EXHIBIT 10.1
THE UNITS (AND UNDERLYING SECURITIES) WHICH
ARE THE SUBJECT OF THIS SUBSCRIPTION AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THE UNITS (AND UNDERLYING
SECURITIES) ACQUIRED BY INVESTORS MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND SUCH STATE LAWS AS MAY
BE APPLICABLE, OR DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
AN INVESTMENT IN THE UNITS IS SUBJECT TO
CERTAIN RISKS. SEE “RISK FACTORS” IN THE
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM, DATED AUGUST 7,
2008.
This Subscription
Agreement, the Confidential Private Placement Memorandum and the
Exhibits attached thereto are highly confidential. This
Subscription Agreement does not constitute an offer to any person
other than the subscriber named below or to the public generally to
subscribe for or otherwise acquire any Units. No one is
permitted to distribute this Subscription Agreement, the
Confidential Private Placement Memorandum and the Exhibits attached
thereto to any person other than the subscriber and those persons,
if any, retained to advise such subscriber, and any disclosure of
any of the contents hereof without our prior written consent is
prohibited. Each prospective purchaser, by accepting
delivery of this Subscription Agreement, the Confidential Private
Placement Memorandum and the Exhibits attached thereto, agrees to
the foregoing and to make no photocopies of this Subscription
Agreement or the Confidential Private Placement Memorandum and the
Exhibits attached thereto or any documents delivered in connection
herewith and if the subscriber does not purchase any Units, or the
offering is terminated, to return this Subscription Agreement and
the Confidential Private Placement Memorandum and the Exhibits
attached thereto and all such documents delivered herewith to
us.
Each person
receiving this Subscription Agreement and the Confidential Private
Placement and the Exhibits attached thereto, prior to delivery
hereof, has agreed, and its acceptance hereof constitutes its
further agreement, that it will hold the information contained or
referred to herein and the transactions contemplated hereby in
confidence.
FOR FLORIDA
RESIDENTS ONLY: PURSUANT TO SECTION 517.061(11)(A)(5) OF THE
FLORIDA SECURITIES ACT, WHEN SALES ARE MADE TO FIVE OR MORE PERSONS
IN FLORIDA, ANY SALE IN THE STATE OF FLORIDA IS VOIDABLE BY THE
PURCHASER IN SUCH SALE EITHER WITHIN THREE (3) DAYS AFTER THE FIRST
TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN
AGENT OF THE ISSUER OR AN ESCROW AGENT OR WITHIN THREE (3) DAYS
AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH
PURCHASER, WHICHEVER OCCURS LATER. EACH FLORIDA RESIDENT
WHO SUBSCRIBES FOR THE PURCHASE OF UNITS HAS THE RIGHT, PURSUANT TO
SECTION 517.061(11)(A)(5) OF THE FLORIDA SECURITIES ACT, TO
WITHDRAW HIS, HER OR ITS SUBSCRIPTION FOR THE PURCHASE AND RECEIVE
A FULL REFUND OF ALL MONIES PAID WITHIN THREE (3) BUSINESS DAYS
AFTER THE EXECUTION OF THE SUBSCRIPTION AGREEMENT OR PAYMENT FOR
THE PURCHASE HAS BEEN MADE, WHICHEVER IS
LATER. WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY
TO ANY PERSON. TO ACCOMPLISH THIS WITHDRAWAL , A
SUBSCRIBER NEED ONLY SEND A LETTER OR TELEGRAM TO THE COMPANY
C/O THOMAS BEVIVINO, EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER, SEVERN BANCORP, INC., 200 WESTGATE CIRCLE, SUITE
200, ANNAPOLIS, MARYLAND 21401, INDICATING HIS, HER
OR ITS INTENTION TO WITHDRAW.
SUCH LETTER OR
TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE
AFOREMENTIONED THIRD BUSINESS DAY. IT IS ADVISABLE TO
SEND SUCH LETTER BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO
ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME IT WAS
MAILED. IF THE REQUEST IS MADE ORALLY, IN PERSON OR BY
TELEPHONE TO AN OFFICER OF THE COMPANY, A WRITTEN CONFIRMATION THAT
THE REQUEST HAS BEEN RECEIVED SHOULD BE REQUESTED.
SUBSCRIPTION AGREEMENT
Parties
: Severn
Bancorp, Inc.
a Maryland
Corporation (the “ Company ”)
200 Westgate
Circle
Annapolis, MD
21401
__________________________ (the “
Subscriber ”)
(Print Name)
__________________________
(Street Address)
__________________________
(City, State, Zip Code)
Date:
,
2008
BACKGROUND
The Company is offering to sell a minimum of
100 Units and a maximum of 250 Units in a private placement (the
“ Offering ”). Each Unit is being
offered at a purchase price of $100,000 per Unit and consists of
6,250 shares of Series A Convertible Preferred Stock, par value
$.01 per share, of the Company (the “ Preferred Stock
”) with an aggregate liquidation preference of $50,000, and a
redeemable Subordinated Note in the original principal amount of
$50,000 (“ Subordinated Note ”). The
Subscriber desires to purchase, and subject to acceptance by the
Company, the Company desires to sell, the number of Units
designated on the Signature Page of this Agreement, upon the terms
and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual
promises and covenants contained herein and for the other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
Subject to the terms and conditions set forth
herein, the Subscriber hereby subscribes for and agrees to purchase
the number of Units designated on the Signature Page of this
Agreement at the purchase price per Unit of One Hundred Thousand
Dollars ($100,000) for total amount as set forth on the signature
page of this Agreement (the “ Subscription Price
”). In payment of the Subscription Price,
Subscriber encloses herewith a check, bank draft or money order
payable to the order of “Severn Bancorp, Inc.” in the
amount of the Subscription Price.
