FIRST PACTRUST BANCORP, INC. COMMON STOCK SUBSCRIPTION AGREEMENT
FIRST
PACTRUST BANCORP, INC.
COMMON
STOCK
THIS SUBSCRIPTION AGREEMENT (this “Subscription
Agreement”) dated as of July 19, 2010 is made by and among the
undersigned subscriber or subscribers (the “Subscriber”),
and First PacTrust Bancorp, Inc., a Maryland
corporation (the “Company”), that owns all of the issued and outstanding capital
stock of Pacific Trust Bank, a federally-chartered stock savings association
(the “Bank”).
RECITALS:
WHEREAS,
in connection with a contemplated recapitalization of the Company (the “Transaction”)
the Company intends to conduct a private placement (the “Offering”)
of newly issued shares of its common stock (as further described herein) to
certain accredited investors;
WHEREAS,
in order permit Subscriber and other subscribers in the Offering to structure
their respective investments in the Company to ensure compliance with regulatory
requirements and policies applicable to such Subscriber, the board of directors
of the Company (the “Board of
Directors”) intends to reclassify, pursuant to the Company’s Articles of
Incorporation, as amended, such number of shares of its common stock, par value
$.01 per share (the “Voting Common
Stock”) into a new class of common stock as necessary to carry out the
purposes of this Agreement (the “Class B
Non-Voting Common Stock” and, with the Voting Common Stock, the “Common
Stock”), such Class B Non-Voting Common Stock to possess identical
rights, preferences and privileges as the Voting Common Stock, except with
respect to voting rights;
WHEREAS,
the Company has engaged ▇▇▇▇▇ Securities, LLC as placement agent (the “Placement
Agent”) (and the Placement Agent has engaged ▇▇▇▇▇▇▇▇ Capital Corp. to
assist it in its role as Placement Agrent) in the Offering; and
WHEREAS,
Subscriber wishes to purchase, and the Company wishes to sell, upon the terms
and conditions stated in this
Agreement, shares of Voting Common Stock (the “Voting
Shares”) and Class B Non-Voting Common Stock (the “Class B
Shares”) in the aggregate numbers indicated below such Subscriber’s name
on the signature page of this agreement (and subject to Section 1 hereof);
and
NOW THEREFORE, in consideration of the
representations, warranties, covenants and agreements contained in this
Agreement, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE
I
PURCHASE
AND SALE OF SECURITIES
1.1 Sale of Securities. Subject to
the terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, the Company hereby agrees to issue and sell to
the
Subscriber
and the Subscriber agrees to purchase from the Company, upon Closing (as such
term is defined in Section 1.3 of this Article I), shares of Common Stock and a
warrant in the form attached hereto as Exhibit A to purchase
shares of Common Stock (the “Warrant
Shares”), as described herein for an aggregate purchase price all as set
forth by the Subscriber on the signature page hereto (the “Purchase
Price”). This Offering is only being made to the Subscriber on
the condition that the Subscriber qualifies as an “accredited investor” (as
defined in Rule 501 under the Securities Act of 1933, as amended (the “Securities
Act”)). To the extent that, as of and giving effect to the consummation
of the Offering on the terms described herein, Subscriber would be deemed for
purposes of the Bank Holding Company Act of 1956 (“BHCA”) or the Change in Bank
Control Act (“CBCA”) to
own, control or have the power to vote voting securities (as such term is
defined in the regulations under the BHCA) equal to 5.0% or more of the
aggregate number of outstanding shares of Voting Stock (the “Voting Ownership
Limit”), Subscriber’s Subscription for Voting Shares in excess of the
Voting Ownership Limit, unless otherwise instructed by Subscriber, shall be
deemed to be, automatically and without further action on the part of Subscriber
or the Company, a Subscription for Class B Shares in an amount equal to such
excess; provided, that in no
event shall Subscriber be obligated to purchase a number of shares of Common
Stock which would cause Subscriber to own or control in excess of 24.99% of the
total stockholder’s equity of the Company. Subscriber understands
that, subject only to the provisions of Articles 7 and 8 of this Agreement,
Subscriber (i) is not entitled to cancel, terminate or revoke this Agreement or
any of the agreements, representations or warranties of Subscriber hereunder,
and (ii) acknowledges that this subscription is irrevocable. The purchase of the
Common Stock is referred to in this Agreement as the “Purchase.” Neither
the Purchase Price nor the aggregate number of shares of Common Stock issuable
to Subscriber pursuant to this Agreement shall be reduced without Subscriber’s
prior written consent if the aggregate subscriptions to the Offering (including
Subscriber’s subscription) at the Closing exceed $60,000,000.
1.2 Escrow. Immediately following
the execution of this Agreement, the Subscriber will deposit with Chicago Title
Company (the “Escrow
Agent”) immediately available United States funds representing two and
one-half percent (2.5%) of the aggregate Purchase Price (the “Deposit”)
in accordance with and pursuant to the terms of the Escrow Agreement
substantially in the form attached hereto as Exhibit B (the “Escrow
Agreement”).
1.3 Closing. Subject to receipt of
any required regulatory approvals and the other conditions to closing set forth
in Article VII of this Agreement, the closing of the transactions contemplated
hereunder (the “Closing”)
shall occur at such date and place as shall be designated by the Company upon at
least five (5) business days’ prior written notice to the Subscriber (the “Closing
Date”). Closing may be conditioned upon Subscriber’s receipt of
regulatory approvals as more fully set forth in this Agreement. At the
Closing:
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(a)
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Subscriber
shall deliver an amount equal to the difference between the Purchase Price
and the Deposit, in immediately available United States funds, to an
account or accounts designated in writing by the
Company;
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(b)
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Subscriber
and the Company shall have given joint written instructions to the Escrow
Agent to release the Deposit to the Company in accordance with Section
3(a) of the Escrow Agreement;
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(c)
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The
Company shall deliver one or more duly executed Voting Common Stock
certificates and, where applicable, Class B Non-Voting Common Stock
certificates, as the case may be, representing the Common Stock subscribed
for by Subscriber;
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(d)
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The
Company shall deliver duly executed warrants in the form attached hereto
as Exhibit
A (the “Warrant”);
and
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(e)
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The
Company shall deliver a duly executed copy of the letter agreement
attached hereto as Exhibit C (the
“BHCA
Letter”).
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1.4 Acceptance. This Agreement
shall be effective immediately upon acceptance by the Company of the
Subscriber’s fully completed and executed version
of the Investor Questionnaire attached hereto (the “Investor
Questionnaire”) and executed
counterpart of this Agreement and shall thereupon be binding upon the Company
and thereupon Subscriber’s firm offer herein shall be deemed accepted. Such
acceptance by the Company shall be evidenced only by counter-execution and
delivery of this Agreement by the Company, and the Company shall have no
obligation hereunder until the Company shall have executed and delivered to the
Subscriber an executed counterpart of this Agreement.
1.5 Termination. Other
than pursuant to Article VIII hereof, this Agreement may not be terminated by
the Subscriber at any time following the Company’s delivery of an executed
counterpart of this Agreement to the Subscriber. Subscriber
understands that, subject only to the provisions of Articles VII and VIII of
this Agreement, Subscriber (i) is not entitled to cancel, terminate or revoke
this Agreement or any of the agreements, representations or warranties of
Subscriber hereunder, and (ii) acknowledges that this subscription is
irrevocable.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES
2.1 Disclosure.
(a) “Material Adverse
Effect” means a material adverse effect on (1) the business, results
of operation or financial condition of the Company and the Bank taken as a
whole; provided that
Material Adverse Effect shall not be deemed to include the effects, to the
extent such effects do not have a disproportionate impact on the Company as
compared to other depository institution holding companies, of (A) any
facts, circumstances, events, changes or occurrences generally affecting
businesses and industries in which the Company operates, companies engaged in
such businesses or industries or the economy, or the financial or securities
markets and credit markets in the United States or elsewhere in the world,
including effects on such businesses, industries, economy or markets resulting
from any regulatory or political conditions or developments, or any outbreak or
escalation of hostilities, declared or undeclared acts of war, terrorism, or
work stoppages, (B) changes or proposed changes in generally accepted
accounting principles in the United States (“GAAP”) or
regulatory accounting requirements applicable to depository institutions and
their holding companies generally (or authoritative interpretations thereof),
(C) changes or proposed changes in banking and other laws of general
applicability or related policies or interpretations of all Governmental
Entities (as defined in Section 7.1(d)), or (D) changes in the market price
or trading volume of Common Stock (it being understood and agreed that the
exception set forth in this clause (D) does not apply to the underlying
reason giving rise to or contributing to any such change), or (2) the
legality, validity or enforceability of this Subscription Agreement, or (3) the
ability of the Company or a Subscriber to consummate timely the Purchase and the
other transactions contemplated by this Subscription Agreement and any other
documents, agreements and instruments delivered in connection herewith
(collectively, the “Transaction
Documents”).
(b) “Previously
Disclosed” information means (1) information contained in the SEC
Reports (as defined in Section 2(g)(1), and if applicable, (2) information
provided pursuant
to this Agreement or any confidentiality agreement between the Company and the
Subscriber.
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(c) Each
party acknowledges that it is not relying upon any representation or warranty
not set forth in the Transaction Documents. The Subscriber is aware that it will
bear the economic risk of an investment in the Common Stock and the
Warrants.
2.2 Representations,
Warranties and Covenants of the Company. Except as Previously
Disclosed, the Company represents, warrants and covenants to the Subscriber that
as of the date hereof (or such other date specified herein):
(a) Organization, Authority;
Subsidiaries. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Maryland, with corporate power and authority to own its properties and conduct
its business as currently conducted, and, except as has not had or would not
reasonably be expected to have a Material Adverse Effect, has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such qualification;
and the Bank has been duly organized as a federally chartered stock savings
institution, and its deposit accounts are insured up to applicable limits by the
Federal Deposit Insurance Corporation (the “FDIC”). Schedule 2.2(a)
contains a true and correct list of all of the Company’s subsidiaries (the
“Subsidiaries”).
(b) Authorization of Common
Stock. The Common Stock and Warrant Shares to be issued have
been duly authorized for issuance by the Company and, when duly issued and
delivered by the Company against payment therefor in accordance with this
Agreement and the Warrant, will be duly and validly issued, fully paid and
nonassessable, and the issuance thereof will not be subject to any preemptive or
other similar rights.
