Exhibit 10(6)

 

SUBORDINATED NOTE PURCHASE AGREEMENT

 

This SUBORDINATED NOTE PURCHASE AGREEMENT (this “Agreement”) is dated as of June
29, 2018, and is made by and among Patriot National Bancorp, Inc., a Connecticut
corporation (the “Company”), and the several purchasers of the Subordinated
Notes (as defined herein) identified on the signature pages hereto (each a
“Purchaser” and collectively, the “Purchasers”).

 

RECITALS

 

WHEREAS, the Company has requested that the Purchasers purchase from the Company
up to $10,000,000 in aggregate principal amount of Subordinated Notes, which
Aggregate Offering Amount is intended to qualify as Tier 2 Capital (as defined
herein).

 

WHEREAS, the Company has engaged Sandler O’Neill + Partners, L.P. as its Lead
Placement Agent and Brean Capital, LLC as its Co-Placement Agent (each, a
“Placement Agent” and, collectively, the “Placement Agents”) 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 offer and sale of the Subordinated Notes by the Company is being
made in reliance upon the exemptions from registration available under Section
4(a)(2) of the Securities Act and Rule 506(b) of Regulation D.

 

WHEREAS, each Purchaser is willing to purchase from the Company a Subordinated
Note in the aggregate principal amount set forth on such Purchaser’s respective
signature page hereto (the “Subordinated Note Amount”) in accordance with the
terms, subject to the conditions 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.

 

 

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

 

“Bank” means Patriot Bank, National Association, a national banking association
and wholly owned subsidiary of the Company.

 

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

 

“Bylaws” has the meaning set forth in Section 3.2.1.2(c).

 

“Charter” has the meaning set forth in Section 3.2.1.2(a).

 

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

 

“Closing Date” means June 29, 2018.

 

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

 

“Company Covered Person” has the meaning set forth in Section 4.2.4.

 

“Company’s SEC Reports” means (i) Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2017, as filed with the SEC, (ii) Company’s
Definitive Proxy Statement on Schedule 14A related to its 2018 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 January 1, 2018, or (iv)
Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended on
March 31, 2018, as filed with the SEC pursuant to the requirements of the
Exchange Act.

 

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

 

“Disqualification Event” has the meaning set forth in Section 4.2.4.

 

“DTC” has the meaning set forth in Section 5.8.

 

“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.

 

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

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“FDIC” means the Federal Deposit Insurance Corporation.

 

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“FRB” means the Board of Governors of the Federal Reserve System.

 

“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 each applicable Regulatory Agency) with
jurisdiction over the Company or a Subsidiary of the 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 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.

 

“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: (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 the
Company; and (ii) all obligations secured by any lien in property owned by the
Company or the 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 the
Company’s or the Bank’s business (including federal funds purchased, advances
from any Federal Home Loan Bank, secured deposits of municipalities, letters of
credit issued by the Company or the 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.

 

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“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 condition, results of operations or business of such Person, or
(ii) would materially impair the ability of such 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 (including the impact of tariffs or other
trade restrictions) or capital market conditions affecting financial
institutions or their market prices generally and not specifically related to
the Company, the Bank or the Purchasers, (4) direct effects of compliance with
this Agreement on the operating performance of the Company, the Bank or the
Purchasers, including expenses incurred by the Company, the Bank or the
Purchasers in consummating the transactions contemplated by this Agreement, and
(5) the effects of any action or omission taken by the Company with the prior
written consent of the Purchasers, and vice versa, or as otherwise contemplated
by this Agreement and the Subordinated Notes.

 

“Maturity Date” means June 30, 2028.

 

“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” or “Placement Agents” has the meaning set forth in the
Recitals.

 

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

 

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

 

“QIB” has the meaning set forth in Section 5.8.

 

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

 

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

 

“SEC” means the Securities and Exchange Commission.

 

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“Secondary Market Transaction” has the meaning set forth in Section 5.5.

 

“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 those “significant subsidiaries,” as defined in Rule 1-02(w)
of Regulation S-X, of the Company that would be required to be identified on
Exhibit 21 to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2017.

