Document:

Exhibit 10.2

 

CHANGE IN CONTROL AGREEMENT

 

This Agreement (the “Agreement”), made as of this 9th day of March 2018 (the “Effective Date”), by and between FVCBankcorp, Inc., a Virginia chartered commercial bank headquartered in Reston, Virginia (the “Company”) and Patricia A. Ferrick (“Officer”).

 

WHEREAS, Officer is President and Chief Financial Officer of the Company and its wholly owned subsidiary, First Virginia Community Bank (the “Bank”); and

 

WHEREAS, the Company believes that it is in the best interests of the Company, and a material inducement to Officer’s continued employment with the Company and bank, that it provide Officer with certain benefits in connection with a Change in Control (as hereinafter defined) of the Company;

 

NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1.                                      Definitions                                   (a)  Change in Control.  For purposes of this Agreement a “Change in Control” shall mean any one of the following events occurring after the Effective Date:

 

(i)  there shall be consummated (1) any consolidation, merger, share exchange, or similar transaction relating to the Company, in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company’s capital stock are converted into cash, securities of another entity or other property, other than a  transaction in which the holders of the Company’s voting stock immediately before transaction shall, upon consummation of such transaction, own at least fifty percent (50%) of the voting stock of the surviving entity, or (2) any sale of all or substantially all of the assets of the Company, other than a transfer of assets to a related person which is not treated as a change in control event under §1.409A-3(i)(5)(vii)(B) of the U.S. Treasury Regulations;

 

(ii)  any person, entity or group (each within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) shall become the beneficial owner (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the voting power of all outstanding securities of the Company entitled to vote generally in the election of directors of Company (including, without limitation, any securities of the Company that any such person has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise, which shall be deemed beneficially owned by such person); or

 

(iii) over a twelve (12) month period, a majority of the members of the Board of Directors of the Company are replaced by directors whose appointment or election was not endorsed by a majority of the members of the of Directors of the Company in office prior to such appointment or election.

 

(iv) Notwithstanding the foregoing (i) if the event purportedly constituting a Change in Control under paragraph 5.1(a), paragraph 5.1(b), or paragraph 5.1(c) does not also constitute a “change in ownership” of the Company, a “change in effective control” of the Company or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the U.S. Treasury Regulations promulgated thereunder (collectively, “Section 409A”), then such event shall not constitute a “Change in Control” hereunder.”

 

(b)                                 Cause.  For purposes of this Agreement, termination for “Cause” shall mean termination of employment based upon:

 

(i) any act of theft, fraud, intentional misrepresentation, personal dishonesty, or breach of fiduciary duty involving personal gain, or similar conduct by Officer in connection with or associated with Officer’s  employment by the Company or the Bank;

 

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(ii) any failure to comply with any requirement of law, regulation or order of a bank regulatory agency having jurisdiction over the Company or Bank (“Regulatory Agency”) which is not cured within 30 days after written notice thereof;

 

(iii) any Regulatory Agency action or proceeding against Officer as a result of Officer’s negligence, fraud, malfeasance or misconduct, or a Regulatory Agency action described in Section 12 hereof;

 

(iv) material failure of the operations department to achieve budget requirements, performance standards or targets established by the Board of Directors of the Company or of the Bank, where such failure is primarily a result  or lack of appropriate effort and/or due diligence by Officer; or

 

(v) any of the following conduct on the part of Officer that has not been corrected or cured within thirty (30) days after having received written notice from the Company or Bank detailing and describing such conduct:

 

(1)  the use of drugs, alcohol or other substances to an extent which materially interferes with or prevents Officer from performing Officer’s duties;

 

(2)  failure by or the inability of Officer to devote full time, attention and energy to the performance of Officer’s duties (other than by reason of death or disability);

 

(3)  intentional material failure by Officer to carry out the explicit lawful and reasonable directions, instructions, policies, rules, regulations or decisions of the Board of Directors of the Company or of the Bank, or of the Chief Executive Officer of the Company and Bank; or

 

(4)  willful or intentional misconduct on the part of Officer that results in substantial injury to the Company or Bank.

 

The Company shall determine if Cause exists with respect to its employment of the Officer in the exercise of its good faith discretion.

 

2.                                      Term of Agreement.  The term of this Agreement shall commence as of the Effective Date and shall continue thereafter for a period of three (3) years.  Commencing on the first anniversary date of the Effective Date (the “Anniversary Date”) and continuing on each Anniversary Date thereafter, the term of this Agreement shall automatically renew for an additional year such that the remaining term of this Agreement shall be three (3) years unless written notice of non-renewal (“Non-Renewal Notice”) is provided by either party at least 90 days prior to any such Anniversary Date, in which event this Agreement shall terminate at the end of the then current term.  Reference herein to the term of this Agreement shall refer to both the initial term and any extensions thereof.

