UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549

 

 

SCHEDULE 13D

 

Under the Securities Exchange Act of 1934
(Amendment No.     )*

 

 

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

(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 that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1 (e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

 

* 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 (the “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).

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See §240.13d-7 for other parties to whom copies are to be sent.

 

 

 

(1)           The information set forth in Items 4, 5 and 6 of this statement on Schedule 13D is incorporated herein by reference.

 

2

 

 

(1)           The information set forth in Items 4, 5 and 6 of this statement on Schedule 13D is incorporated herein by reference.

 

3

 

 

(1)           The information set forth in Items 4, 5 and 6 of this statement on Schedule 13D is incorporated herein by reference.

 

4

 

 

(1)           The information set forth in Items 4, 5 and 6 of this statement on Schedule 13D is incorporated herein by reference.

 

5

 

 

(1)           The information set forth in Items 4, 5 and 6 of this statement on Schedule 13D is incorporated herein by reference.

 

6

 

 

(1)           The information set forth in Items 4, 5 and 6 of this statement on Schedule 13D is incorporated herein by reference.

 

7

 

Item 1.                   Security and Issuer

 

The title and class of equity security to which this statement on Schedule 13D relates is the common stock, par value $1.00 per share, of The Bancorp, Inc. (the “Company”).  The address of the principal executive office of the Company is 409 Silverside Road, Wilmington, Delaware 19809.

 

Item 2.                   Identity and Background

 

This statement on Schedule 13D is being jointly filed by the parties identified below. All of the filers of this Schedule 13D are collectively referred to as the “Reporting Persons.” The Joint Filing Agreement among the Reporting Persons is attached hereto as Exhibit 1 and incorporated herein by reference.

 

(a)-(c)     The following are the Reporting Persons: Castle Creek Capital Partners VI, LP, a Delaware limited partnership (“Fund VI”) and a private equity fund focused on investing in community banks throughout the United States of America; Castle Creek Capital VI LLC, a Delaware limited liability company (“CCC VI”), whose principal business is to serve as the sole general partner of, and manage, Fund VI; John M. Eggemeyer, J. Mikesell Thomas, Mark G. Merlo and John T. Pietrzak, each a managing principal of CCC VI.  The business address for each of the Reporting Persons is 6051 El Tordo, Rancho Santa Fe, CA 92067.

 

(d)           During the last five years, none of the Reporting Persons has been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors).

 

(e)           During the last five years, none of the Reporting Persons has 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.

 

(f)            Each of Mr. Eggemeyer, Mr. Thomas, Mr. Merlo and Mr. Pietrzak is a citizen of the United States of America.

 

Item 3.                   Source and Amount of Funds or Other Consideration

 

The information in Items 4 and 6 is incorporated by reference.

 

Pursuant to the Securities Purchase Agreement, dated as of August 5, 2016 (the “SPA”), Fund VI purchased (i) 1,244,565 shares of the Company’s common stock, par value $1.00 per share (the “Common Stock”) and (ii) 6,585 shares of the Company’s Series C mandatorily convertible perpetual preferred stock, par value $0.01 per share (the “Preferred Stock”, and such shares of Common Stock and Preferred Stock acquired pursuant to the SPA, the “SPA Shares”).  On September 29, 2016, the 6,585 shares of Preferred Stock previously held by Fund VI were converted into 1,463,333 shares of Common Stock following approval of such conversion by the Company’s stockholders.

 

Following acquisition of the SPA Shares, Fund VI has periodically acquired additional shares of Common Stock through open-market transactions.  As of the date hereof, Fund VI owns 3,026,598 shares of Common Stock, which represents approximately 5.4% of the outstanding Common Stock.

 

Item 4.                   Purpose of Transaction

 

The information in Items 3 and 6 is incorporated by reference.

 

Fund VI acquired the Common Stock in the ordinary course of business because of its belief that the Common Stock represented an attractive investment in accordance with its investment strategy.  Fund VI continues to evaluate the desirability of acquiring additional shares of Common Stock in open-market transactions and may acquire additional shares at any time, subject to the limitations on ownership and control described below.

 

Subject to the limitations imposed by the SPA and the applicable federal and state securities laws, the Reporting Persons may dispose of the Common Stock from time to time, subject to market conditions and other investment considerations, and may cause the Common Stock to be distributed in kind to investors.  To the extent permitted by the SPA and applicable bank regulatory limitations, each Reporting Person may directly or indirectly acquire additional shares of Common Stock or associated rights or securities exercisable for or convertible into Common Stock, depending upon an ongoing evaluation of its investment in the Common Stock and securities exercisable for

 

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or convertible into Common Stock, applicable legal restrictions, prevailing market conditions, liquidity requirements of such Reporting Person and/or investment considerations.

 

To the extent permitted under the SPA and the passivity commitments that Fund VI has provided to the Board of Governors of the Federal Reserve System (the “Federal Reserve”) described in Item 6 below, and applicable laws, the Reporting Persons may engage in discussions with management, the Company’s board of directors (the “Board”), other stockholders of the Company and other relevant parties concerning the business, operations, composition of the Board, management, strategy and future plans of the Company.

