SECURITIES PURCHASE AGREEMENT by and among PATRIOT NATIONAL BANCORP, INC., PATRIOT NATIONAL BANK and PNBK HOLDINGS LLC Dated as of December 16, 2009
Execution
Draft
by
and among
PATRIOT
NATIONAL BANCORP, INC.,
PATRIOT
NATIONAL BANK
and
PNBK
HOLDINGS LLC
Dated
as of
December
16, 2009
TABLE OF
CONTENTS
| 1. | Purchase and Sale of Securities. |
1
|
|
|
1.1
|
Authorization
and Issuance of Patriot Common Stock»
|
1
|
|
|
1.2
|
Closing»
|
1
|
|
| 2. | Representations and Warranties of the Companies. |
2
|
|
|
2.1
|
Representations
and Warranties»
|
2
|
|
|
2.2
|
Xxxxxxxxxx»
|
00
|
|
| 0. | Representations and Warranties of the Investor» |
17
|
|
| 4. | Conditions to Investor’s Obligations at Closing» |
19
|
|
|
4.1
|
Representations
and Warranties»
|
19
|
|
|
4.2
|
Performance»
|
19
|
|
|
4.3
|
Compliance
Certificate»
|
19
|
|
|
4.4
|
Secretary’s
Certificate»
|
19
|
|
|
4.5
|
Shareholder
Approval; Other Consents»
|
19
|
|
|
4.6
|
Proceedings
and Documents»
|
20
|
|
|
4.7
|
Regulatory
Approvals»
|
20
|
|
|
4.8
|
Appointment
of Directors and Officers»
|
20
|
|
|
4.9
|
Resignation
of Directors and Officers»
|
20
|
|
|
4.10
|
Change
of Control Agreements»
|
21
|
|
|
4.11
|
Management
and Consulting Agreement»
|
21
|
|
|
4.12
|
Financing»
|
21
|
|
|
4.13
|
Opinions
of Counsel to the Companies»
|
21
|
|
|
4.14
|
Threatened
or Pending Proceedings»
|
21
|
|
|
4.15
|
Certificate
of Incorporation»
|
21
|
|
| 5. | Conditions to the Obligations of the Companies at Closing» |
21
|
|
|
5.1
|
Representations
and Warranties»
|
22
|
|
|
5.2
|
Performance»
|
22
|
|
|
5.3
|
Payment
of Purchase Price»
|
22
|
|
|
5.4
|
Shareholder
Approval»
|
22
|
|
|
5.5
|
Regulatory
Approvals»
|
22
|
|
|
5.6
|
Compliance
Certificate»
|
22
|
|
|
5.7
|
Threatened
or Pending Proceedings»
|
22
|
|
| 6. | Covenants. |
22
|
|
|
6.1
|
Affirmative
Covenants»
|
22
|
|
|
6.2
|
Negative
Covenants of the Companies»
|
32
|
|
| 7. | Termination. |
35
|
|
| 8. | Miscellaneous. |
39
|
|
|
8.1
|
Survival»
|
39
|
|
|
8.2
|
Successors
and Assigns»
|
39
|
|
|
8.3
|
Notices»
|
39
|
|
|
8.4
|
Expenses»
|
39
|
|
|
8.5
|
Entire
Agreement»
|
40
|
|
|
8.6
|
Amendments
and Waivers»
|
40
|
|
|
8.7
|
Severability»
|
40
|
|
|
8.8
|
Governing
Law»
|
40
|
|
|
8.9
|
Counterparts»
|
41
|
|
|
8.10
|
Captions;
Articles and Sections»
|
41
|
|
|
8.11
|
Interpretations»
|
41
|
|
|
8.12
|
Enforcement
of Agreement»
|
41
|
|
|
8.13
|
No
Third Party Beneficiaries»
|
41
|
|
| 9. | Indemnification. |
41
|
|
|
SCHEDULE
A
|
Investment
Schedule
|
Execution
Draft
THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made
as of December 16, 2009 by and among Patriot National Bancorp, Inc., a
Connecticut corporation (“Patriot”), Patriot
National Bank, a national banking association (the “Bank” and together
with Patriot, the “Companies”), and PNBK
Holdings LLC, a Delaware limited liability company (the “Investor”).
Subject
to the terms and conditions set forth in this Agreement, at the Closing (as
defined below), the Investor will purchase up to $50.0 million of Patriot Common
Stock (as defined below), which amount may be increased or decreased in the
reasonable discretion of the Investor subject to Section 1.1 hereof and provided
that the Bank will be, at a minimum, “Well Capitalized” (i.e., 5% Tier 1
Leverage Capital; 6% Tier 1 Risk Based Capital; and 10% Total Risk Based
Capital) under applicable regulatory capital standards immediately following the
Closing. The parties hereto may, upon the mutual agreement (which
agreement shall not be unreasonably withheld, delayed or conditioned), revise
the structure of the transactions contemplated hereby to facilitate regulatory,
tax and/or Investor requirements or preferences, provided that such revision
does not result in a material adverse effect on any of the parties to this
Agreement.
For good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties, intending to be legally bound, agree as
follows:
1. Purchase and Sale of
Securities.
1.1 Authorization and Issuance
of Patriot Common Stock». Subject
to the terms and conditions of this Agreement, the Investor agrees to purchase
at the Closing and Patriot agrees to sell and issue to the Investor at the
Closing, the number of shares of Patriot common stock, $2.00 par value (which
shall be reduced to $0.01 per share pursuant to Section 6.1(b) hereof) per share
(“Patriot Common
Stock”), set forth on Schedule A hereto for
the purchase price set forth thereon. Notwithstanding any other
provision contained herein, at any time prior to the Closing, the Investor may,
in its reasonable discretion, elect to increase or decrease the aggregate dollar
amount of its investment in Patriot by increasing or decreasing the
corresponding number of shares of Patriot Common Stock that the Investor shall
purchase under the terms of this Agreement, provided that Patriot will be “Well
Capitalized” under applicable regulatory standards immediately following the
Closing; provided further, however, that in the event the dollar amount of the
investment is increased, the Investor shall not own more than 94.9% of the
issued and outstanding shares of Patriot Common Stock immediately following the
consummation of the transactions contemplated by this Agreement. The
shares of Patriot Common Stock set forth on Schedule A hereto and
purchased by the Investor pursuant to this Section 1.1 are referred to as the
“Common
Securities.”
Prior to
the Closing, Patriot shall have authorized the sale and issuance to the Investor
of the Common Securities.
1.2 Closing». Subject
to the satisfaction or waiver of the conditions set forth in Sections 4 and
5 hereof (other than those conditions that by their nature are to be satisfied
at
2. Representations and
Warranties of the Companies.
2.1 Representations and
Warranties». Each
of the Companies, as applicable, hereby represents, warrants and covenants to
the Investor on the date hereof and on the Closing Date, and the Investor is
relying upon, the following:
(a) Patriot
is a “bank holding company” under the Bank Holding Company Act of 1956, as
amended (the “BHC
Act”), and is duly registered as such with the Board of Governors of the
Federal Reserve System (the “Federal Reserve”).
Patriot is duly organized and validly existing as a corporation under the laws
of the State of Connecticut with full corporate power and authority to own,
lease and operate its properties and to conduct its business as presently
conducted, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure to so register or qualify or to be in
good standing has not had and will not have a Material Adverse
Effect. As used in this Agreement, the term “Material Adverse
Effect” shall mean (i) any material change in the capital stock,
other equity interests or long term debt of Patriot or any of its Subsidiaries
or any material adverse change, or any development that may cause a prospective
material adverse change, in or affecting the general affairs, management,
earnings, business, properties, assets, current or future consolidated financial
position, business prospects, shareholders’ equity or results of operations of
Patriot and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) any effect with respect
to Patriot or its Subsidiaries considered as one enterprise, which would
prevent, or be reasonably likely to prevent, the Companies from consummating the
transaction contemplated by this Agreement, except as set forth on Schedule
2.1(a). As used in this Agreement, “Subsidiaries” shall
have the meaning provided in Securities Exchange Commission (the “SEC”) Rule 405 of the
Securities Act of 1933, as amended (the “1933 Act”), and
includes all direct and indirect subsidiaries of a Person. As used
herein, “Person” means any
individual, bank, corporation, partnership, association, joint-stock company,
business trust, limited liability company or unincorporated
organization.
(b) The
shares of Common Securities to be issued and sold to the Investor by Patriot
hereunder have been duly authorized and, when issued and delivered to the
Investor against full payment therefor in accordance with the terms hereof will
be validly issued, fully paid and
nonassessable and free of any preemptive or similar rights. The
delivery of the certificate for the shares of Common Securities being issued and
sold pursuant to the terms of this Agreement will pass valid title to the shares
being sold free and clear of any security
interests,
mortgage, pledge or negative pledge, hypothecation, lien, encumbrances, or
adverse equities or claims (“Liens”) or defect in
title, to the Investor, which is purchasing such shares of Common Securities in
good faith and without notice of any Lien or defect in title. The
certificate for the shares of Common Securities being sold hereby will be in
valid and sufficient form. No holder of securities or obligations of
either of the Companies has rights to the registration of any securities of
either of the Companies as a result of or in connection with the consummation of
the transactions contemplated hereby.
(c) The
authorized capital stock of Patriot consists solely of 60,000,000 shares of
Patriot Common Stock, of which 4,774,432 shares are issued and
4,762,727 are outstanding as of the date hereof, and 1,000,000 shares of
preferred stock, none of which are issued and outstanding as of the date
hereof. The outstanding shares of Patriot Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable, and none of
the outstanding shares of Patriot Common Stock have been issued in violation of
the preemptive rights of any Person. Schedule 2.1(c)
discloses for each grant or award under Patriot’s equity-based plans, the name
of the grantee, the date of the grant, the type of grant, the status of the
option grant as qualified or non-qualified under Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”), the number of
shares of Patriot Common Stock subject to each grant or award, the number of
shares of Patriot Common Stock subject to grant or award that are currently
exercisable and the exercise price per share. Except as set forth in
Schedule
2.1(c), there are no shares of Patriot Common Stock reserved for
issuance, Patriot is not a party to or bound by any issued or outstanding
options, warrants or similar rights to subscribe for, or contractual obligations
to issue, sell, transfer or acquire any of its capital stock or any securities
convertible into or exchangeable for any of such capital stock and Patriot does
not have any commitment to authorize, issue or sell any Patriot capital stock or
rights to acquire such Patriot capital stock. No bonds, debentures,
notes or other indebtedness having the right to vote on any matters on which
shareholders of Patriot may vote are outstanding.
(d) All
the outstanding shares of capital stock of the Bank have been, and as of the
Closing Date, will be, duly authorized and validly issued, fully paid and
nonassessable and are free of any preemptive or similar rights.
(e) All
of the issued and outstanding shares of capital stock or other ownership
interests of the Bank are owned by Patriot, directly or indirectly, free and
clear of any Liens. Neither of the Companies is a party to or bound
by any outstanding options, warrants or similar rights to subscribe for, or
contractual obligations to issue, sell, transfer or acquire, any of the Bank’s
capital stock or any securities convertible into or exchangeable for any of the
Bank’s capital stock. Except as set forth on Schedule 2.1(e)
and other than standby letters of credit issued by the Bank in the ordinary
course of business, neither of the Companies have guaranteed, directly or
indirectly, any indebtedness or obligations of any other Person, including any
indebtedness of either of the Companies.
(f) (i) (A) Schedule 2.1(f)(i)
sets forth a list of all of Patriot's Subsidiaries together with the
jurisdiction of organization of each such Subsidiary and the officers
and directors of each Subsidiary, (B) except as set forth in Schedule 2.1(f)(i),
Patriot owns, directly or indirectly, all the issued and outstanding equity
securities of each of its Subsidiaries, (C) no equity securities of any of
Patriot's Subsidiaries are or may become required
to be
issued as the result of any contract, agreement, plan or otherwise,
(D) there are no contracts, commitments, understandings or arrangements by
which any of Patriot's Subsidiaries is or may be bound to sell or otherwise
transfer any of its equity securities, (E) there are no contracts,
commitments, understandings, or arrangements relating to Patriot's rights to
vote or to dispose of such securities and (F) all the equity securities of
Patriot's Subsidiaries held by Patriot or one of its Subsidiaries are fully paid
and nonassessable and are owned by Patriot or its Subsidiaries free and clear of
any Liens. No bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which shareholders of any of the Patriot
Subsidiaries may vote are outstanding.
(ii) Except
as set forth in Schedule 2.1(f)(ii)
and except for securities and other interests held in a fiduciary capacity and
beneficially owned by third parties or taken in consideration of debts
previously contracted, ownership interests in its Subsidiaries and stock in the
Federal Home Loan Bank of Boston and the Federal Reserve Bank of Boston, neither
Patriot nor the Bank owns beneficially, directly or indirectly, any equity
securities or similar interests of any Person or any interest in a partnership
or joint venture of any kind.
(iii) Each
of Patriot's Subsidiaries has been duly organized, is validly existing and is in
good standing, in each case under the laws of the jurisdiction of its
organization, and is duly licensed or qualified to do business and in good
standing in the jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so licensed or qualified, except where
the failure to be so licensed or qualified or to be in good standing would not
have nor reasonably be expected to have a Material Adverse Effect.
(g) Except
as disclosed in Schedule 2.1(g),
neither of the Companies is (i) in violation of (A) its certificate of
incorporation, articles of association, bylaws, or other organizational
documents, (B) any law, statute, ordinance, rules and regulations of,
agreements with, and commitments to, orders, rulings, directives and decrees
(collectively, “Laws”) of, any
governmental, regulatory, administrative, or self-regulatory authority,
securities exchange or market, arbitral body or court (each a “Governmental
Authority”), applicable to either of the Companies, the violation of
which has had or would reasonably be expected to have a Material Adverse Effect;
or (ii) in default in any material respect in the performance of any
obligation, agreement or condition contained in (A) any bond, debenture,
note or any other evidence of indebtedness or (B) any contract (each of (A)
and (B), an “Existing
Instrument”) to which either of the Companies is a party or by which any
of their properties may be subject or bound, which default has had or would
reasonably be expected to have a Material Adverse Effect on either of the
Companies; and to the knowledge of either of the Companies, there does not exist
any state of facts that constitutes a default or an event of default on the part
of any other party thereto, or that, with notice or lapse of time or both, would
constitute a default or event of default.
(h) The
execution and delivery of this Agreement and the performance by each of the
Companies of its obligations under this Agreement has been duly and validly
authorized by each of the Companies, and this Agreement has been duly executed
and delivered by each of them. This Agreement constitutes a valid and
legally binding agreement of each of the
Companies, enforceable against them in accordance with its terms, except to the
extent enforceability may be limited by (i) the application of bankruptcy,
receivership, conservatorship, reorganization, insolvency and similar Laws
affecting creditors’ rights generally and
(ii) equitable
principles being applied at the discretion of a court before which any
proceeding may be brought (the “Bankruptcy and Equity
Exception”), and to limitations on the rights to indemnity and
contribution hereunder that exist by virtue of public policy under federal and
state securities and banking laws.