 

3                                         Change in Control Termination.  For purposes of this Agreement, a “Change in Control Termination” means that:

 

(a)                                 Officer’s employment with the Company and Bank is terminated by the Company and Bank without Cause within the period beginning on the earlier of (i) the date the Company enters into a definitive agreement for a transaction which would if consummated constitute a Change in Control, or (ii) three months prior the effectiveness of a Change in Control, and ending one year after the effectiveness of the Change in Control; or

 

(b)                                 both (i) As of the effective date of the Change in Control, Officer has not been offered a position with the surviving or resulting entity following the Change in Control that is at least comparable (including materially comparable compensation, benefits, title, duties, responsibilities or position, and is located within thirty five (35) miles of Officer’s primary worksite) to the position Officer held immediately prior to the effectiveness of the Change in Control; and (ii) Officer does not accept a position with the surviving or resulting entity which is not a comparable position (other than a temporary position or consulting arrangement with a term of not more than 180 days following the effectiveness of the Change in Control).

 

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4.                                      Termination in Connection with a Change in Control.  (a) If there is a Change in Control Termination, the Officer shall be the Bank shall, shall be paid a lump-sum cash payment equal to 1.99 times the sum of (a) Officer’s then current base salary and (b) cash bonuses received during the twelve (12) month period immediately preceding Officer’s last day of employment, such Change Payment to be made to Officer within forty five (45) days after the later of (i) the termination of Officer’s employment; or (ii) the date of effectiveness of the Change in Control, the exact date of payment to be determined in the sole discretion of the Company, and make monthly payments for twelve (12) months following termination of Officer’s employment, for Officer’s health insurance premiums, or a cash payment equal to the cost thereof (“Change Payment”); provided, however, that the Company shall be relieved of its obligation to pay the Change Payment if Officer fails to sign and deliver to the Company no later than twenty-one (21) days after the later of: (i) the termination of Officer’s employment; or (ii) the date of effectiveness of the Change in Control, a General Release and Waiver in the form attached to this Agreement as Exhibit A.  Notwithstanding anything to the contrary in this Section 4, any payment pursuant to this Section shall be subject to (i) any delay in payment required by Section 6 hereof and (ii) any reduction required pursuant to Section 5 hereof, as applicable.  For purposes hereof, base salary shall not include any item of overtime pay, bonuses, commissions, severance pay, expense allowances or reimbursements, moving expenses, income from the exercise of nonqualified stock options, the disposition of incentive stock options or shares purchased under any employee stock purchase plan, income from restricted stock or stock option awards, excess group life insurance premiums or other extraordinary items of compensation. The Company’s payment of health insurance premiums is conditioned on the terms of the Company’s health insurance policy then in place and the Officer’s compliance with applicable federal and state laws and regulations.

 

(b)                                 For purposes of clarity, it is the intent of this Agreement that if Officer is offered the position of President, or a comparable executive officer position, of the surviving or resulting entity following a Change in Control, which such position has materially comparable compensation, benefits, title, duties, responsibilities or position, and is located within thirty five (35) miles of Officer’s primary worksite, then Officer shall not be entitled to receive the Change Payment, whether or not Officer accepts such position, unless Officer’s employment is subsequent terminated without Cause within one year following the effective date of the Change in Control.  Further, it is the intent of this Agreement that if Officer accepts a position that is not a comparable position, other than a temporary position or consulting arrangement with a term of not more than 180 days following the effectiveness of the Change in Control, Officer shall not be entitled to a Change Payment.

 

5.                                      Adjustment.  (a)  Notwithstanding anything in this Agreement to the contrary, if the Determining Firm (as defined in Section 5(b)) determines that any portion of the Change Payment and/or the portions, if any, of other payments or distributions in the nature of compensation by the Company to or for the benefit of the Officer (including, but not limited to, the value of the acceleration in vesting of restricted stock, options or any other stock-based compensation) whether or not paid or payable or distributed or distributable pursuant to the terms of this Agreement (collectively with the Change Payment, the “Aggregate Payment”), would cause any portion of the Aggregate Payment to be subject to the excise tax imposed by Code Section 4999 or would be nondeductible by the Company pursuant to Code Section 280G (such portion subject to the excise tax or being nondeductible, the “Parachute Payment”), the Aggregate Payment will be reduced, beginning with the Change Payment, to an amount which will not cause any portion of the Aggregate Payment to constitute a Parachute Payment. If, despite the foregoing sentence, a payment shall be made to Officer that would constitute a Parachute Payment, Officer shall have no right to retain such payment and, immediately upon being informed of the impropriety of such payment, Officer shall return such payment to the Company or other entity that was the payer thereof, together with interest at the applicable federal rate determined pursuant to Section 1274(d) of the Code.

