Document:

Exhibit 4.2

 

AMENDED AND RESTATED

 

SYNERGY PHARMACEUTICALS, INC. UNIT AGENCY AGREEMENT

 

UNIT AGENCY AGREEMENT made as of December 15, 2011 and effective as of December 6, 2011  (“Issuance Date”), between Synergy Pharmaceuticals, Inc., a Florida corporation, with offices at 420 Lexington Avenue, Suite 1609, New York, NY 10170 (“Company”), and Broadridge Corporate Issuer Solutions, Inc., with offices at 1717 Arch Street, Suite 1300, Philadelphia, PA 19103 (“Unit Agent”).

 

WHEREAS, the Company and the Unit Agent are parties to a Unit Agency Agreement, dated December 6, 2011 (the “Existing Agreement”); and

 

WHEREAS, the Company is engaged in a public offering (the “Offering”) of units (each a “Unit” and collectively, the “Units”), each unit consisting of two (2) shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) and a warrant to purchase one (1) share of Common Stock for $8.00 per Unit, subject to adjustment as described herein (collectively, the “Units”); and

 

WHEREAS, the Company has filed with the Securities and Exchange Commission a Registration Statement, No. 333-163316 on Form S-3 (as the same may be amended from time to time, the “Registration Statement”) for the registration, under the Securities Act of 1933, as amended (the “Act”) of, among other securities, Units, the Common Stock, the Warrants and the Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”), and such Registration Statement was declared effective on December 10, 2009; and

 

WHEREAS, the Company desires the Unit Agent to act on behalf of the Company, and the Unit Agent is willing to so act, in connection with the issuance, registration, transfer, exchange and separation of the Units; and

 

WHEREAS, the Company desires to provide for the form and provisions of the Units, the terms upon which they shall be issued and separated, and the respective rights, limitation of rights, and immunities of the Company, the Units Agent, and the holders of the Units; and

 

WHEREAS, all acts and things have been done and performed which are necessary to make the Units, when executed on behalf of the Company and countersigned by or on behalf of the Unit Agent, as provided herein, the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Unit Agency Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree that the Existing Agreement is amended and restated in its entirety as follows:

 

1.             Appointment of Unit Agent.  The Company hereby appoints the Unit Agent to act as agent for the Company for the Units, and the Unit Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this Agreement.

 

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2.             Units.

 

2.1           Form of Unit.  Each Unit shall be issued in registered form only, shall be in substantially the form of Exhibit A hereto, the provisions of which are incorporated herein, and shall be signed by, or bear the facsimile signature of, the Chief Executive Officer, President, Chief Financial Officer or Treasurer, Secretary or Assistant Secretary of the Company and shall bear a facsimile of the Company’s seal. In the event the person whose facsimile signature has been placed upon any Unit shall have ceased to serve in the capacity in which such person signed the Unit before such Unit is issued, it may be issued with the same effect as if he or she had not ceased to be such at the date of issuance.  All of the Units shall initially be represented by one or more book-entry certificates (each a “Book-Entry Unit Certificate”).

 

2.2.          Effect of Countersignature.  Unless and until countersigned by the Unit Agent pursuant to this Unit Agreement, a Unit shall be invalid and of no effect and may not be transferred by the holder thereof.

 

2.3.          Registration.

 

2.3.1.       Unit Register.  The Unit Agent shall maintain books (“Unit Register”), for the registration of original issuance and the registration of transfer of the Units.  Upon the initial issuance of the Units, the Unit Agent shall issue and register the Units in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Unit Agent by the Company.  To the extent the Units are DTC eligible as of the Issuance Date, all of the Units shall be represented by one or more Book-Entry Unit Certificates deposited with the Depository Trust Company (the “Depository”) and registered in the name of Cede & Co., a nominee of the Depository. Ownership of beneficial interests in the Book-Entry Unit Certificates shall be shown on, and the transfer of such ownership shall be effected through, records maintained (i) by the Depository or its nominee for each Book-Entry Unit Certificate; (ii) by institutions that have accounts with the Depository (such institution, with respect to a Unit in its account, a “Participant”); or (iii) directly on the book-entry records of the Unit Agent with respect only to owners of beneficial interests that represent such direct registration.

 

If the Units are not DTC Eligible as of the Issuance Date or the Depository subsequently ceases to make its book-entry settlement system available for the Units, the Company may instruct the Unit Agent regarding making other arrangements for book-entry settlement within ten (10) days after the Depository ceases to make its book-entry settlement available.  In the event that the Company does not make alternative arrangements for book-entry settlement within ten (10) days or the Unit s are not eligible for, or it is no longer necessary to have the Unit s available in, book-entry form, the Unit Agent shall provide written instructions to the Depository to deliver to the Unit Agent for cancellation each Book-Entry Unit Certificate, and the Company shall instruct the Unit Agent to deliver to the Depository definitive Unit Certificates in physical form evidencing such Units.  Such definitive Unit Certificates shall be in substantially the form annexed hereto as Exhibit A.

 

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2.3.2.       Beneficial Owner; Registered Holder.  The term “beneficial owner” shall mean any person in whose name ownership of a beneficial interest in the Units evidenced by a Book-Entry Unit Certificate is recorded in the records maintained by the Depository or its nominee.  Prior to due presentment for registration of transfer of any Unit , the Company and the Unit Agent may deem and treat the person in whose name such Unit shall be registered upon the Unit Register (“registered holder”), as the absolute owner of such Unit and of each Unit represented thereby (notwithstanding any notation of ownership or other writing on the Unit Certificate made by anyone other than the Company or the Unit Agent), for the purpose of any separation thereof, and for all other purposes, and neither the Company nor the Unit Agent shall be affected by any notice to the contrary.

 

2.4.          Detachability of Securities underlying the Units.  The securities comprising the Units will not be issued separately and will be separately transferable as set forth in Section 3.2 below.

 

2.5           Uncertificated Units.  Notwithstanding the foregoing and anything else herein to the contrary, the Units may be issued in uncertificated form.

 

3.             Terms of Units.

 

3.1.          Duration of Units.  A Unit may be transferable and separable only during the period (“Transfer Period”) commencing on December 6, 2011 and ending at 5:00 p.m on December 6, 2016 (“Expiration Date”).  Each Unit not separated on or before the Expiration Date shall automatically be separable on the Expiration Date and the Unit shall be void, and all rights thereunder and all rights in respect thereof under this Unit Agreement shall cease at the close of business on the Expiration Date..

