Document:

Exhibit 10.17

 

CUSIP # 550550 AC1

ISIN # US550550AC12

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE SECURITIES OR WITHOUT AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR THAT SUCH TRANSFER IS PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION UNDER THE ACT.

 

THIS SENIOR NOTE IS NOT SECURED AND IS NOT A SAVINGS OR DEPOSIT ACCOUNT, IS NOT GUARANTEED BY ANY BANK, AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE DEPOSIT INSURANCE FUND, OR ANY OTHER GOVERNMENTAL OR PRIVATE AGENCY.

 

LUTHER BURBANK CORPORATION

 

SENIOR NOTE

 

	
$                               
    	
September 29, 2014
    
	
 
    	
Santa Rosa, California
    

 

FOR VALUE RECEIVED, the undersigned, Luther Burbank Corporation, a California corporation (the “Company”), hereby promises to pay to                                     (the “Holder”) or its registered assigns the principal sum of                  dollars ($                ), or such amount as shall then equal the outstanding principal sum hereof, together with accrued interest on the unpaid principal at the rate set forth in Section 3 hereof (the “Senior Note”).  This Senior Note is issued pursuant to that certain Senior Note Purchase Agreement dated September 29, 2014 by and between the Company and each Purchaser listed on Schedule I attached thereto (the “Purchase Agreement”).  All capitalized terms not otherwise defined herein shall have the meaning assigned to it in the Purchase Agreement.

 

1.                                      Maturity.  The unpaid principal balance hereof, together with all unpaid interest accrued thereon, is due and payable on September 30, 2024 (the “Maturity Date”).  If the Maturity Date falls on a day that is not a Business Day, payment of the outstanding principal must be made on the next succeeding Business Day and such extension of time will be included in computing any interest in respect of such payment.

 

2.                                      Interest.  The Company promises to pay interest on the outstanding principal amount of this Senior Note at six and a half percent (6.5%) per annum until the Maturity Date. The Company shall pay interest quarterly on March 30, June 30, September 30 and December 30 of each year beginning December 30, 2014 (if any such day is not a Business Day, on the next

 

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succeeding Business Day) until payment of the principal sum has been made in full.  Interest will be computed on the basis of a 360-day year of twelve 30-day months and interest for any partial period shall be computed on the basis of a 360-day year of twelve 30-day months and the number of days elapsed in any partial month.

 

3.                                      Voluntary Redemption.  This Senior Note shall be redeemable in whole or in part, at the Company’s option, at any time or from time to time:

 

(a)                                 prior to August 31, 2024 (thirty (30) days prior to the maturity date of the Senior Notes), at a redemption price equal to the greater of (i) one hundred percent (100%) of the principal amount of the Senior Notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the Redemption Date) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (defined below) plus 30 basis points, plus in each case accrued and unpaid interest thereon to, but excluding, the Redemption Date; or

 

(b)                                 on or after August 31, 2024 (thirty (30) days prior to the maturity date of the Senior Notes), at a redemption price equal to one hundred percent (100%) of the principal amount of the Senior Notes being redeemed, plus accrued and unpaid interest thereon to, but excluding, the Redemption Date.

 

(c)                                  In the event the Company exercises its right under this Section 3, the Company will mail notice of redemption to the Holders not less than thirty (30) nor more than sixty (60) days prior to the Redemption Date and shall redeem the Senior Note ratably with all other holders of the Senior Notes issued pursuant to the Purchase Agreement.  Interest shall cease to accrue on the Senior Note or portion of the Senior Note called for redemption on and after the Redemption Date and Borrower shall pay accrued and unpaid interest on the principal amount of the Senior Notes being redeemed to, but not including, the Redemption Date

 

(d)                                 For purposes of this Section 3, the following definitions apply:

 

i.                                          “Treasury Rate” means, with respect to any Redemption Date for the Senior Notes, the rate per annum equal to the semiannual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

 

ii.                                       “Comparable Treasury Issue” means the United States Treasury security or securities selected by the Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Senior Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of the Senior Notes.

 

iii.                                    “Comparable Treasury Price” means, with respect to any Redemption Date for the Senior Notes, (A) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer

 

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Quotations, or (B) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

 

iv.                                   “Independent Investment Banker” means an independent investment banker appointed by the Company.

 

v.                                      “Reference Treasury Dealer” means U.S.  governmental securities dealer(s) selected by the Company.

