Document:

ex10_23.htm

Exhibit 10.23

 

 

SUBSCRIPTION AGREEMENT

for

Common Shares, No Par Value

THE COMMON SHARES (“COMMON SHARES”) REFERRED TO HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE OFFERING OF COMMON SHARES HAS NOT BEEN REVIEWED OR APPROVED BY ANY FEDERAL OR STATE REGULATORY AUTHORITIES AND IS NOT REGISTERED UNDER APPLICABLE FEDERAL OR STATE SECURITIES LAWS.

A PURCHASER OF THE COMMON SHARES MUST BE PREPARED TO BEAR THE ECONOMIC RISKS OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND ARE RESTRICTED AS TO TRANSFERABILITY.

THIS SUBSCRIPTION AGREEMENT dated June ____, 2010 (the “Agreement”), between Tower Financial Corporation, Inc., a corporation organized under the laws of the State of Indiana (the “Corporation”), and the Investor listed on the signature page hereof the (“Investor”).

RECITALS

A.           The Corporation.  The Corporation is a public company registered with the Securities and Exchange Commission, which files periodic reports with the Commission pursuant to the requirements of Sections 13 or 15(d) under the Securities Exchange Act of 1934 (the “Exchange Act”) (Commission File No. 000-26287), whose shares are traded on the NASDAQ Global Market under the symbol “TOFC.” The Corporation’s subsidiary is Tower Bank and Trust company (the “Bank”).

 

B.           Authorized and Outstanding Shares.  As of the date hereof, the Corporation has 6,000,000 authorized common shares with no par value (the “Common Shares”), of which 4,090,432 shares are outstanding. In addition, there are 383,391 Common Shares underlying outstanding options, and underlying our Series A Convertible Preferred Stock issued on September 25, 2009 (“Series A Preferred”). We have 4,000,000 preferred shares authorized and 18,300 of these shares are outstanding and designated as Series A Preferred. The Series A Preferred is non-voting and was issued at a price of $100.00 per share. The Series A Preferred is convertible into Common Shares at a conversion price of $6.02 per share of common stock.

C.           The Offering.  The Corporation intends to sell up to 600,000 Common Shares at a price equal to 90% of the closing market price on the day of Closing (the “Offering”), and the Investor intends to purchase from the Corporation the number of Common Shares indicated on the signature page hereof (collectively, the “Purchased Securities”).

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

 

  

  

ARTICLE I

Purchase and Closing

 

	
1.1

	
Purchase.

(a)           Subscription.  The Investor hereby irrevocably subscribes to purchase the number of Purchased Securities indicated on the signature page hereof for a period of thirty (30) days from the subscription date, but in no case extending beyond September 30, 2010, in accordance with the terms of this Subscription Agreement (the “Purchase”). To effect such subscription, the Investor shall deliver an executed counterpart of this Agreement, including all Annexes hereto, to the Corporation or its authorized representative.

(b)           Payment.  Together with delivery of an executed counterpart of this Agreement, the Investor shall deliver and pay in full the aggregate purchase price for the Purchased Securities specified on the signature page hereof (the “Payment”) in United States funds, to the Corporation, in the form of an immediately available wire transfer or by certified check.

(c)           Escrow.  All proceeds of this Offering will be held until the Minimum Offering amount of $2,000,000 has been raised and the Federal Reserve Bank of Chicago (“Federal Reserve”) has approved John V. Tippmann, Sr. (“Tippmann”) and Keith E. Busse (“Busse”) to hold in excess of 9.99% of the Corporation’s common stock.

(d)           Acceptance.  This Agreement shall be effective immediately upon acceptance by the Corporation of the Investor’s executed counterpart of this Agreement and shall thereupon be binding upon the Corporation. Such acceptance by the Corporation shall be evidenced only by counter-execution and delivery of this Agreement by the Corporation, and the Corporation shall have no obligation hereunder until the Corporation shall have executed and delivered to the Investor an executed counterpart of this Agreement. The Investor acknowledges and agrees that the Corporation, in its sole discretion, reserves the right to accept or reject the Purchase, in whole or in part; provided, however, that if the Corporation rejects the Purchase by notice to the Investor, such rejection shall serve as a termination of this Agreement, and the Investor shall have no further rights or obligations under this Agreement.

(e)           Termination.

 

	
  

	
(1)

	
This Agreement may not be terminated by the Investor at any time following the Investor’s delivery of an executed counterpart of this Agreement to the Corporation (even if the Corporation has not yet accepted or rejected the Purchase).

	
  

	
(2)

	
Notwithstanding the foregoing, this Agreement may be terminated by either the Corporation or the Investor upon written notice to the other if the Closing shall not have occurred on or before September 30, 2010.

	
  

	
(3)

	
In the event of termination of this Agreement as provided in Section 1.1(d) or (e), (i) this Agreement shall forthwith become void, and there shall be no liability on the part of either party hereto, except that nothing herein shall relieve either party from liability for any willful breach of this Agreement, and (ii) the Corporation shall promptly return any previously delivered Payment to the Investor, without interest.

 

	
1.2

	
Closing.

