Exhibit 10.2
SECURITIES PURCHASE AGREEMENT by and among META FINANCIAL GROUP, INC. and BOATHOUSE ROW I, LP, BOATHOUSE ROW II, LP, BOATHOUSE ROW OFFSHORE LTD., and OC 532 OFFSHORE FUND, LTD. (collectively, the “Buyers”) June 25, 2015 |
TABLE OF CONTENTS
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| 1. | | PURCHASE AND SALE OF COMMON STOCK | 1 |
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| | (a) | Shares of Common Stock | 1 |
| | (b) | Closing | 2 |
| | (c) | Purchase Price | 2 |
| | (d) | Form of Payment | 2 |
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| 2. | | BUYERS’ REPRESENTATIONS AND WARRANTIES | 2 |
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| | (a) | Organization; Authority | 2 |
| | (b) | No Public Sale or Distribution | 2 |
| | (c) | Accredited Investor Status; Sophistication | 3 |
| | (d) | Reliance on Exemptions | 3 |
| | (e) | Certain Securities Transactions | 3 |
| | (f) | Information | 3 |
| | (g) | No Governmental Review | 4 |
| | (h) | Transfer or Resale | 4 |
| | (i) | Legends | 5 |
| | (j) | No Conflicts | 5 |
| | (k) | Bank Regulatory Agencies | 6 |
| | (l) | Status of the Buyers | 6 |
| | (m) | Stock Ownership | 6 |
| | (n) | Residency | 7 |
| | (o) | No Broker | 7 |
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| 3. | REPRESENTATIONS AND WARRANTIES OF THE COMPANY. | 7 |
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| | (a) | Organization and Qualification | 7 |
| | (b) | Status of Company and Subsidiaries | 8 |
| | (c) | Authorization; Enforcement; Validity | 8 |
| | (d) | Issuance of Shares; No Restrictions on Transfer | 8 |
| | (e) | No Conflicts | 8 |
| | (f) | Consents | 9 |
| | (g) | No General Solicitation; Placement Agent’s Fees | 9 |
| | (h) | No Registration Due to Integrated Offering | 9 |
| | (i) | Application of Takeover and Other Protections; Rights Agreement | 10 |
| | (j) | SEC Documents; Financial Statements | 10 |
| | (k) | Accuracy of Information | 11 |
| | (l) | Absence of Certain Changes. | 11 |
| | (m) | No Undisclosed Liabilities | 12 |
| | (n) | Conduct of Business; Regulatory Permits | 12 |
| | (o) | Investment Company Status | 13 |
| | (p) | Transactions With Affiliates | 13 |
| | (q) | Agreements with Regulatory Agencies | 13 |
| | (r) | Equity Capitalization | 14 |
| | (s) | Subsidiaries | 15 |
| | (t) | Absence of Litigation | 15 |
| | (u) | Properties and Leases | 15 |
| | (v) | Insurance | 16 |
| | (w) | Tax Status | 16 |
| | (x) | Manipulation of Price | 16 |
| | (y) | Shell Company Status | 16 |
| | (z) | U.S. Real Property Holding Corporation Status | 16 |
| | (aa) | Allowance for Possible Loan Losses | 16 |
| | (bb) | Intellectual Property | 17 |
| | (cc) | No Disqualification Events | 17 |
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| 4. | COVENANTS. | 17 |
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| | (a) | Form D and Blue Sky | 17 |
| | (b) | Reports | 18 |
| | (c) | Listing | 18 |
| | (d) | Conduct of the Business | 18 |
| | (e) | Access to Information | 18 |
| | (f) | Efforts to Consummate Transaction; Cooperation | 19 |
| | (g) | NASDAQ Stock Issuance Notice | 19 |
| | (h) | Expenses | 20 |
| | (i) | Pledge of Shares | 20 |
| | (j) | Disclosure of Transactions and Other Material Information | 20 |
| | (k) | Certain Future Actions. | 20 |
| | (l) | Standstill | 23 |
| | (m) | Stock Certificates | 24 |
| | (n) | Disclosure Letter Updates | 24 |
| | (o) | Disqualification Events | 24 |
| | (p) | Use of Proceeds | 24 |
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| 5. | CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL | 24 |
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| 6. | CONDITIONS TO THE BUYERS’ OBLIGATION TO PURCHASE | 26 |
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| 7. | SURVIVAL AND INDEMNIFICATION | 28 |
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| | (a) | Survival | 28 |
| | (b) | Indemnification | 28 |
| | (c) | Procedure | 28 |
| | (d) | Reimbursement | 29 |
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| 8. | TERMINATION | 30 |
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| | (a) | Termination by Mutual Agreement | 30 |
| | (b) | Termination for Failure to Close | 30 |
| | (c) | Termination for Breach | 30 |
| | (d) | Effects of Termination | 30 |
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| 9. | MISCELLANEOUS | 30 |
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| | (a) | Definitions | 30 |
| | (b) | Governing Law; Jurisdiction; Jury Trial | 36 |
| | (c) | Counterparts | 37 |
| | (d) | Headings | 37 |
| | (e) | Severability | 37 |
| | (f) | Entire Agreement; Amendments | 37 |
| | (g) | Notices | 37 |
| | (h) | Successors and Assigns | 38 |
| | (i) | No Third Party Beneficiaries | 38 |
| | (j) | Further Assurances | 39 |
| | (k) | No Strict Construction | 39 |
| | (l) | Remedies | 39 |
| | (m) | Acknowledgment Regarding Buyers’ Shares | 39 |
| | (n) | Buyers’ Acknowledgments Regarding Other Private Placements | 39 |
| | (o) | Interpretive Matters | 40 |
Schedules
Schedule 9(a) Knowledge of the Company
Disclosure Letter
Exhibits
Exhibit A Form of Registration Rights Agreement
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of June 25, 2015, by and among Meta Financial Group, Inc., a Delaware corporation, with headquarters located at 5501 South Broadband Lane, Sioux Falls, South Dakota 57108 (the “Company”), and Boathouse Row I, LP, a Delaware limited partnership, Boathouse Row II, LP, a Delaware limited partnership, Boathouse Row Offshore Ltd., an entity organized and existing under the laws of the Cayman Islands, and OC 532 Offshore Fund, Ltd., an entity organized and existing under the laws of the Cayman Islands (each, a “Buyer” and, collectively, the “Buyers”). Certain defined terms used herein are listed in Section 9(a).
WHEREAS:
A. The Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
B. The Buyers wish to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, certain shares of common stock, par value $0.01, of the Company (the “Common Stock”).
C. Contemporaneously with and as a condition to the Closing, the Company and the Buyers will enter into a Registration Rights Agreement pursuant to the terms of which the Company shall file a registration statement with respect to the resale of the shares of Common Stock purchased by the Buyers hereunder.
D. The Company desires to issue and sell additional shares of Common Stock pursuant to one or more other private placements with Other Investors, which sales are intended to close simultaneously with the Closing hereunder or at such other times as the parties thereto shall agree (the “Other Private Placements”).
E. The Company’s Board of Directors has approved the transactions contemplated by this Agreement and the Other Private Placements.
NOW, THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
(a) Shares of Common Stock. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 5 and 6 below, the Company shall issue and sell to each Buyer, and each Buyer agrees to purchase from the Company, on the Closing Date, the number of shares of Common Stock set forth opposite such Buyer’s name on Schedule 1 attached hereto (the number of shares of Common Stock so purchased by the Buyers, collectively, are referred to herein as the “Shares”).
(b) Closing. The closing (the “Closing”) of the purchase of the Shares by the Buyers shall occur at the offices of Katten Muchin Rosenman LLP, 525 W. Monroe Street, Chicago, IL 60661. The date and time of the Closing (the “Closing Date”) shall be substantially concurrently with the consummation of the Acquisition, subject to the satisfaction or waiver (to the extent permitted by applicable law) of the conditions to the Closing set forth in Sections 5 and 6 below by the parties hereto (other than those conditions required to be satisfied on the Closing Date, in which case such conditions shall have been so satisfied or waived as of the Closing Date) or such other date and time as is mutually agreed to by the Company and the Buyers.
(c) Purchase Price. The aggregate purchase price for all the Shares to be purchased by the Buyers (the “Purchase Price”) shall be an amount equal to $6,000,050.98, and the portion of the Purchase Price for the Shares to be purchased by each Buyer shall be the product of (i) $42.98, multiplied by (ii) the quotient of (A) the number of Shares to be purchased by such Buyer hereunder, divided by (B) the total number of Shares to be purchased by all of the Buyers hereunder.
(d) Form of Payment. On the Closing Date, (i) each Buyer shall pay to the Company at Closing its ratable share of the Purchase Price, as set forth on Schedule 1 attached hereto, for the Shares issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Company’s written wire instructions which shall be given to the Buyers in writing not later than one (1) day prior to the Closing Date, and (ii) the Company shall instruct its transfer agent, Computershare Trust Company, N.A. (the “Transfer Agent”), to issue and deliver to each Buyer its Shares in a single stock certificate, free and clear of all restrictive legends (except as expressly provided in Section 2(i) hereof), evidencing the number of Shares being purchased by such Buyer.
2. BUYERS’ REPRESENTATIONS AND WARRANTIES. As of the date hereof, and as of the Closing Date, each Buyer jointly and severally represents and warrants that:
(a) Organization; Authority. Such Buyer is a limited partnership, in the case of Boathouse Row I, LP and Boathouse Row II, LP, and a company, in the case of Boathouse Row Offshore Ltd. and OC 532 Offshore Fund, Ltd., and in each case is duly formed, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and each other Transaction Document to which it is or will be a party and otherwise to carry out its obligations hereunder and thereunder. This Agreement and each other Transaction Document to which it is or will be a party have been, or when executed and delivered will have been, duly authorized, executed and delivered by such Buyer and constitute or, when executed and delivered, will constitute the legal, valid and binding obligations of such Buyer, enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar Laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(b) No Public Sale or Distribution. Such Buyer is acquiring its Shares for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempt from the registration requirements under the 1933 Act; provided, however, that by making the representations herein, such Buyer does not agree to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance with or pursuant to a registration statement or an exemption from the registration requirements under the 1933 Act. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to resell or distribute any of the Shares in violation of the 1933 Act.
(c) Accredited Investor Status; Sophistication.
(i) Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
(ii) Such Buyer has, by reason of its business and financial experience, such knowledge, sophistication and experience in financial and business matters and in making investment decisions of the type contemplated hereby that it is capable of (A) evaluating the merits and risks of an investment in the Shares and making an informed investment decision, (B) protecting its own interests (financially or otherwise), and (C) bearing the economic risk of such investment for an indefinite period of time.
(d) Reliance on Exemptions. Such Buyer understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Shares.
(e) Certain Securities Transactions. During the period (the “Pre-Announcement Period”) beginning with the date on which such Buyer commenced discussions with the Company in respect of the transactions contemplated hereby and ending on the date of the Pre-Closing 8-K filing (as defined below), neither such Buyer nor any Affiliate controlled by such Buyer, nor to the knowledge of such Buyer any Affiliate controlling such Buyer or under common control with such Buyer, has entered, or will enter, into any transaction in respect of or involving the Common Stock or any Convertible Securities or Options, including any purchase or sale, derivative or hedging transaction, other than the transactions contemplated by this Agreement. Without limiting the foregoing, during the Pre-Announcement Period, such Buyer has not and will not engage in any transaction constituting a “short sale” (as defined in Rule 200 of Regulation SHO under the Securities Exchange Act of 1934, as amended (the “1934 Act”)) of shares of Common Stock or establish an open “put equivalent position” (within the meaning of Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock.
