EXHIBIT 10.17
PLACEMENT AGREEMENT
AMONG
SOUTHCOAST FINANCIAL CORPORATION,
SOUTHCOAST CAPITAL TRUST III
AND
CREDIT SUISSE FIRST BOSTON LLC
Dated as of August 5, 2005
Southcoast Financial Corporation
$10,000,000 Preferred Securities
Floating Rate Preferred Securities
(Liquidation Amount $1,000 per Preferred
Security)
PLACEMENT AGREEMENT
August 5, 2005
Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010
Ladies and Gentlemen:
Southcoast Financial Corporation, a
South Carolina corporation (the “Company”), and its
financing subsidiary, Southcoast Capital Trust III, a Delaware
statutory trust (the “Trust,” and hereinafter together
with the Company, the “Offerors”), hereby confirm their
agreement (this “Agreement”) with you as placement
agent (the “Placement Agent”), as follows:
Section 1. Issuance and Sale of
Securities .
1.1 Introduction . The
Offerors propose to issue and sell at the Closing (as defined in
Section 2.3.1 hereof) TEN MILLION ($10,000,000) DOLLARS of the
Trust’s Floating Rate Preferred Securities, with a
liquidation amount of $1,000 per preferred security, bearing a
variable rate of interest per annum, reset quarterly, equal to
LIBOR (as defined in the Indenture (as defined below)) plus 1.50%
(the “Preferred Securities”), directly or indirectly,
to Credit Suisse First Boston, acting through its Cayman Islands
branch, a Swiss banking corporation (the “Purchaser”),
pursuant to the terms of the Preferred Securities Subscription
Agreement entered into, or to be entered into on or prior to the
Closing Date (as defined in Section 2.3.1 hereof), between the
Offerors and the Purchaser (the “Subscription
Agreement”), the form of which is attached hereto as
Exhibit A and incorporated herein by this
reference.
1.2 Operative Agreements .
The Preferred Securities shall be fully and unconditionally
guaranteed on a subordinated basis by the Company with respect to
distributions and amounts payable upon liquidation, redemption or
repayment (the “Guarantee”) pursuant and subject to the
Guarantee Agreement (the “Guarantee Agreement”), to be
dated as of the Closing Date and executed and delivered by the
Company and Wilmington Trust Company, as guarantee trustee (the
“Guarantee Trustee”), for the benefit from time to time
of the holders of the Preferred Securities. The entire proceeds
from the sale by the Trust to the holders of the Preferred
Securities shall be combined with the entire proceeds from the sale
by the Trust to the Company of its common securities (the
“Common Securities”), and shall be used by the Trust to
purchase TEN MILLION THREE HUNDRED TEN THOUSAND ($10,310,000)
DOLLARS in principal amount of the Floating Rate Junior
Subordinated Notes (the “Junior Subordinated Notes”) of
the Company. The Preferred Securities and the Common Securities of
the Trust shall
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be issued pursuant to an Amended and Restated
Trust Agreement among Wilmington Trust Company, as property trustee
(the “Property Trustee”), and as Delaware trustee (the
“Delaware Trustee”) the Administrative Trustees named
therein and the Company, to be dated as of the Closing Date and in
substantially the form heretofore delivered to the Placement Agent
(the “Trust Agreement”). The Junior Subordinated Notes
shall be issued pursuant to an Indenture (the
“Indenture”), to be dated as of the Closing Date,
between the Company and Wilmington Trust Company, as indenture
trustee (the “Indenture Trustee”). The documents
identified in this Section 1.2 and in Section 1.1 are
referred to herein as the “Operative Documents.” The
Preferred Securities, the Common Securities and the Junior
Subordinated Notes are collectively referred to as the
“Securities.” All other capitalized terms used but not
defined in this Agreement shall have the meanings ascribed to them
in the Indenture.
1.3 Rights of Purchaser . The
Preferred Securities shall be offered and sold by the Trust,
directly or indirectly, to the Purchaser without registration of
any of the Preferred Securities, the Junior Subordinated Notes or
the Guarantee under the Securities Act of 1933, as amended (the
“Securities Act”), or any other applicable securities
laws in reliance upon exemptions from the registration requirements
of the Securities Act and other applicable securities laws. The
Offerors agree that this Agreement shall be incorporated by
reference into the Subscription Agreement and the Purchaser shall
be entitled to each of the benefits of the Placement Agent and the
Purchaser under this Agreement and shall be entitled to enforce
obligations of the Offerors under this Agreement as fully as if the
Purchaser were a party to this Agreement. The Offerors and the
Placement Agent have entered into this Agreement to set forth their
understanding as to their relationship and their respective rights,
duties and obligations. â
1.4 Legends . Upon original
issuance thereof, and until such time as the same is no longer
required under the applicable requirements of the Securities Act,
the Preferred Securities and Junior Subordinated Notes certificates
shall each contain a legend as required pursuant to any of the
Operative Documents.
