered into, or contemplates entering into, one or more other
Common Stock Subscription Agreements with certain other parties (collectively,
the "Subscribers") on terms substantially similar to this Agreement (except that
they may provide for the purchase of a different maximum number of Placement
Shares) and (y) the occurrence of one or more Reduction Events could have the
effect of reducing or eliminating the number of Placement Shares available
hereunder. Subject to Section 1(d), the Placement Shares available for issuance
to Subscribers shall be allocated as nearly as possible on a pro rata basis
among all Subscribers based upon the number of Placement Shares subscribed for
by each such Subscriber, after giving effect to the limitation set forth in
Section 4(b).
(d) No reduction in the number of Placement Shares available for issuance
to Subscribers as a consequence of a Reduction Event shall reduce the
Subscriber's Maximum Share Amount (as defined hereinafter) by more than
one-third. No such reduction shall be made to the number of Placement Shares
that Dartmouth Capital Group, L.P. and certain related parties shall be entitled
to purchase in exchange for funding the Deposit (as defined in the Memorandum)
with the Target Company.
(e) Subject to the terms, conditions and limitations herein set forth, the
Company shall pay to the Subscriber at the Funding (as hereinafter defined) a
commitment fee (the "Commitment Fee") equal to one percent (1%) of the product
of the Subscription Price multiplied by the difference between (x) the number of
shares that the Company had agreed to make available to the Subscriber at the
time of the Company's acceptance of the Subscription (the "Maximum Share
Amount") and (y) the number of Placement Shares actually issued to the
Subscriber, provided that the Subscriber has fully complied with all of the
terms of this Agreement.
2. THE FUNDING
As soon as practicable following its final determination of the total
number of Placement Shares available for sale to the Subscribers made in
anticipation of the closing of the transactions contemplated hereby, the Company
shall notify the Subscriber of the number of Placement Shares, to be purchased
by the Subscriber pursuant to Section 1(a) and the amount of the Commitment Fee
to be paid pursuant to Section 1(e). Contemporaneously with the execution and
delivery of this Agreement, the Subscriber has executed and delivered to the
Company the Escrow Agreement in the form attached as Annex A to this Agreement.
The Subscriber agrees to deliver payment for the Placement Shares, net of the
Commitment Fee, to the Company's escrow agent for deposit in
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an escrow account within three (3) business days following receipt of notice
from the Company that all of the material conditions to the closing of the
Acquisition have been satisfied or, if permitted, duly waived. The name of the
escrow agent and instructions for payment of the aggregate Subscription Price
shall be included in the Company's notice. The delivery of, and the release
from escrow of the payment for, the Placement Shares shall take place at the
executive offices of the Company at One Pacific Plaza, 7777 Center Avenue,
Huntington Beach, California, at 9:00 a.m., California time, prior to, but
substantially simultaneously with, the closing of the Acquisition, such time and
date to be not more than five (5) business days after the foregoing notification
and to be specified therein (such time and date being referred to as the
"Funding Time," the date of the Funding being referred to as the "Funding Date"
and the consummation of the Private Placement being referred to as the
"Funding").
3. DELIVERY OF PLACEMENT SHARES
At the Funding, the Placement Shares to be sold to the Subscriber
hereunder, registered in the name of the Subscriber or its nominee(s), as the
Subscriber may specify in writing at least three (3) days prior to the Funding
Date, shall be delivered by or on behalf of the Company to the Subscriber, for
the Subscriber's account, against delivery by the Subscriber of the aggregate
Subscription Price therefor, net of the Commitment Fee, in immediately available
funds in the form of one or more federal funds checks or a wire transfer to an
account designated by the Company. If the Subscriber shall fail to timely
provide information regarding the registered holder of the Placement Shares,
such shares shall be delivered to the Subscriber in the form of one certificate
registered in the Subscriber's name.
