EXHIBIT 10.2

 

SUBSCRIPTION AGREEMENT

Shares of Series B Mandatorily Convertible Non-Cumulative Junior Participating
Preferred Stock

 

FNBH Bancorp, Inc.

 

To:   FNBH Bancorp, Inc.   Attn: Chief Financial Officer   101 East Grand River
Avenue   Howell, MI 48843

 

Re: Shares of Series B Mandatorily Convertible Non-Cumulative Junior
Participating Preferred Stock

 

1. CERTAIN DEFINITIONS. When used in this Subscription Agreement, the following
terms shall have the following meanings:

 

A. Affiliate. "Affiliate" shall have the meaning set forth in Rule 12b-2 under
the Securities Exchange Act of 1934.

 

B. Agreement. "Agreement" means this Subscription Agreement.

 

C. Bank. "Bank" means the First National Bank in Howell, a wholly-owned
subsidiary of the Company.

 

D. Common Stock. "Common Stock" means the common stock of the Company.

 

E. Company. "Company" means FNBH Bancorp, Inc., a Michigan corporation.

 

F. Memorandum. The "Memorandum" is the Confidential Private Placement Memorandum
prepared by the Company and dated June 20, 2013, as may be modified,
supplemented, or restated from time to time. Terms used in this Agreement
without being defined shall have the meanings assigned to them in the
Memorandum.

 

G. Rights Offering. "Rights Offering" means an offering conducted by the Company
pursuant to which the Company grants holders of its Common Stock the right to
acquire additional shares of Common Stock.

 

H. Shares. "Shares" means the Company's shares of Series B Mandatorily
Convertible Non-Cumulative Junior Participating Preferred Stock, with the terms
set forth in the Certificate of Designations attached as Exhibit A to the
Memorandum.

 

I. Subscriber. "Subscriber" means the person(s) or entity(ies) executing this
Agreement, other than the Company.

 

2. SUBSCRIPTION. On the terms and subject to the conditions of this Agreement,
the Subscriber irrevocably offers and agrees to purchase and to pay for such
number of Shares as is set forth on the signature page of this Agreement. The
Subscriber specifically accepts, adopts, and consents to be bound by each and
every provision of this Agreement. The Subscriber shall pay for the Shares
subscribed for pursuant to this Agreement at the price of $1,000 per Share, in
good funds (e.g. cashier's check, personal check, or wire transfer), and for
that purpose agrees to tender, within five (5) business days of receiving
written demand from the Company, an amount equal to the total "Dollar Amount of
Subscription" as set forth on the signature page of this Agreement.

 

Page 1 of 9

 

 

 

3. CLOSING. The Company may conduct one or more closings of the purchase and
sale of the Shares (each, a "Closing"). Each Closing shall occur on such date as
may be determined by the Company (each, a "Closing Date"). In connection with
each Closing, the Company or the Company's transfer agent will deliver the
Shares to the Subscriber, each registered in the Subscriber's name (or in the
name of such Subscriber's nominees as may be specified by such Subscriber),
against payment by the Subscriber of the purchase price set forth in Section 2
above. After the purchase price has been paid by the Subscriber pursuant to
Section 2 above, such funds may be held in escrow by the Company pending a
Closing, at which time the funds may be accepted and used by the Company for any
purpose.  The Company shall have no obligation to place the funds in an
interest-bearing account.

 

4. CONDITIONS PRECEDENT. The Subscriber's obligation to purchase the Shares is
unconditional and irrevocable. The Company's obligations to issue the Shares and
otherwise complete the Closing is subject to the fulfillment prior to the
Closing of each of the conditions set forth in this Section 4, except to the
extent any such condition is waived by the Company:

 

A. Regulatory Approvals. All approvals, consents, and similar actions by any
federal or state regulatory agency required in order for the Company to issue
all of the Shares subscribed to be purchased in the Private Placement (as
defined in the Memorandum), including pursuant to the terms and conditions set
forth in the Purchase Agreement (as defined in the Memorandum), shall have been
received in a manner acceptable to the Company, in its reasonable discretion.