 

The foregoing references to and descriptions of the SPA and the transactions contemplated thereby do not purport to be complete and are subject to, and are qualified in their entirety by reference to, the full text of the SPA, which is attached hereto as Exhibit 2 and incorporated herein by reference.

 

Other than as described in this Item 4, each of the Reporting Persons has no present plans or proposals that relate to or would result in any of the events set forth in Items 4(a) through (j) of Schedule 13D. However, each of the Reporting Persons reserves the right to change its plans at any time, as it deems appropriate, in light of its ongoing evaluation of (i) its business and liquidity objectives; (ii) the Company’s financial condition, business, operations, competitive position, prospects and/or share price; (iii) industry, economic and/or securities markets conditions; (iv) alternative investment opportunities; and (v) other relevant factors.

 

Item 5.                   Interest in Securities of the Issuer

 

The information contained on the cover pages to this Schedule 13D and the information set forth or incorporated in Items 2, 3, 4 and 6 is incorporated herein by reference.

 

(a) and (b)

 

Reporting Person		Amount Beneficially Owned		Percent of Class (3)		Sole Power to Vote or Direct the Vote		Shared Power to Vote or Direct the Vote		Sole Power to Dispose or to Direct the Disposition		Shared Power to Dispose or Direct the Disposition
Castle Creek Capital Partners VI, LP		3,026,598		5.4	%	0		3,026,598		0		3,026,598
Castle Creek Capital VI LLC (1)		3,026,598		5.4	%	0		3,026,598		0		3,026,598
John M. Eggemeyer (1) (2)		3,026,598		5.4	%	0		3,026,598		0		3,026,598
J. Mikesell Thomas (1) (2)		3,026,598		5.4	%	0		3,026,598		0		3,026,598
Mark G. Merlo (1) (2)		3,026,598		5.4	%	0		3,026,598		0		3,026,598
John T. Pietrzak (1) (2)		3,026,598		5.4	%	0		3,026,598		0		3,026,598

 

(1)   Each of CCC VI, Mr. Eggemeyer, Mr. Thomas, Mr. Merlo and Mr. Pietrzak disclaims beneficial ownership of the Common Stock owned by Fund VI (and Advisors IV, as explained below), except to the extent of its pecuniary interest therein.

 

(2)    This excludes 15,000 shares of unvested restricted stock units (collectively, the “Restricted Stock”) owned by Castle Creek Advisors IV LLC (“Advisors IV”), an affiliate of Fund VI that provides management services to Fund VI pursuant to a management agreement.  The unvested Restricted Stock was awarded to Advisors IV on behalf of Mr. Eggemeyer as compensation for Mr. Eggemeyer’s services as a director of the Company and will become fully vested on February 3, 2018 subject to Mr. Eggemeyer’s continued service on the Company’s board of directors as set forth below.  Each of Mr. Eggemeyer, Mr. Thomas, Mr. Merlo and Mr. Pietrzak is a managing principal of Advisors IV.

 

(3)   This calculation is based on 55,857,645 shares of Common Stock of the Company outstanding as of August 3, 2017, as reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.

 

(c)

 

Fund VI has engaged in the following transactions with respect to the Common Stock during the last sixty days: (i) on August 16, 2017, Fund VI acquired 225,000 shares of Common Stock at a weighted average price per share of $7.4058 (in multiple open-market transactions ranging from $7.4000 to $7.4800 per share, inclusive) and (ii) on August 17, 2017, Fund VI acquired 93,700 shares of Common Stock at a weighted average price per share of $7.4989 (in multiple open-market transactions ranging from $7.4700 to $7.5000 per share, inclusive).

 

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(d)

 

Other than as described herein, no other persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock reported in the Schedule 13D.

 

(e)

 

N/A

 

Item 6.                   Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

 

The information set forth in Items 3 and 4 is incorporated herein by reference.

 

The following is a description of certain terms of the SPA and related transaction documents:

 

Board Representation.  Pursuant to a side letter agreement entered into between the Company and Fund VI on August 5, 2016 (the “Side Letter”), the Company agreed to cause a Fund VI designee (the “Board Representative”) to be nominated to the Board and to the board of directors of The Bancorp Bank (the “Bank Board”), the Company’s subsidiary, in each case subject to satisfaction of legal and regulatory requirements.  As long as Fund VI owns at least 4.0% of the outstanding shares of Common Stock, the Company agreed to recommend to its shareholders the election of the Board Representative and to use its reasonable best efforts to have the Board Representative elected as a director by the shareholders of the Company.  Upon the Board Representative’s death, resignation, retirement, disqualification or removal from office, Fund VI has the right to designate the Board Representative’s replacement, which replacement must satisfy all legal, bank regulatory and governance requirements for service as a director of the Company.  If Fund VI has the right to a Board Representative but the Board Representative is not currently serving on the Board and the Bank Board, the Company must invite a Fund VI designee to attend meetings of the Board and the Bank Board (including any committee meetings which the Board Representative would have been permitted to attend) in a nonvoting, nonparticipating observer capacity (the “Board Observer”).  Pursuant to this provision, John M. Eggemeyer has been appointed, and is currently serving, as a member of the Board.  The Side Letter is attached hereto as Exhibit 3 and incorporated herein by reference.