 

“Tier 2 Capital” has the meaning given to the term “Tier 2 capital” in 12 C.F.R.
Part 217, 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.

 

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 this Agreement and the 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 amendment, 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, the
Company proposes to issue and sell to the Purchasers, severally and not jointly,
Subordinated Notes in an aggregate principal amount equal to the aggregate of
the Subordinated Note Amounts. The Purchasers, severally and not jointly, each
agree to purchase the Subordinated Notes from the 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) the Company’s delivery of a notice of
redemption or repayment in accordance with the terms of the Subordinated Notes.

 

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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. The 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 the Company and the Purchasers hereafter specifically otherwise agree in
writing.

 

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

 

2.5     The Closing. The closing of the sale and purchase of the Subordinated
Notes (the “Closing”) shall occur at the offices of the Company at 3:00 p.m.
(local time) on the Closing Date, as the case may be, or at such other place or
time or on such other date as the parties hereto may agree.

 

2.6     Payments. The 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 the Company or its Subsidiary.

 

2.8     Use of Proceeds. The Company shall use the net proceeds from the sale of
Subordinated Notes for general corporate purposes, which includes capital to
finance and support acquisitions, and for investment in the Bank as regulatory
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 the Company and the
Company has executed and delivered to each of the Purchasers this Agreement and
such Purchaser’s Subordinated Note and any other related documents in form and
substance reasonably satisfactory to the Purchasers, each Purchaser shall
disburse in immediately available funds the Subordinated Note Amount set forth
on each Purchaser’s respective signature page hereto to the Company in exchange
for a Subordinated Note with a principal amount equal to such Subordinated Note
Amount (the “Disbursement”). The 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 the Company by overnight delivery on the next calendar day in
accordance with the delivery instructions of the Purchaser), registered in such
names and denominations as such Purchasers may request.

 

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3.2     Conditions Precedent to the 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 the Closing and to effect the Disbursement is subject to delivery by
or at the direction of the 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 the Company.

 

3.2.1.2     Authority Documents.

 

(a)     A copy, certified by the Secretary or Assistant Secretary of the
Company, of the Articles of Incorporation of the Company, as amended (the
“Charter”);

 

(b)     A certificate of existence of the Company issued by the Secretary of
State of the State of Connecticut;

 

(c)     A copy, certified by the Secretary or Assistant Secretary, of the
Amended and Restated Bylaws of the Company (the “Bylaws”);

 

(d)     A copy, certified by the Secretary or Assistant Secretary of the
Company, of the written consent of the board of directors of the Company
authorizing the execution, delivery and performance of the Transaction
Documents;

 

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

 

(f)     The opinion of Holland & Knight LLP, counsel to the Company, dated as of
the Closing Date, substantially in the form set forth at Exhibit B attached
hereto addressed to the Purchasers and the Placement Agents.

 

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 the Company’s Obligation.

 

3.2.2.1     With respect to a given Purchaser, the obligation of the 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 the Company of
this Agreement, duly authorized and executed by such Purchaser.

 

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4.

REPRESENTATIONS AND WARRANTIES OF COMPANY.

 

The Company hereby represents and warrants to each Purchaser as follows:

 

4.1     Organization and Authority.

 

4.1.1     Organization Matters of the Company and Its Subsidiary.

 

4.1.1.1     The Company is duly organized, validly existing and in good standing
under the laws of the State of Connecticut 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. The 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 on the
Company. The Company is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended.

 

4.1.1.2     The Bank is the only direct or indirect Subsidiary of the Company.
The Bank has been duly chartered and is validly existing as a national banking
association, 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 reasonably be expected to result in
a Material Adverse Effect on the Company. All of the issued and outstanding
shares of capital stock or other Equity Interests in the Subsidiary of the
Company have been duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company directly 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, the
Subsidiary of the Company were issued in violation of the preemptive or similar
rights of any security holder of such Subsidiary of the Company or any other
entity.

