SUBSCRIPTION AGREEMENT for SMITHTOWN BANCORP, INC. A NEW YORK CORPORATION COMMON SHARES, PAR VALUE $0.01 PER SHARE
Exhibit
10.1
for
SMITHTOWN
BANCORP, INC.
A
NEW YORK CORPORATION
COMMON
SHARES, PAR VALUE $0.01 PER SHARE
THE
COMMON SHARES (“COMMON SHARES”) REFERRED TO HEREIN HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), AND ARE BEING
OFFERED AND SOLD IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE OFFERING OF COMMON SHARES HAS NOT BEEN
REVIEWED OR APPROVED BY ANY FEDERAL OR STATE REGULATORY AUTHORITIES AND IS
NOT
REGISTERED UNDER APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
A
PURCHASER OF THE COMMON SHARES MUST BE PREPARED TO BEAR THE ECONOMIC RISKS
OF
THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE THE SHARES HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT AND ARE RESTRICTED AS TO
TRANSFERABILITY.
TABLE
OF CONTENTS
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Page
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Article
I
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Purchase;
Closing
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1.1
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Purchase
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1
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1.2
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Closing
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3
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Article
II
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Representations
and Warranties
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2.1
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Disclosure
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5
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2.2
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Representations
and Warranties of the Company
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5
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2.3
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Representations
and Warranties of the Investor
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10
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Article
III
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Covenants
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3.1
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Commercially
Reasonable Efforts
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13
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3.2
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Expenses
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13
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3.3
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Publicity
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13
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3.4
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Further
Assurances
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14
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Article
IV
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Additional
Agreements of the Investor
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4.1
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Transfer
Restrictions
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14
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4.2
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Legend
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15
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4.3
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Registration
Rights
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16
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Article
V
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Miscellaneous
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5.1
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Survival
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25
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5.2
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Indemnification
Generally
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25
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5.3
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Interpretation
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26
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5.4
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Amendment
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26
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5.5
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Waiver
of Conditions
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26
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5.6
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Counterparts
and Facsimile
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26
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5.7
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Governing
Law; Submission to Jurisdiction, Etc
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26
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5.8
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Notices
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27
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5.9
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Entire
Agreement, Etc
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27
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5.10
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Definitions
of “Subsidiary” and “Affiliate”
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28
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5.11
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Severability
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28
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5.12
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No
Third Party Beneficiaries
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28
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-i-
LIST
OF ANNEXES
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Annex A
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Form
of Opinion of Xxxxxxxx & Xxxxxxxx LLP
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Annex B
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Category
of Accredited Investor
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Annex C
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Federal
Income Tax Backup Withholding
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Annex D
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Individual
Investor Questionnaire
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-ii-
INDEX
OF DEFINED TERMS
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Term
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Location of
Definition
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Affiliate
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5.10(b)
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Agreement
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Preamble
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Applicable
Time
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4.4(g)(1)
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Bankruptcy
Exceptions
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2.2(d)(1)
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BHC
Act
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2.2(h)(1)
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Closing
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1.2(a)
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Closing
Date
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1.2(a)
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Code
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2.3(g)
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Common
Shares
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Recital
A
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Company
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Preamble
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Company
Indemnitee
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4.4(g)(2)
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Effectiveness
Deadline
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4.3(a)(4)
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ERISA
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2.3(g)
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Exchange
Act
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2.1(b)
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FDIC
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2.2(a)
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Federal
Reserve
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2.2(i)(2)
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Filing
Deadline
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4.3(a)(4)
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GAAP
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2.1(a)
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Governmental
Entities
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2.1(a)
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Hedging
Transaction
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4.1(a)
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Indemnitee
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4.4(g)(3)
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Investor
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Preamble
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Investor
Indemnitee
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4.4(g)(1)
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Investor
Material Adverse Effect
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2.3(b)(2)
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Knowledge
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1.3
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Material
Adverse Effect
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2.1(a)
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Memorandum
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Recital
B
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Non-ERISA
Arrangement
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2.3(g)
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Offering
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Recital
B
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Payment
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1.1(b)
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Pending
Offering
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4.3(k)
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Permitted
Transferee
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4.1(b)(1)
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Plan
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2.3(g)
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Plan
Asset Entity
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2.3(g)
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Previously
Disclosed
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2.1(b)
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Purchase
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1.1
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Purchased
Securities
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Recital
B
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Register
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4.4(j)
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Registrable
Securities
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4.4(j)
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Registration
Expenses
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4.4(j)
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Representatives
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5.2
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-iii-
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Rights
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2.2(b)(1)
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Rights
Agreement
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2.2(b)(1)
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SEC
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2.1(b)
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SEC
Reports
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2.1(b)
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Securities
Act
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2.2(a)
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Selling
Expenses
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4.4(j)
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Shelf
Registration Statement
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4.3(a)(2)
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Significant
Subsidiaries
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2.2(a)
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Significant
Subsidiary
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2.2(a)
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Similar
Laws
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2.3(g)
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Subscription
Date
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1.1(d)
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Subsidiary
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5.10(a)
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Transaction
Documents
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Recital
B
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Transfer
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4.1(a)
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-iv-
Subscription
Agreement,
dated
September 26, 2008 (together with any attachments, annexes or exhibits hereto,
collectively, this “Agreement”),
between Smithtown Bancorp, Inc., a corporation organized under the laws of
the
State of New York (the “Company”),
and
the Investor listed on the signature page hereof (the “Investor”).
Recitals:
A. The
Company.
As of
the date hereof, the Company has (i) 20,000,000 authorized Common Shares,
par value $0.01 per share (the “Common
Shares”),
of
which 9,834,477 shares are outstanding, and (ii) 100,000 authorized
Preferred Shares, par value $0.01 per share, of which no shares are
outstanding.
B. The
Issuance.
The
Company intends to issue Common Shares in a private placement (the “Offering”),
and
the Investor intends to purchase from the Company the number of Common Shares
indicated on the signature page hereof (collectively, the “Purchased
Securities”).
For
purposes of this Agreement, the term “Transaction
Documents”
refers
collectively to this Agreement and any other documents, agreements and
instruments delivered in connection herewith (including prior to the date
hereof), in each case, as amended, modified or supplemented from time to time
in
accordance with their respective terms, including the Private Placement
Memorandum, dated September 26, 2008, provided to the Investor (the
“Memorandum”).
NOW,
THEREFORE,
in
consideration of the premises, and of the representations, warranties, covenants
and agreements set forth herein, the parties agree as follows:
Article
I
Purchase;
Closing
1.1 Purchase.
(a) Subscription.
The
Investor hereby irrevocably subscribes to purchase the number of Purchased
Securities indicated on the signature page hereof for a period of 30 days from
the Subscription Date (as hereinafter defined), in accordance with the terms
of
this Subscription Agreement (the “Purchase”).
To
effect such subscription, the Investor shall deliver an executed counterpart
of
this Agreement, including all Annexes hereto, to the Company or its authorized
representative.
(b) Payment.
Together with delivery of an executed counterpart of this Agreement, including
all Annexes hereto, the Investor shall deliver and pay in full the aggregate
purchase price for the Purchased Securities specified on the signature page
hereof (the “Payment”)
in
United States funds, to Wilmington Trust Company, the Company’s escrow agent, in
the form of (1) a certified or bank cashier’s check, in immediately
available funds, made payable to “Wilmington Trust Company, as Escrow Agent for
Smithtown Bancorp, Inc., Account #089834-000, Attention Xxxxx Xxxxx” or
(2) an immediately available wire transfer to the following account:
Wilmington Trust Company, ABA #000000000, Credit: Smithtown Bancorp, Inc.,
Escrow Account #089834-000, Attention Xxxxx Xxxxx.
(c) Acceptance.
This
Agreement shall be effective immediately upon acceptance by the Company of
the
Investor’s executed counterpart of this Agreement and shall thereupon be binding
upon the Company. Such acceptance by the Company shall be evidenced only by
counter-execution and delivery of this Agreement by the Company, and the Company
shall have no obligation hereunder until the Company shall have executed and
delivered to the Investor an executed counterpart of this Agreement. The
Investor acknowledges and agrees that the Company, in its sole discretion,
reserves the right to accept or reject the Purchase, in whole or in part;
provided,
however,
that if
the Company rejects the Purchase by notice to the Investor, such rejection
shall
serve as a termination of this Agreement, and the Investor shall have no further
rights or obligations under this Agreement (but any other Transaction Document
that expires by its terms as of a different date shall remain in full force
and
effect).