 

3.2           Separation of Units.

 

3.2.1.       Separation.  A registered holder may separate a Unit by delivering, not later than 5:00 P.M., New York time, on any business day during the Transfer Period (the “Transfer Date”) to the Unit Agent at its corporate trust department (i) the Unit Certificate evidencing the Units to be separated, or, in the case of a Book-Entry Unit Certificate, the Units to be separated (the “Book-Entry Units”) shown on the records of the Depository to an account of the Unit Agent at the Depository designated for such purpose in writing by the Unit Agent to the Depository from time to time, and (ii) an election to separate the securities underlying the Units to be separated (“Election to Separate”), properly completed and executed by the registered holder on the reverse of the Unit Certificate or, in the case of a Book-Entry Unit Certificate, properly delivered by the Participant in accordance with the Depository’s procedures.

 

If either (A) the Unit Certificate or the Book-Entry Units, or (B) the Election to Separate, is received by the Unit Agent after 5:00 P.M., New York time, on the specified Transfer Date, the Units will be deemed to be received and separated on the business day next succeeding the Transfer Date.  If the date specified as the Transfer Date is not a business day, the Units will be deemed to be received and separated on the next succeeding day that is a business day. If the Units are received or deemed to be received after the Expiration Date, the separation thereof will be null and void.  The validity of any separation of Units will be determined by the Company in its sole

 

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discretion and such determination will be final and binding upon the registered holder or Participant, as applicable, and the Unit Agent.  Neither the Company nor the Unit Agent shall have any obligation to inform a registered holder or the Participant, as applicable, of the invalidity of any separation of Units.

 

3.3.          Issuance of Certificates Representing the Securities Underlying the Units.  The Unit Agent shall, by 11:00 A.M. New York Time on the business day following the Transfer Date of any Unit, advise the Company or the transfer agent and registrar in respect of (a) the shares of Common Stock and Warrants issuable upon such separation of Units in accordance with the terms and conditions of this Agreement, (b) the instructions of each registered holder or Participant, as the case may be (to the extent different than the instructions for the delivery of the Units), with respect to delivery of the shares of Common Stock and Warrants upon such separation, and the delivery of definitive certificates evidencing the Common Stock and Warrants, as appropriate, (c) in case of a Book-Entry Unit Certificate, the notation that shall be made to the records maintained by the Depository, its nominee for each Book-Entry Unit Certificate, or a Participant, as appropriate, evidencing the shares of Common Stock and Warrants after such separation and (d) such other information as the Company or such transfer agent and registrar shall reasonably require.

 

The Company shall cause the Unit Agent, by 5:00 P.M., New York time, on the third business day after the Termination Date, execute, issue and deliver the shares of Common Stock and Warrants to which such registered holder or Participant, as the case may be, is entitled, in fully registered form, registered in such name or names as may be directed by such registered holder or the Participant, as the case may be, to the registered holder or Participant, as the case may be.

 

In lieu of delivering physical certificates representing the shares of Common Stock and Warrants issuable upon separation, provided the Company’s transfer agent is participating in the Depository’s Fast Automated Securities Transfer program, the Company shall use its reasonable best efforts to cause its transfer agent to electronically transmit the shares of Common Stock and shall use its reasonable best efforts to cause its warrant agent to electronically transmit the shares of Common Stock Warrants issuable upon separation to the Depository by crediting the account of the Depository or of the Participant through its Deposit Withdrawal Agent Commission system.  The time periods for delivery described in the immediately preceding paragraph shall apply to the electronic transmittals described herein.

 

3.3.3.       Valid Issuance.  All shares of Common Stock and Warrants issued upon the separation of a Unit in conformity with this Unit Agreement shall be validly issued, fully paid and nonassessable.

 

3.3.4.       Date of Issuance.  Each person in whose name any such certificate for shares of Common Stock and Warrant is issued shall for all purposes be deemed to have become the holder of record of such shares on the date on which the Unit was required to be separated under the terms of this Agreement, irrespective of the date of delivery of any such certificate, except that, if the date of such separation is a date when the stock transfer books of the Company are closed, such person shall be deemed to

 

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have become the holder of such shares of Common Stock and Warrants at the close of business on the next succeeding date on which the stock transfer books are open.

 

3.3.5        No Fractional Separation.  Units may be separated only in whole numbers of Units.  No fractional shares of Common Stock and Warrants are to be issued upon the separation of the Unit. If fewer than all of the shares of Common Stock or Warrants evidenced by a Unit Certificate are separated, a new Unit Certificate for the number of Units remaining shall be executed by the Company and countersigned by the Unit Agent as provided in Section 2 of this Unit Agreement, and delivered to the holder of this Unit Certificate at the address specified on the books of the Unit Agent or as otherwise specified by such registered holder. If fewer than all the Units evidenced by a Book-Entry Unit Certificate are separated, a notation shall be made to the records maintained by the Depository, its nominee for each Book-Entry Unit Certificate, or a Participant, as appropriate, evidencing the balance of the Units remaining after such separation.

 

3.3.6        No Transfer Taxes.  The Company shall not be required to pay any stamp or other tax or governmental charge required to be paid in connection with any transfer involved in the issue of the shares of Common Stock or the Warrants; and in the event that any such transfer is involved, the Company shall not be required to issue or deliver any shares of Common Stock or Warrants until such tax or other charge shall have been paid or it has been established to the Company’s satisfaction that no such tax or other charge is due.

 

4.             Adjustments.

 

4.1           Reclassification, Consolidation, Purchase, Combination, Sale or Conveyance. If, at any time while the Units are outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another person whereby such other person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other person or other persons making or party to, or associated or affiliated with the other persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent separation of a Unit, the registered holder shall have the right to receive, for each Unit that would have been

 

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separable immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock, if any, of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock and Warrants for which this Unit is separable immediately prior to such Fundamental Transaction. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the registered holder shall be given the same choice as to the Alternate Consideration it receives upon any separation of this Unit following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) and for which shareholders received any equity securities of the Successor Entity, to assume in writing all of the obligations of the Company under this Unit Agreement in accordance with the provisions of this Section 4.3 pursuant to written agreements and shall, upon the written request of the registered holder of a Unit, deliver to the registered holder in exchange for this Unit created by this Agreement a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Unit which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity), if any, plus any Alternate Consideration, receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock and Warrants for which the Unit is separable immediately prior to such Fundamental Transaction, plus any Alternate Consideration (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of such Unit immediately prior to the consummation of such Fundamental Transaction).  Upon the occurrence of any such Fundamental Transaction the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Unit Agent Agreement and the Unit referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Agreement and the Unit with the same effect as if such Successor Entity had been named as the Company herein.