(a)           On the terms and subject to the conditions set forth in this Agreement, the closing of the Purchase (the “Closing”) will take place at the corporate offices of the Corporation on June 30, 2010 or as soon as practicable thereafter, but in no event later than September 30, 2010, or at such other place, time and date as shall be agreed between the Corporation and the Investor. The time and date on which the Closing occurs is referred to in this Agreement as the “Closing Date.” All Closing proceeds will be held in escrow pursuant to the Escrow Agreement attached as Annex F to the Memorandum.

(b)           Upon the release of the Offering proceeds from escrow, the Corporation will deliver to the Investor the Purchased Securities, as evidenced by a certificate dated the Closing Date and bearing appropriate legends as hereinafter provided for, registered on the books and records of the Corporation in such Investor’s name.

 

  

  

ARTICLE II

Disclosures and Representations and Warranties;

	
2.1

	
Disclosure.

“Previously Disclosed” means (i) information contained in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2009 filed on March 30, 2010 with the  Securities and Exchange Commission (“SEC”); and all other reports and forms filed with the SEC under Sections 13(a), 14(a) or 15(d) of the Exchange Act, prior to the execution and delivery of this Agreement (collectively, the “SEC Filings”) and (ii) information included in the Company’s June 1, 2010 Confidential Summary Private Placement Memorandum (“Memorandum”).

2.2           Representations and Warranties of the Corporation. Each party acknowledges that it is not relying upon any representation or warranty not set forth in this Agreement. The Investor acknowledges that it has conducted a review and analysis of the business, assets, condition, operations and prospects of the Corporation and the Bank, together with the representations and warranties of the Corporation set forth in this Agreement, which the Investor considers sufficient for purposes of the Purchase. The Corporation represents and warrants to the Investor that as of the date hereof and the Closing Date (or such other date specified herein):

(a)           Organization and Authority. The Corporation has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Indiana, with corporate power and authority to own its properties and conduct its business in all material respects as currently conducted;

(b)           Capitalization.

	
  

	
(1)

	
As of the date hereof, the authorized and outstanding capital stock of the Corporation is as set forth in Recital B.

	
  

	
(2)

	
All of the outstanding shares of capital stock of the Corporation have been duly and validly authorized and issued and are fully paid and non-assessable and were not issued in violation of any preemptive rights, resale rights, rights of first refusal or similar rights.

	
  

	
(3)

	
Except for the 383,391 Common Shares which underlie outstanding options and our Series A Preferred, there are no options, warrants or other rights, agreements, arrangements or commitments to which the Corporation is a party or by which the Corporation is bound relating to the issued or unissued Common Shares of the Corporation.

 

(c)           The Purchased Securities. The Purchased Securities will be, as of the Closing Date, duly authorized by all necessary corporate action on the part of the Corporation and, when issued and delivered as provided in this Agreement, will be duly and validly issued, fully paid and non-assessable, and the issuance thereof will not be subject to any preemptive or similar rights.

(d)           Authorization and Enforceability of Agreement. The Corporation has the corporate power and authority to execute and deliver this Agreement to which it is a party and to carry out its obligations hereunder and thereunder (which includes the issuance of the Purchased Securities). The execution, delivery and performance by the Corporation of this Agreement to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Corporation and its shareholders, and no further approval or authorization is required on the part of the Corporation or its shareholders. This Agreement will be valid and binding obligations of the Corporation enforceable against the Corporation in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles, regardless of whether such enforceability is considered in a proceeding at law or in equity.

2.3           Representations and Warranties of the Investor. The Investor hereby represents and warrants to the Corporation that as of the date hereof and the Closing Date:

(a)           Organization and Authority. The Investor (i) is a natural person, or (ii) has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization, with the requisite power and authority to own its properties and conduct its business as currently conducted.

 

  

  

(b)           Authorization and Enforceability of This Agreement. The Investor has the requisite power and authority to execute and deliver this Agreement to which it is a party and to carry out its obligations hereunder and thereunder. The execution, delivery and performance by the Investor of this Agreement to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Investor, and no further approval or authorization is required on the part of the Investor. This Agreement will be valid and binding obligations of the Investor enforceable against the Investor in accordance with their respective terms.

(c)           Other Representations and Warranties of the Investor.

The Investor:

	
  

	
(1)

	
understands that the Purchased Securities have not been registered under the Securities Act and, therefore, cannot be resold unless they are registered under the Securities Act or (without limitation on the restrictions set forth in Article IV) unless an exemption from registration is available;

	
  

	
(2)

	
understands that the Corporation has no obligation or intention to register any Purchased Securities for resale or transfer under the Act or any state securities laws or to take any action (including the filing of reports or the publication of information as required by Rule 144 under the Act) which would make available any exemption from the registration requirements of any such laws;

	
  

	
(3)

	
understands that the Purchased Securities are and will be “restricted securities” under applicable federal securities law and that the Securities Act and the rules of the SEC, as well as applicable state securities laws, provide in substance that Investor may dispose of the Purchased Securities only pursuant to an effective registration statement under the Securities Act or an exemption therefrom. Under Rule 144 of the Securities Act, as currently in effect, a person may not sell any of the Purchased Securities until six (6) months have elapsed from the date of sale, and even after six (6) months, further restrictions and requirements may apply.  An Investor will not sell or otherwise dispose of any of the Purchased Securities, except in compliance with all of the requirements of Section 4.1;