(f) Information. Such Buyer and its advisors, if any, have received all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Shares which have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of, and have received answers from, the Company regarding the Company and the transactions contemplated hereby. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors or representatives, nor any other statement made by such Buyer in this Section 2, shall modify, amend or affect the Company’s representations and warranties contained herein or such Buyer’s right to rely thereon. Such Buyer understands that its investment in the Shares involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Shares.
(g) No Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.
(h) Transfer or Resale. Such Buyer understands that:
(i) the Shares have not been and, except as provided in the Registration Rights Agreement, are not being registered under the 1933 Act or any state securities Laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder and sold, assigned or transferred pursuant to an effective registration statement, (B) such Buyer shall have delivered to the Company an opinion of counsel reasonably acceptable to the Company, which opinion shall be in a form reasonably acceptable to the Company and the transfer agent for the Common Stock, to the effect that such Shares to be sold, assigned or transferred have been or are being sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance, and certifications to the effect, that (I) such Shares have been or are being sold, assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act (or a successor rule thereto) (“Rule 144”) or Rule 144A promulgated under the 1933 Act (or successor rule thereto) (“Rule 144A”) or (II) such Buyer is not an Affiliate of the Company and the Shares can then be sold by such Buyer pursuant to Rule 144 without any restrictions or limitations thereunder and without compliance with the current public information requirement thereof;
(ii) any sale of the Shares made in reliance on Rule 144 or Rule 144A shall be made in accordance with the terms of Rule 144 or Rule 144A, as applicable, and, further, if Rule 144 or Rule 144A is not applicable, any resale of the Shares under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and
(iii) except as set forth in the Registration Rights Agreement, neither the Company nor any other Person is under any obligation to register the Shares under the 1933 Act or any state securities Laws or to comply with the terms and conditions of any exemption thereunder.
The Shares may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Shares and such pledge of Shares shall not be deemed to be a transfer, sale or assignment of the Shares hereunder, and, except as required by applicable Law, such Buyer shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement, including this Section 2(h), in connection with such a pledge.
(i) Legends. Such Buyer understands that the stock certificates representing the Shares, except as set forth below, shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates in violation of the restrictions on transfer set forth herein):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT OR (B) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY AND THE TRANSFER AGENT FOR THE COMPANY’S COMMON STOCK, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.
The legend set forth above shall be removed and the Company shall issue one or more certificates without such legend to the holder of the Shares upon which it is stamped, unless otherwise required by state securities Laws, if (i) such Shares are registered for resale and shall be resold pursuant to an effective registration statement under the 1933 Act, (ii) such Buyer shall have delivered to the Company an opinion of counsel reasonably acceptable to the Company, which opinion shall be in a form reasonably acceptable to the Company and the transfer agent for the Common Stock, to the effect that such Shares may be freely sold without restriction or limitation without registration under the 1933 Act, or (iii) such holder provides the Company with reasonable assurance, and certification to the effect, that (A) the Shares have been or are being sold, assigned or transferred pursuant to Rule 144 or Rule 144A or (B) such holder is not an Affiliate of the Company and the Shares can be sold by such holder pursuant to Rule 144 without any restrictions or limitations under Rule 144 and without compliance with the current public information requirement thereof.
(j) No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the other Transaction Documents to which it is or will be a party and the consummation by such Buyer of the transactions contemplated hereby and thereby, will not (i) result in a violation of the organizational or formation documents of such Buyer, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any Law (including federal and state securities Laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.
(k) Bank Regulatory Agencies. Neither the Buyers nor their Affiliates are required to obtain any consent, authorization or order of, or make any filing or registration with, any bank regulatory authority or agency, including, but not limited to, the Federal Reserve, in order for the Buyers to execute or deliver this Agreement or any of the other Transaction Documents to which it is or will be a party or perform any of their obligations under or as contemplated by this Agreement or any of the other Transaction Documents to which it is or will be a party in accordance with the terms hereof or thereof. Without limiting the generality of the foregoing sentence, the Buyers are not in “control” (rebuttably or otherwise, as such term is used in 12 C.F.R. Part 238) and have not acted in concert, and are not “acting in concert” within the meaning of 12 C.F.R. §238.31(b)(2) or (d), with any Person (including any of its Affiliates) to knowingly participate in joint activity or parallel action towards a common goal of acquiring control of the Company, whether or not pursuant to an express agreement, such that it would result in the Buyers or any of their Affiliates to be determined by the Federal Reserve (A) to have the power, directly or indirectly, to exercise a controlling influence over, or direct, the management or policies of the Company or any Subsidiary, (B) to have acquired, or to be attempting to acquire, control (rebuttably or otherwise, as such term is used in 12 C.F.R. Part 238) of the Company or any Subsidiary, or otherwise be required to register as a savings and loan holding company, as such term is defined in 12 C.F.R. § 238.2(m), (C) to be an “affiliate” (as defined under 12 C.F.R. § 238.2(a)) of any Subsidiary, such that any transactions between the Buyers and such Subsidiary would be subject to compliance with §§ 23A and 23B of the Federal Reserve Act or Regulation W, 12 C.F.R. Part 223, or (D) to be an “insider” (as defined in 12 C.F.R. § 215.2) of the Company or any Subsidiary such that any transactions between the Buyers and their Affiliates, on the one hand, and the Company and such Subsidiary, on the other, would be subject to compliance with Regulation O of 12 C.F.R. § 215.
(l) Status of the Buyers. Neither the Buyers nor any of their Affiliates shall, as a result of the Buyers entering into, or performing under, this Agreement and the other Transaction Documents to which they are or will be a party (A) have the power, directly or indirectly, to exercise a controlling influence over, or direct, the management or policies of the Company or any Subsidiary, (B) be in “control” of the Company or any Subsidiary, as such term is used in 12 C.F.R. Part 238, or otherwise be required to register as a savings and loan holding company, as such term is defined in 12 C.F.R. § 238.2(m), or (C) be an “affiliate” (as defined under 12 C.F.R. § 238.2(a)) of any Subsidiary, such that any transactions between the Buyers and such Subsidiary would be subject to compliance with §§ 23A and 23B of the Federal Reserve Act or Regulation W, 12 C.F.R. Part 223.
(m) Stock Ownership. Neither such Buyer nor any of its Affiliates own beneficially or of record any Common Stock or other securities of the Company other than, (i) (A) in the case of Boathouse Row I, LP, (x) as of the date hereof, 162,868 shares of Common Stock (the “BRI Previously Acquired Shares”), and (y) as of the Closing Date, the BRI Previously Acquired Shares and the Shares purchased by it hereunder, (B) in the case of Boathouse Row II, LP, (x) as of the date hereof, 52,346 shares of Common Stock (the “BRII Previously Acquired Shares”), and (y) as of the Closing Date, the BRII Previously Acquired Shares and the Shares purchased by it hereunder, (C) in the case of Boathouse Row Offshore Ltd., (x) as of the date hereof, 191,302 shares of Common Stock (the “BRO Previously Acquired Shares”), and (y) as of the Closing Date, the BRO Previously Acquired Shares and the Shares purchased by it hereunder, and (D) in the case of OC 532 Offshore Fund, Ltd., as of the Closing Date, the Shares purchased by it hereunder, and (ii) in the case of any such Affiliate, shares of capital stock of the Company that are held through the mutual fund holdings of such Affiliate.
(n) Residency. Each of Boathouse Row I, LP and Boathouse Row II, LP is formed in the State of Delaware, and each of Boathouse Row Offshore Ltd. and OC 532 Offshore Fund, Ltd. is formed under the Laws of the Cayman Islands. The principal place of business of each Buyer is located in the State of California.
(o) No Broker. Such Buyer has not engaged any broker or other similar agent in connection with its purchase of the Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each Buyer as of the date hereof and as of the Closing Date that, except as otherwise disclosed or incorporated by reference and readily apparent in: (i) the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2014, or any of its other reports and forms filed with or furnished to the SEC under Section 12, 13, 14 or 15(d) of the 1934 Act after September 30, 2014 and publicly available before the date of this Agreement and, solely with respect to the representations and warranties made by the Company in this Agreement as of the Closing Date, all such other reports and forms filed or furnished by the Company with the SEC under the 1934 Act after the date of this Agreement and publicly available before the Closing Date (in each case including any amendments or supplements thereto, but excluding risk factors and/or any other disclosures of risks included in any forward-looking statement disclaimers or other statements that are similarly nonspecific and are predictive and forward-looking in nature); or (ii) the disclosure letter dated as of the date hereof separately provided to the Buyers in connection with, and containing qualifications or information with respect to the provisions of, this Agreement and, with respect to the representations and warranties made by the Company in this Agreement as of the Closing Date, as set forth in any disclosure letter delivered to each Buyer prior to the Closing Date pursuant to Section 4(n) hereof solely for purposes of the representations and warranties made by the Company in this Agreement as of the Closing Date (such disclosure letter, and, as applicable, as supplemented by the disclosure schedules delivered pursuant to Section 4(n) hereof, the “Disclosure Letter”), it being agreed that a disclosure set forth on any particular Schedule of the Disclosure Letter shall constitute disclosure on each other Schedule thereof provided it is readily apparent that the information so disclosed on the first Schedule shall apply to such other Schedule or the representation and warranty as to which such Schedule relates.
(a) Organization and Qualification. The Company and the Subsidiaries other than MetaBank are entities duly organized and validly existing and in good standing, and MetaBank is duly organized and validly existing, under the Laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted. Each of the Company and the Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect.
(b) Status of Company and Subsidiaries. The Company is a savings and loan holding company under the Home Owners’ Loan Act of 1933, as amended (“HOLA”), regulated and supervised primarily by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). MetaBank is a federally chartered stock savings bank duly organized and validly existing under HOLA and regulated and supervised primarily by the Office of the Comptroller of the Currency (the “OCC”). The deposit accounts of MetaBank are insured up to applicable limits by the Deposit Insurance Fund, which is administered by the Federal Deposit Insurance Corporation (the “FDIC”), and no proceedings for the termination or revocation of such insurance are pending or, to the Knowledge of the Company, threatened. The federal stock savings bank charter of MetaBank complies in all material respects with applicable Law. MetaBank is considered “well capitalized” under the prompt corrective action provisions of the Federal Deposit Insurance Act (12 U.S.C. § 1831o and 12 C.F.R. Part 565).
(c) Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under the Transaction Documents and to issue the Shares in accordance with the terms hereof. The execution and delivery by the Company of this Agreement and the other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including the issuance of the Shares, have been duly authorized by the Company’s board of directors (the “Board of Directors”). No further corporate consent or authorization is required by the Company, the Board of Directors or the Company’s stockholders in connection with the execution and delivery by the Company of this Agreement or any of the other Transaction Documents and the performance of the Company’s obligations hereunder and thereunder, including the issuance of the Shares. This Agreement has been, and when executed and delivered by the Company at the Closing, each other Transaction Document will be, duly executed and delivered by the Company and constitute (or when executed and delivered will constitute) the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar Laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(d) Issuance of Shares; No Restrictions on Transfer. Upon the issuance of and payment for the Shares in accordance with this Agreement, such Shares will be validly issued, fully paid and nonassessable, and free and clear of all liens and/or restrictions on transfer (other than restrictions on transfer provided for by applicable federal and state securities Laws or expressly provided for herein) and will not be subject to preemptive rights of any other stockholder of the Company. Subject to the accuracy of the representations and warranties of each Buyer in this Agreement, the offer and sale by the Company of the Shares to the Buyers hereunder will be exempt from registration under the 1933 Act.