(i) Except
for (x) filings of applications or notices with, and approvals or waivers
by, the Federal Reserve and (y) filings with the SEC and The Nasdaq Stock
Market (“Nasdaq”) in
connection with obtaining Shareholder Approval (as defined below) and except as
disclosed in Schedule
2.1(i), none of the issuance and sale of the Common Securities by Patriot
contemplated hereby, the execution, delivery or performance of this Agreement
by, nor the consummation by each of the Companies of the transactions
contemplated hereby (i) requires any consent, approval, authorization or
other order of or registration or filing with, any Governmental Authority or any
third party, (ii) conflicts with or will conflict with or constitutes or
will constitute a breach of, or a default under, the certificate of
incorporation, bylaws or other organizational documents of the Companies or any
Subsidiary, (iii) violates any Law applicable to either of the Companies or
any Subsidiary or any of their properties or the properties of any Subsidiary or
(iv) results in a breach of, default, event of default, or Debt Repayment
Triggering Event (as defined below) under, or results in the creation or
imposition of any Lien upon any property or assets of the Companies or any
Subsidiary pursuant to, or requires the consent of any other party to, any
Existing Instrument, except, in the cases of clauses (i), (iii) and (iv) above,
for such conflicts, breaches, defaults or Liens, that will not, individually or
in the aggregate, result in a Material Adverse Effect. As of the date
hereof, the Companies are not aware of any reason why the approvals set forth
above and referred to in Sections 4.5 and 4.7 will not be received in a
timely manner and without the imposition of a condition, restriction or
requirement of the type described in Section 4.7. As used
herein, “Shareholder
Approval” means (A) approval of the shareholders of Patriot necessary to
approve this Agreement and the issuance of the Common Securities contemplated
hereby for purposes of Nasdaq Rule 5635 or any successor rule thereto, and (B)
approval of the shareholders of Patriot necessary to approve an amendment to
Patriot's certificate of incorporation reducing the par value per share of
Patriot Common Stock from $2.00 per share to $0.01 per share. As used
herein, a “Debt
Repayment Triggering Event” shall mean any event or condition that gives,
or with the giving of notice or lapse of time would give, the holder of any
note, debenture, lease or other evidence of indebtedness or obligation, whether
secured or unsecured (or any indenture trustee or other Person acting on such
holder’s behalf) the right to accelerate any payment or maturity of such
indebtedness or obligation, to require the Companies or any Subsidiary to
repurchase, redeem or repay of all or a portion of such indebtedness or
obligation, or to increase the interest rates or charges or fees on any such
indebtedness or obligation.
(j) The
Bank is a national banking association organized, existing and in good standing
under the laws of the United States of America supervised and regulated by the
Office of the Comptroller of the Currency (“OCC”) and the Federal
Deposit Insurance Corporation (“FDIC” and, together
with the OCC, the “Regulatory
Authorities”). The Bank, after giving effect to the
transactions contemplated by this Agreement, will be “Well Capitalized” for all
purposes of its Regulatory Authorities.
(k) (1) Patriot’s
Annual Report on Form 10-K for the year ended December 31, 2008 and all other
reports, registration statements, definitive proxy statements or information
statements
filed or to be filed by it subsequent to December 31, 2006 under the 1933 Act or
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
as amended (the “1934
Act”), in the form filed or to be filed with the SEC (collectively, the
“SEC
Documents”), as of the date filed or to be filed and as amended prior to
the date hereof, (A) complied or will comply in all material respects as to
form with the applicable regulations of the SEC, as the case may be, and
(B) did not and will not contain any 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 the light of the circumstances under which they were
made, not misleading; and each of the consolidated balance sheets contained in
any such SEC Documents (including the related notes and schedules thereto)
presents fairly, or will present fairly, the consolidated financial position of
Patriot and its Subsidiaries as of its date, and each of the consolidated
balance sheets, statements of operations, statements of shareholders’ equity and
cash flows or equivalent statements in such SEC Documents (including any related
notes and schedules thereto) fairly presents, or will fairly present, the
consolidated statements of operations, consolidated statements of shareholders’
equity and cash flows of Patriot and its Subsidiaries for the periods to which
they relate, in each case in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) consistently
applied during the periods involved, except in each case, as may be noted
therein. Each of such financial statements (including any related
notes and schedules thereto) complies in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. The books and records of Patriot and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transactions.
(ii) Patriot
has filed all forms, reports, statements, certifications and other documents
(including all exhibits, amendments and supplements thereto) required to be
filed by it with the SEC since December 31, 2006. None of Patriot’s
Subsidiaries is required to file periodic reports with the SEC pursuant to the
1934 Act. Patriot has made available to the Investor true, correct
and complete copies of all written correspondence between the SEC, on the one
hand, and Patriot and any of its Subsidiaries, on the other hand, occurring
since December 31, 2006. As of the date of this Agreement, there are
no outstanding or unresolved comments in comment letters received from the SEC
staff with respect to Patriot’s SEC Documents. To the knowledge of
the Companies, none of the Patriot’s SEC Documents is the subject of ongoing SEC
review or outstanding SEC comment.
(iii) Since
June 30, 2009, (A) the Companies and their Subsidiaries have conducted
their respective businesses in the ordinary and usual course consistent with
past practice, (B) neither the Companies nor any of their Subsidiaries has
taken nor permitted or entered into any contract with respect to, or otherwise
agreed or committed to do or take, any of the actions set forth in Section 6.2
and (C) no event has occurred or circumstance arisen that, individually or
taken together with all other facts, circumstances and events has had or is
reasonably likely to have a Material Adverse Effect.
(iv) Except
as disclosed in Schedule 2.1(k)(iv),
no agreement pursuant to which any Loans (as hereinafter defined) or other
assets have been or shall be sold by the Companies
or their Subsidiaries entitled the buyer of such Loans or other assets, unless
there is material breach of a representation or covenant by the Companies or
their Subsidiaries, to cause
the
Companies or their Subsidiaries to repurchase such Loan or other asset or the
buyer to pursue any other form of recourse against the Companies or their
Subsidiaries.
(v) The
records, systems, controls, data and information of the Companies or their
Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of the Companies or their Subsidiaries or accountants (including all means of
access thereto and therefrom), except for any non-exclusive ownership and
non-direct control that would not reasonably be expected to have a Material
Adverse Effect on the system of internal accounting controls described below in
this Section 2.1(k)(v). Patriot (A) has implemented and
maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of
the 0000 Xxx) to ensure that material information relating to Patriot, including
its consolidated Subsidiaries, is made known to the Chief Executive Officer and
the Chief Financial Officer of Patriot by others within those entities and
(B) has disclosed, based on its most recent evaluation prior to the date
hereof, to Patriot’s outside auditors and the audit committee of the Patriot
Board of Directors (x) any significant deficiencies and material weaknesses
in the design or operation of internal controls over financial reporting (as
defined in Rule 13a-15(f) of the 0000 Xxx) which are reasonably likely to
adversely affect Patriot’s ability to record, process, summarize and report
financial information and (y) any fraud, whether or not material, that
involves management or other employees who have a significant role in Patriot’s
internal controls over financial reporting. No disclosures were
required to be made by this process. The Chief Executive Officer and
the Chief Financial Officer of Patriot have signed, and Patriot has furnished to
the SEC, all certifications required by Rule 13a-14 or 15d-14 under the 1934 Act
or 18 U.S.C. § 1350; such certifications contain no qualifications or exceptions
to the matters certified therein and have not been modified or withdrawn; and
neither Patriot nor any of its officers has received notice from any
Governmental Authorities questioning or challenging the accuracy, completeness,
form or manner of filing or submission of such
certifications.
(vi) Since
the enactment of the Xxxxxxxx-Xxxxx Act, (i) neither the Companies nor any
of their Subsidiaries nor, to the knowledge of the Companies, any director,
officer, employee, auditor, accountant or representative of the Companies or any
of their Subsidiaries, has received or otherwise had or obtained knowledge of
any material complaint, allegation, assertion or claim, whether written or oral,
regarding the accounting or auditing practices, procedures, methodologies or
methods of the Companies or their Subsidiaries or their respective internal
accounting controls, including any material complaint, allegation, assertion or
claim that the Companies or any of their Subsidiaries has engaged in
questionable accounting or auditing practices, and (ii) no attorney
representing the Companies or their Subsidiaries, whether or not employed by the
Companies or their Subsidiaries, has reported evidence of a material violation
of securities laws, breach of fiduciary duty or similar violation by the
Companies or any of their Subsidiaries or their respective officers, directors,
employees or agents to the Companies’ Boards of Directors or any committee
thereof or, to the knowledge of the Companies, to any director or officer of the
Companies.
(l) (i) The
allowance for loan losses reflected in Patriot’s audited consolidated balance
sheet at December 31, 2008 was, and the allowance for loan losses shown
on the
consolidated balance sheets in Patriot’s SEC Documents for periods ending after
December 31, 2008 was, adequate, as of the date thereof, under
GAAP. The Companies’
allowance
for loan losses is, and shall be as of the Closing Date, in compliance with the
its existing methodology for determining the adequacy of its allowance for loan
losses as well as the standards established by GAAP and is and shall be adequate
under all such standards. The Companies have complied with all
orders, written comments and directives provided to it by any Governmental
Authorities relating to its allowance for loan losses since December 31,
2006.
(ii) Schedule 2.1(l)(ii)
sets forth a listing, as of September 30, 2009, by account,
of: (A) all Loans (including loan participations) of the
Companies or any of their Subsidiaries that have been accelerated during the
past twelve months; (B) all Loan commitments or lines of credit of the
Companies or any of their Subsidiaries which have been terminated by the
Companies or any of their Subsidiaries during the past twelve months by reason
of a default or adverse developments in the condition of the borrower or other
events or circumstances affecting the credit of the borrower; (C) each
borrower, customer or other party which has notified the Companies or any of
their Subsidiaries during the past twelve months of, or has asserted against the
Companies or any of their Subsidiaries, in each case in writing, any “lender
liability” or similar claim, and, to the knowledge of the Companies, each
borrower, customer or other party which has given the Companies or any of their
Subsidiaries any oral notification of, or orally asserted to or against the
Companies or any of their Subsidiaries, any such claim; (D) all Loans,
(1) that are contractually past due 90 days or more in the payment of
principal and/or interest, (2) that are on non-accrual status,
(3) that as of the date of this Agreement are classified as “Other Loans
Specially Mentioned”, “Special Mention”, “Substandard”, “Doubtful”, “Loss”,
“Classified”, “Criticized”, “Watch list” or words of similar import, together
with the principal amount of and accrued and unpaid interest on each such Loan
and the identity of the obligor thereunder, (4) where, during the past
three years, the interest rate terms have been reduced and/or the maturity dates
have been extended subsequent to the agreement under which the Loan was
originally created due to concerns regarding the borrower’s ability to pay in
accordance with such initial terms, or (5) where a specific reserve
allocation exists in connection therewith, and (E) all assets classified by
the Companies or any of their Subsidiaries as real estate acquired through
foreclosure or in lieu of foreclosure, including in-substance foreclosures, and
all other assets currently held that were acquired through foreclosure or in
lieu of foreclosure. Schedule 2.1(l)(ii)
may exclude any individual Loan with a principal outstanding balance of less
than $100,000.
(iii) Schedule 2.1(l)(iii)
sets forth as of the date hereof (A) all outstanding Loans, Loan
commitments, letters of credit (including stand-by-letters of credit) and other
extensions of credit made by the Companies or their Subsidiaries to or on behalf
of any affiliate or associate (as such terms are defined in Rule 12b-2 of the
0000 Xxx) of the Companies or their Subsidiaries and (B) the outstanding
principal amount of such Loans or commitments, and there has been no default on,
or forgiveness or waiver of, in whole or in part, any such Loan or commitment
during the two years immediately preceding the date hereof.
(iv) All
Loans receivable (including discounts) and accrued interest entered on the books
of the Companies and their Subsidiaries arose out of bona fide arm’s-length
transactions, were made for good and valuable consideration in the ordinary
course of the Companies’ or their Subsidiary’s respective business, and the
notes or other evidences of indebtedness
with respect to such Loans (including discounts) are true and genuine and are
what they purport to be. To the knowledge of the Companies, the
Loans, discounts and the accrued
interest
reflected on the books of the Companies and their Subsidiaries are subject to no
defenses, set-offs or counterclaims (including, without limitation, those
afforded by usury or truth-in-lending laws), except as may be provided by a
Bankruptcy and Equity Exception. All such Loans are owned by the
Companies or their Subsidiaries free and clear of any Liens.
(v) The
notes and other evidences of indebtedness evidencing the Loans described above,
and all pledges, mortgages, deeds of trust and other collateral documents or
security instruments relating thereto are, in all material respects, valid, true
and genuine, and what they purport to be.
(m) Except
as disclosed in Schedule 2.1(m),
there are no claims, actions, suits, proceedings, inquiries (formal or
informal), or investigations (individually and collectively, “Proceedings”) before
or brought by any court or Governmental Authority pending or, to the knowledge
of the Companies, threatened, against the Companies or any Subsidiary or to
which the Companies or any Subsidiary or any of their properties are subject,
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, nor to the knowledge of the Companies is there any
basis for any such Proceeding, in each case, other than those previously
disclosed to the Investor or those that could reasonably be expected to arise
therefrom.
(n) The
Companies have provided to the Investor true, correct and complete copies of
each of the following to which the Companies or any of their Subsidiaries is a
party or subject (each, a “Material Contract”):
(i) any contract or agreement which is a “material contract” within the
meaning of Item 601(b)(10) of Regulation S-K to be performed in whole or in part
after the date of this Agreement; (ii) any contract or agreement which
limits the freedom of the Companies or any of their Subsidiaries to compete in
any line of business; (iii) any contract or agreement which grants any
Person a right of first refusal, right of first offer or similar right with
respect to any material properties, assets or businesses of the Companies or
their Subsidiaries; (iv) any contract relating to the acquisition or
disposition of any material business or material assets (whether by merger, sale
of stock or assets or otherwise), which acquisition or disposition is not yet
complete or where such contract contains continuing material obligations,
including continuing material indemnity obligations, of the Companies or any of
their Subsidiaries; (v) any contract or agreement which is a consulting
agreement or service contract (including data processing, software programming
and licensing contracts and outsourcing contracts) which involves the payment of
$50,000 or more in annual fees; (vi) contracts for the purchase of goods or
services by, or for the furnishing of goods or services to, any of the Companies
that provide for, or could reasonably be expected to provide for, payments by
any of the Company in excess of $50,000 during the term of any such contract;
and (vii) any other contracts not listed in subparagraphs (i) through (vi)
above, whether or not in the ordinary course of business consistent with past
practice, made or entered into since January 1, 2007 that could reasonably be
deemed to be material. None of the Companies is party to any
indemnification agreement or similar arrangement. None of the
Companies is a party to, nor is there outstanding, any agreement, contract or
arrangement that restricts or may restrict the right or ability of any of the
Companies to issue or redeem any of its own securities.