Section 2. Purchase of Preferred
Securities .
2.1 Exclusive Rights; Purchase
Price . From the date hereof until the Closing Date (which date
may be extended by mutual agreement of the Offerors and the
Placement Agent), the Offerors hereby grant to the Placement Agent
the exclusive right to arrange for the sale to the Purchaser of the
Preferred Securities at a purchase price equal to $1,000 per
Preferred Security. The aggregate purchase price shall be TEN
MILLION ($10,000,000) DOLLARS (the “Purchase Price”),
which Purchase Price is equal to 100% of the stated liquidation
amount of the Preferred Securities.
2.2 Subscription . The
Offerors hereby agree to evidence their acceptance of the
subscription by countersigning a copy of the Subscription Agreement
and returning the same to the Placement Agent.
2.3 Closing and Delivery of
Payment .
2.3.1 Closing; Closing Date .
The closing (the “Closing”) for the sale and purchase
of the Preferred Securities by the Offerors to the Purchaser shall
occur at the offices of Thacher
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Proffitt & Wood LLP, Two World Financial
Center, New York, New York 10281, or such other place as the
parties hereto shall agree at 11:00 a.m. (New York time) on August
5, 2005, or such other later date (not later than September 4,
2005) as the parties may designate (such date and time of delivery
and payment for the Preferred Securities being herein called the
“Closing Date”). The Preferred Securities shall be
transferred and delivered to the Purchaser or its designee against
the payment of the Purchase Price to the Offerors in immediately
available funds on the Closing Date to a U.S. account designated in
writing by the Company at least two (2) business days prior to the
Closing Date.
2.3.2 Delivery . Delivery of
the Preferred Securities shall be made at such location, and in
such names and denominations, as the Purchaser shall designate at
least two (2) business days in advance of the Closing Date. The
Company and the Trust agree to have the Preferred Securities
available for inspection and checking by the Purchaser in New York,
New York not later than 1:00 P.M., New York time, on the business
day prior to the Closing Date.
2.4 Placement Agents’ Fees
and Expenses .
2.4.1 Placement Agents’
Compensation . The Trust shall use the proceeds from the sale
of the Preferred Securities, together with the proceeds from the
sale of the Common Securities, to purchase the Junior Subordinated
Notes. The Company shall pay no fees or commissions (the
“Commission”) to the Placement Agent. The Placement
Agent shall be responsible for the following expenses: (i) rating
agency costs and expenses and (ii) any fee payable to the
Company’s introducing agent; provided, that such introducing
agent has an agreement with the Placement Agent, but excluding the
fees and expenses set forth in Section 2.4.2
hereof.
2.4.2 Costs and Expenses .
The Company hereby covenants and agrees that it shall pay or cause
to be paid (directly or by reimbursement) all costs and expenses
incident to the performance of the obligations of the Offerors
under this Agreement, whether or not the transactions contemplated
herein are consummated or this Agreement is terminated, including
(i) all costs and expenses incident to the authorization, issuance,
sale and delivery of the Preferred Securities and any taxes payable
in connection therewith; (ii) the fees and expenses of qualifying
the Preferred Securities under the securities laws of the several
jurisdictions as provided in Section 6.4 ; (iii) the fees
and expenses of the counsel, the accountants and any other experts
or advisors retained by the Company or the Trust which counsel fees
and expenses incurred in connection with the closing of the
transactions contemplated hereby, in an amount up to $10,000, shall
be reimbursed by the Purchaser on the Closing Date; and (iv) the
fees and all reasonable expenses of the Guarantee Trustee, the
Property Trustee, the Delaware Trustee, the Indenture Trustee and
any other trustee or paying agent appointed under the Operative
Documents, including the fees and disbursements of counsel for such
trustees, except for any acceptance fee and annual administrative
fees of any such trustee and the fees and disbursements of counsel
to such trustees incurred in connection with the closing of the
transactions contemplated thereby, which shall be paid by the
Purchaser.
