Exhibit 10.1

 

SUBORDINATED NOTE PURCHASE AGREEMENT

 

This SUBORDINATED NOTE PURCHASE AGREEMENT (this “Agreement”) is dated as of June
29, 2016, and is made by and among Northeast Bancorp, a Maine corporation
(“Company”), and the several purchasers of the Subordinated Notes identified on
the signature pages hereto (each a “Purchaser” and collectively, the
“Purchasers”).

 

RECITALS

 

WHEREAS, Company has requested that the Purchasers purchase from Company up to
$15,050,000 in aggregate principal amount of Subordinated Notes (as defined
herein), which aggregate amount is intended to qualify as Tier 2 Capital (as
defined herein).

 

WHEREAS, Company has engaged Sandler O’Neill + Partners, L.P., as its exclusive
placement agent (“Placement Agent”) for the offering of the Subordinated Notes.

 

WHEREAS, each of the Purchasers is an institutional accredited investor as such
term is defined in Rule 501 of Regulation D (“Regulation D”) promulgated under
the Securities Act of 1933, as amended (the “Securities Act”).

 

WHEREAS, the sale of the Subordinated Notes by Company is being made pursuant to
Rule 506(b) of Regulation D.

 

WHEREAS, each Purchaser is willing to purchase from Company a Subordinated Note
in the principal amount set forth on such Purchaser’s respective signature page
hereto (the “Subordinated Note Amount”) in accordance with the terms of, subject
to the conditions in and in reliance on, the recitals, representations,
warranties, covenants and agreements set forth herein and in the Subordinated
Notes.

 

NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:

 

AGREEMENT

 

1.            DEFINITIONS.

 

1.1     Defined Terms. The following capitalized terms generally used in this
Agreement and in the Subordinated Notes have the meanings defined or referenced
below. Certain other capitalized terms used only in specific sections of this
Agreement may be defined in such sections.

 

“Affiliate(s)” means, with respect to any Person, such Person’s immediate family
members, partners, members or parent and subsidiary corporations, and any other
Person directly or indirectly controlling, controlled by, or under common
control with said Person and their respective Affiliates.

 

“Agreement” has the meaning set forth in the preamble hereto.

 

“Bank” means Northeast Bank, a Maine chartered bank and wholly owned subsidiary
of Company.

 

 
 

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“Business Day” means any day other than a Saturday, Sunday or any other day on
which banking institutions in the State of Maine are permitted or required by
any applicable law or executive order to close.

 

“Closing” has the meaning set forth in Section 2.5.

 

“Closing Date” means June 29, 2016.

 

“Company” has the meaning set forth in the preamble hereto and shall include any
successors to Company.

 

“Company’s Liabilities” means Company’s obligations under the Transaction
Documents.

 

“Company’s SEC Reports” means (i) Company’s Annual Report on Form 10-K for the
fiscal year ended June 30, 2015, as filed with the SEC, (ii) Company’s
Definitive Proxy Statement on Schedule 14A related to its 2015 Annual Meeting of
Shareholders, as filed with the SEC, (iii) any Current Report on Form 8-K, as
filed or furnished by Company with the SEC since June 30, 2015, or (iv)
Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended on
September 30, 2015, December 31, 2015 and March 31, 2016, as filed with the SEC
pursuant to the requirements of the Exchange Act.

 

“Disbursement” has the meaning set forth in Section 3.1.

 

“Equity Interest” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person which is not a corporation, and any
and all warrants, options or other rights to purchase any of the foregoing.

 

“Exchange Act” has the meaning set forth in Section 4.8.

 

“Event of Default” has the meaning set forth in the Subordinated Notes.

 

“FDIC” means the Federal Deposit Insurance Corporation.

 

“GAAP” means generally accepted accounting principles in effect from time to
time in the United States of America.

 

“Governmental Agency(ies)” means, individually or collectively, any federal,
state, county or local governmental department, commission, board, regulatory
authority or agency (including, without limitation, each applicable Regulatory
Agency) with jurisdiction over Company.

 

“Governmental Licenses” has the meaning set forth in Section 4.3.

 

“Hazardous Materials” means flammable explosives, asbestos, urea formaldehyde
insulation, polychlorinated biphenyls, radioactive materials, hazardous wastes,
toxic or contaminated substances or similar materials, including, without
limitation, any substances which are “hazardous substances,” “hazardous wastes,”
“hazardous materials” or “toxic substances” under the Hazardous Materials Laws
and/or other applicable environmental laws, ordinances or regulations.

 

 
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“Hazardous Materials Laws” mean any laws, regulations, permits, licenses or
requirements pertaining to the protection, preservation, conservation or
regulation of the environment which relates to real property, including: the
Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et
seq.; the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended (including the Superfund Amendments and Reauthorization Act
of 1986), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as
amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act,
as amended, 29 U.S.C. Section 651, the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and
Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; and all comparable state and local
laws, laws of other jurisdictions or orders and regulations.

 

“Indebtedness” means and includes: (i) all items arising from the borrowing of
money that, according to GAAP as in effect from time to time, would be included
in determining total liabilities as shown on the consolidated balance sheet of
Company or any Subsidiary of Company; and (ii) all obligations secured by any
lien in property owned by Company or any Subsidiary whether or not such
obligations shall have been assumed; provided, however, Indebtedness shall not
include deposits or other indebtedness created, incurred or maintained in the
ordinary course of Company’s or Bank’s business (including, without limitation,
federal funds purchased, advances from any Federal Home Loan Bank, secured
deposits of municipalities, letters of credit issued by Company or Bank and
repurchase arrangements) and consistent with customary banking practices and
applicable laws and regulations.

 

“Leases” means all leases, licenses or other documents providing for the use or
occupancy of any portion of any Property, including all amendments, extensions,
renewals, supplements, modifications, sublets and assignments thereof and all
separate letters or separate agreements relating thereto.

 

“Material Adverse Effect” means, with respect to any Person, any change or
effect that (i) is or would be reasonably likely to be material and adverse to
the financial position, results of operations or business of such Person, or
(ii) would materially impair the ability of any Person to perform its respective
obligations under any of the Transaction Documents, or otherwise materially
impede the consummation of the transactions contemplated hereby; provided,
however, that “Material Adverse Effect” shall not be deemed to include the
impact of (1) changes in banking and similar laws, rules or regulations of
general applicability or interpretations thereof by Governmental Agencies, (2)
changes in GAAP or regulatory accounting requirements applicable to financial
institutions and their holding companies generally, (3) changes after the date
of this Agreement in general economic or capital market conditions affecting
financial institutions or their market prices generally and not specifically
related to Company or Purchasers, (4) direct effects of compliance with this
Agreement on the operating performance of Company or Purchasers, including
expenses incurred by Company or Purchasers in consummating the transactions
contemplated by this Agreement, and (5) the effects of any action or omission
taken by Company with the prior written consent of Purchasers, and vice versa,
or as otherwise contemplated by this Agreement and the Subordinated Notes.

 

“Material Contract” shall mean any contract, agreement, indenture, mortgage,
deed of trust, pledge, bank loan or credit agreement, or any other agreement or
instrument to which Company or Bank, as applicable, is a party or by which it or
any of its properties may be bound or affected that has been filed, or should
have been filed, by Company as an exhibit to an SEC Report pursuant to Item
601(b)(4) or 601(b)(10) of Regulation S-K.

 

 
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“Maturity Date” means July 1, 2026.

 

“Person” means an individual, a corporation (whether or not for profit), a
partnership, a limited liability company, a joint venture, an association, a
trust, an unincorporated organization, a government or any department or agency
thereof (including a Governmental Agency) or any other entity or organization.

 

“Placement Agent” means Sandler O’Neill + Partners, L.P.

 

“Property” means any real property owned or leased by Company or any Affiliate
or Subsidiary of Company.

 

“Purchaser” or “Purchasers” has the meaning set forth in the preamble hereto.

 

“Regulation D” has the meaning set forth in the Recitals.