(c) Capitalization.
(i) As
of the date of this Agreement, the authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, par value $.01 per share and
5,000,000 shares of Preferred Stock, par value $.01 per share. All
issued and outstanding shares of capital stock of the Company have been, and as
of the Closing Date will be, duly authorized and validly issued and are fully
paid and non-assessable, have been issued in compliance with all applicable
state and federal securities laws in all material respects and were not issued
in violation of, or subject to, any preemptive, subscription or other similar
rights of any stockholder of the Company. As of the date of this
Agreement, the Company has issued 5,445,000 shares of Common Stock, of which
4,244,184 are outstanding and 1,200,816 have been repurchased by the
Company. The Company also has 19,300 issued and outstanding shares of
non-voting Preferred Stock, designated as the Company’s Fixed Rate Cumulative
Perpetual Preferred Stock Series A (“Non-Voting
Preferred”). Except for a warrant to purchase 280,795 shares
of Common Stock (the “Treasury
Warrant”) and outstanding options to purchase 482,396 shares of Common
Stock pursuant to the Company’s equity incentive plan (such options, together
with any similar options granted after the date hereof, “Company Stock
Options”), as of the date of this Agreement, there are no outstanding
options, warrants, rights (including conversion or preemptive rights and rights
of first refusal and similar rights) or agreements, orally or in writing, for
the purchase or acquisition from the Company of any shares of capital stock, and
the Company is not a party to or subject to any agreement or understanding and,
to the Company’s knowledge, there is no agreement or understanding between any
parties, which affects or relates to the voting or giving of written consents
with respect to any security or by a director of the Company. The
Company owns, directly or indirectly, all of the capital stock of the
Subsidiaries, free and clear of any liens, security interests or equitable
interests other than as reflected in the SEC Reports. The Company has
no obligation, contingent or otherwise, to redeem or repurchase any equity
security or any security that is a combination of debt and equity.
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(ii) Immediately
after the Closing and assuming the condition precedent contained in Section
7.1(b) has been satisfied, the Company will have 9,689,729 issued and
outstanding shares of Common Stock, consisting of 8,773,782 shares of Voting
Common Stock and 924,927 shares of Class B
Non-Voting Common Stock, and 19,300 issued and outstanding shares of
Non-Voting Preferred. Except for the Company Stock Options, 1,800,000
Warrant Shares and the Treasury Warrant, immediately after the Closing, there
will be no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal and similar rights) or agreements,
orally or in writing, for the purchase or acquisition from the Company of any
shares of capital stock, and the Company will not be a party to or subject to
any agreement or understanding which affects or relates to the voting or giving
of written consents with respect to any security or by a director of the
Company. Immediately after the Closing, assuming no grants after the
date hereof, 16,500 shares of Common Stock will be available for issuance
pursuant to the Company’s equity incentive plan.
(d) Securities Laws. Assuming the accuracy of the representations and
warranties made by Subscriber contained herein and similar representations by
the other investors in the Offering, the offer and sale of the Common Stock and
Warrants to Subscriber in the manner contemplated by this Agreement, are exempt
from the registration requirements of the Securities Act and any other
applicable laws.
(e) Authorization of this
Agreement. Each of this Agreement and the Warrant has been
duly authorized, executed and delivered by the Company, and assuming due
authorization, execution and delivery of this Agreement by the Subscriber, this
Agreement will constitute a valid, legal and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors’ rights generally or the rights of
creditors of financial institutions, the accounts of whose subsidiaries are
insured by the FDIC and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) (collectively,
the “Enforceability
Exceptions”).
(f) No Material Adverse
Effect. Since December 31, 2009, no fact, circumstance, event,
change, occurrence, condition or development has occurred that, individually or
in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect.
(g) Reports.
(1) The
Company has made all filings required to be made by it under the Securities
Exchange Act of 1934 (as amended, the “Exchange
Act”), including, without limitation, (a) the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2009, (b) the Company’s
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2010, (c)
the Company’s definitive proxy statement dated March 22, 2010, and (d) its other
reports and forms filed with the Securities and Exchange Commission (the “SEC”)
under Sections 13(a), 14(a) or 15(d) of the Exchange Act on or after
January 1, 2010 and prior to the execution and delivery of this Agreement
(collectively, the “SEC
Reports”). The SEC Reports, when filed, complied and will
comply in all material respects with all applicable requirements of the Exchange
Act and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, if and to the extent applicable, and the
rules and regulations of the SEC thereunder applicable to the SEC
Reports. None of the SEC Reports, at the time of filing, contained or
will contain any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading in light of the circumstances in which they
were made. The Company has filed in a timely manner all documents
that the Company was required to file
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under the
Exchange Act during the twelve (12) months preceding the date of this
Agreement. The Company will make all timely filings that the Company
is required to make under the Exchange Act prior to the Closing. The
Company has taken, or will have taken prior to the Closing, all necessary
actions to ensure its continued inclusion in, and the continued eligibility of
the Common Stock for trading on, The Nasdaq Global Market under all currently
effective requirements. Each balance sheet included in the SEC
Reports (including any related notes and schedules) fairly presents and will
fairly present in all material respects the consolidated financial position of
the Company as of its date, and each of the other financial statements included
in the SEC Reports (including any related notes and schedules) fairly presents
and will fairly present in all material respects the consolidated results of
operations of the Company for the periods or as of the dates therein set forth
in accordance with GAAP consistently applied during the periods involved (except
that the interim reports are subject to adjustments which might be required as a
result of year end audit and except as otherwise stated
therein). Such financial statements included in the SEC Reports were,
at that time they were filed, consistent with the books and records of the
Company in all material respects and complied as to form in all material
respects with then applicable accounting requirements and with the rules and
regulations of the SEC with respect thereto. The Company keeps
accounting records in accordance with GAAP in which all material assets and
liabilities, and all material transactions, including off-balance sheet
transactions, of the Company are recorded in material conformity with applicable
accounting principles and disclosed as required by applicable law in the SEC
Reports.
(2) Since
December 31, 2009, the Company and the Bank have filed all reports,
registrations and statements, together with any required amendments thereto,
that was required to be filed with the Office of Thrift Supervision (the “OTS”) and
any other applicable federal or state banking authorities, except where the
failure to file any such report, registration or statement, individually or in
the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect. As of their respective dates, each of the foregoing
reports complied with all applicable rules and regulations promulgated by the
OTS and any other applicable foreign, federal or state securities or banking
authorities, as the case may be, except for any failures that, individually or
in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect.
(h) No General Solicitation or
General Advertising. Neither the Company nor any person acting on its
behalf has engaged or will engage in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act)
in connection with any offer or sale of the Common Stock.
(i) Non-contravention. The
Company is not in violation of (i) any term of its Articles of Incorporation, as
amended, or its Amended and Restated Bylaws, (ii) any agreement or instrument to
which it is a party or by which it or any of its properties or assets is bound;
or (iii) any applicable law, ordinance, rule or regulation or any applicable
order, judgment or decree of any court or Governmental Entity, except, in the
case of (ii) or (iii) above, for any violations that would not, individually or
in the aggregate, have a Material Adverse Effect.
(j) Brokers. The
Company has not incurred any obligation for any finder’s or broker’s or agent’s
fees or commissions in connection with the Offering, except that the Company
will pay to the Placement Agent a fee equal to five percent (5%) of the
aggregate proceeds of the Offering in accordance with that certain agreement
entered into between the Company and the Placement Agent (the “Placement
Agreement”). Except for the Placement Agreement, there are no
contracts, agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company for a brokerage commission,
finder’s fee or other like payment as a result of the transactions contemplated
by this Agreement.
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(k) No Other
Agreements. None of
the terms of subscription in the Offering offered to another investor therein is
more favorable than any provision of this Agreement, and no such other investor
has been offered any rights under any “side letter” which have not also been
offered to Subscriber.
(l) Litigation. Except as Previously Disclosed, (a) there is no
action, suit, proceeding or investigation pending or, to the Company’s
knowledge, currently threatened against the Company or the Bank that could
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect, and (b) neither the Company nor the Bank is a party to
or subject to the provisions of any order, writ, injunction, judgment or decree
of any court, Governmental Entity or other governmental authority that could
reasonably be expected to have a Material Adverse Effect.
(m) Taxes. The
Company has filed all material federal, state and foreign income and franchise
tax returns and has paid or accrued all taxes shown as due thereon, and the
Company has no knowledge of a tax deficiency which has been or might be asserted
or threatened against it which is reasonably likely to have a Material Adverse
Effect.
(n) Disclosure. No
statement (including any representation or warranty) by the Company contained in
this Agreement, the exhibits or schedules attached hereto, or any Transaction
Document, when read together with the SEC Reports, contains any untrue statement
of a material fact or omits to state a material fact reasonably necessary to
make the statements contained herein or therein not misleading.
(o) Warrants. The
Company covenants and agrees that, for as long as Subscriber holds the Warrant
or any portion thereof, it shall not issue any warrant or other right or option
to purchase its capital stock other than the Company Stock Options (including
any warrants issued in connection with the Closing) that provides for
adjustments to the number of shares issuable upon the exercise thereof that (i)
are more favorable to the holder thereof than the adjustments provided for in
Section 4 of the Warrant or (ii) could reasonably be expected to have a
material adverse effect on Subscriber’s percentage ownership (whether
of voting or non-voting securities) of the Company.
2.3 Representations,
Warranties and Covenants Of The Subscriber. The Subscriber hereby
represents, warrants and covenants to the Company that as of the date hereof
(and, as applicable, agrees):
(a) The
Subscriber understands and acknowledges that (i) the offering and sale of the
Common Stock is intended to be exempt from registration under the Securities Act
pursuant to Rule 506 promulgated under the Securities Act, (ii) the Common Stock
has not been registered under the Securities Act, and (iii) the Company has
represented to the Subscriber that the Common Stock has been offered and sold by
the Company in reliance upon the foregoing exemption from registration as well
as corresponding exemptions from registration under any applicable state
securities laws and that the reliance on such exemptions is predicated upon the
accuracy of Subscriber’s representations and warranties in this Agreement and
the Investor Questionnaire. Subscriber further understands that the
shares of Common Stock to be acquired hereunder are characterized as “restricted
securities” under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain limited
circumstances and in accordance with the terms and conditions set forth in the
legends described below. In this connection, Subscriber represents
that Subscriber is familiar with Securities and Exchange Commission Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act.