 

(b)  All determinations required to be made under this Section 5 will be made by a reputable law or accounting firm (the “Determining Firm”) selected by the Company  All fees and expenses of the Determining Firm will be obligations solely of the Company.  The determination of the Determining Firm will be binding upon Officer and the Company.

 

6.                                      Construction; Compliance with 409A, Delay in Payment.  (a) It is the intention of the parties hereto that this Agreement and the payments provided for hereunder shall be in accordance with Section 409A, and thus avoid the imposition of any excise tax and interest on Officer pursuant to Section 409A(a)(1)(B) of the Code, and this Agreement shall be interpreted and construed consistent with this intent.  Officer acknowledges and agrees that Officer 

 

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shall be solely responsible for the payment of any excise tax or penalty which may be imposed or to which Officer may become subject as a result of the payment of any amounts under this Agreement.

 

(b)                                 Notwithstanding anything to the contrary contained herein, any payment hereunder that is considered “nonqualified deferred compensation” that is to be made to Officer while he is a “specified employee”, in each case as defined and determined for purposes of Section 409A, within six months following Officer’s “separation from service” (as determined in accordance with Section 409A), then to the extent that such payment is not otherwise permitted under Section 409A such that it would be exempt from the excise tax thereunder, such payment shall be delayed and shall be paid on the first business day of the seventh calendar month following Officer’s separation from service, or, if earlier upon Officer’s death.  To the extent that any payment to Officer which is payable in installments is required to be deferred pursuant to this Section 5(b), such deferred installments shall be paid on the first business day of the seventh month following Officer’s separation from service, or, if earlier upon Officer’s death, and any remaining installments shall be paid as scheduled.  For purposes of this Agreement any payment to Officer which is payable in installments is represent the right to a series of separate payments.

 

(c)                                  The parties hereto agree that they shall take such actions as may be necessary and permissible under applicable law, regulation and guidance to amend or revise this Agreement in order to ensure that Section 409A(a)(1)(B) does not impose additional tax, penalty or interest on payments made to Officer pursuant to this Agreement.

 

7.                                      Confidentiality; Non-Competition; Non-Interference.

 

(a)                                 Confidential Information.  Officer, during employment, will have, and has had, access to and become familiar with various confidential and proprietary information of the Company and bank and/or relating to the business of the Company and bank (“Confidential Information”), including, but not limited to: business plans; operating results; financial statements and financial information; contracts; mailing lists; purchasing information; customer data (including lists, names and requirements); feasibility studies; personnel related information (including compensation, compensation plans, and staffing plans); internal working documents and communications; and other materials related to the businesses or activities of the Company and Bank which is made available only to employees with a need to know or which is not generally made available to the public.  Failure to mark any Confidential Information as confidential, proprietary or protected information shall not affect its status as part of the Confidential Information subject to the terms of this Agreement. Notwithstanding the foregoing, “Confidential Information” shall not include (1) information that is or becomes public without a breach of the Agreement, (2) information that became available to the Officer on a non-confidential basis from a source not bound, to the Officer’s knowledge, by a non-disclosure agreement that covers the relevant information, (3) information that the Officer knows (and can demonstrate that he knows) before commencing employment with the Bank, and (4) information required to be disclosed by law after notice so that the Bank can contest the required disclosure or seek some other protection.

 

(b)                                 Nondisclosure.  Officer hereby covenants and agrees that she shall not, directly or indirectly, disclose or use, or authorize any person to disclose or use, any Confidential Information (whether or not any of the Confidential Information is novel or known by any other person); provided however, that this restriction shall not apply to the use or disclosure of Confidential Information (i) to any governmental entity to the extent required by law, (ii) which is or becomes publicly known and available through no wrongful act of Officer or any affiliate of Officer or (iii) in connection with the performance of Officer’s duties. Notwithstanding the foregoing, Officer and the Company acknowledge and agree that nothing contained in this Section 7  shall be interpreted, construed, asserted or enforced by the Company to prohibit Officer from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation.  Further, nothing contained in this Agreement shall be interpreted, construed, asserted or enforced by the Company to prohibit or disqualify Officer from being awarded, receiving and/or enjoying the benefit of, any award, reward, emolument or payment, or other relief of any kind whatsoever, from any agency, which is provided based upon Officer’s providing information to any such agency as a whistleblower under applicable law or regulation

 

(c)                                  Documents.  All files, papers, records, documents, compilations, summaries, lists, reports, notes, databases, tapes, sketches, drawings, memoranda, and similar items (collectively, “Documents”), whether prepared by Officer, or 

 

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otherwise provided to or coming into the possession of Officer, that contain any Confidential Information about or pertaining or relating to the Company or Bank (the “Company Information”) shall at all times remain the exclusive property of the Company and Bank. Promptly after a request by the Company or the termination of Officer’s employment, Officer shall take reasonable efforts to (i) return to the Company and Bank all Documents in any tangible form (whether originals, copies or reproductions) and all computer disks or other media containing or embodying any Document or  Company Information and (ii) purge and destroy all Documents and Company Information in any intangible form (including computerized, digital or other electronic format) as may be requested in writing by the Board of Directors of the Company or Bank, and Officer shall not retain in any form any such Document or any summary, compilation, synopsis or abstract of any Document or Company Information.