	
  

	
(4)

	
is acquiring the Purchased Securities pursuant to an exemption from registration under the Securities Act, and represents and warrants that the Purchased Securities being acquired will be acquired for the undersigned’s own account without a view to public distribution or resale and that the undersigned has no contract, undertaking, agreement or arrangement to sell or otherwise transfer or dispose of any Purchased Securities or any portion thereof to any other person;

	
  

	
(5)

	
confirms that all information that the Investor has provided to the Corporation concerning the Investor in this Agreement or otherwise is correct and complete;

	
  

	
(6)

	
is an Accredited Investor (as that term is defined in Rule 501 under the Securities Act) and has certified to the Corporation the basis for qualifying as an Accredited Investor by completing an Accredited Questionnaire as set forth at Annex B of the Memorandum;

	
  

	
(7)

	
has conducted a review of the business and affairs of the Corporation and the Bank that it considers sufficient and reasonable for purposes of making the Purchase; and is familiar with and understands the terms, risks and merits of the proposed business of the Corporation and the Bank, and of an investment in the Purchased Securities. Investor has such knowledge, skill and experience in financial, business and investment matters generally, or concerning the financial, business and operations of the Corporation and the Bank, is capable of evaluating the terms, risks and tax and legal merits of the proposed business of the Corporation and the Bank and of an investment in the Purchased Securities offered hereby;

	
  

	
(8)

	
has had the opportunity to review the Memorandum and all SEC Filings and has had the opportunity to ask questions of and receive answers from representatives of the Corporation concerning the terms and conditions of the Purchase and to obtain any additional information that the Corporation possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of the information contained in the Memorandum or the SEC Filings;

 

  

  

	
  

	
(9)

	
acknowledges and understands that certain information relating to periodic reviews and/or examinations of the Bank conducted by the Federal Reserve  and the Indiana Department of Financial Institutions (“IDFI”) including, but not limited to, the Bank’s scores, findings and results may not be disclosed by the Corporation or the Bank under any condition, whether known or unknown. Investor acknowledges and understands that such undisclosed material may be information that would be deemed material by the Investor. Investor also acknowledges and understands that certain other investors will have access to such material by virtue of being members of the Corporation’s Board of Directors;

	
  

	
(10)

	
has not relied on any representation or warranty in connection with the Purchase other than those contained in this Agreement;

	
  

	
(11)

	
acknowledges that neither the Corporation nor any other person has offered to sell the Purchased Securities to Investor by means of any form of general advertising or solicitation, such as media advertising, seminars, or mass mailings, whether by regular mail or e-mail;

	
  

	
(12)

	
represents and warrants that (i) if an individual, the undersigned is at least twenty-one years of age; (ii) if an individual, the undersigned is a citizen of the United States; (iii) the undersigned has adequate means of providing for the undersigned’s current needs and personal contingencies; (iv) the undersigned has no need for liquidity in the undersigned’s investments; (v) the undersigned maintains the undersigned’s principal residence at the address shown below; (vi) all investments in and commitments to non-liquid investments are, and after the purchase of Purchased Securities will be, reasonable in relation to the undersigned’s net worth and current needs; and (vii) any financial information that is provided herewith by the undersigned, or is subsequently submitted by the undersigned at the request of the Corporation, does or will accurately reflect the undersigned’s financial condition with respect to which the undersigned does not anticipate any material adverse change;

	
  

	
(13)

	
agrees that the Corporation may present the information contained herein to the Corporation as they deem appropriate if called upon to verify the information provided or to establish the availability of an exemption from registration including, but not limited to, Rule 506 of Regulation D; or any state securities statutes or regulations or if the contents are relevant to any issue in any action, suit or proceeding;

	
  

	
(14)

	
has or will have available funds to make the Purchase on the terms and conditions contemplated by this Agreement;

	
  

	
(15)

	
acknowledges that the Investor has been encouraged to rely upon the advice of the Investor’s own legal counsel and accountants or other financial advisers with respect to the tax and other considerations relating to the purchase of Purchased Securities and has been offered, during the course of discussions concerning the purchase of Purchased Securities, the opportunity to ask such questions and inspect such documents concerning the Corporation and the Bank’s business affairs as the Investor has requested so as to understand more fully the nature of the investment and to verify the accuracy of the information supplied; and

	
  

	
(16)

	
understands and acknowledges that unless expressly set forth in this Agreement, nothing in this Agreement shall supersede the provisions of the Confidentiality and Non-Disclosure Agreement, entered into between the Corporation and the Investor, previously (“Confidentiality Agreement”).

 

  

  

ARTICLE III

Covenants

3.1           Expenses.  Each of the parties hereto will bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated under this Agreement, including fees and expenses of its own financial or other consultants, accountants and counsel.

 3.2          Public Announcement. No public release or announcement concerning the transactions contemplated hereby shall be issued by the Investor. The Corporation shall use commercially reasonable efforts to file with the SEC, as promptly as practicable after counter-execution and delivery of this Agreement by the Corporation, but no later than the time required by SEC Form 8-K, the material terms of this Agreement.

