Exhibit 10.9

 

EXCHANGE AGREEMENT

 

THIS EXCHANGE AGREEMENT (this “Agreement”) is made as of December 21, 2016 by
and between Broadway Financial Corporation (the “Company”), a Delaware
corporation and parent company of Broadway Federal Bank, f.s.b., and CJA Private
Equity Financial Restructuring Master Fund I L.P. (“Investor”).

 

W I T N E S S E T H

 

WHEREAS, Investor owns shares of the Company’s common stock, par value $0.01 per
share (the “Common Stock”);

 

WHEREAS, pursuant to the terms of that certain letter agreement dated August 22,
2013 between the Company and Investor and that certain letter agreement dated
October 16, 2014 between the Company and Gapstow Financial Growth Capital Fund I
L.P. (“Gapstow”) (such letter agreements being collectively referred to herein
as the “Letter Agreements”), Investor and its successors and assigns
(collectively hereinafter referred to as “Investor”) have the right to exchange
any voting common stock held by them for Non-Voting Stock (as defined in the
Letter Agreement), in order to effect a reduction of its or their ownership of
voting securities to as low as 4.9% of the voting securities of the Company, as
determined on a fully-diluted basis; and

 

WHEREAS, Investor wishes to exercise its right pursuant to the Letter Agreements
to exchange 284,675 shares of the Company’s Common Stock (the “Exchanged
Shares”) for 284,675 shares of Non-Voting Stock (the “Replacement Shares”) to
maintain its ownership of outstanding voting securities of the Company at a
level not exceeding 9.95%.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth herein, the parties hereby agree as follows:

 

ARTICLE 1
 
EXCHANGE TRANSACTION

 

1.1                            Exchange.  Subject to the terms and conditions of
this Agreement, at the Closing (as defined below), Investor shall deliver to the
Company a stock certificate representing a number of shares of the Company’s
Common Stock that exceeds the number of Exchanged Shares and in exchange
therefor the Company shall issue and deliver to Investor stock certificates,
registered in Investor’s name and address, representing (x) the Replacement
Shares, and (y) the number of shares of the Company’s Common Stock equal to the
difference between the number of Exchanged Shares and the number of shares of
the Company’s Common Stock represented by the stock certificate delivered to the
Company pursuant to this Section 1.1.

 

ARTICLE 2
 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to Investor as follows:

 

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2.1                            Organization; Qualification. The Company is a
corporation duly incorporated and validly existing under the laws of the State
of Delaware.  The Company has all requisite corporate power to execute and
deliver this Agreement, to issue and exchange the Replacement Shares for the
Exchanged Shares and otherwise to carry out the provisions of this Agreement.

 

2.2                            Authorization; Valid and Binding Obligation. All
corporate action on the part of the Company, its officers, directors and
stockholders necessary for the authorization of this Agreement, the performance
of all obligations of the Company hereunder and the authorization and exchange
of the Replacement Shares for the Exchanged Shares pursuant hereto has been
taken.  The Replacement Shares, including the Common Stock issuable upon
conversion of the Replacement Shares, when so issued, sold and delivered against
receipt of the consideration therefor in accordance with the provisions of this
Agreement, shall be duly and validly issued, fully paid and non-assessable. 
This Agreement has been duly executed and delivered by the Company and
constitutes the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.

 

2.3                           
Capitalization.                                             The Company has
disclosed to Investor in writing the capitalization of the Company that will be
in effect immediately after the Closing.  Such disclosure, which is based on the
Company’s understanding that the ownership of stock in the Company of Investor
and its affiliates immediately prior to the Closing consists solely of 2,129,816
shares of Common Stock and 6,169,320 shares of Non-Voting Stock, indicates that
immediately after the consummation of the transactions contemplated by this
Agreement and the transactions contemplated by that certain Securities Purchase
Agreement by and among the United States Department of the Treasury and certain
named purchasers, including the Company, (i) Investor will not own more
than 9.95% of the Common Stock then outstanding for purposes of the Change in
Bank Control Act and the regulations of the Board of Governors of the Federal
Reserve System promulgated thereunder and (ii) Investor’s aggregate investment
in the Company will not account for more than 24.95% of the Company’s
contributed capital for purposes of the Home Owners’ Loan Act and the
regulations of the Board of Governors of the Federal Reserve System promulgated
thereunder.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF INVESTOR

 

Investor represents and warrants to the Company as follows:

 

3.1                            Authorization; Valid and Binding Obligation.
Investor has full power and authority to execute and deliver this Agreement and
to perform its obligations hereunder.  This Agreement constitutes the valid and
binding obligation of Investor, enforceable against it in accordance with its
terms, assuming the due authorization, execution and delivery hereof by the
Company.

 

3.2                            Title to Shares.  Investor has valid title to the
Exchanged Shares, free and clear of all liens, restrictions, proxies, voting
trusts, voting agreements, encumbrances and claims of any kind. At the Closing,
the Company shall acquire valid title to and beneficial and record ownership of
the Exchanged Shares being transferred by Investor pursuant to this Agreement.

