EXHIBIT 10.1
SUBSCRIPTION AGREEMENT
(BRIDGE LOAN/COMMON STOCK)
THIS SUBSCRIPTION AGREEMENT (the "Agreement") is made and entered into as
of the 20th day of December, 1996, by and between Commerce Security Bancorp,
Inc., a Delaware corporation with its principal place of business located in
Huntington Beach, California (the "Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the
"Subscriber").
WHEREAS, the Company is seeking commitments from several accredited
investors through a private placement (the "Private Placement") of shares of
its common stock, par value $.01 (the "Common Stock"), and certain other
securities in connection with the proposed acquisition (the "Acquisition") by
the Company of the Target Company (as such term is used in the Company's
December 18, 1996 Private Placement Memorandum pertaining to the Private
Placement (together with the December 20, 1996 Supplement and any other
supplement, amendment or annex thereof or any document incorporated by
reference therein, the "Memorandum"));
WHEREAS, the Subscriber desires to commit irrevocably to purchase,
subject only to those certain limited conditions described hereinafter,
specified amounts of the Company's Common Stock and to subscribe for and
purchase such amounts (the "Subscription"), at a per share price of $4.40
(the "Subscription Price"), all as is more particularly set forth herein;
WHEREAS, the Subscriber also wishes to loan the Company a fund a portion
of the Deposit (as defined in the Acquisition Agreement); and
WHEREAS, in connection with the Private Placement, the Subscriber desires
to obtain and the Company is willing to grant to the Subscriber certain
registration rights with respect to the Placement Shares;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and other agreements set forth herein,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. PURCHASE AND DELIVERY OF PLACEMENT SHARES
(a) Subject to the terms and conditions herein set forth, the Subscriber
hereby irrevocably agrees and commits to purchase from the Company, at the
Subscription Price per share, the number of shares of Common Stock as
determined in accordance with Section 2(b)(i) hereof (the "Placement Shares").
(b) The Subscriber acknowledges and agrees that its Subscription is
hereby conditioned upon acceptance by the Company and may be accepted or
rejected, in whole (but not in part), by
the Company in its sole discretion (the date on which the Company
accepts this Subscription Agreement being hereinafter called the "Acceptance
Date").
(c) The Company shall pay to the Subscriber at the Funding (as
hereinafter defined) a commitment fee (the "Commitment Fee") equal to one
percent (1%) of the product of the Subscription Price multiplied by the
number of Placement Shares.
2. BRIDGE LOAN
(a) The Subscriber hereby agrees to fund its Subscription initially in
the form of a loan to the Company in an original principal amount equal to
the Subscription Price multiplied by the number of Placement Shares (the
"Bridge Loan"), the proceeds of which the Company shall use to fund a portion
of the Deposit. Interest will accrue on the Bridge Loan at the rate of 8.25%
per annum calculated on the basis of a 360-day year. No payment of principal
or interest will be due until the earlier of the Funding Date (as defined
below) or that date (the "Repayment Date") which is five business days after
the effective date of the termination of the Acquisition Agreement.
(b) Principal and accrued interest on the Bridge Loan shall be payable
as follows:
(i) If the Proposed Acquisition is consummated, the sum of
principal and interest due on the Bridge Loan and the Commitment Fee
(collectively, the Subscription Proceeds), shall be converted, as of the
Funding Date, into an amount of Placement Shares equal to the amount of
the Subscription Proceeds divided by the Subscription Price (rounded to
the nearest Placement Share).
(ii) If the Acquisition Agreement is terminated under
circumstances that result in the Company recovering the Deposit,
principal and interest due on the Bridge Loan shall be payable in cash to
the Subscriber no later than the Repayment Date.