3.3           Further Assurances. Within three days of receipt of a written request from the Corporation, the Investor agrees to provide such information relevant to the Purchase and to execute and deliver such documents as the Corporation determines in good faith to be necessary or advisable to comply with any and all laws, regulations and ordinances to which the Corporation is subject.

ARTICLE IV

Restrictions on Transfer

4.1           Transfer Restrictions.

(a)           Restrictions on Transfer.  The Investor shall not directly or indirectly, transfer, sell, assign, pledge, convey, hypothecate or otherwise encumber or dispose of (collectively, “Transfer”), any of the Purchased Securities.

(b)           Permitted Transfers. Notwithstanding Section 4.1(a), the Investor and Permitted Transferees (as hereinafter defined) shall be permitted to Transfer any Purchased Securities:

	
  

	
(1)

	
at any time a Registration Statement shall be effective and in compliance with the Securities Act and usable for resale of the Purchased Securities; or

	
  

	
(2)

	
if in compliance with Rule 144 under the Securities Act; provided that, if the Investor is an Affiliate of the Corporation or has been an Affiliate of the Corporation during the three months preceding the date of such Transfer, any such Transfer shall be subject to approval by the Corporation in its sole discretion, which approval may be conditioned on the receipt by the Corporation or its agents or representatives of such information, documentation, opinions or assurances or other agreements as the Corporation may determine in its sole discretion to be necessary or advisable.  For purposes of this Section 4.1(b)(2), Affiliate means, with respect to any person, any person directly or indirectly controlling, controlled by or under common control with, such other person. For purposes of this definition, “control” when used with respect to any person, means the possession, directly or indirectly, of the power to cause the direction of management and/or policies of such person, whether through the ownership of voting securities, by contract or otherwise.

4.2           Legend. The Investor agrees that all certificates or other instruments representing Purchased Securities will bear a legend substantially to the following effect:

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AS PERMITTED BY, AND IN ACCORDANCE WITH, THE SUBSCRIPTION AGREEMENT, BETWEEN THE ISSUER OF THESE SECURITIES AND THE INVESTOR REFERRED TO THEREIN, IN A TRANSACTION COMPLYING WITH RULE 144 UNDER SUCH ACT AND AN EXEMPTION UNDER SUCH LAWS. THIS INSTRUMENT IS ISSUED PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF THE SUBSCRIPTION AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID SUBSCRIPTION AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.

 

  

  

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUBSCRIPTION AGREEMENT, AND THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

ARTICLE V

Miscellaneous

 5.1          Survival. The representations and warranties of the Corporation contained in this Agreement shall not survive after the Closing Date, at which time such representations and warranties shall expire. The representations and warranties of the Investor contained in this Agreement shall survive until the date two years after the Closing Date, at which time such representations and warranties shall expire.

5.2           Interpretation. When a reference is made in this Agreement to “Recitals,” “Articles,” or “Sections,” such reference shall be to a Recital, Article or Section of this Agreement unless otherwise indicated. The terms defined in the singular have a comparable meaning when used in the plural, and vice versa. The table of contents and headings contained in this Agreement are for reference purposes only and are not part of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “contained in” shall be deemed to mean “set forth in or incorporated by reference into,” and the words “contain” and “contains” shall have corresponding meanings. No rule of construction against the draftsperson shall be applied in connection with the interpretation or enforcement of this Agreement, as this Agreement is the product of negotiation between sophisticated parties advised by counsel. Except as expressly stated in this Agreement, all references to any statute, rule or regulation are to the statute, rule or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, include any rules and regulations promulgated under the statute) and to any section of any statute, rule or regulation including any successor to the section.

5.3           Amendment. No amendment of any provision of this Agreement will be effective unless made in writing and signed by an officer of a duly authorized representative of each party.

5.4           Waiver of Conditions. The conditions to the Corporation’s obligation to consummate the Purchase are for the sole benefit of the Corporation and may be waived by the Corporation in whole or in part to the extent permitted by applicable law. No waiver will be effective unless it is in a writing signed by a duly authorized officer of the Corporation that makes express reference to the provision or provisions subject to such waiver.

5.5           Counterparts and Facsimile. This Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement. Executed signature pages to this Agreement may be delivered by facsimile or electronically scanned, and such facsimiles or electronic scans will be deemed as sufficient as if actual signature pages had been delivered.

5.6           Governing Law; Submission to Jurisdiction, Etc. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana applicable to contracts made and to be performed entirely within such State. In connection with any dispute, controversy or claim arising out of or relating to this Agreement, or the validity, interpretation, breach or termination of this Agreement, including claims seeking redress or asserting rights under any law, each of the parties hereto agrees (i) to submit to the personal jurisdiction of the State or Federal courts in Allen County, Indiana, (ii) that exclusive jurisdiction and venue shall lie in the State or Federal courts in Allen County, Indiana and (iii) that notice may be served upon such party at the address and in the manner set forth for such party in Section 5.7.

 

  

  

5.7           Notices. All notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, if delivered personally or by courier, or three days after being deposited in the mail (registered or certified mail, postage prepaid, return receipt requested). All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

(a)           If to the Investor, to the person and the address indicated on the signature page to this Agreement.