4. AGREEMENTS AND CONSENTS OF THE SUBSCRIBER
The Subscriber hereby agrees with the Company as follows:
(a) Subject only to the immediately following sentence, the
Subscriber agrees that this Agreement is irrevocable and that the rights and
obligations of any party hereto shall not be terminated or affected by operation
of law, whether by death, incompetence, disability or the occurrence of any
other event affecting a Subscriber. If and only if the Company has not accepted
this Subscription Agreement in accordance with Section 1(b) on or before the
twentieth (20th) calendar day following the Subscriber's delivery hereof to the
Company, then at any time after such date but before the acceptance hereof by
the Company, the Subscriber may withdraw its Subscription hereunder by notice to
the Company. In the event that the Company has not entered into the Acquisition
Agreement on or before January 15, 1997, the Company or the Subscriber may upon
five (5) business days' notice to the other party hereto terminate this
Agreement, which termination shall be without liability to either party. In the
event that the Funding Date does not occur on or before August 15, 1997 or the
Acquisition Agreement is terminated, this Agreement shall terminate without
liability to any party hereto.
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(b) Notwithstanding anything to the contrary contained herein, the
Subscriber acknowledges and agrees that the Company may decline to issue any of
the Placement Shares or pay any portion of the Commitment Fee to the Subscriber
hereunder if, in the reasonable opinion of the Company's counsel, the Subscriber
is required to obtain prior clearance or approval of such transaction from any
state or federal bank regulatory authority and if, in the reasonable opinion of
such counsel, the requisite approval or clearance has not been obtained or
satisfactory evidence thereof has not been presented to the Company by the
Funding Date.
(c) The Subscriber hereby acknowledges and understands that although
the Company has retained The Shattan Group LLC ("TSG") to serve as placement
agent in connection with the offering of securities other than Common Stock in
connection with the Private Placement, the Subscriber has not relied upon any
representation made or information provided by TSG in the Subscriber's decision
to enter into a Subscription Agreement or otherwise invest in the Placement
Shares.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Subscriber as
follows:
(a) As of the Acceptance Date, the Company is, and at all times
thereafter through the time of the Funding, the Company will have been, duly
organized and validly existing and in good standing as a corporation organized
under the laws of the State of Delaware, with corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Memorandum and to perform its obligations under this Agreement.
(b) Each direct or indirect wholly-owned subsidiary of the Company
(each, a "Subsidiary"), and to the Company's knowledge, each direct or indirect
wholly-owned subsidiary of the Target Company (each, a "Target Subsidiary"), has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation and is duly qualified as
a foreign corporation to transact business and is in good standing in each
jurisdiction where the failure to so qualify would have a material adverse
effect on the conduct of the business of, the condition (financial or otherwise)
of, or the earnings or business of (collectively, the "Condition") the Company
and its Subsidiaries and the Target Company and the Target Subsidiaries
considered as one enterprise; all of the issued and outstanding capital stock of
each Subsidiary has been duly authorized and validly issued and is fully paid
and (except as provided by law) nonassessable and is owned by the Company,
directly or through Subsidiaries, free and clear of any mortgage, pledge, lien,
encumbrance or claim whatsoever, and to the Company's knowledge, all of the
issued and outstanding capital stock of each Target Subsidiary has been duly
authorized and validly issued and is fully paid and (except as provided by law)
nonassessable and is owned by the Target Company, directly or through Target
Subsidiaries, free and clear of any mortgage, pledge, lien, encumbrance or claim
whatsoever; except for the
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Subsidiaries and other than as reflected in the financial statements or except
as otherwise reflected in the Memorandum, the Company does not and, to the
Company's knowledge, the Target Company does not, directly or indirectly, own
any shares of stock or any securities of any corporation or have any equity
interest in any firm, partnership, association or other entity.
(c) The Company and its Subsidiaries and, to the Company's knowledge,
the Target Company and the Target Subsidiaries possess all material licenses,
permits and other governmental authorizations as are currently required for the
conduct of their respective businesses, and all such licenses, permits and other
governmental authorizations are in full force and effect; the Company and its
Subsidiaries and, to the Company's knowledge, the Target Company and the Target
Subsidiaries are in compliance therewith except to the extent that
non-compliance would not, individually or in the aggregate, have a material
adverse effect on the Condition of the Company and its Subsidiaries and the
Target Company and the Target Subsidiaries considered as one enterprise; and
neither the Company nor any of its Subsidiaries or, to the Company's knowledge,
neither the Target Company nor any of the Target Subsidiaries has received
notice of any proceeding or action relating to the revocation or modification of
any such material license, permit or other governmental authorization.