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(b) Subscriber
understands and acknowledges that the certificates evidencing the Common Stock
to be purchased hereunder will bear substantially the following
legend:
THE
SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE AFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED.
(c) The
Subscriber is purchasing the Common Stock for its own account, for investment,
and not with a view to, or for offer or sale in connection with, any
distribution thereof in violation of the Securities Act or other applicable
securities laws, subject to any requirement of law that the disposition of its
property be at all times within its control and subject to its ability to resell
such Common Stock pursuant to an exemption from registration available under the
Securities Act or any other applicable securities law.
(d) The
Subscriber represents and warrants that neither the Company nor the Placement
Agent is acting as a fiduciary or financial or investment adviser for the
Subscriber.
(e) The
Subscriber represents and warrants that it is not relying (for purposes of
making any investment decision or otherwise) upon any advice, counsel or
representations (whether written or oral) of the Company (other than the
representations and warranties of the Company contained in this Agreement), the
Placement Agent or their respective legal counsel, advisors and
agents.
(f) The
Subscriber acknowledges that it has conducted a review and analysis of the
business, assets, condition and operations of the Company, together with the
representations and warranties of the Company set forth in this Agreement that
the Subscriber considers sufficient for purposes of the Purchase. The
Subscriber represents and warrants that (i) it has consulted with its own
legal, regulatory, tax, business, investment, financial and accounting advisers
in connection herewith to the extent it has deemed necessary, (ii) it has
had a reasonable opportunity to ask questions of and receive answers from
officers of the Company concerning the Company’s financial condition and results
of operations and the purchase of the Common Stock, and any such questions have
been answered to its satisfaction, (iii) it has had the opportunity to
review all publicly available records and filings concerning the Company and the
Bank and it has carefully reviewed such records and filings that it considers
relevant to making an investment decision, and (iv) it has made its own
investment decisions based upon its own judgment, due diligence and advice from
such advisers as it has deemed necessary. The Subscriber further
represents and warrants that, except for the Company’s management and the
Placement Agent, no person made any representations or warranties concerning the
Company, including as to the accuracy or completeness of the information
contained in this Agreement or any Transaction Document.
(g) The
Subscriber represents and warrants that it is an “accredited investor” within
the meaning of Rule 501 under Regulation D promulgated under the Securities Act,
and that:
(1) the
information contained in the Investor Questionnaire is complete, accurate, and
true in all respects, and agrees to notify and supply corrective information
promptly to the Company if any such information becomes inaccurate or
incomplete.
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(2) the
Subscriber has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an investment in the
Common Stock.
(3) the
Subscriber understands that neither the SEC, OTS, FDIC nor any securities
administrator of any state has made any finding or determination relating to the
fairness of this investment or recommended or endorsed, or will recommend or
endorse, the offering of the securities purchased hereby.
(4) the
Subscriber acknowledges that no general solicitation or general advertising
(including communications published in any newspaper, magazine or other
broadcast) has been received by it and that no public solicitation or
advertisement with respect to the offering of the securities purchased hereby
has been made to it.
(5) no
person has made any direct or indirect representation or warranty of any kind to
the Subscriber with respect to the economic return which may accrue to the
Subscriber.
(6) the
Subscriber is not a participant-directed employee plan, such as a 401(k) plan,
or any other type of plan referred to in paragraph (a)(1)(i)(D) or
(a)(1)(i)(E) of Rule 144A promulgated under the Securities Act, or a trust
fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the
assets of such a plan, unless investment decisions with respect to the plan are
made solely by the fiduciary, trustee or sponsor of such plan.
(h) The
Subscriber represents and warrants that (i) it is not (a) an “employee
benefit plan” (as defined in Section 3(3) of the United States Employee
Retirement Income Security Act of 1974, as amended (“ERISA”))
which is subject to the provisions of Part 4 of Subtitle B of
Title I of ERISA, or any entity whose underlying assets include the assets
of any such plan (an “ERISA
Plan”), (b) any other “plan” (as defined in Section 4975(e)(1)
of the United States Internal Revenue Code of 1986, as amended (the “Code”))
which is subject to the provisions of Section 4975 of the Code or any
entity whose underlying assets include the assets of any such plan (a “Plan”),
(c) an entity whose underlying assets include the assets of any such ERISA
Plan or other Plan by reason of Department of Labor regulation
section 2510.3-101 or otherwise, or (d) a governmental or church plan
that is subject to any federal, state or local law which is substantially
similar to the provisions of Section 406 of ERISA or Section 4975 of
the Code (a “Similar
Law”); or (ii) the purchase, holding and disposition of any such
Common Stock by it will satisfy the requirements for exemptive relief under
Prohibited Transaction Class Exemption (“PTCE”)
▇▇-▇▇, ▇▇▇▇ ▇▇-▇, ▇▇▇▇ 91-38, ▇▇▇▇ ▇▇-▇▇, ▇▇▇▇ 96-23 or a similar exemption, or,
in the case of a plan subject to a Similar Law, will not result in a non-exempt
violation of such Similar Law.
(i) To
the Subscriber’s Knowledge no notice to, filing with, exemption or review by, or
authorization, consent or approval of, any Governmental Entity is required to be
made or obtained by the Subscriber in connection with the consummation by the
Subscriber of the Purchase and the other transactions contemplated by the
Transaction Documents. Subscriber has been duly formed and is validly
existing as a limited partnership in good standing under the laws of the State
of Delaware, with power and authority to own its properties and conduct its
business as currently conducted, and, except as has not had or would not
reasonably be expected to have a Material Adverse Effect, has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification. The Agreement constitutes the legal, valid and binding
obligations of the Subscriber, enforceable in accordance with its terms, except
to the extent that enforceability may be limited by the Enforceability
Exceptions.
9
(j) Subscriber
holds no shares of Common Stock as of the date hereof. The Subscriber
does not have any agreement, arrangement or understanding with any person (other
than the Company) to acquire, dispose of or vote any securities of the
Company.
(k) The
Subscriber acknowledges and agrees that the Offering involves securities for
which only a limited trading market exists, thereby requiring any investment to
be maintained for an indefinite period of time. The purchase of the Common Stock
involves risks which the Subscriber has evaluated, and the Subscriber is able to
bear the substantial economic risk of the investment for an indefinite period of
time, has no need for liquidity in such investment and can afford a complete
loss of such investment. The Subscriber’s overall commitment to investments that
are not readily marketable is not, and its acquisition of the Common Stock will
not cause such overall commitment to become, disproportionate to its net worth
and the Subscriber has adequate means of providing for its current needs and
contingencies.
(l) Subscriber
has not employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finder’s fees, and no
broker or finder has acted directly or indirectly for Subscriber, in connection
with the Purchase.
(m) The
Subscriber acknowledges and agrees that it never has been represented,
guaranteed or warranted by the Company, any of the officers, directors,
stockholders, partners, employees or agents of the Company, or any other
persons, whether expressly or by implication, that: (a) the Company or the
Subscriber will realize any given percentage of profits and/or amount or type of
consideration, profit or loss as a result of the Company’s activities or the
Subscriber’s investment in the Company; or (b) the past performance or
experience of the management of the Company, or of any other person, will in any
way indicate the predictable results of the ownership of the Common Stock or of
the Company’s activities.
(n) [Reserved.]
(o) Subscriber
acknowledges and agrees that any dividends or other distributions paid to
Subscriber by the Company will be paid to, and any contributions made by it to
the Company will be made from, an account in Subscriber’s name unless the
Company, in its sole discretion, agrees otherwise.
(p) Subscriber
agrees to provide any information reasonably requested by the Company which the
Company reasonably believes will enable the Company to comply with all
applicable laws, rules and regulations, including without limitation any
anti-money laundering and any other laws, rules and regulations applicable to
the Company or to any investment held or proposed to be held by the
Company.
(q) [Reserved.]
(r) SUBSCRIBER
SHOULD CHECK THE OFFICE OF FOREIGN ASSETS CONTROL WEBSITE AT ▇▇▇.▇▇▇▇▇.▇▇▇/▇▇▇▇
BEFORE MAKING THE FOLLOWING REPRESENTATIONS:
(i) Subscriber
understands that federal regulations and executive orders administered by the
United States Department of the Treasury’s Office of Foreign Assets Control
(“OFAC”)
prohibit, among other things, the engagement in transactions with, and the
provision of services to, certain foreign countries, territories, entities and
individuals.
(ii) Subscriber
represents that no portion of the Purchase Price is, or will be, directly or
indirectly derived from activities that contravene federal, state or
international laws and regulations,
10
including
anti-money laundering laws and regulations. Federal regulations and Executive
Orders administered by OFAC prohibit, among other things, the engagement in
transactions with, and the provision of services to, certain foreign countries,
territories, entities and individuals. The lists of OFAC prohibited
countries, territories, persons and entities can be found on the OFAC website at
▇▇▇.▇▇▇▇▇.▇▇▇/▇▇▇▇. In addition, the programs administered by OFAC
(the “OFAC
Programs”) prohibit dealing with individuals1 or entities in certain countries
regardless of whether such individuals or entities appear on the OFAC
lists.
(iii) To
the best of Subscriber’s knowledge, none of: (1) Subscriber; (2) any person
controlling or controlled by Subscriber; (3) if Subscriber is a privately-held
entity, any person having a beneficial interest in Subscriber; or (4) any person
for whom Subscriber is acting as agent or nominee in connection with this
investment is a country, territory, individual or entity named on an OFAC list,
or a person or entity prohibited under the OFAC Programs. Please be advised that
the Company may not accept any amounts from a prospective Subscriber if such
prospective Subscriber cannot make the representation set forth in the preceding
paragraph. Subscriber agrees to promptly notify the Company should Subscriber
become aware of any change in the information set forth in these
representations. Subscriber understands and acknowledges that, by law, the
Company may be obligated to “freeze the account” of Subscriber, by segregating
the assets in the account in compliance with governmental regulations, and may
also be required to report such action and to disclose Subscriber’s identity to
OFAC.
