SECURITIES PURCHASE AGREEMENT by and among META FINANCIAL GROUP, INC. and BOATHOUSE ROW I, LP, BOATHOUSE ROW II, LP, BOATHOUSE ROW OFFSHORE LTD., and OC 532 OFFSHORE FUND, LTD. (collectively, the “Buyers”) June 25, 2015

---

Exhibit 10.2

 

---

TABLE OF CONTENTS

 

			Page
1.		PURCHASE AND SALE OF COMMON STOCK	1
	(a)	Shares of Common Stock	1
	(b)	Closing	2
	(c)	Purchase Price	2
	(d)	Form of Payment	2
2.		BUYERS’ REPRESENTATIONS AND WARRANTIES	2
	(a)	Organization; Authority	2
	(b)	No Public Sale or Distribution	2
	(c)	Accredited Investor Status; Sophistication	3
	(d)	Reliance on Exemptions	3
	(e)	Certain Securities Transactions	3
	(f)	Information	3
	(g)	No Governmental Review	4
	(h)	Transfer or Resale	4
	(i)	Legends	5
	(j)	No Conflicts	5
	(k)	Bank Regulatory Agencies	6
	(l)	Status of the Buyers	6
	(m)	Stock Ownership	6
	(n)	Residency	7
	(o)	No Broker	7
3.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY.		7
	(a)	Organization and Qualification	7
	(b)	Status of Company and Subsidiaries	8
	(c)	Authorization; Enforcement; Validity	8
	(d)	Issuance of Shares; No Restrictions on Transfer	8
	(e)	No Conflicts	8
	(f)	Consents	9
	(g)	No General Solicitation; Placement Agent’s Fees	9
	(h)	No Registration Due to Integrated Offering	9
	(i)	Application of Takeover and Other Protections; Rights Agreement	10
	(j)	SEC Documents; Financial Statements	10
	(k)	Accuracy of Information	11
	(l)	Absence of Certain Changes.	11
	(m)	No Undisclosed Liabilities	12
	(n)	Conduct of Business; Regulatory Permits	12
	(o)	Investment Company Status	13

 

---

	(p)	Transactions With Affiliates	13
	(q)	Agreements with Regulatory Agencies	13
	(r)	Equity Capitalization	14
	(s)	Subsidiaries	15
	(t)	Absence of Litigation	15
	(u)	Properties and Leases	15
	(v)	Insurance	16
	(w)	Tax Status	16
	(x)	Manipulation of Price	16
	(y)	Shell Company Status	16
	(z)	U.S. Real Property Holding Corporation Status	16
	(aa)	Allowance for Possible Loan Losses	16
	(bb)	Intellectual Property	17
	(cc)	No Disqualification Events	17
4.	COVENANTS.		17
	(a)	Form D and Blue Sky	17
	(b)	Reports	18
	(c)	Listing	18
	(d)	Conduct of the Business	18
	(e)	Access to Information	18
	(f)	Efforts to Consummate Transaction; Cooperation	19
	(g)	NASDAQ Stock Issuance Notice	19
	(h)	Expenses	20
	(i)	Pledge of Shares	20
	(j)	Disclosure of Transactions and Other Material Information	20
	(k)	Certain Future Actions.	20
	(l)	Standstill	23
	(m)	Stock Certificates	24
	(n)	Disclosure Letter Updates	24
	(o)	Disqualification Events	24
	(p)	Use of Proceeds	24
5.	CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL		24
6.	CONDITIONS TO THE BUYERS’ OBLIGATION TO ▇▇▇▇▇▇▇▇		▇▇
▇.	SURVIVAL AND INDEMNIFICATION		28
	(a)	Survival	28
	(b)	Indemnification	28
	(c)	Procedure	28
	(d)	Reimbursement	29
8.	TERMINATION		30
	(a)	Termination by Mutual Agreement	30
	(b)	Termination for Failure to Close	30

 

---

	(c)	Termination for Breach	30
	(d)	Effects of Termination	30
9.	MISCELLANEOUS		30
	(a)	Definitions	30
	(b)	Governing Law; Jurisdiction; Jury Trial	36
	(c)	Counterparts	37
	(d)	Headings	37
	(e)	Severability	37
	(f)	Entire Agreement; Amendments	37
	(g)	Notices	37
	(h)	Successors and Assigns	38
	(i)	No Third Party Beneficiaries	38
	(j)	Further Assurances	39
	(k)	No Strict Construction	39
	(l)	Remedies	39
	(m)	Acknowledgment Regarding Buyers’ Shares	39
	(n)	Buyers’ Acknowledgments Regarding Other Private Placements	39
	(o)	Interpretive Matters	40

 

 

 

 

 

 

---

 

SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of June 25, 2015, by and among Meta Financial Group, Inc., a Delaware corporation, with headquarters located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the “Company”), and Boathouse Row I, LP, a Delaware limited partnership, Boathouse Row II, LP, a Delaware limited partnership, Boathouse Row Offshore Ltd., an entity organized and existing under the laws of the Cayman Islands, and OC 532 Offshore Fund, Ltd., an entity organized and existing under the laws of the Cayman Islands (each, a “Buyer” and, collectively, the “Buyers”).  Certain defined terms used herein are listed in Section 9(a).

WHEREAS:

NOW, THEREFORE, the Company and the Buyers hereby agree as follows:

 

 

---

(b)       Closing.  The closing (the “Closing”) of the purchase of the Shares by the Buyers shall occur at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.  The date and time of the Closing (the “Closing Date”) shall be substantially concurrently with the consummation of the Acquisition, subject to the satisfaction or waiver (to the extent permitted by applicable law) of the conditions to the Closing set forth in Sections 5 and 6 below by the parties hereto (other than those conditions required to be satisfied on the Closing Date, in which case such conditions shall have been so satisfied or waived as of the Closing Date) or such other date and time as is mutually agreed to by the Company and the Buyers.

 

(c)        Purchase Price.  The aggregate purchase price for all the Shares to be purchased by the Buyers (the “Purchase Price”) shall be an amount equal to $6,000,050.98, and the portion of the Purchase Price for the Shares to be purchased by each Buyer shall be the product of (i) $42.98, multiplied by (ii) the quotient of (A) the number of Shares to be purchased by such Buyer hereunder, divided by (B) the total number of Shares to be purchased by all of the Buyers hereunder.

 

(d)       Form of Payment.  On the Closing Date, (i) each Buyer shall pay to the Company at Closing its ratable share of the Purchase Price, as set forth on Schedule 1 attached hereto, for the Shares issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Company’s written wire instructions which shall be given to the Buyers in writing not later than one (1) day prior to the Closing Date, and (ii) the Company shall instruct its transfer agent, Computershare Trust Company, N.A. (the “Transfer Agent”), to issue and deliver to each Buyer its Shares in a single stock certificate, free and clear of all restrictive legends (except as expressly provided in Section 2(i) hereof), evidencing the number of Shares being purchased by such Buyer.