 

B. No Legal Prohibition. No provision of any federal or state law, rule, or
regulation, and no judgment, injunction, order, or decree shall prohibit the
Closing or shall prohibit the Company from issuing all of the Shares subscribed
to be purchased in the Private Placement (as defined in the Memorandum),
including pursuant to the terms and conditions set forth in the Purchase
Agreement (as defined in the Memorandum).

 

C. Closing with Lead Investor. The closing of the initial issuance of Shares by
the Company to Stanley B. Dickson, Jr. pursuant to the Purchase Agreement shall
take place simultaneously with the Closing.

 

5. ACCEPTANCE. This Agreement is made subject to the Company's discretionary
right to accept or reject the subscription set forth in this Agreement in whole
or in part. Following action by the Company, the Subscriber will be notified as
to whether the subscription has been accepted or rejected. If the Company shall
for any reason reject all or part of this subscription, any amount already paid
by the Subscriber with respect to the rejected subscription (whether in whole or
in part) will be promptly refunded, without interest. Acceptance of this
subscription by the Company will be evidenced by the delivery by the Company to
the Subscriber of a copy of this Agreement countersigned by an officer of the
Company. This Agreement, including the Subscriber's commitment to purchase the
Shares set forth in this Agreement, is not revocable or cancelable by the
Subscriber.

 

6. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER. The Subscriber represents and
warrants to the Company as follows, recognizing that the information contained
in this Agreement is being furnished to the Company in order for the Company to
determine whether the Subscriber's subscription to purchase Shares should be
accepted by the Company in light of the requirements of Section 4(2) of the
Securities Act of 1933 (the "Securities Act") and the rules and regulations
promulgated under the Securities Act, similar sections of the securities laws of
various states, and other relevant factors. The Subscriber understands that
(a) the Company will rely on the information contained in this Agreement for
purposes of such determination, (b) none of the Shares will be registered under
the Securities Act, but are being issued in reliance upon exemptions from
registration afforded under the Securities Act, which may include Regulation D
promulgated pursuant to the Securities Act ("Regulation D"), and (c) none of the
Shares will be registered or qualified under any state securities laws.
Subscriber also represents and warrants to the Company as follows:

 

A. Advisors. Subscriber acknowledges that it has been advised to consult with
its own attorney regarding legal matters concerning the Company and the Shares
and to consult with its tax advisor regarding the tax consequences of acquiring
the Shares.

 

B. Confidential Private Placement Memorandum and Access to SEC Filings.
Subscriber has received and has had a full opportunity to review the Memorandum,
including the description of the Shares and the Risk Factors contained in the
Memorandum. Subscriber acknowledges it has had full access to the Company's
public filings made pursuant to the Securities Exchange Act of 1934, as amended,
which access can be gained at http://www.sec.gov. By entering into this
Agreement, the Subscriber acknowledges receipt of the Company's Annual Report on
Form 10-K for the year ended December 31, 2012 (as amended), and the Company's
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013.

 

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C. Shares Not Registered. Subscriber understands that the Shares have not been
registered under the Securities Act or any other securities laws, but are being
offered and sold to Subscriber in reliance upon specific exemptions from the
registration requirements of federal and state securities laws, and the Company
is relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments, and understandings of Subscriber set forth in this
Agreement in order to determine the applicability of such exemptions and the
suitability of Subscribers to acquire the Shares.

 

D. Investment Experience. The Subscriber is a sophisticated, accredited, and
experienced investor with regard to high-risk investments in restricted
securities of the sort referred to in this Agreement (and the Memorandum) and is
willing and able to bear the economic risk of an investment in the Shares in an
amount equal to the amount the Subscriber has subscribed to purchase. The
Subscriber has the knowledge and experience in financial and business matters to
be capable of evaluating the merits and risks of an investment in the Shares.
The Subscriber has adequate means of providing for current needs and personal
contingencies, has no need for liquidity in the investment, and is able to bear
the economic risk of an investment in the Company of the size contemplated. In
making this statement, the Subscriber considered whether the Subscriber could
afford to hold the Shares for an indefinite period and whether, at this time,
the Subscriber could afford a complete loss of an investment in the Shares.