 

(d)                                 Non-Competition.  Officer hereby acknowledges and agrees that, during the course of employment, Officer has become, and will become, familiar with and involved in all aspects of the business and operations of the Company and Bank. Officer hereby covenants and agrees that during the term of this Agreement, and if Officer shall receive a Change Payment, until the date that is twelve (12) months after the last day of Officer’s employment with the Company and Bank (or any entity surviving or resulting from a Change in Control) (the “Restricted Period”), Officer shall not, without the prior approval of a majority of the Board of Directors, at any time, directly or indirectly, in any capacity (whether as a proprietor, owner, agent, officer, director, shareholder, organizer, partner, principal, manager, member, employee, contractor, consultant or otherwise) provide any advice, assistance or services to any Competitive Business or to any person or entity that is attempting to form or acquire a Competitive Business if such Competitive Business operates, or is planning to operate, any office, branch or other facility (in any case, a “Branch”) that is (or is proposed to be) located within a twenty-five (25) mile radius of the Bank’s headquarters or any Branch or office of the Company or Bank. Notwithstanding any provision hereof to the contrary, this Section 7(d) does not restrict Officer’s right to (i) own securities of any entity that files periodic reports with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; provided that Officer’s total ownership constitutes less than two percent (2%) of the outstanding securities of such company; (ii) to own, or during the Restricted Period to maintain ownership of (but not to acquire ownership of), passive investments in securities of any entity that does not file periodic reports with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; provided that Officer’s total ownership constitutes less than five percent (5%) of the outstanding securities of such company; or (iii) provide legal or investor services to a Competitive Business. For purposes of this Section 7, (i) “Competitive Business” means the banking and financial services business, which includes, without limitation, consumer savings, commercial banking, the savings and loan business and mortgage lending, or any other business in which the Company, the Bank or any subsidiary of the Company or Bank is engaged or has invested significant resources within the prior six (6) month period in preparation for becoming actively engaged; and (ii)”Competitive Products or Services” means, as of any time, those products or services of the type that any of the Company, the Bank or any subsidiary of the Company or Bank is providing, or is actively preparing to provide, to its customers.

 

(e)                                  Non-Interference. Officer hereby covenants and agrees that during the Restricted Period, Officer will not, directly or indirectly, for herself or any other person (whether as a proprietor, owner, agent, officer, director, shareholder, organizer, partner, principal, member, manager, employee, contractor, consultant or any other capacity): (i) induce or attempt to induce any customer, supplier, officer, director, employee, contractor, consultant, agent or representative of, or any other person that has a business relationship with the Company or Bank or any subsidiary of the Company or Bank, to discontinue, terminate or reduce the extent of its, his or her relationship with Company or Bank or any subsidiary of the Company or Bank or to take any action that would disrupt or otherwise be disadvantageous to any such relationship; (ii)  solicit any customer of Company or Bank or any subsidiary of the Company or Bank for the purpose of providing any Competitive Products or Services to such customer (other than any solicitation to the general public that is not disproportionately directed at customers of the Company or Bank or any subsidiary of the Company or Bank); or (iii)  solicit any employee of any of the Company or Bank or any subsidiary of the Company or Bank to commence employment with, become a consultant or independent contractor to or otherwise provide services for the benefit of any other Competitive Business

 

(f)                                   Injunction. In the event of any breach or threatened or attempted breach of any provision of this Article 8 by Officer, the Company shall, in addition to and not to the exclusion of any other rights and remedies at law or in equity, be entitled to seek and receive from any court of competent jurisdiction (i) full temporary and permanent injunctive relief enjoining and restraining Officer and each and every other person concerned therein from the continuation of 

 

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such violative acts and (ii) a decree for specific performance of the applicable provisions of this Agreement, without being required to furnish any bond or other security.

 

(g)                                  Reasonableness.      (a) Officer has carefully read and considered the provisions of this Article 8 and, having done so, agrees that the restrictions and agreements set forth in this Article 8 are fair and reasonable and are reasonably required for the protection of the interests of the Company or Bank or any subsidiary of the Company or Bank. Officer further agrees that the restrictions set forth in this Agreement will not impair or unreasonably restrain Officer’s ability to earn a livelihood.

 

(h)                                 If any court of competent jurisdiction should determine that the duration, geographical area or scope of any provision or restriction set forth in this Section 7 exceeds the maximum duration, geographical area or scope that is reasonable and enforceable under applicable law, the parties agree that said provision shall automatically be modified and shall be deemed to extend only over the maximum duration, geographical area and/or scope as to which such provision or restriction said court determines to be valid and enforceable under applicable law, which determination the parties direct the court to make, and the parties agree to be bound by such modified provision or restriction.