(e) No Conflicts. Except as set forth on Schedule 3(e) of the Disclosure Letter, the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby (including the issuance of the Shares) will not (i) violate the Certificate of Incorporation or the Bylaws, (ii) violate, conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of the Subsidiaries is a party, (iii) assuming the filing of a Form D and state securities Law filings, and such filings or notices as are required by the Principal Market (or the rules and regulations thereof), result in a violation of any Law, or rules and regulations of the Principal Market, applicable to the Company or any of the Subsidiaries or by which any property or asset of the Company or any of the Subsidiaries is bound or affected or (iv) result in or require the creation or imposition of any lien upon or with respect to any of the properties or assets of the Company or any of the Subsidiaries, except in the case of clauses (ii) and (iv), as would not reasonably be expected to have a Material Adverse Effect.
(f) Consents. Neither the Company nor any of the Subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency (including the OCC or the Federal Reserve), or any regulatory or self‑regulatory agency (including the Principal Market) or any other Person in order for the Company to execute, deliver or perform any of its obligations under or contemplated by this Agreement in accordance with the terms hereof, other than (i) the filing with the SEC of a Form D and any the filings contemplated by Section 4(j), (ii) any other filings as may be required by any state securities agencies, and (iii) such filings as are required by the Principal Market (or the rules and regulations thereof).
(g) No General Solicitation; Placement Agent’s Fees. None the Company or any of the Subsidiaries or any of their Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Shares. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by or on behalf of the Buyers or any of the Other Investors) relating to or arising out of the transactions contemplated hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any fee claimed by any placement agent, financial advisor or broker claiming to have been engaged by the Company, or to otherwise have been acting on the Company’s behalf, in connection with the transactions contemplated hereby. Neither the Company nor any of the Subsidiaries has engaged any placement agent or other similar agent in connection with the sale of the Shares.
(h) No Registration Due to Integrated Offering. None of the Company, the Subsidiaries, any of the Affiliates of the Company, and any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the offer or sale to the Buyers of any of the Shares under the 1933 Act. None of the Company or the Subsidiaries or any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of the offer or sale to the Buyers of any of the Shares under the 1933 Act (except as contemplated by the Registration Rights Agreement).
(i) Application of Takeover and Other Protections; Rights Agreement. The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation or any certificates of designations or the Laws of the jurisdiction of its formation or incorporation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including the Company’s issuance of the Shares and the Buyers’ ownership of the Shares.
(j) SEC Documents; Financial Statements.
(i) Except as set forth on Schedule 3(j)(i) of the Disclosure Letter, since September 30, 2014, the Company has timely filed with or furnished to the SEC all forms, reports, schedules, statements, certificates and other documents required to be filed by it with or furnished by it to the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed or furnished since September 30, 2014 and prior to the date hereof being hereinafter referred to as the “SEC Documents”). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act, and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with or furnished to the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. There are no outstanding unresolved written comments from the SEC with respect to any SEC Document.
(ii) As of their respective dates, the consolidated financial statements of the Company and the Subsidiaries included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements (A) have been prepared from, and are in accordance in all material respects with, the books and records of the Company and the Subsidiaries, (B) have been prepared in accordance with GAAP, consistently applied, during the periods involved (except (1) as may be otherwise indicated in such financial statements or the notes thereto, or (2) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements), and (C) fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations, changes in stockholders’ equity and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end adjustments). Since the date of the most recent balance sheet included in the SEC Documents, the Company has not effected any change in any method of accounting or accounting practice, except for any such change required because of a concurrent change in GAAP, nor has it been advised by its independent registered accounting firm or any Governmental Entity that any such change in method of accounting or accounting practice is appropriate.
(iii) Solely to the extent that the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated by the SEC and the Principal Market thereunder (collectively, the “Sarbanes-Oxley Act”) have been applicable to the Company, the Company is in compliance in all material respects with any provision of the Sarbanes-Oxley Act applicable to the Company.
(k) Accuracy of Information. All factual information, taken as a whole, furnished by or on behalf of the Company in writing to the Buyers on or prior to the date of this Agreement for purposes of this Agreement and all other such factual information, taken as a whole, furnished by the Company on behalf of itself and the Subsidiaries in writing to the Buyers pursuant to the terms of this Agreement does not, when taken together with the SEC Documents, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; provided, however, that with respect to any projected financial information or forward-looking statements, business assumptions, strategic plans or similar information, the Company represents only that such information was prepared in good faith based upon assumptions, and subject to such qualifications, believed to be reasonable at the time. The Company understands and confirms that the Buyers will rely on the representations and warranties contained in this Section 3 in effecting transactions in securities of the Company.
(l) Absence of Certain Changes.
(i) Except as disclosed in Schedule 3(l)(i) of the Disclosure Letter or in the SEC Documents, since September 30, 2014, no event or events have occurred that, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect.
(ii) Except as set forth in Schedule 3(l)(ii) of the Disclosure Letter or in the SEC Documents, since September 30, 2014, each of the Company and each Subsidiary has conducted its business in the ordinary course of business consistent with past practice, and during such period neither the Company nor any Subsidiary has:
(A) issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any Indebtedness for borrowed money or capitalized lease obligation, individually or in the aggregate, in excess of $250,000;
(B) (x) acquired any other Person (or any significant business, portion or division thereof), whether by merger, consolidation or reorganization or by purchase of such Person’s assets or capital stock or otherwise and/or (y) terminated and/or made material modifications to any material provisions of any agreements evidencing or relating to the transactions described in the preceding clause (x);
(C) incurred any material loss except for losses adequately provided for on the Company’s most recent balance sheet included in the SEC Documents and expenses associated with this transaction;
(D) in the case of the Company, declared or paid any dividends;
(E) sold any material assets outside the ordinary course of business;
(F) experienced any material change in asset concentrations as to customers or industries or in the nature and source of its liabilities or in the mix of interest-bearing versus noninterest-bearing deposits such that any such material change has had, or can reasonably be anticipated to have, a Material Adverse Effect; or
(G) committed to any of the foregoing.
(iii) Neither the Company nor any of the Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy Law nor does the Company have any Knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual Knowledge of any fact that would reasonably lead a creditor to do so. The Company and the Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing will not be, Insolvent.
(m) No Undisclosed Liabilities. Neither the Company nor any of the Subsidiaries is subject to any liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) which are not properly reflected or reserved against in the Company’s financial statements included in the SEC Documents to the extent required to be so reflected or reserved against in accordance with generally accepted accounting principles in the United States except for, since the date of the most recent balance sheet included in the SEC Documents, liabilities or obligations (i) that are listed or disclosed in Schedule 3(m) included in the Disclosure Letter, (ii) arising in the ordinary course of business consistent with past practices, (iii) incurred under this Agreement or the securities purchase agreements entered into with Other Investors in connection with the Other Private Placements or in connection with the transactions contemplated hereby or thereby, or (iv) that have not had, and would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
(n) Conduct of Business; Regulatory Permits.
(i) The Company is not in violation of any term of its Certificate of Incorporation, any certificate of designation, preferences or rights of any outstanding series of its preferred stock or its Bylaws. No Subsidiary is in violation of any term of its certification of incorporation or bank charter (as the case may be), any certificate of designation, preferences or rights of any outstanding series of its preferred stock or its bylaws (as amended, if at all).
(ii) The Company is not in violation in any material respect of any of the rules, regulations or requirements of the Principal Market and has no Knowledge of any facts or circumstances that would reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. Since September 30, 2014, (A) the Common Stock has been listed on the Principal Market, (B) trading in the Common Stock has not been suspended by the SEC or the Principal Market (other than pursuant to ordinary marketwide circuit breakers and excluding ordinary temporary suspensions in connection with announcements of material Company news) and (C) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market.
(iii) The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary for them to own or lease their properties and assets and to conduct their respective businesses as presently conducted, except where the failure to possess such certificates, authorizations or permits has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any written notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. The Company and the Subsidiaries have complied with and are not in default or violation in any respect of any Law, policy or guideline of any Governmental Entity, other than such defaults or violations that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. To the Knowledge of the Company, neither the Company nor any of the Subsidiaries is under investigation with respect to, or has been threatened to be charged with or given notice of, any violation of any Law, policy or guideline of any Governmental Entity, other than such investigations or violations that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
(o) Investment Company Status. The Company is not, and upon consummation of the sale of the Shares will not be, an “investment company”, or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.
(p) Transactions With Affiliates. Except as set forth in the SEC Documents and other than the outstanding stock options and/or unvested restricted stock disclosed on Schedule 3(p) of the Disclosure Letter, none of the officers, directors or employees of the Company or any of the Subsidiaries, or any of their respective Family Members, is presently a party to any transaction with the Company or any of the Subsidiaries (other than for services as employees, officers, directors or consultants), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from, any such officer, director, employee or Family Member, or, to the Knowledge of the Company, any corporation, partnership, trust or other entity in which any such officer, director, employee or Family Member has a substantial interest or is an officer, director, trustee or partner.
(q) Agreements with Regulatory Agencies. Except as set forth on Schedule 3(q) of the Disclosure Letter:
(i) Since September 30, 2014, neither the Company nor any of the Subsidiaries is or has been subject to any cease and desist order, consent order, assistance agreement, capital directive, supervisory agreement or other formal agreement or memorandum of understanding with, or a party to any commitment letter or similar undertaking to, or is subject to any formal or informal order or directive by, or is a recipient of any supervisory letter from any Governmental Entity which places any restriction on the business of the Company or any Subsidiary (each, a “Regulatory Agreement”).
(ii) Since September 30, 2014, neither the Company nor any Subsidiary (A) has been advised by any Governmental Entity that it is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any Regulatory Agreement, or (B) has any obligation to submit a capital restoration plan.
(iii) Except for examinations conducted by a Governmental Entity in the ordinary course of the business of the Company and each Subsidiary, to the Knowledge of the Company, no Governmental Entity has initiated since September 30, 2014 or has pending any proceeding, enforcement action or formal investigation into the business, disclosures or operations of the Company or any Subsidiary.
(iv) Since September 30, 2014, no Governmental Entity has resolved any proceeding, enforcement action or formal investigation into the business, disclosures or operations of the Company or any Subsidiary.
(v) There is no unresolved violation, criticism or exception by any Governmental Entity with respect to any report or statement relating to any examination or inspection of the Company or any Subsidiary, except where such violation, criticism or exceptions would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(vi) Since September 30, 2014, other than in the ordinary course of the Company’s business, there have been no formal inquiries by, or disagreements or disputes with, any Governmental Entity with respect to the business, operations, policies or procedures of the Company or any Subsidiary.