(b)           If to the Corporation:

Tower Financial Corporation

Attn:  Michael D. Cahill, President/CEO

116 East Berry Street

Fort Wayne, Indiana 46802

Telephone:  (260) 427-7013

Facsimile:  (260) 427-7180

with a copy to:

Barrett & McNagny, LLP

Attn:  Samuel J. Talarico, Jr.

215 East Berry Street

Fort Wayne, IN 46802

Telephone:  (260) 423-9551

Facsimile:  (260) 423-8920

5.8           Entire Agreement. This Agreement, executed and delivered on the date hereof and the Confidentiality and Non-Disclosure Agreement, entered into between the Corporation and the Investor, constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties, both written and oral, between the parties, with respect to the subject matter hereof, and

5.9           Assignment.  This Agreement will not be assignable by any party without the prior written consent of the other party (any attempted assignment in contravention hereof being null and void ab initio).

5.10        Confidentiality.  The Investor agrees to treat all confidential information provided by the Corporation in connection with the transactions contemplated by this Agreement as proprietary information under the confidentiality provisions of the aforementioned Confidentiality Agreement.

5.11        Severability. If any provision of this Agreement, or the application thereof to any person or circumstance, is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to affect the original intent of the parties.

5.12         No Third Party Beneficiaries. Nothing contained in this Agreement, expressed or implied, is intended to confer upon any person or entity other than the Corporation and the Investor, any benefits, rights, or remedies.

In Witness Whereof, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first herein above written.

 

  

  

                                                                                                           

	  	
Tower Financial Corporation

	  	  	  	 
	  	  	  	 
	  	
By:

	  	 
	  	  	
Name:

	 
	  	  	
Title:

	 

 

	
INVESTOR:

	  	 	  
	  	  	 	  
	  	  	 	  
	
Address:

	  	 	  
	  	  	 	  
	  	  	 	  
	  	  	 	  
	  	  	 	  
	  	  	 	  
	
By:

	  	 	  
	  	
Name:

	 	  
	  	
Title:

	 	  

	
Common Shares Subscribed For:

	  	 	  	  
	  	  	 	
(Initial)

	  
	  	  	 	  	  
	  	  	 	  	  
	
Aggregate Purchase Price Delivered Herewith:

	$	 	
 

	  
	  	  	 	
(Initial)Unassociated Document

     

    Exhibit
10.7

    CAMDEN
NATIONAL CORPORATION

     

    AMENDED AND
RESTATED

    LONG-TERM PERFORMANCE SHARE
PLAN

     

     

    1.      Purpose.  This Plan
is intended to create incentives for certain executive officers of the Company
to allow the Company to attract and retain in its employ persons who will
contribute to the future success of the Company.  It is further the
intent of the Company that Awards made under this Plan will be used to achieve
the twin goals of (i) aligning executive incentive compensation with increases
in stockholder value and (ii)
using equity compensation as a tool to retain key employees.  This
Plan shall be a sub-plan of the Stock Option Plan and any Shares awarded under
this Plan shall reduce the number of Shares available for use under the Stock
Option Plan.

     

    2.      Definitions.  Capitalized
terms used and not otherwise defined herein shall have the meanings set forth
below:

     

    2.1          "Award" shall mean, for any
Participant, the actual payment in Shares at the end of a Long-Term Performance
Period.

     

    2.2          "Board" shall mean the Board
of Directors of the Company.

     

    2.3          "Change of Control" shall mean
the occurrence of any one of the following events:

     

    (a)              any
"Person," as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company,
any of its subsidiaries, or any trustee, fiduciary or other person or entity
holding securities under any employee benefit plan or trust of the Company or
any of its Subsidiaries), together with all "affiliates" and "associates" (as
such terms are defined in Rule 12b-2 under the Exchange Act) of such person,
shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 50 percent or more of the combined voting power of the Company's
then outstanding securities having the right to vote in an election of the Board
("Voting Securities") (in such case other than as a result of an acquisition of
securities directly from the Company); or

    

    (b)              persons
who, as of the Effective Date, constitute the Board (the "Incumbent Directors")
cease for any reason, including, without limitation, as a result of a tender
offer, proxy contest, merger or similar transaction, to constitute at least a
majority of the Board, provided that any person becoming a director of the
Company subsequent to the Effective Date shall be considered an Incumbent
Director if such person's election was approved by or such person was nominated
for election by either (i) a vote of at least a majority of the Incumbent
Directors or (ii) a vote of at least a majority of the Incumbent Directors who
are members of a nominating committee comprised, in the majority, of Incumbent
Directors; but provided further, that any such person whose

    

    initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of members of the Board or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board, including by reason of agreement intended to avoid or settle any
such actual or threatened contest or solicitation, shall not be considered an
Incumbent Director; or

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)              the
consummation of a consolidation, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
"Corporate Transaction"); excluding, however, a Corporate Transaction in which
the stockholders of the Company immediately prior to the Corporate Transaction,
would, immediately after the Corporate Transaction, beneficially own (as such
term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
shares representing in the aggregate more than 50 percent of the voting shares
of the corporation issuing cash or securities in the Corporate Transaction (or
of its ultimate parent corporation, if any); or

    

    (d)              the
approval by the stockholders of any plan or proposal for the liquidation or
dissolution of the Company.