(iv) To
the best of Subscriber’s knowledge, none of: (A) Subscriber; (B) any person
controlling or controlled by Subscriber; (C) if Subscriber is a privately-held
entity, any person having a beneficial interest in Subscriber; or (D) any person
for whom Subscriber is acting as agent or nominee in connection with this
investment is a senior foreign political figure2, or any immediate family3 member or close associate4 of a senior foreign political figure,
as such terms are defined in the footnotes below; and
(v) If
Subscriber is affiliated with a non-U.S. banking institution (a “Foreign
Bank”), or if Subscriber receives deposits from, makes payments on behalf
of, or handles other financial transactions related to a Foreign Bank,
Subscriber represents and warrants to the Company that: (1) the Foreign Bank has
a fixed address, other than solely an electronic address, in a country in which
the Foreign Bank is authorized to conduct banking activities; (2) the Foreign
Bank maintains operating records related to its banking activities; and (3) the
Foreign Bank is subject to inspection by the banking authority that licensed the
Foreign Bank to conduct banking activities.
(r) Subscriber
has reviewed the merits of investing in the Company and has reached its decision
to invest in the Company independently from any other investors in the
Company.
______________________________
1 These individuals include
specially designated nationals, specially designated narcotics traffickers and
other parties subject to OFAC sanctions and embargo programs.
2 A "senior foreign
political figure" is defined as a senior official in the executive, legislative,
administrative, military or judicial branches of a foreign government (whether
elected or not), a senior official of a major foreign political party, or a
senior executive of a foreign government-owned corporation. In addition, a
"senior foreign political figure" includes any corporation, business or other
entity that has been formed by, or for the benefit of, a senior foreign
political figure.
3 "Immediate family" of a
senior foreign political figure typically includes the figure's parents,
siblings, spouse, children and in-laws.
4 A "close associate" of a
senior foreign political figure is a person who is widely and publicly known to
maintain an unusually close relationship with the senior foreign political
figure, and includes a person who is in a position to conduct substantial
domestic and international financial transactions on behalf of the senior
foreign political figure.
11
(s) Other
than this Agreement and the BHCA Letter,
Subscriber has no agreement, arrangement or understanding with any other person
for the purpose of acquiring, holding, controlling, voting, distributing or
disposing of any securities of the Company. Any such agreement,
arrangement or understanding shall be subject to the prior written approval of
the Company and compliance with any applicable regulatory
requirements.
(t) Subscriber
(i) has no present intention of acquiring control of the Company, as “control”
is defined in 12 C.F.R. Part 303, Subpart E, or 12 C.F.R. Part 574 (or
any other applicable banking regulation); (ii) will not acquire control in the
future without the prior approval of all applicable Government Entities; and
(iii) is not participating, has not participated with, and has no current
intention to participate in the future with any other investor in the Offering
in any joint activity or parallel action towards a common goal between or among
such investors of acquiring control of, or exerting control over, the
Company.
(u) No
other person holding Common Stock or that, to the knowledge of Subscriber,
presently proposes to acquire shares of Common Stock is (i) under common
control with Subscriber, (ii) a controlling shareholder, partner, trustee,
officer, or director of Subscriber or has policy-making functions with respect
to Subscriber or (iii) advised by any investment advisor or manager who performs
substantially the same services to such person as provided to Subscriber,
unless, with regard to this clause (u), all such persons together with
Subscriber would (A) own, control or have the power to vote shares of Voting
Common Stock not in excess of the Voting Ownership Limit or (B) own or control
no more than 24.99% of the Company’s total equity outstanding, in each case,
determined immediately after giving effect to the issuance of the shares of
Common Stock to all investors in the Offering.
(v) Subscriber
will not, without first determining whether the prior approval of any
Governmental Entity is required and, if such approval is required, obtaining
such approval, directly or indirectly seek to appoint any director or executive
officer to the Company or otherwise attempt to direct the management or policies
of the Company. Subscriber also represents that neither it nor any
Account has discussed the Purchase or the Private Placement or the contents
of this Agreement with any other party or potential investors,
except as expressly permitted under the terms of this Agreement.
(w) Subscriber
has not engaged, and will not engage, as part of a group consisting of
substantially the same persons as the investors in the Company, in substantially
the same combination of interests, in any other banking or nonbanking activities
or business ventures in the United States.
Subscriber
acknowledges and agrees that the executed Investor Questionnaire is an integral
part of this Agreement and shall be deemed incorporated by reference
herein.
Subscriber
agrees to promptly notify the Company should Subscriber become aware of any
change in the information set forth in this Section 2.3 which may make any such
representation contained therein to be untrue or incorrect in any material
respect.
Subscriber
authorizes the Placement Agent to rely on Subscriber’s representations and
warranties contained in Section 2.3(g) above and in the Investor Questionnaire
solely for purposes of determining whether the Offering is exempt from the
Securities Act.
12
ARTICLE
III
SURVIVAL
3.1 All
representations, warranties, and covenants contained in this Agreement shall
survive the delivery of the Common Stock to the Subscriber.
ARTICLE
IV
[RESERVED]
ARTICLE
V
COVENANTS
5.1 As
promptly as practicable following the Closing, the Company shall use its
reasonable best efforts to redeem in full all of the issued and outstanding
shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock Series A
sold to the U.S. Treasury on November 21, 2008 (the “TARP
Redemption”).
5.2 From
the date of this Agreement until the earlier of (a) the Closing and (b) a
termination of this Agreement in accordance with Article VIII hereof, the
Company shall not and shall cause the Bank and their respective representatives
not to, directly or indirectly, (i) solicit, initiate or knowingly encourage
(including by way of providing information) the submission of any inquiries,
proposals or offers that constitute or may reasonably be expected to lead to any
Competing Transaction, (ii) engage in any discussions or negotiations, or
provide or cause to be provided any non-public information or data relating to
the Company or any the Bank in connection with, or have any discussions with any
person relating to, an actual or proposed Competing Transaction, (iii) otherwise
cooperate with or assist or participate in, or facilitate any such inquiries,
proposals, offers, discussions or negotiations to make or implement any
Competing Transaction or (iv) execute or enter into, any letter of intent,
agreement in principle, merger agreement, acquisition agreement, option
agreement or other similar agreement relating to any Competing
Transaction. As used here, the term “Competing
Transaction” means any inquiry, proposal or offer, filing of any
regulatory application or notice (whether in draft or final form) or disclosure
of an intention to do any of the foregoing from any person relating to any
(v) direct or indirect acquisition or purchase of a business that
constitutes ten percent (10%) or more of the total revenues, net income, assets
or deposits of the Company and the Bank taken as a whole, (w) direct or
indirect acquisition or purchase of any class of debt or equity securities
representing five percent (5%) or more of the voting power of the Company or the
Bank, (x) issuance of any equity or debt securities by the Company or the Bank
to any person or group other than pursuant to Previously Disclosed benefit plans
as in effect as of the date hereof, (y) tender offer or exchange offer that
if consummated would result in any person beneficially owning ten percent (10%)
or more of any class of equity securities of the Company or (z) merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or the Bank, other than the
Offering and the transactions contemplated by this Agreement.
5.3 The
Company shall provide for the registration, offering and sale of the shares of
Common Stock purchased by Subscriber hereunder and the Warrant Shares in
accordance with the terms of Schedule 5.3 to this
Agreement.
5.4 As
promptly as practicable following the TARP Redemption, the Bank shall use
reasonable best efforts to enter into an agreement with each of Messrs Ganz and
▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇,
13
▇▇.
▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ (each, an “Executive”)
providing for the Bank, immediately following the execution thereof, to pay to
such Executive one half of the amount that would have been due to such Executive
pursuant to the severance agreement by and between such Executive and the Bank
(each, a “Change of Control
Agreement”) had the Offering constituted a “change of control” (as
defined in the applicable Change of Control Agreement) and the employment of
such Executive ceased (other than as a result of a “Termination for Cause,” as
defined in the applicable Change in Control Agreement), with the balance of such
amount payable if the employment of such Executive actually ceases (other than
as a result of a “Termination for Cause,” as defined in the applicable Change in
Control Agreement), in each case during the period beginning upon the Closing
and ending on the three (3) year anniversary thereof; provided that any such
Executive receiving payment pursuant to this Section 5.4 shall have executed a
customary waiver and release that, among other matters, provides for a waiver of
any right of payment, any claim or any other compensation relating to such
Executive’s Change of Control Agreement or similar agreement and with regard to
the Offering.
5.5 Subject
to regulatory approval, the Company shall use its reasonable best efforts to
enter into an employment agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (“▇▇▇▇▇▇▇▇”),
providing for ▇▇▇▇▇▇▇▇ to be appointed Chief Executive Officer or President of
the Company, and to appoint ▇▇▇▇▇▇▇▇ to the office of Chief Executive Officer or
President of the Company upon or promptly following the Closing.
5.6 The
Company shall use the proceeds from the Offering as set forth on Schedule
5.6.
5.7 At
or prior to the Closing, the Company shall deliver written evidence, in form and
substance satisfactory to Subscriber, that upon each of the Closing and the
consummation of the TARP Redemption: (a) Subscriber will not own, control or
have the power to vote, voting securities equal to or greater than 5.0% of the
aggregate number of outstanding shares of Voting Stock; and (b) Subscriber shall
not own or control shares of Common Stock in excess of 24.99% of the total
stockholder’s equity of Company.
5.8
(a) For
three years following the closing of this Offering and so long as Subscriber
holds at least 90% of the Common Stock purchased hereunder (including for this
purpose shares of Common Stock issuable upon exercise of any warrant issued to
Subscriber in the Offering) if the Company makes any public or nonpublic
offering or sale of Common Stock, or securities convertible into Common Stock
(any such security, a “New
Security”) (other than (i) any Common Stock or other securities issuable
upon the exercise or conversion of any securities of the Company issued or
agreed or contemplated to be issued as of the date hereof; (ii) pursuant to the
granting or exercise of employee stock options or other stock incentives
pursuant to the Company’s stock incentive plans approved by the Board or similar
plan where stock is being issued or offered to a trust, other entity or
otherwise, for the benefit of any employees, officers or directors of the
Company, in each case in the ordinary course of providing incentive
compensation; or (iii) issuances of capital stock as full or partial
consideration for a merger, acquisition, joint venture, strategic alliance,
license agreement or other similar nonfinancing transaction), the
Company will use its commercially reasonable best efforts to give
Subscriber the opportunity to acquire from the Company for the same price (net
of any underwriting discounts or sales commissions) and on the same terms as
such securities are proposed to be offered to others, up to the amount of New
Securities in the aggregate required to enable it to maintain its proportionate
Common Stock-equivalent interest in the Company immediately prior to any such
issuance of New Securities. The amount of New Securities that the Subscriber
shall be entitled to purchase in the aggregate shall be determined by
multiplying (x) the total number or principal amount of such offered New
Securities by (y) a fraction, the numerator of which is the number of shares of
Common Stock held by the Subscriber, and the
14
denominator
of which is the number of shares of Common Stock then outstanding immediately
preceding any offering of New Securities.
