UST Sequence Number:
99
UNITED STATES DEPARTMENT OF THE TREASURY
1500
PENNSYLVANIA AVENUE, NW
WASHINGTON, D.C. 20220
Dear Ladies and
Gentlemen:
The company set forth on the
signature page hereto (the “ Company ”) intends
to issue in a private placement the number of shares of a series of
its preferred stock set forth on Schedule A hereto (the “
Preferred Shares ”) and a warrant to purchase the
number of shares of its common stock set forth on Schedule A hereto
(the “ Warrant ” and, together with the
Preferred Shares, the “ Purchased Securities ”)
and the United States Department of the Treasury (the “
Investor ”) intends to purchase from the Company the
Purchased Securities.
The purpose of this letter agreement
is to confirm the terms and conditions of the purchase by the
Investor of the Purchased Securities. Except to the extent
supplemented or superseded by the terms set forth herein or in the
Schedules hereto, the provisions contained in the Securities
Purchase Agreement – Standard Terms attached hereto as
Exhibit A (the “ Securities Purchase Agreement
”) are incorporated by reference herein. Terms that are
defined in the Securities Purchase Agreement are used in this
letter agreement as so defined. In the event of any inconsistency
between this letter agreement and the Securities Purchase
Agreement, the terms of this letter agreement shall
govern.
Each of the Company and the Investor
hereby confirms its agreement with the other party with respect to
the issuance by the Company of the Purchased Securities and the
purchase by the Investor of the Purchased Securities pursuant to
this letter agreement and the Securities Purchase Agreement on the
terms specified on Schedule A hereto.
This letter agreement (including the
Schedules hereto) and the Securities Purchase Agreement (including
the Annexes thereto) and the Warrant constitute the entire
agreement, and supersede all other prior agreements,
understandings, representations and warranties, both written and
oral, between the parties, with respect to the subject matter
hereof. This letter agreement constitutes the “Letter
Agreement” referred to in the Securities Purchase
Agreement.
This letter agreement may be
executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such
counterparts will together constitute the same agreement. Executed
signature pages to this letter agreement may be delivered by
facsimile and such facsimiles will be deemed as sufficient as if
actual signature pages had been delivered.
* * *
In witness whereof, this letter
agreement has been duly executed and delivered by the duly
authorized representatives of the parties hereto as of the date
written below.
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UNITED STATES DEPARTMENT OF THE
TREASURY
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By:
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/s/ Neel Kashkari
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Name: Neel Kashkari
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Title: Interim Assistant Secretary for Financial
Security
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COMPANY: THE SOUTH FINANCIAL GROUP,
INC.
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By:
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/s/ James R. Gordon
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Name: James R. Gordon
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Title: Senior Executive Vice President and Chief
Financial Officer
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Date: December 5, 2008
EXHIBIT A
SECURITIES PURCHASE
AGREEMENT
W/1317726v1
TABLE OF CONTENTS
Article I
Purchase; Closing
Article II
Representations And
Warranties
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2.2
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Representations and Warranties of the
Company
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5
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Article III
Covenants
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3.1
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Commercially Reasonable Efforts
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14
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3.3
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Sufficiency of Authorized Common Stock; Exchange
Listing
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16
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3.4
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Certain Notifications Until Closing
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16
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3.5
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Access, Information and
Confidentiality
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17
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Article IV
Additional Agreements
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4.1
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Purchase for Investment
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17
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-i-
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4.3
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Certain Transactions
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20
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4.4
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Transfer of Purchased Securities and Warrant
Shares; Restrictions
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On Exercise of the Warrant
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20
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4.6
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Voting of Warrant Shares
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33
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4.8
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Restriction on Dividends and
Repurchases
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33
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4.9
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Repurchase of Investor Securities
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34
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4.10
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Executive Compensation
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35
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Article V
Miscellaneous
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5.2
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Survival of Representations and
Warranties
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36
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5.4
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Waiver of Conditions
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37
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5.5
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Governing Law; Submission to Jurisdiction,
Etc.
