Document:

stockpurchaseagreement-e

EXECUTION VERSION      4811-0033-8921 v.25      STOCK PURCHASE AGREEMENT    dated as of August 2, 2021    relating to the issued share capital of    National Bank of New York City          

 

  -i-  4811-0033-8921 v.25  TABLE OF CONTENTS  Page  ARTICLE I    DEFINITIONS  1.01 Definitions......................................................................................................................1  1.02 Additional Definitions ...................................................................................................9  ARTICLE II    THE SHARE SALE  2.01 The Share Sale .............................................................................................................10  2.02 The Closing ..................................................................................................................10  ARTICLE III    CONSIDERATION  3.01 Payment and Delivery of Consideration ......................................................................11  3.02 Purchase Price ..............................................................................................................11  3.03 Deliveries and Actions at Closing................................................................................12  3.04 Post-Closing Tangible Common Equity Adjustment ..................................................13  3.05 Escrow Deposits...........................................................................................................15  ARTICLE IV    ACTIONS PENDING ACQUISITION  4.01 Conduct of Business Prior to the Closing ....................................................................15  4.02 Forbearances Related to the Bank ................................................................................16  4.03 No Transfer of Shares ..................................................................................................18  4.04 Permitted Dividends and Distributions ........................................................................18  ARTICLE V    REPRESENTATIONS AND WARRANTIES  5.01 Bank Disclosure Schedule ...........................................................................................19  5.02 Representations and Warranties of Each Seller ...........................................................19  5.03 Representations and Warranties of the Bank ...............................................................20  5.04 Representations and Warranties with Respect to Purchaser ........................................30  

 

  -ii-  4811-0033-8921 v.25  ARTICLE VI    COVENANTS  6.01 Reasonable Best Efforts ...............................................................................................32  6.02 Filings; Authorizations and Consents ..........................................................................32  6.03 Press Releases; Public Announcements .......................................................................33  6.04 Access; Information .....................................................................................................33  6.05 Confidentiality .............................................................................................................33  6.06 Fees and Expenses .......................................................................................................35  6.07 Tax Matters ..................................................................................................................35  6.08 Compensation Matters .................................................................................................37  6.09 Subsequent Financial Statements .................................................................................38  6.10 Competing Transaction ................................................................................................38  6.11 Notice ...........................................................................................................................38  6.12 Release .........................................................................................................................38  6.13 Shareholders’ Agreement .............................................................................................39  6.14 Maintenance of Branch Office .....................................................................................39  ARTICLE VII    CONDITIONS TO CONSUMMATION OF THE SHARE SALE  7.01 Conditions to the Obligation of Each Party to Effect the Share Sale ..........................39  7.02 Conditions to the Obligation of Purchaser ...................................................................40  7.03 Conditions to the Obligation of the Bank and Sellers ..................................................42  ARTICLE VIII    TERMINATION  8.01 Termination ..................................................................................................................42  8.02 Notice of Termination ..................................................................................................43  8.03 Effect of Termination and Abandonment ....................................................................43  ARTICLE IX    INDEMNIFICATION  9.01 Indemnification by Sellers ...........................................................................................44  9.02 Indemnification by Purchaser ......................................................................................45  9.03 Third-Person Claims ....................................................................................................45  9.04 Limitation of Liability ..................................................................................................46  9.05 Survival of Representations and Warranties and Covenants .......................................46  9.06 Exclusive Remedy .......................................................................................................47  

 

  -iii-  4811-0033-8921 v.25  ARTICLE X  SELLERS’ REPRESENTATIVE  10.01 Acknowledgement .......................................................................................................47  10.02 Sellers’ Representative Expenses ................................................................................48  10.03 Indemnification of Sellers’ Representative ..................................................................48  10.04 Reliance........................................................................................................................49  10.05 Replacement of the Sellers’ Representative ................................................................49  ARTICLE XI    MISCELLANEOUS  11.01 Waiver; Amendment ....................................................................................................49  11.02 Counterparts .................................................................................................................49  11.03 Governing Law ............................................................................................................50  11.04 Specific Performance ...................................................................................................50  11.05 Assignment ..................................................................................................................50  11.06 Notices .........................................................................................................................50  11.07 Entire Understanding; Third-Party Beneficiaries ........................................................52  11.08 Interpretation; Effect ....................................................................................................52  11.09 Severability ..................................................................................................................53  11.10 WAIVER OF JURY TRIAL ........................................................................................53  11.11 Venue for Resolution of Disputes ................................................................................54      Schedules  Schedule A Sellers  Schedule B Minority Director Shareholders  Schedule C Minority Shareholders  Schedule D Office Locations  Schedule E Bank Disclosure Schedule   Schedule F Lease for Owned Property  Schedule G Non-Performing Loan  

 

    4811-0033-8921 v.25  This STOCK PURCHASE AGREEMENT is dated as of August 2, 2021 (the  “Execution Date”), by and among those persons whose names and addresses are set forth in  Schedule A (collectively, “Sellers” and each, a “Seller”), National Bank of New York City (the  “Bank”), a national bank located in the State of New York, and Newtek Business Services Corp.,  a corporation formed under the laws of the State of Maryland (“Purchaser”).  RECITALS  WHEREAS, as of the Execution Date, Sellers collectively own 33,600 shares of  common stock, par value $25.00 per share (“Common Stock”), of the Bank, which shares  constitute all of the Outstanding Equity Interests of the Bank other than the shares of Common  Stock held by the Minority Director Shareholders (collectively, the “Shares”);  WHEREAS, Sellers wish to sell, and Purchaser wishes to purchase, all of the  Shares held by Sellers, upon the terms and subject to the conditions set forth in this Agreement;   WHEREAS, the directors named in Schedule B hereto (“Minority Director  Shareholders”), owning the number of shares set forth in Schedule B, each have entered into  agreements with the Bank pursuant to which each Minority Director Shareholder has agreed to  resign, effective as of the date immediately preceding the Closing Date and in connection  therewith the Shares owned thereby will be repurchased by the Bank, subject to any required  regulatory approval, at the price per share set forth in said agreements (the “Director Resignation  Agreements”);   WHEREAS, on the date hereof, Purchaser has entered into an employment  agreement with Nicholas DeMeo, the President of the Bank, with such agreement to be effective  upon and subject to the Closing; and  WHEREAS, Purchaser, the Bank and Sellers desire to make certain  representations, warranties, covenants and agreements in connection with this Agreement.  NOW, THEREFORE, in consideration of these premises and of the mutual  covenants, representations and warranties and agreements contained herein and for other good  and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the  parties agree as follows:  ARTICLE I    DEFINITIONS  1.01 Definitions.  Capitalized terms used but not otherwise defined herein shall  have the meanings set forth below, including for purposes of the preamble and the Recitals  hereof:  “Action” means any civil, criminal or administrative action, suit, claim, case,  litigation, arbitration, demand, investigation or legal, administrative or arbitration proceeding.  

 

  -2-  4811-0033-8921 v.25  “Affiliate” means, with respect to a person, those other persons that, directly or  indirectly, control, are controlled by or are under common control with such person.    “Agreement” means this Stock Purchase Agreement, as amended or modified  from time to time in accordance with Section 11.01, including all Schedules and Exhibits hereto.  “Bank Equity-to-Debt Ratio” means total stockholders’ equity divided by total  liabilities, as calculated in accordance with GAAP.  “Bank Transaction Expense Excess Amount” means the aggregate amount of any  Bank Transaction Expenses that exceed $1,500,000.  “Bank Transaction Expenses” means any out-of-pocket fees, costs and expenses  of third-party advisors incurred, paid or payable by the Bank in connection with this Agreement  and the transactions contemplated hereby or the Escrow Agreement, including any investment  banking fees, legal fees, accounting fees, and similar costs and expenses.    “BIN” means a unique bank identification number or interbank card association  assigned by Visa Inc. or MasterCard Inc., respectively (or their affiliates), for use in entering or  receiving card transactions from such payment network.  “BIN Sponsor” means any member institution of MasterCard Inc. or Visa Inc. that  serves as an acquiring bank for any merchant or that sponsors a company’s participation in either  such payment network.  “Board of Directors” or “Board” means, with respect to any person, the board of  directors, board of managers, supervisory board and executive board, managing member(s),  managers or such other similar governing body or group, as applicable, established pursuant to  the Governing Documents of such person.   “Business Day” means any day other than a Saturday, Sunday or a day on which  banking institutions in New York, New York are authorized or required by law to close.  “Competing Transaction” means a sale of all or any significant part of the Bank or  any of the equity of the Bank, whether by stock purchase, merger, reorganization,  recapitalization, consolidation, or other business combination or any other means.  “Consent” means any consent, approval, authorization, clearance, exemption,  waiver or similar affirmation by any person pursuant to any Contract, Law, Order, or Permit or  otherwise.  “Contract” means, with respect to any person, any agreement, contract, indenture,  undertaking, debt instrument, lease, license, consent, settlement, note, mortgage, understanding,  arrangement, obligation or commitment to which such person or any of its Subsidiaries is a party  or by which any of them may be bound or to which any of their assets or properties may be  subject, whether or not in writing, but excluding any Benefit Plans.  

 

  -3-  4811-0033-8921 v.25  “Control” (including, with correlative meanings, the terms “controlled by” or  “under common control with”), as applied to any person, means the possession, directly or  indirectly, of (a) ownership, control or power to vote 25 percent or more of the outstanding  shares of any class of voting securities of such person, (b) control, in any manner, over the  election of a majority of the directors, trustees, general partners or managing members (or  individuals exercising similar functions) of such person or (c) the power to exercise a controlling  influence over the management or policies of such person.  “Copyrights” means copyrights, mask works, works of authorship and moral  rights and any registrations, renewals, extensions and reversions of any of the foregoing.  “Default” means (a) any material breach or violation of or default under any  Contract, Law, Order or Permit, (b) any occurrence of any event that with the passage of time or  the giving of notice or both would constitute a material breach or violation of or default under  any Contract, Law, Order or Permit or (c) any occurrence of any event that, with or without the  passage of time or the giving of notice, would give rise to a right to terminate or revoke, change  the current terms of or renegotiate, accelerate, increase or impose any liability under, any  Contract, Law, Order or Permit or result in any change in the then-prevailing terms of any  Contract, Law, Order or Permit, including by operation of provisions in existence on such date.  “Derivative Transaction” means any swap transaction, option, warrant, forward  purchase or sale transaction, futures transaction, cap transaction, floor transaction or collar  transaction relating to one or more currencies, commodities, bonds, equity securities, loans,  interest rates, catastrophe events, weather-related events, credit-related events or conditions or  any indices, or any other similar transaction (including any option with respect to any of these  transactions) or combination of any of these transactions, including collateralized mortgage  obligations or other similar instruments or any debt or equity instruments evidencing or  embedding any such types of transactions, and any related credit support, collateral or other  similar arrangements related to such transactions, other than those included or embedded in any  Extension of Credit.  “Dividend Approval” means the approval of the OCC required for the Bank to  (i) make any Permitted Dividends and (ii) form the Operating Subsidiary and contribute the  Owned Property to the Operating Subsidiary.  “Effect” means any circumstance, change, effect, event, development, occurrence,  condition, action, omission or state of facts.  “Equity Interest” means any type of equity ownership in a person or Right to  acquire any equity ownership in a person, including partnership interests in a general partnership  or limited partnership, membership interests in a limited liability company, share or similar  security in a corporation or the comparable instruments for any other person, or any other interest  entitling the holder thereof to participate in distributions, including of the income or profits of  such person, to vote for the governing body of such person or otherwise granting any other  economic, voting or other rights, obligations, benefits or interests in, or attaching to, such  interests.  

 

  -4-  4811-0033-8921 v.25  “Escrow End Date” means the date that is eighteen (18) months after the Closing  Date.  “FDIC Approval” means any approval, to the extent required, of the Federal  Deposit Insurance Corporation (the “FDIC”), including Bank Merger Act approvals, required to  transfer any assets of Purchaser or any Subsidiary of Purchaser to, or for the assumption of  liabilities of the Purchaser or any Subsidiary of Purchaser by, the Bank; or for any Subsidiary of  Purchaser to merge or consolidate with the Bank for purposes of the Bank Merger Act.  “Federal Reserve Approval” means the approval of the Board of Governors of the  Federal Reserve System (the “Federal Reserve”) for Purchaser to become a bank holding  company and engage in nonbanking activities under the Bank Holding Company Act of 1956  and the rules and regulations promulgated thereunder, including any approval of the Federal  Reserve required for Purchaser to organize an interim national bank and to acquire control of the  Bank; approval of the Federal Reserve of an election by Purchaser to be treated as a financial  holding company; and any other approvals of the Federal Reserve required to consummate the  transactions contemplated by this Agreement.   “Final Determination” means, with respect to a dispute, an occurrence where  (a) the parties to the dispute have reached an agreement in writing, (b) a court of competent  jurisdiction shall have entered a final and non-appealable Order or judgment with respect to a  claim or (c) an arbitration or like panel shall have rendered a final non-appealable determination  with respect to disputes the parties have agreed to submit thereto.  “GAAP” means generally accepted accounting principles in the United States of  America.  “Governing Documents” means the charter, constitution, articles or articles of  incorporation and by-laws of a corporation or banking organization, the certificate of partnership  and partnership agreement of a general or limited partnership, the certificate of formation and  limited liability company agreement of a limited liability company, the trust agreement of a trust  and the comparable documents of other entities.  “Governmental Authority” means any federal, state, local, foreign or  supranational court, tribunal, arbitral or administrative agency or commission or other  governmental authority or instrumentality, or any industry self-regulatory authority.  “Hazardous Substance” means any substance that is defined as a pollutant,  contaminant, toxic or hazardous substance under any applicable Environmental Law, including  asbestos, petroleum and its derivatives and by-products and polychlorinated biphenyls.  “Indebtedness” means:  (a) all liabilities of such person for borrowed money,  whether current or funded, fixed or contingent, secured or unsecured, all obligations evidenced  by bonds, debentures, notes or similar instruments, and all liabilities in respect of mandatorily  redeemable or purchasable share capital or securities convertible into share capital; (b) all  liabilities of such person for the deferred purchase price of property or services that are, and to  the extent, required to be classified and accounted for under GAAP as liabilities; (c) all liabilities  of such person in respect of any lease of (or other arrangement conveying the right to use) real or  

 

  -5-  4811-0033-8921 v.25  personal property, or a combination thereof that are, and to the extent, required to be classified  and accounted for under GAAP as capital leases; and (d) all liabilities of such person for the  reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit  transaction securing obligations of a type described in clause (a), (b) or (c) above to the extent of  the obligation secured; and all liabilities as obligor, guarantor or otherwise, to the extent of the  obligation secured; notwithstanding the foregoing, Indebtedness shall not include any customer  deposits maintained at the Bank.  “Intellectual Property Rights” means all intellectual property rights and related  priority rights protected, created or arising under the Laws of any jurisdiction or under any  international convention, including all (a) Patents, (b) Marks, (c) Copyrights and (d) Trade  Secrets.  “Knowledge” means, with respect to an individual, that the individual is actually  aware of such fact or other matter or should have become aware after due inquiry.  “Law” means any domestic or foreign law (including common law), statute, code,  ordinance, rule, regulation, Order, decree, directive, permit, authorization or injunction issued,  promulgated or entered into by or with any Governmental Authority.  “Lien” means any charge, mortgage, pledge, security interest, restriction, lien or  similar encumbrance.  “Marks” means trademarks, service marks, trade names, Internet domain names,  trade dress, logos, corporate names and other indicators of origin and any registrations,  applications, renewals and extensions of any of the foregoing and all goodwill associated with or  symbolized by any of the foregoing.  “Material Adverse Effect” means any Effect that, individually or in the aggregate,  (i) has been, or would reasonably be expected to be, materially adverse to the business, assets,   condition (financial or otherwise) or results of operations of the Bank; provided, however, that in  determining whether a Material Adverse Effect has occurred there shall be excluded any Effect  to the extent attributable to, arising out of, relating to or resulting from (a) any change in  applicable Laws, regulations or interpretations of applicable Laws or regulations after the date of  this Agreement; (b) any change in generally accepted accounting principles or applicable  regulatory accounting requirements after the date of this Agreement; (c) changes in general  economic, business, market or financial market conditions after the date of this Agreement;  (d) changes in national or international political conditions, including the engagement in  hostilities, whether or not pursuant to the declaration of a national emergency or war, or the  occurrence of any military or terrorist attack or sabotage, after the date of this Agreement; or (e)  the announcement of the transactions contemplated by this Agreement or any actions expressly  contemplated by this Agreement; provided, further, that the Effects listed in clauses (a) – (d)  above will be considered in determining whether a Material Adverse Effect has occurred to the  extent they impact the Bank disproportionately to other similarly situated national banking  associations; or (ii) would prevent, materially delay or materially impair the ability of the Bank  or any Seller to consummate any of the transactions contemplated hereby. “Minority  Shareholders” means the persons set forth in Schedule C.  

 

  -6-  4811-0033-8921 v.25  “OCC Approval” means the approvals of the Office of the Comptroller of the  Currency (the “OCC”) of (i) the proposed business plan for the operation of the Bank after  Closing, including any required approval of an application filed by the Bank in respect of any  changes to the asset composition of the Bank; any approvals, including any approval in  connection with acquiring or establishing an operating subsidiary of the Bank, required to  transfer any assets of Purchaser to the Bank or any subsidiary thereof (including the contribution  of Subsidiaries of Purchaser to an operating subsidiary of the Bank); any required waivers of the  qualifications for directors of national banking associations under applicable Law for the  directors of the Bank after Closing; any approvals required under applicable Law with respect to  the establishment of office locations as set forth in Schedule D; any approval required to  organize an interim national bank and to effect a merger or other business combination between  the interim national bank and the Bank and (ii) any other approvals required by the OCC to  consummate the transactions contemplated by this Agreement or in connection with the proposed  business plan for the Bank with respect to its operation after Closing.  “Order” means any administrative decision or award, decree, injunction,  judgment, order, quasi-judicial decision or award, ruling or writ of any federal, state, local,  foreign or other court, arbitrator, mediator, tribunal, administrative agency or Governmental  Authority.  “Outstanding” means, with respect to Equity Interests of a Party, those Equity  Interests that are issued and outstanding at a particular time.  “Party” means Purchaser, the Bank or Sellers, and “Parties” means, collectively,  the foregoing persons.  “Patents” means patents and patent applications, including any continuation,  continuation-in-part, divisional and provisional applications and any patents issuing thereon and  any reissues, reexaminations, substitutes and extensions of any of the foregoing.  “Permit” means any federal, state, local or foreign governmental approval,  authorization, certificate, easement, filing, franchise, license, order or permit from Governmental  Authorities that is required for the operation of a Party’s respective businesses.  “Permitted Liens” means (a) Liens imposed by Law for Taxes, assessments or  other governmental charges or levies that are not yet due and payable or that are being contested  in good faith by appropriate proceedings and for which reserves are maintained in accordance  with GAAP; (b) mechanics’, materialmen’s, warehousemen’s, carriers’, workers’ or repairmen’s  liens or other similar common law or statutory Liens arising in the ordinary course of business;  (c) deposits to secure the performance of bids, trade contracts, leases, statutory obligations,  surety and appeal bonds, performance bonds and other similar obligations, in each case in the  ordinary course of business; (d) leases, subleases, licenses, sublicenses, easements, restrictions,  rights-of-way, encumbrances, imperfections of title on real property, standard exceptions  commonly found in title policies in the jurisdiction where such real property is located, and other  Liens that do not materially interfere with or materially impair the ordinary conduct of business;  (e) gaps in chain of title or other irregularities apparent in the records of the Governmental  

 

  -7-  4811-0033-8921 v.25  Authority maintaining such records; and (f) zoning, building, subdivision and other similar  requirements and restrictions.  “Pre-Closing Tax Period” means any taxable year or period ending on or before  the Closing Date.  “Previously Disclosed” means information set forth by the Bank in the Bank  Disclosure Schedule as described in Section 5.01.  “Pro Rata Share” means, (i) with respect to a Seller and where Minority  Shareholders are included, the percentage obtained by dividing (a) the total number of those  Shares held by such Seller immediately prior to the Closing (as described opposite such Seller’s  name on Schedule A) by (b) the total number of Shares outstanding immediately prior to the  Closing; and (ii) with respect to a Seller and where Minority Shareholders are excluded, Pro Rata  Share means the percentage obtained by dividing (a) the total number of those Shares held by  such Seller immediately prior to the Closing (as described opposite such Seller’s name on  Schedule A) by (b) the total number of Shares outstanding immediately prior to the Closing,  excluding in each case the Shares owned by the Minority Shareholders.  “Registered” means issued by, registered with, renewed by or the subject of a  pending application before any Governmental Authority or Internet domain name registrar.   “Representatives” means, with respect to any person, such person’s, or such  person’s Subsidiaries’, directors, officers, employees, accountants, investment bankers,  commercial bank lenders, attorneys and other advisors or representatives (including the  employees or attorneys of such accountants, investment bankers or attorneys).  “Rights” means, with respect to any person, securities or obligations directly or  indirectly convertible into or exercisable or exchangeable for, or giving any other person any  right, directly or indirectly, to subscribe for or acquire, or any options, puts, calls or  commitments relating, directly or indirectly, to, or any share appreciation right or other  instrument the value of which is determined in whole or in part by reference to the market price,  book or other value of, shares, units or other Equity Interests of such first person, or the first  person or any of its Subsidiaries is or may become obligated to offer, issue, sell, purchase, return  or redeem, or cause to be offered, issued, sold, purchased, returned or redeemed, any Equity  Interests of such person or any of its Subsidiaries, whether pursuant to any security, obligation,  right, instrument, agreement, contract, commitment, option, undertaking or other arrangement or  understanding (including, for the avoidance of doubt, upon exercise of any options, warrants or  convertible loans or securities), whether fixed or contingent and whether or not in writing.  “SBA Approval” means any approvals required by the U.S. Small Business  Administration (the “SBA”) to be obtained by Purchaser to consummate the transactions  contemplated by this Agreement and approval required, if any, by the SBA to be obtained by the  Bank for the Bank to be a licensed SBA lender.  “Straddle Period” means any taxable year or period beginning prior to the Closing  Date and ending after the Closing Date.   