 

8.                                      Successors and Assigns.              (a)  This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Company that shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Company.

 

(b)                                 Since the Company is contracting for the unique and personal skills of the Officer, the Officer shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Company.

 

9.                                      No Mitigation.  The Officer shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Officer in any subsequent employment.

 

10.                               No Plan Created.  The Officer and the Company expressly declare and agree that this Agreement was negotiated among them and that no provision or provisions of this Agreement are intended to, or shall be deemed to, create any plan for purposes of the Employee Retirement Income Security Act or any other law or regulation, and the Company and the Officer each expressly waives any right to assert the contrary. Any assertion in any judicial or administrative filing, hearing, or process by or on behalf of the Officer or the Company that such a plan was so created by this Agreement shall be deemed a material breach of this Agreement by the party making such an assertion or on whose behalf such assertion was made.

 

11.                               No Additional Rights; Third Party Beneficiary.  (a)            This Agreement does not confer any right to employment, continuation of employment for any period, or any other right not specifically stated herein. Any assertion in any judicial or administrative filing, hearing, or process by or on behalf of the Officer or the Company that it does so shall be deemed a material breach of this Agreement by the party making such an assertion or on whose behalf such assertion was made.

 

(b)                                 This Agreement is for the benefit of the parties hereto and the Bank, and except as expressly stated herein with respect to the Bank, is not intended to be for the benefit of, or to be enforceable by, any other person.

 

12.                               Certain Regulatory Events.  (a)  If the Officer is removed and/or permanently prohibited from participating in the conduct of the Company’s or Bank’s affairs by an order issued under Sections 8(e)(4) or 8(g)(1) of the FDIA, all obligations of the Company under this Agreement shall terminate as of the effective date of the order.

 

(b)  If the Bank is in default (as defined in Section 3(x)(1) of FDIA), all obligations of the Company under this Agreement shall terminate as of the date of default.

 

(c)  If a notice served under Sections 8(e)(3) or 8(g)(1) of the FDIA suspends and/or temporarily prohibits the Officer from participating in the conduct of the Company’s or Bank’s affairs, the Company’s obligations under this Agreement shall be suspended as of the date of such service, unless stayed by appropriate proceedings.  If the charges in the notice 

 

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are dismissed, the Company may, in its discretion, (i) pay the Officer all or part of the compensation withheld while its contract obligations were suspended, and (ii) reinstate (in whole or in part) any of its obligations that were suspended.

 

The occurrence of any of the events described in paragraphs a, b, and c above may be considered by the Company in connection with a termination for Cause.

 

13.                               Notices.  All notices, requests, demands and other communications in connection with this Agreement shall be made in writing and shall be deemed to have been given when delivered by hand or 48 hours after mailing at any general or branch United States Post Office, by registered or certified mail, postage prepaid, addressed as follows, or to such other address as shall have been designated in writing by the addressee:

 

To:                             David W. Pijor

Chief Executive Officer

FVCBankcorp, Inc.

11325 Random Hills Road

Fairfax, VA  22030

dpijor@fvcbank.com

 

To:                             Patricia A. Ferrick

 

 

14.                               Amendments.  No amendments or additions to this Agreement shall be binding unless made in writing and signed by all of the parties.

 

15.                               Applicable Law.  Except to the extent preempted by Federal law, the laws of the Commonwealth of Virginia, without regard to its conflict of laws principles, shall govern this Agreement in all respects.

 

16.                               Severability.  The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

 

17.                               Headings. Headings contained herein are for convenience of reference only.

 

18.                               Entire Agreement.  This Agreement, together with any understanding or modifications thereof as agreed to in writing by the parties, shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof. Not in limitation of the foregoing, this Agreement supersedes in its entirety that certain Employment Agreement, dated as of April 20, 2007, by and between the Bank and Officer, which Employment Agreement is hereby terminated and of no further force or effect.

 

IN WITNESS WHEREOF, the undersigned have set their respective hands, duly authorized, as of the date and year first above written.

 

FVCBANKCORP, INC.

 

	
By:
    	
/s/   David W. Pijor
    	
 
    
	
 
    	
David   W. Pijor, Chief Executive Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
PATRICIA   A. FERRICK
    	
 
    
	
 
    	
 
    
	
/s/   Patricia A. Ferrick
    	
 
    

 

7Exhibit 10.3

 

SUBORDINATED NOTE PURCHASE AGREEMENT

 

This SUBORDINATED NOTE PURCHASE AGREEMENT (this “Agreement”) is dated as of June 20, 2016, and is made by and among FVCBANKCORP, INC., a Virginia corporation (“Company”), and the several purchasers of the Subordinated Notes identified on the signature pages hereto (each a “Purchaser” and collectively, the “Purchasers”).