(b) Notwithstanding
anything herein to the contrary, in no event shall the Subscriber purchase
securities hereunder to the extent such purchase would result in such
Subscriber, together with its Affiliates (as defined under Rule 405 under the
Securities Act), owning a greater percentage interest in the Company than such
Subscriber held immediately prior to the issuance of the New Securities
(counting for such purposes all shares of Common Stock into or for which any
securities owned by the Subscriber are directly or indirectly convertible or
exercisable) and provided that such acquisition would not result in Subscriber
or its Affiliates (i) being deemed to “control” the Company within the
meaning of the Bank Holding Company Act of 1956, as amended (the “BHC Act”),
and the Change in Bank Control Act of 1978, as amended (the “CIBC Act”)
or the Home Owners Loan Act, as amended and any rules and regulations
promulgated thereunder (“HOLA”) or
(ii) (A) owning, controlling or having the power to vote, voting
securities (under the meaning of the HOLA or the BHC Act, whichever is
applicable to the Company, and the rules and regulations promulgated thereunder)
equal to or greater than 5.0% of the aggregate number of outstanding shares of
Voting Stock, or (B) owning or controlling shares of Common Stock in excess of
24.99% of the total stockholder’s equity of Company. For purposes of
calculating the beneficial ownership of Subscriber and its Affiliates under this
Section 5.8(b), (x) any security that is convertible into, or exercisable
for, any such voting securities or Common Stock that is beneficially owned by
Subscriber or its Affiliates shall be treated as fully converted or exercised,
as the case may be, into the underlying voting securities or Common Stock, and
(y) any security convertible into, or exercisable for, the Common Stock
that is beneficially owned by any person other than Subscriber or any of its
Affiliates shall not be taken into account).
(c) The
Company will also use its commercially reasonable best efforts to give
Subscriber the opportunity to acquire from the Company in any future public or
private offering of the Company’s debt, equity or trust preferred securities
other than a New Security (“Other
Securities”). The Company and the
Subscriber shall cooperate in good faith to facilitate the Subscriber’s
participation in any offering involving a New Security or Other Securities,
however, the Company will not be required to incur any expense, delay or risk
that the offering may not be completed related to the Subscriber’s proposed
participation in any such offering, including any required approvals or consents
Subscriber must obtain. The assurances given to Subscriber described herein
shall be personal to Subscriber and the transfer, assignment and/or conveyance
of any rights arising from such assurances from Subscriber to any other person
and/or entity is prohibited and shall be void and of no force or
effect.
ARTICLE
VI
[RESERVED]
ARTICLE
VII
CLOSING
CONDITIONS
7.1 The
obligation of the Company to consummate the Purchase is subject to the following
conditions:
(a) the
representations and warranties of Subscriber contained in Section 2.3 of this
Agreement shall be true and correct on and as of Closing in all material
respects (except for those representations and warranties which are qualified by
materiality, which shall be true and correct in all respects) with the same
effect as though such representations and warranties had been made on and as of
15
Closing
(except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specified date);
(b) at
or simultaneously with the Closing, the Company shall have received gross
proceeds from the sale of shares of its Common Stock in the Offering to
purchasers other than Subscriber at least equal to $45,000,000.00 in the
aggregate;
(c) requisite
shareholder approval required, if any, in connection with the shares of Common
Stock to be sold in the Offering, including without limitation the Common Stock,
for the purposes of Nasdaq Rule 5635 or any successor rule thereto shall have
been obtained;
(d) the
Company shall have received all approvals, consents or non-objections of all
applicable governmental agencies, authorities or instrumentalities having
supervisory or regulatory authority with respect to the Company or the Bank
(each, a “Governmental
Entity”), including but not limited to the Board of Governors of the
Federal Reserve System, the OTS and the FDIC, as applicable, that are required
prior to the Closing Date for the consummation of the Offering;
(e) the
full Purchase Price shall have been received by the Company;
(f) Subscriber
shall have duly executed the Investor Questionnaire;
(g) no
proceedings shall have been initiated or threatened by any Governmental Entity
or other governmental authority or any other third party seeking to enjoin or
otherwise restrain or to obtain an award for damages in connection with the
consummation of Transaction, including without limitation the Offering and the
Purchase contemplated hereby, or which would reasonably be expected to result in
a Material Adverse Effect;
(h) no
Governmental Entity shall have imposed any conditions or restrictions on the
Company or the Bank that would materially adversely impact the business
activities of the Company or the Bank or materially impair, impede or delay
certification by the FDIC of the Bank as being eligible to bid in connection
with the sale of failed depository institutions by the FDIC; and
(i) any
Interagency Notice of Change in Control with respect to the Company or the Bank
required to be submitted by Subscriber or any affiliate of Subscriber pursuant
to 12 U.S.C. § 1817(j) and 12 C.F.R. Part 303 required to consummate the
Offering shall have received the approval or non-objection of the Bank
Regulators and/or FDIC and the OTS, as applicable, to the reasonable
satisfaction of the Company.
7.2 The
obligation of Subscriber to deliver the balance of the Purchase Price to the
Company pursuant to Section 1.3(a) hereof is subject to the following
conditions:
(a) the
representations and warranties of the Company contained in Section 2.2 of this
Agreement shall be true and correct on and as of Closing in all material
respects (for the avoidance of doubt including the related schedules thereto and
except for those representations and warranties which are qualified by
materiality, which shall be true and correct in all respects) with the same
effect as though such representations and warranties had been made on and as of
Closing (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specified date);
(b) Subscriber
shall have received a certificate executed by the Chief Executive Officer or
Chief Financial Officer of the Company, dated as of the Closing, certifying that
the condition precedent set forth in Section 7.2(a) has been satisfied and that
all covenants, agreements and conditions required to
16
be
satisfied by the Company under this Agreement and the BHCA Letter at or prior to
the Closing have been performed, satisfied and complied with by the Company in
all material respects.
(c) requisite
shareholder approval required, if any, in connection with the shares of Common
Stock to be sold in the Offering, including without limitation the Common Stock,
for the purposes of Nasdaq Rule 5635 or any successor rule thereto shall have
been obtained;
(d) Subscriber
shall have received a copy of the Company’s Articles of Incorporation, as
amended and certified by the Secretary of State of the State of Maryland,
authorizing the Class B Non-Voting Common Stock and such Articles of
Incorporation, as amended, shall be satisfactory to Subscriber in its sole and
absolute discretion;
(e) the
Class B Non-Voting Common Stock to be issued to Subscriber shall not, in the
sole judgment of Subscriber, constitute a “voting security” (as defined in 12
CFR § 225.2(q)) or “voting stock” (as defined in 12 CFR §
574.2(u));
(f) as
of and giving effect to the Closing and the consummation of the Offering on the
terms described herein, and assuming that no person or entity affiliated with
Subscriber or deemed to be acting in concert with Subscriber pursuant to 12
C.F.R. Part 303, Subpart E, or 12 C.F.R. Part 574 (or any other applicable
banking regulation) has subscribed for any shares of Common Stock in the
Offering (except to the extent that Subscriber has previously provided notice of
such subscription to the Company in writing), (i) Subscriber shall not own,
control or have the power to vote, voting securities equal to 5.0% or more of
the aggregate number of outstanding shares of Voting Stock; and (ii) Subscriber
shall not own or control shares of Common Stock in excess of 24.99% of the total
stockholder’s equity of Company.
(g) the
consummation of the Offering would not result in Subscriber or any of its
affiliates being deemed to have a direct or indirect controlling interest in the
Company or the Bank or otherwise require any of them to register as a savings
and loan holding company under the Savings and Loan Holding Company provisions
of the Home Owners’ Loan Act, as amended, and Subscriber shall have received a
written non-control determination from the Office of Thrift Supervision in form
and substance reasonably satisfactory to Subscriber to such effect;
(h) no
proceedings shall have been initiated or threatened by any Governmental Entity
or other 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 Transaction, including without limitation the Offering and the
Purchase contemplated hereby;
(i) at
or simultaneously with the Closing, the Company shall have received gross
proceeds from the sale of shares of its Common Stock in the Offering to
purchasers other than Subscriber at least equal to $45,000,000.00 in the
aggregate;
(j) since
the date of this Agreement, there shall not have been any Material Adverse
Effect;
(k) no
Governmental Entity shall have imposed any conditions or restrictions on the
Company or the Bank or Subscriber or its affiliates that would materially
adversely affect the business of the Company, the Bank
or Subscriber;
(l) Subscriber
shall have received the BHCA Letter, duly executed by the Company;
and
(m) since
the date of this Agreement, there shall have been no grants or awards of Company
Stock Options by the Company and the Company shall have cancelled or otherwise
terminated (or shall,
17
as soon
as permitted under applicable law following the Closing Date, cancel or
otherwise terminate) all Company Stock Options and the consideration paid by the
Company in respect of such cancellation and/or termination shall be equal to
$3.00 per Company Stock Option.
ARTICLE
VIII
TERMINATION
8.1 Termination;
Certain Fees.
(a) This
Agreement may be terminated prior to the Closing:
(i) By
mutual written agreement of the Company and
Subscriber;
(ii) by
the Company or Subscriber, in the event that the Closing Date does not occur on
or before December 31, 2010 or such later date, if any, as Subscriber and the
Company agree upon in writing (as such date may be extended, the “Outside
Date”); provided, however, that the right to terminate this Agreement
pursuant to this Section 8.1(a)(ii) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the cause
of, or shall have resulted in, the failure of the Closing Date to occur on or
prior to the Outside Date; or
(iii) by
the Company or Subscriber, upon written notice to the other party, in the event
that any Governmental Entity shall have issued any order, decree or injunction
or taken any other action restraining, enjoining or prohibiting any of the
transactions contemplated by this Agreement, and such order, decree, injunction
or other action shall have become final and nonappealable; or
(iv) by
the Subscriber if the Company does not have written, binding subscriptions to
the Offering totaling $60,000,000 (including Subscriber’s subscription) on or
prior to August 31, 2010.
