FORM OF SUBORDINATED NOTE PURCHASE AGREEMENT
This SUBORDINATED NOTE PURCHASE AGREEMENT (this “Agreement”) is dated as of October 7, 2019, and is made by and among Bay Banks of Virginia, Inc., a Virginia corporation (the “Company”),
and the several purchasers of the Subordinated Notes identified on the signature pages hereto (each a “Purchaser” and collectively, the “Purchasers”).
Company has requested that the Purchasers purchase from the Company up to $25,000,000 in aggregate principal amount of Subordinated Notes (as defined herein), which aggregate amount is intended to qualify as Tier 2 Capital (as defined herein).
Company has engaged Sandler O’Neill + Partners, L.P. as its exclusive placement agent (“Placement Agent”) for the offering of the Subordinated Notes.
of the Purchasers is an institutional accredited investor as such term is defined in Rule 501 of Regulation D (“Regulation D”) promulgated under the Securities
Act of 1933, as amended (the “Securities Act”), or a “qualified institutional buyer” as such term is defined in Rule 144A promulgated under the Securities Act.
offer and sale of the Subordinated Notes by the Company is being made in reliance upon the exemptions from registration available under Section 4(a)(2) of the Securities Act and pursuant to Rule 506(b) of Regulation D.
Purchaser is willing to purchase from the Company a Subordinated Note in the principal amount set forth on such Purchaser’s respective signature page hereto (the “Subordinated
Note Amount”) in accordance with the terms, subject to the conditions and in reliance on, the recitals, representations, warranties, covenants and agreements set forth herein and in the Subordinated Notes.
in consideration of the mutual covenants, conditions and agreements herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:
1.1 Defined Terms. The following
capitalized terms used in this Agreement and in the Subordinated Notes have the meanings defined or referenced below. Certain other capitalized terms used only in specific sections of this Agreement may be defined in such sections.
with respect to any Person (as hereinafter defined), such Person’s immediate family members, partners, members or parent and subsidiary corporations, and any other Person directly or indirectly controlling, controlled by, or under common control with
said Person and their respective Affiliates.
“Agreement” has the meaning
set forth in the preamble hereto.
means, with respect to any transfer or exchange of or for beneficial interests in any Subordinated Note represented by a global certificate, the rules and procedures of DTC that apply to such transfer or exchange.
“Articles” has the meaning
set forth in Section 220.127.116.11(a).
“Bank” means Virginia
Commonwealth Bank, a Virginia state-chartered bank and wholly owned subsidiary of the Company.
“Business Day” means any day other than a Saturday, Sunday or
any other day on which banking institutions in the Commonwealth of Virginia are permitted or required by any applicable law or executive order to close.
“Bylaws” has the meaning
set forth in Section 18.104.22.168(c).
“Closing” has the
meaning set forth in Section 2.5.
“Closing Date” means October 7, 2019.
“Company” has the
meaning set forth in the preamble hereto and shall include any successors to the Company.
“Company Covered Person” has the meaning set
forth in Section 4.2.4.
“Company’s Reports” means (i) the Company’s annual report on
Form 10-K for the fiscal year ended December 31, 2018, as filed with the SEC; (ii) the Company’s quarterly reports on Form 10-Q for the quarters ended March 31, 2019 and June 30, 2019, as filed with the SEC; and (iii) any Current Report on Form 8-K,
as filed or furnished by the Company with the SEC since January 1, 2019.
“Disbursement” has the
meaning set forth in Section 3.1.
has the meaning set forth in Section 4.2.4.
“DTC” means The
Depository Trust Company.
means any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of Hazardous Materials (as hereinafter defined) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials.
“Equity Interest” means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person which is not a corporation, and any and all warrants, options or other rights to purchase any of the
“Event of Default” has the meaning set forth in the Subordinated Notes.
“Exchange Act” means the
Securities and Exchange Act of 1934, as amended.
“FDIC” means the Federal
Deposit Insurance Corporation.
“GAAP” means generally
accepted accounting principles in effect from time to time in the United States of America.
“Global Note” has the
meaning set forth in Section 3.1.
“Governmental Agency(ies)” means, individually or collectively,
any arbitrator, court, governmental body, commission, board, regulatory body, administrative agency or other authority or agency (including, without limitation, each applicable Regulatory Agency (as hereinafter defined)) with jurisdiction over the
Company or a Subsidiary (as hereinafter defined) or any of their respective properties, assets or operations.
“Governmental Licenses” has the meaning set forth in Section 4.3.
“Hazardous Materials” means chemicals, pollutants,
contaminants, wastes, toxic or contaminated substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials, mold or similar materials, including, without limitation, any substances which are “hazardous substances,”
“hazardous wastes,” “hazardous materials” or “toxic substances” under the Hazardous Materials Laws (as hereinafter defined) and/or other applicable environmental laws, ordinances or regulations.
“Hazardous Materials Laws” mean any laws, regulations, permits, licenses or requirements pertaining to the
protection, preservation, conservation or regulation of the environment which relates to real property, including, but not limited to: the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (including the
Superfund Amendments and Reauthorization Act of 1986), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; and all
comparable state and local laws, laws of other jurisdictions or orders and regulations.
(i) all items arising from the borrowing of money that, according to GAAP as in effect from time to time, would be included in determining total liabilities as shown on the consolidated balance sheet of the Company or any Subsidiary of the Company;
and (ii) all obligations secured by any lien in property owned by the Company or any Subsidiary whether or not such obligations shall have been assumed; provided,
however, Indebtedness shall not include deposits or other indebtedness created, incurred or maintained in the ordinary course of the Company’s or
the Bank’s business (including, without limitation, federal funds purchased, advances from any Federal Home Loan Bank, secured deposits of municipalities, letters of credit issued by the Company or the Bank and repurchase arrangements) and consistent
with customary banking practices and applicable laws and regulations.
“Leases” means all
leases, licenses or other documents providing for the use or occupancy of any portion of any Property (as hereinafter defined), including all amendments, extensions, renewals, supplements, modifications, sublets and assignments thereof and all
separate letters or separate agreements relating thereto.
“Material Adverse Effect”
means, with respect to any Person, any change or effect that (i) is or would be reasonably likely to be material and adverse to the financial condition, results of operations, business, assets or prospects of such Person, or (ii) would materially
impair the ability of any Person to perform its respective obligations under any of the Transaction Documents (as defined below), or otherwise materially impede the consummation of the transactions contemplated hereby; provided, however, that “Material Adverse Effect” shall not be deemed
to include the impact of (1) changes in banking and similar laws, rules or regulations of general applicability or interpretations thereof by Governmental Agencies, (2) changes, subsequent to the date hereof, in GAAP or regulatory accounting
requirements applicable to financial institutions and their holding companies generally, (3) changes after the date of this Agreement in general economic or capital market conditions affecting financial institutions or their market prices generally
and not specifically related to the Company, the Bank or the Purchasers, (4) direct effects of compliance with this Agreement on the operating performance of the Company, the Bank or the Purchasers, including expenses incurred by the Company, the
Bank or the Purchasers in consummating the transactions contemplated by this Agreement, or (5) the effects of any action or omission taken by the Company with the prior written consent of the Purchasers, and vice versa, or as otherwise contemplated
by this Agreement and the Subordinated Notes; except to the extent that the effects of such changes in the foregoing (1) through (3) disproportionately affect such Person and its Subsidiaries, to the extent applicable, taken as a whole.
