Exhibit 10.1
 
 
INVESTMENT AGREEMENT
dated as of May 5, 2011
among
GREEN BANKSHARES, INC.,
GREENBANK
and
NORTH AMERICAN FINANCIAL HOLDINGS, INC.
 
 

 

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TABLE OF CONTENTS
ARTICLE I
PURCHASE; CLOSING

                    1.1    
Purchase
    2     1.2    
Closing
    2  

ARTICLE II
REPRESENTATIONS AND WARRANTIES

                    2.1    
Disclosure
    7     2.2    
Representations and Warranties of the Company and the Bank
    8     2.3    
Representations and Warranties of Purchaser
    32  

ARTICLE III
COVENANTS

                    3.1    
Filings; Other Actions
    36     3.2    
Access, Information and Confidentiality
    38     3.3    
Conduct of the Business
    38     3.4    
Acquisition Proposals
    43     3.5    
Repurchase
    46     3.6    
D&O Indemnification
    46     3.7    
Notice of Developments
    47  

ARTICLE IV
ADDITIONAL AGREEMENTS

                    4.1    
Governance Matters
    48     4.2    
Legend
    48     4.3    
Exchange Listing
    49     4.4    
Registration Rights
    49     4.5    
Employees
    49     4.6    
Reservation for Issuance
    49     4.7    
Additional Investment
    49  

ARTICLE V
TERMINATION

                    5.1    
Termination
    49     5.2    
Effects of Termination
    51     5.3    
Fees
    51  

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ARTICLE VI
MISCELLANEOUS

                    6.1    
No Survival
    52     6.2    
Expenses
    52     6.3    
Amendment; Waiver
    52     6.4    
Counterparts and Facsimile
    53     6.5    
Governing Law
    53     6.6    
Notices
    53     6.7    
Entire Agreement, Assignment
    54     6.8    
Interpretation; Other Definitions
    54     6.9    
Captions
    55     6.10    
Severability
    55     6.11    
No Third Party Beneficiaries
    56     6.12    
Time of Essence
    56     6.13    
Certain Adjustments
    56     6.14    
Public Announcements
    56     6.15    
Specific Performance; Limitation on Damages
    56  

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INDEX OF DEFINED TERMS

          Term     Location of Definition
409A Plan
      2.2(s)(8)
Acquisition Agreement
      3.4(b)
Acquisition Proposal
      3.4(c)
Adverse Recommendation Change
      3.4(b)
Affiliate
      6.8(a)
Agency
      2.2(w)(5)(D)
Agreement
  Preamble
Authorizations
      2.2(a)(1)
Bank
  Preamble
Bank Charter
      2.2(a)(2)
beneficial owner
      6.8(g)
beneficially own
      6.8(g)
Benefit Plan
      2.2(s)(1)
Burdensome Condition
      1.2(c)(2)(F)
business day
      6.8(e)
Capitalization Date
      2.2(b)
CERCLA
      2.2(v)
Charge-Offs
      1.2(c)(2)(L)
Charter
      2.2(a)(1)
Closing
      1.2(a)
Closing Date
      1.2(a)
Closing Expense Reimbursement
      6.2
Code
      2.2(j)
Common Stock
  Recitals
Company
  Preamble
Company 10-K
      2.1(c)(2)(A)
Company Insurance Policies
      2.2(x)
Company Preferred Stock
      2.2(b)
Company Recommendation
      3.1(b)
Company Reports
      2.2(h)(1)
Company Representatives
      3.2(a)
Company Significant Agreement
      2.2(m)(i)
Company’s knowledge
      2.1(d)
Confidentiality Agreement
      3.2(b)
control
      6.8(a)
controlled by
      6.8(a)
CVRs
  Recitals
Disclosure Schedule
      2.1(a)
EESA
      2.2(s)(10)
ERISA
      2.2(s)(1)
ERISA Affiliate
      2.2(s)(1)
Exchange Act
      2.2(h)(1)
Existing D&O Policies
      1.2(c)(2)(H)(i)
Expense Reimbursement
      5.3(c)

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          Term     Location of Definition
FDIC
      2.2(a)(2)
Federal Reserve
      1.2(c)(1)(B)
GAAP
      2.2(g)
Governmental Entity
      1.2(c)(1)(A)
herein
      6.8(d)
hereof
      6.8(d)
hereunder
      6.8(d)
include
      6.8(c)
included
      6.8(c)
includes
      6.8(c)
including
      6.8(c)
knowledge of the Company
      2.1(d)
Laws
      2.1(b)
Liens
      1.2(b)(1)
Loan Portfolio Committee
      4.1(c)
Loans
      2.2(w)(1)
Loan Tape
      2.2(w)(9)
Material Adverse Effect
      2.1(b)
NASDAQ
      1.2(c)(2)(I)
Nominees
      4.1(b)
Notice of Recommendation Change
      3.4(b)
or
      6.8(b)
Option
  Recitals
Organizational Common Stock
      2.2(b)
Permits
      2.2(q)
Permitted Liens
      2.2(i)
Per Share Purchase Price
      1.2(b)(2)
person
      6.8(f)
Pool
      2.2(w)(8)
Previously Disclosed
      2.1(c)
Proprietary Rights
      2.2(y)
Purchased Shares
      1.1
Purchaser
  Preamble
Purchaser Designees
      1.2(c)(2)(G)
Registration Rights Agreement
      4.4
Regulatory Agreement
      2.2(u)
Resigning Directors
      1.2(c)(2)(G)
Representatives
      3.4(a)
Repurchase
  Recitals
Required Approvals
      2.2(f)
Sarbanes-Oxley Act
      2.2(h)(2)
SEC
      2.1(c)(2)(A)
Securities Act
      2.2(h)(1)
Series A Preferred
  Recitals
Shareholder Meeting
      3.1(b)
Shareholder Proposal
      3.1(b)

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          Term     Location of Definition
SRO
      2.2(h)(1)
Subsidiaries
      2.2(a)(1)
Subsidiary
      2.2(a)(1)
Superior Proposal
      3.4(c)
Tax Return
      2.2(j)
Taxes
      2.2(j)
Tennessee DFI
      1.2(c)(1)(B)
Termination Fee
      5.3(c)
Treasury
  Recitals
Treasury Warrants
  Recitals
Trust Preferred Securities
      2.2(d)(2)
under common control with
      6.8(a)
VA
      2.2(w)(5)
Voting Debt
      2.2(b)

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LIST OF SCHEDULES AND EXHIBITS

     
Schedule A
List of Subsidiaries
 
   
Exhibit A
Terms of Contingent Value Rights
Exhibit B
Terms of Repurchase
Exhibit C
Form of Registration Rights Agreement

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INVESTMENT AGREEMENT, dated as of May 5, 2011 (this “Agreement”), among Green
Bankshares, Inc., a corporation organized under the laws of the State of
Tennessee (the “Company”), GreenBank, a Tennessee state-chartered banking
corporation and a banking subsidiary of the Company (the “Bank”), and North
American Financial Holdings, Inc., a Delaware corporation (“Purchaser”).
RECITALS:
WHEREAS, the Company intends to issue and sell to Purchaser, and Purchaser
intends to purchase from the Company, as an investment in the Company,
119,900,000 shares of common stock, $2.00 par value per share, of the Company
(the “Common Stock”) at a purchase price of $1.81 per share on the terms and
conditions described herein;
WHEREAS, on the date hereof, the Company has granted to the Purchaser an option
to acquire up to 2,628,183 shares of Common Stock (but not to exceed 19.9% of
the Company’s issued and outstanding shares of Common Stock without giving
effect to any shares subject to or issued pursuant to such option) at a price
per share equal to the closing price on the Nasdaq Global Select Market for
shares of Common Stock on the first trading day following the date hereof (the
“Option”);
WHEREAS, in addition to the purchase price described above, the Company shall,
immediately prior to the issuance of shares of Common Stock to Purchaser, issue
to the holders of its Common Stock (excluding the Purchaser) contingent value
rights (the “CVRs”) on substantially the terms set forth in Exhibit A;
WHEREAS, in connection with the investment by Purchaser, the Purchaser shall
enter into a binding definitive agreement with the United States Department of
the Treasury (“Treasury”), pursuant to which, among other things and subject to
the terms and conditions set forth therein, contemporaneous with the Closing,
the Purchaser will purchase from Treasury all of the outstanding shares of the
Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the
“Series A Preferred”) (including all obligations with respect to accrued but
unpaid dividends on the Series A Preferred) and related warrants to purchase
shares of Company Common Stock (the “Treasury Warrants”) (the “Repurchase”) (the
terms of the Repurchase being set forth in Exhibit B); and
WHEREAS, the Company intends to amend its Charter and its bylaws, in form and
substance reasonably satisfactory to Purchaser, to permit the transactions
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the representations,
warranties, covenants and agreements set forth herein, the parties agree as
follows:

 

1

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ARTICLE I
PURCHASE; CLOSING
1.1 Purchase. On the terms and subject to the conditions set forth herein, at
the Closing, Purchaser will purchase from the Company, and the Company will
issue and sell to Purchaser, 119,900,000 shares of Common Stock (the “Purchased
Shares”).
1.2 Closing.
(a) The Closing. The closing of the purchase and sale of the Purchased Shares
referred to in Section 1.1 (the “Closing”) shall occur at 10:00 a.m., New York
City time, on the third business day after the satisfaction or, if permissible,
waiver (by the party entitled to grant such waiver) of the conditions to the
Closing set forth in this Agreement (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to fulfillment or waiver
of those conditions), at the offices of Wachtell, Lipton, Rosen & Katz, 51 West
52nd Street, New York, New York 10019 or such other date or location as agreed
by the parties. The date of the Closing is referred to as the “Closing Date.”
(b) Closing Deliveries. Subject to the satisfaction or waiver on the Closing
Date of the applicable conditions to the Closing set forth in Section 1.2(c), at
the Closing:
(1) the Company will deliver to Purchaser (A) the Closing Expense Reimbursement
in accordance with Section 6.2 hereof, by wire transfer of immediately available
funds to an account or accounts designated by Purchaser, and (B) the Purchased
Shares, as evidenced by one or more certificates dated the Closing Date and
bearing the appropriate legends as set forth herein and free and clear of all
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (other than restrictions on transfer imposed by applicable securities
Laws) (collectively, “Liens”); and
(2) Purchaser will deliver to the Company, by wire transfer of immediately
available funds to an account or accounts designated by the Company, an amount
equal to the product of $1.81 per share (the “Per Share Purchase Price”)
multiplied by the number of Purchased Shares.
(c) Closing Conditions. (1) The obligation of Purchaser, on the one hand, and
the Company and the Bank, on the other hand, to effect the Closing is subject to
the fulfillment or written waiver by Purchaser, the Company and the Bank prior
to the Closing of the following conditions:
(A) no provision of any applicable Law and no judgment, injunction, order or
decree of any court, administrative agency or commission or other governmental
authority or instrumentality, whether federal, state, local or foreign (each, a
“Governmental Entity”) shall prohibit the Closing or shall prohibit or restrict
Purchaser or its Affiliates from owning or voting any Purchased Shares, and no
lawsuit or formal administrative proceeding shall have been commenced by any
Governmental Entity seeking to effect any of the foregoing;

 

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(B) any Required Approvals of the Tennessee Department of Financial Institutions
(the “Tennessee DFI”), Office of the Comptroller of the Currency and the Board
of Governors of the Federal Reserve System (the “Federal Reserve”) required to
consummate the transactions contemplated by this Agreement shall have been made
or obtained and shall be in full force and effect as of the Closing Date; and
(C) the holders of shares of Common Stock of the Company shall have approved the
Shareholder Proposal (other than the proposal set forth in clause (1)(iii) of
the definition of “Shareholder Proposal”) by the requisite vote of such holders
and the corresponding amendments to the Charter shall have become effective.
(2) The obligation of Purchaser to purchase the Purchased Shares at the Closing
is also subject to the fulfillment or written waiver by Purchaser prior to the
Closing of each of the following conditions:
(A) all representations and warranties of the Company and the Bank contained in
this Agreement shall be true and correct (without regard to materiality or
Material Adverse Effect qualifiers contained therein), both individually and in
the aggregate, except where the failure of such representations and warranties
to be so true and correct, individually or in the aggregate, has not had and
would not be reasonably expected to have a Material Adverse Effect (other than
the representations and warranties set forth in Sections 2.2(b), (d)(1), (o),
(z), and (bb), which shall be true and correct in all material respects (subject
to materiality or Material Adverse Effect qualifiers contained therein)) as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date (except to the extent any such representation and warranty
expressly relates to a specified date, in which case such representation and
warranty need only be true and correct as of such specified date);
(B) each of the Company and the Bank shall have performed in all material
respects all obligations required to be performed by it at or prior to the
Closing;
(C) Purchaser shall have received a certificate signed on behalf of each of the
Company and the Bank by a senior executive officer certifying to the effect that
the conditions set forth in Sections 1.2(c)(2)(A) and 1.2(c)(2)(B) have been
satisfied;
(D) since December 31, 2010, except as set forth in any section of the Company
Disclosure Schedule corresponding to Section 2.2 of this Agreement, no fact,
event, change, condition, development, circumstance or effect shall have
occurred that, individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect;

 

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(E) (i) The Treasury shall have entered into a binding definitive agreement with
Purchaser providing for, contemporaneous with the Closing, the sale to Purchaser
of all of the issued and outstanding shares of the Series A Preferred (including
all obligations with respect to accrued but unpaid dividends on the Series A
Preferred) and the Treasury Warrants in accordance with the terms set forth in
Exhibit B and such agreement shall remain in full force and effect; and (ii) the
Company shall have received from each employee of the Company listed on
Schedule 1.2(c)(2)(E) who has waived any compensation or benefits in connection
with the Company’s issuance of the Series A Preferred and Treasury Warrants
pursuant to the interim final rule issued by Treasury or who would be prohibited
from receiving compensation or benefits under the interim final rule issued by
Treasury, a binding waiver (in a form acceptable to Purchaser) stipulating that
such compensation and benefits that are not payable as of the date of this
Agreement will not become payable at or following the Closing;
(F) no Required Approval issued by any Governmental Entity shall impose or
contain any restraint, condition or requirement, that, individually or in the
aggregate, is adverse to Purchaser or any of its Affiliates in any material
respect (in the case this clause, “adverse” shall mean reducing the economic
benefit or increasing the economic burden of the transactions contemplated
hereby), as determined by Purchaser in its reasonable good faith judgment (any
restraint, condition, or requirement of the type described in this clause (F), a
“Burdensome Condition”);
(G) each of the individuals designated by the Purchaser in its sole discretion
prior to the Closing (the “Purchaser Designees”) shall have been appointed to
the Board of Directors of the Company and of the Bank, and an equal number of
individuals shall have resigned from the Board of Directors of the Company and
of the Bank (the “Resigning Directors”), in each case effective as of the
Closing, such that immediately after the Closing, the Purchaser Designees
constitute a majority of the Board of Directors of each of the Company and the
Bank; provided, however, in no event shall the Board of Directors of the Company
contain fewer than two of the members of the Company’s Board of Directors as of
the date hereof, which members shall also be appointed to the board of directors
of Purchaser immediately following the Closing;
(H) either (i) the existing directors and officers liability and errors and
omissions insurance policies of the Company, the Bank and any Subsidiary (the
“Existing D&O Policies”) shall remain in full force and effect as of the date of
this Agreement and shall continue in full force and effect until they expire
upon the expiration dates set forth in Section 2.2(x) of the Company Disclosure
Schedule and the insurers thereunder shall have provided to the Company an
endorsement in writing to the effect that neither the execution and delivery of
this Agreement, nor the

 

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consummation of the transactions contemplated by this Agreement shall result in
a termination of such policies, or a reduction in coverage of any such policies;
or (ii) the Company shall have obtained a policy (or policies) of directors and
officers liability and errors and omissions insurance coverage with insurance
carriers believed to be financially sound and reputable with coverage
substantially identical to the coverage provided by the Existing D&O Policies;
(I) the shares of Common Stock included in the Purchased Shares shall have been
authorized for listing on the NASDAQ Stock Market (“NASDAQ”) or such other
market on which the Common Stock is then listed or quoted, subject to official
notice of issuance;
(J) the Company shall have entered into the Registration Rights Agreement
pursuant to Section 4.4, having the terms set forth in Exhibit C;
(K) as measured immediately prior to the Closing and excluding any deposits
withdrawn by Purchaser or its controlled Affiliates, core deposits (i.e., money
market, demand, checking, savings and transactional accounts for retail
customers) of the Bank shall not have decreased by more than twenty percent
(20%) from the amount thereof as of March 31, 2011;
(L) excluding Charge-Offs made at the written direction of Purchaser or any
controlled Affiliate of Purchaser, (i) the Charge-Offs in any completed calendar
fiscal quarter commencing after March 31, 2011 shall not exceed $40,000,000 and
(ii) the Charge-Offs in the most recent interim quarterly period commencing
after the date hereof and ending five calendar days prior to the Closing Date
shall not exceed an amount equal to $40,000,000 pro-rated by the number of days
in such interim quarterly period; for the purposes of this Section 1.2(c)(2)(L),
“Charge-Offs” shall mean the loans charged-off as reflected in the Company
Reports, 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 and with the
Company’s or Bank’s written policies in effect as of the date of this Agreement;
and three calendar days prior to the Closing Date, the Company shall provide
Purchaser with a schedule reporting Charge-Offs for the periods referred to in
clauses (i) and (ii);
(M) The Board of Directors of the Company shall have declared a distribution of
the CVRs, effective immediately prior to the Closing, pursuant to a contingent
value right agreement substantially on the terms set forth on Exhibit A and in
form and substance reasonably acceptable to the Purchaser;

 

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(N) Either (i) the holders of shares of Common Stock of the Company shall have
approved the proposal set forth in clause (1)(iii) of the definition of
“Shareholder Proposal” by the requisite vote of such holders and the
corresponding amendment to the Charter shall have become effective or (ii) the
merger of the Bank with and into a Subsidiary of the Purchaser on terms
reasonably satisfactory to Purchaser and consistent with Exhibit D shall have
been approved by the Boards of Directors of the Company and the Bank and by any
Governmental Entity the approval of which is required, and such merger is
reasonably capable of being consummated not later than three (3) business days
following the Closing; and
(3) The obligations of the Company and the Bank to effect the Closing are
subject to the fulfillment or written waiver by both of the Company and the Bank
prior to the Closing of the following additional conditions:
(A) all representations and warranties of Purchaser contained in this Agreement
shall be true and correct (without regard to materiality or material adverse
effect qualifiers contained therein) in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except to the extent any such representation and warranty
expressly relates to a specified earlier date, in which case such representation
and warranty need only be true and correct as of such specified earlier date,
and except where the failure of any such representation or warranty to be true
and correct would not, individually or in the aggregate, impair in any material
respect the ability of Purchaser to consummate the transactions contemplated by
this Agreement;
(B) Purchaser shall have performed in all material respects all obligations
required to be performed by it at or prior to the Closing;
(C) the Company and the Bank each shall have received a certificate signed on
behalf of Purchaser by a senior executive officer certifying to the effect that
the conditions set forth in Sections 1.2(c)(3)(A) and (B) have been satisfied;
and
(D) Purchaser and the Treasury shall have entered into a binding definitive
agreement reflecting Purchaser’s agreement to repurchase all of the issued and
outstanding Series A Preferred (including all obligations with respect to
accrued but unpaid dividends on the Series A Preferred) and the Treasury
Warrants in accordance with the terms set forth in Exhibit B and such agreement
shall remain in full force and effect.

 

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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Disclosure. (a) On or prior to the date hereof, the Company and the Bank
delivered to Purchaser and Purchaser delivered to the Company and the Bank a
schedule (a “Disclosure Schedule”) setting forth, among other things, items the
disclosure of which is necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an exception to one
or more representations or warranties contained in Section 2.2 with respect to
the Company or the Bank, or in Section 2.3 with respect to Purchaser, or to one
or more covenants contained in Article III.
(b) “Material Adverse Effect” means any fact, event, change, development,
circumstance or effect that, individually or in the aggregate, (1) is or would
be reasonably likely to be material and adverse to the business, assets,
liabilities, results of operations or condition (financial or otherwise) of the
Company, the Bank and the Subsidiaries, taken as a whole (provided, however,
that with respect to this clause (1), a “Material Adverse Effect” shall not be
deemed to include any fact, event, change, condition, development, circumstance
or effect to the extent resulting from actions or omissions by the Company taken
or not taken with the prior written consent or at the written direction of
Purchaser or as expressly required by this Agreement), or (2) materially impairs
or would be reasonably likely to materially impair the ability of the Company or
the Bank to perform its obligations under this Agreement or to consummate the
Closing. Notwithstanding the foregoing, any adverse change, event or effect to
the extent arising from: (i) conditions generally affecting the United States
economy or generally affecting the banking industry except to the extent the
Company and the Bank, taken as a whole, are affected in a materially
disproportionate manner as compared to other community banks in the southeastern
United States; (ii) national or international political or social conditions,
including terrorism or the engagement by the United States in hostilities or
acts of war except to the extent the Company and the Bank, taken as a whole, are
affected in a materially disproportionate manner as compared to other community
banks in the southeastern United States; (iii) changes in any federal, state,
local or foreign Laws, any rule or regulation of any SRO, statutes, regulations,
rules, ordinances and judgments, decrees, orders, writs and injunctions
(collectively, “Laws”) issued by any Governmental Entity; (iv) any action taken
by Purchaser prior to or at the Closing; (v) any failure, in and of itself, by
the Company or the Bank to meet any internal or disseminated projections,
forecasts or revenue or earnings predictions for any period (provided that any
underlying causes of such failure shall not be excluded in determining whether a
Material Adverse Effect has occurred or would reasonably be expected to occur);
(vi) any natural disaster except to the extent the Company and the Bank, taken
as a whole, are affected in a materially disproportionate manner as compared to
other community banks in the southeastern United States (vii) any compliance by
the Company or the Bank with any express written request made by Purchaser;
(viii) a decline in the price, or a change in the trading volume, of the Common
Stock on the NASDAQ (provided that any underlying causes of such decline or
change shall not be excluded in determining whether a Material Adverse Effect
has occurred or would reasonably be expected to occur); or (ix) the public
announcement, pendency or completion of the transactions contemplated by this
Agreement, including any action taken in response thereto by any person with
which the Company or the Bank does business shall not, in any such case, be
taken into account in determining whether a “Material Adverse Effect” has
occurred or would reasonably be expected to occur.

 

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(c) “Previously Disclosed” with regard to (1) a party means information set
forth in its Disclosure Schedule, and (2) the Company or the Bank means
information publicly disclosed by the Company in (A) its Annual Report on Form
10-K for the fiscal year ended December 31, 2010, as filed by it with the
Securities and Exchange Commission (“SEC”) on March 15, 2010 (including all
exhibits included or incorporated by reference therein) (the “Company 10-K”), or
(B) any Current Report on Form 8-K filed or furnished by it with the SEC since
January 1, 2011 and publicly available prior to the date of this Agreement
(excluding any risk factor disclosures contained in such documents under the
heading “Risk Factors” and any disclosure of risks included in any
“forward-looking statements” disclaimer or other statements that are similarly
non-specific and are predictive or forward-looking in nature).
(d) “To the knowledge of the Company,” “to the knowledge of the Bank,” or any
similar phrase means, (i) with respect to any fact or matter, the actual
knowledge of Stephen M. Rownd or James E. Adams, and (ii) with respect to facts
or matters relating to representations and warranties set forth in
Section 2.2(w), Stephen M. Rownd, James E. Adams or Steve Droke, in the case of
each of clauses (i) and (ii) without any duty to investigate.
2.2 Representations and Warranties of the Company and the Bank. The Company and
the Bank, jointly and severally, represent and warrant to Purchaser, as of the
date of this Agreement and as of the Closing Date (except to the extent made
only as of a specified date in which case as of such date), that, except as
Previously Disclosed:
(a) Organization and Authority. (1) The Company is, and at the Closing Date will
be, a corporation duly organized, validly existing and in good standing under
the laws of the State of Tennessee. The Company is a bank holding company duly
registered under the Bank Holding Company Act of 1956, as amended. The Company
has, and at the Closing Date will have, the power and authority (corporate,
governmental, regulatory and otherwise) and has or will have all necessary
approvals, orders, licenses, certificates, permits and other governmental
authorizations (collectively, the “Authorizations”) to own or lease all of the
assets owned or leased by it and to conduct its business in all material
respects in the manner Previously Disclosed, and has the corporate power and
authority to own its properties and assets and to carry on its business as it is
now being conducted except where the failure to have such power and authority or
such Authorizations has not had, individually or in the aggregate, a Material
Adverse Effect. The Company is, and at the Closing Date will be, duly licensed
or qualified to do business and in good standing as a foreign corporation in all
jurisdictions in which the nature of the activities conducted by the Company
requires such qualification except for jurisdictions in which the failure to be
so qualified or authorized has not had, individually or in the aggregate, a
Material Adverse Effect. The Charter, as amended, of the Company (the “Charter”)
complies in all material respects with applicable Law. A complete and correct
copy of the Charter and bylaws of the Company, as amended and as currently in
effect, has been delivered or made available to Purchaser. The Company’s direct
and indirect subsidiaries (other than the Bank) (each a “Subsidiary” and
collectively the “Subsidiaries”) are listed on Schedule A to this Agreement.

 

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(2) The Bank is a wholly owned subsidiary of the Company and is a corporation
and state chartered bank duly organized, validly existing and in good standing
under the Laws of the State of Tennessee. The deposit accounts of the Bank are
insured up to applicable limits by the Deposit Insurance Fund, which is
administered by the Federal Deposit Insurance Corporation (the “FDIC”); all
premiums and assessments required to be paid in connection therewith have been
paid when due; and no proceedings for the termination or revocation of such
insurance are pending or, to the knowledge of the Company, threatened. The Bank
has the power and authority (corporate, governmental, regulatory and otherwise)
and has or will have all necessary Authorizations to own or lease all of the
assets owned or leased by it and to conduct its business in all material
respects in the manner Previously Disclosed, except where the failure to have
such power and authority or such Authorizations has not had, individually or in
the aggregate, a Material Adverse Effect. The Bank is duly licensed or qualified
to do business and in good standing in all jurisdictions in which the nature of
the activities conducted by the Bank requires such qualification except for
jurisdictions in which the failure to be so qualified or authorized has not had,
individually or in the aggregate, a Material Adverse Effect. The charter (“Bank
Charter”) of the Bank complies in all material respects with applicable Law. A
complete and correct copy of the Bank Charter and the bylaws of the Bank, as
amended and as currently in effect, has been delivered or made available to
Purchaser.
(3) Each of the Subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization. Each such Subsidiary has the power and authority
(corporate, governmental, regulatory and otherwise) and has or will have all
necessary Authorizations to own or lease all of the assets owned or leased by it
and to conduct its business in all material respects as Previously Disclosed,
except where the failure to have such power and authority or such Authorizations
has not had, individually or in the aggregate, a Material Adverse Effect. Each
such Subsidiary is duly licensed or qualified to do business and in good
standing as a foreign corporation or other legal entity in all jurisdictions in
which the nature of the activities conducted by such Subsidiary requires such
qualification except for jurisdictions in which the failure to be so qualified
or authorized has not had, individually or in the aggregate, a Material Adverse
Effect. The charter, articles or certificate of incorporation, certificate of
trust or other organizational document of each Subsidiary comply in all material
respects with applicable Law. A complete and correct copy of the charter,
articles or certificate of incorporation or certificate of trust and bylaws of
each Subsidiary (or similar governing documents), as amended and as currently in
effect, has been delivered or made available to Purchaser.

 

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(b) Capitalization. The authorized capital stock of the Company consists of 130
shares of organizational common stock, par value $10.00 per share, of the
Company (the “Organizational Common Stock”), 20,000,000 shares of Common Stock
and 1,000,000 shares of preferred stock, no par value, of the Company (the
“Company Preferred Stock”). As of the close of business on May 2, 2011 (the
“Capitalization Date”), there were no shares of Organizational Common Stock and
no more than 13,206,952 shares of Common Stock outstanding (which includes
restricted shares) and 72,278 shares of Series A Preferred and no other shares
of Company Preferred Stock outstanding. Since the Capitalization Date and
through the date of this Agreement, except in connection with this Agreement and
the transactions contemplated hereby, and as set forth in Section 2.2(b) of the
Company Disclosure Schedule, the Company has not (1) issued or authorized the
issuance of any shares of Organizational Common Stock, Common Stock or Company
Preferred Stock, or any securities convertible into or exchangeable or
exercisable for shares of Organizational Common Stock, Common Stock or Company
Preferred Stock, (2) reserved for issuance any shares of Organizational Common
Stock, Common Stock or Company Preferred Stock or (3) repurchased or redeemed,
or authorized the repurchase or redemption of, any shares of Organizational
Common Stock, Common Stock or Company Preferred Stock. As of the close of
business on the Capitalization Date, other than in respect of shares of Common
Stock reserved for issuance in connection with the Treasury Warrants, any stock
option or other equity incentive plan in respect of which an aggregate of no
more than 146,169 shares of Common Stock have been reserved for issuance and
under the Company’s Dividend Reinvestment Plan, no shares of Organizational
Common Stock, Common Stock or Company Preferred Stock were reserved for
issuance. All of the issued and outstanding shares of Organizational Common
Stock, Common Stock and Company Preferred Stock have been duly authorized and
validly issued and are fully paid and nonassessable, and have been issued in
compliance with all federal and state securities laws, and were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities. All shares of Organizational Common Stock are
callable by the Company at any time at a price of $10.00 per share by the
Company. No bonds, debentures, notes or other indebtedness having the right to
vote on any matters on which the shareholders of the Company may vote (“Voting
Debt”) are issued and outstanding. As of the date of this Agreement, except
(A) pursuant to any cashless exercise provisions of any Company stock options or
pursuant to the surrender of shares to the Company or the withholding of shares
by the Company to cover tax withholding obligations under the Benefit Plans,
(B) the warrant to purchase up to 635,504 shares of Common Stock sold by the
Company to the Treasury pursuant to that certain Letter Agreement and Securities
Purchase Agreement dated as of December 23, 2008 or (C) as set forth elsewhere
in this Section 2.2(b) or on the Company Disclosure Schedule, the Company does
not have and is not bound by any outstanding subscriptions, options, calls,
commitments or agreements of any character calling for the purchase or issuance
of, or securities or rights convertible into or exchangeable for, any shares of
Organizational Common Stock, Common Stock or Company Preferred Stock or any
other equity securities of the Company or Voting Debt or any securities
representing the right to purchase or otherwise receive any shares of capital
stock of the Company (including any rights plan or agreement). Section 2.2(b) of
the Company Disclosure Schedule sets forth a table listing the outstanding
series of trust preferred and subordinated debt securities of the Company and
the Bank and certain information with respect thereto, including the holders of
such securities as of the date of this Agreement if known to the Company, and
all such information is accurate and complete to the knowledge of the Company
and the Bank.

 

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(c) Subsidiaries. With respect to the Bank and each of the Subsidiaries, (1) all
the issued and outstanding shares of such entity’s capital stock have been duly
authorized and validly issued, are fully paid and nonassessable, have been
issued in compliance with all federal and state securities Laws, and were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and (2) there are no outstanding options
to purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into or exchangeable for, or
any contracts or commitments to issue or sell, shares of such entity’s capital
stock, any other equity security or any Voting Debt, or any such options,
rights, convertible securities or obligations. Except as set forth in
Section 2.2(c) of the Company Disclosure Schedule, the Company owns, directly or
indirectly, all of the issued and outstanding shares of capital stock of each of
the Bank and the Subsidiaries, free and clear of all Liens. Except as set forth
in Section 2.2(c) of the Company Disclosure Schedule, the Company does not own,
directly or indirectly, any capital stock or other equity securities of any
person that is not a Subsidiary or the Bank.
(d) Authorization. (1) Each of the Company and the Bank has the full legal
right, corporate power and authority to enter into this Agreement and the other
agreements referenced herein to which it will be a party and to carry out its
obligations hereunder and thereunder. The execution, delivery and performance of
this Agreement and the other agreements referenced herein to which each of the
Company and the Bank will be a party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Boards of
Directors of each of the Company and the Bank. This Agreement has been, and the
other agreements referenced herein to which they will be a party, when executed,
will be, duly and validly executed and delivered by the Company and the Bank
and, assuming due authorization, execution and delivery by Purchaser, is and
will be a valid and binding obligation of each of the Company and the Bank
enforceable against each of the Company and the Bank in accordance with its
terms (except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws of
general applicability relating to or affecting creditors’ rights or by general
equity principles). No other corporate proceedings are necessary for the
execution and delivery by the Company or the Bank of this Agreement and the
other agreements referenced herein to which it will be a party, the performance
by them of their obligations hereunder and thereunder or the consummation by
them of the transactions contemplated hereby, subject to receipt of the approval
by the Company’s shareholders of the Shareholder Proposal. Except as set forth
in Section 2.2(d) of the Company Disclosure Schedule, the only vote of the
shareholders of the Company required in connection with the approval of the
Shareholder Proposal is the affirmative vote of the holders of not less than a
majority of the outstanding Common Stock entitled to vote at the meeting at
which such a vote is taken. All shares of Common Stock outstanding on the record
date for a meeting at which a vote is taken with respect to the Shareholder
Proposal shall be eligible to vote on such proposal.

 

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(2) Neither the execution and delivery by the Company or the Bank of this
Agreement, nor the consummation of the transactions contemplated hereby, nor
compliance by the Company or the Bank with any of the provisions hereof, will
(A) violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an event that, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or result in
the loss of any benefit or creation of any right on the part of any third party
under, or accelerate the performance required by, or result in a right of
termination or acceleration of, or result in the creation of any Liens upon any
of the material properties or assets of the Company, the Bank or any Subsidiary
under any of the terms, conditions or provisions of (i) its charter or bylaws
(or similar governing documents) or the certificate of incorporation, charter,
bylaws or other governing instrument of any Subsidiary or (ii) except as set
forth in Section 2.2(d) of the Company Disclosure Schedule, and except for
defaults that would not have nor reasonably be expected to have a Material
Adverse Effect, any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the
Company, the Bank or any Subsidiary is a party or by which it may be bound,
including without limitation the trust preferred securities issued by Greene
County Capital Trust I, Greene County Capital Trust II, GreenBank Capital Trust
I, Civitas Statutory Trust I, Cumberland Capital Statutory Trust II or the
related indentures (collectively, the “Trust Preferred Securities”), or to which
the Company, the Bank or any Subsidiary or any of the properties or assets of
the Company, the Bank or any Subsidiary may be subject, or (B) except for
violations that would not have nor reasonably be expected to have a Material
Adverse Effect, assuming the consents referred to in Section 2.2(f) are duly
obtained, violate any Law applicable to the Company, the Bank or any Subsidiary
or any of their respective properties or assets.
(e) Accountants. Dixon Hughes PLLC, who has expressed its opinion with respect
to the consolidated financial statements contained in the Company 10-K, is as of
the date of such opinion a registered independent public accountant, within the
meaning of the Code of Professional Conduct of the American Institute of
Certified Public Accountants, as required by the Securities Act and the rules
and regulations promulgated thereunder and by the rules of the Public Accounting
Oversight Board.
(f) Consents. Schedule 2.2(f) of the Company Disclosure Schedule lists all
governmental and any other material consents, approvals, authorizations,
applications, registrations and qualifications that are required to be obtained
in connection with or for the consummation of the transactions contemplated by
this Agreement (the “Required Approvals”). Other than the securities or blue sky
laws of the various states and the Required Approvals, no material notice to,
registration, declaration or filing with, exemption or review by, or
authorization, order, consent or approval of, any Governmental Entity or SRO, or
expiration or termination of any statutory waiting period, is necessary for the
consummation by the Company or the Bank of the transactions contemplated by this
Agreement.

 

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(g) Financial Statements. The Company has previously made available to Purchaser
copies of the consolidated statements of financial condition of the Company, the
Bank and the Subsidiaries as of December 31 for the fiscal years 2008, 2009 and
2010, and the related consolidated statements of operations, of comprehensive
income, of changes in shareholders’ equity, and of cash flows for the fiscal
years 2008 through 2010, inclusive, as reported in the Company 10-K, in each
case accompanied by the audit report of Dixon Hughes PLLC. The December 31, 2010
consolidated statement of financial condition of the Company (including the
related notes, where applicable) fairly presents in all material respects the
consolidated financial position of the Company, the Bank and the Subsidiaries as
of the date thereof, and the other financial statements referred to in this
Section 2.2(g) (including the related notes, where applicable) fairly present in
all material respects, and the financial statements to be filed by the Company
with the SEC after the date of this Agreement will fairly present in all
material respects (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount), the results of the
consolidated operations, comprehensive income, changes in shareholders’ equity,
cash flows and the consolidated financial position of the Company, the Bank and
the Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) in all material respects complies, and the financial statements to
be filed by the Company with the SEC after the date of this Agreement will
comply, with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto; and each of such statements
(including the related notes, where applicable) has been, and the financial
statements to be filed by the Company with the SEC after the date of this
Agreement will be, prepared in accordance with generally accepted accounting
principles (“GAAP”) consistently applied during the periods involved, except as
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. There is no transaction, arrangement or other
relationship between the Company, the Bank or any Subsidiary and an
unconsolidated or other Affiliated entity that is not reflected on the financial
statements specified in this Section 2.2(g). The books and records of the
Company, the Bank and the Subsidiaries in all material respects have been, and
are being, maintained in accordance with applicable Law and GAAP accounting
requirements and reflect only actual transactions. Dixon Hughes PLLC has not
resigned or been dismissed as independent public accountants of the Company as a
result of or in connection with any disagreements with the Company on a matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure.
(h) Reports. (1) Since December 31, 2008, the Company, the Bank and each
Subsidiary has timely filed all material reports, registrations, documents,
filings, statements and submissions, together with any amendments thereto, that
it was required to file with any Governmental Entity or self-regulatory
organization having jurisdiction over the Company (“SRO”) (the foregoing,
collectively, the “Company Reports”) and has paid all material fees and
assessments due and payable in connection therewith. As of their respective
dates of filing, the Company Reports complied in all material respects

 

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with all statutes and applicable rules and regulations of the applicable
Governmental Entities or SROs. Except as set forth in Section 2.2(h)(1) of the
Company Disclosure Schedule, to the knowledge of the Company, as of the date of
this Agreement, there are no outstanding comments from the SEC or any other
Governmental Entity or any SRO with respect to any Company Report. In the case
of each such Company Report filed with or furnished to the SEC, such Company
Report did not, as of its date or if amended prior to the date of this
Agreement, as of the date of such amendment, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made in it, in light of the
circumstances under which they were made, not misleading and complied as to form
in all material respects with the applicable requirements of the Securities Act
of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of
1934, as amended (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, or the dates of their respective amendments. No
executive officer of the Company, the Bank or any 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. Copies of all Company Reports not otherwise
publicly filed have, to the extent allowed by applicable Law, been made
available to Purchaser by the Company. Except for normal examinations conducted
by a Governmental Entity or SRO in the regular course of the business of the
Company, the Bank and the Subsidiaries, no Governmental Entity or SRO has
initiated any proceeding or, to the knowledge of the Company, investigation into
the business or operations of the Company, the Bank or any Subsidiary since
December 31, 2008. Except as set forth in Section 2.2(h)(1) of the Company
Disclosure Schedule, to the knowledge of the Company and the Bank, there is no
unresolved violation, criticism or exception by any Governmental Entity or SRO
with respect to any report or statement relating to any examinations of the
Company, the Bank or any of the Subsidiaries.
(2) The Company (i) keeps books, records and accounts that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company, the Bank and the Subsidiaries, and (ii) maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with management’s
general or specific authorization, (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain accountability for assets, (C) access to assets is permitted only in
accordance with management’s general or specific authorization and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. 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 Bank and the
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 date hereof, to the
Company’s outside auditors and the audit committee of the Board of Directors
(x) any significant deficiencies and material weaknesses in the design or
operation of internal controls over financial

 

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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. Since December 31, 2008,
(A) none of the Company, the Bank or any Subsidiary or, to the knowledge of the
Company or the Bank, any director, officer, employee, auditor, accountant or
representative of the Company, the Bank or any Subsidiary has received or
otherwise had or obtained knowledge of any material complaint, allegation,
assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of the Company, the
Bank or any Subsidiary or their respective internal accounting controls,
including any material complaint, allegation, assertion or claim that the
Company, the Bank or any Subsidiary has engaged in questionable accounting or
auditing practices, and (B) no attorney representing the Company, the Bank or
any Subsidiary, whether or not employed by the Company, the Bank or any
Subsidiary, has reported evidence of a material violation of securities laws,
breach of fiduciary duty or similar violation by the Company or any of its
officers, directors, employees or agents to the Company’s Board of Directors or
any committee thereof or to any director or officer of the Company. The Company
is otherwise in compliance in all material respects with all applicable
provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as
amended and the rules and regulations promulgated thereunder and as of the date
of this Agreement, the Company has no knowledge of any reason that its outside
auditors and its chief executive officer and chief financial officer shall not
be able to give the certifications and attestations required pursuant to the
rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act,
without qualification, when next due.
(i) Properties and Leases. The Company, the Bank and the Subsidiaries have good
and marketable title to all real properties and transferable title to all other
properties and assets, tangible or intangible, owned by them (other than any
assets or properties classified as other real estate owned) that are material to
the operation of their businesses, in each case free from Liens (other than
(i) Liens for current taxes and assessments not yet past due or being contested
in good faith, (ii) inchoate Liens for construction in progress,
(iii) mechanics’, materialmen’s, workmen’s, repairmen’s, warehousemen’s and
carriers’ Liens arising in the ordinary course of business of the Company, the
Bank or such Subsidiary consistent with past practice for sums not yet
delinquent or being contested in good faith by appropriate proceedings and
(iv) Liens with respect to tenant personal property, fixtures and/or leasehold
improvements at the subject premises arising under state statutes and/or
principles of common law (collectively, “Permitted Liens”)) that would impair in
any material respect the value thereof or interfere with the use made or to be
made thereof by them in any material respect. The Company, the Bank and the
Subsidiaries own, lease or otherwise have valid easement rights to use all
properties as are necessary to their operations as now conducted. To the
knowledge of the Company, the Company, the Bank and the 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
in any material respect. None of the Company, the

 