 

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ARTICLE 4

CLOSING

 

4.1                            Closing.  The Closing of the transactions
contemplated by this Agreement (“Closing”) shall take place concurrently with
the execution of this Agreement, either by mail, virtually through the Internet,
or at the offices of Arnold & Porter LLP, 777 South Figueroa Street, 44th Floor,
Los Angeles, California, or at such other time and place as may be mutually
agreed upon by the parties hereto.

 

4.2                            Deliveries at the Closing.

 

(a)                               By Investor. At the Closing, Investor shall
deliver or cause to be delivered to the Company or, if applicable, the transfer
agent for the Replacement Shares, certificates representing the Exchanged Shares
owned by Investor free and clear of all liens, encumbrances, pledges and claims
of any kind, accompanied by instruments of transfer sufficient to transfer such
stock to the Company.

 

(b)                              By the Company. At the Closing, the Company
shall deliver the Replacement Shares to Investor, including the certificates
specified in Section 1.1.

 

ARTICLE 5
 
MISCELLANEOUS

 

5.1                            Survival of Representations, Warranties and
Covenants.  The representations, warranties, agreements and covenants made by
each party in this Agreement shall survive execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
notwithstanding any investigation, audit or review made at any time by any party
to this Agreement and notwithstanding the delivery of any documents, exhibits,
schedules or certificates pursuant to this Agreement.

 

5.2                            Further Assurances.  Each party will at any time
and from time to time execute, acknowledge, deliver and perform all such further
acts, deeds, assignments, transfers, conveyances, powers of attorney and
assurances as may be necessary to carry out the provisions and intent of this
Agreement.

 

5.3                            Notices.  All notices and other communications
given or made pursuant to this Agreement shall be in writing and shall be deemed
effectively given upon the earliest of: (i) personal delivery to the party to be
notified; (ii) five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid; or (iii) one (1) business day
after deposit with a nationally recognized overnight courier, freight prepaid,
specifying next business day delivery, with written verification of receipt. All
communications shall be sent to each party as follows:

 

If to the Company:

 

Broadway Financial Corporation

 

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5055 Wilshire Boulevard, Suite 500

Los Angeles, CA 90036

Attention: Wayne-Kent A. Bradshaw, President and CEO

 

with a copy to:

 

Arnold & Porter LLP

777 South Figueroa Street, 44th Floor

Los Angeles, CA 90017

Attention: James R. Walther, Esq.

 

If to Investor:

 

CJA Private Equity Financial Restructuring Master Fund I L.P.

654 Madison Avenue, Suite 601

New York, NY 10065

 

5.4                            Entire Agreement.  This Agreement contains the
entire understanding of the parties in respect of its subject matter and
supersedes all prior agreements and understandings between or among the parties
with respect to such subject matter.

 

5.5                            Expenses. The parties shall pay their own fees
and expenses, including their own counsel fees, incurred in connection with this
Agreement or any transaction contemplated by this Agreement.

 

5.6                            Amendment; Waiver. This Agreement may not be
modified, amended, supplemented, cancelled or discharged, except by written
instrument executed by each of the parties. The rights and remedies of the
parties to this Agreement are cumulative and not alternative. Neither the
failure nor any delay by any party in exercising any right, power or privilege
under this Agreement or the documents referred to in this Agreement will operate
as a waiver of such right, power or privilege, and no single or partial exercise
of any such right, power or privilege will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege.

 

5.7                            Binding Effect; Assignment. Except as otherwise
provided herein, the rights and obligations of this Agreement shall bind and
inure to the benefit of the parties and their respective successors and legal
assigns. The rights and obligations of this Agreement may not be assigned by any
of the parties without the prior written consent of the other parties. Any
assignment in violation of this Section 5.7 shall be void and of no force or
effect.

 

5.8                            Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Facsimile or PDF
signatures shall be deemed originals for all purposes.

 

5.9                            Headings. The headings contained in this
Agreement are for convenience of reference only and are not to be given any
legal effect and shall not affect the meaning or interpretation of this
Agreement.

 

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5.10                    Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware, all rights and
remedies being governed by said laws, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws.

 

IN WITNESS WHEREOF, each of the parties, intending to be legally bound, has
executed this Agreement or has caused this Agreement to be executed by its duly
authorized representatives as of the date first above written.

 

 

BROADWAY FINANCIAL CORPORATION

 

 

 

 

 

 

 

By:

/s/Wayne-Kent A. Bradshaw

 

 

Name: Wayne-Kent A. Bradshaw

 

Title: President and Chief Executive Officer

 

 

 

 

 

CJA PRIVATE EQUITY FINANCIAL RESTRUCTURING MASTER FUND I L.P.

 

 

 

 

By:

CJA Private Equity Financial Restructuring Master Fund GP I Ltd., its General
Partner

 

 

 

 

 

 

 

By:

/s/Christopher J. Acito

 

 

Name:

Christopher J. Acito

 

Title:

Managing Member

 

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