(iii) If the Merger Agreement is terminated under circumstances
that do result in the Company recovering the Deposit, at the Company's
election, the Company shall pay the principal and interest due under the
Bridge Loan either:
(A) in cash, or
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(B) if and to the extent that payment in cash would cause
the Company to cease to be "well capitalized" for regulatory
purposes on a pro forma basis as of the month end next preceding
the Repayment Date, in Common Stock, using a conversion price
equal to the book value per share of Common Stock as of December
31, 1996, adjusted (if necessary) to take into account the loss
of the Deposit, or
(C) in any combination of (A) and (B).
3. CLOSING; DELIVERY OF PLACEMENT SHARES
(a) If the Proposed Acquisition is consummated, the delivery of the
Placement Shares shall take place at the executive offices of the Company at
One Pacific Plaza, 7777 Center Avenue, Huntington Beach, California, at 9:00
a.m., California time, prior to, but substantially simultaneously with, the
closing of the Proposed Acquisition, such time and date to be not more than
five (5) business days after the foregoing notification and to be specified
therein (such time and date being referred to as the "Funding Time," the date
of the Funding being referred to as the "Funding Date" and the consummation
of the Private Placement being referred to as the "Funding").
(b) At the Funding, the Placement Shares to be sold to the Subscriber
hereunder, registered in the name of the Subscriber or its nominee(s), as the
Subscriber may specify in writing at least three (3) days prior to the
Funding Date, shall be delivered by or on behalf of the Company to the
Subscriber, for the Subscriber's account, against delivery by the Subscriber
of the aggregate Subscription Price therefor, net of the Commitment Fee, in
immediately available funds in the form of one or more federal funds checks
or a wire transfer to an account designated by the Company. If the
Subscriber shall fail to timely provide information regarding the registered
holder of the Placement Shares, such shares shall be delivered to the
Subscriber in the form of one certificate registered in the Subscriber's name.
4. AGREEMENTS AND CONSENTS OF THE SUBSCRIBER
The Subscriber hereby agrees with the Company as follows:
(a) Subject only to the immediately following sentence, the
Subscriber agrees that this Agreement is irrevocable and that the rights and
obligations of any party hereto shall not be terminated or affected by
operation of law, whether by death, incompetence, disability or the
occurrence of any other event affecting a Subscriber. If and only if the
Company has not accepted this Subscription Agreement in accordance with
Section 1(b) on or before the twentieth (20th) calendar day following the
Subscriber's delivery hereof to the Company, then at any time after such date
but before the acceptance hereof by the Company, the Subscriber may withdraw
its
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Subscription hereunder by notice to the Company. In the event that the
Company has not entered into the Acquisition Agreement on or before January
15, 1997, the Company or the Subscriber may upon five (5) business days'
notice to the other party hereto terminate this Agreement, which termination
shall be without liability to either party. In the event that the Funding
Date does not occur on or before August 15, 1997 or the Acquisition Agreement
is terminated, this Agreement shall terminate without liability to any party
hereto.
(b) Notwithstanding anything to the contrary contained herein, the
Subscriber acknowledges and agrees that the Company may decline to issue any
of the Placement Shares or pay any portion of the Commitment Fee to the
Subscriber hereunder if, in the reasonable opinion of the Company's counsel,
the Subscriber is required to obtain prior clearance or approval of such
transaction from any state or federal bank regulatory authority and if, in
the reasonable opinion of such counsel, the requisite approval or clearance
has not been obtained or satisfactory evidence thereof has not been presented
to the Company by the Funding Date.
(c) The Subscriber hereby acknowledges and understands that
although the Company has retained The Shattan Group LLC ("TSG") to serve as
placement agent in connection with the offering of securities other than
Common Stock in connection with the Private Placement, the Subscriber has not
relied upon any representation made or information provided by TSG in the
Subscriber's decision to enter into a Subscription Agreement or otherwise
invest in the Placement Shares.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Subscriber as
follows:
(a) As of the Acceptance Date, the Company is, and at all times
thereafter through the time of the Funding, the Company will have been, duly
organized and validly existing and in good standing as a corporation
organized under the laws of the State of Delaware, with corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Memorandum and to perform its obligations under
this Agreement.