 

  -8-  4811-0033-8921 v.25  “Subsidiary” means, with respect to a person, an Affiliate directly or indirectly  controlled by such person.    “Tangible Common Equity” means common stockholders’ equity minus goodwill  and intangible assets calculated in accordance with GAAP.  “Tangible Common Equity Calculation” means a calculation of the Bank’s  Tangible Common Equity based on the Bank Financial Statements as of the Tangible Common  Equity Calculation Date.   “Tangible Common Equity Calculation Date” means (i) the Closing Date, if such  date is the first day of the calendar month or (ii) if the Closing Date is not the first day of the  calendar month, the last day of the calendar month immediately prior to the month of the Closing  Date.   “Target Tangible Common Equity Value” means $20,000,000.  “Tax Returns” means all federal, state, local and foreign returns and reports  required to be filed with respect to any Tax.  “Taxes” means all federal, state, local and foreign taxes, however denominated,  including, without limitation, income, gross receipts, windfall profits, value added, severance,  property, production, sales, use, license, excise, franchise, employment, withholding, estimated  or other similar taxes, duties, fees, assessments or other charges imposed by any taxing authority,  together with any interest, and penalties imposed by any taxing authority with respect to the  foregoing.  “Technology” means all (a) computer programs, including all software  implementations of algorithms, models and methodologies, whether in source code or object  code, (b) descriptions, flow-charts and other work product used to design, plan, organize and  develop any of the foregoing, screens, user interfaces, report formats, firmware, middleware,  development tools, templates, menus, buttons and icons, (c) documentation, including user  manuals and other training documentation, related to any of the foregoing, and (d) content,  information, designs, formulae, compositions, algorithms, procedures, methods, techniques,  ideas, know-how, research and development, technical data, databases and compilations,  including all data and collections of data, whether machine readable or otherwise, subroutines,  tools, materials, specifications, processes, inventions (whether patentable or not and whether  reduced to practice or not), invention disclosures, improvements, apparatus, creations, works of  authorship and other similar materials, and all recordings, graphs, drawings, reports, analyses,  and other writings, and other tangible embodiments of the foregoing, in any form whether or not  specifically listed herein.  Notwithstanding the foregoing, “Technology” shall not include  customer data or other personally identifiable data subject to privacy or other similar legal  restrictions.  “Trade Secrets” means trade secrets, know-how and other proprietary  information.  

 

  -9-  4811-0033-8921 v.25  1.02 Additional Definitions.  Each of the following terms has the meaning  specified in the Section of this Agreement set forth opposite such term:   Term Section     “Accountant” Section 3.04(b)  “Adjustment Escrow Account” Section 3.03(c)(iv)  “Adjustment Escrow Deposit” Section 3.03(c)(iv)  “Bank” Preamble  “Bank Audited Financial Statements” Section 5.03(k)  “Bank Benefit Plan” Section 5.03(w)(i)  “Bank Disclosure Schedule” Section 5.01  “Bank Financial Statements” Section 5.03(k)  “Bank Interim Financial Statements” Section 5.03(k)  “Bank Material Contracts” Section 5.03(y)  “Bank Releasee” Section 6.12  “Benefit Plans” Section 5.03(w)  “Burdensome Conditions” Section 7.01(b)  “Closing” Section 2.02  “Closing Date” Section 2.02  “Closing Payment” Section 3.02(a)  “Common Stock” Recitals  “Confidentiality Agreement” Section 6.05(a)  “Confidential Information” Section 6.05(a)  “Cross-Receipt” Section 3.03(a)(iv)  “Director Resignation Agreements” Recitals  “Environmental Law” Section 5.03(u)(i)  “Escrow Agent” Section 3.03(c)(iii)  “Escrow Agreement” Section 3.05(a)  “Escrow Deposits” Section 3.03(c)(iv)  “Execution Date” Preamble  “Expiration Date” Section 9.05  “Extensions of Credit” Section 5.03(l)(iv)  “FHLBNY” Section 7.02(j)  “Final Determination” Section 3.02(c)  “Final Tangible Common Equity Value” Section 3.04(c)  “Funds Flow Memorandum” Section 3.02(b)  “Indemnified Party” Section 9.03(a)  “Indemnifying Party” Section 9.03(a)  “Indemnity Escrow Account” Section 3.03(c)(iii)  “Indemnity Escrow Deposit”  Section 3.03(c)(iii)  “Lease” Section 4.04  “Losses” Section 9.01(a)  “Minority Director Shareholders” Recitals  “Net Recovery” Section 3.02(c)  “Notice”  Section 11.06  “Notice of Objection” Section 3.04(a)  

 

  -10-  4811-0033-8921 v.25  Term Section     “Non-Performing Loan” Section 3.02(c)  “Operating Subsidiary” Section 4.02(d)  “Owned Property” Section 4.04  “Permitted Dividends” Section 4.04  “Pre-Closing Returns” Section 6.07(c)(i)  “Purchase Price” Section 3.02(a)  “Purchaser” Preamble  “Purchaser Approvals” Section 8.03(b)  “Purchaser Indemnified Persons” Section 9.01(a)  “Purchaser Shareholder Approval” Section 7.02(i)  “Purchaser Termination Fee” Section 8.03(b)  “Regulatory Reports” Section 5.03(o)(i)  “Requisite Regulatory Approvals”  Section 6.02  “Seller” and “Sellers” Preamble  “Seller Indemnified Persons” Section 9.02(a)  “Sellers’ Representative” Section 10.01  “Share Sale”  Section 2.01  “Shares” Recitals  “Shareholders’ Agreement” Section 6.13   “Straddle Returns” Section 6.07(c)(ii)  “Subsequent Financial Statements”  Section 6.09  “Third Person” Section 9.03(a)  “Threshold” Section 9.04  “Voting Debt” Section 5.03(c)(i)    ARTICLE II    THE SHARE SALE  2.01 The Share Sale.  On the terms of this Agreement and subject to the  satisfaction or waiver of the conditions set forth in Article VII hereof, at the Closing, each Seller  shall sell, transfer and deliver to Purchaser, and Purchaser shall purchase and accept from each  Seller, all the Shares held by such Seller (which total number of Shares held by such Seller is set  forth opposite such Seller’s name in Schedule A) free and clear of any Liens (the “Share Sale”).     2.02 The Closing.  The closing of the Share Sale (the “Closing,” and the date  on which the Closing occurs, the “Closing Date”) shall take place at the offices of Sullivan &  Cromwell LLP, 125 Broad Street, New York, New York 10004, at 10 a.m. New York City time,  on the fifth (5th) Business Day immediately following the satisfaction or waiver of the last of the  conditions specified in Article VII of this Agreement to be satisfied or waived, other than those  conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or  waiver of those conditions, or at such other place or on such other date as agreed to by the  Parties.  

 

  -11-  4811-0033-8921 v.25  ARTICLE III    CONSIDERATION  3.01 Payment and Delivery of Consideration.  At the Closing, Purchaser shall,  in consideration of the Share Sale, pay (or cause to be paid) to each Seller (or any person or  persons designated by such Seller in writing no later than five (5) Business Days prior to the  Closing) an amount in cash in U.S. Dollars determined in accordance with Section 3.02(a).  3.02 Purchase Price.    (a) The aggregate purchase price shall equal $20,000,000 (the  “Purchase Price”).  At the Closing, an amount equal to (i) the Purchase Price,  (ii) minus the Bank Transaction Expense Excess Amount, (iii) minus the Indemnity  Escrow Deposit, (iv) minus the Adjustment Escrow Deposit, (v) plus any Bank  Transaction Expenses paid by the Bank prior to Closing up to an amount equal to  $1,500,000, (vi) plus an amount equal to (a) the amount of the Bank’s Tangible  Common Equity as of the Closing Date after adjustment for the Bank Transaction  Expense Excess Amount, if any, and the Permitted Dividends payable at Closing  minus (b) the Purchase Price (the “Closing Payment”) shall be paid to the Sellers as  set forth below.  (b) Payment of each Seller’s Pro Rata Share of the Closing Payment or  any other amounts of cash under this Agreement shall be in U.S. Dollars by wire  transfer of immediately available funds to, in respect of each Seller, an account to be  designated by the person (which designation shall be made by such Seller) receiving  such payment by written Notice to Purchaser at least five (5) Business Days prior to  the date on which each payment is due and reflected in a funds flow memorandum  provided by Sellers’ Representative (the “Funds Flow Memorandum”).  (c) In addition to the Closing Payment, in the event that, within the  period of six (6) months subsequent to the Closing Date, the nonperforming loan (the  “Non Performing Loan”) identified in Schedule G is repaid in full and the Bank  recovers any or all of the amount related to the Non-Performing Loan that was  previously charged off, the aggregate amount of such recovery of the amount related  to the Non-Performing Loan that was previously charged off, net of any expenses  incurred by the Bank in effecting the recovery and any tax liability, if any, solely  attributable to the Bank resulting from such recovery (the “Net Recovery”), shall be  paid by Purchaser and/or the Bank to the Sellers, on a pro rata basis, by wire transfer  within five (5) Business Days of the Final Determination (as hereinafter defined) of  the Net Recovery in immediately available funds to each Seller in the amount of their  respective Pro Rata Share. Within five (5) Business Days of the Net Recovery, the  Bank will deliver to the Purchaser the calculation of the Net Recovery with  reasonable supporting detail. If Purchaser provides written notice of its objection to  the calculation of the Net Recovery, setting forth in reasonable detail its disagreement  with the calculation of the Net Recovery within thirty (30) calendar days of the  Bank’s delivery of its calculation of the Net Recovery, Purchaser and Sellers’  

 

  -12-  4811-0033-8921 v.25  Representative shall attempt to resolve Purchaser’s disagreement with the calculation  of the Net Recovery within twenty (20) calendar days of the delivery of the  Purchaser’s notice. If the Purchaser and Sellers’ Representative cannot come to a  mutually acceptable calculation of the Net Recovery, such dispute will be resolved  pursuant to the method set forth in Sections 3.04(b), 3.04(c) and 3.04(d). “Final  Determination” shall be the date that Purchaser and the Sellers’ Representative  mutually accept the calculation of the Net Recovery or if the matter has had to  proceed to resolution by the Accountant, the date the Accountant renders its final  determination.  3.03 Deliveries and Actions at Closing.    (a) By the Sellers. At the Closing, the Sellers’ Representative shall  deliver, or cause to be delivered, to Purchaser the following:  (i) for each Seller, a share certificate or certificates representing the  Shares, duly endorsed in blank or accompanied by a share transfer power duly  executed in blank in a form acceptable for transfer on the books of the Bank, as well  as a related letter of transmittal;  (ii) a certificate, dated the Closing Date, signed by Sellers’  Representative, certifying as to the matters set forth in Section 7.02(c);  (iii) a counterpart to the Escrow Agreement, duly executed by the  Sellers’ Representative; and  (iv) a cross-receipt in a form reasonably satisfactory to the Parties (the  “Cross-Receipt”).  (b) By the Bank. At the Closing, the Bank shall deliver, or cause to be  delivered, to Purchaser the following:  (i) all corporate books and records of the Bank;  (ii) a certificate, dated the Closing Date, signed by an executive officer  of the Bank, certifying as to the matters set forth in Sections 7.02(b) and 7.02(d);   (iii) the resignation of the Minority Director Shareholders in  accordance with the Director Resignation Agreements and, if requested by Purchaser  in accordance with Section 7.02(h), the written resignations of all the remaining  members of the Board of Directors of the Bank;   (iv) a Tangible Common Equity Calculation in accordance with  Section 3.04; and  (v) a statement setting forth in reasonable detail the Bank Transaction  Expenses.  

 

  -13-  4811-0033-8921 v.25  (c) By Purchaser. At the Closing, Purchaser shall deliver, or cause to  be delivered, the following:  (i) a certificate, dated the Closing Date, signed by an executive officer  of Purchaser, certifying as to the matters set forth in Sections 7.03(a) and 7.03(b);  (ii) pursuant to instructions set forth in the Funds Flow Memorandum,  to each Seller, a payment in an amount equal to the proportion of such Seller’s Pro  Rata Share of the Closing Payment;  (iii) pursuant to instructions set forth in the Funds Flow Memorandum,  a payment in an amount equal to $3,000,000 (the “Indemnity Escrow Deposit”), to an  account (the “Indemnity Escrow Account”) specified by an escrow agent mutually  agreed upon between the Bank and Purchaser (the “Escrow Agent”), which Indemnity  Escrow Deposit shall be held, safeguarded and released pursuant to the terms of the  Escrow Agreement; notwithstanding anything to the contrary herein, the Purchase  Price allocable to the Shares held by the Minority Shareholders will not be subject to  adjustment for the Indemnity Escrow Deposit, and, accordingly, Sellers who are not  Minority Shareholders shall bear more than their Pro Rata Share (under clause (i) of  the definition of Pro Rata Share) of the adjustment to the Purchase Price for the  Indemnity Escrow Deposit;  (iv) pursuant to instructions set forth in the Funds Flow Memorandum,  a payment in an amount equal to $2,000,000 (the “Adjustment Escrow Deposit,” and  together with the Indemnity Escrow Deposit, the “Escrow Deposits”) to an account  (the “Adjustment Escrow Account”) specified by the Escrow Agent, which  Adjustment Escrow Deposit shall be held, safeguarded and released pursuant to the  terms of the Escrow Agreement;  (v) a counterpart to the Escrow Agreement;   (vi) pursuant to instructions set forth in the Funds Flow Memorandum,  Purchaser shall pay any unpaid amounts of the Bank Transaction Expenses due and  owing to any third-party advisors, such payment to be by wire transfer of immediately  available funds; and  (vii) the Cross-Receipt.  3.04 Post-Closing Tangible Common Equity Adjustment.   (a) At the Closing, the Bank shall deliver a Tangible Common Equity  Calculation to Purchaser along with reasonable supporting detail. If Purchaser  disputes the Bank’s Tangible Common Equity Calculation, Purchaser shall deliver to  the Sellers’ Representative a written statement (a “Notice of Objection”) setting forth  in reasonable detail the particulars of such disagreements (which shall indicate  Purchaser’s reasonable belief that the Bank’s Tangible Common Equity Calculation  has not been calculated in accordance with GAAP) not later than thirty (30) calendar  days after receipt of the Tangible Common Equity Calculation.  Purchaser and the  

 

  -14-  4811-0033-8921 v.25  Sellers’ Representative shall then seek, in good faith, to agree to a Tangible Common  Equity Calculation.   (b) If Purchaser has validly provided a Notice of Objection to the  Bank’s Tangible Common Equity Calculation delivered at Closing and Purchaser and  Sellers’ Representative fail to mutually agree upon a Tangible Common Equity  Calculation within twenty (20) calendar days of Purchaser’s delivery of the Notice of  Objection to Sellers’ Representative, then resolution of any disagreements with  respect to the Tangible Common Equity Calculation shall be submitted to an  independent accounting firm of recognized national standing in the United States as  may be mutually selected by Purchaser and the Sellers’ Representative) (such  accounting firm that is ultimately selected, the “Accountant”) to resolve any  remaining disagreements and to prepare a Tangible Common Equity Calculation.  (c)  The Accountant shall be instructed to render its determination  with respect to the Tangible Common Equity Calculation as soon as reasonably  possible (which the Parties agree shall not be later than forty-five (45) calendar days  following the formal engagement of the Accountant).  The determination of the  Accountant in accordance with this Section 3.04(c) shall be binding and final for  purposes of this Agreement.  The Accountant’s final statement setting forth its  Tangible Common Equity Calculation resulting from the determinations made by the  Accountant in accordance with this Section 3.04(c) shall be deemed final (the value  of the Bank’s Tangible Common Equity set forth in such Tangible Common Equity  Calculation, the “Final Tangible Common Equity Value”).  (d) The Accountant shall allocate the costs and expenses for its  services performed in connection with Section 3.04 equally between Purchaser and  Sellers, with the cost and expenses of Sellers in respect of such services being  deducted from the Adjustment Escrow Account.  (e) Within five (5) Business Days following the determination of the  Final Tangible Common Equity Value:   (i) if the Final Tangible Common Equity Value is less than the  Tangible Common Equity Calculation, then Purchaser and the Sellers’ Representative  shall jointly instruct the Escrow Agent, pursuant to the Escrow Agreement, to release  and deliver to Purchaser an amount equal to the absolute value of the difference  between the Tangible Common Equity Calculation and the Final Tangible Common  Equity Value, out of the Adjustment Escrow Account, then, if insufficient, from the  Indemnity Escrow Account.  Immediately following the release of an amount  pursuant to this Section 3.04(e)(i), Purchaser and Sellers’ Representative shall jointly  instruct the Escrow Agent, pursuant to the Escrow Agreement, to release and deliver  to each Seller an amount equal to the proportion of such Seller’s Pro Rata Share of  the amount remaining in the Adjustment Escrow Account.  (ii) if the Final Tangible Common Equity Value equals or exceeds the  Tangible Common Equity Calculation, Purchaser and the Sellers’ Representative  

 

  -15-  4811-0033-8921 v.25  shall jointly instruct the Escrow Agent, pursuant to the Escrow Agreement, to release  and deliver to each Seller an amount equal to the proportion of such Seller’s Pro Rata  Share of the amount in the Adjustment Escrow Account.   3.05 Escrow Deposits.  (a) At the Closing, Purchaser, the Sellers’ Representative and the  Escrow Agent shall enter into an escrow agreement with respect to the Escrow  Deposits (the “Escrow Agreement”).  Upon the terms and subject to the conditions set  forth in the Escrow Agreement, the Adjustment Escrow Deposit shall be available to  satisfy any payment obligations of Sellers pursuant to Section 3.04 and the Indemnity  Escrow Deposit shall be available to satisfy any payment obligations of Sellers  pursuant to any eligible indemnity claims made pursuant to Article IX, as well as any  excess obligations pursuant to Section 3.04(e)(i).  (b)  Promptly following the Final Determination of any claim made by  any Purchaser Indemnified Person pursuant to Sections 9.01 and 9.03, Purchaser and  the Sellers’ Representative shall direct the Escrow Agent to distribute from the  Indemnity Escrow Account an amount equal to the amount finally determined to be  payable to such indemnified party in connection with such claim, if any, in each case,  in accordance with, and subject to the conditions set forth in, this Agreement and the  Escrow Agreement.  Promptly following the Escrow End Date, Purchaser and the  Sellers’ Representative shall direct the Escrow Agent to distribute any remaining  portion of the Indemnity Escrow Deposit, in accordance with, and subject to the  conditions of, this Agreement and the Escrow Agreement, to each Seller (other than  the Minority Shareholders) in proportion to such Seller’s Pro Rata Share; provided,  that, to the extent there are any pending and unresolved claims for indemnification  under Article IX for which notice has been timely provided, all or a portion of the  funds in the Indemnity Escrow Account in an amount equal to such pending and  unresolved claims shall be retained in the Indemnity Escrow Account in accordance  with the Escrow Agreement (together with any amount pending subject to release  solely as described in Section 3.04) and shall be released in accordance with the  procedures set forth in this Agreement and the Escrow Agreement.  (c) Any disbursement of amounts from the Indemnity Escrow Account  pursuant to this Section 3.05 shall be made promptly upon the Final Determination of  the amounts thereof, and, in all cases, within five (5) Business Days thereof.  ARTICLE IV    ACTIONS PENDING ACQUISITION  4.01 Conduct of Business Prior to the Closing.  Sellers and the Bank agree that  from the Execution Date until the Closing, except as Previously Disclosed, except as expressly  contemplated or required by this Agreement, and except as consented to in writing by Purchaser  (which consent shall not be unreasonably withheld, delayed or conditioned), Sellers shall cause  the Bank to and the Bank shall:  (a) conduct its business in the ordinary course; (b) use  