(o) Each
Material Contract has been duly authorized, executed and delivered, constitute
valid and binding agreements of the Companies or any Subsidiary, are enforceable
against
the Companies or any Subsidiary in accordance with the terms thereof, except as
enforceability thereof may be limited by the Bankruptcy and Equity Exception,
and the Companies and any such Subsidiary are in compliance in all material
respects with the terms of each such Material Contract. Neither the
Companies nor any Subsidiary has received notice or been made aware that any
other party to such a contract is in breach of or default under any such
Material Contract.
(p) Except
as disclosed in Schedule 2.1(o), all
of the Bank’s call reports (“Call Reports”)
submitted to the Regulatory Authorities conform in all material respects to the
Federal Financial Institutions Examination Council’s requirements for Call
Reports and all such Call Reports conform to the requirements of Section 37 of
the Federal Deposit Insurance Act (“FDIA”) and applicable
regulations thereunder.
(q) Except
as disclosed in Patriot’s SEC Documents, since December 31, 2006
(i) neither the Companies nor any Subsidiary has incurred any material
liabilities or obligations (whether absolute, contingent or accrued or otherwise
and whether due or to become due) other than liabilities incurred after
September 30, 2009 in the ordinary course of business consistent with past
practice and, to the Companies’ knowledge, there is no existing condition, event
or circumstance which could result in any such material liability in the future,
(ii) neither the Companies nor any Subsidiary has entered into any
transaction that is not in the ordinary course of business consistent with past
practice, (iii) neither the Companies nor any Subsidiary has sustained any
material loss or interference with its business or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance,
(iv) neither the Companies nor any Subsidiary has paid or declared any
dividends or other distributions with respect to its capital stock or
repurchased any of its capital stock and no event has occurred that with notice,
the passage of time or both would be a default or an event of default under the
terms of any class or series of capital stock, and (v) there has not been
any change in the authorized or outstanding capital stock of the Companies or
any Subsidiary or any material change in the indebtedness, leases or obligations
of the Companies or any Subsidiary (other than in the ordinary course of
business).
(r) All
offers and sales of any of the capital stock of the Companies and any Subsidiary
and other debt or other securities prior to the date hereof were made in
compliance with, or were the subject of an available exemption from, the
1933 Act and all other applicable state and federal laws or regulations, or
any Proceedings under the 1933 Act or any state or federal laws or
regulations in respect of any such offers or sales are effectively barred by
effective waivers or statutes of limitation.
(s) The
Companies have each filed all tax returns required to be filed and all such tax
returns are true, complete and accurate in all material respects and were
prepared in compliance with all applicable Laws. The Companies have
duly and on a timely basis paid or remitted all Taxes (whether or not shown on
any such tax return filed by either of the Companies) required to be paid or
remitted by them on or before the date hereof, including all Taxes assessed or
reassessed by any tax authority, all Taxes held in trust or deemed to be held in
trust for a tax authority and all installments on account of Taxes for the
current year, except for Taxes
being contested by the Companies in good faith. The Companies have
each withheld and paid all Taxes required to have been withheld and paid
over. Neither of the Companies is in
default
in the payment of any Taxes that were otherwise payable pursuant to said tax
returns or any assessments with respect thereto. There are no Liens for Taxes on
any of the assets of either of the Companies (other than statutory Liens arising
for taxes not yet due). No claim has been made against either of the
Companies for any unpaid Taxes, no assessment, deficiency or adjustment has been
asserted, proposed, or threatened in writing with respect to any tax return
filed by or with respect to either of the Companies and no audits, examinations,
investigations, or other administrative proceedings or court proceedings are
presently pending with regard to any Taxes owed by, or tax returns filed by or
with respect to either of the Companies. Neither of the Companies has
made or changed any election in respect of Taxes, adopted or changed any
accounting method in respect of Taxes, entered into any tax allocation
agreement, tax sharing agreement, tax indemnity agreement or closing agreement,
settlement or compromise of any claim or assessment in respect of Taxes, or
consented to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes with any tax authority or
otherwise. Neither of the Companies has any liability for Taxes of
another Person under Treasury Regulations §1.1502-6 (or any similar provision of
state, local or foreign law) and neither of the Companies has ever had any
direct or indirect equity interest in any entity other than Patriot’s ownership
of Bank. Neither of the Companies will be required to include any
amount in income for any taxable period beginning after the Closing Date as a
result of a change in accounting method for any taxable period ending on or
before the Closing Date. No claim has ever been received by the
Companies from a tax authority in a jurisdiction where the Companies or any of
their Subsidiaries does not file tax returns that the Companies or any of their
Subsidiaries is or may be subject to taxation by that
jurisdiction. The unpaid Taxes of the Companies did not, as of
September 30, 2009, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the Companies’ consolidated balance
sheets. On the Closing Date, all stock transfer and other Taxes that
are required to be paid in connection with the sale of the Common Securities to
be sold hereby to the Investor will have been fully paid by Patriot and all Laws
imposing such Taxes will have been complied with by Patriot and the
Bank. For purposes of this Agreement, “Tax” or “Taxes” means
(i) any federal, state, local or foreign income, profits, withholding, real
or personal property, production, sales, use, license, excise, franchise,
employment, payroll, alternative or add-on minimum, ad valorem, value-added,
transfer, stamp, or environmental tax (including taxes under section 59A of the
Code), escheat payments or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or penalty, addition to tax or additional amount imposed by any taxing
authority; and (ii) any liability for the payment of amounts
determined by reference to amounts described in clause (i) as a result of
being a member of an affiliated, consolidated, combined or unitary group, or as
a result of any obligation under any Tax sharing or indemnity
arrangement.
(t) All
transactions and contracts by and among the Companies and their respective
directors, officers and affiliates comply in all material respects with Federal
Reserve Act, Sections 23A and 23B thereof and Federal Reserve Regulation W and
all other applicable Laws, orders and Permits (as defined below).
(u) Patriot
is not an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for, an investment company within the meaning of the
Investment Company Act of 1940, as amended (the “ICA”). Patriot
is not required, and upon the
issuance
and sale of the Common Securities and the application of the net proceeds of
such offering and sale as provided herein will not be required, to register as
an “investment company” nor will Patriot be an entity “controlled” by an
“investment company” as such terms are defined in the ICA and SEC
regulations.
(v) None
of the issuance, sale or delivery of the Common Securities contemplated hereby
nor the application of any of the proceeds thereof by either of the Companies
will be used to acquire or hold any margin securities or will violate Federal
Reserve Regulations T, U, or X.
(w) Each
of the Companies and their Subsidiaries have good and valid title to all
property (real, personal and mixed) owned by it, free and clear of all Liens,
except those Liens that are not materially burdensome and have not had and will
not result in a Material Adverse Effect. All property (real, personal and mixed)
held under leases by each of the Companies and their Subsidiaries is held under
valid, subsisting and enforceable leases with only such exceptions as in the
aggregate are not materially burdensome and have not and will not result in a
Material Adverse Effect.
(x) Each
of the Companies and their Subsidiaries has all permits, licenses, franchises,
orders, approvals, consents and authorizations of Governmental Authorities
(each, a “Permit”) as are
necessary to own its properties and to conduct its business except where the
failure to have obtained any such Permit has not had and will not have a
Material Adverse Effect. Each of the Companies and their Subsidiaries
has operated and is operating its business in material compliance with and not
in material violation of its obligations with respect to each such Permit and no
event has occurred that allows, or after notice or lapse of time would allow,
the suspension, revocation or termination of any such Permit or result in any
other material impairment of the rights of any such Permit and such Permits
contain no restrictions that have been or will be materially burdensome to
either of the Companies or their Subsidiaries.
(y) Except
as set forth on Schedule 2.1(y), each
of the Companies and their Subsidiaries has conducted its business in compliance
in all material respects with all Laws applicable to it, including, without
limitation, (i) all regulations and outstanding orders of, or agreements
with, the Federal Reserve, the OCC and the FDIC, and (ii) state and federal
Laws governing the offer and extension of credit, including, without limitation,
consumer credit and usury laws, the Truth in Lending Act, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act, the Bank Secrecy Act, and the USA PATRIOT Act; and
(iii) all applicable Laws, regulations and orders related to the offer and
sale of investments and insurance and advice related thereto. Except
as set forth on Schedule 2.1(x),
neither the Companies nor any of their Subsidiaries has received any
communication from any Governmental Authority asserting that it is not in
compliance with any Law.
(z) Except
as set forth on Schedule 2.1(z),
neither of the Companies is a party to or subject to any order, decree
(including without limitation consent decree), judgment, memorandum
of understanding or similar agreement with, or a commitment letter, supervisory
letter or similar submission to, any Governmental Authority charged with its
supervision or regulation or their respective activities, and neither of the
Companies has been advised by any
Governmental
Authority that such Governmental Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum or understanding, commitment letter,
supervisory letter or similar submission.
(aa) The
Companies maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in
accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
and to maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management’s general or specific
authorizations, (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences, and (v) the internal accounting controls
otherwise comply with all applicable federal and state banking, securities and
other applicable Laws, including the Foreign Corrupt Practices Act and the
FDIA. Since the end of its most recent audited fiscal year, there has
been (x) no material weakness in the Companies’ internal control over financial
reporting (whether or not remediated) and (y) no change in the Companies’
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Companies’ internal control over
financial reporting.
(bb) Neither
of the Companies, nor, to the knowledge of the Companies, any employee, agent or
representative thereof, has, directly or indirectly, (i) made any unlawful
contribution to any candidate for political office, or failed to disclose fully
any contribution in violation of law or (ii) made any payment to any
federal, state, local or foreign governmental official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof or
applicable foreign jurisdictions.
(cc) In
the ordinary course of business, the Companies periodically review the effect of
Environmental Laws (as defined below) on their business, operations and
properties, in the course of which it identifies and evaluates associated costs
and liabilities (including any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws or any
Permit, license or approval, any related constraints on operating activities and
any potential liabilities to third parties). On the basis of such
reviews and the amount of its established reserves, the Companies have
reasonably concluded that such associated costs and liabilities have not had and
will not have, individually or in the aggregate, a Material Adverse
Effect. Except as set forth on Schedule 2.1(cc), the Companies and
their Subsidiaries are (i) in compliance with all applicable federal,
state, local and foreign Laws relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants (“Environmental Laws”),
(ii) have received all Permits required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such Permit, except where such
noncompliance with Environmental Laws or, the failure to receive or to comply
with the terms and conditions of any required Permits, has not had and will not
have, individually or in the
aggregate, a Material Adverse Effect. Neither the Companies nor any
of their Subsidiaries has been named as a “potentially responsible party” under
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended. Neither the Companies nor any
of their
Subsidiaries owns, leases, operates or occupies any property that appears on any
list of hazardous or superfund sites compiled by any Governmental Authority and
none of them previously owned, leased, operated or occupied any such
property.
(dd) Each
of the Companies and their Subsidiaries owns and has full right, title and
interest in and to, or has valid licenses to use, each trade name, trademark,
service xxxx, patent, copyright, approval, trade secret and other similar rights
(collectively “Intellectual
Property”) under which it conducts its business, and neither of them has
created or suffered any Lien on, waived or released any rights to or granted any
right or license with respect to, any such Intellectual Property, except where
the failure to own or obtain a license or right to use or any grant of such
right or license, has not and will not have a Material Adverse
Effect. There is no claim pending against either of the Companies or
their Subsidiaries with respect to any Intellectual Property and neither of the
Companies nor any of their Subsidiaries has received notice or otherwise become
aware that any Intellectual Property that it uses or has used in the conduct of
its business infringes upon or conflicts with the rights of any third party.
Neither of the Companies nor any of their Subsidiaries has become aware that any
material Intellectual Property that it uses or has used in the conduct of its
business infringes upon or conflicts with the rights of any third
party.
(ee) The
Companies and their Subsidiaries maintain insurance on their respective
properties and businesses, including business interruption and directors and
officers’ insurance with insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
businesses in which it is engaged; and neither of the Companies nor any of their
Subsidiaries has reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a comparable cost to that currently paid.
(ff) ii) The
Companies, their Subsidiaries and any “employee benefit plan” (as defined under
the Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder (collectively, “ERISA”)) maintained,
funded, operated and administered by the Companies or their ERISA Affiliates are
in compliance with ERISA and all other applicable state and federal laws that
relate to employee benefit plans. “ERISA Affiliate”
means, with respect to the Companies and their Subsidiaries, any member of any
group or organization described in Sections 414(b), (c), (m) or (o) of the Code,
of which the Companies or any of their Subsidiaries is a
member. Each “employee benefit plan” established or
maintained by the Companies, their Subsidiaries or any of their ERISA Affiliates
that is intended to be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred, whether by action or failure to act, that
would cause the loss of such qualification. None of the Companies,
their Subsidiaries nor any of their ERISA Affiliates sponsor, maintain or
contribute to (and no such Company, Subsidiary or ERISA Affiliate has ever
sponsored, maintained or contributed to) any “employee pension benefit plan” (as
defined in Section 3(2) of ERISA) that is subject to Title IV of ERISA or
Sections 430 or 412 of the Code, any “multiemployer
plan” as defined in Section 3(37) of ERISA, or any “multiple employer plan”
subject to Section 4063 of 4064 of ERISA.
(ii) Except
as set forth on Schedule 2.1(ee)(ii),
neither the Companies nor any of their Subsidiaries is a party to any
employment, severance, or non-compete agreements with any
party. Except as set forth on Schedule 2.1(ee)(ii),
none of the execution of this Agreement, the Shareholder Approval or
consummation of the transactions contemplated hereby, either alone or in
connection with a subsequent event, will (A) entitle any current or former
employee or any current or former director or independent contractor of the
Companies or any of their Subsidiaries to severance pay or any increase in
severance pay upon any termination of employment after the date hereof,
(B) accelerate the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or trigger any other material obligation
pursuant to, any Benefit Plan (as defined below), or result in or trigger any
action that does not comply with Section 409A of the Code and the regulations
promulgated thereunder, (C) result in any breach or violation of, or a
default under, any Benefit Plan, (D) result in any payment that would be a
“parachute payment” to a “disqualified individual” as those terms are defined in
Section 280G of the Code, without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future or
(E) result in any payment or portion of any payment that would not be
deductible by the Companies under Section 162(m) of the Code when
paid. As used herein, the term “Benefit Plan” shall
mean any “employee benefit plan”, any severance, employment or change in control
agreement or similar arrangement, any fringe benefit, deferred compensation,
stock option, stock purchase, stock appreciation rights, incentive or bonus
plans, programs, policies or arrangements.