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37
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5.10
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No Third Party Beneficiaries
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39
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-ii-
LIST OF ANNEXES
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ANNEX A:
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FORM OF CERTIFICATE OF DESIGNATIONS
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-iii-
INDEX OF DEFINED
TERMS
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Term
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Location of Definitions
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Affiliate
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5.7(b)
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Agreement
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Recitals
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Appraisal Procedure
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4.9(c)(i)
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Appropriate Federal Banking Agency
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2.2(s)
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Bankruptcy Exceptions
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2.2(d)
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Benefit Plans
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1.2(d)(iv)
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Board of Directors
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2.2(f)
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Business Combination
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4.4
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business day
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1.3
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Capitalization Date
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2.2(b)
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Certificate of Designations
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1.2(d)(iii)
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Charter
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1 .2(d)(iii)
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Closing
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1.2(a)
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Closing Date
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1.2(a)
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Code
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2.2(n)
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Common Stock
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Recitals
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Company
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Recitals
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Company Financial Statements
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2.2(h)
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Company Material Adverse Effect
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2.1(a)
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Company Reports
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2.2(i)(i)
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Company Subsidiary; Company
Subsidiaries
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2.2(i)(i)
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control; controlled by; under common control
with
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5.7(b)
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Controlled Group
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2.2(n)
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CPP
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Recitals
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EESA
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1.2(d)(iv)
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ERISA
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2.2(n)
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Exchange Act
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2.1(b)
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Fair Market Value
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4.9(c)(ii)
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GAAP
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2.1(a)
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Governmental Entities
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1.2(c)
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Holder
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4.5(k)(i)
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Holders’ Counsel
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4.5(k)(ii)
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Indemnitee
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4. 5(g)(i)
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Information
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3.5(b)
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Initial Warrant Shares
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Recitals
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Investor
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Recitals
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Junior Stock
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4.8(c)
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knowledge of the Company; Company’s
knowledge
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5.7(c)
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Last Fiscal Year
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2.1(b)
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Letter Agreement
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Recitals
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-iv-
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officers
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5.7(c)
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Parity Stock
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4.8(c)
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Pending Underwritten Offering
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4.5(l)
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Permitted Repurchases
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4. 8(a)(ii)
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Piggyback Registration
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4.5(a)(iv)
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Plan
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2.2(n)
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Preferred Shares
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Recitals
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Preferred Stock
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Recitals
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Previously Disclosed
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2.1(b)
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Proprietary Rights
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2.2(u)
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Purchase
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Recitals
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Purchase Price
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1.1
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Purchased Securities
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Recitals
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Qualified Equity Offering
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4.4
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register; registered; registration
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4.5(k)(iii)
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Registrable Securities
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4.5(k)(iv)
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Registration Expenses
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4.5(k)(v)
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Regulatory Agreement
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2.2(s)
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Rule 144; Rule 144A; Rule 159A; Rule 405; Rule
415
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4.5(k)(vi)
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Schedules
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Recitals
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SEC
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2.1(b)
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Securities Act
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2.2(a)
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Selling Expenses
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4.5(k)(vii)
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Senior Executive Officers
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4.10
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Share Dilution Amount
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4.8(a)(ii)
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Shelf Registration Statement
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4. 5(a)(ii)
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Signing Date
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2.1(a)
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Special Registration
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4.5(i)
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Stockholder Proposals
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3.1(b)
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subsidiary
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5.8(a)
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Tax; Taxes
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2.2(o)
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Transfer
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4.4
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Warrant
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Recitals
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Warrant Shares
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2.2(d)
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-v-
SECURITIES PURCHASE AGREEMENT -
STANDARD TERMS
Recitals:
WHEREAS, the United States
Department of the Treasury (the “ Investor ”)
may from time to time agree to purchase shares of preferred stock
and warrants from eligible financial institutions which elect to
participate in the Troubled Asset Relief Program Capital Purchase
Program (“ CPP ”);
WHEREAS, an eligible financial
institution electing to participate in the CPP and issue securities
to the Investor (referred to herein as the “ Company
”) shall enter into a letter agreement (the “ Letter
Agreement ”) with the Investor which incorporates this
Securities Purchase Agreement – Standard Terms;
WHEREAS, the Company agrees to
expand the flow of credit to U.S. consumers and businesses on
competitive terms to promote the sustained growth and vitality of
the U.S. economy;
WHEREAS, the Company agrees to work
diligently, under existing programs, to modify the terms of
residential mortgages as appropriate to strengthen the health of
the U.S. housing market;
WHEREAS, the Company intends to
issue in a private placement the number of shares of the series of
its Preferred Stock (“ Preferred Stock ”) set
forth on Schedule
A to the Letter Agreement
(the “ Preferred Shares ”) and a warrant to
purchase the number of shares of its Common Stock (“
Common Stock ”) set forth on Schedule A to the Letter Agreement (the “ Initial
Warrant Shares ”) (the “ Warrant ”
and, together with the Preferred Shares, the “ Purchased
Securities ”) and the Investor intends to purchase (the
“ Purchase ”) from the Company the Purchased
Securities; and
WHEREAS, the Purchase will be
governed by this Securities Purchase Agreement – Standard
Terms and the Letter Agreement, including the schedules thereto
(the “ Schedules ”), specifying additional terms
of the Purchase. This Securities Purchase Agreement –
Standard Terms (including the Annexes hereto) and the Letter
Agreement (including the Schedules thereto) are together referred
to as this “ Agreement ”. All references in this
Securities Purchase Agreement – Standard Terms to
“Schedules” are to the Schedules attached to the Letter
Agreement.
NOW, THEREFORE
, in consideration of the premises,
and of the representations, warranties, covenants and agreements
set forth herein, the parties agree as follows:
ARTICLE I
PURCHASE; CLOSING
1.1.
Purchase . On the terms and subject to the conditions
set forth in this Agreement, the Company agrees to sell to the
Investor, and the Investor agrees to purchase from the Company, at
the Closing (as hereinafter defined), the Purchased Securities for
the price set forth on Schedule A (the “ Purchase Price
”).
(a)
On the terms and subject to the
conditions set forth in this Agreement, the closing of the Purchase
(the “ Closing ”) will take place at the
location specified in Schedule A , at the time and on the date set forth
in Schedule A
or as soon as practicable
thereafter, or at such other place, time and date as shall be
agreed between the Company and the Investor. The time and date on
which the Closing occurs is referred to in this Agreement as the
“ Closing Date ”.