(b) Each direct or indirect wholly-owned subsidiary of the Company
(each, a "Subsidiary"), and to the Company's knowledge, each direct or
indirect wholly-owned subsidiary of the Target Company (each, a "Target
Subsidiary"), has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction where the failure to so
qualify would have a material adverse effect on the conduct of the business
of, the condition (financial or otherwise) of, or the earnings or business of
(collectively, the "Condition") the Company and its Subsidiaries and the
Target Company and the Target Subsidiaries considered as one enterprise; all
of the issued and outstanding capital stock
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of each Subsidiary has been duly authorized and validly issued and is fully
paid and (except as provided by law) nonassessable and is owned by the
Company, directly or through Subsidiaries, free and clear of any mortgage,
pledge, lien, encumbrance or claim whatsoever, and to the Company's
knowledge, all of the issued and outstanding capital stock of each Target
Subsidiary has been duly authorized and validly issued and is fully paid and
(except as provided by law) nonassessable and is owned by the Target Company,
directly or through Target Subsidiaries, free and clear of any mortgage,
pledge, lien, encumbrance or claim whatsoever; except for the Subsidiaries
and other than as reflected in the financial statements or except as
otherwise reflected in the Memorandum, the Company does not and, to the
Company's knowledge, the Target Company does not, directly or indirectly, own
any shares of stock or any securities of any corporation or have any equity
interest in any firm, partnership, association or other entity.
(c) The Company and its Subsidiaries and, to the Company's
knowledge, the Target Company and the Target Subsidiaries possess all
material licenses, permits and other governmental authorizations as are
currently required for the conduct of their respective businesses, and all
such licenses, permits and other governmental authorizations are in full
force and effect; the Company and its Subsidiaries and, to the Company's
knowledge, the Target Company and the Target Subsidiaries are in compliance
therewith except to the extent that non-compliance would not, individually or
in the aggregate, have a material adverse effect on the Condition of the
Company and its Subsidiaries and the Target Company and the Target
Subsidiaries considered as one enterprise; and neither the Company nor any of
its Subsidiaries or, to the Company's knowledge, neither the Target Company
nor any of the Target Subsidiaries has received notice of any proceeding or
action relating to the revocation or modification of any such material
license, permit or other governmental authorization.
(d) Neither the Company nor any of the Subsidiaries and, to the
Company's knowledge, neither the Target Company nor any of the Target
Subsidiaries is in violation of its charter or other organizational document
or bylaws or materially in default in the performance or observance of the
obligations, agreements, covenants or conditions contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
it is a party or by which it or any of them or any of their properties may be
bound and that is material to the Company and its Subsidiaries and the Target
Company and the Target Subsidiaries considered as one enterprise.
(e) The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated hereby, including the filing of an amended and restated
Certificate of Incorporation (the "Amended and Restated Charter") which
contemplates the terms of the Placement Shares and the Securities (as defined
in the Memorandum) offered in the Private Placement, have been duly
authorized by all necessary corporate action of the Company, and constitute a
valid and legally binding instrument of the Company enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
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transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(f) The execution and delivery of this Agreement, the consummation
by the Company of the transactions herein contemplated and the compliance by
the Company with the terms hereof will not conflict with, or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, the Certificate of Incorporation, assuming the filing, prior
to the Funding, of the Amended and Restated Charter, or Bylaws of the
Company, or any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which any of
its properties or assets are bound, with such exceptions as would not have a
material adverse effect on the Condition of the Company and its Subsidiaries
and the Target Company and the Target Subsidiaries, considered as one
enterprise, or any applicable law, rule, regulation, judgment, order or
decree of any governmental, governmental instrumentality or court having
jurisdiction over the Company or any of its properties or assets; and no
consent, approval, authorization, order, registration or qualification of or
with any such government, governmental instrumentality or court is required
for the valid authorization, execution, delivery and performance by the
Company of this Agreement, the Placement Shares, and the Commitment Fee or
the consummation by the Company of the other transactions contemplated by
this Agreement, except such federal and state regulatory approvals as are
described in the Memorandum and such consents, approvals, authorizations,
registrations or qualification as may be required under state securities or
"blue sky" laws.