(gg) The
Companies and their Subsidiaries have complied in all material respects with
applicable wage and hour determinations issued by the U.S. Department of Labor
under the Service Contract Act of 1965 and the Fair Labor Standards Act in
paying its employees’ salaries, wages, overtime, fringe benefits and other
compensation for the performance of work or other duties, and have complied in
all material respects with the requirements of the Americans with Disabilities
Act of 1990, the Family and Medical Leave Act of 1993, the Civil Rights Act of
1964 (Title VII), the National Labor Relations Act, the Vietnam Era Veteran’s
Readjustment Act, the Age Discrimination in Employment Act, as amended by the
Older Workers’ Benefit Protection Act, and federal, state and local labor laws,
each as amended, except where the failure to comply with any such requirements
has not, and is not reasonably expected to have, a Material Adverse
Effect. No labor dispute with employees of the Companies or any of
their Subsidiaries exists or, to the knowledge of the Companies, is imminent,
and neither of the Companies is aware of any existing or imminent labor
disturbance by the employees of any of its or any Subsidiary’s principal
suppliers, vendors, customers or contractors which, in either case, may
reasonably be expected to result in a Material Adverse Effect. No
labor dispute or disturbance with employees of the Companies or any of their
Subsidiaries exists or, to the knowledge of the Companies, is contemplated or
threatened, and neither of the Companies is aware of any existing or imminent
labor disturbance by the employees of any of the Companies’ principal suppliers,
vendors, counterparties, customers or contractors which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(hh) Neither
of the Companies nor any of their Subsidiaries has any contract, arrangement or
understanding with any investment broker, finder or similar agent with respect
to the transactions contemplated by this Agreement, except as set forth on Schedule
2.1(hh).
(ii) The
Board of Directors of Patriot has taken all necessary action to ensure that
Sections 33-841 and 33-844 of the Connecticut Business Corporation Act, and any
other similar “moratorium,” “control share,” “fair price,” “takeover”, or
“interested shareholder” laws or provisions, and any “poison pill” or “rights
plan”, do not and will not apply to this Agreement, any of the transactions
contemplated hereby or to the Investor or any of its affiliates generally
following the Closing.
(jj) Each
of the Companies and their Subsidiaries has good and marketable title to all
securities held by it (except securities sold under repurchase agreements or
held in any fiduciary or agency capacity) free and clear of any Lien or other
restriction of any kind, except to the extent such securities are pledged in the
ordinary course of business consistent with prudent business practices to secure
obligations of the Companies and any of their Subsidiaries and except for such
defects in title or Liens, claims, charges, options, encumbrances, mortgages,
pledges or security interests or other restrictions of any kind that would not
constitute a Material Adverse Effect; such securities are valued on the books of
the Companies and their Subsidiaries in accordance with GAAP.
(kk) Any
and all material swaps, caps, floors, futures, forward contracts, option
agreements (other than employee stock options) and other derivative financial
instruments, contracts or arrangements, whether entered into for the account of
the Companies or their Subsidiaries or for the account of a customer of the
Companies or their Subsidiaries, were entered into in the ordinary course of
business and in accordance with prudent business practice and applicable laws,
rules, regulations and policies of all applicable regulatory agencies and with
counterparties believed to be financially responsible at the
time. Each of the Companies and their Subsidiaries have duly
performed all of their obligations thereunder to the extent that such
obligations to perform have accrued, and there are no breaches, violations or
defaults or allegations or assertions of such by any party thereunder, except
for such breaches, violations, defaults or allegations that would not constitute
a Material Adverse Effect.
(ll) Neither
of the Companies are the subject of any pending or threatened bankruptcy,
insolvency, receivership, conservatorship or similar proceedings (“Bankruptcy
Proceedings”); and the Companies shall not commence any Bankruptcy
Proceeding.
(mm) The
Patriot Common Stock is in compliance with all the requirements of Nasdaq for
continued listing of the Patriot Common Stock thereon. Patriot has
taken no action designed to, or reasonably likely to have the effect of,
terminate the registration of the Patriot Common Stock under the 1934 Act or
de-listing the Patriot Common Stock from Nasdaq, nor has Patriot received any
notification that the SEC is contemplating terminating such registration or
listing.
(nn) Except
with respect to claims arising under or relating to that certain Standstill
Agreement entered into by the parties on December 4, 2009, none of the Companies
has any claim against the Investor and/or any of its affiliates, Subsidiaries,
parent entities, members
or managers or their respective officers, directors, members, managers or
agents, nor are any of the Companies aware of the basis for any such
claim.
2.2 Disclosure». The
Companies have provided the Investor with all the information that it has
requested. None of such information nor this Agreement (including all
the exhibits and schedules hereto) nor any other statements or certificates made
or delivered in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading in light of the circumstances under which they were
made.
3. Representations and
Warranties of the Investor». The
Investor hereby represents, warrants and covenants that the
Investor:
(a) is
a limited liability company duly organized validly existing and in good standing
under the laws of the State of Delaware.
(b) has
full power and authority to enter into this Agreement, and this Agreement
constitutes a valid and legally binding obligation of the Investor, enforceable
in accordance with its terms, subject to the Bankruptcy and Equity Exception and
subject to the fact that the indemnification and contribution provisions may be
limited by virtue of public policy under federal and state securities and
banking laws.
(c) except
for filings of applications or notices with, and approvals or waivers by, the
Federal Reserve, the consummation by the Investor of the transactions
contemplated hereby does not (i) require any consent, approval,
authorization or other order of or registration or filing with, any Governmental
Authority or any third party, (ii) conflict with or will conflict with or
constitutes or will constitute a breach of, or a default under, the
organizational documents of the Investor, or (iii) violate any Law
applicable to the Investor or any of its properties or the properties of any
Subsidiary, except for such conflicts, breaches, defaults or violations that
will not, individually or in the aggregate, result in a material adverse
effect. As of the date hereof, the Investor is not aware of any
reason why the approvals set forth above and referred to in Sections 4.5
and 4.7 will not be received in a timely manner and without the imposition of a
condition, restriction or requirement of the type described in
Section 4.7.
(d) confirms
that the Common Securities to be received by it will be acquired for such
Investor’s own account, and not with a view to the distribution of such Common
Securities.
(e) is
an investor in securities of financial services companies and acknowledges that
it can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the securities to be sold in accordance
with this Agreement.
(f) is
an “accredited investor” within the meaning of SEC Rule 501 of
Regulation D under the 1933 Act.
(g) has
independently evaluated its investment decision; followed its own investment
procedures; conducted diligence and received information it needs for an
informed decision.
(h) understands
that the Common Securities it is purchasing as contemplated hereby are
“restricted securities” under the federal securities laws and that such
securities may be resold without registration under the 1933 Act only in certain
limited circumstances. In the absence of an effective registration
statement covering the securities or an available exemption from registration
under the 1933 Act, the Common Securities must be held
indefinitely. In this connection, the Investor represents that it is
familiar with SEC Rule 144 and Rule 144A, as presently in effect, and
understands the resale limitations imposed thereby and by the 1933
Act.
(i) (i) agrees
to the imprinting, so long as is required by this Section 3(i), of a legend on
any of the Common Securities purchased pursuant to this Agreement in
substantially the following form:
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
(ii) certificates
evidencing the Common Securities purchased pursuant to this Agreement shall not
contain any legend (including the legend set forth in Section 3(i)(i)),
(x) while a registration statement covering the resale of such security is
effective under the 1933 Act, or (y) following any sale of such securities
pursuant to Rule 144 (or any successor rule), or (z) if such securities are
eligible for sale under Rule 144(k) (or any successor rule). Patriot
shall cause its counsel to issue a legal opinion to Patriot’s transfer agent if
required by such transfer agent to effect the removal of the legend
hereunder. Patriot agrees that at such time as such legend is no
longer required under this Section 3(i)(ii), it will, no later than three
business days following the delivery by the Investor to Patriot, or its
respective transfer agent, of a certificate representing securities issued with
a restrictive legend, deliver or cause to be delivered to the Investor a
certificate representing such securities that is free from all restrictive and
other legends. Patriot may not make any notation on its records or
give instructions to any transfer agent of Patriot that enlarge the restrictions
on transfer set forth in this Section.
(iii) agrees
that the removal of the restrictive legend from certificates representing Common
Securities purchased pursuant to this Agreement as set forth in this Section
3(i) is predicated upon Patriot’s reliance that the Investor will sell any
Common Securities purchased pursuant to this Agreement pursuant to either the
registration requirements
of
the 1933 Act, including any applicable prospectus delivery requirements, or an
exemption therefrom.
(j) does
not and, to Investor’s knowledge, none of its affiliates or associates (as such
terms are defined under Rule 12b-2 of the 1934 Act), own beneficially or of
record, directly or indirectly, or is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of,
shares of Patriot Common Stock, provided, however, that
nothing set forth herein shall limit or restrict any existing shareholders of
any of the Companies from directly or indirectly acquiring additional shares of
Patriot Common Stock pursuant to the transactions contemplated by this
Agreement.
(k) Except
with respect to (i) claims arising under or relating to that certain Standstill
Agreement entered into by the parties on December 4, 2009, and (ii) that certain
civil action pending in the Connecticut Superior Court, captioned as PNBK Holdings LLC and Xxxxxxx X.
Xxxxxxxx v. Patriot National Bancorp, Inc. and Patriot National Bank,
Docket No.: FST-CV-09-6002166-S, Investor has no claim against the Patriot or
the Bank, and/or any of their respective affiliates, Subsidiaries, parent
entities, officers or directors, nor is Investor aware of the basis for any such
claim.
4. Conditions to Investor’s
Obligations at Closing». The
obligations of the Investor under Section 1.1 of this Agreement are subject to
the fulfillment and satisfaction on or before the Closing of each of the
following conditions, the waiver of which shall not be effective unless the
Investor consents in writing thereto:
4.1 Representations and
Warranties». The
representations and warranties of the Companies contained in Section 2
shall be true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of such
Closing.
4.2 Performance». Each
of the Companies shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing.
4.3 Compliance
Certificate». Each
of the Companies shall deliver to the Investor at Closing a certificate stating
that the conditions specified in Sections 4.1 and 4.2 have been
fulfilled.
4.4 Secretary’s
Certificate». The
Secretary of each of the Companies shall deliver to the Investor at Closing a
certificate stating that the certificate of incorporation, bylaws, or other
organizational documents and resolutions attached thereto are true and correct,
and shall certify to such other matters as the Investor may reasonably
request.
4.5 Shareholder Approval; Other
Consents». (a)
Patriot shall have obtained Shareholder Approval, (b) Patriot shall have
received all consents or approvals of, or provided all notices to, or
declarations or filings with any third party required under any Material
Contract or Permit which are necessary in connection with the consummation of
the transactions contemplated by this Agreement, and (c) the Common Securities
to be issued pursuant to this Agreement shall have been approved for listing on
the Nasdaq Global Market, subject only to
notice of
issuance, and Nasdaq shall not have objected to the consummation of the
transactions contemplated hereby.
4.6 Proceedings and
Documents». All
corporate and other proceedings in connection with the transactions contemplated
at the Closing shall have been executed and delivered by the respective parties
thereto in form and substance reasonably satisfactory to the Investor and all
other documents, instruments and agreements reasonably requested by the Investor
shall have been executed and delivered to the Investor.
4.7 Regulatory
Approvals». (a)
The applications of each of the Investor, PNBK Sponsor LLC, a Delaware limited
liability company and sole managing member of the Investor (the “Managing Member”),
and Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx") to acquire
and control (directly or indirectly) the Common Securities and, with respect to
the Investor and the Managing Member, to become bank holding companies under the
BHC Act, shall each be approved by the Federal Reserve, all other regulatory
approvals required to consummate the transactions contemplated by this Agreement
shall have been obtained, and all approvals referenced in this Section 4.7 shall
remain in full force and effect and all statutory waiting periods in respect
thereof shall have expired and (b) no such approvals referenced in this Section
4.7 shall include any condition or requirement that, individually or in the
aggregate, would reduce the benefits of the transactions contemplated by this
Agreement to the Investor, the Managing Member or Xxxxxxxx in so significant a
manner that the Investor, in its sole discretion, would not have entered into
this Agreement had such condition or requirement been known at the date hereof
(any such condition or requirement, a "Burdensome
Condition").
4.8 Appointment of Directors and
Officers». Subject
to any applicable Federal regulatory approvals and the Companies’ internal
corporate governance policies, which in each case the Companies’ shall use
reasonable best efforts to promptly obtain and comply with, the Companies shall
have caused each of the Boards of Directors of the Companies to have taken all
corporate actions necessary to effectuate the election of Xxxxxxxx as Chairman
of the Board of Directors of Patriot and a director of the Bank, effective as of
the Closing Date. If prior to the Closing Date the Investor provides written
request
that any additional individuals be elected or appointed, as applicable, to any
of the Boards of Directors of the Companies or as an officer to any of the
Companies, subject to any applicable Federal regulatory approvals and the
Companies’ internal corporate governance policies, which in each case the
Companies’ shall use reasonable best efforts to promptly obtain and comply with,
the Companies shall have caused all such additional individuals to be elected or
appointed, as applicable, to the specified Board(s) of Directors and/or
officerships, effective as of the Closing Date.
4.9 Resignation of Directors and
Officers». It
is the intention of the Investor to meet with the executive officers and
directors of Patriot as soon as reasonably practicable following the execution
hereof to discuss potential opportunities for such individuals to continue to be
actively involved with Patriot following the Closing Date. If
requested by Investor, Patriot shall have secured the written resignations,
effective as of the Closing Date, from the following (a) directors of
Patriot: Xxxxxxx X. Xxxxxx, Xxxxxx X. X’Xxxxxxx, Xxxxxx X. Xxxxxxx,
Xxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxxx, X. Xxxxxx Xxxxxxxxx, Xxxxxxx X. Xxxxxxxx
and Xxxxxxx X. Xxxxx (or any replacement for any of the foregoing); (b)
directors of the Bank: Xxxxxxx X. Xxxxxx, Xxxxxx X. X’Xxxxxxx and
Xxxxxx X. Xxxxxxx (or any replacement for any of the foregoing); (c)
officers
of Patriot: Xxxxxx Xx Xxxx, Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxxx X.
Capadonno (or any replacement for any of the foregoing); and (d) officers of the
Bank: Xxxxxxx X. Xxxxxx (or any replacement therefor); (e) directors of Pinpat
Acquisition Corporation: Xxxxxxx X. Xxxxxx (or any replacement therefor); and
(f) officers of Pinpat Acquisition Corporation: Xxxxxxx X. Xxxxxx (or any
replacement therefor).
4.10 Change of Control
Agreements». Patriot
and the Bank shall have obtained an executed change of control waiver from each
of Xxxxxx X. X’Xxxxxxx, Xxxxxx Xx Xxxx, Xxxxxx X. Xxxxxxx, Xxxxxxx X.
Xxxxxx and Xxxxxx X. Xxxxx and shall use best efforts to obtain an executed
change of control waiver from Xxxxxxx X. Xxxxxxx, to the extent any change of
control agreement remains in effect, and has not been terminated for any reason,
on the Closing Date. Such waiver shall be in a form and substance
reasonably satisfactory to Investor and will provide for a waiver of any right
of payment, any claim or any other compensation relating to any change of
control or similar agreement and with regard to the transactions contemplated by
this Agreement.
