Exhibit 10.22.1

 

EXCHANGE AGREEMENT

 

This Exchange Agreement (“Agreement”), dated as of August 22, 2013, is entered
into by and among National Community Investment Fund, located at 135 South
LaSalle, Suite 2040, Chicago, IL 60603 (“NCIF”), and Broadway Financial
Corporation, located at 5055 Wilshire Boulevard, Suite 500, Los Angeles,
California 90036 (“Broadway”) with reference to the following facts:

 

WHEREAS, Broadway desires to acquire all of the issued and outstanding shares of
its Noncumulative Perpetual Preferred Stock, Series C (the “Series C Preferred
Stock”) in exchange for shares of its common stock (“Common Stock”) on the terms
and conditions set forth in this Agreement; and

 

WHEREAS, NCIF is currently the owner of 76,950 shares, comprising all of the
issued and outstanding shares, of the Series C Preferred Stock; and

 

WHEREAS, NCIF is willing to exchange the Series C Preferred Stock held by it for
Common Stock on the terms and conditions set forth in this Agreement (the “NCIF
Exchange”); and

 

WHEREAS, concurrently with the NCIF Exchange, Broadway proposes (i) to issue
shares of its Common Stock, which may include non-voting common stock, to the
United States Department of Treasury (the “Treasury Department”) in exchange for
all of the issued and outstanding shares of Broadway’s Fixed Rate Cumulative
Perpetual Preferred Stock, Series D and Broadway’s Fixed Rate Cumulative
Perpetual Preferred Stock, Series E (collectively, the “TARP Preferred Stock”)
held by the Treasury Department and comprising all of the issued and outstanding
shares of the TARP Preferred Stock (the “Treasury Exchanges”), and (ii) to enter
into and complete exchanges of its Common Stock for all of the issued and
outstanding shares of Broadway’s Series A Noncumulative Perpetual Preferred
Stock and Series B Noncumulative Perpetual Preferred Stock with the holders of
such respective series of preferred stock (the “Other Preferred Stock
Exchanges,” and, collectively with Treasury Exchanges, the “Other Exchanges”,
all on the terms and conditions set forth in the agreements listed in Exhibit A
to this Agreement, complete copies of which have been provided to NCIF); and

 

WHEREAS, concurrently with the NCIF Exchange and the Other Exchanges described
above, Broadway proposes to sell Common Stock to investors for cash in a private
placement transaction raising gross proceeds of $3.5 million or more (the
“Equity Offering”).

 

NOW THEREFORE, in consideration of the mutual covenants herein set forth, the
parties hereto agree as follows:

 

1.                                      SHARE EXCHANGE.  On the terms and
subject to the conditions set forth herein, NCIF agrees to transfer to Broadway
all of its right, title and interest in and to the shares of Series C Preferred
Stock of which NCIF or a nominee is the registered owner (the “Shares”) in
exchange for and against delivery of Common Stock at an exchange ratio equal to
(A) 50% of the aggregate liquidation preference of all of the shares of Series C
Preferred Stock exchanged, divided by (B) the per share value assigned to the
Common Stock in connection with

 

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Broadway’s exchange of Common Stock with the Treasury Department for the TARP
Preferred Stock held by the Treasury Department, which value Broadway and the
Treasury Department have agreed will be the lowest price per share paid by the
investors in the Equity Offering.

 

2.                                      CLOSING.  The completion of the
transactions contemplated by this Agreement (the “Closing”) shall take place
concurrently with the completion of the Treasury Exchanges prior to August 31,
2013 (or such later date to which NCIF consents) (the “Closing Date”), as
follows: NCIF shall deliver or cause to be delivered the Shares to be exchanged
hereunder to Broadway or Broadway’s agent in such manner as shall be reasonably
acceptable to Broadway and effective to convey all right, title and interest of
NCIF in the Shares to Broadway against delivery by Broadway through the transfer
agent for Common Stock, or such other means as shall be reasonably acceptable to
NCIF, of the number of shares of Common Stock provided for herein, registered in
such names as NCIF shall specify to Broadway at least three (3) business days
prior to the Closing.

 

3.                                      CONDITIONS TO CLOSING.  The obligation
of NCIF to consummate the NCIF Exchange is also subject to the fulfillment (or
waiver by NCIF) at or prior to the Closing of each of the following conditions:

 

(a)                                 Broadway shall complete the Other Exchanges
concurrently with the NCIF Exchange.

 

(b)                                 Broadway shall complete the Equity Offering
concurrently with the NCIF Exchange.

 

(c)                                  Broadway shall complete the issuance of
shares of Common Stock in partial satisfaction of indebtedness owed by Broadway
to BBCN Bank pursuant to that certain Agreement for the Partial Satisfaction of
a Debt Previously Contracted, dated August     , 2013, entered into between BBCN
Bank and Broadway concurrently with the NCIF Exchange.