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Bank or any Subsidiary or, to the knowledge of the Company, any other party
thereto is in default in any material respect under any lease described in the
immediately preceding sentence. There are no condemnation or eminent domain
proceedings pending or, to the knowledge of the Company, threatened in writing,
with respect to any of the real properties owned, or to the Company’s knowledge,
any of the real properties leased, by the Company, the Bank or any of the
Subsidiaries. None of the Company, the Bank or any of the Subsidiaries has,
within the last two (2) years, made any material title claims, or has
outstanding any material title claims, under any policy of title insurance
respecting any parcel of real property.
(j) Taxes. Except as set forth in Section 2.2(j) of the Company Disclosure
Schedule, (1) each of the Company, the Bank and the Subsidiaries has duly and
timely filed (including, pursuant to applicable extensions granted without
penalty) all material Tax Returns required to be filed by it and all such Tax
Returns are correct and complete in all material respects. Each of the Company,
the Bank and the Subsidiaries have paid in full, or made adequate provision in
the financial statements of the Company (in accordance with GAAP) for, all Taxes
shown as due on such Tax Returns; (2) no material deficiencies for any Taxes
have been proposed, asserted or assessed against or with respect to any Taxes
due by, or Tax Returns of, the Company, the Bank or any of the Subsidiaries
which deficiencies have not since been resolved; and (3) there are no material
Liens for Taxes upon the assets of either the Company, the Bank or the
Subsidiaries except for statutory Liens for Taxes not yet due or that are being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP have been provided. None of the Company, the
Bank or any of the Subsidiaries has been a “distributing corporation” or a
“controlled corporation” in any distribution occurring during the last two years
in which the parties to such distribution treated the distribution as one to
which Section 355 of the U.S. Internal Revenue Code of 1986, as amended and the
Treasury Regulations promulgated thereunder (the “Code”) is applicable. None of
the Company, the Bank or any Subsidiary has engaged in any transaction that is
the same as or substantially similar to a “listed transaction” for United States
federal income tax purposes within the meaning of Treasury Regulations section
1.6011-4. None of the Company, the Bank or any of the Subsidiaries has engaged
in a transaction of which it made disclosure to any taxing authority to avoid
penalties under Section 6662(d) or any comparable provision of state, foreign or
local Law. None of the Company, the Bank or any of the Subsidiaries has
participated in any “tax amnesty” or similar program offered by any taxing
authority to avoid the assessment of penalties or other additions to Tax. The
Company, the Bank and each of the Subsidiaries have complied in all material
respects with all requirements to report information for Tax purposes to any
individual or taxing authority, and have collected and maintained all requisite
certifications and documentation in valid and complete form with respect to any
such reporting obligation, including, without limitation, valid Internal Revenue
Service Forms W-8 and W-9. No claim has been made by a Tax Authority in writing
to the Company, the Bank or any of the Subsidiaries in a jurisdiction where the
Company, the Bank or any of the Subsidiaries, as the case may be, does not file
Tax Returns that the Company, the Bank or any of such Subsidiaries, as the case
may be, is or may be subject to Tax by that jurisdiction. None of the Company,
the Bank or any of the Subsidiaries has granted any waiver, extension or
comparable consent regarding the application of the

 

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statute of limitations with respect to any Taxes or Tax Return that is
outstanding, nor has any request for any such waiver or consent been made. None
of the Company, the Bank or any of the Subsidiaries has been or is in violation
(or with notice or lapse of time or both, would be in violation) of any
applicable Law relating to the payment or withholding of Taxes (including,
without limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of
the Code or any similar provisions of state, local or foreign Law). Each of the
Company, the Bank and its Subsidiaries has duly and timely withheld from
employee salaries, wages and other compensation and paid over to the appropriate
taxing authority all amounts required to be so withheld and paid over for all
periods under all applicable Laws. No audits or material investigations by any
taxing authority relating to any Tax Returns of any of the Company, the Bank or
any of the Subsidiaries is in progress, nor has the Company, the Bank or any of
the Subsidiaries received notice from any taxing authority of the commencement
of any audit not yet in progress. There are no outstanding powers of attorney
enabling any person or entity not a party to this Agreement to represent the
Company, the Bank or any Subsidiary with respect to Tax matters. None of the
Company, the Bank or any of the Subsidiaries has applied for, been granted, or
agreed to any accounting method change for which it will be required to take
into account any adjustment under Code Section 481 or any similar provision.
There are no material elections regarding Taxes affecting the Company, the Bank
or any of the Subsidiaries. None of the Company, the Bank or any of the
Subsidiaries has undergone an “ownership change” within the meaning of Code
Section 382(g) provided that the Company makes no representations as to whether
the execution of this Agreement or the consummation of the transactions
contemplated hereby will constitute an “ownership change” under Code
Section 382(g). For purposes of this Agreement, “Taxes” shall mean all taxes,
charges, levies, penalties or other assessments imposed by any United States
federal, state, local or foreign taxing authority, including any income, excise,
property, sales, transfer, franchise, payroll, withholding, social security,
abandoned or unclaimed property or other taxes, together with any interest,
penalties or additions to tax attributable thereto, and any payments made or
owing to any other person measured by such taxes, charges, levies, penalties or
other assessment, whether pursuant to a tax indemnity agreement, tax sharing
payment or otherwise (other than pursuant to commercial agreements or Benefit
Plans). For purposes of this Agreement, “Tax Return” shall mean any return,
report, information return or other document (including any related or
supporting information) required to be filed with any taxing authority with
respect to Taxes, including, without limitation, all information returns
relating to Taxes of third parties, any claims for refunds of Taxes and any
amendments or supplements to any of the foregoing.
(k) Absence of Certain Changes. Since December 31, 2010, except as Previously
Disclosed, (1) the Company, the Bank and the Subsidiaries have conducted their
respective businesses in all material respects in the ordinary and usual course
of business and consistent with prior practice, (2) none of the Company, the
Bank or any Subsidiary has issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except borrowings in the
ordinary course of business, (3) except for publicly disclosed ordinary
dividends on the Common Stock and outstanding Company Preferred Stock or as
contemplated by Section 2.2(b) of this Agreement, the Company has not made or
declared any distribution in cash or in kind to its shareholders

 

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or issued or repurchased any shares of its capital stock or other equity
interests, (4) no fact, event, change, condition, development, circumstance or
effect has occurred that has had or would reasonably be expected to have a
Material Adverse Effect and (5) no material default (or event that, with notice
or lapse of time, or both, would constitute a material default) exists on the
part of the Company, the Bank or any Subsidiary or, to their knowledge, on the
part of any other party, in the due performance and observance of any term,
covenant or condition of any Company Significant Agreement that would,
individually or in the aggregate, constitute a Material Adverse Effect.
(l) No Undisclosed Liabilities. Except as set forth in Section 2.2(l) of the
Company Disclosure Schedule, none of the Company, the Bank or any of the
Subsidiaries has any liabilities or obligations of any nature and is not an
obligor under any guarantee, keepwell or other similar agreement (absolute,
accrued, contingent or otherwise) except for (1) liabilities or obligations
reflected in or reserved against in the Company’s consolidated balance sheet as
of December 31, 2010, (2) current liabilities that have arisen since
December 31, 2010 in the ordinary and usual course of business and consistent
with past practice and that have either been Previously Disclosed or would not
have, individually or in the aggregate, a material impact on the Company, the
Bank or any Subsidiary and (3) contractual liabilities under (other than
liabilities arising from any breach or violation of) agreements made in the
ordinary and usual course of business and consistent with past practice and that
have either been Previously Disclosed or would not have, individually or in the
aggregate, a material impact on the Company, the Bank or any Subsidiary.
(m) Commitments and Contracts. (i) The Company has Previously Disclosed or made
available to Purchaser or its representatives true, correct and complete copies
of, each of the following written contracts to which the Company, the Bank or
any Subsidiary is a party (each, a “Company Significant Agreement”):
(1) any contract or agreement which is a “material contract” within the meaning
of Item 601(b)(10) of Regulation S-K to be performed in whole or in part after
the date of this Agreement;
(2) any contract or agreement with respect to the employment or service of any
current or former directors, officers, or consultants of the Company, the Bank
or any of the Subsidiaries;
(3) any contract or agreement with any director, officer, or Affiliate of the
Company, the Bank or any of the Subsidiaries;
(4) any contract or agreement materially limiting the freedom of the Company,
the Bank or any Subsidiary to engage in any line of business or to compete with
any other person or prohibiting the Company, the Bank or any Subsidiary from
soliciting customers, clients or employees, in each case whether in any
specified geographic region or business or generally;

 

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(5) any contract or agreement with a labor union or guild (including any
collective bargaining agreement);
(6) any contract or agreement which grants any person a right of first refusal,
right of first offer or similar right with respect to any material properties,
assets or businesses of the Company, the Bank or the Subsidiaries other than
other real estate owned;
(7) any trust indenture, mortgage, promissory note, loan agreement or other
contract, agreement or instrument for the borrowing of money, any currency
exchange, commodities or other hedging arrangement or any leasing transaction of
the type required to be capitalized in accordance with GAAP, in each case, where
the Company, the Bank or any Subsidiary is a lender, borrower or guarantor other
than those entered into in the ordinary course of business;
(8) any contract or agreement entered into since January 1, 2005 (and any
contract or agreement entered into at any time to the extent that material
obligations remain as of the date hereof) relating to the acquisition or
disposition of any material business or material assets (whether by merger, sale
of stock or assets or otherwise), which acquisition or disposition is not yet
complete or where such contract contains continuing material obligations,
including continuing material indemnity obligations, of the Company, the Bank or
any of the Subsidiaries;
(9) any agreement of guarantee, support or indemnification by the Company, the
Bank or any Subsidiary, assumption or endorsement by the Company, the Bank or
any Subsidiary of, or any similar commitment by the Company, the Bank or any
Subsidiary with respect to, the obligations, liabilities (whether accrued,
absolute, contingent or otherwise) or indebtedness of any other person other
than those entered into in the ordinary course of business;
(10) any alliance, cooperation, joint venture, stockholders’ partnership or
similar agreement involving a sharing of profits or losses relating to the
Company, the Bank or any Subsidiary;
(11) any agreement, option or commitment or right with, or held by, any third
party to acquire, use or have access to any assets or properties, or any
interest therein, of the Company, the Bank or any Subsidiary; and
(12) any material contract or agreement that would require any consent or
approval of a counterparty as a result of the consummation of the transactions
contemplated by this Agreement.
(ii) (A) Each of the Company Significant Agreements has been duly and validly
authorized, executed and delivered by the Company, the Bank or any Subsidiary
and is binding on the Company, the Bank and the Subsidiaries, as applicable, and
to the Company’s knowledge, is in full force and effect; (B) the Company, the
Bank and each of the Subsidiaries, as applicable, are in all material respects
in compliance with and have

 

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in all material respects performed all obligations required to be performed by
them to date under each Company Significant Agreement; (C) as of the date
hereof, none of the Company, the Bank or any of the Subsidiaries has received
notice of any material violation or default (or any condition that with the
passage of time or the giving of notice would cause such a violation of or a
default) by any party under any Company Significant Agreement; and (D) no other
party to any Company Significant Agreement is, to the knowledge of the Company,
in default in any material respect thereunder.
(n) Offering of Purchased Shares. 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 that would require the integration of such offering
with the offering of any of the Purchased Shares, the shares underlying the
Option or CVRs to be issued pursuant to this Agreement, in each case 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
Shares or the shares underlying the Option to Purchaser or the CVRs to the
Company’s shareholders (excluding the Purchaser) pursuant to this Agreement to
the registration requirements of the Securities Act.
(o) Status of Purchased Shares. The Purchased Shares to be issued pursuant to
this Agreement have been duly authorized by all necessary corporate action, in
each case subject to the approval of the Shareholder Proposal. When issued,
delivered and sold against receipt of the consideration therefor as provided in
this Agreement, the Purchased Shares will be validly issued, fully paid and
nonassessable, will not be issued in violation of or subject to preemptive
rights of any other shareholder of the Company and will not result in the
violation or triggering of any price-based antidilution adjustments under any
agreement to which the Company, the Bank or any Subsidiary is a party. The
voting rights of the holders of the Purchased Shares will be enforceable in
accordance with the terms of the Charter, the bylaws of the Company and
applicable Law.
(p) Litigation and Other Proceedings. Except as set forth in Section 2.2(p) of
the Company Disclosure Schedule, none of the Company, the Bank or any Subsidiary
is a party to any, and there are no pending or, to the Company’s knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature (1) against
the Company, the Bank or any Subsidiary (excluding those of the type
contemplated by the following clause (2)) that, if adversely determined, would
reasonably be expected to result in damages, costs or any other liability owed
by the Company, the Bank or such Subsidiary, as applicable, in excess of
$1,000,000 individually or $5,000,000 in the aggregate or (2) as of the date
hereof, challenging the validity or propriety of the transactions contemplated
by this Agreement. There is no material injunction, order, judgment, decree or
regulatory restriction (other than regulatory restrictions of general
application that apply to similarly situated companies) imposed upon the
Company, the Bank, any Subsidiary or the assets of the Company, the Bank or any
Subsidiary. There is no material unresolved violation, criticism or exception by
any Governmental Entity with respect to any report or relating to any
examinations or inspections of the Company, the Bank or any Subsidiary.

 

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(q) Compliance with Laws. (1) The Company, the Bank and each Subsidiary have all
material permits, licenses, franchises, authorizations, orders and approvals of
(“Permits”), and have made all filings, applications and registrations with,
Governmental Entities and SROs 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, except where the failure to have, or the suspension or cancellation
of, any Permit has not had a Material Adverse Effect. Except as has not had a
Material Adverse Effect, each of the Company, the Bank and each Subsidiary is
and has been in compliance with and is 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, has been threatened to be charged with or
given notice of any material violation of, any applicable material domestic
(federal, state or local) or foreign Law or order, demand, writ, injunction,
decree or judgment of any Governmental Entity or SRO. Except for statutory or
regulatory restrictions of general application, no Governmental Entity or SRO
has placed any material restriction on the business or properties of the
Company, the Bank or any Subsidiary. Except as set forth in Section 2.2(q) of
the Company Disclosure Schedule, since December 31, 2009, none of the Company,
the Bank or any Subsidiary has received any written notification or
communication from any Governmental Entity or SRO (A) asserting that the
Company, the Bank or any Subsidiary is not in material compliance with any
applicable Law, (B) threatening to revoke any permit, license, franchise,
authorization, order or approval, or (C) threatening or contemplating revocation
or limitation of, or which would have the effect of revoking or limiting, FDIC
deposit insurance.
(2) Except as would not be material to the Company, the Bank and the
Subsidiaries, taken as a whole, the Bank and each Subsidiary have properly
administered all accounts for which the Bank or any Subsidiary acts as a
fiduciary, including accounts for which the Bank or any Subsidiary serves as a
trustee, agent, custodian, personal representative, guardian, conservator or
investment adviser, in accordance with the terms of the governing documents,
applicable state and federal law and regulation and common law in all material
respects. None of the Bank or any Subsidiary, or any director, officer or
employee of the Bank or any Subsidiary, has committed any breach of trust with
respect to any such fiduciary account that would be material to the Bank and the
Subsidiaries, taken as a whole, and the accountings for each such fiduciary
account are true and correct in all material respects and accurately reflect in
all material respects the assets of such fiduciary account.
(r) Labor. Employees of the Company, the Bank and the Subsidiaries are not
represented by any labor union nor are any collective bargaining agreements
otherwise in effect with respect to such employees. No labor organization or
group of employees of the Company, the Bank or any Subsidiary has made a pending
demand for recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or threatened to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority. There are no
organizing activities (to the Company’s knowledge), strikes, work stoppages,
slowdowns, lockouts, material arbitrations or material grievances, or other
material labor

 

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disputes pending or to the Company’s knowledge threatened against or involving
the Company, the Bank or any Subsidiary. The Company, the Bank and each
Subsidiary believe that their relations with their employees are good. As of the
date hereof, no executive officer of the Company, the Bank or any Subsidiary has
notified the Company, the Bank or any Subsidiary that such officer intends to
leave the employ of the Company, the Bank or any Subsidiary or otherwise
terminate such executive officer’s employment with the Company, the Bank or any
Subsidiary. To the knowledge of the Company, no executive officer of the
Company, the Bank or any Subsidiary is, or is now expected to be, in violation
of any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
agreement or any restrictive covenant, and to the knowledge of Company the
continued employment of each such executive officer does not subject the
Company, the Bank or any Subsidiary to any liability with respect to any of the
foregoing matters. The Company, the Bank and the Subsidiaries are in compliance
with all notice and other requirements under the Worker Adjustment and
Retraining Notification Act of 1988, and any other similar applicable foreign,
state, or local Laws relating to facility closings and layoffs.
(s) Company Benefit Plans.
(1) (A) Section 2.2(s)(1)(A) of the Company Disclosure Schedule sets forth a
complete list of the Company’s Benefit Plans. With respect to each Benefit Plan,
except as set forth in Section 2.2(s)(1)(A) of the Company Disclosure Schedule,
the Company, the Bank and the Subsidiaries have complied, and are now in
compliance, in both instances in all material respects, with all provisions of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the
Code and all Laws and regulations applicable to such Benefit Plan; and (B) each
Benefit Plan has been administered in all material respects in accordance with
its terms. “Benefit Plan” means any employee welfare benefit plan within the
meaning of Section 3(1) of ERISA, any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, and any bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance, employment,
change of control, fringe benefit, or other compensation or employee benefit
plan, program, agreement, arrangement or policy sponsored, maintained or
contributed to or required to be contributed to by the Company or by any trade
or business, whether or not incorporated (an “ERISA Affiliate”), that together
with the Company would be deemed a “single employer” within the meaning of
section 4001(b) of ERISA, or to which the Company, the Bank, any Subsidiary or
any of their respective ERISA Affiliates is party, whether written or oral, for
the benefit of any director, former director, consultant, former consultant,
employee or former employee of the Company, the Bank or any Subsidiary.
(2) With respect to each Benefit Plan, the Company has heretofore delivered or
made available to Purchaser or Previously Disclosed true and complete copies of
each of the following documents, to the extent applicable: (A) a copy of the
Benefit Plan and any amendments thereto (or if the Benefit Plan is not a written
Benefit Plan, a description thereof); (B) a copy of the two most

 

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recent annual reports and actuarial reports, and the most recent report prepared
with respect thereto in accordance with Statement of Financial Accounting
Standards No. 87; (C) a copy of the most recent summary plan description
required under ERISA with respect thereto; (D) if the Benefit Plan is funded
through a trust or any third party funding vehicle, a copy of the trust or other
funding agreement and the latest financial statements thereof; and (E) the most
recent determination or opinion letter received from the Internal Revenue
Service with respect to each Benefit Plan intended to qualify under section 401
of the Code.
(3) Except as set forth in Section 2.2(s)(3) of the Company Disclosure Schedule,
no claim has been made, or to the knowledge of the Company threatened, against
the Company, the Bank or any of the Subsidiaries related to the employment and
compensation of employees or any Benefit Plan, including, without limitation,
any claim related to the purchase of employer securities or to expenses paid
under any defined contribution pension plan other than ordinary course claims
for benefits.
(4) No Benefit Plans are subject to Title IV or described in Section 3(37) of
ERISA, and none of the Company, the Bank or its Subsidiaries has at any time
within the past six (6) years sponsored or contributed to, or has or had within
the past six (6) years any liability or obligation in respect of, any plan
subject to Title IV or described in Section 3(37) of ERISA. Except as set forth
in Section 2.2(s)(4) of the Company Disclosure Schedule, neither the Company,
the Bank, nor any Subsidiary has incurred any current or projected liability in
respect of post-retirement health, medical or life insurance benefits for
Company Employees, except as required to avoid an excise tax under Section 4980B
of the Code or comparable State benefit continuation laws.
(5) Each Benefit Plan intended to be “qualified” within the meaning of section
401(a) of the Code is so qualified and the trusts maintained thereunder are
exempt from taxation under section 501(a) of the Code, and, to the knowledge of
the Company, no condition exists that could reasonably be expected to jeopardize
any such qualification or exemption.
(6) None of the Company, the Bank or any Subsidiary, any Benefit Plan, any trust
created thereunder, or any trustee or administrator thereof has engaged in a
transaction in connection with which the Company, the Bank or any Subsidiary,
any Benefit Plan, any such trust, or any trustee or administrator thereof, or
any party dealing with any Benefit Plan or any such trust could be subject to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA or a
tax imposed pursuant to section 4975 or 4976 of the Code.
(7) There has been no material failure of a Benefit Plan that is a group health
plan (as defined in section 5000(b)(1) of the Code) to meet the requirements of
section 4980B(f) of the Code with respect to a qualified beneficiary (as defined
in section 4980B(g) of the Code).

 

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(8) Except as set forth in Section 2.2(s)(8) of the Company Disclosure Schedule,
each Benefit Plan that is a “non-qualified deferred compensation plan” within
the meaning of Section 409A(d)(1) of the Code (a “409A Plan”) complies in all
material respects with the requirements of Section 409A of the Code and the
guidance promulgated thereunder. From January 1, 2005 through December 31, 2008,
each 409A Plan and any award thereunder was maintained in good faith operational
compliance with the requirements of (i) Section 409A of the Code and (ii)
(x) the proposed regulations issued thereunder, (y) the final regulations issued
thereunder or (z) Internal Revenue Service Notice 2005-1. From and after
January 1, 2009, each 409A Plan and any award thereunder has been maintained in
operational compliance with the requirements of Section 409A of the Code the
final regulations issued thereunder. Except as set forth in Section 2.2(s)(8) of
the Company Disclosure Schedule, as of and since December 31, 2008, each 409A
Plan and any award thereunder has been in documentary compliance with the
requirements of Section 409A of the Code and the final regulations issued
thereunder. Except as set forth in Section 2.2(s)(8) of the Company Disclosure
Schedule, no payment to be made under any 409A Plan is or will be subject to the
interest and additional tax payable pursuant to Section 409A(a)(1)(B) of the
Code. None of the Company, the Bank or any Subsidiary is party to, or otherwise
obligated under, any contract, agreement, plan or arrangement that provides for
the gross-up of taxes imposed by Section 409A(a)(1)(B) of the Code.
(9) (A) Except as set forth in Section 2.2(s)(9) of the Company Disclosure
Schedule or as required by applicable Law, neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby
will (i) result in any payment (including severance, unemployment compensation,
“excess parachute payment” (within the meaning of Section 280G of the Code),
forgiveness of indebtedness or otherwise) becoming due to any current or former
employee, officer or director of the Company, the Bank or any Subsidiary from
the Company, the Bank or any Subsidiary under any Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any Benefit Plan,
(iii) result in any acceleration of the time of payment or vesting of any such
benefits, (iv) require the funding or increase in the funding of any such
benefits or (v) result in any limitation on the right of the Company, the Bank
or any Subsidiary to amend, merge, terminate or receive a reversion of assets
from any Benefit Plan or related trust and (B) except as set forth in
Section 2.2(s)(9) of the Company Disclosure Schedule or as required by
applicable Law, none of the Company, the Bank or any Subsidiary has taken, or
permitted to be taken, any action that required, and no circumstances exist that
will require the funding, or increase in the funding, of any benefits, or will
result, in any limitation on the right of the Company, the Bank or any
Subsidiary to amend, merge, terminate any Benefit Plan or receive a reversion of
assets from any Benefit Plan or related trust. Except as set forth in
Section 2.2(s)(9) of the Company Disclosure Schedule, none of the Company, the
Bank or any Subsidiary is party to, or otherwise obligated under, any contract,
agreement, plan or arrangement that provides for the gross-up of excise taxes
imposed by Section 4999 of the Code.