 

(a)        Organization; Authority.  Such Buyer is a limited partnership, in the case of Boathouse Row I, LP and Boathouse Row II, LP, and a company, in the case of Boathouse Row Offshore Ltd. and OC 532 Offshore Fund, Ltd., and in each case is duly formed, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and each other Transaction Document to which it is or will be a party and otherwise to carry out its obligations hereunder and thereunder.  This Agreement and each other Transaction Document to which it is or will be a party have been, or when executed and delivered will have been, duly authorized, executed and delivered by such Buyer and constitute or, when executed and delivered, will constitute the legal, valid and binding obligations of such Buyer, enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar Laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

(b)        No Public Sale or Distribution.  Such Buyer is acquiring its Shares for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempt from the registration requirements under the 1933 Act; provided, however, that by making the representations herein, such Buyer does not agree to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance with or pursuant to a registration statement or an exemption from the registration requirements under the 1933 Act.  Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to resell or distribute any of the Shares in violation of the 1933 Act.

 

---

(c)        Accredited Investor Status; Sophistication.

 

 

(d)        Reliance on Exemptions.  Such Buyer understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Shares.

 

(e)        Certain Securities Transactions.  During the period (the “Pre-Announcement Period”) beginning with the date on which such Buyer commenced discussions with the Company in respect of the transactions contemplated hereby and ending on the date of the Pre-Closing 8-K filing (as defined below), neither such Buyer nor any Affiliate controlled by such Buyer, nor to the knowledge of such Buyer any Affiliate controlling such Buyer or under common control with such Buyer, has entered, or will enter, into any transaction in respect of or involving the Common Stock or any Convertible Securities or Options, including any purchase or sale, derivative or hedging transaction, other than the transactions contemplated by this Agreement.  Without limiting the foregoing, during the Pre-Announcement Period, such Buyer has not and will not engage in any transaction constituting a “short sale” (as defined in Rule 200 of Regulation SHO under the Securities Exchange Act of 1934, as amended (the “1934 Act”)) of shares of Common Stock or establish an open “put equivalent position” (within the meaning of Rule 16a-1(h) under the ▇▇▇▇ ▇▇▇) with respect to the Common Stock.

 

---

(f)        Information.  Such Buyer and its advisors, if any, have received all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Shares which have been requested by such Buyer.  Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of, and have received answers from, the Company regarding the Company and the transactions contemplated hereby.  Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors or representatives, nor any other statement made by such Buyer in this Section 2, shall modify, amend or affect the Company’s representations and warranties contained herein or such Buyer’s right to rely thereon.  Such Buyer understands that its investment in the Shares involves a high degree of risk.  Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Shares.

 

(g)        No Governmental Review.  Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

 

(h)        Transfer or Resale.  Such Buyer understands that:

 

 

 

 

The Shares may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Shares and such pledge of Shares shall not be deemed to be a transfer, sale or assignment of the Shares hereunder, and, except as required by applicable Law, such Buyer shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement, including this Section 2(h), in connection with such a pledge.

 

---

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT OR (B) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY AND THE TRANSFER AGENT FOR THE COMPANY’S COMMON STOCK, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.

The legend set forth above shall be removed and the Company shall issue one or more certificates without such legend to the holder of the Shares upon which it is stamped, unless otherwise required by state securities Laws, if (i) such Shares are registered for resale and shall be resold pursuant to an effective registration statement under the 1933 Act, (ii) such Buyer shall have delivered to the Company an opinion of counsel reasonably acceptable to the Company, which opinion shall be in a form reasonably acceptable to the Company and the transfer agent for the Common Stock, to the effect that such Shares may be freely sold without restriction or limitation without registration under the 1933 Act, or (iii) such holder provides the Company with reasonable assurance, and certification to the effect, that (A) the Shares have been or are being sold, assigned or transferred pursuant to Rule 144 or Rule 144A or (B) such holder is not an Affiliate of the Company and the Shares can be sold by such holder pursuant to Rule 144 without any restrictions or limitations under Rule 144 and without compliance with the current public information requirement thereof.

 

(j)         No Conflicts.  The execution, delivery and performance by such Buyer of this Agreement and the other Transaction Documents to which it is or will be a party and the consummation by such Buyer of the transactions contemplated hereby and thereby, will not (i) result in a violation of the organizational or formation documents of such Buyer, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any Law (including federal and state securities Laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.

 

---

(k)        Bank Regulatory Agencies.  Neither the Buyers nor their Affiliates are required to obtain any consent, authorization or order of, or make any filing or registration with, any bank regulatory authority or agency, including, but not limited to, the Federal Reserve, in order for the Buyers to execute or deliver this Agreement or any of the other Transaction Documents to which it is or will be a party or perform any of their obligations under or as contemplated by this Agreement or any of the other Transaction Documents to which it is or will be a party in accordance with the terms hereof or thereof.  Without limiting the generality of the foregoing sentence, the Buyers are not in “control” (rebuttably or otherwise, as such term is used in 12 C.F.R. Part 238) and have not acted in concert, and are not “acting in concert” within the meaning of 12 C.F.R. §238.31(b)(2) or (d), with any Person (including any of its Affiliates) to knowingly participate in joint activity or parallel action towards a common goal of acquiring control of the Company, whether or not pursuant to an express agreement, such that it would result in the Buyers or any of their Affiliates to be determined by the Federal Reserve (A) to have the power, directly or indirectly, to exercise a controlling influence over, or direct, the management or policies of the Company or any Subsidiary, (B) to have acquired, or to be attempting to acquire, control (rebuttably or otherwise, as such term is used in 12 C.F.R. Part 238) of the Company or any Subsidiary, or otherwise be required to register as a savings and loan holding company, as such term is defined in 12 C.F.R. § 238.2(m), (C) to be an “affiliate” (as defined under 12 C.F.R. § 238.2(a)) of any Subsidiary, such that any transactions between the Buyers and such Subsidiary would be subject to compliance with §§ 23A and 23B of the Federal Reserve Act or Regulation W, 12 C.F.R. Part 223, or (D) to be an “insider” (as defined in 12 C.F.R. § 215.2) of the Company or any Subsidiary such that any transactions between the Buyers and their Affiliates, on the one hand, and the Company and such Subsidiary, on the other, would be subject to compliance with Regulation O of 12 C.F.R. § 215.

 

(l)        Status of the Buyers.  Neither the Buyers nor any of their Affiliates shall, as a result of the Buyers entering into, or performing under, this Agreement and the other Transaction Documents to which they are or will be a party (A) have the power, directly or indirectly, to exercise a controlling influence over, or direct, the management or policies of the Company or any Subsidiary, (B) be in “control” of the Company or any Subsidiary, as such term is used in 12 C.F.R. Part 238, or otherwise be required to register as a savings and loan holding company, as such term is defined in 12 C.F.R. § 238.2(m), or (C) be an “affiliate” (as defined under 12 C.F.R. § 238.2(a)) of any Subsidiary, such that any transactions between the Buyers and such Subsidiary would be subject to compliance with §§ 23A and 23B of the Federal Reserve Act or Regulation W, 12 C.F.R. Part 223.