 

vi.                                   “Reference Treasury Dealer Quotations” means, with respect to the Reference Treasury Dealer and any Redemption Date for the Senior Notes, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by the Reference Treasury Dealer at 3:30 p.m. New York time on the third business day preceding such Redemption Date.

 

4.                                      Unsecured Obligation.  This Senior Note is an unsecured obligation of the Company.

 

5.                                      Events of Default.  Any of the following events shall be an “Event of Default”:

 

(a)                                 the Company defaults in the payment of any installment of interest upon any of the Senior Notes issued pursuant to the Purchase Agreement as and when the same shall become due and payable, and such default continues for a period of thirty (30) days;

 

(b)                                 the Company defaults in the payment of all or any part of the principal of any of the Senior Notes as and when the same shall become due and payable at maturity, by declaration of acceleration or otherwise;

 

(c)                                  the Company fails to perform any other covenant or agreement on the part of the Company contained in the Senior Notes or in the Purchase Agreement and such failure continues for a period of ninety (90) days after the date on which notice specifying such failure, stating that such notice is a “Notice of Default” and demanding that the Company remedy the same, shall have been given to the Company by the Holders of at least twenty five percent (25%) in aggregate principal amount of the Senior Notes at the time outstanding;

 

(d)                                 the institution by the Company or Bank of proceedings to be adjudicated as bankrupt or insolvent, or the consent by the Company or Bank to institution of bankruptcy or insolvency proceedings against it, or the filing by the Company or Bank of a petition or answer or consent seeking reorganization or release under the federal Bankruptcy Act, or any other applicable federal or state law, or the consent by it to the filing of any such petition or the appointment of a receiver, liquidator, assignee, trustee or other similar official for the Company or Bank, or of any substantial part of the Company’s or Bank’s property, or the making by Company or Bank of an assignment for the benefit of creditors, or the taking of corporate action by the Company or Bank in furtherance of any such action;

 

(e)                                  if within sixty (60) days after the commencement of an action against the Company or Bank (and service of process in connection therewith on the Company or Bank) seeking any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar relief

 

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under any present or future statute, law or regulation, such action shall not have been resolved in favor of the Company or Bank or all orders or proceedings thereunder affecting the operations or the business of the Company or Bank stayed, or if the stay of any such order or proceeding shall thereafter be set aside, or if, within sixty (60) days after the appointment without the consent or acquiescence of the Company or Bank of any trustee, receiver or liquidator of the Company or Bank, or of all or any substantial part of the properties of the Company or Bank, such appointment shall not have been vacated; or

 

(f)                                   the Company or Bank shall default under any bond, debenture, note or other Indebtedness for money borrowed by the Company or Bank having an aggregate principal amount outstanding of at least Ten Million Dollars ($10,000,000), or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or Bank having an aggregate principal amount outstanding of at least Ten Million Dollars ($10,000,000), whether such Indebtedness now exists or is created or incurred in the future, which default (i) constitutes a failure to pay any portion of the principal of such Indebtedness when due and payable after the expiration of any applicable grace period or (ii) results in such Indebtedness becoming due or being declared due and payable prior to the date on which it otherwise would have become due and payable without, in the case of clause (i), such Indebtedness having been discharged or, in the case of clause (ii), without such Indebtedness having been discharged or such acceleration having been rescinded or annulled within thirty (30) days of such acceleration.  As used herein, “Indebtedness” shall not include any transaction (including an agreement with respect thereto) that is an interest rate swap, interest rate option, equity or equity index swap, equity or equity index option, bond or bond index swap, bond or bond index option, or similar transaction, or any combination thereof, entered into by the Bank in the ordinary course of its business.

 

If an Event of Default with respect to the Senior Notes occurs and is continuing, the holders of not less than twenty-five percent (25%) in aggregate principal amount of the outstanding Senior Notes may, by a notice in writing to the Company, declare the principal thereof, premium, if any, and all unpaid interest thereon to be due and payable immediately (other than an event of default arising from specified events in bankruptcy, insolvency or reorganization with respect to the Company, in which case the principal of the Senior Notes, premium, if any, and all unpaid interest thereon shall be immediately due and payable without any declaration or other action on the part of any holder of the Senior Notes).