 

“Regulatory Agencies” means any federal or state agency charged with the
supervision or regulation of depositary institutions or holding companies of
depositary institutions, or engaged in the insurance of depositary institution
deposits, or any court, administrative agency or commission or other authority,
body or agency having supervisory or regulatory authority with respect to
Company, Bank or any of their Subsidiaries.

 

“SEC” means the Securities and Exchange Commission.

 

“Secondary Market Transaction” has the meaning set forth in Section 5.4.

 

“Securities Act” has the meaning set forth in the Recitals.

 

“Subordinated Note” means the Subordinated Note (or collectively, the
“Subordinated Notes”) in the form attached as Exhibit A hereto, as amended,
restated, supplemented or modified from time to time, and each Subordinated Note
delivered in substitution or exchange for such Subordinated Note.

 

“Subordinated Note Amount” has the meaning set forth in the Recitals.

 

“Subsidiary” means with respect to any Person, any corporation or entity in
which a majority of the outstanding Equity Interest is directly or indirectly
owned by such Person.

 

“Tier 2 Capital” has the meaning given to the term “Tier 2 capital” in 12 C.F.R.
Part 208 and 12 C.F.R. Part 250, as amended, modified and supplemented and in
effect from time to time or any replacement thereof.

 

“Transaction Documents” has the meaning set forth in Section 3.2.1.1.

 

 
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1.2     Interpretations. The foregoing definitions are equally applicable to
both the singular and plural forms of the terms defined. The words “hereof”,
“herein” and “hereunder” and words of like import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. The word “including” when used in this Agreement without the
phrase “without limitation,” shall mean “including, without limitation.” All
references to time of day herein are references to Eastern Time unless otherwise
specifically provided. All references to the Agreement and Subordinated Notes
shall be deemed to be to such documents as amended, modified or restated from
time to time. With respect to any reference in this Agreement to any defined
term, (i) if such defined term refers to a Person, then it shall also mean all
heirs, legal representatives and permitted successors and assigns of such
Person, and (ii) if such defined term refers to a document, instrument or
agreement, then it shall also include any replacement, extension or other
modification thereof.

 

1.3     Exhibits Incorporated. All Exhibits attached are hereby incorporated
into this Agreement.

 

2.            SUBORDINATED DEBT.

 

2.1     Certain Terms. Subject to the terms and conditions herein contained,
Company proposes to issue and sell to the Purchasers, severally and not jointly,
Subordinated Notes, in an amount equal to the aggregate of the Subordinated Note
Amounts. The Purchasers, severally and not jointly, each agree to purchase the
Subordinated Notes, from Company on the Closing Date in accordance with the
terms of, and subject to the conditions and provisions set forth in, this
Agreement and the Subordinated Notes. The Subordinated Note Amounts shall be
disbursed in accordance with Section 3.1. The Subordinated Notes shall bear
interest per annum as set forth in the Subordinated Notes. The unpaid principal
balance of the Subordinated Notes plus all accrued but unpaid interest thereon
shall be due and payable on the Maturity Date, or such earlier date on which
such amount shall become due and payable on account of (i) acceleration by the
Purchasers in accordance with the terms of the Subordinated Notes and this
Agreement or (ii) Company’s delivery of a notice of redemption or repayment in
accordance with the terms of the Subordinated Notes.

 

2.2     Subordination. The Subordinated Notes shall be subordinated in
accordance with the subordination provisions set forth therein.

 

2.3     Maturity Date. On the Maturity Date, all sums due and owing under this
Agreement and the Subordinated Notes shall be repaid in full. Company
acknowledges and agrees that the Purchasers have not made any commitments,
either express or implied, to extend the terms of the Subordinated Notes past
their Maturity Date, and shall not extend such terms beyond the Maturity Date
unless Company and the Purchasers hereafter specifically otherwise agree in
writing.

 

2.4     Unsecured Obligations. The obligations of Company to the Purchasers
under the Subordinated Notes shall be unsecured.

 

2.5     The Closing. The execution and delivery of the Transaction Documents
(the “Closing”) shall occur at the offices of Company at 10:00 a.m. (local time)
on the Closing Date, or at such other place or time or on such other date as the
parties hereto may agree.

 

2.6     Payments. Company agrees that matters concerning payments and
application of payments shall be as set forth in this Agreement and in the
Subordinated Notes.

 

2.7     Right of Offset. Each Purchaser hereby expressly waives any right of
offset it may have against Company.

 

 
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2.8     Use of Proceeds. Company shall use the net proceeds from the sale of
Subordinated Notes for general corporate purposes, including loan growth and the
provision of additional liquidity and working capital.

 

3.            DISBURSEMENT.

 

3.1     Disbursement. On the Closing Date, assuming all of the terms and
conditions set forth in Section 3.2 have been satisfied by Company and Company
has executed and delivered to Purchasers each of the Agreement and the
Subordinated Notes and any other related documents in form and substance
reasonably satisfactory to Purchasers, each Purchaser shall disburse in
immediately available funds the Subordinated Note Amount set forth on such
Purchaser’s signature page hereto to Company in exchange for a Subordinated Note
with a principal amount equal to such Subordinated Note Amount (the
“Disbursement”). Company will deliver to the respective Purchaser one or more
certificates representing the Subordinated Notes in definitive form (or provide
evidence of the same with the original to be delivered by Company by overnight
delivery on the next calendar day in accordance with the delivery instructions
of Purchaser), registered in such names and denominations as such Purchasers may
request.

 

3.2     Conditions Precedent to Disbursement.

 

3.2.1     Conditions to the Purchasers’ Obligation. The obligation of each
Purchaser to consummate the purchase of the Subordinated Notes to be purchased
by them at Closing and to effect the Disbursement is subject to delivery by or
at the direction of Company to such Purchaser each of the following (or written
waiver by such Purchaser prior to the Closing of such delivery):

 

3.2.1.1     Transaction Documents. This Agreement and the Subordinated Notes
(collectively, the “Transaction Documents”), each duly authorized and executed
by Company.

 

3.2.1.2     Authority Documents.

 

 

(a)

A copy, certified by the Secretary or Assistant Secretary of Company, of the
Articles of Incorporation, of Company;

 

 

(b)

A certificate of existence of Company issued by the Secretary of State of the
State of Maine;

 

 

(c)

A copy, certified by the Secretary or Assistant Secretary, of the Bylaws of
Company;

 

 

(d)

A copy, certified by the Secretary or Assistant Secretary of Company, of the
resolutions of the board of directors of Company (and any committee thereof)
authorizing the execution, delivery and performance of the Transaction
Documents;

 

 

(e)

An incumbency certificate of the Secretary or Assistant Secretary of Company
certifying the names of the officer or officers of Company authorized to sign
the Transaction Documents and the other documents provided for in this
Agreement; and

 

 

(f)

The opinion of Goodwin Procter LLP, counsel to Company, dated as of the Closing
Date, substantially in the form set forth at Exhibit B attached hereto addressed
to the Purchasers and Placement Agent.

 

 
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3.2.1.3     Other Documents. Such other certificates, affidavits, schedules,
resolutions, notes and/or other documents which are provided for hereunder or as
a Purchaser may reasonably request.

 

3.2.1.4     Aggregate Investments. Prior to, or contemporaneously with the
Closing, each Purchaser shall have actually subscribed for the Subordinated Note
Amount set forth on such Purchaser’s signature page.

 

3.2.2     Conditions to Company’s Obligation.

 

3.2.2.1     Since the date of this Agreement, there shall not have been any
action taken, or any law, rule or regulation enacted, entered, enforced or
deemed applicable to Company or its Subsidiaries or the transactions
contemplated by this Agreement by any Governmental Agency which imposes any
restriction or condition that Company determines, in its reasonable good faith
judgment, is materially and unreasonably burdensome on Company’s business or
would materially reduce the economic benefits of the transactions contemplated
by this Agreement to Company to such a degree that Company would not have
entered into this Agreement had such condition or restriction been known to it
on the date hereof.