(d) Termination.
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(1)
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This
Agreement may not be terminated by the Company unless, before the
Closing
occurs, the Company determines in good faith that the conditions
to the
Closing set forth in Section 1.2(d) will not be satisfied within 10
days of the date of the Company’s acceptance of the Investor’s
subscription by counter-execution and delivery of this Agreement
by the
Company. The Company shall deliver notice of such termination to
the
Investor promptly upon making such determination, and such termination
shall have the effect of terminating this Agreement, effective as
of the
date such notice is received by the Investor in accordance with
Section 5.8. Subject to the foregoing, the Company agrees to use its
commercially reasonable efforts to consummate the Closing on the
Closing
Date (as hereinafter defined) or as soon as practicable thereafter.
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(2)
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This
Agreement may not be terminated by the Investor at any time following
the
Investor’s delivery of an executed counterpart of this Agreement to the
Company (even if the Company has not yet accepted or rejected the
Purchase); provided,
however, that,
before the Closing has occurred, the Investor may withdraw its
subscription by delivering notice of such withdrawal to the Company
after
a period of 15 days after the date (the “Subscription
Date”)
that is the later of (x) the first date the Investor delivers an
executed counterpart of this Agreement, including all Annexes hereto,
to
the Company or its authorized representative and (y) the first date
the Investor delivers the Payment in accordance with Section 1.1(b).
Such withdrawal shall have the effect of terminating this Agreement,
effective as of the date such notice is received by the Company in
accordance with Section 5.8.
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-2-
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(3)
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Notwithstanding
the foregoing, this Agreement may be terminated by either the Company
or
the Investor upon written notice to the other if the Closing shall
not
have occurred on or before October 3,
2008.
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(4)
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In
the event of termination of this Agreement as provided in this
Section 1.1(d), (A) this Agreement shall forthwith become void,
and there shall be no liability on the part of either party hereto,
except
that nothing herein shall relieve either party from liability for
any
willful breach of this Agreement, and (B) the Company shall promptly
instruct its escrow agent to return any previously delivered Payment
to
the Investor, without interest.
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1.2 Closing.
(a) On
the
terms and subject to the conditions set forth in this Agreement, the closing
of
the Purchase (the “Closing”)
will
take place at the offices of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time, on September 29, 2008
or as soon as practicable thereafter, or at such other place, time and date
as
shall be agreed between the Company and the Investor. The time and date on
which
the Closing occurs is referred to in this Agreement as the “Closing
Date.”
(b) At
the
Closing, the Company will deliver to the Investor the Purchased Securities,
as
evidenced by one or more certificates dated the Closing Date and bearing
appropriate legends as hereinafter provided for, registered on the books and
records of the Company in such Investor’s name.
(c) The
obligation of the Investor to consummate the Closing is also subject to the
fulfillment (or waiver by the Investor) at or prior to the Closing of each
of
the following conditions:
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(1)
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(A) the
representations and warranties of the Company set forth in this Agreement
shall be true and correct as though made on and as of the Closing
Date
(other than representations and warranties that by their terms speak
as of
another date, which representations and warranties shall be true
and
correct as of such date), except to the extent that the failure of
such
representations and warranties to be so true and correct (without
giving
effect to any qualifiers or exceptions relating to materiality or
Material
Adverse Effect (as hereinafter defined)), individually or in the
aggregate, does not have and would not reasonably be expected to
have a
Material Adverse Effect and (B) the Company shall have performed in
all material respects all obligations required to be performed by
it under
this Agreement at or prior to the
Closing;
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-3-
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(2)
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the
Investor shall have received from Xxxxxxxx & Xxxxxxxx LLP a legal
opinion in the form attached hereto as Annex A,
addressed to the Investor, dated as of the Closing Date;
and
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(3)
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the
Investor shall have received a certificate dated as of the Closing
Date
signed on behalf of the Company by a senior officer of the Company
certifying compliance with
Section 1.2(c)(1).
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(d) The
obligation of the Company to consummate the Closing is also subject to the
fulfillment (or waiver by the Company) at or prior to the Closing of each of
the
following conditions:
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(1)
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(A) the
representations and warranties of the Investor set forth in this
Agreement
shall be true and correct as though made on and as of the Closing
Date
(other than representations and warranties that by their terms speak
as of
another date, which representations and warranties shall be true
and
correct as of such date), except to the extent that the failure of
such
representations and warranties to be so true and correct (without
giving
effect to any qualifiers or exceptions relating to materiality or
Material
Adverse Effect (as hereinafter defined)), individually or in the
aggregate, does not have and would not reasonably be expected to
have a
Material Adverse Effect and (B) the Investor shall have performed in
all material respects all obligations required to be performed by
it under
this Agreement at or prior to the
Closing;
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(2)
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the
Company shall have received from Xxxxxxxx & Xxxxxxxx LLP a legal
opinion substantially in the form attached hereto as Annex A,
addressed to the Company, dated as of the Closing Date;
and
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(3)
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the
Company shall have received a certificate dated as of the Closing
Date
signed by the Investor or an authorized representative of the Investor
certifying compliance with
Section 1.2(d)(1).
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-4-
Article
II
Representations
and Warranties
2.1 Disclosure.
(a) “Material
Adverse Effect”
means
a
material adverse effect on (1) the business, results of operation or
financial condition of the Company and its subsidiaries taken as a whole;
provided
that
Material Adverse Effect shall not be deemed to include the effects of
(A) any facts, circumstances, events, changes or occurrences generally
affecting businesses and industries in which the Company operates, companies
engaged in such businesses or industries or the economy, or the financial or
securities markets and credit markets in the United States or elsewhere in
the
world, including effects on such businesses, industries, economy or markets
resulting from any regulatory or political conditions or developments, or any
outbreak or escalation of hostilities, declared or undeclared acts of war,
terrorism, or work stoppages, (B) changes or proposed changes in generally
accepted accounting principles in the United States (“GAAP”)
or
regulatory accounting requirements applicable to depository institutions and
their holding companies generally (or authoritative interpretations thereof),
(C) changes or proposed changes in banking and other laws of general
applicability or related policies or interpretations of all United States
governmental or regulatory authorities (collectively, “Governmental
Entities”),
or
(D) changes in the market price or trading volume of Common Shares (it
being understood and agreed that the exception set forth in this clause (D)
does not apply to the underlying reason giving rise to or contributing to any
such change), or (2) the ability of the Company timely to consummate the
Purchase and the other transactions contemplated by the Transaction
Documents.
(b) “Previously
Disclosed”
means
(1) information contained in the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2007, or its other reports and forms
filed with the Securities and Exchange Commission (the “SEC”)
under
Sections 13(a), 14(a) or 15(d) of the Securities Exchange Act of 1934 (the
“Exchange
Act”)
on or
after January 1, 2008 (the “SEC
Reports”)
and
prior to the execution and delivery of this Agreement, and (2) information
contained in the Memorandum.
(c) Each
party acknowledges that it is not relying upon any representation or warranty
not set forth in the Transaction Documents. The Investor acknowledges that
it
has conducted a review and analysis of the business, assets, condition,
operations and prospects of the Company and its subsidiaries, together with
the
representations and warranties of the Company set forth in the Transaction
Documents, that the Investor considers sufficient for purposes of the
Purchase.
2.2 Representations
and Warranties of the Company.
Except
as Previously Disclosed, the Company represents and warrants to the Investor
that as of the date hereof and the Closing Date (or such other date specified
herein):
(a) Organization,
Authority and Significant Subsidiaries.