 

The Company shall instruct the Unit Agent to mail by first class mail, postage prepaid, to each registered holder of a Unit, written notice of the execution of any such amendment, supplement or agreement. Any supplemented or amended agreement entered into by the successor corporation or transferee shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in Section 4. The Unit Agent shall be under no responsibility to determine the correctness of any provisions contained in such agreement relating either to the kind or amount of securities or other property receivable upon separation of the Units or with respect to the method employed and provided therein for any adjustments and shall be entitled to rely upon the provisions contained in any such agreement. The provisions of this Section 4.3 shall similarly apply to successive reclassifications, changes, consolidations, mergers, sales and conveyances of the kind described above.

 

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4.2.          Notices of Changes in Unit.  Upon the occurrence of any event specified in Sections 4.1, then, in any such event, the Company shall give written notice to each registered holder, at the last address set forth for such holder in the warrant register, of the record date or the effective date of the event.  Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event.

 

4.3.          Form of Unit.  The form of Unit need not be changed because of any adjustment pursuant to this Section 4.  However, the Company may at any time in its sole discretion make any change in the form of Unit that the Company may deem appropriate and that does not affect the substance thereof, and any Unit thereafter issued or countersigned, whether in exchange or substitution for an outstanding Unit or otherwise, may be in the form as so changed.

 

5.             Transfer and Exchange of Units.

 

5.1.          Registration of Transfer.  The Unit Agent shall register the transfer, from time to time, of any outstanding Unit upon the Unit Register, upon surrender of such Unit for transfer, properly endorsed with signatures properly guaranteed and accompanied by appropriate instructions for transfer.  Upon any such transfer, a new Unit representing an equal aggregate number of Units shall be issued and the old Unit shall be cancelled by the Unit Agent.  The Units so cancelled shall be delivered by the Unit Agent to the Company from time to time upon request.

 

5.2.          Procedure for Surrender of Units.  Units may be surrendered to the Unit Agent, together with a written request for exchange or transfer reasonably acceptable to Unit Agent, duly executed by the registered holder thereof, or by a duly authorized attorney, and thereupon the Unit Agent shall issue in exchange therefor one or more new Unit s as requested by the registered holder of the Unit s so surrendered, representing an equal aggregate number of Unit s; provided, however, that except as otherwise provided herein or in any Book-Entry Unit Certificate, each Book-Entry Unit Certificate may be transferred only in whole and only to the Depository, to another nominee of the Depository, to a successor depository, or to a nominee of a successor depository; provided further, however, that in the event that a Unit surrendered for transfer bears a restrictive legend, the Unit Agent shall not cancel such Unit and issue new Unit s in exchange therefor until the Unit Agent has received an opinion of counsel for the Company stating that such transfer may be made and indicating whether the new Unit s must also bear a restrictive legend.  Upon any such registration of transfer, the Company shall execute, and the Unit Agent shall countersign and deliver, in the name of the designated transferee a new Unit Certificate or Unit Certificates of any authorized denomination evidencing in the aggregate a like number of unexercised Units.

 

5.3.          Fractional Units.  The Unit Agent shall not be required to effect any registration of transfer or exchange which will result in the issuance of a Unit Certificate for a fraction of a Unit.

 

5.4.          Service Charges.  A service charge shall be made for any exchange or registration of transfer of Units, as negotiated between Company and Unit Agent.

 

5.5.          Unit Execution and Countersignature.  The Unit Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Unit

 

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Agreement, the Units required to be issued pursuant to the provisions of this Section 5, and the Company, whenever required by the Unit Agent, will supply the Unit Agent with Unit s duly executed on behalf of the Company for such purpose.

 

6.             Intentionally Omitted

 

7.             Other Provisions Relating to Rights of Holders of Units.

 

7.1.          No Rights as Stockholder.  Except as otherwise specifically provided herein, a registered holder, solely in its capacity as a holder of a Unit, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Unit Agreement be construed to confer upon a registered holder, solely in its capacity as the registered holder of a Unit , any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the registered holder of the shares of Common Stock or Warrants which it is then entitled to receive upon the due separation of a Unit . A Unit does not entitle the registered holder thereof to any of the rights of a stockholder.

 

7.2.          Lost, Stolen, Mutilated, or Destroyed Units.  If any Unit is lost, stolen, mutilated, or destroyed, the Company and the Unit Agent may on such terms as to indemnity (including obtaining an open penalty bond protecting the Unit Agent) or otherwise as they may in their discretion impose (which shall, in the case of a mutilated Unit, include the surrender thereof), issue a new Unit of like denomination, tenor, and date as the Unit so lost, stolen, mutilated, or destroyed.  Any such new Unit shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Unit shall be at any time enforceable by anyone.

 

7.3.          Reservation of Common Stock.  The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common Stock and Warrant Shares that will be sufficient to permit the issuance in full of all outstanding Units issued pursuant to this Unit Agreement.

 

8.             Concerning the Unit Agent and Other Matters.

 

8.1           Concerning the Unit Agent.  The Unit Agent:

 

a)             shall have no duties or obligations other than those set forth herein and no duties or obligations shall be inferred or implied;

 

b)            may rely on and shall be held harmless by the Company in acting upon any certificate, statement, instrument, opinion, notice, letter, facsimile transmission, telegram or other document, or any security delivered to it, and reasonably believed by it to be genuine and to have been made or signed by the proper party or parties;

 

c)             may rely on and shall be held harmless by the Company in acting upon written or oral instructions or statements from the Company with respect to any matter relating to its acting as Unit Agent;

 

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d)            May consult with counsel satisfactory to it (including counsel for the Company) and shall be held harmless by the Company in relying on the advice or opinion of such counsel in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion of such counsel;

 

e)             solely shall make the final determination as to whether or not a Unit received by Unit Agent is duly, completely and correctly executed, and Unit Agent shall be held harmless by the Company in respect of any action taken, suffered or omitted by Unit Agent hereunder in good faith and in accordance with its determination;

 

f)             shall not be obligated to take any legal or other action hereunder which might, in its judgment subject or expose it to any expense or liability unless it shall have been furnished with an indemnity satisfactory to it; and

 

g)            shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to the Registration Statement or this Unit Agreement, including without limitation obligations under applicable regulation or law.

 

8.2           Payment of Taxes.  The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Unit Agent in respect of the issuance or delivery of shares of Common Stock and Warrants upon the separation of Units, but the Company shall not be obligated to pay any transfer taxes in respect of the Units or such shares of Common Stock or Warrants.  The Unit Agent shall not register any transfer or issue or deliver any Unit Certificate(s) or shares of Common Stock or Warrants unless or until the persons requesting the registration or issuance shall have paid to the Unit Agent for the account of the Company the amount of such tax, if any, or shall have established to the reasonable satisfaction of the Company that such tax, if any, has been paid.