(d) Neither the Company nor any of the Subsidiaries and, to the
Company's knowledge, neither the Target Company nor any of the Target
Subsidiaries is in violation of its charter or other organizational document or
bylaws or materially in default in the performance or observance of the
obligations, agreements, covenants or conditions contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which it
is a party or by which it or any of them or any of their properties may be bound
and that is material to the Company and its Subsidiaries and the Target Company
and the Target Subsidiaries considered as one enterprise.
(e) The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby, including the filing of an amended and restated Certificate of
Incorporation (the "Amended and Restated Charter") which contemplates the terms
of the Placement Shares and the Securities (as defined in the Memorandum)
offered in the Private Placement, have been duly authorized by all necessary
corporate action of the Company, and constitute a valid and legally binding
instrument of the Company enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(f) The execution and delivery of this Agreement, the consummation by
the Company of the transactions herein contemplated and the compliance by the
Company with the terms hereof will not conflict with, or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
the Certificate of Incorporation, assuming the filing,
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prior to the Funding, of the Amended and Restated Charter, or Bylaws of the
Company, or any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which any of its
properties or assets are bound, with such exceptions as would not have a
material adverse effect on the Condition of the Company and its Subsidiaries and
the Target Company and the Target Subsidiaries, considered as one enterprise, or
any applicable law, rule, regulation, judgment, order or decree of any
governmental, governmental instrumentality or court having jurisdiction over the
Company or any of its properties or assets; and no consent, approval,
authorization, order, registration or qualification of or with any such
government, governmental instrumentality or court is required for the valid
authorization, execution, delivery and performance by the Company of this
Agreement, the Placement Shares, and the Commitment Fee or the consummation by
the Company of the other transactions contemplated by this Agreement, except
such federal and state regulatory approvals as are described in the Memorandum
and such consents, approvals, authorizations, registrations or qualification as
may be required under state securities or "blue sky" laws.
(g) When issued and delivered by the Company against payment
therefor, the Placement Shares will be duly authorized, validly issued, fully
paid and non-assessable, and the forms of certificates evidencing the Placement
Shares will be in due and proper form.
(h) Relying in part on the representations and warranties of the
Subscribers set forth in Section 6, the offering of the Placement Shares to the
Subscriber is exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to Section 4(2) thereof.
(i) The Memorandum does 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 under which they
were made, not misleading with respect to information regarding the Company and
its Subsidiaries, and as of the date of the Memorandum and at all times
thereafter through the Acceptance Date, the Memorandum will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading with respect to information regarding the
Company and its Subsidiaries.
(j) The Company has no reason to believe that the information
concerning the Target Company that is contained in the Memorandum is not true
and correct in all material respects or that the representations and warranties
of the Target Company as set forth in the Acquisition Agreement (as defined in
the Memorandum) are not true and correct in all material respects.
(k) The accountants who certified the financial statements and
supporting schedules of SDN Bancorp, Inc., Liberty National Bank and Commerce
Security Bank included
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in the 1996 Information Statement (as defined in the Memorandum) are independent
public accountants within the meaning of the Securities Act and the rules and
regulations promulgated thereunder (the "Securities Act Regulations").
(l) The financial statements of the Company as at September 30, 1996
and for the three- and nine-month periods then ended included in the Memorandum
and the historical financial statements of SDN Bancorp, Inc., Liberty National
Bank and Commerce Security Bank included in the 1996 Information Statement (1)
comply in all material respects, except as may be reflected in the notes to the
financial statements, as to form with the accounting requirements of the
Securities Act, the Securities Act Regulations, and the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), (2) present fairly in all material
respects the financial position of the respective entities as at the dates
indicated and the results of their operations for the periods specified, except
as described in the Offering Materials (as defined in the Memorandum) and (3)
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis, except as stated therein or, in the case of
unaudited statements, as permitted by SEC Form 10-Q or 10-QSB, as applicable.
Except as set forth in the pro forma financial statements of the Company
included in the Memorandum, such pro forma financial statements comply in all
material respects with the requirements of Regulation S-X and reflect all
adjustments necessary to present fairly the pro forma financial position of the
Company at the dates indicated.