2.4.3 Reimbursement of
Expenses . If the sale of the Preferred Securities provided for
in this Agreement is not consummated because any condition set
forth in Section 3 to be satisfied by either the Company or
the Trust is not satisfied, because this Agreement is terminated
pursuant to Section 10 or because of any failure, refusal or
inability on the part of the Company
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or the Trust to perform all obligations and
satisfy all conditions on its part to be performed or satisfied
hereunder other than by a reason of a default by the Placement
Agent, the Company will reimburse the Placement Agent upon demand
for all reasonable out-of-pocket expenses (including the fees and
expenses of each of the Placement Agent’s or
Purchaser’s counsel) that shall have been incurred by the
Placement Agent or Purchaser in connection with the proposed
purchase and sale of the Preferred Securities. The Company shall
not in any event be liable to the Placement Agent or Purchaser for
the loss of anticipated profits from the transactions contemplated
by this Agreement.
2.5 Failure to Close . If any
of the conditions to the Closing specified in this Agreement shall
not have been fulfilled to the satisfaction of the Placement Agent
or if the Closing shall not have occurred on or before 11:00 a.m.
(New York time) on September 4, 2005, then each party hereto,
notwithstanding anything to the contrary in this Agreement, shall
be relieved of all further obligations under this Agreement without
thereby waiving any rights it may have by reason of such
nonfulfillment or failure; provided, however, that the obligations
of the parties under Sections 2.4 , and 8 shall not
be so relieved and shall continue in full force and
effect.
Section 3. Closing Conditions . The
obligations of the parties under this Agreement on the Closing Date
are subject to the following conditions:
3.1 Accuracy of Representations
and Warranties . The representations and warranties contained
in this Agreement, and the statements of the Offerors made in any
certificates pursuant to this Agreement, shall be accurate as of
the date of delivery of the Preferred Securities:
3.2 Opinions of Counsel . On
the Closing Date, the Placement Agent shall have received the
following favorable opinions or certificate, as the case may be,
each dated as of the Closing Date: (a) from Thacher Proffitt &
Wood LLP, special counsel for the Placement Agent and Purchaser and
addressed to the Placement Agent and Purchaser in substantially the
form set forth on Exhibit B-1 attached hereto and
incorporated herein by this reference, (b) from Haynsworth Sinkler
Boyd, P.A., counsel for the Offerors, or an Officers’
Certificate, addressed to the Purchaser and the Placement Agent in
substantially the form set forth on Exhibit B-2 attached
hereto and incorporated herein by this reference, (c) from Thacher
Proffitt & Wood LLP, special tax counsel for the Placement
Agent and Purchaser and addressed to the Placement Agent and
Purchaser in substantially the form set forth on Exhibit B-3
attached hereto and incorporated herein by this reference, (d) from
Morris, James, Hitchens & Williams LLP., special Delaware
counsel to the Trust and addressed to the Purchaser, the Placement
Agent and the Offerors, in substantially the form set forth on
Exhibit B-4 attached hereto and incorporated herein by this
reference, and (e) from Morris, James, Hitchens & Williams LLP,
special counsel to the Indenture Trustee, the Property Trustee, the
Delaware Trustee and the Guarantee Trustee and addressed to the
Purchaser, the Placement Agent and the Offerors, in substantially
the form set forth on Exhibit B-5 attached hereto and
incorporated herein by this reference. Each opinion addressed to
the Purchaser shall state that the first entity, if any, to which
the Purchaser transfers any of the Preferred Securities (each, a
“Subsequent Purchaser”) shall be entitled to rely on
such opinion.
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3.3 Officer’s
Certificate . The Company shall have furnished to the Placement
Agent and the Purchaser a certificate of the Company, signed by the
Chief Executive Officer, President or an Executive Vice President
and by the Chief Financial Officer, Treasurer or Assistant
Treasurer of the Company, and the Trust shall have furnished to the
Placement Agent and the Purchaser a certificate of the Trust,
signed by an Administrative Trustee of the Trust, in each case
dated the Closing Date, and, in the case of the Company, as to
3.3.1 and 3.3.2 below and, in the case of the Trust,
as to 3.3.1 below:
3.3.1 the representations and
warranties in this Agreement are true and correct on and as of the
Closing Date with the same effect as if made on the Closing Date,
and the Company and the Trust have complied with all the agreements
and satisfied all the conditions on either of their part to be
performed or satisfied at or prior to the Closing Date;
and
3.3.2 since the date of the Interim
Financial Statements (as defined below), there has been no material
adverse change in the condition (financial or other), earnings,
business, prospects or assets of the Company and its subsidiaries,
whether or not arising from transactions occurring in the ordinary
course of business.