 

8.3           Resignation, Consolidation, or Merger of Unit Agent.

 

8.3.1.       Appointment of Successor Unit Agent.  The Unit Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company.  If the office of the Unit Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Unit Agent in place of the Unit Agent.  If the Company shall fail to make such appointment within a period of 30 days after it has been notified in writing of such resignation or incapacity by the Unit Agent or by the holder of the Unit (who shall, with such notice, submit his Unit for inspection by the Company), then the holder of any Unit may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Unit Agent at the Company’s cost.  Any successor Unit Agent (but not including the initial Unit Agent), whether appointed by the Company or by such court, shall be a corporation organized and existing under the laws of the State of New York, in good standing and having its principal office in the Borough of Manhattan,

 

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City and State of New York, and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority.  After appointment, any successor Unit Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor Unit Agent with like effect as if originally named as Unit Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Unit Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Unit Agent all the authority, powers, and rights of such predecessor Unit Agent hereunder; and upon request of any successor Unit Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Unit Agent all such authority, powers, rights, immunities, duties, and obligations.

 

8.2.2.       Notice of Successor Unit Agent.  In the event a successor Unit Agent shall be appointed, the Company shall give notice thereof to the predecessor Unit Agent and the transfer agent for the Common Stock not later than the effective date of any such appointment.

 

8.2.3.       Merger or Consolidation of Unit Agent.  Any corporation into which the Unit Agent may be merged or with which it may be consolidated or any corporation resulting from any merger or consolidation to which the Unit Agent shall be a party shall be the successor Unit Agent under this Unit Agreement without any further act.

 

8.3.          Fees and Expenses of Unit Agent.

 

8.3.1.       Remuneration.  The Company agrees to pay the Unit Agent reasonable remuneration in an amount separately agreed to between Company and Unit Agent for its services as Unit Agent hereunder and will reimburse the Unit Agent upon demand for all expenditures that the Unit Agent may reasonably incur in the execution of its duties hereunder.  One half of the total Unit Agent fees (not including postage) must be paid upon execution of this Unit Agreement.  The remaining half must be paid within fifteen (15) business days thereafter.  An invoice for any out-of-pocket and/or per item fees incurred will be rendered to and payable by the Company within fifteen (15) days of the date of said invoice.  It is understood and agreed that all services to be performed by Unit Agent shall cease if full payment for its services has not been received in accordance with the above schedule, and said services will not commence thereafter until all payment due has been received by Unit Agent.

 

8.3.2.       Further Assurances.  The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Unit Agent for the carrying out or performing of the provisions of this Unit Agreement.

 

8.4.          Liability of Unit Agent.

 

8.4.1.       Reliance on Company Statement.  Whenever in the performance of its duties under this Unit Agreement, the Unit Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company

 

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prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the President of the Company and delivered to the Unit Agent.  The Unit Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Unit Agreement.

 

8.4.2.       Indemnity.  The Unit Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith.  The Company agrees to indemnify the Unit Agent and save it harmless against any and all liabilities, including judgments, claims, losses, damages, costs and reasonable counsel fees, for anything done or omitted by the Unit Agent in the execution of this Unit Agreement except as a result of the Unit Agent’s gross negligence, willful misconduct, or bad faith.

 

8.4.3.       Limitation of Liability. The Unit Agent’s aggregate liability, if any, during the term of this Unit Agreement with respect to, arising from, or arising in connection with this Unit Agreement, or from all services provided or omitted to be provided under this Unit  Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid or payable hereunder by the Company to Unit Agent as fees and charges, but not including reimbursable expenses.

 

8.4.4        Disputes.  In the event any question or dispute arises with respect to the proper interpretation of this Unit  Agreement or the Unit Agent’s duties hereunder or the rights of the Company or of any holder of a Unit , the Unit Agent shall not be required to act and shall not be held liable or responsible for refusing to act until the question or dispute has been judicially settled (and the Unit Agent may, if it deems it advisable, but shall not be obligated to, file a suit in interpleader or for a declaratory judgment for such purpose) by final judgment rendered by a court of competent jurisdiction, binding on all parties interested in the matter which is no longer subject to review or appeal, or settled by a written document in form and substance satisfactory to the Unit Agent and executed by the Company and each other interested party.  In addition, the Unit Agent may require for such purpose, but shall not be obligated to require, the execution of such written settlement by all the Unit holders, as applicable, and all other parties that may have an interest in the settlement.

 

8.4.5        Exclusions.  The Unit Agent shall have no responsibility with respect to the validity of this Unit Agreement or with respect to the validity or execution of any Unit  (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Unit  Agreement or in any Unit ; nor shall it be responsible to make any adjustments required under the provisions of Section 4 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Unit  Agreement or any Unit  or as to whether any shares of Common Stock will when issued be valid and fully paid and nonassessable.

 

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8.5.          Acceptance of Agency.  The Unit Agent hereby accepts the agency established by this Unit Agreement and agrees to perform the same upon the terms and conditions herein set forth and among other things, shall account promptly to the Company with respect to Units separated.

 

9.             Miscellaneous Provisions.

 

9.1.          Successors.  All the covenants and provisions of this Unit Agreement by or for the benefit of the Company or the Unit Agent shall bind and inure to the benefit of their respective successors and assigns.

 

9.2.          Notices.  Any notice, statement or demand authorized by this Unit Agreement to be given or made by the Unit Agent or by the holder of any Unit  to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Company with the Unit Agent), as follows:

 

Synergy Pharmaceuticals, Inc.

420 Lexington Avenue, Suite 1609

New York, NY 10170
 Attn:       Gary Jacob, Chief Executive Officer

 

Any notice, statement or demand authorized by this Unit Agreement to be given or made by the holder of any Unit or by the Company to or on the Unit Agent shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Unit Agent with the Company), as follows:

 

Broadridge Corporate Issuer Solutions, Inc.,

1717 Arch St, Suite 1300

Philadelphia, PA  19103

Attn:  Compliance Department

 

with a copy in each case to:

 

Sichenzia Ross Friedman Ference LLP
 61 Broadway, 32nd Floor
 New York, NY 10006
 Attn:  Jeffrey J. Fessler, Esq.

 

and:

 

Aegis Capital Corp.