 

(d)                                 Broadway shall complete the issuance of
shares of Common Stock in complete satisfaction of the indebtedness of Broadway
to NCIF, acquired in connection herewith pursuant to the Loan Purchase and Sale
Agreement dated August     , 2013 entered into between BBCN Bank and NCIF (the
“Loan Sale Agreement”).

 

(e)                                  The representations and warranties of
Broadway set forth in this Agreement shall be true and correct in all material
respects as though made on and as of the Closing Date (other than
representations and warranties that by their terms speak as of another date,
which representations and warranties shall be true and correct in all respects
as of such other date).

 

(f)                                   Broadway shall have obtained such
stockholder and other corporate approvals, and shall have taken all such other
action as shall be necessary to authorize Common Stock or Common Stock
Equivalents necessary to comply with its obligations under this Agreement.

 

(g)                                  Broadway shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing.

 

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4.                                      MUTUAL REPRESENTATIONS AND WARRANTIES. 
Broadway hereby makes the following representations and warranties to NCIF, and
NCIF hereby makes the following representations and warranties to Broadway:

 

(a)                                 Broadway is a corporation duly incorporated,
validly existing and in good standing under the laws of Delaware.  NCIF is duly
constituted as a trust under the laws of Illinois.

 

(b)                                 (i) Each has full power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby, and (ii) the person or entity who has executed this Agreement is duly
authorized to do so and thereby bind the party on whose behalf he, she or it is
purporting to act.

 

(c)                                  This Agreement is a valid and binding
agreement, enforceable against each party in accordance with its terms.

 

5.                                      REPRESENTATIONS AND WARRANTIES OF
BROADWAY.  Broadway hereby makes the following representations and warranties to
NCIF:

 

(a)                                 Upon issuance, the Common Stock to be issued
by Broadway pursuant hereto (i) will be duly and validly authorized and issued,
fully paid and nonassessable, and NCIF will acquire such Common Stock free and
clear of any liens, encumbrances, pledges, security interests or other
restrictions or claims of third parties, and (ii) will, when combined with
shares that may be issued to NCIF or its affiliates in connection with the
partial exchange of the loan from NCIF Bank to Broadway comprise less than, or
equal to, 9.90% of Broadway’s issued and outstanding shares of Common Stock.

 

(b)                                 Broadway is a certified Community
Development Financial Institution and its business strategy emphasizes serving
the credit and other banking needs of the low-to-moderate income communities it
serves.

 

(c)                                  Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate, result in a breach of any of the terms or provisions of, constitute a
default (or in any event that, with the giving of notice or the passage of time
or both would constitute a default) under, accelerate any obligations under, or
conflict with, (i) Broadway’s charter, articles or certificate of incorporation
or bylaws, or other organizational documents, if applicable, or any agreement,
indenture or other instrument to which Broadway is a party or by which Broadway
or Broadway’s properties are bound, (ii) any judgment, decree, order or award of
any court, governmental body or arbitrator to which Broadway is subject, or
(iii) any law, rule or regulation applicable to Broadway.

 

(d)                                 Neither Broadway nor any person acting on
its behalf has taken any action (including any offering of any securities of
Broadway under circumstances which would require the integration of such
offering with the offering of the Common Stock or Common Stock Equivalents (as
defined below) under the Securities Act of 1933, as amended, (the “Act”) and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder), which might subject the offering, issuance or sale of the Common
Stock or Common Stock Equivalents to NCIF pursuant to this Agreement to the
registration requirements of the Act.

 

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(e)                                  No broker, finder or investment banker is
entitled to any financial advisory, brokerage, finder’s or other fee or
commission in connection with this Agreement or the transactions contemplated
hereby based upon arrangements made by or on behalf of Broadway or any
subsidiary of Broadway for which NCIF could have any liability.

 

6.                                      REPRESENTATIONS AND WARRANTIES OF NCIF. 
NCIF hereby represents and warrants to Broadway that it is the sole legal and
beneficial owner of the Shares to be exchanged by it pursuant to this Agreement,
and, upon the Closing, Broadway will acquire the Shares free and clear of any
liens, encumbrances, pledges, security interests or other restrictions or claims
of third parties.

 

7.                                      SURVIVAL OF REPRESENTATIONS AND
WARRANTIES.  All representations, warranties and agreements of each party hereto
shall survive the Closing.