(r) Equity Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 10,000,000 shares of Common Stock, par value $.01 per share, of which as of the date of this Agreement, 6,965,129 are issued and 6,944,879 are outstanding and 800,369 shares are reserved for issuance pursuant to securities outstanding as of the date of this Agreement and exercisable or exchangeable for, or convertible into, shares of Common Stock, and (ii) 800,000 shares of preferred stock, par value $.01 per share, of which as of the date of this Agreement none are issued and outstanding. All of such outstanding and reserved shares have been, or upon issuance will be, validly issued and fully paid and nonassessable. Except for any shares to be issued in connection with the Acquisition, the Transaction Documents, or as disclosed in Schedule 3(r) of the Disclosure Letter: (i) none of the Company’s capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) other than shares of Common Stock issuable to the Buyers hereunder or the shares of Common Stock issued to any Other Investor pursuant to any Other Private Placement, as of the date hereof there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of the Subsidiaries, or contracts or arrangements by which the Company or any of the Subsidiaries is or may become bound to issue additional capital stock of the Company or any of the Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of the Subsidiaries; (iii) except as provided in the Registration Rights Agreement to be executed with the Buyers on the Closing Date, and except for registration rights to be granted to any Other Investor pursuant to any registration rights agreement entered into by the Company in connection with any Other Private Placement, as of the date hereof there are no agreements or arrangements under which the Company or any of the Subsidiaries remains obligated to register the sale of any of their securities, whether presently outstanding or securities that may be issued subsequently, under the 1933 Act; (iv) there are no outstanding securities or instruments of the Company or any of the Subsidiaries which contain any redemption or similar provisions, and as of the date of this Agreement, there are no contracts, commitments or arrangements by which the Company or any of the Subsidiaries is or may become bound to redeem a security of the Company or any of the Subsidiaries; (v) there are no securities or instruments of the Company containing anti-dilution or similar provisions, other than provisions for equitable adjustments upon a stock split, stock dividend, combination or similar recapitalizations with respect to the Company’s capital stock; and (vi) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. To the Company’s Knowledge, no stockholder of the Company has entered into any agreement with any other stockholder with respect to the voting of equity securities of the Company. The Company has furnished to the Buyers true, correct and complete copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date of this Agreement (the “Certificate of Incorporation”), and the Company’s Bylaws, as amended and as in effect on the date of this Agreement (the “Bylaws”).
(s) Subsidiaries. Schedule 3(s) of the Disclosure Letter sets forth a complete and accurate list of all direct and indirect Subsidiaries as of the date of this Agreement, showing in each case as of the date of this Agreement (as to each such Subsidiary) the jurisdiction of its formation, and, with respect to each non-wholly owned Subsidiary, the number of shares, membership interests or partnership interests (as applicable) of each class of its equity interests authorized, and the number outstanding, on the date of this Agreement and the percentage of each such class of its equity interests owned (directly or indirectly) by the Company, and the number of shares covered by all outstanding options, warrants, rights of conversion or purchase and similar rights as of the date of this Agreement. All of the outstanding equity interests in each of the Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by the Company or one or more of the Subsidiaries, free and clear of all liens. Except as set forth in Schedule 3(s) of the Disclosure Letter, the Company or one or more of the Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable Law) to receive dividends and distributions on, all capital securities of the Subsidiaries as owned by the Company or such Subsidiary.
(t) Absence of Litigation. Except as set forth in Schedule 3(t) of the Disclosure Letter or as set forth in the SEC Documents, there is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, government agency, arbiter, mediator, self-regulatory organization or body pending or, to the Knowledge of the Company, threatened against or affecting the Company or any of the Subsidiaries, or, to the Company’s Knowledge, any of the Company’s or the Subsidiaries’ officers or directors, that (i) is reasonably likely to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of this Agreement or the consummation of the transactions contemplated by this Agreement.
(u) Properties and Leases. The Company and the Subsidiaries have good and marketable title to all real properties and all other material properties and assets that purport to be owned by them, in each case free from liens, encumbrances, claims and defects that would affect the value thereof or interfere with the use made or to be made thereof by them, except for such defects in title or liens, encumbrances and claims that would not, individually or in the aggregate, reasonably be likely to result in a Material Adverse Effect. The Company and the Subsidiaries hold all leased real or personal property under valid and enforceable leases with no exceptions that would interfere with the use made or to be made thereof by them, and neither the Company nor any of the Subsidiaries has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the Company or any such Subsidiary under any such leases, or affecting or questioning the rights of such entity to the continued possession of the leased premises, except for such title exceptions or claims that would not, individually or in the aggregate, reasonably be likely to result in a Material Adverse Effect.
(v) Insurance. The Company and each of the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as companies engaged in a similar business would, in accordance with good business practice, customarily be insured.
(w) Tax Status. (i) Each of the Company and the Subsidiaries has (A) duly and timely filed (including pursuant to applicable extensions granted without penalty) all material Tax Returns required to be filed by it, (B) paid in full all Taxes due, whether or not shown as due on such Tax Returns, other than such Taxes being contested in good faith or such Taxes the nonpayment of which would not, individually or in the aggregate, reasonably be likely to result in a Material Adverse Effect, and (C) made adequate provision for any unpaid Taxes not yet due in the financial statements of the Company (in accordance with GAAP); (ii) no material deficiencies for any Taxes have been proposed, asserted or assessed in writing against or with respect to any Taxes due by or Tax Returns of the Company or any of the Subsidiaries, which deficiencies have not since been resolved, except for Taxes proposed, asserted or assessed that are being contested in good faith by appropriate proceedings and for which reserves adequate in accordance with GAAP have been provided in the financial statements of the Company; and (iii) there are no material liens for Taxes upon the assets of either the Company or its material Subsidiaries except for statutory liens for current Taxes not yet due or liens for Taxes that are being contested in good faith by appropriate proceedings and for which reserves adequate in accordance with GAAP have been provided in the financial statements of the Company.
(x) Manipulation of Price. The Company has not, and to its Knowledge no one acting on its behalf has, taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale of any of the Shares to the Buyers hereunder.
(y) Shell Company Status. The Company is not, and has never been, an issuer of the type described in paragraph (i) of Rule 144.
(z) U.S. Real Property Holding Corporation Status. The Company is not, nor has ever been, a U.S. real property holding corporation within the meaning of Section 897 of the Code.
(aa) Allowance for Possible Loan Losses. The allowance for possible loan or credit losses (the “Allowance”) shown on the consolidated balance sheets of each Subsidiary, as applicable, included in the most recent SEC Documents dated prior to the date of this Agreement was, as of the dates thereof, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines) to provide for all known, reasonably anticipated or probable losses relating to or inherent in the loan and lease portfolios (including accrued interest receivables) of such Subsidiary and other extensions of credit (including letters of credit and commitments to make loans or extend credit) by such Subsidiary as of the date thereof; provided, however, that there can be no assurance that future losses will not exceed the Allowance, or that additional provisions for loan losses will not be required in future periods, and provided, further, that it is understood that the Company’s determination of the Allowance is subject to review by the Company’s bank regulator, which can require the establishment of additional general or specific allowances.
(bb) Intellectual Property. Except as would not have a Material Adverse Effect, (i) the Company owns or has the right to use all Intellectual Property necessary to conduct its business as currently conducted (the “Company Intellectual Property”) and (ii) to the Company’s Knowledge, no Person is infringing, violating or misappropriating any Company Intellectual Property.
(cc) No Disqualification Events. None of the Company, any of its predecessors, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner (as that term is defined in Rule 13d-3 under the 1934 Act) of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, any “promoter” (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the Closing Date, any placement agent or dealer participating in the offering of the Shares and any of such agents’ or dealer’s directors, executive officers, other officers participating in the offering of the Shares (each, a “Covered Person” and, together, “Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”). The Company has exercised reasonable care to determine (i) the identity of each person that is a Covered Person; and (ii) whether any Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e) under the 1933 Act. With respect to each Covered Person, the Company has established procedures reasonably designed to ensure that the Company receives notice from each such Covered Person of (i) any Disqualification Event relating to that Covered Person, and (ii) any event that would, with the passage of time, become a Disqualification Event relating to that Covered Person; in each case occurring up to and including any Closing Date. The Company is not for any other reason disqualified from reliance upon Rule 506 of Regulation D under the 1933 Act for purposes of the offer and sale of the Shares.
4. COVENANTS.
(a) Form D and Blue Sky. The Company agrees to file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof to the Buyers promptly after such filing. The Company shall, on or before the Closing Date, take such action (if any) as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Shares for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and sale to the Buyers of the Shares required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date.
(b) Reports. For as long as the Buyers hold the Shares, the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act from and after the date hereof and so long as the Company shall be required to do so under the 1934 Act. For as long as the Buyers hold the Shares, if the Company is not required to file reports pursuant to the 1934 Act, it will prepare and furnish to the Buyers and make publicly available in accordance with Rule 144(c) such information as is required for the Buyers to sell the Shares under Rule 144.
(c) Listing. Subject to the occurrence of the Closing, the Company shall promptly secure the listing of all of the Shares upon the Principal Market and, at all times while the Common Stock is listed on the Principal Market, and for so long as the Buyers hold the Shares, shall maintain such listing of all Shares. The Company shall use its commercially reasonable efforts to maintain authorization for the Common Stock for quotation on the Principal Market or any other Eligible Market, and so long as the Buyers collectively own at least 33% of the number of Shares originally purchased hereunder, neither the Company nor any of the Subsidiaries shall take any action which would reasonably be expected to result in the delisting or suspension of the Common Stock on the Principal Market or any other Eligible Market (other than in connection with a change of listing to another Eligible Market and excluding ordinary temporary suspensions in connection with announcements of material Company news). The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(c).
(d) Conduct of the Business. Commencing on the date hereof and ending on the earlier of the Closing Date and the date that this Agreement shall terminate in accordance with Section 8 hereof (the “Interim Period”), the Company shall, and shall cause each Subsidiary to, use commercially reasonable efforts to carry on and maintain and preserve its business in the ordinary course of business; provided, however, that nothing contained in this sentence shall limit, preclude or require any actions that the Board of Directors or the board of directors of such Subsidiary (as the case may be) may, in good faith, determine to be inconsistent with their duties or the Company’s or such Subsidiary’s obligations under applicable Law; and, provided, further, that nothing contained in this sentence shall limit or preclude the Company or such Subsidiary from terminating any contract, license, loan or other extension of credit made or extended to any borrower, customer or other obligor, or other agreement or right, or entry into the Purchase Agreement, as the Company or such Subsidiary, as the case may be, shall in its good faith judgment deem necessary, appropriate or advisable.
(e) Access to Information. During the Interim Period and upon reasonable advance written notice from the Buyers, the Company shall (and shall cause each of the Subsidiaries to) provide to officers, directors, managers, employees, accountants, counsel, consultants, advisors and representatives of the Buyers (collectively, the “Buyer Representatives”), solely for the purpose of evaluating the transactions contemplated by this Agreement, reasonable access, during normal business hours, to members of the Company Executive Team and to such other employees of the Company and the Subsidiaries as specifically approved by a member of the Company Executive Team, and to the assets, properties, agreements, books and records of the Company and the Subsidiaries. During the Interim Period, the Company shall and shall cause each of the Subsidiaries to (i) furnish promptly to a Buyer Representative all information concerning its finances, operations, business, properties, personnel and condition (financial or otherwise), and respond to such inquiries, in each case as may from time to time be reasonably requested by such Buyer Representative, and (ii) use commercially reasonable efforts to make available during normal business hours to such Buyer Representative, upon request, the appropriate individuals (including management, personnel, employees, attorneys, accountants and other professionals) for reasonable inquiries regarding the Company’s and the Subsidiaries’ finances, operations, business, properties, personnel and condition (financial or otherwise). Notwithstanding the foregoing provisions of this Section 4(e), nothing contained herein shall require the Company or any of the Subsidiaries to disclose any information to the extent that the Company reasonably believes that (x) such information is a trade secret or competitively sensitive proprietary information or because there exists, or the Company reasonably believes there exists, a conflict or a potential conflict of interest between the Company and any Buyer, (y) disclosure would cause a violation of any applicable Law or any confidentiality agreement or undertaking in effect and binding upon the Company or such Subsidiary or (z) disclosure would cause a risk of a loss of privilege to the Company or such Subsidiary, in which case with respect to clause (x) or (y) the parties hereto will make appropriate substitute disclosure arrangements, if such arrangements can be made by the parties using their commercially reasonable efforts and without such violation. Each Buyer acknowledges and agrees that all information so provided such Buyer and the Buyer Representatives is and shall be subject to the terms of the Confidentiality Agreement.