 

ERISA Matters.  Fund VI was provided customary VCOC rights pursuant to a VCOC Letter Agreement, dated as of August 5, 2016, by and between Fund VI and the Company (the “VCOC Letter Agreement”), including the right to receive regular financial reports (including, but not limited to, annual and quarterly financial reports), the right to inspect the books and records of the Company and the right to consult with management of the Company on matters relating to the business and affairs of the Company; provided, however, that this provision does not entitle the VCOC Investor to consult with management of the Company on matters relating to the business and affairs of the Company more than once per calendar quarter.  The Company also agreed to consider, in good faith, the recommendations of the VCOC Investor or its designated representative in connection with the matters on which it is consulted as described above, recognizing that the ultimate discretion with respect to all such matters shall be retained by the Company.  The VCOC Letter Agreement is attached hereto as Exhibit 4 and incorporated herein by reference.

 

Representations and Warranties.  Pursuant to the SPA, the Company made customary representations and warranties to Fund VI relating to the Company, its business, the issuance of the Common Stock and authorization to enter into the transaction.  Fund VI also made customary representations and warranties to the Company regarding, among other things, Fund VI’s valid organization and authorization to enter into the transaction.

 

Transfer Restrictions.  Fund VI acknowledged in the SPA that it had acquired the SPA Shares solely for investment purposes with no intent to distribute them to any person in violation of the Securities Act of 1933, as amended (the “Securities Act”), or any applicable state securities laws.  Fund VI agreed not to sell or dispose of the SPA Shares unless doing so was in compliance with the registration requirements or exemptions of the Securities Act and applicable state, federal or foreign securities laws.

 

Ownership Limitation and Avoidance of Control.  Fund VI agreed that neither it nor its affiliates (for purposes of any banking regulation or law) shall be entitled to purchase shares of Common Stock that would result in Fund VI and its affiliates collectively to be deemed to own, control or have the power to vote more than 9.9% of the Company’s issued and outstanding Common Stock.  Neither the Company nor any of its subsidiaries is permitted under the SPA to take any action (including any redemption, repurchase, rescission or recapitalization of Common Stock or securities or rights to purchase or that may become convertible into Common Stock, in each case, where Fund VI is not given the right to participate in such transaction to the extent of Fund VI’s pro rata portion), that would cause (i) the equity in the Company owned by Fund VI and its affiliates (as such term is used under the Bank Holding Company Act (the “BHCA”)) to exceed 33.3% of the Company’s total equity (provided that there is no ownership or control in excess of 9.99% of any class of voting securities of the Company by Fund VI together with its affiliates) or (ii) Fund VI’s and its affiliates’ ownership of any class of voting securities of the Company to exceed 9.99% of such class, in each case without the prior written consent of Fund VI.  Finally, the Company may not take any action that would cause Fund VI’s ownership to increase to an amount that would constitute “control” under the BHCA, the Change in Bank Control Act, or any rules or regulations promulgated thereunder.  Additionally, Fund VI shall not have the ability to purchase more than

 

10

 

33.3% of the Company’s total equity or exercise any voting rights in excess of 9.99% of the total outstanding voting securities of the Company.  In the event that Fund VI breaches any of these obligations, or believes that it is reasonably likely to breach such obligations, Fund VI agreed to promptly notify the other parties to the SPA and to cooperate in good faith with such parties to modify ownership or make other arrangements or take any other action necessary to cure or avoid such breach.

 

Indemnification.  The Company agreed to indemnify Fund VI, its controlling persons and each of their directors, officers, stockholders, members, partners, employees, agents, investment advisors and those with similar roles (each a “Fund VI Party”) for all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses (collectively, “Losses”) suffered or incurred as a result of (i) the Company’s breach of any of its representations, warranties, covenants or agreements in the SPA or any other transaction documents or (ii) any action instituted against a Fund VI Party in any capacity by any shareholder of the Company or other third party who is not an affiliate of such Fund VI Party.  Fund VI agreed to indemnify the Company and its affiliates and their respective directors, officers, stockholders, members, partners, employees and agents and those with similar roles against all Losses suffered and incurred as a result of Fund VI’s breach of any of its representations, warranties, covenants or agreements in the SPA.  Each party’s indemnification obligations are subject to the limitations set forth in the SPA.

 

Registered Securities.  The securities issued or issuable to Fund VI in accordance with the SPA have been registered under the Securities Act pursuant to the registration statement on Form S-3 filed with the U.S. Securities and Exchange Commission on October 5, 2016, as amended by Amendment No. 1 to Form S-3 filed on October 18, 2016, and declared effective on October 18, 2016.