 

RECITALS

 

WHEREAS, Company has requested that the Purchasers purchase from Company up to $25,000,000 in aggregate principal amount of Subordinated Notes (as defined herein), which aggregate amount is intended to qualify as Tier 2 Capital (as defined herein).

 

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

 

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

 

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

 

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

 

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

 

AGREEMENT

 

1.                                      DEFINITIONS.

 

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

 

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

 

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

 

 

“Bank” means First Virginia Community Bank, a Virginia chartered commercial bank and wholly owned subsidiary of Company.

 

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

 

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

 

“Closing Date” means June 20, 2016.

 

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

 

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

 

“Company’s Reports” means (i) audited financial statements of Company for the year ended December 31, 2015; (ii) the unaudited financial statements of Company for the quarter ended March 31, 2016; and (iii) Company’s report for the year ended December 31, 2015 as filed with the FRB.

 

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

 

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

 

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

 

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

 

“FDIC” means the Federal Deposit Insurance Corporation.

 

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

 

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

 

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

 

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

 

“Hazardous Materials” means flammable explosives, asbestos, urea formaldehyde insulation, polychlorinated biphenyls, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances”

 

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under the Hazardous Materials Laws and/or other applicable environmental laws, ordinances or regulations.

 

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

 

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

 

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

 

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

 

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with the prior written consent of Purchasers, and vice versa, or as otherwise contemplated by this Agreement and the Subordinated Notes.

 

“Maturity Date” means June 30, 2026.

 

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

 

“Placement Agent” has the meaning set forth in the Recitals.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Tier 2 Capital” has the meaning given to the term “Tier 2 capital” in 12 C.F.R. Part 217, as amended, modified and supplemented and in effect from time to time or any replacement thereof.

 

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

 

1.2                               Interpretations.  The foregoing definitions are equally applicable to both the singular and plural forms of the terms defined.  The words “hereof”, “herein” and “hereunder” and words of like import when used in this Agreement shall refer to this Agreement as a whole and not

 

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to any particular provision of this Agreement.  The word “including” when used in this Agreement without the phrase “without limitation,” shall mean “including, without limitation.” All references to time of day herein are references to Eastern Time unless otherwise specifically provided.  All references to this Agreement and Subordinated Notes shall be deemed to be to such documents as amended, modified or restated from time to time.  With respect to any reference in this Agreement to any defined term, (i) if such defined term refers to a Person, then it shall also mean all heirs, legal representatives and permitted successors and assigns of such Person, and (ii) if such defined term refers to a document, instrument or agreement, then it shall also include any replacement, extension or other modification thereof.

 

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

 

2.                                      SUBORDINATED DEBT.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.8                               Use of Proceeds.  Company shall use the net proceeds from the sale of Subordinated Notes for contribution to the capital of the Bank and other general corporate purposes.

 

3.                                      DISBURSEMENT.

 

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

 

3.2                               Conditions Precedent to Disbursement.

 

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

 

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

 

3.2.1.2                       Authority Documents.

 

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

 

(b)                                 A certificate of existence of Company issued by the State Corporation Commission of the Commonwealth of Virginia;

 

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

 

(d)                                 A copy, certified by the Secretary or Assistant Secretary of Company, of the resolutions of the board of directors

 

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of Company, and any committee thereof, authorizing the execution, delivery and performance of the Transaction Documents;

 

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

 

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

 

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

 

3.2.2                                 Conditions to Company’s Obligation.

 

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

 

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

 

4.                                      REPRESENTATIONS AND WARRANTIES OF COMPANY.

 

Company hereby represents and warrants to each Purchaser as follows:

 

4.1                               Organization and Authority.

 

4.1.1                                 Organization Matters of Company and Its Subsidiaries.

 

4.1.1.1                       Company is validly existing and in good standing under the laws of the Commonwealth of Virginia, and has all requisite corporate power and authority to conduct its business and activities as presently conducted, to own its properties, and to perform its obligations under the Transaction Documents.  Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification

 

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is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect on Company. Company is a duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended.

 

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

 

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

 

4.1.2                                 Capital Stock and Related Matters.  The Articles of Incorporation of Company authorize Company to issue 20,000,000 shares of common stock and 1,000,000 shares of preferred stock.  As of the date of this Agreement, there are [•] shares of the Company’s common stock issued and outstanding and no shares of Company’s preferred stock have been issued and outstanding.  All of the outstanding capital stock of Company has been duly authorized and validly issued and is fully paid and non-assessable.  There are, as of the date hereof, no outstanding options, rights, warrants or other agreements or instruments obligating Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of Company or obligating Company to grant, extend or enter into any such agreement or commitment to any Person other than Company except pursuant to Company’s equity incentive plans duly adopted by Company’s Board of Directors.