(m) From September 30, 1996 through and including the Acceptance
Date, and except as described in the Memorandum, (1) no event or development has
occurred with respect to the Company or any of its Subsidiaries or, to the
Company's knowledge, the Target Company or any of the Target Subsidiaries that,
individually or in the aggregate, has had or could reasonably be expected to
have, a material adverse effect on the Condition of the Company and its
Subsidiaries and the Target Company and its Subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business, (2) other
than the Acquisition Agreement and the agreements relating to the Private
Placement and described in the Memorandum, there have been no material
transactions or agreements entered into by the Company or any of its
Subsidiaries or, to the Company's knowledge, the Target Company or any of the
Target Subsidiaries other than those in the ordinary course of business, (3)
except pursuant to agreements relating to the Private Placement and described in
the Memorandum, neither the Company nor any of its Subsidiaries has issued or
purported to issue any securities or, other than in the ordinary course of
business, incurred any material liability or obligation, direct or contingent,
for borrowed money, and (4) neither the Company nor any of its Subsidiaries and,
to the Company's knowledge, neither the Target Company nor any of the Target
Subsidiaries has not entered into or modified any outstanding, material
agreement with, or plan or undertaking submitted to, any regulatory or
supervisory agency or body which would materially modify the ability of the
Company and its Subsidiaries or the Target Company and the Target Subsidiaries
to continue to conduct their respective businesses as now currently conducted.
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(n) The Company's capitalization as of September 30, 1996 and as
adjusted to give effect to the issuance of the Securities are as set forth in
the Memorandum under the heading "USE OF PROCEEDS AND CAPITALIZATION" and the
Securities conform in all material respects to the respective descriptions
thereof in the Memorandum.
(o) Except as disclosed in the Memorandum, the Company and its
Subsidiaries and, to the Company's knowledge, the Target Company and the Target
Subsidiaries have conducted and are conducting their businesses so as to comply
in all material respects with all applicable statutes and regulations to which a
failure to comply could, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the Condition of the Company and
its Subsidiaries and the Target Company and its Subsidiaries, considered as one
enterprise. Except as disclosed in the Memorandum, neither the Company nor any
of its Subsidiaries and, to the Company's knowledge, neither the Target Company
nor any of the Target Subsidiaries is materially in violation of any written
directive from any regulatory or governmental body to make any material change
in the method of conducting its business; there is no charge, investigation,
action, suit or proceeding before or by any court or governmental agency or body
(domestic or foreign) pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries or, to the Company's knowledge,
the Target Company or any of the Target Subsidiaries that is material to the
Condition of the Company and its Subsidiaries and the Target Company and the
Target Subsidiaries, considered as one enterprise, except as may be disclosed in
the Memorandum; all pending or threatened legal or governmental proceedings to
which the Company or any of its Subsidiaries or, to the Company's knowledge, the
Target Company or any of the Target Subsidiaries is a party or of which any of
their respective properties or assets is the subject which are not described in
the Memorandum, including ordinary routine litigation incidental to their
business, considered in the aggregate, could not reasonably be expected to have
a material adverse effect upon the Condition of the Company and its Subsidiaries
and the Target Company and the Target Subsidiaries, considered as one
enterprise.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBSCRIBER
The Subscriber hereby represents, warrants and covenants to the
Company as follows:
(a) If the Subscriber is a corporation, the Subscriber is duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of organization, with full power and authority (corporate and
other) to perform its obligations under this Agreement.
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If the Subscriber is a trust, the Trustee has been duly appointed
as Trustee of the Subscriber with full power and authority to act on behalf of
the Subscriber and to perform the obligations of the Subscriber under this
Agreement.
If the Subscriber is a limited partnership, the Subscriber is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, with full power and authority to perform its
obligations under this Agreement.
If the Subscriber is an individual, the Subscriber has the full
power and authority to perform its obligations under this Agreement.