 

Passivity Commitments.  On August 14, 2017, Fund VI made certain customary passivity commitments to the Federal Reserve in a commitment letter to ensure that Fund VI and its affiliates will not, among other things, exercise or attempt to exercise a controlling influence over the management or policies of the Company or any of its subsidiaries.

 

The following is a description of certain terms of the Restricted Stock Award Agreement (as defined below):

 

Pursuant to the Stock Award Agreement, dated as of February 3, 2017 (the “Restricted Stock Award Agreement”), the Company granted Castle Creek Advisors IV, LLC, on behalf of John M. Eggemeyer in his capacity as a member of the Board, 15,000 restricted stock units (the “Restricted Stock Units), each of which represents the right to receive one share of Common Stock.  The restricted stock units will become fully vested on February 3, 2018 subject to Mr. Eggemeyer’s continued service on the Company’s board of directors as set forth below.

 

Pursuant to the Restricted Stock Award Agreement, all unvested Restricted Stock Units shall be forfeited if Mr. Eggemeyer ceases to be a director of the Company for any reason other than retirement, death or disability.  In the event Mr. Eggemeyer ceases to be a director of the Company as a result of retirement, death or disability, all Restricted Stock Units which have not vested will vest over a one-year period following the date of death or termination of service, as applicable.  Notwithstanding the foregoing, in the event of a Change of Control (as defined in the Restricted Stock Award Agreement), if Mr. Eggemeyer is involuntarily removed from the Board, all Restricted Stock Units will become fully exercisable.  The Restricted Stock Award Agreement is attached hereto as Exhibit 5 and incorporated herein by reference.

 

The foregoing reference to and description of the SPA, the Side Letter, the VCOC Letter Agreement and the Restricted Stock Award Agreement, and the transactions contemplated thereby, do not purport to be complete and are subject to, and are qualified in their entirety by reference to, the full text of the SPA, the Side Letter, the VCOC Letter Agreement and the Restricted Stock Award Agreement, which are attached hereto as Exhibits 2, 3, 4, and 5, respectively, and incorporated herein by reference.

 

Item 7.                   Material to Be Filed as Exhibits

 

Exhibit		Description
Exhibit 1		Joint Filing Agreement, dated as of August 25, 2017, by and among Castle Creek Capital Partners VI, LP, Castle Creek Capital VI LLC, John M. Eggemeyer, J. Mikesell Thomas, Mark G. Merlo, and John T. Pietrzak.
Exhibit 2		Securities Purchase Agreement, dated as of August 5, 2016, by and among The Bancorp, Inc. and Castle Creek Capital Partners VI, LP (incorporated by reference to Exhibit 10.1 to The Bancorp, Inc.’s Current Report on Form 8-K filed on August 8, 2016).
Exhibit 3		Side Letter, dated as of August 5, 2016, by and between The Bancorp, Inc. and Castle Creek Capital Partners VI, LP.
Exhibit 4		VCOC Letter Agreement, dated as of August 5, 2016, by and between The Bancorp,

 

11

 

		Inc. and Castle Creek Capital Partners VI, LP.
Exhibit 5		Stock Award Agreement granted under The Bancorp, Inc. Stock Option and Equity Plan of 2013.

 

12

 

SIGNATURES

 

After reasonable inquiry and to the best of the knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: August 25, 2017

 

	CASTLE CREEK CAPITAL PARTNERS VI, LP
	By:	/s/ John M. Eggemeyer
	Name:	John M. Eggemeyer
	Title:	Managing Principal
	CASTLE CREEK CAPITAL VI LLC
	By:	/s/ John M. Eggemeyer
	Name:	John M. Eggemeyer
	Title:	Managing Principal
	JOHN M. EGGEMEYER
	By:	/s/ John M. Eggemeyer
	Name:	John M. Eggemeyer
	J. MIKESELL THOMAS
	By:	/s/ J. Mikesell Thomas
	Name:	J. Mikesell Thomas
	MARK G. MERLO
	By:	/s/ Mark G. Merlo
	Name:	Mark G. Merlo
	JOHN T. PIETRZAK
	By:	/s/ John T. Pietrzak
	Name:	John T. Pietrzak

 

SIGNATURE PAGE TO SCHEDULE 13D (THE BANCORP, INC.)

 

13

Exhibit 1

 

JOINT FILING AGREEMENT

 

The undersigned hereby agree that this Schedule 13D, dated August 25, 2017, with respect to the common stock, par value $1.00 per share, of The Bancorp, Inc., a Delaware corporation, is, and any amendments hereto signed by each of the undersigned shall be, filed on behalf of each of us pursuant to and in accordance with the provisions of Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended.

 

Dated: August 25, 2017

 

	CASTLE CREEK CAPITAL PARTNERS VI, LP
	By:	/s/ John M. Eggemeyer
	Name:	John M. Eggemeyer
	Title:	Managing Principal
	CASTLE CREEK CAPITAL VI LLC
	By:	/s/ John M. Eggemeyer
	Name:	John M. Eggemeyer
	Title:	Managing Principal
	JOHN M. EGGEMEYER
	By:	/s/ John M. Eggemeyer
	Name:	John M. Eggemeyer
	J. MIKESELL THOMAS
	By:	/s/ J. Mikesell Thomas
	Name:	J. Mikesell Thomas
	MARK G. MERLO
	By:	/s/ Mark G. Merlo
	Name:	Mark G. Merlo
	JOHN T. PIETRZAK
	By:	/s/ John T. Pietrzak
	Name:	John T. Pietrzak

 

SIGNATURE PAGE TO JOINT FILING AGREEMENT (THE BANCORP, INC.)