3.4 No Subsequent Change .
Subsequent to the execution of this Agreement, there shall not have
been any change, or any development involving a prospective change,
in or affecting the condition (financial or other), earnings,
business, prospects or assets of the Company and its subsidiaries,
whether or not occurring in the ordinary course of business, the
effect of which is, in the Placement Agent’s or
Purchaser’s judgment, so material and adverse as to make it
impractical or inadvisable to proceed with the purchase of the
Preferred Securities.
3.5 Purchase Permitted by
Applicable Laws; Legal Investment . The purchase of and payment
for the Preferred Securities as described in this Agreement and
pursuant to the Subscription Agreement shall (a) not be prohibited
by any applicable law or governmental regulation, (b) not subject
the Purchaser or the Placement Agent to any penalty or, in the
reasonable judgment of the Purchaser and the Placement Agent, other
onerous conditions under or pursuant to any applicable law or
governmental regulation, and (c) be permitted by the laws and
regulations of the jurisdictions to which the Purchaser and the
Placement Agent are subject.
3.6 Consents and Permits .
The Company and the Trust shall have received all consents, permits
and other authorizations, and made all such filings and
declarations, as may be required from any person or entity pursuant
to any law, statute, regulation or rule (federal, state, local and
foreign), or pursuant to any agreement, order or decree to which
the Company or the Trust is a party or to which either is subject,
in connection with the transactions contemplated by this
Agreement.
3.7 Information . Prior to or
on the Closing Date, the Offerors shall have furnished to the
Placement Agent, the Purchaser and their respective counsel such
further information, certificates, opinions and documents as the
Placement Agent, Purchaser or their respective counsel may
reasonably request.
If any of the conditions specified
in this Section 3 shall not have been fulfilled when and as
required in this Agreement, or if any of the opinions, certificates
and documents mentioned above or elsewhere in this Agreement shall
not be reasonably satisfactory in form and substance
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to the Placement Agent, the Purchaser or their
respective counsel, this Agreement and all the Placement
Agent’s obligations hereunder may be canceled at, or any time
prior to, the Closing Date by the Placement Agent. Notice of such
cancellation shall be given to the Offerors in writing or by
telephone or facsimile confirmed in writing.
Each certificate signed by any
trustee of the Trust or any officer of the Company and delivered to
the Placement Agent, Purchaser or their respective counsel in
connection with the Operative Documents and the transactions
contemplated hereby and thereby shall be deemed to be a
representation and warranty of the Trust and/or the Company, as the
case may be, and not by such trustee or officer in any individual
capacity.
Section 4. Representations and Warranties of
the Offerors . The Offerors jointly and severally represent and
warrant to the Placement Agent and the Purchaser as of the date
hereof and as of the Closing Date as follows:
4.1 Securities Laws Matters
.
(i) Neither the Company nor the
Trust, nor any of their “Affiliates” (as defined in
Rule 501(b) of Regulation D under the Securities Act
(“Regulation D”)), nor any person acting on any of
their behalf (except for the Placement Agent, as to which neither
the Company nor the Trust make any representation) has, directly or
indirectly, made offers or sales of any security, or solicited
offers to buy any security, under circumstances that would require
the registration under the Securities Act of any of the
Securities.
(ii) Neither the Company nor the
Trust, nor any of their Affiliates, nor any person acting on its or
their behalf (except for the Placement Agent, as to which neither
the Company nor the Trust make any representation) has (i) offered
for sale or solicited offers to purchase the Securities, (ii)
engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with any offer
or sale of any of the Securities, or (iii) engaged in any
“directed selling efforts” within the meaning of
Regulation S under the Securities Act (“Regulation S”)
with respect to the Securities.
(iii) The Securities (i) are not and
have not been listed on a national securities exchange registered
under section 6 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), or quoted on a U.S. automated
interdealer quotation system and (ii) are not of an open-end
investment company, unit investment trust or face-amount
certificate company that are, or are required to be, registered
under section 8 of the Investment Company Act of 1940, as amended
(the “Investment Company Act”), and the Securities
otherwise satisfy the eligibility requirements of Rule 144A(d)(3)
promulgated pursuant to the Securities Act (“Rule
144A(d)(3)”).