 

8.                                      RETIREMENT OR PURCHASE OF COMMON STOCK. 
Should Broadway at any time and for any reason desire to retire or repurchase
shares of its outstanding Common Stock, Broadway shall give NCIF thirty (30)
days’ prior written notice of such intent.  Such notice shall specify the number
of outstanding shares of Common Stock prior to such retirement or repurchase,
and the number of outstanding shares of Common Stock after giving effect to such
retirement or repurchase.  Upon receipt of such notice, NCIF shall have the
right to sell to Broadway, at the same price per share as that at which Broadway
proposes to retire or repurchase its other shares of outstanding Common Stock,
the minimum number of shares of Common Stock that would result in NCIF and its
affiliates owning less than, or equal to, 4.90% of the outstanding shares of
Common Stock of Broadway after giving effect to such retirement or repurchase
and such sale by NCIF to Broadway; provided, that (i) Broadway shall not be
required hereby to purchase from NCIF more shares of Common Stock than were
indicated in its notice of desired purchase sent to NCIF, (ii) Broadway may
decide not to repurchase or retire any shares of Common Stock, and (iii) NCIF’s
right to sell Common Stock pursuant hereto shall be subject to pro rata
reduction to the extent that CJA Private Equity Financial Restructuring Master
Fund I LP and/or BBCN Bancorp, Inc. exercise the similar sale rights granted to
them by Broadway, based on the respective numbers of shares of Common Stock
requested to be sold by each.  Within ten (10) days after the receipt of such
notice by NCIF, NCIF shall notify Broadway in writing of its intent to exercise
its rights to sell shares of Common Stock to Broadway pursuant to this
Section 8, which shall include the number of shares of Common Stock to be sold
by NCIF to Broadway in accordance with this Section 8, the owner of such shares
and the proposed closing date, which date shall be no later than the business
day preceding the date of the retirement or repurchase. Such option shall be in
effect as long as NCIF maintains a beneficial ownership in Broadway Common
Stock.  The provisions of this Section 8 shall apply on an as-converted basis to
any Common Stock Equivalents or non-voting preferred stock or non-voting common
stock of Broadway theretofore issued in exchange for Common Stock at the request
of NCIF.

 

9.                                      TRANSFER OF COMMON STOCK.  Subject to
compliance with applicable securities laws, NCIF shall be permitted to transfer,
sell, assign or otherwise dispose of (“Transfer”) all or a portion of the Common
Stock acquired by NCIF pursuant to this Agreement or the Loan Sale Agreement at
any time, and Broadway shall take all steps as may be reasonably requested by
NCIF to facilitate the Transfer of Common Stock.

 

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10.                               ISSUANCE OF EQUITY SECURITIES.  Broadway
agrees not to issue equity securities ranking senior to the Common Stock for a
period of two (2) years from the Closing Date, except in the following
circumstances:  (i) in connection with the provisions of a shareholders’ rights
plan of Broadway; (ii) in connection with a rights offering or other
distribution to shareholders of Common Stock in proportion to their respective
ownership interests; or (iii) if approved by the holders of a majority of the
outstanding Common Stock.

 

11.                               POSSIBLE COMMON STOCK EQUIVALENT TRANSACTION.

 

(a)                                 Broadway does not currently have sufficient
authorized but unissued shares of Common Stock available under its certificate
of incorporation to enable it to complete the NCIF Exchange, each of the Other
Exchanges, and the Equity Offering.  In addition, issuance of Common Stock for
such purposes would ordinarily require approval by Broadway’s stockholders
pursuant to Rule 5635 of the corporate governance rules of the Nasdaq Stock
Market.  Accordingly, Broadway has agreed with the Treasury Department that
Broadway will, as a condition to completion of the Treasury Exchanges, either: 
(i) obtain the required Broadway stockholder approval under the Nasdaq corporate
governance rules and complete the other steps required to amend its certificate
of incorporation to authorize the issuance of a sufficient number of shares of
Common Stock for such purposes; or (ii) file a certificate of designations with
the Secretary of State of the State of Delaware to designate a new series of
preferred stock out of Broadway’s authorized but unissued preferred stock, to be
designated Series F Common Stock Equivalent (the “Common Stock Equivalents”),
the terms of which will include that, upon the affirmative vote of the
stockholders of Broadway specified in such certificate and relating to an
increase in the shares of Common Stock it is authorized to issue (the “Required
Vote”), such preferred stock shall be mandatorily convertible into the number of
shares of Common Stock that would be issued directly if the Treasury Exchanges
were made for Common Stock and an escalating cumulative dividend requirement to
provide an incentive to the stockholders of Broadway to provide such vote.  The
certificate of designations for such series of preferred stock shall be
substantially in the form attached as Exhibit B to this Agreement.  Broadway and
the Treasury Department have further agreed in such event that the Treasury
Exchanges shall be for shares of the Common Stock Equivalents rather than shares
of Common Stock.  The number of shares of Common Stock Equivalents to be issued
in such alternative transaction (excluding shares to be issued in respect of
accrued cumulative dividends under the terms of the TARP Preferred Stock) shall
be the number of shares of Common Stock Equivalents that has an aggregate
liquidation preference equal to 50% of the liquidation preference of all of the
TARP Preferred Stock to be exchanged.