(b) In
the event of any termination of this Agreement pursuant to Section 8.1(a) (other
than pursuant to Section 8.1(a)(ii) as result of a breach by Subscriber), the
parties shall deliver joint written instructions to the Escrow Agent to promptly
release to the Subscriber the full amount of the Deposit and any interest earned
thereon as of such date in accordance with Section 3(b) of the Escrow
Agreement.
(c) In
the event that the Offering is not consummated as a result, directly or
indirectly, of a breach of this Agreement by the Company that causes or results
in a failure of any of the conditions specified in Article VII hereof to be
satisfied as of the Outside Date, and Subscriber has terminated this Agreement
pursuant to Section 8.1(a)(ii) hereof, the Company shall pay Subscriber an
aggregate fee equal to the Company Termination Fee by wire transfer of same-day
funds on the first business day following the date of such
termination. For the purposes of this agreement, the term “Company
Termination Fee” shall mean an amount equal to the product of (i)
$1,000,000.00 and (ii) (a) the Purchase Price divided by (b) the aggregate
purchase price for all shares of Common Stock subscribed for by all of the
investors in the Offering. The parties hereto acknowledge and agree
that the Company Termination Fee shall constitute Subscriber’s sole remedy in
the event that the Closing shall not have occurred by the Outside Date as a
result, directly or indirectly, of a breach of this Agreement by the
Company.
18
(d) In
the event that the Offering is not consummated as a result, directly or
indirectly, of a breach of this Agreement by Subscriber that causes or results
in a failure of any of the conditions specified in Article VII hereof to be
satisfied as of the Outside Date, and the Company has terminated this Agreement
pursuant to Section 8.1(a)(ii) hereof, the parties shall deliver joint written
instructions to the Escrow Agent, in accordance with the terms of Section 3(c)
of the Escrow Agreement, to: (i) release to the Company from the Subscriber’s
Deposit, an amount (the “Investor
Liquidated Damages Amount”) equal to the lesser of (A) the full amount of
the Deposit and (B) the product of (1) $1,500000.00 and (2)(x) the Purchase
Price divided by (y)
the aggregate purchase price for all shares of Common Stock subscribed for by
all of the investors in the Offering; and (ii) release to Subscriber an amount
equal to the difference between the Deposit and the Investor Liquidated Damages
Amount, together with all Income (as defined in the Escrow
Agreement). The parties hereto acknowledge and agree that the
Investor Liquidated Damages Amount shall constitute the Company’s sole remedy in
the event that any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached by
Subscriber.
(e) In
the event of any termination of this Agreement as provided in Section 8.1(a),
this Agreement (other than Sections 8.1(b), 8.1(c), 8.1(d), 8.1(e) and Article
IX and Article X, which shall remain in full force and effect) shall forthwith
become wholly void and of no further force and effect; provided that nothing
herein shall relieve any party from liability for breach of this Agreement prior
to such termination.
ARTICLE
IX
CONFIDENTIALITY
9.1 Each
party agrees to keep all information furnished by another party pursuant to this
Agreement confidential (“Confidential
Information”) except such information that (i) is or becomes generally
available to the public (other than as a result of a disclosure by the receiving
party in violation of this Agreement), (ii) was available to the receiving
party on a non-confidential basis prior to its disclosure by the disclosing
party, (iii) becomes available to the receiving party on a non-confidential
basis from a person other than the disclosing party who is not known by the
receiving party to be otherwise bound by a confidentiality agreement with the
disclosing party, or is not known by the receiving party to be otherwise
prohibited from transmitting the information to the receiving party, (iv) the
disclosing party agrees may be disclosed or (v) the receiving party is requested
pursuant to, or required by, law, regulation, legal process or regulatory
authority to disclose, and neither party hereto shall release or disclose such
information to any other person, except its auditors, attorneys, financial
advisors, or other consultants and advisors. In the event that any party is
requested pursuant to, or required by, law, regulation, legal process or
regulatory authority to disclose any Confidential Information, such party agrees
that it will provide the other party with prompt notice of such request(s) or
requirement(s) (to the extent legally permitted) to enable the non-disclosing
party to seek an appropriate protective order (at the non-disclosing party’s
sole cost and expense), waive compliance with the provisions of this Agreement
or take other appropriate action. Each party agrees to use its good
faith efforts to assist the other party in obtaining such a protective
order. If, in the absence of a protective order or the receipt of a
waiver hereunder, the disclosing party is nonetheless, in the opinion of its
counsel, compelled to disclose the Confidential Information or else stand liable
for contempt or suffer other censure or significant penalty, such party, after
notice to the non-disclosing party (to the extent legally permitted), may
disclose such Confidential Information that the disclosing party is compelled to
disclose and shall exercise all reasonable efforts to obtain reasonable
assurances that confidential treatment will be accorded to such disclosed
Confidential Information. For the avoidance of doubt, the Company may
present this Agreement and the information provided in the Investor
Questionnaire to
19
such
parties as it deems advisable if compelled by law or called upon to establish
the availability under any Federal or state securities laws of an exemption from
registration of the Offering.
ARTICLE
X
MISCELLANEOUS
10.1 Any
notice or other communication given hereunder shall be deemed sufficient if in
writing and sent by registered or certified mail, return receipt requested,
international courier or delivered by hand against written receipt therefor, or
by confirmed facsimile transmission, to the following addresses, or such other
address as may be furnished to the other parties as herein
provided:
To the
Bank: First
PacTrust Bancorp, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇
President
and Chief Executive Officer
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
To the
Subscriber: At the address set
forth on the signature page hereto.
Unless
otherwise expressly provided herein, notices shall be deemed to have been given
on the date of mailing, except notice of change of address, which shall be
deemed to have been given when received.
10.2 This
Agreement shall not be changed, modified or amended except in writing and signed
by the parties to be charged, and this Agreement may not be discharged except by
performance in accordance with its terms or by a writing signed by the party
to be
charged.
10.3 Except
as otherwise provided herein, this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and assigns. If the Subscriber is more than
one person, the obligation of such Subscriber shall be joint and several and the
agreements, representations, warranties, covenants and acknowledgments herein
contained shall be deemed to be made by and be binding upon each such person and
his or her heirs, executors, administrators, successors and legal
representatives. The obligations of the parties may not be assigned
except in the event of a merger, consolidation or other reorganization
undertaken for a reason other than to assign a party’s obligation, under this
Agreement, provided, that the Subscriber may assign a portion or portions of the
Purchase (and related obligations) to one or more of its Affiliates, provided
further, that at or prior to any such assignment, any such assignee shall
execute a joinder to this Agreement, agreeing to be bound by the terms
hereof.
10.4 This
Agreement contains the entire agreement of the parties with respect to the
matters set forth herein and there are no representations, covenants or other
agreements except as stated or referred to herein; provided, however, that, if
applicable, any confidentiality agreement between the Company and the Subscriber
shall remain in full force and effect except to the extent inconsistent with
this Agreement.
10.5 [Reserved.]
20
10.6 In
the event of a dispute regarding this Agreement that results in litigation or
arbitration, the prevailing party, as determined by the finder of facts, shall
be entitled to an award of reasonable attorneys’ fees.
10.7 Except
to the extent governed by federal law applicable to national savings
associations, all questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws of
the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
New York County, New York, of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding
is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any right to service process in any
manner permitted by law.
10.8 The
parties agree to execute and deliver all such further documents, agreements and
instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.
10.9 This
Agreement may be executed in one or more counterparts each of which shall be
deemed an original, but all of which shall together constitute one and the same
instrument. Electronic transmissions of
signature pages, whether via email, facsimile or other means, shall be effective
as original signatures for all purposes.
10.10 In
the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that the Company’s and the Subscriber’s rights and privileges shall be
enforceable to the fullest extent permitted by law.
10.11 Except
as may be required by applicable law, the Company shall not issue or make, or
cause to have issued or made, any public release or announcement concerning this
Agreement, including Subscriber’s identity, or the transactions contemplated
hereby, including but not limited to the offering of Common Stock to any other
subscriber, unless Subscriber shall have previously consented to such public
release or announcement in writing, which consent may be granted or withheld in
Subscriber’s sole discretion. Any such press release or public statement
required by applicable law naming Subscriber shall only be made by the Company
after reasonable notice and opportunity for review by Subscriber.
10.12 Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, including, with respect to the Company
to the extent shareholder approvals are required (including by virtue of Nasdaq
Rule 5635 or any successor rule thereto) to consummate the Offering, taking all
actions (including making all necessary filings in connection therewith)
necessary, in accordance with applicable law, regulation and its certificate of
incorporation and bylaws, to call and hold a shareholders meeting as promptly as
reasonably practicable following the date hereof, recommending that its
shareholders vote to approve the transactions contemplated by the offering at
such
21
meeting,
and using its reasonable best efforts to obtain such approvals, as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement.
10.13 The
parties agree that irreparable damage would occur and that the parties would not
have any adequate remedy at law in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached by the Company. It is accordingly agreed that
Subscriber shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement by the Company and to enforce specifically the terms and
provisions of this Agreement against the Company, in addition to any other
remedy to which it is entitled at law or in equity.
NOTE:
YOU MUST COMPLETE AND SIGN THE INVESTOR QUESTIONNAIRE ATTACHED
HERETO.
Signatures
appear on the following page
22
IN WITNESS WHEREOF, the
undersigned has caused this Agreement to be executed by its duly authorized
representative as of July 19, 2010.
TCW Shared Opportunity Fund
V,
L.P.
Name of
Subscriber (please print)
By: /s/ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
Name:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title:
Senior Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title:
Senior Vice President
TCW Shared Opportunity Fund
V,
L.P.