 

(m)       Stock Ownership.  Neither such Buyer nor any of its Affiliates own beneficially or of record any Common Stock or other securities of the Company other than, (i) (A) in the case of Boathouse Row I, LP, (x) as of the date hereof, 162,868 shares of Common Stock (the “BRI Previously Acquired Shares”), and (y) as of the Closing Date, the BRI Previously Acquired Shares and the Shares purchased by it hereunder, (B) in the case of Boathouse Row II, LP, (x) as of the date hereof, 52,346 shares of Common Stock (the “BRII Previously Acquired Shares”), and (y) as of the Closing Date, the BRII Previously Acquired Shares and the Shares purchased by it hereunder, (C) in the case of Boathouse Row Offshore Ltd., (x) as of the date hereof, 191,302 shares of Common Stock (the “BRO Previously Acquired Shares”), and (y) as of the Closing Date, the BRO Previously Acquired Shares and the Shares purchased by it hereunder, and (D) in the case of OC 532 Offshore Fund, Ltd., as of the Closing Date, the Shares purchased by it hereunder, and (ii) in the case of any such Affiliate, shares of capital stock of the Company that are held through the mutual fund holdings of such Affiliate.

 

---

(n)       Residency.  Each of Boathouse Row I, LP and Boathouse Row II, LP is formed in the State of Delaware, and each of Boathouse Row Offshore Ltd. and OC 532 Offshore Fund, Ltd. is formed under the Laws of the Cayman Islands. The principal place of business of each Buyer is located in the State of California.

 

(o)        No Broker.  Such Buyer has not engaged any broker or other similar agent in connection with its purchase of the Shares.

(a)        Organization and Qualification.  The Company and the Subsidiaries other than MetaBank are entities duly organized and validly existing and in good standing, and MetaBank is duly organized and validly existing, under the Laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted.  Each of the Company and the Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect.

 

---

(b)       Status of Company and Subsidiaries.  The Company is a savings and loan holding company under the Home Owners’ Loan Act of 1933, as amended (“HOLA”), regulated and supervised primarily by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).  MetaBank is a federally chartered stock savings bank duly organized and validly existing under HOLA and regulated and supervised primarily by the Office of the Comptroller of the Currency (the “OCC”).  The deposit accounts of MetaBank are insured up to applicable limits by the Deposit Insurance Fund, which is administered by the Federal Deposit Insurance Corporation (the “FDIC”), and no proceedings for the termination or revocation of such insurance are pending or, to the Knowledge of the Company, threatened.  The federal stock savings bank charter of MetaBank complies in all material respects with applicable Law.  MetaBank is considered “well capitalized” under the prompt corrective action provisions of the Federal Deposit Insurance Act (12 U.S.C. § 1831o and 12 C.F.R. Part 565).

(c)        Authorization; Enforcement; Validity.  The Company has the requisite power and authority to enter into and perform its obligations under the Transaction Documents and to issue the Shares in accordance with the terms hereof.  The execution and delivery by the Company of this Agreement and the other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including the issuance of the Shares, have been duly authorized by the Company’s board of directors (the “Board of Directors”).  No further corporate consent or authorization is required by the Company, the Board of Directors or the Company’s stockholders in connection with the execution and delivery by the Company of this Agreement or any of the other Transaction Documents and the performance of the Company’s obligations hereunder and thereunder, including the issuance of the Shares.  This Agreement has been, and when executed and delivered by the Company at the Closing, each other Transaction Document will be, duly executed and delivered by the Company and constitute (or when executed and delivered will constitute) the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar Laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

(d)        Issuance of Shares; No Restrictions on Transfer.  Upon the issuance of and payment for the Shares in accordance with this Agreement, such Shares will be validly issued, fully paid and nonassessable, and free and clear of all liens and/or restrictions on transfer (other than restrictions on transfer provided for by applicable federal and state securities Laws or expressly provided for herein) and will not be subject to preemptive rights of any other stockholder of the Company.  Subject to the accuracy of the representations and warranties of each Buyer in this Agreement, the offer and sale by the Company of the Shares to the Buyers hereunder will be exempt from registration under the 1933 Act.

 

(e)        No Conflicts.  Except as set forth on Schedule 3(e) of the Disclosure Letter, the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby (including the issuance of the Shares) will not (i) violate the Certificate of Incorporation or the Bylaws, (ii) violate, conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of the Subsidiaries is a party, (iii) assuming the filing of a Form D and state securities Law filings, and such filings or notices as are required by the Principal Market (or the rules and regulations thereof), result in a violation of any Law, or rules and regulations of the Principal Market, applicable to the Company or any of the Subsidiaries or by which any property or asset of the Company or any of the Subsidiaries is bound or affected or (iv) result in or require the creation or imposition of any lien upon or with respect to any of the properties or assets of the Company or any of the Subsidiaries, except in the case of clauses (ii) and (iv), as would not reasonably be expected to have a Material Adverse Effect.

 

---

(f)        Consents.  Neither the Company nor any of the Subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency (including the OCC or the Federal Reserve), or any regulatory or self‑regulatory agency (including the Principal Market) or any other Person in order for the Company to execute, deliver or perform any of its obligations under or contemplated by this Agreement in accordance with the terms hereof, other than (i) the filing with the SEC of a Form D and any the filings contemplated by Section 4(j), (ii) any other filings as may be required by any state securities agencies, and (iii) such filings as are required by the Principal Market (or the rules and regulations thereof).

 

(g)        No General Solicitation; Placement Agent’s Fees.  None the Company or any of the Subsidiaries or any of their Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Shares.  The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by or on behalf of the Buyers or any of the Other Investors) relating to or arising out of the transactions contemplated hereby.  The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any fee claimed by any placement agent, financial advisor or broker claiming to have been engaged by the Company, or to otherwise have been acting on the Company’s behalf, in connection with the transactions contemplated hereby.  Neither the Company nor any of the Subsidiaries has engaged any placement agent or other similar agent in connection with the sale of the Shares.

 

(h)        No Registration Due to Integrated Offering.  None of the Company, the Subsidiaries, any of the Affiliates of the Company, and any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the offer or sale to the Buyers of any of the Shares under the 1933 Act.  None of the Company or the Subsidiaries or any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of the offer or sale to the Buyers of any of the Shares under the 1933 Act (except as contemplated by the Registration Rights Agreement).

 

---

(i)         Application of Takeover and Other Protections; Rights Agreement.  The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation or any certificates of designations or the Laws of the jurisdiction of its formation or incorporation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including the Company’s issuance of the Shares and the Buyers’ ownership of the Shares.

 

(j)         SEC Documents; Financial Statements.