The
Company has been duly incorporated and is validly existing as a corporation
in
good standing under the laws of the State of New York, with corporate power
and
authority to own its properties and conduct its business in all material
respects as currently conducted, and, except as has not had or would not
reasonably be expected to have a Material Adverse Effect, has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such qualification;
and each Subsidiary (as defined in Section 5.10(a)) of the Company that is
a “significant subsidiary” within the meaning of Rule 1-01(w) of
Regulation S-X under the Securities Act of 1933, as amended (the
“Securities
Act”)
(each,
a “Significant
Subsidiary”
and,
collectively, the “Significant
Subsidiaries”)
has
been duly organized and is validly existing in good standing under the laws
of
its jurisdiction of organization. The Company’s principal depository institution
Subsidiary is duly organized and validly existing as a New York State chartered
bank, and its deposit accounts are insured up to applicable limits by the
Federal Deposit Insurance Corporation (the “FDIC”).
-5-
(b) Capitalization.
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(1)
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As
of the date hereof, the authorized and outstanding capital stock
of the
Company is as set forth in Recital
A.
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(2)
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All
of the outstanding shares of capital stock of the Company have been
duly
and validly authorized and issued and are fully paid and non-assessable
and were not issued in violation of any preemptive rights, resale
rights,
rights of first refusal or similar
rights.
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(3)
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All
of the outstanding shares of capital stock of each Significant Subsidiary
have been duly and validly authorized and issued, are fully paid
and
non-assessable and were not issued in violation of any preemptive
rights,
resale rights, rights of first refusal or similar rights, and are
owned
directly or indirectly by the Company, free and clear of all security
interests, liens, encumbrances, equities or
claims.
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(4)
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Except
for the Rights (as hereinafter defined) issued pursuant to the Rights
Agreement (as hereinafter defined) and awards of restricted Common
Shares
pursuant to the Company’s equity compensation and/or employee stock
purchase plans, there are no options, warrants or other rights,
agreements, arrangements or commitments to which the Company is a
party or
by which the Company is bound relating to the issued or unissued
Common
Shares of the Company. For purposes of this Agreement, “Rights”
means the rights to purchase Common Shares of the Company issued
pursuant
to the Rights Agreement, and “Rights
Agreement”
means the Shareholder Protection Rights Agreement, dated as of September
23, 1997 and last amended as of February 6, 2008, by and between
the
Company and Mellon Investor Services LLC, setting forth the rights of
the holders of Rights.
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(c) The
Purchased Securities.
The
Purchased Securities will be, as of the Closing Date, duly authorized by all
necessary corporate action on the part of the Company and, when issued and
delivered as provided in this Agreement, will be duly and validly issued, fully
paid and non-assessable, and the issuance thereof will not be subject to any
preemptive or similar rights.
-6-
(d) Authorization
and Enforceability of Transaction Documents.
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(1)
|
The
Company has the corporate power and authority to execute and deliver
the
Transaction Documents to which it is a party and to carry out its
obligations hereunder and thereunder (which includes the issuance
of the
Purchased Securities). The execution, delivery and performance by
the
Company of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby
have been
duly authorized by all necessary corporate action on the part of
the
Company and its shareholders, and no further approval or authorization
is
required on the part of the Company or its shareholders. The Transaction
Documents to which the Company is a party are or will be valid and
binding
obligations of the Company enforceable against the Company in accordance
with their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar
laws affecting the enforcement of creditors’ rights generally and general
equitable principles, regardless of whether such enforceability is
considered in a proceeding at law or in equity (“Bankruptcy
Exceptions”).
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(2)
|
The
execution, delivery and performance by the Company of the Transaction
Documents to which it is a party, the consummation of the transactions
contemplated hereby and thereby and compliance by the Company with
any of
the provisions hereof and thereof, will not violate, conflict with,
or
result in a breach of any provision of, or constitute a default (or
an
event which, with notice or lapse of time or both, would constitute
a
default) under, result in the termination of or accelerate the performance
required by, or result in a right of termination or acceleration
of, or
result in the creation of, any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or
any
Significant Subsidiary under any of the terms, conditions or provisions
of
(A) the certificate of incorporation, by-laws or other organizational
document of the Company or any Significant Subsidiary or (B) any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which the Company or any Significant
Subsidiary is a party or by which it or any Significant Subsidiary
may be
bound, or to which the Company or any Significant Subsidiary or any
of the
properties or assets of the Company or any Significant Subsidiary
may be
subject, or (C) subject to compliance with the statutes and
regulations referred to in Section 2.2(d)(3), violate any statute,
rule or regulation or any judgment, ruling, order, writ, injunction
or
decree applicable to the Company or any Significant Subsidiary or
any of
their respective properties or assets except, in the case of
clauses (B) and (C), for those occurrences that, individually or in
the aggregate, have not had and would not reasonably be expected
to have a
Material Adverse Effect.
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(3)
|
Other
than in connection or in compliance with the provisions of the Securities
Act and the securities or “blue sky” laws of the various states, to the
Company’s Knowledge without inquiry, no notice to, filing with, exemption
or review by, or authorization, consent or approval of, any Governmental
Entity is required to be made or obtained by the Company in connection
with the Purchase and the other transactions contemplated by the
Transaction Documents.
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-7-
(e) Company
Financial Statements.
The
consolidated financial statements of the Company and its subsidiaries (including
the related notes and supporting schedules) contained in the SEC Reports present
fairly in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates indicated therein
and
the consolidated results of their operations for the periods specified therein;
and except as stated therein, such financial statements were prepared in
conformity with GAAP applied on a consistent basis.
(f) No
Material Adverse Effect.
Since
June 30, 2008, no fact, circumstance, event, change, occurrence, condition
or
development has occurred that, individually or in the aggregate, has had or
would reasonably be expected to have a Material Adverse Effect.
(g) Proceedings.
As of
the date of this Agreement, there is no litigation or similar proceeding or
governmental proceeding pending or, to the Company’s Knowledge, threatened to
which the Company or any of its subsidiaries is a party or of which any property
of the Company or any of its subsidiaries is the subject that the Company’s
management believes, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect.
(h) Compliance
with Laws; Permits.
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(1)
|
The
Company is a bank holding company registered under the Bank Holding
Company Act of 1956 (the “BHC
Act”);
the Company and each of its subsidiaries have conducted their businesses
in compliance with all applicable federal, state and foreign laws,
orders,
judgments, decrees, rules, regulations and applicable stock exchange
requirements, including all laws and regulations restricting activities
of
bank holding companies and banking organizations, except for any
noncompliance that, individually or in the aggregate, has not had
and
would not be reasonably expected to have a Material Adverse
Effect.
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|
(2)
|
The
Company and each Subsidiary have all permits, licenses, authorizations,
orders and approvals of, and have made all filings, applications
and
registrations with, any Governmental Entities that are required in
order
to carry on their business as presently conducted, except where the
failure to have such permits, licenses, authorizations, orders and
approvals or the failure to make such filings, applications and
registrations, individually or in the aggregate, have not had and
would
not reasonably be expected to have a Material Adverse Effect; and
all such
permits, licenses, certificates of authority, orders and approvals
are in
full force and effect and, to the Knowledge of the Company without
inquiry, no suspension or cancellation of any of them is threatened,
and
all such filings, applications and registrations are current, except
where
such absences, suspensions or cancellations, individually or in the
aggregate, have not had or would not reasonably be expected to have
a
Material Adverse Effect.
|
-8-
(i) Reports.
|
(1)
|
Since
December 31, 2006, the Company has timely filed all documents
required to be filed with the SEC pursuant to Sections 13(a), 14(a)
and 15(d) of the Exchange Act.
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|
(2)
|
Since
December 31, 2006, the Company and each Subsidiary have filed all
material reports, registrations and statements, together with any
required
amendments thereto, that it was required to file with the Board of
Governors of the Federal Reserve System (the “Federal
Reserve”),
the FDIC, the New York State Banking Department and any other applicable
federal or state securities or banking authorities, except where
the
failure to file any such report, registration or statement, individually
or in the aggregate, has not had and would not reasonably be expected
to
have a Material Adverse Effect. As of their respective dates, each
of the
foregoing reports complied with all applicable rules and regulations
promulgated by the Federal Reserve, the FDIC, the New York State
Banking
Department and any other applicable foreign, federal or state securities
or banking authorities, as the case may be, except for any failures
that,
individually or in the aggregate, have not had and would not reasonably
be
expected to have a Material Adverse
Effect.
|
(j) Memorandum.
