Exhibit 10.1
UST
Sequence Number: 422
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extent supplemented or superseded by the terms set forth herein or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.
UNITED STATES DEPARTMENT OF
THE TREASURY
By: /s/ Neel Kashkari
--------------------------------------
Name: Neel Kashkari
Title: Interim Assistant
Secretary
For Financial Stability
COMPANY:
GUARANTY FEDERAL BANCSHARES,
INC.
By: /s/ Shaun A. Burke
--------------------------------------
Name: Shaun A. Burke
Title: President and
Chief Executive
Officer
Date: January 30, 2009
EXHIBIT A
================================================================================
SECURITIES PURCHASE AGREEMENT
STANDARD TERMS
================================================================================
TABLE OF CONTENTS
Page
Article I
Purchase; Closing
1.1
Purchase............................................................1
1.2
Closing.............................................................2
1.3
Interpretation......................................................4
Article II
Representations and Warranties
2.1
Disclosure..........................................................4
2.2 Representations and Warranties of the
Company.......................5
Article III
Covenants
3.1 Commercially Reasonable
Efforts....................................13
3.2
Expenses...........................................................14
3.3 Sufficiency of Authorized Common Stock; Exchange
Listing...........14
3.4 Certain Notifications Until
Closing................................14
3.5 Access, Information and
Confidentiality............................15
Article IV
Additional Agreements
4.1 Purchase for
Investment............................................15
4.2
Legends............................................................16
4.3 Certain
Transactions...............................................17
4.4 Transfer of Purchased Securities and Warrant Shares;
Restrictions on Exercise of the
Warrant............................18
4.5 Registration
Rights................................................18
4.6 Voting of Warrant
Shares...........................................29
4.7 Depositary
Shares..................................................29
i
4.8 Restriction on Dividends and
Repurchases...........................30
4.9 Repurchase of Investor
Securities..................................31
4.10 Executive
Compensation.............................................32
Article V
Miscellaneous
5.1
Termination........................................................32
5.2 Survival of Representations and
Warranties.........................33
5.3
Amendment..........................................................33
5.4 Waiver of
Conditions...............................................33
5.5 Governing Law: Submission to Jurisdiction, Etc.
....................33
5.6
Notices............................................................34
5.7
Definitions........................................................34
5.8
Assignment.........................................................34
5.9
Severability.......................................................35
5.10 No Third Party
Beneficiaries.......................................35
ii
LIST OF ANNEXES
ANNEX A: FORM OF CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK
ANNEX B: FORM OF WAIVER
ANNEX C: FORM OF OPINION
ANNEX D: FORM OF WARRANT
iii
INDEX OF DEFINED TERMS
Location
of
Term
Definition
------------------------------------------------------
----------------------
Affiliate 5.7(b)
Agreement Recitals
Appraisal Procedure 4.9(c)(i)
Appropriate Federal Banking Agency 2.2(s)
Bankruptcy Exceptions 2.2(d)
Benefit Plans
1.2(d)(iv)
Board of Directors 2.2(f)
Business Combination 4.4
business day 1.3
Capitalization Date 2.2(b)
Certificate of Designations
1.2(d)(iii)
Charter
1.2(d)(iii)
Closing 1.2(a)
Closing Date 1.2(a)
Code 2.2(n)
Common Stock Recitals
Company Recitals
Company Financial Statements 2.2(h)
Company Material Adverse Effect 2.1(a)
Company Reports 2.2(i)(i)
Company Subsidiary; Company Subsidiaries 2.2(i)(i)
control; controlled by; under common control with 5.7(b)
Controlled Group 2.2(n)
CPP Recitals
EESA
1.2(d)(iv)
ERISA 2.2(n)
Exchange Act 2.1(b)
Fair Market Value
4.9(c)(ii)
GAAP 2.1(a)
Governmental Entities 1.2(c)
Holder 4.5(k)(i)
Holders' Counsel
4.5(k)(ii)
Indemnitee 4.5(g)(i)
Information 3.5(b)
Initial Warrant Shares Recitals
Investor Recitals
Junior Stock 4.8(c)
knowledge of the Company; Company's knowledge 5.7(c)
Last Fiscal Year 2.1(b)
Letter Agreement Recitals
officers 5.7(c)
Parity Stock 4.8(c)
Pending Underwritten Offering 4.5(l)
iv
Location of
Term
Definition
------------------------------------------------------
----------------------
Permitted Repurchases
4.8(a)(ii)
Piggyback Registration
4.5(a)(iv)
Plan 2.2(n)
Preferred Shares Recitals
Preferred Stock Recitals
Previously Disclosed 2.1(b)
Proprietary Rights 2.2(u)
Purchase Recitals
Purchase Price 1.1
Purchased Securities Recitals
Qualified Equity Offering 4.4
register; registered; registration
4.5(k)(iii)
Registrable Securities
4.5(k)(iv)
Registration Expenses 4.5(k)(v)
Regulatory Agreement 2.2(s)
Rule 144; Rule 144A; Rule 159A; Rule 405; Rule 415
4.5(k)(vi)
Schedules Recitals
SEC 2.1(b)
Securities Act 2.2(a)
Selling Expenses
4.5(k)(vii)
Senior Executive Officers 4.10
Share Dilution Amount
4.8(a)(ii)
Shelf Registration Statement
4.5(a)(ii)
Signing Date 2.1(a)
Special Registration 4.5(i)
Stockholder Proposals 3.1(b)
subsidiary 5.8(a)
Tax; Taxes 2.2(o)
Transfer 4.4
Warrant Recitals
Warrant Shares 2.2(d)
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"
).
1.2
Closing
.
(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 Section1.2, 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
.
(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
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;
2
(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 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 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).
3
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.
Article II
Representations and Warranties
2.1
Disclosure
.
(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
4
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 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
.
5
(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 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
.
(e)
Authorization, Enforceability
.
(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
6
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.
(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
7
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
accounting
requirements and with the published rules and regulations of the
SEC with
respect thereto.
(i)
Reports
.
(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,
8
summarize and report financial information and (y) any fraud,
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 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
9
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.
(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.
10
(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 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,
11
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 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.
12
(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.
(b) If the Company is required