 

 

 

---

(k)       Accuracy of Information.  All factual information, taken as a whole, furnished by or on behalf of the Company in writing to the Buyers on or prior to the date of this Agreement for purposes of this Agreement and all other such factual information, taken as a whole, furnished by the Company on behalf of itself and the Subsidiaries in writing to the Buyers pursuant to the terms of this Agreement does not, when taken together with the SEC Documents, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; provided, however, that with respect to any projected financial information or forward-looking statements, business assumptions, strategic plans or similar information, the Company represents only that such information was prepared in good faith based upon assumptions, and subject to such qualifications, believed to be reasonable at the time.  The Company understands and confirms that the Buyers will rely on the representations and warranties contained in this Section 3 in effecting transactions in securities of the Company.

 

(i)        Except as disclosed in Schedule 3(l)(i) of the Disclosure Letter or in the SEC Documents, since September 30, 2014, no event or events have occurred that, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect.

 

 

 

 

 

 

 

---

(m)       No Undisclosed Liabilities.  Neither the Company nor any of the Subsidiaries is subject to any liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) which are not properly reflected or reserved against in the Company’s financial statements included in the SEC Documents to the extent required to be so reflected or reserved against in accordance with generally accepted accounting principles in the United States except for, since the date of the most recent balance sheet included in the SEC Documents, liabilities or obligations (i) that are listed or disclosed in Schedule 3(m) included in the Disclosure Letter, (ii) arising in the ordinary course of business consistent with past practices, (iii) incurred under this Agreement or the securities purchase agreements entered into with Other Investors in connection with the Other Private Placements or in connection with the transactions contemplated hereby or thereby, or (iv) that have not had, and would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

 

(n)        Conduct of Business; Regulatory Permits.

 

 

 

 

---

 

 

 

 

 

---

 

 

 

 

 

---

 

 

 

---

 

 

 

 

(z)        U.S. Real Property Holding Corporation Status.  The Company is not, nor has ever been, a U.S. real property holding corporation within the meaning of Section 897 of the Code.

 

 

---

 

 

(a)        Form D and Blue Sky.  The Company agrees to file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof to the Buyers promptly after such filing.  The Company shall, on or before the Closing Date, take such action (if any) as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Shares for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior to the Closing Date.  The Company shall make all filings and reports relating to the offer and sale to the Buyers of the Shares required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date.

 

---

(b)        Reports.  For as long as the Buyers hold the Shares, the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act from and after the date hereof and so long as the Company shall be required to do so under the 1934 Act.  For as long as the Buyers hold the Shares, if the Company is not required to file reports pursuant to the 1934 Act, it will prepare and furnish to the Buyers and make publicly available in accordance with Rule 144(c) such information as is required for the Buyers to sell the Shares under Rule 144.

 

(c)        Listing.  Subject to the occurrence of the Closing, the Company shall promptly secure the listing of all of the Shares upon the Principal Market and, at all times while the Common Stock is listed on the Principal Market, and for so long as the Buyers hold the Shares, shall maintain such listing of all Shares.  The Company shall use its commercially reasonable efforts to maintain authorization for the Common Stock for quotation on the Principal Market or any other Eligible Market, and so long as the Buyers collectively own at least 33% of the number of Shares originally purchased hereunder, neither the Company nor any of the Subsidiaries shall take any action which would reasonably be expected to result in the delisting or suspension of the Common Stock on the Principal Market or any other Eligible Market (other than in connection with a change of listing to another Eligible Market and excluding ordinary temporary suspensions in connection with announcements of material Company news).  The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(c).

 

(d)       Conduct of the Business.  Commencing on the date hereof and ending on the earlier of the Closing Date and the date that this Agreement shall terminate in accordance with Section 8 hereof (the “Interim Period”), the Company shall, and shall cause each Subsidiary to, use commercially reasonable efforts to carry on and maintain and preserve its business in the ordinary course of business; provided, however, that nothing contained in this sentence shall limit, preclude or require any actions that the Board of Directors or the board of directors of such Subsidiary (as the case may be) may, in good faith, determine to be inconsistent with their duties or the Company’s or such Subsidiary’s obligations under applicable Law; and, provided, further, that nothing contained in this sentence shall limit or preclude the Company or such Subsidiary from terminating any contract, license, loan or other extension of credit made or extended to any borrower, customer or other obligor, or other agreement or right, or entry into the Purchase Agreement, as the Company or such Subsidiary, as the case may be, shall in its good faith judgment deem necessary, appropriate or advisable.

 

(e)        Access to Information.  During the Interim Period and upon reasonable advance written notice from the Buyers, the Company shall (and shall cause each of the Subsidiaries to) provide to officers, directors, managers, employees, accountants, counsel, consultants, advisors and representatives of the Buyers (collectively, the “Buyer Representatives”), solely for the purpose of evaluating the transactions contemplated by this Agreement, reasonable access, during normal business hours, to members of the Company Executive Team and to such other employees of the Company and the Subsidiaries as specifically approved by a member of the Company Executive Team, and to the assets, properties, agreements, books and records of the Company and the Subsidiaries.  During the Interim Period, the Company shall and shall cause each of the Subsidiaries to (i) furnish promptly to a Buyer Representative all information concerning its finances, operations, business, properties, personnel and condition (financial or otherwise), and respond to such inquiries, in each case as may from time to time be reasonably requested by such Buyer Representative, and (ii) use commercially reasonable efforts to make available during normal business hours to such Buyer Representative, upon request, the appropriate individuals (including management, personnel, employees, attorneys, accountants and other professionals) for reasonable inquiries regarding the Company’s and the Subsidiaries’ finances, operations, business, properties, personnel and condition (financial or otherwise).  Notwithstanding the foregoing provisions of this Section 4(e), nothing contained herein shall require the Company or any of the Subsidiaries to disclose any information to the extent that the Company reasonably believes that (x) such information is a trade secret or competitively sensitive proprietary information or because there exists, or the Company reasonably believes there exists, a conflict or a potential conflict of interest between the Company and any Buyer, (y) disclosure would cause a violation of any applicable Law or any confidentiality agreement or undertaking in effect and binding upon the Company or such Subsidiary or (z) disclosure would cause a risk of a loss of privilege to the Company or such Subsidiary, in which case with respect to clause (x) or (y) the parties hereto will make appropriate substitute disclosure arrangements, if such arrangements can be made by the parties using their commercially reasonable efforts and without such violation.  Each Buyer acknowledges and agrees that all information so provided such Buyer and the Buyer Representatives is and shall be subject to the terms of the Confidentiality Agreement.