(g) When issued and delivered by the Company against payment
therefor, the Placement Shares will be duly authorized, validly issued, fully
paid and non-assessable, and the forms of certificates evidencing the
Placement Shares will be in due and proper form.
(h) Relying in part on the representations and warranties of the
Subscribers set forth in Section 6, the offering of the Placement Shares to
the Subscriber is exempt from registration under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to Section 4(2) thereof.
(i) The Memorandum does not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading with respect to information
regarding the Company and its Subsidiaries, and as of the date of the
Memorandum and at all times thereafter through the Acceptance Date, the
Memorandum will not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading with
respect to information regarding the Company and its Subsidiaries.
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(j) The Company has no reason to believe that the information
concerning the Target Company that is contained in the Memorandum is not true
and correct in all material respects or that the representations and
warranties of the Target Company as set forth in the Acquisition Agreement
(as defined in the Memorandum) are not true and correct in all material
respects.
(k) The accountants who certified the financial statements and
supporting schedules of SDN Bancorp, Inc., Liberty National Bank and Commerce
Security Bank included in the 1996 Information Statement (as defined in the
Memorandum) are independent public accountants within the meaning of the
Securities Act and the rules and regulations promulgated thereunder (the
"Securities Act Regulations").
(l) The financial statements of the Company as at September 30,
1996 and for the three- and nine-month periods then ended included in the
Memorandum and the historical financial statements of SDN Bancorp, Inc.,
Liberty National Bank and Commerce Security Bank included in the 1996
Information Statement (1) comply in all material respects, except as may be
reflected in the notes to the financial statements, as to form with the
accounting requirements of the Securities Act, the Securities Act
Regulations, and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (2) present fairly in all material respects the financial
position of the respective entities as at the dates indicated and the results
of their operations for the periods specified, except as described in the
Offering Materials (as defined in the Memorandum) and (3) have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis, except as stated therein or, in the case of unaudited
statements, as permitted by SEC Form 10-Q or 10-QSB, as applicable. Except as
set forth in the pro forma financial statements of the Company included in
the Memorandum, such pro forma financial statements comply in all material
respects with the requirements of Regulation S-X and reflect all adjustments
necessary to present fairly the pro forma financial position of the Company
at the dates indicated.
(m) From September 30, 1996 through and including the Acceptance
Date, and except as described in the Memorandum, (1) no event or development
has occurred with respect to the Company or any of its Subsidiaries or, to
the Company's knowledge, the Target Company or any of the Target Subsidiaries
that, individually or in the aggregate, has had or could reasonably be
expected to have, a material adverse effect on the Condition of the Company
and its Subsidiaries and the Target Company and its Subsidiaries, considered
as one enterprise, whether or not arising in the ordinary course of business,
(2) other than the Acquisition Agreement and the agreements relating to the
Private Placement and described in the Memorandum, there have been no
material transactions or agreements entered into by the Company or any of its
Subsidiaries or, to the Company's knowledge, the Target Company or any of the
Target Subsidiaries other than those in the ordinary course of business, (3)
except pursuant to agreements relating to the Private Placement and described
in the Memorandum, neither the Company nor any of its Subsidiaries has issued
or purported to issue any securities or, other than
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in the ordinary course of business, incurred any material liability or
obligation, direct or contingent, for borrowed money, and (4) neither the
Company nor any of its Subsidiaries and, to the Company's knowledge, neither
the Target Company nor any of the Target Subsidiaries has not entered into or
modified any outstanding, material agreement with, or plan or undertaking
submitted to, any regulatory or supervisory agency or body which would
materially modify the ability of the Company and its Subsidiaries or the
Target Company and the Target Subsidiaries to continue to conduct their
respective businesses as now currently conducted.