 

3.2.2.2     With respect to a given Purchaser, the obligation of Company to
consummate the sale of the Subordinated Notes and to effect the Closing is
subject to delivery by or at the direction of such Purchaser to Company, this
Agreement, duly authorized and executed by such Purchaser.

 

4.            REPRESENTATIONS AND WARRANTIES OF COMPANY.

 

Company hereby represents and warrants to each Purchaser as follows:

 

4.1     Organization and Authority.

 

4.1.1     Organization Matters of Company and Its Subsidiaries.

 

4.1.1.1     Company is validly existing and in good standing under the laws of
the State of Maine and has all requisite corporate power and authority to
conduct its business and activities as presently conducted, to own its
properties, and to perform its obligations under the Transaction Documents.
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect. Company is duly
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended.

 

 
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4.1.1.2     Each Subsidiary of Company other than the Bank either has been duly
organized and is validly existing as a corporation or limited liability company,
or, in the case of the Bank, has been duly chartered and is validly existing as
a Maine chartered bank, in each case in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to own,
lease and operate its properties and to conduct its business and is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except where
the failure so to qualify or to be in good standing would not result in a
Material Adverse Effect. All of the issued and outstanding shares of capital
stock or other equity interests in each Subsidiary have been duly authorized and
validly issued, are fully paid and non-assessable and are owned by Company,
directly or through Subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim; none of the outstanding shares of
capital stock of, or other equity interests in, any Subsidiary were issued in
violation of the preemptive or similar rights of any securityholders of such
Subsidiary or any other entity.

 

4.1.1.3     Bank is a Maine chartered bank. The deposit accounts of Bank are
insured by the FDIC up to applicable limits. Neither Company nor Bank has
received any notice or other information indicating that Bank is not an “insured
depository institution” as defined in 12 U.S.C. Section 1813, nor has any event
occurred which could reasonably be expected to adversely affect the status of
Bank as an FDIC-insured institution.

 

4.1.2     Capital Stock and Related Matters. All of the outstanding capital
stock of Company has been duly authorized and validly issued and is fully paid
and nonassessable. There are, as of the date hereof, no outstanding options,
rights, warrants or other agreements or instruments obligating Company to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
the capital stock of Company or obligating Company to grant, extend or enter
into any such agreement or commitment to any Person other than Company except
(i) as described in Company’s SEC Reports or (ii) pursuant to employment
arrangements, agreements or understandings or Company’s equity incentive plans
duly adopted by Company’s Board of Directors/

 

4.1.3     Subsidiaries. Each of Company’s subsidiaries that is a “significant
subsidiary” as defined in Rule 102 of Regulation S-X is reflected in its Annual
Report on Form 10-K for the fiscal year ended June 30, 2015.

 

4.2     No Impediment to Transactions.

 

4.2.1     Transaction is Legal and Authorized. The issuance of the Subordinated
Notes, the borrowing of the aggregate of the Subordinated Note Amounts, the
execution of the Transaction Documents and compliance by Company with all of the
provisions of the Transaction Documents are within the corporate and other
powers of Company.

 

4.2.2     Agreement. This Agreement has been duly authorized, executed and
delivered, and, assuming due authorization, execution and delivery by the other
parties hereto, constitutes the legal, valid and binding obligations of Company,
enforceable in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors’ rights generally or by general
equitable principles.

 

 
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4.2.3     Subordinated Notes. The Subordinated Notes have been duly authorized
by Company and when executed by Company and issued, delivered to and paid for by
the Purchasers in accordance with the terms of the Agreement, will have been
duly executed, authenticated, issued and delivered and will constitute legal,
valid and binding obligations of Company, and enforceable in accordance with
their terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors’ rights generally or by general equitable principles.

 

4.2.4     No Defaults or Restrictions. Neither the execution and delivery of the
Transaction Documents nor compliance with their respective terms and conditions
will (whether with or without the giving of notice or lapse of time or both) (i)
violate, conflict with or result in a breach of, or constitute a default under:
(1) the Articles of Incorporation or Bylaws of Company; (2) any of the terms,
obligations, covenants, conditions or provisions of any corporate restriction or
of any contract, agreement, indenture, mortgage, deed of trust, pledge, bank
loan or credit agreement, or any other agreement or instrument to which Company
or Bank, as applicable, is now a party or by which it or any of its properties
may be bound or affected; (3) any judgment, order, writ, injunction, decree or
demand of any court, arbitrator, grand jury, or Governmental Agency applicable
to Company or the Bank; or (4) any statute, rule or regulation applicable to
Company, except, in the case of items (2), (3) or (4), for such violations,
conflicts, breaches or defaults that would not reasonably be expected to have,
singularly or in the aggregate, a Material Adverse Effect on Company and its
Subsidiaries, taken as a whole, or (ii) result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon any property or
asset of Company. Neither Company nor the Bank is in default in the performance,
observance or fulfillment of any of the terms, obligations, covenants,
conditions or provisions contained in any Material Contract creating, evidencing
or securing Indebtedness of any kind or pursuant to which any such Indebtedness
is issued, or any other Material Contract, except, in each case, only such
defaults that would not reasonably be expected to have, singularly or in the
aggregate, a Material Adverse Effect on Company.

 

4.2.5     Governmental Consent. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained by Company that have not
been obtained, and no registrations or declarations are required to be filed by
Company that have not been filed in connection with, or, in contemplation of,
the execution and delivery of, and performance under, the Transaction Documents,
except for applicable requirements, if any, of the Securities Act, the Exchange
Act or state securities laws or “blue sky” laws of the various states and any
applicable federal or state banking laws and regulations.

 

4.3     Possession of Licenses and Permits. Company and its Subsidiaries possess
such permits, licenses, approvals, consents and other authorizations
(collectively, “Governmental Licenses”) issued by the appropriate Governmental
Agencies necessary to conduct the business now operated by it except where the
failure to possess such Governmental Licenses would not, singularly or in the
aggregate, have a Material Adverse Effect on Company or such applicable
Subsidiary; Company and each Subsidiary of Company is in compliance with the
terms and conditions of all such Governmental Licenses, except where the failure
so to comply would not, individually or in the aggregate, have a Material
Adverse Effect on Company or such applicable Subsidiary of Company; all of the
Governmental Licenses are valid and in full force and effect, except where the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not have a Material Adverse Effect
on Company or such applicable Subsidiary of Company; and neither Company nor any
Subsidiary of Company has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses.

 

 
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4.4     Financial Condition.

 

4.4.1     Company Financial Statements. The financial statements of Company
included in Company’s SEC Reports (including the related notes, where
applicable) (i) have been prepared from, and are in accordance with, the books
and records of Company; (ii) fairly present in all material respects the results
of operations, cash flows, changes in stockholders’ equity and financial
position of Company and its consolidated Subsidiaries, for the respective fiscal
periods or as of the respective dates therein set forth (subject in the case of
unaudited statements to recurring year-end audit adjustments normal in nature
and amount), as applicable; (iii) complied as to form, as of their respective
dates of filing in all material respects with applicable accounting and banking
requirements as applicable, with respect thereto; and (iv) have been prepared in
accordance with GAAP consistently applied during the periods involved, except,
in each case, as indicated in such statements or in the notes thereto and
Regulation S-X promulgated under the Securities Act. The books and records of
Company have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements.
Company does not have any material liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due),
except for those liabilities that are reflected or reserved against on the
consolidated balance sheet of Company contained in Company’s SEC Reports for
Company’s most recently completed quarterly or annual fiscal period, as
applicable, and for liabilities incurred in the ordinary course of business
consistent with past practice or in connection with this Agreement and the
transactions contemplated hereby.

 

4.4.2     Absence of Default. Since the date of the latest audited financial
statements included in Company’s SEC Reports, no event has occurred which either
of itself or with the lapse of time or the giving of notice or both, would give
any creditor of Company the right to accelerate the maturity of any material
Indebtedness of Company. Company is not in default under any other Lease,
agreement or instrument, or any law, rule, regulation, order, writ, injunction,
decree, determination or award, non-compliance with which could reasonably be
expected to result in a Material Adverse Effect on Company.