 

6.                                      Transferability.  This Senior Note may not be transferred in violation of any restrictive legend set forth hereon.  Each new note issued upon transfer of this Senior Note shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the applicable securities laws, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance therewith.  The Company may issue stop transfer instructions in connection with such restrictions.  Prior to presentation of this Senior Note for registration of transfer, the Company shall treat the registered holder hereof as the owner and holder of this Senior Note for the purpose of receiving all payments of principal and interest hereon and for all other purposes whatever, whether or not this Senior Note shall be overdue and the Company shall not be affected by notice to the contrary.

 

7.                                      Denominations.  The Senior Notes are issuable only as fully registered notes without

 

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interest coupons in minimum denominations of $2,000 or any amount in excess thereof which is an integral multiple of $1,000.  Senior Notes shall be transferred only in authorized denominations and in a minimum amount of One Hundred Thousand Dollars ($100,000)

 

8.                                      Amendment and Waiver.  The terms contained herein may only be amended or waived as set forth in Section 8.3 of the Purchase Agreement.

 

9.                                      Severability.  The unenforceability or invalidity of any provision of this Senior Note shall not affect the enforceability or validity of the remainder of such provision or any other provision herein and the invalidity or unenforceability of any provision of this Senior Note as to any person or circumstance shall not affect the enforceability or validity of such provision as it may apply to other persons or circumstances.

 

10.                               Governing Laws.  This Senior Note shall be governed by, and construed in accordance with, the laws of the State of California, without giving effect to principles of conflict of laws.

 

11.                               Order of Payments; Pari Passu. Any payments made under this Senior Note shall be applied first against the reasonable costs and expenses, if any, of Holder hereunder; then against interest due hereunder; and then against principal due hereunder. Holder acknowledges and agrees that the payment of all or any portion of the outstanding principal amount of this Senior Note and all interest hereon shall be pari passu in right of payment and in all other respects to the other Senior Notes.  In the event Holder receives payments in excess of its pro rata share of the Company’s payments to the holders of all of the Senior Notes, then Holder shall hold in trust all such excess payments for the benefit of the holders of the other Senior Notes and shall pay such amounts held in trust to such other holders upon demand by such holders.

 

[Signature Page Follows]

 

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This Senior Note shall not be valid or become obligatory for any purpose until executed by or on behalf of the Company by manual signature.

 

IN WITNESS WHEREOF, the Company has caused this Senior Note to be issued as of the date first written above.

 

 

	
 
    	
LUTHER   BURBANK CORPORATION,
    
	
 
    	
a   California corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

6Exhibit 10.18

 

S CORPORATION TERMINATION AND

TAX SHARING AGREEMENT

 

This S Corporation Termination and Tax Sharing Agreement, dated as of                , 2017 (the “Agreement”), is made by and between Luther Burbank Corporation, a California corporation (the “Company”), and the trusts and individual(s) identified on the signature page hereto (each a “Shareholder” and collectively the “Shareholders”).

 

RECITALS:

 

A. The Company has elected to be an S corporation (the “S Election”) under Section 1362 of the Internal Revenue Code of 1986, as amended (the “Code”).

 

B. The Company intends to conduct an initial public offering registered under the Securities Act of 1933, as amended (the “Public Offering”).

 

C. On the Termination Date (as defined in Section 2.01) the Company’s status as an S corporation will terminate.

 

D. The Shareholders are currently the only shareholders of the Company, and will continue to be so until immediately before the consummation of the Public Offering.

 

E. In connection with the Public Offering, and in order to induce the investment by the public in the Company, the Company and the Shareholders desire to provide for the termination of the Company’s status as an S Corporation and a tax allocation and indemnification agreement in connection with tax periods prior to and following the Termination Date (as defined below), as well as the other agreements set forth herein.

 

AGREEMENT:

 

NOW, THEREFORE, for mutual consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Shareholders do hereby covenant and agree as follows:

 

ARTICLE 1

DEFINITIONS

 

The following terms, as used herein, have the following meanings:

 

“Accumulated Adjustments Account,” or “AAA” shall have the meaning assigned to that term by Section 1368(e)(1) of the Code.

 

“Assumed Tax Rate” means, with respect to any tax period, the maximum combined federal and state income tax rates for taxpayers who are married and filing jointly, applicable for such period, taking into account the deductibility of state income tax for federal income tax purposes, applicable to an individual resident in California.

 

“C Short Year” shall have the meaning set forth in Section 1362(e)(1)(B) of the Code.

 

“Code” shall have the meaning set forth in Recital A.