    

    Notwithstanding
the foregoing, a "Change of Control" shall not be deemed to have occurred for
purposes of the foregoing clause (a) solely as the result of an acquisition of
securities by the Company which, by reducing the number of shares of Voting
Securities outstanding, increases the proportionate number of shares of Voting
Securities beneficially owned by any person to 50 percent or more of the
combined voting power of all then outstanding Voting Securities; provided,
however, that if any person referred to in this sentence shall thereafter become
the beneficial owner of any additional shares of Voting Securities (other than
pursuant to a stock split, stock dividend, or similar transaction or as a result
of an acquisition of securities directly from the Company) and immediately
thereafter beneficially owns 50 percent or more of the combined voting power of
all then outstanding Voting Securities, then a "Change of Control" shall be
deemed to have occurred for purposes of the foregoing clause (a).

     

    2.4          "Code" shall
mean the Internal Revenue Code of 1986, as amended.

     

    2.5          "Committee"
shall mean those members of the Compensation Committee of the Board who
are "outside directors" and "non-employee directors" as such terms are defined
under the Code, applicable regulations and Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended, respectively.

     

    2.6          "Company"
shall mean Camden National Corporation.

     

    2.7          "Effective Date"
shall mean, with respect to this amendment and restatement of the Plan,
January 1, 2010, and with respect to the original Plan, January 1, 2005
(amendments to the Plan shall be effective as indicated therein).

     

    2.8          "Efficiency Ratio "or "ER”  for a Long-Term Performance Period
shall mean the Company's non-interest expense divided by the Company's revenues
(i.e., the Company's fully tax equivalent net interest income and non-interest
income) during such Long-Term Performance Period.  Non-interest
expense and non-interest income shall exclude material non recurring events and
security gains and losses.

     

    2.9          "Fiscal Year" shall mean the
fiscal year of the Company, which is the 12- month period ending December 31 of
each year.

     

    2.10                     "Long-Term Performance Period"
shall mean a period of three consecutive Fiscal Years beginning on the
January 1 of the first year of such Long-Term Performance Period.  A
Long-Term Performance Period shall terminate prior to the expiration of three
consecutive Fiscal Years to the extent required pursuant to Section 6.3
hereof.

     

    2.11                     “Net Income Growth” for a
Long-Term Performance Period shall mean the compound annual growth rate of the
Company's net income over the
Long-Term Performance Period.  Non-interest income and non-interest
expense shall exclude material non recurring events.

     

    2.12                     "Non-Performing Asset Ratio"
shall mean non-performing assets (which includes non-accrual loans, loans
over 90 days past due still accruing, other real estate owned and repossessed
assets) as a percentage of total assets.

     

    

    2.13                     "Participant" shall mean an
executive officer of the Company designated by the Committee pursuant to Section
4 to participate in the Plan with respect to a Long-Term Performance
Period.

     

    2.14                     "Performance Measures" for
any Long-Term Performance Period shall mean:

     

    (a)              For
the Long-Term Performance Period beginning on or after January 1, 2007: Revenue
Growth and Efficiency Ratio.

    

    (b)              For
Long-Term Performance Periods beginning on or after January 1, 2009: Efficiency
Ratio, Return on Average Equity, Revenue Growth and/or Tangible Book Value Per
Diluted Share, as determined by the Committee in its discretion.

    

    (c)              For
Long-Term Performance Periods beginning on or after January 1, 2010: Efficiency
Ratio, Non-Performing Asset Ratio, Net Income Growth, Return on Average Equity,
Revenue Growth, and/or Tangible Book Value Per Diluted Share, as determined by
the Committee in its discretion.

    

    2.15                     "Plan" shall mean the Camden
National Corporation Amended and Restated Long-Term Performance Share Plan, as
amended from time to time.

     

    2.16                     "Retirement” shall mean an
employee's bona fide retirement from the Company provided that at the time of
such retirement (a) such employee is in good standing, and (b) has attained age
55 with at least 10 years of employment with the Company or has attained age 65
with at least five years of employment with the Company.

     

    2.17                     "Return on Average Equity" or
"ROAE" for
a Long-Term Performance Period shall mean (i) the Company's net income after
taxes for each Fiscal Year during such Long-Term Performance Period, divided by
(ii) the Company's average equity during such Long-Tern Performance Period, in
each case as reported in the Company's annual reports on Form 10-K for the
Fiscal Years included in such Long-Term Performance Period.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    2.18                     "Revenue Growth" or
“Compound Annual Growth Rate" or "CAGR” for a Long-Term Performance Period
shall mean the compound annual growth rate of the Company's revenues
(i.e., the Company's fully tax equivalent net interest income and non-interest
income) over the Long-Term Performance Period.  Non-interest income
shall exclude material non recurring events and security gains and
losses.

     

    2.19                     "Share"
shall mean a share of common stock, no par value, of the
Company.

     

    2.20                     "Stock Option Plan"
shall mean the Camden National Corporation 2003 Stock Option and
Incentive Plan.