 

---

(f)         Efforts to Consummate Transaction; Cooperation.  Each party hereto shall use its commercially reasonable efforts to satisfy on a timely basis each of the covenants and conditions to be satisfied by it as provided in Sections 4, 5 and 6 of this Agreement.  Each party shall refrain from taking any action which would render any representation or warranty contained in Sections 2 and 3 hereof inaccurate in any material respect as of the Closing Date.  Each party hereto shall promptly notify the other party of (i) any event or matter that would reasonably be expected to cause any of its representations or warranties to be untrue in any material respect as of the Closing Date or that would reasonably be expected to cause any of the conditions to Closing provided in Section 5 or 6, as the case may be, not to be satisfied in the manner contemplated herein, or (ii) any action, suit or proceeding that shall be instituted or threatened against such party to restrain, prohibit or otherwise challenge the legality of any of the transactions contemplated by this Agreement.

 

(g)       NASDAQ Stock Issuance Notice.  At least fifteen (15) days prior to the issuance of the Shares hereunder (but in any event as soon as reasonably practicable following the date hereof), the Company shall file with the NASDAQ OMX Listing Center the notice, appropriately completed, required by NASDAQ Stock Market Rule 5250(e)(2)(D) in respect of the Shares issuable hereunder and the shares of capital stock issuable in connection with the Other Private Placements, and thereafter prepare and file such amendments and supplements thereto as shall be required, and respond to such inquiries (if any) from the NASDAQ OMX Listing Center (or the Principal Market) relating thereto, in each case on a timely basis.  At the request of the Buyers, the Company shall provide copies to the Buyers of such filing and any such amendments and supplements in advance of the filing of any thereof.  Each Buyer shall reasonably cooperate, in a timely manner, in connection with the Company’s obligations under this Section 4(g), including, without limitation, furnishing the Company in a timely manner upon request with all information with respect to such Buyer as may be required to be included in the NASDAQ Stock Market Rule notice filing or any amendment or supplement thereto.

 

---

(h)        Expenses.  Each party hereto shall be responsible for its own costs and expenses incurred by it in connection with the transactions contemplated hereby.

 

(i)         Pledge of Shares.  The Company acknowledges and agrees that the Shares may be pledged by any Buyer and that such pledge of the Shares shall not be deemed to be a transfer, sale or assignment of the Shares hereunder, and, except as required by applicable Law, such Buyer shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement; provided, however, that such Buyer and its pledgee shall be required to provide notice to the Company and comply with the applicable provisions hereof, including the requirements of Section 2(l), in order to effect (and otherwise in connection with) any sale, transfer or assignment of the Shares to such pledgee.

 

(j)        Disclosure of Transactions and Other Material Information.  On or before 5:30 p.m., New York City time, on the fourth (4^th) Business Day following (i) the date of this Agreement the Company shall issue a press release and file a current report on Form 8-K describing the terms of the transactions contemplated by this Agreement, in the form required by the 1934 Act and attaching this Agreement (and, as appropriate, any other Transaction Document) as an exhibit to such filing (including such attachment, the “Pre-Closing 8-K”), and (ii) such other matters as are required or deemed appropriate by the Company to be disclosed under Form 8-K relating to the transactions contemplated hereby, in the form required by the 1934 Act.  In addition, following the Closing, the Company may file a press release and a Form 8-K relating to the Closing of the transactions contemplated hereby to the extent deemed appropriate by the Company (the “Post-Closing 8‑K”).  A reasonable time prior to issuing any press release referred to in the previous two sentences, the Company shall provide the Buyers with a copy of the proposed press release and shall consult with the Buyers with respect to the content of such press release and Pre-Closing 8-K, or Post-Closing 8-K, as the case may be, and consider in good faith any comments proposed by the Buyers.  Subject to the foregoing, none of the Company and the Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that (i) the Company shall be entitled, without the prior approval of the Buyers, to make any press release or other public disclosure with respect to such transactions in substantial conformity with the Pre-Closing 8-K or the Post-Closing 8-K, as the case may be (provided that the Company shall consult with the Buyers in connection with any such press release or other public disclosure prior to its release and consider in good faith any comments proposed by the Buyers) and (ii) either party may make such disclosure as is required by applicable Law.

 

 

 

---

 

---

“Benchmark Price” means, in the case of any Excess Shares sold pursuant to this Section 4(k)(ii), (x) during the period commencing on the Closing Date and ending on the eighteen (18) month anniversary of the Closing Date, the greater of the Fair Market Value per share of the Excess Shares and the price per share paid hereunder for the Shares at the Closing, and (y) at any time after the eighteen (18) month anniversary of the Closing Date, the Fair Market Value per share of such Excess Shares.

 

“Fair Market Value” means, in the case of any Excess Shares sold pursuant to this Section 4(k)(ii), (a) if the Common Stock is traded on an Eligible Market, the price which represents the trailing 20-trading day (including trading days on which no Common Stock were in fact traded) average of the closing “bid” price (determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours) of the Common Stock ending on (and including) the trading day immediately preceding the date that is one (1) trading day prior to the date on which such Excess Shares shall have been so sold or (b) if the Common Stock is not so traded, the fair market value (per share) of Common Stock as of the date that is one (1) trading day immediately preceding the date on which such Excess Shares shall have been sold as determined in good faith between the Company and the selling Buyer; provided, however, that if the Company and such Buyer do not reach an agreement as to the fair market value of such Common Stock by the date on which the Company shall be required to make any payment to such Buyer pursuant to this Section 4(k)(ii), then such fair market value shall be determined by an independent, nationally recognized investment banking firm, accounting firm or appraisal firm selected by such Buyer and reasonably acceptable to the Company and paid for by the Company and the date on which any payment required to be made by the Company to such Buyer pursuant to this Section 4(k)(ii) shall be extended until the date that is three (3) Business Days following the date on which such valuation firm shall have delivered to the Company and such Buyer its fair market value determination (which determination shall, for purposes of this Section 4(k)(ii), be conclusive and binding on the parties hereto absent manifest error).

 

---

“Market Price” means, with respect to any Excess Shares sold by a Buyer pursuant to this Section 4(k)(ii), the fair market value thereof, per share, based on the price that would be obtained by a seller of such Excess Shares who was acting in good faith and in a commercially reasonable manner on the date of such sale; provided, however, that if any such Excess Shares are sold at any time during which the Company’s Common Stock is listed on any national securities exchange or quoted on the over-the-counter bulletin board, then the “Market Price” shall be deemed to be the closing price of such shares of Common Stock as reported on such national securities exchange or bulletin board on the date of sale of such Excess Shares.

(l)        Standstill.  Each Buyer hereby agrees that, during the period commencing on the Closing Date and ending on the second annual anniversary thereof (the “Standstill Period”), unless specifically invited in writing by the Company, such Buyer will not, and will not permit any director, officer or Affiliate of such Buyer to, in any manner, directly or indirectly (including by directing or causing any other Person that is not such Buyer or a director, officer or Affiliate of such Buyer):

 

 

 

---

 

 

 

Each Buyer further agrees that it shall not, and shall not permit any director, officer or Affiliate of such Buyer to, during the Standstill Period, directly or indirectly, publicly request the Company (or its directors, officers, employees or agents) to amend or waive any provision of this Section 4(l) (including this sentence).