(b)
Subject to the fulfillment or waiver
of the conditions to the Closing in this Section 1.2, at the
Closing the Company will deliver the Preferred Shares and the
Warrant, in each case as evidenced by one or more certificates
dated the Closing Date and bearing appropriate legends as
hereinafter provided for, in exchange for payment in full of the
Purchase Price by wire transfer of immediately available United
States funds to a bank account designated by the Company on
Schedule A
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(c)
The respective obligations of each
of the Investor and the Company to consummate the Purchase are
subject to the fulfillment (or waiver by the Investor and the
Company, as applicable) prior to the Closing of the conditions that
(i) any approvals or authorizations of all United States and other
governmental, regulatory or judicial authorities (collectively,
“ Governmental Entities ”) required for the
consummation of the Purchase shall have been obtained or made in
form and substance reasonably satisfactory to each party and shall
be in full force and effect and all waiting periods required by
United States and other applicable law, if any, shall have expired
and (ii) no provision of any applicable United States or other law
and no judgment, injunction, order or decree of any Governmental
Entity shall prohibit the purchase and sale of the Purchased
Securities as contemplated by this Agreement.
(d)
The obligation of the Investor to
consummate the Purchase is also subject to the fulfillment (or
waiver by the Investor) at or prior to the Closing of each of the
following conditions:
(i)
(A) the representations and
warranties of the Company set forth in (x) Section 2.2(g) of this
Agreement shall be true and correct in all respects as though made
on and as of the Closing Date, (y) Sections 2.2(a) through (f)
shall be true and correct in all material respects as though made
on and as of the Closing Date (other than representations and
warranties that by their terms speak as of another date,
which
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representations and warranties shall
be true and correct in all material respects as of such other date)
and (z) Sections 2.2(h) through (v) (disregarding all
qualifications or limitations set forth in such representations and
warranties as to “materiality”, “Company Material
Adverse Effect” and words of similar import) shall be true
and correct as though made on and as of the Closing Date (other
than representations and warranties that by their terms speak as of
another date, which representations and warranties shall be true
and correct as of such other date), except to the extent that the
failure of such representations and warranties referred to in this
Section 1.2(d)(i)(A)(z) to be so true and correct, individually or
in the aggregate, does not have and would not reasonably be
expected to have a Company Material Adverse Effect and (B) the
Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at
or prior to the Closing;
(ii)
the Investor shall have received a
certificate signed on behalf of the Company by a senior executive
officer certifying to the effect that the conditions set forth in
Section 1.2(d)(i) have been satisfied;
(iii)
the Company shall have duly adopted
and filed with the Secretary of State of its jurisdiction of
organization or other applicable Governmental Entity the amendment
to its certificate or articles of incorporation, articles of
association, or similar organizational document (“
Charter ”) in substantially the form attached hereto
as Annex A
(the “ Certificate of
Designations ”) and such filing shall have been
accepted;
(iv)
(A) the Company shall have effected
such changes to its compensation, bonus, incentive and other
benefit plans, arrangements and agreements (including golden
parachute, severance and employment agreements) (collectively,
“ Benefit Plans ”) with respect to its Senior
Executive Officers (and to the extent necessary for such changes to
be legally enforceable, each of its Senior Executive Officers shall
have duly consented in writing to such changes), as may be
necessary, during the period that the Investor owns any debt or
equity securities of the Company acquired pursuant to this
Agreement or the Warrant, in order to comply with Section 111(b) of
the Emergency Economic Stabilization Act of 2008 (“
EESA ”) as implemented by guidance or regulation
thereunder that has been issued and is in effect as of the Closing
Date, and (B) the Investor shall have received a certificate signed
on behalf of the Company by a senior executive officer certifying
to the effect that the condition set forth in Section 1.2(d)(iv)(A)
has been satisfied;
(v)
each of the Company’s Senior
Executive Officers shall have delivered to the Investor a written
waiver in the form attached hereto as Annex B releasing the Investor from any claims that such
Senior Executive Officers may otherwise have as a result of the
issuance, on or prior to the Closing Date, of any regulations which
require the modification of, and the agreement of the Company
hereunder to modify, the terms of any Benefit Plans with respect to
its Senior Executive Officers to eliminate any provisions of such
Benefit Plans that would not be in compliance with the
requirements
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of Section 111(b) of the EESA as
implemented by guidance or regulation thereunder that has been
issued and is in effect as of the Closing Date;
(vi)
the Company shall have delivered to
the Investor a written opinion from counsel to the Company (which
may be internal counsel), addressed to the Investor and dated as of
the Closing Date, in substantially the form attached hereto
as Annex C
;
(vii)
the Company shall have delivered
certificates in proper form or, with the prior consent of the
Investor, evidence of shares in book-entry form, evidencing the
Preferred Shares to Investor or its designee(s); and
(viii)
the Company shall have duly executed
the Warrant in substantially the form attached hereto as
Annex D and delivered such executed Warrant to the
Investor or its designee(s).
1.3.