 

“Post-Termination Distribution” shall mean a cash distribution during the Post-Termination Transition Period as set forth in Section 1371(e) of the Code to the extent it does not exceed the AAA.

 

 

“Post-Termination Transition Period” shall have the meaning set forth in Section 1377(b)(1) of the Code and shall begin on the day after the last day of the Company’s S Short Year.

 

“Public Offering” shall have the meaning set forth in Recital B.

 

“S Corporation” shall have the meaning set forth in Section 1361 of the Code.

 

“S Corporation Taxable Income” shall mean, for periods beginning on or after the date the Company became an S corporation and ending with the close of the last day of the S Short Year, the sum of (i) the Company’s items of separately stated income and gain (within the meaning of Section 1366(a)(1)(A) of the Code) reduced, to the extent applicable, by the Company’s separately stated items of deduction and loss (within the meaning of Section 1366(a)(1)(A) of the Code) and (ii) the Company’s nonseparately computed net income (within the meaning of Section 1366(a)(l)(B) of the Code).

 

“S Corporation Tax Year” means any taxable period during which the Company had an S Election in effect, including the S Short Year.

 

“S Election” shall have the meaning set forth in Recital A.

 

“S Short Year” shall have the meaning set forth in Section 1362(e)(1)(A) of the Code.

 

“S Termination Year” shall have the meaning set forth in Section 1362(e)(4) of the Code.

 

“Tax Proceeding” shall have the meaning set forth in Section 2.02.

 

“Termination Date” shall have the meaning set forth in Section 2.01.

 

“Treasury Regulations” means the regulations promulgated by the United States Treasury Department under the Code.

 

ARTICLE 2

S CORPORATION TERMINATION AND TAX SHARING

 

2.01 Termination of S Corporation Status. Pursuant to Section 1362(d) of the Code, the Company’s status as an S Corporation shall terminate on the earlier of (i) on which the Shareholders holding more than one-half of the shares of the Company stock file a consent to revoke the Company’s status as an S Corporation in accordance with and in the manner provided by Treasury Regulation Section 1.1362-6(a)(3), which election shall be in substantially the form attached hereto as Exhibit 1; and (ii) the day on which the Company issues shares of the Company’s common stock in the Public Offering to one or more shareholders which causes the Company to no longer qualify as an S Corporation (the “Termination Date”).

 

2.02 Payments Related to Future Adjustments. In the event that any final determination of an adjustment (by reason of an amended return, claim for refund, audit, judicial decision or otherwise, which determination occurs after the Termination Date (each, a “Tax Proceeding”)) results in an increase in S Corporation Taxable Income, the Company shall distribute to the each Shareholder within 30 days of such final determination, cash in an amount equal to (i) the product of (A) the amount of increase in taxable income to such Shareholder resulting from the adjustment and (B) the Assumed Tax Rate plus (ii) any interest and penalties imposed thereon.

 

2.03 Liability for Taxes Incurred During the S Short Year and for Tax Periods Ending Prior to the Termination Date. Each Shareholder severally, and not jointly, covenants and agrees that: (i) such Shareholder has duly included (to the best of such Shareholder’s knowledge), or will duly include, in such Shareholder’s federal, state, and local income tax returns, such Shareholder’s respective allocable shares of all items of income, gain, loss, deduction, or credit attributable to the S Short Year of the Company, (ii)its federal, state and local income tax returns shall, to the extent required by applicable law, include such Shareholder’s allocable share of S Corporation Taxable Income of the Company from all sources through and including the close of business on the last day of the

 

 

S Short Year of the Company, and (iii) such Shareholder shall, to the extent required by applicable law, pay any and all taxes such Shareholder is required to pay, as a result of being a shareholder of the Company, for all taxable periods (or that portion of any period) during which the Company was an S Corporation.

 

2.04 Shareholder Indemnification for Tax Liabilities. The Shareholders severally (according to the relative percentage of the outstanding shares of the Company’s common stock owned by each Shareholder on the last day of any applicable period to which a liability described below relates) and not jointly, each hereby agree to indemnify and hold the Company harmless from, against and in respect of any unpaid income tax liabilities of the Company (including interest and penalties imposed thereon) (i) which are attributable to the S Short Year or (ii) which are incurred by the Company as a result of a final determination of an adjustment (by reason of a Tax Proceeding) to the taxable income of the Shareholders for any period, including the S Short Year or thereafter, and which (in the case of this clause (ii)) are attributable to a decrease for any period in the Shareholders’ taxable income and a corresponding increase for any period in the taxable income of the Company. Each Shareholder shall pay to the Company cash in an amount equal to: (A)(i) the amount of such increase in the tax liabilities of the Company, plus (ii) any interest and penalties imposed thereon, multiplied by (B) such Shareholder’s percentage of the outstanding shares of the Company’s common stock owned by each Shareholder on the last day of any applicable period to which a liability described below relates in proportion to such Shareholder’s ownership of the shares of the Company’s common stock owned by such Shareholder immediately prior to the effectiveness of the revocation of the election to be treated as an S Corporation.