(iv) Neither the Company nor the
Trust is, and, immediately following consummation of the
transactions contemplated hereby and the application of the net
proceeds therefrom, neither the Company nor the Trust will be, an
“investment company” or an entity
“controlled” by an “investment company,” in
each case within the meaning of section 3(a) of the Investment
Company Act.
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(v) Neither the Company nor the
Trust has paid or agreed to pay to any person or entity, directly
or indirectly, any fees or other compensation for soliciting
another to purchase any of the Securities.
4.2 Standing and Qualification of
the Trust . The Trust has been duly created and is validly
existing in good standing as a statutory trust under the Delaware
Statutory Trust Act, 12 Del. C. §3801, et seq . (the
“Statutory Trust Act”) with all requisite power and
authority to own property and to conduct the business it transacts
and proposes to transact and to enter into and perform its
obligations under the Operative Documents to which it is a party.
The Trust is duly qualified to transact business as a foreign
entity and is in good standing in each jurisdiction in which such
qualification is necessary, except where the failure to so qualify
or be in good standing would not have a material adverse effect on
the condition (financial or otherwise), earnings, business,
prospects or assets of the Trust, whether or not occurring in the
ordinary course of business. The Trust is not a party to, or
otherwise bound by, any agreement other than the Operative
Documents. The Trust is, and under current law will continue to be,
classified for federal income tax purposes as a grantor trust and
not as an association or publicly traded partnership taxable as a
corporation.
4.3 Trust Agreement . The
Trust Agreement has been duly authorized by the Company and, on the
Closing Date specified in Section 2.3.1 , will have been
duly executed and delivered by the Company and the Administrative
Trustees of the Trust, and, assuming due authorization, execution
and delivery by the Property Trustee and the Delaware Trustee, will
be a legal, valid and binding obligation of the Company and the
Administrative Trustees, enforceable against them in accordance
with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally and to
general principles of equity. Each of the Administrative Trustees
of the Trust is an employee of the Company or one of its subsidiary
banks and has been duly authorized by the Company to execute and
deliver the Trust Agreement. To the knowledge of the Administrative
Trustees, the Trust is not in violation of any provision of the
Statutory Trust Act.
4.4 Guarantee Agreement and the
Indenture . Each of the Guarantee and the Indenture has been
duly authorized by the Company and, on the Closing Date, will have
been duly executed and delivered by the Company, and, assuming due
authorization, execution and delivery by the Guarantee Trustee, in
the case of the Guarantee, and by the Indenture Trustee, in the
case of the Indenture, will be a legal, valid and binding
obligation of the Company enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors’ rights generally and to general
principles of equity.
4.5 Preferred Securities and
Common Securities . The Preferred Securities and the Common
Securities have been duly authorized by the Trust and, when issued
and delivered against payment therefor on the Closing Date to the
Purchaser in accordance with this Agreement and the Subscription
Agreement, in the case of the Preferred Securities, and to the
Company in accordance with the Common Securities Subscription
Agreement between the Company and the Trust, dated as of the
Closing Date, in the case of the Common Securities, will be validly
issued, fully paid and nonassessable and will represent undivided
beneficial interests in the assets of the Trust entitled to the
benefits of the Trust Agreement, enforceable against the Trust in
accordance with their terms, subject to applicable bankruptcy,
insolvency and similar
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laws affecting creditors’ rights generally
and to general principles of equity. The issuance of the Securities
is not subject to preemptive or other similar rights. On the
Closing Date, all of the issued and outstanding Common Securities
will be directly owned by the Company free and clear of any pledge,
security interest, claim, lien or other encumbrance (each, a
“Lien”).
4.6 Junior Subordinated Notes
. The Junior Subordinated Notes have been duly authorized by the
Company and, on the Closing Date, will have been duly executed and
delivered to the Indenture Trustee for authentication in accordance
with the Indenture and, when authenticated in the manner provided
for in the Indenture and delivered to the Trust against payment
therefor in accordance with the Junior Subordinated Note
Subscription Agreement between the Company and the Trust, dated as
of the Closing Date, will constitute legal, valid and binding
obligations of the Company entitled to the benefits of the
Indenture enforceable against the Company in accordance with their
terms, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors’ rights generally and to general
principles of equity.
4.7 Placement Agreement .
This Agreement has been duly authorized, executed and delivered by
the Company and the Trust and constitutes the legal, valid and
binding obligation of the Company and the Trust, enforceable
against the Company and the Trust in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general
principles of equity.
