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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
Professional Bancorp, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
743112104
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(CUSIP Number)
Jonathan D. Joseph, Esq.
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, California 94104
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(415) 983-1000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 13, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rules 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. [ ]
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* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 743112104 SCHEDULE 13D Page 2 of 6 Pages
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1. NAME OF REPORTING PERSON
Joel W. Kovner, Dr. P.H.
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2. CHECK THE APPROPRIATE BOX IF MEMBER OF A GROUP
(a) [ ] (b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
[OO]
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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NUMBER OF SHARES 7. SOLE VOTING POWER 12,116 shares*
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BENEFICIALLY OWNED 8. SHARED VOTING POWER -0- shares
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BY EACH REPORTING 9. SOLE DISPOSITIVE POWER 12,116 shares*
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PERSON WITH 10. SHARED DISPOSITIVE POWER -0- shares
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,116 shares
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12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.9%
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14. TYPE OF REPORTING PERSON
IN
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* See Item 5(e).
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CUSIP NO. 743112104 SCHEDULE 13D Page 3 of 6 Pages
This Amendment No. 2 to the Schedule 13D, dated April 27, 1992, of Joel
W. Kovner, Dr. P.H., as amended by Amendment No. 1 thereto, dated December 31,
1994 ("Schedule 13D") relates to the shares of Common Stock of Professional
Bancorp, Inc., a Pennsylvania corporation ("Company") owned by Dr. Kovner, and
is being filed pursuant to Rule 13d-2 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
Item 2. Identity and Background
Item 2 is hereby amended in its entirety to read as follows:
The name of the person filing this statement is Joel W. Kovner, Dr.
P.H.. His residential address is 29665 Harvester Road, Malibu, California 90265.
Dr. Kovner is self-employed as a consultant. During the past five years, Dr.
Kovner has not been convicted in a criminal proceeding nor has he been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws. Dr. Kovner is a citizen of the United
States of America.
Item 3. Source and Amount of Funds or other Consideration
Item 3 is hereby amended in its entirety to read as follows:
On March 13, 1998 Dr. Kovner entered into separate purchase agreements
with (i) Basswood Financial Partners, L.P., a Delaware limited partnership;
Basswood International Fund, Inc., a Cayman Islands corporation; and Whitewood
Financial Partners, L.P., a Delaware limited partnership, (collectively,
"Basswood"); (ii) Castle Creek Capital Partners Fund I, L.P., a Delaware limited
partnership ("Castle"); and (iii) Mutual Financial Services Fund, a series of
Franklin Mutual Series Fund Inc., a Maryland corporation ("Franklin" and,
collectively with Basswood and Castle, the "Purchasers"). The following summary
is qualified in its entirety by reference to the purchase agreements
(collectively, the "Purchase Agreements"), a copy of which is attached for each
as Exhibits A, B and C, respectively.
Pursuant to the Purchase Agreements, Dr. Kovner agreed to (a) sell to
the Purchasers the aggregate amount of 12,320 shares of the Common Stock of the
Company directly held by Dr. Kovner (the "Direct Shares") for a total purchase
price of $17.125 per share or an aggregate purchase price of $210,980.00, and
(b) sell to the Purchasers 276,515 shares of Common Stock of the Company
immediately upon Dr. Kovner's exercise of options to purchase those shares (the
"Option Shares") for $17.125 per share or an aggregate purchase price of
$4,735,319.38 (said purchase price being inclusive of the option exercise amount
provided by the Purchasers as described in the last sentence of Item 3 below).
Of those Direct Shares of the Company held by Dr. Kovner, Basswood purchased
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CUSIP NO. 743112104 SCHEDULE 13D Page 4 of 6 Pages
2,365 shares, Castle purchased 3,318 shares, and Franklin purchased 6,637
shares. Of the Option Shares of the Company sold by Dr. Kovner immediately
after the exercise of his options, Basswood purchased 53,046 of said shares,
Castle purchased 148,979 of said shares, and Franklin purchased 74,490 of said
shares. In connection with the Purchase Agreements and the transactions
contemplated therein, Dr. Kovner used funds provided solely by the Purchasers
to exercise: (i) options to purchase 264,600 shares of the Common Stock of the
Company at an exercise price of $12.70, for a total option exercise price of
$3,360,420.00; (ii) options to purchase 6,127 shares of the Common Stock of the
Company at an exercise price of $7.71, for a total option exercise price of
$47,239.17; and (iii) options to purchase 5,788 shares of the Common Stock of
the Company at an exercise price of $14.22, for a total option exercise price
of $82,305.36.
Item 4. Purpose of Transaction
Item 4 is hereby supplementally amended as follows:
The purpose of the transaction was to allow Dr. Kovner to exercise his
stock options and to sell all of his Option Shares and Direct Shares in the
Company (which sales excluded 12,116 shares held in his 401(k) and IRA accounts)
to the Purchasers pursuant to the Purchase Agreements. By virtue of exercising
his options, Dr. Kovner paid in $3,489,964.50 to the Company. The Purchasers
represented to Dr. Kovner that the Option Shares and Direct Shares were acquired
by them for investment purposes. Pursuant to the Purchase Agreements, Dr. Kovner
must first offer to each Purchaser a specified percentage of the 12,116 shares
held by Dr. Kovner in his 401(k) and IRA accounts during a 180 day period
following the date of the Purchase Agreements, March 13, 1998, before Dr. Kovner
can sell, transfer or otherwise dispose of his beneficial ownership in the
12,116 shares. Dr. Kovner does not presently have specific plans to sell or
acquire additional shares of the Company's Common Stock. However, depending upon
future developments (including, among other things, other business and
investment opportunities, general economic conditions and stock market
conditions), Dr. Kovner may decide to purchase additional shares of the
Company's Common Stock on the open market or may decide to dispose of all or a
portion of all the shares presently owned.
Except as set forth above or as described in Item 5 below, Dr. Kovner
has no present plans or intentions which will result in or relate to any of the
transactions described in subparagraphs (a) through (j) or Item 4 of Schedule
13D.
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CUSIP NO. 743112104 SCHEDULE 13D Page 5 of 6 Pages
Item 5. Interest in Securities of the Issuer
Item 5 is hereby amended in its entirety to read as follows:
(a) As of the consummation of the transactions contemplated by the
Purchase Agreements, Dr. Kovner is the beneficial owner of an aggregate of
12,116 shares of the Company's Common Stock held in his 401(k) and IRA accounts,
representing approximately 0.9% of the Common Stock of the Company outstanding
as of the Company's latest 10-Q filed November 11, 1997.
(b) Except as described in Item 4 herein above, Dr. Kovner has sole
power to vote and to dispose of all shares beneficially owned by him.
(c) During the past sixty days from the date hereof except pursuant to
the Purchase Agreements, Dr. Kovner has not effected any transactions in the
Common Stock of the Company.
(d) Other than as described herein, no person is known to Dr. Kovner to
have the right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, those shares of Common Stock of the Company
held by Dr. Kovner.
(e) Dr. Kovner ceased to be the beneficial owner of the Direct Shares
on March 20, 1998; it is expected that Dr. Kovner will cease to be the
beneficial owner of the Option Shares, and thereby go below 5%, on or about
March 25, 1998.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
Item 6 is hereby amended in its entirety to read as follows:
Dr. Kovner entered into an Advisory Engagement and Transactional
Execution Agreement ("Engagement Agreement") with Financial Institutional
Partners, LLC ("FIP"), on or about October 10, 1997, whereby FIP undertook to
identify potential buyers of the Common Stock and options of the Company held by
Dr. Kovner. Pursuant to the Engagement Agreement, Dr. Kovner agreed to pay FIP
upon the successful sale of his shares and/or options a fee representing five
percent of the net sale price proceeds received by Dr. Kovner except that a fee
representing seven percent of any net sale proceeds is payable if such net sale
amount is in excess of $1.8 million. This summary is qualified in its entirety
by reference to the Engagement Agreement, a copy of which is attached hereto as
Exhibit D.
Except for the Engagement Agreement described above and the
transactions contemplated by the Purchase Agreements described in Item 3 and
Item 4, Dr. Kovner is not a party to any other contract, arrangement,
understanding or relationship (legal or otherwise) with respect to any
securities of the Company.
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CUSIP NO. 743112104 SCHEDULE 13D Page 6 of 6 Pages
Item 7. Material to be Filed as Exhibits
A. Purchase Agreement dated March 13, 1998 by and between Basswood
Financial Partners, L.P., Basswood International Fund, Inc.,
Whitewood Financial Partners, L.P., and Joel W. Kovner.
B. Purchase Agreement dated March 13, 1998 by and between Castle Creek
Capital Partners Fund I, L.P., and Joel W. Kovner.
C. Purchase Agreement dated March 13, 1998 by and between Mutual
Financial Services Fund and Joel W. Kovner.
D. Advisory Engagement and Transactional Execution Agreement dated
October 10, 1997 between Financial Institutional Partners, L.L.C.,
and Joel W. Kovner.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
March 23, 1998 /s/ Joel W. Kovner
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(Date) (Signature)
Joel W. Kovner, Dr. P.H.
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(Name)
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EXHIBIT A
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PURCHASE AGREEMENT
This AGREEMENT is entered into this 13th day of March, 1998 by and
between each of the entities identified as purchasers on the signature page
hereof (each a "Purchaser" and collectively, the "Purchasers"), and JOEL W.
KOVNER, an individual ("Seller").
WITNESSETH
WHEREAS, Seller is the owner of 12,320 shares of the Common Stock (the
"Direct Shares"), (not including 12,116 shares held by Seller's 401(k) and IRA
plans (the "Retirement Shares")) of Professional Bancorp, Inc., a Pennsylvania
corporation (the "Issuer");
WHEREAS, Seller is the owner of options (the "$12.70 Stock Options") to
purchase 264,600 shares of the Common Stock of the Issuer at an exercise price
of $12.70;
WHEREAS, Seller is the owner of options (the "$7.71 Stock Options") to
purchase 6,127 shares of the Common Stock of the Issuer at an exercise price of
$7.71;
WHEREAS, Seller is the owner of options (the "$14.22 Stock Options") to
purchase 5,788 shares of the Common Stock of the Issuer at an exercise price of
$14.22 (collectively, the $12.70 Stock Options, $7.71 Stock Options, and $14.22
Stock Options being referred to herein as the "Stock Options");
WHEREAS, each Purchaser has requested that Seller sell to Purchaser his
interest in certain of Seller's Stock Options, to the extent possible, or, in
the alternative to take appropriate actions through exercise of the Stock
Options and assignment to such Purchaser of all of Seller's right, title and
interest in and to the Common Stock issuable upon exercise of said Stock
Options;
WHEREAS, Seller desires to sell and each Purchaser desires to purchase
the number of shares of Common Stock of the Issuer enumerated by such
Purchaser's name on Exhibit A hereof (the "Sale Shares" which shall refer
herein, with respect to each Purchaser, to that number of shares set forth by
each Purchaser's name on Exhibit A hereof), which include Seller's right, title
and interest in and to the Option Shares (as defined below)upon the terms and
conditions set forth in this Agreement;
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
ARTICLE 1
1.1 Purchase and Sale. On the Closing Date or Dates (as defined
herein), and subject to the terms and conditions of this Agreement, each
Purchaser, in reliance upon the representations and warranties made by
Seller herein, shall acquire from Seller, and Seller, in reliance upon
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the representations and warranties made by Purchaser herein, shall transfer
and convey all his right, title and interest in and to the Sale Shares
to Purchaser.
