Item 1.01 Entry into a Material Definitive Agreement.
Stock Purchase Agreement
On February 1, 2021, Carver Bancorp, Inc. (the “Company”) entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Wells Fargo Central Pacific Holdings, Inc. (“Wells Fargo”), pursuant to which the Company sold: (i) 157,806 shares of the Company’s common stock, par value $0.01 per share, at a purchase price of $7.75 per share (the “Common Stock”), and (ii) 3,177 shares of a new series of preferred stock, Series E non-cumulative non-voting participating preferred stock, par value $0.01 per share, at a purchase price of $1,000 per share (the “Series E Preferred Stock” and together with the Common Stock, the “Shares”), in a private placement (the “Private Placement”) for gross proceeds of approximately $4.4 million.
The Company intends to use the net proceeds of the Private Placement for general corporate purposes. The Stock Purchase Agreement contains representations, warranties, and covenants of the Company and Wells Fargo that are customary in private placement transactions.
The issuance of the Shares pursuant to the Stock Purchase Agreement is exempt from registration pursuant to the exemption provided under Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”). The offering was made only to accredited investors as that term is defined in Rule 501(a) of Regulation D under the Act.
Wells Fargo may not sell or transfer or otherwise dispose of the Shares without the prior written consent of the Company. Wells Fargo has pro-rata rights to participate in any subsequent equity or voting debt securities offerings to maintain its 4.9% voting interest in the Company.
The foregoing description of the Stock Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Stock Purchase Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Series E Preferred Stock
On January 28, 2021, the Company filed a Certificate of Designations to its Certificate of Incorporation with the Secretary of State of the State of Delaware to issue 3,177 shares of Series E Preferred Stock (the “Certificate of Designations”) to Wells Fargo. The preferences, limitations, powers and relative rights of the Series E Preferred Stock are set forth in the Certificate of Designations and are described below.
Upon the completion of any of the following transfers of shares of Series E Preferred Stock, if the holder of the shares of Series E Preferred Stock effecting such transfer has followed certain notice requirements, each such transferred share of Series E Preferred Stock will be converted into (i) the number of shares of Common Stock equal to the quotient of (A) the Stated Amount (as defined below) with respect to such share of Series E Preferred Stock as of the date of such transfer and the related conversion divided by (B) $7.96, which is the current conversion price (the “Conversion Price”), plus (ii) cash in lieu of fraction shares:
| | a) | in a widespread public distribution, |
| | c) | in a transfer in which no transferee (or group of associated transferees) would receive 2% or more of any class of voting securities of the Company, or |
| | d) | to a transferee that would control more than 50% of the voting securities of the Company without any transfer from the holder; |
provided, that in no event will the number of such shares of Common Stock, taken together with any other voting securities and nonvoting securities owned by a holder of the Series E Preferred Stock, exceed 33.3% of the total issued and outstanding equity of the Company. The Conversion Price will be subject to customary anti-dilution adjustments. “Stated Amount” means, in respect of Series E Preferred Stock, $1,000 per share.