Name in
which shares are to be registered
(if
different)
If the
Subscriber is a natural person, the Subscriber’s State of residence
is:
If there
are Joint Subscribers, please check one:
|
|
£
|
Joint
Tenants with Rights of Survivorship
|
|
|
£
|
Tenants-in-Common
|
|
|
£
|
Community
Property
|
If the
Subscriber is not a natural person, it:
· is
the following type of organization: Limited Partnership
· is
organized under the laws of: Delaware
· has
its principal place of business in: Los Angeles,
California
· was
formed for the purpose of: Investing in a variety of portfolio
investments
Subscriber’s
Social Security Number or EIN:
|
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇
▇▇▇▇
Business
Address - Street
Los
Angeles, California 90025
City State Zip
Code
Attn:
▇▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
Telephone
No.:
Facsimile
No.:
Email
Address:
|
Mailing
Address - Street (if different)
City State Zip
Code
Attn:
Telephone
No.:
Facsimile
No.:
Email
Address:
|
23
Number
of shares subscribed for: 1,363,636 (438,689 shares Voting Common Stock, 924,947
shares of Class B Non-Voting Common Stock); Purchase Price: $14,999,9965
You must
pay the Purchase Price pursuant to the instructions to be
provided. THE
SUBSCRIBER IS RESPONSIBLE FOR ALL WIRE TRANSFER FEES IMPOSED BY THE SUBSCRIBER’S
BANK. Wire funds to:
Bank: The Bank of New York
Mellon
ABA Number:
Account name to credit:
Account number to credit: First
PacTrust Bancorp Subscription
NOTE:
THE FOLLOWING MUST BE COMPLETED
Name of
DTC Participant: The Bank of New York Mellon
DTC
Participant Number: 901
Subscriber’s
Account Number with DTC Participant: 355717 TCW SHARED OPPORTUNITY FUND V,
LP
5 Assumes
(1) $60,000,000 offering; and (2) Company’s capitalization does not change
between signing and Closing.
24
Accepted
as of the 27th day of July,
2010.
FIRST
PACTRUST BANCORP, INC.
By: /s/ ▇▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇
President
and Chief Executive Officer
Schedule
5.3
REGISTRATION
RIGHTS
Defined
terms used but not defined in this Schedule 5.3 shall have the meaning ascribed
to such terms in the agreement (including all schedules, annexes and exhibits
thereto, the “Agreement”) to which this Schedule 5.3 is attached.
(a) The
Company shall, as soon as practicable following the Closing Date, but in no
event later than the 30th
business day following the Closing Date, but subject to delay as set forth in
paragraph (c) below (in which case as soon as possible after the lapse of such
postponement or suspension in accordance with the terms thereof) (the
“Registration Deadline’), file with the Securities and Exchange Commission
(“SEC”) a Shelf Registration Statement relating to the offer and sale from time
to time of all of the Registrable Securities by Subscriber and the other
subscribers in the Offering, and the direct and indirect transferees of
Subscriber and such other subscribers (Subscriber, such other subscribers and
such direct and indirect transferees, collectively, the “Holders”), and shall,
if such Shelf Registration Statement is not automatically effective, use its
reasonable best efforts to cause such Shelf Registration Statement to be
declared effective under the Securities Act as soon as possible after filing;
provided, however, that not less than three (3) business days prior to the
filing of the Shelf Registration Statement, the Company shall provide the Holder
(or the investment adviser of such Holder) with a copy of the Shelf Registration
Statement proposed to be filed and the Company shall consider all appropriate
comments provided by such Holder with respect to the Shelf Registration
Statement for inclusion in the Shelf Registration Statement to be
filed.
(b) The
Company shall use its reasonable best efforts to keep such Shelf Registration
Statement continuously effective under the Securities Act in order to permit the
Shelf Prospectus forming a part thereof to be usable by Subscriber (including by
filing post-effective amendments to such Shelf Registration Statement (or a new
Shelf Registration Statement if the initial Shelf Registration Statement
expires)) until the earlier of (i) the date as of which all of Subscriber’s
Registrable Securities have been sold (A) pursuant to the Shelf Registration
Statement or another Registration Statement filed under the Securities Act (but
in no event prior to any applicable period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder) and/or (B) to the public in compliance
with Rule 144 under the Securities Act and (ii) the first anniversary of the
Closing (or, if Subscriber is or becomes an officer or member of the Board of
Directors of the Company, the fifth anniversary of the Closing) (such
period of effectiveness, the “Shelf Period”). The Company shall not
be deemed to have used its reasonable best efforts to keep the Shelf
Registration Statement effective during the Shelf Period if the Company
voluntarily takes any action or omits to take any action that would result in
Subscriber thereby not being able to offer and sell any Registrable Securities
pursuant to such Shelf Registration Statement during the Shelf Period, unless
such action or omission is required by applicable law and except as set forth in
paragraph (c) below. The Company shall use its reasonable best
efforts to meet (and continue to meet) the registrant eligibility requirements
of Form S-3 during the Shelf Period.
(c) The
Company shall not be required to effect a registration pursuant to Schedule
5.3 with respect to securities that are not Registrable Securities and
shall be entitled to postpone the filing or initial effectiveness of,
or suspend the use of, a Shelf Registration Statement if the Company
notifies Subscriber in writing that in the good faith judgment of the
Chief Executive Officer or the Chief Financial Officer of the Company such
registration, offering or use would be materially
detrimental to the Company or any material transaction
under consideration by the Company or would require the disclosure of
information that has not been, and is not otherwise required to be, disclosed to
the public, the premature disclosure of which would be materially
detrimental to the Company. No such postponement or
suspension shall
exceed
60 consecutive days, no subsequent such postponement or suspension shall
commence fewer than 15 days following the expiration of any preceding period,
and the aggregate of all such postponements or suspensions shall not exceed
120 days in any 360-day period. Notwithstanding any other provision of this
Schedule 5.3, but subject to the obligations of the Company in paragraphs (a)
and (b) above, the Registration Deadline shall be extended if, for reasons
beyond the reasonable control of the Company, any of the following (an
“Interruption Event”) shall occur: (i) the SEC refuses to declare the applicable
Registration Statement effective; (ii) if after it has become effective, such
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC such that the Registration Statement shall not
be effective; or (iii) if the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with such
Registration Statement are not satisfied and are not otherwise waived. If an
Interruption Event occurs, the Registration Deadline shall automatically be
extended for a period equal to the duration of such Interruption
Event.
(d) The
Company shall, so long as a Holder owns any Registrable Securities, file the
reports required to be filed by it under the Securities Act and the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and
regulations adopted by the SEC thereunder, and it will take such further action
as Subscriber may reasonably request, all to the extent required from time to
time to enable Subscriber to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
(i) Rule 144 or 144A or Regulation S under the Securities Act, as such
Rules may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the SEC. Upon the written request of Subscriber,
the Company will deliver to Subscriber a written statement as to whether it has
complied with such requirements and, if not, the specifics thereof.
(e) Subscriber
shall, promptly on the Company’s request, (i) furnish to the Company such
information regarding Subscriber, the Registrable Securities held by Subscriber,
the manner of holding any interests therein, and distribution of such
Registrable Securities, as the Company may from time to time reasonably request
in writing, and (ii) provide such consents as the Company may reasonably require
with respect to disclosure of the content of the disclosures and any
identification of Subscriber or its Registrable Securities or the circumstances
in which they are held. Subscriber shall, upon receipt of any notice from the
Company if (i) the SEC requests any amendment or supplement to, or
any additional information in respect of, any Registration Statement or related
prospectus, (ii) the SEC issues any stop order suspending the effectiveness of a
Registration Statement or initiates any proceedings for that purpose, (iii) the
Company receives any notice that the qualification of any Registrable Securities
for sale in any jurisdiction has been suspended or that any proceeding has been
initiated for the purpose of suspending such qualification, or (iv) upon the
discovery, or upon the occurrence of any event, which requires that any changes
be made in such Registration Statement or any related prospectus so that such
Registration Statement or prospectus will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, in light of the
circumstances under which they were made (provided, however, that in the case of
this subclause (iv), such notice need only state that an event of such nature
has occurred, without describing such event), suspend the disposition of any
Registrable Securities covered by such Registration Statement or prospectus
until Subscriber’s receipt of the copies of a supplemented or amended prospectus
or until it is advised in writing by the Company that the use of the
applicable prospectus may be resumed, and, if so directed by the Company
Subscriber will deliver to the Company all copies, other than permanent file
copies, then in Subscriber’s possession of any prospectus covering such
Registrable Securities. If the Company shall have given any such notice during a
period when a Registration Statement is effective, the Registration Deadline
shall be extended by the number of days of such suspension period.
(f) All
Registration Expenses incurred in connection with any registration,
qualification or compliance under this Schedule 5.3 shall be borne by the
Company. All Selling Expenses incurred in
connection
with any registrations of its Registrable Securities hereunder, shall be borne
by Subscriber. Subscriber shall not use any free writing prospectus (as defined
in Rule 405 under the Securities Act) in connection with the sale of
Registrable Securities without the prior written consent of the
Company.
(g) In
case of the Shelf Registration Statement effected by the Company subject to this
Schedule 5.3, the Company shall keep the Subscriber, on behalf of Holder,
advised in writing as to the initiation of such registration, and as to the
completion thereof. In addition, the Company shall, to the extent
applicable to the Shelf Registration Statement:
(i) prepare
and file with the SEC such amendments and supplements to the Shelf Registration
Statement as may be necessary to keep such registration continuously effective
and free from any material misstatement or omission necessary to make the
statements therein, in light of the circumstances, not misleading, and comply
with provisions of the Securities Act with respect to the disposition of all
securities covered thereby during the period referred to in clause (b)
above;
(ii) update,
correct, amend and supplement the Shelf Registration Statement as
necessary;
(iii) notify
the Holder promptly when the Shelf Registration Statement is declared effective
by the SEC, and furnish such number of prospectuses, including preliminary
prospectuses, and other documents incident thereto as Holder may reasonably
request from time to time;
(iv) use
its commercially reasonable efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions of
the United States where an exemption is not available and as Holder may
reasonably request to enable it to consummate the disposition in such
jurisdiction of the Registrable Securities;
(v) notify
Holder at any time when a prospectus relating to the Registrable Securities is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in the Shelf Registration Statement
contains an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading and the Company will prepare a
supplement or amendment to such prospectus, so that, as thereafter delivered to
purchasers of such shares, such prospectus will not contain any untrue
statements of a material fact or omit to state any fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(vi) cause
all such Registrable Securities to be listed on each securities exchange on
which similar securities issued by the Company are then listed and obtain all
necessary approvals from The Nasdaq Global Market for trading
thereon;
(vii) provide
a transfer agent and registrar for all such Registrable Securities not later
than the effective date of the Shelf Registration Statement;
(viii) upon
the sale of any Registrable Securities pursuant to the Shelf Registration
Statement, direct the transfer agent to remove all restrictive legends from all
certificates or other instruments evidencing the Registrable
Securities;
(ix) To
advise the Holder promptly after it has received notice or obtained knowledge of
the existence of any stop order by the SEC delaying or suspending the
effectiveness of the Shelf Registration Statement or of the initiation or threat
of any proceeding for that purpose, and to make
every
commercially reasonable effort to obtain the withdrawal of any order suspending
the effectiveness of the Shelf Registration Statement at the earliest possible
time.