1.2 Purchase Price. The purchase price (the "Purchase Price") for the
Sale Shares shall be equal to the number of Sale Shares multiplied by $17.125,
less the Option Exercise Amount and the Tax Payment (each as defined below).
1.3 The Sale Shares. The Sale Shares with respect to each Purchaser
shall consist of: the Direct Shares, and all of Seller's right, title and
interest in and to the shares resulting from the exercise of $12.70 Stock
Options, the shares resulting from the exercise of $7.71 Stock Options, and the
shares resulting from the exercise of $14.22 Stock Options, in each case as
enumerated by each Purchaser's name on Exhibit A hereof.
1.4 The Retirement Shares: Right of First Refusal. In the event Seller
intends to sell, transfer or otherwise dispose of his beneficial ownership in
any Retirement Shares during the 180 day period following the date of this
Agreement, Seller shall first offer to each Purchaser the percentage of such
Retirement Shares enumerated by each Purchaser's name on Exhibit A hereof (up to
a maximum of that number of Retirement Shares enumerated by each Purchaser's
name on Exhibit A hereof) at the lowest bid then being quoted by the principal
market maker(s) of the Issuer's common stock. Seller's offer to each Purchaser
in accordance with this section will terminate twenty four hours after Purchaser
receives Seller's offer and any acceptance by such Purchaser must be
communicated to Seller within that time.
ARTICLE 2
2.1 Exercise of Options. Upon the execution of this Agreement by all
parties, (i) Seller shall execute all instruments necessary to exercise Stock
Options to purchase 53,046 shares of the Issuer's Common Stock (the "Option
Instruments") and deliver the Option Instruments to Pillsbury Madison & Sutro
LLP (the "Escrow Agent"); (ii) Purchasers shall wire to the Escrow Agent in
immediately available funds (x) an amount (the "Option Exercise Amount") equal
to the aggregate exercise price of the options being exercised by Seller, as set
forth in Exhibit A hereof and (y) the amount of any required federal, state or
other required withholding amounts under federal or California law or regulation
as mutually agreed upon between Seller and the Issuer and set forth on Exhibit A
hereof (the "Tax Payment"); and (iii) Seller and Purchaser shall instruct the
Escrow Agent to submit to the Issuer the Option Instruments, the Option Exercise
Amount, and the Tax Payment, along with Seller's instructions that the stock
certificate to be issued in connection with the exercise of the Stock Options
(the "Option Shares") be returned forthwith to the Escrow Agent.
2.2 Transfer of the Direct Shares. Upon the execution of this Agreement
by all parties, Seller shall (A) take such steps as are necessary to deliver to
the Escrow Agent the stock certificate or certificates reflecting the Direct
Shares (including instructing the Issuer's transfer agent to certificate
Seller's Direct Shares), along with stock powers duly endorsed by Seller in
blank, signatures medallion guaranteed (the "Direct Shares Transfer
Instruments"); and within two (2) business days after receiving certificate(s)
reflecting the Direct Shares from the Issuer's transfer agent, Seller shall
deliver the Direct Shares Transfer Instruments to the Escrow Agent, or
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(B) provide written authorization to the Escrow Agent (the "Direct Shares
Transfer Instructions") to instruct Seller's broker through which
Seller's Direct Shares are held to transfer the Direct Shares to the brokerage
account or accounts designated by Purchaser (together with the DTC number for
each such brokerage firm and each Purchaser's individual account number at such
brokerage firm) PROVIDED that the Escrow Agent shall not be authorized to
transmit such instructions until it receives from the Purchaser an amount equal
to the number of Direct Shares multiplied by $17.125 (pursuant to Section 2.5).
In the event the parties hereto select the procedure set forth in Section
2.2(B), Purchasers shall promptly notify the Escrow Agent in writing of the
brokerage account(s) to which the Direct Shares shall be transferred.
2.3 Transfer of the Option Shares. Upon the execution of this Agreement
by all parties, the Seller shall deliver to the Escrow Agent stock powers duly
endorsed by Seller in blank, signatures medallion guaranteed, to be attached to
the Option Shares (the "Option Shares Transfer Instruments").
2.4 Closing Date and Location. The closing of the sale and purchase of
the Sale Shares shall take place upon the satisfaction of the conditions
specified in Articles 6 and 7 of this Agreement (the "Closing Date") at the
offices of the Escrow Agent or such location as the parties may mutually agree
in writing. If the closing of the purchase and sale of the Direct Shares and the
Option Shares occur on separate days, as provided for in Section 7.3 hereof, any
reference to "Closing Date" herein which commences a period of time shall mean
the date on which the last of the Direct Shares or the Option Shares transferred
by this Agreement closes.
2.5 Payment to be Made at Closing. Upon confirmation to the Purchasers
by the Escrow Agent that the Escrow Agent has in its possession the Direct
Shares Transfer Instruments (or the Direct Shares Transfer Instructions, as the
case may be) and the Option Shares Transfer Instruments, along with the Option
Shares, the Purchasers shall (i) promptly pay the Purchase Price to the Escrow
Agent in immediately available funds; (ii) instruct the Escrow Agent to release
the Purchase Price to Seller (PROVIDED that in the event that the Escrow Agent
has in its possession Direct Shares Transfer Instructions rather than Direct
Shares Transfer Instruments, (x) the Escrow Agent shall wire the minimum amount
(the "Margin Payment") required by Seller's broker in order to transfer the
Direct Shares set forth on Exhibit A hereof to each Purchaser's brokerage
account, and (z) the release to the Seller of the payment for the Direct Shares
remaining after the payment of the Margin Payment described above shall be
conditioned upon Purchasers confirming to the Escrow Agent receipt of the Direct
Shares in Purchasers' brokerage account or accounts specified in Section 2.2
hereof); and (iii) send to the Escrow Agent instructions addressed to the Issuer
(the "Purchaser Instructions") directing the Issuer to reregister and deliver
the Sale Shares (or Option Shares if the procedure set forth in Section 2.2(B)
is utilized) in accordance with the Purchaser Instructions.
2.6 Documents to be Delivered after Closing. Upon receipt by the Escrow
Agent of the Purchase Price, the Escrow Agent shall deliver to the Issuer's
transfer agent (i) the stock certificate or certificates reflecting the Direct
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Shares, along with the Direct Shares Transfer Instruments (except if the
procedure set forth in Section 2.2(B) is selected by the parties);
(ii) the Option Shares and the Option Shares Transfer Instruments;
and (iii) the Purchaser Instructions.
ARTICLE 3
Representations and Warranties of Seller. Seller represents and
warrants to each Purchaser as follows:
3.1 Seller has the power, authority and legal right to execute, deliver
and perform this Agreement and all agreements, documents and instruments in
connection therewith. This Agreement has been, and the other agreements,
documents and instruments delivered by Seller in accordance with the provisions
hereof (the "Seller's Documents") have been, duly executed and delivered by
Seller, and each of this Agreement and Seller's Documents constitutes the legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with its terms.
3.2 Neither the execution and delivery of this Agreement nor the
compliance with the terms and provisions hereof by Seller will result in the
breach of any state or federal law, rule or regulation applicable to Seller, or
any administrative or court order or decree, or any agreement or other
instrument to which Seller is a party, or by which Seller is or may be bound, or
constitute an event of default thereunder, or with the lapse of time or the
giving of notice or both, will constitute an event of default thereunder by
Seller.
3.3 Seller has good and marketable title to the Direct Shares, free of
any lien, claim, encumbrance or restriction and Seller will transfer, sell and
convey at Closing all right, title and interest he has in and to the Option
Shares. Seller is entitled to sell the Direct Shares and Option Shares to
Purchaser as provided in this Agreement and will deliver to Purchaser on the
Closing Date, the Direct Shares and will assign to Purchaser all of the Seller's
right, title and interest in and to the Option Shares free of any lien, claim or
restriction of any kind; provided, however, that Seller shall not be responsible
for or obligated to cause Issuer to record Purchaser on its stock register or
otherwise to cause Issuer or Issuer's transfer agent to record the stock
transfer contemplated hereunder or to issue certificates representing the Sale
Shares. Subject to the foregoing, Seller shall transfer to Purchaser good and
valid title to the Sale Shares. No other person has any right or option to
acquire, or any direct or indirect interest, right or claim against, any of the
Sale Shares.
3.4 Except for Seller's financial advisor (whose name has been provided
to Purchasers), no agent, broker, investment banker or other person or firm
acting on behalf of or under the authority of Seller is or will be entitled to
any broker's or finder's fee or any other commission or similar fee, directly or
indirectly, in connection with the transactions contemplated by this Agreement.
3.5 To Seller's knowledge, as of the date hereof, Seller is not an
affiliate of the Issuer within the meaning of Rule 144 under the Securities Act
of 1933, as amended.
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ARTICLE 4
Representations and Warranties of each Purchaser. Each Purchaser, as
to itself only, represents and warrants to Seller as follows:
4.1 Purchaser is duly organized, and validly existing and in good
standing under the laws of the state or jurisdiction of its organization.
Purchaser has the power, authority and legal right to execute, deliver and
perform this Agreement. This Agreement has been duly executed and delivered on
behalf of Purchaser, and this Agreement constitutes the legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with its
terms. The person signing this Agreement on behalf of Purchaser has been duly
authorized by Purchaser and has full power and authority to do so.
4.2 Neither the execution and delivery of this Agreement nor the
compliance with the terms and provisions hereof by Purchaser will result in a
breach of the Bank Holding Company Act of 1956, as amended, the Change in Bank
Control Act of 1978, as amended, or any other federal or state law, rule or
regulation applicable to Purchaser or any of Purchaser's affiliates, or any
administrative or court order or decree, or any agreement or other instrument to
which Purchaser or any of Purchaser's affiliates is a party, or by which
Purchaser or any of Purchaser's affiliates is or may be bound, or constitute an
event of default thereunder, or with the lapse of time or the giving of notice
or both, will constitute an event of default thereunder by Purchaser.
4.3 Purchaser is not acquiring the Sale Shares as a member of any
group, or in concert with any other person or entity, and its determination to
purchase the Sale Shares is independent of any other person or entity's decision
to acquire any item of value from Seller.
4.4 (a) Purchaser understands that the Sale Shares being acquired
hereunder are being offered and sold pursuant to an exemption from registration
contained in the Securities Act and the California Corporate Securities Law
based in part upon the representations of Purchaser contained herein.
(b) Purchaser knows of no public solicitation or advertisement of an
offer in connection with the proposed sale of the Sale Shares.
(c) Purchaser is acquiring the Sale Shares for its own account for
investment and not as a nominee and not with a view to the distribution thereof.
Purchaser understands that it must bear the economic risk of this investment.