“Maturity Date” means
October 15, 2029.
“Paying Agency Agreement”
means the Paying Agency and Registrar Agreement, dated as of October 7, 2019, between the Company and UMB Bank N.A., as paying agent and registrar.
“Paying Agent” means UMB
Bank N.A., as paying agent and registrar under the Paying Agency Agreement, or any successor in accordance with the applicable provisions of the Paying Agency Agreement.
“Person” means an
individual, a corporation (whether or not for profit), a partnership, a limited liability company, a joint venture, an association, a trust, an unincorporated organization, a government or any department or agency thereof (including a Governmental
Agency) or any other entity or organization.
“Placement Agent” has
the meaning set forth in the Recitals.
“Property” means any
real property owned or leased by the Company or any Affiliate or Subsidiary of the Company.
“Purchaser” or “Purchasers” has the meaning set forth in the preamble hereto.
“QIB” means a Qualified
Institutional Buyer as defined in Rule 144A of the Securities Act.
“Regulation D” has the
meaning set forth in the Recitals.
means any federal or state agency charged with the supervision or regulation of depository institutions or holding companies of depository institutions, or engaged in the insurance of depository institution deposits, or any court, administrative
agency or commission or other authority, body or agency having supervisory or regulatory authority with respect to the Company, the Bank or any of their Subsidiaries.
“SEC” means the
Securities and Exchange Commission.
“Secondary Market Transaction”
has the meaning set forth in Section 5.5.
“Securities Act” has the
meaning set forth in the Recitals.
means the Subordinated Note (or collectively, the “Subordinated Notes”) in the form attached as Exhibit A hereto, as amended, restated, supplemented or modified from time to time, and each Subordinated Note delivered in substitution or exchange for such Subordinated Note.
“Subordinated Note Amount”
has the meaning set forth in the Recitals.
“Subsidiary” means with
respect to any Person, any corporation or entity in which a majority of the outstanding Equity Interest is directly or indirectly owned by such Person.
“Tier 2 Capital” has the
meaning given to the term “Tier 2 capital” in 12 C.F.R. Part 217 and 12 C.F.R. Part 250, as amended, modified and supplemented and in effect from time to time or any replacement thereof.
has the meaning set forth in Section 22.214.171.124.
1.2 Interpretations. The foregoing
definitions are equally applicable to both the singular and plural forms of the terms defined. The words “hereof”, “herein” and “hereunder” and words of like import when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. The word “including” when used in this Agreement without the phrase “without limitation,” shall mean “including, without limitation.” All references to time of day herein are references to Eastern Time
unless otherwise specifically provided. All references to this Agreement and Subordinated Notes shall be deemed to be to such documents as amended, modified or restated from time to time. With respect to any reference in this Agreement to any
defined term, (i) if such defined term refers to a Person, then it shall also mean all heirs, legal representatives and permitted successors and assigns of such Person, and (ii) if such defined term refers to a document, instrument or agreement,
then it shall also include any amendment, replacement, extension or other modification thereof.
1.3 Exhibits Incorporated. All Exhibits
attached are hereby incorporated into this Agreement.
2. SUBORDINATED DEBT.
2.1 Certain Terms. Subject to the terms and
conditions herein contained, the Company proposes to issue and sell to the Purchasers, severally and not jointly, Subordinated Notes in an aggregate principal amount equal to the aggregate of the Subordinated Note Amounts. The Purchasers, severally
and not jointly, each agree to purchase the Subordinated Notes from the Company on the Closing Date in accordance with the terms of, and subject to the conditions and provisions set forth in, this Agreement and the Subordinated Notes. The
Subordinated Note Amounts shall be disbursed in accordance with Section 3.1. The Subordinated Notes shall bear interest per annum as set forth in the
Subordinated Notes. The unpaid principal balance of the Subordinated Notes plus all accrued but unpaid interest thereon shall be due and payable on the Maturity Date, or such earlier date on which such amount shall become due and payable on account
of (i) acceleration by the Purchasers in accordance with the terms of the Subordinated Notes and this Agreement or (ii) the Company’s delivery of a notice of redemption or repayment in accordance with the terms of the Subordinated Notes.
2.2 Subordination. The Subordinated Notes
shall be subordinated in accordance with the subordination provisions set forth therein.
2.3 Maturity Date. On the Maturity Date,
all sums due and owing under this Agreement and the Subordinated Notes shall be repaid in full. The Company acknowledges and agrees that the Purchasers have not made any commitments, either express or implied, to extend the terms of the
Subordinated Notes past their Maturity Date, and shall not extend such terms beyond the Maturity Date unless the Company and the Purchasers hereafter specifically otherwise agree in writing.
2.4 Unsecured Obligations. The obligations
of the Company to the Purchasers under the Subordinated Notes shall be unsecured and not covered by a guarantee of the Company or an Affiliate of the Company.
2.5 The Closing. The closing of the sale
and purchase of the Subordinated Notes (the “Closing”) shall occur at the offices of the Company at 10:00 a.m. (local time) on the Closing Date, or at such
other place or time or on such other date as the parties hereto may agree.
2.6 Payments. The Company agrees that
matters concerning payments and application of payments shall be as set forth in this Agreement and in the Subordinated Notes.
2.7 Right of Offset. Each Purchaser hereby
expressly waives any right of offset it may have against the Company or any of its Subsidiaries.
2.8 Use of Proceeds. The Company shall use
the net proceeds from the sale of Subordinated Notes for general corporate purposes, including the repayment of subordinated debt and supporting capital levels at the Bank.
3.1 Disbursement. On the Closing Date, assuming all of the terms and
conditions set forth in Section 3.2 have been satisfied by the Company and the Company has executed and delivered to each of the Purchasers this Agreement
and such Purchaser’s Subordinated Note and any other related documents in form and substance reasonably satisfactory to the Purchasers, each Purchaser shall countersign and deliver this Agreement and disburse in immediately available funds the
Subordinated Note Amount set forth on each Purchaser’s respective signature page hereto to the Company in exchange for an electronic securities entitlement through the facilities of DTC in accordance with the Applicable Procedures in the
Subordinated Note with a principal amount equal to such Subordinated Note Amount (the “Disbursement”). The Company will deliver to the Paying Agent a global
certificate representing the Subordinated Notes (the “Global Note”) registered in the name of Cede & Co., as nominee for DTC.
3.2 Conditions Precedent to Disbursement.
3.2.1 Conditions to the Purchasers’ Obligation. The obligation of each Purchaser to consummate the purchase of the Subordinated Notes to be purchased by them at Closing and to effect the
Disbursement is subject to delivery by or at the direction of the Company to such Purchaser (or, with respect to the Paying Agent Agreement, the Paying Agent) each of the following (or written waiver by such Purchaser prior to the Closing of such
126.96.36.199 Transaction Documents. This
Agreement, the Paying Agent Agreement and the Global Note (collectively, the “Transaction Documents”), each duly authorized and executed by the Company.