(n) The Company's capitalization as of September 30, 1996 and as
adjusted to give effect to the issuance of the Securities are as set forth in
the Memorandum under the heading "USE OF PROCEEDS AND CAPITALIZATION" and the
Securities conform in all material respects to the respective descriptions
thereof in the Memorandum.
(o) Except as disclosed in the Memorandum, the Company and its
Subsidiaries and, to the Company's knowledge, the Target Company and the
Target Subsidiaries have conducted and are conducting their businesses so as
to comply in all material respects with all applicable statutes and
regulations to which a failure to comply could, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
Condition of the Company and its Subsidiaries and the Target Company and its
Subsidiaries, considered as one enterprise. Except as disclosed in the
Memorandum, neither the Company nor any of its Subsidiaries and, to the
Company's knowledge, neither the Target Company nor any of the Target
Subsidiaries is materially in violation of any written directive from any
regulatory or governmental body to make any material change in the method of
conducting its business; there is no charge, investigation, action, suit or
proceeding before or by any court or governmental agency or body (domestic or
foreign) pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries or, to the Company's knowledge, the Target
Company or any of the Target Subsidiaries that is material to the Condition
of the Company and its Subsidiaries and the Target Company and the Target
Subsidiaries, considered as one enterprise, except as may be disclosed in the
Memorandum; all pending or threatened legal or governmental proceedings to
which the Company or any of its Subsidiaries or, to the Company's knowledge,
the Target Company or any of the Target Subsidiaries is a party or of which
any of their respective properties or assets is the subject which are not
described in the Memorandum, including ordinary routine litigation incidental
to their business, considered in the aggregate, could not reasonably be
expected to have a material adverse effect upon the Condition of the Company
and its Subsidiaries and the Target Company and the Target Subsidiaries,
considered as one enterprise.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBSCRIBER
The Subscriber hereby represents, warrants and covenants to the
Company as follows:
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(a) If the Subscriber is a corporation, the Subscriber is duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of organization, with full power and authority (corporate and
other) to perform its obligations under this Agreement.
If the Subscriber is a trust, the Trustee has been duly
appointed as Trustee of the Subscriber with full power and authority to act
on behalf of the Subscriber and to perform the obligations of the Subscriber
under this Agreement.
If the Subscriber is a limited partnership, the Subscriber is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, with full power and authority to perform its
obligations under this Agreement.
If the Subscriber is an individual, the Subscriber has the full
power and authority to perform its obligations under this Agreement.
(b) The execution, delivery and performance of this Agreement by
the Subscriber and the consummation by the Subscriber of the transactions
contemplated hereby have been duly authorized by all necessary corporate or
other action of the Subscriber; and this Agreement, when duly executed and
delivered by the Subscriber and accepted by the Company, will constitute a
valid and legally binding instrument, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
(c) The Subscriber is not insolvent and has sufficient cash funds
on hand to purchase the Placement Shares on the terms and conditions
contained in this Agreement and has no reason to believe that it will not
have such funds on or about the Funding Date. Upon a reasonable request by
the Company, the Subscriber will provide the Company with evidence or
substantiation that such Subscriber has the financial means to satisfy its
financial obligations under this Agreement and the foregoing evidence and
substantiation shall be a true and accurate representation of such means.
(d) Except as may be disclosed on Annex B to this Agreement, no
state, federal or foreign regulatory approvals, permits, licenses or consents
or other contractual or legal obligations are required in order for the
Subscriber to enter into this Agreement or to purchase the Placement Shares.
Based upon the advice of Subscriber's counsel, Subscriber has no reason to
believe that the regulatory approvals listed on Annex B, if any, will not be
received within usual and customary time frames and without the imposition of
any terms or conditions that would have an adverse effect on the Company's
operations or strategic plan.