(d) Purchaser has the capacity to protect its own interests in
connection with the purchase of the Sale Shares hereunder and has the ability to
bear the economic risk (including the risk of total loss) of its investment.
(e) Purchaser will not make any sale, transfer or other disposition of
the Sale Shares in violation of the Securities Act or the Exchange Act, or the
rules of the Securities and Exchange Commission (the "SEC") promulgated
thereunder.
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(f) Purchaser acknowledges that it has had the opportunity to review
with its own legal counsel this Agreement, the exhibits and the schedules
attached hereto and the transactions contemplated by this Agreement. Purchaser
is relying solely on such counsel with respect to legal advice, and not on any
statement or representations of Seller or any of its agents, with respect to
this investment or the transactions contemplated by this Agreement.
(g) Purchaser acknowledges that it understands that Seller is not an
officer or director or otherwise affiliated with the Issuer in any way.
Purchaser further acknowledges that it is making the decision to purchase the
Sale Shares from Seller based solely on Purchaser's independent review of
available information concerning the Issuer, including such information made
available to the public as a result of the Issuer's filings with the SEC
pursuant to the Exchange Act. Purchaser shall not hold Seller responsible for
any liabilities or damages that Purchaser may incur, or losses on its investment
hereby that Purchaser may suffer, as a result of any inaccuracies or omissions
contained in any such information that Purchaser may have obtained by, from or
concerning the Issuer.
ARTICLE 5
5.1 Survival of Representations. All representations, warranties,
covenants and agreements made by the parties in this Agreement shall survive for
three (3) years after the Closing Date.
ARTICLE 6
Conditions to Closing by Seller. The obligations of Seller under this
Agreement are subject to the fulfillment of the following conditions precedent
at or before the Closing Date; provided, however, that Seller may conditionally
or unconditionally waive one or more of those conditions:
6.1 Each of the representations and warranties of Purchasers contained
in this Agreement shall be true in all material respects as of the Closing Date
as if made on such date.
6.2 Purchasers shall have performed, satisfied and complied with each
of the covenants, terms and conditions required by this Agreement to be
performed, satisfied or complied with by Purchasers on or before the Closing
Date.
6.3 The execution of an Escrow Agreement among the Purchasers, Seller,
and the Escrow Agent mutually satisfactory to each party.
6.4 The execution of such additional documents as counsel for Seller
shall reasonably request in order to effectuate the purpose and intent of this
Agreement.
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ARTICLE 7
Conditions to Closing by Purchasers. The obligations of Purchasers to
purchase the Sale Shares under this Agreement are subject to the fulfillment of
the following conditions precedent at or before the Closing Date; provided,
however, that Purchasers may conditionally or unconditionally waive one or more
of these conditions:
7.1 Each of the representations and warranties of Seller contained in
this Agreement shall be true in all material respects as of the Closing Date as
if made on such date.
7.2 Seller shall have performed, satisfied and complied with each of
the covenants, terms and conditions required by this Agreement to be performed,
satisfied or complied with by Seller on or before the Closing Date.
7.3 Seller shall deliver to Purchasers on the Closing Date all
documents required to be delivered pursuant to Sections 2.2 and 2.3 of this
Agreement; PROVIDED that the closings of the transfer of the Direct Shares and
the Option Shares need not occur on the same day, provided further that the
conditions pertinent to each are satisfied.
7.4 The execution of such additional documents as counsel for
Purchasers shall reasonably request in order to effectuate the purpose and
intent of this Agreement.
7.5 The execution of an Escrow Agreement among the Purchasers, Seller,
and the Escrow Agent mutually satisfactory to each party.
ARTICLE 8
8.1 Indemnification.
(a) Seller's Indemnity. From and after the Closing Date, Seller hereby
indemnifies each Purchaser against and agrees to hold it harmless from, as and
to the fullest extent permitted by applicable law, any and all losses, claims,
damage, liabilities, costs and expense (including, without limitation,
reasonable attorney's fees and expenses, judgments, fines and amounts paid in
settlement) in connection with any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative, in which
Purchaser is, or is threatened to be made, a party based on, or arising out of,
or pertaining to breaches of Seller's representations, warranties and covenants
in this Agreement or due to any actions of Seller after the Closing Date related
in any way to any of the transactions contemplated hereby; provided, that
Purchaser acknowledges that Seller may have claims against Issuer unrelated to
this Agreement and Seller's actions in furtherance of these claims, if any,
shall not be subject to this Section 8.1(a). Purchaser may retain counsel
reasonably satisfactory to it; provided, however, that (x) Seller shall have the
right to assume the defense thereof and upon such assumption Seller shall not be
liable to Purchaser for any legal expenses of other counsel or any other
expenses subsequently incurred by Purchaser in connection with the defense
thereof, except that if Seller elects not to assume such defense or counsel for
Purchaser reasonably advises Purchaser that there are issues which raise
conflicts of interest between Seller and Purchaser, Purchaser may retain counsel
(subject to the following sentence) reasonably satisfactory to it, and Seller
-7-
<PAGE>
shall pay the reasonable fees and expenses of such counsel for Purchaser,
(y) Seller shall not be liable for any settlement effected without his prior
written consent (which consent shall not be unreasonably withheld) and
(z) Seller shall have no obligation hereunder to Purchaser when and if a court
of competent jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that indemnification of Purchaser in
the manner contemplated hereby is prohibited by applicable law or regulation.
Seller's obligations under this Section 8.1(a) continue in full force and
effect for a period of three (3) years from the Closing Date; provided,
however, that all rights to indemnification in respect of any claim asserted or
made within such period shall continue until the final disposition of such
claim.
(b) Purchaser's Indemnity. From and after the Closing Date, each
Purchaser hereby indemnifies Seller against and agrees to hold him harmless
from, as and to the fullest extent permitted by applicable law, any and all
losses, claims, damage, liabilities, costs and expense (including, without
limitation, reasonable attorney's fees and expenses, judgments, fines and
amounts paid in settlement) in connection with any threatened or actual claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative, in which Seller is, or is threatened to be made, a party based
on, or arising out of, or pertaining to breaches of Purchaser's representations,
warranties and covenants in this Agreement or due to any actions of Purchaser
after the Closing Date related in any way to any of the transactions
contemplated hereby. Seller may retain counsel reasonably satisfactory to him;
provided, however, that (x) Purchaser shall have the right to assume the defense
thereof and upon such assumption Purchaser shall not be liable to Seller for any
legal expenses of other counsel or any other expenses subsequently incurred by
Seller in connection with the defense thereof, except that if Purchaser elects
not to assume such defense or counsel for Seller reasonably advises Seller that
there are issues which raise conflicts of interest between Seller and Purchaser,
Seller may retain counsel (subject to the following sentence) reasonably
satisfactory to him, and Purchaser shall pay the reasonable fees and expenses of
such counsel for Seller, (y) Purchaser shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld) and (z) Purchaser shall have no obligation hereunder to
Seller when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of Seller in the manner contemplated hereby is prohibited by
applicable law or regulation. Purchaser's obligations under this Section 8.1(b)
continue in full force and effect for a period of three (3) years from the
Closing Date; provided, however, that all rights to indemnification in respect
of any claim asserted or made within such period shall continue until the final
disposition of such claim. Notwithstanding anything to the contrary contained
elsewhere in this Agreement, each Purchaser's obligations described in this
Section 8.1(b) are limited to its pro rata share (considered among all
responsible parties), and such obligations are several and not joint. For
example, if two of the Purchasers are collectively responsible for any loss,
claim, damage, liability, costs or expense, the pro rata share of each such
Purchaser's obligations under this Section 8.1(b) shall be 50%. Notwithstanding
the foregoing two sentences, in the event that any Purchaser is responsible for
any loss, claim, damage, liability, costs or expense in excess of their pro rata
share, such party will be fully responsible for such excess amount.
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ARTICLE 9
9.1 The parties agree that (i) no public release or announcement
(excluding for this purpose, filings with federal or state regulatory agencies)
concerning the transactions contemplated hereby shall be issued by any party and
(ii) neither party will disclose the existence of this Agreement or the
intention of such party to consummate the transactions contemplated hereby to
any other party prior to the Closing Date, without in either case the prior
written consent of the other party, except as required by law or applicable
regulations.
9.2 Purchasers shall pay all documentary and other transfer taxes, if
any, due as a result of the sale of the Sale Shares in accordance herewith.
Except as set forth in this Section 9.2, each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
Notwithstanding the foregoing, in any action between the parties seeking
enforcement of any of the terms and provisions of this Agreement, the prevailing
party in such action shall be awarded, in addition to damages, injunctive or
other relief, its reasonable costs and expenses, including but not limited to
reasonable attorneys' fees and expenses.
9.3 This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby. It shall not be
amended or modified except by written instrument duly executed by each of the
parties hereto. Any and all previous agreements and understandings between or
among the parties regarding the subject matter hereof, whether written or oral,
are superseded by this Agreement.
9.4 This Agreement may not be assigned prior to the Closing Date by any
party hereto without the prior written consent of the other party. Subject to
the foregoing, all of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of, and be enforceable by the successors
and assigns of Seller and Purchasers.
9.5 Any term or provision of this Agreement may be waived at any time
by the party entitled to the benefit thereof by a written instrument duly
executed by such party.
9.6 This Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the State of California.
9.7 Each of the parties hereto will cooperate with the other and
execute and deliver to the other party hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by the other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
9.8 Any provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.9 This Agreement may be executed in any number of counterparts and
any party hereto may execute any such counterpart, each of which when executed
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and delivered shall be deemed to be an original and all of which counterparts
taken together shall constitute one and the same instrument.
9.10 For purposes of this Agreement and all other documents executed
and delivered pursuant hereto or in connection herewith, facsimile signatures
shall have the same force and effect as originally executed signatures.
9.11 Each of Purchasers and Seller hereby submits to the exclusive
jurisdiction of any court of the State of California and the federal courts of
the United States located in California in respect of the transactions
contemplated by this Agreement, and hereby waives, and agrees not to assert, as
a defense in any action, suit or proceeding for the transactions contemplated by
this Agreement, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that this
Agreement may not be enforced in or by said courts or that its property is
exempt or immune from execution, that the action, suit or proceeding is brought
in an inconvenient forum, or that the venue of the action, suit or proceeding is
improper.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
JOEL W. KOVNER
/s/ Joel W. Kovner
------------------------------------
PURCHASERS:
BASSWOOD FINANCIAL PARTNERS, LP,
a Delaware limited partnership
By: /s/ Matthew Lindenbaum
------------------------------------
Name: Matthew Lindenbaum
Title: President of Basswood Management
General Partner, Basswood Partners, L.P.
General Partner, Basswood Financial Partners, L.P.
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<PAGE>
BASSWOOD INTERNATIONAL FUND, INC.,
a Cayman Islands corporation
By: /s/ Matthew Lindenbaum
------------------------------------
Name: Matthew Lindenbaum
Title: President of Basswood Management
General Partner, Basswood Partners
General Partner, Basswood International Fund, L.P.
WHITEWOOD FINANCIAL PARTNERS, L.P.
A Delaware limited partnership
By: /s/ Matthew Lindenbaum
------------------------------------
Name: Matthew Lindenbaum
Title: President of Basswood Management
General Partner, Basswood Partners, L.P.