 

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(10) The Company, the Bank and the Subsidiaries will be in compliance, as of the
Closing Date, with Sections 111 and 302 of the Emergency Economic Stabilization
Act of 2008, as amended by the U.S. American Recovery and Reinvestment Act of
2009, including all guidance issued thereunder by a Governmental Entity
(collectively “EESA”). Except as set forth in Section 2.2(s)(10) of the Company
Disclosure Schedule, without limiting the generality of the foregoing, each
employee of the Company, the Bank, and the Subsidiaries who is subject to the
limitations imposed under EESA has executed a waiver of claims against the
Company, the Bank and the Subsidiaries with respect to limiting or reducing
rights to compensation for so long as the EESA limitations are required to be
imposed.
(t) Risk Management Instruments. All material derivative instruments, including,
swaps, caps, floors and option agreements, whether entered into for the
Company’s own account, or for the account of the Bank or one or more of the
Subsidiaries, were entered into (1) only in the ordinary and usual course of
business and consistent with past practice, (2) in accordance with commercially
reasonable banking practices and in all material respects with all applicable
laws, rules, regulations and regulatory policies and (3) with counterparties
believed to be financially responsible at the time; and each of them constitutes
the valid and legally binding obligation of the Company, the Bank or one of the
Subsidiaries, enforceable in accordance with its terms. None of the Company, the
Bank or the Subsidiaries, or, to the knowledge of the Company, any other party
thereto, is in breach of any of its material obligations under any such
agreement or arrangement.
(u) Agreements with Regulatory Agencies. Except as set forth in Section 2.2(u)
of the Company Disclosure Schedule, none of the Company, the Bank or any
Subsidiary is subject to any cease-and-desist or other similar order or
enforcement action issued by, or is a party to any 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
has adopted any board resolutions at the request of, any Governmental Entity or
SRO (each item in this sentence, a “Regulatory Agreement”), nor has the Company,
the Bank or any Subsidiary been advised since December 31, 2008 by any
Governmental Entity or SRO that it is considering issuing, initiating, ordering,
or requesting any such Regulatory Agreement. Except as set forth in Section
2.2(u) of the Company Disclosure Schedule, the Company, the Bank and each
Subsidiary are in compliance in all material respects with each Regulatory
Agreement to which it is a party or subject, and none of the Company, the Bank
or any Subsidiary has received any notice from any Governmental Entity or SRO
indicating that either the Company, the Bank or any Subsidiary is not in
compliance in all material respects with any such Regulatory Agreement.

 

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(v) Environmental Liability. The Company, the Bank and the Subsidiaries have,
and at the Closing Date will have, complied in all material respects with all
laws, regulations, ordinances and orders relating to public health, safety or
the environment (including without limitation all laws, regulations, ordinances
and orders relating to releases, discharges, emissions or disposals to air,
water, land or groundwater, to the withdrawal or use of groundwater, to the use,
handling or disposal of polychlorinated biphenyls, asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances, pollutants or contaminants, or to exposure to toxic, hazardous or
other controlled, prohibited or regulated substances), the violation of which
would or might have a material impact on the Company, the Bank or any Subsidiary
or the consummation of the transactions contemplated by this Agreement. There is
no legal, administrative, arbitral or other proceeding, claim, action or notice
of any nature seeking to impose, or that could result in the imposition of, on
the Company, the Bank or any Subsidiary, any liability or obligation of the
Company, the Bank or any Subsidiary with respect to any environmental health or
safety matter or any private or governmental, environmental health or safety
investigation or remediation activity of any nature arising under common law or
under any local, state or federal environmental, health or safety statute,
regulation or ordinance, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (“CERCLA”), pending or, to
the Company’s knowledge, threatened against the Company, the Bank or any
Subsidiary or any property in which the Company, the Bank or any Subsidiary has
taken a security interest the result of which has had or would reasonably be
expected to have a Material Adverse Effect; to the Company’s knowledge, there is
no reasonable basis for, or circumstances that could reasonably be expected to
give rise to, any such proceeding, claim, action, investigation or remediation;
and to the Company’s knowledge, none of the Company, the Bank or any Subsidiary
is subject to any agreement, order, judgment, decree, letter or memorandum by or
with any Governmental Entity or third party that could impose any such
environmental obligation or liability.
(w) Loan Portfolio.
(1) Except as set forth in Section 2.2(w)(1) of the Company Disclosure Schedule,
as of April 29, 2011, none of the Company, the Bank or any Subsidiary is a party
to (A) any written or oral loan, loan agreement, note or borrowing arrangement
(including leases, credit enhancements, commitments, guarantees and
interest-bearing assets) (collectively, “Loans”), other than any Loan the unpaid
principal balance of which does not exceed $50,000, under the terms of which the
obligor was, as of March 31, 2011, over 90 days delinquent in payment of
principal or interest or in default of any other provision, or (B) Loan in
excess of $100,000 with any director, executive officer or five percent or
greater shareholder of the Company, the Bank or any Subsidiary, or to the
knowledge of the Company, any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing. Section 2.2(w)
of the Company Disclosure Schedule sets forth (x) all of the Loans in original
principal amount in excess of $100,000 of the Company, the Bank or any of the
Subsidiaries that as of March 31, 2011 were classified by the Company or the
Bank or any regulatory examiner as “Other Loans Specially Mentioned,” “Special
Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Credit
Risk Assets,” “Concerned Loans,” “Watch List” or words of similar import,
together with the principal amount of and accrued and unpaid interest on each
such Loan as of March 31, 2011 and the identity of the borrower thereunder,
(y) by category of Loan (i.e., commercial, consumer, etc.), all of the other
Loans of the Company, the Bank and the Subsidiaries that as of March 31, 2011
were classified as such, together with the aggregate principal amount of and
accrued and unpaid interest on such Loans by category as of March 31, 2011 and
(z) each asset of the Company or the Bank that as of March 31, 2011 was
classified as “Other Real Estate Owned” and the book value thereof.

 

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(2) Each Loan of the Company, the Bank or any of the Subsidiaries (A) is
evidenced by notes, agreements or other evidences of indebtedness that are true,
genuine and what they purport to be, (B) to the extent secured, has been secured
by valid Liens which have been perfected and (C) is the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and other laws
of general applicability relating to or affecting creditors’ rights and to
general equity principles.
(3) Each outstanding Loan (including Loans held for resale to investors) has
been solicited and originated and is administered and serviced (to the extent
administered and serviced by the Company, the Bank or any Subsidiary), and the
relevant Loan files are being maintained in all material respects in accordance
with the relevant loan documents, the Company’s and the Bank’s underwriting
standards (and, in the case of Loans held for resale to investors, the
underwriting standards, if any, of the applicable investors) and in material
compliance with all applicable requirements of federal, state and local Laws,
regulations and rules.
(4) Except as set forth in Section 2.2(w)(4) of the Company Disclosure Schedule,
none of the agreements pursuant to which the Company, the Bank or any of the
Subsidiaries has sold Loans or pools of Loans or participations in Loans or
pools of Loans contains any obligation to repurchase such Loans or interests
therein.
(5) Each of the Company, the Bank and the Subsidiaries, as applicable, is
approved by and is in good standing: (A) as a supervised mortgagee by the
Department of Housing and Urban Development to originate and service Title I FHA
mortgage loans; (B) as a GNMA I and II Issuer by the Government National
Mortgage Association; (C) by the Department of Veterans Affairs (“VA”) to
originate and service VA loans; and (D) as a seller/servicer by the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation to
originate and service conventional residential mortgage Loans (each such entity
being referred to herein as an “Agency”).
(6) Except as set forth in Section 2.2(w)(6) of the Company Disclosure Schedule,
none of the Company, the Bank or any of the Subsidiaries is now nor has it ever
been since December 31, 2008 subject to any fine, suspension, settlement or
other agreement or other administrative agreement or sanction by, or any
reduction in any loan purchase commitment from, any Agency or any federal or
state agency relating to the origination, sale or servicing of mortgage or
consumer Loans. None of the Company, the Bank or any of the Subsidiaries has
received any notice, nor does it have any reason to believe as of the date of
this Agreement, that any Agency proposes to limit or terminate the underwriting
authority of the Company, the Bank or any of the Subsidiaries or to increase the
guarantee fees payable to any such Agency.

 

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(7) Each of the Company, the Bank and the Subsidiaries is in compliance in all
material respects with all applicable federal, state and local Laws, rules and
regulations, including the Truth-In-Lending Act and Regulation Z, the Equal
Credit Opportunity Act and Regulation B, the Real Estate Settlement Procedures
Act and Regulation X, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act and all Agency and other investor and mortgage insurance company
requirements relating to the origination, sale and servicing of mortgage and
consumer Loans.
(8) To the knowledge of the Company, each Loan included in a pool of Loans
originated, acquired or serviced by the Company, the Bank or any of the
Subsidiaries (a “Pool”) meets all eligibility requirements (including all
applicable requirements for obtaining mortgage insurance certificates and loan
guaranty certificates) for inclusion in such Pool. All such Pools have been
finally certified or, if required, recertified in accordance with all applicable
Laws, rules and regulations, except where the time for certification or
recertification has not yet expired. To the knowledge of the Company, no Pools
have been improperly certified, and no Loan has been bought out of a Pool
without all required approvals of the applicable investors.
(9) The information with respect to each Loan set forth in the Loan Tape, and,
to the knowledge of the Company, any third party information set forth in the
Loan Tape is true, correct and accurate as of the dates specified therein, or,
if no such date is indicated therein, as of December 31, 2010. As used herein,
“Loan Tape” means a data storage disk produced by the Company from its
management information systems regarding the Loans.
(x) Insurance. The Company, the Bank and each of the Subsidiaries maintain, and
have maintained for the two years prior to the date of this Agreement, insurance
underwritten by insurers of recognized financial responsibility, of the types
and in the amounts that the Company, the Bank and the Subsidiaries reasonably
believe are adequate for their respective businesses and as constitute
reasonably adequate coverage against all risks customarily insured against by
banking institutions and their subsidiaries of comparable size and operations,
including, but not limited to, insurance covering all real and personal property
owned or leased by the Company, the Bank and any Subsidiary against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, with such deductibles as are customary for companies in the same or
similar business. True, correct and complete copies of all policies and binders
of insurance currently maintained in respect of the assets, properties,
business, operations, employees, officers or directors of the Company, the Bank
and the Subsidiaries, excluding such policies pursuant to which the Company, the
Bank, any Subsidiary or an

 

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Affiliate of any them acts as the insurer and that are identified with
respective expiration dates on Section 2.2(x) of the Company Disclosure Schedule
(collectively, the “Company Insurance Policies”), and all correspondence
relating to any material claims under the Company Insurance Policies, have been
previously made available to Purchaser. All of the Company Insurance Policies
are in full force and effect, the premiums due and payable thereon have been
timely paid, and there is no breach or default (and no condition exists or event
has occurred which, with the giving of notice or lapse of time or both, would
constitute such a breach or default) by the Company, the Bank or any of the
Subsidiaries under any of the Company Insurance Policies or, to the knowledge of
the Company, by any other party to the Company Insurance Policies, except for
any such breach or default that would not reasonably be expected to have,
individually or in the aggregate, a material impact on the Company, the Bank or
any Subsidiary. None of the Company, the Bank or any of the Subsidiaries has
received any written notice of cancellation or non-renewal of any Company
Insurance Policy nor, to the knowledge of the Company, is the termination of any
such policies threatened, and, except as set forth in Section 2.2(x) of the
Company Disclosure Schedule, there is no claim for coverage by the Company, the
Bank or any of the Subsidiaries, pending under any of such Company Policies as
to which coverage has been questioned, denied or disputed by the underwriters of
such Company Policies or in respect of which such underwriters have reserved
their rights.
(y) Intellectual Property. The Company, the Bank and the Subsidiaries own, or
are licensed or otherwise possess rights to use free and clear of all Liens all
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets, applications and other unpatented or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names (collectively, “Proprietary Rights”) used in the conduct of the
business of the Company, the Bank and the Subsidiaries as now conducted, except
where the failure to own such Proprietary Rights would not have any material
impact on the Company, the Bank or any Subsidiary. The Company, the Bank and the
Subsidiaries have the right to use all Proprietary Rights used in or necessary
for the conduct of their respective businesses without infringing the rights of
any person or violating the terms of any licensing or other agreement to which
the Company, the Bank or any Subsidiary is a party, except for such
infringements or violations that have not had a Material Adverse Effect, and, to
the Company’s knowledge, no person is infringing upon any of the Proprietary
Rights, except where the infringement of or lack of a right to use such
Proprietary Rights would not have any material impact on the Company, the Bank
or any Subsidiary. Except as Previously Disclosed, no charges, claims or
litigation have been asserted or, to the Company’s knowledge, threatened against
the Company, the Bank or any Subsidiary contesting the right of the Company, the
Bank or any Subsidiary to use, or the validity of, any of the Proprietary Rights
or challenging or questioning the validity or effectiveness of any license or
agreement pertaining thereto or asserting the misuse thereof, and, to the
Company’s knowledge, no valid basis exists for the assertion of any such charge,
claim or litigation. All licenses and other agreements to which the Company, the
Bank or any Subsidiary is a party relating to Proprietary Rights are in full
force and effect and constitute valid, binding and enforceable obligations of
the Company, the Bank or such Subsidiary, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar Laws

 

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of general applicability relating to or affecting creditors’ rights and to
general equity principles, as the case may be, and there have not been and there
currently are not any defaults (or any event that, with notice or lapse of time,
or both, would constitute a default) by the Company, the Bank or any Subsidiary
under any license or other agreement affecting Proprietary Rights used in or
necessary for the conduct of the business of the Company, the Bank or any
Subsidiary, except for defaults, if any, which would not have any material
impact on the Company, the Bank or any Subsidiary. The validity, continuation
and effectiveness of all licenses and other agreements relating to the
Proprietary Rights and the current terms thereof will not be affected by the
transactions contemplated by this Agreement.
(z) Anti-takeover Provisions Not Applicable. The Company has taken all action
required to be taken by it in order to exempt this Agreement, the purchase of
the Purchased Shares, the merger of the Bank into a depository subsidiary of the
Purchaser and the other transactions to be consummated pursuant to the express
terms of this Agreement from, and this Agreement and the transactions
contemplated hereby are exempt from, any anti-takeover or similar provisions of
the Charter, and its bylaws and the requirements of any “moratorium,” “control
share,” “fair price,” “affiliate transaction,” “business combination” or other
antitakeover Laws and regulations of any state, including the Tennessee Business
Corporation Act.
(aa) Knowledge as to Conditions. As of the date of this Agreement, each of the
Company and the Bank knows of no reason why any regulatory approvals and, to the
extent necessary, any other approvals, authorizations, filings, registrations
and notices required for the consummation of the transactions contemplated by
this Agreement will not be obtained or that any Required Approval will not be
granted without the imposition of a Burdensome Condition, provided, however,
that neither the Company nor the Bank makes any representation or warranty with
respect to the management, capital or ownership structure of Purchaser or any of
its Affiliates.
(bb) Brokers and Finders. Except as set forth in Section 2.2(bb) of the Company
Disclosure Schedule, none of the Company, the Bank or any Subsidiary or any of
their respective officers, directors, employees or agents has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder’s fees, and no broker or finder has acted
directly or indirectly for the Company, the Bank or any Subsidiary, in
connection with this Agreement or the transactions contemplated hereby.
(cc) Related Party Transactions.
(1) Except as set forth in Section 2.2(cc) of the Company Disclosure Schedule or
as part of the normal and customary terms of an individual’s employment or
service as a director, none of the Company, the Bank or any of the Subsidiaries
is party to any extension of credit (as debtor, creditor, guarantor or
otherwise), contract for goods or services, lease or other agreement with any
(A) affiliate, (B) insider or related interest of an insider, (C) shareholder
owning 5% or more of the outstanding Common Stock or related interest of such a

 

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shareholder, or (D) to the knowledge of the Company, and other than credit and
consumer banking transactions in the ordinary course of business, employee who
is not an executive officer. For purposes of the preceding sentence, the term
“affiliate” shall have the meaning assigned in Regulation W issued by the
Federal Reserve, as amended, and the terms “insider,” “related interest,” and
“executive officer” shall have the meanings assigned in the Federal Reserve’s
Regulation O, as amended.
(2) Except as set forth in Section 2.2(cc) of the Company Disclosure Schedule,
the Bank is in compliance with, and has since December 31, 2008, complied with,
Sections 23A and 23B of the Federal Reserve Act, its implementing regulations,
and the Federal Reserve’s Regulation O.
(dd) Foreign Corrupt Practices. None of the Company, the Bank or any Subsidiary,
or, to the knowledge of the Company, any director, officer, agent, employee or
other person acting on behalf of the Company, the Bank or any Subsidiary has, in
the course of its actions for, or on behalf of, the Company, the Bank or any
Subsidiary (A) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity;
(B) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (C) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (D) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
(ee) Customer Relationships.
(1) Each trust or wealth management customer of the Company, the Bank or any
Subsidiary has been in all material respects originated and serviced (A) in
conformity with the applicable policies of the Company, the Bank and the
Subsidiaries, (B) in accordance with the terms of any applicable instrument or
agreement governing the relationship with such customer, (C) in accordance with
any instructions received from such customers, (D) consistent with each
customer’s risk profile and (E) in compliance with all applicable laws and the
Company’s, the Bank’s and the Subsidiaries’ constituent documents, including any
policies and procedures adopted thereunder. Each instrument or agreement
governing a relationship with a trust or wealth management customer of the
Company, the Bank or any Subsidiary has been duly and validly executed and
delivered by the Company, the Bank and each Subsidiary and, to the knowledge of
the Company, the other contracting parties, each such instrument of agreement
constitutes a valid and binding obligation of the parties thereto, except as
such enforceability may be limited by bankruptcy, insolvency, moratorium and
other similar Laws affecting creditors’ rights generally and by general
principles of equity, and the Company, the Bank and the Subsidiaries and the
other parties thereto have duly performed in all material respects their
obligations thereunder and the Company, the Bank and the Subsidiaries and such
other person is in compliance with each of the terms thereof.

 

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(2) No instrument or agreement governing a relationship with a trust or wealth
management customer of the Company, the Bank or any Subsidiary provides for any
material reduction of fees charged (or in other compensation payable to the
Company, the Bank or any Subsidiary thereunder) at any time subsequent to the
date of this Agreement.
(3) None of the Company, the Bank or any Subsidiary or any of their respective
directors or senior officers (A) is the beneficial owner of any interest in any
of the accounts maintained on behalf of any trust or wealth management customer
of the Company, the Bank or any Subsidiary or (B) is a party to any contract
pursuant to which it is obligated to provide service to, or receive compensation
or benefits from, any of the trust or wealth management customers of the
Company, the Bank or any Subsidiary after the Closing Date.
(4) Each account opening document, margin account agreement, investment advisory
agreement and customer disclosure statement with respect to any trust or wealth
management customer of the Company, the Bank or any Subsidiary conforms in all
material respects to the forms provided to Purchaser prior to the Closing Date.
(5) Except as would not have any material impact on the Company, the Bank or any
Subsidiary, all other books and records primarily related to the trust and
wealth management businesses of the Company, the Bank and each Subsidiary
include documented risk profiles signed by each such customer.
(ff) Investment Company; Investment Adviser. Neither the Company, the Bank nor
any Subsidiary is required to be registered as, and is not an affiliate of, and
immediately following the Closing will not be required to register as, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended. Neither the Company, the Bank nor any Subsidiary is required to be
registered, licensed or qualified as an investment adviser under the Investment
Advisers Act of 1940, as amended, or in another capacity thereunder with the SEC
or any other Governmental Entity.
2.3 Representations and Warranties of Purchaser. Purchaser hereby represents and
warrants to the Company and the Bank, as of the date of this Agreement and as of
the Closing Date (except to the extent made only as of a specified date, in
which case as of such date), that, except as Previously Disclosed:
(a) Organization and Authority. Purchaser is duly organized, validly existing
and in good standing under the Laws of the jurisdiction of its organization, is
duly qualified to do business and is in good standing in all jurisdictions where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified, and Purchaser has the power and authority and governmental
authorizations to own its properties and assets and to carry on its business in
all material respects as it is now being conducted.