188.8.131.52 Authority Documents.
A copy, certified by the Secretary or Assistant Secretary of the Company, of the Articles of Incorporation of the Company,
as amended (the “Articles”);
A certificate of good standing of the Company issued by the Clerk of the State Corporation Commission of the Commonwealth of
A copy, certified by the Secretary or Assistant Secretary of the Company, of the Bylaws of the Company, as amended (the “Bylaws”);
A copy, certified by the Secretary or Assistant Secretary of Company, of the resolutions of the board of directors of the
Company, and any committee thereof, authorizing the execution, delivery and performance of the Transaction Documents;
An incumbency certificate of the Secretary or Assistant Secretary of the Company certifying the names of the officer or
officers of the Company authorized to sign the Transaction Documents and the other documents provided for in this Agreement; and
The opinion of Williams Mullen, counsel to the Company, dated as of the Closing Date, substantially in the form set forth at
Exhibit B attached hereto addressed to the Purchasers and Placement Agent.
184.108.40.206 Other Documents and Information.
Such other additional information regarding the Company, the Bank and any other Subsidiary of the Company and their respective assets, liabilities (including any liabilities arising from, or relating to, legal proceedings) and contracts as as well
as other certificates, affidavits, schedules, resolutions, notes and/or other documents which are provided for hereunder or as a Purchaser may reasonably require.
220.127.116.11 Aggregate Investments. Prior to,
or contemporaneously with the Closing, each Purchaser shall have actually subscribed for the Subordinated Note Amount set forth on such Purchaser’s signature page.
3.2.2 Conditions to the Company’s Obligation.
With respect to a given Purchaser, the obligation of the Company to consummate the sale of the Subordinated Notes
thereto and to effect the Closing is subject to delivery by or at the direction of such Purchaser to the Company of this Agreement, duly authorized and executed by such Purchaser.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Purchaser as follows:
4.1 Organization and Authority.
4.1.1 Organization Matters of the Company and Its
18.104.22.168 The Company is a duly organized corporation, is validly existing and in good standing under the laws of the Commonwealth of Virginia and has all
requisite corporate power and authority to conduct its business and activities as presently conducted, to own, lease and operate its properties, and to perform its obligations under the Transaction Documents. The Company is duly qualified as a
foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse Effect. The Company is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended.
22.214.171.124 The Bank, VCB Financial Group, Inc., Steptoes Holdings, LLC and Bay Service Company, Inc. are the only direct or indirect Subsidiaries of the
Company. The Bank has been duly chartered and is validly existing as a Virginia-chartered bank and each other Subsidiary has been duly organized and is validly existing under the jurisdiction of its incorporation, in each case in good standing
under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business and is duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a
Material Adverse Effect. All of the issued and outstanding shares of capital stock or other equity interests in each Subsidiary of the Company have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the
Company, directly or through Subsidiaries of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim; none of the outstanding shares of capital stock of, or other Equity Interests in, any Subsidiary of the
Company were issued in violation of the preemptive or similar rights of any security holder of such Subsidiary of the Company or any other entity.
126.96.36.199 The deposit accounts of the Bank are insured by the FDIC up to applicable limits. The Bank has not received any notice or other information
indicating that the Bank is not an “insured depository institution” as defined in 12 U.S.C. Section 1813, nor has any event occurred which could reasonably be expected to adversely affect the status of Bank as an FDIC-insured institution.
4.1.2 Capital Stock and Related Matters. The
Articles of the Company authorize the Company to issue 30,000,000 shares of common stock and 2,000,000 shares of preferred stock. As of the date of this Agreement, there are 13,332,484 shares of the Company’s common stock and zero shares of preferred stock issued and outstanding. All of the outstanding capital stock of the Company has been duly authorized and validly issued and is
fully paid and non-assessable. Other than pursuant to the Company’s equity incentive and other benefit plans duly adopted by the Company’s Board of Directors, as of the date hereof there are no outstanding options, rights, warrants or other
agreements or instruments obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of the Company or obligating the Company to grant, extend or enter into any such agreement
or commitment to any Person other than the Company.
4.2 No Impediment to Transactions.
4.2.1 Transaction is Legal and Authorized.
The issuance of the Subordinated Notes, the borrowing of the aggregate of the Subordinated Note Amount, the execution of the Transaction Documents and compliance by the Company with all of the provisions of the Transaction Documents are within the
corporate and other powers of the Company.
4.2.2 Agreement and Paying Agent Agreement.
This Agreement and the Paying Agent Agreement have been duly authorized, executed and delivered by the Company, and, assuming due authorization, execution and delivery by the other parties hereto, constitutes the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’
rights generally or by general equitable principles.
4.2.3 Subordinated Notes. The Subordinated Notes have been duly authorized by the Company and when duly executed, authenticated, issued and delivered to the Purchasers and paid for as provided herein will constitute the legal, valid and binding obligations of the Company, enforceable in accordance with their
terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by general equitable principles.
4.2.4 Exemption from Registration; No Disqualification
Event. Neither the Company, nor any of its Subsidiaries or Affiliates, nor any Person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Subordinated Notes. Assuming the accuracy of the representations and warranties of each Purchaser set forth
in this Agreement, the Subordinated Notes will be issued in a transaction exempt from the registration requirements of the Securities Act. No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification Event”) is applicable to the Company or, to the Company’s knowledge, any Person described in Rule 506(d)(1) (each, a “Company Covered Person”). To the Company’s knowledge, no Company Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with
its disclosure obligations under Rule 506(e).
4.2.5 No Defaults or Restrictions. Neither
the execution and delivery of the Transaction Documents nor compliance with their respective terms and conditions will (whether with or without the giving of notice or lapse of time or both) (i) violate, conflict with or result in a breach of, or
constitute a default under: (1) the Articles or Bylaws of the Company; (2) any of the terms, obligations, covenants, conditions or provisions of any corporate restriction or of any contract, agreement, indenture, mortgage, deed of trust, pledge,
bank loan or credit agreement, or any other agreement or instrument to which the Company or the Bank, as applicable, is now a party or by which it or any of its properties may be bound or affected; (3) any judgment, order, writ, injunction, decree
or demand of any court, arbitrator, grand jury, or Governmental Agency applicable to the Company or the Bank; or (4) any statute, rule or regulation applicable to the Company, except, in the case of items (2), (3) or (4), for such violations and
conflicts that would not, either singularly or in the aggregate, reasonably be expected to result in, a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole, or (ii) result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any property or asset of the Company. Neither the Company nor the Bank is in default in the performance, observance or fulfillment of any of the terms, obligations, covenants, conditions or provisions
contained in any indenture or other agreement creating, evidencing or securing Indebtedness of any kind or pursuant to which any such Indebtedness is issued, or any other agreement or instrument to which the Company or the Bank, as applicable, is a
party or by which the Company or the Bank, as applicable, or any of its properties may be bound or affected, except, in each case, only such defaults that would not reasonably be expected to have, either singularly or in the aggregate, a Material
Adverse Effect on the Company.
