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Item 3. Legal Proceedings

2022-04-15 compared with 2021-03-31 · 16 added, 44 removed, 4 unchanged (94% of the section changed)

LEGAL PROCEEDINGS

Between February 3, 2021 and March 1, 2021, eight purported holders of the Company’s common stock filed the following complaints against the Company and the members of its board of directors (collectively, the

“Stockholder Complaints”):

(i) Chris Pinkney v.

Broadway Financial Corporation, et al., filed on February 3, 2021 in the in the United States District Court for the Southern District of New York, No.

1:21-cv-00945;

(ii) Jose Lopez v.

Financial Corporation, et al., filed on February 5, 2021 in the United States District Court for the District of Delaware, No.

1:21-cv-00157;

(iii) Jamal Howard v.

Broadway Financial Corporation, et al., filed on February 10, 2021 in the United

States District Court for the Eastern District of New York, No.

1:21-cv-00706;

(iv) Rose Stovall v.

Broadway Financial Corporation, et al., filed on February 11, 2021 in the United States District Court for the Southern District of New York, No.

1:21-cv-01238;

(v) Sally Nahra v.

Broadway Financial Corporation, et al., filed on February 18, 2021 in the United States District Court for the Southern District of New York, No.

1:21-cv-01459;

(vi) Jordan Rosenblatt v.

Broadway Financial

Corporation, et al., filed on February 25, 2021 in the United States District Court for the Central District of California, No.

2:21-cv-079001790;

(vii) Patrick Plumley v.

Broadway Financial Corporation, et al., filed on February 25, 2021 in the

United States District Court for the District of Delaware, No.

1:21-cv-00290;

and (viii) Derek Mueller v.

Broadway Financial Corporation, et al., filed on March 1, 2021 in the United States District Court for the Eastern District of Pennsylvania, No.

1:21-cv-00975.

The Stockholder Complaints assert, among others, claims under Section 14(a) of the Exchange Act against the Company and the members of its board of directors and claims under Section 20(a) of the Exchange Act against

the members of the board of directors for allegedly causing a materially incomplete and misleading registration statement on Form S-4 or prospectus on Form 424B3 (collectively, the “Offering Materials”) to be filed with the SEC and challenging the

adequacy of certain disclosures made therein.

The Lopez and Mueller complaints also include CFBanc in their allegations under Section 20(a) of the Exchange Act, and the Nahra complaint also includes a count against the members of the Company’s board

of directors for breach of fiduciary duty.

Additionally, the Pinkney complaint asserts that the merger consideration is unfair and that the termination fee agreed by the Company and CFBanc to be payable in the event of termination of the merger

agreement in certain circumstances is excessive.

Among other remedies, the Stockholder Complaints sought primarily to enjoin the merger and require dissemination of revised Offering Materials.

Since none of the plaintiffs moved for preliminary

injunction and the merger has received stockholder approval, these requests are now moot.

The Stockholder Complaints also state that the plaintiffs seek, in the event the merger is consummated, a rescission of the merger or an award of rescissory or

other damages in an unspecified amount, and attorneys’ fees and costs.

The Company believes that the claims in the Stockholder Complaints are without merit and intends to defend against them vigorously.

On October 5, 2021, purported Company stockholder Sally Nahra filed a complaint against the Company and the members of the pre-Merger board of directors for Broadway in the Superior Court of the State of California in

and for the County of Los Angeles.

Bradshaw , No.

21STCV36502, Plaintiff Nahra brings claims of breach of fiduciary duty of candor on behalf of herself and other similarly situated individuals.

Plaintiff Nahra alleges that the proxy statement filed with the U.S.

Securities and Exchange Commission on February 9, 2021, failed to disclose the personal conflicts of the directors and omitted key financial metrics, and as a result, her shares

were diluted and she was deprived of an opportunity to obtain a premium on her investment through potential alternative transactions.

Among other remedies, she seeks compensatory and rescissory damages.

The Company believes that these claims are

without merit and is defending against them vigorously.

The Company and the individual defendants have filed a demurrer requesting that the Court dismiss the complaint in its entirety.

On March 29, 2022 the court held a hearing on defendant’s

demurrer and entered an order sustaining the demurrer and dismissing all of plaintiff’s claims with leave to amend.

As a result, plaintiff has been directed to file an amended complaint, if any, by April 29, 2022.

In the ordinary course of business, we are defendants in various litigation matters from time to time.

In our opinion, the disposition of any litigation and other legal and regulatory matters currently pending or threatened against us would not

have a material adverse effect on our financial position, results of operations or cash flows.

In our opinion, the disposition of any litigation and other legal and regulatory matters currently pending or

threatened against us would not have a material adverse effect on our financial position, results of operations or cash flows.

MINE SAFETY DISCLOSURES

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings