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Exhibit 10.1
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to the extent supplemented or superseded by the terms set forth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.
* * *
<PAGE>
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 the Office
of Financial Stability
COMPANY: FIRST LITCHFIELD FINANCIAL CORPORATION
By: /s/ Joseph J. Greco
--------------------
Name: Joseph J. Greco
Title: President and Chief Executive Officer
Dated: December 12, 2008
<PAGE>
EXHIBIT A
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SECURITIES PURCHASE AGREEMENT
STANDARD TERMS
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<PAGE>
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..................................15
3.5 Access, Information and
Confidentiality..............................15
Article IV
Additional Agreements
4.1 Purchase for
Investment..............................................16
4.2
Legends..............................................................16
4.3 Certain
Transactions.................................................18
4.4 Transfer of Purchase Securities and Warrant Shares;
Restrictions
on Exercise of the
Warrant...........................................18
4.5 Registration
Rights..................................................19
4.6 Voting of Warrant
Shares.............................................30
4.7 Depository
Shares....................................................31
4.8 Restriction on Dividends and
Repurchase..............................31
4.9 Repurchase of Investor
Securities....................................32
4.10 Executive
Compensation...............................................33
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<PAGE>
Article V
Miscellaneous
5.1
Termination..........................................................34
5.2 Survival of Representations and
Warranties...........................34
5.3
Amendment............................................................34
5.4 Waiver of
Conditions.................................................34
5.5 Governing Law: Submission to Jurisdiction,
Etc.......................35
5.6
Notices..............................................................35
5.7
Definitions..........................................................35
5.8
Assignment...........................................................36
5.9
Severability.........................................................36
5.10 No Third Party
Beneficiaries.........................................36
ii
<PAGE>
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
<PAGE>
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)
iv
<PAGE>
Location of
Term Definition
Parity Stock 4.8(c)
Pending Underwritten Offering 4.5(l)
Permitted Repurchases 4.8(a)(ii)
Piggyback Registrations 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 5.7(a)
Tax; Taxes 2.2(o)
Transfer 4.4
Warrant Recitals
Warrant Shares 2.2(d)
v
<PAGE>
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
<PAGE>
on Schedule A (the "Purchase Price").
1.2 Closing.
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(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.
(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
2
<PAGE>
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 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 designees(s).
3
<PAGE>
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.
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(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
4
<PAGE>
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
5
<PAGE>
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 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
6
<PAGE>
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.
(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
7
<PAGE>
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 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
8
<PAGE>
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, 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
<PAGE>
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
<PAGE>
(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, has adopted any board resolutions at the
request of, any
Governmental Entity (other than the
11
<PAGE>
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.
(v) Brokers and Finder
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