 

E. Accredited Investor Status. The Subscriber has submitted to the Company a
complete and executed "Accredited Investor Questionnaire" substantially in the
form attached to this Agreement. The Subscriber certifies it is an "Accredited
Investor," as that term is defined under Rule 501(a) of the Securities Act, and
all information the Subscriber has provided to the Company in the Accredited
Investor Questionnaire is correct and complete as of the date set forth in such
Accredited Investor Questionnaire. The Subscriber is aware the sale of the
Shares is being made in reliance on Rule 506 of Regulation D, an exemption for
non-public offerings under Section 4(2) of the Securities Act.

F. Purchase for Own Account. The Subscriber's purchase of the Shares will be
solely for the Subscriber's own account and not for the account of any other
person.

 

G. Investment Purpose. The Shares are being acquired by the Subscriber in good
faith for investment and not with a view to distributing such Shares to others
or otherwise reselling any of the Shares. The Subscriber understands the
substance of the above representations is (i) that the Subscriber does not
presently intend to sell or otherwise dispose of all or any part of the Shares;
(ii) that the Subscriber does not now have in mind the sale or other disposition
of all or any part of the Shares on the occurrence or nonoccurrence of any
predetermined event; and (iii) that the Company is relying upon the truth and
accuracy of the representations.

 

H. Investment Risks. The Subscriber understands the purchase of the Shares is
subject to risks as stated in the Risk Factors section of the Memorandum and the
Risk Factors disclosed in the Company's SEC filings (including those filed after
the date of the Memorandum) or as otherwise may be applicable to similar
investments. The Subscriber acknowledges it has had an opportunity to review,
and upon review, fully understands all of such Risk Factors.

 

I. Due Diligence. The Subscriber has relied solely upon this Agreement, the
Memorandum (including its exhibits), and the independent investigations made by
the Subscriber with respect to the Shares subscribed, and no oral or written
representations beyond the Company's SEC filings have been made to or been
relied upon by the Subscriber in making this investment decision.

 

J. Representations Complete. The Subscriber's representations in this Agreement
are complete and accurate to the best of the Subscriber's knowledge, and the
Company may rely upon them. The Subscriber will notify the Company immediately
if any material change occurs in any of this information before the Closing.

 

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K. Transfer Restrictions and Resale. None of the Shares have been registered
with the Securities and Exchange Commission. The Shares may be sold or
transferred only in compliance with the applicable securities laws and
regulations, including the Securities Act. The Shares will be "restricted
securities" for purposes of Rule 144 issued under the Securities Act. The
Subscriber agrees to comply with Rule 144, which permits resales of shares by
persons not affiliated with the Company only if the shares have been held for at
least six months. The Subscriber acknowledges that due to the status of the
Shares as "restricted securities," it may not be possible to liquidate the
Subscriber's investment in the Company during the six month (or longer) holding
period required by Rule 144.

 

L. Legend. The Subscriber understands and agrees stop transfer instructions
relating to the Shares as well as the Common Stock into which the Shares are
convertible will be placed in the Company's stock transfer ledger, and the
certificates and other instruments evidencing all of such securities will bear a
legend in substantially the following form:

 

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND ARE "RESTRICTED SECURITIES" AS THAT TERM
IS DEFINED IN RULE 144 UNDER THE ACT. THE SHARES MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
ISSUER. IN ADDITION, THE TRANSFER OF THESE SHARES IS SUBJECT TO ADDITIONAL
RESTRICTIONS SET FORTH IN A SUBSCRIPTION AGREEMENT ENTERED INTO WITH RESPECT TO
THE PURCHASE OF THESE SHARES (OR SHARES OF PREFERRED STOCK CONVERTED INTO THESE
SHARES)."