4.2.6 Governmental Consent. No governmental
orders, permissions, consents, approvals or authorizations are required to be obtained by the Company that have not been obtained, and no registrations or declarations are required to be filed by the Company that have not been filed in connection
with, or, in contemplation of, the execution and delivery of, and performance under, the Transaction Documents, except for applicable requirements, if any, of the Securities Act, the Exchange Act or state securities laws or “blue sky” laws of the
various states and any applicable federal or state banking laws and regulations.
4.3 Possession of Licenses and Permits. The
Company and its Subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, “Governmental Licenses”) issued by
the appropriate Governmental Agencies necessary to conduct the business now operated by them except where the failure to possess such Governmental Licenses would not, singularly or in the aggregate, have a Material Adverse Effect on the Company or
such applicable Subsidiary. The Company and each Subsidiary of the Company is in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or such applicable Subsidiary of the Company. All of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a Material Adverse Effect on the Company or such applicable Subsidiary of the Company. Neither the Company nor any Subsidiary of the Company has received any notice of proceedings
relating to the revocation or modification of any such Governmental Licenses.
4.4 Financial Condition.
4.4.1 Company Financial Statements. The
financial statements of the Company included in the Company’s Reports (including the related notes, where applicable), which have been provided to, or are otherwise publicly available to, the Purchasers (i) have been prepared from, and are in
accordance with, the books and records of the Company; (ii) fairly present in all material respects the results of operations, cash flows, changes in stockholders’ equity and financial position of the Company and its consolidated Subsidiaries, for
the respective fiscal periods or as of the respective dates therein set forth (subject in the case of unaudited statements to recurring year-end audit adjustments normal in nature and amount), as applicable; (iii) complied as to form, as of their
respective dates of filing with the SEC in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC, as applicable, with respect thereto; and (iv) have been prepared in accordance with
GAAP consistently applied during the periods involved, except, in each case, as indicated in such statements or in the notes thereto. The books and records of the Company have been, and are being, maintained in all material respects in accordance
with GAAP and any other applicable legal and accounting requirements. The Company does not have any material liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), except for those
liabilities that are reflected or reserved against on the consolidated balance sheet of the Company contained in the Company’s Reports for the Company’s most recently completed quarterly or annual fiscal period, as applicable, and for liabilities
incurred in the ordinary course of business consistent with past practice or in connection with this Agreement and the transactions contemplated hereby.
4.4.2 Absence of Default. Since the end of
the Company’s last fiscal quarter ended June 30, 2019, no event has occurred which either of itself or with the lapse of time or the giving of notice or both, would give any creditor of the Company the right to accelerate the maturity of any
material Indebtedness of the Company. The Company is not in default under any other Lease, agreement or instrument, or any law, rule, regulation, order, writ, injunction, decree, determination or award, non-compliance with which could reasonably be
expected to result in a Material Adverse Effect on the Company.
4.4.3 Solvency. After giving effect to the
consummation of the transactions contemplated by this Agreement, the Company has capital sufficient to carry on its business and transactions and is solvent and able to pay its debts as they mature. No transfer of property is being made and no
Indebtedness is being incurred in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of the Company or any Subsidiary of the Company.
4.4.4 Ownership of Property. The Company and
each of its Subsidiaries has good and marketable title as to all real property owned by it and good title to all assets and properties owned by the Company and such Subsidiary in the conduct of its businesses, whether such assets and properties are
real or personal, tangible or intangible, including assets and property reflected in the most recent balance sheet contained in the Company’s Reports or acquired subsequent thereto (except to the extent that such assets and properties have been
disposed of in the ordinary course of business, since the date of such balance sheet), subject to no encumbrances, liens, mortgages, security interests or pledges, except (i) those items which secure liabilities for public or statutory obligations
or any discount with, borrowing from or other obligations to the Federal Home Loan Bank, inter-bank credit facilities, reverse repurchase agreements or any transaction by the Bank acting in a fiduciary capacity, (ii) statutory liens for amounts not
yet delinquent or which are being contested in good faith and (iii) such as do not, individually or in the aggregate, materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such
property by the Company or any of its Subsidiaries. The Company and each of its Subsidiaries, as lessee, has the right under valid and existing Leases of real and personal properties that are material to the Company or such Subsidiary, as
applicable, in the conduct of its business to occupy or use all such properties as presently occupied and used by it. Such existing Leases and commitments to Lease constitute or will constitute operating Leases for both tax and financial
accounting purposes and the Lease expense and minimum rental commitments with respect to such Leases and Lease commitments are as disclosed in all material respects in the Company’s Reports.
4.5 No Material Adverse Change. Since the
end of the Company’s last fiscal quarter ended June 30, 2019, there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries.
4.6 Legal Matters.
4.6.1 Compliance with Law. The Company and
each of its Subsidiaries (i) has complied with and (ii) to the Company’s knowledge, is not under investigation with respect to, and has not been threatened to be charged with or given any notice of any material violation of, any applicable
statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any instrumentality or agency thereof, having jurisdiction over the conduct of its business or the ownership of its properties, except where any such
failure to comply or violation would not reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole. The Company and each of its Subsidiaries is in compliance with, and at all times prior to the
date hereof has been in compliance with, (x) all statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any Governmental Agency applicable to it, and (y) its own privacy policies and written commitments to
customers, consumers and employees, concerning data protection, the privacy and security of personal data, and the nonpublic personal information of its customers, consumers and employees, in each case except where any such failure to comply would
not result, either individually or in the aggregate, in a Material Adverse Effect. At no time during the two (2) years prior to the date hereof has the Company or any of its Subsidiaries received any written notice asserting any violations of any
of the foregoing.
4.6.2 Regulatory Enforcement Actions. The
Company, the Bank and its other Subsidiaries are in compliance in all material respects with all laws administered by and regulations of any Governmental Agency applicable to it or to them, the failure to comply with which would have a Material
Adverse Effect. None of the Company, the Bank, the Company’s or the Bank’s Subsidiaries nor any of their officers or directors is now operating under any restrictions, agreements, memoranda, commitment letter, supervisory letter or similar
regulatory correspondence, or other commitments (other than restrictions of general application) imposed by any Governmental Agency, nor are, to the Company’s knowledge, (a) any such restrictions threatened, (b) any agreements, memoranda or
commitments being sought by any Governmental Agency, or (c) any legal or regulatory violations previously identified by, or penalties or other remedial action previously imposed by, any Governmental Agency remains unresolved.