810 Seventh Avenue, 11th Fl

New York, NY 10019

Attn:       Compliance Department Attn: Compliance Department

 

12

 

and:

 

ReedSmith LLP

599 Lexington Avenue

New York, NY 10022
 Attn:       Yvan-Claude Pierre, Esq.

 

and;

 

Broadridge Financial Solutions, Inc.

2 Journal Square Plaza

Jersey City, New Jersey 07306

Attention: General Counsel

 

9.3.          Applicable law.  The validity, interpretation, and performance of this Unit Agreement and of the Units shall be governed in all respects by the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction.  The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Unit Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.  The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenience forum.  Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 9.2 hereof.  Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim.

 

9.4.          Persons Having Rights under this Unit Agreement.  Nothing in this Unit Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the registered holders of the Units and, for purposes of Sections 3.3, 9.3 and 9.8, the Underwriter, any right, remedy, or claim under or by reason of this Unit Agreement or of any covenant, condition, stipulation, promise, or agreement hereof.  The Underwriters shall be deemed to be an express third-party beneficiary of this Unit Agreement with respect to Sections 3.3, 9.3 and 9.8 hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Unit Agreement shall be for the sole and exclusive benefit of the parties hereto (and the Underwriters with respect to the Sections 3.3, 9.3 and 9.8 hereof) and their successors and assigns and of the registered holders of the Unit s.

 

9.5.          Examination of the Unit Agreement.  A copy of this Unit Agreement shall be available at all reasonable times at the office of the Unit Agent in the city of Philadelphia, Commonwealth of Pennsylvania, for inspection by the registered holder of any Unit.  The Unit Agent may require any such holder to submit his Unit for inspection by it.

 

13

 

9.6.          Counterparts.  This Unit Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

9.7.          Effect of Headings.  The Section headings herein are for convenience only and are not part of this Unit Agreement and shall not affect the interpretation thereof.

 

9.8           Amendments.  This Unit Agreement may be amended by the parties hereto without the consent of any registered holder for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions arising under this Unit Agreement as the parties may deem necessary or desirable and that the parties deem shall not adversely affect the interest of the registered holders.  All other modifications or amendments shall require the written consent of the Underwriter and the registered holders of a majority of the then outstanding Units.

 

9.9           Severability. This Unit Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Unit Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Unit Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.

 

9.10         Force Majeure.  In the event either party is unable to perform its obligations under the terms of this Unit Agreement because of acts of God, strikes, failure of carrier or utilities, equipment or transmission failure or damage that is reasonably beyond its control, or any other cause that is reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes.  Performance under this Unit Agreement shall resume when the affected party or parties are able to perform substantially that party’s duties.

 

9.11         Consequential Damages.  Notwithstanding anything in this Unit Agreement to the contrary, neither party to this Unit Agreement shall be liable to the other party for any consequential, indirect, special or incidental damages under any provision of this Agreement or for any consequential, indirect, punitive, special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages.

 

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IN WITNESS WHEREOF, this Amended and Restated Unit Agreement has been duly executed by the parties hereto as of the day and year first above written.

 

 

	
 
    	
SYNERGY   PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Gary S. Jacob
    
	
 
    	
Title:   CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BROADRIDGE   CORPORATE ISSUER
   SOLUTIONS, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

15Exhibit 10.14

 

 

October 29, 2010

 

Mr. Brian Boyles

3855 Sea Oaks Circle

Davenport, IA  52807

 

Dear Brian,

 

I am pleased to confirm our offer for you to join Pulaski Bank (the “Bank”) as President of our Mortgage Division. In this capacity, you will become a member of the Management Executive Committee at the Bank. We are confident that our association will be mutually beneficial to both you and the Bank, and we look forward to your timely acceptance.

 

Listed below are the terms of the offer that we have discussed over the past several weeks:

 

Start Date — We anticipate your start date with Pulaski Bank to be on or before November 15, 2010.

 

Base Salary — $300,000 per annum; payable on a bi-weekly payroll schedule.  During the duration of your employment your base salary will not be less than $300,000 per annum and will be subject to annual review for potential upward adjustment based on such factors as your performance, the Bank’s performance and competitive market analysis.

 

Fiscal 2011 Incentive Payments — You will receive the following cash bonus payments for our 2011 fiscal year which began October 1, 2010 and ends September 30, 2011.  Within five business days of your start date you will receive a signing bonus in the amount of $100,000, subject to customary tax withholdings.  In addition, you will receive a cash incentive bonus for the fiscal year-ending September 30, 2011 in the amount of $100,000, again subject to customary tax and other withholdings.  This bonus, which is guaranteed for fiscal 2011, will be payable in four equal quarterly installments of $25,000 each. These installments will be paid in conjunction with the first regular payroll period following December 31, 2010, March 31, 2011, June 30, 2011 and September 30, 2011.

 

In the event you voluntarily terminate your employment with the Bank (other than your voluntary termination for “Good Reason” (as defined in Appendix A)) or your employment is terminated by the Bank for “Cause”, within two years from your start date, you agree to reimburse us the signing bonus and first year incentive bonus (“Initial Year Cash Bonuses”).  For purposes of this paragraph only, the Initial Year Cash Bonuses will be deemed to have been “earned” monthly over your first twenty-four (24) months of

 

 

employment.  In the event of your voluntary termination (other than your voluntary termination for “Good Reason” (as defined in Appendix A)) or termination for “Cause” prior to the second anniversary of your start date, you will be obligated to reimburse to the Bank the unearned portion of your Initial Year Cash Bonuses.  By way of example, but not limitation, if you were to voluntarily terminate employment with the Bank or be terminated for “Cause” by the Bank after completing twelve months of employment following your start date, the Bank would be entitled to receive a reimbursement of $100,000 of your Initial Year Cash Bonuses ($200,000 ÷ 24 months x 12 unearned months).  For purposes of this letter, a termination of your employment by the Bank for “Cause” means termination on account of any of the following: (i) personal dishonesty; (ii) incompetence, (iii) willful misconduct; (iv) breach of fiduciary duty involving personal profit; (v) Intentional failure to perform stated duties; or (vi) willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.

 

Notwithstanding the foregoing, you will not be required to provide any reimbursement of your Initial Year Cash Bonuses if you voluntarily terminate employment for Good Reason (as defined in Appendix A).

 

Initial Restricted Stock Grant — Upon commencement of your employment, you will be granted Restricted Common Shares of Pulaski Financial Corp. (the “Company”) valued at $50,000 based on the closing price of our common stock on your first day of employment.  The number of actual shares to be awarded will be arrived at by dividing $50,000 by the closing price of our common stock as of your first day of employment.  These Restricted Shares will vest either at the end of three years from the date of grant or when the Company redeems its currently outstanding preferred stock held by the U.S. Treasury, whichever period is longer.