(b) The execution, delivery and performance of this Agreement by the
Subscriber and the consummation by the Subscriber of the transactions
contemplated hereby have been duly authorized by all necessary corporate or
other action of the Subscriber; and this Agreement, when duly executed and
delivered by the Subscriber and accepted by the Company, will constitute a valid
and legally binding instrument, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(c) The Subscriber is not insolvent and has sufficient cash funds on
hand to purchase the Placement Shares on the terms and conditions contained in
this Agreement and has no reason to believe that it will not have such funds on
or about the Funding Date. Upon a reasonable request by the Company, the
Subscriber will provide the Company with evidence or substantiation that such
Subscriber has the financial means to satisfy its financial obligations under
this Agreement and the foregoing evidence and substantiation shall be a true and
accurate representation of such means.
(d) Except as may be disclosed on Annex B to this Agreement, no
state, federal or foreign regulatory approvals, permits, licenses or consents or
other contractual or legal obligations are required in order for the Subscriber
to enter into this Agreement or to purchase the Placement Shares. Based upon
the advice of Subscriber's counsel, Subscriber has no reason to believe that the
regulatory approvals listed on Annex B, if any, will not be received within
usual and customary time frames and without the imposition of any terms or
conditions that would have an adverse effect on the Company's operations or
strategic plan.
(e) The execution and delivery of this Agreement, the consummation by
the Subscriber of the transactions herein contemplated and the compliance by the
Subscriber with the terms hereof do not and will not conflict with, or result in
a breach or violation of any of the terms or provisions of, or constitute a
default under, the constituent documents of the Subscriber or any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
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which the Subscriber is a party or by which any of the Subscriber's properties
or assets are bound, or any applicable law, rule, regulation, judgment, order or
decree of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Subscriber or any of the Subscriber's
properties or assets; and no consent, approval, authorization, order,
registration or qualification of or with any such government, governmental
instrumentality or court, domestic or foreign, is required for the valid
authorization, execution, delivery and performance by the Subscriber of this
Agreement or the consummation by the Subscriber of the transactions contemplated
by this Agreement except as may be disclosed on Annex B.
(f) Except as may be disclosed in the Memorandum, the Subscriber has
not entered into any contracts, arrangements, understandings or relationships
(legal or otherwise) with any other person or persons with respect to the
transactions contemplated by this Agreement or any securities of the Company,
including but not limited to transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or withholding
of proxies; and the Subscriber does not own any securities of the Company which
are pledged or otherwise subject to a contingency the occurrence of which would
give another person voting power or investment power over such securities.
(g) The Subscriber has been advised and understands that the
Placement Shares have not been registered under the Securities Act in reliance
upon the exemption from such registration provided in Section 4(2) thereof and
that the Placement Shares have not been registered under the securities laws of
any state in reliance on exemptions therefrom and, therefore, the Placement
Shares may not be resold unless registered under applicable state securities
laws or an exemption from registration is available. The Company is and will be
under no obligation to register the Placement Shares under the Securities Act
except to the extent provided in the Registration Rights Agreement (as defined
hereinafter), when executed by the Company.
(h) The Subscriber acknowledges receipt of, and has had a reasonable
opportunity to review, the Memorandum and understands that no person has been
authorized to provide any additional information regarding the Company, the
Target Company or the Proposed Acquisition (other than information which
otherwise is publicly available) or make any representations that were not
contained in such Memorandum, and the Subscriber has not relied on any such
other information or representations in making a decision to purchase any of the
Placement Shares. The Subscriber understands that an investment in the
Placement Shares involves a high degree or risk, including the risks set forth
under the heading "RISK FACTORS" in the Memorandum.
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(i) The Subscriber has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Placement Shares, is able to bear the economic risk of an
investment in the Placement Shares, including at the date hereof, the ability to
afford a complete loss of the investment, and is (i) a sophisticated
institutional or corporate investor as well as an "accredited investor" as
defined in Rule 501(a) under the Securities Act; or (ii) a sophisticated
individual investor as well as an "accredited investor" as defined in
Rule 501(a) under the Securities Act. The Subscriber agrees to provide promptly
such additional information as may be reasonably required by the Company for
compliance with the securities laws of the state in which the Subscriber is
located.
(j) The Subscriber intends to purchase the Placement Shares offered
in the Memorandum for the account of the Subscriber and its affiliates and not,
in whole or in part, for the account of any other person. The Subscriber
represents and warrants to, and covenants and agrees with, the Company that the
Placement Shares to be acquired by it hereunder are being acquired for its own
account for investment and with no intention of distributing or reselling such
Placement Shares or any part thereof or interest therein in any transaction
which would be in violation of the securities laws of the United States of
America or any state.