 

4.1.1.3     The Bank is a national banking association. The deposit accounts of
the Bank are insured by the FDIC up to applicable limits The Bank has not
received any notice or other information indicating that the 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 the Bank as an FDIC-insured institution.

 

4.1.2     Capital Stock and Related Matters. The Charter of the Company
authorizes the Company to issue 100,000,000 shares of common stock and no shares
of preferred stock. As of the date of this Agreement, there are 3,978,319 shares
of the Company’s common stock issued and 3,904,578 shares of the Company’s
common stock outstanding and no shares of the Company’s preferred stock issued
and outstanding. All of the outstanding capital stock of the Company has been
duly authorized and validly issued and is fully paid and non-assessable. There
are, as of the date hereof, no outstanding options, rights, warrants or other
agreements or instruments obligating the Company to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of the capital stock of
the Company or obligating the Company to grant, extend or enter into any such
agreement or commitment to any Person other than the Company except pursuant to
the Company’s equity incentive plans duly adopted by the Company’s Board of
Directors.

 

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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 Amount the
execution of the Transaction Documents and compliance by the Company with all of
the provisions of the Transaction Documents are within the corporate and other
powers of the Company.

 

4.2.2     Agreement. This Agreement has been duly authorized, executed and
delivered by the Company, and, assuming due authorization, execution and
delivery by the other parties hereto, constitutes the legal, valid and binding
obligations of the Company, enforceable against the Company 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.

 

4.2.3     Subordinated Notes. The Subordinated Notes have been duly authorized
by the Company and when executed by the 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 the 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     Exemption from Registration. Neither the Company, nor its Subsidiary,
nor any of its Affiliates, nor any Person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offer or sale of the
Subordinated Notes. Assuming the accuracy of the representations and warranties
of each Purchaser set forth in this Agreement, the Subordinated Notes will be
issued in a transaction exempt from the registration requirements of the
Securities Act. No “bad actor” disqualifying event described in Rule
506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification Event”) is
applicable to the Company or, to the Company’s knowledge, any Person described
in Rule 506(d)(1) (each, a “Company Covered Person”). The Company has exercised
reasonable care to determine whether any Company Covered Person is subject to a
Disqualification Event. The Company has complied, to the extent applicable, with
its disclosure obligations under Rule 506(e).

 

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4.2.5     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 Charter or Bylaws of the 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 the 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 the Company or the Bank; or (4) any statute, rule or regulation applicable to
the Company, except, in the case of items (2), (3) or (4), for such violations
and conflicts that would not reasonably be expected to have, singularly or in
the aggregate, a Material Adverse Effect on the Company and its Subsidiary,
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 the
Company except that would not reasonably be expected to have, singularly or in
the aggregate, a Material Adverse Effect on the Company and its Subsidiary,
taken as a whole. Neither the 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 indenture or other
agreement creating, evidencing or securing Indebtedness of any kind or pursuant
to which any such Indebtedness is issued, or any other agreement or instrument
to which the Company or the Bank, as applicable, is a party or by which the
Company or the Bank, as applicable, or any of its properties may be bound or
affected, 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
the Company and the Bank, taken as a whole.

 

4.2.6     Governmental Consent. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained by the Company that have
not been obtained, and no registrations or declarations are required to be filed
by the 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. The Company and its Subsidiaries
possesses 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 them except where the
failure to possess such Governmental Licenses would not, singularly or in the
aggregate, have a Material Adverse Effect on the Company or the Subsidiary; the
Company and the Subsidiary of the 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 the Company or the Subsidiary; 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 the Company or the
Subsidiary; and neither the Company nor the Subsidiary of the 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 the Company
included in the Company’s SEC Reports (including the related notes, where
applicable), which have been provided to the Purchasers (i) have been prepared
from, and are in accordance with, the books and records of the Company; (ii)
fairly present in all material respects the results of operations, cash flows,
changes in stockholders’ equity and financial position of the 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. The books and records of
the Company have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements.
the 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 the Company contained in the Company’s SEC Reports
for the 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 conclusion of the Company’s most
recently completed fiscal year as reflected in the 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 the Company the right to
accelerate the maturity of any material Indebtedness of the Company. The 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 the Company and the Bank, taken as a whole.

