13D Filing: Basswood Capital and Regional Management Corp. (RM)

On January 26, 2018, the Management Company entered into a Cooperation Agreement with the Issuer (a copy of which is attached as Exhibit 99.2 hereto) pursuant to which the Issuer appointed Jonathan D. Brown, a representative of the Management Company, to the Board, effective January 26, 2018.  The Issuer also agreed that, subject to the conditions set forth in the Cooperation Agreement, the Board will nominate Mr. Brown for election to the Board at the Issuer’s 2018 annual meeting of stockholders.

Pursuant to the Cooperation Agreement, Mr. Brown (or any successor designee of the Management Company to the Board) must offer to resign from the Board if (i) the Management Company and its affiliates, collectively, no longer beneficially own an aggregate “net long position” of at least 874,705 shares of Common Stock (subject to adjustment for stock splits, reverse stock splits, stock dividends, and similar adjustments), or (ii) the Management Company fails to comply with or breaches any of the terms of the Cooperation Agreement in any material respect and, if capable of being cured, such material breach or failure has not been cured within 15 days after receipt by the Management Company of written notice from the Issuer specifying such material breach or failure; provided that the Issuer is not in material breach of the Cooperation Agreement at such time (each, a “Resignation Trigger”).  The Cooperation Agreement also provides that, if requested by the Management Company, the Issuer is obligated to appoint Mr. Brown to any existing or newly created committee of the Board that may be designated to oversee or review strategic alternatives (including an extraordinary transaction).

In the Cooperation Agreement, in addition to certain confidentiality and non-disparagement provisions, the Management Company has agreed to various customary standstill provisions for the duration of the Standstill Period (as defined below), which provide, among other things, that the Management Company and its affiliates will not (i) acquire beneficial ownership of 19.9% or more of the outstanding shares of Common Stock, (ii) participate in a proxy solicitation with respect to the voting of any Common Stock, (iii) submit a proposal for or offer of any extraordinary transaction or propose a change in the structure, size, or composition of the Board or executive officers of the Issuer, or (iv) subject to certain exceptions for open market and underwritten transactions, sell Common Stock to a third party or group that to the Management Company’s knowledge would result in such third party or group owning 5% or more of the outstanding shares of Common Stock.

The Management Company has also agreed that, during the Standstill Period, it shall cause the shares of Common Stock beneficially owned by it and its affiliates to be voted (i) in favor of each director nominated by the Board for election, and (ii) in accordance with the Board’s recommendations on all other matters; provided that the Management Company and its affiliates may vote their shares of Common Stock in their sole discretion with respect to (a) a proposal to authorize or approve an extraordinary transaction, (b) matters related to the