4.11 Management and Consulting
Agreement». Patriot
and the Managing Member shall have executed and delivered a management and
consulting agreement pursuant to which the Managing Member shall provide
management and consulting services to Patriot, the terms of which shall be
negotiated in good faith by the parties thereto, which management and consulting
agreement shall be effective as of the Closing Date. Additionally, if
requested by Investor and Xxxxxxx X. Xxxxxx, Patriot and the Bank shall have
entered into a consulting agreement with Xx. Xxxxxx on terms agreeable to
Investor and Xx. Xxxxxx.
4.12 Financing». The
Investor shall have successfully completed the Offering (as defined
below). As used herein, the Investor shall have “successfully
completed” the Offering if the Investor has raised net proceeds in an amount
equal to the aggregate purchase price set forth in Section 1.1 above, as
may be adjusted as provided therein.
4.13 Opinions of Counsel to the
Companies». The
Investor shall have received from counsel to the Companies, an opinion, dated as
of the Closing, as to the matters specified in Exhibit A
hereto.
4.14 Threatened or Pending
Proceedings». No
proceedings shall have been initiated or threatened by any Governmental
Authority or any other third party seeking to enjoin or otherwise restrain or to
obtain an award for damages in connection with the consummation of the
transactions contemplated hereby or which would reasonably be expected to result
in a Material Adverse Effect.
4.15 Certificate of
Incorporation». Patriot
shall have filed with the Secretary of State of the State of Connecticut a
certificate of amendment to its certificate of incorporation, in a form approved
by the Investor reducing the par value per share of Patriot Common Stock from
$2.00 per share to $0.01 per share.
5. Conditions to the
Obligations of the Companies at Closing». The
obligations of the Companies under Section 1.1 of this Agreement are subject to
the fulfillment and satisfaction
on or
before the Closing of each of the following conditions, the waiver of which
shall not be effective unless the Companies consent in writing
thereto:
5.1 Representations and
Warranties». The
representations and warranties of the Investor contained in Section 3 shall
be true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of such
Closing.
5.2 Performance». The
Investor shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or
complied with by it on or before the Closing.
5.3 Payment of Purchase
Price». The
Investor shall have delivered in immediately available funds the purchase price
for the Common Securities specified in Schedule A hereto, as
may be adjusted pursuant to Section 1.1 hereof.
5.4 Shareholder Approval». Patriot
shall have obtained Shareholder Approval.
5.5 Regulatory
Approvals». The
applications of each of the Investor, the Managing Member, and Xxxxxxxx to
acquire and control (directly or indirectly) the Common Securities and, with
respect to the Investor and the Managing Member, to become bank holding
companies under the BHC Act, shall each be approved by the Federal Reserve, all
other regulatory approvals required to consummate the transactions contemplated
by this Agreement shall have been obtained, and all approvals referenced in this
Section 5.5 shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired.
5.6 Compliance
Certificate». The
Investor shall deliver to the Companies at Closing a certificate stating that
the conditions specified in Sections 5.1 and 5.2 have been
fulfilled.
5.7 Threatened or Pending
Proceedings». No
proceedings shall have been initiated or threatened by any Governmental
Authority or any other third party seeking to enjoin or otherwise restrain or to
obtain an award for damages in connection with the consummation of the
transactions contemplated hereby or which would reasonably be expected to
prevent the consummation of the transactions contemplated hereby.
6. Covenants.
6.1 Affirmative
Covenants».
(a) Subject
to the terms and conditions of this Agreement, each of the Companies and the
Investor agrees to use its reasonable best efforts in good faith, and to cause
its Subsidiaries to use their reasonable best efforts in good faith, to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, so as to
permit consummation of the transactions contemplated by this Agreement as
promptly as practicable and otherwise to enable consummation of the transactions
contemplated by this Agreement, including the satisfaction of the conditions set
forth in Sections 4 and 5 hereof, as applicable, and shall cooperate fully with
the other parties hereto to that end.
(b) (i) Patriot
agrees to take, in accordance with applicable laws and regulations and its
certificate of incorporation and bylaws, all action necessary to convene as soon
as reasonably practicable a special meeting of its shareholders to consider and
vote upon the approval of (A) an amendment to Patriot’s certificate of
incorporation reducing the par value per share of Patriot Common Stock from
$2.00 per share to $0.01 per share, (B) an amendment to Patriot’s certificate of
incorporation increasing the number of authorized shares of common stock to
a number sufficient to satisfy all issuances required or contemplated by this
Agreement, including without limitation those set forth in Sections 1.1 and
6.1(m), and (C) this Agreement and the issuance of the Common Securities
contemplated hereby for purposes of Nasdaq Rule 5635 or any successor rule
thereto (including any adjournment or postponement, the “Patriot
Meeting”). Except with the prior approval of the Investor, no
other matters shall be submitted for the approval of the Patriot shareholders at
the Patriot Meeting. The Patriot Board of Directors shall at all
times prior to and during such meeting recommend such approval and shall take
all reasonable lawful action to solicit such approval by its shareholders and
shall not (1) withdraw, modify or qualify in any manner adverse to the
Investor such recommendation or (2) take any other action or make any other
public statement in connection with the Patriot Meeting inconsistent with such
recommendation (collectively, a “Change in
Recommendation”), except as and to the extent permitted by
Section 6.1(b)(ii). Notwithstanding any Change in
Recommendation, the proposals set forth in subclauses (A) and (B) above shall be
submitted to the shareholders of Patriot at the Patriot Meeting for the purpose
of approving such proposals and any other matters required to be approved by
Patriot’s shareholders for consummation of the transactions contemplated
hereby.
(ii) Notwithstanding
the foregoing, Patriot and the Patriot Board of Directors shall be permitted to
effect a Change in Recommendation if and only to the extent that: (A)
Patriot shall have complied in all material respects with Section 6.1(b)(i)
hereof; (B) the Patriot Board of Directors, after consulting with its outside
legal and financial advisors, shall have determined in good faith that failure
to do so would breach, or would reasonably be expected to result in a breach of,
the Patriot Board of Directors’ fiduciary duties under applicable law; and (C)
if the Patriot Board of Directors intends to effect a Change in Recommendation
following an Acquisition Proposal (defined below), (x) the Patriot Board of
Directors shall have concluded in good faith, after giving effect to all of the
adjustments which may be offered by the Investor pursuant to subclause (z)
below, that such Acquisition Proposal constitutes a Superior Proposal (defined
below), (y) Patriot shall notify the Investor, at least five business days in
advance, of its intention to effect a Change in Recommendation in response to
such Superior Proposal (including the identity of the party making such
Acquisition Proposal) and furnish to the Investor a copy of the relevant
proposed transaction agreements with the party making such Superior Proposal and
all other material documents, and (z) prior to effecting such a Change in
Recommendation, Patriot shall, and shall cause its financial and legal advisors
to, during the period following Patriot’s delivery of the notice referred to in
clause (y) above, negotiate with the Investor in good faith for a period of up
to five business days (to the extent the Investor desires to negotiate) to make
such adjustments in the terms and conditions of this Agreement so that such
Acquisition Proposal ceases to constitute a Superior Proposal.
(c) (i) Each
of the Companies and the Investor shall cooperate and use their respective
reasonable best efforts to prepare all documentation, to effect all filings and
to obtain all permits, consents, approvals and authorizations of all third
parties and Governmental
Authorities
necessary to consummate the transactions contemplated by this
Agreement. Each of the Companies and the Investor shall have the
right to review in advance, and to the extent practicable each shall consult
with the other, in each case subject to applicable laws relating to the exchange
of information, with respect to all written information submitted to any third
party or any Governmental Authority in connection with the transactions
contemplated by this Agreement; provided, however, that the
Companies shall not be entitled to review or receive the confidential
portions of such written information submitted by or on behalf of the Investor,
the Managing Member or Xxxxxxxx, or the affiliates thereof. In
exercising the foregoing right, each of such parties agrees to act reasonably
and as promptly as practicable. Each party hereto agrees that it
shall consult with the other parties hereto with respect to the obtaining of all
permits, consents, approvals, waivers and authorizations of all third parties
and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement, and each party shall keep the other
parties apprised of the status of material matters relating to completion
thereof. Notwithstanding anything to the contrary contained in this
Agreement, the Investor shall not be required to take any action hereunder that
would result in the imposition of any Burdensome Condition.
(ii) Each
party agrees, upon request, to furnish the other parties with all information
concerning itself, its Subsidiaries, directors, officers, shareholders, members
and such other matters as may be reasonably necessary or advisable in connection
with any filing, notice or application made by or on behalf of such other
parties or any of their Subsidiaries to any third party or Governmental
Authority.
(d) (i) The
Companies agree that upon reasonable notice and subject to applicable laws
relating to the exchange of information, it shall afford the Investor and its
officers, employees, counsel, accountants and other authorized representatives
such access during normal business hours throughout the period prior to the
Closing Date to the books, records (including, without limitation, Tax returns
and work papers of independent auditors), systems, properties, personnel and
advisors of the Companies and to such other information relating to the
Companies as the Investor may reasonably request and, during such period, the
Companies shall furnish promptly to the Investor (A) a copy of each report,
schedule, registration statement and other document filed or received during
such period pursuant to the requirements of federal or state securities laws and
federal or state banking, lending, consumer finance or privacy laws and
(B) all other information concerning the business, properties and personnel
of the Companies as the Investor may reasonably request.
(ii) During
the period from the date of this Agreement to the Closing Date, the Companies
shall, upon the request of the Investor, cause one or more of its designated
representatives to confer on a monthly or more frequent basis with
representatives of the Investor regarding its financial condition, operations
and business and matters relating to the completion of the transactions
contemplated by this Agreement. As soon as reasonably available, but
in no event more than 45 days after the end of each calendar quarter ending
after the date of this Agreement (other than the last quarter of each fiscal
year ending December 31), the Companies will deliver to the Investor its
consolidated balance sheet and consolidated statements of operations, changes in
shareholders’ equity and cash flows, without related notes, for such quarter
prepared in accordance with GAAP and, as soon as reasonably available, but in no
event more than 90 days after the end of each fiscal year, the Companies will
deliver to the Investor its
consolidated
balance sheet and consolidated statements of operations, changes in
shareholders’ equity and cash flows for such year prepared in accordance with
GAAP. Within 15 days after the end of each month, the Companies will
deliver to the Investor a consolidated balance sheet and consolidated statements
of operations, without related notes, for such month prepared in accordance with
GAAP.
(iii) No
investigation by any of the parties or their respective representatives shall
affect the representations, warranties, covenants or agreements of the other
parties set forth herein.
(iv) The
Companies shall allow a representative of the Investor to attend, as an
observer, all meetings of the Boards of Directors, and committees thereof, of
the Companies as well as all meetings of the Board of Directors, and committees
thereof, for each of its Subsidiaries (including, without limitation, loan
committee meetings), except that no representative of the Investor will be
entitled to attend, or be entitled to receive any materials with respect to, the
confidential portion of any meeting in which the Companies’ Boards of Directors
consider the transactions contemplated by this Agreement or an Acquisition
Proposal or could jeopardize an attorney-client privilege (which determination
is made after the Companies’ consultation with its outside
counsel). The Companies shall give reasonable notice to the Investor
of any such meeting and, if known, the agenda for or business to be discussed at
such meeting. Subject to the proviso in the first sentence above, the
Companies shall also provide to the Investor all written agendas and meeting or
written consent materials provided to the directors of the Companies and their
Subsidiaries in connection with Board of Directors and committee
meetings.
(v) All
information furnished pursuant to this Section 6.1(d) shall be subject to the
provisions of the Confidentiality Agreement, dated as of March 10, 2009, between
Patriot and Xxxxxxxx (the “Confidentiality
Agreement”).
(e) (i) Each
of the Companies agrees that it shall, and shall direct its affiliates,
directors, officers, employees, agents and representatives (including, without
limitation, any investment banker, financial advisor, attorney, accountant or
other representative retained by it) (all of the foregoing, collectively, “Representatives”) to,
immediately cease any discussions or negotiations with any other parties that
may be ongoing with respect to the possibility or consideration of any
Acquisition Proposal (as defined below), and will use its reasonable best
efforts to enforce any confidentiality or similar agreement relating to any
Acquisition Proposal, including by requesting the other party to promptly return
or destroy any confidential information previously furnished by or on behalf of
the Companies thereunder and by specifically enforcing the terms thereof in a
court of competent jurisdiction. Subject to Section 6.1(q)
hereof, from the date of this Agreement through the time of Closing, the
Companies shall not, and shall cause their directors, officers or employees (and
those of any their Subsidiaries) or any Representative retained by them (or any
Subsidiary) not to, directly or indirectly through another Person,
(A) solicit, initiate or encourage (including by way of furnishing
information or assistance), or take any other action designed to facilitate or
that is likely to result in, any inquiries or the making of any proposal or
offer that constitutes, or is reasonably likely to lead to, any Acquisition
Proposal, (B) provide any confidential information or data to any Person
relating to any Acquisition Proposal, (C) participate in any
communications,
discussions or negotiations regarding any Acquisition Proposal, (D) waive,
terminate, modify or fail to enforce any provision of any contractual
“standstill” or similar obligations of any Person other than the Investor or its
affiliates, (E) approve or recommend, propose to approve or recommend, or
execute or enter into, any letter of intent, agreement in principle, merger
agreement, asset purchase agreement, securities purchase agreement, share
exchange agreement, option agreement or other similar agreement related to any
Acquisition Proposal
or propose to do any of the foregoing, or (F) make or authorize any
statement, recommendation or solicitation in support of any Acquisition
Proposal; provided,
however, that prior to the date of the Patriot Meeting, if the Patriot
Board of Directors determines in good faith, after consulting with its outside
legal and financial advisors, that the failure to do so would breach, or would
reasonably be expected to result in a breach of, the Patriot Board of Directors’
fiduciary duties under applicable law, Patriot may, in response to a bona fide,
written Acquisition Proposal not solicited in violation of this
Section 6.1(e)(i) that the Patriot Board of Directors determines in good
faith constitutes a Superior Proposal (as defined below), subject to providing
48 hour prior written notice of its decision to take such action to the Investor
and identifying the Person making the proposal and all the material terms and
conditions of such proposal and compliance with Section 6.1(e)(ii), (1)
furnish information with respect to the Companies and their Subsidiaries to any
Person making such a Superior Proposal pursuant to a customary confidentiality
agreement (as determined by Patriot after consultation with its outside counsel)
on terms no more favorable to such Person than the terms contained in the
Confidentiality Agreement are to the Investor, and (2) participate in
discussions or negotiations regarding such a Superior Proposal. For
purposes of this Agreement, the term “Acquisition Proposal”
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 (w) direct or indirect
acquisition or purchase of a business that constitutes 10% or more of the total
revenues, net income, assets or deposits of Patriot and its Subsidiaries taken
as a whole, (x) direct or indirect acquisition or purchase of any class of
debt or equity securities representing 5% or more of the voting power of Patriot
or any of its Subsidiaries, (y) tender offer or exchange offer that if
consummated would result in any person beneficially owning 10% or more of any
class of equity securities of Patriot or (z) merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Patriot or any of its Subsidiaries, other than the
transactions contemplated by this Agreement. For purposes of this
Agreement, the term “Superior Proposal”
means any bona fide written proposal made by a third party to acquire, directly
or indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of cash and/or securities,
more than 50% of the combined voting power of the shares of Patriot Common Stock
then outstanding or all or substantially all of Patriot’s consolidated assets,
which the Patriot Board of Directors determines in good faith, after taking into
account all legal, financial, regulatory and other aspects of the proposal and
the Person making the proposal (including any break-up fees, expense
reimbursement provisions and conditions to consummation), and after taking into
account the advice of Patriot’s financial advisor (which shall be a nationally
recognized investment banking firm) and outside counsel, (i) is
substantially more favorable from a financial point of view to its shareholders
than the transactions contemplated by this Agreement, (ii) is reasonably
likely to be consummated on the terms set forth, (iii) will close no later
than the scheduled Closing Date indicated by the Investor, and (iv) for which
financing, to the extent required, is then committed
or
which, in the good faith judgment of the Patriot Board of Directors, is
reasonably likely to be obtained by such third party.