The
Memorandum does not contain an untrue statement of a material fact or omit
to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(k) No
General Solicitation or General Advertising.
Neither
the Company nor any person acting on its behalf has engaged or will engage
in
any form of general solicitation or general advertising (within the meaning
of
Regulation D under the Securities Act) in connection with any offer or sale
of the Purchased Securities.
(l) No
Integration.
The
Company has not, directly or indirectly, solicited any offer to buy or offer
to
sell any Common Shares in a manner that would require the registration of the
Purchased Securities pursuant to the Securities Act and has no present intention
to solicit any offer to buy or offer to sell any Purchased Securities or any
other securities of the Company other than pursuant to (1) this form of
Subscription Agreement, (2) pursuant to a registered public offering of the
Purchased Securities and other Common Shares offered and sold in the Offering
as
contemplated by this form of Subscription Agreement or (3) pursuant to the
Company’s equity compensation and/or employee stock purchase plans.
-9-
2.3 Representations
and Warranties of the Investor.
The
Investor hereby represents and warrants to the Company that as of the date
hereof and the Closing Date:
(a) Organization
and Authority.
The
Investor (1) has been duly organized and is validly existing in good
standing under the laws of the jurisdiction of its organization, with the
requisite power and authority to own its properties and conduct its business
as
currently conducted or (2) is a natural person.
(b) Authorization
and Enforceability of Transaction Documents.
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(1)
|
The
Investor has the requisite power and authority to execute and deliver
the
Transaction Documents to which it is a party and to carry out its
obligations hereunder and thereunder. The execution, delivery and
performance by the Investor of the Transaction Documents to which
it is a
party and the consummation of the transactions contemplated hereby
and
thereby have been duly authorized by all necessary action on the
part of
the Investor, and no further approval or authorization is required
on the
part of the Investor. The Transaction Documents to which the Investor
is a
party are or will be valid and binding obligations of the Investor
enforceable against the Investor in accordance with their respective
terms, except as the same may be limited by Bankruptcy
Exceptions.
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(2)
|
The
execution, delivery and performance by the Investor of the Transaction
Documents to which it is a party, the consummation of the transactions
contemplated hereby and thereby and compliance by the Investor with
any of
the provisions hereof and thereof, will not (A) violate, conflict
with, or result in a breach of any provision of or constitute a default
(or an event which, with notice or lapse of time or both, would constitute
a default) under, or result in the termination of, accelerate the
performance required by, result in a right of termination or acceleration
of or result in the creation of, any lien, security interest, charge
or
encumbrance upon any of the properties or assets of such Investor
under
any of the terms, conditions or provisions of (i) its organizational
documents or (ii) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which
the
Investor is a party or by which it may be bound, or to which the
Investor
or any of the properties or assets of the Investor may be subject,
or
(B) subject to compliance with the statutes and regulations referred
to in Section 2.3(b)(3), violate any statute, rule or regulation or
any judgment, ruling, order, writ, injunction or decree applicable
to the
Investor or any of its properties or assets except, in the case of
clauses (A)(ii) and (B), for those occurrences that, individually or
in the aggregate, have not had and would not reasonably be expected
to
have an Investor Material Adverse Effect. “Investor
Material Adverse Effect”
means a material adverse effect on the ability of the Investor timely
to
consummate the Purchase and the other transactions contemplated by
this
Agreement.
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-10-
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(3)
|
Other
than in connection or in compliance with the provisions of the Securities
Act and the securities or “blue sky” laws of the various states, to the
Investor’s Knowledge without inquiry, no notice to, filing with, exemption
or review by, or authorization, consent or approval of, any Governmental
Entity is required to be made or obtained by the Investor in connection
with the consummation by the Investor of the Purchase and the other
transactions contemplated by the Transaction
Documents.
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(c) Ownership.
Giving
effect to the Purchase, as of the Closing Date, the Investor and all of its
Affiliates on an aggregate basis will not beneficially own, control or have
the
power to vote 10% or more of the outstanding Common Shares. The Investor does
not have any agreement, arrangement or understanding with any person (other
than
the Company and any Permitted Transferee (as defined in Section 4.1(b)(1)))
to acquire, dispose of or vote any securities of the Company.
(d) No
Registration; Purchase for Investment; Accredited Investor;
Sophistication.
The
Investor:
|
(1)
|
understands
that the Purchased Securities have not been registered under the
Securities Act and, therefore, cannot be resold unless they are registered
under the Securities Act or (without limitation on the restrictions
set
forth in Article IV) unless an exemption from registration is
available;
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|
(2)
|
understands
that the Purchased Securities have not been registered under any
United
States state securities laws;
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|
(3)
|
is
acquiring the Purchased Securities pursuant to an exemption from
registration under the Securities Act solely for investment and not
with a
view to any resale or transfer of any of the Purchased Securities
to any
person;
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|
(4)
|
confirms
that it is aware of the transfer restrictions on the Purchased Securities
described in Article IV and in the Memorandum and will not sell or
otherwise dispose of any of the Purchased Securities, except in compliance
with the registration requirements of the Securities Act and any
applicable United States state securities laws or in compliance with
all
of the requirements of
Section 4.1;
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-11-
|
(5)
|
confirms
that all information that the Investor has provided to the Company
concerning the Investor in this Agreement or otherwise is correct
and
complete;
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|
(6)
|
is
an Accredited Investor (as that term is defined in Rule 501 under the
Securities Act) and has certified to the Company the basis for qualifying
as an Accredited Investor on Annex B;
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|
(7)
|
in
the ordinary course of its business, regularly makes investments
of this
type, and has such knowledge and experience in financial and business
matters and in investments of this type that it is capable of
(A) evaluating the merits and risks of the Purchase and of making an
informed investment decision and (B) bearing the financial risks of
an investment in the Purchased Securities for an indefinite period
of
time;
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(8)
|
has
conducted a review of the business and affairs of the Company that
it
considers sufficient and reasonable for purposes of making the
Purchase;
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(9)
|
has
been provided the opportunity to ask questions of and receive answers
from
representatives of the Company concerning the terms and conditions
of the
Purchase and to obtain any additional information that the Company
possesses or can acquire without unreasonable effort or expense that
is
necessary to verify the accuracy of the information contained in
the
Memorandum;
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|
(10)
|
has
received the Memorandum, has read the Memorandum carefully, is fully
familiar with and understands the contents of the Memorandum;
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|
(11)
|
has
read the SEC Reports carefully, is fully familiar with and understands
the
contents of the SEC Reports; and
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|
(12)
|
has
not relied on any representation or warranty in connection with the
Purchase other than those contained in the Transaction Documents.
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(e) Financial
Capability.
The
Investor has or will have available funds to make the Purchase on the terms
and
conditions contemplated by this Agreement.
(f) No
Legal, Tax, Accounting or Business Advice. The Investor understands that
neither the Company nor any of its agents has given any legal, tax, accounting
or business advice regarding the consequences of the Purchase, and the Investor
has consulted the Investor’s own legal, tax, accounting and business advisors
with respect to the Purchase.
-12-
(g) ERISA.
Either
(1) the Investor is not a Plan, a Plan Asset Entity or a Non-ERISA Arrangement
and is not purchasing the Purchased Securities on behalf of or with the assets
of any Plan, a Plan Asset Entity or Non-ERISA Arrangement, or (2) the purchase
and holding of the Purchased Securities will not constitute a non-exempt
prohibited transaction or a similar violation under any applicable Similar
Laws.
The term “Plan”
means
a
pension, profit-sharing or other employee benefit plan subject to the U.S.
Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
an
individual retirement account, a Xxxxx plan or any other plan that is subject
to
Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”);
“Plan
Asset Entity”
means
an entity whose underlying assets include “plan assets” by reason of any Plan’s
investment in the entity; “Non-ERISA
Arrangement”
means
an employee benefit plan that is a governmental plan (as defined in Section
3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA)
and
non-U.S. plans (as described in Section 4(b)(4) of ERISA); and “Similar
Laws”
means
applicable federal, state, local, non-U.S or other laws that impose requirements
similar to those of Section 406 of ERISA or Section 4975 of the
Code.