(k) The Subscriber has been advised that, prior to any registration
of the Placement Shares pursuant to the provisions of the Registration Rights
Agreement, any and all certificates representing the Placement Shares and any
and all certificates issued in replacement thereof or in exchange therefor shall
bear the following legend or one substantially similar thereto:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE IN RELIANCE ON EXEMPTIONS
THEREFROM AND, THEREFORE, MAY NOT BE RESOLD UNLESS
REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE
(INCLUDING, WITHOUT LIMITATION, THE EXEMPTION PROVIDED UNDER
RULE 144A OF THE ACT).
In addition, certificates representing the Placement Shares acquired by
Subscribers located in certain states will bear additional legends as required
by the securities laws of those states.
(l) The Subscriber will not sell or otherwise transfer any of the
Placement Shares, except in compliance with the provisions of the applicable
securities laws and as stated in any legend. The Subscriber has been advised
that (i) there are significant restrictions on the transfer or the Placement
Shares, (ii) there is no active market for the Common Stock, (iii) no
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trading market for the Placement Shares is likely to be available in the
foreseeable future, and (iv) an investment in the Placement Shares may be
extremely illiquid.
7. FUNDING CONDITIONS.
The respective obligations of the Subscriber and the Company to consummate
the purchase and sale of the Placement Shares and, if applicable, the payment of
the Commitment Fee shall be subject, in the discretion of the Company or the
Subscriber, as the case may be, to the following conditions:
(a) All representations and warranties and other statements of the
other party are, at and as of the Funding Time (except as expressly provided
otherwise), true and correct in all material respects (assuming that the other
party shall have performed in all material respects all of its obligations
hereunder theretofore to be performed).
(b) The Company has complied in all material respects with all
agreements and satisfied in all material respects all conditions on its part to
be performed or satisfied hereunder at or prior to the Funding.
(c) No stop order suspending the Private Placement shall have been
issued, and no proceeding for that purpose shall have been instituted or, to the
knowledge of the Company or the Subscriber, threatened by any regulatory or
governmental body.
(d) The Company shall have entered into an Acquisition Agreement that
is substantially similar in all material respects to the Acquisition Agreement
described in the Memorandum, which Acquisition Agreement shall provide for
Merger Consideration (as defined in the Memorandum) of not more than $23.00 per
share of Target Company common stock; all of the material conditions to the
closing of the Acquisition shall have been satisfied or, if permitted, duly
waived, and the Funding of the sale of the Placement Shares shall occur prior
to, but substantially simultaneous with, the closing of the Acquisition pursuant
to the Acquisition Agreement.
(e) Other than as contemplated by the Memorandum, there shall not
have been any change effected without the Subscriber's prior written consent
(which shall not be unreasonable withheld) after the date of this Agreement in
the charter or other organizational document or bylaws of the Company adversely
affecting the rights of the holders of the Placement Shares; PROVIDED, HOWEVER,
that an increase in the Company's authorized capital stock, whether or not
described in the Memorandum, shall not be deemed to adversely affect the rights
of the holders of the Placement Shares.
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(f) At the Funding, the Subscriber shall have received a
certificate, dated as of the Funding Date, of the Chief Executive Officer and
the Chief Financial Officer of the Company in which such officers state that, to
their knowledge, the closing conditions specified in paragraphs (a) through (e)
of this Section have been satisfied.
(g) At the Funding, the Company shall have executed and delivered to
the Subscriber a registration rights agreement in the form attached hereto as
Annex C (the "Registration Rights Agreement").
(h) At the Funding, the Company and the Subscriber shall have
received the customary form of opinion, dated as of such date, of Xxxxxx,
XxXxxxxxx & Fish, LLP, outside counsel for the Company, in form and substance
satisfactory to your counsel, and such other customary closing documentation as
the parties may reasonably request.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Subscriber herein shall survive the execution of this Agreement, the
delivery to the Subscriber of certificates representing the Placement Shares
being purchased and the payment therefor.