(h) (i) Notwithstanding
anything to the contrary in the Agreement, in connection with any registration
under this Schedule 5.3, the Company shall, without limitation as to time,
indemnify and hold harmless, to the fullest extent permitted by law, Subscriber
(and its officers, directors, agents, partners (general and limited), members,
equity holders and employees, each person who controls Subscriber (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act),
the officers, directors, agents, partners (general and limited), members, equity
holders and employees of each such controlling person and any financial or
investment adviser) (each, an “Registration Indemnified Party”), to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, actions or proceedings (whether commenced or threatened),
reasonable out-of-pocket costs (including, without limitation, reasonable costs
of preparation and reasonable attorneys’ fees) and reasonable out-of-pocket
expenses (including reasonable expenses of investigation) (collectively,
“Registration Losses”), as incurred, arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, prospectus (including the Shelf Prospectus) or form of prospectus or
in any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except to the extent that the same arise out of or are based upon
information furnished in writing to the Company by or on behalf such
Registration Indemnified Party or Subscriber expressly for use therein; provided, that the foregoing
indemnity agreement contained in this paragraph (g) with respect to
such Registration Statement or any preliminary, final or summary
prospectus contained therein or furnished by the Company, or any amendment or
supplement thereto, shall not inure to the benefit of any Registration
Indemnified Party from whom the person asserting any such losses, claims,
damages or liabilities purchased Registrable Securities, where (A) prior to the
written confirmation of the sale of Registrable Securities to such person (the
“Applicable Time”), the Company shall have notified such Registration
Indemnified Party in writing that such Registration Statement or
prospectus contains an untrue statement of a material fact or omits to state
therein a material fact necessary in order to make the statements therein not
misleading, (B) such untrue statement or omission of a material fact was
corrected in a further amendment or supplement to such Registration Statement or
prospectus and such Registration Statement or prospectus was provided to such
Registration Indemnified Party prior to the Applicable Time, (C) such corrected
Registration Statement or prospectus (excluding any document incorporated by
reference therein) was not conveyed by the Registration Indemnified Party to
such person at or prior to the Applicable Time and (D) such loss, claim, damage
or liability would not have occurred had such corrected Registration Statement
or prospectus (excluding any document incorporated by reference therein) been
conveyed to such person as provided for in clause (C) above. Each indemnity and
reimbursement of costs and expenses shall remain in full force and effect
regardless of any investigation made by or on behalf of such Registration
Indemnified Party.
(ii) Subscriber
agrees to, and the Company may require, as a condition to including any
Registrable Securities of Subscriber in any Registration Statement filed
pursuant to this Schedule 5.3 or to entering into any underwriting agreement
with respect thereto, that the Company shall have received an undertaking
reasonably satisfactory to it from Subscriber and each underwriter named in any
such underwriting agreement (each a “Company Indemnifying Party”), severally and
not jointly, to indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed any Registration Statement and each person,
if any, who controls the Company within the meaning of the Securities Act and
all other Holders of Registrable Securities (each, a “Company Indemnitee”),
against any and all Registration Losses, insofar as such Registration Losses
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in such Registration Statement, or any preliminary,
final or summary prospectus contained therein or furnished by the Company to
Company
Indemnifying Party, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company or its representative by or on behalf the Company
Indemnifying Party expressly for use therein. Notwithstanding the
foregoing, Subscriber shall not be liable for Registration Losses in an amount
in excess of proceeds received in a sale under such Registration Statement
(after deducting Selling Expenses).
(iii) Promptly
after receipt by a Registration Indemnified Party or Company Indemnitee (each,
an “Indemnified Party”) of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section, such Indemnified Party will, if a claim in respect
thereof is to be made against, respectively, Company, on the one hand, or
Subscriber, on the other hand (such person, the “Indemnifying Party”), give
written notice to the Indemnifying Party of the commencement of such action;
provided, however, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its or their
obligations under this Section, except to the extent that the Indemnifying Party
is actually materially prejudiced by such failure to give notice, and in no
event shall such failure relieve the Indemnifying Party from any other liability
which it may have to such Indemnified Party. If any such claim or action shall
be brought against an Indemnified Party, and it shall notify the Indemnifying
Party thereof, the Indemnifying Party shall be entitled to participate in the
defense thereof, and, to the extent that it wishes, to assume the defense
thereof with counsel reasonably satisfactory to the Indemnified Party, and after
notice from the Indemnifying Party to such Indemnified Party of its election to
assume the defense thereof, the Indemnifying Party shall not be liable to such
Indemnified Party under this Section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof, other than reasonable costs of investigation; provided, further, that
if, in the Indemnified Party’s reasonable judgment, a conflict of interest
between the Indemnified Party and the Indemnifying Party exists in respect of
such claim, then the Indemnified Party shall have the right to participate in
the defense of such claim and to employ one firm of attorneys reasonably
acceptable to the Indemnifying Party, at the Indemnifying Party’s expense, to
represent such Indemnified Party. No Indemnified Party will consent to entry of
any judgment or enter into any settlement without the Indemnifying Party’s
written consent to such judgment or settlement, which shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, consent to entry of any judgment or enter into any settlement
in respect of which the Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such claim or proceeding.
(iv) If
the indemnification provided for in this Schedule 5.3 is unavailable to an
Indemnified Party with respect to any Registration Losses or is insufficient to
hold such Indemnified Party harmless as contemplated therein, then the
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Registration Losses in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party in connection with the statements or omissions that resulted
in such Registration Losses, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Indemnifying Party or by such Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this Schedule 5.3 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in this Schedule
5.3. Notwithstanding the provisions of this Schedule 5.3,
Subscriber
shall not be required to contribute any amount in excess of the amount by which
the dollar amount of the proceeds received by it from the sale of any
Registrable Securities (after deducting Selling Expenses) exceeds the amount of
any damages which it has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Subscriber’s
obligations in this Schedule 5.3 to contribute shall be several in
proportion to the principal amount of Registrable Securities registered or
underwritten, as the case may be, by or on behalf of it, and not
joint.
(j) The
agreements set forth in this Schedule 5.3 shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties to the Agreement,
including, without limitation and without the need for an express assignment or
assumption, direct and indirect transferees of Subscriber’s Registrable
Securities to whom the Registrable Securities have been validly transferred
under the terms of the Agreement. In furtherance, and not in
limitation, of the foregoing, the Company agrees that such direct and indirect
transferees shall be third party beneficiaries of the agreements set forth in
this Schedule 5.3, and each such direct or indirect transferee shall have the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights hereunder; provided,
however, that such direct or indirect transferee fulfills all of its obligations
hereunder.
(k) The
agreements set forth in this Schedule 5.3 shall survive any post-Closing
termination of the Agreement until the earlier of (i) three years from the
Closing Date and (ii) the date on which Subscriber no longer owns any
Registrable Securities. The indemnification obligations under
paragraph (f) above shall survive any post-Closing termination of the Agreement
and/or this Schedule 5.3.
As used
herein, the following terms have the following meanings:
“Registrable
Securities” means all shares of Voting Common Stock and Class B Non-Voting Stock
and Warrants and Warrant Shares issued by the Company in the Offering and any
securities which may be issued or distributed in respect thereof by way of stock
dividend or stock split or other distribution, recapitalization or
reclassification. As to any particular Registrable Securities, such
Registrable Securities shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale by a Holder thereof shall be or
have been declared effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (ii) such
securities shall have been sold to the public in compliance with Rule 144 under
the Securities Act or (iii) such securities shall have ceased to be
outstanding.
“Registration
Expenses” means all expenses incurred by the Company in effecting any
registration pursuant to this Schedule 5.3 (whether or not any registration or
prospectus becomes effective or final) including all registration, filing and
listing fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, and expenses of the Company’s independent accountants (including a
commercially reasonable comfort letter to the extent the Registrable Securities
are sold in an underwritten public offering), and the reasonable fees and costs
of counsel to Subscriber and other participants in any registration pursuant to
this Schedule 5.3 up to $20,000, but shall not include Selling
Expenses.
“Registration
Statement” means any registration statement of the Company under the Securities
Act that permits the public offering of any of the Registrable Securities and
the Shelf Prospectus, amendments and supplements to such registration statement,
including post-effective amendments, all exhibits and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement. No Registrable Securities may be registered under more than one
Registration Statement at any one time.
“Selling
Expenses” means all discounts, selling commissions, and stock transfer taxes for
the Subscriber and/or any underwriter applicable to the sale of Registrable
Securities.
“Shelf
Prospectus” means the prospectus included in any Shelf Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Shelf Registration Statement and all other amendments and supplements to
such prospectus, including post-effective amendments, and all materials
incorporated by reference in such prospectus.
“Shelf
Registration Statement” means a Registration Statement of the Company filed with
the SEC on either (a) Form S-3 (or any successor form or other appropriate form
under the Securities Act) or (b) if the Company is not permitted to file a
Registration Statement on Form S-3, an evergreen Registration Statement on Form
S-1 (or any successor form or other appropriate form under the Securities Act),
in each case for an offering to be made on a continuous or delayed basis
pursuant to Rule 415 under the Securities Act covering Registrable
Securities. To the extent that the Company is a “well-known seasoned
issuer” (as defined in Rule 405 under the Securities Act), a “Shelf Registration
Statement” shall be deemed to refer to an automatic shelf registration statement
(as defined in Rule 405 under the Securities Act) on Form S-3.