General Partner, Whitewood Financial Partners, L.P.
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EXHIBIT A
BASSWOOD FINANCIAL PARTNERS, LP
Direct Shares: 1,956
Total Sale Shares: 45,813
Percentage of Retirement Shares: 15.8578%
Maximum Number of Retirement Shares: 1,922
No. of Option
Options Exercise Amount
$12.70 Stock Options 41,968 $ 532,993.60
$ 7.71 Stock Options 971 $ 7,486.41
$14.22 Stock Options 918 $ 13,053.96
Tax Payment $ 70,765.69
Direct Shares Purchase Amount $ 33,496.50
(of which the Margin Payment
equals $16,019.92)
Pro Rata Escrow Fee $ 826.79
Total to be wired to Escrow
Agent upon execution of this
Agreement $ 658,622.95
Purchase Amount to be Funded Upon
Receipt by Escrow Agent of Option
Shares $ 126,751.47
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BASSWOOD INTERNATIONAL FUND, INC.
Direct Shares: 388
Total Sale Shares: 9,089
Percentage of Retirement Shares: 3.1461%
Maximum Number of Retirement Shares: 381
No. of Option
Options Exercise Amount
$12.70 Stock Options 8,326 $ 105,740.20
$ 7.71 Stock Options 193 $ 1,488.03
$14.22 Stock Options 182 $ 2,588.04
Tax Payment $ 14,039.45
Direct Shares Purchase Amount $ 6,644.50
(of which the Margin Payment
equals $3,178.25)
Pro Rata Escrow Fee $ 164.03
Total to be wired to Escrow
Agent upon execution of this
Agreement $ 130,664.25
Purchase Amount to be Funded Upon
Receipt by Escrow Agent of Option
Shares $ 25,148.91
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WHITEWOOD FINANCIAL PARTNERS, LP
Direct Shares: 21
Total Sale Shares: 509
Percentage of Retirement Shares: 0.1764%
Maximum Number of Retirement Shares: 21
No. of Option
Options Exercise Amount
$12.70 Stock Options 467 $ 5,930.90
$ 7.71 Stock Options 11 $ 84.81
$14.22 Stock Options 10 $ 142.20
Tax Payment $ 786.23
Direct Shares Purchase Amount $ 359.63
(of which the Margin Payment
equals $177.98)
Pro Rata Escrow Fee $ 9.18
Total to be wired to Escrow
Agent upon execution of this
Agreement $ 7,312.95
Purchase Amount to be Funded Upon
Receipt by Escrow Agent of Option
Shares $ 1,412.86
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EXHIBIT B
---------
PURCHASE AGREEMENT
This AGREEMENT is entered into this 13th day of March, 1998 by and
between MUTUAL FINANCIAL SERVICES FUND, a series of Franklin Mutual Series Fund
Inc., a Maryland corporation, ("Purchaser"), and JOEL W. KOVNER, an individual
("Seller").
WITNESSETH
WHEREAS, Seller is the owner of 12,320 shares of the Common Stock (the
"Direct Shares"), (not including 12,116 shares held by Seller's 401(k) and IRA
plans (the "Retirement Shares")) of Professional Bancorp, Inc., a Pennsylvania
corporation (the "Issuer");
WHEREAS, Seller is the owner of options (the "$12.70 Stock Options") to
purchase 264,600 shares of the Common Stock of the Issuer at an exercise price
of $12.70;
WHEREAS, Seller is the owner of options (the "$7.71 Stock Options") to
purchase 6,127 shares of the Common Stock of the Issuer at an exercise price of
$7.71;
WHEREAS, Seller is the owner of options (the "$14.22 Stock Options") to
purchase 5,788 shares of the Common Stock of the Issuer at an exercise price of
$14.22 (collectively, the $12.70 Stock Options, $7.71 Stock Options, and $14.22
Stock Options being referred to herein as the "Stock Options");
WHEREAS, Purchaser has requested that Seller sell to Purchaser his
interest in certain of Seller's Stock Options, to the extent possible, or, in
the alternative to take appropriate actions through exercise of the Stock
Options and assignment to such Purchaser of all of Seller's right, title and
interest in and to the Common Stock issuable upon exercise of said Stock
Options;
WHEREAS, Seller desires to sell and Purchaser desires to purchase the
number of shares of Common Stock of the Issuer enumerated by such Purchaser's
name on Exhibit A hereof (the "Sale Shares"), which include Seller's right,
title and interest in and to the Option Shares (as defined below) upon the terms
and conditions set forth in this Agreement;
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
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ARTICLE 1
1.1 Purchase and Sale. On the Closing Date or Dates (as defined
herein), and subject to the terms and conditions of this Agreement, in reliance
upon the representations and warranties made by Seller herein, shall acquire
from Seller, and Seller, in reliance upon the representations and warranties
made by Purchaser herein, shall transfer and convey all his right, title and
interest in and to the Sale Shares to Purchaser.
1.2 Purchase Price. The purchase price (the "Purchase Price") for the
Sale Shares shall be equal to the number of Sale Shares multiplied by $17.125,
less the Option Exercise Amount and the Tax Payment (each as defined below).
1.3 The Sale Shares. The Sale Shares shall consist of: the Direct
Shares, and all of Seller's right, title and interest in and to the shares
resulting from the exercise of $12.70 Stock Options, the shares resulting from
the exercise of $7.71 Stock Options, and the shares resulting from the exercise
of $14.22 Stock Options, in each case as enumerated by Purchaser's name on
Exhibit A hereof.
1.4 The Retirement Shares: Right of First Refusal. In the event Seller
intends to sell, transfer or otherwise dispose of his beneficial ownership in
any Retirement Shares during the 180 day period following the date of this
Agreement, Seller shall first offer to Purchaser the percentage of such
Retirement Shares enumerated by Purchaser's name on Exhibit A hereof (up to a
maximum of that number of Retirement Shares enumerated by Purchaser's name on
Exhibit A hereof) at the lowest bid then being quoted by the principal market
maker(s) of the Issuer's common stock. Seller's offer to Purchaser in accordance
with this section will terminate twenty four hours after Purchaser receives
Seller's offer and any acceptance by Purchaser must be communicated to Seller
within that time.
ARTICLE 2
2.1 Exercise of Options. Upon the execution of this Agreement by both
parties, (i) Seller shall execute all instruments necessary to exercise Stock
Options to purchase 148,979 shares of the Issuer's Common Stock (the "Option
Instruments") and deliver the Option Instruments to Pillsbury Madison & Sutro
LLP (the "Escrow Agent"); (ii) Purchaser shall wire to the Escrow Agent in
immediately available funds (x) an amount (the "Option Exercise Amount") equal
to the aggregate exercise price of the options being exercised by Seller, as set
forth in Exhibit A hereof and (y) the amount of any required federal, state or
other required withholding amounts under federal or California law or regulation
as mutually agreed upon between Seller and the Issuer and set forth on Exhibit A
hereof (the "Tax Payment"); and (iii) Seller and Purchaser shall instruct the
Escrow Agent to submit to the Issuer the Option Instruments, the Option Exercise
Amount, and the Tax Payment, along with Seller's instructions that the stock
certificate to be issued in connection with the exercise of the Stock Options
(the "Option Shares") be returned forthwith to the Escrow Agent.
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2.2 Transfer of the Direct Shares. Upon the execution of this Agreement
by both parties, Seller shall (A) take such steps as are necessary to deliver to
the Escrow Agent the stock certificate or certificates reflecting the Direct
Shares (including instructing the Issuer's transfer agent to certificate
Seller's Direct Shares), along with stock powers duly endorsed by Seller in
blank, signatures medallion guaranteed (the "Direct Shares Transfer
Instruments"); and within two (2) business days after receiving certificate(s)
reflecting the Direct Shares from the Issuer's transfer agent, Seller shall
deliver the Direct Shares Transfer Instruments to the Escrow Agent, or (B)
provide written authorization to the Escrow Agent (the "Direct Shares Transfer
Instructions") to instruct Seller's broker through which Seller's Direct Shares
are held to transfer the Direct Shares to the brokerage account or accounts
designated by Purchaser (together with the DTC number for each such brokerage
firm and Purchaser's individual account number at such brokerage firm) PROVIDED
that the Escrow Agent shall not be authorized to transmit such instructions
until it receives from the Purchaser an amount equal to the number of Direct
Shares multiplied by $17.125 (pursuant to Section 2.5). In the event the parties
hereto select the procedure set forth in Section 2.2(B), Purchaser shall
promptly notify the Escrow Agent in writing of the brokerage account(s) to which
the Direct Shares shall be transferred.
2.3 Transfer of the Option Shares. Upon the execution of this Agreement
by both parties, the Seller shall deliver to the Escrow Agent stock powers duly
endorsed by Seller in blank, signatures medallion guaranteed, to be attached to
the Option Shares (the "Option Shares Transfer Instruments").
2.4 Closing Date and Location. The closing of the sale and purchase of
the Sale Shares shall take place upon the satisfaction of the conditions
specified in Articles 6 and 7 of this Agreement (the "Closing Date") at the
offices of the Escrow Agent or such location as the parties may mutually agree
in writing. If the closing of the purchase and sale of the Direct Shares and the
Option Shares occur on separate days, as provided for in Section 7.3 hereof, any
reference to "Closing Date" herein which commences a period of time shall mean
the date on which the last of the Direct Shares or the Option Shares transferred
by this Agreement closes.
2.5 Payment to be Made at Closing. Upon confirmation to the Purchaser
by the Escrow Agent that the Escrow Agent has in its possession the Direct
Shares Transfer Instruments (or the Direct Shares Transfer Instructions, as the
case may be) and the Option Shares Transfer Instruments, along with the Option
Shares, the Purchaser shall (i) promptly pay the Purchase Price to the Escrow
Agent in immediately available funds; (ii) instruct the Escrow Agent to release
the Purchase Price to Seller (PROVIDED that in the event that the Escrow Agent
has in its possession Direct Shares Transfer Instructions rather than Direct
Shares Transfer Instruments, (x) the Escrow Agent shall wire the minimum amount
(the "Margin Payment") required by Seller's broker in order to transfer the
Direct Shares set forth on Exhibit A hereof to Purchaser's brokerage account,
and (y) the release to the Seller of the payment for the Direct Shares remaining
after the payment of the Margin Payment described above shall be conditioned
upon Purchaser confirming to the Escrow Agent receipt of the Direct Shares in
Purchaser's brokerage account or accounts specified in Section 2.2 hereof); and
(iii) send to the Escrow Agent instructions addressed to the Issuer (the
"Purchaser Instructions") directing the Issuer to reregister and deliver the
Sale Shares (or Option Shares if the procedure set forth in Section 2.2(B) is
utilized) in accordance with the Purchaser Instructions.
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2.6 Documents to be Delivered after Closing. Upon receipt by the Escrow
Agent of the Purchase Price, the Escrow Agent shall deliver to the Issuer's
transfer agent (i) the stock certificate or certificates reflecting the Direct
Shares, along with the Direct Shares Transfer Instruments (except if the
procedure set forth in Section 2.2(B) is selected by the parties); (ii) the
Option Shares and the Option Shares Transfer Instruments; and (iii) the
Purchaser Instructions.