 

M. Binding Obligation. This Agreement, if and when fully executed and accepted
by the Company, will constitute a valid and legally binding obligation of the
Subscriber, enforceable in accordance with its terms except (a) as its
obligations may be affected by bankruptcy, insolvency, reorganization,
moratorium, or similar laws, or by equitable principles relating to or limiting
creditors' rights generally, and (b) that the remedies of specific performance,
injunction, and other forms of equitable relief are subject to certain tests of
equity jurisdiction, equitable defenses, and the discretion of the court before
which any proceeding for any such remedy may be brought. The Subscriber, if it
is a partnership, joint venture, corporation, trust, or other entity, was not
formed or organized for the specific purpose of acquiring the Shares. The
purchase of the Shares by the Subscriber, if it is an entity, is a permissible
investment in accordance with the Subscriber's Articles of Incorporation,
bylaws, partnership agreement, articles of organization, declaration of trust,
or other similar charter document, and has been duly approved by all requisite
action by the entity's owners, directors, officers, or other authorized
managers. The person signing this Agreement and all documents necessary to
consummate the purchase of the Shares has all requisite authority to sign such
documents on behalf of the Subscriber, if it is an entity.

 

N. No General Solicitation. The Shares were not offered to the Subscriber by way
of general solicitation or general advertising and at no time was the Subscriber
presented with or solicited by means of any leaflet, public promotional meeting,
circular, newspaper or magazine article, or radio or televisions advertisement.

 

O. Future Issuances. The Company may in the future issue additional preferred
stock, senior debt, subordinated debt, and/or Common Stock and/or options,
warrants, or other rights to acquire preferred stock, senior debt, subordinated
debt, and/or Common Stock.

 

7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In connection with the
agreement to purchase Shares by Subscriber set forth in this Agreement, the
Company represents and warrants as follows:

 

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A. The Organization. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Michigan and has
all the requisite power and authority to conduct its business and own and
operate its properties and to enter into and execute this Agreement and to carry
out the transactions contemplated by this Agreement.

 

B. Authority. The Company has the power to execute, deliver, and perform the
terms and provisions of this Agreement and has taken all necessary action to
authorize the execution, delivery, and performance of this Agreement and to
authorize the issuance and sale of the Shares contemplated by this Agreement,
and the representatives of the Company executing this Agreement are duly
authorized to do so.

 

C. Capitalization. The authorized capital stock of the Company consists of
11,000,000 shares of Common Stock, of which 455,115 shares were outstanding as
of March 31, 2013, and 30,000 shares of preferred stock, of which no shares were
outstanding as of March 31, 2013.

 

D. Binding Obligation. Assuming the due execution and delivery of this Agreement
by the Subscriber, this Agreement is a legal, valid, and binding obligation of
the Company, enforceable in accordance with its terms except (a) as its
obligations may be affected by bankruptcy, insolvency, reorganization,
moratorium, or similar laws, or by equitable principles relating to or limiting
creditors' rights generally, and (b) that the remedies of specific performance,
injunction, and other forms of equitable relief are subject to certain tests of
equity jurisdiction, equitable defenses, and the discretion of the court before
which any proceeding for such remedy may be brought.

 

E. No Conflicts. The execution, delivery, and performance of this Agreement and
the fulfillment of or compliance with the terms and provisions of this
Agreement, including the issuance and sale of the Shares contemplated by this
Agreement, are not in contravention of or in conflict with any material contract
to which the Company is a party or by which the Company or any of its properties
may be bound or affected.

 

F. Validly Issued. Upon receipt by the Company of payment for the Shares as
contemplated by this Agreement and upon issuance of the Shares in accordance
with this Agreement, the Shares will be validly issued and outstanding, fully
paid, and non-assessable.

 

8. LOCK-UP. If the Closing occurs, the Subscriber agrees not to sell, transfer,
or otherwise dispose of any Shares or any shares of Common Stock issued upon
conversion of the Shares for a period of 180 days beginning on the Closing Date.

 

9. WAIVER OF RIGHTS IN RIGHTS OFFERING. If the Closing occurs, to the extent the
Subscriber is granted or acquires any rights to acquire shares of Common Stock
in a Rights Offering, the Subscriber waives and agrees not to exercise any such
right to acquire shares of Common Stock in such Rights Offering; provided that
this waiver and agreement shall only apply to the first Rights Offering
conducted by the Company after the Closing and only if the record date for such
Rights Offering occurs within one year following the Closing.