 

(b)                                 NCIF hereby agrees that if the Treasury
Exchanges are completed using Common Stock Equivalents, then NCIF will exchange
all of its shares of Series C Preferred Stock for shares of Common Stock
Equivalents on the same basis, as adjusted to reflect the different per share
liquidation preferences of the Series C Preferred Stock and the TARP Preferred
Stock, that is, the number of shares of Common Stock Equivalents to be issued to
NCIF shall equal the number determined by dividing (A) 50% of the aggregate
liquidation preference of all of the Shares exchanged by NCIF by (B) $1,000,
which is the per share liquidation preference of the Common Stock Equivalents. 
NCIF further agrees to vote all shares of Common Stock Equivalents and Common
Stock that it owns or controls so as to obtain the Required Vote.

 

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(c)                                  Broadway represents and warrants that the
Common Stock Equivalents will have been duly and validly authorized by all
necessary action, and, when issued and delivered pursuant to this Agreement,
such Common Stock Equivalents will be duly and validly issued and fully paid and
nonassessable, will not be issued in violation of any preemptive rights, will
not subject the holder thereof to personal liability, and such shares will rank
pari passu with or senior to all other series or classes of preferred stock,
whether or not issued or outstanding.

 

12.                               NOTICE.  Any notice required or permitted to
be given to either party under this Agreement shall be deemed duly given and
effective if such notice is either served personally or placed in the United
States mail, postage prepaid, addressed as indicated below:

 

As to NCIF:

 

National Community Investment Fund
135 South LaSalle
Chicago, IL  60603
Attn: Saurabh Narain

 

As to Broadway:

 

Broadway Financial Corporation
5055 Wilshire Boulevard, Suite 500
Los Angeles, CA 90036
Attn: Senior Vice President and Chief Financial Officer

 

13.                               FURTHER ASSURANCES.  Each party hereto shall
promptly execute and deliver such further agreements and instruments, and take
such further actions, as either of the other parties may reasonably request in
order to carry out the purpose and intent of this Agreement.

 

14.                               ASSIGNABILITY AND PARTIES IN INTEREST.  This
Agreement shall not be assignable by any of the parties hereto without the prior
written consent of all the other parties hereto.  This Agreement shall inure to
the benefit of and be binding upon the parties and their respective permitted
successors and assigns.

 

15.                               GOVERNING LAW.  This Agreement shall be
governed by and construed and enforced in accordance with the internal
substantive law, and not the law pertaining to conflicts or choice of law, of
the State of Delaware.

 

16.                               COUNTERPARTS.  This Agreement may be executed
in several counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.

 

17.                               COMPLETE AGREEMENT.  This Agreement is an
integrated agreement containing the entire agreement between the parties hereto
with respect to the subject matter hereof, and shall supersede all previous and
all contemporaneous oral or written negotiations, commitments or understandings.

 

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18.                               MODIFICATIONS, AMENDMENTS AND WAIVERS.  This
Agreement may be modified, amended, or otherwise supplemented only by a writing
signed by the parties against whom it is sought to be enforced in such amended,
modified or supplemented form.  No waiver of any right or power hereunder shall
be deemed effective unless and until a writing waiving such right or power is
executed by the parties waiving such right or power.

 

19.                               NO THIRD PARTY BENEFICIARIES.  There are no
third party beneficiaries under this Agreement or intended by any party hereto.

 

20.                               CAPTIONS.  The paragraph captions contained in
this Agreement are for convenience only and do not constitute a part of the
provisions.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the first date written above.

 

BROADWAY FINANCIAL CORPORATION

NATIONAL COMMUNITY INVESTMENT FUND

 

 

By:

/s/ Wayne-Kent A. Bradshaw

 

By:

/s/ /Saurabh Narain

 

 

 

 

 

Name:

Wayne-Kent A. Bradshaw

 

Name:

Saurabh Narain

 

 

 

 

 

Title:

Chief Executive Officer and President

 

Title:

Chief Executive

 

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Exhibit A

 

1.                                      Exchange Agreement, dated February 10,
2012, between the Company and the United States Treasury Department.

 

2.                                      Exchange Agreement, dated March 15,
2012, among the Company, the Automobile Club of Southern California and the
Interinsurance Exchange of the Automobile Club.

 

3.                                      Exchange Agreement, dated August 22,
2013, between the Company and BBCN Bancorp, Inc.

 

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Exhibit B

 

Form of Certificate of Designations for Series F Common Stock Equivalent

 

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