 

4.4.3     Solvency. After giving effect to the consummation of the transactions
contemplated by this Agreement, Company has capital sufficient to carry on its
business and transactions and is solvent and able to pay its debts as they
mature. No transfer of property is being made and no Indebtedness is being
incurred in connection with the transactions contemplated by this Agreement with
the intent to hinder, delay or defraud either present or future creditors of
Company or any Subsidiary of Company.

 

4.4.4     Ownership of Property. Company and each of its Subsidiaries has good
and marketable title as to all real property owned by it and good title to all
assets and properties owned by Company and such Subsidiary in the conduct of its
businesses, whether such assets and properties are real or personal, tangible or
intangible, including assets and property reflected in the most recent balance
sheet contained in Company’s SEC Reports or acquired subsequent thereto (except
to the extent that such assets and properties have been disposed of in the
ordinary course of business, since the date of such balance sheet), subject to
no encumbrances, liens, mortgages, security interests or pledges, except (i)
those items which secure liabilities for public or statutory obligations or any
discount with, borrowing from or other obligations to the Federal Home Loan
Bank, inter-bank credit facilities, reverse repurchase agreements or any
transaction by Bank acting in a fiduciary capacity, (ii) statutory liens for
amounts not yet delinquent or which are being contested in good faith and (iii)
such as do not, individually or in the aggregate, materially affect the value of
such property and do not materially interfere with the use made and proposed to
be made of such property by Company or any of its Subsidiaries. Company and each
of its Subsidiaries, as lessee, has the right under valid and existing Leases of
real and personal properties that are material to Company or such Subsidiary, as
applicable, in the conduct of its business to occupy or use all such properties
as presently occupied and used by it. Such existing Leases and commitments to
Lease constitute or will constitute operating Leases for both tax and financial
accounting purposes except as otherwise disclosed in the Company’s SEC Reports,
and the Lease expense and minimum rental commitments with respect to such Leases
and Lease commitments are as disclosed in all material respects in Company’s SEC
Reports.

 

 
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4.5     No Material Adverse Change. Since the date of the latest audited
financial statements included in Company’s SEC Reports, there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect on Company or any of its Subsidiaries.

 

4.6      Legal Matters.

 

4.6.1     Compliance with Law. Company and each of its Subsidiaries (i) has
complied with and (ii) is not under investigation with respect to, and, to
Company’s knowledge, have not been threatened to be charged with or given any
notice of any material violation of any applicable statutes, rules, regulations,
orders and restrictions of any domestic or foreign government, or any
instrumentality or agency thereof, having jurisdiction over the conduct of its
business or the ownership of its properties, except where any such failure to
comply or violation would not reasonably be expected to have a Material Adverse
Effect on Company or any of its Subsidiaries.

 

4.6.2     Regulatory Enforcement Actions. Company, Bank and its other
Subsidiaries are in compliance with all laws administered by and regulations of
any Governmental Agency applicable to it or to them, except where the failure to
so comply would have a Material Adverse Effect. None of Company, Bank, Company’s
Subsidiaries nor any of their officers or directors is now operating under any
restrictions, agreements, memoranda, or commitments (other than restrictions of
general application) imposed by any Governmental Agency, nor are, to Company’s
knowledge, (a) any such restrictions threatened or (b) any agreements, memoranda
or commitments being sought by any Governmental Agency.

 

4.6.3     Pending Litigation. There are no actions, suits, proceedings or
written agreements pending, or, to Company’s knowledge, threatened or proposed,
against Company, Bank, or any of its other Subsidiaries at law or in equity or
before or by any federal, state, municipal, or other governmental department,
commission, board, or other administrative agency, domestic or foreign, that,
either separately or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Company and any of its Subsidiaries, taken as a
whole, or affect issuance or payment of the Subordinated Notes; and neither
Company nor any of its Subsidiaries is a party to or named as subject to the
provisions of any order, writ, injunction, or decree of, or any written
agreement with, any court, commission, board or agency, domestic or foreign,
that either separately or in the aggregate, will have a Material Adverse Effect
on Company and any of its Subsidiaries, taken as a whole.

 

 
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4.6.4     Environmental. No Property is or, to Company’s knowledge, has been a
site for the use, generation, manufacture, storage, treatment, release,
threatened release, discharge, disposal, transportation or presence of any
Hazardous Materials and neither Company nor any of its Subsidiaries has engaged
in such activities. There are no claims or actions pending or, to Company’s
knowledge, threatened against Company or any of its Subsidiaries by any
Governmental Agency or by any other Person relating to any Hazardous Materials
or pursuant to any Hazardous Materials Law.

 

4.6.5     Brokerage Commissions. Except for commissions paid to the Placement
Agent, neither Company nor any Affiliate of Company is obligated to pay any
brokerage commission or finder’s fee to any Person in connection with the
transactions contemplated by this Agreement.

 

4.6.6     Investment Company Act. Neither Company nor any of its Subsidiaries is
an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended

 

4.6.7     Anti-Money Laundering. Company and its Subsidiaries are in compliance
in all material respects with the applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transaction Reporting Act of
1970, as amended, including as amended by the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
(the "USA PATRIOT Act") and the rules and regulations thereunder and any other
applicable anti-money laundering statute, rule, or regulation (the "Anti-Money
Laundering Laws"). Company and its Subsidiaries have established compliance
programs to ensure compliance with the requirements of the Anti-Money Laundering
Laws. There is no charge, investigation, action, suit or proceeding before any
court, regulatory authority or governmental agency or body pending or, to the
best knowledge of Company and its Subsidiaries, threatened regarding the
compliance by Company and its Subsidiaries with any applicable anti-money
laundering statue, rule or regulation.

 

4.6.8     Compliance with Economic Sanctions.

 

4.6.8.1     Neither the Company nor any of its Subsidiaries is acting or has
acted at any time, directly or indirectly, on behalf of any persons or entities
whose name appears on the Annex to the Executive Order No. 13224 (Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism) or are included on any relevant lists maintained
by the Office of Foreign Assets Control ("OFAC") of U.S. Department of Treasury,
including the Specially Designated Nationals and Blocked Persons List, the
Foreign Sanctions Evaders List, and the Sectoral Sanctions Identifications List,
and any similar list maintained by the U.S. Department of State, or other U.S.
government agencies, all as may be amended from time to time (such lists,
collectively, the "Government Lists").

 

4.6.8.2     Neither the Company nor any of its Subsidiaries engages, or has
engaged, in business activities or transactions with or for the benefit of any
persons or countries subject to any sanctions administered by OFAC, including
any persons in Cuba, Iran, Sudan, Syria or North Korea, or any person on any
relevant lists maintained by OFAC, the U.S. Department of State or other U.S.
government agencies, including the Government Lists.

 

 
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4.6.8.3     The operations of the Company and its Subsidiaries are not in
contravention of, and since January 1, 2009 have not violated, any applicable
economic sanctions laws, including laws administered and enforced by the U.S.
government or pursuant to the Trading with the Enemy Act, the International
Emergency Economic Powers Act, the Iran Sanctions Act, the Comprehensive Iran
Sanctions, Accountability, and Divestment Act, the National Defense
Authorization Act for Fiscal Year 2012, the National Defense Authorization Act
for Fiscal Year 2013, the Iran Threat Reduction and Syria Human Rights Act of
2012, the Iran Freedom and Counter-Proliferation Act of 2012, Executive Order
13660 of March 6, 2014, Executive Order 13661 of March 17, 2014, Executive Order
13662 of March 20, 2014, and any executive order or regulations issued pursuant
to any of the foregoing (collectively, "Economic Sanctions"). No proceeding
before any government authority involving the Company or its Subsidiaries with
respect to Economic Sanctions is pending or, to the Company's knowledge, is
threatened, nor have there been any such proceedings within the past five years.