(m)       Stock Certificates.  In connection with the Closing, the Company shall instruct the Transfer Agent to issue the stock certificates representing the Shares as required by this Agreement and take such actions as shall be reasonably requested by the Transfer Agent such that the applicable stock certificate shall be delivered to each Buyer within five (5) Business Days after the Closing Date.

 

(n)        Disclosure Letter Updates.  No later than two Business Days prior to the Closing Date, the Company shall amend or supplement the Disclosure Letter with respect to any matter or event arising or occurring after the date hereof to the extent necessary or desirable in order to make the representations and warranties being made by the Company pursuant to this Agreement as of the Closing Date true and correct as of the Closing Date.

 

(o)        Disqualification Events.  The Company will notify the Buyers in writing, prior to the Closing Date of (i) any Disqualification Event relating to any Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Covered Person.

 

(p)       Use of Proceeds.  The Company will use the proceeds from the sale of the Shares to finance the Acquisition (including to pay any expenses associated with the Acquisition).

The obligation of the Company hereunder to issue and sell the Shares to the Buyers at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions; provided that these conditions are for the Company’s sole benefit and (to the extent permitted by applicable Law) may be waived by the Company at any time in its sole discretion by providing the Buyers with prior written notice thereof:

 

---

 

 

 

 

 

 

 

---

The obligation of any Buyer hereunder to purchase the Shares at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for such Buyer’s sole benefit and (to the extent permitted by applicable Law) may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

 

 

 

 

 

 (vi)         Representations, Warranties and Covenants.

 

(1)          The representations and warranties of the Company set forth in Sections 3(a), 3(b), 3(c), 3(d), 3(g), 3(h), 3(i), 3(l)(i), 3(x), 3(y), 3(z) and 9(n) (the “Fundamental Representations”) shall be true and correct in all respects as of the date hereof and as of the Closing Date (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date);

 

(2)          The representations and warranties of the Company set forth in Section 3 hereof, other than the Fundamental Representations, shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect or like qualifiers, which shall be true and correct in all respects) as of the date hereof and as of the Closing Date (except for representations and warranties that speak as of a specific date, which shall be true and correct in all material respects (or, if such representation and warranty is qualified by materiality or Material Adverse Effect, in all respects) as of such specified date);

 

---

(3)          The Company shall have performed, satisfied and complied with in all material respects the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date; and

 

(4)          The Buyers shall have received a certificate, executed by the Chief Executive Officer or Chief Financial Officer (or other senior executive officer reasonably acceptable to the Buyers) of the Company, dated as of the Closing Date, that the conditions set forth in each of clauses (1) through and including (3) above have been satisfied, and further certifying that the facts, events or circumstances described in updates to the Disclosure Letter and in any document filed or furnished with the SEC under the 1934 Act after the date hereof and publicly available before the Closing Date have not had, and are reasonably expected not to have, a Material Adverse Effect.

 

 

 

 

 

 

---

 

 

 

---

 

---

 

 

 

 

(a)        Definitions.

 

“1933 Act” has the meaning set forth in Whereas clause A.

 

“1934 Act” has the meaning set forth in Section 2(e).

 

“Acquisition” means the first of any of the following after the date of this Agreement: (i) a consolidation, merger or other business combination of the Company or any Subsidiary, on the one hand, with or into another Person, on the other hand (including, for the avoidance of doubt, through the acquisition of equity interests in another Person), immediately after giving effect to which the Company or any Subsidiary holds, directly or indirectly, a majority of the combined voting power of the surviving entity or entities entitled to vote generally for the election of a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (ii) an acquisition by the Company or any Subsidiary, directly or indirectly, of all or substantially all of the assets of another Person; provided that, in any such case, such transaction is approved by the Board of Directors and provides for the payment or other delivery by, or on behalf of, the Company or any Subsidiary of aggregate consideration (whether in the form of cash or otherwise) of not less than $40 million.

 

---

“Affiliate” means any Person controlling, controlled by or under common control with any other Person.  For purposes of this definition, “control” (including “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of securities, partnership or other ownership interests, by contract or otherwise.

 

“Agreement” has the meaning set forth in the preamble.

 

“Allowance” has the meaning set forth in Section 3(aa).

 

“Board of Directors” has the meaning set forth in Section 3(c).

 

“BRI Previously Acquired Shares” has the meaning set forth in Section 2(m).

 

“BRII Previously Acquired Shares” has the meaning set forth in Section 2(m).

 

“BRO Previously Acquired Shares” has the meaning set forth in Section 2(m).

 

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by Law to remain closed.

 

“Buyer” and “Buyers” have the respective meanings set forth in the preamble.

 

“Buyer Controlled Entity” means any Person controlled, directly or indirectly, by any of the Buyers.

 

“Buyer Representatives” has the meaning set forth in Section 4(e).

 

“Bylaws” has the meaning set forth in Section 3(r).

 

“Certificate of Incorporation” has the meaning set forth in Section 3(r).

 

 “Closing” has the meaning set forth in Section 1(b).

 

“Closing Date” has the meaning set forth in Section 1(b).

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Common Stock” has the meaning set forth in Whereas clause B.

 

“Company” has the meaning set forth in the preamble.

 

---

“Company Controlled Affiliate” means any Affiliate controlled, directly or indirectly, by the Company.

 

“Company Executive Team” means J. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇.

 

“Company Intellectual Property” has the meaning set forth in Section 3(bb).

 

“Confidentiality Agreement” means the confidentiality letter agreement, dated as of May 29, 2015, by and between Philadelphia Financial Management of San Francisco, LLC, an Affiliate of the Buyers, and the Company.

 

“Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

 

“Control Group Member” means any Person which directly or indirectly controls, or is under common control with, any of the Buyers.

 

“Convertible Securities” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Common Stock.

 

“Covered Person” and “Covered Persons” has the meaning set forth in Section 3(cc).

 

“Disclosure Letter” has the meaning set forth in Section 3.

 

“Disqualification Event” has the meaning set forth in Section 3(cc).

 

“Eligible Market” means the NYSE MKT, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the New York Stock Exchange or the Over-the-Counter Bulletin Board.

 

“Excess Shares” has the meaning set forth in Section 4(k)(ii).

 

“Family Member” means, with respect to any Person, such Person’s spouse, children, parents or siblings.

 

“FDIC” has the meaning set forth in Section 3(b).

 

“Federal Reserve” has the meaning set forth in Section 3(b).

 

“Fundamental Representations” has the meaning set forth in Section 6(vi)(1).

 

“Fundamental Terms” has the meaning set forth in Section 9(n).

 

---

“GAAP” means U.S. generally accepted accounting principles.

 

“Governmental Entity” means any federal, state, local or foreign, court, governmental, legislative, judicial, administrative or regulatory authority, agency, commission, body or other governmental entity or self-regulatory organization or stock exchange, including the OCC, the FDIC, the SEC and NASDAQ.