(f) Efforts to Consummate Transaction; Cooperation. Each party hereto shall use its commercially reasonable efforts to satisfy on a timely basis each of the covenants and conditions to be satisfied by it as provided in Sections 4, 5 and 6 of this Agreement. Each party shall refrain from taking any action which would render any representation or warranty contained in Sections 2 and 3 hereof inaccurate in any material respect as of the Closing Date. Each party hereto shall promptly notify the other party of (i) any event or matter that would reasonably be expected to cause any of its representations or warranties to be untrue in any material respect as of the Closing Date or that would reasonably be expected to cause any of the conditions to Closing provided in Section 5 or 6, as the case may be, not to be satisfied in the manner contemplated herein, or (ii) any action, suit or proceeding that shall be instituted or threatened against such party to restrain, prohibit or otherwise challenge the legality of any of the transactions contemplated by this Agreement.
(g) NASDAQ Stock Issuance Notice. At least fifteen (15) days prior to the issuance of the Shares hereunder (but in any event as soon as reasonably practicable following the date hereof), the Company shall file with the NASDAQ OMX Listing Center the notice, appropriately completed, required by NASDAQ Stock Market Rule 5250(e)(2)(D) in respect of the Shares issuable hereunder and the shares of capital stock issuable in connection with the Other Private Placements, and thereafter prepare and file such amendments and supplements thereto as shall be required, and respond to such inquiries (if any) from the NASDAQ OMX Listing Center (or the Principal Market) relating thereto, in each case on a timely basis. At the request of the Buyers, the Company shall provide copies to the Buyers of such filing and any such amendments and supplements in advance of the filing of any thereof. Each Buyer shall reasonably cooperate, in a timely manner, in connection with the Company’s obligations under this Section 4(g), including, without limitation, furnishing the Company in a timely manner upon request with all information with respect to such Buyer as may be required to be included in the NASDAQ Stock Market Rule notice filing or any amendment or supplement thereto.
(h) Expenses. Each party hereto shall be responsible for its own costs and expenses incurred by it in connection with the transactions contemplated hereby.
(i) Pledge of Shares. The Company acknowledges and agrees that the Shares may be pledged by any Buyer and that such pledge of the Shares shall not be deemed to be a transfer, sale or assignment of the Shares hereunder, and, except as required by applicable Law, such Buyer shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement; provided, however, that such Buyer and its pledgee shall be required to provide notice to the Company and comply with the applicable provisions hereof, including the requirements of Section 2(l), in order to effect (and otherwise in connection with) any sale, transfer or assignment of the Shares to such pledgee.
(j) Disclosure of Transactions and Other Material Information. On or before 5:30 p.m., New York City time, on the fourth (4th) Business Day following (i) the date of this Agreement the Company shall issue a press release and file a current report on Form 8-K describing the terms of the transactions contemplated by this Agreement, in the form required by the 1934 Act and attaching this Agreement (and, as appropriate, any other Transaction Document) as an exhibit to such filing (including such attachment, the “Pre-Closing 8-K”), and (ii) such other matters as are required or deemed appropriate by the Company to be disclosed under Form 8-K relating to the transactions contemplated hereby, in the form required by the 1934 Act. In addition, following the Closing, the Company may file a press release and a Form 8-K relating to the Closing of the transactions contemplated hereby to the extent deemed appropriate by the Company (the “Post-Closing 8‑K”). A reasonable time prior to issuing any press release referred to in the previous two sentences, the Company shall provide the Buyers with a copy of the proposed press release and shall consult with the Buyers with respect to the content of such press release and Pre-Closing 8-K, or Post-Closing 8-K, as the case may be, and consider in good faith any comments proposed by the Buyers. Subject to the foregoing, none of the Company and the Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that (i) the Company shall be entitled, without the prior approval of the Buyers, to make any press release or other public disclosure with respect to such transactions in substantial conformity with the Pre-Closing 8-K or the Post-Closing 8-K, as the case may be (provided that the Company shall consult with the Buyers in connection with any such press release or other public disclosure prior to its release and consider in good faith any comments proposed by the Buyers) and (ii) either party may make such disclosure as is required by applicable Law.
(k) Certain Future Actions.
(i) From the date of this Agreement and so long as any Buyer or its Affiliates, individually or collectively, shall hold any Shares, the Buyers shall not, nor shall they permit any of their respective Affiliates to “act in concert” within the meaning of C.F.R. §238.21(b)(2) or (D) with any Person (including any of its Affiliates) to knowingly participate in joint activity or parallel action towards a common goal of acquiring control of the Company, whether or not pursuant to an express agreement, such that it would result in the Buyers or any of their Affiliates to be determined by the Federal Reserve (A) to have the power, directly or indirectly, to exercise a controlling influence over, or direct, the management or policies of the Company or any Subsidiary, (B) to have acquired, or to be attempting to acquire, control (rebuttably or otherwise, as such term is used in 12 C.F.R. Part 238) of the Company or any Subsidiary, or otherwise be required to register as a savings and loan holding company, as such term is defined in 12 C.F.R. § 238.2(m), (C) to be an “affiliate” (as defined under 12 C.F.R. § 238.2(a)) of any Subsidiary, such that any transactions between the Buyers and such Subsidiary would be subject to compliance with §§ 23A and 23B of the Federal Reserve Act or Regulation W, 12 C.F.R. Part 223, or (D) to be an “insider” (as defined in 12 C.F.R. § 215.2) of the Company or any Subsidiary such that any transactions between such Buyer and its Affiliates, on the one hand, and the Company and such Subsidiary, on the other, would be subject to compliance with Regulation O of 12 C.F.R. § 215.
(ii) From and after the Closing Date and so long as the Buyers and their Affiliates (who are known to the Company to be a holder of any Shares), individually or collectively, shall hold any Shares, if (A) the Company intends to redeem or repurchase shares of Common Stock from any holder of shares of Common Stock and such redemption or repurchase will not be offered to the holders (including the Buyers and their Affiliates known to the Company who hold Shares) of all (or substantially all) of the outstanding shares of Common Stock on a pro-rata basis (a “Non-Pro-Rata Stock Repurchase”) and (B) such Non-Pro-Rata Stock Repurchase would, immediately after completion of such Non-Pro-Rata Stock Repurchase, result in the Buyers’ and such Affiliates’ collective ownership of the Shares to exceed 9.999% of the total outstanding shares of Common Stock of the Company, as calculated for the purposes of the Bank Holding Company Act of 1956 (as amended) or HOLA (the occurrence of the events described in the foregoing clauses (A) and (B), collectively, a “Stock Reduction Triggering Event”), then the Buyers shall use their commercially reasonable efforts to sell or cause to be sold that number of Shares held by the Buyers that would, immediately after giving effect to such sale, result in the Buyers’ and such Affiliates’ collective ownership of the Shares to not exceed 9.999% of the total shares of outstanding Common Stock (such number of shares required to be sold, the “Excess Shares”), all in accordance with the provisions of this Section 4(k)(ii); provided, however, that if the Buyers then hold fewer than the number of Excess Shares that are required to be sold, then the Buyers shall use their commercially reasonable efforts to sell all such fewer Shares, and the term “Excess Shares” shall be deemed to mean such fewer number of Shares. The Company shall give written notice to the Buyers of a Stock Reduction Triggering Event at least twenty (20) Business Days prior to effecting any such Non-Pro-Rata Stock Repurchase (such prior notice period, the “Pre-Redemption Period”). The Buyers shall use their commercially reasonable efforts to sell or cause to be sold the Excess Shares (in a single transaction or in multiple transactions over a period of one or more Business Days) not later than the expiration of the Pre-Redemption Period provided that the Excess Shares may be then sold pursuant to an effective registration statement or pursuant to an exemption available under the 1933 Act (including under Rule 144) that would be sufficient to enable the Buyers to sell all such Excess Shares during such period; provided, however, that if there shall not be a registration statement then in effect with respect to the Excess Shares or if there shall not be an exemption available under the 1933 Act (including under Rule 144) that would be sufficient to enable the Buyers to sell all such Excess Shares during the Pre-Redemption Period, then the Pre-Redemption Period shall be automatically extended until the expiration of twenty (20) Business Days following the earlier of the first date on which (x) such registration statement shall have become so effective and (y) the Buyers shall have the right to sell such Excess Shares pursuant to an exemption from the 1933 Act sufficient to enable the Buyers to sell all such Excess Shares within a twenty (20) Business Day period. If, with respect to any Excess Shares sold by any such Buyer pursuant to this Section 4(k)(ii), the Benchmark Price (as defined below) on the date of such sale is greater than the Market Price (as defined below) on such date, then the Company shall pay to such Buyer an amount that is equal to the product of (x) the number of Excess Shares so sold on such date pursuant to this Section 4(k)(ii) and (y) the amount by which such Benchmark Price exceeds such Market Price. Any amount required to be paid by the Company to a Buyer pursuant to this Section 4(k)(ii) shall be paid not later than three (3) Business Days following the date on which the Company is notified that the Excess Shares shall have been sold. The Company and the Buyers agree to cooperate with all reasonable requests of the other party for purposes of more fully giving effect to and carrying out the intent and purposes of this Section 4(k)(ii), including providing to the Company such evidence and other information relating to the sale of the Excess Shares as shall be reasonably requested by the Company. Notwithstanding anything to the contrary contained herein, the Company’s obligation to make any payment to any Buyer pursuant to this Section 4(k)(ii) shall be subject to applicable banking and bank holding company Laws and any order or directive (or similar action) of any governmental regulatory authority or agency (including the Federal Reserve) having regulatory authority over the Company. For purposes of this Section 4(k)(ii), the following terms shall have the following meanings:
“Benchmark Price” means, in the case of any Excess Shares sold pursuant to this Section 4(k)(ii), (x) during the period commencing on the Closing Date and ending on the eighteen (18) month anniversary of the Closing Date, the greater of the Fair Market Value per share of the Excess Shares and the price per share paid hereunder for the Shares at the Closing, and (y) at any time after the eighteen (18) month anniversary of the Closing Date, the Fair Market Value per share of such Excess Shares.
“Fair Market Value” means, in the case of any Excess Shares sold pursuant to this Section 4(k)(ii), (a) if the Common Stock is traded on an Eligible Market, the price which represents the trailing 20-trading day (including trading days on which no Common Stock were in fact traded) average of the closing “bid” price (determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours) of the Common Stock ending on (and including) the trading day immediately preceding the date that is one (1) trading day prior to the date on which such Excess Shares shall have been so sold or (b) if the Common Stock is not so traded, the fair market value (per share) of Common Stock as of the date that is one (1) trading day immediately preceding the date on which such Excess Shares shall have been sold as determined in good faith between the Company and the selling Buyer; provided, however, that if the Company and such Buyer do not reach an agreement as to the fair market value of such Common Stock by the date on which the Company shall be required to make any payment to such Buyer pursuant to this Section 4(k)(ii), then such fair market value shall be determined by an independent, nationally recognized investment banking firm, accounting firm or appraisal firm selected by such Buyer and reasonably acceptable to the Company and paid for by the Company and the date on which any payment required to be made by the Company to such Buyer pursuant to this Section 4(k)(ii) shall be extended until the date that is three (3) Business Days following the date on which such valuation firm shall have delivered to the Company and such Buyer its fair market value determination (which determination shall, for purposes of this Section 4(k)(ii), be conclusive and binding on the parties hereto absent manifest error).