(h) No
General Solicitation or General Advertising.
Neither
the Investor, any of its Affiliates (as defined in Section 5.10(b)) nor any
person acting on its or their behalf, has made or will make offers or sales
of
the Purchased Securities by means of any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities
Act).
Article
III
Covenants
3.1 Commercially
Reasonable Efforts.
Subject
to the terms and conditions of this Agreement, each of the parties will use
its
commercially reasonable efforts in good faith to take, or cause to be taken,
all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation
of
the Purchase as promptly as practicable and otherwise to enable consummation
of
the transactions contemplated hereby and shall cooperate fully with the other
party to that end, including cooperating in seeking to obtain any consent,
authorization or approval that might be required from Governmental
Entities.
3.2 Expenses.
Except
to the extent otherwise provided in any Transaction Document executed by the
Company and the Investor, each of the parties hereto will bear and pay all
costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated under the Transaction Documents, including fees and expenses of
its
own financial or other consultants, investment bankers, accountants and
counsel.
3.3 Publicity.
No
public release or announcement concerning the transactions contemplated hereby
shall be issued by the Investor without the prior consent of the
Company.
The
Company shall use commercially reasonable efforts to file with the SEC, as
promptly as practicable after counter-execution and delivery of this Agreement
by the Company, but no later than the time required by SEC Form 8-K, (a) the
material terms of this Agreement and the Offering and (b) all information
previously provided to the Investor in connection with its evaluation of the
Offering, if any, that constitutes material non-public information with respect
to the Company within the meaning of United States federal securities
laws.
-13-
3.4 Further
Assurances.
Within
three days of receipt of a written request from the Company, the Investor agrees
to provide such information relevant to the Purchase and to execute and deliver
such documents as the Company determines in good faith to be necessary or
advisable to comply with any and all laws, regulations and ordinances to which
the Company is subject.
Article
IV
Additional
Agreements of the Investor
4.1 Transfer
Restrictions.
(a) Restrictions
on Transfer.
The
Investor shall not, directly or indirectly, transfer, sell, assign, pledge,
convey, hypothecate or otherwise encumber or dispose of, or engage in a Hedging
Transaction (as hereinafter defined) with respect to (collectively,
“Transfer”),
any
of the Purchased Securities. For purposes of this Agreement, “Hedging
Transaction”
means
any short sale (whether or not against the box) or any purchase, sale or grant
of any right (including any put or call option) with respect to any security
(other than a broad-based market basket or index) that includes, relates to
or
derives any significant part of its value from the Purchased
Securities.
(b) Permitted
Transfers.
Notwithstanding Section 4.1(a), the Investor and Permitted Transferees (as
hereinafter defined) shall be permitted to Transfer any Purchased
Securities:
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(1)
|
in
the case of an Investor that is an institution, at any time to any
direct
or indirect wholly owned Subsidiary of the Investor or any mutual
fund
that is managed by the Investor (each, a “Permitted
Transferee”),
but only if the transferee agrees in writing for the benefit of the
Company to be bound by the terms of this Agreement; provided
that such Permitted Transferee shall be permitted to own such Purchased
Securities only so long as such Permitted Transferee shall remain
a direct
or indirect wholly owned Subsidiary of the Investor or a mutual fund
managed by the Investor; and provided, further,
that no such Transfer shall relieve such Investor of its obligations
under
this Agreement;
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(2)
|
at
any time a Shelf Registration Statement (as defined in
Section 4.3(a)(2)) shall be effective and in compliance with the
Securities Act and usable for resale of the Purchased Securities,
including entering into a Hedging Transaction in accordance with
applicable law, as permitted by and subject to the limitations set
forth
in Section 4.3; and
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-14-
|
(3)
|
at
times or under circumstances not contemplated by clause (1) or (2)
of this
Section 4.1(b) in compliance with Rule 144A or
Rule 144 under the Securities Act; provided
that, if the Investor is an Affiliate of the Company or has been
an
Affiliate of the Company during the three months preceding the date
of
such Transfer, any such Transfer shall be subject to approval by
the
Company in its sole discretion, which approval may be conditioned
on the
receipt by the Company or its agents or representatives of such
information, documentation, opinions or assurances or other agreements
as
the Company may determine in its sole discretion to be necessary
or
advisable.
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4.2 Legend.
The
Investor agrees that all certificates or other instruments representing
Purchased Securities will bear a legend substantially to the following
effect:
“THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT
RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR AS PERMITTED BY, AND IN ACCORDANCE WITH, A SUBSCRIPTION AGREEMENT,
DATED
SEPTEMBER 26, 2008, BETWEEN THE ISSUER OF THESE SECURITIES AND THE INVESTOR
REFERRED TO THEREIN, IN A TRANSACTION COMPLYING WITH RULE 144A OR
RULE
144 UNDER SUCH ACT AND AN EXEMPTION UNDER SUCH LAWS. THIS INSTRUMENT IS ISSUED
PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS
OF
THE SUBSCRIPTION AGREEMENT, A COPY OF WHICH IS ON FILE WITH
THE
ISSUER. THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR
OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.”
-15-
4.3 Registration
Rights.
| (a) |
Registration.
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|
(1)
|
Subject
to the terms and conditions of this Agreement, the Company covenants
and
agrees to use commercially reasonable efforts to (A) prepare and file
with the SEC a Shelf Registration Statement (as hereinafter defined)
covering all Registrable Securities no later than October 7, 2008,
(B) cause such Shelf Registration Statement to become effective no
later than December 7, 2008, and (C) keep such Shelf Registration
Statement continuously effective and in compliance with the Securities
Act
and usable for resale of such Registrable Securities (including by
filing
post-effective amendments to such Shelf Registration Statement (or
a new
Shelf Registration Statement if the initial Shelf Registration Statement
expires)) for a period from the date of its initial effectiveness
until
the earlier of (x) the second anniversary of the Closing Date and
(y) such time as there are no Registrable Securities
remaining.
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|
(2)
|
Any
registration pursuant to this Section 4.3(a) shall be effected by
means of a shelf registration under the Securities Act (a “Shelf
Registration Statement”),
and any such registration (including a resale of Registrable Securities
from an effective Shelf Registration Statement) shall be effected
in
accordance with the methods of distribution set forth in the Shelf
Registration Statement and Rule 415 under the Securities
Act.
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(3)
|
The
Company shall not be required to effect a registration (including
a resale
of Registrable Securities from an effective Shelf Registration Statement)
pursuant to this Section 4.3(a): (A) with respect to securities
that are not Registrable Securities; or (B) if the Company has
notified the Investor that in the good faith judgment of the Chief
Executive Officer of the Company, it would be materially detrimental
to
the Company or its securityholders for such registration to be effected
at
such time until the Chief Executive Officer of the Company shall
have
withdrawn such determination; provided
that the Company may not exercise its right pursuant to this clause
(B) for a continuous period of more than 45 days or for more than 90
days in any calendar year.
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|
(4)
|
If
(A) the Shelf Registration Statement is not filed by the Company with
the SEC on or prior to October 7, 2008 (the “Filing
Deadline”),
or (B) the Shelf Registration Statement has not become effective on
or prior to the date that is 90 days after the filing of such Shelf
Registration Statement with the SEC (the “Effectiveness
Deadline”),
then for each day following the Filing Deadline or the Effective
Deadline,
as applicable, until but excluding the date the Shelf Registration
Statement is filed or becomes effective, respectively, the Company
shall,
for each such day, pay the Investor, as liquidated damages and not
as a
penalty, an amount equal to 0.05% of the aggregate purchase price
paid by
the Investor for the Registrable Securities pursuant to this Agreement.
Any such payment shall be made in cash no later than five business
days
following the first day of the calendar month after the day with
respect
to which such payment is due. Notwithstanding the foregoing, in no
event
shall the Company be obligated to pay any liquidated damages to the
Investor pursuant to this paragraph (A) in respect of the same Registrable
Securities for the same period of time or (B) in an aggregate amount
that
exceeds 6.0% of the aggregate purchase price paid by the Investor
for the
Registrable Securities pursuant to this
Agreement.
|
-16-
(b) Expenses
of Registration.