ARTICLE 3
Representations and Warranties of Seller. Seller represents and
warrants to Purchaser as follows:
3.1 Seller has the power, authority and legal right to execute, deliver
and perform this Agreement and all agreements, documents and instruments in
connection therewith. This Agreement has been, and the other agreements,
documents and instruments delivered by Seller in accordance with the provisions
hereof (the "Seller's Documents") have been, duly executed and delivered by
Seller, and each of this Agreement and Seller's Documents constitutes the legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with its terms.
3.2 Neither the execution and delivery of this Agreement nor the
compliance with the terms and provisions hereof by Seller will result in the
breach of any state or federal law, rule or regulation applicable to Seller, or
any administrative or court order or decree, or any agreement or other
instrument to which Seller is a party, or by which Seller is or may be bound, or
constitute an event of default thereunder, or with the lapse of time or the
giving of notice or both, will constitute an event of default thereunder by
Seller.
3.3 Seller has good and marketable title to the Direct Shares, free of
any lien, claim, encumbrance or restriction and Seller will transfer, sell and
convey at Closing all right, title and interest he has in and to the Option
Shares. Seller is entitled to sell the Direct Shares and Option Shares to
Purchaser as provided in this Agreement and will deliver to Purchaser on the
Closing Date, the Direct Shares and will assign to Purchaser all of the Seller's
right, title and interest in and to the Option Shares free of any lien, claim or
restriction of any kind; provided, however, that Seller shall not be responsible
for or obligated to cause Issuer to record Purchaser on its stock register or
otherwise to cause Issuer or Issuer's transfer agent to record the stock
transfer contemplated hereunder or to issue certificates representing the Sale
Shares. Subject to the foregoing, Seller shall transfer to Purchaser good and
valid title to the Sale Shares. No other person has any right or option to
acquire, or any direct or indirect interest, right or claim against, any of the
Sale Shares.
3.4 Except for Seller's financial advisor (whose name has been provided
to Purchaser), no agent, broker, investment banker or other person or firm
acting on behalf of or under the authority of Seller is or will be entitled to
any broker's or finder's fee or any other commission or similar fee, directly or
indirectly, in connection with the transactions contemplated by this Agreement.
3.5 To Seller's knowledge, as of the date hereof, Seller is not an
affiliate of the Issuer within the meaning of Rule 144 under the Securities Act
of 1933, as amended.
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ARTICLE 4
Representations and Warranties of Purchaser. Purchaser represents and
warrants to Seller as follows:
4.1 Purchaser is duly organized, and validly existing and in good
standing under the laws of the state or jurisdiction of its organization.
Purchaser has the power, authority and legal right to execute, deliver and
perform this Agreement. This Agreement has been duly executed and delivered on
behalf of Purchaser, and this Agreement constitutes the legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with its
terms. The person signing this Agreement on behalf of Purchaser has been duly
authorized by Purchaser and has full power and authority to do so.
4.2 Neither the execution and delivery of this Agreement nor the
compliance with the terms and provisions hereof by Purchaser will result in a
breach of the Bank Holding Company Act of 1956, as amended, the Change in Bank
Control Act of 1978, as amended, or any other federal or state law, rule or
regulation applicable to Purchaser or any of Purchaser's affiliates, or any
administrative or court order or decree, or any agreement or other instrument to
which Purchaser or any of Purchaser's affiliates is a party, or by which
Purchaser or any of Purchaser's affiliates is or may be bound, or constitute an
event of default thereunder, or with the lapse of time or the giving of notice
or both, will constitute an event of default thereunder by Purchaser.
4.3 Purchaser is not acquiring the Sale Shares as a member of any
group, or in concert with any other person or entity, and its determination to
purchase the Sale Shares is independent of any other person or entity's decision
to acquire any item of value from Seller.
4.4 (a) Purchaser understands that the Sale Shares being acquired
hereunder are being offered and sold pursuant to an exemption from registration
contained in the Securities Act and the California Corporate Securities Law
based in part upon the representations of Purchaser contained herein.
(b) Purchaser knows of no public solicitation or advertisement of an
offer in connection with the proposed sale of the Sale Shares.
(c) Purchaser is acquiring the Sale Shares for its own account for
investment and not as a nominee and not with a view to the distribution thereof.
Purchaser understands that it must bear the economic risk of this investment.
(d) Purchaser has the capacity to protect its own interests in
connection with the purchase of the Sale Shares hereunder and has the ability to
bear the economic risk (including the risk of total loss) of its investment.
(e) Purchaser will not make any sale, transfer or other disposition of
the Sale Shares in violation of the Securities Act or the Exchange Act, or the
rules of the Securities and Exchange Commission (the "SEC") promulgated
thereunder.
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(f) Purchaser acknowledges that it has had the opportunity to review
with its own legal counsel this Agreement, the exhibits and the schedules
attached hereto and the transactions contemplated by this Agreement. Purchaser
is relying solely on such counsel with respect to legal advice, and not on any
statement or representations of Seller or any of its agents, with respect to
this investment or the transactions contemplated by this Agreement.
(g) Purchaser acknowledges that it understands that Seller is not an
officer or director or otherwise affiliated with the Issuer in any way.
Purchaser further acknowledges that it is making the decision to purchase the
Sale Shares from Seller based solely on Purchaser's independent review of
available information concerning the Issuer, including such information made
available to the public as a result of the Issuer's filings with the SEC
pursuant to the Exchange Act. Purchaser shall not hold Seller responsible for
any liabilities or damages that Purchaser may incur, or losses on its investment
hereby that Purchaser may suffer, as a result of any inaccuracies or omissions
contained in any such information that Purchaser may have obtained by, from or
concerning the Issuer.
ARTICLE 5
5.1 Survival of Representations. All representations, warranties,
covenants and agreements made by the parties in this Agreement shall survive for
three (3) years after the Closing Date.
ARTICLE 6
Conditions to Closing by Seller. The obligations of Seller under this
Agreement are subject to the fulfillment of the following conditions precedent
at or before the Closing Date; provided, however, that Seller may conditionally
or unconditionally waive one or more of those conditions:
6.1 Each of the representations and warranties of Purchaser contained
in this Agreement shall be true in all material respects as of the Closing Date
as if made on such date.
6.2 Purchaser shall have performed, satisfied and complied with each of
the covenants, terms and conditions required by this Agreement to be performed,
satisfied or complied with by Purchaser on or before the Closing Date.
6.3 The execution of an Escrow Agreement among the Purchaser, Seller,
and the Escrow Agent mutually satisfactory to each party.
6.4 The execution of such additional documents as counsel for Seller
shall reasonably request in order to effectuate the purpose and intent of this
Agreement.
ARTICLE 7
Conditions to Closing by Purchaser. The obligations of Purchaser to
purchase the Sale Shares under this Agreement are subject to the fulfillment
of the following conditions precedent
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at or before the Closing Date; provided, however, that Purchaser may
conditionally or unconditionally waive one or more of these conditions:
7.1 Each of the representations and warranties of Seller contained in
this Agreement shall be true in all material respects as of the Closing Date as
if made on such date.
7.2 Seller shall have performed, satisfied and complied with each of
the covenants, terms and conditions required by this Agreement to be performed,
satisfied or complied with by Seller on or before the Closing Date.
7.3 Seller shall deliver to Purchaser on the Closing Date all documents
required to be delivered pursuant to Sections 2.2 and 2.3 of this Agreement;
PROVIDED that the closings of the transfer of the Direct Shares and the Option
Shares need not occur on the same day, provided further that the conditions
pertinent to each are satisfied.
7.4 The execution of such additional documents as counsel for Purchaser
shall reasonably request in order to effectuate the purpose and intent of this
Agreement.
7.5 The execution of an Escrow Agreement among the Purchaser, Seller,
and the Escrow Agent mutually satisfactory to each party.
ARTICLE 8
8.1 Indemnification.
(a) Seller's Indemnity. From and after the Closing Date, Seller hereby
indemnifies Purchaser against and agrees to hold it harmless from, as and to the
fullest extent permitted by applicable law, any and all losses, claims, damage,
liabilities, costs and expense (including, without limitation, reasonable
attorney's fees and expenses, judgments, fines and amounts paid in settlement)
in connection with any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, in which Purchaser is,
or is threatened to be made, a party based on, or arising out of, or pertaining
to breaches of Seller's representations, warranties and covenants in this
Agreement or due to any actions of Seller after the Closing Date related in any
way to any of the transactions contemplated hereby; provided, that Purchaser
acknowledges that Seller may have claims against Issuer unrelated to this
Agreement and Seller's actions in furtherance of these claims, if any, shall not
be subject to this Section 8.1(a). Purchaser may retain counsel reasonably
satisfactory to it; provided, however, that (x) Seller shall have the right to
assume the defense thereof and upon such assumption Seller shall not be liable
to Purchaser for any legal expenses of other counsel or any other expenses
subsequently incurred by Purchaser in connection with the defense thereof,
except that if Seller elects not to assume such defense or counsel for Purchaser
reasonably advises Purchaser that there are issues which raise conflicts of
interest between Seller and Purchaser, Purchaser may retain counsel (subject to
the following sentence) reasonably satisfactory to it, and Seller shall pay the
reasonable fees and expenses of such counsel for Purchaser, (y) Seller shall not
be liable for any settlement effected without his prior written consent (which
consent shall not be unreasonably withheld) and (z) Seller shall have no
obligation hereunder to Purchaser when and if a court of competent
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jurisdiction shall ultimately determine, and such determination shall
have become final and nonappealable, that indemnification of Purchaser in the
manner contemplated hereby is prohibited by applicable law or regulation.
Seller's obligations under this Section 8.1(a) continue in full force and effect
for a period of three (3) years from the Closing Date; provided, however, that
all rights to indemnification in respect of any claim asserted or made within
such period shall continue until the final disposition of such claim.
(b) Purchaser's Indemnity. From and after the Closing Date, Purchaser
hereby indemnifies Seller against and agrees to hold him harmless from, as and
to the fullest extent permitted by applicable law, any and all losses, claims,
damage, liabilities, costs and expense (including, without limitation,
reasonable attorney's fees and expenses, judgments, fines and amounts paid in
settlement) in connection with any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative, in which
Seller is, or is threatened to be made, a party based on, or arising out of, or
pertaining to breaches of Purchaser's representations, warranties and covenants
in this Agreement or due to any actions of Purchaser after the Closing Date
related in any way to any of the transactions contemplated hereby. Seller may
retain counsel reasonably satisfactory to him; provided, however, that (x)
Purchaser shall have the right to assume the defense thereof and upon such
assumption Purchaser shall not be liable to Seller for any legal expenses of
other counsel or any other expenses subsequently incurred by Seller in
connection with the defense thereof, except that if Purchaser elects not to
assume such defense or counsel for Seller reasonably advises Seller that there
are issues which raise conflicts of interest between Seller and Purchaser,
Seller may retain counsel (subject to the following sentence) reasonably
satisfactory to him, and Purchaser shall pay the reasonable fees and expenses of
such counsel for Seller, (y) Purchaser shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld) and (z) Purchaser shall have no obligation hereunder to
Seller when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of Seller in the manner contemplated hereby is prohibited by
applicable law or regulation. Purchaser's obligations under this Section 8.1(b)
continue in full force and effect for a period of three (3) years from the
Closing Date; provided, however, that all rights to indemnification in respect
of any claim asserted or made within such period shall continue until the final
disposition of such claim. Notwithstanding anything to the contrary contained
elsewhere in this Agreement, Purchaser's obligations described in this Section
8.1(b) are limited to its pro rata share (considered among all responsible
parties), and such obligations are several and not joint. For example, if two of
the Purchasers are collectively responsible for any loss, claim, damage,
liability, costs or expense, the pro rata share of each such Purchaser's
obligations under this Section 8.1(b) shall be 50%. Notwithstanding the
foregoing two sentences, in the event that any Purchaser is responsible for any
loss, claim, damage, liability, costs or expense in excess of their pro rata
share, such party will be fully responsible for such excess amount.
