Exhibit 10.1

 

            CONTINGENT VALUE RIGHTS AGREEMENT

            THIS CONTINGENT VALUE RIGHTS AGREEMENT, dated as of October 1, 2012
(this “Agreement”), is entered into by Capital Bank Financial Corporation (the
“Purchaser”), a Delaware corporation, for the benefit of the Holders (as defined
herein).

RECITALS:

            WHEREAS, the Purchaser, Winston 23 Corporation and Southern
Community Financial Corporation (the “Company”) have entered into an Agreement
and Plan of Merger dated as of March 26, 2012, as amended on June 25, 2012 and
September 25, 2012 (the “Merger Agreement”), pursuant to which Winston 23
Corporation, a wholly owned subsidiary of Purchaser, will merge with and into
the Company, with the Company continuing as the surviving the entity, pursuant
to the terms and conditions set forth in the Merger Agreement.

            WHEREAS, pursuant to Section 2.7 of the Merger Agreement, the
Purchaser agreed to issue contingent value rights to holders of the Company’s
common stock, no par value (the “Common Stock”), as described herein.

            WHEREAS, the Purchaser has done all things necessary to make the
contingent value rights, when issued pursuant to the Merger Agreement and
hereunder, the valid obligations of the Purchaser and to make this Agreement a
valid and binding agreement of the Purchaser, in accordance with its terms.

            NOW, THEREFORE, for and in consideration of the premises and the
consummation of the transactions referred to above, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders (as
hereinafter defined), as follows:

ARTICLE I
DEFINITIONS

SECTION 1.1            DEFINITIONS. 

(A)                FOR ALL PURPOSES OF THIS AGREEMENT, EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED OR UNLESS THE CONTEXT OTHERWISE REQUIRES:

(I)                 THE TERMS DEFINED IN THIS ARTICLE HAVE THE MEANINGS ASSIGNED
TO THEM IN THIS ARTICLE;

(II)               ALL ACCOUNTING TERMS USED HEREIN AND NOT EXPRESSLY DEFINED
HEREIN SHALL HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN ACCORDANCE WITH U.S.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, AS IN EFFECT ON THE DATE HEREOF;

(III)             THE WORDS “HEREIN,” “HEREOF” AND “HEREUNDER” AND OTHER WORDS
OF SIMILAR IMPORT REFER TO THIS AGREEMENT AS A WHOLE AND NOT TO ANY PARTICULAR
ARTICLE, SECTION OR OTHER
SUBDIVISION;                                                                                                                                                                                                             

 

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(IV)             UNLESS THE CONTEXT OTHERWISE REQUIRES, WORDS DESCRIBING THE
SINGULAR NUMBER SHALL INCLUDE THE PLURAL AND VICE VERSA, WORDS DENOTING ANY
GENDER SHALL INCLUDE ALL GENDERS; AND

(V)               ALL REFERENCES TO “INCLUDING” SHALL BE DEEMED TO MEAN
INCLUDING WITHOUT LIMITATION.

(B)               THE FOLLOWING TERMS SHALL HAVE THE MEANINGS ASCRIBED TO THEM
AS FOLLOWS:

            “Agreement” has the meaning set forth in the first paragraph of this
agreement.

            “Bank” means Southern Community Bank and Trust, a North Carolina
state-chartered bank, or its successor.

            “Board Resolution” means a copy of a resolution certified by the
secretary or an assistant secretary of the Purchaser to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification.

            “Business Day” means any day except Saturday, Sunday and any day
that shall be a legal holiday or a day on which banking institutions in the
State of New York or in the State of North Carolina generally are authorized or
required by law or other governmental action to close.

            “Change of Control” means the consummation of any transaction
resulting in the holders of the equity interests of the Purchaser, in the
aggregate, immediately prior to such transaction owning, directly or indirectly,
in the aggregate, less than 50% of the equity interests of the Purchaser
immediately following such transaction.

            “Charge-Offs” means the loans charged-off and realized losses on
“real estate owned” properties as reflected in the reports the Company files
with the SEC, if then publicly filed, and otherwise derived from the books and
records of the Bank in a manner consistent with past practice, with the
preparation of the financial statements in the Company Reports (as defined in
the Merger Agreement) and with the Company’s or Bank’s written policies in
effect as of the date of the Merger Agreement and any changes required by
applicable law.

            “Code” means the U.S. Internal Revenue Code of 1986, as amended and
the Treasury Regulations promulgated thereunder.