 

  -16-  4811-0033-8921 v.25  commercially reasonable efforts to maintain and preserve intact its business organization, assets,  employees and relationships with regulators, customers, suppliers and employees; and (c) take no  action that would reasonably be expected to (i) adversely affect or delay (or fail to take any  action the failure of which would be reasonably expected to adversely affect or delay) the ability  of any person to obtain any required Consents or the Requisite Regulatory Approvals or to  perform its obligations under this Agreement, or (ii) result in the Share Sale or the other  transactions contemplated by this Agreement not being consummated on a timely basis.    4.02 Forbearances Related to the Bank.  The Bank agrees that from the date  hereof until the Closing, except as Previously Disclosed, except as required by applicable Law or  regulation, and except as contemplated or required by this Agreement, the Bank shall not take  any of the following actions without the prior written consent of Purchaser (which consent shall  not be unreasonably withheld, delayed or conditioned):  (a) amend its Governing Documents, or enter into a plan of  consolidation, merger, share exchange, reorganization or similar business  combination;  (b) (i) adjust, split, combine or reclassify any Equity Interests, or issue  or authorize the issuance of any securities in respect of, in lieu of or in substitution for  its Equity Interests, (ii) subject to Section 4.04, make, declare or pay any dividend,  except the Permitted Dividends, or make any other distribution on, or directly or  indirectly redeem, purchase or otherwise acquire, any of its Equity Interests,  (iii) grant or issue any Rights, (iv) issue any Voting Debt or (v) enter into or make  any change in any instrument or Contract governing the terms of any of its Equity  Interests;  (c) other than in the ordinary course of business or pursuant to  Contracts Previously Disclosed and other than by way of foreclosures or acquisitions  of control in a fiduciary or similar capacity or in satisfaction of debts previously  contracted in good faith, make any acquisition of or investment in (either by purchase  of shares or securities, contributions to capital, property transfers, or purchase of any  property or assets) any other person;  (d) (i) enter into any new line of business or (ii) change in any material  respect its lending, investment, underwriting, risk and asset liability management and  other banking and operating policies, except as required by applicable Law or any  corrective actions imposed on it by any Governmental Authority; provided, however,  the Bank shall be permitted to form a new operating subsidiary (“Operating  Subsidiary”) to which the Owned Property will be transferred;  (e) commit to make a loan or grant an Extension of Credit to any  borrower (including any renewals of watch list loans) which does not comply, in all  material respects, with the Bank’s loan policy and is not materially consistent with the  past lending practices of the Bank;  

 

  -17-  4811-0033-8921 v.25  (f) sell, transfer, pledge, lease, grant, license, mortgage, assign,  encumber or otherwise dispose of (including by merger) any part of its business or  any of its properties or assets to any person, or cancel, release or assign to any other  person any Indebtedness of any person to any other person or any claims against any  person to any person, except either (i) in each such case in the ordinary course of  business or (ii) pursuant to Contracts Previously Disclosed;  (g) other than in the ordinary course of business or pursuant to  Contracts Previously Disclosed, make any capital expenditure;  (h)  (i) other than FHLBNY advances in the ordinary course of  business consistent with past practice, incur any Indebtedness for borrowed money, or  (ii) assume, guarantee, endorse or otherwise as an accommodation become  responsible for the material obligations of any other person;  (i) except as required by GAAP, restructure or make any material  change to its investment portfolio or its interest rate exposure or the manner in which  the portfolio is classified or reported, in any material respect;  (j) other than to satisfy Previously Disclosed contractual obligations,  (i) terminate, enter into or amend any Bank Benefit Plan, other than amendments to  health and welfare plans that do not materially increase benefits, (ii) grant any salary  or wage increase to employees other than to increase salary and wages for employees  by no more than 3% in the aggregate or to the extent consistent with past practice, in  connection with promotions in the ordinary course, (iii) pay any bonus or incentive  compensation in excess of the amount earned based on actual performance to any  employee or (iv) issue any equity-based incentive compensation awards;   (k) settle any Action, except for any Action (i) involving solely money  damages in an amount not in excess of $50,000, and (ii) that does not involve or  create an adverse precedent for an Action that is reasonably likely to be material to  the Bank;  (l) implement or adopt any change in its financial accounting  principles, practices or methods, including reserving methodologies, other than as  may be required by GAAP, regulatory accounting guidelines or applicable Law;  (m) enter into any other material transaction or make any material  expenditure other than in the ordinary and usual course of its business, except for  expenses reasonably related to completion of the Share Sale and other transactions  contemplated by this Agreement;  (n) adopt a plan of complete or partial liquidation or resolutions  providing for or authorizing such a liquidation or dissolution, restructuring,  recapitalization or reorganization;   (o)  other than loans, funding arrangements and other transactions  made in the ordinary course of business, enter into or renew any Contract or  

 

  -18-  4811-0033-8921 v.25  amendment thereof, that (i) provides for aggregate annual payments of $50,000 or  more and that is not terminable on sixty (60) calendar days’ or less notice without  payment of a premium or penalty, (ii) contains any non-competition or exclusive  dealing obligations or other obligation that purports to limit or restrict in any respect  the ability of the Bank (or, following consummation of the Share Sale contemplated  hereby, the ability of Purchaser or any of its Subsidiaries) to solicit customers or the  manner in which, or the localities in which, all or any portion of the business of the  Bank is or would be conducted or (iii) contains any agreement that grants any right of  first refusal or right of first offer or similar right or that limits or purports to limit the  ability of the Bank (or, following consummation of the Share Sale contemplated  hereby, the ability of Purchaser or any of its Subsidiaries) to own, operate, sell,  transfer, pledge or otherwise dispose of any assets or business;  (p) (i) make or change any Tax election, adopt or change any Tax  accounting method or file any amended Tax Return, or (ii) enter into any closing  agreement, settle any Tax claim or assessment, surrender any right to claim a Tax  refund, or waive any statute of limitations with respect to any Tax, if any such action  would have the effect of increasing the Tax liability of the Bank for any taxable  period ending after the Closing Date; or  (q) enter into any Contract, or otherwise agree or commit, to do any of  the foregoing.  4.03 No Transfer of Shares.  Each of the Sellers agrees that from the date  hereof until the Closing, it shall not sell, offer to sell, contract or agree to sell, hypothecate,  pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or  indirectly, any Shares.  4.04 Permitted Dividends and Distributions.  Notwithstanding Sections 4.01  and 4.02, at or prior to the Closing and subject to obtaining the Dividend Approval, the Bank  shall make, declare or pay any dividends or distributions to Sellers in respect of the Bank’s cash  or Owned Property (“Permitted Dividends”); provided, that such Permitted Dividends do not  cause the value of the Bank’s Tangible Common Equity as of the Closing to be less than the  Target Tangible Common Equity Value; provided further, that the Bank will not dividend any of  the ownership or title to the Bank’s property located at 136-29 38th Avenue, Flushing, New  York 11354 (the “Owned Property”) without first entering into the lease set forth in Schedule F  hereto for the Bank’s continued use of the Owned Property in the same manner as prior to the  Closing for a period of at least one (1) year, measured from the Closing Date, plus an option to  extend such lease for a period of one (1) year (subject to early termination by the Bank without a  fee or penalty) (the “Lease”); provided further, that the Parties hereto agree that, subject to the  provisions hereof and receipt of the Dividend Approval, as of the Closing, the Bank shall  dividend (i) the Owned Property and (ii) cash in the amount equal to the excess, if any, of the  Bank’s Tangible Common Equity as of the Closing Date over the Target Tangible Common  Equity Value.  

 

  -19-  4811-0033-8921 v.25  ARTICLE V    REPRESENTATIONS AND WARRANTIES  5.01 Bank Disclosure Schedule.  Contemporaneously with the execution of this  Agreement, the Bank has delivered to Purchaser a schedule (the “Bank Disclosure Schedule”)  setting forth, in correspondingly numbered sections, items the disclosure of which is necessary or  appropriate either in response to an express disclosure requirement contained in a provision  hereof or as an exception to one or more representations and warranties contained in Section 5.03  or to one or more of the covenants contained in Article IV or Article VI.  Information disclosed  in any single section of the Bank Disclosure Schedule shall be deemed to be included in any  other section where such disclosure would reasonably appear on its face to be an applicable  disclosure or qualification thereunder, whether or not repeated or cross-referenced under such  section. The mere inclusion of an item in the Bank Disclosure Schedule as an exception to a  representation and warranty or covenant shall not be deemed an admission by Sellers that such  item has had, or would have, a Material Adverse Effect, or that such item is material or meets or  exceeds any monetary or other threshold specified for disclosure in the Agreement.  5.02 Representations and Warranties of Each Seller.  Each Seller, severally and  not jointly and only with respect to itself, hereby represents and warrants to Purchaser, as  follows:  (a) Ownership of Shares.  Seller is the sole legal and beneficial owner  of the Shares listed opposite Seller’s name on Schedule A, free and clear of all Liens.   Except for Shares listed opposite Seller’s name on Schedule A, such Seller does not  own (either legally or beneficially), or have any interest in or right to acquire, any  Equity Interests of the Bank, including, due to the waiver thereby of the terms  thereof, pursuant to the terms of the Shareholders’ Agreement.  (b) Authority.  Seller has the power necessary to execute, deliver and  perform its obligations under this Agreement, and to consummate (or to cause the  consummation of) the sale of Seller’s Shares as contemplated hereby.  Assuming due  authorization, execution, and delivery of this Agreement by the Parties hereto other  than Seller, this Agreement is a valid and legally binding obligation of Seller,  enforceable in accordance with its terms (except as enforcement may be limited by  applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer  and similar Laws of general applicability relating to or affecting creditors’ rights or  by general equity principles).  (c) Residency.  The principal residence of Seller is listed below such  Seller’s name on Schedule A.  (d) Consents and Approvals.  No notice to, application or filing with,  or Consent of, any Governmental Authority is necessary on the part of Seller in  connection with Seller’s execution, delivery or performance of this Agreement and  the consummation of the transactions contemplated hereby.    

 

  -20-  4811-0033-8921 v.25  (e) Financial Advisors.  Seller has not incurred any liability for any  brokerage fees, commissions or finders’ fees in connection with the transactions  contemplated hereby.  (f) Litigation.   As of the date of this Agreement, there is no Action  pending or, to such Seller’s Knowledge, threatened against the Seller, nor is there any  Order of any Governmental Authority or arbitration outstanding or, to such Seller’s  Knowledge, threatened, against the Seller, except as would not prevent, materially  delay or materially impair the ability of the Seller to consummate any of the  transactions contemplated hereby.  5.03 Representations and Warranties of the Bank.  Except as Previously  Disclosed, each Seller hereby represents and warrants to Purchaser, as follows:  (a) Organization, Standing, Power.  The Bank is (i) duly organized,  (ii) validly existing and (iii) in good standing under the Laws of the United States.  The Bank has Previously Disclosed complete and correct copies of the Governing  Documents of the Bank, each as amended to the date hereof, and such Governing  Documents are in full force and effect.  (b) Power.  The Bank has all requisite power, authority, charters,  licenses and franchises necessary or required by law to carry on the business activity  in which it is presently engaged, and the Bank is not in default under any such  charter, license or franchise the effect of which might materially and adversely affect  its right to conduct its business as presently conducted.  (c) Capitalization.  As of the date of this Agreement, the authorized  share capital of the Bank consists of 40,000 shares of Common Stock, of which  33,607 shares of Common Stock are validly issued, Outstanding and held by Sellers  or the Minority Director Shareholders, as applicable (as set forth in Schedule A), free  and clear of any Liens (other than any restrictions imposed by applicable securities  Laws).  As of the date of this Agreement, there are no other Outstanding Equity  Interests in the Bank.  As of the date of this Agreement, there are no Outstanding  Rights relating to any Equity Interests of the Bank, except the Shareholders’  Agreement.  All of the Outstanding Equity Interests of the Bank are duly and validly  authorized and validly issued, and are fully paid and nonassessable.  None of the  Outstanding Equity Interests of the Bank have been issued in violation of any  preemptive or similar rights of the current or past holders of Equity Interests of the  Bank.  (i) No bonds, debentures, notes or other Indebtedness having the right  to vote on any matters on which the holders of Equity Interests may vote (“Voting  Debt”) are Outstanding in respect of the Bank.  (ii)  There are no Contracts by which the Bank is bound to sell or  otherwise transfer any Equity Interest of the Bank or that relate to its rights to vote or  dispose of any Equity Interests of the Bank.   

 

  -21-  4811-0033-8921 v.25  (iii) The Bank has no Indebtedness other than $18.0 million in  advances from the FHLBNY as of the date hereof.  (d) No Bank Subsidiaries or Equity Holdings.  The Bank has no  Subsidiaries, and does not own, control or hold for its own account any Equity  Interests. In connection with the Share Sale and the transactions contemplated by this  Agreement, the Bank will form the Operating Subsidiary.  (e) Insured Status.  The Bank is an insured bank under the provisions  of Chapter 16 of Title 12 of the United States Code, relating to the FDIC, its deposits  are insured to the maximum extent provided by Law, and no act or default on the part  of the Bank has occurred which might adversely affect the status of the Bank as an  insured bank.  The Bank has paid all fees and amounts due to the FDIC.  (f) Authority.  The Bank has the authority necessary to execute,  deliver and perform its obligations under this Agreement, and to consummate (or to  cause the consummation of) the transactions contemplated hereby.  Assuming due  authorization, execution, and delivery of this Agreement by the Parties hereto other  than the Bank, this Agreement is a valid and legally binding obligation of the Bank,  enforceable in accordance with its terms (except as enforcement may be limited by  applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer  and similar Laws of general applicability relating to or affecting creditors’ rights or  by general equity principles).  No separate approval of the shareholders of the Bank is  required to enter into this Agreement or consummate the transactions contemplated  hereby.  (g) Consents and Approvals.  No notice to, application or filing with,  or Consent of, any Governmental Authority is necessary on the part of the Bank in  connection with the Bank’s execution, delivery or performance of this Agreement and  the consummation of the transactions contemplated hereby, other than the Requisite  Regulatory Approvals.  As of the date of this Agreement, the Bank has not received  any indication from any Governmental Authority that any such Governmental  Authority would oppose or refuse to grant or issue its consent or approval, if required,  with respect to the transactions contemplated hereby or has knowledge of any reason  why all Requisite Regulatory Approvals would not be received in order to permit  consummation of the transactions contemplated hereby on a timely basis without the  imposition of any significant and non-ordinary course condition or requirement.  (h) Regulatory Matters.  The Bank is not subject to, and has not been  advised in writing that it would become subject to, any written Order, decree,  agreement, memorandum of understanding or similar arrangement with, or a  commitment letter or similar submission to, or extraordinary supervisory letter from,  or adopted any extraordinary Board resolutions at the request of, any Governmental  Authority charged with the supervision or regulation of financial institutions or  issuers of securities or engaged in the insurance of deposits or otherwise involved  with the supervision or regulation of the Bank.  The Bank is not aware of any  investigation of the Bank that could reasonably be expected to result in any of the  

 

  -22-  4811-0033-8921 v.25  foregoing.  The Bank has a “Satisfactory” or better rating on each component of its  most recent Community Reinvestment Act Performance Evaluation, and, to the  Knowledge of the Bank, no fact or circumstance exists that is reasonably likely to  negatively affect any such rating.  The Bank is “well capitalized” (as that term is  defined in the relevant regulations of the OCC).  (i) No Defaults.  Neither the consummation of any of the transactions  contemplated by this Agreement nor the compliance by the Bank with any of the  provisions hereof shall (A) conflict with or result in a breach or violation of the  Bank’s Governing Documents, (B) constitute or result in a Default under, or require  any Consent pursuant to, or result in the creation or acceleration of, any material Lien  (with or without the giving of notice, the lapse of time or both) on any asset of the  Bank or Permit of the Bank, or any change in any of the Bank’s rights or obligations  under any Bank Material Contract or (C) subject to receipt of the Requisite  Regulatory Approvals and the expiration of any waiting period required by Law,  violate any Law or Permit applicable to the Bank or any of its respective material  assets.  (j) Financial Advisors.  The Bank has not incurred any liability for  any brokerage fees, commissions or finders’ fees in connection with the transactions  contemplated hereby, except for fees to Piper Sandler & Co. pursuant to the  engagement letter, a true and correct copy of which has been Previously Disclosed.  (k) Bank’s Financial Statements.  The Bank has made available to  Purchaser (A) the audited balance sheets of the Bank as of December 31, 2019 and  2020, and the audited statements of operations, shareholders’ equity and  comprehensive income (loss), and cash flows of the Bank for the years ended  December 31, 2019 and 2020 (collectively, the “Bank Audited Financial Statements”)  and (B) the unaudited balance sheets of the Bank as of March 31, 2021 and the  unaudited statements of operations, shareholders’ equity and comprehensive income  (loss), and cash flows of the Bank for the three-month period ended March 31, 2021  (collectively, the “Bank Interim Financial Statements” and, together with the Bank  Audited Financial Statements, the “Bank Financial Statements”).  (i) The Bank Financial Statements and, pursuant to Section 6.09, any  Subsequent Financial Statements shared with Purchaser have been prepared in  accordance with GAAP, consistently applied throughout the period indicated, and  present fairly, in all material respects, the consolidated financial position, results of  operations and cash flows of the Bank, as applicable, as of the respective dates and  for the periods covered thereby, subject to (A) in each case, any matter disclosed in  the Bank Financial Statements (or the notes thereto, if applicable) and (B) in the case  of the Bank Interim Financial Statements (or the notes thereto, if applicable), normal  year-end adjustments.  (ii)  As of the date of this Agreement, there are no material liabilities  or obligations of any nature for which the Bank is liable which are not reflected in the  audited consolidated balance sheet of the Bank as of December 31, 2020 and would  

 

  -23-  4811-0033-8921 v.25  be required to be reflected under GAAP.  All debts, liabilities and obligations  incurred after December 31, 2020 were incurred in the ordinary course of business  and are usual and normal in amount, both individually and in the aggregate.   (iii) RSM US LLP, which has expressed its opinion with respect to the  Bank Audited Financial Statements, is a registered independent public accountant,  within the meaning of the Code of Professional Conduct of the American Institute of  Certified Public Accountants.     (l) Loans.   (i) Each loan of the Bank (a) is evidenced by notes, agreements or  other evidences of indebtedness that are true, genuine and what they purport to be,  (b) to the extent secured, has been secured by valid liens which have been perfected  and (c) is, to the Knowledge of the Bank, the legal, valid and binding obligation of  the obligor named therein, enforceable in accordance with its terms (except as  enforcement may be limited by applicable bankruptcy, insolvency, reorganization,  moratorium, fraudulent transfer and similar laws of general applicability relating to or  affecting creditors’ rights or by general equity principles).  The collateral for each  secured loan is (i) the collateral described in the related loan documentation,  (ii) subject to a valid, enforceable and perfected lien, and (iii) to the Knowledge of the  Bank, in material compliance with all Environmental Laws and not subject to any  material environmental liability under Environmental Laws.  (ii)  Each outstanding loan has been solicited and originated and is  administered and serviced (to the extent administered and serviced by the Bank), and  the relevant loan files are being maintained in accordance with the relevant loan  documents, the Bank’s underwriting standards and with all applicable requirements of  Law in all material respects.  (iii) Since December 31, 2018, the Bank has not been subject to any  fine, suspension, settlement or other agreement or other administrative agreement or  sanction by, or any reduction in any loan purchase commitment from, any  Governmental Authority, including any federal or state agency relating to the  origination, sale or servicing of mortgage or consumer loans.  The Bank has not  received any notice, nor does it have any reason to believe, that any Governmental  Authority proposes to limit or terminate the underwriting authority of the Bank or to  increase the guarantee fees payable to any such Governmental Authority.   (iv) Section 5.03(l)(iv) of the Bank Disclosure Schedule lists each  loan, revolving credit facility, letter of credit or other extension of credit or  commitment to extend credit (collectively, “Extensions of Credit”) that has been  classified by the Bank, as of December 31, 2020, as “Classified,” “Criticized,”  “Watch,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Past Due” or  words of similar import.  

