UST 99
FORM OF WARRANT TO PURCHASE
COMMON STOCK
THE SECURITIES REPRESENTED BY THIS
INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A
REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS. THIS INSTRUMENT IS
ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS
OF A SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF THESE
SECURITIES AND THE INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS
ON FILE WITH THE ISSUER. THE SECURITIES REPRESENTED BY THIS
INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN
COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.
WARRANT
to purchase
10,106,796 Shares of Common
Stock
of The South Financial Group,
Inc.
Issue Date: December 5,
2008
1.
Definitions
. Unless the context otherwise
requires, when used herein the following terms shall have the
meanings indicated.
“
Affiliate” has
the meaning ascribed to it in the Purchase Agreement.
“ Appraisal
Procedure” means a
procedure whereby two independent appraisers, one chosen by the
Company and one by the Original Warrantholder, shall mutually agree
upon the determinations then the subject of appraisal. Each party
shall deliver a notice to the other appointing its appraiser within
15 days after the Appraisal Procedure is invoked. If within 30 days
after appointment of the two appraisers they are unable to agree
upon the amount in question, a third independent appraiser shall be
chosen within 10 days thereafter by the mutual consent of such
first two appraisers. The decision of the third appraiser so
appointed and chosen shall be given within 30 days after the
selection of such third appraiser. If three appraisers shall be
appointed and the determination of one appraiser is disparate from
the middle determination by more than twice the amount by which the
other determination is disparate from the middle determination,
then the determination of such appraiser shall be excluded, the
remaining two determinations shall be averaged and such average
shall be binding and conclusive upon the Company and the Original
Warrantholder; otherwise, the average of all three
determinations
shall be binding upon the Company
and the Original Warrantholder. The costs of conducting any
Appraisal Procedure shall be borne by the Company.
“ Board of
Directors” means
the board of directors of the Company, including any duly
authorized committee thereof.
“ Business
Combination” means
a merger, consolidation, statutory share exchange or similar
transaction that requires the approval of the Company’s
stockholders.
“ business
day” means 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.
“ Capital
Stock” means (A)
with respect to any Person that is a corporation or company, any
and all shares, interests, participations or other equivalents
(however designated) of capital or capital stock of such Person and
(B) with respect to any Person that is not a corporation or
company, any and all partnership or other equity interests of such
Person.
“ Charter”
means, with respect to any Person,
its certificate or articles of incorporation, articles of
association, or similar organizational document.
“ Common
Stock” has the
meaning ascribed to it in the Purchase Agreement.
“ Company”
means the Person whose name,
corporate or other organizational form and jurisdiction of
organization is set forth in Item 1 of Schedule A
hereto.
“
conversion” has
the meaning set forth in Section 13(B).
“ convertible
securities” has the
meaning set forth in Section 13(B).
“ CPP”
has the meaning ascribed to it in
the Purchase Agreement.
“ Exchange
Act” means the
Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated
thereunder.
“ Exercise
Price” means the
amount set forth in Item 2 of Schedule A hereto.
“ Expiration
Time” has the
meaning set forth in Section 3.
“ Fair Market
Value” means, with
respect to any security or other property, the fair market value of
such security or other property as determined by the Board of
Directors, acting in good faith or, with respect to Section 14, as
determined by the Original Warrantholder acting in good faith. For
so long as the Original Warrantholder holds this Warrant or any
portion thereof, it may object in writing to the Board of
Director’s calculation of fair market value within 10 days of
receipt of written notice thereof. If the Original Warrantholder
and the Company are unable to agree on fair market value during the
10-day period following the delivery of the Original
Warrantholder’s objection, the Appraisal Procedure may be
invoked by either party to
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determine Fair Market Value by
delivering written notification thereof not later than the 30
th day after delivery of the Original
Warrantholder’s objection.
“ Governmental
Entities” has the
meaning ascribed to it in the Purchase Agreement.
“ Initial
Number” has the
meaning set forth in Section 13(B).
“Issue
Date” means the
date set forth in Item 3 of Schedule A hereto.
“ Market
Price” means, with
respect to a particular security, on any given day, the last
reported sale price regular way or, in case no such reported sale
takes place on such day, the average of the last closing bid and
ask prices regular way, in either case on the principal national
securities exchange on which the applicable securities are listed
or admitted to trading, or if not listed or admitted to trading on
any national securities exchange, the average of the closing bid
and ask prices as furnished by two members of the Financial
Industry Regulatory Authority, Inc. selected from time to time by
the Company for that purpose. “Market Price” shall be
determined without reference to after hours or extended hours
trading. If such security is not listed and traded in a manner that
the quotations referred to above are available for the period
required hereunder, the Market Price per share of Common Stock
shall be deemed to be (i) in the event that any portion of the
Warrant is held by the Original Warrantholder, the fair market
value per share of such security as determined in good faith by the
Original Warrantholder or (ii) in all other circumstances, the
fair market value per share of such security as determined in good
faith by the Board of Directors in reliance on an opinion of a
nationally recognized independent investment banking corporation
retained by the Company for this purpose and certified in a
resolution to the Warrantholder. For the purposes of determining
the Market Price of the Common Stock on the “trading
day” preceding, on or following the occurrence of an event,
(i) that trading day shall be deemed to commence immediately
after the regular scheduled closing time of trading on the New York
Stock Exchange or, if trading is closed at an earlier time, such
earlier time and (ii) that trading day shall end at the next
regular scheduled closing time, or if trading is closed at an
earlier time, such earlier time (for the avoidance of doubt, and as
an example, if the Market Price is to be determined as of the last
trading day preceding a specified event and the closing time of
trading on a particular day is 4:00 p.m. and the specified event
occurs at 5:00 p.m. on that day, the Market Price would be
determined by reference to such 4:00 p.m. closing
price).