            “Common Stock” has the meaning set forth in the recitals.

            “Company” has the meaning set forth in the recitals.

            “Credit Losses” means the Charge-Offs for any loans or “real estate
owned” properties owned by the Company or the Bank as of March 26, 2012 for the
period commencing on March 26, 2012 and ending on the Maturity Date less any
recoveries in respect of such Charge-Offs.

            “CVRs” means the contingent value rights issued by the Purchaser
pursuant to the Merger Agreement and this Agreement.

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“CVR Register” has the meaning set forth in Section 2.3(b).

            “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

            “Group” has the meaning assigned to such term in Section 13(d)(3) of
the Exchange Act.

            “Holder” means a Person in whose name a CVR is registered in the CVR
Register.

            “Maturity Date” means October 1, 2017.

            “Maximum Payment Amount” means an amount equal to $1.30 per CVR,
payable in cash.

            “Merger Agreement” has the meaning set forth in the recitals.

“Paying Agent” has the meaning set forth in Section 2.4.

            “Payment Amount” has the meaning set forth in Section 2.4.

            “Payment Certificate” has the meaning set forth in Section 2.4.

            “Payment Date” means the date that a Payment Amount is paid by the
Purchaser to the Holders, which date shall be established pursuant to Section
2.4.

            “Permitted Transfer” means any transfer of a CVR held by a natural
person upon the death of such Holder by will or the laws of descent or
distribution, in which case the designee, legal representative, legatee,
successor trustee of such Holder’s inter vivos trust or the person who acquired
the right to the CVR by reason of such death shall succeed to such Holder’s
rights with respect to the CVR.

            “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.

            “Purchaser” has the meaning set forth in the recitals.

            “Redemption Date” means the date that the Redemption Price is paid
by the Purchaser to the Holders, which date shall be established pursuant to
Section 2.5.

            “Redemption Price” has the meaning set forth in Section 2.5.

            “Registrar” shall have the meaning set forth in Section 2.3.

“SEC” means the U.S. Securities and Exchange Commission.

            “Securities Act” means the Securities Act of 1933, as amended.

            “Stipulated Amount” means $87,000,000.

            “Surviving Person” has the meaning set forth in Section 5.1.

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ARTICLE II
CONTINGENT VALUE RIGHTS

SECTION 2.1            HOLDERS OF CVRS.

            Immediately prior to the Closing (as defined in the Merger
Agreement), existing shareholders of the Company as of the Effective Time (as
defined in the Merger Agreement) will become the Holder of one CVR for each
share of Common Stock owned by such shareholder as of such date. 

SECTION 2.2            TRANSFERABILITY; ATTACHMENT

            The CVRs shall not be subject, in whole or in part, to attachment,
execution, or levy of any kind, and any attempt to sell, pledge, assign,
hypothecate, transfer or otherwise dispose of the CVRs or any interest therein,
other than through a Permitted Transfer, shall be void ab initio.  

SECTION 2.3            NO CERTIFICATE; REGISTRATION; CHANGE OF ADDRESS.

(A)                THE CVRS SHALL NOT BE EVIDENCED BY A CERTIFICATE OR OTHER
INSTRUMENT.

(B)               THE PURCHASER, OR AN AGENT APPOINTED BY THE PURCHASER, SHALL
KEEP A REGISTER (THE “CVR REGISTER”) FOR THE REGISTRATION OF CVRS.  THE
PURCHASER IS HEREBY INITIALLY APPOINTED “CVR REGISTRAR” FOR THE PURPOSE OF
REGISTERING CVRS AND TRANSFERS OF CVRS AS HEREIN PROVIDED.  FOR THE AVOIDANCE OF
DOUBT, THE PURCHASER SHALL BE PERMITTED, AT ITS DISCRETION, TO APPOINT THE
TRANSFER AGENT FOR THE COMPANY AS CVR REGISTRAR.

(C)                A HOLDER MAY MAKE A WRITTEN REQUEST TO THE CVR REGISTRAR TO
CHANGE SUCH HOLDER’S ADDRESS OF RECORD IN THE CVR REGISTER.  THE WRITTEN REQUEST
MUST BE DULY EXECUTED BY THE HOLDER.  UPON RECEIPT OF SUCH WRITTEN NOTICE, THE
CVR REGISTRAR SHALL PROMPTLY RECORD THE CHANGE OF ADDRESS IN THE CVR REGISTER.