 

4.4.3     Solvency. After giving effect to the consummation of the transactions
contemplated by this Agreement, the 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 the
Company or the Subsidiary of the Company.

 

4.4.4     Ownership of Property. Each of the Company and its Subsidiary has good
and marketable title as to all real property owned by it and good title to all
assets and properties owned by the Company and the 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 the 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 the 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 the Company or its
Subsidiary. The Company and its Subsidiary, as lessee, has the right under valid
and existing Leases of real and personal properties that are material to the
Company or the 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 the Company’s SEC Reports.

 

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4.5     No Material Adverse Change. Since the conclusion of the Company’s most
recently completed fiscal year ended as reflected in the 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 the Company or its Subsidiary.

 

4.6     Legal Matters.

 

4.6.1     Compliance with Law. Each of the Company and its Subsidiary (i) has
complied with and (ii) is not under investigation with respect to, and, to the
Company’s knowledge, has 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 the Company and its Subsidiary, taken as a whole. The Company and its
Subsidiary is in compliance with, and at all times prior to the date hereof has
been in compliance with, (x) all statutes, rules, regulations, orders and
restrictions of any domestic or foreign government, or any Governmental Agency,
applicable to it, and (y) its own privacy policies and written commitments to
customers, consumers and employees, concerning data protection, the privacy and
security of personal data, and the nonpublic personal information of its
customers, consumers and employees, in each case except where any such failure
to comply, would not result, individually or in the aggregate, in a Material
Adverse Effect on the Company and its Subsidiary, taken as a whole. At no time
during the two years prior to the date hereof has the Company or any of its
Subsidiary received any written notice asserting any violations of any of the
foregoing.

 

4.6.2     Regulatory Enforcement Actions. The Company and the Bank are in
compliance in all material respects with all laws administered by and
regulations of any Governmental Agency applicable to it or to them, the failure
to comply with which would have a Material Adverse Effect on the Company and the
Bank, taken as a whole. None of the Company or the Bank nor any of their
respective officers or directors is now operating under any restrictions,
agreements, memoranda, commitment letter, supervisory letter or similar
regulatory correspondence, or other commitments (other than restrictions of
general application) imposed by any Governmental Agency, nor are, to the
Company’s knowledge, (a) any such restrictions threatened, (b) any agreements,
memoranda or commitments being sought by any Governmental Agency , or (c) any
legal or regulatory violations previously identified by, or penalties or other
remedial action previously imposed by, any Governmental Agency remains
unresolved.

 

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4.6.3     Pending Litigation. There are no actions, suits, proceedings or
written agreements pending, or, to the Company’s knowledge, threatened or
proposed, against the Company or its Subsidiary 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 the Company and its Subsidiary, taken as a whole, or affect
issuance or payment of the Subordinated Notes; and neither the Company nor its
Subsidiary 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 the Company and its
Subsidiary, taken as a whole.

 

4.6.4     Environmental. No Property is or, to the 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 the Company nor its Subsidiary has engaged in
such activities. There are no claims or actions pending or, to the Company’s
knowledge, threatened against the Company or its Subsidiary 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
Agents, neither the Company nor any Affiliate of the 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 the Company nor the Bank is an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended.

 

4.7     No Misstatement. No information, exhibit, report, schedule or document,
when viewed together as a whole, furnished by the Company to the Purchasers in
connection with the negotiation, execution or performance of this Agreement.
None of the representations, warranties, covenants and agreements made in this
Agreement or in any certificate or other document delivered to the Purchasers by
or on behalf of the Company pursuant to or in connection with 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 when made or furnished to Purchasers and as of the date of
this Agreement.

 

4.8     Reporting Compliance. The 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 Exchange Act and the rules and the regulations of
the SEC thereunder. The 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.