All
Registration Expenses incurred in connection with any registration,
qualification or compliance under this Section 4.3 shall be borne by the
Company. All Selling Expenses incurred in connection with any registrations
hereunder, shall be borne by the Investor and any Permitted Transferees
pro rata
on the
basis of the aggregate offering or sale price of the securities so
registered.
(c) Obligations
of the Company.
Whenever required to effect the registration of any Registrable Securities
or
facilitate the resale of Registrable Securities from an effective Shelf
Registration Statement, the Company shall, as expeditiously as reasonably
practicable, use commercially reasonable efforts to:
|
(1)
|
(A) Prepare
and file with the SEC a prospectus supplement with respect to a proposed
offering of Registrable Securities pursuant to an effective Shelf
Registration Statement and (B) subject to this Section 4.3(c),
keep such Shelf Registration Statement effective or such prospectus
supplement current for the period reasonably required to complete
the
distribution of such Registrable
Securities.
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|
(2)
|
Prepare
and file with the SEC such amendments and supplements to the applicable
Shelf Registration Statement and the prospectus or prospectus supplement
used in connection with such Shelf Registration Statement as may
be
necessary to comply with the provisions of the Securities Act with
respect
to the disposition of all of such Registrable
Securities.
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|
(3)
|
Furnish
to the Investor or a Permitted Transferee and any underwriters such
number
of copies of the applicable Shelf Registration Statement and each
such
amendment or supplement thereto (including in each case all exhibits)
and
of a prospectus, including any preliminary prospectus, in conformity
with
the requirements of the Securities Act, and such other documents
as they
may reasonably request in order to facilitate the disposition of
Registrable Securities to be resold by
them.
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-17-
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(4)
|
Register
and qualify the securities covered by such Shelf Registration Statement
under such other securities or Blue Sky laws of such jurisdictions
in the
United States as shall be reasonably requested by the Investor, a
Permitted Transferee or any managing underwriter, to keep such
registration or qualification in effect for so long as such Shelf
Registration Statement remains in effect, and to take any other action
which may be reasonably necessary to enable such seller to consummate
the
disposition in such jurisdictions of the securities owned by the
Investor;
provided
that the Company shall not be required in connection therewith or
as a
condition thereto to qualify to do business or to file a general
consent
to service of process in any such states or
jurisdictions.
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(5)
|
Notify
the Investor at any time when a prospectus relating to any Registrable
Securities is required to be delivered under the Securities Act of
the
happening of any event as a result of which the applicable prospectus,
as
then in effect, includes an untrue statement of a material fact or
omits
to state a material fact required to be stated therein or necessary
to
make the statements therein not misleading in light of the circumstances
then existing.
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(6)
|
Give
prompt written notice to the
Investor:
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(A)
|
when
any Shelf Registration Statement filed pursuant to Section 4.3(a) or
any amendment thereto has been filed with the SEC and when such Shelf
Registration Statement or any post-effective amendment thereto has
become
effective;
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(B)
|
of
any request by the SEC for amendments or supplements to any Shelf
Registration Statement or the prospectus included therein or for
additional information;
|
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(C)
|
of
the issuance by the SEC of any stop order suspending the effectiveness
of
any Shelf Registration Statement or the initiation of any proceedings
for
that purpose;
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(D)
|
of
the receipt by the Company or its legal counsel of any notification
with
respect to the suspension of the qualification of the Common Shares
for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose;
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(E)
|
of
the happening of any event that requires the Company to make changes
in
any effective registration statement or the prospectus related to
such
registration statement in order to make the statements therein not
misleading (which notice shall be accompanied by an instruction to
suspend
the use of the prospectus until the requisite changes have been made);
or
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-18-
|
(F)
|
if
at any time the representations and warranties of the Company contained
in
any underwriting agreement relating to Registrable Securities cease
to be
true and correct.
|
|
(7)
|
Use
its commercially reasonable efforts to prevent the issuance or obtain
the
withdrawal of any order suspending the effectiveness of any Shelf
Registration Statement referred to in Section 4.3(c)(6)(C) at the
earliest practicable time.
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(8)
|
Except
under the circumstances described in clause (A), (B) or (C) of
Section 4.3(a)(3), upon the occurrence of any event contemplated by
Section 4.3(c)(5) or 4.3(c)(6)(E), prepare and furnish to the
Investor, as soon as reasonably practicable, a reasonable number
of copies
of a prospectus supplemented or amended so that such prospectus shall
conform in all material respects to the applicable requirements of
the
Securities Act and the rules and regulations of the SEC thereunder
and
shall not include an untrue statement of a material fact or omit
to state
a material fact required to be stated therein or necessary to make
the
statements therein not misleading in light of the circumstances then
existing.
|
|
(9)
|
Procure
the cooperation of the Company’s transfer agent in settling any offering
or sale of Registrable Securities.
|
|
(10)
|
Cause
all such Registrable Securities to be listed on each securities exchange,
if any, on which Common Shares of the Company are then
listed.
|
|
(11)
|
If
requested by the Investor, a Permitted Transferee or the managing
underwriter, if any, of an underwritten distribution of the Registrable
Securities, include in a prospectus supplement or amendment such
information as the Investor or managing underwriter, if any, may
reasonably request in order to permit the intended method of distribution
of such securities and make all required filings of such prospectus
supplement or such amendment as soon as practicable after the Company
has
received such request.
|
|
(12)
|
Timely
provide to its securityholders earning statements satisfying the
provisions of Section 11(a) of the Securities Act (which the Company
may do by complying with Rule 158 under the Securities
Act).
|
-19-
(d) Suspension
of Sales.
Upon
receipt of written notice from the Company that a registration statement,
prospectus or prospectus supplement contains or may contain an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that
circumstances exist that make use of such registration statement, prospectus
or
prospectus supplement inadvisable, the Investor and any Permitted Transferee
shall discontinue disposition of Registrable Securities until the Investor
has
received copies of a supplemented or amended prospectus or prospectus
supplement, or until the Investor is advised in writing by the Company that
the
use of the prospectus and, if applicable, prospectus supplement may be resumed,
and, if so directed by the Company, the Investor and any Permitted Transferee
shall deliver to the Company (at the Company’s expense) all copies, other than
permanent file copies then in the Investor’s or such Permitted Transferee’s
possession, of the prospectus and, if applicable, prospectus supplement covering
such Registrable Securities current at the time of receipt of such notice.
(e) The
Investor’s registration rights as to any securities held by the Investor (and
its Affiliates, partners, members and former members) shall not be available
unless such securities are Registrable Securities.
(f) Furnishing
Information.
|
(1)
|
Neither
the Investor nor any Permitted Transferees shall use any free writing
prospectus (as defined in Rule 405 under the Securities Act) in
connection with the sale of Registrable Securities without the prior
written consent of the Company.
|
|
(2)
|
It
shall be a condition precedent to the obligations of the Company
to take
any action pursuant to Section 4.3 (including the payment of
liquidated damages pursuant to Section 4.3(a)(4)) that the Investor,
any Permitted Transferees and their underwriters, if any, shall furnish
to
the Company a reasonable time before the Company’s proposed filing date
for the Shelf Registration Statement such information regarding
themselves, the Registrable Securities held by them and the intended
method of disposition of such securities as shall be required to
effect
the registered offering of their Registrable
Securities.
|
-20-
(g) Indemnification
Related to Registration.