(d)       Upon the occurrence of a Permitted Transfer, the recipient may make a
written request to the CVR Registrar to record such transfer in the CVR
Register.  The written request must be accompanied by written evidence that the
transfer qualifies as a Permitted Transfer in such form as may be acceptable to
the CVR Registrar and such other documentation as may be required by the CVR
Registrar.  Upon receipt of such written notice, the CVR Registrar shall
promptly record the transfer in the CVR Register.

 

SECTION 2.4            PAYMENT PROCEDURES.

(A)                PROMPTLY FOLLOWING THE MATURITY DATE, BUT IN NO EVENT LATER
THAN THIRTY (30) DAYS AFTER SUCH DATE, THE PURCHASER SHALL APPOINT A PAYING
AGENT (THE “PAYING AGENT”) AND DELIVER TO THE PAYING AGENT A CERTIFICATE (THE
“PAYMENT CERTIFICATE”) SETTING FORTH (I) THE AMOUNT OF CREDIT LOSSES, ON AN
AGGREGATE AND PER-CVR BASIS, AND (II) THE CALCULATION OF THE PAYMENT AMOUNT. 
THE “PAYMENT AMOUNT” SHALL BE EQUAL TO:

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(I)                 IF  THE AMOUNT OF CREDIT LOSSES IS LESS THAN THE STIPULATED
AMOUNT, THE LESSER OF (I) 75% OF THE EXCESS OF THE STIPULATED AMOUNT OVER THE
AMOUNT OF CREDIT LOSSES, TO BE PAID ON A PRO RATA, PER CVR BASIS AND (II) THE
MAXIMUM PAYMENT AMOUNT; AND

(II)               IF THE AMOUNT OF CREDIT LOSSES EQUALS OR EXCEEDS THE
STIPULATED AMOUNT, ZERO.

(B)               ALL DETERMINATIONS WITH RESPECT TO THE CALCULATION OF CREDIT
LOSSES AND THE PAYMENT AMOUNT SHALL BE MADE BY THE SPECIAL CVR COMMITTEE OF THE
PURCHASER’S BOARD OF DIRECTORS IN ITS SOLE DISCRETION, WHOSE DETERMINATIONS
SHALL BE BINDING ON THE PURCHASER, THE COMPANY AND THE HOLDERS.  THE SPECIAL CVR
COMMITTEE OF THE PURCHASER’S BOARD OF DIRECTORS, IN ITS SOLE DISCRETION, MAY
UTILIZE A THIRD PARTY FINANCIAL ADVISOR TO ASSIST IN VERIFYING THE AMOUNT OF
CREDIT LOSSES AND THE CALCULATION OF THE PAYMENT AMOUNT AND MAY RELY ON A REPORT
OF SUCH FINANCIAL ADVISOR FOR PURPOSES OF MAKING ITS DETERMINATIONS HEREUNDER.

(C)                EXCEPT AS OTHERWISE REQUESTED BY ANY HOLDER, THE PAYING AGENT
SHALL PROMPTLY (AND IN NO EVENT LATER THAN FIVE BUSINESS DAYS AFTER ITS RECEIPT
THEREOF) SEND EACH HOLDER A COPY OF THE PAYMENT CERTIFICATE AT ITS REGISTERED
ADDRESS. 

(D)               IF THE PURCHASER DELIVERS A PAYMENT CERTIFICATE TO THE PAYING
AGENT PURSUANT TO SECTION 2.4(A) ABOVE AND THE PAYMENT AMOUNT IS GREATER THAN
ZERO, THE PURCHASER SHALL ESTABLISH A PAYMENT DATE WITH RESPECT TO SUCH PAYMENT
AMOUNT THAT IS NO LATER THAN NINETY (90) DAYS AFTER THE MATURITY DATE.  AT LEAST
5 BUSINESS DAYS PRIOR TO SUCH PAYMENT DATE, THE PURCHASER SHALL CAUSE AN AMOUNT
IN CASH EQUAL TO THE PAYMENT AMOUNT MULTIPLIED BY THE NUMBER OF CVRS OUTSTANDING
TO BE DELIVERED TO THE PAYING AGENT, WHO WILL IN TURN, ON THE PAYMENT DATE, PAY
TO EACH OF THE HOLDERS AN AMOUNT IN CASH EQUAL TO THE PAYMENT AMOUNT MULTIPLIED
BY THE NUMBER OF CVRS HELD BY SUCH HOLDER AS REFLECTED ON THE CVR REGISTER BY
CHECK MAILED TO THE ADDRESS OF EACH HOLDER AS REFLECTED IN THE CVR REGISTER AS
OF THE CLOSE OF BUSINESS ON THE LAST BUSINESS DAY PRIOR TO SUCH PAYMENT DATE.
UPON SUCH PAYMENT, THIS AGREEMENT SHALL TERMINATE AS PROVIDED IN SECTION 6.10. 