“Market Price” means, with respect to any Excess Shares sold by a Buyer pursuant to this Section 4(k)(ii), the fair market value thereof, per share, based on the price that would be obtained by a seller of such Excess Shares who was acting in good faith and in a commercially reasonable manner on the date of such sale; provided, however, that if any such Excess Shares are sold at any time during which the Company’s Common Stock is listed on any national securities exchange or quoted on the over-the-counter bulletin board, then the “Market Price” shall be deemed to be the closing price of such shares of Common Stock as reported on such national securities exchange or bulletin board on the date of sale of such Excess Shares.
(l) Standstill. Each Buyer hereby agrees that, during the period commencing on the Closing Date and ending on the second annual anniversary thereof (the “Standstill Period”), unless specifically invited in writing by the Company, such Buyer will not, and will not permit any director, officer or Affiliate of such Buyer to, in any manner, directly or indirectly (including by directing or causing any other Person that is not such Buyer or a director, officer or Affiliate of such Buyer):
(i) effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other Person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (A) any acquisition of any securities (or beneficial ownership thereof) or rights or options to acquire any securities (or beneficial ownership thereof) of the Company or any of the Subsidiaries or Company Controlled Affiliates if, after giving effect to any such acquisition, the Buyers and/or any Buyer Controlled Entity and/or Control Group Member, either individually or in the aggregate, would beneficially own more than nine and ninety-nine one hundredths percent (9.99%) of the shares of Common Stock then outstanding, (B) any tender or exchange offer, merger or other business combination involving the Company or any of the Subsidiaries or Company Controlled Affiliates or any division or line of business of any thereof, (C) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company or any of the Subsidiaries or Company Controlled Affiliates or any division thereof, or (D) any “solicitation” of “proxies” (as such terms are used in the proxy rules of the SEC) or consents to vote any voting securities of the Company;
(ii) form, join or in any way participate in a “group” (within the meaning of Section 13(d)(3) of the 1934 Act) with respect to the securities of the Company or any of the Subsidiaries or Company Controlled Affiliates (it being understood that this provision shall not prevent any coordinated activity between or among each of the Buyers hereof);
(iii) otherwise act, alone or in concert with others, to seek to control or influence the management, the board of directors or the policies of the Company or any of the Subsidiaries or Company Controlled Affiliates;
(iv) take any action which would or would reasonably be expected to force the Company to make a public announcement regarding any of the types of matters set forth in clause (i) above; or
(v) enter into any discussions or arrangements with any third party with respect to any of the foregoing.
Each Buyer further agrees that it shall not, and shall not permit any director, officer or Affiliate of such Buyer to, during the Standstill Period, directly or indirectly, publicly request the Company (or its directors, officers, employees or agents) to amend or waive any provision of this Section 4(l) (including this sentence).
(m) Stock Certificates. In connection with the Closing, the Company shall instruct the Transfer Agent to issue the stock certificates representing the Shares as required by this Agreement and take such actions as shall be reasonably requested by the Transfer Agent such that the applicable stock certificate shall be delivered to each Buyer within five (5) Business Days after the Closing Date.
(n) Disclosure Letter Updates. No later than two Business Days prior to the Closing Date, the Company shall amend or supplement the Disclosure Letter with respect to any matter or event arising or occurring after the date hereof to the extent necessary or desirable in order to make the representations and warranties being made by the Company pursuant to this Agreement as of the Closing Date true and correct as of the Closing Date.
(o) Disqualification Events. The Company will notify the Buyers in writing, prior to the Closing Date of (i) any Disqualification Event relating to any Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Covered Person.
(p) Use of Proceeds. The Company will use the proceeds from the sale of the Shares to finance the Acquisition (including to pay any expenses associated with the Acquisition).
5. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Shares to the Buyers at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions; provided that these conditions are for the Company’s sole benefit and (to the extent permitted by applicable Law) may be waived by the Company at any time in its sole discretion by providing the Buyers with prior written notice thereof:
(i) Other Transaction Documents. Each Buyer shall have duly executed each other Transaction Document (in the case of the Registration Rights Agreement, substantially in the form of Exhibit A hereto) and delivered each such other Transaction Document to the Company.
(ii) Representations, Warranties and Covenants. The representations and warranties of each Buyer shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct in all material respects (or, if such representation and warranty is qualified by materiality or Material Adverse Effect, in all respects) as of such specified date), and each Buyer shall have performed, satisfied and complied with, in all material respects, the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date. The Company shall have received a certificate, executed by the Chief Executive Officer or Chief Financial Officer (or other senior executive officer reasonably acceptable to the Company) of each Buyer and dated as of the Closing Date, to the foregoing effect.
(iii) Purchase Price. Each Buyer shall have delivered to the Company the Purchase Price for its Shares by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company pursuant to Section 1(d).
(iv) No Injunction or Restraints. No Laws shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by any Transaction Document, nor shall there be on file any complaint by any Person seeking an order or decree, restraining, enjoining or prohibiting the transactions contemplated by any Transaction Document.
(v) Governmental Filings and Consents. All material governmental filings, consents, orders and approvals legally required to be filed or made by any Buyer for the consummation of the transactions contemplated hereby shall have been made or obtained and shall be in full force and effect.
(vi) Corporate Documents. Each Buyer shall have delivered to the Company a certificate, executed by the Secretary of such Buyer and dated as of the Closing Date, as to (A) the certificate of formation of such Buyer, as in effect at the Closing, (B) the limited partnership agreement or similar governing document of such Buyer as in effect at the Closing, and (C) the incumbency signatures of the officers of such Buyer or its general partner or investment manager, as the case may be, executing this Agreement or any other document executed in connection with this Agreement.
(vii) Other Documents. Each Buyer shall have delivered to the Company such other documents relating to the transactions contemplated by this Agreement as the Company or its counsel may reasonably request.
(viii) Consummation of the Acquisition. The Acquisition shall have been (or shall substantially concurrently with the Closing be) consummated.
6. CONDITIONS TO THE BUYERS’ OBLIGATION TO PURCHASE.
The obligation of any Buyer hereunder to purchase the Shares at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for such Buyer’s sole benefit and (to the extent permitted by applicable Law) may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) Other Transaction Documents. The Company shall have duly executed each other Transaction Document (in the case of the Registration Rights Agreement, substantially in the form of Exhibit A hereto) and delivered each such other Transaction Document to such Buyer.
(ii) Stock Certificate and Transfer Agent. The Company shall have delivered to the Buyers a copy of the instructions delivered to the Transfer Agent instructing the Transfer Agent to issue the stock certificates evidencing the Shares as required by this Agreement and deliver such stock certificates to the Buyers within five (5) Business Days after the Closing Date.
(iii) Legal Opinion. Such Buyer shall have received the opinion of Katten Muchin Rosenman LLP, the Company’s outside counsel, substantially in the form approved by the Buyers prior to the execution and delivery of this Agreement, dated as of the Closing Date.
(iv) Good Standing Certificate. The Company shall have delivered to the Buyers a certificate evidencing the incorporation and good standing of the Company issued by the Secretary of State of the State of Delaware as of a date within fifteen (15) days of the Closing Date.
(v) Corporate Documents. The Company shall have delivered to the Buyers a certificate, executed by the Secretary of each of the Company and MetaBank and dated as of the Closing Date, as to (A) the resolutions consistent with Section 3(c) as adopted by the Board of Directors, (B) the Certificate of Incorporation, (C) the federal stock charter of MetaBank, as in effect at the Closing, (D) the Bylaws and the bylaws of MetaBank, as in effect at the Closing, and (E) the incumbency signatures of the officers of the Company executing each Transaction Document or any other document executed in connection with this Agreement.
(vi) Representations, Warranties and Covenants.
(1) The representations and warranties of the Company set forth in Sections 3(a), 3(b), 3(c), 3(d), 3(g), 3(h), 3(i), 3(l)(i), 3(x), 3(y), 3(z) and 9(n) (the “Fundamental Representations”) shall be true and correct in all respects as of the date hereof and as of the Closing Date (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date);
(2) The representations and warranties of the Company set forth in Section 3 hereof, other than the Fundamental Representations, shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect or like qualifiers, which shall be true and correct in all respects) as of the date hereof and as of the Closing Date (except for representations and warranties that speak as of a specific date, which shall be true and correct in all material respects (or, if such representation and warranty is qualified by materiality or Material Adverse Effect, in all respects) as of such specified date);
(3) The Company shall have performed, satisfied and complied with in all material respects the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date; and
(4) The Buyers shall have received a certificate, executed by the Chief Executive Officer or Chief Financial Officer (or other senior executive officer reasonably acceptable to the Buyers) of the Company, dated as of the Closing Date, that the conditions set forth in each of clauses (1) through and including (3) above have been satisfied, and further certifying that the facts, events or circumstances described in updates to the Disclosure Letter and in any document filed or furnished with the SEC under the 1934 Act after the date hereof and publicly available before the Closing Date have not had, and are reasonably expected not to have, a Material Adverse Effect.
(vii) No Injunction or Restraints. No Laws shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by any Transaction Document, nor shall there be on file any complaint by any Person (other than any Buyer or its Affiliates) seeking an order or decree, restraining, enjoining or prohibiting the transactions contemplated by any Transaction Document.
(viii) Number of Outstanding Shares of Common Stock. The Company shall have delivered to the Buyers a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding as of a date within five (5) Business Days of the Closing Date.
(ix) Common Stock Remains Listed. The Common Stock (including the Shares) (A) shall be listed on the Principal Market and (B) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (x) in writing by the SEC or the Principal Market or (y) by the Company’s falling below the minimum listing maintenance requirements of the Principal Market.
(x) Governmental Filings and Consents. All material governmental filings, consents, orders and approvals legally required to be filed or made by the Company for the consummation of the transactions contemplated hereby shall have been made or obtained and shall be in full force and effect.
(xi) Other Documents. The Company shall have delivered to the Buyers such other documents relating to the transactions contemplated by this Agreement as the Buyers or their counsel may reasonably request.
(xii) No Company Material Adverse Effect. Since the date of this Agreement, no Material Adverse Effect shall have occurred.
(xiii) Consummation of the Acquisition. The Acquisition shall have been (or shall substantially concurrently with the Closing be) consummated.
7. SURVIVAL AND INDEMNIFICATION.
(a) Survival. Unless this Agreement is terminated under Section 8, the representations and warranties of the Company and the Buyers contained in Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 7, 8 and 9(b) shall survive the Closing and the delivery of the Shares.
(b) Indemnification. Subject to the other terms and conditions of this Section 7, the Company shall indemnify, defend and hold harmless the Buyers, their Affiliates and their respective partners, directors, officers, employees, advisors and representatives (each, an “Indemnified Party” and collectively, the “Indemnified Parties”) against any and all Losses (including actions brought by the Buyers or the Company or any equity holders of the Company or derivative actions brought by any Person claiming through or in the Company’s name other than actions brought by the Company for breach of any Buyer’s representations, warranties or covenants made by it under this Agreement), proceedings or investigations (whether formal or informal), or threats thereof, based upon, resulting from, relating to or arising out of (i) any breach of any representation or warranty of the Company in this Agreement, (ii) any breach of any covenant, agreement or obligation of the Company contained in this Agreement, or (iii) any action, suit or proceeding initiated by one or more stockholders of the Company (other than any Buyer) as a result of the transactions contemplated by this Agreement that are to be consummated on the Closing Date; provided, that if and to the extent that such indemnification is unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of such Losses which shall be permissible under applicable Laws; and, provided, further, that the Company shall have no obligation to indemnify, defend or hold harmless (or make contribution to the payment and satisfaction to) any Indemnified Party to the extent the Losses suffered by such Indemnified Party arise out of or result from a breach of any representation, warranty or covenant made or to be complied with by such Indemnified Party hereunder or the gross negligence or willful misconduct of such Indemnified Party.