Interpretation
. When a reference is made in this
Agreement to “Recitals,” “Articles,”
“Sections,” or “Annexes” such reference
shall be to a Recital, Article or Section of, or Annex to, this
Securities Purchase Agreement – Standard Terms, and a
reference to “Schedules” shall be to a Schedule to the
Letter Agreement, in each case, unless otherwise indicated. The
terms defined in the singular have a comparable meaning when used
in the plural, and vice versa. References to “herein”,
“hereof”, “hereunder” and the like refer to
this Agreement as a whole and not to any particular section or
provision, unless the context requires otherwise. The table of
contents and headings contained in this Agreement are for reference
purposes only and are not part of this Agreement. Whenever the
words “include,” “includes” or
“including” are used in this Agreement, they shall be
deemed followed by the words “without limitation.” No
rule of construction against the draftsperson shall be applied in
connection with the interpretation or enforcement of this
Agreement, as this Agreement is the product of negotiation between
sophisticated parties advised by counsel. All references to
“$” or “dollars” mean the lawful currency
of the United States of America. Except as expressly stated in this
Agreement, all references to any statute, rule or regulation are to
the statute, rule or regulation as amended, modified, supplemented
or replaced from time to time (and, in the case of statutes,
include any rules and regulations promulgated under the statute)
and to any section of any statute, rule or regulation include any
successor to the section. References to a “ business
day ” shall mean any day except Saturday, Sunday and any
day on which banking institutions in the State of New York
generally are authorized or required by law or other governmental
actions to close.
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ARTICLE II
REPRESENTATIONS AND
WARRANTIES
(a)
“ Company Material Adverse
Effect ” means a material adverse effect on (i) the
business, results of operation or financial condition of the
Company and its consolidated subsidiaries taken as a whole;
provided , however , that Company Material Adverse Effect shall not
be deemed to include the effects of (A) changes after the date of
the Letter Agreement (the “ Signing Date ”) in
general business, economic or market conditions (including changes
generally in prevailing interest rates, credit availability and
liquidity, currency exchange rates and price levels or trading
volumes in the United States or foreign securities or credit
markets), or any outbreak or escalation of hostilities, declared or
undeclared acts of war or terrorism, in each case generally
affecting the industries in which the Company and its subsidiaries
operate, (B) changes or proposed changes after the Signing Date in
generally accepted accounting principles in the United States
(“ GAAP ”) or regulatory accounting
requirements, or authoritative interpretations thereof, (C) changes
or proposed changes after the Signing Date in securities, banking
and other laws of general applicability or related policies or
interpretations of Governmental Entities (in the case of each of
these clauses (A), (B) and (C), other than changes or occurrences
to the extent that such changes or occurrences have or would
reasonably be expected to have a materially disproportionate
adverse effect on the Company and its consolidated subsidiaries
taken as a whole relative to comparable U.S. banking or financial
services organizations), or (D) changes in the market price or
trading volume of the Common Stock or any other equity,
equity-related or debt securities of the Company or its
consolidated subsidiaries (it being understood and agreed that the
exception set forth in this clause (D) does not apply to the
underlying reason giving rise to or contributing to any such
change); or (ii) the ability of the Company to consummate the
Purchase and the other transactions contemplated by this Agreement
and the Warrant and perform its obligations hereunder or thereunder
on a timely basis.
(b)
“ Previously Disclosed
” means information set forth or incorporated in the
Company’s Annual Report on Form 10-K for the most recently
completed fiscal year of the Company filed with the Securities and
Exchange Commission (the “ SEC ”) prior to the
Signing Date (the “ Last Fiscal Year ”) or in
its other reports and forms filed with or furnished to the SEC
under Sections 13(a), 14(a) or 15(d) of the Securities Exchange Act
of 1934 (the “ Exchange Act ”) on or after the
last day of the Last Fiscal Year and prior to the Signing
Date.
2.2.
Representations and Warranties of
the Company . Except as
Previously Disclosed, the Company represents and warrants to the
Investor that as of the Signing Date and as of the Closing Date (or
such other date specified herein):
(a)
Organization, Authority and
Significant Subsidiaries . The Company has been duly incorporated and is
validly existing and in good standing under
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the laws of its jurisdiction of
organization, with the necessary power and authority to own its
properties and conduct its business in all material respects as
currently conducted, and except as has not, individually or in the
aggregate, had and would not reasonably be expected to have a
Company Material Adverse Effect, has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification; each subsidiary of the Company that is a
“significant subsidiary” within the meaning of Rule
1-02(w) of Regulation S-X under the Securities Act of 1933 (the
“ Securities Act ”) has been duly organized and
is validly existing in good standing under the laws of its
jurisdiction of organization. The Charter and bylaws of the
Company, copies of which have been provided to the Investor prior
to the Signing Date, are true, complete and correct copies of such
documents as in full force and effect as of the Signing
Date.
(b)
Capitalization
. The authorized capital stock of
the Company, and the outstanding capital stock of the Company
(including securities convertible into, or exercisable or
exchangeable for, capital stock of the Company) as of the most
recent fiscal month-end preceding the Signing Date (the “
Capitalization Date ”) is set forth on
Schedule B
. The outstanding shares of capital
stock of the Company have been duly authorized and are validly
issued and outstanding, fully paid and nonassessable, and subject
to no preemptive rights (and were not issued in violation of any
preemptive rights). Except as provided in the Warrant, as of the
Signing Date, the Company does not have outstanding any securities
or other obligations providing the holder the right to acquire
Common Stock that is not reserved for issuance as specified
on Schedule B
, and the Company has not made any
other commitment to authorize, issue or sell any Common Stock.
Since the Capitalization Date, the Company has not issued any
shares of Common Stock, other than (i) shares issued upon the
exercise of stock options or delivered under other equity-based
awards or other convertible securities or warrants which were
issued and outstanding on the Capitalization Date and disclosed
on Schedule B
and (ii) shares disclosed on
Schedule B
.