 

2.05 Company Indemnification for Tax Liabilities. The Company hereby indemnifies and agrees to hold the Shareholders harmless from, against and in respect of income tax liabilities (including interest and penalties imposed thereon), if any, incurred by the Shareholders as a result of a final determination of an adjustment (by reason of a Tax Proceeding) to the taxable income of the Company for any period ending after the Termination Date (including, without limitation, the C Short Year) which results in an increase for any period in the taxable income of the Shareholders. The Company shall distribute to each Shareholder cash in an amount equal to (i) the product of (A) the amount of such increase in the taxable income of such Shareholder resulting from such final determination and (B) the Assumed Tax Rate, plus (ii) any interest and penalties imposed thereon.

 

2.06 Payments. The Shareholders or the Company, as the case may be, shall make any payment required under Sections 2.04 or 2.05 of this Agreement within 30 days after receipt of notice from the other party that a final determination of an adjustment (by reason of a Tax Proceeding) has occurred and a payment is due by such party to the appropriate taxing authority.

 

2.07 Termination Payments to Shareholders. Immediately after the closing of the Public Offering, the Company shall distribute to the Shareholders in proportion to the ownership of the shares of the Company’s common stock owned by each Shareholder: (i) an amount equal to $50,000,000; and (ii) if not distributed prior to the closing of the Public Offering, an amount equal to the estimated federal and state tax liabilities of Shareholders for taxable income of the Company during the S Short Year of the Company attributable to such Shareholder, and in respect of which no prior tax distribution shall have been made (the “Estimated Distribution”). Within 90 days of the effectiveness of the termination of the Company’s S Election, the Company shall make any necessary adjustments to the Company’s income during the S Short Year attributable to the Shareholders and, (x) if the amount of the Estimated Distribution to a Shareholder is less than the amount equal to the product of (A) the amount of increase in taxable income to such Shareholder resulting from the adjustment and (B) the Assumed Tax Rate (the “Final Distribution”), then the Company shall, within 30 days thereafter, distribute to the Shareholders and amount equal to the excess of the Final Distribution over the Estimated Distribution; and (y) if the amount of the Final Distribution is less than the Estimated Amount, then each Shareholder shall, within 30 days thereafter, deliver to the Company an amount equal to the excess of the Estimated Distribution over the Final Distribution.

 

ARTICLE 3

ALLOCATION OF INCOME

 

3.01 Short Taxable Years. The parties acknowledge that the taxable year in which the S corporation status of the Company is terminated will be an “S Termination Year” for tax purposes, as defined in Section 1362(e)(4) of the

 

 

Code. Pursuant to Section 1362(e)(1) of the Code, the S Termination Year of the Company shall be divided into two short taxable years: an “S Short Year” and a “C Short Year.” As defined in Section 1362(e)(1)(A) of the Code, the S Short Year shall be that portion of the Company’s S Termination Year ending on the day immediately preceding the Termination Date. Pursuant to Section 1362(e)(1)(B) of the Code, that portion of the S Termination Year beginning on the Termination Date and ending on the last day of the taxable year shall be the C Short Year of the Company.

 

3.02 Closing of the Books. The Company and the Shareholder understand that for tax purposes (including for purposes of determining the Company’s S Corporation Taxable Income for its S Short Year), the Company will, where the Termination Date is established in as a result of the filing of consents in accordance with Section 2.01(i) hereof, allocate its items of income, gain, loss, deduction and credit for its calendar year between the S Short Year and the C Short Year based on a “closing of the books.”