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(e) The execution and delivery of this Agreement, the consummation
by the Subscriber of the transactions herein contemplated and the compliance
by the Subscriber with the terms hereof do not and will not conflict with, or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, the constituent documents of the Subscriber or
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Subscriber is a party or by which any of the
Subscriber's properties or assets are bound, or any applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Subscriber or any of the Subscriber's properties or assets; and no consent,
approval, authorization, order, registration or qualification of or with any
such government, governmental instrumentality or court, domestic or foreign,
is required for the valid authorization, execution, delivery and performance
by the Subscriber of this Agreement or the consummation by the Subscriber of
the transactions contemplated by this Agreement except as may be disclosed on
Annex B.
(f) Except as may be disclosed in the Memorandum, the Subscriber
has not entered into any contracts, arrangements, understandings or
relationships (legal or otherwise) with any other person or persons with
respect to the transactions contemplated by this Agreement or any securities
of the Company, including but not limited to transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangements, puts
or calls, guarantees of profits, division of profits or loss, or the giving
or withholding of proxies; and the Subscriber does not own any securities of
the Company which are pledged or otherwise subject to a contingency the
occurrence of which would give another person voting power or investment
power over such securities.
(g) The Subscriber has been advised and understands that the
Placement Shares have not been registered under the Securities Act in
reliance upon the exemption from such registration provided in Section 4(2)
thereof and that the Placement Shares have not been registered under the
securities laws of any state in reliance on exemptions therefrom and,
therefore, the Placement Shares may not be resold unless registered under
applicable state securities laws or an exemption from registration is
available. The Company is and will be under no obligation to register the
Placement Shares under the Securities Act except to the extent provided in
the Registration Rights Agreement (as defined hereinafter), when executed by
the Company.
(h) The Subscriber acknowledges receipt of, and has had a
reasonable opportunity to review, the Memorandum and understands that no
person has been authorized to provide any additional information regarding
the Company, the Target Company or the Proposed Acquisition (other than
information which otherwise is publicly available) or make any
representations that were not contained in such Memorandum, and the
Subscriber has not relied on any such other information or representations in
making a decision to purchase any of the Placement Shares. The Subscriber
understands that an investment in the Placement Shares
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involves a high degree or risk, including the risks set forth under the
heading "RISK FACTORS" in the Memorandum.
(i) The Subscriber has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of
an investment in the Placement Shares, is able to bear the economic risk of
an investment in the Placement Shares, including at the date hereof, the
ability to afford a complete loss of the investment, and is (i) a
sophisticated institutional or corporate investor as well as an "accredited
investor" as defined in Rule 501(a) under the Securities Act; or (ii) a
sophisticated individual investor as well as an "accredited investor" as
defined in Rule 501(a) under the Securities Act. The Subscriber agrees to
provide promptly such additional information as may be reasonably required by
the Company for compliance with the securities laws of the state in which the
Subscriber is located.
(j) The Subscriber intends to purchase the Placement Shares offered
in the Memorandum for the account of the Subscriber and its affiliates and
not, in whole or in part, for the account of any other person. The
Subscriber represents and warrants to, and covenants and agrees with, the
Company that the Placement Shares to be acquired by it hereunder are being
acquired for its own account for investment and with no intention of
distributing or reselling such Placement Shares or any part thereof or
interest therein in any transaction which would be in violation of the
securities laws of the United States of America or any state.
(k) The Subscriber has been advised that, prior to any registration
of the Placement Shares pursuant to the provisions of the Registration Rights
Agreement, any and all certificates representing the Placement Shares and any
and all certificates issued in replacement thereof or in exchange therefor
shall bear the following legend or one substantially similar thereto:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE IN RELIANCE ON EXEMPTIONS
THEREFROM AND, THEREFORE, MAY NOT BE RESOLD UNLESS
REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE
(INCLUDING, WITHOUT LIMITATION, THE EXEMPTION PROVIDED UNDER
RULE 144A OF THE ACT).