4.8 Defaults . Neither the
issue and sale of the Common Securities, the Preferred Securities
or the Junior Subordinated Notes, nor the purchase of the Junior
Subordinated Notes by the Trust, the execution and delivery of and
compliance with the Operative Documents by the Company or the
Trust, the consummation of the transactions contemplated herein or
therein, or the use of the proceeds therefrom, (i) will conflict
with or constitute a breach of, or a default under, the Trust
Agreement or the charter or bylaws of the Company or any subsidiary
of the Company or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, governmental
authority, agency or instrumentality or court, domestic or foreign,
having jurisdiction over the Trust, or the Company or any of its
subsidiaries, or their respective properties or assets
(collectively, “Governmental Entities”), (ii) will
conflict with or constitute a violation or breach of, or a default
or Repayment Event (as defined below) under, or result in the
creation or imposition of any Lien upon any property or assets of
the Trust, the Company or any of the Company’s subsidiaries
pursuant to any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which (A) the
Trust, the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or (B) any of the property or
assets of any of them is subject, or any judgment, order or decree
of any court, Governmental Entity or arbitrator, except, in the
case of this clause (ii), for such conflicts, breaches, violations,
defaults, Repayment Events (as defined below) or Liens which (X)
would not, singly or in the aggregate, adversely affect the
consummation of the transactions contemplated by the Operative
Documents and (Y) would not, singly or in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
earnings, business, liabilities, prospects and assets (taken as a
whole) or business prospects of the Company and its subsidiaries
taken as a whole, whether or not occurring in the ordinary course
of business (a “Material Adverse Effect”) or (iii)
require the consent, approval, authorization or order of any court
or Governmental Entity. As used herein, a “Repayment
Event” means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any
person acting on such holder’s behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Trust or the Company or any of its subsidiaries
prior to its scheduled maturity.
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4.9 Organization, Standing and
Qualification of the Company . The Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of South Carolina, with all requisite
corporate power and authority to own, lease and operate its
properties and conduct the business it transacts and proposes to
transact, and is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the
nature of its activities requires such qualification, except where
the failure of the Company to be so qualified would not, singly or
in the aggregate, have a Material Adverse Effect.
4.10 Subsidiaries of the
Company . The Company has no subsidiaries that are material to
its business, financial condition or earnings other than those
subsidiaries listed in Schedule 1 attached hereto (the
“Significant Subsidiaries”). Each Significant
Subsidiary has been duly organized and is validly existing and in
good standing under the laws of the jurisdiction in which it is
chartered or organized, with all requisite power and authority to
own its properties and conduct the business it transacts and
proposes to transact. Each Significant Subsidiary is duly qualified
to transact business and is in good standing as a foreign entity in
each jurisdiction where the nature of its activities requires such
qualification, except where the failure of any such Significant
Subsidiary to be so qualified would not, singly or in the
aggregate, have a Material Adverse Effect.
4.11 Government Licenses .
Each of the Trust, the Company and each of its subsidiaries hold
all necessary approvals, authorizations, orders, licenses,
certificates and permits (collectively, “Government
Licenses”) of and from Governmental Entities necessary to
conduct its respective business as now being conducted, and neither
the Trust, the Company nor any of the Company’s subsidiaries
has received any notice of proceedings relating to the revocation
or modification of any such Government License, except where the
failure to be so licensed or approved or the receipt of an
unfavorable decision, ruling or finding, would not, singly or in
the aggregate, have a Material Adverse Effect; all of the
Government Licenses are valid and in full force and effect, except
where the invalidity or the failure of such Government Licenses to
be in full force and effect, would not, singly or in the aggregate,
have a Material Adverse Effect; and the Company and its
subsidiaries are in compliance with all applicable laws, rules,
regulations, judgments, orders, decrees and consents, except where
the failure to be in compliance would not, singly or in the
aggregate, have a Material Adverse Effect.
4.12 Stock . All of the
issued and outstanding shares of capital stock of the Company and
each of its subsidiaries are validly issued, fully paid and
nonassesssable; all of the issued and outstanding capital stock of
each subsidiary of the Company is owned by the Company, directly or
through subsidiaries, free and clear of any Lien, claim or
equitable right; and none of the issued and outstanding capital
stock of the Company or any subsidiary was issued in violation of
any preemptive or similar rights arising by operation of law, under
the charter or by-laws of such entity or under any agreement to
which the Company or any of its subsidiaries is a party.