 

“HOLA” has the meaning set forth in Section 3(b).

 

“Indebtedness” of any Person means, without duplication (i) all indebtedness (including principal, interest, fees and charges) for borrowed money, but exclusive of “deposits” (as defined in 12 U.S.C. § 1813(l)), (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with generally accepted accounting principles) (other than trade payables incurred in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness; provided that the amount of the indebtedness included in “Indebtedness” pursuant to this clause (vii) shall be limited to the fair market value of the property or asset subject to such mortgage, lien, pledge, charge, security interest or other encumbrance, and (viii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.

 

“Indemnified Party” or “Indemnified Parties” has the meaning set forth in Section 7(b).

 

“Insolvent” means, with respect to any Person, that (i) the fair value of the assets of such Person, at a fair valuation, will exceed his, her or its debts and liabilities, subordinated, contingent or otherwise; (ii) the present fair saleable value of the property of such Person will be greater than the amount that will be required to pay the probable liability of his, her or its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) such Person will be able to pay his, her or its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) such Person will not have unreasonably small capital with which to conduct the business in which he, she or it is engaged as such business is now conducted.

 

---

“Intellectual Property” means any and all of the following in any jurisdiction throughout the world: (i) trademarks and service marks, including all applications and registrations and the goodwill connected with the use of and symbolized by the foregoing; (ii) copyrights, including all applications and registrations related to the foregoing; (iii) trade secrets and confidential know-how; (iv) patents and patent applications; (v) internet domain name registrations; and (vi) other intellectual property and related proprietary rights, interests and protections.

 

“Interim Period” has the meaning set forth in Section 4(d).

 

“Knowledge of the Company” or phrases of similar effect (including the words “Known” or “Know”) means the knowledge, after reasonable investigation, of the individuals listed on Schedule 9(a) attached hereto.

 

“Law” means any statute, ordinance, license, rule, regulation, order, demand, writ, injunction, decree or judgment of any Governmental Entity, including any of the foregoing which relate to the business of banking generally, lending activities, deposit taking, money transmission, stored value cards, credit cards, savings associations, savings and loan holding companies, trust operations, government contracts, national security, and protection of classified information, including, without limitation, the Home Owners Loan Act of 1934, the Savings and Loan Holding Company Act, the Bank Secrecy Act, the United States Foreign Corrupt Practices Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Equal Credit Opportunity Act, the Community Reinvestment Act of 1977, the Gramm‑▇▇▇▇▇‑▇▇▇▇▇▇ Act, the Fair Consumer Credit Protection Act, and all regulations promulgated thereunder.

 

“Losses” has the meaning set forth in Section 7(d).

 

“Material Adverse Effect” means any fact, circumstance, effect, event or change (whether or not constituting a breach of a representation, warranty, covenant or agreement set forth in this Agreement) that, individually or in the aggregate with all other facts, circumstances, effects, events or changes, has a material adverse effect on the business, properties, assets, operations, results of operations or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or on the Company’s ability to consummate the transactions contemplated hereby, or on the authority or ability of the Company to perform its obligations under this Agreement, but shall not include facts, circumstances, effects, events or changes: (i) generally affecting any of the industries in which the Company, taken together with the Subsidiaries, operates in the United States or elsewhere in the world or the economy or the financial or securities markets in the United States or elsewhere in the world; (ii) resulting from political conditions, including acts of war (whether or not declared), armed hostilities and terrorism, or developments or changes therein; (iii) resulting from any announcement of this Agreement or any of the other agreements entered into with the Other Investors in the Other Private Placements or the transactions contemplated hereby or thereby, in each case, solely to the extent due to such announcement; (iv) resulting from a change in the Company’s stock price or the trading volume in the Common Stock in and of itself (it being understood that the underlying circumstances, event or reasons giving rise to any such failure (to the extent provided for in this definition) can be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur); or (v) resulting from a failure to meet securities analysts’ published revenue or earnings predictions for the Company in and of itself (it being understood that the underlying circumstances, event or reasons giving rise to any such failure (to the extent provided for in this definition) can be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur); provided, however, that the facts, circumstances, events or changes set forth in clause (i) above may be taken into account in determining whether there is or has been a Material Adverse Effect if and only to the extent such act, circumstance, event, effect or change has a materially disproportionate impact on the Company and the Subsidiaries relative to the other participants in the industries in which the Company and the Subsidiaries operate.

 

---

 “MetaBank” means MetaBank, a federally-chartered savings association and wholly-owned subsidiary of the Company.

 

“Non-Pro-Rata Stock Repurchase” has the meaning set forth in Section 4(k)(ii).

 

“OCC” has the meaning set forth in Section 3(b).

 

“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

“Other Investor” means any Person who has executed a securities purchase agreement dated as of the date hereof pursuant to which such Person has agreed to purchase shares of Common Stock in connection with the Other Private Placements.

 

“Other Private Placements” has the meaning set forth in Whereas clause D.

 

“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization or a government or any department or agency thereto.

 

“Post-Closing 8-K” has the meaning set forth in Section 4(j).

 

“Pre-Announcement Period” has the meaning set forth in Section 2(e).

 

“Pre-Closing 8-K” has the meaning set forth in Section 4(j).

 

“Pre-Redemption Period” has the meaning set forth in Section 4(k)(ii).

 

“Previously Purchased Shares” has the meaning set forth in Section 2(m).

 

“Principal Market” means the NASDAQ Global Select Market.

 

“Purchase Price” has the meaning set forth in Section 1(c).

 

“Registration Rights Agreement” means a Registration Rights Agreement between the Company and the Buyers substantially in the form set forth on Exhibit A hereto.

 

“Regulation D” has the meaning set forth in Whereas clause A.

 

---

“Regulatory Agreement” has the meaning set forth in Section 3(q)(i).

 

“Rule 144” has the meaning set forth in Section 2(h)(i).

 

“Rule 144A” has the meaning set forth in Section 2(h)(i).

 

“▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act” has the meaning set forth in Section 3(j)(iii).

 

“SEC” has the meaning set forth in Whereas clause A.

 

“SEC Documents” has the meaning set forth in Section 3(j)(i).

 

“Shares” has the meaning set forth in Section 1(a).

 

“Standstill Period” has the meaning set forth in Section 4(l).

 

“Stock Reduction Triggering Event” has the meaning set forth in Section 4(k)(ii).

 

 “Subsidiaries” means MetaBank and any other entity (including any joint venture) in which the Company, directly or indirectly, owns capital stock or holds an equity or similar interest having general voting power in respect of more than fifty percent (50%) of all of the capital stock or equity or similar interest of such entity or joint venture.