(c) Procedure. Promptly after receipt by an Indemnified Party of notice by a third party of any complaint or the commencement of any audit, investigation, action or proceeding with respect to which such Indemnified Party may be entitled to receive payment from the Company for any Losses, such Indemnified Party will notify the Company in writing following the Indemnified Party’s receipt of such complaint or of notice of the commencement of such audit, investigation, action or proceeding; provided, however, that the failure to so notify the Company in writing will not relieve the Company from liability under this Agreement with respect to such claim unless such failure to notify the Company in writing results in the forfeiture of material rights or defenses otherwise available to the Company with respect to such claim. The Company will have the right, upon written notice delivered to the Indemnified Party within twenty (20) days thereafter, which notice shall include the Company’s written statement that it is assuming full responsibility for any Losses resulting from such audit, investigation, action or proceeding, to assume the defense of such audit, investigation, action or proceeding, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of the fees and disbursements of such counsel. In the event, however, that the Company declines or fails to assume the defense of the audit, investigation, action or proceeding on the terms provided above or to employ counsel reasonably satisfactory to the Indemnified Party, in either case within such twenty (20) day period, then such Indemnified Party may employ counsel to represent or defend it in any such audit, investigation, action or proceeding and the Company will pay the reasonable fees and disbursements of such counsel as incurred; provided, however, that the Company will not be required to pay the fees and disbursements of more than one counsel plus appropriate local counsel for all Indemnified Parties in any jurisdiction in any single audit, investigation, action or proceeding. In any audit, investigation, action or proceeding with respect to which indemnification is being sought hereunder, the Indemnified Party or the Company, whichever is not assuming the defense of such action, will have the right to participate in such matter and to retain its own counsel at such party’s own expense. The Company or the Indemnified Party, as the case may be, shall at all times use reasonable efforts to keep the Company or the Indemnified Party, as the case may be, reasonably apprised of the status of the defense of any matter the defense of which they are maintaining and to cooperate in good faith with each other with respect to the defense of any such matter. No Indemnified Party may settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder without the prior written consent of the Company, unless (i) the Company fails to assume and maintain the defense of such claim pursuant to this Section 7(c) or (ii) such settlement, compromise or consent (A) includes an unconditional release of the Company from all liability arising out of such claim, (B) does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the Company, and (C) does not contain any equitable order, judgment or term which in any manner affects, restrains or interferes with the business of the Company or any of the Company’s Affiliates. The Company may not, without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed), settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder unless such settlement, compromise or consent (A) includes an unconditional release of the Indemnified Party from all liability arising out of such claim, (B) does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the Indemnified Party, (C) does not contain any equitable order, judgment or term which in any manner affects, restrains or interferes with the business of the Indemnified Party or any of the Indemnified Party’s Affiliates and (D) does not require payment of any amount that is not being paid by the Company.
(d) Reimbursement. In the event the Company is obligated to indemnify for expenses, the Company shall, subject to the provisions of this Section 7, upon presentation of appropriate invoices containing reasonable detail, reimburse each Indemnified Party for all such expenses (including reasonable expenses of investigation and reasonable fees, disbursements and other charges of counsel in connection with any claim, action, suit or proceeding) as they are incurred by such Indemnified Party. “Losses” means all losses, claims (including any claim by a third party), damages and expenses (including reasonable expenses of investigation and reasonable fees, disbursements and other charges of counsel in connection with any claim, action, suit or proceeding) actually incurred by the Indemnified Party in connection with any claim, action, suit or proceeding.
8. TERMINATION.
(a) Termination by Mutual Agreement. This Agreement may be terminated prior to the Closing by mutual written agreement of the Company and the Buyers.
(b) Termination for Failure to Close. In the event that the Closing shall not have occurred on or before 5:00 p.m., New York City Time, on September 30, 2015, either the Company or the Buyers shall have the option to terminate this Agreement at the close of business on such date or at any time thereafter, without liability to such party, by the giving of written notice of termination, unless the Closing has not occurred by reason of the failure of the party seeking to terminate this Agreement to comply in all material respects with its obligations under this Agreement.
(c) Termination for Breach. This Agreement may be terminated by the Company or the Buyers in the event the Company (in the case of termination by the Buyers) or any Buyer (in the case of termination by the Company) is in breach in any material respect of any representation, warranty, covenant or agreement contained in this Agreement such that the conditions to the nonbreaching party’s obligation to consummate the transactions contemplated by this Agreement would not be satisfied, the terminating party has notified the other party of the breach, and such breach has continued without cure for a period of ten (10) Business Days after the notice of breach.
(d) Effects of Termination. In the event of any termination of this Agreement as provided in Section 8(a), 8(b) or 8(c), this Agreement (other than this Section 8(d), Section 7 and Section 9, which shall remain in full force and effect) shall forthwith become wholly void and of no further force and effect; provided, that the Company will remain liable to the Buyers for any breach of this Agreement by the Company existing at the time of such termination, the Buyers will remain jointly and severally liable to the Company for any breach of this Agreement by any Buyer existing at the time of such termination, and the Buyers or the Company, as the case may be, may seek such remedies against the other with respect to any such breach as are provided in this Agreement or as are otherwise available at Law or in equity.
9. MISCELLANEOUS.
(a) Definitions.
“1933 Act” has the meaning set forth in Whereas clause A.
“1934 Act” has the meaning set forth in Section 2(e).
“Acquisition” means the first of any of the following after the date of this Agreement: (i) a consolidation, merger or other business combination of the Company or any Subsidiary, on the one hand, with or into another Person, on the other hand (including, for the avoidance of doubt, through the acquisition of equity interests in another Person), immediately after giving effect to which the Company or any Subsidiary holds, directly or indirectly, a majority of the combined voting power of the surviving entity or entities entitled to vote generally for the election of a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (ii) an acquisition by the Company or any Subsidiary, directly or indirectly, of all or substantially all of the assets of another Person; provided that, in any such case, such transaction is approved by the Board of Directors and provides for the payment or other delivery by, or on behalf of, the Company or any Subsidiary of aggregate consideration (whether in the form of cash or otherwise) of not less than $40 million.
“Affiliate” means any Person controlling, controlled by or under common control with any other Person. For purposes of this definition, “control” (including “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of securities, partnership or other ownership interests, by contract or otherwise.
“Agreement” has the meaning set forth in the preamble.
“Allowance” has the meaning set forth in Section 3(aa).
“Board of Directors” has the meaning set forth in Section 3(c).
“BRI Previously Acquired Shares” has the meaning set forth in Section 2(m).
“BRII Previously Acquired Shares” has the meaning set forth in Section 2(m).
“BRO Previously Acquired Shares” has the meaning set forth in Section 2(m).
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by Law to remain closed.
“Buyer” and “Buyers” have the respective meanings set forth in the preamble.
“Buyer Controlled Entity” means any Person controlled, directly or indirectly, by any of the Buyers.
“Buyer Representatives” has the meaning set forth in Section 4(e).
“Bylaws” has the meaning set forth in Section 3(r).
“Certificate of Incorporation” has the meaning set forth in Section 3(r).
“Closing” has the meaning set forth in Section 1(b).
“Closing Date” has the meaning set forth in Section 1(b).
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” has the meaning set forth in Whereas clause B.
“Company” has the meaning set forth in the preamble.
“Company Controlled Affiliate” means any Affiliate controlled, directly or indirectly, by the Company.
“Company Executive Team” means J. Tyler Haahr, Bradley C. Hanson, Troy Moore, Glen W. Herrick, Ira D. Frericks and Ronald W. Butterfield.
“Company Intellectual Property” has the meaning set forth in Section 3(bb).
“Confidentiality Agreement” means the confidentiality letter agreement, dated as of May 29, 2015, by and between Philadelphia Financial Management of San Francisco, LLC, an Affiliate of the Buyers, and the Company.
“Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
“Control Group Member” means any Person which directly or indirectly controls, or is under common control with, any of the Buyers.
“Convertible Securities” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Common Stock.
“Covered Person” and “Covered Persons” has the meaning set forth in Section 3(cc).
“Disclosure Letter” has the meaning set forth in Section 3.
“Disqualification Event” has the meaning set forth in Section 3(cc).
“Eligible Market” means the NYSE MKT, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the New York Stock Exchange or the Over-the-Counter Bulletin Board.
“Excess Shares” has the meaning set forth in Section 4(k)(ii).
“Family Member” means, with respect to any Person, such Person’s spouse, children, parents or siblings.
“FDIC” has the meaning set forth in Section 3(b).
“Federal Reserve” has the meaning set forth in Section 3(b).
“Fundamental Representations” has the meaning set forth in Section 6(vi)(1).
“Fundamental Terms” has the meaning set forth in Section 9(n).
“GAAP” means U.S. generally accepted accounting principles.
“Governmental Entity” means any federal, state, local or foreign, court, governmental, legislative, judicial, administrative or regulatory authority, agency, commission, body or other governmental entity or self-regulatory organization or stock exchange, including the OCC, the FDIC, the SEC and NASDAQ.
“HOLA” has the meaning set forth in Section 3(b).
“Indebtedness” of any Person means, without duplication (i) all indebtedness (including principal, interest, fees and charges) for borrowed money, but exclusive of “deposits” (as defined in 12 U.S.C. § 1813(l)), (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with generally accepted accounting principles) (other than trade payables incurred in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness; provided that the amount of the indebtedness included in “Indebtedness” pursuant to this clause (vii) shall be limited to the fair market value of the property or asset subject to such mortgage, lien, pledge, charge, security interest or other encumbrance, and (viii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.
“Indemnified Party” or “Indemnified Parties” has the meaning set forth in Section 7(b).
“Insolvent” means, with respect to any Person, that (i) the fair value of the assets of such Person, at a fair valuation, will exceed his, her or its debts and liabilities, subordinated, contingent or otherwise; (ii) the present fair saleable value of the property of such Person will be greater than the amount that will be required to pay the probable liability of his, her or its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) such Person will be able to pay his, her or its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) such Person will not have unreasonably small capital with which to conduct the business in which he, she or it is engaged as such business is now conducted.
“Intellectual Property” means any and all of the following in any jurisdiction throughout the world: (i) trademarks and service marks, including all applications and registrations and the goodwill connected with the use of and symbolized by the foregoing; (ii) copyrights, including all applications and registrations related to the foregoing; (iii) trade secrets and confidential know-how; (iv) patents and patent applications; (v) internet domain name registrations; and (vi) other intellectual property and related proprietary rights, interests and protections.
“Interim Period” has the meaning set forth in Section 4(d).
“Knowledge of the Company” or phrases of similar effect (including the words “Known” or “Know”) means the knowledge, after reasonable investigation, of the individuals listed on Schedule 9(a) attached hereto.
“Law” means any statute, ordinance, license, rule, regulation, order, demand, writ, injunction, decree or judgment of any Governmental Entity, including any of the foregoing which relate to the business of banking generally, lending activities, deposit taking, money transmission, stored value cards, credit cards, savings associations, savings and loan holding companies, trust operations, government contracts, national security, and protection of classified information, including, without limitation, the Home Owners Loan Act of 1934, the Savings and Loan Holding Company Act, the Bank Secrecy Act, the United States Foreign Corrupt Practices Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Equal Credit Opportunity Act, the Community Reinvestment Act of 1977, the Gramm‑Leach‑Bliley Act, the Fair Consumer Credit Protection Act, and all regulations promulgated thereunder.
“Losses” has the meaning set forth in Section 7(d).