(ii) In
addition to the obligations of the Companies set forth in
Section 6.1(e)(i), the Companies shall promptly (within 24 hours) advise
the Investor orally and in writing of its receipt of any Acquisition Proposal
(or any inquiry, of any type, which could lead to an Acquisition Proposal),
provide copies of all proposals, offers, terms or any correspondences
relating to an investment or Acquisition Proposal and keep the Investor
informed, on a current basis, of the continuing status thereof, including the
terms and conditions thereof and any changes thereto, and shall
contemporaneously provide to the Investor all materials provided to or made
available to any third party pursuant to this Section 6.1(e) which were not
previously provided to the Investor.
(iii) Notwithstanding
anything herein to the contrary, Patriot and the Patriot Board of Directors
shall be permitted to comply with Rule 14d-9 and Rule 14e-2
promulgated under the 1934 Act; provided, however, that
compliance with such rules will in no way limit or modify the effect that any
action pursuant to such rules would otherwise have under this
Agreement.
(iv) The
Companies agree that any violation of the provisions set forth in this Section
6.1(e) by any Representative of the Companies or their Subsidiaries shall be
deemed a breach of this Section 6.1(e) by the Companies.
(v) (1) Without
limiting any other rights or remedies available to Investor under this
Agreement, at law and/or in equity, and without limiting any of this obligations
of the Companies under this Section 6.1(e), in the event that any of the
Companies receives a bona fide, written Acquisition Proposal not solicited in
violation of Section 6.1(e)(i) that the Patriot Board of Directors
determines in good faith constitutes a Superior Proposal, Patriot shall
immediately deliver the Superior Proposal to Investor. Upon the
request of the Investor, Patriot shall furnish to Investor such additional
information regarding the Superior Proposal and the maker thereof, including
without limitation its principals, financial and business information and
business experience, as Investor shall reasonably request.
(2) Without
limiting any other rights or remedies available to Investor under this
Agreement, at law and/or in equity, the Investor shall have the exclusive right
for a period of thirty (30) days following its actual receipt of the Superior
Proposal to purchase or otherwise acquire from the Companies, and the Companies
shall have the obligation to transfer and sell to the Investor, the securities
that are the subject of the Superior Proposal, upon the same terms and
conditions stated therein. In the event that the Investor so elects
to purchase the securities as described in the preceding
sentence, the Investor shall have the right to designate the time,
date and place of the closing of such transaction, provided that such closing
shall occur within seventy-five (75) days following the date of its actual
receipt of the Superior Proposal.
(f) The
Companies hereby agree that all transactions which are entered into after the
date hereof by and among the Companies and their respective directors, officers
and affiliates will comply with Sections 23A and 23B of the Federal Reserve Act
and Federal
Reserve
Regulation W and similar rules and regulations of and any agreements with, and
commitments to, orders, rulings, directives and decrees of, the Regulatory
Authorities. All such transactions must be in writing on an
arms’-length basis and on commercially reasonable terms no less favorable to
(i) the Companies in the case of all transactions with any of them, or
(ii) Patriot in the case of transactions with directors, officers and
affiliates (other than the Bank), as compared to transactions with unaffiliated
third parties.
(g) The
Companies will maintain accurate books and records and internal and disclosure
controls as required by Law and to account for all transactions in accordance
with United States generally accepted accounting principles.
(h) The
Companies and the Investor shall consult with each other before issuing any
press release with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statements without the prior consent of the other parties, which shall not be
unreasonably withheld.
(i) At
the next annual or at a special meeting of shareholders following the Closing
Date, Patriot will take all necessary action to obtain shareholder approval to
adopt a new performance-based stock compensation plan under which it may grant
stock options, stock appreciation rights and/or restricted stock to key
employees and directors of the Companies.
(j) The
Investor shall prepare or cause to be prepared confidential offering materials
to be used in connection with the offer and sale in a private placement that is
exempt from the registration provisions of the 1933 Act of membership interests
in the Investor (the “Offering”), and the
proceeds from such Offering will be used to fund the aggregate purchase price
set forth on Schedule A hereto, subject to adjustment as set forth in
Section 1.1 hereof. The Companies shall, upon request, furnish the
Investor with all information concerning the Companies and their directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable to be included in such offering materials. The Investor
shall provide to the Companies a copy of the confidential offering materials for
their review.
(k) Prior
to the Closing Date, Patriot and the Bank shall use commercially reasonable
efforts (i) subject to Section 4.11, to enter into a consulting agreement with
Xxxxxxx X. Xxxxxx, and (ii) to enter into employment agreements with each of
Xxxxxx X. X’Xxxxxxx, Xxxxxx Xx Xxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx
and Xxxxxx X. Xxxxx, in form and substance reasonably satisfactory to the
Investor.
(l) Patriot
and the Managing Member shall execute and deliver a management and consulting
agreement pursuant to which the Managing Member shall provide management and
consulting services to Patriot, the terms of which shall be negotiated in good
faith by the parties thereto, and such management and consulting agreement shall
be effective as of the Closing Date.
(m) (4) Subject
to receipt of all applicable approvals, consents, waivers or non-objections from
Governmental Authorities deemed necessary or advisable by the Patriot Board of
Directors (whether before or after the Closing), including, without limitation,
the receipt of one or more No-Action Letters from the SEC with respect to the
issuance of shares of
Patriot
Common Stock without registration in connection with the dividends contemplated
by this Section 6.1(m), following the Closing Date, Patriot may pay one or
more special stock dividend(s) of Patriot Common Stock (each, a “Special
Dividend”) to Eligible Shareholders (as defined below), in
accordance with, and subject to, the terms and conditions described
below. As used herein, “Eligible
Shareholders” means the holders of Patriot Common Stock (excluding the
Investor) as of the record date established by the Patriot Board of
Directors in connection with the declaration and payment of each Special
Dividend.
(ii) The
aggregate value of all Special Dividends which may be declared and paid shall be
calculated based upon the dollar amount of actual Recoveries (as defined below)
received by the Bank (the “Aggregate Dividend
Amount”) during the period beginning after June 30, 2009 and ending on
June 30, 2011 (the “Special Dividend
Period”) from the charged off portion of Loans on the Bank’s books, on or
prior to June 30, 2009 and as specified on Schedule 6.1(m)(ii)
hereto. As used herein, “Recoveries” shall
mean actual cash collections, net of all fees and expenses, received prior to
June 30, 2011 with respect to the charged off amounts of Loans identified in
Schedule 6.1(m)(ii).
(iii) The
initial $1.0 million of the Aggregate Dividend Amount recovered during the
Special Dividend Period (the "Initial Amount")
shall be eligible to be paid to the Eligible Shareholders in the form of one or
more Special Dividends and, thereafter, 50% of the remaining Aggregate Dividend
Amount recovered during the Special Dividend Period (together with the Initial
Amount, the "Distributable
Amount") shall be eligible to be paid to the Eligible Shareholders in the
form of one or more Special Dividends. Each Special Dividend will be
paid on a pro rata basis to the Eligible Shareholders based upon their
respective holdings of Patriot Common Stock as of the record date for such
Special Dividend. The number of shares of Patriot Common Stock
issuable pursuant to each Special Dividend shall be calculated by dividing (A)
the Distributable Amount that has not already been paid as a Special Dividend by
(B) the greater of (x) 75% of Patriot’s book value per share calculated on the
last day of the calendar quarter in which the recovery was realized, or (y)
$1.50, rounded to the nearest whole share.
By way of
example and not limitation, the following is provided as an illustration of the
calculation of a Special Dividend:
A=
aggregate number of shares of Patriot Common Stock issuable as a Special
Dividend;
W= $1.3
million in Recoveries during the period of June 30, 2009 and December 31,
2009;
X= the
amount of Recoveries in excess of $1.0 million; and
Y= the
greater of (i) 75% of Patriot’s book value per share calculated on the last day
of the quarter in which the recovery was realized, or (ii) $1.50. For
purposes of this example, assume Patriot’s book value per share as of December
31, 2009 is $2.50.
A= ([W-X]
+ [X * .5]) ÷ Y
A= ($1.0
million + $150,000) ÷ 1.88
A= $1.15
million ÷ 1.88
A=
611,702
(iv) Distributions
of the Special Dividends, if any, will be made within 45 days following the last
day of each fiscal quarter beginning with the first fiscal quarter end following
the Closing Date (the “Payment
Date”). The aggregate amount of each Special Dividend will be
based on the actual Recoveries during the quarter immediately preceding the
Payment Date, except that the Special Dividend paid on the initial Payment Date
will include amounts recovered between June 30, 2009 through the quarter end
immediately preceding the initial Payment Date.
(v) No
certificates or scrip for fractional shares of Patriot Common Stock shall be
issued in connection with the payment of a Special Dividend. Any such
fractional shares shall be eliminated by rounding up to the next whole number of
shares payable pursuant to a Special Dividend, if any.
(vi) Notwithstanding
any provision of this Agreement to the contrary, the parties hereto understand
and acknowledge that the Investor is not legally obligated to provide or cause
Patriot to provide the Special Dividend; provided, however, that,
subject to Section 6.1(m)(i), the Investor agrees to take or cause to be taken
all actions reasonably required to cause the Special Dividend to be provided in
accordance with this Section 6.1(m). Neither Patriot nor the
Bank may seek to terminate this Agreement to the extent that the Governmental
Authorities do not provide the requisite approvals, consents, waivers or
non-objections to payment of the Special Dividends contemplated by this Section
6.1(m) in connection with the Closing of the transactions contemplated by this
Agreement. To the extent that the applicable Governmental Authorities
withdraw, revoke or otherwise modify any such approvals, consents, waivers or
non-objections to the Special Dividends, Patriot may discontinue the payment of
such Special Dividends at any time. The parties hereto expressly
acknowledge that the provisions of this Section 6.1(m) are not intended to
create any enforceable rights by either Patriot, the Bank, the shareholders of
Patriot, or any third parties as to the Investor, Patriot or the
Bank.
(vii) In
the event of any stock split, reverse stock split, stock dividend (excluding a
Special Dividend), reorganization, reclassification, combination,
recapitalization or other like change with respect to the Patriot Common Stock
occurring during the Special Dividend Period, all references in this Section
6.1(m) to specified numbers of shares of Patriot Common Stock affected thereby,
and all calculations provided for that are based upon numbers of shares of
Patriot Common Stock affected thereby, shall be equitably adjusted to the extent
necessary to provide the Eligible Shareholders with the same economic effect as
contemplated by this Section 6.1(m) prior to such stock split, reverse stock
split, stock dividend, reorganization, reclassification, combination,
recapitalization or other like change.
(n) The
Companies agree to provide the Investor with such reports, financial statements
and findings which demonstrate to Investor's satisfaction that under 12 CFR part
225 and other applicable laws, with respect to the securities issued pursuant
to: (a) the Amended and Restated Declaration of Trust dated as of
March 26, 2003 by and among U.S. Bank National Association, as Institutional
Trustee, Patriot National Bancorp, Inc., as Sponsor, and Xxxxxx X. X’Xxxxxxx,
Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxx, as Administrators, relating to (i) the
Certificate Evidencing Floating Rate Capital Securities of Patriot National
Statutory Trust I (the “Trust Capital
Securities”); and (ii) the Certificate Evidencing Floating Rate Common
Securities of Patriot National Statutory Trust I (the “Trust Common
Securities”), and (b) the Indenture
dated as
of March 26, 2003 between Patriot National Bancorp, Inc. (the “Holding Company”), as
Issuer, and U.S. Bank National Association, as Trustee relating to the Floating
Rate Junior Subordinated Deferrable Interest Debentures due 2033 (the “Corresponding
Debentures”) (collectively, the "Trust Preferred
Securities"), (1) the Companies are permitted to include the outstanding
balance of the funds derived by the Companies from such Trust Preferred
Securities in their Tier 1 capital; (2) the Companies are in compliance with the
limitations under applicable law with the limitations on the amount of the
restricted core capital elements (including the funds derived from such Trust
Preferred Securities) which may be included in Tier 1 Capital and Tier 2
Capital
(respectively); and (3) the Corresponding Debentures will be classified as
indebtedness of the Holding Company for U.S. federal income tax
purposes.
(o) Patriot
agrees to use its commercially reasonable efforts to timely file all periodic
reports required under Sections 13(a), 15(d) and 14(a) of the 1934 Act and to
maintain the listing of the Patriot Common Stock on the Nasdaq Global Market or
other similar stock exchange.
(p) Each
of the Companies shall give prompt notice to the Investor of any fact, event or
circumstance known to it that (i) is reasonably likely, individually or taken
together with all other facts, events and circumstances known to it, to result
in any Material Adverse Effect with respect to it or its Subsidiaries or (ii)
would cause or constitute a material breach of any of its representations,
warranties, covenants or agreements contained herein.