ARTICLE 9
9.1 The parties agree that (i) no public release or announcement
(excluding for this purpose, filings with federal or state regulatory agencies)
concerning the transactions contemplated hereby shall be issued by any party and
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(ii) neither party will disclose the existence of this Agreement or the
intention of such party to consummate the transactions contemplated hereby to
any other party prior to the Closing Date, without in either case the prior
written consent of the other party, except as required by law or applicable
regulations.
9.2 Purchaser shall pay all documentary and other transfer taxes, if
any, due as a result of the sale of the Sale Shares in accordance herewith.
Except as set forth in this Section 9.2, each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
Notwithstanding the foregoing, in any action between the parties seeking
enforcement of any of the terms and provisions of this Agreement, the prevailing
party in such action shall be awarded, in addition to damages, injunctive or
other relief, its reasonable costs and expenses, including but not limited to
reasonable attorneys' fees and expenses.
9.3 This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby. It shall not be
amended or modified except by written instrument duly executed by each of the
parties hereto. Any and all previous agreements and understandings between or
among the parties regarding the subject matter hereof, whether written or oral,
are superseded by this Agreement.
9.4 This Agreement may not be assigned prior to the Closing Date by any
party hereto without the prior written consent of the other party. Subject to
the foregoing, all of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of, and be enforceable by the successors
and assigns of Seller and Purchaser.
9.5 Any term or provision of this Agreement may be waived at any time
by the party entitled to the benefit thereof by a written instrument duly
executed by such party.
9.6 This Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the State of California.
9.7 Each of the parties hereto will cooperate with the other and
execute and deliver to the other party hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by the other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
9.8 Any provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.9 This Agreement may be executed in any number of counterparts and
any party hereto may execute any such counterpart, each of which when executed
and delivered shall be deemed to be an original and all of which counterparts
taken together shall constitute one and the same instrument.
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9.10 For purposes of this Agreement and all other documents executed
and delivered pursuant hereto or in connection herewith, facsimile signatures
shall have the same force and effect as originally executed signatures.
9.11 Each of Purchasers and Seller hereby submits to the exclusive
jurisdiction of any court of the State of California and the federal courts of
the United States located in California in respect of the transactions
contemplated by this Agreement, and hereby waives, and agrees not to assert, as
a defense in any action, suit or proceeding for the transactions contemplated
by this Agreement, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that this
Agreement may not be enforced in or by said courts or that its property is
exempt or immune from execution, that the action, suit or proceeding is brought
in an inconvenient forum, or that the venue of the action, suit or proceeding is
improper.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
JOEL W. KOVNER
/s/ Joel W. Kovner
-----------------------------------
PURCHASER:
MUTUAL FINANCIAL SERVICES FUND,
a series of Franklin Mutual
Series Fund Inc., a
Maryland corporation
By: /s/ E.N. Cohernour
-----------------------------------
Name: E.N. Cohernour
Title: General Counsel/Secretary
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EXHIBIT A
MUTUAL FINANCIAL SERVICES FUND
Direct Shares: 6,637
Total Sale Shares: 155,616
Percentage of Retirement Shares: 53.8792%
Maximum Number of Retirement Shares: 6,528
No. of Option
Options Exercise Amount
$12.70 Stock Options 142,559 $ 1,810,499.30
$ 7.71 Stock Options 3,301 $ 25,450.71
$14.22 Stock Options 3,119 $ 44,352.18
Tax Payment $ 240,374.42
Direct Shares Purchase Amount $ 113,658.63
(of which the Margin Payment
equals $54,415.90)
Escrow Fee $ 1,000.00
Total to be wired to Escrow
Agent upon execution of this
Agreement $ 2,235,335.24
Purchase Amount to be Funded Upon
Receipt by Escrow Agent of Option
Shares $ 430,588.76
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EXHIBIT C
---------
PURCHASE AGREEMENT
This AGREEMENT is entered into this 13th day of March, 1998 by and
between CASTLE CREEK CAPITAL PARTNERS FUND I, L.P., a Delaware limited
partnership, ("Purchaser"), and JOEL W. KOVNER, an individual ("Seller").
WITNESSETH
WHEREAS, Seller is the owner of 12,320 shares of the Common Stock (the
"Direct Shares"), (not including 12,116 shares held by Seller's 401(k) and IRA
plans (the "Retirement Shares")) of Professional Bancorp, Inc., a Pennsylvania
corporation (the "Issuer");
WHEREAS, Seller is the owner of options (the "$12.70 Stock Options") to
purchase 264,600 shares of the Common Stock of the Issuer at an exercise price
of $12.70;
WHEREAS, Seller is the owner of options (the "$7.71 Stock Options") to
purchase 6,127 shares of the Common Stock of the Issuer at an exercise price of
$7.71;
WHEREAS, Seller is the owner of options (the "$14.22 Stock Options") to
purchase 5,788 shares of the Common Stock of the Issuer at an exercise price of
$14.22 (collectively, the $12.70 Stock Options, $7.71 Stock Options, and $14.22
Stock Options being referred to herein as the "Stock Options");
WHEREAS, Purchaser has requested that Seller sell to Purchaser his
interest in certain of Seller's Stock Options, to the extent possible, or, in
the alternative to take appropriate actions through exercise of the Stock
Options and assignment to such Purchaser of all of Seller's right, title and
interest in and to the Common Stock issuable upon exercise of said Stock
Options;
WHEREAS, Seller desires to sell and Purchaser desires to purchase the
number of shares of Common Stock of the Issuer enumerated by such Purchaser's
name on Exhibit A hereof (the "Sale Shares"), which include Seller's right,
title and interest in and to the Option Shares (as defined below) upon the terms
and conditions set forth in this Agreement;
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
ARTICLE 1
1.1 Purchase and Sale. On the Closing Date or Dates (as defined
herein), and subject to the terms and conditions of this Agreement, in reliance
upon the representations and warranties made by Seller herein, shall acquire
from Seller, and Seller, in reliance upon the representations and warranties
made by Purchaser herein, shall transfer and convey all his right, title and
interest in and to the Sale Shares to Purchaser.
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1.2 Purchase Price. The purchase price (the "Purchase Price") for the
Sale Shares shall be equal to the number of Sale Shares multiplied by $17.125,
less the Option Exercise Amount and the Tax Payment (each as defined below).
1.3 The Sale Shares. The Sale Shares shall consist of: the Direct
Shares, and all of Seller's right, title and interest in and to the shares
resulting from the exercise of $12.70 Stock Options, the shares resulting from
the exercise of $7.71 Stock Options, and the shares resulting from the exercise
of $14.22 Stock Options, in each case as enumerated by Purchaser's name on
Exhibit A hereof.
1.4 The Retirement Shares: Right of First Refusal. In the event Seller
intends to sell, transfer or otherwise dispose of his beneficial ownership in
any Retirement Shares during the 180 day period following the date of this
Agreement, Seller shall first offer to Purchaser the percentage of such
Retirement Shares enumerated by Purchaser's name on Exhibit A hereof (up to a
maximum of that number of Retirement Shares enumerated by Purchaser's name on
Exhibit A hereof) at the lowest bid then being quoted by the principal market
maker(s) of the Issuer's common stock. Seller's offer to Purchaser in accordance
with this section will terminate twenty four hours after Purchaser receives
Seller's offer and any acceptance by Purchaser must be communicated to Seller
within that time.
ARTICLE 2
2.1 Exercise of Options. Upon the execution of this Agreement by both
parties, (i) Seller shall execute all instruments necessary to exercise Stock
Options to purchase 74,490 shares of the Issuer's Common Stock (the "Option
Instruments") and deliver the Option Instruments to Pillsbury Madison & Sutro
LLP (the "Escrow Agent"); (ii) Purchaser shall wire to the Escrow Agent in
immediately available funds (x) an amount (the "Option Exercise Amount") equal
to the aggregate exercise price of the options being exercised by Seller, as set
forth in Exhibit A hereof and (y) the amount of any required federal, state or
other required withholding amounts under federal or California law or regulation
as mutually agreed upon between Seller and the Issuer and set forth on Exhibit A
hereof (the "Tax Payment"); and (iii) Seller and Purchaser shall instruct the
Escrow Agent to submit to the Issuer the Option Instruments, the Option Exercise
Amount, and the Tax Payment, along with Seller's instructions that the stock
certificate to be issued in connection with the exercise of the Stock Options
(the "Option Shares") be returned forthwith to the Escrow Agent.
2.2 Transfer of the Direct Shares. Upon the execution of this Agreement
by both parties, Seller shall (A) take such steps as are necessary to deliver to
the Escrow Agent the stock certificate or certificates reflecting the Direct
Shares (including instructing the Issuer's transfer agent to certificate
Seller's Direct Shares), along with stock powers duly endorsed by Seller in
blank, signatures medallion guaranteed (the "Direct Shares Transfer
Instruments"); and within two (2) business days after receiving certificate(s)
reflecting the Direct Shares from the Issuer's transfer agent, Seller shall
deliver the Direct Shares Transfer Instruments to the Escrow Agent, or (B)
provide written authorization to the Escrow Agent (the "Direct Shares Transfer
Instructions") to instruct Seller's broker through which Seller's Direct Shares
are held to transfer the Direct Shares to the brokerage account or accounts
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designated by Purchaser (together with the DTC number for each such brokerage
firm and Purchaser's individual account number at such brokerage firm) PROVIDED
that the Escrow Agent shall not be authorized to transmit such instructions
until it receives from the Purchaser an amount equal to the number of Direct
Shares multiplied by $17.125 (pursuant to Section 2.5). In the event the
parties hereto select the procedure set forth in Section 2.2(B), Purchaser
shall promptly notify the Escrow Agent in writing of the brokerage account(s)
to which the Direct Shares shall be transferred.
2.3 Transfer of the Option Shares. Upon the execution of this Agreement
by both parties, the Seller shall deliver to the Escrow Agent stock powers duly
endorsed by Seller in blank, signatures medallion guaranteed, to be attached to
the Option Shares (the "Option Shares Transfer Instruments").