     

    2.21                     "Tangible Book
Value Per Diluted Share or "TBV" for a Long-Term Performance Period shall
mean the Company's tangible book value per diluted share as of the end of such
Long-Tern Performance Period, calculated by dividing (i) the Company's tangible
book value (i.e., total assets less total liabilities, less goodwill, and less
core deposit intangibles) as of the end of such Long-Term Performance Period
(ii) by the total amount of common shares outstanding on a fully diluted basis
as of the end of such Long-Term Performance Period, in each case as reported in
the Company's annual report on Form 10-K for the year that ends simultaneously
with (or that includes the last day of) such Long-Term Performance
Period.

     

    2.22                     "Target Award”
shall mean, for any Participant, a percentage of his or her base salary
at the beginning of the Long-Term Performance Period.

     

    2.23                     "Termination Event"
shall mean, for any Participant, termination of such Participant's
employment with the Company either (a) by the Company for any reason other than
Cause or (b) by the Participant for Good Reason. "Cause" means a vote of the
Board resolving that the Participant should be dismissed as a result of (i) the
commission of any act by a grantee constituting financial dishonesty against the
Company (which act would be chargeable as a crime under applicable law); (ii) a
Participant's engaging in any other act of dishonesty, fraud, intentional
misrepresentation, moral turpitude, illegality or harassment which, as
determined in good faith by the Board, would: (A) materially adversely affect
the business or the reputation of the Company with its current or prospective
customers, suppliers, lenders and/or other third parties with whom it does or
might do business; or (B) expose the Company to a risk of civil or criminal
legal damages, liabilities or penalties; (iii) the repeated failure by a
Participant to follow the directives of the Company's chief executive officer or
Board or (iv) any material misconduct, violation of the Company's policies, or
willful and deliberate non-performance of duty by the participant in connection
with the business affairs of the Company. "Good Reason" means the occurrence of
any of the following events: (i) a substantial adverse change in the nature or
scope of the Participant's responsibilities, authorities, powers, functions or
duties; (ii) a substantial reduction in the Participant's annual base salary
except for across-the-board salary reductions similarly affecting all or
substantially all management employees; or (iii) the relocation of the offices
at which the Participant is principally employed to a location more than 50
miles from such offices.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    3.      Administration.  The
Committee shall have sole discretionary power to interpret the provisions of
this Plan, to administer and make all decisions and exercise all rights of the
Company with respect to this Plan.  The Committee shall have final
authority to apply the provisions of the Plan and determine, in its sole
discretion, the amount of the Awards to be paid to Participants hereunder and
shall also have the exclusive discretionary authority to make all other
determinations (including, without limitation, the interpretation and
construction of the Plan and the determination of relevant facts) regarding the
entitlement to benefits hereunder and the amount of benefits to be paid pursuant
to the Plan.  The Committee's exercise of this discretionary authority
shall at all times be in accordance with the terms of the Plan and shall be
entitled to deference upon review by any court, agency or other entity empowered
to review its decision, and shall be enforced, provided that it is not
arbitrary, capricious or fraudulent.

     

    4.      Eligibility.  For each Long-Term Performance Period,
the Committee in its discretion shall select those executive officers who shall
be Participants.  The selection of an individual to be a Participant
in any one Long-Term Performance Period does not entitle the individual to be a
Participant in any other Long-Term Performance Period.  A newly hired
executive may be eligible to become a Participant if he or she is hired prior to
the first day of a Long-Term Performance Period.  Subject to Section
7 hereof, any Participant
who is not a Participant at the beginning of the Long-Term Performance Period
and therefore does not participate for the entire Long-Term Performance Period,
including a newly hired or promoted Participant, shall receive a pro-rated
Target Award based on his period of participation.

     

    5.      Performance Measures
and Awards.

     

    5.1          Performance
Measures. Within the first 180
days of a Long-Term Performance Period, the Committee shall establish the
performance share matrix with the Performance Measures for the Long-Term
Performance Period. The established matrix shall be set forth in Exhibit
A.

     

    5.2          Granting of Awards.
The
Committee shall assign each Participant a Target Award for the Long-Term
Performance Period.

     

    5.3          Nature of Awards.
The Target
Awards granted under this Plan shall be used solely as a device for the
measurement and determination of Awards that may potentially be made to each
Participant as provided herein. Awards shall not constitute or be treated as
property or as a trust fund of any kind or as capital stock of the Company,
stock options or other form of equity or security until they are paid to
Participants in the form of Shares.

     

    6.      Payment of
Awards.

     

    6.1          Committee
Certification.  No Participant shall receive an Award
of any Shares under this Plan unless the Committee has certified, by resolution
or other appropriate action in writing, that the Performance Measure with
respect to the Long-Term Performance Period has in fact been
satisfied.  No payments shall be made if the Performance Measure has
not been met for the Long-Term Performance Period.  If each of the
Performance Measures has been met, the amount of the actual Award will be made
pursuant to the provisions of Section

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    6.2          Award to
Participants at End of Long-Term Performance Period. At the end of each
Long-Term Performance Period, if each Performance Measure equals or exceeds the
threshold set forth in Exhibit A, then each Participant shall receive an Award
in accordance with the matrix in Exhibit A. The Award for a Long-Term
Performance Period shall be paid to such Participant in Shares during the first
three months of the first Fiscal Year commencing after the end of such Long-Term
Performance Period.  The conversion of dollar amounts into Shares will
be based on the market value of a Share on the first day of the relevant
Long-Term Performance Period. Shares will be issued from the Stock Option
Plan.