(q) The
Investor shall use reasonable efforts to provide to the Companies copies of
non-binding Subscription Agreements, which shall be subject to such negotiations
and modification as the Investor determines to be necessary or appropriate, or
other commitment letters reasonably satisfactory to the Companies from investors
who have agreed on a non-binding basis to participate in the Offering (each, an
“Investor
Letter”) representing an aggregate amount of at least (i) $20.0 million
(the “Threshold
Investment”) by March 5, 2010 (the “Threshold Investment
Deadline”) and (ii) $35.0 million (the “Minimum Investment”)
by March 31, 2010 (the “Minimum Investment
Deadline”). The Investor shall provide the Companies with
regular communications between the date hereof and the Minimum Investment
Deadline regarding its progress with respect to obtaining Investor Letter for
the Threshold Investment and the Minimum Investment. If the Investor
is not able to provide Investor Letters representing the Threshold Investment by
the Threshold Investment Deadline, the Investor shall provide written notice of
the same to the Companies within two (2) business days following the Threshold
Investment Deadline, together with a statement of the total amount of
investments represented by Investor Letters, then the Companies and their
Representatives may terminate by written notice to Investor their obligations
and covenants set forth in Section 6.1(e)(i) hereof until such time as the
Investor shall provide the Companies Investor Letters representing the Minimum
Investment, in which case the obligations and covenants set forth in
Section 6.1(e)(i) shall remain in full force and effect as to the Companies
and their Representatives. If the Investor is not able to provide
Investor Letters representing the Minimum Investment by the Minimum Investment
Deadline, the Investor shall provide written notice of the same to the Companies
within two (2) business days following the Minimum Investment Deadline, together
with a statement of the total amount of investments represented by Investor
Letters, then the Companies and their Representatives may terminate by written
notice to Investor their obligations and covenants set forth in
Section 6.1(e)(i) hereof until such time as the Investor shall provide
Investor Letters to
the
Companies representing the Minimum Investment, in which case the obligations and
covenants set forth in Section 6.1(e)(i) shall remain in full force and
effect as to the Companies and their Representatives. Notwithstanding
anything to the contrary contained herein, the Investor shall be entitled to
receive any and all payments or fees payable to it pursuant to Section 7(b)(ii)
hereof in the event that this Agreement is terminated by either the Investor or
the Companies.
(r) Patriot
shall maintain its existing directors’ and officers’ liability insurance policy
(or provide a policy providing comparable coverage and amounts on terms no less
favorable to the Persons currently covered by Patriot’s existing policy)
covering Persons who are currently covered by such insurance for a period of not
less than six years following the Closing Date; provided, however, that in no
event shall Patriot be obligated to expend an annual amount in excess of 200% of
the annual premiums paid by Patriot as of the date hereof in order to maintain
or provide such insurance coverage.
(s) Patriot
and the Investor shall enter into a registration rights agreement at or prior to
closing in a form acceptable to the Investor granting customary demand and
piggyback registration rights with respect to the Patriot Common Stock purchased
pursuant to this Agreement.
6.2 Negative Covenants of the
Companies». From
the date hereof until the Closing, except as expressly contemplated or permitted
by this Agreement, without the prior written consent of the Investor, which
consent shall not be unreasonably withheld, delayed or conditioned, each of
Patriot and the Bank will not, and will cause each of its Subsidiaries not
to:
(a) Conduct
its business other than in the ordinary and usual course consistent with past
practice or fail to use reasonable best efforts to preserve its business
organization, keep available the present services of its employees and preserve
for itself the goodwill of its customers and others with whom business relations
exist.
(b) Other
than as set forth on Schedule 2.1(c) and
outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of stock
or any warrants, options, rights, convertible securities and other arrangements
or commitments which obligate it to issue or dispose of any of its capital stock
or other ownership interests or (ii) permit any additional shares of stock
to become subject to grants of employee or director stock options, warrants,
rights, convertible securities and other similar arrangements.
(c) (i) Make,
declare, pay or set aside for payment any dividend on or in respect of, or
declare or make any distribution on any shares of Patriot capital stock other
than dividends from wholly owned Subsidiaries to Patriot or another wholly
owned Subsidiary of Patriot or (ii) directly or indirectly adjust, split,
combine, redeem, reclassify, purchase or otherwise acquire, any shares of its
capital stock.
(d) Subject
to Sections 6.1(k) and (l), enter into or amend or renew any employment,
consulting, severance, change in control, bonus, salary continuation or similar
agreements or arrangements with any director, officer or employee of the
Companies or any
Subsidiaries,
or with any third party, or grant any salary or wage increase or increase any
employee benefit (including incentive or bonus payments), except for changes
that are required by applicable law or that are made in the ordinary course
consistent with past practice, both as to amount and timing, to non-executive
personnel.
(e) Hire
any person as an employee of the Companies or any of their Subsidiaries or
promote any employee, except (i) to satisfy contractual obligations
existing as of the date hereof and set forth on Schedule 6.2(e) and
(ii) persons hired to fill any non-executive officer vacancies arising
after the date hereof and whose employment is terminable at the will of the
Companies or a Subsidiary, as applicable, and who are not subject to or eligible
for any severance or similar benefits or payments that would become payable as a
result of the transactions contemplated by this Agreement or consummation
thereof.
(f) Enter
into, establish, adopt, amend or terminate, or make any contributions to (except
(i) as may be required by applicable law, (ii) to satisfy contractual
obligations existing as of the date hereof and set forth on Schedule 6.2(f) or
(iii) to comply with the requirements of this Agreement), any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement (or
similar arrangement) related thereto, in respect of any director, officer or
employee of the Companies or their Subsidiaries or take any action to accelerate
the vesting or exercisability of stock options, restricted stock, stock
appreciation rights or other compensation or benefits payable
thereunder.
(g) Except
for other real estate owned that is sold in the ordinary course of business
consistent with past practices, sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its assets (other than its “available for sale
securities portfolio”), deposits, business or properties.
(h) Acquire
(other than by way of foreclosures or acquisitions of control in a bona fide
fiduciary capacity or in satisfaction of debts previously contracted in good
faith, in each case in the ordinary and usual course of business consistent with
past practice), including without limitation, by merger or consolidation or by
investment in a partnership or joint venture, all or any portion of the assets,
business, securities (other than as permitted by Section 6.2(p)), deposits or
properties of any other Person.
(i) Make
any capital expenditures, other than capital expenditures in the ordinary course
of business consistent with past practice, in amounts not exceeding $25,000
individually or $75,000 in the aggregate.
(j) Amend
the organizational documents of the Companies or of any Subsidiary or enter into
a plan of consolidation, merger, share exchange or reorganization with any
Person, or a letter of intent or agreement in principle with respect
thereto.
(k) Implement
or adopt any change in its accounting principles, practices or methods, other
than as may be required by changes in laws or regulations or GAAP.
(l) Except
as otherwise permitted under this Section 6.2, enter into, cancel, fail to renew
or terminate any Material Contract or amend or modify in any material respect
any of its existing Material Contracts.
(m) Enter
into any settlement or similar agreement with respect to any action, suit,
proceeding, order or investigation to which the Companies or any of their
Subsidiaries is or becomes a party after the date of this Agreement, which
settlement, agreement or action involves
payment
by the Companies or any of their Subsidiaries of an amount which exceeds $25,000
and/or would impose any material restriction on the business of the Companies or
any of their Subsidiaries or create precedent for claims that are reasonably
likely to be material to the Companies and their Subsidiaries taken as a
whole.
(n) Enter
into any new material line of business; introduce any material new products or
services; change its material lending, investment, underwriting, pricing,
servicing, risk and asset liability management and other material banking and
operating policies, except as required by applicable law, regulation or policies
imposed by any Governmental Authority, or the manner in which its investment
securities or loan portfolio is classified or reported; or invest in any
mortgage-backed or mortgage-related security that would be considered “high
risk” under applicable regulatory guidance; or file any application or enter
into any contract with respect to the opening, relocation or closing of, or
open, relocate or close, any branch, office, service center or other
facility.
(o) Incur
any indebtedness for borrowed money (other than deposits, federal funds
purchased, cash management accounts, Federal Home Loan Bank or Federal Reserve
borrowings that mature within one year and that have no put or call features and
securities sold under agreements to repurchase that mature within 90 days, in
each case in the ordinary course of business consistent with past practice); or
assume, guarantee, endorse or otherwise as an accommodation become responsible
for the obligations of any other Person, other than with respect to the
collection of checks and other negotiable instruments in the ordinary course of
business consistent with past practice.
(p) (i) Except
for government agency or government guaranteed mortgage-backed securities
portfolios in the ordinary course of business consistent with past
practice, acquire (other than by way of foreclosures or acquisitions
in a bona fide fiduciary capacity or in satisfaction of debts previously
contracted in good faith, in each case in the ordinary course of business
consistent with past practice) any debt security or equity investment other than
federal funds or United States Government securities or United States Government
agency securities, in each case with a term of one year or less or
(ii) dispose of any debt security or equity investment.
(q) (i) Make,
renew or otherwise modify any loan, loan commitment, letter of credit or other
extension of credit (collectively, “Loans”), other than
Loans made or acquired in the ordinary course of business consistent with past
practice which have (x) in the case of unsecured Loans made to any one
borrower that are originated in compliance with the entity’s internal
Loan
policies, a principal balance not in excess of $100,000, (y) in the case of
Loans secured other than by real estate that are originated in compliance with
the entity’s internal Loan policies, a principal balance not in excess of
$1,000,000 and (z) in the case of Loans secured by real estate made to any
one borrower that are originated in compliance with the entity’s internal Loan
policies, a principal balance not in excess of $3,000,000; (ii) take any
action that would result in any discretionary release of collateral or
guarantees or otherwise restructure the respective amounts set forth in clause
(i) above; or (iii) enter into any Loan securitization or create any
special purpose funding entity.
(r) Make
any investment or commitment to invest in real estate or in any real estate
development project (other than by way of foreclosure or acquisitions in a bona
fide fiduciary
capacity or in satisfaction of a debt previously contracted in good faith, in
each case in the ordinary course of business consistent with past
practice).
(s) Make
or change any material Tax election, settle or compromise any material Tax
liability of the Companies or any of their Subsidiaries, agree to an extension
or waiver of the statute of limitations with respect to the assessment or
determination of a material amount of Taxes of the Companies or any of their
Subsidiaries, enter into any closing agreement with respect to any material
amount of Taxes or surrender any right to claim a material Tax refund, adopt or
change any method of accounting with respect to Taxes, or file any amended tax
return.
(t) Take
any action (i) that would cause this Agreement or the transactions
contemplated hereby to be subject to the provisions of any state antitakeover
law or state law that purports to limit or restrict business combinations or the
ability to acquire or vote shares or (ii) to exempt or make not subject to
the provisions of any state antitakeover law or state law that purports to limit
or restrict business combinations or the ability to acquire or vote shares, any
Person (other than the Investor) or any action taken thereby, which Person or
action would have otherwise been subject to the restrictive provisions thereof
and not exempt therefrom.
(u) Enter
into any contract with respect to, or otherwise agree or commit to do, any of
the foregoing.
7. Termination.
(a) This
Agreement may be terminated, and the transactions contemplated hereby may be
abandoned, at any time prior to the time of Closing:
(i) By
the mutual consent in writing of the Investor and the Companies.
(ii) Provided
that the terminating party is not then in breach of any representation,
warranty, covenant or agreement contained herein, by the Investor or the
Companies, in the event of a breach by the other party of any representation,
warranty, covenant or agreement contained herein (other than a breach of Section
6.1(e), which shall be the subject of Section 7(a)(vi) below), which breach
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching party or parties of such breach.
(iii) By
the Investor or the Companies, in the event that the transactions contemplated
hereby are not consummated by May 31, 2010, except to the extent that the
failure of such consummation by such date shall be due to the failure of the
party seeking to terminate
pursuant
to this Section 7(a)(iii) to perform or observe the covenants and agreements of
such party set forth in this Agreement.
(iv) By
the Investor or the Companies in the event the approval of any Governmental
Authority required for consummation of the transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or an application therefor shall have been permanently
withdrawn at the request of a Governmental Authority; provided, however, that no
party shall have the right to terminate this
Agreement
pursuant to this Section 7(a)(iv) if such denial shall be due to the failure of
the party seeking to terminate this Agreement to perform or observe the
covenants of such party set forth herein.
(v) By
either the Investor or the Companies, if Shareholder Approval shall not have
been obtained by reason of the failure to obtain the required vote at the
Patriot Meeting or at any adjournment or postponement thereof.
(vi) By
the Investor if (A) either Patriot or the Bank shall have breached the
provisions of Section 6.1(e) in any respect, (B) the Patriot Board of
Directors shall have failed to make its recommendation referred to in Section
6.1(b), withdrawn such recommendation or modified or changed such recommendation
in a manner adverse in any respect to the interests of the Investor, or (C)
Patriot shall have breached its obligations under Section 6.1(b) by failing to
call, give notice of, convene and hold the Patriot Meeting in accordance with
Section 6.1(b).
(vii) By
the Investor if there shall have occurred (A) any material adverse change in the
business, financial condition, results of operations, or prospects of the
Companies since the date of this Agreement, whether or not such material adverse
change constitutes a Material Adverse Effect, or (B) any material claims
(whether or not asserted in litigation) have been asserted against the
Companies, in each of clauses (A) and (B), as determined in the sole discretion
of the Investor; provided,
however, in no event shall the items identified on Schedule 2.1(a) as
expressly not constituting a Material Adverse Effect be grounds for termination
under this Section 7(a)(vii).
(viii) By
the Investor if a tender offer or exchange offer for 25% or more of the
outstanding shares of Patriot Common Stock is commenced (other than by the
Investor), and the Patriot Board of Directors recommends that the shareholders
of Patriot tender their shares in such tender or exchange offer or otherwise
fails to recommend that such shareholders reject such tender offer or exchange
offer within the ten-business day period specified in Rule 14e-2(a) under the
1934 Act.
(b) (i) In
the event of termination of this Agreement pursuant to this Section 7, no party
to this Agreement shall have any liability or further obligation to any other
party hereunder except that (x) this Section 7(b), Section 6.1(d)(v) and Section
8 shall survive any termination of this Agreement and (y) notwithstanding
anything to the contrary, neither the Investor nor the Companies shall be
relieved or released from any liabilities or damages arising out of its fraud or
willful breach of any provision of this Agreement.