2.4 Closing Date and Location. The closing of the sale and purchase of
the Sale Shares shall take place upon the satisfaction of the conditions
specified in Articles 6 and 7 of this Agreement (the "Closing Date") at the
offices of the Escrow Agent or such location as the parties may mutually agree
in writing. If the closing of the purchase and sale of the Direct Shares and the
Option Shares occur on separate days, as provided for in Section 7.3 hereof, any
reference to "Closing Date" herein which commences a period of time shall mean
the date on which the last of the Direct Shares or the Option Shares transferred
by this Agreement closes.
2.5 Payment to be Made at Closing. Upon confirmation to the Purchaser
by the Escrow Agent that the Escrow Agent has in its possession the Direct
Shares Transfer Instruments (or the Direct Shares Transfer Instructions, as the
case may be) and the Option Shares Transfer Instruments, along with the Option
Shares, the Purchaser shall (i) promptly pay the Purchase Price to the Escrow
Agent in immediately available funds; (ii) instruct the Escrow Agent to release
the Purchase Price to Seller (PROVIDED that in the event that the Escrow Agent
has in its possession Direct Shares Transfer Instructions rather than Direct
Shares Transfer Instruments, (x) the Escrow Agent shall wire the minimum amount
(the "Margin Payment") required by Seller's broker in order to transfer the
Direct Shares set forth on Exhibit A hereof to Purchaser's brokerage account,
and (y) the release to the Seller of the payment for the Direct Shares remaining
after the payment of the Margin Payment described above shall be conditioned
upon Purchaser confirming to the Escrow Agent receipt of the Direct Shares in
Purchaser's brokerage account or accounts specified in Section 2.2 hereof); and
(iii) send to the Escrow Agent instructions addressed to the Issuer (the
"Purchaser Instructions") directing the Issuer to reregister and deliver the
Sale Shares (or Option Shares if the procedure set forth in Section 2.2(B) is
utilized) in accordance with the Purchaser Instructions.
2.6 Documents to be Delivered after Closing. Upon receipt by the Escrow
Agent of the Purchase Price, the Escrow Agent shall deliver to the Issuer's
transfer agent (i) the stock certificate or certificates reflecting the Direct
Shares, along with the Direct Shares Transfer Instruments (except if the
procedure set forth in Section 2.2(B) is selected by the parties); (ii) the
Option Shares and the Option Shares Transfer Instruments; and (iii) the
Purchaser Instructions.
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ARTICLE 3
Representations and Warranties of Seller. Seller represents and
warrants to Purchaser as follows:
3.1 Seller has the power, authority and legal right to execute, deliver
and perform this Agreement and all agreements, documents and instruments in
connection therewith. This Agreement has been, and the other agreements,
documents and instruments delivered by Seller in accordance with the provisions
hereof (the "Seller's Documents") have been, duly executed and delivered by
Seller, and each of this Agreement and Seller's Documents constitutes the legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with its terms.
3.2 Neither the execution and delivery of this Agreement nor the
compliance with the terms and provisions hereof by Seller will result in the
breach of any state or federal law, rule or regulation applicable to Seller, or
any administrative or court order or decree, or any agreement or other
instrument to which Seller is a party, or by which Seller is or may be bound, or
constitute an event of default thereunder, or with the lapse of time or the
giving of notice or both, will constitute an event of default thereunder by
Seller.
3.3 Seller has good and marketable title to the Direct Shares, free of
any lien, claim, encumbrance or restriction and Seller will transfer, sell and
convey at Closing all right, title and interest he has in and to the Option
Shares. Seller is entitled to sell the Direct Shares and Option Shares to
Purchaser as provided in this Agreement and will deliver to Purchaser on the
Closing Date, the Direct Shares and will assign to Purchaser all of the Seller's
right, title and interest in and to the Option Shares free of any lien, claim or
restriction of any kind; provided, however, that Seller shall not be responsible
for or obligated to cause Issuer to record Purchaser on its stock register or
otherwise to cause Issuer or Issuer's transfer agent to record the stock
transfer contemplated hereunder or to issue certificates representing the Sale
Shares. Subject to the foregoing, Seller shall transfer to Purchaser good and
valid title to the Sale Shares. No other person has any right or option to
acquire, or any direct or indirect interest, right or claim against, any of the
Sale Shares.
3.4 Except for Seller's financial advisor (whose name has been provided
to Purchaser), no agent, broker, investment banker or other person or firm
acting on behalf of or under the authority of Seller is or will be entitled to
any broker's or finder's fee or any other commission or similar fee, directly or
indirectly, in connection with the transactions contemplated by this Agreement.
3.5 To Seller's knowledge, as of the date hereof, Seller is not an
affiliate of the Issuer within the meaning of Rule 144 under the Securities Act
of 1933, as amended.
ARTICLE 4
Representations and Warranties of Purchaser. Purchaser represents and
warrants to Seller as follows:
4.1 Purchaser is duly organized, and validly existing and in good
standing under the laws of the state or jurisdiction of its organization.
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Purchaser has the power, authority and legal right to execute, deliver and
perform this Agreement. This Agreement has been duly executed and delivered on
behalf of Purchaser, and this Agreement constitutes the legal, valid and
binding obligations of Purchaser, enforceable against Purchaser in accordance
with its terms. The person signing this Agreement on behalf of Purchaser has
been duly authorized by Purchaser and has full power and authority to do so.
4.2 Neither the execution and delivery of this Agreement nor the
compliance with the terms and provisions hereof by Purchaser will result in a
breach of the Bank Holding Company Act of 1956, as amended, the Change in Bank
Control Act of 1978, as amended, or any other federal or state law, rule or
regulation applicable to Purchaser or any of Purchaser's affiliates, or any
administrative or court order or decree, or any agreement or other instrument to
which Purchaser or any of Purchaser's affiliates is a party, or by which
Purchaser or any of Purchaser's affiliates is or may be bound, or constitute an
event of default thereunder, or with the lapse of time or the giving of notice
or both, will constitute an event of default thereunder by Purchaser.
4.3 Purchaser is not acquiring the Sale Shares as a member of any
group, or in concert with any other person or entity, and its determination to
purchase the Sale Shares is independent of any other person or entity's decision
to acquire any item of value from Seller.
4.4 (a) Purchaser understands that the Sale Shares being acquired
hereunder are being offered and sold pursuant to an exemption from registration
contained in the Securities Act and the California Corporate Securities Law
based in part upon the representations of Purchaser contained herein.
(b) Purchaser knows of no public solicitation or advertisement of an
offer in connection with the proposed sale of the Sale Shares.
(c) Purchaser is acquiring the Sale Shares for its own account for
investment and not as a nominee and not with a view to the distribution thereof.
Purchaser understands that it must bear the economic risk of this investment.
(d) Purchaser has the capacity to protect its own interests in
connection with the purchase of the Sale Shares hereunder and has the ability to
bear the economic risk (including the risk of total loss) of its investment.
(e) Purchaser will not make any sale, transfer or other disposition of
the Sale Shares in violation of the Securities Act or the Exchange Act, or the
rules of the Securities and Exchange Commission (the "SEC") promulgated
thereunder.
(f) Purchaser acknowledges that it has had the opportunity to review
with its own legal counsel this Agreement, the exhibits and the schedules
attached hereto and the transactions contemplated by this Agreement. Purchaser
is relying solely on such counsel with respect to legal advice, and not on any
statement or representations of Seller or any of its agents, with respect to
this investment or the transactions contemplated by this Agreement.
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(g) Purchaser acknowledges that it understands that Seller is not an
officer or director or otherwise affiliated with the Issuer in any way.
Purchaser further acknowledges that it is making the decision to purchase the
Sale Shares from Seller based solely on Purchaser's independent review of
available information concerning the Issuer, including such information made
available to the public as a result of the Issuer's filings with the SEC
pursuant to the Exchange Act. Purchaser shall not hold Seller responsible for
any liabilities or damages that Purchaser may incur, or losses on its investment
hereby that Purchaser may suffer, as a result of any inaccuracies or omissions
contained in any such information that Purchaser may have obtained by, from or
concerning the Issuer.
ARTICLE 5
5.1 Survival of Representations. All representations, warranties,
covenants and agreements made by the parties in this Agreement shall survive for
three (3) years after the Closing Date.
ARTICLE 6
Conditions to Closing by Seller. The obligations of Seller under this
Agreement are subject to the fulfillment of the following conditions precedent
at or before the Closing Date; provided, however, that Seller may conditionally
or unconditionally waive one or more of those conditions:
6.1 Each of the representations and warranties of Purchaser contained
in this Agreement shall be true in all material respects as of the Closing Date
as if made on such date.
6.2 Purchaser shall have performed, satisfied and complied with each of
the covenants, terms and conditions required by this Agreement to be performed,
satisfied or complied with by Purchaser on or before the Closing Date.
6.3 The execution of an Escrow Agreement among the Purchaser, Seller,
and the Escrow Agent mutually satisfactory to each party.
6.4 The execution of such additional documents as counsel for Seller
shall reasonably request in order to effectuate the purpose and intent of this
Agreement.
ARTICLE 7
Conditions to Closing by Purchaser. The obligations of Purchaser to
purchase the Sale Shares under this Agreement are subject to the fulfillment of
the following conditions precedent at or before the Closing Date; provided,
however, that Purchaser may conditionally or unconditionally waive one or more
of these conditions:
7.1 Each of the representations and warranties of Seller contained in
this Agreement shall be true in all material respects as of the Closing Date as
if made on such date.
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7.2 Seller shall have performed, satisfied and complied with each of
the covenants, terms and conditions required by this Agreement to be performed,
satisfied or complied with by Seller on or before the Closing Date.
7.3 Seller shall deliver to Purchaser on the Closing Date all documents
required to be delivered pursuant to Sections 2.2 and 2.3 of this Agreement;
PROVIDED that the closings of the transfer of the Direct Shares and the Option
Shares need not occur on the same day, provided further that the conditions
pertinent to each are satisfied.
7.4 The execution of such additional documents as counsel for Purchaser
shall reasonably request in order to effectuate the purpose and intent of this
Agreement.
7.5 The execution of an Escrow Agreement among the Purchaser, Seller,
and the Escrow Agent mutually satisfactory to each party.
ARTICLE 8
8.1 Indemnification.
(a) Seller's Indemnity. From and after the Closing Date, Seller hereby
indemnifies Purchaser against and agrees to hold it harmless from, as and to the
fullest extent permitted by applicable law, any and all losses, claims, damage,
liabilities, costs and expense (including, without limitation, reasonable
attorney's fees and expenses, judgments, fines and amounts paid in settlement)
in connection with any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, in which Purchaser is,
or is threatened to be made, a party based on, or arising out of, or pertaining
to breaches of Seller's representations, warranties and covenants in this
Agreement or due to any actions of Seller after the Closing Date related in any
way to any of the transactions contemplated hereby; provided, that Purchaser
acknowledges that Seller may have claims against Issuer unrelated to this
Agreement and Seller's actions in furtherance of these claims, if any, shall not
be subject to this Section 8.1(a). Purchaser may retain counsel reasonably
satisfactory to it; provided, however, that (x) Seller shall have the right to
assume the defense thereof and upon such assumption Seller shall not be liable
to Purchaser for any legal expenses of other counsel or any other expenses
subsequently incurred by Purchaser in connection with the defense thereof,
except that if Seller elects not to assume such defense or counsel for Purchaser
reasonably advises Purchaser that there are issues which raise conflicts of
interest between Seller and Purchaser, Purchaser may retain counsel (subject to
the following sentence) reasonably satisfactory to it, and Seller shall pay the
reasonable fees and expenses of such counsel for Purchaser, (y) Seller shall not
be liable for any settlement effected without his prior written consent (which
consent shall not be unreasonably withheld) and (z) Seller shall have no
obligation hereunder to Purchaser when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of Purchaser in the manner contemplated
hereby is prohibited by applicable law or regulation. Seller's obligations under
this Section 8.1(a) continue in full force and effect for a period of three (3)
years from the Closing Date; provided, however, that all rights to
indemnification in respect of any claim asserted or made within such period
shall continue until the final disposition of such claim.