In addition, certificates representing the Placement Shares acquired by
Subscribers located in certain states will bear additional legends as
required by the securities laws of those states.
(l) The Subscriber will not sell or otherwise transfer any of the
Placement Shares, except in compliance with the provisions of the applicable
securities laws and as stated in
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any legend. The Subscriber has been advised that (i) there are significant
restrictions on the transfer or the Placement Shares, (ii) there is no active
market for the Common Stock, (iii) no trading market for the Placement Shares
is likely to be available in the foreseeable future, and (iv) an investment
in the Placement Shares may be extremely illiquid.
7. FUNDING CONDITIONS.
The respective obligations of the Subscriber and the Company to
consummate the purchase and sale of the Placement Shares and, if applicable,
the payment of the Commitment Fee shall be subject, in the discretion of the
Company or the Subscriber, as the case may be, to the following conditions:
(a) All representations and warranties and other statements of the
other party are, at and as of the Funding Time (except as expressly provided
otherwise), true and correct in all material respects (assuming that the
other party shall have performed in all material respects all of its
obligations hereunder theretofore to be performed).
(b) The Company has complied in all material respects with all
agreements and satisfied in all material respects all conditions on its part
to be performed or satisfied hereunder at or prior to the Funding.
(c) No stop order suspending the Private Placement shall have been
issued, and no proceeding for that purpose shall have been instituted or, to
the knowledge of the Company or the Subscriber, threatened by any regulatory
or governmental body.
(d) The Company shall have entered into an Acquisition Agreement
that is substantially similar in all material respects to the Acquisition
Agreement described in the Memorandum, which Acquisition Agreement shall
provide for Merger Consideration (as defined in the Memorandum) of not more
than $23.00 per share of Target Company common stock; all of the material
conditions to the closing of the Acquisition shall have been satisfied or, if
permitted, duly waived, and the Funding of the sale of the Placement Shares
shall occur prior to, but substantially simultaneous with, the closing of the
Acquisition pursuant to the Acquisition Agreement.
(e) Other than as contemplated by the Memorandum, there shall not
have been any change effected without the Subscriber's prior written consent
(which shall not be unreasonable withheld) after the date of this Agreement
in the charter or other organizational document or bylaws of the Company
adversely affecting the rights of the holders of the Placement Shares;
PROVIDED, HOWEVER, that an increase in the Company's authorized capital
stock, whether or not described in the Memorandum, shall not be deemed to
adversely affect the rights of the holders of the Placement Shares.
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(f) At the Funding, the Subscriber shall have received a
certificate, dated as of the Funding Date, of the Chief Executive Officer and
the Chief Financial Officer of the Company in which such officers state that,
to their knowledge, the closing conditions specified in paragraphs (a)
through (e) of this Section have been satisfied.
(g) At the Funding, the Company shall have executed and delivered
to the Subscriber a registration rights agreement in the form attached hereto
as Annex C (the "Registration Rights Agreement").
(h) At the Funding, the Company and the Subscriber shall have
received the customary form of opinion, dated as of such date, of ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ & Fish, LLP, outside counsel for the Company, in form and substance
satisfactory to your counsel, and such other customary closing documentation
as the parties may reasonably request.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations and warranties made by the Company
and the Subscriber herein shall survive the execution of this Agreement, the
delivery to the Subscriber of certificates representing the Placement Shares
being purchased and the payment therefor.
9. BROKER'S FEE.
The Subscriber represents to the Company that it has taken no action
which would entitle anyone to a broker's or finder's fee or other
compensation in connection with the transactions contemplated hereby.
10. INDEMNITY.
The Subscriber agrees to indemnify and hold harmless the Company and each
employee, officer and director of the Company from and against any loss,
damage or liability caused by or arising out of a breach of any
representation, warranty or agreement of the Subscriber contained in this
Agreement or in any other document provided by the Subscriber to the Company
in connection with the Subscriber's investment in Placement Shares.