 

  -24-  4811-0033-8921 v.25  (v) The allowances for loan losses in the Bank Financial Statements  were established in accordance with the requirements of GAAP and the bank  regulators to provide for possible losses on loans (including accrued interest  receivable) outstanding as of the date of the applicable balance sheet.  (m) Judgments.  There are no unsatisfied judgments of record against  the Bank.  (n) Insider Loans; Related Party Transactions.  There are no  (i) outstanding notes or other evidences of indebtedness executed and delivered by the  Bank to insiders of the Bank and (ii) any other contract or agreement of any nature in  effect between insiders of the Bank and the Bank.  For purposes of this Section  5.03(n), “insider” shall mean any officer or director of the Bank or any shareholder of  the Bank owning more than 5% of the Bank’s stock or any members of the immediate  families or related interests of such officers, directors or shareholders, as the terms  “immediate families” and “related interests” are defined in § 215.2(g) and (n) of  Federal Reserve Regulation O (12 C.F.R. § 215.2(g) and (n)).  (o) Regulatory Reporting.    (i) Since December 31, 2018, the Bank has timely filed all material  reports, registrations, documents, filings, statements and submissions, together with  any amendments thereto, that it was required to file with any Governmental  Authority, including, without limitation, the OCC and the FDIC (the foregoing,  collectively, the “Regulatory Reports”) and has paid all material fees and assessments  due and payable in connection therewith.  As of their respective dates of filing or  amendments, the Regulatory Reports complied in all material respects with statutes,  regulations, and requirements of the applicable Governmental Authorities and were  complete and accurate in all material respects.  To the Bank’s Knowledge, as of the  date of this Agreement, there are no outstanding comments of any Governmental  Authority with respect to any Regulatory Report.  Except for normal examinations  conducted by a Governmental Authority in the regular course of the business of the  Bank, no Governmental Authority has initiated or threatened any proceeding or  investigation into the business or operations of the Bank since December 31, 2018.   There is no unresolved violation, criticism or exception by any Governmental  Authority with respect to any report or statement relating to any examinations of the  Bank.    (ii) The records, systems, controls, data and information of the Bank  are recorded, stored, maintained and operated under means (including any electronic,  mechanical or photographic process, whether computerized or not) that are under the  exclusive ownership and direct control of the Bank or their accountants (including all  means of access thereto and therefrom).  The Bank (i) keeps books, records and  accounts that, in reasonable detail, accurately and fairly reflect the transactions and  dispositions of the assets of the Bank, and (ii) maintains a system of internal  accounting controls sufficient to provide reasonable assurances that (A) transactions  are executed in accordance with management’s general or specific authorization,  

 

  -25-  4811-0033-8921 v.25  (B) transactions are recorded as necessary to permit the preparation of financial  statements in conformity with GAAP and to maintain accountability for assets,  (C) access to assets is permitted only in accordance with management’s general or  specific authorization and (D) the recorded accountability for assets is compared with  the existing assets at reasonable intervals and appropriate action is taken with respect  to any differences.  Since December 31, 2018 and until the Execution Date,  (x)  neither the Bank nor, to the Bank’s Knowledge, any director, officer, employee,  auditor, accountant or representative of the Bank has received or otherwise had or  obtained knowledge of any material complaint, allegation, assertion or claim, whether  written or oral, regarding the accounting or auditing practices, procedures,  methodologies or methods of the Bank or their respective internal accounting  controls, including any material complaint, allegation, assertion or claim that the  Bank has engaged in questionable accounting or auditing practices, and (y) no  attorney representing the Bank, whether or not employed by the Bank, has reported  evidence of a material violation of securities laws, breach of fiduciary duty or similar  violation by the Bank or any of its respective officers, directors, employees or agents  to the respective boards of directors or any committees thereof or to any director or  officer of the Bank.  The books and records of the Bank have been accurately  maintained in all material respects, and there are no inaccuracies or discrepancies of  any kind contained or reflected therein except as would not be material to the Bank.  (p) Absence of Certain Changes.  Since December 31, 2020, (i) except  for actions taken in connection with the transactions contemplated by this Agreement,  the Bank has conducted its business in the ordinary course and (ii) no Effect has  occurred or arisen that, individually or taken together with all other Effects, has had,  or would have, a Material Adverse Effect.  (q) Litigation.  Section 5.03(q) of the Bank Disclosure Schedule lists  all Actions pending or, to the Bank’s Knowledge, threatened against the Bank, as of  the date of this Agreement.  (r) Compliance with Laws.  Since December 31, 2018, (x) the Bank  has conducted its business in all material respects in compliance with all Laws  applicable thereto or to the employees conducting such business and (y) the Bank has  held all Permits and Orders of, and has made all filings, applications and registrations  with, all Governmental Authorities that are required in order to permit it to own or  lease its assets and properties and to conduct its respective businesses as presently  conducted; all such Permits and Orders are in full force and effect and, to the Bank’s  Knowledge, no suspension or cancellation of any of them is threatened.  (s)  Tax Matters.  The Bank (i) has timely filed (taking into account  any extension of time within which to file) all Tax Returns required to be filed by it,  and all such Tax Returns are complete and accurate; (ii) has paid or accrued all Taxes  that are shown as due on such Tax Returns; (iii) has not waived any statute of  limitations with respect to Taxes or agreed to any extension of time with respect to a  Tax assessment or deficiency; (iv) has not been a member of a combined,  consolidated, affiliated or unitary group for Tax filing purposes for which it has any  

 

  -26-  4811-0033-8921 v.25  current or future liability for Taxes; and (v) has withheld from amounts owing to any  employee, creditor or third party, all amounts that it is obligated to have withheld.  No  Liens for Taxes exist with respect to any of the Bank’s assets, except for statutory  Liens for Taxes not yet due and payable or that are being contested in good faith.  As  of the date hereof, there are no pending, or threatened in writing, audits,  examinations, investigations or other proceedings in respect of material Taxes of the  Bank.  (t) Intellectual Property Matters. (i) The Bank has Previously  Disclosed a complete and accurate list of all (A) Patents; (B) Marks; and  (C) Copyrights that are, in each of clauses (A) through (C), Registered as of the date  of this Agreement in the name of the Bank and are material to the conduct of the  business of the Bank as currently conducted.  (ii) The material Intellectual Property Rights owned by the Bank are  owned free and clear of all Liens (other than (A) Permitted Liens, (B) non-exclusive  and exclusive licenses, covenants not to assert, settlements, consents and other  arrangements entered into by the Bank in the ordinary course of business and  (C) Liens incurred in the ordinary course of business securing obligations or liabilities  that are not, individually or in the aggregate, material to the Bank).  (iii) To the Bank’s Knowledge, (A) within the two-year period prior to  the date hereof, the Bank has not (1) received any written claim that remains  unresolved alleging that it infringes or misappropriates in any material manner the  Intellectual Property Rights of any third party or (2) made any written claim against a  third party that remains unresolved alleging that such third party is infringing or  misappropriating in any material manner any material Intellectual Property Rights  owned by the Bank; and (B) as of the date of this Agreement, the conduct of the  business of the Bank as currently conducted does not infringe or misappropriate the  Intellectual Property Rights of any third party, except as has not had, nor would have,  a Material Adverse Effect.  (u) Environmental Matters.   (i) The Bank is in compliance with all applicable Laws concerning the  protection of the environment or the handling, use, disposal, release or threatened  release of any Hazardous Substance (each, an “Environmental Law”).   (ii) Since December 31, 2018 to the date of this Agreement, the Bank  has not (A) received any written notice, demand, letter, claim or request for  information indicating that it may be in material violation of or subject to any  material liability under any Environmental Law; or (B) been subject to any material  Order or other arrangement with any Governmental Authority concerning liability  under any Environmental Law.    (iii) The Bank possesses all material Permits and authorizations  required under any Environmental Law for its operations as presently conducted.  

 

  -27-  4811-0033-8921 v.25  (iv) Notwithstanding any other representation and warranty in this  Article V, the representations and warranties contained in this Section 5.03(u)  constitute the sole representations and warranties of the Bank relating to any  Environmental Law or Hazardous Substance.  (v) Labor and Employment Matters.    (i)  The Bank is not bound by or a party to any collective bargaining  agreement.  (ii) There are no actual, pending or, to the Bank’s Knowledge,  threatened unfair labor practice complaints, strikes, work stoppages, picketing, lock- outs, hand-billings, boycotts, slowdowns, arbitrations, grievances, complaints or  charges or proceedings pertaining to the Bank.  (iii) The Bank employs all its respective employees in compliance, in  all material respects, with all applicable taxation, health, labor and employment Laws,  including those pertaining to occupational health and safety, discrimination, pay  equity, employment equity, employment standards, human rights and workers’  compensation.  (w) Employee Benefit Plans.    (i) Section 5.03(w)(i) of the Bank Disclosure Schedule contains a list  of every benefit plan, program, agreement or arrangement maintained, contributed to  or provided by the Bank for the benefit of any Bank employees, former Bank  employees or dependent or independent contractors of the Bank or their respective  dependents or beneficiaries (the “Benefit Plans”), identifying those which are  sponsored or maintained by the Bank (each, a “Bank Benefit Plan”), including all  bonus, deferred compensation, incentive compensation, share purchase, share option,  share appreciation, phantom share, savings, profit sharing, severance or termination  pay, health or other medical, life, disability or other insurance (whether insured or  self-insured), supplementary unemployment benefit, pension, retirement and  supplementary retirement plans, programs, agreements and arrangements, except for  any statutory plans to which the Bank is obliged to contribute or comply, including  plans administered pursuant to applicable federal, state or local health, workers  compensation and employment insurance legislation.    (ii) The Bank has made available to Purchaser true, complete and up- to-date copies of all Benefit Plans and all amendments thereto together with all  summary descriptions of the Benefit Plans provided to past or present participants  therein, where applicable, the statement of investment policies for each plan, all  funding agreements and service provider contracts or other contracts in respect of the  Benefit Plan in respect of which the Bank may have liability and, if applicable, the  two most recent actuarial reports, the financial statements and evidence of any  registration or qualification, as applicable, in respect thereof.  

 

  -28-  4811-0033-8921 v.25  (iii) All the Bank Benefit Plans have been filed where required by  applicable Law (including filing with the relevant Tax authorities where such filing is  required to qualify for Tax exemption or other beneficial Tax status) and have been  administered in all material respects in compliance with their terms and applicable  Law.  (iv) All employer and employee obligations in respect of the Bank  Benefit Plans, including payments, contributions and premiums required under  applicable Law and their terms, have been satisfied in all material respects and there  are no outstanding material defaults or material violations in respect thereof.  (v)  There are no material actions, suits, claims, trials, demands,  investigations, arbitrations or other proceedings pending or, to the Bank’s  Knowledge, threatened with respect to the Bank Benefit Plans against the Bank or the  fund of such Bank Benefit Plans, other than claims for benefits in the ordinary course.  (vi) No order has been made or notice given pursuant to any applicable  Law requiring (or proposing to require) the Bank to take (or refrain from taking) any  action in respect of any Bank Benefit Plan and, except for the transactions  contemplated by this Agreement, no event has occurred and no condition or  circumstance exists that has resulted or could reasonably result in any Bank Benefit  Plan (A) being ordered or required to be terminated or wound up in whole or in part,  (B) having its registration or qualification, as applicable, under any applicable Law  refused or revoked, (C) being placed under the administration of any trustee or any  regulatory authority or (D) being required to pay any material Taxes or penalties  under any applicable Law.  (vii) The Bank Benefit Plans are fully funded in accordance with their  terms and all applicable Laws and generally accepted actuarial principles and  practices.  (viii) The Bank has no obligation in respect of any Bank Benefit Plans  that are multi-employer pension plans or multi-employer benefit plans.  (ix) Neither the execution, delivery or performance of this Agreement,  nor the consummation of any of the other transactions contemplated by this  Agreement, will result in any bonus, golden parachute, severance or other payment or  obligation to any current or former employee or director of the Bank (whether or not  under any Benefit Plan), increase the benefits payable or provided under any Benefit  Plan, result in any acceleration of the time of payment or vesting of any such benefit,  or increase or accelerate employer contributions thereunder.  (x)  Since December 31, 2018, there have been no complaints of  harassment, discrimination or other inappropriate workplace conduct by any  employee, former employee, contractor, customer or agent of the Bank against the  Bank or any of its directors, employees or shareholders.  

 

  -29-  4811-0033-8921 v.25  (x) Property. (i) The Bank has Previously Disclosed a complete and  accurate list of all real property owned, leased or licensed by the Bank or otherwise  occupied by the Bank.  (ii) Owned Real Property.  The Bank has good and marketable fee title  to all real property owned by it free and clear of all Liens, except Permitted Liens.   There are no outstanding options, rights of first offer or refusal or other pre-emptive  rights or purchase rights with respect to any such owned real property.  There are no  pending or, to the Bank’s Knowledge, any threatened condemnation or similar  proceedings affecting such owned real property or any portion thereof.  (iii) Leased Property.  All leases of real property, and all other leases,  material to the Bank under which the Bank, as lessee, leases personal property are  valid, binding and enforceable in accordance with their respective terms, there is not  under such lease any material existing Default by the Bank or, to the Bank’s  Knowledge, any other party thereto, or any event which with notice or lapse of time  would constitute such a material Default and all rent and other sums and charges due  and payable under such lease have been paid.  (y) Bank Material Contracts.  (i) The Bank has Previously Disclosed a  complete and accurate list, and previously made available to Purchaser complete and  accurate copies, of the following Contracts (the “Bank Material Contracts”) to which  the Bank is a party, or by which the Bank may be bound, or to which the Bank or its  respective assets or properties may be subject, in each case as of the date of this  Agreement:  (A) any partnership, limited liability company, joint venture or  other similar agreement or arrangement that is material to the Bank;  (B) any Contract relating to the acquisition or disposition of  any business or operations (whether by merger, sale of shares, sale of assets or  otherwise) entered into since December 31, 2018 (other than Contracts relating to  the acquisition or sale of other real property owned) for which there are any  outstanding obligations;  (C) any Contract for the purchase of services, materials,  supplies, goods, equipment or other assets or property that provides for either  (1) annual payments of $100,000 or more or (2) aggregate payments of $250,000  or more;  (D) any Contract (1) containing covenants that limit the ability  of the Bank to compete in any line of business or with any person, or that involve  any restriction with respect to the geographic area in which, or the method by  which, the Bank may carry on its business (other than as may be required by Law  or any Governmental Authority), or (2) that requires the Bank to deal exclusively  or on a “sole source” basis with another party to such Contract with respect to the  subject matter of such Contract;  

 

  -30-  4811-0033-8921 v.25  (E) any Contract granting the Bank a license to Intellectual  Property Rights, where such license is material to the operation of the Bank  (excluding any license to off-the-shelf or other commercially available  Technology); and  (F) any Contract with a Governmental Authority (other than  routine or customary Contracts with any self-regulatory body).  (ii) Each Bank Material Contract is a valid and legally binding  agreement of the Bank, as applicable, and, to the Bank’s Knowledge, of the  counterparty or counterparties thereto, is enforceable in accordance with its terms  (except as enforcement may be limited by applicable bankruptcy, insolvency,  reorganization, moratorium, fraudulent transfer and similar Laws of general  applicability relating to or affecting creditors’ rights or by general equity principles)  and is in full force and effect.  The Bank or, to the Bank’s Knowledge, any  counterparty or counterparties is not in breach of any provision of or in Default under,  and none have taken any action resulting in the termination of, acceleration of  performance required by, resulting in a right of termination or acceleration or  resulting in any change in the-then prevailing terms, including by operation of  provisions in existence on such date, of any Bank Material Contract in any material  respect.  (z) Insurance Coverage.  The Bank has Previously Disclosed a  complete and correct list of each Contract representing insurance coverage of the  Bank.  The Bank is not in Default under any such insurance policies.  Since  December 31, 2018 through the date of this Agreement, there has been no denial of  coverage in respect of any claim submitted by the Bank pursuant to such insurance  policies.  (aa) Derivative Instruments and Transactions.  The Bank is not and has  never been a party to any Derivative Transactions.  5.04 Representations and Warranties with Respect to Purchaser.  Purchaser  hereby represents and warrants to the Bank and Sellers, with respect to itself and its Subsidiaries,  as follows:  (a) Organization, Standing.  Purchaser is duly organized, validly  existing and in good standing under the Laws of the jurisdiction of its organization.  (b) Authority.  Purchaser has the corporate power and authority  necessary to execute, deliver and perform its obligations under this Agreement, and to  consummate (or to cause the consummation of) the transactions contemplated hereby.   Other than the Purchaser Shareholder Approval, no vote of the holders of Purchaser’s  Equity Interests is necessary to approve this Agreement or the transactions  contemplated hereby on the part of Purchaser.  The Board of Directors of Purchaser  has approved this Agreement, the transactions contemplated by this Agreement, and  this Agreement and the transactions contemplated hereby have been authorized by all  

 

  -31-  4811-0033-8921 v.25  necessary corporate action on the part of Purchaser.  Assuming due authorization,  execution, and delivery of this Agreement by the other Parties, this Agreement is a  valid and legally binding obligation of Purchaser, enforceable in accordance with its  terms (except as enforcement may be limited by applicable bankruptcy, insolvency,  reorganization, moratorium, fraudulent transfer and similar Laws of general  applicability relating to or affecting creditors’ rights or by general equity principles).  (c) Consents and Approvals.  Other than the Federal Reserve  Approval, FDIC Approval, OCC Approval and SBA Approval, no notice to,  application or filing with, or Consent of, any Governmental Authority is necessary on  the part of Purchaser or any of its Subsidiaries in connection with Purchaser’s  execution, delivery or performance of this Agreement, and the consummation of the  transactions contemplated hereby.  As of the date of this Agreement, neither  Purchaser nor any of its Subsidiaries has received any indication from any  Governmental Authority that such Governmental Authority would oppose or refuse to  grant or issue its consent or approval, if required, with respect to the transactions  contemplated hereby or has knowledge of any reason why all Requisite Regulatory  Approvals would not be received in order to permit consummation of the transactions  contemplated hereby on a timely basis without the imposition of any significant and  non-ordinary course condition or requirement.  (d) Regulatory Matters.  Purchaser is not subject to, nor has been  advised that it is reasonably likely to become subject to, any written Order, decree,  agreement, memorandum of understanding or similar arrangement with, or a  commitment letter or similar submission to, or supervisory letter from, or adopted any  Board resolutions at the request of, any Governmental Authority charged with the  supervision or regulation of financial institutions or issuers of securities or engaged in  the insurance of deposits or otherwise involved with the supervision or regulation of  Purchaser.    (e) No Defaults.  Neither the execution nor the delivery by Purchaser  of this Agreement, nor the consummation of any of the transactions contemplated  hereby nor the compliance by Purchaser or its Subsidiaries with any of the provisions  hereof, (i) conflicts with or results in a breach or violation of Purchaser’s Governing  Documents or those of its Subsidiaries, (ii) constitutes or results in a Default under, or  requires any Consent pursuant to, or results in the creation or acceleration of, any  material Lien (with or without the giving of notice, the lapse of time or both) on any  material asset of Purchaser or its Subsidiaries under any Contract or Permit of  Purchaser or its Subsidiaries, or any change in the rights or obligations of Purchaser  or any of its Subsidiaries under any material Contract or (iii) subject to receipt of the  Requisite Regulatory Approvals and the expiration of any waiting period required by  Law, violates any Law or Permit applicable to Purchaser or its Subsidiaries or any of  their respective material assets, in the case of clauses (ii) and (iii), that would  reasonably be expected to prevent, materially delay or materially impair the ability of  Purchaser or its Subsidiaries to consummate any of the transactions contemplated by  this Agreement or otherwise to perform their respective obligations hereunder.  