 

4.2                               No Impediment to Transactions.

 

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

 

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

 

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

 

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

 

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

 

4.3                               Possession of Licenses and Permits.  Company and its Subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, “Governmental

 

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

 

4.4                               Financial Condition.

 

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

 

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

 

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

 

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contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of Company or any Subsidiary of Company.

 

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

 

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

 

4.6                               Legal Matters.

 

4.6.1                                 Compliance with Law.  Company and each of its Subsidiaries (i) has complied with and (ii) is not, to the Company’s knowledge, under investigation with respect to, and, to the Company’s knowledge, has not been threatened to be charged with or given any notice of any material violation of any applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any instrumentality or agency thereof, having jurisdiction over the conduct of its business or the ownership of its properties, except where any such failure to comply or violation would not reasonably be expected to have a Material Adverse Effect on Company or any of its Subsidiaries.  Company and each of its Subsidiaries (x) is, and at all times prior to the date hereof has been, compliant with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any Governmental Agency, and their own privacy policies and written commitments to their respective customers, consumers and employees, concerning data protection and the privacy and security of personal data and the nonpublic personal information of their respective customers, consumers and employees, in each case the failure to comply with which would not result, individually or in the aggregate, in a Material Adverse Effect on Company or such applicable Subsidiary, and (y) at no time during the two years prior to the date hereof has received any notice asserting any violations of any of the

 

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foregoing, which, if accurate, would reasonably be expected to result in a Material Adverse Effect on Company or such Subsidiary.

 

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

 

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

 

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

 

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

 

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

 

4.7                               No Misstatement.  No information, exhibit, report, schedule or document, when viewed together as a whole, furnished by Company to Purchasers in connection with the negotiation, execution or performance of this Agreement contains any untrue statement of a

 

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material fact, or omits to state a material fact necessary to make the statements contained therein not misleading in light of the circumstances when made or furnished to Purchasers and as of the Closing Date.

 

4.8                               Internal Accounting Controls.  Company, Bank and each other applicable Subsidiary of the Company has established and maintains a system of internal control over financial reporting that pertain to the maintenance of records that accurately and fairly reflect the transactions and dispositions of the Company’s assets (on a consolidated basis), provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that Company’s and Bank’s receipts and expenditures and receipts and expenditures of each of the Company’s other Subsidiaries are being made only in accordance with authorizations of Company management and Board of Directors, and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of the Company on a consolidated basis that could have a material effect on the financial statements.  Such internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP.  Since the conclusion of the Company’s last completed fiscal year there has not been and there currently is not (i) any significant deficiency or material weakness in the design or operation of its internal control over financial reporting which are reasonably likely to adversely affect its ability to record, process, summarize and report financial information, or (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Company’s or Bank’s internal control over financial reporting and the internal control over financial reporting of each other applicable Subsidiary of the Company.  The Company (A) has implemented and maintains disclosure controls and procedures reasonably designed and maintained to ensure that material information relating to the Company is made known to the Chief Executive Officer and the Chief Financial Officer of the Company by others within the Company and (B) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and the audit committee of the Company’s Board of Directors (x) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company’s internal controls over financial reporting.  Such disclosure controls and procedures are effective for the purposes for which they were established.

 

4.9                               Representations and Warranties Generally.  The representations and warranties of the Company set forth in this Agreement and in any certificate or other document delivered to Purchasers by or on behalf of Company pursuant to or in connection with this Agreement are true and correct as of the date hereof and will be true and correct as of the Closing Date and as otherwise specifically provided herein or therein.  None of the representations, warranties, covenants and agreements made in this Agreement or in any certificate or other document delivered to Purchasers by or on behalf of Company pursuant to or in connection with this Agreement contains any untrue statement of a material fact or omits to state a material fact or any fact necessary to make the statements contained therein not misleading in light of the circumstances when made and as of the Closing Date.

 

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5.                                      GENERAL COVENANTS, CONDITIONS AND AGREEMENTS.

 

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

 

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

 

5.2                               [Intentionally Omitted]

 

5.3                               Compliance with Laws.

 

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

 

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

 

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

 

5.3.4                                 Corporate Existence.  Company shall do or cause to be done all things reasonably necessary to maintain, preserve and renew its corporate existence and that of Bank and the other Subsidiaries and its and their rights and franchises.