 

4.6.9     Taxes. Company and its Subsidiaries have filed all Tax Returns that
they were required to file under applicable laws and regulations, other than Tax
Returns that are not yet due or for which a request for extension was filed. All
such Tax Returns were correct and complete in all material respects and have
been prepared in substantial compliance with all applicable laws and
regulations. All Taxes due and owing by and Company and its Subsidiaries
(whether or not shown on any Tax Return) have been paid other than Taxes that
have been reserved or accrued on the balance sheet of Company and which Company
is contesting in good faith.

 

4.7     No Misstatement. No information, exhibit, report, schedule or document,
when viewed together as a whole, furnished by Company to Purchasers in
connection with the negotiation, execution or performance of this Agreement
contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements contained therein not misleading in light
of the circumstances under which they were made.

 

4.8     Reporting Compliance. Company is subject to, and is in compliance in all
material respects with, the reporting requirements of Section 13 and Section
15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and
the rules and the regulations of the SEC thereunder (collectively, the “Exchange
Act”). Company’s SEC Reports at the time they were or hereafter are filed with
the SEC, complied in all material respects with the requirements of the Exchange
Act and did not and do not include any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.

 

4.9     Internal Control Over Financial Reporting. Company and its Subsidiaries
maintain systems of “internal control over financial reporting” (as defined in
Rule 13a-15(f) of the Exchange Act) that comply with the requirements of the
Exchange Act and have been designed by, or under the supervision of, their
respective principal executive and principal financial officers, or persons
performing similar functions, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP, including, but not limited to, a
system of accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Since the end of Company’s most recent audited fiscal year, (y)
Company has no knowledge of (i) any material weakness in Company’s internal
control over financial reporting (whether or not remediated) or (ii) any fraud,
whether or not material, that involves management or other employees who have a
significant role in Company’s internal controls and (z) there has been no change
in Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, Company’s internal
control over financial reporting.

 

 
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4.10     Disclosure Controls and Procedures. Company and its Subsidiaries
maintain an effective system of disclosure controls and procedures (as defined
in Rule 13a-15 and Rule 15d-15 of the Exchange Act), that (i) are designed to
ensure that information required to be disclosed by Company in the reports that
it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC’s rules and forms and
that material information relating to Company and its Subsidiaries is made known
to Company’s principal executive officer and principal financial officer by
others within Company and its Subsidiaries to allow timely decisions regarding
disclosure, and (ii) are effective in all material respects to perform the
functions for which they were established. As of the date hereof, Company has no
knowledge that would reasonably cause it to believe that the evaluation to be
conducted of the effectiveness of Company’s disclosure controls and procedures
for the most recently ended fiscal quarter period will result in a finding that
such disclosure controls and procedures are ineffective for such quarter ended.
Based on the evaluation of Company’s and each Subsidiary’s disclosure controls
and procedures described above, Company is not aware of (1) any significant
deficiency in the design or operation of internal controls which could adversely
affect Company’s ability to record, process, summarize and report financial data
or any material weaknesses in internal controls or (2) any fraud, whether or not
material, that involves management or other employees who have a significant
role in Company’s internal controls. Since the most recent evaluation of
Company’s disclosure controls and procedures described above, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls.

 

4.11      No Registration. Other than the Purchasers with respect to the
Subordinated Notes, no person has the right to require Company or any of its
Subsidiaries to register any securities for sale under the Securities Act by
reason of the issuance and sale of the Subordinated Notes to be sold by Company
hereunder.

 

4.12     Representations and Warranties Generally. The representations and
warranties of Company set forth in this Agreement are true and correct as of the
date hereof and will be true and correct as of the Closing Date and as otherwise
specifically provided herein. Any certificate signed by an officer of Company
and delivered to the Purchasers or to counsel for Purchasers shall be deemed to
be a representation and warranty by Company to the Purchasers as to the matters
set forth therein.

 

5.            GENERAL COVENANTS, CONDITIONS AND AGREEMENTS.

 

Company hereby further covenants and agrees with each Purchaser as follows:

 

5.1     Compliance with Transaction Documents. Company shall comply with,
observe and timely perform each and every one of the covenants, agreements and
obligations under the Transaction Documents.

 

 
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5.2     Affiliate Transactions. Company shall not itself, nor shall it cause,
permit or allow any of its Subsidiaries to enter into any transaction, including
the purchase, sale or exchange of property or the rendering of any Service, with
any Affiliate of Company except in the ordinary course of business and pursuant
to the reasonable requirements of Company’s or such Affiliates business and upon
terms consistent with applicable laws and regulations and reasonably found by
the appropriate board(s) of directors to be fair and reasonable and no less
favorable to Company or such Affiliate than would be obtained in a comparable
arm’s length transaction with a Person not an Affiliate.

 

5.3     Compliance with Laws.

 

5.3.1     Generally. Company shall comply and cause Bank and each other
Subsidiary to comply with all applicable statutes, rules, regulations, orders
and restrictions in respect of the conduct of its business and the ownership of
its properties, except, in each case, where such noncompliance would not
reasonably be expected to have a Material Adverse Effect on Company.

 

5.3.2     Regulated Activities. Company shall not itself, nor shall it cause,
permit or allow Bank or any other Subsidiary (i) engage in any business or
activity not permitted by all applicable laws and regulations, except where such
business or activity would not reasonably be expected to have a Material Adverse
Effect on Company, Bank and/or such Subsidiary or (ii) make any loan or advance
secured by the capital stock of another bank or depository institution, or
acquire the capital stock, assets or obligations of or any interest in another
bank or depository institution, in each case other than in accordance with
applicable laws and regulations and safe and sound banking practices.

 

5.3.3     Taxes. Company shall and shall cause Bank and any other Subsidiary to
promptly pay and discharge all taxes, assessments and other governmental charges
imposed upon Company, Bank or any other Subsidiary or upon the income, profits,
or property of Company or any Subsidiary and all claims for labor, material or
supplies which, if unpaid, might by law become a lien or charge upon the
property of Company, Bank or any other Subsidiary. Notwithstanding the
foregoing, none of Company, Bank or any other Subsidiary shall be required to
pay any such tax, assessment, charge or claim, so long as the validity thereof
shall be contested in good faith by appropriate proceedings, and appropriate
reserves therefor shall be maintained on the books of Company, Bank and such
other Subsidiary

 

5.3.4     Environmental Matters. Except as would not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on
Company or any Subsidiary of Company, Company shall: (i) exercise, and cause
each such Subsidiary to exercise, due diligence in order to comply in all
material respects with all Hazardous Materials Laws; and (ii) promptly take any
and all remedial action required of Company in connection with any Condition or
Release or threatened Condition or Release on, under or about any Property in
order to comply in all material respects with all applicable Hazardous Materials
Laws; provided, however, that Company shall not be deemed to be in breach of the
foregoing covenant if and to the extent it has not taken such remedial actions
due to (x) its diligent pursuit of an available statutory or administrative
exemption from compliance with the relevant Hazardous Materials Law from the
appropriate Governmental Agency (and no material penalties for non-compliance
with the relevant Hazardous Materials Law(s) shall accrue as a result of such
non-compliance, without rebate or waiver if such exemption or waiver is
granted), or (y) is actively and diligently contesting in good faith any
Governmental Agency's order, determination or decree with respect to the
applicability or interpretation of any such relevant Hazardous Materials Law
and/or the actions required under such laws or regulations in respect of such
Condition or Release. In the event Company or any other Subsidiary of Company
undertakes any remedial action with respect to such Hazardous Material on, under
or about any Property, Company or such Subsidiary shall conduct and complete
such remedial action in compliance in all material respects with all applicable
Hazardous Materials Laws and in accordance with the binding and applicable
policies, orders and directives of all Governmental Agencies. Company hereby
agrees to defend, indemnify and hold harmless the Noteholders, their directors.
officers. employees. agents. successors and assigns (including, without
limitation, any participants in the Subordinated Notes) from and against any and
all losses, damages, liabilities, claims, actions, judgments, court costs and
legal or other expenses (including, without limitation, attorney's fees and
expenses) which the Noteholders may incur as a direct or indirect consequence of
(a) any Hazardous Materials Claim or any other violation of a Hazardous
Materials Law applicable to the operations of Company or any of its Subsidiaries
or the Property. or (b) the use generation, manufacture, storage, disposal,
threatened disposal, transportation or presence of Hazardous Materials in, on,
under or about the Property or otherwise by Company or any of its Subsidiaries
in violation of Hazardous Materials Law. Company's duty and obligations to
defend. indemnify and hold harmless the Noteholders shall survive the
cancellation of the Subordinated Notes and any other document executed in
connection therewith until the expiration of the relevant statutes of limitation
under Hazardous Materials Law.