(ii) The
parties hereto agree that in addition to the amounts set forth in Section
7(b)(iv) below, the Companies shall pay the Investor:
A. without
limiting Investor’s rights to the payment of additional amounts pursuant to the
Break-Up Fee set forth in Section 7(b)(ii)C. below, the sum of $1.5 million if
this Agreement is terminated by the Investor pursuant to Section 7(a)(ii) or
(v), which amount shall be paid by the Companies to the Investor on the second
business day following the termination of this Agreement; or
B. the
sum of $1.0 million if this Agreement is terminated by the Investor pursuant to
Sections 7(a)(vii), which amount shall be paid by the Companies to the Investor
on the second business day following the termination of this Agreement;
or
C. the
sum of $3.5 million (the “Break-Up Fee”) if (I)
the Investor has received Investor Letters representing the Minimum Investment
on or prior to the Minimum Investment Deadline; provided, however, that if
the Investor has not received Investor Letters representing the Minimum
Investment as of such date, then the Break-Up Fee payable under this Section
7(b)(ii)C. shall be equal to the product of (y) $3.5 million and (z) the
quotient of (aa) the aggregate amount of funds for which the Investor has
received Investor Letters and (bb) the Minimum Investment; provided, further, that in no
event shall the Break-Up Fee be less than $3.5 million if the obligation to pay
the Break-Up Fee is triggered on or prior to March 5, 2010 and in no event shall
the Break-Up Fee be less than $1.5 million if the obligation to pay the Break-Up
Fee is triggered after March 5, 2010, and (II) this Agreement is terminated as
follows:
(1) If
this Agreement is terminated by the Investor pursuant to Sections 7(a)(vi) or
(viii), the Companies shall pay such amount to the Investor on the second
business day following the termination of this Agreement; or
(2) If
this Agreement is terminated by (a) the Investor pursuant to Section 7(a)(ii),
(b) pursuant to Section 7(a)(iii) and at the time of such termination no vote of
the Patriot shareholders contemplated by this Agreement at the Patriot Meeting
shall have occurred, or (c) pursuant to Section 7(a)(v), and an Acquisition
Proposal shall have been publicly announced or otherwise communicated or made
known to the senior management of the Companies or the Boards of Directors
thereof (or any Person shall have publicly announced, communicated or made known
an intention, whether or not conditional, to make an Acquisition Proposal, or
reiterated a previously expressed plan or intention to make an Acquisition
Proposal) at any time after the date of this Agreement and, in the case of
clauses (a) or (b), on or prior to the date of termination, or, in the case of
clause (c), prior to the taking of the vote of the shareholders of Patriot
contemplated by this Agreement at the Patriot Meeting, then (x) if within 12
months after such termination Patriot enters into an agreement with respect to a
Control Transaction (as defined below), then the Companies shall pay to the
Investor an amount equal to 75% of the Break-Up Fee (calculated pursuant to
Section 7(b)(ii)(C)(I)) on the date of execution of such agreement (less any
amount previously paid by the Companies pursuant to Section 7(b)(ii)(A) above)
and upon consummation of any such Control Transaction at any time thereafter,
the Companies shall pay to the Investor the remaining 25% of the Break-Up Fee
(calculated pursuant to Section 7(b)(ii)(C)(I)) on the date of such
consummation, and (y) if a Control Transaction is consummated otherwise than
pursuant to an agreement with Patriot within
15 months
after such termination, then the Companies shall pay to the Investor the amount
payable pursuant to this Section 7(b) (calculated pursuant to Section
7(b)(ii)(C)(I)) (less any amount previously paid by the Companies pursuant to
subclause (x) above) on the date of such consummation of such Control
Transaction.
As used
in this Agreement, a “Control Transaction”
means (i) the acquisition by any Person whether by purchase, merger,
consolidation, sale, transfer or otherwise, in one transaction or any series of
transactions, of a majority of the voting power of the outstanding securities of
Patriot or the Bank or a majority of the assets or Patriot or the Bank, (ii) any
issuance of securities resulting
in the
ownership by any Person of more than 50% of the voting power of Patriot or by
any Person other than Patriot or its Subsidiaries of more than 50% of the voting
power of the Bank or (iii) any merger, consolidation or other business
combination transaction involving Patriot or any of its Subsidiaries as a result
of which the shareholders of Patriot cease to own, in the aggregate, at least
50% of the total voting power of the entity surviving or resulting from such
transaction.
Any
amount that becomes payable pursuant to this Section 7(b) shall be paid by wire
transfer of immediately available funds to an account designated by the
Investor.
(iii) The
Companies and the Investor agree that the agreement contained in paragraph (ii)
above is an integral part of the transactions contemplated by this Agreement,
that without such agreement the Investor would not have entered into this
Agreement, and that such amounts do not constitute a penalty or liquidated
damages in the event of a breach of this Agreement by the
Companies. If the Companies fails to pay the Investor the amounts due
under paragraph (ii) above within the time periods specified in such paragraph
(ii), the Companies shall pay the costs and expenses (including reasonable legal
fees and expenses) incurred by the Investor in connection with any action,
including the filing of any lawsuit, taken to collect payment of such amounts,
provided the Investor prevails on the merits, together with interest on the
amount of any such unpaid amounts at the prime lending rate prevailing during
such period as published in The Wall Street Journal,
calculated on a daily basis from the date such amounts were required to be paid
until the date of actual payment.
(iv) Without
limiting any of the obligations described in Section 7(b)(ii), in the event that
the obligation to pay any fee or amount to Investor is triggered pursuant to
Section 7 hereof, this Section 7(b)(iv) serves as joint written notice pursuant
to Section 3 of that certain Standstill Agreement entered into by the parties on
December 4, 2009 to the escrow agent to immediately release and deliver to
Investor $400,000 plus all interest thereon (the “Escrowed
Funds”). Without limiting the foregoing, the undersigned hereby agree
that in the event that the obligation to pay any fee or amount to Investor is
triggered pursuant to Section 7 hereof, Investor may deliver to Escrow Agent (as
such term is defined under that certain Escrow Agreement by and among PNBK
HOLDINGS LLC, Xxxxxxx X. Xxxxxxxx, Patriot National Bancorp, Inc. and Patriot
National Bank and Xxxxxxx Bank N.A. of even date hereof) the Joint Written
Consent of Release of Escrow Funds attached hereto as Exhibit B, without
further notice or obligation to the Companies, and none of the Companies nor any
of their respective officers, directors or agents shall take any action to
interfere with the immediate release to Investor of the Escrowed Funds held
pursuant to such Escrow Agreement. Notwithstanding anything to
the contrary contained herein, in the event this Agreement is terminated
pursuant to Section 7(a)(vii) and the Companies dispute Investor’s right to
terminate under such section, the Escrowed Funds
shall
remain in escrow with the Escrow Agent until the first to occur of (a) such time
as the Investor and the Companies mutually agree in writing to the release of
the Escrowed Funds or (b) until such time as a court of competent jurisdiction
orders the release of the funds from escrow to the Companies or the Investor,
the parties acknowledging that the Escrowed Funds shall be released to Investor
if such court determines that Investor is entitled to a termination fee as a
result of termination under Section 7(a)(vii).
8. Miscellaneous.
8.1 Survival». The
representations and warranties of the Companies and the Investor contained in or
made pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing for such period of time as the applicable statute of
limitations would apply to each such representation and warranty in question,
and shall in no way be affected by any investigation of the subject matter
thereof made by or on behalf of the Investor or the Companies. The covenants of the
Companies and the Investor contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing in
accordance with their terms.
8.2 Successors and
Assigns». Except
as otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties (including any transferees of any securities contemplated
hereby); provided,
however, that the Investor may not assign this Agreement without the
prior written consent of the Companies. Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than the parties
hereto or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
8.3 Notices». All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (i) upon personal delivery to the party to be notified,
(ii) when sent by confirmed facsimile if sent during normal business hours
of the recipient, if not, then on the next business day; (iii) five days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (iv) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the
address as set forth on the respective signature pages hereof or at such other
address as such party may designate by ten days advance written notice to the
other parties hereto.
8.4 Expenses». On
the Closing Date, the Companies agree to pay to the Investor all of the
Investor’s expenses incurred in connection with the transactions contemplated by
this Agreement, including, without limitation, the Investor’s due diligence,
legal, tax, consultant, and accounting expenses (less any payments received
pursuant the Standstill Agreement dated December 4, 2009), and a closing fee,
payable to the Managing Member, equal to 3% of the aggregate purchase price paid
for the Common Securities pursuant to Section 1.1 hereof.
8.5 Entire Agreement». Except
as otherwise expressly provided herein, this Agreement (including the documents,
agreements and instruments referred to herein or therein executed or delivered
in connection with this Agreement) and the transactions contemplated hereby and
thereby constitutes the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral.
8.6 Amendments and
Waivers». Any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Companies
and the Investor.
8.7 Severability». Any
term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be only so broad as
is enforceable.
8.8 Governing Law;
Arbitration». Regardless
of any conflict of law or choice of law principles that might otherwise apply,
this Agreement shall be governed exclusively by the laws of the State of New
York, and all rights and remedies shall be governed by such laws without regard
to principles of conflict of laws. Any controversy or claim arising
out of or relating to this Agreement, or the breach thereof, shall be resolved
by one arbitrator in an arbitration administered in Fairfield County,
Connecticut, by the American Arbitration Association under its applicable
Commercial Arbitration Rules and Mediation Procedures in effect at the time the
claim is filed, and judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The parties agree
that they shall be prepared to present their cases within 60 days of the
filing of the claim, and that if the arbitrator is not able to schedule hearings
within such time frame, that inability, by itself, shall be cause for
removal of the arbitrator at the request of either party. The parties
agree that there may be depositions, and that the arbitrator shall have the sole
authority to allow depositions. The parties agree that the claimant
in any arbitration shall have no more than three days to present its case, and
the respondent shall have no more than a total of three days (combined) to cross
examine and respond to the claimant's case in chief. Any counterclaim
shall be governed by the same time limit as the foregoing (i.e., the entire
procedure, including any rebuttals by the claimant and counter-claimant, shall
cover no more than twelve (12) days). The parties agree that
post-hearing briefs, if any, shall be filed no later than ten (10) days
following the last day of testimony. The arbitrator shall be asked to
render a decision within ten (10) days following the closing of the hearing
(i.e., the submission of post-hearing briefs). The arbitrator, in
making his or her decision, must strictly adhere to the contractual
provisions of this Agreement, including without limitation, those relating to
any rights or remedies upon any breach of any representation, warranty or
covenant made herein. The prevailing party shall be entitled
to an award of reasonable attorneys’ fees and costs. Nothing herein shall
preclude a party hereto from (a) seeking either injunctive relief in aid of
arbitration or a prejudgment remedy to attach assets or secure an eventual
arbitration award or (b) instituting legal action to confirm or enforce an
arbitration
award. the parties agree that this Agreement shall be governed by and construed
in all respects in accordance with the laws of the State of New
York.
8.9 Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute one and the
same instrument.
8.10 Captions; Articles and
Sections». The
captions contained in this Agreement are for reference purposes only and are not
part of this Agreement. Unless otherwise indicated, all references to
particular Articles or Sections shall mean and refer to the referenced Articles
and Sections of this Agreement.
8.11 Interpretations». Neither
this Agreement nor any uncertainty or ambiguity herein shall be construed or
resolved against any party, whether under any rule of construction or
otherwise. No party to this Agreement shall be considered the
draftsman. The parties acknowledge and agree that this Agreement has
been reviewed, negotiated, and accepted by all parties and their attorneys and
shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
8.12 Enforcement of
Agreement». The
parties hereto agree that irreparable damage would occur in the event that any
of the provisions of this Agreement was not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.13 No Third Party
Beneficiaries». Except
for (a) the rights of the Managing Member to receive its closing fee under
Section 8.4, which is expressly intended to be for the irrevocable benefit of,
and shall be enforceable by, the Managing Member or its successors and assigns
and (b) the indemnified parties’ rights under Section 9, which are expressly
intended to be for the irrevocable benefit of, and shall be enforceable by, each
such indemnified party and such Person’s successors, assigns, heirs and
representatives, nothing in this Agreement, expressed or implied, is intended to
confer upon any Person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
9. Indemnification.
(a) In
consideration of the Investor’s execution and delivery of this Agreement and
performance of its obligations hereunder, and in addition to all of the
Companies’ other obligations under this Agreement, the Companies shall defend,
protect, indemnify and hold harmless the Investor and all of its shareholders,
partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing persons’ agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Investor
Indemnitees”) from
and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Investor Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by any Investor Indemnitee as a result of, or
arising out of, or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Companies in this Agreement or any other
certificate, instrument or document contemplated hereby, (ii) any breach of
any covenant, agreement or obligation of the Companies contained in this
Agreement or any other certificate, instrument or document contemplated hereby
or (iii) any cause of action, suit or claim brought or made against such
Investor Indemnitee by a third party (including for these purposes a derivative
action brought on behalf of Patriot) and arising out of or resulting from
(x) the execution, delivery, performance or enforcement of this Agreement
or any other certificate, instrument or document contemplated hereby, or
(y) the status of such Investor as an investor in Patriot. To
the extent that the foregoing undertaking by the Companies may be unenforceable
for any reason, the Companies shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
Notwithstanding
the foregoing, the indemnification provided for in this Section 9(a) shall not
apply to the Bank to the extent that such indemnification by the Bank
constitutes a violation of any financial institution law or regulation
applicable to the Bank, including if such indemnification constitutes a covered
transaction under Section 23A of the Federal Reserve Act.
(b) In
consideration of the Companies’ execution and delivery of this Agreement and
performance of its obligations hereunder, and in addition to all of the
Investor’s other obligations under this Agreement, the Investor shall defend,
protect, indemnify and hold harmless each of the Companies and all of their
shareholders, partners, members, officers, directors, employees and direct or
indirect investors and any of the foregoing persons’ agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the “Patriot Indemnitees”)
from and against any and all Indemnified Liabilities incurred by any Patriot
Indemnitee as a result of, or arising out of, or relating to (i) any
misrepresentation or breach of any representation or warranty made by the
Investor in this Agreement or any other certificate, instrument or document
contemplated hereby or thereby, or (ii) any breach of any covenant,
agreement or obligation of the Investor contained in this Agreement or any other
certificate, instrument or document contemplated hereby. To the
extent that the foregoing undertaking by any Investor may be unenforceable for
any reason, the Investor shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed as of the date first above
written by their respective undersigned officers thereunto duly
authorized.
[Balance
of page intentionally left blank.]
Execution Draft
|
Counterpart
Signature Page to
|
|||
|
PATRIOT
NATIONAL BANCORP, INC.
|
|||
|
By: /s/ Xxxxxx Xx
Xxxx
Name:
Xxxxxx Xx Xxxx
Title:
Chairman & CEO
|
|||
|
Address:
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
|
|||
|
PATRIOT
NATIONAL BANK
|
|||
|
By:
/s/ Xxxxxx Xx
Xxxx
Name:
Xxxxxx Xx Xxxx
Title:
Chairman
|
|||
|
Address:
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
|
|||
|
with
copies to:
Xxxxxxx
X. Xxxxxx III
Xxxxx
X. Xxxxxxx
Xxxxxxxx,
Xxxxx & Xxxxxx LLP
00
Xxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
|
|||
|
Counterpart
Signature Page to
|
|
|
INVESTOR:
PNBK
HOLDINGS LLC
By: PNBK SPONSOR
LLC,
Its
sole managing member
By:
/s/ Xxxxxxx X.
Xxxxxxxx
Name: Xxxxxxx
X. Xxxxxxxx
Title: Manager
|
|
|
Address:
000 Xxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
|
|
|
with
copies to:
Xxxx
X. Xxxx
Xxxxxxxx
& Xxxx LLP
0000
Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx,
XX 00000-0000
Tel
(000) 000-0000
Fax
(000) 000-0000
xxxxx@xx.xxx
|
|
SCHEDULE
A
|
Investor
|
Number
of shares of
Common
Securities
to
be purchased(1)
|
Purchase
Price
|
Aggregate
Purchase Price(1)
|
|
33,333,333
|
$1.50
|
$50,000,000
|
|
|
TOTAL:
|
$50,000,000
|
____________
(1) Subject
to adjustment as provided in Section 1.1 of the Agreement.