4.13 Property . Each of the
Trust, the Company and each subsidiary of the Company has good and
marketable title to all of its respective real and personal
properties, in each case
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free and clear of all Liens and defects, except
for those that would not, singly or in the aggregate, have a
Material Adverse Effect; and all of the leases and subleases under
which the Trust, the Company or any subsidiary of the Company holds
properties are in full force and effect, except where the failure
of such leases and subleases to be in full force and effect would
not, singly or in the aggregate, have a Material Adverse Effect and
none of the Trust, the Company or any subsidiary of the Company has
any notice of any claim of any sort that has been asserted by
anyone adverse to the rights of the Trust, the Company or any
subsidiary of the Company under any such leases or subleases, or
affecting or questioning the rights of such entity to the continued
possession of the leased or subleased premises under any such lease
or sublease, except for such claims that would not, singly or in
the aggregate, have a Material Adverse Effect.
4.14 Conflicts, Authorizations
and Approvals . Neither the Company nor any of its subsidiaries
is (i) in violation of its respective charter, bylaws or similar
organizational documents or (ii) in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which either the
Company or any such subsidiary is a party or by which it or any of
them may be bound or to which any of the property or assets of any
of them is subject, except, in the case of clause (ii), where such
default would not, singly or in the aggregate, have a Material
Adverse Effect. No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of,
any Governmental Entity, other than those that have been made or
obtained, is necessary or required for the performance by the Trust
or the Company of their respective obligations under the Operative
Documents, as applicable, or the consummation by the Trust and the
Company of the transactions contemplated by the Operative
Documents.
4.15 Holding Company Registration
and Deposit Insurance . The Company is duly registered as a
bank holding company under the Bank Holding Company Act of 1956, as
amended (the “ Bank Holding Company Act ”), and
the regulations of the Board of Governors of the Federal Reserve
System (the “ Federal Reserve ”), and the
deposit accounts of the Company’s subsidiary depository
institutions are insured by the Federal Deposit Insurance
Corporation (“FDIC”) to the fullest extent permitted by
law and the rules and regulations of the FDIC, and no proceeding
for the termination of such insurance are pending or, to the
knowledge of the Company or the Trust after due inquiry,
threatened.
4.16 Financial Statements
.
(a) The audited consolidated
financial statements (including the notes thereto) and schedules of
the Company and its consolidated subsidiaries at and for the fiscal
year ended December 31, 2004 (the “Financial
Statements”) and the interim unaudited consolidated financial
statements of the Company and its consolidated subsidiaries at and
for the quarter ended June 30, 2005 (the “Interim Financial
Statements”) provided to the Placement Agent are the most
recently available audited and unaudited consolidated financial
statements of the Company and its consolidated subsidiaries,
respectively, and fairly present in all material respects, in
accordance with U.S. generally accepted accounting principles
(“GAAP”), the financial position of the Company and its
consolidated subsidiaries, and the results of operations and
changes in financial condition as of the dates and for the periods
therein specified, subject, in the case of Interim Financial
Statements, to year-end adjustments (which
11
are expected to consist solely of normal
recurring adjustments). Such consolidated financial statements and
schedules have been prepared in accordance with GAAP consistently
applied throughout the periods involved (except as otherwise noted
therein).
(b) The Company’s report on
FRY-9C, dated June 30, 2005 (the “FRY-9C”), provided to
the Placement Agent is the most recently available such report, and
the information therein fairly presents in all material respects
the financial position of the Company and its subsidiaries. None of
the Company or any of its subsidiaries has been requested by a
Governmental Entity to republish, restate or refile any regulatory
or financial report.
(c) Since the respective dates of
the Financial Statements, Interim Financial Statements and the
FRY-9C, there has not been (A) any material adverse change or
development with respect to the condition (financial or otherwise),
earnings, business, assets or business prospects of the Company and
its subsidiaries, taken as a whole, whether or not occurring in the
ordinary course of business or (B) any dividend or distribution of
any kind declared, paid or made by the Company on any class of its
capital stock other than regular quarterly dividends on the
Company’s common stock.
(d) The accountants of the Company
who certified the Financial Statements are independent public
accountants of the Company and its subsidiaries within the meaning
of the Securities Act and the rules and regulations of the
Securities and Exchange Commission (“SEC”)
thereunder.