|
(1)
|
If
the Investor or any Permitted Transferee has any Registrable Securities
included in a Shelf Registration Statement, the Company shall indemnify
the Investor, any such Permitted Transferee, each person who participates
as a sales or placement agent or as an underwriter and each person,
if
any, that controls the Investor or such Permitted Transferee, sales
or
placement agent or underwriter within the meaning of the Securities
Act
(each, an “Investor
Indemnitee”),
against any losses, claims, damages or liabilities, joint or several,
to
which such Investor Indemnitee may become subject under the Securities
Act
or otherwise, insofar as such losses, claims, damages or liabilities
(or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained
in such
Shelf Registration Statement or any preliminary, final or summary
prospectus contained therein or furnished by the Company to any such
Investor Indemnitee, or any amendment or supplement thereto, or arise
out
of or are based upon the omission or alleged omission to state therein
a
material fact necessary to make the statements therein not misleading,
and
will reimburse such Investor Indemnitee for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided that
the Company shall not be liable in any such case to the extent that
any
such loss, claim, damage or liability arises out of or is based upon
an
untrue statement or alleged untrue statement or omission or alleged
omission made in any of such documents in reliance upon and in conformity
with written information furnished to the Company by such Investor
Indemnitee expressly for use therein;
and provided,
further,
that the foregoing indemnity agreement contained in this
Section 4.3(g)(1) with respect to such Shelf Registration Statement
or any preliminary, final or summary prospectus contained therein
or
furnished by the Company, or any amendment or supplement thereto,
shall
not inure to the benefit of any Investor Indemnitee from whom the
person
asserting any such losses, claims, damages or liabilities purchased
Registrable Securities, where (A) prior to the written confirmation
of the
sale of Registrable Securities to such person (the “Applicable
Time”),
the Company shall have notified such Investor Indemnitee that such
Shelf
Registration Statement or prospectus contains an untrue statement
of a
material fact or omits to state therein a material fact necessary
in order
to make the statements therein not misleading, (B) such untrue statement
or omission of a material fact was corrected in a further amendment
or
supplement to such Shelf Registration Statement or prospectus and
such
Shelf Registration Statement or prospectus was provided to such Investor
Indemnitee prior to the Applicable Time, (C) such corrected Shelf
Registration Statement or prospectus (excluding any document incorporated
by reference therein) was not conveyed to such person at or prior
to the
contract for sale of the Registrable Securities to such person and
(D)
such loss, claim, damage or liability would not have occurred had
such
corrected Shelf Registration Statement or prospectus, or any amendment
or
supplement thereto (excluding any document incorporated by reference
therein) been conveyed to such person as provided for in clause (C)
above.
|
-21-
|
(2)
|
The
Investor and each Permitted Transferee agree to, and the Company
may
require, as a condition to including any Registrable Securities in
any
Shelf Registration Statement filed pursuant to Section 4.3(a) or to
entering into any underwriting agreement with respect thereto, that
the
Company shall have received an undertaking reasonably satisfactory
to it
from each underwriter named in any such underwriting agreement, severally
and not jointly, to (A) indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed any Shelf
Registration Statement and each person, if any, who controls the
Company
within the meaning of the Securities Act and all other holders of
Registrable Securities (each, a “Company
Indemnitee”),
against any and all losses, claims, damages or liabilities to which
any
Company Indemnitee may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained
in such
Shelf Registration Statement, or any preliminary, final or summary
prospectus contained therein or furnished by the Company to the Investor
or such Permitted Transferee or its agent or underwriter, or any
amendment
or supplement thereto, or arise out of or are based upon the omission
or
alleged omission to state therein a material fact necessary to make
the
statements therein not misleading, in each case to the extent, but
only to
the extent, that such untrue statement or alleged untrue statement
or
omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by the Investor,
such
Permitted Transferee or such agent or underwriter expressly for use
therein, and (B) reimburse such Company Indemnitee for any legal or
other expenses reasonably incurred by such Company Indemnitee in
connection with investigating or defending any such loss, claim,
damage,
liability or action.
|
-22-
|
(3)
|
If
the indemnification provided for in Section 4.3(g)(1) or 4.3(g)(2) is
unavailable to an Investor Indemnitee or Company Indemnitee (each,
an
“Indemnitee”)
with respect to any losses, claims, damages, actions, liabilities,
costs
or expenses referred to therein or is insufficient to hold such Indemnitee
harmless as contemplated therein, then each indemnifying party shall
contribute to the amount paid or payable by such Indemnitee as a
result of
such losses, claims, damages, actions, liabilities, costs or expenses
(or
actions in respect thereof) in such proportion as is appropriate
to
reflect the relative fault of the indemnifying party and the Indemnitee
in
connection with the statements or omissions that resulted in such
losses,
claims, damages, actions, liabilities, costs or expenses (or actions
in
respect thereof), as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and Indemnitee shall
be
determined by reference to, among other things, whether the untrue
or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied
by such
indemnifying party or by such Indemnitee, and the parties’ relative
intent, knowledge, access to information and opportunity to correct
or
prevent such statement or omission. The parties hereto agree that
it would
not be just and equitable if contributions pursuant to this
Section 4.3(g)(3) were determined by pro
rata
allocation (even if the indemnifying party or any agents or underwriters
or all of them were treated as one entity for such purpose) or by
any
other method of allocation that does not take account of the equitable
considerations referred to in this Section 4.3(g)(3). The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages, actions, liabilities, costs or expenses (or actions in respect
thereof) referred to above shall be deemed to include any legal or
other
fees or expenses reasonably incurred by such Indemnitee in connection
with
investigating or defending any such action or claim. Notwithstanding
the
provisions of this Section 4.3(g)(3), neither the Investor or any
Permitted Transferee nor the Company shall be required to contribute
any
amount in excess of the amount by which the dollar amount of the
proceeds
received by it from the sale of any Registrable Securities (after
deducting any fees, discounts and commissions applicable thereto)
exceeds
the amount of any damages which it has otherwise been required to
pay by
reason of such untrue or alleged untrue statement or omission or
alleged
omission, and no underwriter shall be required to contribute any
amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten and distributed by it exceeds the amount
of any
damages which such underwriter has otherwise been required to pay
by
reason of such untrue or alleged untrue statement or omission or
alleged
omission. No person guilty of fraudulent misrepresentation (within
the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Investor’s, any Permitted Transferee’s, the
Company’s and any underwriters’ obligations in this Section 4.3(g)(3)
to contribute shall be several in proportion to the principal amount
of
Registrable Securities registered or underwritten, as the case may
be, by
or on behalf of them and not joint.
|
(h) [Intentionally
Omitted].
(i) Rule 144
Reporting.
With a
view to making available to the Investor or a Permitted Transferee the benefits
of certain rules and regulations of the SEC which may permit the sale of the
Registrable Securities to the public without registration, the Company agrees
to
use commercially reasonable efforts to:
|
(1)
|
remain
in compliance with the reporting obligations under the Exchange Act;
and
|
-23-
|
(2)
|
so
long as the Investor or such Permitted Transferee owns any Registrable
Securities, furnish to the Investor or such Permitted Transferee
promptly
upon request a written statement by the Company as to its compliance
with
the reporting requirements under Exchange
Act.
|
(j) As
used
in this Section 4.3, the following terms shall have the following
respective meanings:
“Register,”
“registered”
and
“registration”
shall
refer to a registration effected by preparing and (1) filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of effectiveness of
such
registration statement, or (2) filing a prospectus and/or prospectus
supplement in respect of an appropriate effective registration statement on
Form S-3.
“Registration
Expenses”
means
all expenses incurred by the Company in effecting any registration pursuant
to
this Agreement (whether or not any registration or prospectus becomes effective
or final) or otherwise complying with its obligations under this
Section 4.3, including all registration, filing and listing fees, printing
expenses, fees and disbursements of counsel for the Company, blue sky fees
and
expenses, expenses incurred in connection with any “road show” and expenses of
the Company’s independent accountants in connection with any regular or special
reviews or audits incident to or required by any such registration, but shall
not include Selling Expenses and the compensation of regular employees of the
Company, which shall be paid in any event by the Company.
-24-
“Selling
Expenses”
means
all discounts, selling commissions, stock transfer taxes and fees and
disbursements of counsel for the Investor and any Permitted Transferee
applicable to the sale of Registrable Securities.
(k) At
any
time, the Investor may elect to forfeit its rights set forth in this
Section 4.3 from that date forward; provided
that the
Investor forfeiting such rights shall nonetheless (1) be obligated under
Section 4.3(h)(1) with respect to any Pending Offering (as hereinafter
defined) to the same extent that the Investor would have been obligated if
the
Investor had not withdrawn; and provided,
further,
that no
such forfeiture shall terminate the Investor’s rights or obligations under
Section 4.3(f) with respect to any prior registration or Pending Offering.