 

Exhibit 3

 

The Bancorp, Inc.
409 Silverside Road
Wilmington, DE 19809

 

August 5, 2016

 

Castle Creek Capital Partners VI, L.P.

6051 El Tordo

Rancho Santa Fe, CA 92091

 

Ladies and Gentlemen:

 

Reference is made to that certain Securities Purchase Agreement, dated as August 5, 2016 (the “Purchase Agreement”), between The Bancorp, Inc., a Delaware corporation (the “Company”), and the purchasers identified on the signature pages thereto (the “Purchasers”). In connection with the execution and delivery of the Purchase Agreement, the Company and Castle Creek Capital Partners, VI, L.P. (“Castle Creek”) are contemporaneously entering into this agreement (this “Side Letter Agreement”) and, as such, the parties hereto acknowledge and agree that this Side Letter Agreement shall remain in full force and effect notwithstanding the execution and delivery of the Purchase Agreement. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.

 

The Company and Castle Creek hereby agree as follows:

 

1. Board Appointment.

 

(a)             Following the Closing and upon the written request of Castle Creek, the Company will promptly cause a person designated by Castle Creek (the “Board Representative”) to be elected or appointed to the Board of Directors of the Company (the “Board of Directors”), subject to satisfaction of all legal and regulatory requirements regarding service and election or appointment as a director of the Company, and The Bancorp Bank (the “Bank”) board of directors (the “Bank Board”), subject to all legal and regulatory requirements regarding service and election or appointment as a director of the Bank, in each case for as long as Castle Creek, together with its Affiliates, owns in the aggregate 4.0% or more of all of the outstanding Common Stock (assuming the conversion of the Preferred Stock)(“Minimum Ownership Interest”). So long as Castle Creek, together with its Affiliates, has a Minimum Ownership Interest, the Company will recommend to its shareholders the election of the Board Representative to the Board of Directors at the Company’s annual meeting of shareholders, subject to satisfaction of all legal requirements regarding service and election or appointment as a director of the Company. If Castle Creek no longer has a Minimum Ownership Interest, Castle Creek will have no further rights under Sections 1(a) through 1(b) and, at the written request of the Board of Directors, shall use commercially reasonable efforts to cause its Board Representative to resign from the Board of Directors and the Bank Board as promptly as possible thereafter.

 

(b)             The Board Representative shall, subject to applicable law, be one of the Company’s nominees to serve on the Board of Directors. The Company shall use its reasonable best efforts to have the Board Representative elected as a director of the Company by the shareholders of the Company, and the Company shall solicit proxies for the Board Representative to the same extent as it does for any of its other Company nominees to the Board of Directors. The Company shall ensure, and shall cause the Bank to ensure, that the Board of Directors and the Bank Board shall have at least four members for so long as Castle Creek shall have the right to appoint a Board Representative.

 

 

(c)             Subject to Section 1(a), upon the death, resignation, retirement, disqualification, or removal from office as a member of the Board or the Bank Board of the Board Representative, Castle Creek shall have the right to designate the replacement for such Board Representative, which replacement shall satisfy all legal, bank regulatory and governance requirements regarding service as a director of the Company. The Board and the Bank Board shall use their respective reasonable best efforts to take all action required to fill the vacancy resulting therefrom with such person (including such person, subject to applicable Law, being one of the Company’s nominees to serve on the Board and the Bank Board), using reasonable best efforts to have such person elected as director of the Company by the shareholders of the Company and the Company soliciting proxies for such person to the same extent as it does for any of its other nominees to the Board, as the case may be.

 

(d)             The Board Representative shall be entitled to compensation, including fees, and indemnification and insurance coverage in connection with his or her role as a director to the same extent as other directors on the Board or the Bank Board, as applicable, and the Board Representative shall be entitled to reimbursement for reasonable documented, out-of-pocket expenses incurred in attending meetings of the Board and the Bank Board, or any committee thereof in accordance with Company policy.

 

(e)             The Company acknowledges that the Board Representative may have certain rights to indemnification, advancement of expenses and/or insurance provided by Castle Creek and/or certain of its Affiliates (collectively, the “Castle Creek Indemnitors”). The Company hereby agrees on behalf of itself and the Bank that with respect to a claim by the Board Representative for indemnification arising out his or her service as a director of the Company and/or the Bank (1) that it is the indemnitor of first resort (i.e., its obligations to the Board Representative with respect to indemnification, advancement of expenses and/or insurance (which obligations shall be the same as, but in no event greater than, any such obligations to members of the Board or the Bank Board, as applicable) are primary and any obligation of the Castle Creek Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Board Representative are secondary), and (2) the Castle Creek Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of the Board Representative against the Company.