(E)                THE PURCHASER SHALL BE ENTITLED TO DEDUCT AND WITHHOLD, OR
CAUSE TO BE DEDUCTED OR WITHHELD, FROM EACH PAYMENT AMOUNT OTHERWISE PAYABLE
PURSUANT TO THIS AGREEMENT, SUCH AMOUNTS AS IT IS REQUIRED TO DEDUCT AND
WITHHOLD WITH RESPECT TO THE MAKING OF SUCH PAYMENT UNDER THE CODE, OR ANY
PROVISION OF STATE, LOCAL OR FOREIGN TAX LAW.  TO THE EXTENT THAT AMOUNTS ARE SO
WITHHELD OR PAID OVER TO OR DEPOSITED WITH THE RELEVANT GOVERNMENTAL ENTITY,
SUCH WITHHELD AMOUNTS SHALL BE TREATED FOR ALL PURPOSES OF THIS AGREEMENT AS
HAVING BEEN PAID TO THE HOLDER IN RESPECT OF WHICH SUCH DEDUCTION AND
WITHHOLDING WAS MADE.

SECTION 2.5            REDEMPTION. 

(A)                THE PURCHASER MAY, AT ITS OPTION, AT ANY TIME PRIOR TO THE
MATURITY DATE, REDEEM THE CVRS, IN WHOLE OR IN PART, AT A REDEMPTION PRICE OF
$1.30 PER CVR (THE “REDEMPTION PRICE”).  THE REDEMPTION OF CVRS BY THE BOARD OF
DIRECTORS OF THE PURCHASER MAY BE MADE EFFECTIVE AT SUCH TIME AND WITH SUCH
CONDITIONS AS SUCH BOARD OF DIRECTORS OF THE PURCHASER, IN ITS SOLE DISCRETION,
MAY ESTABLISH.

 

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(B)               FROM AND AFTER THE DATE HEREOF BUT PRIOR TO THE MATURITY DATE,
IN THE EVENT OF A CHANGE OF CONTROL, THE PURCHASER SHALL, UPON THE CONSUMMATION
OF SUCH CHANGE OF CONTROL, REDEEM ALL OF THE CVRS AT THE REDEMPTION PRICE.

(C)                IMMEDIATELY UPON AN ACTION ORDERING THE REDEMPTION OF CVRS
PURSUANT TO SECTION 2.5(A) OR THE CONSUMMATION OF THE CHANGE OF CONTROL UNDER
SECTION 2.5(B), AND WITHOUT ANY FURTHER ACTION AND WITHOUT ANY FURTHER NOTICE,
EACH CVR SUBJECT TO REDEMPTION SHALL BECOME VOID, AND ALL RIGHTS THEREUNDER AND
ALL RIGHTS IN RESPECT THEREOF UNDER THIS AGREEMENT SHALL CEASE, EXCEPT FOR THE
RIGHT TO RECEIVE THE REDEMPTION PRICE.  WITHIN 10 DAYS AFTER SUCH ACTION OR
CONSUMMATION, THE PURCHASER SHALL MAIL, OR CAUSE TO BE MAILED, A NOTICE OF
REDEMPTION TO EACH OF THE HOLDERS OF THE THEN OUTSTANDING CVRS AT SUCH HOLDERS’
REGISTERED ADDRESS. 