 

 
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5.3.5     Corporate Existence. Company shall do or cause to be done all things
reasonably necessary to maintain , preserve and renew its corporate existence
and that of Bank and the other Subsidiaries and its and their rights and
franchises, and comply in all material respects with all related laws applicable
to Company, Bank or the other Subsidiaries.

 

5.3.6     Dividends, Payments, and Guarantees During Event of Default. During
the continuance of an Event of Default (as defined under the Subordinated Notes)
and except as required by any federal or state Governmental Agency, Company
agrees not to (a) declare or pay any dividends on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of its capital stock; (b)
make any payment of principal of, or interest or premium, if any, on, or repay,
repurchase or redeem any of Company’s Indebtedness that ranks equal with or
junior to the Subordinated Notes; or (c) make any payments under any guarantee
that ranks equal with or junior to the Subordinated Notes, other than (i) any
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, any class of Company’s common stock; (ii)
any declaration of a dividend in connection with the implementation of a
shareholders’ rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto;
(iii) as a result of a reclassification of Company’s capital stock or the
exchange or conversion of one class or series of Company’s capital stock for
another class or series of Company’s capital stock; (iv) the purchase of
fractional interests in shares of Company’s capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged; or (v) purchases of any class of Company’s common stock
related to the issuance of common stock or rights under any benefit plans for
Company’s directors, officers or employees or any of Company’s dividend
reinvestment plans.

 

5.3.7     Tier 2 Capital. If all or any portion of the Subordinated Notes ceases
to be deemed to be Tier 2 Capital, other than due to the limitation imposed on
the capital treatment of subordinated debt during the five (5) years immediately
preceding the Maturity Date of the Subordinated Notes, Company will immediately
notify the Purchasers, and thereafter Company and the Purchasers will work
together in good faith for thirty (30) days to execute and deliver all
agreements as reasonably necessary in order to restructure the applicable
portions of the obligations evidenced by the Subordinated Notes to qualify as
Tier 2 Capital; provided, however, that nothing contained in this Agreement
shall limit Company’s right to redeem the Subordinated Notes upon the occurrence
of a Tier 2 Capital Event as described in the Subordinated Notes.

 

 
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5.4     Absence of Control. It is the intent of the parties to this Agreement
that in no event shall Purchasers, by reason of any of the Transaction
Documents, be deemed to control, directly or indirectly, Company, and Purchasers
shall not exercise, or be deemed to exercise, directly or indirectly, a
controlling influence over the management or policies of Company.

 

5.5     Secondary Market Transactions. Each Purchaser shall have the right at
any time and from time to time to securitize its Subordinated Notes or any
portion thereof in a single asset securitization or a pooled loan securitization
of rated single or multi-class securities secured by or evidencing ownership
interests in the Subordinated Notes (each such securitization is referred to
herein as a “Secondary Market Transaction”). In connection with any such
Secondary Market Transaction, Company shall, at Company’s expense, cooperate
with Purchasers and otherwise reasonably assist Purchasers in satisfying the
market standards to which Purchasers customarily adhere or which may be
reasonably required in the marketplace or by applicable rating agencies in
connection with any such Secondary Market Transaction. Subject to any written
confidentiality obligation, all information regarding Company may be furnished,
without liability except in the case of gross negligence or willful misconduct,
to any Purchaser and to any Person reasonably deemed necessary by Purchaser in
connection with participation in such Secondary Market Transaction. All
documents, financial statements, appraisals and other data relevant to Company
or the Subordinated Notes may be retained by any such Person.

 

5.6     Insurance. At its sole cost and expense, Company shall maintain, and
shall cause each Subsidiary to maintain, bonds and insurance to such extent,
covering such risks as is required by law. or as is usual and customary for
owners of similar businesses and properties in the same general area in which
Company or any of its Subsidiaries operates. All such bonds and policies of
insurance shall be in a form, in an amount and with Company’s/insurers
recognized as adequate by prudent business persons.

 

5.7     Bloomberg and DTC. Company shall use commercially reasonable efforts to
cause the Subordinated Notes to be quoted on Bloomberg and to be registered in
the name of The Depository Trust Company.

 

6.            REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASERS.

 

Each Purchaser hereby represents and warrants to Company, and covenants with
Company, severally and not jointly, as follows:

 

6.1     Legal Power and Authority. It has all necessary power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. It is an entity duly organized,
validly existing and in good standing under the laws its jurisdiction of
organization.

 

6.2     Authorization and Execution. The execution, delivery and performance of
this Agreement has been duly authorized by all necessary action on the part of
such Purchaser, and this Agreement is a legal, valid and binding obligation of
such Purchaser, enforceable against such Purchaser in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors’ rights generally or by general equitable principles.

 

 
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6.3     No Conflicts. Neither the execution, delivery or performance of the
Transaction Documents nor the consummation of any of the transactions
contemplated thereby will conflict with, violate, constitute a breach of or a
default (whether with or without the giving of notice or lapse of time or both)
under (i) its organizational documents, (ii) any agreement to which it is party,
(iii) any law applicable to it or (iv) any order, writ, judgment, injunction,
decree, determination or award binding upon or affecting it.

 

6.4     Purchase for Investment. It is purchasing the Subordinated Note for its
own account and not with a view to distribution and with no present intention of
reselling, distributing or otherwise disposing of the same. It has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for, or which is likely to compel, a disposition of the
Subordinated Notes in any manner.

 

6.5     Institutional Accredited Investor. It is and will be on the Closing Date
an institutional “accredited investor” as such term is defined in Rule 501(a) of
Regulation D and as contemplated by subsections (1), (2), (3) and (7) of Rule
501(a) of Regulation D, and has no less than $5,000,000 in total assets.

 

6.6     Financial and Business Sophistication. It has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the prospective investment in the Subordinated Notes. It
has relied solely upon its own knowledge of, and/or the advice of its own legal,
financial or other advisors with regard to, the legal, financial, tax and other
considerations involved in deciding to invest in the Subordinated Notes.

 

6.7     Ability to Bear Economic Risk of Investment. It recognizes that an
investment in the Subordinated Notes involves substantial risk. It has the
ability to bear the economic risk of the prospective investment in the
Subordinated Notes, including the ability to hold the Subordinated Notes
indefinitely and further including the ability to bear a complete loss of all of
its investment in Company.

 

6.8     Information. It acknowledges that: (i) it is not being provided with the
disclosures that would be required if the offer and sale of the Subordinated
Notes were registered under the Securities Act, nor is it being provided with
any offering circular or prospectus prepared in connection with the offer and
sale of the Subordinated Notes; (ii) it has conducted its own examination of
Company and the terms of the Subordinated Notes to the extent it deems necessary
to make its decision to invest in the Subordinated Notes; and (iii) it has
availed itself of publicly available financial and other information concerning
Company to the extent it deems necessary to make its decision to purchase the
Subordinated Notes. It has reviewed the information set forth in Company’s SEC
Reports and the exhibits and schedules hereto and contained in the data room
established by Company on May 25, 2016.

 

6.9     Access to Information. It acknowledges that it and its advisors have
been furnished with all materials relating to the business, finances and
operations of Company that have been requested by it or its advisors and have
been given the opportunity to ask questions of, and to receive answers from,
persons acting on behalf of Company concerning terms and conditions of the
transactions contemplated by this Agreement in order to make an informed and
voluntary decision to enter into this Agreement.