 

5.3.5                                 Dividends, Payments, and Guarantees During Event of Default.  Upon the occurrence of a failure by Company to make any required payment of principal or interest on the Subordinated Notes or of an Event of Default (as defined under the Subordinated Notes) until such failure or Event of Default is cured, except as required by any federal or state Governmental Agency,  Company shall not (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock; (b) make any payment of principal of, or interest or premium, if any, on, or repay, repurchase or redeem any

 

14

 

of Company’s Indebtedness that ranks equal with or junior to the Subordinated Notes; or (c) make any payments under any guarantee that ranks equal with or junior to the Subordinated Notes, other than (i) any dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of Company’s common stock; (ii) any declaration of a non-cash dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result of a reclassification of Company’s capital stock or the exchange or conversion of one class or series of Company’s capital stock for another class or series of Company’s capital stock; (iv) the purchase of fractional interests in shares of Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged; or (v) purchases of any class of Company’s common stock related to the issuance of common stock or rights under any benefit plans for Company’s directors, officers or employees or any of Company’s dividend reinvestment plans.

 

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

 

5.3.7                     Form D.  Not later than 15 business days following the Closing, the Company shall file, or cause to be filed, a Form D with the Securities Exchange Commission and, where required by applicable law, state securities administrators of the jurisdictions in which the Purchasers are resident.

 

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

 

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

 

15

 

Transaction.  All documents, financial statements, appraisals and other data relevant to Company or the Subordinated Notes may be retained by any such Person.

 

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

 

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

 

5.8                               DTC Registration.  The Company shall use commercially reasonable efforts to cause the Subordinated Notes held by Qualified Institutional Buyers as defined in Rule 144A of the Securities Act to be registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”) or a nominee of DTC.

 

6.                                      REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASERS.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6.8                               Information.  It acknowledges that:  (i) it is not being provided with the disclosures that would be required if the offer and sale of the Subordinated Notes were registered under the Securities Act, nor is it being provided with any offering circular or prospectus prepared in connection with the offer and sale of the Subordinated Notes; (ii) it has conducted its own examination of Company and the terms of the Subordinated Notes to the extent it deems necessary to make its decision to invest in the Subordinated Notes; and (iii) it has availed itself of publicly available financial and other information concerning Company to the extent it deems necessary to make its decision to purchase the Subordinated Notes.  It has reviewed the information set forth in Company’s Reports and the exhibits and schedules hereto and contained in the data room established by Company on June 8, 2016.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.                                      [Intentionally Omitted]

 

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8.                                      MISCELLANEOUS.

 

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

 

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

 

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

 

8.4                               Severability.  Any provision of this Agreement which is unenforceable or invalid or contrary to law, or the inclusion of which would adversely affect the validity, legality or enforcement of this Agreement, shall be of no effect and, in such case, all the remaining terms and provisions of this Agreement shall subsist and be fully effective according to the tenor of this

 

19

 

Agreement the same as though any such invalid portion had never been included herein.  Notwithstanding any of the foregoing to the contrary, if any provisions of this Agreement or the application thereof are held invalid or unenforceable only as to particular persons or situations, the remainder of this Agreement, and the application of such provision to persons or situations other than those to which it shall have been held invalid or unenforceable, shall not be affected thereby, but shall continue valid and enforceable to the fullest extent permitted by law.

 

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

 

20

 

	
if   to Company:
    	
FVCBankcorp, Inc.   

11325   Random Hills Road, Suite 240 

Fairfax,   Virginia 22030  

 

Attention:   Patricia A. Ferrick, Chief Financial Officer
    
	
 
    	
 
    
	
with   a copy to:
    	
BuckleySandler   LLP 

1250   24th Street, NW, Suite 700 

Washington,   DC 20037  

 

Attention:   Noel M. Gruber, Esquire
    
	
 
    	
 
    
	
if   to Purchasers:
    	
To   the address indicated on such Purchaser’s signature page.
    

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

8.15                        Waiver Of Right To Jury Trial.  TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF COMPANY OR PURCHASERS.  THE PARTIES ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING

 

22

 

OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF THEIR OWN FREE WILL.  THE PARTIES FURTHER ACKNOWLEDGE THAT (I) THEY HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (II) THIS WAIVER HAS BEEN REVIEWED BY THE PARTIES AND THEIR COUNSEL AND IS A MATERIAL INDUCEMENT FOR ENTRY INTO THIS AGREEMENT AND (III) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED THEREIN.

 

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

 

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

 

[Signature Pages Follow]

 

23

 

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

 

	
 
    	
COMPANY:  

 

FVCBANKCORP, INC. 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
David   W. Pijor  
    
	
 
    	
 
    	
Title:
    	
President   and Chief Executive Officer
    

 

[Company Signature Page to Subordinated Note Purchase Agreement]

 

 

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

 

	
 
    	
PURCHASER:  

 

[INSERT PURCHASER’S NAME]
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
[·]
    
	
 
    	
 
    	
Title:
    	
[·]
    
	
 
    	
 
    
	
 
    	
Address   of Purchaser: 
    
	
 
    	
 
    
	
 
    	
[·](1)
    
	
 
    	
 
    
	
 
    	
Principal   Amount of Purchased Subordinated Note: 
    
	
 
    	
 
    
	
 
    	
$[·]
    

 

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

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