(D)               IF THE PURCHASER ORDERS THE REDEMPTION OF THE CVRS PURSUANT TO
SECTION 2.5(A) OR THERE IS THE CONSUMMATION OF A CHANGE OF CONTROL UNDER SECTION
2.5(B), THE PURCHASER SHALL ESTABLISH THE DATE OF SUCH ORDER OR CONSUMMATION AS
THE REDEMPTION DATE.  ON OR IMMEDIATELY FOLLOWING SUCH REDEMPTION DATE, THE
PURCHASER SHALL APPOINT A PAYING AGENT AND CAUSE AN AMOUNT IN CASH EQUAL TO THE
REDEMPTION PRICE MULTIPLIED BY THE NUMBER OF CVRS OUTSTANDING TO BE DELIVERED TO
THE PAYING AGENT, WHO WILL IN TURN, AS PROMPTLY AS PRACTICABLE, PAY TO EACH OF
THE HOLDERS AN AMOUNT IN CASH EQUAL TO THE REDEMPTION PRICE MULTIPLIED BY THE
NUMBER OF CVRS HELD BY SUCH HOLDER AS REFLECTED ON THE CVR REGISTER BY CHECK
MAILED TO THE ADDRESS OF EACH HOLDER AS REFLECTED IN THE CVR REGISTER AS OF THE
CLOSE OF BUSINESS ON THE LAST BUSINESS DAY PRIOR TO SUCH REDEMPTION DATE.

(E)                THE PURCHASER SHALL BE ENTITLED TO DEDUCT AND WITHHOLD, OR
CAUSE TO BE DEDUCTED OR WITHHELD, FROM THE REDEMPTION PRICE OTHERWISE PAYABLE
PURSUANT TO THIS AGREEMENT, SUCH AMOUNTS AS IT IS REQUIRED TO DEDUCT AND
WITHHOLD WITH RESPECT TO THE MAKING OF SUCH PAYMENT UNDER THE CODE, OR ANY
PROVISION OF STATE, LOCAL OR FOREIGN TAX LAW.  TO THE EXTENT THAT AMOUNTS ARE SO
WITHHELD OR PAID OVER TO OR DEPOSITED WITH THE RELEVANT GOVERNMENTAL ENTITY,
SUCH WITHHELD AMOUNTS SHALL BE TREATED FOR ALL PURPOSES OF THIS AGREEMENT AS
HAVING BEEN PAID TO THE HOLDER IN RESPECT OF WHICH SUCH DEDUCTION AND
WITHHOLDING WAS MADE    

SECTION 2.6            NO VOTING, DIVIDENDS OR INTEREST; NO EQUITY OR OWNERSHIP
INTEREST IN THE COMPANY.

(A)                THE CVRS SHALL NOT HAVE ANY VOTING OR DIVIDEND RIGHTS, AND
INTEREST SHALL NOT ACCRUE ON ANY AMOUNTS PAYABLE ON THE CVRS TO ANY HOLDER.

(B)               THE CVRS SHALL NOT REPRESENT ANY EQUITY OR OWNERSHIP INTEREST
IN, OR CONFER ANY RIGHTS OF ANY KIND OR NATURE WHATSOEVER AS, A SHAREHOLDER OF
THE PURCHASER OR ANY OF ITS AFFILIATES EITHER AT LAW OR IN EQUITY.

ARTICLE III
COVENANTS

SECTION 3.1            PAYMENT OF PAYMENT AMOUNT.

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            The Purchaser shall duly and promptly pay, or cause to be paid to,
each Holder the applicable Payment Amount or Redemption Price, if any, in the
manner provided for in Sections 2.4 and 2.5 and in accordance with the terms of
this Agreement.

ARTICLE IV
AMENDMENTS

SECTION 4.1            AMENDMENTS WITHOUT CONSENT OF HOLDERS.

(A)                WITHOUT THE CONSENT OF ANY HOLDERS, THE PURCHASER, WHEN
AUTHORIZED BY A BOARD RESOLUTION, AT ANY TIME AND FROM TIME TO TIME, MAY ENTER
INTO ONE OR MORE AMENDMENTS HERETO, FOR ANY OF THE FOLLOWING PURPOSES:

(I)                 SUBJECT TO SECTION 5.1, TO EVIDENCE THE SUCCESSION OF
ANOTHER PERSON TO THE PURCHASER AND THE ASSUMPTION BY ANY SUCH SUCCESSOR OF THE
COVENANTS OF THE PURCHASER HEREIN; OR

(II)               TO EVIDENCE THE TERMINATION OF THE CVR REGISTRAR AND THE
SUCCESSION OF ANOTHER PERSON AS A SUCCESSOR CVR REGISTRAR AND THE ASSUMPTION BY
ANY SUCCESSOR OF THE OBLIGATIONS OF THE CVR REGISTRAR HEREIN.