 

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(b) Authorization. (1) Purchaser has the power and authority to enter into this
Agreement and the other agreements referenced herein to which it will be a party
and to carry out its obligations hereunder and thereunder. The execution,
delivery and performance of this Agreement and the other agreements referenced
herein to which it will be a party by Purchaser and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by
Purchaser’s board of directors, and no further approval or authorization by any
of its shareholders or other equity owners, as the case may be, is required.
This Agreement has been, and the other agreements referenced herein to which it
will be a party, when executed, will be, duly and validly executed and delivered
by Purchaser and assuming due authorization, execution and delivery by both the
Company and the Bank, is and will be a valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms (except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar Laws of general applicability
relating to or affecting creditors’ rights or by general equity principles).
(2) Neither the execution, delivery and performance by Purchaser of this
Agreement, nor the consummation of the transactions contemplated hereby, nor
compliance by Purchaser with any of the provisions hereof, will (A) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event that, 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 upon any of the properties or assets of
Purchaser under any of the terms, conditions or provisions of (i) its
certificate of incorporation or similar governing documents or (ii) any material
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Purchaser is a party or by which it may
be bound, or to which Purchaser or any of the properties or assets of Purchaser
may be subject, or (B) subject to compliance with the statutes and regulations
referred to in Section 2.3(b)(3), violate any Law, statute, ordinance, rule or
regulation, permit, concession, grant, franchise or any judgment, ruling, order,
writ, injunction or decree applicable to Purchaser or any of its properties or
assets except in the case of clauses (A)(ii) and (B) for such violations,
conflicts and breaches as would not reasonably be expected to materially and
adversely affect Purchaser’s ability to perform its obligations under this
Agreement or consummate the transactions contemplated hereby.
(3) Assuming the Company’s and the Bank’s representations contained in Section
2.2(f) are true and correct and other than the securities or blue sky Laws of
the various states or as set forth in Section 2.3(b)(3) of the Purchaser
Disclosure Schedule, no material notice to, registration, declaration or filing
with, exemption or review by, or authorization, order, consent or approval of,
any Governmental Entity, or expiration or termination of any statutory waiting
period, is necessary for the consummation by Purchaser of the transactions
contemplated by this Agreement.

 

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(c) Restricted Securities; Limitation on Resale. Purchaser acknowledges that the
Purchased Shares have not been registered under the Securities Act or under any
state securities Laws and Purchaser understands that the Purchased Shares are
“restricted securities” under applicable federal and state securities Laws and
that, pursuant to these Laws, the Purchaser must hold the Purchased Shares
indefinitely unless they are registered with the SEC and qualified by state
authorities, or an exemption from such registration and qualification
requirements is available.
(d) Purchase for Investment. Purchaser (1) is acquiring the Purchased Shares
pursuant to an exemption from registration under the Securities Act solely for
investment with no present intention to resell or distribute any of the
Purchased Shares to any person, (2) will not sell or otherwise dispose of any of
the Purchased Shares, except in compliance with the registration requirements or
exemption provisions of the Securities Act and any other applicable securities
Laws, (3) has such knowledge, sophistication and experience in financial and
business matters and in investments of this type that it is capable of
evaluating the merits and risks of its investment in the Purchased Shares, of
making an informed investment decision and of bearing the economic risk of such
investment for an indefinite period of time, and (4) is an “accredited investor”
(as that term is defined by Rule 501 of the Securities Act ). Purchaser has not
been formed for the specific purpose of acquiring the Purchased Shares.
Purchaser has had an opportunity to discuss the business, management, financial
affairs of the Company and of the Bank and the terms and conditions of the
offering of the Purchased Shares with management of the Company and of the Bank
and has had an opportunity to review the facilities of the Company and the Bank.
The foregoing, however, does not limit or modify the representations and
warranties of the Company or of the Bank in Section 2.2 of this Agreement or the
right of Purchaser to rely thereon.
(e) Financial Capability. Purchaser currently has, and at the Closing will have,
available funds necessary to pay the funds described in Section 1.2(b)(2) and to
consummate the Closing on the terms and conditions contemplated by this
Agreement.
(f) No General Solicitation. Neither Purchaser, nor any of its officers,
directors, employees, agents, stockholders or partners has either directly or
indirectly, including through a broker or finder (i) engaged in any general
solicitation, or (ii) published any advertisement in connection with the offer
and sale of the Purchased Shares.
(g) Brokers and Finders. Neither Purchaser nor its Affiliates, any of their
respective officers, directors, employees or agents has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder’s fees, and no broker or finder has acted directly
or indirectly for Purchaser, in connection with this Agreement or the
transactions contemplated hereby, in each case, whose fees the Company, the Bank
or any Subsidiary would be required to pay (other than pursuant to the
reimbursement of expenses provisions of Section 6.2).

 

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(h) Litigation and Other Proceedings. Neither Purchaser nor any Affiliate of
Purchaser is a party to any, and there are no pending or, to Purchaser’s
knowledge, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
(i) against Purchaser or any Affiliate of Purchaser (excluding those of the type
contemplated by the following clause (ii)) that, if adversely determined, would
reasonably be expected to have a material adverse effect on Purchaser or
(ii) challenging the validity or propriety of the transactions contemplated by
this Agreement. There is no material injunction, order, judgment, decree or
regulatory restriction (other than regulatory restrictions of general
application that apply to similarly situated companies) imposed upon Purchaser
or any of its Affiliates or their respective assets. There is no material
unresolved violation, criticism or exception by any Governmental Entity with
respect to any report or relating to any examinations or inspections of
Purchaser or any of its Affiliates.
(i) Compliance with Laws. Each of Purchaser and its Affiliates is and has been
in compliance in all material respects with and is not in default or violation
in any material respect of, and none of them is, to the knowledge of Purchaser,
under investigation with respect to or, to the knowledge of Purchaser, has been
threatened to be charged with or given notice of any material violation of, any
applicable material 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, except for such
noncompliance that has not had nor reasonably would be expected to have a
material adverse effect on Purchaser.
(j) Agreements with Regulatory Agencies. None of Purchaser or any of its
Affiliates is subject to any Regulatory Agreement, nor has Purchaser or any of
its Affiliates been advised since December 31, 2009 by any Governmental Entity
or SRO that it is considering issuing, initiating, ordering, or requesting any
such Regulatory Agreement. Purchaser and its Affiliates are in compliance in all
material respects with each Regulatory Agreement to which it is a party or
subject, and none of Purchaser and its Affiliates has received any notice from
any Governmental Entity or SRO indicating that either Purchaser or its
Affiliates is not in compliance in all material respects with any such
Regulatory Agreement.
(k) Information in the Proxy Statement. The information supplied in writing by
Purchaser expressly for inclusion in the Proxy Statement will not contain at the
time it is first mailed to the shareholders of the Company or at the time of the
Shareholder Meeting, any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading.
(l) Knowledge as to Conditions. As of the date of this Agreement, Purchaser
knows of no reason why any regulatory approvals and, to the extent necessary,
any other approvals, authorizations, filings, registrations, and notices
required for the consummation of the transactions contemplated by this Agreement
will not be obtained.

 

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ARTICLE III
COVENANTS
3.1 Filings; Other Actions.
(a) Subject to the conditions set forth in this Agreement and the last sentence
of this Section 3.1(a), Purchaser, on the one hand, and the Company and the
Bank, on the other hand, will cooperate and consult with the other and use
reasonable best efforts to prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions, filings and other
documents, and to obtain all necessary permits, consents, orders, approvals and
authorizations of, or any exemption by, all third parties and Governmental
Entities, including, without limitation, the Required Approvals, and the
expiration or termination of any applicable waiting period, necessary or
advisable to consummate the transactions contemplated by this Agreement, at the
earliest practicable date, and to perform the covenants contemplated by this
Agreement. Each party shall execute and deliver both before and after the
Closing such further certificates, agreements and other documents and take such
other actions as the other party may reasonably request to consummate or
implement such transactions or to evidence such events or matters. In
furtherance (but not in limitation) of the foregoing, Purchaser shall use
reasonable best efforts to file any required applications, notices or other
filings with the Federal Reserve Board and the Tennessee DFI within twenty
(20) calendar days of the date hereof. Purchaser, the Company and the Bank will
have the right to review in advance, and to the extent practicable, each will
consult with the others with respect to, in each case subject to applicable Laws
relating to the exchange of information, all the information relating to such
other party, and any of their respective Affiliates, which appears in any filing
made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions to which it will be
party contemplated by this Agreement. In exercising the foregoing right, each of
the parties hereto agrees to act reasonably and as promptly as practicable. Each
party hereto agrees to keep the other party apprised of the status of matters
referred to in this Section 3.1(a). Purchaser shall promptly furnish the Company
and the Bank, and the Company and the Bank shall promptly furnish Purchaser, to
the extent permitted by applicable Law, with copies of written communications
received by it or their subsidiaries from, or delivered by any of the foregoing
to, any Governmental Entity in respect of the transactions contemplated by this
Agreement. Notwithstanding anything in this Agreement to the contrary, Purchaser
shall not be required to furnish the Company with any (1) personal biographical
or financial information of any of the directors, officers, employees, managers
or partners of Purchaser or any of its present of former Affiliates (other than
the personal biographical information of any of the directors, officers,
employees, managers, investors or partners of Purchaser or any of its present of
former Affiliates required to be disclosed by the Company by reason of the fact
that such person will be appointed or elected to the Company’s Board of
Directors) or (2) proprietary and non-public information related to the
organizational terms of, or investors in, Purchaser or any of its present or
former Affiliates. Notwithstanding anything to the contrary herein, nothing
contained in this Agreement shall require Purchaser or any of its present or
former Affiliates to take or refrain from taking or agree to take or refrain
from taking any action or suffer to exist any condition, limitation, restriction
or requirement that individually or in the aggregate with any other actions,
conditions, limitations, restrictions or requirements would or would be
reasonably likely to result in a Burdensome Condition.

 

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(b) The Company shall call and hold a special meeting of its shareholders (the
“Shareholder Meeting”), as promptly as practicable following the date hereof to
vote on a proposal (the “Shareholder Proposal”) to (1) amend the Charter to
(i) increase the number of authorized shares of Common Stock to at least
300,000,000 shares, (ii) reduce the par value per share of Common Stock to an
amount equal to or less than $0.01 and (iii) expressly exempt Purchaser, its
Affiliates and associates and their respective successors and assigns from the
provisions Section 9 of the Charter (the form of such amendment being acceptable
to the Purchaser in its sole discretion), (2) approve the issuance and sale of
the Purchased Shares and any shares purchased pursuant to Section 4.7,
(3) approve the merger of the Bank with and into a subsidiary of Purchaser on
terms consistent with Exhibit D and (4) remove Section 8(j) from the Charter.
The Board of Directors of the Company shall recommend to the Company’s
shareholders that such shareholders vote in favor of the Shareholder Proposal
(subject to any legally required abstentions and subject to Section 3.4(b))
(such recommendation, the “Company Recommendation”) and Purchaser shall, to the
extent permitted by applicable Law, vote all shares owned by it in favor of the
Shareholder Proposal. In connection with such meeting, the Company shall
promptly prepare (and Purchaser will reasonably cooperate with the Company to
prepare) and file with the SEC a preliminary proxy statement, shall use its
reasonable best efforts to respond to any comments of the SEC or its staff and
to cause a definitive proxy statement related to such shareholders’ meeting to
be mailed to the Company’s shareholders not more than five business days after
clearance thereof by the SEC, and shall use its reasonable best efforts to
solicit proxies for such shareholder approval. The Company shall notify
Purchaser promptly of the receipt of any comments from the SEC or its staff with
respect to the proxy statement and of any request by the SEC or its staff for
amendments or supplements to such proxy statement or for additional information
and will supply Purchaser with copies of all correspondence between the Company
or any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to such proxy statement. If at any time prior to the
Shareholder Meeting there shall occur any event that should, upon the advice of
the Company’s outside legal counsel, be set forth in an amendment or supplement
to the Proxy Statement so that the Proxy Statement shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, the Company shall
as promptly as practicable prepare and mail to its shareholders such an
amendment or supplement. Each of Purchaser and the Company agrees promptly to
correct any information provided by it or on its behalf for use in the proxy
statement if and to the extent that such information shall have become false or
misleading in any material respect, and the Company shall, as promptly as
practicable, prepare and mail to its shareholders an amendment or supplement to
correct such information to the extent required by applicable Laws and
regulations. The Company shall consult with Purchaser prior to filing any proxy
statement, or any amendment or supplement thereto, and provide Purchaser with a
reasonable opportunity to comment thereon. For the avoidance of doubt, the
obligations of the Company to call and hold the Shareholder Meeting and to file,
finalize and mail the proxy statement related thereto shall not be affected by
the receipt of any Acquisition Proposal or by any Adverse Recommendation Change.

 

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3.2 Access, Information and Confidentiality.
(a) From the date hereof until the Closing Date, the Company and the Bank will
permit Purchaser and Purchaser’s officers, directors, employees, accountants,
counsel, financial advisors, agents and other representatives to visit and
inspect, at Purchaser’s expense (subject to Section 6.2), the properties of the
Company, the Bank and the Subsidiaries, to examine the corporate books and
records and to discuss the affairs, finances and accounts of the Company, the
Bank and the Subsidiaries with the officers, directors, employees, accountants,
counsel, financial advisors, agents and other representatives of the Company
(the “Company Representatives”), all upon reasonable advance notice and at such
reasonable times and as often as Purchaser may reasonably request. Any
investigation pursuant to this Section 3.2 shall be conducted during normal
business hours and in such manner as not to interfere unreasonably with the
conduct of the business of the Company, the Bank or any Subsidiary, and nothing
herein shall require any Company Representative to disclose any information to
the extent (1) prohibited by applicable Law or regulation, or (2) that such
disclosure would reasonably be expected to cause a violation of any agreement to
which the Company, the Bank or such Company Representative is a party as of the
date of this Agreement or would cause a material risk of a loss of privilege to
the Company, the Bank or any Subsidiary (provided that the Company and the Bank
shall use commercially reasonable efforts to make appropriate substitute
disclosure arrangements that would not cause such a violation under
circumstances where such restrictions apply).
(b) All information furnished by the Company, the Bank or any Subsidiary to
Purchaser or any of its representatives pursuant hereto shall be subject to, and
Purchaser shall hold all such information in confidence in accordance with, the
provisions of the confidentiality agreement between North American Financial
Holdings, Inc. and the Company dated September 28, 2010 (the “Confidentiality
Agreement”).
3.3 Conduct of the Business. Each of the Company and the Bank agree that, prior
to the earlier of the Closing Date and the termination of this Agreement
pursuant to Section 5.1, except as Previously Disclosed in Section 3.3 of the
Company Disclosure Schedule or as otherwise expressly permitted or required by
this Agreement, without the prior written consent of Purchaser (not to be
unreasonably withheld, conditioned or delayed), it will not, and will cause each
of the Subsidiaries not to:
(1) Ordinary Course. Fail to carry on its business in the ordinary and usual
course of business and in all material respects consistent with past practice or
fail to use reasonable best efforts to maintain and preserve its business
(including its organization, assets, properties, goodwill and insurance
coverage) and to preserve its current business relationships with customers,
strategic partners, suppliers, distributors and others with whom it has
significant business dealings.

 

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(2) Operations. Enter into any new line of business or materially change its
lending, investment, underwriting, risk and asset liability management, and
other banking and operating policies in effect as of December 31, 2010, except
as required by applicable Law or policies imposed by any Governmental Entity.
(3) Deposits. Alter materially its interest rate or fee pricing policies with
respect to depository accounts of the Bank or waive any material fees with
respect thereto, in each case except as required by applicable Law or policies
imposed by any Governmental Entity.
(4) Capital Expenditures. Make any capital expenditures on information
technology or systems or in excess of $100,000 individually or $1,000,000 in the
aggregate in any fiscal quarter, other than as required pursuant to Previously
Disclosed commitments already entered into.
(5) Material Contracts. Except as permitted by Section 4.5(a), terminate, enter
into, amend, modify (including by way of interpretation) or renew any contract
that would be a Company Significant Agreement if entered into prior to the date
hereof, other than in the ordinary course of business and consistent with past
practice.
(6) Capital Stock. Issue, sell or otherwise permit to become outstanding, or
dispose of or encumber or pledge, or authorize or propose the creation of, any
additional shares of its stock or any additional options or other rights, grants
or awards with respect to the Common Stock, and any shares of Common Stock
issued pursuant to the exercise of stock options, warrants or vesting of
restricted stock, in each case only to the extent outstanding as of the date of
this Agreement and set forth in Section 2.2(b) of the Company Disclosure
Schedule.
(7) Dividends, Distributions, Repurchases. Make, declare, pay or set aside for
payment any dividend on or in respect of, or declare or make any distribution on
any shares of its capital stock (other than dividends from its wholly owned
Subsidiaries to it or another of its wholly owned Subsidiaries) or directly or
indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise
acquire, any shares of its stock or any options or other rights, grants or
awards with respect to the Common Stock or other securities other than (i) the
repurchase or cancellation of restricted stock or other shares of Common Stock
in accordance with the terms of the applicable award agreements or similar
arrangements to satisfy withholding obligations upon the vesting of restricted
stock, stock appreciation rights or the exercise of options or (ii) the
acceptance of shares of Common Stock as payment of the exercise price of options
or for withholding taxes incurred in connection with the exercise of options
provided that nothing herein shall prohibit the making, declaration, payment, or
setting aside for payment of dividends or distributions with respect to the
Series A Preferred or the Trust Preferred Securities in accordance with the
terms thereof.

 

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(8) Dispositions. Sell, transfer, mortgage, encumber or otherwise dispose of or
discontinue any of its material assets, deposits, business or properties, except
for sales, transfers, mortgages, encumbrances or other dispositions or
discontinuances (including without limitation dispositions of problem assets or
mortgage loans held for sale which are sold at or above the value reflected for
such assets or loans on the Company’s books as of the date hereof) in the
ordinary and usual course of business consistent with past practice and in a
transaction that individually or taken together with all other such transactions
is not material to it and the Subsidiaries, taken as a whole.
(9) Incurrence of Indebtedness. Incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise become
responsible for the obligations of, any other person, except in the ordinary and
usual course of business and consistent with past practice.
(10) Extensions of Credit and Interest Rate Instruments. Make, renew or amend
(except in the ordinary and usual course of business and consistent with past
practice where there has been no material change in the relationship with the
borrower or in an attempt to mitigate loss with respect to the borrower) any
extension of credit in excess of $2,500,000 for any new extension of credit and
$7,500,000 for any renewal of an existing extension of credit in accordance with
the Bank’s policies (except for commitments in writing made prior to the date of
this Agreement and disclosed to Purchaser prior to the execution of this
Agreement) or enter into, renew or amend any interest rate swaps, caps, floors
or option agreements or other interest rate risk management arrangements,
whether entered into for the account of it or for the account of a customer of
it or one of the Subsidiaries, except in the ordinary and usual course of
business and consistent with past practice.
(11) Acquisitions. Acquire (other than by way of foreclosures, deeds in lieu of
foreclosure, acquisitions of control in a fiduciary or similar capacity,
acquisitions of loans or participation interests, or in satisfaction of debts
previously contracted in good faith, in each case in the ordinary and usual
course of business and consistent with past practice) all or any portion of the
assets, business, deposits or properties of any other person.
(12) Banking Offices. File any application to establish, or to relocate or
terminate the operations of, any banking office.
(13) Constituent Documents. Except for such amendments as have been proposed in
the Company’s proxy statement on Form DEF14A filed with the SEC on April 8,
2011, amend its certificate of incorporation or bylaws or similar organizational
documents.

 

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(14) Accounting Practices. Implement or adopt any change in its accounting
principles, practices or methodologies, other than as may be required by GAAP
(or any interpretation thereof), or applicable accounting requirements of a
Governmental Entity or by Law.
(15) Tax Matters. Make, change or revoke any Tax accounting method or Tax
election, prepare any Tax Returns inconsistent in any material respect with past
practice, file any amended Tax Return, consent to any extension or waiver of any
statute of limitations with respect to Tax, enter into any closing agreement,
settle any material Tax claim or assessment, or surrender any right to claim a
refund of Taxes.
(16) Claims. Settle any action, suit, claim or proceeding against it, except for
an action, suit, claim or proceeding that is settled in the ordinary and usual
course of business and consistent with past practice in an amount or for
consideration not in excess of $150,000 individually or $1,500,000 in the
aggregate and that would not impose any material restriction on the business of
the Company, the Bank or the Subsidiaries or, after the Closing, Purchaser or
any of its Affiliates.
(17) Compensation. Terminate, enter into, amend, modify (including by way of
interpretation) or renew any employment, officer, consulting, severance, change
in control or similar contract, agreement or arrangement with any director,
officer, employee or consultant, or grant any salary or wage increase or
increase any employee benefit, including incentive or bonus payments (or, with
respect to any of the preceding, communicate any intention to take such action)
or pay to any such individual any amount or benefit not due, except to make
changes that are required by applicable Law or by the terms of a Benefit Plan
existing as of the date hereof and disclosed on Section 2.2(s)(1)(A) of the
Company Disclosure Schedule.
(18) Benefit Arrangements. Terminate, enter into, establish, adopt, amend,
modify (including by way of interpretation), make new grants or awards under or
renew any Benefit Plan (or any arrangement that would following the applicable
action be a Benefit Plan), amend the terms of any outstanding equity-based
award, take any action to accelerate the vesting, exercisability or payment (or
fund or secure the payment) of stock options, restricted stock or other
compensation or benefits payable thereunder or add any new participants to any
non-qualified retirement plans (or, with respect to any of the preceding,
communicate any intention to take such action), except as required by applicable
Law or by the terms of a Benefit Plan existing as of the date hereof and
disclosed on Section 2.2(s)(1)(A) of the Company Disclosure Schedule.