 

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4.9     Internal Control Over Financial Reporting. The Company and its
Subsidiary maintains 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 conclusion of the Company’s most recently completed
fiscal year, (y) Company has no knowledge of (A) any material weakness in
Company’s internal control over financial reporting (whether or not remediated)
or (B) 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 the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial reporting.

 

4.10     Disclosure Controls and Procedures. The Company and its Subsidiary
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 the 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 the Company and its Subsidiary
is made known to the Company’s principal executive officer and principal
financial officer by others within the Company and its Subsidiary 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, the Company has no knowledge that would reasonably cause it to
believe that the evaluation to be conducted of the effectiveness of the
Company’s disclosure controls and procedures for the most recently completed
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
the Company’s and the Subsidiary’s disclosure controls and procedures described
above, the Company is not aware of (1) any significant deficiency in the design
or operation of internal controls which could adversely affect the 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 the
Company’s internal controls. Since the most recent evaluation of the 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.

 

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4.11     Representations and Warranties Generally. The representations and
warranties of the Company set forth in this Agreement or in any other document
delivered to Purchasers by or on behalf of the Company pursuant to or in
connection with this Agreement are true and correct as of the date hereof and as
otherwise specifically provided herein or therein.

 

5.

GENERAL COVENANTS, CONDITIONS AND AGREEMENTS.

 

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

 

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

 

5.2     Affiliate Transactions. The Company shall not itself, nor shall it
cause, permit or allow its Subsidiary to enter into any transaction, including,
the purchase, sale or exchange of property or the rendering of any service, with
any Affiliate of the Company except in the ordinary course of business and
pursuant to the reasonable requirements of the Company’s or such Affiliate’s
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 the 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. The Company shall comply and cause the Bank to comply in
all material respects 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 the Company.

 

5.3.2     Regulated Activities. The Company shall not itself, nor shall it
cause, permit or allow the Bank to (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
the Company or the Bank 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. The Company shall and shall cause the Bank to promptly pay and
discharge all taxes, assessments and other governmental charges imposed upon the
Company or the Bank or upon the income, profits, or property of the Company or
the Bank and all claims for labor, material or supplies which, if unpaid, might
by law become a lien or charge upon the property of the Company or the Bank.
Notwithstanding the foregoing, none of the Company or the Bank 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 the Company
and the Bank.

 

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

 

5.3.5     Dividends, Payments, and Guarantees During Event of Default. During
the continuance of an Event of Default (as defined under the Subordinated
Notes), except as required by any federal or state Governmental Agency, the
Company shall not (a) declare or pay any dividends or distributions 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 the 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 the
Company’s common stock; (ii) any declaration of a non-cash 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 the Company’s capital stock or the exchange or conversion of
one class or series of the Company’s capital stock for another class or series
of the Company’s capital stock; (iv) the purchase of fractional interests in
shares of the 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 the Company’s common stock related to the
issuance of common stock or rights under any benefit plans for the Company’s
directors, officers or employees or any of the Company’s dividend reinvestment
plans.

 

5.3.6     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, the Company will
immediately notify the Noteholder (as defined in the Subordinated Note), and
thereafter the Company and the Noteholder (as defined in the Subordinated Note)
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 the
Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2
Capital Event as described in the Subordinated Notes.

 

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, the Company, and
Purchasers shall not exercise, or be deemed to exercise, directly or indirectly,
a controlling influence over the management or policies of the Company.

 

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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, the Company shall, at the 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 the 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 the
Company or the Subordinated Notes may be retained by any such Person.

 

5.6     Bloomberg. The Company shall use commercially reasonable efforts to
cause the Subordinated Notes to be quoted on Bloomberg.

 

5.7     Rule 144A Information. While any Subordinated Notes remain “restricted
securities” within the meaning of the Securities Act, the Company will make
available, upon request, to any seller of such Subordinated Notes the
information specified in Rule 144A(d)(4) under the Securities Act, unless the
Company is then subject to Section 13 or 15(d) of the Exchange Act.