(III)             TO EVIDENCE THE SUCCESSION OF ANOTHER PERSON AS A SUCCESSOR
PAYING AGENT AND THE ASSUMPTION BY ANY SUCCESSOR OF THE COVENANTS AND
OBLIGATIONS OF THE PAYING AGENT HEREIN;

(IV)             TO ADD TO THE COVENANTS OF THE PURCHASER SUCH FURTHER
COVENANTS, RESTRICTIONS, CONDITIONS OR PROVISIONS AS THE BOARD OF DIRECTORS
SHALL CONSIDER TO BE FOR THE PROTECTION OF THE HOLDERS; PROVIDED, THAT IN EACH
CASE, SUCH PROVISIONS SHALL NOT ADVERSELY AFFECT THE INTERESTS OF THE HOLDERS IN
ANY MATERIAL RESPECT;

(V)               TO CURE ANY AMBIGUITY, TO CORRECT OR SUPPLEMENT ANY PROVISION
HEREIN THAT MAY BE DEFECTIVE OR INCONSISTENT WITH ANY OTHER PROVISION HEREIN, OR
TO MAKE ANY OTHER PROVISIONS WITH RESPECT TO MATTERS OR QUESTIONS ARISING UNDER
THIS AGREEMENT; PROVIDED, THAT IN EACH CASE, SUCH PROVISIONS SHALL NOT ADVERSELY
AFFECT THE INTERESTS OF THE HOLDERS IN ANY MATERIAL RESPECT;

(VI)             AS MAY BE NECESSARY OR APPROPRIATE TO ENSURE THAT THE CVRS ARE
NOT SUBJECT TO REGISTRATION UNDER THE SECURITIES ACT OR THE EXCHANGE ACT;
PROVIDED  THAT SUCH PROVISIONS SHALL NOT ADVERSELY AFFECT THE INTERESTS OF THE
HOLDERS IN ANY MATERIAL RESPECT; OR

(VII)           ANY OTHER AMENDMENTS HERETO FOR THE PURPOSE OF ADDING,
ELIMINATING OR CHANGING ANY PROVISIONS OF THIS AGREEMENT UNLESS SUCH ADDITION,
ELIMINATION OR CHANGE IS ADVERSE TO THE INTERESTS OF THE HOLDERS IN ANY MATERIAL
RESPECT.

(B)               PROMPTLY AFTER THE EXECUTION BY THE PURCHASER OF ANY AMENDMENT
PURSUANT TO THE PROVISIONS OF THIS SECTION 4.1, THE PURCHASER SHALL MAIL A
NOTICE THEREOF BY FIRST-CLASS MAIL TO THE HOLDERS AT THEIR ADDRESSES AS THEY
SHALL APPEAR ON THE CVR REGISTER, SETTING FORTH IN GENERAL

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terms the substance of such amendment, or shall publish such information in a
manner reasonably calculated to inform the Holders of such amendment (which may,
for the avoidance of doubt, including the filing of a report with the SEC
including such information).

 

SECTION 4.2            AMENDMENTS WITH CONSENT OF HOLDERS.

(A)                SUBJECT TO SECTION 4.1 (WHICH AMENDMENTS PURSUANT TO SECTION
4.1 MAY BE MADE WITHOUT THE CONSENT OF THE HOLDERS), WITH THE CONSENT OF THE
HOLDERS OF NOT LESS THAN A MAJORITY OF THE OUTSTANDING CVRS, WHETHER EVIDENCED
IN WRITING OR TAKEN AT A MEETING OF THE HOLDERS, THE PURCHASER, WHEN AUTHORIZED
BY A BOARD RESOLUTION, MAY ENTER INTO ONE OR MORE AMENDMENTS HERETO FOR THE
PURPOSE OF ADDING, ELIMINATING OR CHANGING ANY PROVISIONS OF THIS AGREEMENT,
EVEN IF SUCH ADDITION, ELIMINATION OR CHANGE IS IN ANY WAY ADVERSE TO THE
INTEREST OF THE HOLDERS.

(B)               PROMPTLY AFTER THE EXECUTION BY THE PURCHASER OF ANY AMENDMENT
PURSUANT TO THE PROVISIONS OF THIS SECTION 4.2, THE PURCHASER SHALL MAIL A
NOTICE THEREOF BY FIRST-CLASS MAIL TO THE HOLDERS AT THEIR ADDRESSES AS THEY
SHALL APPEAR ON THE CVR REGISTER, SETTING FORTH IN GENERAL TERMS THE SUBSTANCE
OF SUCH AMENDMENT, OR SHALL PUBLISH SUCH INFORMATION IN A MANNER REASONABLY
CALCULATED TO INFORM THE HOLDERS OF SUCH AMENDMENT (WHICH MAY, FOR THE AVOIDANCE
OF DOUBT, INCLUDING THE FILING OF A REPORT WITH THE SEC INCLUDING SUCH
INFORMATION).