4.6.3 Pending Litigation. There are no
actions, suits, proceedings or written agreements pending, or, to the Company’s knowledge, threatened or proposed, against the Company or any of its Subsidiaries at law or in equity before or by any Governmental Agency, that would reasonably be
expected to have a Material Adverse Effect on the Company and any of its Subsidiaries, taken as a whole, or materially and adversely affect the issuance or payment of the Subordinated Notes; the aggregate of all pending legal or governmental
proceedings to which the Company or any such Subsidiary is a party or of which any of their respective properties or assets is the subject, including ordinary routine litigation incidental to the business, could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
4.6.4 Environmental. Except as would not,
individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (i) neither the Company nor any of its Subsidiaries is in violation of any Environmental Laws, (ii) there are no pending or, to the knowledge of the
Company, threatened, administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations or proceedings relating to any Environmental Law against the Company or any of
its Subsidiaries, and (iii) to the knowledge of the Company, there are no events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or
Governmental Entity, against or affecting the Company or any of its Subsidiaries relating to Hazardous Materials or any Environmental Laws. No Property is or, to the Company’s knowledge, has been a site for the use, generation, manufacture,
storage, treatment, release, threatened release, discharge, disposal, transportation or presence of any Hazardous Materials and neither the Company nor any of its Subsidiaries has engaged in such activities.
4.6.5 Brokerage Commissions. Except for
commissions paid to the Placement Agent, neither the Company nor any Affiliate of the Company is obligated to pay any brokerage commission or finder’s fee to any Person in connection with the transactions contemplated by this Agreement.
4.6.6 Investment Company Act. The Company is
not required, and upon the issuance and sale of the Subordinated Notes and the application of the net proceeds therefrom as herein contemplated will not be required, to register as an “investment company” under the Investment Company Act of 1940,
4.7 No Misstatement. No information, exhibit, report, schedule or
document furnished by the Company to the Purchasers in connection with the negotiation, execution or performance of this Agreement and none of the representations, warranties, covenants and agreements made in this Agreement or in any certificate or
other document delivered to the Purchasers by or on behalf of the Company, when taken together as a whole with the Company’s Reports, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the
statements contained therein not misleading in light of the circumstances when made or furnished to the Purchasers, as of the date of this Agreement and as of the Closing Date.
4.8 Internal Accounting Controls. The Company, the Bank and each other
applicable Subsidiary has established and maintains a system of internal control over financial reporting that pertains to the maintenance of records that accurately and fairly reflect the transactions and dispositions of the Company’s assets (on a
consolidated basis), provides reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s and the Bank’s receipts and expenditures and receipts and
expenditures of each of the Company’s other Subsidiaries are being made only in accordance with authorizations of the Company’s management and the Board of Directors, and provides reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of assets of the Company on a consolidated basis that could have a Material Adverse Effect. Such internal control over financial reporting is effective to provide reasonable assurance regarding the
reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP. Since the conclusion of the Company’s last completed fiscal year there has not been and there
currently is not (i) any significant deficiency or material weakness in the design or operation of its internal control over financial reporting which is reasonably likely to adversely affect its ability to record, process, summarize and report
financial information, or (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Company’s or the Bank’s internal control over financial reporting. The Company (A) has implemented and maintains
disclosure controls and procedures reasonably designed and maintained to ensure that material information relating to the Company is made known to the Chief Executive Officer and the Chief Financial Officer of the Company by others within the
Company and (B) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and the audit committee of the Company’s Board of Directors any significant deficiencies or material weaknesses in the
design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company’s internal controls over financial reporting. Such disclosure controls and procedures are effective for the purposes for
which they were established.
4.9 Tax Matters. The Company, the Bank and
each Subsidiary of the Company have (i) filed all material foreign, U.S. federal, state and local tax returns, information returns and similar reports that are required to be filed, and all such tax returns are true, correct and complete in all
material respects, and (ii) paid all material taxes required to be paid by it and any other material assessment, fine or penalty levied against it other than taxes (x) currently payable without penalty or interest, or (y) being contested in good
faith by appropriate proceedings.
4.10 Representations and Warranties Generally.
The representations and warranties of the Company set forth in this Agreement that do not contain a “Material Adverse Effect” qualification or other express materiality or similar qualification are true and correct in all material respects (i) as
of the date hereof, (ii) as of the Closing Date and (iii) as otherwise specifically provided herein. The representations and warranties of the Company set forth in this Agreement that contain a “Material Adverse Effect” qualification or any other
express materiality or similar qualification are true and correct (a) as of the date hereof, (b) as of the Closing Date and (c) as otherwise specifically provided herein.
5. GENERAL COVENANTS, CONDITIONS AND AGREEMENTS.
The Company hereby further covenants and agrees with each Purchaser as follows:
5.1 Compliance with Transaction Documents.
The Company shall comply with, observe and timely perform each and every one of the covenants, agreements and obligations under the Transaction Documents.
5.2 Affiliate Transactions. The Company
shall not itself enter into, nor shall it cause, permit or allow any of its Subsidiaries to enter into, any transaction, including, the purchase, sale or exchange of property or the rendering of any service, with any Affiliate of the Company except
in the ordinary course of business and pursuant to the reasonable requirements of the Company’s or such Affiliate’s business and upon terms consistent with applicable laws and regulations and reasonably found by the appropriate board(s) of
directors to be fair and reasonable and no less favorable to the Company or such Affiliate than would be obtained in a comparable arm’s length transaction with a Person not an Affiliate.
5.3 Compliance with Laws.
5.3.1 Generally. The Company shall comply and
cause the Bank and each of its other Subsidiaries to comply in all material respects with all applicable statutes, rules, regulations, orders and restrictions in respect of the conduct of its business and the ownership of its properties, except, in
each case, where such noncompliance would not reasonably be expected to have a Material Adverse Effect on the Company.
5.3.2 Regulated Activities. The Company shall
not itself, nor shall it cause, permit or allow the Bank or any other of its Subsidiaries to, (i) engage in any business or activity not permitted by all applicable laws and regulations, except where such business or activity would not reasonably
be expected to have a Material Adverse Effect on the Company, the Bank and/or such of its Subsidiaries or (ii) make any loan or advance secured by the capital stock of another bank or depository institution, or acquire the capital stock, assets or
obligations of or any interest in another bank or depository institution, in each case other than in accordance with applicable laws and regulations and safe and sound banking practices.
5.3.3 Taxes. The Company shall and shall
cause the Bank and any other of its Subsidiaries to promptly pay and discharge all taxes, assessments and other governmental charges imposed upon the Company, the Bank or any other of its Subsidiaries or upon the income, profits, or property of the
Company or any Subsidiary and all claims for labor, material or supplies which, if unpaid, might by law become a lien or charge upon the property of the Company, the Bank or any other of its Subsidiaries. Notwithstanding the foregoing, none of the
Company, the Bank or any other of its Subsidiaries shall be required to pay any such tax, assessment, charge or claim, so long as the validity thereof shall be contested in good faith by appropriate proceedings, and appropriate reserves therefor
shall be maintained on the books of the Company, the Bank and such other Subsidiary.
5.3.4 Corporate Existence. The Company shall
do or cause to be done all things reasonably necessary to maintain, preserve and renew its corporate existence and that of the Bank and the other Subsidiaries and its and their rights and franchises, and comply in all material respects with all
related laws applicable to the Company, the Bank or the other Subsidiaries; provided, however, that the Company may consummate the transactions described in Section 9(b) of the Subordinated Notes in accordance with the provisions of that section.