 

 
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6.10     Investment Decision. It has made its own investment decision based upon
its own judgment, due diligence and advice from such advisors as it has deemed
necessary and not upon any view expressed by any other person or entity,
including the Placement Agent. Neither such inquiries nor any other due
diligence investigations conducted by it or its advisors or representatives, if
any, shall modify, amend or affect its right to rely on Company’s
representations and warranties contained herein. It is not relying upon, and has
not relied upon, any advice, statement, representation or warranty made by any
Person by or on behalf of Company, including, without limitation, the Placement
Agent, except for the express statements, representations and warranties of
Company made or contained in this Agreement. Furthermore, it acknowledges that
(i) the Placement Agent has not performed any due diligence review on behalf of
it and (ii) nothing in this Agreement or any other materials presented by or on
behalf of Company to it in connection with the purchase of the Subordinated
Notes constitutes legal, tax or investment advice.

 

6.11     Private Placement; No Registration; Restricted Legends. It understands
and acknowledges that the Subordinated Notes are being sold by Company without
registration under the Securities Act in reliance on the exemption from federal
and state registration set forth in, respectively, Rule 506(b) of Regulation D
under Section 4(a)(2) of the Securities Act and Section 18 of the Securities
Act, or any state securities laws, and accordingly, may be resold, pledged or
otherwise transferred only if exemptions from the Securities Act and applicable
state securities laws are available to it. It is not subscribing for the
Subordinated Notes as a result of or subsequent to any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or presented at any seminar or
meeting. It further acknowledges and agrees that all certificates or other
instruments representing the Subordinated Notes will bear the restrictive legend
set forth in the form of Subordinated Note. It further acknowledges its primary
responsibilities under the Securities Act and, accordingly, will not sell or
otherwise transfer the Subordinated Notes or any interest therein without
complying with the requirements of the Securities Act and the rules and
regulations promulgated thereunder and the requirements set forth in this
Agreement.

 

6.12     Placement Agent. It will purchase the Subordinated Note(s) directly
from Company and not from the Placement Agent and understands that neither the
Placement Agent nor any other broker or dealer has any obligation to make a
market in the Subordinated Notes.

 

6.13     Tier 2 Capital. If all or any portion of the Subordinated Notes ceases
to be deemed to be Tier 2 Capital, other than due to the limitation imposed on
the capital treatment of subordinated debt during the five (5) years immediately
preceding the Maturity Date of the Subordinated Notes, Company will immediately
notify the Purchasers, and thereafter Company and the Purchasers will work
together in good faith to execute and deliver all agreements as reasonably
necessary in order to restructure the applicable portions of the obligations
evidenced by the Subordinated Notes to qualify as Tier 2 Capital; provided,
however, that nothing contained in this Agreement shall limit Company’s right to
redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event as
described in the Subordinated Notes.

 

6.14     Accuracy of Representations. It understands that each of the Placement
Agent and Company will rely upon the truth and accuracy of the foregoing
representations, acknowledgements and agreements in connection with the
transactions contemplated by this Agreement, and agrees that if any of the
representations or acknowledgements made by it are no longer accurate as of the
Closing Date, or if any of the agreements made by it are breached on or prior to
the Closing Date, it shall promptly notify the Placement Agent and Company.

 

 
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6.15     Representations and Warranties Generally. The representations and
warranties of Purchaser set forth in this Agreement are true and correct as of
the date hereof and will be true and correct as of the Closing Date and as
otherwise specifically provided herein. Any certificate signed by a duly
authorized representative of Purchaser and delivered to Company or to counsel
for Company shall be deemed to be a representation and warranty by Purchaser to
Company as to the matters set forth therein.

 

7.     MISCELLANEOUS.

 

7.1     Prohibition on Assignment by Company. Except as described in Section 8
(Merger or Sale of Assets) of the Subordinated Notes, Company may not assign,
transfer or delegate any of its rights or obligations under this Agreement or
the Subordinated Notes without the prior written consent of Purchasers. In
addition, in accordance with the terms of the Subordinated Notes, any transfer
of such Subordinated Notes must be made in accordance with the Assignment Form
attached thereto and the requirements and restrictions thereof.

 

7.2     Time of the Essence. Time is of the essence of this Agreement.

 

7.3     Waiver or Amendment. No waiver or amendment of any term, provision,
condition, covenant or agreement herein or in the Subordinated Notes shall be
effective except with the consent of the holders of not less than more than
fifty percent (50%) in aggregate principal amount (excluding any Subordinated
Notes held by Company or any of its Affiliates) of the Subordinated Notes at the
time outstanding; provided, however, that without the consent of each holder of
an affected Subordinated Note, no such amendment or waiver may: (i) reduce the
principal amount of the Subordinated Note; (ii) reduce the rate of or change the
time for payment of interest on any Subordinated Note; (iii) extend the maturity
of any Subordinated Note, (iv) change the currency in which payment of the
obligations of Company under this Agreement and the Subordinated Notes are to be
made; or (v) lower the percentage of aggregate principal amount of outstanding
Subordinated Notes required to approve any amendment of this Agreement or the
Subordinated Notes, (vi) make any changes to Section 6 (Failure to Make a
Payment) of the Subordinated Notes that adversely affects the rights of any
holder of a Subordinated Note; or (vii) disproportionately affect the rights of
any of the holders of the then outstanding Subordinated Notes. Notwithstanding
the foregoing, Company may amend or supplement the Subordinated Notes without
the consent of the holders of the Subordinated Notes to cure any ambiguity,
defect or inconsistency or to provide for uncertificated Subordinated Notes in
addition to or in place of certificated Subordinated Notes, or to make any
change that does not adversely affect the rights of any holder of any of the
Subordinated Notes. No failure to exercise or delay in exercising, by a
Purchaser or any holder of the Subordinated Notes, of any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege preclude any other or further
exercise thereof, or the exercise of any other right or remedy provided by law.
The rights and remedies provided in this Agreement are cumulative and not
exclusive of any right or remedy provided by law or equity. No notice or demand
on Company in any case shall, in itself, entitle Company to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Purchasers to any other or further action in any circumstances
without notice or demand. No consent or waiver, expressed or implied, by the
Purchasers to or of any breach or default by Company in the performance of its
obligations hereunder shall be deemed or construed to be a consent or waiver to
or of any other breach or default in the performance of the same or any other
obligations of Company hereunder. Failure on the part of the Purchasers to
complain of any acts or failure to act or to declare an Event of Default,
irrespective of how long such failure continues, shall not constitute a waiver
by the Purchasers of their rights hereunder or impair any rights, powers or
remedies on account of any breach or default by Company.

 

 
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7.4     Severability. Any provision of this Agreement which is unenforceable or
invalid or contrary to law, or the inclusion of which would adversely affect the
validity, legality or enforcement of this Agreement, shall be of no effect and,
in such case, all the remaining terms and provisions of this Agreement shall
subsist and be fully effective according to the tenor of this Agreement the same
as though any such invalid portion had never been included herein.
Notwithstanding any of the foregoing to the contrary, if any provisions of this
Agreement or the application thereof are held invalid or unenforceable only as
to particular persons or situations, the remainder of this Agreement, and the
application of such provision to persons or situations other than those to which
it shall have been held invalid or unenforceable, shall not be affected thereby,
but shall continue valid and enforceable to the fullest extent permitted by law.

 

7.5     Notices. Any notice which any party hereto may be required or may desire
to give hereunder shall be deemed to have been given if in writing and if
delivered personally, or if mailed, postage prepaid, by United States registered
or certified mail, return receipt requested, or if delivered by a responsible
overnight commercial courier promising next business day delivery, addressed:

 

if to Company:

Northeast Bancorp

200 Berkeley Street, 17th Floor

Boston, MA 02116

Attn: Richard Wayne, President & CEO

   

with a copy to:

Goodwin Procter LLP

100 Northern Avenue

Boston, MA 02210

Attn: Samantha M. Kirby. Esq.