(c)
Preferred Shares
. The Preferred Shares have been
duly and validly authorized, and, when issued and delivered
pursuant to this Agreement, such Preferred Shares will be duly and
validly issued and fully paid and non-assessable, will not be
issued in violation of any preemptive rights, and will rank
pari passu
with or senior to all other series
or classes of Preferred Stock, whether or not issued or
outstanding, with respect to the payment of dividends and the
distribution of assets in the event of any dissolution, liquidation
or winding up of the Company.
(d)
The Warrant and Warrant
Shares . The Warrant has
been duly authorized and, when executed and delivered as
contemplated hereby, will constitute a valid and legally binding
obligation of the Company enforceable against the Company in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of
-6-
creditors’ rights generally
and general equitable principles, regardless of whether such
enforceability is considered in a proceeding at law or in equity
(“ Bankruptcy Exceptions ”). The shares of
Common Stock issuable upon exercise of the Warrant (the “
Warrant Shares ”) have been duly authorized and
reserved for issuance upon exercise of the Warrant and when so
issued in accordance with the terms of the Warrant will be validly
issued, fully paid and non-assessable, subject, if applicable, to
the approvals of its stockholders set forth on
Schedule C
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(e)
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Authorization, Enforceability
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(i)
The Company has the corporate power
and authority to execute and deliver this Agreement and the Warrant
and, subject, if applicable, to the approvals of its stockholders
set forth on Schedule
C , to carry out its
obligations hereunder and thereunder (which includes the issuance
of the Preferred Shares, Warrant and Warrant Shares). The
execution, delivery and performance by the Company of this
Agreement and the Warrant and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company and its
stockholders, and no further approval or authorization is required
on the part of the Company, subject, in each case, if applicable,
to the approvals of its stockholders set forth on
Schedule C
. This Agreement is a valid and
binding obligation of the Company enforceable against the Company
in accordance with its terms, subject to the Bankruptcy
Exceptions.
(ii)
The execution, delivery and
performance by the Company of this Agreement and the Warrant and
the consummation of the transactions contemplated hereby and
thereby and compliance by the Company with the provisions hereof
and thereof, will not (A) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration of, or result in the creation of, any lien, security
interest, charge or encumbrance upon any of the properties or
assets of the Company or any Company Subsidiary under any of the
terms, conditions or provisions of (i) subject, if applicable, to
the approvals of the Company’s stockholders set forth
on Schedule C
, its organizational documents or
(ii) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the
Company or any Company Subsidiary is a party or by which it or any
Company Subsidiary may be bound, or to which the Company or any
Company Subsidiary or any of the properties or assets of the
Company or any Company Subsidiary may be subject, or (B) subject to
compliance with the statutes and regulations referred to in the
next paragraph, violate any statute, rule or regulation or any
judgment, ruling, order, writ, injunction or decree applicable to
the Company or any Company Subsidiary or any of their respective
properties or assets except, in the case of clauses (A)(ii) and
(B), for those occurrences that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Company
Material Adverse Effect.
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(iii)
Other than the filing of the
Certificate of Designations with the Secretary of State of its
jurisdiction of organization or other applicable Governmental
Entity, any current report on Form 8-K required to be filed with
the SEC, such filings and approvals as are required to be made or
obtained under any state “blue sky” laws, the filing of
any proxy statement contemplated by Section 3.1 and such as have
been made or obtained, no notice to, filing with, exemption or
review by, or authorization, consent or approval of, any
Governmental Entity is required to be made or obtained by the
Company in connection with the consummation by the Company of the
Purchase except for any such notices, filings, exemptions, reviews,
authorizations, consents and approvals the failure of which to make
or obtain would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect.
(f)
Anti-takeover Provisions and
Rights Plan . The Board
of Directors of the Company (the “ Board of Directors
”) has taken all necessary action to ensure that the
transactions contemplated by this Agreement and the Warrant and the
consummation of the transactions contemplated hereby and thereby,
including the exercise of the Warrant in accordance with its terms,
will be exempt from any anti-takeover or similar provisions of the
Company’s Charter and bylaws, and any other provisions of any
applicable “moratorium”, “control share”,
“fair price”, “interested stockholder” or
other anti-takeover laws and regulations of any jurisdiction. The
Company has taken all actions necessary to render any
stockholders’ rights plan of the Company inapplicable to this
Agreement and the Warrant and the consummation of the transactions
contemplated hereby and thereby, including the exercise of the
Warrant by the Investor in accordance with its terms.
(g)
No Company Material Adverse
Effect . Since the last
day of the last completed fiscal period for which the Company has
filed a Quarterly Report on Form 10-Q or an Annual Report on Form
10-K with the SEC prior to the Signing Date, no fact, circumstance,
event, change, occurrence, condition or development has occurred
that, individually or in the aggregate, has had or would reasonably
be expected to have a Company Material Adverse Effect.