 

  -32-  4811-0033-8921 v.25  (f) Financial Advisors.  None of Purchaser, its Subsidiaries or any of  their respective directors, officers or employees has employed any broker or finder or  incurred any liability for any brokerage fees, commissions or finders’ fees in  connection with the transactions contemplated hereby, except for Metropolitan  Capital and Keefe, Bruyette & Woods, Inc.  (g) Available Funds.  Purchaser has or, as of the Closing Date, will  have adequate financial resources, including capital, to satisfy its monetary and other  obligations under this Agreement in accordance with the terms of this Agreement.  (h) Litigation and Claims.  As of the date of this Agreement, there is  no Action pending or, to Purchaser’s knowledge, threatened against Purchaser or its  Subsidiaries, nor is there any Order of any Governmental Authority or arbitration  outstanding or, to Purchaser’s knowledge, threatened against Purchaser or its  Subsidiaries (or in the process of being issued), in each case that, individually or in  the aggregate, would prevent, materially impair or materially delay the ability of  Purchaser or its Subsidiaries to consummate the transactions contemplated hereby.  ARTICLE VI    COVENANTS  6.01 Reasonable Best Efforts. (a) Subject to the terms and conditions of this  Agreement, each of the Parties shall use their respective reasonable best efforts to take, or cause  to be taken, in good faith, all actions, and to do, or cause to be done, all things necessary, proper  or desirable, or advisable under applicable Laws, so as to cause and enable the transactions  contemplated hereby to be consummated as promptly as practicable, and shall cooperate fully  with, and furnish information to, the other Parties to that end.  The Parties shall cooperate and  use their respective best efforts to execute any additional documents necessary to confirm or  carry out the provisions of this Agreement and to consummate the transactions contemplated by  this Agreement.  (b) In connection with and without limiting the generality of the foregoing,  each Party shall provide, or cause to be provided, all necessary notices and information to, and  enter into discussions with, any third party (other than any Governmental Authority) from whom  any Consent is required to be obtained in connection with the Share Sale or the other transactions  contemplated by this Agreement and to use its best efforts to obtain all such Consents.  Each  Party shall use best efforts to obtain the consent of any third party to a Contract that would  otherwise be breached by any covenant, representation or warranty or any other obligation of this  Agreement.  6.02 Filings; Authorizations and Consents.  Purchaser, the Bank and Sellers  will cooperate and consult with the others and use reasonable best efforts to prepare and file all  necessary documentation, to effect all necessary applications, notices, petitions, filings and other  documents (including any application required to be filed with the OCC by the Bank in respect  of any changes to the asset composition of the Bank), and to obtain all necessary permits,  consents, orders, approvals and authorizations of, or any exemption by, all Governmental  

 

  -33-  4811-0033-8921 v.25  Authorities, including the Federal Reserve Approval, the FDIC Approval, the OCC Approval,  the Dividend Approval and the SBA Approval (all such Consents and Permits, the “Requisite  Regulatory Approvals”), and the expiration or termination of any applicable waiting period,  necessary or advisable to consummate the transactions contemplated by this Agreement, and to  perform the covenants contemplated hereby.  Each Party shall execute and deliver such further  certificates, agreements and other documents and take such other actions as the other party may  reasonably request to consummate or implement such transactions contemplated by this  Agreement or to evidence such events or matters.    6.03 Press Releases; Public Announcements.  Subject to the written advice of  legal counsel with respect to legal requirements relating to public disclosure of matters related to  the subject matter of this Agreement, the timing and content of any announcements, press  releases or other public statements concerning the Share Sale and transactions contemplated by  this Agreement will be determined by Purchaser, in consultation with the Bank.  6.04 Access; Information. (a) Each Party hereto shall keep the other Parties  apprised of the status of matters relating to completion of the Share Sale and the other  transactions contemplated hereby, including promptly furnishing the other with copies of any  material notices or other communications received by such Party or, to the knowledge of such  Party, its Representatives from any third party and/or any Governmental Authority with respect  to the Share Sale and the other transactions contemplated by this Agreement, in each case to the  extent permitted by applicable Law.  Each Party shall give prompt notice to the other Parties of  any development or combination of developments that, individually or in the aggregate, would  be reasonably likely to (i) cause it to fail to comply with or satisfy in any material respect any  covenant, condition or agreement under this Agreement or (ii) prevent, materially delay or  materially impair its ability to consummate the transactions contemplated by this Agreement or  otherwise to perform its respective obligations hereunder, including the failure of a condition in  Article VII of this Agreement; provided, however, that no such notification shall affect the  representations, warranties, covenants or agreements of the Parties or the conditions to the  obligations of the Parties under this Agreement.  (b) With prior notice to the Bank, subject to applicable Law, the books,  records, properties, contracts and documents of the Bank will be available at all reasonable times  to Purchaser and its counsel, accountants and other Representatives and financing sources.  Such  items will be open for inspection as Purchaser deems reasonably relevant to the Share Sale and  transactions contemplated by this Agreement.  The Bank shall cooperate fully in such inspection,  and make available all information reasonably requested by or on behalf of Purchaser or such  other persons.  (c) Upon request by Purchaser, the Bank shall request that any third parties  involved in the preparation or review of the Bank Financial Statements and the Subsequent  Financial Statements disclose to Purchaser the work papers or any similar materials related to  such Bank Financial Statements and Subsequent Financial Statements.  6.05 Confidentiality. (a)  From and after the date hereof and continuing  thereafter, each Party shall, and shall cause its Affiliates (if any) and Representatives to, keep  confidential all information and data that the other Party or any of its Representatives furnishes  

 

  -34-  4811-0033-8921 v.25  or otherwise makes available to such Party or its Representatives, whether before, on or after the  date of this Agreement, including any technical, scientific, trade secret or other proprietary  information of the other Party with which such Party or its Representatives may come into  contact in connection with the transactions contemplated by this Agreement, and whether oral,  visual, written, or electronic, or other form, together with any reports, analyses, summaries,  interpretations, compilations, forecasts, financial statements, memoranda, notes, studies or any  other written or electronic materials prepared by or for such Party or its Representatives that  contain, reflect or are based upon or generated from such information, including all copies,  electronic or otherwise, and reproductions thereof (collectively, the “Confidential Information”);  provided, however, that, after the Closing, the Purchaser will not be restricted with respect to  Confidential Information of the Bank; provided further, that a Party may disclose Confidential  Information (i) to such Party’s Affiliates (if any) and to Representatives of such Party and its  Affiliates who need to know such information for the purpose of assisting such Party in their  capacity as such so long as such Party causes such Representatives to treat the Confidential  Information in a confidential manner and in accordance with the terms hereof (it being  understood that such Party will be responsible for any breach of the terms of this Section 6.05 by  any of such Representatives), (ii) if and to the extent that the other Party so consents in writing,  (iii) to a bank or securities regulatory authority to avoid violating banking or securities laws and  (iv) as provided in the second succeeding sentence.  Notwithstanding the foregoing, neither the  Bank nor any Seller shall be required to provide access to or to disclose information where such  access or disclosure would violate or prejudice the rights of the Bank’s customers, jeopardize the  attorney-client privilege of the Bank or any Seller or contravene any Law, fiduciary duty or  binding agreement entered into prior to the date of this Agreement. The Parties will make  appropriate substitute disclosure arrangements under circumstances in which the restrictions of  the preceding sentence apply.  Notwithstanding the foregoing, the term “Confidential  Information” will not include information that (A) is or becomes available to a Party on a non- confidential basis from a source other than the other Party or the other Party’s Representatives, if  such other source is not known by such Party after reasonable inquiry to be bound by a  confidentiality obligation covering the relevant information or is otherwise prohibited from  disclosing the relevant information to such Party or (B) is or becomes generally available to the  public (other than as a result of a breach by such Party or its Representatives of this Section  6.05).  If a Party or any of its Representatives is required to disclose any Confidential  Information in connection with a judicial or administrative proceeding or examination (including  by oral questions, interrogatories, requests for information or documents, subpoena or similar  process), such Party will, to the extent legally permissible, give the other Party prompt and prior  written notice of such requirement.  Such Party also agrees, to the extent legally permissible, to  give the other Party, in advance of any such disclosure, a list of any Confidential Information  that such Party intends to disclose (and, if applicable, the text of the disclosure language itself)  and to cooperate with the other Party (at the other Party’s expense) to the extent that the other  Party may seek to limit such disclosure, including, if requested, taking all reasonable steps to  resist or avoid any such judicial or administrative proceedings referred to above.  If and to the  extent that, in the absence of a protective order, other remedy, or the receipt of a waiver from the  other Party after a request in writing therefor is made by such Party (such request to be made as  soon as practicable to allow the other Party a reasonable amount of time to respond), such Party  or its Representatives are legally required, as advised by counsel in writing, to disclose  Confidential Information to any tribunal to avoid censure or penalty, such Party will limit such  

 

  -35-  4811-0033-8921 v.25  disclosure to that which is legally required and will use reasonable efforts to obtain assurances  that confidential treatment will be accorded to any Confidential Information that such Party is so  required to disclose, and thereafter such Party may disclose such information without liability  hereunder.  (b) As of the date of this Agreement, the Confidentiality Agreement, dated as  of March 26, 2021 between Purchaser and the Bank (the “Confidentiality Agreement”), shall be  terminated.  (c) For the avoidance of doubt, in the event of a breach of the obligations  under this Section 6.05 by any Party, its Affiliates (if any) or any Representatives of any of the  foregoing, the other Party, in addition to all other available remedies, shall be entitled to seek  specific performance to enforce the provisions of this Section 6.05 in any court of competent  jurisdiction in accordance with Section 11.04.  6.06 Fees and Expenses.  Except where explicitly provided otherwise herein, all  fees and expenses incurred in connection with the transactions contemplated hereby, including  the fees and disbursements of counsel, financial advisors and accountants, shall be paid by the  person incurring such fees or expenses, whether or not such transactions are consummated;  provided that, upon consummation of the transactions contemplated by this Agreement,  Purchaser shall promptly pay any unpaid and due and owing Bank Transaction Expenses; and  provided further that Sellers shall be responsible for the Bank Transaction Expense Excess  Amount, which Purchaser may deduct from the consideration paid to Sellers in accordance with  Section 3.02(a).  6.07 Tax Matters.  (a) Sellers shall be liable for any and all Taxes imposed on the Bank,  or for which the Bank may otherwise be liable, for any Pre-Closing Tax Period and  with respect to any Straddle Period, for the portion thereof ending on the Closing  Date. With respect to any Tax Return for a Pre-Closing Tax Period with a due date  after the Closing Date and which is not filed prior to the Closing, Purchaser shall  (A) prepare, or cause to be prepared, such Tax Return in a manner consistent with the  past practice of the Bank, except as otherwise required by Law, and (B) deliver to the  Sellers’ Representative for its review, comment and approval (which approval shall  not be unreasonably withheld, conditioned or delayed) a copy of such Tax Return at  least thirty (30) calendar days in advance of the due date (taking into account any  available extensions) for filing such Tax Return; in the event of any disagreement  between Purchaser and the Sellers’ Representative regarding the preparation of any  such Tax Return, the Sellers’ Representative shall use its reasonable best efforts to  resolve any such disagreement and, if it is unable to resolve such disagreement, to  cause an independent accounting firm to resolve such disagreement at least five (5)  Business Days prior to the due date therefor (taking into account any available  extensions), and any such resolution shall be final and binding upon the Parties. The  fees and expenses of the accounting firm shall be borne equally by Purchaser and  Sellers.  

 

  -36-  4811-0033-8921 v.25  (b) For purposes of paragraph (a), in the case of Taxes that are payable  with respect to any Straddle Period, the portion of any such Taxes that is attributable  to the portion of the period ending on the Closing Date shall be:  (i) in the case of Taxes that are either (A) based upon or related to  income or receipts, or (B) imposed in connection with any sale or other transfer or  assignment of property (real or personal, tangible or intangible) deemed equal to the  amount that would be payable if the Tax period of the Bank (and each partnership in  which the Bank is a partner) ended with (and included) the Closing Date; provided  that exemptions, allowances or deductions that are calculated on an annual basis  (including depreciation and amortization deductions) shall be allocated between the  period ending on and including the Closing Date and the period beginning after the  Closing Date in proportion to the number of calendar days in each period; and  (ii) in the case of Taxes that are imposed on a periodic basis with  respect to the assets or capital of the Bank, deemed to be the amount of such Taxes  for the entire Straddle Period (or, in the case of such Taxes determined on an arrears  basis, the amount of such Taxes for the immediately preceding period), multiplied by  a fraction the numerator of which is the number of calendar days in the portion of the  period ending on and including the Closing Date and the denominator of which is the  number of calendar days in the entire period.  (c) Tax Returns.  (i) The Bank shall prepare and file, or cause to be prepared and filed,  all Tax Returns that are required to be filed by the Bank for all Pre-Closing Tax  Periods with a due date on or before the Closing Date (“Pre-Closing Returns”). All  Pre-Closing Returns shall be prepared on a basis consistent with the past practice of  the Bank, except as otherwise required by law. Sellers shall deliver to Purchaser at  least thirty (30) days prior to the due date for filing such Pre-Closing Return (taking  into account any applicable extensions) a draft of each such Pre-Closing Return (in  the form intended to be filed) and such additional information as Purchaser may  reasonably request. Purchaser shall have the right to review each such Pre-Closing  Return and additional information, if any, prior to the filing of such Pre-Closing  Return and Sellers shall consider in good faith any reasonable comments provided by  Purchaser in respect thereof.  Purchaser shall not, and shall not cause or permit, the  Bank to amend any Pre-Closing Return without the prior written consent of Sellers,  not to be unreasonably withheld;  (ii) Purchaser shall prepare and timely file, or cause to be prepared and  timely filed, all Tax Returns required to be filed by the Bank for any Straddle Period  (“Straddle Returns”). Purchaser shall prepare, or cause to be prepared, such Straddle  Returns in a manner consistent with the past practice of the Bank, except as otherwise  required by Law. Purchaser shall deliver to Sellers for their review, comment and  approval (which approval shall not be unreasonably withheld, conditioned or delayed)  a copy of such Straddle Returns at least thirty (30) calendar days in advance of the  due date (taking into account any available extensions) for filing such Straddle  

 

  -37-  4811-0033-8921 v.25  Returns. In the event of any disagreement between Purchaser and Sellers regarding  the preparation of a Straddle Return, Purchaser and Sellers shall use their reasonable  best efforts to resolve any such disagreement and, if they are unable to resolve such  disagreement, to cause an independent accounting firm to resolve such disagreement  at least five (5) Business Days prior to the due date therefor (taking into account any  available extensions), and any such resolution shall be final and binding upon the  Parties. The fees and expenses of the accounting firm shall be borne equally by  Purchaser and Sellers; and   (iii) The preparation and filing of all other Tax Returns shall be  exclusively within the control of Purchaser.  (d) Mutual Assistance and Cooperation.  After the Closing, Sellers and  Purchaser shall, subject to Section 6.04 and Section 6.05:  (i) assist (and cause their respective Affiliates to assist) the other party  in preparing any Tax Return of the Bank;  (ii) cooperate fully in preparing for any audit of, or dispute with, any  taxing authority regarding any Tax Return of the Bank;  (iii) make available to the other party and to any taxing authority as  reasonably requested all information, records and documents relating to Taxes of the  Bank;  (iv) provide timely notice to the other party in writing of any pending  or threatened tax audit or assessment of the Bank for Taxes for which the other party  may have a liability; and  (v) furnish the other party with copies of all correspondence received  from any taxing authority in connection with any audit or information request with  respect to the Bank for Taxes for which the other party may have a liability.  (e) Transfer Taxes.  Purchaser shall be liable for any transfer, stamp,  documentary, registration, sales, use tax and other such Taxes and any conveyance  fee, recording charge and other fees and charges (including any penalties and interest)  incurred as a result of the transfers effected pursuant to this Agreement.  (f) Tax-Sharing Agreements.  As of the Closing Date, any tax-sharing  or allocation agreement or arrangement, whether or not written, that may have been  entered into between the Bank and Sellers shall be terminated, and no payments  which are owed by or to the Bank pursuant thereto shall be made.  6.08 Compensation Matters.  After the date hereof, the Purchaser shall create a  cash retention pool of $225,000 in the aggregate for employees of the Bank on such terms as  shall be determined by the Purchaser in consultation with the chief executive officer of the Bank,  which shall, subject to the Closing, be paid to such employees of the Bank within thirty (30) days  following the Closing Date or at such later dates as may be provided in any retention award.  

 

  -38-  4811-0033-8921 v.25  6.09 Subsequent Financial Statements.  From the date hereof until Closing, the  Bank shall deliver (A) the unaudited balance sheet of the Bank as of each calendar quarter, and  the unaudited statements of operations, shareholders’ equity and comprehensive income (loss),  and cash flows of the Bank for the three-month periods ending on the last day of each such  quarter, in each case, within twenty (20) calendar days after the end of each quarter, respectively,  (B) the unaudited balance sheets of the Bank as of each calendar month-end after the date of this  Agreement and the unaudited statements of operations, shareholders’ equity and comprehensive  income (loss), and cash flows of the Bank for each one-month period ending after date of this  Agreement, in each case, within 20 (twenty) calendar days of the month-end and (C) if  applicable, audited financial statements for the year ended December 31, 2021, within ninety  (90) calendar days of December 31, 2021 (the financial statements described in clauses (A)-(C)  above, the “Subsequent Financial Statements”).  The Subsequent Financial Statements shall  (x) be prepared from the books and records of the Bank and (y) present fairly in all material  respects the financial position and operating results of the Bank at the times indicated and for the  periods covered.  6.10 Competing Transaction.  The Sellers and the Bank agree that they will not,  and that they will direct and use commercially reasonable efforts to cause the Bank’s directors,  officers, employees, affiliates, agents and representatives (including, without limitation, any  investment banker, attorney or accountant retained by it) not to, directly or indirectly, solicit,  negotiate, furnish information to, accept, encourage, consider or otherwise pursue any offer or  inquiry from any person regarding a Competing Transaction, or provide any Confidential  Information or data to any person relating to, a Competing Transaction, or otherwise facilitate  any effort or attempt to make or implement a Competing Transaction.  The Sellers and the Bank  will, and shall cause the Bank’s employees, officers, directors, shareholders, affiliates,  representatives and agents to, immediately cease and cause to be terminated any existing  activities, discussions or negotiations with any parties conducted heretofore with respect to any  of the foregoing.  The Sellers and the Bank will take the necessary steps to inform the  appropriate individuals or entities referred to in the first sentence hereof of the obligations  undertaken in this Section 6.10.  The Sellers and the Bank will notify Purchaser immediately if  any written proposals are received by, any such information is requested from, or any such  negotiations are sought to be initiated or continued with the Sellers or the Bank.  6.11 Notice.  The Parties will provide each other with prompt written notice of:   (a) any events that, individually or in the aggregate, can reasonably be  expected to have a Material Adverse Effect with respect to them; and  (b) the commencement of any Action against any one or more of the  Parties by or before any court or Governmental Authority.  6.12 Release.  Effective at the Closing, each Seller, on behalf of itself and each  of its heirs, successors and assigns, hereby irrevocably and unconditionally releases, remises and  forever discharges any and all rights, claims and losses of any type that it or any of its Affiliates  has had, now has or might now or hereafter have against the Bank and its individual, joint or  mutual, past, present and future representatives, Affiliates, stockholders, successors and assigns  (each, a “Bank Releasee”), except for (i) rights, claims and losses arising under this Agreement  

 

  -39-  4811-0033-8921 v.25  or (ii) rights under any indemnification provisions of the articles of association, the bylaws or  other organizational or governance documents of the Bank.  Each Seller, for itself, and on behalf  of its heirs, successors and assigns, hereby irrevocably covenants to refrain from, directly or  indirectly, asserting any claim or demand, or commencing, instituting or causing to be  commenced or voluntarily aiding, any claim or proceeding of any kind against any Bank  Releasee, based upon any matter purported to be released hereby.  The Parties acknowledge that  this Section 6.12 is not an admission of liability or of the accuracy of any alleged fact, event,  development, omission or claim.  This Section 6.12 shall not be construed as an admission in any  dispute, action, litigation, arbitration, mediation or other proceeding as evidence of or any  admission or acknowledgement by any Party of any violation, infraction or wrongdoing. Without  limiting the foregoing, upon request from any Bank Releasee made promptly after the Closing,  each Seller shall confirm (or cause its applicable Affiliates to confirm) in writing the scope of the  foregoing release.  6.13 Shareholders’ Agreement.  Each Seller who is a party to that certain  Shareholders’ Agreement dated January 2, 2001, as amended (the “Shareholders’ Agreement”),  does hereby waive any and all rights such Seller has under the Shareholders’ Agreement, such  waiver to be irrevocable unless this Agreement is terminated in accordance with its terms. Each  Seller who is a party to the Shareholders’ Agreement agrees that effective upon the Closing, the  Shareholders’ Agreement shall terminate and be of no further force and effect. Each Director  Resignation Agreement shall expressly contemplate the waiver of any and all rights that the  Minority Director Shareholder has under the Shareholders’ Agreement.  6.14 Maintenance of Branch Office.  Purchaser will maintain a branch office at  the premises of the Owned Property subsequent to the Closing Date for no less than the initial  term of the Lease.  ARTICLE VII    CONDITIONS TO CONSUMMATION OF THE SHARE SALE  7.01 Conditions to the Obligation of Each Party to Effect the Share Sale.  The  respective obligation of each Party to consummate the Share Sale is subject to the fulfillment, or  written waiver before the Closing, of each of the following conditions.  (a) Regulatory Approvals.  All Requisite Regulatory Approvals shall  have been obtained and shall remain in full force and effect and all statutory waiting  periods in respect thereof shall have expired; provided that no Requisite Regulatory  Approval shall require compliance with any Burdensome Condition.   Notwithstanding any other provision of this Agreement, the inclusion of a  Burdensome Condition in connection with any Requisite Regulatory Approval shall  constitute a denial of such Requisite Regulatory Approval and such Requisite  Regulatory Approval shall be deemed not received for all purposes in this Agreement.  (b) No Burdensome Conditions.  Purchaser shall have concluded in its  reasonable good faith judgment that, after giving effect to the transactions  contemplated by this Agreement, neither Purchaser nor the Bank shall be subject to  

 