11. TERMINATION.
(a) Either of the parties hereto may terminate this Agreement (i)
if the Funding Date does not occur by August 15, 1997 through no fault of the
Subscriber, (ii) any federal or state regulator shall have made a final
determination denying an application of either party to the Acquisition
Agreement, the granting of which is essential to the consummation of the
Proposed
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Acquisition, or (iii) the Target Company terminates the Acquisition
Agreement. In addition, this Agreement shall terminate upon mutual consent
of the parties hereto.
(b) The Company and the Subscriber hereby agree that any
termination of this Agreement pursuant to Section 11(a) (other than
termination in the event of a breach of this Agreement by the Subscriber or
misrepresentation of any of the statements made herein by the Subscriber)
shall be without liability of the Company or the Subscriber.
12. NOTICES.
All communications hereunder shall be in writing and, if to the
Company, will be mailed, delivered or telecopied and confirmed to it at One
Pacific Plaza, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇; and if to the
Subscriber, will be mailed, delivered or telecopied and confirmed to it at
the address set forth on the signature page hereto;
13. BINDING EFFECT.
This Agreement shall be binding upon, and shall inure solely to the
benefit of, each of the parties hereto, and each of their respective heirs,
executors, administrators, successors and permitted assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement.
14. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance
with the laws of the State of Delaware without regard to the conflict of law
provisions thereof.
15. ENTIRE AGREEMENT.
This Agreement represents the entire understanding of the parties with
respect to the matters addressed herein and supersedes all prior written and
oral understandings concerning the subject matter herein.
16. ASSIGNMENT.
This Agreement may not be assigned by the Subscriber without the consent
of the Company.
17. SUCCESSORS.
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This Agreement shall inure to the benefit of and be binding upon the
Company, the Subscriber and their respective successors and permitted
assigns. Nothing expressed herein is intended or shall be construed to give
any person other than the persons referred to in the preceding sentence any
legal or equitable right, remedy or claim under or in respect of this
Agreement.
18. SEVERABILITY OF PROVISIONS.
Any covenant, provision, agreement or term of this Agreement that is
prohibited or is held to be void or unenforceable in any jurisdiction shall
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions thereof.
19. MISCELLANEOUS.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for the purposes
of references only and shall not limit or otherwise affect the meaning
hereof.
20. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of the counterparts,
each of which counterparts when so executed and delivered shall be deemed to
be an original, but all such respective counterparts shall together
constitute but one and the same instrument.
* * *
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IN WITNESS WHEREOF, and intending to be legally bound thereby, each of
the Subscriber and Commerce Security Bancorp, Inc. has signed or caused to be
signed its name under seal as of the day and year first above written.
Maximum Number of Shares of INDIVIDUAL INVESTOR:
Common Stock Desired
To Be Purchased
Hereunder:
-----------------------------------
(Print Name)
---------------------- -----------------------------------
(Signature)
Mailing
Address:
--------------------------------------
--------------------------------------
Telephone:
-----------------------------------------
Facsimile:
-----------------------------------------
PARTNERSHIP, CORPORATION, TRUST OR
INSTITUTIONAL INVESTOR:
----------------------------------------------
(Print Name of Entity)
By:-------------------------------------------
Name:
Title:
Jurisdiction
of Organization:
-------------------------------
Mailing
Address:
-------------------------------------------
-------------------------------------------
Telephone:
-----------------------------------------
Facsimile:
-----------------------------------------
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ACCEPTANCE OF SUBSCRIPTION
The Company hereby accepts the above subscription for Placement Shares.
COMMERCE SECURITY BANCORP, INC.
By:
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
308137_7.WP6
ANNEX B
DESCRIPTION OF REQUIRED REGULATORY APPROVALS
TO BE OBTAINED BY THE SUBSCRIBER