 

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(19) Labor Matters. Effectuate (1) a plant closing (as defined in the Worker
Adjustment and Retraining Notification Act of 1988, and any other similar
applicable foreign, state, or local Laws relating to plant closings and
layoffs)affecting any site of employment or one or more facilities or operating
units within any site of employment of the Company, the Bank or any of the
Subsidiaries; (2) a mass layoff as defined in such Laws affecting any site of
employment of the Company, the Bank or any of the Subsidiaries; or (3) any
similar action under such Laws requiring notice to employees in the event of an
employment loss or layoff.
(20) Intellectual Property. (1) Grant, extend, amend (except as required in the
diligent prosecution of the Proprietary Rights owned (beneficially, and of
record where applicable) by or developed for the Company, the Bank and the
Subsidiaries), waive, or modify any material rights in or to, sell, assign,
lease, transfer, license, let lapse, abandon, cancel, or otherwise dispose of,
or extend or exercise any option to sell, assign, lease, transfer, license, or
otherwise dispose of, any Proprietary Rights, or (2) fail to exercise a right of
renewal or extension under any material agreement under which the Company, the
Bank or any of the Subsidiaries is licensed or otherwise permitted by a third
party to use any Proprietary Rights (other than “shrink wrap” or “click through”
licenses).
(21) Communication. Make any written or oral communications to the officers or
employees of the Company, the Bank or any of the Subsidiaries pertaining to
compensation or benefit matters that are affected by the transactions
contemplated by this Agreement without providing Purchaser with a copy or
written description of the intended communication and a reasonable period of
time to review and comment on such communication; provided, however, that the
foregoing shall not prevent senior management or human resources personnel of
the Company, the Bank or any Subsidiary from orally answering questions of
individual employees pertaining to compensation or benefit matters with respect
to such individual employee that are affected by the transactions contemplated
by this Agreement on an individual basis with such employee.
(22) Related Party Transactions. Engage in (or modify in a manner adverse to the
Company, the Bank or the Subsidiaries) any transactions (except for any ordinary
course banking relationships permitted under applicable Law) with any Affiliate
of the Company or any director or officer (senior vice president or above) of
the Company, the Bank or the Subsidiaries (or any Affiliate of any such person).
(23) Receivership or Liquidation. Commence a voluntary procedure for
reorganization, arrangement, adjustment, relief or composition of indebtedness
or bankruptcy, receivership or a similar proceeding, or consent to the entry of
an order for relief in an involuntary procedure for reorganization, arrangement,
adjustment, relief or composition of indebtedness or bankruptcy, receivership or
a similar proceeding or consent to the appointment of a receiver, liquidator,
custodian or trustee, in each case, with respect to the Company, the Bank or any
of the Subsidiaries, or any other liquidation or dissolution of the Company, the
Bank or any of the Subsidiaries.

 

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(24) Credit Policy; Underwriting. Make or permit any material exceptions or
changes to the Company’s or the Bank’s credit, underwriting, lending,
investment, risk and asset-liability management and other material banking or
operating policies in effect as of the date hereof except as to update these
policies to conform to recent regulatory or accounting guidance or to update
these policies to address recently identified internal audit or regulatory
examination deficiencies, in each case to reduce the Bank’s risk exposure.
(25) Adverse Actions. Notwithstanding any other provision hereof, knowingly take
any action that is reasonably likely to materially impair its ability to perform
its obligations under this Agreement or to consummate the transactions
contemplated hereby, except as required by applicable Law or this Agreement.
(26) Commitments. Enter into any contract with respect to, or otherwise agree or
commit to do, any of the foregoing.
3.4 Acquisition Proposals.
(a) No Solicitation or Negotiation. The Company and the Bank agree that none of
the Company, the Bank or any of the Subsidiaries or any of the officers or
directors of the Company, the Bank or any of the Subsidiaries shall, and that
they shall instruct and use their reasonable best efforts to cause their and the
Subsidiaries’ employees, investment bankers, attorneys, accountants and other
advisors or representatives (such directors, officers, employees, investment
bankers, attorneys, accountants and other advisors or representatives,
collectively, “Representatives”) not to (it being understood and agreed that any
violation of the restrictions set forth in this Section 3.4 by a Representative,
whether or not such Representative is so authorized and whether or not such
Representative is purporting to act on behalf of the Company, the Bank or any
Subsidiary or otherwise, shall be deemed to be a breach of this Agreement by the
Company and the Bank), directly or indirectly:
(1) initiate, solicit or knowingly facilitate or encourage any inquiries or the
making of any proposal or offer that constitutes, or could reasonably be
expected to lead to, any Acquisition Proposal;
(2) make or authorize any statement, recommendation or solicitation in support
of any Acquisition Proposal;
(3) engage in, continue or otherwise participate in any discussions or
negotiations or enter into an agreement regarding, or provide any non-public
information or data to any person relating to, any Acquisition Proposal; or
(4) otherwise knowingly facilitate any effort or attempt to make an Acquisition
Proposal.

 

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Notwithstanding the foregoing, at any time prior to obtaining the approval of
the Shareholder Proposal (other than the proposal set forth in clause (1)(iii)
of the definition of “Shareholder Proposal”), in response to a bona fide written
Acquisition Proposal that the Board of Directors of the Company determines in
good faith (after consultation with outside counsel and a financial advisor of
nationally recognized reputation) constitutes or is reasonably likely to lead to
a Superior Proposal, and which Acquisition Proposal was not solicited after the
date of this Agreement and was made after the date of this Agreement and prior
to the Shareholder Meeting and did not otherwise result from a breach of this
Section 3.4(a), the Company and the Bank may, subject to compliance with
Section 3.4(f), (x) furnish information with respect to the Company and the Bank
to the person making such Acquisition Proposal (provided that all such
information has previously been provided to the Purchaser or is provided to the
Purchaser prior to or substantially concurrent with the time it is provided to
such person) pursuant to a customary confidentiality agreement not less
restrictive of such person than the Confidentiality Agreement (other than with
respect to standstill provisions), and (y) participate in discussions regarding
the terms of such Acquisition Proposal and the negotiation of such terms with,
and only with, the person making such Acquisition Proposal.
(b) Change in Recommendation. Except as set forth below, neither the Board of
Directors of the Company nor any committee thereof shall (i) (A) withdraw (or
modify in any manner adverse to the Purchaser), or propose publicly to withdraw
(or modify in any manner adverse to the Purchaser), the Company Recommendation
or any other approval, recommendation or declaration of advisability by the
Board of Directors of the Company or any such committee thereof with respect to
this Agreement or (B) approve, recommend or declare advisable, or propose
publicly to approve, recommend or declare advisable, any Acquisition Proposal
(any action in this clause (i) being referred to as a “Adverse Recommendation
Change”) or (ii) approve, recommend or declare advisable, or propose publicly to
approve, recommend or declare advisable, or allow the Company, the Bank, or any
of their Affiliates to execute or enter into, any letter of intent, memorandum
of understanding, agreement in principle, merger agreement, acquisition
agreement, option agreement, joint venture agreement, alliance agreement,
partnership agreement or other agreement or arrangement (an “Acquisition
Agreement”) constituting or related to, or that is intended to or would
reasonably be expected to lead to, any Acquisition Proposal, or requiring, or
reasonably expected to cause, the Company or the Bank to abandon, terminate,
delay or fail to consummate, or that would otherwise impede, interfere with or
be inconsistent with, the transactions contemplated by this Agreement, or
requiring, or reasonably expected to cause, the Company or the Bank to fail to
comply with this Agreement (other than a confidentiality agreement referred to
in Section 3.4(a)). Notwithstanding the foregoing, at any time prior to
obtaining the approval of the Shareholder Proposal (other than the proposal set
forth in clause (1)(iii) of the definition of “Shareholder Proposal”), the Board
of Directors of the Company may make an Adverse Recommendation Change in favor
of a Superior Proposal if the Board of Directors of the Company determines in
good faith (after consultation with outside counsel and a financial advisor of
nationally recognized reputation) that the failure to do so would be a breach of
its fiduciary duties under applicable Law; provided, however, that the Company
shall not be entitled to exercise its right to make an Adverse Recommendation
Change until after the second Business Day following the Purchaser’s receipt of
written notice (a “Notice of Recommendation Change”) from the Company advising
the Purchaser that the Board of Directors of the Company intends to take such

 

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action and specifying the reasons therefor, including the terms and conditions
of the Superior Proposal that is the basis of the proposed action by the Board
of Directors of the Company (it being understood and agreed that any amendment
to any material term of such Superior Proposal shall require a new Notice of
Recommendation Change and a new two business-day period). In determining whether
to make an Adverse Recommendation Change, the Board of Directors of the Company
shall take into account any changes to the terms of this Agreement proposed by
the Purchaser in response to a Notice of Recommendation Change or otherwise.
(c) Definitions. For purposes of this Agreement, the term “Acquisition Proposal”
means (1) any proposal or offer with respect to a merger, joint venture,
partnership, consolidation, dissolution, liquidation, tender offer,
recapitalization, reorganization, rights offering, share exchange, business
combination or similar transaction involving the Company, the Bank or any of the
Subsidiaries and (2) any acquisition by any person resulting in, or proposal or
offer, that, if consummated, would result in any person becoming the beneficial
owner, directly or indirectly, in one or a series of related transactions, of
ten percent (10%) or more of the total voting power of any class of equity
securities of the Company or the Bank or those of any of the Subsidiaries, or
ten percent (10%) or more of the consolidated total assets (including, without
limitation, equity securities of any subsidiaries) of the Company, in each case
other than the transactions contemplated by this Agreement. For purposes of this
Agreement, the term “Superior Proposal” means any bona fide written proposal or
offer made by a third party or group pursuant to which such third party or group
would acquire, directly or indirectly more than 50% of the Common Stock or
assets of the Company, the Bank, or their Subsidiaries (i) on terms which the
Board of Directors of the Company determines in good faith (after consultation
with the Company’s outside legal counsel and its financial advisor) to be
superior from a financial point of view to the holders of Common Stock than the
transactions contemplated by this Agreement (including any changes proposed by
the Purchaser to the terms of this Agreement) and (ii) that is reasonably likely
to be completed, on a timely basis, taking into account all material financial,
regulatory, legal and other aspects of such proposal on or before the date that
the transactions contemplated by this Agreement are reasonably likely to be
completed.
(d) Federal Securities Laws. Nothing contained in this Section 3.4 shall
prohibit the Company from (i) taking and disclosing to its shareholders a
position required by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange
Act or (ii) making any disclosure to its shareholders if the Board of Directors
of the Company has determined in good faith, after consultation with outside
legal counsel, that the failure to do so would be inconsistent with any
applicable Law; provided, that the Board of Directors of the Company may not
effect an Adverse Recommendation Change unless permitted to do so by Section
3.4(b); provided, however, that compliance with such Rule 14e-2(a) or Rule 14d-9
shall not in any way limit or modify the effect that any action taken pursuant
to such rules has under any other provision of this Agreement, including under
Article V hereof.

 

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(e) Existing Discussions. The Company and the Bank each agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal and, between the date hereof and the Closing, take
such action as is necessary to enforce any “standstill” provisions or provisions
of similar effect to which the Company is a party or of which the Company is a
beneficiary. The Company and the Bank each agrees that it will take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this Section 3.4. The
Company and the Bank each also agrees that it will promptly request each person
that has heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company, the Bank or any of the Subsidiaries to
return or destroy all confidential information heretofore furnished to such
person by or on behalf of it or any of the Subsidiaries.
(f) Notice; Specific Performance. The Company and the Bank each agrees that it
will promptly (and, in any event, within 24 hours) notify Purchaser if any
inquiries, proposals or offers with respect to an Acquisition Proposal are
received by, any such information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, the Company, the Bank
or any Subsidiary or any of their respective Representatives indicating, in
connection with such notice, the name of such person and the material terms and
conditions of any proposals or offers (including, if applicable, copies of any
written requests, proposals or offers, including proposed agreements) and
thereafter shall keep Purchaser informed, on a current basis, of the status and
terms of any such proposals or offers (including any amendments thereto) and the
status of any such discussions or negotiations, including any change in the
Company’s or the Bank’s intentions as previously notified. Notwithstanding
anything contained herein to the contrary, each of the Company and the Bank
agrees that a non-exclusive right and remedy for noncompliance with this
Section 3.4 is to have such provision specifically enforced by any court having
equity jurisdiction; it being acknowledged and agreed that any such breach will
cause irreparable injury to Purchaser and that money damages may not provide an
adequate remedy to Purchaser.
3.5 Repurchase. The Company and the Bank shall use reasonable best efforts to
facilitate the entry into and maintenance in effect of a definitive agreement
with the Treasury providing for the Repurchase on the terms set forth in
Exhibit B prior to the Closing; provided that Purchaser from and after the date
hereof shall be responsible for all communications and/or negotiations with the
Treasury in respect of such definitive agreement and neither the Company nor the
Bank shall, without the prior written consent of Purchaser, contact or
communicate with the Treasury in respect of the Repurchase. Purchaser shall
provide the Company and the Bank with the reasonable opportunity to participate
in substantive telephone conversations and meetings that Purchaser or its
representatives may have from time to time with the Treasury with respect to the
Repurchase and shall advise the Company and the Bank of the material terms of
any discussions between Purchaser and the Treasury. Subject to the foregoing,
Purchaser will permit the Company to review in advance, and to the extent
practicable, will consult with the Company with respect to, in each case subject
to applicable Laws relating to the exchange of information, all the information
and documentation relating to the Repurchase.

 

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3.6 D&O Indemnification.
(a) On or before the Closing, the Company shall offer to enter into a Directors
& Officers Indemnification Agreement, containing terms no less favorable than
those set out in the Charter and the Company’s bylaws as of the date hereof,
with each director serving on its Board of Directors, including each of the
Purchaser Designees and any other directors or officers of the Company, the Bank
or any of the Subsidiaries designated by or affiliated with Purchaser in form
and substance reasonably satisfactory to such individuals.
(b) From and after the Closing, to the extent permitted by applicable Law and in
accordance with the Charter in effect as of the date hereof and the Company’s
bylaws in effect as of the date hereof, the Company (and any successor or assign
thereof) shall and from and after any merger of the Company into Purchaser, to
the extent permitted by applicable Law and in accordance with the Amended and
Restated Articles of Incorporation of Purchaser and Amended and Restated Bylaws
of Purchaser (which shall provide for indemnification and advancement rights no
less favorable than those contained in the Charter in effect as of the date
hereof and the Company’s bylaws in effect as of the date hereof), the Purchaser
(and any successor or assign thereof) shall, indemnify, defend and hold
harmless, and provide advancement of defense costs and other expenses (including
attorneys’ fees) to, each person who is now, or has been at any time prior to
the date hereof or who becomes prior to the Closing, an officer or director of
the Company or any of its subsidiaries against all losses, claims, damages,
costs, expenses (including attorneys’ fees), liabilities or judgments or amounts
that are paid in settlement of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director or officer of the
Company, the Bank or any of its Subsidiaries, and pertaining to any matter
existing or occurring, or any acts or omissions occurring, at or prior to the
Closing, whether asserted or claimed prior to, at or after the Closing
(including matters, acts or omissions occurring in connection with the approval
of this Agreement and the consummation of the transactions contemplated hereby).
Notwithstanding anything in this Agreement to the contrary, prior to the
Closing, the Company may purchase tail insurance coverage under its current
policies of directors’ and officers’ liability insurance or a comparable policy
from another insurer for a term not to exceed six years from the Closing with
respect to claims arising from facts or events which occurred prior to the
Closing; provided, however, that the total premium payment for such insurance
shall not exceed three times the amount of the last premium paid by the Company
in respect of such insurance prior to the date hereof; provided further that if
the Company is unable to maintain such policy (or any substitute policy) as a
result of the preceding proviso, the Company shall obtain as much comparable
insurance as is available for such annual premium amount.
3.7 Notice of Developments. Each party to this Agreement will give prompt
written notice to each of the other parties of any adverse development causing a
breach of any of its own representations and warranties contained in Article II
of this Agreement. No disclosure by any party pursuant to this Section 3.7 shall
be deemed to amend or supplement the Disclosure Schedules or to prevent or cure
any misrepresentation or breach of warranty.

 

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ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Governance Matters.
(a) Prior to the Closing, the Company and the Bank shall use reasonable best
efforts to cause the Resigning Directors to resign from their respective Boards
of Directors and, if such Resigning Directors do not resign, the Company and the
Bank shall take all requisite corporate action to remove such Resigning
Directors or increase the size of their respective Boards of Directors to
accommodate the appointment of each of the Purchaser Designees to their
respective Boards of Directors effective as of the Closing, to elect or appoint
each of the Purchaser Designees to their respective Boards of Directors
effective as of the Closing, and to permit the Purchaser Designees to constitute
a majority of each of their respective Boards of Directors immediately after the
Closing.
(b) Following the Closing, the Purchaser, the Company and the Bank shall take
all requisite action to re-elect two members of the Company’s board as of the
date hereof designated by the Purchaser (the “Nominees”) to the Company’s, the
Bank’s and the Purchaser’s Boards of Directors until the consolidation of the
Company and the Bank with the other bank holding companies and banks controlled
by the Purchaser, at which time the Purchaser shall take all requisite action to
elect the Nominees to such consolidated bank and bank holding company Boards of
Directors.
(c) Following the Closing, the Purchaser, the Company and the Bank shall take
all requisite action to (i) establish a Loan Portfolio Committee (the “Loan
Portfolio Committee”) as a committee of the Board of Directors of the Bank,
which Loan Portfolio Committee shall monitor and review the status of the Bank’s
loan portfolio and any the level of credit losses, payments, collections and
savings realized in such portfolio and (ii) elect or appoint Stephen M. Rownd as
the chairman of the Loan Portfolio Committee.
4.2 Legend. (a) Purchaser agrees that all certificates or other instruments
representing the Purchased Shares will bear a legend substantially to the
following effect:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR 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.
(b) Upon request of Purchaser, upon receipt by the Company of an opinion of
counsel reasonably satisfactory to the Company to the effect that such legend is
no longer required under the Securities Act and applicable state Laws, the
Company shall promptly cause the legend set forth above to be removed from any
certificate for any securities purchased pursuant to this Agreement (or issued
upon exercise thereof).

 

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4.3 Exchange Listing. The Company shall promptly use its reasonable best efforts
to cause the Purchased Shares to be approved for listing on the NASDAQ or such
other nationally recognized securities exchange on which the Common Stock may be
listed, if any, subject to official notice of issuance, as promptly as
practicable, and in any event before the Closing if permitted by the rules of
the NASDAQ.
4.4 Registration Rights. Prior to the Closing, the Company shall enter into the
Registration Rights Agreement with Purchaser in substantially the form attached
as Exhibit C (the “Registration Rights Agreement”).
4.5 Employees. It is the intention of Purchaser to maintain in place the
management team of the Bank, subject to the establishment of, and acceptance of,
performance criteria in accordance with the Purchaser’s anticipated business
plan. Notwithstanding the foregoing, nothing in this Agreement, including this
Section 4.5, shall be construed to guarantee or extend any offer of employment
to, or to prevent the termination of employment of any employee or the amendment
or termination of any particular Benefit Plan to the extent permitted by its
terms.
4.6 Reservation for Issuance. The Company will reserve that number of shares of
Common Stock sufficient for issuance of the Purchased Shares; provided that
solely to the extent the Company is unable to reserve such number of shares
under the Charter the Company will reserve such sufficient number of shares of
Common Stock following the approval of the Shareholder Proposal (other than the
proposal set forth in clause (1)(iii) of the definition of “Shareholder
Proposal”) pursuant to Section 3.1(b).
4.7 Additional Investment. Following the Closing and until the Bank is combined
with another bank controlled by the Purchaser, in the event that the tier 1
leverage ratio of either the Company or the Bank falls below 10% (or such other
capital ratio as may be required to be maintained by applicable Governmental
Entities), the Purchaser will be permitted to purchase a sufficient quantity of
shares of Common Stock from the Company to cause the Company or the Bank (as
applicable) to meet such capital ratio. The purchase price for any shares of
Common Stock purchased pursuant to the preceding sentence shall be equal to the
lesser of (i) $1.81 per share of Common Stock and (ii) the Company’s tangible
book value per share of Common Stock as of end of the then most recently
completed fiscal quarter.
ARTICLE V
TERMINATION
5.1 Termination. This Agreement may be terminated prior to the Closing:
(a) by mutual written agreement of the Company, the Bank and Purchaser;

 

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(b) by Purchaser, upon written notice to the Company and the Bank, or by the
Company, upon written notice to Purchaser, in the event that the Closing Date
does not occur on or before the date that is 150 calendar days from the date
hereof; provided, however, that the respective rights to terminate this
Agreement pursuant to this Section 5.1(b) shall not be available to any party
whose failure, in any material respect, (or, in the case of the Company, the
failure of the Bank) to fulfill any obligation under this Agreement shall have
been the proximate cause of, or shall have resulted in, the failure of the
Closing Date to occur on or prior to such date;
(c) by the Company or Purchaser, upon written notice to the other, in the event
that any Governmental Entity shall have issued any order, decree or injunction
or taken any other action restraining, enjoining or prohibiting any of the
transactions contemplated by this Agreement, and such order, decree, injunction
or other action shall have become final and nonappealable;
(d) by Purchaser or the Company, if Purchaser or any of its Affiliates, or the
Company, receives written notice from or is otherwise advised by a Governmental
Entity that it will not grant (or intends to rescind or revoke if previously
approved) any Required Approval or receives written notice from such
Governmental Entity that it will not grant such Required Approval on the terms
contemplated by this Agreement without imposing any Burdensome Condition,
provided that, (A) prior to Purchaser terminating this Agreement, Purchaser
shall have complied with its obligations under Section 3.1(a) in all material
respects, and (B) prior to the Company terminating this Agreement, the Company
shall have complied with its obligations under Section 3.1(a) in all material
respects;
(e) by the Company, if neither the Company nor the Bank is in material breach of
any of the terms of this Agreement, and there has been a breach of any
representation, warranty, covenant or agreement made by Purchaser in this
Agreement, or any such representation and warranty shall have become untrue
after the date of this Agreement, such that the condition set forth in
Section 1.2(c)(3)(A) or (B) would not be satisfied and such breach is not
curable or, if curable, is not cured within thirty (30) days after written
notice thereof is given by the Company to Purchaser;
(f) by Purchaser, if Purchaser is not in material breach of any of the terms of
this Agreement, and there has been a breach of any representation, warranty,
covenant or agreement made by the Company or the Bank in this Agreement, or any
such representation and warranty shall have become untrue after the date of this
Agreement, such that the condition set forth in Section 1.2(c)(2)(A) or
(B) would not be satisfied and such breach is not curable or, if curable, is not
cured within thirty (30) days after written notice thereof is given by Purchaser
to the Company and the Bank;
(g) by Purchaser on or prior to the day before the date of the Shareholder
Meeting (as may be adjourned or postponed), if the Company or the Bank shall
have breached the covenants contained in Section 3.4 hereof or if the Company’s
Board of Directors shall have made any Adverse Recommendation Change; and
(h) by Purchaser or the Company, if the approval of the Shareholder Proposal
(other than the proposal set forth in clause (1)(iii) of the definition of
“Shareholder Proposal”) is not obtained at the Shareholder Meeting.