“Material Adverse Effect” means any fact, circumstance, effect, event or change (whether or not constituting a breach of a representation, warranty, covenant or agreement set forth in this Agreement) that, individually or in the aggregate with all other facts, circumstances, effects, events or changes, has a material adverse effect on the business, properties, assets, operations, results of operations or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or on the Company’s ability to consummate the transactions contemplated hereby, or on the authority or ability of the Company to perform its obligations under this Agreement, but shall not include facts, circumstances, effects, events or changes: (i) generally affecting any of the industries in which the Company, taken together with the Subsidiaries, operates in the United States or elsewhere in the world or the economy or the financial or securities markets in the United States or elsewhere in the world; (ii) resulting from political conditions, including acts of war (whether or not declared), armed hostilities and terrorism, or developments or changes therein; (iii) resulting from any announcement of this Agreement or any of the other agreements entered into with the Other Investors in the Other Private Placements or the transactions contemplated hereby or thereby, in each case, solely to the extent due to such announcement; (iv) resulting from a change in the Company’s stock price or the trading volume in the Common Stock in and of itself (it being understood that the underlying circumstances, event or reasons giving rise to any such failure (to the extent provided for in this definition) can be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur); or (v) resulting from a failure to meet securities analysts’ published revenue or earnings predictions for the Company in and of itself (it being understood that the underlying circumstances, event or reasons giving rise to any such failure (to the extent provided for in this definition) can be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur); provided, however, that the facts, circumstances, events or changes set forth in clause (i) above may be taken into account in determining whether there is or has been a Material Adverse Effect if and only to the extent such act, circumstance, event, effect or change has a materially disproportionate impact on the Company and the Subsidiaries relative to the other participants in the industries in which the Company and the Subsidiaries operate.
“MetaBank” means MetaBank, a federally-chartered savings association and wholly-owned subsidiary of the Company.
“Non-Pro-Rata Stock Repurchase” has the meaning set forth in Section 4(k)(ii).
“OCC” has the meaning set forth in Section 3(b).
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
“Other Investor” means any Person who has executed a securities purchase agreement dated as of the date hereof pursuant to which such Person has agreed to purchase shares of Common Stock in connection with the Other Private Placements.
“Other Private Placements” has the meaning set forth in Whereas clause D.
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization or a government or any department or agency thereto.
“Post-Closing 8-K” has the meaning set forth in Section 4(j).
“Pre-Announcement Period” has the meaning set forth in Section 2(e).
“Pre-Closing 8-K” has the meaning set forth in Section 4(j).
“Pre-Redemption Period” has the meaning set forth in Section 4(k)(ii).
“Previously Purchased Shares” has the meaning set forth in Section 2(m).
“Principal Market” means the NASDAQ Global Select Market.
“Purchase Price” has the meaning set forth in Section 1(c).
“Registration Rights Agreement” means a Registration Rights Agreement between the Company and the Buyers substantially in the form set forth on Exhibit A hereto.
“Regulation D” has the meaning set forth in Whereas clause A.
“Regulatory Agreement” has the meaning set forth in Section 3(q)(i).
“Rule 144” has the meaning set forth in Section 2(h)(i).
“Rule 144A” has the meaning set forth in Section 2(h)(i).
“Sarbanes-Oxley Act” has the meaning set forth in Section 3(j)(iii).
“SEC” has the meaning set forth in Whereas clause A.
“SEC Documents” has the meaning set forth in Section 3(j)(i).
“Shares” has the meaning set forth in Section 1(a).
“Standstill Period” has the meaning set forth in Section 4(l).
“Stock Reduction Triggering Event” has the meaning set forth in Section 4(k)(ii).
“Subsidiaries” means MetaBank and any other entity (including any joint venture) in which the Company, directly or indirectly, owns capital stock or holds an equity or similar interest having general voting power in respect of more than fifty percent (50%) of all of the capital stock or equity or similar interest of such entity or joint venture.
“Tax” means all federal, state, local, foreign or other governmental taxes, assessments, duties, fees, levies or similar charges of any kind imposed by a Governmental Entity, including, but not limited to, all income, profit, gross receipts, franchise, excise, property, use, intangibles, sales, payroll, social security, employment, value added, withholding and other taxes, and including all interest, penalties and additional amounts imposed with respect to such amounts, whether as a primary obligor or as a result of being a “transferee” (within the meaning of Section 6901 of the Code or any other applicable Law) of another Person or as a result of being a member of an affiliated, consolidated, unitary or combined group.
“Tax Return” means any return, declaration, report, claim for refund, information return, statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Transaction Documents” means, collectively, this Agreement, the Registration Rights Agreement and each of the other agreements and instruments the Company or any of the Buyers are, or will be, a party or by which any such Person is, or will be, bound in connection with the transactions contemplated hereby and thereby.
“Transfer Agent” has the meaning set forth in Section 1(d).
(b) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal Laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the Laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Sioux Falls, South Dakota, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by Law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(c) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided, that a facsimile or electronic (i.e., “PDF”) signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original.
(d) Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
(e) Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
(f) Entire Agreement; Amendments. This Agreement, the Confidentiality Agreement, the Registration Rights Agreement and the other Transaction Documents supersede all other prior oral or written agreements among the Buyers and the Company, their Affiliates and Persons acting on their behalf with respect to the matters discussed herein and therein, and this Agreement, the Confidentiality Agreement, the Registration Rights Agreement and the other Transaction Documents contain the entire understanding of the parties hereto with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Buyers. No provision hereof may be waived other than by an instrument in writing signed by the party from whom waiver is sought.
(g) Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
Meta Financial Group, Inc.
5501 S. Broadband Lane
Sioux Falls, South Dakota 57108
Facsimile: (605) 338-0596
Attention: J. Tyler Haahr
with a copy (for informational purposes only) to:
Katten Muchin Rosenman LLP
2900 K Street, NW
North Tower, Suite 200
Washington, DC 20007
Facsimile: (202) 339-8281
Attention: Jeffrey M. Werthan, Esq.
If to the Buyers (or any Buyer):
Boathouse Row I, LP
Boathouse Row II, LP
Boathouse Row Offshore Ltd.
OC 532 Offshore Fund, Ltd.
c/o Philadelphia Financial Management
of San Francisco
450 Sansome Street, Suite 1500
San Francisco, California 94111
Facsimile: (415) 352-4473
Attention: Rachael Clarke
or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party pursuant to this Section.
(h) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. Neither the Company nor any Buyer shall assign or delegate this Agreement or any of its rights or obligations hereunder without the prior written consent of the other party hereto.
(i) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
(j) Further Assurances. Each party hereto shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rules of strict construction will be applied against any party.
(l) Remedies. The Buyers shall have all rights and remedies set forth in this Agreement and all rights and remedies which they have been granted at any time under any other agreement or contract and all of the rights which such holders have under any Law. Each party hereto shall be entitled to enforce its rights hereunder specifically (without posting a bond or other security or proving actual damages), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by Law. Notwithstanding anything to the contrary contained herein, neither party hereto shall be entitled to consequential, special, exemplary, indirect or incidental damages hereunder.
(m) Acknowledgment Regarding Buyers’ Shares. The Company acknowledges and agrees that each Buyer is acting solely in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Buyers are not acting as a financial advisor or fiduciary of the Company or any of the Subsidiaries (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby, and any advice given by the Buyers or any of their representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Buyers’ purchase of the Shares. The Company further represents to the Buyers that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation by the Company and its representatives.
(n) Buyers’ Acknowledgments Regarding Other Private Placements. Except as set forth in the proviso to this sentence, each Buyer acknowledges and agrees that it is entering into (or will enter into) this Agreement and each other Transaction Document to which it is or will be a party without relying on any representation and warranty of, or any other statement made by, the Company or any of its advisors or representatives to the effect that the terms, conditions and provisions of this Agreement and such other Transaction Documents are based on the same terms, conditions and provisions as those terms, conditions and provisions agreed to by the Company and any Other Investor in connection with any Other Private Placement; provided, that the Company hereby represents and warrants that this Agreement and each of the securities purchase agreements entered into by the Other Investors in connection with the Other Private Placements are on the date hereof, and will be on the Closing Date, substantially the same with respect to the following provisions (or absence thereof, as the case may be), and the terms of each such provision are not more or less favorable in any respect to any Buyer as compared to any Other Investor: (i) the manner of computing the Purchase Price (as set forth in Section 1(c) hereof), (ii) the outside date by which any party hereto or thereto, as applicable, may terminate such agreement if the Closing of the transactions contemplated hereby or thereby, as applicable, shall not have occurred (as set forth in Section 8(b) hereof), (iii) the definition of “Material Adverse Effect” (as set forth in Section 9(a) hereof), (iv) the indemnification provisions (as set forth in Section 7 hereof), and (v) the absence of a provision relating to any Buyer or any Other Investor being entitled to receive reimbursement from the Company of any of its costs or expenses related to entering into this Agreement or the securities purchase agreements entered into in connection with the Other Private Placements, as the case may be (other than pursuant to the indemnification provisions to the extent provided therein, if at all, which indemnification provisions are substantially the same) (collectively, the “Fundamental Terms”). In the event that the Company agrees to amend any of the Fundamental Terms for any Other Investor in connection with any Other Private Placement, the Company shall notify the Buyers within one (1) Business Day of such amendment (which, in any event, shall be not less than one (1) Business Day prior to the Closing Date) and provide to the Buyers a draft of the revised securities purchase agreement or other transaction document, as applicable.
(o) Interpretive Matters. Unless the context otherwise requires, (a) all references to Sections, Schedules, Appendices or Exhibits are to Sections, Schedules, Appendices or Exhibits contained in or attached to this Agreement, (b) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter, (c) the words “hereof,” “herein” and words of similar effect shall reference this Agreement in its entirety, and (d) the use of the word “including” in this Agreement shall be by way of example rather than limitation.
[Signature Page Follows]
IN WITNESS WHEREOF, the Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
| | COMPANY: |
| | |
| | META FINANCIAL GROUP, INC. |
| | | |
| | By: | /s/ Glen W. Herrick |
| | Name: | Glen W. Herrick |
| | Title: | Executive Vice President and Chief Financial Officer |
| | | |
| | BUYERS: |
| | |
| | BOATHOUSE ROW I, LP |
| | |
| | By: | Philadelphia Financial Management of |
| | | San Francisco, LLC, its Investment Manager |
| | | |
| | By: | /s/ Jordan Hymowitz |
| | Name: | Jordan Hymowitz |
| | Title: | Managing Member |
| | | |
| | BOATHOUSE ROW II, LP |
| | | |
| | By: | Philadelphia Financial Management of |
| | | San Francisco, LLC, its Investment Manager |
| | | |
| | By: | /s/ Jordan Hymowitz |
| | Name: | Jordan Hymowitz |
| | Title: | Managing Member |
[Signature Page to Securities Purchase Agreement – Boathouse]
| | BOATHOUSE ROW OFFSHORE LTD. |
| | | |
| | By: | Philadelphia Financial Management of |
| | | San Francisco, LLC, its Investment Manager |
| | | |
| | By: | /s/ Jordan Hymowitz |
| | Name: | Jordan Hymowitz |
| | Title: | Managing Member |
| | |
| | OC 532 OFFSHORE FUND, LTD. |
| | | |
| | By: | Philadelphia Financial Management of |
| | | San Francisco, LLC, its Investment Manager |
| | | |
| | By: | /s/ Jordan Hymowitz |
| | Name: | Jordan Hymowitz |
| | Title: | Managing Member |
[Signature Page to Securities Purchase Agreement – Boathouse]