5.3.5 Dividends, Payments, and Guarantees During Event of
Default. Upon the occurrence of an Event of Default (as defined under the Subordinated Notes) until such Event of Default is
cured by the Company or waived by the Noteholders (as defined under the Subordinated Notes) in accordance with Section 18 of the Subordinated Notes, except as required by any federal or state
Governmental Agency, the Company shall not (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company’s capital stock; (b) make any payment of principal or
interest or premium, if any, on or repay, repurchase or redeem any debt of the Company that ranks equal with or junior to the Subordinated Notes; or (c) make any payments under any guarantee that ranks equal with or junior to the Subordinated
Notes, other than (i) any dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of the Company’s common stock; (ii) any declaration of a non-cash dividend in connection with the
implementation of a shareholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result of a reclassification of the Company’s capital stock
or the exchange or conversion of one class or series of the Company’s capital stock for another class or series of the Company’s capital stock; (iv) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being converted or exchanged; or (v) purchases of any class of the Company’s common stock related to the issuance of common stock or rights under any benefit plans for the
Company’s directors, officers or employees or any of the Company’s dividend reinvestment plans.
5.3.6 Tier 2 Capital. If all or any portion of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to the limitation imposed on the capital treatment of
subordinated debt during the five (5) years immediately preceding the Maturity Date of the Subordinated Notes, the Company will immediately notify the Noteholder (as defined in the Subordinated Notes), and thereafter, if requested by the Company,
the Company and the Noteholder (as defined in the Subordinated Notes) will work together in good faith to execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions of the obligations evidenced by the
Subordinated Notes to qualify as Tier 2 Capital; provided, however, that nothing contained in this Section 5.3.6 shall limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event (as defined in the Subordinated Notes) pursuant to Section 4(a) or Section 4(b) of the Subordinated Notes.
5.4 Absence of Control. It is the intent of
the parties to this Agreement that in no event shall the Purchasers, by reason of any of the Transaction Documents, be deemed to control, directly or indirectly, the Company, and the Purchasers shall not exercise, or be deemed to exercise, directly
or indirectly, a controlling influence over the management or policies of the Company.
5.5 Secondary Market Transactions. To the
extent and so long as not in violation of Section 6.4 hereof, each Purchaser shall have the right at any time and from time to time to securitize its
Subordinated Notes or any portion thereof in a single asset securitization or a pooled loan securitization of rated single or multi-class securities secured by or evidencing ownership interests in the Subordinated Notes (each such securitization is
referred to herein as a “Secondary Market Transaction”). In connection with any such Secondary Market Transaction, the Company shall, at the Company’s
expense, cooperate with the Purchasers and otherwise reasonably assist the Purchasers in satisfying the market standards to which the Purchasers customarily adhere or which may be reasonably required in the marketplace or by applicable rating
agencies in connection with any such Secondary Market Transaction, but in no event shall the Company be required to incur any material costs or expenses in connection therewith. Subject to any written confidentiality obligation, including the terms
of any non-disclosure agreements between the Purchasers and the Company, all information regarding the Company may be furnished to any Purchaser and to any Person reasonably deemed necessary by the Purchaser in connection with participation in such
Secondary Market Transaction. All documents, financial statements, appraisals and other data relevant to the Company or the Subordinated Notes may be retained by any such Person, subject to the terms of any nondisclosure agreement between the
Purchaser and the Company.
5.6 Bloomberg. The Company shall use
commercially reasonable efforts to cause the Subordinated Notes to be quoted on Bloomberg.
5.7 Rule 144A Information. While any Subordinated Notes remain
“restricted securities” within the meaning of the Securities Act, the Company will make available, upon the request of any Purchaser or subsequent holder of any Subordinated Notes the information specified in Rule 144A(d)(4) under the Securities
Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange Act.
WARRANTIES AND COVENANTS OF THE PURCHASERS.
Each Purchaser hereby represents and warrants to the Company, and covenants with the Company, severally and not
jointly, as follows:
6.1 Legal Power and Authority. It has all
necessary power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. It is an entity duly organized, validly existing and in good standing under the laws its
jurisdiction of organization.
6.2 Authorization and Execution. The
execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of such Purchaser, and assuming due authorization, execution and delivery by the other parties hereto, this Agreement is a legal,
valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors’ rights generally or by general equitable principles.
6.3 No Conflicts. Neither the execution,
delivery or performance of the Transaction Documents nor the consummation of any of the transactions contemplated thereby will conflict with, violate, constitute a breach of or a default (whether with or without the giving of notice or lapse of
time or both) under (i) its organizational documents, (ii) any agreement to which it is party, (iii) any law applicable to it or (iv) any order, writ, judgment, injunction, decree, determination or award binding upon or affecting it.
6.4 Purchase for Investment. It is
purchasing the Subordinated Note for its own account and not with a view to distribution and with no present intention of reselling, distributing or otherwise disposing of the same. It has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for, or which is likely to compel, a disposition of the Subordinated Notes in any manner.
6.5 Institutional Accredited Investor. It
is and will be on the Closing Date either (i) an institutional “accredited investor” as such term is defined in Rule 501(a) of Regulation D and as contemplated by subsections (1), (2), (3) and (7) of Rule 501(a) of Regulation D, and has no less
than $5,000,000 in total assets, or (ii) a QIB.
6.6 Financial and Business Sophistication.
It has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment in the Subordinated Notes. It has relied solely upon its own knowledge of, and/or the advice
of its own legal, financial or other advisors with regard to, the legal, financial, tax and other considerations involved in deciding to invest in the Subordinated Notes.
6.7 Ability to Bear Economic Risk of Investment.
It recognizes that an investment in the Subordinated Notes involves substantial risk. It has the ability to bear the economic risk of the prospective investment in the Subordinated Notes or any other securities of the Company, including the
ability to hold the Subordinated Notes indefinitely, and further including the ability to bear a complete loss of all of its investment in the Company.
6.8 Information. It acknowledges that: (i)
it is not being provided with the disclosures that would be required if the offer and sale of the Subordinated Notes were registered under the Securities Act, nor is it being provided with any offering circular or prospectus prepared in connection
with the offer and sale of the Subordinated Notes or any other securities of the Company; (ii) it has conducted its own examination of the Company and the terms of the Subordinated Notes to the extent it deems necessary to make its decision to
invest in the Subordinated Notes; (iii) it has availed itself of publicly available financial and other information concerning the Company to the extent it deems necessary to make its decision to purchase the Subordinated Notes (including meeting
with representatives of the Company); and (iv) it has not received nor relied on any form of general solicitation or general advertising (within the meaning of Regulation D) from the Company in connection with the offer and sale of the Subordinated
Notes. It has reviewed the information, including information regarding “Risk Factors” pertaining to the Company, set forth in the Company’s Reports, the exhibits and schedules thereto and hereto and the information contained in the data room
established by the Company in connection with the transactions contemplated by this Agreement.
6.9 Access to Information. It acknowledges
that it and its advisors have been furnished with all materials relating to the business, finances and operations of the Company that have been requested by it or its advisors and have been given the opportunity to ask questions of, and to receive
answers from, persons acting on behalf of the Company concerning terms and conditions of the transactions contemplated by this Agreement in order to make an informed and voluntary decision to enter into this Agreement.