 

2. Board Observer. The Company hereby agrees that, from and after the Closing Date, for so long as Castle Creek and its Affiliates own in the aggregate 50% or more of all of the Shares purchased by Castle Creek and its Affiliates pursuant to the Purchase Agreement, and do not have a Board Representative currently serving on the Board of Directors and the Bank Board, the Company shall invite a person designated by Castle Creek (the “Observer”) to attend meetings of the Board of Directors and the Bank Board (including any meetings of committees thereof on which the Board Representative would be permitted to attend) in a nonvoting, nonparticipating observer capacity. The Observer shall be entitled to attend such meetings only in the event Castle Creek does not have a Board Representative on the Board of Directors and the Bank Board. The Observer shall not have any right to vote on any matter presented to the Board of Directors or the Bank Board or any committee thereof. The Company shall give the Observer written notice of each meeting of the Board of Directors and the Bank Board at the same time and in the same manner as the members of the Board of Directors or the Bank Board (as the case may be), shall provide the Observer with all written materials and other information given to members of the Board of Directors or the Bank Board (as the case may be) at the same time such materials and information are given to such members (provided, however, that the Observer shall not be provided any confidential supervisory information) and shall permit the Observer to attend as an observer at all meetings thereof, and in the event the Company proposes to take any action by written consent in lieu of a meeting, the Company shall give written notice thereof to the Observer prior to the effective date of such consent describing the nature and substance of such action and including the proposed text of such written

 

 

consents. If Castle Creek and its Affiliates in the aggregate no longer own in the aggregate 50% or more of all of the Shares purchased by Castle Creek and its Affiliates pursuant to the Purchase Agreement, Castle Creek will have no further rights under this Section 2.

 

3. Reimbursement for Legal Expenses. The Company shall pay the reasonable legal fees and expenses of counsel to Castle Creek, not to exceed $20,000, incurred by Castle Creek in connection with the transactions contemplated by the Transaction Documents, which amount shall be paid directly by the Company to counsel for Castle Creek at the Closing.

 

4. Governing Law. This Side Letter Agreement and all acts and transactions pursuant hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware without giving effect to principles of conflicts of laws.

 

5. Conflicting Terms. This Side Letter Agreement constitutes a valid and binding agreement of the Company and Castle Creek and shall survive the execution and delivery of the Purchase Agreement. In the event of any conflict between the provisions of this Side Letter Agreement and the provisions of the Purchase Agreement, the provisions of this Side Letter Agreement shall prevail and be given effect.

 

6. Counterparts. This Side Letter Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts will be deemed an original, will be construed together and will constitute one and the same instrument.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, the parties have executed this Side Letter Agreement as of the date first above written.

 

			THE BANCORP, INC.
			By:	/s/ Damian Kozlowski
				Name: Damian Kozlowski
				Title: Chief Executive Officer
Agreed and acknowledged as of the date first above written:
CASTLE CREEK CAPITAL PARTNERS VI, L.P.
By: Castle Creek Capital VI LLC, its general partner
By:	/s/ David Volk
	Name:	David Volk
	Title:	Principal

 

Exhibit 4

 

The Bancorp, Inc.

409 Silverside Road

Wilmington, DE  19809

 

August 5, 2016

 

Castle Creek Capital Partners VI, L.P.

6051 El Tordo

Rancho Santa Fe, CA 92091

 

Dear Sir/Madam:

 

Reference is made to the Securities Purchase Agreement by and between The Bancorp, Inc., a Delaware corporation (the “Corporation”), and Castle Creek Capital Partners VI, L.P., a Delaware limited partnership (the “VCOC Investor”), dated as of August 5, 2016 (the “Securities Purchase Agreement”), pursuant to which the VCOC Investor agreed to purchase from the Corporation shares of its voting common stock, $1.00 par value per share (the “Common Stock”).  Capitalized terms used herein without definition shall have the respective meanings in the Securities Purchase Agreement.

 

For good and valuable consideration acknowledged to have been received, the Corporation hereby agrees that it shall:

 

·                                          For so long as the VCOC Investor, directly or through one or more Affiliates, continues to hold any Common Stock, provide the VCOC Investor or its designated representative with the governance rights set forth in the letter agreement, dated as of August 5, 2016, by and between the VCOC Investor and the Corporation;

 

·                                          For so long as the VCOC Investor, directly or through one or more Affiliates, continues to hold any Common Stock, without limitation or prejudice of any of the rights provided to the VCOC Investor under the Securities Purchase Agreement or any other agreement or otherwise, provide the VCOC Investor or its designated representative with:

 

(i)            the right to visit and inspect any of the offices and properties of the Corporation and its subsidiaries and inspect the books and records of the Corporation and its subsidiaries at such times as the VCOC Investor shall reasonably request upon three (3) business days’ notice but not more frequently than once per calendar quarter, provided, however, that such rights shall not extend to confidential bank supervisory communications, customer financial records or other “exempt records” as defined by 12 C.F.R. Part 309, or reports of examination of any national or state chartered insured bank, which information may only be disclosed by the Corporation or any subsidiary of the Corporation in accordance with the provisions and subject to the limitations of applicable law or regulation;