 

Incentive Compensation — Fiscal 2012 and Beyond — Your incentive compensation for fiscal years 2012 and beyond will be dependent upon whether or not you are classified as a Most Highly Compensated Employee (“MHCE”) and whether or not the Bank’s existing preferred stock issued to the U.S. Treasury remains outstanding.  If both of these situations exist, your incentive compensation will be subject to certain restrictions (“TARP Restrictions”) imposed on us by virtue of our preferred stock issuance to the U.S. Treasury.

 

Assuming No TARP Restrictions — Your cash incentive award will be based upon the Mortgage Division’s achievement of profit improvement goals.  These goals and related percentages will be mutually agreed upon by you and me following the commencement of your employment.  These cash incentive awards will be paid on a fiscal quarter basis as follows; 75% will be paid as soon as practicable after quarterly results are available and the additional 25% to be held in escrow and paid out following completion of the fiscal year.

 

You will also have the opportunity to be awarded annual equity grants in the range of 25% - 35% of your base salary.  These equity grants may consist of stock options, restricted stock grants or other forms of equity awards.  Awards will be determined at the sole discretion of the Compensation Committee of the Board of Directors of the Bank, taking into account your performance, that of the Mortgage Division and overall Bank performance.

 

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Assuming TARP Restrictions — Your incentive compensation will be paid in restricted common stock of the Company.  The value of the awards will be based upon the Mortgage Division’s achievement of profit improvement goals.  These goals and related level of awards will be mutually agreed upon by you and me following the commencement of your employment.  The TARP Restrictions limit the value of these awards in any particular year to one-third of your total compensation.  This restriction generally equates to an overall limit of approximately 50% of your base salary.  So, for any year that you are under TARP Restrictions your incentive compensation for that year will be paid in Restricted Shares and will not exceed approximately $150,000 in value (assuming your base salary remains at $300,000).

 

The number of actual restricted shares to be awarded will be arrived at by dividing the value of the grant by the closing price of our common stock as of the actual grant date.  These restricted shares will vest either at the end of three years from the date of grant or when the Company redeems its preferred stock currently held by the U.S. Treasury, whichever period is longer.

 

Relocation  — To facilitate your move to St. Louis, we will purchase your existing home in Davenport, Iowa.  The purchase price will be the appraised value as determined by an independent qualified appraiser engaged directly by the Bank (the “Appraised Value”).  The Bank agrees to market the property for up to twelve months from the date of purchase at a price not below the Appraised Value.  After the initial twelve-month marketing period, the Bank, at its sole discretion, will determine the price at which the property will be marketed and ultimately sold.  We agree that during this initial twelve-month period we will not sell the property at less than the Appraised Value without your consent.  In addition, the Bank will absorb all carrying costs related to the property during this period, including any commission on the sale of the property.

 

As consideration for the Bank purchasing your home at the commencement of your employment, you agree to reimburse us for any ultimate loss incurred upon the sale of the property.  The calculation of the loss, if any, will not include the carrying costs as described in the preceding paragraph.  To effectuate the required reimbursement, the Bank will deduct 50% of your quarterly bonus that would otherwise be paid to you over a twenty-four month period beginning with the quarter ending December 31, 2012 and ending no later than the quarter ending December 31, 2014.  To the extent necessary, the Bank may also access portions of your 25% quarterly bonus hold-back to satisfy any loss reimbursement.  Should you voluntarily terminate your employment with us (other than your voluntary termination for Good Reason (as defined in Appendix A) or if you are terminated for “Cause” (as defined above) by the Bank, before any loss on disposition of the property has been fully recouped through bonus reductions, you agree to reimburse the Bank for such loss within 180 days of such termination date.  Notwithstanding the foregoing, you will not be required to provide any reimbursement under this paragraph if you voluntarily terminate employment for Good Reason (as defined in Appendix A).

 

We will provide you with an allowance of $50,000 (payable within five (5) business days of the closing on your new St. Louis-area residence or as other mutually agreed) to cover other customary relocation expenses, including moving costs, household settling-

 

3

 

in costs, house hunting trip(s) for you, your spouse and children and any other similar expenses.  In addition to the aforementioned allowance, the Bank will either pay for or reimburse you for temporary living expenses while in transition.

 

The remainder of this letter outlines other terms and conditions of your employment.

 

Employee Health and Welfare Benefit Plans — As an executive employee, you will be eligible to participate in the Bank’s health insurance plans effective with your first day of employment.  A separate description of the coverage and costs pertaining to these plans, as well as other ancillary plans will be provided.

 

401(k) Retirement Savings Plan — Employees are eligible to enroll in the Bank’s 401(k) retirement plan effective the first day of the month following 6 months of employment.  The plan includes a number of investment options including Company stock (NASDAQ symbol: PULB).  Effective January 1, 2011, the Bank’s employer matching contribution is 50% of the first 5% of deferred salary.  Additional information pertaining to the Bank 401(k) plan will be provided to you subsequent to your hire.

 

Leave — You will be entitled to sick leave and paid annual vacation in accordance with policies established from time to time by the Bank.  In no event shall your annual paid vacation be less than four (4) weeks.

 

Background Investigation — This offer of employment is contingent upon the Bank’s receipt of a satisfactory response and results pertaining to an investigative consumer report.

 

Restrictive Covenants — By your signature below, you agree to be bound by the restrictive covenants set forth in Appendix A to this letter, all of which are incorporated by reference as part of this letter.  You acknowledge that your acceptance of these restrictions is an essential inducement to the Bank’s willingness to extend this offer of employment.

 

*     *     *

 

By accepting this offer of employment, you acknowledge and agree that your employment with the Bank will at all times be on an at-will basis, and that neither you, nor the Bank, has entered into an oral, written, or implied contract relating to the duration of your employment.  As an at-will employee, you are free to terminate your employment with the Bank at any time, with or without cause or advance notice.  Likewise, the Bank has the right to terminate your employment at any time, with or without cause or advance notice.  This letter is limited to its express terms, is not intended to constitute an employment agreement for a specified term of employment, and does not create on your behalf any right to receive post-employment severance compensation.

 

We are confident that your skills and background will greatly benefit our organization, and we have created a compensation package that is designed to link your rewards with the impact that you will have on the Bank.  Please do not hesitate to contact me with any

 

4

 

questions, comments, or concerns you may have with regard to this offer or employment with Pulaski Bank.