6.10 Investment Decision. It has made its
own investment decision based upon its own judgment, due diligence and advice from such advisors as it has deemed necessary and not upon any view expressed by any other Person or entity, including the Placement Agent. Neither such inquiries nor
any other due diligence investigations conducted by it or its advisors or representatives, if any, shall modify, amend or affect its right to rely on the Company’s representations and warranties contained herein. It is not relying upon, and has
not relied upon, any advice, statement, representation or warranty made by any Person by or on behalf of the Company, including, without limitation, the Placement Agent, except for the express statements, representations and warranties of the
Company made or contained in this Agreement. Furthermore, it acknowledges that (i) the Placement Agent has not performed any due diligence review on behalf of it and (ii) nothing in this Agreement or any other materials presented by or on behalf
of the Company to it in connection with the purchase of the Subordinated Notes constitutes legal, tax or investment advice.
6.11 Private Placement; No Registration; Restricted Legends. It
understands and acknowledges that the Subordinated Notes are characterized as “restricted securities” under the Securities Act and are being sold by the Company without registration under the Securities Act in reliance on the exemption from federal
and state registration set forth in, respectively, Rule 506(b) of Regulation D promulgated under Section 4(a)(2) of the Securities Act and Section 18 of the Securities Act, or any state securities laws, and accordingly, may be resold, pledged or
otherwise transferred only in compliance with the registration requirements of federal and state securities laws or if exemptions from the Securities Act and applicable state securities laws are available to it. It further understands and
acknowledges that the Company will not be obligated in the future to register the Subordinated Notes under the Securities Act, the Exchange Act, or under any state securities laws. It is not subscribing for the Subordinated Notes as a result of or
subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or presented at any seminar or meeting. It further acknowledges and agrees that
all certificates or other instruments representing the Subordinated Notes will bear the restrictive legend set forth in the form of Subordinated Note. It further acknowledges its primary responsibilities under the Securities Act and, accordingly,
will not sell or otherwise transfer the Subordinated Notes or any interest therein without complying with the requirements of the Securities Act and the rules and regulations promulgated thereunder and the requirements set forth in this Agreement.
Neither the Placement Agent nor the Company has made or is making any representation, warranty or covenant, express or implied, as to the availability of any exemption from registration under the Securities Act or any applicable state securities
laws for the resale, pledge or other transfer of the Subordinated Notes, or that the Subordinated Notes purchased by it will ever be able to be lawfully resold, pledged or otherwise transferred.
6.12 Placement Agent. It will purchase the
Subordinated Note(s) directly from the Company and not from the Placement Agent and understands that neither the Placement Agent nor any other broker or dealer has any obligation to make a market in the Subordinated Notes.
6.13 Tier 2 Capital. If all or any portion
of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to the limitation imposed on the capital treatment of subordinated debt during the five (5) years immediately preceding the Maturity Date of the Subordinated Notes,
and if requested by the Company following notification to the Noteholders (as defined in the Subordinated Notes), the Company and the Noteholders will work together in good faith to execute and deliver all agreements as reasonably necessary in
order to restructure the applicable portions of the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital; provided, however,
that nothing contained in this Section 6.13 shall limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event
pursuant to Section 4(a) or Section 4(b) of the Subordinated
6.14 Accuracy of Representations. It understands that each of the
Placement Agent and the Company are relying and will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements in connection with the transactions contemplated by this Agreement, and agrees that if any of
the representations or acknowledgements made by it are no longer accurate as of the Closing Date, or if any of the agreements made by it are breached on or prior to the Closing Date, it shall promptly notify the Placement Agent and the Company.
6.15 Representations and Warranties Generally.
The representations and warranties of the Purchaser set forth in this Agreement are true and correct (i) as of the date hereof and will be true and correct as of the Closing Date and (ii) as otherwise specifically provided herein. Any certificate
signed by a duly authorized representative of the Purchaser and delivered to the Company or to counsel for the Company shall be deemed to be a representation and warranty by the Purchaser to the Company as to the matters set forth therein.
7.1 Prohibition on Assignment by the Company.
Except as described in Section 9(b) (Merger or Sale of Assets) of the Subordinated Notes, the Company may not assign, transfer or delegate any of its rights
or obligations under this Agreement or the Subordinated Notes without the prior written consent of all the Noteholders (as defined in the Subordinated Notes). In addition, in accordance with the terms of the Subordinated Notes, any transfer of
such Subordinated Notes by the Noteholders must be made in accordance with the Assignment Form attached thereto and the requirements and restrictions thereof.
7.2 Time of the Essence. Time is of the
essence of this Agreement.
7.3 Waiver or Amendment. No waiver or
amendment of any term, provision, condition, covenant or agreement herein or in the Subordinated Notes shall be effective except with the consent of the holders of not less than more than fifty percent (50%) of the aggregate principal amount
(excluding any Subordinated Notes held by the Company or any of its Affiliates) of the Subordinated Notes at the time outstanding; provided, however, that without the consent of each holder of an affected Subordinated Note, no such amendment or waiver may: (i) reduce the principal amount
of any Subordinated Note; (ii) reduce the rate of or change the time for payment of interest on any Subordinated Note; (iii) extend the maturity of any Subordinated Note, (iv) change the currency in which payment of the obligations of the Company
under this Agreement and the Subordinated Notes are to be made; or (v) lower the percentage of aggregate principal amount of outstanding Subordinated Notes required to approve any amendment of this Agreement or the Subordinated Notes, (vi) make any
changes to Section 6 (Events of Default; Acceleration; Compliance Certificate), Section 7 (Failure to Make Payments), Section 8 (Affirmative Covenants of the Company) or Section 9 (Negative Covenants of the Company) of the Subordinated Notes that adversely affects the rights of any holder of a Subordinated Note; or (vii) disproportionately and adversely
affect the rights of any of the holders of the then outstanding Subordinated Notes. Notwithstanding the foregoing, the Company may amend or supplement the Subordinated Notes without the consent of the holders of the Subordinated Notes to cure any
ambiguity, defect or inconsistency or to provide for uncertificated Subordinated Notes in addition to or in place of certificated Subordinated Notes, or to make any change that does not adversely affect the rights of any holder of any of the
Subordinated Notes. No failure to exercise or delay in exercising, by a Purchaser or any holder of the Subordinated Notes, of any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right or remedy provided by law, except as provided for in the Subordinated Notes. The rights and remedies provided in this Agreement are
cumulative and not exclusive of any right or remedy provided by law or equity. No notice or demand on the Company in any case shall, in itself, entitle the Company to any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Purchasers to any other or further action in any circumstances without notice or demand. No consent or waiver, expressed or implied, by the Purchasers to or of any breach or default by the Company in the
performance of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance of the same or any other obligations of the Company hereunder. Failure on the part of the
Purchasers to complain of any acts or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute a waiver by the Purchasers of their rights hereunder or impair any rights, powers or
remedies on account of any breach or default by the Company.