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SUBSCRIPTION IRREVOCABLE BY SUBSCRIBER BUT
SUBJECT TO ACCEPTANCE OR REJECTION BY THE COMPANY.
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(a) Except as to
Florida subscribers as described above, this
Subscription Agreement is not, and shall not be, revocable by
Subscriber.
(b) The Subscriber
understands and agrees that: (i) this subscription shall not be
binding upon the Company until accepted by the Company, (ii) the
Company reserves the right to reject the Subscriber’s
subscription for any reason or no reason, (iii) the Company may
accept this subscription in whole or in part and (iv) the Company
reserves the right, in its sole discretion, to accept subscriptions
for a partial Unit from any subscriber in the
Offering. The Subscriber shall not have any recourse
against the Company if the subscription is rejected in whole or in
part. If the subscription is rejected, the Company will
promptly return to Subscriber, without deduction or interest, the
rejected Subscription Price.
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SUBSCRIBER’S REPRESENTATIONS AND
WARRANTIES.
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Subscriber hereby
represents and warrants that:
(a) Subscriber has
received, has carefully read and understands the Confidential
Private Placement Memorandum, dated August 7, 2008 and the Exhibits
attached thereto (the “Memorandum”),
including without limitation the Form of Subordinated Note attached
as Exhibit H to the Memorandum (“Form of Subordinated
Note”) and Form of Articles of Amendment attached as Exhibit
J to the Memorandum (“Form of Articles of
Amendment”). Subscriber has based his, her or its
decision to invest on the information contained in the Memorandum,
has not been furnished with any other offering literature or
prospectus and has not received any representations or warranties
from the Company, the officers or directors of the Company or any
agent of any of the foregoing other than as set forth herein or in
the Memorandum.
(b) Subscriber has
such knowledge and experience in financial and business matters and
that Subscriber is fully capable of evaluating the merits and risks
of the investment in the Company;
(c) Subscriber is
acquiring the Units (and underlying securities) for
Subscriber’s own account, not for the account of any other
person or entity, and for investment and not with a view to resale
or distribution and no other person or entity has a direct or
indirect beneficial ownership interest in the Units (and underlying
securities);
(d) Subscriber can
bear the economic risk of losing Subscriber’s entire
investment;
(e) By reason of
Subscriber’s business or financial experience, Subscriber has
the capacity and has taken all steps necessary to protect the
Subscriber’s own interests in connection with an investment
in the Units (and underlying securities);
(f) Subscriber has
not paid or given any commission or other remuneration in
connection with the purchase of the Units (and underlying
securities);
(g) The Units (and
underlying securities) were not offered to the Subscriber by means
of any general solicitation or general advertising by the Company
or any person acting on its behalf, including, but not limited to:
(i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast
over television or radio; or (ii) any seminar or meeting to which
the Subscriber was invited by any general solicitation or general
advertising;
(h) Subscriber (i)
is at least twenty one (21) years of age (if the Subscriber is a
natural person, (ii) maintains his, her or its residence or
principal place of business (as applicable) (and is not a transient
or temporary resident) at the address shown on page 2 hereto and
has no present intention of becoming a resident or changing its
principal place of business to another state or jurisdiction, (iii)
has adequate means of providing for his or her current needs and
personal contingencies (if the Subscriber is a natural person),
(iv) has no need for liquidity in the investment in the Units (and
underlying securities), (v) has investments in and commitments to
non liquid investments which are, and after the purchase of the
Units (and underlying securities) will be, reasonable in relation
to his, her or its net worth and current needs, and (vi) is able to
bear the economic risk of losing his, her or its entire investment
in the Units (and underlying securities). The Subscriber
acknowledges and agrees that no offer of the Units was made to the
Subscriber in any state other than such state of residence or
principal place of business;
(i)
Subscriber’s overall commitment to investments which are not
readily marketable is not disproportionate to Subscriber’s
net worth, Subscriber’s investment in the Units (and
underlying securities) will not cause such overall commitment to
become excessive, and the investment is suitable for Subscriber
when viewed in light of Subscriber’s other securities
holdings and Subscriber’s financial situation and needs;
(j) Subscriber has
adequate means of providing for Subscriber’s current needs
and contingencies;
(k) Subscriber has
evaluated all the risks of investment in the Company, including
without limitation those set forth under “Risk Factors”
in the Memorandum, in Part I, Item 1.A "Risk Factors" in the
Company's Annual Report on Form 10-K included as Exhibit A to the
Memorandum and in Part II, Item 1.A "Risk Factors" in the
Company’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2008 included as Exhibit C to the Memorandum;
(l) Subscriber has
experience in evaluating and making investment decisions of this
kind;
(m) Subscriber has a
reasonable understanding of the business in which the Company is
engaged;
(n) Subscriber is an
“accredited investor” as defined in Rule 501 of
Regulation D under the Securities Act of 1933, as amended (the
“ Securities Act ”) as indicated on the
signature page hereto;
(o) Subscriber
otherwise meets any special suitability standards applicable to the
Subscriber’s state of residence or principal place of
business (as applicable);
(p) Subscriber has
been furnished with all additional documents and i