  -40-  4811-0033-8921 v.25  any condition in connection with obtaining and maintaining any Requisite Regulatory  Approvals that would (i) materially restrict the business plan proposed by Purchaser  for the operation of the Bank after Closing or (ii) be materially burdensome on  Purchaser’s business following the Closing, in each case which would likely reduce  the economic benefits of the transactions contemplated by this Agreement to  Purchaser to such a degree that Purchaser would not have entered into this Agreement  had such restriction or condition been known to it at the date hereof (such conditions,  “Burdensome Conditions”).  (c) No Injunction.  No Governmental Authority of competent  jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law or  Order (whether temporary, preliminary or permanent) that is in effect and prohibits or  makes illegal the consummation of the Share Sale.  7.02 Conditions to the Obligation of Purchaser.  The obligation of Purchaser to  consummate the Share Sale is also subject to the fulfillment, or written waiver by Purchaser,  before the Closing of each of the following conditions.  (a) Representations and Warranties of Each Seller.  The  representations and warranties of each Seller set forth in Section 5.02 shall be true  and correct as of the date of this Agreement and as of the Closing Date as if made on  and as of such date (except to the extent that any such representation and warranty  expressly speaks as of a specific date, in which case such representation and warranty  shall be true and correct as of such specific date).  (b) Representations and Warranties of the Bank.  (i)  The  representations and warranties of the Bank set forth in this Agreement to the extent  qualified by materiality, Material Adverse Effect or similar words shall be true and  correct in all respects as of the date of this Agreement and as of the Closing Date as if  made on and as of such date and any other representations and warranties of the Bank  set forth in this Agreement shall be true and correct in all material respects as of the  date of this Agreement and as of the Closing Date as if made on and as of such date  (except, in each case, to the extent that any such representation and warranty  expressly speaks as of a specific date, in which case such representation and warranty  shall be true and correct as of such specific date); and (ii) Purchaser shall have  received a certificate, dated the Closing Date, signed by an executive officer of the  Bank to that effect.  (c) Performance of Obligations of Sellers.  Sellers shall have  performed in all material respects all obligations required to be performed by it under  this Agreement at or before the Closing Date, and Purchaser shall have received a  certificate, dated the Closing Date, signed by the Sellers’ Representative to that  effect.  (d) Performance of Obligations of the Bank.  The Bank shall have  performed in all material respects all obligations required to be performed by it under  this Agreement at or before the Closing Date, and Purchaser shall have received a  

 

  -41-  4811-0033-8921 v.25  certificate, dated the Closing Date, signed by an executive officer of the Bank to that  effect.   (e) Tangible Common Equity.  The value of the Bank’s Tangible  Common Equity shall equal or exceed the Target Tangible Common Equity Value.  (f) Bank Equity-to-Debt Ratio.  The Bank Equity-to-Debt Ratio as of  the Closing shall be ten percent (10%) or greater.  (g) No Material Adverse Effect.  Since December 31, 2020, there will  have been no material damage, destruction or loss (whether or not covered by  insurance) and no other event, individually or in the aggregate, constituting a Material  Adverse Effect with respect to the Bank.  (h) Board Resignations.  If requested by Purchaser, the Bank shall  have delivered to Purchaser the written resignations of all members of the Board of  Directors of the Bank, effective as of the Closing.  (i) Purchaser Shareholder Approval.  Purchaser shall have obtained  the approval of its stockholders to withdraw its election as a business development  company under the Investment Company Act of 1940, as amended (the “Purchaser  Shareholder Approval”).  (j) Financing Matters.  (i) Purchaser shall have completed a  refinancing of its outstanding notes, including the elimination of any provisions  relating to Purchaser’s election to be treated as a business development company  under the Investment Company Act of 1940, as amended; and (ii) the Bank shall have  established a standard line of credit from the Federal Home Loan Bank of New York  (the “FHLBNY”) of an amount equal to or exceeding the lesser of $80,000,000 or the  maximum possible amount permitted that is secured by the Bank’s portfolio of  commercial and residential real estate loans, and the Bank’s portfolio of commercial  real estate loans shall be eligible to be pledged to the FHLBNY as collateral to  support a line of credit in such amount.  (k) Bank Employees.  The number of employees of the Bank as of the  Closing shall not be less than 75% of the number of employees as of the date of this  Agreement and shall include Nicholas DeMeo; for the avoidance of doubt, the other  Bank employees as of the Closing do not need to be the same persons as were  employees as of the date hereof, provided that any person hired by the Bank as a  Bank employee subsequent to the date hereof shall be reasonably qualified, based  upon, among other considerations, such person’s experience, expertise, credentials  and qualifications to perform the job functions of the position at the Bank for which  such person is hired. Purchaser shall have entered into an employment agreement  with Nicholas DeMeo, with such agreement effective upon and subject to the Closing.  (l) BIN Sponsorship.  The Bank shall have used its reasonable best  efforts to become a BIN Sponsor.  

 

  -42-  4811-0033-8921 v.25  (m) Total Average Deposits.  Total average deposits of the Bank,  determined in the same manner as the Bank’s quarterly call reports, shall be equal to  or in excess of $125,000,000 on average for the last thirty (30) calendar days prior to  Closing.  (n) Articles of Association. The articles of association of the Bank  shall have been amended, in a manner reasonably acceptable to the Purchaser, to  remove any geographic restrictions on the location of the main office of the Bank  other than those that may be imposed under applicable Law.   7.03 Conditions to the Obligation of the Bank and Sellers.  The obligation of  the Bank and Sellers to consummate the Share Sale is also subject to the fulfillment, or written  waiver by the Bank and Sellers’ Representative, before the Closing of each of the following  conditions.  (a) Representations and Warranties of Purchaser.  (i) The  representations and warranties of Purchaser set forth in this Agreement to the extent  qualified by materiality, Material Adverse Effect or similar words shall be true and  correct in all respects as of the date of this Agreement and as of the Closing Date as if  made on and as of such date, and any other representations and warranties of  Purchaser set forth in this Agreement shall be true and correct in all material respects  as of the date of this Agreement and as of the Closing Date as if made on and as of  such date (except, in each case, to the extent that any such representation and  warranty expressly speaks as of a specific date, in which case such representation and  warranty shall be true and correct as of such specific date) and (ii) Sellers shall have  received a certificate, dated the Closing Date, signed by an executive officer of  Purchaser to that effect.  (b) Performance of Obligations of Purchaser.  Purchaser shall have  performed in all material respects all obligations required to be performed by it under  this Agreement at or before the Closing Date, and Sellers shall have received a  certificate, dated the Closing Date, signed by an executive officer of Purchaser to that  effect.  ARTICLE VIII    TERMINATION  8.01 Termination.  This Agreement may be terminated, and the Share Sale may  be abandoned, at any time before the Closing:  (a) by the mutual written agreement of Purchaser and Sellers’  Representative;   (b) by either Purchaser or Sellers’ Representative if the Closing has  not occurred by the close of business on the date that is fifteen (15) months after the  date of this Agreement;  

 

  -43-  4811-0033-8921 v.25  (c) by either Purchaser or Sellers’ Representative (i) if any  Governmental Authority of competent jurisdiction has enacted, issued, promulgated,  enforced or entered any Law or final, nonappealable Order that is in effect and  prohibits or makes illegal the consummation of the Share Sale or (ii) any Requisite  Regulatory Approval is denied by final, nonappealable action of the relevant  Governmental Authority;  (d) by Purchaser in the event the Purchaser Shareholder Approval is  not obtained at the shareholder meeting where such approval is considered or any  adjournment thereof;   (e) by Purchaser in the event of a breach of any representation,  warranty, covenant or agreement contained in this Agreement on the part of the Bank  or Sellers, which breach, individually or in the aggregate, would result in, if occurring  or continuing on the Closing Date, the failure of any condition to the Purchaser’s  obligations set forth in Article VII to be satisfied, and which cannot be or has not  been cured within thirty (30) calendar days after the giving of written notice to the  Bank and Sellers’ Representative of such breach;   (f) by the Sellers’ Representative in the event of a breach of any  representation, warranty, covenant or agreement contained in this Agreement on the  part of Purchaser, which breach, individually or in the aggregate, would result in, if  occurring or continuing on the Closing Date, the failure of any condition to the Bank  and Sellers’ obligations set forth in Article VII to be satisfied, and which cannot be or  has not been cured within thirty (30) calendar days after the giving of written notice  to Purchaser of such breach.  8.02 Notice of Termination.  Any Party desiring to terminate this Agreement  pursuant to Section 8.01 shall give written notice of such termination.  In the case of any such  termination by the Purchaser, such written notice shall be given to the Sellers’ Representative  and in the case of any such termination by Sellers, such written notice shall be given by the  Sellers’ Representative to the Purchaser.  8.03 Effect of Termination and Abandonment.    (a) Except as otherwise provided herein, (i) if this Agreement is  terminated as provided in Section 8.01, none of the Parties shall have any liability or  further obligation under this Agreement, except pursuant to Sections 6.03, 6.05 and  6.06, this Section 8.03, Article X and Article XI (and any related definitional  provisions), which shall survive termination of this Agreement and (ii) termination  shall not relieve any Party from liability for fraud; provided that in no event shall any  Party be liable for punitive damages.  (b) In the event this Agreement is terminated by (I) Purchaser or  Sellers’ Representative (i) pursuant to Section 8.01(b) and (A) the Dividend Approval  has been obtained in accordance with Section 7.01(a) and (B) all other conditions to  consummate the Share Sale set forth in Article VII have been fulfilled or waived in  

 

  -44-  4811-0033-8921 v.25  accordance with Article VII (or are capable of being fulfilled on the Closing Date)  other than Section 7.01(a) in respect of the Federal Reserve Approval, the FDIC  Approval, the OCC Approval or the SBA Approval in respect of the Purchaser  (together, the “Purchaser Approvals”) or (ii) pursuant to Section 8.01(c) in respect of  any Purchaser Approval or (II) Sellers’ Representative pursuant to Section 8.01(f) due  to the Purchaser’s voluntary withdrawal of any application related to the Purchaser  Approvals, and in each case in the event that each of the Bank and the Sellers has  complied in all material respects with Section 6.02, Purchaser shall pay to the Bank  within five (5) Business Days of the date of such termination an amount equal to  $200,000 (the “Purchaser Termination Fee”). The Purchaser Termination Fee shall  constitute liquidated damages and not a penalty and, except in the case of fraud or  willful or intentional breaches of this Agreement, the receipt thereof shall be the sole  and exclusive monetary remedy of the Bank and Sellers under this Agreement.  ARTICLE IX    INDEMNIFICATION  9.01 Indemnification by Sellers.  (a) The Sellers, except for the Minority Shareholders, shall, severally,  but not jointly, in proportion to their Pro Rata Share (as adjusted to reflect the  exclusion of the Minority Shareholders from the obligations of Article IX),  indemnify, defend, protect and hold harmless Purchaser, and its officers, directors,  employees, agents and representatives (collectively, “Purchaser Indemnified  Persons”) from and against all liabilities, losses, claims, damages, actions, suits,  proceedings, demands, assessments, adjustments, fees, costs and expenses (including  attorneys’ fees and costs and expenses of investigation), net of any insurance  proceeds actually received and net of any tax benefits actually received by the  Purchaser Indemnified Person in cash in the year of the loss (collectively, “Losses”)  incurred by any of such indemnified persons as a result of or arising from (i) any  misrepresentations or breach of any warranty or representation of the Bank set forth  in Section 5.03 or the schedules or certificates delivered in connection herewith, (ii)  any breach or nonfulfillment of any covenant or agreement on the part of the Bank  under this Agreement, and (iii) Taxes that the Bank or Sellers shall be liable for  pursuant to Section 6.07(a).  In addition, each Seller shall indemnify, defend, protect  and hold harmless the Purchaser Indemnified Persons from and against any Losses  incurred by any of such indemnified persons as a result of or arising from (i) any  misrepresentations or breach of any warranty or representation made by such Seller in  Section 5.02 or the schedules or certificates delivered in connection herewith or  (ii) any breach or nonfulfillment of any covenant or agreement on the part of such  Seller under this Agreement.  (b) Purchaser shall give the Sellers’ Representative written notice of  any claim for indemnification pursuant to this Section 9.01 within thirty (30) calendar  days after Purchaser receives notice, or becomes aware of, an event giving rise to  such claim for indemnification.  

 

  -45-  4811-0033-8921 v.25  9.02 Indemnification by Purchaser.   (a) Purchaser shall indemnify, defend, protect and hold harmless  Sellers and their agents, representatives, beneficiaries and heirs (collectively, “Seller  Indemnified Persons”) from and against all Losses incurred by any of such  indemnified persons as a result of or arising from (a) any misrepresentation or breach  of the representations and warranties of Purchaser set forth in Section 5.04 or in the  schedules or certificates delivered in connection herewith, and (b) any breach or  nonfulfillment of any covenant or agreement on the part of Purchaser under this  Agreement.   (b) The Sellers’ Representative shall give Purchaser written notice of  any claim for indemnification pursuant to this Section 9.02 within thirty (30) calendar  days after the Sellers’ Representative receives notice, or becomes aware of, an event  giving rise to such claim for indemnification.    9.03 Third-Person Claims.  (a) Notice.  Promptly after any Purchaser Indemnified Person or Seller  Indemnified Person indemnified pursuant to Section 9.01 and 9.02 (Purchaser  Indemnified Person and Seller Indemnified Person, each an “Indemnified Party”) has  received notice of or has knowledge of any claim by a person not a party to this  Agreement (a “Third Person”), of the commencement of any action or proceeding by  a Third Person, which the Indemnified Party believes in good faith is an  indemnifiable claim under this Agreement, the Indemnified Party shall promptly  provide to the Party obligated to provide indemnification pursuant to Section 9.01 or  9.02 (such Party, the “Indemnifying Party”) written notice of such claim or the  commencement of such action or proceeding.  To the extent known, such notice shall  state the nature and the basis of such claim and a reasonable estimate of the amount  thereof.  (b) Defense by Indemnifying Party.  The Indemnifying Party shall  have the right to defend, at its own expense and by its own counsel, any such matter,  other than any matter with a Governmental Authority with jurisdiction over the Bank  or Purchaser or any of their Affiliates, so long as the Indemnifying Party pursues the  same diligently and in good faith.  If the Indemnifying Party undertakes to defend, it  shall promptly provide written notice to the Indemnified Party of its intention to do so  and confirm that it will be responsible for any Losses related to the matter, and the  Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all  commercially reasonable respects in the defense thereof.  After the Indemnifying  Party has notified the Indemnified Party of its intention to undertake to defend any  such asserted liability, and for so long as the Indemnifying Party diligently pursues  such defense, the Indemnifying Party shall not be liable for any additional legal  expenses incurred by the Indemnified Party in connection with any defense of such  asserted liability; provided, however, that the Indemnified Party shall be entitled, at  its expense, to participate in the defense of such asserted liability, and provided  further that if the Indemnified Party identifies a conflict of interest between the  

 

  -46-  4811-0033-8921 v.25  Indemnified Party and the Indemnifying Party in such matter, the Indemnified Party  may hire separate counsel at the Indemnifying Party’s expense.  (c) Settlement.  The Indemnifying Party shall not settle any such Third  Person claim without the consent of the Indemnified Party, unless the settlement  thereof imposes no liability or obligation on, and includes a complete release from  liability of, the Indemnified Party.    (d) Defense by Indemnified Party.  If, upon receiving notice, the  Indemnifying Party does not undertake to defend such matter to which the  Indemnified Party is entitled to indemnification hereunder within thirty (30) calendar  days, or fails diligently to pursue such defense or is not entitled to assume such  defense, the Indemnified Party may undertake such defense through counsel of its  choice, at the cost and expense of the Indemnifying Party, and the Indemnified Party  may settle such matter, in its sole and absolute discretion, and the Indemnifying Party  shall reimburse the Indemnified Party to the extent the amount paid in such settlement  and any other liabilities or expenses incurred by the Indemnified Party in connection  therewith are indemnifiable Losses under this Agreement.  (e) No Waiver.  Except as provided in writing to such effect signed by  such person, no action or inaction of an Indemnifying Party under this Section 9.03  shall be deemed a waiver of such person’s right to contest any claim for  indemnification under this Agreement.  9.04 Limitation of Liability.  Any indemnification right resulting under this  Article IX shall be subject to reaching a minimum aggregate obligation (a “Threshold”) of One  Hundred Thousand Dollars ($100,000.00), whereupon, subject to the provisions and limitations  hereof, the entire aggregate amount of all obligations and liabilities in excess of the Threshold  shall be immediately due and payable. In no event will any Seller be liable for indemnification of  any amount of Losses in excess of the amount of the Purchase Price actually received by such  Seller, and the maximum aggregate amount of indemnification payable by the Sellers hereunder  shall not exceed $12,500,000.  Notwithstanding any provision in this Agreement to the contrary,  except to the extent awarded by a court to a Third Person, in no event will any party be liable for  any indirect, special, consequential or punitive damages (including, but not limited to, lost  profits), in each case, to the extent not reasonably foreseeable. Notwithstanding the foregoing,  the Threshold shall not apply to any claim related to fraudulent misrepresentations or willful or  intentional breaches of this Agreement.    9.05 Survival of Representations and Warranties and Covenants.  The  representations and warranties set forth in Article V shall survive the Closing for a period of  eighteen (18) months from the Closing Date (the “Expiration Date”).  Notwithstanding anything  in this Article IX to the contrary, an Indemnifying Party’s indemnification obligations under  Article IX shall not terminate as of the Expiration Date with respect to any claims for  indemnification to which the Expiration Date would otherwise be applicable which are asserted  in writing prior to the Expiration Date and have not been finally resolved prior to the Expiration  Date.  Further, this Section 9.05 shall not operate to extinguish any claims any Party may have  relating to fraudulent misrepresentations or willful or intentional breaches of this Agreement.   

 

  -47-  4811-0033-8921 v.25  The covenants and agreements of the Parties contained in this Agreement that by their terms are  to be performed following the Closing shall survive the Closing and continue in effect in  accordance with their terms until performed or the obligation to so perform shall have expired.   The covenants and agreements of the Parties contained herein that by their terms are to be  performed at or prior to the Closing shall not survive the Closing and shall terminate on the  earlier of (a) the time at which they are performed and (b) immediately after the Closing.    9.06 Exclusive Remedy.  In the absence of fraud or willful or intentional  breaches of this Agreement by the Bank and Sellers on the one hand, or Purchaser on the other  hand, the exclusive remedy of Sellers on the one hand, and Purchaser on the other hand, for  Losses that are indemnifiable pursuant to Section 9.01 or 9.02 shall be pursuant to this  Article IX, unless an additional remedy or different remedy is expressly set forth in a provision  of this Agreement, and the parties waive all other remedies.  Notwithstanding the foregoing, this  Section 9.06 shall not limit the availability of specific performance or other equitable remedies.  ARTICLE X  SELLERS’ REPRESENTATIVE  10.01 Acknowledgement.  Each Seller hereby irrevocably constitutes and  appoints each of Richard Gelman and Corey Gelman as the representative of Sellers (each, a  “Sellers’ Representative”), and each of Richard Gelman and Corey Gelman hereby accepts such  appointment as the Sellers’ Representative, to act on behalf of such Seller as its agent and  attorney-in-fact, with full power of substitution, to act in its name, place and stead in connection  with the Share Sale and transactions contemplated hereby.  The power of attorney granted in this  Section 10.01 by each Seller is coupled with an interest, is irrevocable (except as provided by  Section 10.05), may be delegated by a Sellers’ Representative and shall survive the death,  dissolution or incapacity of any Seller and the consummation of the transactions contemplated  hereby.  Purchaser shall be entitled to rely on the actions of any one of the two individuals  appointed in this Section 10.01 as a Sellers’ Representative as taken on behalf of the Sellers in  connection with the transactions contemplated hereby.  By signing this Agreement, each Seller  shall be deemed to have authorized and empowered any one of the two individuals appointed in  this Section 10.01 as a Sellers’ Representative, on its behalf and in its name, to (other than in  connection with a claim pursuant to the second sentence of Section 9.01(a)):  (a) act for and on behalf of each Seller in any and all capacities and to  do and perform every act and thing required or permitted to be done, in the reasonable  judgment of the Sellers’ Representative, in connection with the Share Sale and  transactions contemplated hereby;  (b) give and receive all notices or documents given or to be given to or  by Sellers pursuant hereto or in connection herewith and to give and receive and  accept service of legal process in connection with any Action arising under this  Agreement or the Escrow Agreement;  (c) engage counsel and such accountants and other advisors for Sellers  and incur and pay such other expenses on behalf of Sellers in connection with the  

 

  -48-  4811-0033-8921 v.25  Share Sale and transactions contemplated hereby as the Sellers’ Representative may  deem appropriate;  (d) take such action on behalf of Sellers as the Sellers’ Representative  may deem appropriate in respect of the following:  (i) any matters contemplated by Section 3.04 (including any dispute  relating thereto);  (ii) any claims (including settlement thereof) made for indemnification  pursuant to Article IX;  (iii) any amendment, waiver or consent with respect to this Agreement  or the Escrow Agreement; and  (iv) any claims, filings or other matters contemplated by Section 6.02;  (e) take such other action as the Sellers’ Representative is authorized  to take under this Agreement or the Escrow Agreement;  (f) make all determinations required or permitted under this  Agreement or the Escrow Agreement; and  (g) take all relevant action in all such other matters as the Sellers’  Representative may deem necessary or appropriate to consummate the Share Sale.  10.02 Sellers’ Representative Expenses.  The Sellers’ Representative shall not be  entitled to any fee, commission or other compensation for the performance of its services  hereunder but shall be entitled to reimbursement for out-of-pocket fees and expenses (including  legal, accounting and other advisors’ fees and expenses, if applicable) incurred by the Sellers’  Representative in performing its duties under this Agreement and the Escrow Agreement.  The  Sellers’ Representative shall be entitled to deduct any such fees and expenses from any amounts  payable to Sellers in accordance with the terms of this Agreement or the Escrow Agreement.  10.03 Indemnification of Sellers’ Representative.  Sellers shall indemnify the  Sellers’ Representative for and shall hold the Sellers’ Representative harmless against any loss,  liability or expense incurred by the Sellers’ Representative or his agents, stockholders,  consultants, attorneys, accountants, advisors, brokers or representatives, in each case relating to  the Sellers’ Representative’s conduct as the Sellers’ Representative, including all out-of-pocket  expenses incurred for legal fees or otherwise, other than losses, liabilities or expenses resulting  from the Sellers’ Representative’s gross negligence or willful misconduct in connection with its  performance under this Agreement and the Escrow Agreement.  The costs of such  indemnification (including the costs and expenses of enforcing this right of indemnification)  shall be individual obligations of each Seller based on his or her Pro Rata Share of such costs.   The Sellers’ Representative shall be entitled to deduct any such fees and expenses from any  amounts payable to Sellers in accordance with the terms of this Agreement or the Escrow  Agreement.  In no event shall the Sellers’ Representative be liable hereunder or in connection  herewith for any indirect, punitive, special or consequential damages.  