 

If you are in agreement with the above outline and terms and conditions of employment, including Appendix A, kindly sign and date below by Friday, October 29, 2010.  We look forward to your positive response.

 

Sincerely,

 

 

	
/s/ Gary W. Douglass
    	
 
    	
 
    
	
Gary W. Douglass
    	
 
    	
 
    
	
Chief Executive Officer
    	
 
    	
 
    

 

 

I accept the offer of employment presented to me as stated above and agree to the terms and conditions contained herein:

 

 

	
/s/ Brian Boyles
    	
 
    	
10/29/2010
    
	
Brian Boyles
    	
 
    	
Date
    

 

5

 

Appendix A

Restrictive Covenants

 

Pursuant to the terms of the letter agreement dated as of October 29, 2010 between Brian Boyles (“Executive”) and Pulaski Bank (the “Bank”), Executive agrees to be bound as follows:

 

Use and Disclosure of Confidential Information.

 

(a)           Executive acknowledges and agrees that (i) by virtue of his employment, he will be given access to, and will help analyze, formulate or otherwise use, Confidential Information, (ii) the Bank has devoted (and will devote) substantial time, money, and effort to develop Confidential Information and maintain the proprietary and confidential nature thereof, and (iii) Confidential Information is proprietary and confidential and, if any Confidential Information were disclosed or became known by persons engaging in a business in any way competitive with the Bank’s Business, such disclosure would result in hardship, loss, irreparable injury, and damage to the Employer, the measurement of which would be difficult, if not impossible, to determine. Accordingly, the Executive agrees that (i) the preservation and protection of Confidential Information is an essential part of his duties of employment and that, as a result of his employment with the Bank, he has a duty of fidelity, loyalty, and trust to the Bank in safeguarding Confidential Information. The Executive further agrees that he will use his best efforts, exercise utmost diligence, and take all steps necessary to protect and safeguard Confidential Information, whether such information derives from the Executive, other employees of the Employer, Customers, Prospective Customers, or vendors or suppliers of the Bank, and that he will not, directly or indirectly, use, disclose, distribute, or disseminate to any other person or entity or otherwise employ Confidential Information, either for his own benefit or for the benefit of another, except as required in the ordinary course of his employment by the Bank. The Executive shall follow all Bank policies and procedures to protect all Confidential Information and shall take any additional precautions necessary under the circumstances to preserve and protect against the prohibited use or disclosure of any Confidential Information.

 

(b)           The confidentiality obligations contained in this Appendix A shall continue as long as Confidential Information remains confidential (except that the obligations shall continue, if Confidential Information loses its confidential nature through improper use or disclosure,) and shall survive the termination of the Executive’s employment with the Bank.

 

Ownership of Documents and Return of Materials At Termination of Employment.

 

(a)           Any and all documents, records, and copies thereof, including but not limited to hard copies or copies stored digitally or electronically, pertaining to or including Confidential Information (collectively, “Bank Documents”) that are made or received by the Executive during his employment shall be deemed to be property of the Employer. The Executive shall use Bank Documents and information contained therein only in the course of his employment for the Bank and for no other purpose. The Executive shall not use or disclose any Bank Documents to anyone except as authorized in the course of his employment and in furtherance of the Bank’s business.

 

(b)           Upon termination of employment, the Executive shall immediately deliver to the Bank (with or without request) all Bank Documents and all other Bank property in the Executive’s possession or under his custody or control.

 

Non-Solicitation of Customers. The Executive agrees that while employed by the Bank and for a period of two (2) years following his termination of employment for any reason, the Executive shall not, directly or indirectly, individually or jointly, (i) solicit in any manner, seek to obtain or service, or accept the business of any Customer for any product or service of the type offered by the Bank or competitive with the Bank’s Business, (ii) solicit in any manner, seek to obtain or service, or accept the business of any Prospective Customer for any product or service

 

6

 

of the type offered by the Employer or otherwise competitive with the Bank’s Business, or (iii) request or advise any Customer, Prospective Customer, or supplier of the Bank to terminate, reduce, limit, or change its business or relationship with the Bank.  Notwithstanding the foregoing, the period of restriction set forth in this paragraph shall be reduced to one (1) year if (i) following a Change in Control, the Executive’s employment is involuntarily terminated without “Cause” (as defined in the letter agreement), or (ii) at any time, the Executive voluntarily terminates his employment for Good Reason.

 

Covenant Not to Compete/Non-Solicitation of Employees. The Executive hereby understands and acknowledges that, by virtue of his position with the Bank, he has obtained advantageous familiarity and personal contacts with Customers and Prospective Customers, wherever located, and the business, operations, and affairs of the Bank. Accordingly, while employed by the Bank and for a period of two (2) years following his termination of his employment for any reason, the Executive shall not, directly or indirectly:

 

(a)           as owner, officer, director, stockholder, investor, proprietor, organizer, employee, agent, representative, consultant, independent contractor, or otherwise, engage in the same trade or business as the Bank’s Business, in the same or similar capacity as the Executive worked for the Bank, or in such capacity as would cause the actual or threatened use of the Bank’s trade secrets and/or Confidential Information; provided, however, that this paragraph shall not restrict the Executive from acquiring, as a passive investment, less than five percent (5%) of the outstanding securities of any class of an entity that are listed on a national securities exchange or actively traded in the over-the-counter market. The Executive acknowledges and agrees that, given the level of trust and responsibility given to him while in the Bank’ employ, and the level and depth of trade secrets and Confidential Information entrusted to him, any immediately subsequent employment with a competitor to the Bank’s Business would result in the inevitable use or disclosure of the Bank’s trade secrets and Confidential Information and, therefore, this restriction is reasonable and necessary to protect against such inevitable disclosure; or

 

(b)           offer to provide employment or work of any kind (whether such employment is with the Executive or any other business or enterprise), either on a full-time or part-time or consulting basis, to any person who then currently is, or who within two (2) years preceding such offer or provision of employment has been, an employee of the Bank.

 

(c)           The noncompetition restrictions contained in subparagraph (a) of this section shall be limited to the following geographical areas: (i) within a ten (10) mile radius of each business location operated by the Bank on the Executive’s termination date; (ii) within each county in which a business location is operated by the Bank on the Executive’s termination date; (iii) within a fifty (50) mile radius of the Bank’s corporate headquarters address in St. Louis, Missouri.

 

Notwithstanding anything in the letter agreement and this Appendix A to the contrary, if (i) following a Change in Control, the Executive’s employment is involuntarily terminated without “Cause” (as defined in the letter agreement), or (ii) at any time, the Executive voluntarily terminates his employment for Good Reason, (i) the restrictions set forth in subparagraph (a) of this section shall not apply for any period and (ii) the period applicable to the restrictions set forth in subparagraph (b) of this section shall be reduced to one (1) year.