 

10. ENTIRE AGREEMENT. Except as set forth in Section 14 below, this Agreement,
together with the Accredited Investor Questionnaire, constitute the entire
agreement between the parties with respect to the subscription for the Shares
described in this Agreement and may only be amended by a writing executed by all
parties to this Agreement.

 

11. SURVIVAL OF REPRESENTATIONS. The representations, warranties,
acknowledgements, and agreements made in this Agreement shall survive issuance
of the Shares.

 

12. WAIVERS. No waiver or modification of any of the terms of this Agreement
shall be valid unless in writing. No waiver of a breach of, or default under,
any provision of this Agreement shall be deemed a waiver of such provision or of
any subsequent breach or default of the same or similar nature or of any
provision or condition of this Agreement.

 

13. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

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14. CONFIDENTIALITY AGREEMENT. The Subscriber agrees the provisions of any
Confidentiality Agreement previously signed by the Subscriber remains in full
force and effect.

 

15. NOTICES. Except as otherwise required in this Agreement, all notices,
communications and deliveries required or permitted by this Agreement shall be
made in writing signed by the party making the same and shall be deemed given or
made (a) on the date delivered if delivered in person, (b) on the third business
day after it is mailed if mailed by registered or certified mail (return receipt
requested) (with postage and other fees prepaid), (c) on the day after it is
delivered, prepaid, to an overnight express delivery service that confirms to
the sender delivery on such day, or (d) when sent by email, if during the
recipient's regular business hours on a business day and, otherwise, on the next
succeeding business day, but only if either the recipient confirms receipt or if
a copy of the notice, demand, or other communication is also delivered to the
recipient by one of the other methods described in this Section. Any such notice
sent to the Subscriber shall be sent to the address set forth in this Agreement.

 

16. NON-ASSIGNABILITY. The obligations of either party pursuant to this
Agreement shall not be delegated or assigned to any other person without the
prior written consent of the other party.

 

17. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Michigan, excluding those
provisions related to the conflict of laws of different jurisdictions if the
effect of the application of those provisions will be to require the application
of the laws of a jurisdiction other than Michigan. Each party consents to the
jurisdiction of the federal courts located in either Kent or Livingston County,
Michigan, which will be the sole venue for resolution of all disputes related to
this Agreement. THE PARTIES WAIVE THE RIGHT TO TRIAL BY JURY IN CONNECTION WITH
ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

 

INTENDING TO BE LEGALLY BOUND, the Subscriber has executed this Subscription
Agreement and declares it is truthful and correct.

 

Page 6 of 9

 

INDIVIDUALS SIGN HERE:

 

  (Check One)             X                     X       ¨ Individually          
  X       ¨ Joint tenants with
right of survivorship
(Both must sign)               Print Name     ¨ Tenants in common
(All must sign)               Print Name                                   Print
Name                                   Address                                  
Address                                   Telephone Number                      
            Telephone Number                                   Social Security
Number                           Number of Shares Subscribed for Purchase:  
Dollar Amount of Subscription ($1,000 per Share):                 $            
          Date:                

 

 

Signature Page for Individuals

 

 

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ENTITIES SIGN HERE:

 

 

 ¨ Partnerships or LLC               Print Partnership or LLC Name              
  By:             Authorized Signature                ¨ Corporation            
  Print Corporate Name                     By:             Authorized Signature
                    Title:                  ¨ As Custodian, Trustee or Agent    
          Print Name                     By:             Authorized Signature  
                                Title, if applicable                   All
Entities Complete:               Address                                  
Address                                   Address                              
    Telephone Number  

 

      Tax I.D. No.:                

 

Number of Shares Subscribed for Purchase:   Dollar Amount of Subscription
($1,000 per Share):                 $                       Date:              
 

 

 

 

Signature Page for Entities

Page 8 of 9

 

 

SUBSCRIPTION AGREEMENT ACCEPTED:

 

 

¨ IN FULL or ¨ for $                                    

 

 

FNBH BANCORP, INC.,

a Michigan corporation

 

 

By: ________________________________

 

Name: _______________________

 

Title: ________________________

 

 

 

 

Date: _______________________________

 

 

 

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