 

ARTICLE 4

TAX MATTERS

 

4.01. Refunds. If the Company receives a refund of any income tax (including penalties and interest) for any period prior to the Termination Date, or as to which it has previously been indemnified by the any Shareholder, the Company shall pay an amount equal to such refund, within 30 days after receipt thereof, to such Shareholder on the last day of any applicable period to which the refund relates. If a Shareholder receives a refund of any income tax (including penalties and interest) as to which such Shareholder has previously been indemnified by the Company, such Shareholder shall, within 30 days after receipt thereon, remit an amount equal to such refund to the Company (for the avoidance of doubt, such refund shall be determined assuming such Shareholder’s only items of income, loss or deduction arise from the Company during the S Short Year).

 

4.02. Notice and Tax Proceedings.

 

(a) Any time that any Shareholder believes that such Shareholder may be entitled to a payment under this Agreement as a result of a Tax Proceeding such Shareholder shall use reasonable efforts to promptly notify the Company of such Tax Proceeding.

 

(b) The Company will have the option to represent itself in any Tax Proceeding, at its own expense and using advisors of the Company’s choice.

 

(c) The Shareholders shall cooperate fully with the Company in any Tax Proceeding and each such Shareholder shall have the right, but not the obligation, to participate in such Proceeding at such Shareholder’s own expense.

 

(d) Breach by a Shareholder of any of the provisions of this Section 4.01 will terminate the Company’s obligation to make payments to such Shareholder under Article 2 to the extent any such breach materially prejudices the result of any Tax Proceeding.

 

4.03. Inconsistent Reporting. If a Shareholder hereafter reports an item on such Shareholder’s income tax return in a manner materially inconsistent with the tax treatment reflected in the Schedule K-1 or other tax information provided to the Shareholders by the Company for a taxable period during which the Company had an S Election in effect, the Shareholder shall notify the Company of such treatment before filing the Shareholder’s income tax return. If such Shareholder fails to notify the Company of such inconsistent reporting, such Shareholder shall be liable to the Company for any losses, costs or expenses (including reasonable attorneys’ fees) arising from such inconsistent reporting, including an audit.

 

 

ARTICLE 5

MISCELLANEOUS

 

5.01 Post-Termination Distributions. To the extent practicable and to the extent consistent with applicable law, payments or other distributions made to the Shareholders pursuant to Article 2 will be treated as Post-Termination Distributions for U.S. federal income tax purposes and any correspondingly applicable state and/or local tax purposes.

 

5.02 Other Distributions. To the extent that the Company’s tax return preparers determine that such payments or distributions cannot be properly treated as Post-Termination Distributions, then the amount of any distribution made to the Shareholders pursuant to Article 2 shall be increased by the amount of the Shareholders’ additional tax liability, if any, resulting from such payments or distributions, as reasonably determined by the Company’s tax return preparers, assuming that the Shareholders pay tax at the Assumed Tax Rate.

 

5.03 Confidentiality. Each of the parties agrees that any information furnished pursuant to this Agreement is confidential and, except as and to the extent required by law, or otherwise during the course of an audit or contest or other administrative or legal proceeding, shall not be disclosed to any person or entity.

 

5.04 Successors and Access to Information. This Agreement shall be binding upon and inure to the benefit of any successor, heirs or personal representatives to any of the parties, by merger, acquisition of assets or stock in the Company or otherwise, to the same extent as if the successor, heir or personal representative had been an original party to this Agreement or the applicable Shareholder for the taxable period in question, and in such event, all references herein to a party shall refer instead to the successor, heir or personal representative of such party; provided, however, that for purposes of calculating the tax liability to which any payments under this Agreement would relate, the original Shareholders’ tax liability shall be taken into account, but any payments in connection therewith shall be made to the successor, heir or personal representative of the original Shareholders.

 

5.05 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California excluding (to the greatest extent permissible by law) any rule of law that would cause the application of the laws of any jurisdiction other than the State of California.

 

5.06 Headings. The headings in this Agreement are for convenience only and shall not be deemed for any purpose to constitute a part or to affect the interpretation of this Agreement.

 

5.07 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which will be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one counterpart.

 

5.08 Electronic Transmission. Any facsimile or electronically transmitted copies hereof or signature hereon shall, for all purposes, be deemed originals.

 

5.09 Notices. Any notice or communication required or permitted to be given under this Agreement shall be in writing (including telecopy communication) and mailed, telecopied or delivered to the parties at the addresses specified in Schedule A or at such other address as one party may specify by notice to the other party. All such notices and communications shall be effective when received. Any payment required to be made under this Agreement shall be mailed or delivered to the parties at the addresses specified in Schedule A or at such other address or account as one party may specify by notice to the other party.