4.17 Regulatory Enforcement
Matters . None of the Trust, the Company nor any of its
subsidiaries, nor any of their respective officers, directors,
employees or representatives, is subject or is party to, or has
received any notice from any Regulatory Agency (as defined below)
that any of them will become subject or party to any investigation
with respect to, any cease-and-desist order, agreement, civil
monetary penalty, consent agreement, memorandum of understanding or
other regulatory enforcement action, proceeding or order with or
by, or is a party to any commitment letter or similar undertaking
to, or is subject to any directive by, or has been a recipient of
any supervisory letter from, or has adopted any board resolutions
at the request or suggestion of, any Regulatory Agency that, in any
such case, currently restricts in any material respect the conduct
of their business or that in any material manner relates to their
capital adequacy, their credit policies, their management or their
business (each, a “Regulatory Action”), nor has the
Trust, the Company or any of its subsidiaries been advised by any
Regulatory Agency that it is considering issuing or requesting any
such Regulatory Action; and there is no unresolved violation,
criticism or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of the Trust, the
Company or any of its subsidiaries, except where such unresolved
violation, criticism or exception would not, singly or in the
aggregate, have a Material Adverse Effect. If the Company is a bank
holding company that is subject to the Bank Holding Company Act, it
is a “well-run” bank holding company that satisfies the
criteria of the Federal Reserve’s regulations at 12 C.F.R.
§225.14(c). Each of the Company’s subsidiaries that is a
depository institution, the accounts of which are insured by the
FDIC (i) is “well-capitalized” within the meaning of 12
U.S.C. §1831o and applicable implementing regulations
thereunder; and (ii) is not, and has not been notified by any
Regulatory Agency that it is, in “troubled condition”
within the meaning of 12 U.S.C. §1831i and applicable
implementing regulations thereunder. As used herein, the term
“Regulatory Agency” means any
12
federal or state agency charged with the
supervision or regulation of depositary institutions or holding
companies of depositary institutions, or engaged in the insurance
of depositary institution deposits, or any court, administrative
agency or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with
respect to the Trust, the Company or any of its
subsidiaries.
4.18 No Undisclosed
Liabilities . None of the Trust, the Company nor any of its
subsidiaries has any material liability, whether known or unknown,
whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for taxes
(and there is no past or present fact, situation, circumstance,
condition or other basis for any present or future action, suit,
proceeding, hearing, charge, complaint, claim or demand against the
Company or its subsidiaries that could give rise to any such
liability), except for (i) liabilities set forth in the Financial
Statements or the Interim Financial Statements and (ii) normal
fluctuations in the amount of the liabilities referred to in clause
(i) above occurring in the ordinary course of business of the
Trust, the Company and all of its subsidiaries since the date of
the most recent balance sheet included in such Financial
Statements.
4.19 Litigation . There is no
action, suit or proceeding before or by any Governmental Entity,
arbitrator or court, domestic or foreign, now pending or, to the
knowledge of the Company or the Trust after due inquiry, threatened
against or affecting the Trust or the Company or any of the
Company’s subsidiaries, except for such actions, suits or
proceedings that, if adversely determined, would not, singly or in
the aggregate, adversely affect the consummation of the
transactions contemplated by the Operative Documents or have a
Material Adverse Effect; and the aggregate of all pending legal or
governmental proceedings to which the Trust or the Company or any
of its subsidiaries is a party or of which any of their respective
properties or assets is subject, including ordinary routine
litigation incidental to the business, are not expected to result
in a Material Adverse Effect.
4.20 No Labor Disputes . No
labor dispute with the employees of the Trust, the Company or any
of its subsidiaries exists or, to the knowledge of the executive
officers of the Trust or the Company, is imminent, except those
which would not, singly or in the aggregate, have a Material
Adverse Effect.
4.21 Filings with the SEC .
The documents of the Company filed with the SEC in accordance with
the Exchange Act, from and including the commencement of the fiscal
year covered by the Company’s most recent Annual Report on
Form 10-K, at the time they were or hereafter are filed by the
Company with the SEC (collectively, the “1934 Act
Reports”), complied and will comply in all material respects
with the requirements of the Exchange Act and the rules and
regulations of the SEC thereunder (the “1934 Act
Regulations”), and, at the date of this Agreement and on the
Closing Date, do not and will not include an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; and other than such instruments, agreements, contracts
and other documents as are filed as exhibits to the Company’s
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K, there are no instruments, agreements,
contracts or documents of a character described in Item 601 of
Regulation S-K promulgated by the SEC to which the
13
Company or any of its subsidiaries is a party.
The Company is in compliance with all currently applicable
requirements of the Exchange Act that were added by the
Sarbanes-Oxley Act of 2002.
4.22 Deferral of
Inte