 

5.8     DTC Registration. Upon the request of a holder of a Subordinated Note
that is a Qualified Institutional Buyers as defined in Rule 144A of the
Securities Act (each, a “QIB”) and provided that the applicable depository
eligibility requirements are met, the Company shall use commercially reasonable
efforts to cause the Subordinated Notes held by such QIB to be registered in the
name of Cede & Co. as nominee of The Depository Trust Company (“DTC”) or a
nominee of DTC; provided, however, that the Company shall not be obligated to
incur more than $5,000 in fees and expenses in connection with the registration
of the Subordinated Note as contemplated by this section. For the avoidance of
doubt, such limitation shall not apply to fees incurred in connection with the
engagement and retention of a paying agent.

 

6.

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS.

 

Each Purchaser hereby represents and warrants to the Company, and covenants with
the 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 the 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 the
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
the Company to the extent it deems necessary to make its decision to purchase
the Subordinated Notes. It has reviewed the information set forth in the
Company’s SEC Reports and the exhibits and schedules hereto and contained in the
data room established by the Company in connection with the transactions
contemplated by this Agreement.

 

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 the 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 the 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 Agents. 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 the 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 the Company, including, without limitation, the
Placement Agents, except for the express statements, representations and
warranties of the Company made or contained in this Agreement. Furthermore, it
acknowledges that (i) the Placement Agents 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 the 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 the 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 Agents. It will purchase the Subordinated Note(s) directly
from the Company and not from the Placement Agents and understands that neither
the Placement Agents nor any other broker or dealer has any obligation to make a
market in the Subordinated Notes.

 

6.13     Tier 2 Capital. If the Company provides notice as contemplated in
Section 5.3.6 of the occurrence of the event contemplated in such section,
thereafter the 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 the 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
Agents and the Company are relying upon the truth and accuracy of the foregoing
representations, acknowledgements and agreements in connection with the
transactions contemplated by this Agreement.

 

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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 the Company or to
counsel for the Company shall be deemed to be a representation and warranty by
Purchaser to the Company as to the matters set forth therein.

 

7.

MISCELLANEOUS.

 

7.1     Prohibition on Assignment by the Company. Except as described in Section
8(b) (Merger or Sale of Assets) of the Subordinated Notes, the 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 all the
Noteholders (as defined in the Subordinated Note). In addition, in accordance
with the terms of the Subordinated Notes, any transfer of such Subordinated
Notes by the Noteholders (as defined in the Subordinated Note) 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 for 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 at least fifty percent (50%) of the
aggregate principal amount (excluding any Subordinated Notes held by the 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 the 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
Payments) 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, the 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 the Company in any case shall, in itself, entitle the Company to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of Purchasers to any other or further action in any
circumstances without notice or demand. No consent or waiver, expressed or
implied, by Purchasers to or of any breach or default by the 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 the Company hereunder. Failure on the part of
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 Purchasers of their rights hereunder or impair any rights, powers or
remedies on account of any breach or default by the Company.

 

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7.4     Severabilitv. 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 the Company:

Patriot National Bancorp, Inc.

900 Bedford Street

Stamford, Connecticut  06901

 

Attention: Michael A. Carrazza

   

with a copy to (which shall not constitute notice):

Holland & Knight LLP

800 17th Street, NW Suite 1100

Washington DC  20006

 

Attention: Kevin Houlihan and Mark Goldschmidt

   

if to the 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).

 

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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 the Company in violation of this Agreement shall be effective or confer any
rights on any purported assignee of the 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.

 

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 the
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 the 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 Agents 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.

 

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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.

 

7.14     Knowledge; Discretion. All references herein to a Purchaser’s or the
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]

 

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

 

 

COMPANY:

 

        PATRIOT NATIONAL BANCORP, INC.  

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

Joseph D. Perillo

 

 

 

Title:

Executive Vice President and Chief Financial Officer

 

 

[Company Signature Page to Subordinated Note Purchase Agreement]

 

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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:

 

                 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

          Address of Purchaser:                  

Principal Amount of Purchased Subordinated Note:

          $    

 

S-2