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(b) Purchaser's Indemnity. From and after the Closing Date, Purchaser
hereby indemnifies Seller against and agrees to hold him harmless from, as and
to the fullest extent permitted by applicable law, any and all losses, claims,
damage, liabilities, costs and expense (including, without limitation,
reasonable attorney's fees and expenses, judgments, fines and amounts paid in
settlement) in connection with any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative, in which
Seller is, or is threatened to be made, a party based on, or arising out of, or
pertaining to breaches of Purchaser's representations, warranties and covenants
in this Agreement or due to any actions of Purchaser after the Closing Date
related in any way to any of the transactions contemplated hereby. Seller may
retain counsel reasonably satisfactory to him; provided, however, that (x)
Purchaser shall have the right to assume the defense thereof and upon such
assumption Purchaser shall not be liable to Seller for any legal expenses of
other counsel or any other expenses subsequently incurred by Seller in
connection with the defense thereof, except that if Purchaser elects not to
assume such defense or counsel for Seller reasonably advises Seller that there
are issues which raise conflicts of interest between Seller and Purchaser,
Seller may retain counsel (subject to the following sentence) reasonably
satisfactory to him, and Purchaser shall pay the reasonable fees and expenses of
such counsel for Seller, (y) Purchaser shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld) and (z) Purchaser shall have no obligation hereunder to
Seller when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of Seller in the manner contemplated hereby is prohibited by
applicable law or regulation. Purchaser's obligations under this Section 8.1(b)
continue in full force and effect for a period of three (3) years from the
Closing Date; provided, however, that all rights to indemnification in respect
of any claim asserted or made within such period shall continue until the final
disposition of such claim. Notwithstanding anything to the contrary contained
elsewhere in this Agreement, Purchaser's obligations described in this Section
8.1(b) are limited to its pro rata share (considered among all responsible
parties), and such obligations are several and not joint. For example, if two of
the Purchasers are collectively responsible for any loss, claim, damage,
liability, costs or expense, the pro rata share of each such Purchaser's
obligations under this Section 8.1(b) shall be 50%. Notwithstanding the
foregoing two sentences, in the event that any Purchaser is responsible for any
loss, claim, damage, liability, costs or expense in excess of their pro rata
share, such party will be fully responsible for such excess amount.
ARTICLE 9
9.1 The parties agree that (i) no public release or announcement
(excluding for this purpose, filings with federal or state regulatory agencies)
concerning the transactions contemplated hereby shall be issued by any party and
(ii) neither party will disclose the existence of this Agreement or the
intention of such party to consummate the transactions contemplated hereby to
any other party prior to the Closing Date, without in either case the prior
written consent of the other party, except as required by law or applicable
regulations.
9.2 Purchaser shall pay all documentary and other transfer taxes, if
any, due as a result of the sale of the Sale Shares in accordance herewith.
Except as set forth in this Section 9.2, each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying
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out this Agreement and the consummation of the transactions contemplated hereby.
Notwithstanding the foregoing, in any action between the parties seeking
enforcement of any of the terms and provisions of this Agreement, the prevailing
party in such action shall be awarded, in addition to damages, injunctive or
other relief, its reasonable costs and expenses, including but not limited to
reasonable attorneys' fees and expenses.
9.3 This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby. It shall not be
amended or modified except by written instrument duly executed by each of the
parties hereto. Any and all previous agreements and understandings between or
among the parties regarding the subject matter hereof, whether written or oral,
are superseded by this Agreement.
9.4 This Agreement may not be assigned prior to the Closing Date by any
party hereto without the prior written consent of the other party. Subject to
the foregoing, all of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of, and be enforceable by the successors
and assigns of Seller and Purchaser.
9.5 Any term or provision of this Agreement may be waived at any time
by the party entitled to the benefit thereof by a written instrument duly
executed by such party.
9.6 This Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the State of California.
9.7 Each of the parties hereto will cooperate with the other and
execute and deliver to the other party hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by the other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
9.8 Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
9.9 This Agreement may be executed in any number of counterparts and
any party hereto may execute any such counterpart, each of which when executed
and delivered shall be deemed to be an original and all of which counterparts
taken together shall constitute one and the same instrument.
9.10 For purposes of this Agreement and all other documents executed
and delivered pursuant hereto or in connection herewith, facsimile signatures
shall have the same force and effect as originally executed signatures.
9.11 Each of Purchasers and Seller hereby submits to the exclusive
jurisdiction of any court of the State of California and the federal courts of
the United States located in California in respect of the transactions
contemplated by this Agreement, and hereby waives, and agrees not
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to assert, as a defense in any action, suit or proceeding for the transactions
contemplated by this Agreement, that it is not subject thereto or that such
action, suit or proceeding may not be brought or is not maintainable in said
courts or that this Agreement may not be enforced in or by said courts or that
its property is exempt or immune from execution, that the action, suit or
proceeding is brought in an inconvenient forum, or that the venue of the action,
suit or proceeding is improper.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
JOEL W. KOVNER
/s/ Joel W. Kovner
-----------------------------------
PURCHASER:
CASTLE CREEK CAPITAL PARTNERS FUND I, L.P.,
a Delaware limited partnership
By: /s/ William J. Ruh
-----------------------------------
Name: William J. Ruh
Title: Senior Vice President
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EXHIBIT A
CASTLE CREEK CAPITAL PARTNERS FUND I, L.P.
Direct Shares: 3,318
Total Sale Shares: 77,808
Percentage of Retirement Shares: 26.9396%
Maximum Number of Retirement Shares: 3,264
No. of Option
Options Exercise Amount
$12.70 Stock Options 71,280 $ 905,256.00
$ 7.71 Stock Options 1,651 $ 12,729.21
$14.22 Stock Options 1,559 $ 22,168.98
Tax Payment $ 120,187.21
Direct Shares Purchase Amount $ 56,820.75
(of which the Margin Payment
equals $27,207.95)
Escrow Fee $ 1,000.00
Total to be wired to Escrow
Agent upon execution of this
Agreement $ 1,118,162.15
Purchase Amount to be Funded Upon
Receipt by Escrow Agent of Option
Shares $ 215,299.85
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EXHIBIT D
---------
ADVISORY ENGAGEMENT AND
TRANSACTIONAL EXECUTION AGREEMENT
Dated: October 10, 1997
Financial Institutional Partners, LLC ("FIP") and Joel W. Kovner
("JWK") hereby enter into the following Advisory Engagement and Transactional
Execution Agreement ("The Agreement"):
A. Basic Transaction and Representation
1. JWK desires to sell his options and/or underlying stock and directly
owned stock in Professional Bancorp, Inc. (ASE stock symbol: MDB).
2. JWK desires to engage an investment banker to evaluate his strategic
options for the orderly sale of his options and/or shares in MDB.
3. JWK also desires to engage the same investment banking firm to execute
said sale.
4. JWK desires the same investment banking firm to identify the potential
buyers of his MDB options and/or stock.
5. JWK desires for the investment banking firm to negotiate the pricing
and terms of the execution for JWK, both subject to JWK approval.
B. Acknowledgments
1. FIP acknowledges that JWK has been approached by representatives of
Hovde Financial and/or representatives of Hovde Financial's investment
fund, and that JWK has negotiated terms for a potential sale of the JWK
options and/or stock to Hovde Financial or its funds.
2. FIP acknowledges that JWK has been approached by representatives of
City National Bank and that JWK has negotiated terms for a potential
sale of the JWK options and/or stock to City National Bank.
3. FIP agrees that should a transaction transpire between the parties in
Paragraphs B.1 and/or B.2 of this Agreement, FIP would not be entitled
to any compensation.
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C. Terms and Termination
1. JWK desires to engage FIP to act on his behalf in all of the previously
listed capacities for a period of THIRTY-ONE (31) DAYS commencing with
the date of the signing of this Agreement.
2. The execution of this Agreement for additional terms of THIRTY-ONE (31)
DAYS will be based upon mutual agreement with TEN (10) DAYS prior
notice.
3. JWK agrees that this Engagement and Execution Agreement between JWK and
FIP represents an exclusivity, non-circumvention agreement on the part
of JWK to transact through, and be represented by, only FIP, other than
should a transaction actually transpire with any of the parties in
Paragraphs B.1 and/or B.2 of this Agreement.
4. JWK agrees that should any other party approach him during the term of
this Agreement, he will refer that party to FIP.
5. JWK also agrees that should a transaction transpire during a period of
time, not to exceed SIX (6) MONTHS, but after the term of this
Agreement, with any parties or contacts that FIP introduces to JWK,
that FIP will still be compensated in accordance with the terms of the
compensation section of this Agreement.
D. Compensation
1. JWK agrees to pay FIP upon the successful sale of the JWK options
and/or stock a fee representing FIVE PERCENT (5%) of the sale price
proceeds received by JWK up to an amount equal to ONE MILLION EIGHT
HUNDRED THOUSAND DOLLARS ($1,800,000.00). If FIP should provide an
execution that brings JWK proceeds in excess of ONE MILLION EIGHT
HUNDRED THOUSAND DOLLARS ($1,800,000.00), the fee percentage paid to
FIP shall be SEVEN PERCENT (7%) of all of those proceeds. Those fees
shall be paid in full promptly on the settlement date of the
transaction.
E. Confidentiality
The term of this Agreement shall remain confidential, and both parties shall be
bound by said confidentiality.
F. Assignment and Miscellaneous Provisions
1. This Agreement shall be binding upon and shall inure to the benefit of
the respective successors and assigns of JWK and FIP. This Agreement
shall not be transferred or assigned by either party without the express
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written approval of the other party. This Agreement shall be governed
by and constructed in accordance with the laws of the State of
California.
2. The persons executing this Agreement on behalf of JWK and FIP represent
and warrant that they are duly authorized to execute the same.
FIP: JWK:
FINANCIAL INSTITUTIONAL PARTNERS, LLC, JOEL W. KOVNER
a California limited liability company
/s/ Stephen H. Gordon /s/ Joel W. Kovner
By: ----------------------------------- By: -------------------------------
Stephen H. Gordon Joel W. Kovner
Principal
/s/ Fredric J. Forster
By: -----------------------------------
Fredric J. Forster
Principal
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