 

  -49-  4811-0033-8921 v.25  10.04 Reliance.  In the performance of its duties hereunder, the Sellers’  Representative shall be entitled to (a) rely upon any document or instrument reasonably believed  to be genuine, accurate as to content and signed by any Seller or any Party hereunder and  (b) assume that any person purporting to give any notice in accordance with the provisions  hereof has been duly authorized to do so.  A decision, act, consent or instruction of any one of  the two individuals appointed in Section 10.01 as a Sellers’ Representative, including an  amendment, extension or waiver of this Agreement, shall constitute a decision of Sellers and  shall be final, binding and conclusive upon the Sellers.  Purchaser shall be entitled to rely  conclusively upon any statement or action within the scope of Section 10.01 made or taken by  any one of the two individuals appointed in Section 10.01 as a Sellers’ Representative as being  the action of Sellers.  The Sellers’ Representative may, in all questions arising under this  Agreement, rely on the advice of counsel, and for anything done, omitted or suffered in good  faith by the Sellers’ Representative in accordance with such advice, the Sellers’ Representative  shall not be liable to the Sellers or the Escrow Agent or any other person.  Purchaser shall be  entitled to rely fully on all actions of any one of the two individuals appointed in Section 10.01  as a Sellers’ Representative as a legal and binding action by the Sellers.  Purchaser shall have no  liability whatsoever for relying on any one of the two individuals appointed in Section 10.01 as a  Sellers’ Representative or in dealing solely with Sellers’ Representative in any action, including  any action requiring approval of the Sellers or any Seller.    10.05 Replacement of the Sellers’ Representative.  The Sellers’ Representative  may be replaced at any time by the affirmative vote or written consent of Sellers representing at  least a majority of the Shares contemplated to be sold (or if such replacement is being made after  the Closing, actually sold) hereunder.  Sellers exercising such replacement right shall cause  (a) written notice of such replacement (along with the replacement Sellers’ Representative’s  notice details and evidence of the requisite Seller vote or consent having been obtained) to be  promptly given to Purchaser and each other Seller and (b) the replacement Sellers’  Representative to accede to this Agreement as the Sellers’ Representative, it being understood  that no replacement of the Sellers’ Representative pursuant to this Section 10.05 shall be  effective until the notice contemplated by clause (a) has been delivered and the accession  contemplated by clause (b) shall have occurred.  ARTICLE XI    MISCELLANEOUS  11.01 Waiver; Amendment.  Subject to Section 10.05, any provision of this  Agreement may be amended or waived if, and only if, such amendment or waiver is in writing  and signed, in the case of an amendment, by both Purchaser and the Sellers’ Representative, or in  the case of a waiver, by the Party granting the waiver or, in the case of a waiver granted by or on  behalf of any Seller, by such Seller or by the Sellers’ Representative. No failure or delay by any  Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor  shall any single or partial exercise thereof preclude any other or further exercise thereof or the  exercise of any other right, power or privilege.   11.02 Counterparts.  This Agreement may be executed in one or more  counterparts, each of which shall be deemed an original, and all of which shall constitute one and  

 

  -50-  4811-0033-8921 v.25  the same Agreement and shall become effective when one or more counterparts have been signed  by each of the parties hereto and delivered to the other parties hereto; it being understood and  agreed that all parties hereto need not sign the same counterpart. The delivery by facsimile or by  electronic delivery in PDF format of this Agreement with all executed signature pages (in  counterparts or otherwise) shall be sufficient to bind the parties hereto to the terms and  conditions set forth herein. All of the counterparts will together constitute one and the same  instrument, and each counterpart will constitute an original of this Agreement.  11.03 Governing Law.  This Agreement shall be governed by, and interpreted in  accordance with, the laws of the State of New York applicable to contracts made and to be  performed entirely within such State, without regard to the conflicts of law principles thereof to  the extent that such principles would apply the law of another jurisdiction.  11.04 Specific Performance.  Each Party agrees that irreparable damage would  occur in the event that any of the provisions of this Agreement were not performed by it in  accordance with their specific terms or were otherwise breached or threatened to be breached.  It  is accordingly agreed that, except as expressly set forth in this Agreement to the contrary, each  Party shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and  to enforce specifically the terms and provisions of this Agreement in the United States District  Court for the Eastern District of New York or the Supreme Court of the State of New York for  the County of New York, without bond or other security being required, this being in addition to  any other right, remedy or cause of action to which Sellers or Purchaser is entitled under any  theory of recovery whatsoever (including at law or in equity and including any remedies in tort  or any other claims).  11.05 Assignment.  This Agreement shall be binding upon and inure to the  benefit of the Parties and their respective permitted successors and assigns.  None of the Sellers  may assign any of its rights or delegate any of its obligations under this Agreement without the  prior written consent of the Purchaser, and the Purchaser may not assign any of its rights or  delegate any of its obligations under this Agreement without the prior written consent of the  Sellers’ Representative, except that the Purchaser can assign its rights or delegate any obligations  to any Subsidiary or Affiliate of the Purchaser.  11.06 Notices.  All notices or other communications hereunder to a Party shall  be deemed to have been duly given and made if in writing and (a) if served by personal delivery,  on the day of such delivery, (b) if delivered by registered or certified mail (return receipt  requested), or by a national courier service, on the day of delivery, (c) if sent by facsimile, upon  confirmed transmission of such facsimile (provided that the facsimile is given during the normal  business hours of the recipient; otherwise on the Business Day during which such normal  business hours next occur); and (d) if sent by email, upon confirmation by telephone, facsimile  or electronic mail from the receiving Party (or its legal counsel) or receipt thereof (excluding,  however, out-of-office replies or other automatically generated responses), to the person at the  address set forth below, or such other address as may be designated in writing hereafter, in the  same manner, by such person (each such notice, a “Notice”):  

 

  -51-  4811-0033-8921 v.25  If to Sellers’ Representative, to:  Richard Gelman  Corey Gelman  Email:   gelmanr@gmail.com    corey@chicdog.com  Telephone: (954) 714-9400    If to any Seller, to:  the address and contact information set forth below the name of such  Seller in Schedule A    If to Purchaser, to:  Newtek Business Service Corp.  4800 T-Rex Avenue, Suite 120  Boca Raton, FL  33431    Attention: Barry Sloane  Email:   bsloane@newtekone.com  Telephone: (212) 356-9500  Facsimile: (866) 339-7027    With a copy to:  Sullivan & Cromwell LLP  125 Broad Street  New York, New York  10004  Attention: Jared M. Fishman  Telephone: (212) 558-4000  Facsimile: (212) 558-9280  Email:   fishmanj@sullcrom.com  If to the Bank, prior to the Closing, to:  National Bank of New York City  136-29 38th Avenue  Flushing, NY  11354-4112  Attention: Richard Gelman, Chairman of the Board  Email:   rgelman@nbnyc.com  Telephone: (718) 358-4400  Facsimile: (718) 358-4488    

 

  -52-  4811-0033-8921 v.25  With a copy to:  Silver, Freedman, Taff & Tiernan LLP  3299 K Street, NW, Suite 100  Washington, DC  20007  Attention: Philip Ross Bevan  Email:   rbeva@sfttlaw.com  Telephone: (202) 295-4517  Facsimile: (202) 337-5202    If to the Bank after the Closing, to the persons indicated under Purchaser above.    11.07 Entire Understanding; Third-Party Beneficiaries.  This Agreement  (including the Schedules, Annexes and Exhibits hereto) represents the entire understanding of  the Parties hereto with respect to the subject matter hereof and thereof and supersedes any and all  other oral or written agreements heretofore made.  Nothing in this Agreement, express or  implied, is intended to confer upon any person, other than the Parties and their respective  permitted successors and assigns, any rights or remedies under or by reason of this Agreement.   Only the Parties that are signatories to this Agreement (and their permitted successors and  assigns) shall have any obligation or liability under, in connection with, arising out of, resulting  from or in any way related to, this Agreement, the Share Sale or any other matter contemplated  hereby, or the process leading up to the execution and delivery of this Agreement and the  transactions contemplated hereby.  11.08 Interpretation; Effect.  In this Agreement, except as context may otherwise  require:  (a) references to the Preamble, Recitals, Sections, Exhibits or  Schedules are to the Preamble to, a Recital or Section of, or Schedule to, this  Agreement;  (b) references to this Agreement are to this Agreement and Exhibits  and the Schedules to it, taken as a whole;  (c) references to the transactions contemplated hereby include the  transactions provided for in this Agreement, including the Share Sale;  (d) references to any agreement (including this Agreement), contract,  statute or regulation are to the agreement, contract, statute or regulation as amended,  modified, supplemented, restated or replaced from time to time (in the case of an  agreement or contract, to the extent permitted by the terms thereof); and to any  Section of any statute or regulation include any successor to the section;   (e) references to any Governmental Authority include any successor to  that Governmental Authority;  (f) references to “Dollars” or “$” are to U.S. Dollars;  

 

  -53-  4811-0033-8921 v.25  (g) the words “hereby,” “herein,” “hereof,” “hereunder,” and similar  terms are to be deemed to refer to this Agreement as a whole and not to any specific  Section;  (h) the words “include,” “includes,” or “including” are to be deemed  followed by the words “without limitation”;   (i) any singular term in this Agreement will be deemed to include the  plural, and any plural term the singular; and all pronouns and variations of pronouns  will be deemed to refer to the feminine, masculine or neuter, singular or plural, as the  identity of the person referred to may require;  (j) the table of contents and article and section headings are for  reference purposes only and do not limit or otherwise affect any of the substance of  this Agreement;  (k) this Agreement is the product of negotiation by the parties, having  the assistance of counsel and other advisors, and the parties intend that this  Agreement not be construed more strictly with regard to one Party than with regard to  the other; and  (l) no provision of this Agreement shall require or be construed to  require, directly or indirectly, any person to take any action, or omit to take any  action, to the extent such action or omission would violate applicable Law.  11.09 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.  If any provisions of this Agreement or the  application thereof to any person or entity or any circumstance is found by a court or other  Governmental Authority of competent jurisdiction to be invalid or unenforceable, (a) a suitable  and equitable provision shall be substituted therefor in order to carry out, so far as may be valid  and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the  remainder of this Agreement and the application of such provision to other persons, entities or  circumstances shall not be affected by such invalidity or unenforceability, nor shall such  invalidity or unenforceability affect the validity or enforceability of such provision or the  application thereof in any other jurisdiction.  11.10 WAIVER OF JURY TRIAL.  EACH PARTY ACKNOWLEDGES AND  AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT  IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE  EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY  RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY  LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS  AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY  CERTIFIES AND ACKNOWLEDGES THAT:  (A) NO REPRESENTATIVE, AGENT OR  ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR  OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF  

 

  -54-  4811-0033-8921 v.25  LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (B) EACH PARTY  UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER;  (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (D) EACH PARTY HAS  BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,  THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.10.  11.11 Venue for Resolution of Disputes.  Each Party hereto agrees that it shall  bring any action or proceeding in respect of any claim arising out of or related to this Agreement  and the transactions contemplated hereby, whether in tort or contract or at law or in equity,  exclusively in the United States District Court for the Southern District of New York or the  Supreme Court of the State of New York for the County of New York, and (a) irrevocably  submits to the exclusive jurisdiction of such courts, (b) waives any objection to laying venue in  any such action or proceeding in such courts, (c) waives any objection that such courts are an  inconvenient forum or do not have jurisdiction over any Party hereto and (d) agrees that service  of process upon such Party in any such action or proceeding shall be effective if Notice is given  in accordance with Section 11.06 of this Agreement.  Each Party hereto further hereby  irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or  proceeding arising out of this Agreement or the transactions contemplated hereby in such courts,  and hereby irrevocably and unconditionally waives and agrees not to plead or claim in any such  court that any such action, suit or proceeding brought in any such court has been brought in an  inconvenient forum or that such Party is not subject to personal jurisdiction in such court.  [signature pages follow]  

 

IN WITNESS WHEREOF, the parties hereto have executed or have caused this  Agreement to be duly executed in counterparts all as of the day and year first above written.  SELLERS:  GAIL FARBER REVOCABLE TRUST, AS  AMENDED, FBO ETOILE GELMAN  By:  Name: Corey D. Gelman  Title:  Trustee  GAIL FARBER REVOCABLE TRUST, AS  AMENDED, FBO GARISON GELMAN  By: _____________________________ Name:  Corey D. Gelman  Title:  Trustee  GAIL FARBER REVOCABLE TRUST, AS  AMENDED, FBO JOIX GELMAN  By: _____________________________ Name:  Corey D. Gelman  Title:  Trustee  COREY GELMAN REVOCABLE LIVING  TRUST  By:  Name: Corey D. Gelman  Title: Trustee  GARY FARBER GELMAN REVOCABLE  TRUST  By:  Name:  Gary F. Gelman  Title:  Trustee  

 

JOIX GELMAN  By:  Name:  Gary Gelman  Title:  Custodian, NY UTMA  ETOILE GELMAN  By:  Name:  Gary Gelman  Title:  Custodian, NY UTMA  GARISON GELMAN  By:  Name:  Gary Gelman  Title:  Custodian, NY UTMA  RICHARD GELMAN  By:  Name:  Richard Gelman  BANK:  NATIONAL BANK OF NEW YORK CITY  By:  Name:  Richard Gelman  Title:  Chairman of the Board  PURCHASER:  NEWTEK BUSINESS SERVICES CORP.  By:  Name: Title:ex10-1

 

Exhibit
10.1

 

SECOND AMENDMENT TO AND CONSENT UNDER LOAN, SECURITY AND GUARANTEE
AGREEMENT

 

This SECOND AMENDMENT TO AND CONSENT UNDER LOAN,
SECURITY AND GUARANTEE AGREEMENT (this “Amendment”), dated as of
July 30, 2021 (the “Amendment Date”), is
entered into by and among AUTOWEB,
INC., a Delaware corporation (the “Borrower”), THE OTHER OBLIGORS PARTY HERETO,
THE LENDERS PARTY HERETO,
and CIT NORTHBRIDGE CREDIT
LLC, a Delaware limited liability company, as agent for the
Lenders (in such capacity, together with its successors and
assigns, “Agent”).

 

WHEREAS, the Borrower, the other
Obligors party thereto, the financial institutions from time to
time party thereto as lenders (collectively, the
“Lenders”)
and the Agent are parties to that certain Loan, Security and
Guarantee Agreement dated as of March 26, 2020 (as amended by that certain First
Amendment to Loan, Security and Guarantee Agreement dated as of May
18, 2020 and as the same may be further amended, restated,
supplemented, or otherwise modified from time to time, the
“Loan
Agreement”);

 

WHEREAS, the Borrower has advised Agent
that (a) the Borrower has formed a new wholly-owned Subsidiary,
Tradein Expert, Inc., a Delaware corporation (“Tradein Expert”), (b) the
Borrower desires that Tradein Expert acquire certain assets of Car
Acquisition, LLC, a Texas limited liability company, dba CarZeus
(“CarZeus”; such
acquisition, the “CarZeus Acquisition”),
and (c) that proceeds of the Revolver Loans be used to pay the
purchase price for the CarZeus Acquisition and fund the ongoing
business needs of Tradein Expert;

 

WHEREAS, in connection with the
foregoing, the Borrower has requested that the Agent and Lenders
(a) consent to the formation of Tradein Expert and the CarZeus
Acquisition and (b) amend certain provisions of the Loan Agreement
as set forth herein; and

 

WHEREAS, the Agent and Lenders have
agreed to such consent and amendments subject to the terms and
conditions set forth herein.

 

NOW, THEREFORE, in consideration of the
premises and agreements, provisions and covenants herein contained,
the parties hereto agree as follows:

 

Section
1. Defined
Terms. Capitalized terms used but not defined herein shall
have the meanings assigned to such terms in the Loan Agreement (as
amended hereby).

 

Section
2. Consent.
Reference is hereby made to the Asset Purchase Agreement to be
dated on or about July 31, 2021 (the “CarZeus Purchase
Agreement”), by and among the Borrower, Tradein
Expert, CarZeus, and the other parties thereto. Notwithstanding
anything contained in the Loan Agreement or any other Loan Document
to the contrary, (a) Agent and the undersigned Lenders hereby (i)
consent to the consummation of the CarZeus Acquisition for a
purchase price (excluding any post-closing adjustments) not to
exceed $400,000, subject to the satisfaction of the
conditions to Permitted Acquisitions set forth in clause (b) of the
definition of “Permitted Acquisition” in the Loan
Agreement (other than (x) the conditions specified in clauses
(b)(iv) and
(b)(v) thereof and
(y) the requirement that the Acquisition be made by the Borrower),
and provided that the CarZeus Acquisition is completed in all
material respects in accordance with the terms of the CarZeus
Purchase Agreement, and (ii) agree that, subject to the conditions
set forth in Sections
2.1.1 and 6.2 of the Loan Agreement,
proceeds of Revolving Loans in an aggregate amount not to exceed
$400,000 may be used by the Borrower to pay the purchase price for
the CarZeus Acquisition, and (b) the Borrower, Agent and the
undersigned Lenders hereby agree that the CarZeus Acquisition shall
be deemed to be a Permitted Acquisition under the Loan Agreement.
In addition, Agent and the undersigned Lenders hereby consent to
the formation of Tradein Expert without concurrent compliance with
the requirements set forth in Section 10.1.9 of the Loan
Agreement; provided, that all such
requirements are satisfied within ten (10) Business Days after the
date hereof (or such longer period as approved by
Agent).

 

 

-1-

 

 

Section
3. Amendments. Subject
to the satisfaction of the conditions set forth herein, effective
as of the Amendment Date, the terms of the Loan Agreement are
hereby amended as follows:

 

3.1 Section 1.1 of the Loan
Agreement is hereby amended by inserting the following new
definitions in their proper alphabetical order:

 

CarZeus: Car Acquisition, LLC,
a Texas limited liability company, dba CarZeus.

 

CarZeus Acquisition: the
purchase by Tradein Expert of certain assets of CarZeus, pursuant
to the CarZeus Purchase Agreement.

 

CarZeus Purchase Agreement:
that certain Asset Purchase Agreement dated on or about July 31,
2021, by and among AutoWeb, Tradein Expert, CarZeus, and the other
parties thereto.

 

Eligible Tradein Account: an
Account owing to Tradein Expert that arises in the Ordinary Course
of Business from the sale of used motor vehicles, is payable in
Dollars and is deemed by Agent, in its Permitted Discretion, to be
an Eligible Tradein Account. Without limiting the foregoing, no
Account shall be an Eligible Tradein Account if (i) it is unpaid
for more than 30 days after the date on which such Account is
created or (ii) it would not be an Eligible Account pursuant to any
requirement set forth in clauses (d) through (o) of the definition
of Eligible Account.

 

Second Amendment Effective
Date: July 30, 2021.

 

Tradein Expert: Tradein Expert,
Inc., a Delaware corporation.