 

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5.2 Effects of Termination. In the event of any termination of this Agreement as
provided in Section 5.1, subject to Section 5.3, this Agreement (other than
Section 3.2(b) and Articles V and VI, which shall remain in full force and
effect) shall forthwith become wholly void and of no further force and effect;
provided that nothing herein shall relieve any party from liability (x) for
fraud or (y) except to the extent set forth in the third sentence of Section
5.3(d) in the case an expense reimbursement is payable by Purchaser, for
intentional breach of this Agreement.
5.3 Fees.
(a) If, after the date hereof, an Acquisition Proposal is made to the Company,
the Bank, any Subsidiary, or the Company’s shareholders generally, or becomes
public and thereafter this Agreement is terminated pursuant to Section 5.1(f) on
the basis of a breach of a covenant or agreement made by the Company or the Bank
in this Agreement, Section 5.1(g) or Section 5.1(h), the Company and the Bank
shall be jointly and severally obligated to pay to Purchaser (1) an amount equal
to the Expense Reimbursement and, in the case of such a termination pursuant to
Section 5.1(g) because the Company’s Board of Directors shall have made any
Adverse Recommendation Change, 50% of the Termination Fee, promptly, but in any
event not later than two (2) business days, following such termination and (2),
in the case of a termination referred to in this subsection, if within twelve
months after such termination the Company and/or the Bank enters into a
definitive agreement to effect, or consummates, an Acquisition Proposal, an
amount equal to the Termination Fee minus the portion of the Termination Fee
already paid by the Company to Purchaser pursuant to the preceding clause
(1) promptly, but in any event not later than two (2) business days, following
the consummation of such Acquisition Proposal.
(b)
(1) If this Agreement is terminated pursuant to Section 5.1(e) due to a breach
of a covenant, Purchaser shall be obligated to pay to the Company an amount
equal to eight million dollars ($8,000,000) in respect of the Company’s and the
Bank’s out-of-pocket expenses incurred in connection with this Agreement and the
transactions contemplated hereby promptly, but in any event not later than two
(2) business days, following such termination.
(2) If this Agreement is terminated pursuant to Section 5.1(f) due to a breach
of a covenant other than in circumstances where fees are payable pursuant to
5.3(a), the Company and the Bank shall be jointly and severally obligated to pay
to Purchaser an amount equal to the Expense Reimbursement promptly, but in any
event no later than two (2) business days, following such termination.
(c) “Termination Fee” means an amount in cash equal to eight million dollars
($8,000,000), which Termination Fee shall be paid by wire transfer of
immediately available funds to the account or accounts designated by Purchaser
at the time specified in this Section 5.3. “Expense Reimbursement” means an
amount in cash equal to seven hundred and fifty thousand dollars ($750,000) in
respect of Purchaser’s out-of-pocket expenses incurred in connection with due
diligence, the negotiation and preparation of this Agreement. To the extent not
paid when due, any amount payable pursuant to this Section 5.3 shall accrue
interest at a rate equal to eighteen percent (18%) per annum or, if lower, the
maximum rate allowable by Law.

 

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(d) Each of the Company, the Bank and Purchaser acknowledges that the agreements
contained in this Section 5.3 are an integral part of the transactions
contemplated by this Agreement. The amounts payable pursuant to Section 5.3
hereof constitute liquidated damages and not a penalty and shall be the sole
monetary remedy in the event a Termination Fee or Expense Reimbursement paid in
connection with a termination of this Agreement on the bases specified in
Section 5.3 hereof. The amounts payable pursuant to Section 5.3 hereof
constitute liquidated damages and not a penalty and shall be the sole remedy in
the event an expense reimbursement by Purchaser is paid in connection with a
termination of this Agreement on the bases specified in Section 5.3 hereof. In
the event that the Company or the Bank shall fail to make any payment pursuant
to this Section 5.3 when due, the Company and the Bank shall be jointly and
severally obligated to reimburse Purchaser for all reasonable expenses actually
incurred or accrued by Purchaser (including reasonable expenses of counsel) in
connection with the collection under and enforcement of this Section 5.3. In the
event Purchaser fails to make any payment pursuant to this Section 5.3 when due,
Purchaser shall be obligated to reimburse the Company and the Bank for all
reasonable expenses actually incurred or accrued by the Company and the Bank
(including reasonable expenses of counsel) in connection with the collection
under and enforcement of this Section 5.3.
ARTICLE VI
MISCELLANEOUS
6.1 No Survival. None of the representations and warranties set forth in this
Agreement shall survive the Closing. Except as otherwise provided herein, all
covenants and agreements contained herein, other than those which by their terms
are to be performed in whole or in part after the Closing Date, shall terminate
as of the Closing Date.
6.2 Expenses. Subject to Section 5.3, each of the parties will bear and pay all
other costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated pursuant to this Agreement; except that if the Closing
occurs, the Company and the Bank shall jointly and severally be obligated to
reimburse Purchaser, without duplication, for all of its reasonable
out-of-pocket expenses incurred in connection with due diligence, the
negotiation and preparation of this Agreement and undertaking of the
transactions contemplated pursuant to this Agreement (including all stamp and
other Taxes payable with respect to the issuance of the Purchased Stock, the
Option and CVRs, filing fees, fees and expenses of attorneys, consultants and
accounting and financial advisers incurred by or on behalf of Purchaser or its
Affiliates in connection with the transactions contemplated pursuant to this
Agreement) (the “Closing Expense Reimbursement”).

 

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6.3 Amendment; Waiver. No amendment or waiver of any provision of this Agreement
will be effective with respect to any party unless made in writing and signed by
an officer or a duly authorized representative of such party. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The conditions to each party’s obligation to
consummate the Closing are for the sole benefit of such party and may be waived
by such party in whole or in part to the extent permitted by applicable Law. No
waiver of any party to this Agreement, as the case may be, will be effective
unless it is in a writing signed by a duly authorized officer of the waiving
party that makes express reference to the provision or provisions subject to
such waiver. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by Law.
6.4 Counterparts and Facsimile. For the convenience of the parties hereto, this
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
Agreement may be delivered by facsimile or pdf and such facsimiles or pdfs will
be deemed as sufficient as if actual signature pages had been delivered.
6.5 Governing Law. This Agreement will be governed by and construed in
accordance with the Laws of the State of Delaware applicable to contracts made
and to be performed entirely within such State. The parties hereby irrevocably
and unconditionally consent to submit to the exclusive jurisdiction of the
federal courts of the United States of America located in the State of Delaware,
or, if jurisdiction in such federal courts is not available, the courts of the
State of Delaware, for any actions, suits or proceedings arising out of or
relating to this Agreement and the transactions contemplated hereby.
6.6 Notices. 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 second 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.

  (a)   If to Purchaser:         North American Financial Holdings, Inc.
4725 Piedmont Row Drive
Charlotte, North Carolina 28210
Attention:    Christopher G. Marshall
Telephone:  (704) 554-5901
Fax:              (704) 964-2442         with a copy to (which copy alone shall
not constitute notice):

 

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      Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention:    David E. Shapiro
Telephone:  (212) 403-1000
Fax:              (212) 403-2000     (b)   If to the Company or the Bank:      
  Green Bankshares, Inc.
100 North Main Street
Greeneville, Tennessee 37743
Attention:    Stephen M. Rownd
Telephone:  (423) 278-3323
Fax:              (866) 550-2336         with a copy to (which copy alone shall
not constitute notice):         Bass, Berry & Sims PLC
150 Third Avenue South, Suite 2800
Nashville, Tennessee 37201
Attention:    D. Scott Holley
Telephone:  (615) 742-7721
Fax:              (615) 742-2813

6.7 Entire Agreement, Assignment. (a) This Agreement (including the Exhibits,
Schedules and Disclosure Schedules hereto) constitutes the entire agreement, and
except for the Confidentiality Agreement, supersedes all other prior agreements,
understandings, representations and warranties, both written and oral, among the
parties, with respect to the subject matter hereof; and (b) this Agreement will
not be assignable by operation of Law or otherwise (any attempted assignment in
contravention hereof being null and void); provided that Purchaser may assign
its rights and obligations under this Agreement to any person, but only if
immediately after the Closing, North American Financial Holdings, Inc. and/or
its Affiliates shall collectively own at least a majority of the pro forma
outstanding Common Stock of the Company; provided further, that no such
assignment shall relieve Purchaser of its obligations hereunder.
6.8 Interpretation; Other Definitions. Wherever required by the context of this
Agreement, the singular shall include the plural and vice versa, and the
masculine gender shall include the feminine and neuter genders and vice versa,
and references to any agreement, document or instrument shall be deemed to refer
to such agreement, document or instrument as amended, supplemented or modified
from time to time. All article, section, paragraph or clause references not
attributed to a particular document shall be references to such parts of this
Agreement, and all exhibit, annex and schedule references not attributed to a
particular document shall be references to such exhibits, annexes and schedules
to this Agreement. The disclosure of any matter or item in the Company
Disclosure Schedule shall not be deemed to constitute an acknowledgement that
such matter or item is required to be disclosed therein or is a material
exception to a representation, warranty, covenant or condition set forth in this
Agreement and

 

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shall not be used as a basis for interpreting the terms “material,”
“materially,” “materiality,” “Material Adverse Effect” or any word or phrase of
similar import and does not mean that such matter or item would, with any other
matter or item, have or be reasonably expected, individually or in the
aggregate, to have a Material Adverse Effect. Certain matters have been
disclosed in the Company Disclosure Schedule for informational purposes only. In
addition, the following terms are ascribed the following meanings:
(a) the term “Affiliate” means, with respect to any person, any person directly
or indirectly controlling, controlled by or under common control with, such
other person. For purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”)
when used with respect to any person, means the possession, directly or
indirectly, of the power to cause the direction of management or policies of
such person, whether through the ownership of voting securities by contract or
otherwise;
(b) the word “or” is not exclusive;
(c) the words “including,” “includes,” “included” and “include” are deemed to be
followed by the words “without limitation”; and
(d) the terms “herein,” “hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular section,
paragraph or subdivision;
(e) “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 Tennessee generally are authorized or required by Law or
other governmental action to close;
(f) “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; and
(g) a person shall be deemed to “beneficially own” any securities of which such
person is considered to be a “beneficial owner” under Rule 13d-3 under the
Exchange Act.
6.9 Captions. The article, section, paragraph and clause captions herein are for
convenience of reference only, do not constitute part of this Agreement and will
not be deemed to limit or otherwise affect any of the provisions hereof.
6.10 Severability. If any provision of this Agreement or the application thereof
to any person (including the officers and directors of the parties hereto) 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 parties shall negotiate in good faith in an effort to agree upon a suitable
and equitable substitute provision to effect the original intent of the parties.

 

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6.11 No Third Party Beneficiaries. Nothing contained in this Agreement, express
or implied, including Section 4.5 hereof, is intended to confer upon any person
other than the parties hereto, any benefit, right or remedies, except that the
provisions of Sections 3.6, 4.1(b) and 4.1(c) shall inure to the benefit of the
persons referred to in such Sections.
6.12 Time of Essence. Time is of the essence in the performance of each and
every term of this Agreement.
6.13 Certain Adjustments. Without limiting the generality of Purchaser’s rights
and remedies under this Agreement, if the representations and warranties set
forth in Section 2.2(b) shall not be true and correct as of the Closing Date,
the number of shares of Common Stock to be purchased hereunder, and the number
of shares of Common Stock for which the Option is exercisable, shall be, at
Purchaser’s option, proportionately adjusted to provide Purchaser the same
economic effect as contemplated by this Agreement in the absence of such failure
to be true and correct.
6.14 Public Announcements. Subject to each party’s disclosure obligations
imposed by Law or the rules of any stock exchange upon which its securities are
listed, the parties hereto will cooperate with each other in the development and
distribution of all news releases and other public information disclosures with
respect to this Agreement and any of the transactions contemplated by this
Agreement, and none of the Company, the Bank or Purchaser will make any such
news release or public disclosure without first consulting with the other two
parties, and, in each case, also receiving the other’s consent (which shall not
be unreasonably withheld or delayed) and each party shall coordinate with the
party whose consent is required with respect to any such news release or public
disclosure.
6.15 Specific Performance; Limitation on Damages.
(a) The Company and the Bank agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed by them in
accordance with their specific terms. It is accordingly agreed that Purchaser
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedies to which Purchaser is entitled at law or equity.
Notwithstanding anything to the contrary herein, in no event shall Purchaser be
responsible to the Company or the Bank for any consequential, special or
punitive damages or any fees or expenses other than pursuant to Section
5.3(b)(1).
(b) Notwithstanding anything to the contrary in this Agreement, the parties
acknowledge that neither the Company nor the Bank shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement by Purchaser or
any remedy to enforce specifically the terms and provisions of this Agreement.

 

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[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officers of the parties hereto as of the date first herein above
written.

            GREEN BANKSHARES, INC.
      By:   /s/ Stephen M. Rownd         Name:   Stephen M. Rownd       
Title:   Chairman and CEO        GREENBANK
      By:   /s/ Stephen M. Rownd         Name:   Stephen M. Rownd       
Title:   Chairman and CEO     

[Signature Page to Investment Agreement]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officers of the parties hereto as of the date first herein above
written.

            NORTH AMERICAN FINANCIAL HOLDINGS, INC.
      By:   /s/ Christopher G. Marshall         Name:   Christopher G. Marshall 
      Title:   EVP, CFO     

[Signature Page to Investment Agreement]

 

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Schedule A

          State or Other Jurisdiction of Name of Subsidiary  
Incorporation/Organization
Company Subsidiaries
   
Greene County Capital Trust I
  Delaware
Greene County Capital Trust II
  Delaware
GreenBank Capital Trust I
  Delaware
Civitas Statutory Trust I
  Delaware
Cumberland Capital Statutory Trust II
  Connecticut
Bank Subsidiaries
   
Superior Financial Services, Inc.
  Tennessee
GCB Acceptance Corporation
  Tennessee
Fairway Title Company
  Tennessee
GB Holdings, LLC
  Tennessee

Schedule A

 

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Exhibit A
Form of Contingent Value Rights
Exhibit A
Term Sheet for Contingent Value Rights

     
Recipients
  Immediately prior to the Closing, existing shareholders of the Company as of a
predetermined record date mutually agreeable to the Purchaser and the Company
will be issued one right (a “CVR”) for each share of Common Stock owned by such
shareholder. Each CVR would entitle the holder to a cash payment based on the
amount of Credit Losses (as defined below) prior to the Maturity Date up to a
maximum of $0.75 per CVR in the aggregate.  
Maturity Date
  5 years from the Closing Date  
Settlement Obligation at Maturity
  If the amount of Credit Losses is less than the Stipulated Amount, the Issuer
will pay to holders of the CVRs, within 60 days of the Maturity Date, an amount
equal to:  
 
 
(A) If the difference between the Stipulated Amount and the amount of Credit
Losses expressed on a per CVR basis (such difference, the “Loss Shortfall”) is
less than or equal to $0.50, then 100% of the Loss Shortfall; and
 
 
 
(B) If the Loss Shortfall is greater than $0.50, then $0.50 plus 50% of the
excess of the Loss Shortfall over $0.50 with a maximum of $0.75 per CVR.
 
 
  If the amount of Credit Losses equals or exceeds the Stipulated Amount (as
defined below), the CVRs will expire and the Company shall not be required to
make any payment with respect to them.  
Credit Losses
  “Credit Losses” means the Charge-Offs for any loans existing as of the date
hereof for the period commencing on the date hereof and ending on the Maturity
Date less any recoveries in respect of such Charge-Offs.  
Stipulated Amount
  $178,000,000.  
Determinations
  All determinations with respect to Credit Losses calculations for purposes of
the CVRs and amounts payable in respect of the CVRs shall be made by the Loan
Portfolio Committee of the Company’s Board of Directors in its sole discretion.
 
Early Redemption
  The Company may redeem the CVRs at any time at a price of $0.75 per CVR.  
Voting rights
  Any modifications of the terms of the CVRs that are adverse to the holders
will require the consent of the holders of a majority of the CVRs. Otherwise, no
voting rights attach to the CVRs.  
Dividend rights
  None.

Exhibit A-1

 

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Merger, Acquisition or Change in Control
  In the event that the Company experiences a Change in Control, all rights
under the CVRs shall be redeemed upon closing at $0.75 per CVR.  
Change in Control
  A “Change in Control” shall mean any transaction resulting in the holders of
the equity interests of the Parent immediately prior to such transaction owning,
directly or indirectly, less than 50% of the equity interests of the Parent
immediately following such transaction. For purposes of the preceding sentence,
the “Parent” shall mean the ultimate holder that directly or indirectly owns or
controls, by share ownership, contract or otherwise, a majority of the equity
interests of the Company.  
Transferability; Attachment; Death
  The rights of a holder of a CVR may not be assigned or transferred except by
will or the laws of descent or distribution. The CVR 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 CVR
shall be void. If a holder of a CVR should die, the designee, legal
representative, or legatee, the successor trustee of such holder’s inter vivos
trust or the person who acquired the right to the CVR by reason of the death of
such holder (individually, a “Successor”) shall succeed to such holder’s rights
with respect to the CVR.

Exhibit A-2

 

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Exhibit B
Terms of Repurchase
Purchaser shall have entered into a binding definitive agreement with the
Treasury to purchase substantially contemporaneous with the Closing, on terms
and conditions consistent with those disclosed to the Company’s Board of
Directors by Purchaser’s representatives on April 26, 2011, all of the
outstanding shares of the Series A Preferred (including all obligations with
respect to accrued but unpaid dividends on the Series A Preferred) and the
Treasury Warrants. For the avoidance of doubt, at the Closing, such agreement
shall remain in full force and effect.
Exhibit B

 

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Exhibit C
Form of Registration Rights Agreement
Exhibit C

 

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REGISTRATION RIGHTS AGREEMENT
dated as of [•], 2011
by and between
GREEN BANKSHARES, INC.
and
NORTH AMERICAN FINANCIAL HOLDINGS, INC.
 
 

 

 

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Table of Contents

             
1.
  Certain Definitions     1  
 
           
2.
  Shelf Registration Statements     4  
 
           
3.
  Additional Demand Registrations     4  
 
           
4.
  Piggyback Registrations     6  
 
           
5.
  Other Registrations     7  
 
           
6.
  Selection of Underwriters     7  
 
           
7.
  Holdback Agreements     8  
 
           
8.
  Procedures     8  
 
           
9.
  Registration Expenses     13  
 
           
10.
  Indemnification     14  
 
           
11.
  Rule 144     15  
 
           
12.
  Transfer of Registration Rights     16  
 
           
13.
  Conversion or Exchange of Other Securities     16  
 
           
14.
  Miscellaneous     16  
 
           

 

 

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REGISTRATION RIGHTS AGREEMENT, dated as of [•], 2011, by and between Green
Bankshares, Inc., a corporation organized under the laws of the State of
Tennessee (the “Company”), and North American Financial Holdings, Inc., a
Delaware corporation (“Purchaser”).
In consideration of the mutual covenants and agreements herein contained and
other good and valid consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Certain Definitions.
In addition to the terms defined elsewhere in this Agreement, the following
terms shall have the following meanings:
“Affiliate” of any Person means any other Person that, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person. The term “control” (including the terms
“controlling,” “controlled by” and “under common control with”) as used with
respect to any Person means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
“Agreement” means this Registration Rights Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the
foregoing, and shall refer to this Registration Rights Agreement as the same may
be in effect at the time such reference becomes operative.
“Blackout Period” has the meaning set forth in Section 8(e) hereof.
“Business Day” means any day, except a Saturday, Sunday or legal holiday on
which banking institutions in the State of New York or State of Tennessee are
authorized or obligated by law or executive order to close.
“Closing Date” has the meaning set forth in the Investment Agreement.
“Common Stock” means common stock, $[0.01] par value, of the Company.
“Company” has the meaning set forth in the introductory paragraph and includes
any other person referred to in the second sentence of Section 14(c) hereof.
“Delay Period” has the meaning set forth in Section 3(d) hereof.
“Demand Registration” has the meaning set forth in Section 3(a) hereof.
“Demand Registration Statement” has the meaning set forth in Section 3(a)
hereof.

 

 

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“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“Full Cooperation” means, in connection with any underwritten offering, where,
in addition to the cooperation otherwise required by this Agreement, (a) members
of senior management of the Company (including the chief executive officer and
chief financial officer) fully cooperate with the underwriter(s) in connection
therewith and, at the recommendation or request of the underwriters, make
themselves available to participate in “road-show” and other customary marketing
activities in such locations (domestic and foreign) as recommended by the
underwriter(s) (including one-on-one meetings with prospective purchasers of the
Registrable Common Stock) and (b) the Company prepares preliminary and final
prospectuses (preliminary and final prospectus supplements in the case of an
offering pursuant to the Shelf Registration Statement) for use in connection
therewith containing such additional information as reasonably requested by the
underwriter(s) (in addition to the minimum amount of information required by
law, rule or regulation).
“Fully Marketed Underwritten Offering” means an underwritten offering in which
there is Full Cooperation.
“Governmental Entity” means any national, federal, state, municipal, local,
territorial, foreign or other government or any department, commission, board,
bureau, agency, regulatory authority or instrumentality thereof, or any court,
judicial, administrative or arbitral body or public or private tribunal.
“Investment Agreement” means the Investment Agreement, dated as of May 5, 2011,
by and among the Company, GreenBank, a Tennessee state-chartered banking
corporation and a banking subsidiary of the Company, and Purchaser. All
capitalized terms used herein but not otherwise defined shall have those
meanings set forth in the Investment Agreement.
“NASDAQ” means The NASDAQ Stock Market LLC.
“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, Governmental
Entity or any other entity.
“Piggyback Registration” has the meaning set forth in Section 4(a) hereof.
“Piggyback Registration Statement” has the meaning set forth in Section 4(a)
hereof.