(h)
Company Financial
Statements . Each of the
consolidated financial statements of the Company and its
consolidated subsidiaries (collectively the “ Company
Financial Statements ”) included or incorporated by
reference in the Company Reports filed with the SEC since December
31, 2006, present fairly in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries
as of the dates indicated therein (or if amended prior to the
Signing Date, as of the date of such amendment) and the
consolidated results of their operations for the periods specified
therein; and except as stated therein, such financial statements
(A) were prepared in conformity with GAAP applied on a consistent
basis (except as may be noted therein), (B) have been prepared
from, and are in accordance with, the books and records of the
Company and the Company Subsidiaries and (C) complied as to form,
as of their respective dates of filing with the SEC, in all
material respects with the applicable
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accounting requirements and with the
published rules and regulations of the SEC with respect
thereto.
(i)
Since December 31, 2006, the Company
and each subsidiary of the Company (each a “ Company
Subsidiary ” and, collectively, the “ Company
Subsidiaries ”) has timely filed all reports,
registrations, documents, filings, statements and submissions,
together with any amendments thereto, that it was required to file
with any Governmental Entity (the foregoing, collectively, the
“ Company Reports ”) and has paid all fees and
assessments due and payable in connection therewith, except, in
each case, as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
As of their respective dates of filing, the Company Reports
complied in all material respects with all statutes and applicable
rules and regulations of the applicable Governmental Entities. In
the case of each such Company Report filed with or furnished to the
SEC, such Company Report (A) did not, as of its date or if amended
prior to the Signing Date, as of the date of such amendment,
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made,
not misleading, and (B) complied as to form in all material
respects with the applicable requirements of the Securities Act and
the Exchange Act. With respect to all other Company Reports, the
Company Reports were complete and accurate in all material respects
as of their respective dates. No executive officer of the Company
or any Company Subsidiary has failed in any respect to make the
certifications required of him or her under Section 302 or 906 of
the Sarbanes-Oxley Act of 2002.
(ii)
The records, systems, controls, data
and information of the Company and the Company Subsidiaries are
recorded, stored, maintained and operated under means (including
any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and
direct control of the Company or the Company Subsidiaries or their
accountants (including all means of access thereto and therefrom),
except for any non-exclusive ownership and non-direct control that
would not reasonably be expected to have a material adverse effect
on the system of internal accounting controls described below in
this Section 2.2(i)(ii). The Company (A) has implemented and
maintains disclosure controls and procedures (as defined in Rule
13a-15(e) of the Exchange Act) to ensure that material information
relating to the Company, including the consolidated Company
Subsidiaries, is made known to the chief executive officer and the
chief financial officer of the Company by others within those
entities, and (B) has disclosed, based on its most recent
evaluation prior to the Signing Date, to the Company’s
outside auditors and the audit committee of the Board of Directors
(x) any significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting
(as defined in Rule 13a-15(f) of the Exchange Act) that are
reasonably likely to adversely affect the Company’s ability
to record, process, summarize and report financial information and
(y) any fraud,
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whether or not material, that
involves management or other employees who have a significant role
in the Company’s internal controls over financial
reporting.
(j)
No Undisclosed
Liabilities . Neither the
Company nor any of the Company Subsidiaries has any liabilities or
obligations of any nature (absolute, accrued, contingent or
otherwise) which are not properly reflected or reserved against in
the Company Financial Statements to the extent required to be so
reflected or reserved against in accordance with GAAP, except for
(A) liabilities that have arisen since the last fiscal year end in
the ordinary and usual course of business and consistent with past
practice and (B) liabilities that, individually or in the
aggregate, have not had and would not reasonably be expected to
have a Company Material Adverse Effect.
(k)
Offering of Securities
. Neither the Company nor any person
acting on its behalf has taken any action (including any offering
of any securities of the Company under circumstances which would
require the integration of such offering with the offering of any
of the Purchased Securities under the Securities Act, and the rules
and regulations of the SEC promulgated thereunder), which might
subject the offering, issuance or sale of any of the Purchased
Securities to Investor pursuant to this Agreement to the
registration requirements of the Securities Act.
(l)
Litigation and Other
Proceedings . Except (i)
as set forth on Schedule
D or (ii) as would not,
individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect, there is no (A) pending or, to the
knowledge of the Company, threatened, claim, action, suit,
investigation or proceeding, against the Company or any Company
Subsidiary or to which any of their assets are subject nor is the
Company or any Company Subsidiary subject to any order, judgment or
decree or (B) unresolved violation, criticism or exception by any
Governmental Entity with respect to any report or relating to any
examinations or inspections of the Company or any Company
Subsidiaries.
(m)
Compliance with Laws
. Except as would not, individually
or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, the Company and the Company Subsidiaries
have all permits, licenses, franchises, authorizations, orders and
approvals of, and have made all filings, applications and
registrations with, Governmental Entities that are required in
order to permit them to own or lease their properties and assets
and to carry on their business as presently conducted and that are
material to the business of the Company or such Company Subsidiary.
Except as set forth on Schedule E , the Company and the Company Subsidiaries have
complied in all respects and are not in default or violation of,
and none of them is, to the knowledge of the Company, under
investigation with respect to or, to the knowledge of the Company,
have been threatened to be charged with or given notice of any
violation of, any applicable domestic (federal, state or local) or
foreign law, statute, ordinance, license, rule, regulation, policy
or guideline, order, demand, writ, injunction, decree or judgment
of any Governmental Entity, other than such noncompliance, defaults
or
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violations that would not,
individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. Except for statutory or regulatory
restrictions of general application or as set forth on
Schedule E
, no Governmental Entity has placed
any restriction on the business or properties of the Company or any
Company Subsidiary that would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse
Effect.