“ Ordinary Cash
Dividends” means a
regular quarterly cash dividend on shares of Common Stock out of
surplus or net profits legally available therefor (determined in
accordance with generally accepted accounting principles in effect
from time to time), provided that Ordinary Cash Dividends shall not include
any cash dividends paid subsequent to the Issue Date to the extent
the aggregate per share dividends paid on the outstanding Common
Stock in any quarter exceed the amount set forth in Item 4 of
Schedule A hereto, as adjusted for any stock split, stock dividend,
reverse stock split, reclassification or similar
transaction.
“ Original
Warrantholder” means the United States Department of the
Treasury. Any actions specified to be taken by the Original
Warrantholder hereunder may only be taken by such Person and not by
any other Warrantholder.
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“ Permitted
Transactions” has
the meaning set forth in Section 13(B).
“ Person”
has the meaning given to it in
Section 3(a)(9) of the Exchange Act and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act.
“ Per Share Fair Market
Value” has the
meaning set forth in Section 13(C).
“Preferred
Shares” means the
perpetual preferred stock issued to the Original Warrantholder on
the Issue Date pursuant to the Purchase Agreement.
“ Pro Rata
Repurchases” means
any purchase of shares of Common Stock by the Company or any
Affiliate thereof pursuant to (A) any tender offer or exchange
offer subject to Section 13(e) or 14(e) of the Exchange Act or
Regulation 14E promulgated thereunder or (B) any other offer
available to substantially all holders of Common Stock, in the case
of both (A) or (B), whether for cash, shares of Capital Stock
of the Company, other securities of the Company, evidences of
indebtedness of the Company or any other Person or any other
property (including, without limitation, shares of Capital Stock,
other securities or evidences of indebtedness of a subsidiary), or
any combination thereof, effected while this Warrant is
outstanding. The “ Effective Date”
of a Pro Rata Repurchase shall mean
the date of acceptance of shares for purchase or exchange by the
Company under any tender or exchange offer which is a Pro Rata
Repurchase or the date of purchase with respect to any Pro Rata
Repurchase that is not a tender or exchange offer.
“ Purchase
Agreement” means
the Securities Purchase Agreement – Standard Terms
incorporated into the Letter Agreement, dated as of the date set
forth in Item 5 of Schedule A hereto, as amended from time to time,
between the Company and the United States Department of the
Treasury (the “ Letter Agreement”),
including all annexes and schedules
thereto.
“ Qualified Equity
Offering” has the
meaning ascribed to it in the Purchase Agreement.
“ Regulatory
Approvals” with
respect to the Warrantholder, means, to the extent applicable and
required to permit the Warrantholder to exercise this Warrant for
shares of Common Stock and to own such Common Stock without the
Warrantholder being in violation of applicable law, rule or
regulation, the receipt of any necessary approvals and
authorizations of, filings and registrations with, notifications
to, or expiration or termination of any applicable waiting period
under, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.
“ SEC ” means the
U.S. Securities and Exchange Commission.
“ Securities
Act” means the
Securities Act of 1933, as amended, or any successor statute, and
the rules and regulations promulgated thereunder.
“ Shares ” has
the meaning set forth in Section 2.
“ trading day
”means (A) if the shares of Common Stock are not traded on
any national or regional securities exchange or association or
over-the-counter market, a business day or (B) if the shares
of Common Stock are traded on any national or regional securities
exchange or
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association or over-the-counter
market, a business day on which such relevant exchange or quotation
system is scheduled to be open for business and on which the shares
of Common Stock (i) are not suspended from trading on any national
or regional securities exchange or association or over-the-counter
market for any period or periods aggregating one half hour or
longer; and (ii) have traded at least once on the national or
regional securities exchange or association or over-the-counter
market that is the primary market for the trading of the shares of
Common Stock.
“ U.S. GAAP
”means United States generally accepted accounting
principles.
“
Warrantholder” has the meaning set forth in Section
2.
“ Warrant”
means this Warrant, issued pursuant
to the Purchase Agreement.
2.
Number of Shares; Exercise
Price . This certifies
that, for value received, the United States Department of the
Treasury or its permitted assigns (the “ Warrantholder
”) is entitled, upon the terms and subject to the conditions
hereinafter set forth, to acquire from the Company, in whole or in
part, after the receipt of all applicable Regulatory Approvals, if
any, up to an aggregate of the number of fully paid and
nonassessable shares of Common Stock set forth in Item 6 of
Schedule A hereto, at a purchase price per share of Common Stock
equal to the Exercise Price. The number of shares of Common Stock
(the “ Shares ”) and the Exercise Price are
subject to adjustment as provided herein, and all references to
“Common Stock,” “Shares” and
“Exercise Price” herein shall be deemed to include any
such adjustment or series of adjustments.