SECTION 4.3            EFFECT OF AMENDMENTS.

            Upon the execution of any amendment under this Article IV, this
Agreement shall be modified in accordance therewith, such amendment shall form a
part of this Agreement for all purposes and every Holder shall be bound thereby.

ARTICLE V
CONSOLIDATION, MERGER, SALE OR CONVEYANCE

 

SECTION 5.1            COMPANY MAY CONSOLIDATE, ETC.

(A)                THE PURCHASER SHALL NOT CONSOLIDATE WITH OR MERGE INTO ANY
OTHER PERSON OR CONVEY, TRANSFER OR LEASE ITS PROPERTIES AND ASSETS
SUBSTANTIALLY AS AN ENTIRETY TO ANY PERSON, UNLESS THE PERSON FORMED BY SUCH
CONSOLIDATION OR INTO WHICH THE PURCHASER IS MERGED OR THE PERSON THAT ACQUIRES
BY CONVEYANCE OR TRANSFER, OR THAT LEASES, THE PROPERTIES AND ASSETS OF THE
PURCHASER SUBSTANTIALLY AS AN ENTIRETY (THE “SURVIVING PERSON”) SHALL EXPRESSLY
ASSUME PAYMENT OF AMOUNTS ON ALL THE CVRS AND THE PERFORMANCE OF EVERY DUTY AND
COVENANT OF THIS AGREEMENT ON THE PART OF THE PURCHASER TO BE PERFORMED OR
OBSERVED; PROVIDED THAT THIS SECTION 5.1 SHALL NOT SUPERSEDE ANY APPLICABLE
REQUIREMENTS OF SECTION 2.5(B) WITH RESPECT TO A CHANGE OF CONTROL.

(B)               FOR PURPOSES OF THIS SECTION 5.1, “CONVEY, TRANSFER OR LEASE
ITS PROPERTIES AND ASSETS SUBSTANTIALLY AS AN ENTIRETY” SHALL MEAN PROPERTIES
AND ASSETS CONTRIBUTING IN THE AGGREGATE AT LEAST 80% OF THE PURCHASER’S TOTAL
CONSOLIDATED REVENUES AS REPORTED IN THE PURCHASER’S LAST AVAILABLE PERIODIC
FINANCIAL REPORT (QUARTERLY OR ANNUAL, AS THE CASE MAY BE).

SECTION 5.2            SUCCESSOR SUBSTITUTED.

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            Upon any consolidation of or merger by the Purchaser with or into
any other Person, or any conveyance, transfer or lease of the properties and
assets substantially as an entirety to any Person in accordance with Section
5.1, the Surviving Person shall succeed to, and be substituted for, and may
exercise every right and power of, the Purchaser under this Agreement with the
same effect as if the Surviving Person had been named as the Purchaser herein,
and thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Agreement and the CVRs.

ARTICLE VI
OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 6.1            NOTICES TO THE COMPANY.

            Any notice, request, instruction or other document to be given
hereunder by any party to another will be in writing and will be deemed to have
been duly given (a) on the date of delivery if delivered personally or by
telecopy or facsimile, upon confirmation of receipt, (b) on the first business
day following the date of dispatch if delivered by a recognized next-day courier
service, or (c) on the third business day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage
prepaid.  All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice

            TO THE PURCHASER:

Capital Bank Financial Corporation
4725 Piedmont Row Drive
Charlotte, North Carolina 28210
Attn: Christopher G. Marshall
Telephone:  704-554-5901
Fax: 704-964-2442

with a copy to (which copy alone shall not constitute notice):

Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: David E. Shapiro
Telephone:  (212) 403-1000   
Fax:  (212) 403-2000

SECTION 6.2            NOTICE TO HOLDERS.

            Where this Agreement provides for notice to Holders, except as
otherwise set forth in this Agreement, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his, her
or its address as it appears in the CVR Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice.  In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders.

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SECTION 6.3            EFFECT OF HEADINGS.

            The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.