 

Tradein Obligor Date: the date
on which Tradein Expert is joined as a Guarantor, an Obligor, and a
Pledgor under this Agreement and the other Loan Documents upon the
satisfaction of the following conditions, with all documentation to
be in form and substance reasonably satisfactory to the
Agent:

 

(a)           execution
and delivery of (i) a joinder agreement with respect to this
Agreement and the other Loan Documents, (ii) a Pledge Supplement
(as defined in the Pledge Agreement) and (iii) such other Security
Documents necessary to evidence or perfect Agent’s Lien under
the UCC on any Collateral acquired pursuant to the CarZeus
Acquisition, together with all instruments, documents,
certificates, supplements and agreements executed or delivered
pursuant thereto (including pledged Collateral, with undated
irrevocable transfer powers executed in blank, as
applicable);

 

(b)           delivery
of (i) acknowledgments of all filings or recordations necessary to
perfect Agent’s Liens in the Collateral of Tradein Expert
(including, without limitation, (A) UCC financing statements to be
filed with the applicable filing office and (B) the recording of
any IP Assignments to be filed with the United States Patent and
Trademark Office) and
(ii) UCC and
Lien searches and other evidence satisfactory to Agent that
there are no Liens upon the Collateral of Tradein
Expert other than Permitted Liens;

 

(c)           delivery
of a certificate of a duly authorized officer of Tradein Expert,
certifying (i) that attached copies of Tradein Expert’s
charter, certificate or articles of incorporation, bylaws or
similar agreement or instrument governing the formation of Tradein
Expert are true and complete, and in full force and effect, without
amendment except as shown; (ii) that an attached copy of
resolutions authorizing execution and delivery of the Loan
Documents is true and complete, and that such resolutions are in
full force and effect, were duly adopted, have not been amended,
modified or revoked, and constitute all resolutions adopted with
respect to this credit facility; and (iii) to the title, name and
signature of each Person authorized to sign the Loan
Documents;

 

(d)           delivery
of a written opinion of Jones Day in a form customary for
transactions of this kind;

 

 

-2-

 

 

(e)           delivery
of (i) copies of the charter documents of Tradein Expert, certified
by the Secretary of State or other appropriate official of Tradein
Expert’s jurisdiction of organization and (ii) good standing
certificates for Tradein Expert, issued by the Secretary of State
or other appropriate official of Tradein Expert’s
jurisdiction of organization and each jurisdiction where Tradein
Expert maintains offices;

 

(f)           delivery
of updated copies of policies or certificates of insurance and
related endorsements for the insurance policies carried by Tradein
Expert, all in compliance with the Loan Documents (including the
requirements of Section
8.6.2);

 

(g)           Agent
shall have received an executed copy of the CarZeus Purchase
Agreement and any other material documents and instruments executed
and delivered in connection therewith; and

 

(h)           delivery
of satisfactory evidence that Tradein Expert has received its motor
vehicle dealer license.

 

3.2 The following
definitions in Section
1.1 of the Loan Agreement are hereby and restated to read in
their entirety as follows:

 

Accounts Formula Amount: the
sum of (a) up to 85% of the Value of Eligible Accounts (other than
Eligible Tradein Accounts) plus (b) on and after the Tradein
Obligor Date, the lesser of (i) 85% of the Value of Eligible
Tradein Accounts and (ii) $3,000,000, in each case, subject to
Agent’s discretion; provided, however, that, in each case,
such percentage shall be reduced by 1.0% for each percentage point
(or portion thereof) that the Dilution Percent exceeds
5.0%.

 

Restricted Investment: any
Investment by an Obligor or Subsidiary, other than (a) Investments
in an Obligor (other than Investments in Tradein Expert); (b)
Investments in a Subsidiary of an Obligor not exceeding $300,000 in
the aggregate after the Closing Date (other than Investments in
Tradein Expert); (c) Cash Equivalents that are subject to
Agent’s Lien and control, pursuant to documentation in form
and substance satisfactory to Agent; (d) advances to an officer or
employee for salary, travel expenses, commissions and similar items
in the Ordinary Course of Business; (e) prepaid expenses and
extensions of trade credit made in the Ordinary Course of Business;
(f) deposits with financial institutions permitted hereunder; (g)
Investments received with respect to Collateral other than Eligible
Accounts or Eligible Unbilled Accounts in satisfaction or partial
satisfaction of Accounts owing by financially troubled account
debtors to the extent reasonably necessary to prevent or limit
loss; (h) Permitted Acquisitions; (i) Investments by AutoWeb in
Tradein Expert (i) not exceeding $400,000 in the aggregate used to
pay the purchase price for the CarZeus Acquisition and (ii) in
amounts that, after giving effect to Upstream Payments by Tradein
Expert to AutoWeb with respect to such Investments, do not exceed
(A) $1,500,000 during the period from the Second Amendment
Effective Date until the Tradein Obligor Date and (B) $3,000,000 at
any time on or after later of (x) the Tradein Obligor Date and (y)
the date on which Borrower shall have caused the cash management
and deposit account structure of Tradein Expert to comply with the
terms of the Loan Agreement; and (j) other Investments not
exceeding $100,000 in the aggregate after the Closing
Date.

 

3.3 Section 3.6.2 of the Loan
Agreement is hereby amended by adding the following new sentence at
the end of such Section:

 

The
parties hereto hereby acknowledge and agree that (i) pursuant to
the public statement by the Financial Conduct Authority, the
regulatory supervisor of LIBOR’s administrator, on March 5,
2021, the Scheduled Unavailability Date is expected to occur on
June 30, 2023, and (ii) subject to the occurrence after the date
hereof of any additional circumstances set forth in clauses (a)
through (c) above, Agent and Borrowers shall endeavor to establish
the LIBOR Successor Rate, together with any proposed LIBOR
Successor Rate Conforming Changes as set forth in this Section 3.6.2, prior to June 30,
2023.

 

 

-3-

 

 

3.4 Section 5.6.3 of the Loan
Agreement is hereby amended by adding the following new sentence at
the end of such Section:

 

Notwithstanding the
foregoing, with respect to any payment that Agent makes to any
Lender or other Secured Party as to which Agent determines (in its
sole and absolute discretion) that any of the following applies
(such payment referred to as the “Rescindable Amount”): (i)
Borrowers have not in fact made the corresponding payment to Agent;
(ii) Agent has made a payment in excess of the amount(s) received
by it from Borrowers either individually or in the aggregate
(whether or not then owed); or (iii) Agent has for any reason
otherwise erroneously made such payment; then each of the Secured
Parties severally agrees to repay to Agent forthwith on demand the
Rescindable Amount so distributed to such Secured Party, in
immediately available funds with interest thereon, for each day
from and including the date such amount is distributed to it to but
excluding the date of payment to Agent, at the greater of the
Federal Funds Rate and a rate determined by Agent in accordance
with banking industry rules on interbank compensation.

 

3.5 Section 12 of the Loan
Agreement is hereby amended by adding the following new
Section 12.17
thereto in proper numerical order:

 

            

12.17            

Recovery of
Erroneous Payments.
Notwithstanding anything to the contrary in this Agreement, if at
any time Agent determines (in its sole and absolute discretion)
that it has made a payment hereunder in error to any Lender or
other Secured Party, whether or not in respect of an Obligation due
and owing by Borrowers at such time, where such payment is a
Rescindable Amount, then in any such event, each such Person
receiving a Rescindable Amount severally agrees to repay to Agent
forthwith on demand the Rescindable Amount received by such Person
in immediately available funds in the currency so received, with
interest thereon, for each day from and including the date such
Rescindable Amount is received by it to but excluding the date of
payment to Agent, at the greater of the Federal Funds Rate and a
rate determined by Agent in accordance with banking industry rules
on interbank compensation. Each Lender and each other Secured Party
irrevocably waives any and all defenses, including any
“discharge for value” (under which a creditor might
otherwise claim a right to retain funds mistakenly paid by a third
party in respect of a debt owed by another), “good
consideration”, “change of position” or similar
defenses (whether at law or in equity) to its obligation to return
any Rescindable Amount. Agent shall inform each Lender or other
Secured Party that received a Rescindable Amount promptly upon
determining that any payment made to such Person comprised, in
whole or in part, a Rescindable Amount. Each Person’s
obligations, agreements and waivers under this Section 12.17 shall survive the
resignation or replacement of the Agent, any transfer of rights or
obligations by, or the replacement of, a Lender, the termination of
the Commitments and/or the repayment, satisfaction or discharge of
all Obligations (or any portion thereof) under any Loan
Document.

 

Section
4. Conditions to
Effectiveness. This Amendment
shall be effective as of the Amendment Date upon the satisfaction
of each of the following conditions, and in case of any
documentation to be delivered to the Agent, such documentation
shall be in form and substance reasonably satisfactory to the
Agent:

 

(a) This Amendment
shall have been duly executed and delivered by the Borrower, the
other Obligors, the Agent and the Lenders.

 

(b) The representations
and warranties of each Obligor set forth in Section 5(a) of this Amendment
shall be true and correct in all material respects on and as of the
Amendment Date; provided that, to the extent
that such representations and warranties specifically refer to an
earlier date, they shall be true and correct in all material
respects as of such earlier date; provided further that any representation
and warranty that is qualified as to “materiality,”
“Material Adverse Effect” or similar language shall be
true and correct in all respects on the date of such credit
extension or on such earlier date, as the case may be.

 

(c) No Default or Event
of Default shall exist or would result from the execution of this
Amendment or the transactions contemplated hereby.

 

 

-4-

 

 

(d) The Borrower shall
have paid to the Agent a non-refundable amendment fee in the amount
of $20,000, which shall be earned, due, and payable on the
Amendment Date in immediately available funds and (ii) the
reasonable and documented costs and expenses of the Agent incurred
by it in connection with the transactions contemplated
hereby.

 

Section
5. Representations and
Warranties.

 

(a)           Each
Obligor hereby represents and warrants, on and as of the Amendment
Date, that:

 

(i)            

The representations
and warranties of each Obligor set forth in Section 9 of the Loan
Agreement and in each other Loan Document are true and correct in
all material respects on and as of the Amendment Date; provided that, to the extent
that such representations and warranties specifically refer to an
earlier date, they are true and correct in all material respects as
of such earlier date; provided further that any representation
and warranty that is qualified as to “materiality,”
“Material Adverse Effect” or similar language is true
and correct in all respects on the date of such credit extension or
on such earlier date, as the case may be.

 

(ii)            

No Default or Event
of Default exists or will result from the execution of this
Amendment.

 

(iii)            

Each Obligor has
all requisite power and authority to execute, deliver and perform
its obligations under this Amendment. The execution, delivery and
performance of this Amendment (A) are within such Obligor’s
corporate or other powers, (B) have been duly authorized by all
necessary corporate or other organizational action, and (C) do not
(1) require any consent or approval of any holders of Equity
Interests of any Obligor, except those already obtained, (2)
contravene the Organic Documents of any Obligor, (3) violate or
cause a default under any Applicable Law or Material Contract
except where the violation or default would not reasonably be
expected to result in a Material Adverse Effect, or (4) result in
or require imposition of a Lien (other than Permitted Liens) on any
Obligor’s Property.

 

(iv)            

This Amendment has
been duly executed and delivered by each Obligor that is a party
thereto.

 

(v)            

This Amendment
constitutes a legal, valid and binding obligation of such Obligor,
enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors’ rights generally.

 

(b)           Each
Obligor hereby represents and warrants, upon the consummation of
the CarZeus Acquisition, that:

 

(i)           After
giving pro forma effect to the CarZeus Acquisition and the use of
Revolver Loan proceeds in connection therewith, the Borrower is
Solvent, and the Borrower and its Subsidiaries, taken as a whole,
are Solvent.

 

(ii)           
Each of the representations and warranties contained in the CarZeus
Purchase Agreement made by an Obligor or Subsidiary is true and
correct in all material respects.

 

(iii)
(A) Borrower and Tradein Expert have duly taken all necessary
organizational action to authorize the execution, delivery and
performance of the CarZeus Purchase Agreement and the consummation
of transactions contemplated thereby; (B) the CarZeus Acquisition
has been consummated in accordance with the terms of the CarZeus
Purchase Agreement; (C) the CarZeus Acquisition complied with all
applicable material legal requirements, and all necessary
governmental, regulatory, creditor, shareholder, partner and other
material consents, approvals and exemptions required to be obtained
by Borrower and Tradein Expert have been duly obtained and will be
in full force and effect; and (D) the execution and delivery of the
CarZeus Purchase Agreement did not, and the consummation of the
CarZeus Acquisition will not, violate any material statute or
regulation of the United States (including any securities law) or
of any state or other applicable jurisdiction, or any material
order, judgment or decree of any court or governmental body binding
on Borrower or Tradein Expert or result in a breach of, or
constitute a default under, any material agreement, indenture,
instrument or other document, or any judgment, order or decree, to
which Borrower or Tradein Expert is a party or by which Borrower or
Tradein Expert is bound.

 

 

-5-

 

 

Section
6. Post-Closing
Covenants.

 

(a)           Within
thirty (30) days after the Tradein Obligor Date (or such longer
period as approved by the Agent), Borrower shall have used
commercially reasonable efforts to obtain a duly executed Lien
Waiver in form and substance reasonably acceptable to Agent from the
lessor of its facility located at 4335 Van Jackson, Suite 104, San
Antonio, Texas.

 

(b)           Within
thirty (30) days after the Tradein Obligor Date (or such longer
period as approved by the Agent), Borrower shall have used
commercially reasonable efforts to obtain an acknowledgement of the
Agent’s Lien on Tradein Expert’s assets, in form and
substance reasonably acceptable to Agent, from each auction house
utilized by Tradein Expert.

 

(c)           Within
ten (10) Business Days after the Tradein Obligor Date (or such
longer period as approved by the Agent), Borrower shall have caused
the cash management and deposit account structure of Tradein Expert
to comply with the terms of the Loan Agreement, which shall
include, without limitation, (i) the establishment of Deposit
Accounts with automatic sweeps to Borrower’s Dominion Account
and (ii) the delivery of duly executed blocked or springing (as
determined by Agent) Deposit Account Control Agreements with
respect to all of Tradein Expert’s Deposit Accounts (other
than Excluded Accounts), in each case, with financial institutions
reasonably satisfactory to Agent and otherwise in form and
substance acceptable to Agent; provided, that from and after
the Tradein Obligor Date until the above requirements are
satisfied, Tradein Expert shall instruct each applicable financial
institution to provide for a daily manual sweep from each of
Tradein Expert’s Deposit Accounts to Borrower’s
Dominion Account.

 

(d)           The
failure of Borrower to comply with paragraph (a), (b) or (c) above
shall constitute an immediate Event of Default under the Loan
Agreement.

 

Section
7. Effect on Loan
Documents.

 

(a) On and after the
Amendment Date, each reference in any Loan Document, and in any
other document or instrument incidental thereto, to the Loan
Agreement shall mean and be a reference to the Loan Agreement as
amended by this Amendment, and each reference in the Loan Agreement
to “this Agreement”, “herein”,
“hereinafter”, “hereto”,
“hereof”, and words of similar import shall mean, from
and after the Amendment Date, the Loan Agreement as amended by this
Amendment.

 

(b) Except as expressly
amended hereby, the provisions of the Loan Documents are and shall
continue to be in full force and effect and are hereby in all
respects ratified and confirmed.

 

(c) The execution,
delivery and effectiveness of this Amendment shall not operate as a
waiver of any right, power or remedy of any Lender or any Agent
under any of the Loan Documents, nor constitute a waiver of any
provision of the Loan Documents or in any way limit, impair or
otherwise affect the rights and remedies of the Agent or the
Lenders under the Loan Documents.

 

(d) Each party hereto
acknowledges and agrees that, on and after the Amendment Date, this
Amendment shall constitute a Loan Document for all purposes under
the Amended Loan Documents.

 

Section
8. Non-Reliance on
Agent. Each Lender acknowledges that it has, independently
and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this
Amendment. Each Lender also acknowledges that it will, without
reliance upon the Agent or any other Lender and based on such
documents and information as it shall from time to time deem
appropriate, continue to make its own credit decisions in taking or
not taking action under or based upon this Amendment, the Loan
Agreement, any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.

 

 

-6-

 

 

Section
9. Reaffirmation;
Other Agreements. Subject to any limitations on its
obligations expressly stated in the Loan Documents to which it is a
party, each Obligor (a) acknowledges and agrees, as of the
Amendment Date, that all of its obligations under the Loan
Documents to which it is a party are reaffirmed and remain in full
force and effect on a continuous basis and (b) reaffirms each Lien
granted by each Obligor pursuant to the Collateral Documents, all
of which obligations and Liens remain in full force and effect
after giving effect to this Amendment. Further, each Obligor
acknowledges and agrees that the amendments and consent set forth
herein do not constitute any course of dealing between the Agent,
the Lenders, and the Obligors. Nothing contained in this Amendment
shall be construed as substitution or novation of the obligations
outstanding under the Loan Agreement or the other Loan Documents.
The consent set forth herein shall not apply to any other past,
present, or future noncompliance with any provision of the Loan
Agreement or the other Loan Documents or any circumstances other
than those described herein.

 

Section
10. No Actions, Claims,
Etc.. As of the date hereof, each of the Obligors hereby
acknowledges and confirms that it has no knowledge of any actions,
causes of action, claims, demands, damages and liabilities of
whatever kind or nature, in law or in equity, against the Agent,
the Lenders, or the Agent’s or the Lenders’ respective
officers, employees, representatives, agents, advisors,
consultants, counsel or directors arising from any action by such
Persons, or failure of such Persons to act on or prior to the date
hereof.

 

Section
11. Release of
Claims. In consideration of the Lenders’ and the
Agent’s agreements contained in this Amendment, each Obligor
hereby irrevocably releases and forever discharges the Lenders and
the Agent and their respective affiliates, subsidiaries,
successors, assigns, directors, officers, employees,
representatives, agents, advisors, consultants and counsel (each, a
“Released
Person”) of and from any and all claims, suits,
actions, investigations, proceedings, demands or damages, whether
based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute, common law or otherwise of
any kind or character, known or unknown, which such Obligor ever
had or now has against the Agent, any Lender or any other Released
Person which relates, directly or indirectly, to any acts or
omissions of Agent, any Lender or any other Released Person on or
prior to the date hereof.

 

Section
12. Governing
Law. THIS AMENDMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.

 

Section
13. Miscellaneous.

 

(a) This Amendment is
binding and enforceable as of the date hereof against each party
hereto and its successors and permitted assigns.

 

(b) This Amendment may
be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument. Delivery of an executed signature page
counterpart hereof by telecopy, emailed pdf. or any other
electronic means that reproduces an image of the actual executed
signature page shall be effective as delivery of a manually
executed counterpart hereof. The words “execution,”
“signed,” “signature,”
“delivery,” and words of like import in or relating to
any document to be signed in connection with this Amendment and the
transactions contemplated hereby shall be deemed to include
electronic signatures, the electronic association of signatures and
records on electronic platforms, deliveries or the keeping of
records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed
signature, physical delivery thereof or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New
York State Electronic Signatures and Records Act, any other similar
state laws based on the Uniform Electronic Transactions Act or the
Uniform Commercial Code, each as amended, and the parties hereto
hereby waive any objection to the contrary, provided that (x) nothing
herein shall require the Agent to accept electronic signature
counterparts in any form or format and (y) Agent reserves the right
to require, at any time and at its sole discretion, the delivery of
manually executed counterpart signature pages to this Amendment and
the parties hereto agree to promptly deliver such manually executed
counterpart signature pages.

 

(c) If any provision of
this Amendment is held to be illegal, invalid or unenforceable, (i)
the legality, validity and enforceability of the remaining
provisions of this Amendment shall not be affected or impaired
thereby and (ii) the parties shall endeavor in good faith
negotiations to replace the illegal, invalid or unenforceable
provisions with valid provisions the economic effect of which comes
as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render
unenforceable such provision in any other
jurisdiction.

 

(d) Borrower shall pay
all out of pocket costs and expenses of Agent incurred in
connection with this Amendment including, without limitation,
reasonable attorneys’ fees and expenses.

 

[Remainder of page intentionally left blank; signature pages
follow]

 

 

-7-

 

 

IN WITNESS WHEREOF, the parties hereto,
by their officers thereunto duly authorized, have executed this
Amendment as of the day and year first above written.

 

 

 

BORROWER:

 

 

AUTOWEB,
INC.

 

                                                                 

By: /s/ Glenn E.
Fuller

                                                                 

Name: Glenn E.
Fuller

Title:
Executive Vice President, Chief Legal Officer and
Secretary

 

 

GUARANTORS:

 

 

AUTOBYTEL,
INC.

 

                                                                 

By: /s/ Glenn E.
Fuller                                 

                                                                 

Name: Glenn E.
Fuller

Title:
Executive Vice President, Chief Legal Officer and
Secretary

 

 

AW
GUA USA, INC.

 

                                                                 

By: /s/ Glenn E.
Fuller                       

                                                                 

Name: Glenn E.
Fuller

Title:
Executive Vice President, Chief Legal Officer and
Secretary

 

 

CAR.COM,
INC.

 

                                                                 

By: /s/ Glenn E.
Fuller                                    

            

Name: Glenn E.
Fuller

Title:
Executive Vice President, Chief Legal Officer and
Secretary

 

 

-8-

 

 

	
 

	

AGENT AND
LENDERS:

 

CIT NORTHBRIDGE CREDIT LLC,

as
Agent

 

By:
/s/ Jacqueline
Iervese 

Name:
Jacqueline Iervese

Title:
Authorized Signatory

 

	
 

	
 

	
 

	

CIT NORTHBRIDGE FUNDING I LLC,

as a
Lender

 

By:
/s/ Jacqueline
Iervese 

Name:
Jacqueline Iervese

Title:
Authorized Signatory

 

 

	
 

	
 

 

 

 

-9-

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