(n)
Employee Benefit
Matters . Except as would
not reasonably be expected to have, either individually or in the
aggregate, a Company Material Adverse Effect: (A) each
“employee benefit plan” (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ ERISA ”)) providing benefits to any
current or former employee, officer or director of the Company or
any member of its “ Controlled Group ” (defined
as any organization which is a member of a controlled group of
corporations within the meaning of Section 414 of the Internal
Revenue Code of 1986, as amended (the “ Code ”))
that is sponsored, maintained or contributed to by the Company or
any member of its Controlled Group and for which the Company or any
member of its Controlled Group would have any liability, whether
actual or contingent (each, a “ Plan ”) has been
maintained in compliance with its terms and with the requirements
of all applicable statutes, rules and regulations, including ERISA
and the Code; (B) with respect to each Plan subject to Title IV of
ERISA (including, for purposes of this clause (B), any plan subject
to Title IV of ERISA that the Company or any member of its
Controlled Group previously maintained or contributed to in the six
years prior to the Signing Date), (1) no “reportable
event” (within the meaning of Section 4043(c) of ERISA),
other than a reportable event for which the notice period referred
to in Section 4043(c) of ERISA has been waived, has occurred in the
three years prior to the Signing Date or is reasonably expected to
occur, (2) no “accumulated funding deficiency” (within
the meaning of Section 302 of ERISA or Section 412 of the Code),
whether or not waived, has occurred in the three years prior to the
Signing Date or is reasonably expected to occur, (3) the fair
market value of the assets under each Plan exceeds the present
value of all benefits accrued under such Plan (determined based on
the assumptions used to fund such Plan) and (4) neither the Company
nor any member of its Controlled Group has incurred in the six
years prior to the Signing Date, or reasonably expects to incur,
any liability under Title IV of ERISA (other than contributions to
the Plan or premiums to the PBGC in the ordinary course and without
default) in respect of a Plan (including any Plan that is a
“multiemployer plan”, within the meaning of Section
4001(c)(3) of ERISA); and (C) each Plan that is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service with respect
to its qualified status that has not been revoked, or such a
determination letter has been timely applied for but not received
by the Signing Date, and nothing has occurred, whether by action or
by failure to act, which could reasonably be expected to cause the
loss, revocation or denial of such qualified status or favorable
determination letter.
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(o)
Taxes . Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect, (i) the Company and the Company Subsidiaries have
filed all federal, state, local and foreign income and franchise
Tax returns required to be filed through the Signing Date, subject
to permitted extensions, and have paid all Taxes due thereon, and
(ii) no Tax deficiency has been determined adversely to the Company
or any of the Company Subsidiaries, nor does the Company have any
knowledge of any Tax deficiencies. “ Tax ” or
“ Taxes ” means any federal, state, local or
foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or
add on minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or
penalty, imposed by any Governmental Entity.
(p)
Properties and Leases
. Except as would not, individually
or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, the Company and the Company Subsidiaries
have good and marketable title to all real properties and all other
properties and assets owned by them, in each case free from liens,
encumbrances, claims and defects that would affect the value
thereof or interfere with the use made or to be made thereof by
them. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect,
the Company and the Company Subsidiaries hold all leased real or
personal property under valid and enforceable leases with no
exceptions that would interfere with the use made or to be made
thereof by them.
(q)
Environmental
Liability . Except as
would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect:
(i)
there is no legal, administrative,
or other proceeding, claim or action of any nature seeking to
impose, or that would reasonably be expected to result in the
imposition of, on the Company or any Company Subsidiary, any
liability relating to the release of hazardous substances as
defined under any local, state or federal environmental statute,
regulation or ordinance, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, pending or, to
the Company’s knowledge, threatened against the Company or
any Company Subsidiary;
(ii)
to the Company’s knowledge,
there is no reasonable basis for any such proceeding, claim or
action; and
(iii)
neither the Company nor any Company
Subsidiary is subject to any agreement, order, judgment or decree
by or with any court, Governmental Entity or third party imposing
any such environmental liability.
(r)
Risk Management
Instruments . Except as
would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect, all derivative
instruments, including, swaps, caps, floors and option agreements,
whether
-12-
entered into for the Company’s
own account, or for the account of one or more of the Company
Subsidiaries or its or their customers, were entered into (i) only
in the ordinary course of business, (ii) in accordance with prudent
practices and in all material respects with all applicable laws,
rules, regulations and regulatory policies and (iii) with
counterparties believed to be financially responsible at the time;
and each of such instruments constitutes the valid and legally
binding obligation of the Company or one of the Company
Subsidiaries, enforceable in accordance with its terms, except as
may be limited by the Bankruptcy Exceptions. Neither the Company or
the Company Subsidiaries, nor, to the knowledge of the Company, any
other party thereto, is in breach of any of its obligations under
any such agreement or arrangement other than such breaches that
would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect.