Fax: 617-523-1231

Email: skirby@goodwinprocter.com

   

if to Purchasers:

To the address indicated on such Purchaser’s signature page.

   

or to such other address or addresses as the party to be given notice may have
furnished in writing to the party seeking or desiring to give notice, as a place
for the giving of notice; provided that no change in address shall be effective
until five (5) Business Days after being given to the other party in the manner
provided for above. Any notice given in accordance with the foregoing shall be
deemed given when delivered personally or, if mailed, three (3) Business Days
after it shall have been deposited in the United States mails as aforesaid or,
if sent by overnight courier, the Business Day following the date of delivery to
such courier (provided next business day delivery was requested).

 

7.6     Successors and Assigns. This Agreement shall inure to the benefit of the
parties and their respective heirs, legal representatives, successors and
assigns; except that, unless a Purchaser consents in writing, no assignment made
by Company in violation of this Agreement shall be effective or confer any
rights on any purported assignee of Company. The term “successors and assigns”
will not include a purchaser of any of the Subordinated Notes from any Purchaser
merely because of such purchase.

 

 
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7.7     No Joint Venture. Nothing contained herein or in any document executed
pursuant hereto and no action or inaction whatsoever on the part of a Purchaser,
shall be deemed to make a Purchaser a partner or joint venturer with Company.

 

7.8     Documentation. All documents and other matters required by any of the
provisions of this Agreement to be submitted or furnished to a Purchaser shall
be in form and substance satisfactory to such Purchaser.

 

7.9     Entire Agreement. This Agreement and the Subordinated Notes along with
the Exhibits thereto constitute the entire agreement between the parties hereto
with respect to the subject matter hereof and may not be modified or amended in
any manner other than by supplemental written agreement executed by the parties
hereto. No party, in entering into this Agreement, has relied upon any
representation, warranty, covenant, condition or other term that is not set
forth in this Agreement or in the Subordinated Notes.

 

7.10     Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to its
laws or principles of conflict of laws. Nothing herein shall be deemed to limit
any rights, powers or privileges which a Purchaser may have pursuant to any law
of the United States of America or any rule, regulation or order of any
department or agency thereof and nothing herein shall be deemed to make unlawful
any transaction or conduct by a Purchaser which is lawful pursuant to, or which
is permitted by, any of the foregoing.

 

7.11     No Third Party Beneficiary. This Agreement is made for the sole benefit
of Company and the Purchasers, and no other person shall be deemed to have any
privity of contract hereunder nor any right to rely hereon to any extent or for
any purpose whatsoever, nor shall any other person have any right of action of
any kind hereon or be deemed to be a third party beneficiary hereunder;
provided, that the Placement Agent may rely on the representations and
warranties contained herein to the same extent as if it were a party to this
Agreement.

 

7.12     Legal Tender of United States. All payments hereunder shall be made in
coin or currency which at the time of payment is legal tender in the United
States of America for public and private debts.

 

7.13     Captions; Counterparts. Captions contained in this Agreement in no way
define, limit or extend the scope or intent of their respective provisions. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument. In the event that any signature is
delivered by facsimile transmission, or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.

 

 
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7.14     Knowledge; Discretion. All references herein to Purchaser’s or
Company’s knowledge shall be deemed to mean the knowledge of such party based on
the actual knowledge of such party’s Chief Executive Officer and Chief Financial
Officer or such other persons holding equivalent offices. Unless specified to
the contrary herein, all references herein to an exercise of discretion or
judgment by a Purchaser, to the making of a determination or designation by a
Purchaser, to the application of a Purchaser’s discretion or opinion, to the
granting or withholding of a Purchaser’s consent or approval, to the
consideration of whether a matter or thing is satisfactory or acceptable to a
Purchaser, or otherwise involving the decision making of a Purchaser, shall be
deemed to mean that such Purchaser shall decide using the reasonable discretion
or judgment of a prudent lender.

 

7.15     Waiver Of Right To Jury Trial. TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
THAT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN
CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS, OR ANY OTHER STATEMENTS OR
ACTIONS OF COMPANY OR PURCHASERS. THE PARTIES ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL SELECTED OF THEIR OWN FREE WILL. THE PARTIES FURTHER
ACKNOWLEDGE THAT (i) THEY HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS
OF THIS WAIVER, (ii) THIS WAIVER HAS BEEN REVIEWED BY THE PARTIES AND THEIR
COUNSEL AND IS A MATERIAL INDUCEMENT FOR ENTRY INTO THIS AGREEMENT AND (iii)
THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH TRANSACTION DOCUMENTS AS IF
FULLY INCORPORATED THEREIN.

 

7.16     Expenses. Except as otherwise provided in this Agreement, each of the
parties will bear and pay all other costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated pursuant to this
Agreement.

 

7.17     Survival. Each of the representations and warranties set forth in this
Agreement shall survive the consummation of the transactions contemplated hereby
for a period of one year after the date hereof. Except as otherwise provided
herein, all covenants and agreements contained herein shall survive until, by
their respective terms, they are no longer operative.

 

 

 

[Signature Pages Follow]

 

 
23

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IN WITNESS WHEREOF, Company has caused this Subordinated Note Purchase Agreement
to be executed by its duly authorized representative as of the date first above
written.

 

 

COMPANY:

 

NORTHEAST BANCORP

 

 

 

By:         _________________________________

Name:   Richard Wayne

Title:    Chief Executive Officer

 

 

 

[Company Signature Page to Subordinated Note Purchase Agreement]

 

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the Purchaser has caused this Subordinated Note Purchase
Agreement to be executed by its duly authorized representative as of the date
first above written.

 

 

 

 

PURCHASER:

 

[INSERT PURCHASER’S NAME]

 

By:         _________________________________

                Name:    [●]

Title:      [●]

     

Address of Purchaser:

 

[●]1

     

Principal Amount of Purchased Subordinated Note:

 

$[●] 

 

 

--------------------------------------------------------------------------------

 

1 NTD: Insert domicile/headquarter address of Purchaser and mailing address for
delivery of notices (if different).

[Purchaser Signature Page to Subordinated Note Purchase Agreement]

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT A

 

SUBORDINATED NOTE

 

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT B

 

OPINION OF COUNSEL

 

1.     Each of Company and Bank (i) has been organized or formed, as the case
may be, is validly existing and is in good standing under the laws of its
jurisdiction of organization, (ii) has all requisite power and authority to
carry on its business and to own, lease and operate its properties and assets as
described in Company’s SEC Reports and (iii) is duly qualified or licensed to do
business and is in good standing as a foreign corporation, partnership or other
entity as the case may be, authorized to do business in each jurisdiction in
which the nature of such businesses or the ownership or leasing of such
properties requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, have a Material Adverse
Effect.

 

2.     Company has all necessary power and authority to execute, deliver and
perform its obligations under the Transaction Documents to which it is a party
and to consummate the transactions contemplated by the Agreement,

 

3.     The Agreement has been duly and validly authorized, executed and
delivered by Company.

 

4.     The Subordinated Notes have been duly and validly authorized by Company
and when issued and delivered to and paid for by Purchasers in accordance with
the terms of this Agreement, will have been duly executed, authenticated, issued
and delivered and will constitute legal, valid and binding obligations of
Company, and enforceable against Company in accordance with their terms, except
that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, receivership, moratorium, fraudulent conveyance, fraudulent
transfer or other similar laws now or hereafter in effect relating to creditors’
rights generally and (ii) general principles of equity (whether applied by a
court of law or equity) and the discretion of the court before which any
proceeding therefor may be brought.

 

5.     Assuming the accuracy of the representations of each of Purchasers set
forth in the Agreement, the Subordinated Notes to be issued and sold by Company
to Purchasers pursuant to the Agreement will be issued in a transaction exempt
from the registration requirements of the Securities Act.

 

3201680.5