9. BROKER'S FEE.
The Subscriber represents to the Company that it has taken no action which
would entitle anyone to a broker's or finder's fee or other compensation in
connection with the transactions contemplated hereby.
10. INDEMNITY.
The Subscriber agrees to indemnify and hold harmless the Company and each
employee, officer and director of the Company from and against any loss, damage
or liability caused by or arising out of a breach of any representation,
warranty or agreement of the Subscriber contained in this Agreement or in any
other document provided by the Subscriber to the Company in connection with the
Subscriber's investment in Placement Shares.
11. TERMINATION.
(a) Either of the parties hereto may terminate this Agreement (i) if
the Funding Date does not occur by August 15, 1997 through no fault of the
Subscriber, (ii) any federal or state regulator shall have made a final
determination denying an application of either party to the Acquisition
Agreement, the granting of which is essential to the consummation of the
Proposed
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Acquisition, or (iii) the Target Company terminates the Acquisition Agreement.
In addition, this Agreement shall terminate upon mutual consent of the parties
hereto.
(b) The Company and the Subscriber hereby agree that any termination
of this Agreement pursuant to Section 11(a) (other than termination in the event
of a breach of this Agreement by the Subscriber or misrepresentation of any of
the statements made herein by the Subscriber) shall be without liability of the
Company or the Subscriber.
12. NOTICES.
All communications hereunder shall be in writing and, if to the
Company, will be mailed, delivered or telecopied and confirmed to it at One
Pacific Plaza, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxxx, Facsimile: (000) 000-0000; and if to the
Subscriber, will be mailed, delivered or telecopied and confirmed to it at the
address set forth on the signature page hereto;
13. BINDING EFFECT.
This Agreement shall be binding upon, and shall inure solely to the
benefit of, each of the parties hereto, and each of their respective heirs,
executors, administrators, successors and permitted assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement.
14. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with
the laws of the State of Delaware without regard to the conflict of law
provisions thereof.
15. ENTIRE AGREEMENT.
This Agreement represents the entire understanding of the parties with
respect to the matters addressed herein and supersedes all prior written and
oral understandings concerning the subject matter herein.
16. ASSIGNMENT.
This Agreement may not be assigned by the Subscriber without the consent of
the Company.
17. SUCCESSORS.
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This Agreement shall inure to the benefit of and be binding upon the
Company, the Subscriber and their respective successors and permitted assigns.
Nothing expressed herein is intended or shall be construed to give any person
other than the persons referred to in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this Agreement.
18. SEVERABILITY OF PROVISIONS.
Any covenant, provision, agreement or term of this Agreement that is
prohibited or is held to be void or unenforceable in any jurisdiction shall as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions thereof.
19. MISCELLANEOUS.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for the purposes of
references only and shall not limit or otherwise affect the meaning hereof.
20. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of the counterparts, each
of which counterparts when so executed and delivered shall be deemed to be an
original, but all such respective counterparts shall together constitute but one
and the same instrument.
* * *
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IN WITNESS WHEREOF, and intending to be legally bound thereby, each of the
Subscriber and Commerce Security Bancorp, Inc. has signed or caused to be signed
its name under seal as of the day and year first above written.
Maximum Number of Shares of INDIVIDUAL INVESTOR:
Common Stock Desired
To Be Purchased
Hereunder: --------------------------------
(Print Name)
--------------------------- --------------------------------
(Signature)
Mailing
Address:
-----------------------------
-----------------------------
Telephone:
----------------------------
Facsimile:
----------------------------
PARTNERSHIP, CORPORATION, TRUST OR
INSTITUTIONAL INVESTOR:
-----------------------------------
(Print Name of Entity)
By:
-------------------------------
Name:
Title:
Jurisdiction
of Organization:
--------------------------
Mailing
Address:
----------------------------------
----------------------------------
Telephone:
----------------------------------
Facsimile:
----------------------------------
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ACCEPTANCE OF SUBSCRIPTION
The Company hereby accepts the above subscription for Placement Shares.
COMMERCE SECURITY BANCORP, INC.
By:
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
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ANNEX B
DESCRIPTION OF REQUIRED REGULATORY APPROVALS
TO BE OBTAINED BY THE SUBSCRIBER
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