Item 1.01 Entry Into a Material Definitive Agreement.
Broadway Financial Corporation (the "Company") entered into stock purchase
agreements (the "Stock Purchase Agreements") with Cedars-Sinai Medical Center
("Cedars-Sinai"), Banc of America Strategic Investments Corporation, a wholly
owned subsidiary of Bank of America Corporation ("BofA") and Wells Fargo Central
Pacific Holdings, Inc., a wholly owned subsidiary of Wells Fargo & Company
("Wells Fargo" and together with Cedars-Sinai and BofA, the "Investors") on
November 23, 2020, November 23, 2020 and November 24, 2020, respectively,
pursuant to which the Company has agreed to sell and such Investors have
severally agreed to purchase shares of the Company's common stock in individual
amounts that aggregate to up to 4,639,888 shares of Class A Common Stock of the
Company, par value $0.01 per share ("Class A Common Stock") and 1,587,162 shares
of Class C Common Stock of the Company, par value $0.01 per share ("Class C
Common Stock", and together with the Class A Common Stock, the "Common Stock"),
in each case, structured as non-controlling equity investments and subject to
adjustment in certain circumstances, at a price of $1.78 per share payable in
cash at the closing of the sales of stock, for an aggregate purchase price of
$11,084,149.
The Company's existing classes of voting common stock and non-voting common
stock will be renamed as Class A Common Stock and Class C Common Stock,
respectively, in connection with the consummation of the merger of CFBanc
Corporation with and into the Company, in which the Company will be the
surviving corporation, pursuant to the previously reported Agreement and Plan of
Merger, dated August 25, 2020, entered into between the Company and CFBanc
Corporation (the "Merger").
The consummation of each of the sales of shares of Common Stock to the Investors
under the respective Stock Purchase Agreements is subject to the satisfaction of
certain closing conditions, including (i) the consummation of the Merger, which
is subject to the satisfactions of various conditions including stockholder and
regulatory approval, among others, (ii) receipt of any stockholder approvals
required under applicable law or the NASDAQ Listing Rules and (iii) certain
other customary closing conditions. There can be no assurance that all of such
conditions will be satisfied. The respective stock purchase obligations of the
individual Investors are not conditioned on the completion of sales of Common
Stock to any other Investor.
The Stock Purchase Agreements contain customary representations and warranties
of the Company and the Investors. The Stock Purchase Agreements also contain
certain indemnification obligations of each party with respect to breaches of
representations, warranties and covenants and certain other specified matters.
The Company may enter into additional stock purchase agreements with other
investors for the sale of up to a maximum of 12,720,000 shares of Common Stock,
including the 6,227,050 shares covered by the Stock Purchase Agreements reported
herein, for the same price per share and on similar terms as the Stock Purchase
Agreements entered into with the Investors.
The above description of the Stock Purchase Agreements has been included to
provide investors and security holders with information regarding the terms of
the Stock Purchase Agreements. It is not intended to provide any other factual
information about the Company, the Investors or their respective subsidiaries
and affiliates.
Item 3.02 Unregistered Sales of Equity Securities.
As described in Item 1.01 above, on November 23, 2020 and November 24, 2020, the
Company entered into Stock Purchase Agreements with the Investors pursuant to
which the Company has agreed to sell and such Investors have severally agreed to
purchase 4,639,888 shares of Class A Common Stock and 1,587,162 shares of Class
C Common Stock, at a price of $1.78 per share, for an aggregate purchase price
of $11,084,149. Such Stock Purchase Agreements were individually negotiated with
the respective Investors and the sales of shares of Common Stock pursuant
thereto will be made in private placement transactions that are exempt from the
registration requirements of the Securities Act of 1933, as amended, pursuant to
Section 4(a)(2) thereof or Rule 506 of Regulation D promulgated thereunder.
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The Company expects to pay placement fees of an aggregate amount of
approximately $221,683 to Raymond James & Associates, Inc. and Keefe, Bruyette &
Woods, Inc. in connection with the transaction. The Class C Common Stock is
subject to restrictions on transfer (summarized below) and will convert
automatically into an equal number of shares of Class A Common Stock in the
event of permitted transfers in accordance with the same terms applicable to the
Company's currently outstanding non-voting common stock, par value $0.01 per
share, as set forth in the Company's certificate of incorporation.
The Class C Common Stock is only transferrable by the initial holder thereof or
an affiliate of the initial holder (i) to an affiliate of the initial holder,
(ii) to the Company, (iii) in a widespread public distribution, (iv) in a
transfer in which no transferee (or group of associated transferees) would
receive 2% or more of any class of voting securities of the Company, or (v) to a
transferee that would control more than 50% of the voting securities of the
Company without any transfer from the initial holder or any affiliate of the
initial holder. Pursuant to the Company's certificate of incorporation, the
Class C Common Stock may be made subject to additional restrictions on transfer
imposed by the Company if necessary to preserve the non-voting classification of
the Class C Common Stock for bank regulatory purposes.
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