“Pending
Offering”
means,
with respect to the Investor forfeiting its rights pursuant to this
Section 4.3(k), (x) any registered sale described in
Section 4.3(h)(1) that has an effective date prior to the date of the
Investor’s forfeiture, and (y) any other underwritten offering of
Registrable Securities (including an underwritten offering pursuant to a Shelf
Registration Statement) in which the Investor has advised the Company of its
intent to register its Registrable Securities pursuant to Section 4.3(a)(2)
prior to the date of the Investor’s forfeiture.
Article
V
Miscellaneous
5.1 Survival.
The
representations and warranties of the Company contained in this Agreement shall
survive until the date two years after the Closing Date, at which time such
representations and warranties shall expire; provided
that the
representations and warranties made in Sections 2.2(a), (b), (c) and (d)
shall survive until the expiration of the applicable statute of limitations.
The
representations and warranties of the Investor contained in this Agreement
shall
survive until the date two years after the Closing Date, at which time such
representations and warranties shall expire; provided
that the
representations and warranties made in Sections 2.3(a) and (b) shall
survive the Closing until the expiration of the applicable statute of
limitations.
5.2 Indemnification
Generally.
The
Investor agrees (a) to indemnify and hold harmless the Company and its
affiliates, directors, controlling persons, agents, attorneys, accountants
and
employees (collectively, “Representatives”),
from
and against all losses, claims, damages, liabilities or actions that the Company
and/or its Representatives may incur by reason of (1) the Investor’s
failure to fulfill any of the terms or conditions of this Agreement,
(2) any breach of the representations and warranties made by the Investor
herein or in any document provided by the Investor to the Company and/or its
Representatives relating in any way to the Investor and/or the Purchase and/or
(3) any disposition of the Purchased Securities contrary to the
restrictions set forth in Article IV and (b) to reimburse the Company and
its Representatives for any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action.
-25-
5.3 Interpretation.
When
a
reference is made in this Agreement to “Recitals,” “Articles,” “Sections” or
“Annexes,” such reference shall be to a Recital, Article or Section of, or Annex
to, this Agreement unless otherwise indicated. The terms defined in the singular
have a comparable meaning when used in the plural, and vice versa. The table
of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words “include,”
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation.” The words “contained in” shall be
deemed to mean “set forth in or incorporated by reference into,” and the words
“contain” and “contains” shall have corresponding meanings. No rule of
construction against the draftsperson shall be applied in connection with the
interpretation or enforcement of this Agreement, as this Agreement is the
product of negotiation between sophisticated parties advised by counsel. All
references to “$” or “dollars” mean the lawful currency of the United States of
America. Except as expressly stated in this Agreement, all references to any
statute, rule or regulation are to the statute, rule or regulation as amended,
modified, supplemented or replaced from time to time (and, in the case of
statutes, include any rules and regulations promulgated under the statute)
and
to any section of any statute, rule or regulation including any successor to
the
section. All references to the “Knowledge”
of the
Company mean the actual knowledge of the Chief Executive Officer or Chief
Financial Officer of the Company; all references to the “Knowledge”
of
the
Investor mean the actual knowledge of the “executive officers” (as defined in
Rule 3b-7 under the Exchange Act) of the Investor (or, if the Investor is a
natural person, the Investor himself or herself). For the avoidance of doubt,
at
any time when this Agreement requires a calculation of the number or percentage
of shares of Common Shares owned or controlled by a person, the number of shares
of Common Shares underlying any convertible or exchangeable securities
beneficially owned or controlled by such person are to be included as if such
securities were fully converted in the hands of such person as of that
time.
5.4 Amendment.
No
amendment of any provision of this Agreement will be effective unless made
in
writing and signed by an officer of a duly authorized representative of each
party.
5.5 Waiver
of Conditions.
The
conditions to the Company’s obligation to consummate the Purchase are for the
sole benefit of the Company and may be waived by the Company in whole or in
part
to the extent permitted by applicable law. No waiver will be effective unless
it
is in a writing signed by a duly authorized officer of the Company that makes
express reference to the provision or provisions subject to such
waiver.
5.6 Counterparts
and Facsimile.
This
Agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
will together constitute the same agreement. Executed signature pages to this
Agreement may be delivered by facsimile, and such facsimiles will be deemed
as
sufficient as if actual signature pages had been delivered.
5.7 Governing
Law; Submission to Jurisdiction, Etc.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York applicable to contracts made and to be performed entirely
within such State. In connection with any dispute, controversy or claim arising
out of or relating to the Transaction Documents, or the validity,
interpretation, breach or termination of any such Transaction Documents,
including claims seeking redress or asserting rights under any law, each of
the
parties hereto agrees (a) to submit to the personal jurisdiction of the
State or Federal courts in the Borough of Manhattan, The City of New York,
(b) that exclusive jurisdiction and venue shall lie in the State or Federal
courts in the State of New York and (c) that notice may be served upon such
party at the address and in the manner set forth for such party in
Section 5.8.
-26-
5.8 Notices.
All
notices, requests, claims, demands, waivers and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
by hand, if delivered personally or by courier, or three days after being
deposited in the mail (registered or certified mail, postage prepaid, return
receipt requested). All notices hereunder shall be delivered as set forth below,
or pursuant to such other instructions as may be designated in writing by the
party to receive such notice.
|
(A)
|
If
to the Investor, to the person and the address indicated on the signature
page to this Agreement.
|
| (B) |
If
to the Company:
|
Smithtown
Bancorp, Inc.
000
Xxxxx
Xxxxxxx, Xxxxx 000
Xxxxxxxxx,
Xxx Xxxx 00000
Attention:
Chief Financial Officer
Facsimile:
000-000-0000
with
a
copy to:
Xxxxxxxx
& Xxxxxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxx
X.
Xxxxxxx
Xxx
X. Xxxxxx
Facsimile:
000-000-0000
5.9 Entire
Agreement, Etc.
(a) This Agreement, the other Transaction Documents executed and delivered
on the date hereof and the confidentiality letter agreement, as amended, and
entered into between the Company and the Investor, constitute the entire
agreement, and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, between the parties,
with
respect to the subject matter hereof, and (b) this Agreement will not be
assignable by any party without the prior written consent of the other party
(any attempted assignment in contravention hereof being null and void
ab initio).
The
Investor agrees to treat all confidential information provided by the Company
in
connection with the transactions contemplated by the Transaction Documents
as
Proprietary Information under the confidentiality provisions of the
aforementioned confidentiality letter agreement.
-27-
5.10 Definitions
of “Subsidiary” and “Affiliate”.
(a) When
a
reference is made in this Agreement to a Subsidiary of a person, the term
“Subsidiary”
means
those corporations, banks, savings banks, associations and other entities of
which such person owns or controls more than 50% of the outstanding equity
securities either directly or through an unbroken chain of entities as to each
of which more than 50% of the outstanding equity securities is owned directly
or
indirectly by its parent.
(b) The
term
“Affiliate”
means,
with respect to any person, any person directly or indirectly controlling,
controlled by or under common control with, such other person. For purposes
of
this definition, “control” when used with respect to any person, means the
possession, directly or indirectly, of the power to cause the direction of
management and/or policies of such person, whether through the ownership of
voting securities, by contract or otherwise.
5.11 Severability.
If any
provision of this Agreement or a Transaction Document, or the application
thereof to any person or circumstance, is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
hereof, or the application of such provision to persons or circumstances other
than those as to which it has been held invalid or unenforceable, will remain
in
full force and effect and shall in no way be affected, impaired or invalidated
thereby, so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination, the parties shall negotiate in good faith in
an
effort to agree upon a suitable and equitable substitute provision to effect
the
original intent of the parties.
5.12 No
Third Party Beneficiaries.
Nothing
contained in this Agreement, expressed or implied, is intended to confer upon
any person or entity other than the Company and the Investor, any benefits,
rights, or remedies.
[The
next page is the signature page.]
-28-
In
Witness Whereof,
this
Agreement has been duly executed and delivered by the duly authorized officers
of the parties hereto as of the date first herein above written.
|
SMITHTOWN
BANCORP, INC.
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
INVESTOR:
|
||||
|
Address:
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
Common
Shares Subscribed For:
|
||||
|
Aggregate
Purchase Price Delivered Herewith:
|
||||