     

    6.3          Change of
Control.  Notwithstanding anything to the contrary elsewhere
herein, if a Change of Control shall occur, (a) each Long-Term Performance
Period that has not yet ended shall end as of the date the Change of Control
occurs and Awards shall be calculated for each such Long-Term Performance Period
as of such date based on the Company's performance through such date and (b) all
Participants who are employed by the Company on the date the Change of Control
occurs shall receive a pro rata Award based on such shortened Long-Term
Performance Period (or, in the discretion of the Committee, the cash value of
such pro rata Award), if any, as soon as practicable. Notwithstanding the
foregoing, in the event a Participant has a Termination Event within six months
after such Change of Control and such Termination Event is in connection with
such Change of Control, then such Participant shall be entitled to an additional
Award under this Plan at such time in an amount equal to the excess, if any, of
the amount determined pursuant to the preceding sentence (assuming the amount in
(a) was calculated based on Superior Target), over the amount determined
pursuant to the preceding sentence (assuming the amount in (a) was calculated
based on the Company's actual performance.

     

    7.      Forfeiture;
Retirement.  Unless otherwise determined by the Committee, a
Participant whose employment with the Company terminates for any reason (other
than Retirement) prior to the actual payment of the Awards under Section 6.2
above shall forfeit all rights to the Target Award which might otherwise have
been granted to him. Unless otherwise determined by the Committee, a Participant
whose employment with the Company terminates due to such Participant's
Retirement prior to the actual payment of the Awards under Section 6.2 above
shall receive a pro rata Award.  Such Award shall be based on the
entire Long-Term Performance Period and shall be pro-rated based on the portion
of the relevant Long-Term Performance Period during which such Participant was
an employee of the Company.  Any such pro rata Award shall be paid
during the first three  months of the first Fiscal Year commencing
after the end of such Long-Term Performance Period.

     

    Anything
herein to the contrary notwithstanding, if at the time of the Participant's
separation from service within the meaning of Section 409A of the Code, the
Participant is considered a "specified employee" within the meaning of Section
409A(a)(2)(B)(i) of the Code, and
if any payment that the Participant becomes entitled to under this Plan is
considered deferred compensation subject to interest, penalties and additional
tax imposed pursuant to Section 409A(a) of the Code as a result of the
application of Section 409A(a)(2)(B)(i) of the Code, then no such payment shall
be payable prior to the date that is the earlier of (i) six months after the
Participant’s separation from service, or (ii) the participant's
death.  It is intended that this Plan will be administered in
accordance with Section 409A of the Code.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    8.      Amendment or
Termination of Plan.  The Company may amend or terminate this
Plan at any time or from time to time; provided however,
that no such amendment or termination shall, without the written consent
of the Participants, affect the rights of a Participant in any material adverse
way with respect to benefits earned prior to the date of the amendment or
termination.

     

    9.      Limitation of
Company's Liability. Subject to its obligation to make payments as
provided for hereunder, neither the Company nor any person acting on behalf of
the Company shall be liable for any act performed or the failure to perform any
act with respect to this Plan, except in the event that there has been a
judicial determination of willful misconduct on the part of the Company or such
person.  The Company is under no obligation to fund any of the
payments required to be made hereunder in advance of their actual payment or to
establish any reserves with respect to this Plan.  Any benefits which
become payable hereunder shall be paid from the general assets of the
Company.  No Participant, beneficiary or beneficiaries, shall have any
right, other than the right of an unsecured general creditor, against the
Company in respect of the benefits to be paid hereunder.

     

    10.                 Withholding of
Tax.  Anything to the contrary notwithstanding, all payments of
Awards required to be made by the Company hereunder shall be subject to the
withholding of such amounts as the Company reasonably may determine that it is
required to withhold pursuant to applicable federal, state or local law or
regulation.  Withholding can be made in the form of
Shares.

     

    11.                 Assignability.  Except
as otherwise provided by law, no benefit hereunder shall be assignable, or
subject to alienation, garnishment, execution or levy of any kind, and any
attempt to cause any benefit to be so subject shall be void.

     

    12.                 No Contract for
Continuing Services.  This Plan shall not be construed as
creating any contract for continued services between the Company and any
Participant and nothing herein contained shall give any Participant the right to
be retained as an employee of the Company.

     

    13.                 Governing Law.
This Plan shall be construed, administered, and enforced in accordance
with the laws of the State of Maine.

     

    14.                 Non-Exclusivity.  The
Plan does not limit the authority of the Company, the Committee, or any
subsidiary of the Company, to grant Awards or authorize any other compensation
under any other plan or authority, including, without limitation, awards or
other compensation based on the same Performance Measure used under the
Plan.

     

    
      
        	 	CAMDEN
      NATIONAL CORPORATION	 
	 	 	 	 
	Witness:	 	
                 

              	
                By:
      

              	 	 
	 	 	Its
      CEO and President	 
	 	 	 	 
	 	Date:	 	 

      

    

    
 

    
      
         

      

      
        6

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