3.
Exercise of Warrant;
Term . Subject to Section
2, to the extent permitted by applicable laws and regulations, the
right to purchase the Shares represented by this Warrant is
exercisable, in whole or in part by the Warrantholder, at any time
or from time to time after the execution and delivery of this
Warrant by the Company on the date hereof, but in no event later
than 5:00 p.m., New York City time on the tenth anniversary of the
Issue Date (the “ Expiration Time ”), by (A) the
surrender of this Warrant and Notice of Exercise annexed hereto,
duly completed and executed on behalf of the Warrantholder, at the
principal executive office of the Company located at the address
set forth in Item 7 of Schedule A hereto (or such other office or
agency of the Company in the United States as it may designate by
notice in writing to the Warrantholder at the address of the
Warrantholder appearing on the books of the Company), and (B)
payment of the Exercise Price for the Shares thereby
purchased:
(i)
by having the Company withhold, from
the shares of Common Stock that would otherwise be delivered to the
Warrantholder upon such exercise, shares of Common stock issuable
upon exercise of the Warrant equal in value to the aggregate
Exercise Price as to which this Warrant is so exercised based on
the Market Price of the Common Stock on the trading day on which
this Warrant is exercised and the Notice of Exercise is delivered
to the Company pursuant to this Section 3, or
(ii)
with the consent of both the Company
and the Warrantholder, by tendering in cash, by certified or
cashier’s check payable to the order of the Company, or by
wire transfer of immediately available funds to an account
designated by the Company.
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If the Warrantholder does not
exercise this Warrant in its entirety, the Warrantholder will be
entitled to receive from the Company within a reasonable time, and
in any event not exceeding three business days, a new warrant in
substantially identical form for the purchase of that number of
Shares equal to the difference between the number of Shares subject
to this Warrant and the number of Shares as to which this Warrant
is so exercised. Notwithstanding anything in this Warrant to the
contrary, the Warrantholder hereby acknowledges and agrees that its
exercise of this Warrant for Shares is subject to the condition
that the Warrantholder will have first received any applicable
Regulatory Approvals.
4.
Issuance of Shares;
Authorization; Listing .
Certificates for Shares issued upon exercise of this Warrant will
be issued in such name or names as the Warrantholder may designate
and will be delivered to such named Person or Persons within a
reasonable time, not to exceed three business days after the date
on which this Warrant has been duly exercised in accordance with
the terms of this Warrant. The Company hereby represents and
warrants that any Shares issued upon the exercise of this Warrant
in accordance with the provisions of Section 3 will be duly and
validly authorized and issued, fully paid and nonassessable and
free from all taxes, liens and charges (other than liens or charges
created by the Warrantholder, income and franchise taxes incurred
in connection with the exercise of the Warrant or taxes in respect
of any transfer occurring contemporaneously therewith). The Company
agrees that the Shares so issued will be deemed to have been issued
to the Warrantholder as of the close of business on the date on
which this Warrant and payment of the Exercise Price are delivered
to the Company in accordance with the terms of this Warrant,
notwithstanding that the stock transfer books of the Company may
then be closed or certificates representing such Shares may not be
actually delivered on such date. The Company will at all times
reserve and keep available, out of its authorized but unissued
Common Stock, solely for the purpose of providing for the exercise
of this Warrant, the aggregate number of shares of Common Stock
then issuable upon exercise of this Warrant at any time. The
Company will (A) procure, at its sole expense, the listing of the
Shares issuable upon exercise of this Warrant at any time, subject
to issuance or notice of issuance, on all principal stock exchanges
on which the Common Stock is then listed or traded and (B) maintain
such listings of such Shares at all times after issuance. The
Company will use reasonable best efforts to ensure that the Shares
may be issued without violation of any applicable law or regulation
or of any requirement of any securities exchange on which the
Shares are listed or traded.
5.
No Fractional Shares or
Scrip . No fractional
Shares or scrip representing fractional Shares shall be issued upon
any exercise of this Warrant. In lieu of any fractional Share to
which the Warrantholder would otherwise be entitled, the
Warrantholder shall be entitled to receive a cash payment equal to
the Market Price of the Common Stock on the last trading day
preceding the date of exercise less the pro-rated Exercise Price
for such fractional share.
6.
No Rights as Stockholders;
Transfer Books . This
Warrant does not entitle the Warrantholder to any voting rights or
other rights as a stockholder of the Company prior to the date of
exercise hereof. The Company will at no time close its transfer
books against transfer of this Warrant in any manner which
interferes with the timely exercise of this Warrant.
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7.
Charges, Taxes and
Expenses . Issuance of
certificates for Shares to the Warrantholder upon the exercise of
this Warrant shall be made without charge to the Warrantholder for
any issue or transfer tax or other incidental expense in respect of
the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company.
(A)
Subject to compliance with clause
(B) of this Section 8, this