 

(ii)           consolidated balance sheets and statements of income and cash flows of the Corporation and its subsidiaries prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis (A) as of the end of

 

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each quarter of each fiscal year of the Corporation as soon as practicable after preparation thereof but in no event later than ninety (90) days after the end of such quarter, and (B) with respect to each fiscal year end statement, as soon as practicable after preparation thereof but in no event later than one hundred and twenty (120) days after the end of such fiscal year together with an auditor’s report thereon of a firm of established national reputation; and

 

(iii)          to the extent the Corporation or any of its subsidiaries is required by law or pursuant to the terms of any outstanding indebtedness of the Corporation or any subsidiary to prepare such reports, any annual reports, quarterly reports and other periodic reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 or otherwise, actually prepared by the Corporation or any of its subsidiaries as soon as available;

 

provided that, in each case, if the Corporation makes the information described in clauses (ii) and (iii) of this bullet point available through public filings on the EDGAR system or any successor or replacement system of the U.S. Securities and Exchange Commission, the delivery of the information shall be deemed satisfied by such public filings.

 

·                                          Make appropriate officers and directors of the Corporation, and its subsidiaries, available periodically and at such times as reasonably requested by the VCOC Investor for consultation with the VCOC Investor or its designated representative, but not more frequently than once per calendar quarter, with respect to matters relating to the business and affairs of the Corporation and its subsidiaries; and

 

·                                          If the VCOC Investor’s regular outside counsel determines in writing that other rights of consultation are reasonably necessary under applicable legal authorities promulgated after the date of this agreement to preserve the qualification of VCOC Investor’s investment in the Corporation as a “venture capital investment” for purposes of the United States Department of Labor Regulation published at 29 C.F.R. Section 2510.3-101(d)(3)(i) (the “Plan Asset Regulation”), the Corporation agrees to cooperate in good faith with the VCOC Investor to amend this letter agreement to reflect such other rights that are mutually satisfactory to the Corporation and the VCOC Investor and consistent with the Federal Reserve Policy Statement on Equity Investments in Banks and Bank Holding Companies; provided that such consultation rights shall be limited to once per calendar quarter.

 

The Corporation agrees to consider, in good faith, the recommendations of the VCOC Investor or its designated representative in connection with the matters on which it is consulted as described above, recognizing that the ultimate discretion with respect to all such matters shall be retained by the Corporation.

 

In the event the VCOC Investor transfers all or any portion of its investment in the Corporation to an affiliated entity (or to a direct or indirect wholly-owned conduit subsidiary of any such affiliated entity) that is intended to qualify as a venture capital operating company under the Plan Asset Regulation, such affiliated entity shall be afforded the same rights that the Corporation has afforded to the VCOC Investor hereunder and shall be treated, for such purposes, as a third party beneficiary hereunder.

 

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The rights of the VCOC Investor under this letter agreement are unique to the VCOC Investor and shall not be assignable or transferrable other than to an affiliated entity that is intended to qualify as a venture capital operating company under the Plan Asset Regulation.

 

This letter agreement and the rights and the duties of the parties hereto shall be governed by, and construed in accordance with, the laws of the State of Delaware and may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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			THE BANCORP, INC.
			By:	/s/ Damian Kozlowski
				Name: Damian Kozlowski
				Title: Chief Executive Officer
Agreed and acknowledged as of the date first above written:
CASTLE CREEK CAPITAL PARTNERS VI, L.P.
By: Castle Creek Capital VI LLC, its general partner
By:	/s/ David Volk
	Name: David Volk
	Title: Principal

 

[Signature Page to VCOC Letter Agreement]

 

Exhibit 5

 

Stock Agreement

Non-Employee Director — 1 year vesting

 

STOCK AWARD

Granted by

THE BANCORP, INC.

under the

 

THE BANCORP, INC.
STOCK OPTION AND EQUITY PLAN OF 2013

 

This Stock Award Agreement (the “Stock Award” or this “Agreement”) is and will be subject in every respect to the provisions of the Stock Option and Equity Plan of 2013 (the “Plan”) of The Bancorp, Inc. (the “Company”) which are incorporated herein by reference and made a part hereof, subject to the provisions of this Agreement. A copy of the Plan has been provided to each person granted a Stock Award pursuant to the Plan. The holder of this Stock Award (the “Participant”) hereby accepts this Stock Award, subject to all the terms and provisions of the Plan and this Agreement, and agrees that all decisions under and interpretations of the Plan and this Agreement by the Committee appointed to administer the Plan (“Committee”) or the Board will be final, binding and conclusive upon the Participant and the Participant’s heirs, legal representatives, successors and permitted assigns. Capitalized terms used herein but not defined will have the same meaning as in the Plan.