 

Remedies. The Executive agrees that the Bank will suffer irreparable damage and injury and will not have an adequate remedy at law if the Executive breaches any restriction set forth in this Appendix A (the “Restrictive Covenants”).  Accordingly, if the Executive breaches or threatens or attempts to breach the Restrictive Covenants, in addition to all other available remedies, the Bank shall be entitled to seek injunctive relief, and no or minimal bond or other security shall be required in connection therewith. The Executive acknowledges and agrees that in the event of his termination of employment for any reason whatsoever, the Executive can obtain employment not competitive with the Bank’s Business (or, if competitive, outside of the geographic and customer-specific scope described herein) and that the issuance of an injunction to enforce the provisions

 

7

 

of the Restrictive Covenants shall not prevent the Executive from earning a livelihood. The Restrictive Covenants are essential terms and conditions to the Bank entering into an employment relationship with the Executive.

 

Reasonableness of Restrictive Covenants. The Bank and the Executive acknowledge and agree that the Restrictive Covenants are reasonable in view of the nature of the Bank’s Business and the Executive’s advantageous knowledge of and familiarity with the Bank’s Business, operations, affairs, and Customers. Notwithstanding anything contained herein to the contrary, if the scope of any Restrictive Covenant is found by a court of competent jurisdiction to be too broad to permit enforcement of such restriction or covenant to its full extent, then such restriction or covenant shall be enforced to the maximum extent permitted by law.

 

Definitions.  For purposes of the letter agreement and this Appendix A, the following definitions shall apply:

 

Bank means Pulaski Bank and any affiliate of Pulaski Bank.

 

Bank’s Business means, collectively, the products and services provided by the Bank, including, but not limited to, lending activities (including individual loans consisting primarily of home equity lines of credit, residential real estate loans, and/or consumer loans, and commercial loans, including lines of credit, real estate loans, letters of credit, and lease financing) and depository activities (including noninterest-bearing demand, NOW, savings and money market, and time deposits), debit and ATM cards, merchant cash management, internet banking, treasury services, and other general banking services.

 

Change in Control means the first occurrence of any of the following events:

 

(1)           the acquisition by any person (within the meaning of Section 13(d) of the Securities Exchange Act of 1934 (“Act”)), other than the Company (as defined in the letter agreement), a subsidiary, and any employee benefit plan of the Company or a subsidiary, of twenty-five percent 25%) or more of the combined voting power entitled to vote generally in the election of the directors of the Company’s then outstanding voting securities;

 

(2)           the persons who were serving as the members of the Board of Directors of the Company immediately prior to the commencement of a proxy contest relating to the election of directors or a tender or exchange offer for voting securities of the Company (“Incumbent Directors”) shall cease to constitute at least a majority of the Board of Directors (or the board of directors of any successor to the Company) at any time within one year of the election of directors as a result of such contest or the purchase or exchange of voting securities of the Company pursuant to such offer, provided that any director elected to the Board of Directors, or nominated for election, by a majority of the Incumbent Directors then still in office and whose nomination or election was not made at the request or direction of the person(s) initiating such contest or making such offer shall be deemed to be an Incumbent Director for purposes of this subsection (2);

 

(3)           consummation of a merger, reorganization, or consolidation of the Company, as a result of which persons who were shareholders of the Company immediately prior to such merger, reorganization, or consolidation do not, immediately thereafter, own, directly or indirectly and in substantially the same proportions as their ownership of the stock of the Company immediately prior to the merger, reorganization, or consolidation, more than fifty percent (50%) of the combined voting power entitled to vote generally in the election of directors of (i) the merged, reorganized, or consolidated company or (ii) an entity that, directly or indirectly, owns more than fifty percent (50%) of the combined voting power entitled to vote generally in the election of directors of the company described in clause (i);

 

(4)           a sale, transfer, or other disposition of all or substantially all of the assets of the Company, which is consummated and immediately following which the persons who were shareholders of the Company immediately prior to such sale, transfer, or disposition, do not own, directly or indirectly and in substantially the same proportions as their ownership of the stock of

 

8

 

the Company immediately prior to the sale, transfer, or disposition, more than fifty percent (50%) of the combined voting power entitled to vote generally in the election of directors of (i) the entity or entities to which such assets are sold or transferred or (ii) an entity that, directly or indirectly, owns more than fifty percent (50%) of the combined voting power entitled to vote generally in the election of directors of the entities described in clause (i); or

 

(5)           the shareholders of the Company approve a liquidation of the Company.

 

Confidential Information means the following:

 

(1)           materials, records, documents, data, statistics, studies, plans, writings, and information (whether in handwritten, printed, digital, or electronic form) relating to the Bank’s Business that are not generally known or available to the Bank’s business, trade, or industry or to individuals who work therein, or

 

(2)           trade secrets of the Bank.

 

Confidential Information also includes, but is not limited to: (i) information about the Bank’s employees; (ii) information about the Bank’s compensation policies, structure, and implementation; (iii) hardware, software, and computer programs and technology used by the Bank; (iv) Customer and Prospective Customer identities, lists, and databases, including private information related to customer history, loan activity, account balances, and financial information; (v) strategic, operating, and marketing plans; (vi) lists and databases and other information related to the Bank’s vendors; (vii) policies, procedures, practices, and plans related to pricing of products and services; and (viii) information related to the Bank’s acquisition and divestiture strategy. Information or documents that are generally available or accessible to the public shall be deemed Confidential Information, if the information is retrieved, gathered, assembled, or maintained by the Bank in a manner not available to the public or for a purpose beneficial to the Bank.

 

Customer means a person or entity who is a customer of an Employer at the time of the Executive’s termination of employment or with whom the Executive had direct contact on behalf of the Bank at any time during the period of the Executive’s employment with the Bank.

 

Good Reason means the occurrence of any of the following without the express written consent of the Executive:

 

(1)           a material reduction in the Executive’s duties or responsibilities with the Bank;

 

(2)           a reduction in the Executive’s base compensation; or

 

(3)           a change in the primary location at which the Executive is required perform the duties of his employment to a location that is more than fifty (50) miles from the location at which his office is located on the effective date of this Agreement.

 

Prospective Customer means a person or entity who was the direct target of sales or marketing activity by the Executive or whom the Executive knew was a target of the Bank’s sales or marketing activities during the one year period preceding the Executive’s termination of employment.

 

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