SECTION 6.4            SUCCESSORS AND ASSIGNS.

            All covenants and agreements in this Agreement by the Purchaser
shall bind its successors and assigns, whether so expressed or not.

SECTION 6.5            BENEFITS OF AGREEMENT.

            Nothing in this Agreement, express or implied, shall give to any
Person (other than the Purchaser, the Holders and their permitted successors and
assigns hereunder) any benefit or any legal or equitable right, remedy or claim
under this Agreement or under any covenant or provision herein contained, all
such covenants and provisions being for the sole benefit of the Purchaser, the
Holders and their permitted successors and assigns.

SECTION 6.6            GOVERNING LAW.

            This Agreement will be governed by and construed in accordance with
the laws of the State of North Carolina applicable to contracts made and to be
performed entirely within such State.  The Purchaser irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the federal
courts of the United States of America located in the State of North Carolina,
or, if jurisdiction in such federal courts is not available, the courts of the
State of North Carolina, for any actions, suits or proceedings arising out of or
relating to this Agreement and the transactions contemplated hereby.

SECTION 6.7            LEGAL HOLIDAYS.

            In the event that a Payment Date or Redemption Date shall not be a
Business Day, then, notwithstanding any provision of this Agreement to the
contrary, any payment required to be made in respect of the CVRs on such date
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the applicable payment date.

SECTION 6.8            SEVERABILITY CLAUSE.

            If any provision of this Agreement or the application thereof to any
person or circumstance is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision to persons or circumstances other than those as to
which it has been held invalid or unenforceable, will remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the transactions contemplated hereby is
not affected in any manner materially adverse to any party.  Upon such
determination, the Purchaser shall negotiate in good faith in an effort to agree
upon a suitable and equitable substitute provision to effect the original intent
of the Purchaser.

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SECTION 6.9            COUNTERPARTS. 

            This Agreement and any amendments thereto may be signed in any
number of counterparts (which may be effectively delivered by facsimile or other
electronic means), each of which shall be deemed to constitute but one and the
same instrument.

SECTION 6.10        TERMINATION. 

(A)                THIS AGREEMENT SHALL BE TERMINATED AND OF NO FORCE OR EFFECT,
AND THE PURCHASER SHALL HAVE NO LIABILITY HEREUNDER, UPON THE EARLIER TO OCCUR
OF (A) THE PAYMENT OF THE PAYMENT AMOUNT REQUIRED TO BE PAID UNDER THE TERMS OF
THIS AGREEMENT, (B) IF THE PAYMENT CERTIFICATE REFLECTS A PAYMENT AMOUNT OF
ZERO, THE DATE SUCH PAYMENT CERTIFICATE IS SENT TO HOLDERS PURSUANT TO SECTION
2.4, AND (C) THE PAYMENT OF THE REDEMPTION PRICE PURSUANT TO SECTION 2.5.

(B)               NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT, ANY
PORTION OF THE CASH PROVIDED BY THE PURCHASER TO THE PAYING AGENT THAT REMAINS
UNCLAIMED TWO (2) YEARS AFTER TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH
THIS SECTION 6.10 (OR SUCH EARLIER DATE IMMEDIATELY PRIOR TO SUCH TIME AS SUCH
AMOUNTS WOULD OTHERWISE ESCHEAT TO, OR BECOME PROPERTY OF, ANY GOVERNMENTAL
ENTITY) SHALL, TO THE EXTENT PERMITTED BY LAW, BECOME THE PROPERTY OF THE
PURCHASER FREE AND CLEAR OF ANY CLAIMS OR INTEREST OF ANY PERSON PREVIOUSLY
ENTITLED THERETO.

SECTION 6.11        ENTIRE AGREEMENT.

            This Agreement and the Investment Agreement represent the entire
understanding of the Purchaser with reference to the transactions and matters
contemplated hereby and thereby and this Agreement supersedes any and all other
oral or written agreements hereto made except for the Investment Agreement.  If
and to the extent that any provision of this Agreement is inconsistent or
conflicts with the Merger Agreement, this Agreement shall govern and be
controlling.

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EXECUTION COPY

 

 

 

            IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed on their behalf by their duly authorized officers as of the day and
year first above written.

CAPITal bank financial corporation

By:  _/s/ Christopher G. Marshall                
       Name:  Christopher G. Marshall
       Title:    Chief Financial Officer

  

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature page to CVR agreement]

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