 

1.                                      `Name of Participant                                                                              Castle Creek

 

2.                                      Date of Grant: February 3, 2017

 

3.                                      Total number of shares of Company common stock, $0.01 par value per share, covered by the Stock Award: 15,000 (subject to adjustment pursuant to Section 8 below).

 

4.                                      Vesting Schedule. Except as otherwise provided in this Agreement, this Stock Award first becomes earned in accordance with the vesting schedule specified herein.

 

The Stock Award granted under the Plan shall vest in one (1) annual installment, becoming exercisable on the anniversary date of grant, or February 3, 2018.

 

Notwithstanding the above vesting schedule, vesting may accelerate pursuant to the events listed in Section 9 of this Agreement (e.g., death, Disability, Retirement or Change in Control).

 

 

5.                                      Grant of Stock Award.

 

This Stock Award will not be in the form of issued and outstanding shares of Stock on the date of grant. As soon as practicable after the date any Stock Awards vest, the Company shall deliver to the Participant a number of Shares equal to the number of Stock Awards that vest. The Company shall issue the Shares either (i) in certificate form or (ii) in book entry form, registered in the name of the Participant.

 

Delivery of any certificates will be made to the Participant’s last address reflected on the books of the Company unless the Company is otherwise instructed in writing. Neither the Participant nor any of the Participant’s successors, heirs, assigns or personal representatives shall have any further rights or interests in any Stock Awards that are so paid. Notwithstanding anything herein to the contrary, the Company shall have no obligation to issue Shares in payment of the Stock Awards unless such issuance and such payment shall comply with all relevant provisions of law and the requirements of any stock exchange.

 

6.                                      No Voting or Dividends.

 

The Participant will not have the right to vote the Stock Awards awarded hereunder or receive cash dividends on such awards. Voting and Dividend rights will apply when such awards become vested.

 

7.                                      Delivery of Shares.

 

Delivery of shares of Stock under this Stock Award will comply with all applicable laws (including, the requirements of the Securities Act), and the applicable requirements of any securities exchange or similar entity.

 

8.                                      Adjustment Provisions.

 

This Stock Award, including the number of shares subject to the Stock Award, will be adjusted upon the occurrence of the events specified in, and in accordance with the provisions of, Section 5(d) of the Plan.

 

9.                                      Effect of Termination of Service on Stock Award.

 

(i)                                        Death. In the event of the Participant’s Termination of Service by reason of the Participant’s death, all non-vested Stock Awards will vest over a one year period beginning on the date of death.

 

(ii)                                     Disability. In the event of the Participant’s Termination of Service by reason of the Participant’s Disability, all non-vested Stock Awards will vest over a one year period beginning on the date of the Termination of Service.

 

(iii)                                  Retirement. In the event of the Participant’s Termination of Service by reason of the Participant’s Retirement, all non-vested Stock Awards will vest over a one year period beginning on the date of the Termination of

 

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Service. Notwithstanding the foregoing, an Employee who continues to serve as a Director or as a consultant to the Company or the Bank following Termination of Service shall continue to vest in his or her Awards and shall not be deemed to have terminated Service due to Retirement until Service in all such capacities has terminated.

 

(iv)                                 Termination for Cause. If the Participant’s Termination of Service is for Cause, all Stock Awards that have not vested will expire and be forfeited.

 

(v)                                    A Change in Control. In the event of a Change in Control, if you involuntarily forfeit your current position or if you will be employed at a significantly lower salary, all Stock Awards will become fully exercisable. In addition, all Stock Awards may become fully exercisable pursuant to Sections 18 (a) and 18(b) of the Plan. A “Change in Control” will be deemed to have occurred as provided in Section 2(b) of the Plan.

 

(vi)                                 Other Termination. If the Participant’s Termination of Service is for any reason other than death, Disability, Retirement, for Cause or following a Change of Control, all non-vested Stock Awards will expire and be forfeited on the date of the Termination of Service.

 

10.                               Miscellaneous.

 

10.1              This Agreement may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Participant.

 

10.2              Stock Awards are not transferable prior to the time such Awards vest in the Participant.

 

10.3              This Stock Award and this Agreement will be governed by and construed in accordance with the laws of the State of Delaware.

 

10.4              This Stock Award and this Agreement are subject to all laws, regulations and orders of any governmental authority which may be applicable thereto and, notwithstanding any of the provisions hereof, the Company will not be obligated to issue any shares of stock hereunder if the issuance of such shares would constitute a violation of any such law, regulation or order or any provision thereof.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this instrument to be executed in its name and on its behalf as of the date of grant of this Stock Award set forth above.

 

	THE BANCORP, INC.
	/s/ Paul Frenkiel
	By:	Paul Frenkiel
	Its:	Chief Financial Officer

 

PARTICIPANT’S ACCEPTANCE

 

The undersigned hereby accepts the foregoing Stock Award and agrees to the terms and conditions hereof, including the terms and provisions of the Company’s Stock Option and Equity Plan of 2013. The undersigned hereby acknowledges receipt of a copy of the Company’s Stock Option and Equity Plan of 2013.

 

	PARTICIPANT
	/s/ John Eggemeyer

 

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