 

“Tax” means all federal, state, local, foreign or other governmental taxes, assessments, duties, fees, levies or similar charges of any kind imposed by a Governmental Entity, including, but not limited to, all income, profit, gross receipts, franchise, excise, property, use, intangibles, sales, payroll, social security, employment, value added, withholding and other taxes, and including all interest, penalties and additional amounts imposed with respect to such amounts, whether as a primary obligor or as a result of being a “transferee” (within the meaning of Section 6901 of the Code or any other applicable Law) of another Person or as a result of being a member of an affiliated, consolidated, unitary or combined group.

 

“Tax Return” means any return, declaration, report, claim for refund, information return, statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

“Transaction Documents” means, collectively, this Agreement, the Registration Rights Agreement and each of the other agreements and instruments the Company or any of the Buyers are, or will be, a party or by which any such Person is, or will be, bound in connection with the transactions contemplated hereby and thereby.

 

“Transfer Agent” has the meaning set forth in Section 1(d).

 

(b)        Governing Law; Jurisdiction; Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal Laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the Laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Sioux Falls, South Dakota, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by Law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

---

(c)        Counterparts.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided, that a facsimile or electronic (i.e., “PDF”) signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original.

 

(d)       Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

(e)        Severability.  If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

(f)        Entire Agreement; Amendments.  This Agreement, the Confidentiality Agreement, the Registration Rights Agreement and the other Transaction Documents supersede all other prior oral or written agreements among the Buyers and the Company, their Affiliates and Persons acting on their behalf with respect to the matters discussed herein and therein, and this Agreement, the Confidentiality Agreement, the Registration Rights Agreement and the other Transaction Documents contain the entire understanding of the parties hereto with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Buyers.  No provision hereof may be waived other than by an instrument in writing signed by the party from whom waiver is sought.

 

(g)        Notices.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight courier service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

 

---

If to the Company:

Meta Financial Group, Inc.

▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇

▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇  ▇▇▇▇▇

Facsimile:  (▇▇▇) ▇▇▇-▇▇▇▇

Attention:  J. ▇▇▇▇▇ ▇▇▇▇▇

with a copy (for informational purposes only) to:

▇▇▇▇▇▇ ▇▇▇▇▇▇ Rosenman LLP

▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇

▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇

▇▇▇▇▇▇▇▇▇▇, ▇▇  ▇▇▇▇▇

Facsimile:  (▇▇▇) ▇▇▇-▇▇▇▇

Attention:  ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.

If to the Buyers (or any Buyer):

Boathouse Row I, LP

Boathouse Row II, LP

Boathouse Row Offshore Ltd.

OC 532 Offshore Fund, Ltd.

▇/▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇

▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇

▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇

▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Facsimile:  (▇▇▇) ▇▇▇-▇▇▇▇

Attention:  ▇▇▇▇▇▇▇ ▇▇▇▇▇▇

 

or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party pursuant to this Section.

(h)       Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.  Neither the Company nor any Buyer shall assign or delegate this Agreement or any of its rights or obligations hereunder without the prior written consent of the other party hereto.

 

(i)         No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

---

(j)         Further Assurances.  Each party hereto shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

(k)        No Strict Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rules of strict construction will be applied against any party.

 

(l)         Remedies.  The Buyers shall have all rights and remedies set forth in this Agreement and all rights and remedies which they have been granted at any time under any other agreement or contract and all of the rights which such holders have under any Law.  Each party hereto shall be entitled to enforce its rights hereunder specifically (without posting a bond or other security or proving actual damages), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by Law.  Notwithstanding anything to the contrary contained herein, neither party hereto shall be entitled to consequential, special, exemplary, indirect or incidental damages hereunder.

 

(m)       Acknowledgment Regarding Buyers’ Shares.  The Company acknowledges and agrees that each Buyer is acting solely in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby.  The Company further acknowledges that the Buyers are not acting as a financial advisor or fiduciary of the Company or any of the Subsidiaries (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby, and any advice given by the Buyers or any of their representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Buyers’ purchase of the Shares.  The Company further represents to the Buyers that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation by the Company and its representatives.

 

(n)        Buyers’ Acknowledgments Regarding Other Private Placements.  Except as set forth in the proviso to this sentence, each Buyer acknowledges and agrees that it is entering into (or will enter into) this Agreement and each other Transaction Document to which it is or will be a party without relying on any representation and warranty of, or any other statement made by, the Company or any of its advisors or representatives to the effect that the terms, conditions and provisions of this Agreement and such other Transaction Documents are based on the same terms, conditions and provisions as those terms, conditions and provisions agreed to by the Company and any Other Investor in connection with any Other Private Placement; provided, that the Company hereby represents and warrants that this Agreement and each of the securities purchase agreements entered into by the Other Investors in connection with the Other Private Placements are on the date hereof, and will be on the Closing Date, substantially the same with respect to the following provisions (or absence thereof, as the case may be), and the terms of each such provision are not more or less favorable in any respect to any Buyer as compared to any Other Investor: (i) the manner of computing the Purchase Price (as set forth in Section 1(c) hereof), (ii) the outside date by which any party hereto or thereto, as applicable, may terminate such agreement if the Closing of the transactions contemplated hereby or thereby, as applicable, shall not have occurred (as set forth in Section 8(b) hereof), (iii) the definition of “Material Adverse Effect” (as set forth in Section 9(a) hereof), (iv) the indemnification provisions (as set forth in Section 7 hereof), and (v) the absence of a provision relating to any Buyer or any Other Investor being entitled to receive reimbursement from the Company of any of its costs or expenses related to entering into this Agreement or the securities purchase agreements entered into in connection with the Other Private Placements, as the case may be (other than pursuant to the indemnification provisions to the extent provided therein, if at all, which indemnification provisions are substantially the same) (collectively, the “Fundamental Terms”).  In the event that the Company agrees to amend any of the Fundamental Terms for any Other Investor in connection with any Other Private Placement, the Company shall notify the Buyers within one (1) Business Day of such amendment (which, in any event, shall be not less than one (1) Business Day prior to the Closing Date) and provide to the Buyers a draft of the revised securities purchase agreement or other transaction document, as applicable.

 

---

(o)       Interpretive Matters.  Unless the context otherwise requires, (a) all references to Sections, Schedules, Appendices or Exhibits are to Sections, Schedules, Appendices or Exhibits contained in or attached to this Agreement, (b) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter, (c) the words “hereof,” “herein” and words of similar effect shall reference this Agreement in its entirety, and (d) the use of the word “including” in this Agreement shall be by way of example rather than limitation.

[Signature Page Follows]

 

---

IN WITNESS WHEREOF, the Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

 

 

[Signature Page to Securities Purchase Agreement – Boathouse]

 

---

 

Share Allocation

 

 

---

 

 

▇. ▇▇▇▇▇ ▇▇▇▇▇

 

▇▇▇▇ ▇. ▇▇▇▇▇▇▇

 

▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇

 

▇▇▇▇ ▇▇▇▇

 

A-1

A-2

A-3

A-4

A-5

A-6

 

A-7

A-8

A-9

A-10

A-11

A-12

A-13