(s)
Agreements with Regulatory
Agencies . Except as set
forth on Schedule
F , neither the Company
nor any Company Subsidiary is subject to any material
cease-and-desist or other similar order or enforcement action
issued by, or is a party to any material written agreement, consent
agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any
capital directive by, or since December 31, 2006, has adopted any
board resolutions at the request of, any Governmental Entity (other
than the Appropriate Federal Banking Agencies with jurisdiction
over the Company and the Company Subsidiaries) that currently
restricts in any material respect the conduct of its business or
that in any material manner relates to its capital adequacy, its
liquidity and funding policies and practices, its ability to pay
dividends, its credit, risk management or compliance policies or
procedures, its internal controls, its management or its operations
or business (each item in this sentence, a “ Regulatory
Agreement ”), nor has the Company or any Company
Subsidiary been advised since December 31, 2006 by any such
Governmental Entity that it is considering issuing, initiating,
ordering, or requesting any such Regulatory Agreement. The Company
and each Company Subsidiary are in compliance in all material
respects with each Regulatory Agreement to which it is party or
subject, and neither the Company nor any Company Subsidiary has
received any notice from any Governmental Entity indicating that
either the Company or any Company Subsidiary is not in compliance
in all material respects with any such Regulatory Agreement.
“ Appropriate Federal Banking Agency ” means the
“appropriate Federal banking agency” with respect to
the Company or such Company Subsidiaries, as applicable, as defined
in Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C.
Section 1813(q)).
(t)
Insurance . The Company and the Company Subsidiaries are
insured with reputable insurers against such risks and in such
amounts as the management of the Company reasonably has determined
to be prudent and consistent with industry practice. The Company
and the Company Subsidiaries are in material compliance with their
insurance policies and are not in default under any of the material
terms thereof, each such policy is outstanding and in full force
and effect, all premiums and other payments due under any material
policy have been paid, and all claims
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thereunder have been filed in due
and timely fashion, except, in each case, as would not,
individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
(u)
Intellectual Property
. Except as would not, individually
or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, (i) the Company and each Company
Subsidiary owns or otherwise has the right to use, all intellectual
property rights, including all trademarks, trade dress, trade
names, service marks, domain names, patents, inventions, trade
secrets, know-how, works of authorship and copyrights therein, that
are used in the conduct of their existing businesses and all rights
relating to the plans, design and specifications of any of its
branch facilities (“ Proprietary Rights ”) free
and clear of all liens and any claims of ownership by current or
former employees, contractors, designers or others and (ii) neither
the Company nor any of the Company Subsidiaries is materially
infringing, diluting, misappropriating or violating, nor has the
Company or any or the Company Subsidiaries received any written
(or, to the knowledge of the Company, oral) communications alleging
that any of them has materially infringed, diluted, misappropriated
or violated, any of the Proprietary Rights owned by any other
person. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect,
to the Company’s knowledge, no other person is infringing,
diluting, misappropriating or violating, nor has the Company or any
or the Company Subsidiaries sent any written communications since
January 1, 2006 alleging that any person has infringed, diluted,
misappropriated or violated, any of the Proprietary Rights owned by
the Company and the Company Subsidiaries.
(v)
Brokers and Finders
. No broker, finder or investment
banker is entitled to any financial advisory, brokerage,
finder’s or other fee or commission in connection with this
Agreement or the Warrant or the transactions contemplated hereby or
thereby based upon arrangements made by or on behalf of the Company
or any Company Subsidiary for which the Investor could have any
liability.
ARTICLE III
COVENANTS
|
|
3.1.
|
Commercially Reasonable Efforts
.
|
(a)
Subject to the terms and conditions
of this Agreement, each of the parties will use its commercially
reasonable efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary,
proper or desirable, or advisable under applicable laws, so as to
permit consummation of the Purchase as promptly as practicable and
otherwise to enable consummation of the transactions contemplated
hereby and shall use commercially reasonable efforts to cooperate
with the other party to that end.
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(b)
If the Company is required to obtain
any stockholder approvals set forth on Schedule C , then the Company shall comply with this
Section 3.1(b) and Section 3.1(c). The Company shall call a special
meeting of its stockholders, as promptly as practicable following
the Closing, to vote on proposals (collectively, the “
Stockholder Proposals ”) to (i) approve the exercise
of the Warrant for Common Stock for purposes of the rules of the
national security exchange on which the Common Stock is listed
and/or (ii) amend the Company’s Charter to increase the
number of authorized shares of Common Stock to at least such number
as shall be sufficient to permit the full exercise of the Warrant
for Common Stock and comply with the other provisions of this
Section 3.1(b) and Section 3.1(c). The Board of Directors shall
recommend to the Company’s stockholders that such
stockholders vote in favor of the Stockholder Proposals. In
connection with such meeting, the Company shall prepare (and the
Investor will reasonably cooperate with the Company to prepare) and
file with the SEC as promptly as practicable (but in no event more
than ten business days after the Closing) a preliminary proxy
statement, shall use its reasonable best efforts to respond to any
comments of the SEC or its staff thereon and to cause a definitive
proxy statement related to such stockholders’ meeting to be
mailed to the Company’s stockholders not more than five
business days after clearance thereof by the SEC, and shall use its
reasonable best efforts to solicit proxies for such stockholder
approval of the Stockholder Proposals. The Company shall notify the
Investor promptly of the receipt of any comments from the SEC or
its staff with respect to the proxy statement and of any request by
the SEC or its staff for amendments or supplements to such proxy
statement or for additional information and will supply the
Investor with copies of all correspondence between the Company or
any of its representatives, on the one hand, and the SEC or its
staff