7.4 Severability. Any provision of this
Agreement which is unenforceable or invalid or contrary to law, or the inclusion of which would adversely affect the validity, legality or enforcement of this Agreement, shall be of no effect and, in such case, all the remaining terms and
provisions of this Agreement shall subsist and be fully effective according to the tenor of this Agreement the same as though any such invalid portion had never been included herein. Notwithstanding any of the foregoing to the contrary, if any
provisions of this Agreement or the application thereof are held invalid or unenforceable only as to particular persons or situations, the remainder of this Agreement, and the application of such provision to persons or situations other than those
to which it shall have been held invalid or unenforceable, shall not be affected thereby, but shall continue valid and enforceable to the fullest extent permitted by law.
7.5 Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be deemed to have been given if in writing and if delivered personally, or if mailed, postage prepaid, by United States registered or certified mail, return receipt requested, or if delivered by a responsible
overnight commercial courier promising next business day delivery, addressed:
if to the Company:
Bay Banks of Virginia, Inc.
1801 Bayberry Court
Richmond, Virginia 23226
Attention: Randal R. Greene
with a copy to:
Williams Mullen Center
200 South 10th Street
Richmond, Virginia 23219
Attention: Scott H. Richter
if to the Purchasers:
To the address indicated on such Purchaser’s signature page.
or to such other address or addresses as the party to be given notice may have furnished in writing to the party seeking or desiring
to give notice, as a place for the giving of notice; provided that no change in address shall be effective until five (5) Business Days after being given to the other party in the manner provided for above. Any notice given in accordance with the
foregoing shall be deemed given when delivered personally or, if mailed, three (3) Business Days after it shall have been deposited in the United States mails as aforesaid or, if sent by overnight courier, the Business Day following the date of
delivery to such courier (provided next business day delivery was requested).
7.6 Successors and Assigns. This Agreement
shall inure to the benefit of the parties and their respective heirs, legal representatives, successors and assigns; except that, (i) unless a Purchaser consents in writing, no assignment made by the Company in violation of this Agreement shall be
effective or confer any rights on any purported assignee of the Company and (ii) unless such assignment complies with the Assignment Form attached to the Subordinated Notes, no assignment made by a Purchaser shall be effective or confer any rights
on any purported assignee of Purchaser. The term “successors and assigns” will not include a purchaser of any of the Subordinated Notes from any Purchaser merely because of such purchase but shall include a purchaser of any of the Subordinated
Notes pursuant to an assignment complying with the Assignment Form attached to the Subordinated Notes.
7.7 No Joint Venture. Nothing contained
herein or in any document executed pursuant hereto and no action or inaction whatsoever on the part of a Purchaser, shall be deemed to make a Purchaser a partner or joint venturer with the Company.
7.8 Documentation. All documents and other
matters required by any of the provisions of this Agreement to be submitted or furnished to a Purchaser shall be in form and substance satisfactory to such Purchaser.
7.9 Entire Agreement. This Agreement and
the Subordinated Notes along with any exhibits thereto and any non-disclosure agreements between the Purchaser and the Company, constitute the entire agreement between the parties hereto with respect to the subject matter hereof and may not be
modified or amended in any manner other than by supplemental written agreement executed by the parties hereto. No party, in entering into this Agreement, has relied upon any representation, warranty, covenant, condition or other term that is not
set forth in this Agreement or in the Subordinated Notes.
7.10 Choice of Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York without giving effect to its laws or principles of conflict of laws. Nothing herein shall be deemed to limit any rights, powers or privileges which a Purchaser may have
pursuant to any law of the United States of America or any rule, regulation or order of any department or agency thereof and nothing herein shall be deemed to make unlawful any transaction or conduct by a Purchaser which is lawful pursuant to, or
which is permitted by, any of the foregoing.
7.11 No Third Party Beneficiary. This
Agreement is made for the sole benefit of the Company and the Purchasers, and no other Person shall be deemed to have any privity of contract hereunder nor any right to rely hereon to any extent or for any purpose whatsoever, nor shall any other
Person have any right of action of any kind hereon or be deemed to be a third party beneficiary hereunder; provided, that the Placement Agent
may rely on the representations and warranties contained herein to the same extent as if it were a party to this Agreement.
7.12 Legal Tender of United States. All
payments hereunder shall be made in coin or currency which at the time of payment is legal tender in the United States of America for public and private debts.
7.13 Captions; Counterparts. Captions
contained in this Agreement in no way define, limit or extend the scope or intent of their respective provisions. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which
when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a
“.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.
7.14 Knowledge; Discretion. All references
herein to a Purchaser’s or the Company’s knowledge shall be deemed to mean the knowledge of such party based on the actual knowledge of such party’s Chief Executive Officer and Chief Financial Officer or such other persons holding equivalent
offices or individuals performing similar functions. Unless specified to the contrary herein, all references herein to an exercise of discretion or judgment by a Purchaser, to the making of a determination or designation by a Purchaser, to the
application of a Purchaser’s discretion or opinion, to the granting or withholding of a Purchaser’s consent or approval, to the consideration of whether a matter or thing is satisfactory or acceptable to a Purchaser, or otherwise involving the
decision making of a Purchaser, shall be deemed to mean that such Purchaser shall decide using the reasonable discretion or judgment of a prudent lender.
7.15 Waiver Of Right To Jury Trial. TO THE
EXTENT PERMITTED UNDER APPLICABLE LAW, THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS, OR
ANY OTHER STATEMENTS OR ACTIONS OF THE COMPANY OR THE PURCHASERS. THE PARTIES ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF THEIR OWN FREE
WILL. THE PARTIES FURTHER ACKNOWLEDGE THAT (I) THEY HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (II) THIS WAIVER HAS BEEN REVIEWED BY THE PARTIES AND THEIR COUNSEL AND IS A MATERIAL INDUCEMENT FOR ENTRY INTO THIS
AGREEMENT AND (III) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED THEREIN.
7.16 Expenses. Except as otherwise provided
in this Agreement, each of the parties will bear and pay all other costs and expenses incurred by it or on its behalf in connection with the transactions contemplated pursuant to this Agreement.
7.17 Survival. Each of the representations
and warranties set forth in this Agreement shall survive the consummation of the transactions contemplated hereby for a period of one year after the date hereof. Except as otherwise provided herein, all covenants and agreements contained herein
shall survive until, by their respective terms, they are no longer operative.
[Signature Pages Follow]
IN WITNESS WHEREOF,
the Company has caused this Subordinated Note Purchase Agreement to be executed by its duly authorized representative as of the date first above written.
BAY BANKS OF VIRGINIA, INC.
Name: Randal R. Greene
Title: President and Chief Executive Officer
[Company Signature Page to Subordinated Note Purchase Agreement]
IN WITNESS WHEREOF,
the Purchaser has caused this Subordinated Note Purchase Agreement to be executed by its duly authorized representative as of the date first above written.
[INSERT PURCHASER’S NAME]
Addresss of Purchaser:
Principal Amount of Purchased Subordinated Note:
[Purchaser Signature Page to Subordinated Note Purchase Agreement]
FORM OF SUBORDINATED NOTE
OPINION OF COUNSEL