 

5.10 Severability. If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the maximum extent practicable. In any event, all other provisions of this Agreement shall be deemed valid, binding, and enforceable to their full extent.

 

5.11 Effective Date and Survival. This Agreement shall be effective as of the Termination Date and shall remain in force and be binding so long as the applicable period of assessments (including extensions) remains

 

 

unexpired for any taxes contemplated by this Agreement; provided, however, that if the Public Offering has not been consummated on or before December 31, 2017, this Agreement will be void, having no force or effect.

 

5.12 Successor Provisions. Any reference herein to any provisions of the Code or Treasury Regulations shall be deemed to include any amendments or successor provisions thereto as appropriate.

 

5.13 Integration; Amendments. Except as explicitly stated herein, this Agreement embodies the entire understanding between the parties relating to its subject matter and supersedes and terminates all prior agreements and understandings among the parties with respect to such matters. No promises, covenants or representations of any kind, other than those expressly stated herein, have been made to induce any party to enter into this Agreement. This Agreement shall not be modified or terminated except by a writing duly signed by each of the parties hereto, and no waiver of any provisions of this Agreement shall be effective unless in a writing duly signed by the party sought to be bound.

 

5.14 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING OUT OF THIS AGREEMENT. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.14.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the parties have executed this S Corporation Termination and Indemnification Agreement on the date first set forth above.

 

	
 
    	
LUTHER BURBANK   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    
	
 
    	
VICTOR S TRIONE TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Victor S. Trione,   Trustee
    
	
     
    	
 
    
	
 
    	
VICTOR HENRY DAVID   TRIONE TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
, Trustee
    
	
 
    	
 
    
	
 
    	
MADELYNE VICTORIA   TRIONE TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
, Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
MARK H. TRIONE AND   CATHERINE L. TRIONE TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
, Trustee
    
	
 
    	
 
    
	
 
    	
HENRY MARK TRIONE 1997   IRREVOCABLE TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
, Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DENISE CATHERINE TRIONE   1997 IRREVOCABLE TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
, Trustee
    
				

 

 

	
 
    	
SALLY PATRICIA TRIONE   1997 IRREVOCABLE TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
, Trustee
    
	
 
    	
 
    
	
 
    	
GEORGE AND BICE MANCINI
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
George Mancini
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GEORGE MANCINI 2006   TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
George Mancini, Trustee
    
				

 

 

SCHEDULE A

 

Notices

 

To the Company:

 

With a copy to:

 

To the Shareholders:

 

With a copy to:

 

 

EXHIBIT 1

 

, 2017

 

VIA [Telecopier]

Internal Revenue Service

 

 

RE:                           Luther Burbank Corporation

520 Third Street, Fourth Floor

Santa Rosa, CA 95401

TIN 68-0270948

 

Ladies and Gentlemen:

 

In accordance with §1362(d) of the Internal Revenue Code of 1986, as amended (the “Code”), the above referenced company, Luther Burbank Corporation (the “Company”) hereby revokes the election under §1362(a) of the Code to be an S corporation, effective as of              , 2017. As of the time of revocation, the number of issued and outstanding shares of the Company’s stock is 42,000,000. There are no shares of nonvoting stock issued or outstanding as of the revocation date

 

Attached hereto are executed consents of shareholders of the Company holding more than one-half of the issued and outstanding shares of the Company’s stock.

 

	
 
    	
LUTHER BURBANK CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Laura Tarantino
    
	
 
    	
 
    	
Executive Vice   President &
    
	
 
    	
 
    	
 
    	
Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    

 

 

CONSENT TO REVOCATION OF S ELECTION

 

The undersigned shareholder of Luther Burbank Corporation (the Company”), TIN 68-0270948, in accordance with Section 1362(d) of the Internal Revenue Code of 1986, as amended (the “Code”), does hereby consent to the revocation of the election of the Company under Section 1362(a) of the Code to be an S Corporation, effective as of           , 2017.

 

	
Name and Address
    	
 
    	
TIN
    	
 
    	
No. of Shares owned
    	
 
    	
Date(s) Acquired
    	
 
    	
Tax Year End
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Under penalty of perjury, the undersigned shareholder declares that the foregoing information and the attached statement by the Company are to the undersigned’s knowledge, are true, correct and complete.

 

	
 
    	
[SHAREHOLDER NAME]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00276-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00276-of-00352.parquet"}]]