 

2

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“Prospectus” means the prospectus or prospectuses forming a part of, or deemed
to form a part of, or included in, or deemed included in, any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Common Stock
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus or prospectuses.
“Registrable Common Stock” means (i) any shares of Common Stock issued as Stock
Consideration, (ii) any other security into or for which the Common Stock
referred to in clause (i) has been converted, substituted or exchanged, and any
security issued or issuable with respect thereto upon any stock dividend or
stock split or in connection with a combination of shares, reclassification,
recapitalization, merger, consolidation or other reorganization or otherwise.
“Registration Expenses” has the meaning set forth in Section 9(a) hereof.
“Registration Statement” means any registration statement of the Company that
covers any of the Registrable Common Stock pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all materials incorporated by reference in such Registration Statement.
“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act,
as such rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC as a replacement thereto having substantially the
same effect as such rule.
“Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities Act,
as such rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC as a replacement thereto having substantially the
same effect as such rule.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Shelf Registration Statement” has the meaning set forth in Section 2(a) hereof.
“Stock Consideration” means the shares of Common Stock issued to Purchaser
pursuant to the Investment Agreement.
“Purchaser” has the meaning set forth in the introductory paragraph.
“Suspension Notice” has the meaning set forth in Section 8(e) hereof.

 

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“underwritten registration or underwritten offering” means an offering in which
securities of the Company are sold to one or more underwriters (as defined in
Section 2(a)(11) of the Securities Act) for resale to the public.
2. Shelf Registration Statements.
(a) Right to Request Registration. At the request of Purchaser, the Company
shall use its reasonable best efforts to promptly file a registration statement
on Form S-3 or such other form under the Securities Act then available to the
Company providing for the resale pursuant to Rule 415 from time to time by
Purchaser of such number of shares of Registrable Common Stock requested by
Purchaser to be registered thereby (including the Prospectus, amendments and
supplements to the shelf registration statement or Prospectus, including pre-
and post-effective amendments, all exhibits thereto and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such shelf registration statement, the “Shelf Registration Statement”). The
Company shall use its reasonable best efforts to cause the Shelf Registration
Statement to be declared effective by the SEC as promptly as practicable
following such filing. The Company shall maintain the effectiveness of the Shelf
Registration Statement for a period of at least eighteen (18) months in the
aggregate plus the duration of any Blackout Period. The plan of distribution
contained in the Shelf Registration Statement (or related Prospectus supplement)
shall be determined by Purchaser in consultation with the Company.
(b) Number of Fully Marketed Underwritten Offerings. Purchaser shall be entitled
to request an aggregate of four (4) Fully Marketed Underwritten Offerings
pursuant to the Shelf Registration Statement; provided, however, that Purchaser
shall be entitled to request no more than two (2) underwritten offerings
pursuant to the Shelf Registration Statement in any twelve (12)-month period
that require involvement by management of the Company in “road-show” or similar
marketing activities. If Purchaser requests a Fully Marketed Underwritten
Offering, the Company shall cause there to occur Full Cooperation in connection
therewith. An underwritten offering shall not count as one of the permitted
Fully Marketed Underwritten Offerings if there is not Full Cooperation in
connection therewith or Purchaser is not able to sell at least 50% of the
Registrable Common Stock desired to be sold in such Fully Marketed Underwritten
Offering. Except as provided in this Section 2(b), there shall be no limitation
on the number of takedowns off the Shelf Registration Statement.
3. Additional Demand Registrations.
(a) Right to Request Registration. Any time after the date hereof, Purchaser may
request registration for resale under the Securities Act of all or part of the
Registrable Common Stock pursuant to a Registration Statement separate from the
Shelf Registration Statement (a “Demand Registration”). As promptly as
practicable after such request, but in any event within twenty (20) days of such
request by Purchaser, the

 

4

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Company shall file a registration statement registering for resale such number
of shares of Registrable Common Stock held by Purchaser as requested to be so
registered (including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement,
a “Demand Registration Statement”). In connection with each such Demand
Registration, the Company shall cause there to occur Full Cooperation.
(b) Number of Demand Registrations. Purchaser will be entitled to request four
(4) Demand Registrations pursuant to Section 3(a) minus the number of Fully
Marketed Underwritten Offerings completed off of the Shelf Registration
Statement. A registration shall not count as one of the permitted Demand
Registrations pursuant to Section 3(a) (i) until the related Demand Registration
Statement has become effective, (ii) if Purchaser is not able to register and
sell at least 50% of the Registrable Common Stock requested to be included in
such registration, or (iii) if there was not Full Cooperation in connection
therewith. For avoidance of doubt, the aggregate number of Demand Registrations
and Fully Marketed Underwritten Offerings completed off of the Shelf
Registration Statement shall not exceed four (4).
(c) Priority on Demand Registrations. If a Demand Registration pursuant to this
Section 3 involves an underwritten offering and the managing underwriter shall
advise the Company that in its opinion the number of securities requested to be
included in such registration exceeds the number of securities that can be sold
in such offering without having an adverse effect on such offering, including
the price at which such securities can be sold, then the Company shall include
in such registration the maximum number of shares that such underwriter advises
can be so sold without having such effect, allocated (i) first, to Registrable
Common Stock requested by Purchaser to be included in such registration and
(ii) second, among all shares of Common Stock requested to be included in such
registration by any other Persons (including securities to be sold for the
account of the Company) allocated among such Persons in such manner as they may
agree.
(d) Restrictions on Demand Registrations. The Company may postpone the filing or
the effectiveness of a Demand Registration Statement if, based on the good faith
judgment of the Company’s Board of Directors, such postponement is necessary in
order to avoid premature disclosure of a matter the Board of Directors has
determined would not be in the best interest of the Company to be disclosed at
such time; provided, however, that Purchaser requesting such Demand Registration
Statement shall be entitled, at any time after receiving notice of such
postponement and before such Demand Registration Statement becomes effective, to
withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the permitted Demand Registrations. The
Company shall provide written notice to Purchaser of (x) any postponement of the
filing or effectiveness of a Demand Registration Statement pursuant

 

5

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to this Section 3(d), (y) the Company’s decision to file or seek effectiveness
of such Demand Registration Statement following such postponement and (z) the
effectiveness of such Demand Registration Statement. The Company may defer the
filing or effectiveness of a particular Demand Registration Statement pursuant
to this Section 3(d) only once during any twelve (12)-month period.
Notwithstanding the provisions of this Section 3(d), the Company may not
postpone the filing or effectiveness of a Demand Registration Statement past the
date that is the earliest of (a) the date upon which any disclosure of a matter
the Board of Directors has determined would not be in the best interest of the
Company to be disclosed is disclosed to the public or ceases to be material,
(b) forty-five (45) days after the date upon which the Board of Directors has
determined such matter should not be disclosed and (c) such date that, if such
postponement continued, would result in there being more than ninety (90) days
in the aggregate in any twelve (12)-month period during which the filing or
effectiveness of one or more Registration Statements has been so postponed. The
period during which filing or effectiveness is so postponed hereunder is
referred to as a “Delay Period.”
(e) Effective Period of Demand Registrations. After any Demand Registration
filed pursuant to this Agreement has become effective, the Company shall use its
reasonable best efforts to keep such Demand Registration Statement effective for
a period of at least 90 days from the date on which the SEC declares such Demand
Registration Statement effective plus the duration of any Delay Period and any
Blackout Period, or such shorter period that shall terminate when all of the
Registrable Common Stock covered by such Demand Registration Statement has been
sold pursuant to such Demand Registration Statement in accordance with the plan
of distribution set forth therein.
4. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to publicly sell or
register for sale any of its common equity securities pursuant to a registration
statement (a “Piggyback Registration Statement”) under the Securities Act (other
than a registration statement on Form S-8 or on Form S-4 or any similar
successor forms thereto), whether for its own account or for the account of one
or more securityholders of the Company (a “Piggyback Registration”), the Company
shall give prompt written notice to Purchaser of its intention to effect such
sale or registration and, subject to Sections 4(b) and 4(c), shall include in
such transaction all Registrable Common Stock with respect to which the Company
has received a written request from Purchaser for inclusion therein within
fifteen (15) days after the receipt of the Company’s notice. The Company may
postpone or withdraw the filing or the effectiveness of a Piggyback Registration
at any time in its sole discretion, without prejudice to Purchaser’s right to
immediately request a Demand Registration or Shelf Registration Statement
hereunder. A Piggyback Registration shall not be considered a Demand
Registration for purposes of Section 3 of this Agreement or a Shelf Registration
Statement for purposes of Section 2 of this Agreement.

 

6

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(b) Priority on Primary Registrations. If a Piggyback Registration is initiated
as an underwritten primary registration on behalf of the Company where the
primary use of proceeds does not include the repurchase, redemption,
subscription or retirement of capital stock of the Company (a “Stock
Repurchase”), and the managing underwriter advises the Company in writing that
in its opinion the number of securities requested to be included in such
registration exceeds the number of securities that can be sold in such offering
without having an adverse effect on such offering, including the price at which
such securities can be sold, then the Company shall include in such registration
the maximum number of shares that such underwriter advises can be so sold
without having such effect, allocated (i) first, to the securities the Company
proposes to sell, (ii) second, to the Registrable Common Stock requested to be
included therein by Purchaser, and (iii) third, among other securities requested
to be included in such registration by other security holders of the Company on
such basis as such holders may agree among themselves and the Company.
(c) Priority on Secondary Registrations. If a Piggyback Registration is
initiated as an underwritten registration on behalf of a holder of the Company’s
securities other than Registrable Common Stock or on behalf of the Company where
the use of proceeds includes a Stock Repurchase, and the managing underwriter
advises the Company in writing that in its opinion the number of securities
requested to be included in such registration exceeds the number that can be
sold in such offering without having an adverse effect on such offering,
including the price at which such securities can be sold, then the Company shall
include in such registration the maximum number of shares that such underwriter
advises can be so sold without having such effect, allocated (i) first, to the
securities requested to be included therein by the holder(s) requesting such
registration and the Registrable Common Stock requested to be included in such
registration, pro rata among the holders of such securities on the basis of the
number of shares requested to be registered by such holders and (ii) second, to
other securities (including Registrable Common Stock) requested to be included
in such registration by other security holders, the Company and Purchaser, pro
rata among such holder(s), the Company and Purchaser on the basis of the number
of shares requested to be registered by them.
5. Other Registrations
The Company shall not grant to any Person the right, other than as set forth
herein, to request the Company to register any securities of the Company except
such rights as are not more favorable than or not inconsistent with the rights
granted to Purchaser and that do not adversely affect the priorities set forth
herein of Purchaser.
6. Selection of Underwriters.
If any of the Registrable Common Stock covered by a Demand Registration
Statement or a Shelf Registration Statement is to be sold in an underwritten
offering, Purchaser shall have the right to select the managing underwriter(s)
to administer the offering subject to the prior approval of the Company, which
approval shall not be unreasonably withheld.

 

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7. Holdback Agreements.
The Company agrees not to, and shall exercise its reasonable best efforts to
obtain agreements (in the underwriters’ customary form) from its directors,
executive officers and beneficial owners of 5% or more of the Company’s
outstanding voting stock not to, directly or indirectly offer, sell, pledge,
contract to sell, (including any short sale), grant any option to purchase or
otherwise dispose of any equity securities of the Company or enter into any
hedging transaction relating to any equity securities of the Company during the
ninety (90) days beginning on the effective date of any underwritten Demand
Registration Statement or any underwritten Piggyback Registration Statement or
the pricing date of any underwritten offering pursuant to any Registration
Statement (except as part of such underwritten offering or pursuant to
registrations on Form S-8 or S-4 or any successor forms thereto) unless the
underwriter managing the offering otherwise agrees to a shorter period.
8. Procedures.
(a) In connection with the registration and sale of Registrable Common Stock
pursuant to this Agreement, the Company shall use its reasonable best efforts to
effect the registration and the sale of such Registrable Common Stock in
accordance with Purchaser’s intended methods of disposition thereof, and
pursuant thereto the Company shall as expeditiously as reasonably practicable:
(i) prepare and file with the SEC a Registration Statement with respect to such
Registrable Common Stock and use its reasonable best efforts to cause such
Registration Statement to become effective as soon as practicable thereafter;
and before filing a Registration Statement or Prospectus or any amendments or
supplements thereto (including any prospectus supplement for a shelf takedown),
furnish to Purchaser and the underwriter or underwriters, if any, copies of all
such documents proposed to be filed, including documents incorporated by
reference in the Prospectus and, if requested by Purchaser, the exhibits
incorporated by reference, and Purchaser (and the underwriter(s), if any) shall
have the opportunity to review and comment thereon, and the Company will make
such changes and additions thereto as reasonably requested by Purchaser (and the
underwriter(s), if any) prior to filing any Registration Statement or amendment
thereto or any Prospectus or any supplement thereto;

 

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(ii) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for a period of not less
than 90 days, in the case of a Demand Registration Statement or an aggregate of
eighteen (18) months, in the case of a Shelf Registration Statement (plus, in
each case, the duration of any Delay Period and any Blackout Period), or such
shorter period as is necessary to complete the distribution of the securities
covered by such Registration Statement and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement during such period in accordance with the intended
methods of disposition by Purchaser thereof set forth in such Registration
Statement and, in the case of the Shelf Registration Statement, prepare such
prospectus supplements containing such disclosures as may be reasonably
requested by Purchaser or any underwriter(s) in connection with each shelf
takedown;
(iii) furnish to Purchaser such number of copies of such Registration Statement,
each amendment and supplement thereto, each Prospectus (including each
preliminary Prospectus and Prospectus supplement) and such other documents as
Purchaser and any underwriter(s) may reasonably request in order to facilitate
the disposition of the Registrable Common Stock, provided, however, that the
Company shall have no such obligation to furnish copies of a final prospectus if
the conditions of Rule 172(c) under the Securities Act are satisfied by the
Company;
(iv) use its reasonable best efforts to register or qualify such Registrable
Common Stock under such other securities or blue sky laws of such jurisdictions
(domestic or foreign) as Purchaser and any underwriter(s) reasonably requests
and do any and all other acts and things that may be reasonably necessary or
advisable to enable Purchaser and any underwriter(s) to consummate the
disposition in such jurisdictions of the Registrable Common Stock (provided,
that the Company will not be required to (1) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this subparagraph (iv), (2) subject itself to taxation in any such jurisdiction
or (3) consent to general service of process in any such jurisdiction);
(v) notify Purchaser and any underwriter(s), at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act, of the
occurrence of any event as a result of which any Prospectus contains an untrue
statement of a material fact or omits any material fact necessary to make the
statements therein not misleading, and, at the request of Purchaser or any
underwriter(s), the Company shall prepare a supplement or amendment to such
Prospectus so that, as thereafter supplemented and/or amended, such Prospectus
shall not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;

 

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(vi) in the case of an underwritten offering, (i) enter into such customary
agreements (including underwriting agreements in customary form), (ii) take all
such other actions as Purchaser or the underwriter(s) reasonably request in
order to expedite or facilitate the disposition of such Registrable Common Stock
(including, without limitation, causing senior management and other Company
personnel to cooperate with Purchaser and the underwriter(s) in connection with
performing due diligence) and (iii) cause its counsel to issue opinions of
counsel in form, substance and scope as are customary in primary underwritten
offerings, addressed and delivered to the underwriter(s) and Purchaser;
(vii) in connection with each Demand Registration pursuant to Section 3 and each
Fully Marketed Underwritten Offering requested by Purchaser under Section 2,
cause there to occur Full Cooperation and, in all other cases, cause members of
senior management of the Company to be available to participate in, and to
cooperate with the underwriter(s) in connection with customary marketing
activities (including select conference calls and one-on-one meetings with
prospective purchasers);
(viii) make available for inspection by Purchaser, any underwriter participating
in any disposition pursuant to a Registration Statement, and any attorney,
accountant or other agent retained by Purchaser or underwriter, all pertinent
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company’s officers, directors, employees and independent
accountants to supply all information reasonably requested by Purchaser, any
underwriter, any attorney, any accountant or any agent in connection with such
Registration Statement;
(ix) use its reasonable best efforts to cause all such Registrable Common Stock
to be listed on NASDAQ, or any exchange on which securities of the same class
issued by the Company are then listed or, if no such similar securities are then
listed, on a national securities exchange selected by the Company and agreed to
by Purchaser;
(x) provide a transfer agent and registrar for all such Registrable Common Stock
not later than the effective date of such Registration Statement;

 

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(xi) if requested, cause to be delivered, immediately prior to the pricing of
any underwritten offering, immediately prior to effectiveness of each
Registration Statement (and, in the case of an underwritten offering, at the
time of closing of the sale of Registrable Common Stock pursuant thereto),
letters from the Company’s independent registered public accountants addressed
to Purchaser and each underwriter, if any, stating that such accountants are
independent public accountants within the meaning of the Securities Act and the
applicable rules and regulations adopted by the SEC thereunder, and otherwise in
customary form and covering such financial and accounting matters as are
customarily covered by letters of the independent registered public accountants
delivered in connection with primary underwritten public offerings;
(xii) make generally available to Purchaser and its Affiliates a consolidated
earnings statement (which need not be audited) for the 12 months beginning after
the effective date of a Registration Statement as soon as reasonably practicable
after the end of such period, which earnings statement shall satisfy the
requirements of an earning statement under Section 11(a) of the Securities Act;
and
(xiii) promptly notify Purchaser and the underwriter or underwriters, if any:
(1) when the Registration Statement, any pre-effective amendment, the Prospectus
or any Prospectus supplement or post-effective amendment to the Registration
Statement has been filed and, with respect to the Registration Statement or any
post-effective amendment, when the same has become effective;
(2) of any written request by the SEC for amendments or supplements to the
Registration Statement or any Prospectus or of any inquiry by the SEC relating
to the Registration Statement or the Company’s status as a well-known seasoned
issuer;
(3) of the notification to the Company by the SEC of its initiation of any
proceeding with respect to the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement; and
(4) of the receipt by the Company of any notification with respect to the
suspension of the qualification of any Registrable Common Stock for sale under
the applicable securities or blue sky laws of any jurisdiction.

 

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(b) The Company represents and warrants that no Registration Statement
(including any amendments or supplements thereto and Prospectuses contained
therein) shall contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein, or necessary to make the
statements therein not misleading (except that the Company makes no
representation or warranty with respect to information relating to Purchaser
furnished to the Company by or on behalf of Purchaser specifically for use
therein).
(c) The Company shall make available to Purchaser (i) promptly after the same is
prepared and publicly distributed, filed with the SEC, or received by the
Company, one copy of each Registration Statement and any amendment thereto, each
preliminary Prospectus and Prospectus and each amendment or supplement thereto,
each letter written by or on behalf of the Company to the SEC or the staff of
the SEC (or other governmental agency or self-regulatory body or other body
having jurisdiction, including any domestic or foreign securities exchange), and
each item of correspondence from the SEC or the staff of the SEC (or other
governmental agency or self-regulatory body or other body having jurisdiction,
including any domestic or foreign securities exchange), in each case relating to
such Registration Statement or to any of the documents incorporated by reference
therein, and (ii) such number of copies of each Prospectus, including a
preliminary Prospectus, and all amendments and supplements thereto and such
other documents as Purchaser or any underwriter may reasonably request in order
to facilitate the disposition of the Registrable Common Stock. The Company will
promptly notify Purchaser of the effectiveness of each Registration Statement or
any post-effective amendment or the filing of any supplement or amendment to
such Shelf Registration Statement or of any Prospectus supplement. The Company
will promptly respond to any and all comments received from the SEC, with a view
towards causing each Registration Statement or any amendment thereto to be
declared effective by the SEC as soon as practicable and shall file an
acceleration request, if necessary, as soon as practicable following the
resolution or clearance of all SEC comments or, if applicable, following
notification by the SEC that any such Registration Statement or any amendment
thereto will not be subject to review.
(d) The Company may require Purchaser to furnish to the Company any other
information regarding Purchaser and the distribution of such securities as the
Company reasonably determines, based on the advice of counsel, is required to be
included in any Registration Statement.
(e) Purchaser agrees that, upon notice from the Company of the happening of any
event as a result of which the Prospectus included (or deemed included) in such
Registration Statement contains an untrue statement of a material fact or omits
any material fact necessary to make the statements therein not misleading (a
“Suspension Notice”), Purchaser will forthwith discontinue disposition of
Registrable Common Stock pursuant to such Registration Statement for a
reasonable length of time not to exceed 10 days (45 days in the case of an event
described in Section 3(d)) until Purchaser is advised in writing by the Company
that the use of the Prospectus may be resumed and is furnished with a
supplemented or amended Prospectus as contemplated by Section 8(a)

 

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hereof; provided, however, that such postponement of sales of Registrable Common
Stock by Purchaser shall not exceed ninety (90) days in the aggregate in any 12
month period. If the Company shall give Purchaser any Suspension Notice, the
Company shall extend the period of time during which the Company is required to
maintain the applicable Registration Statements effective pursuant to this
Agreement by the number of days during the period from and including the date of
the giving of such Suspension Notice to and including the date Purchaser either
is advised by the Company that the use of the Prospectus may be resumed or
receives the copies of the supplemented or amended Prospectus contemplated by
Section 8(a) (a “Blackout Period”). In any event, the Company shall not be
entitled to deliver more than a total of three (3) Suspension Notices or notices
of any Delay Period in any twelve (12)-month period.
(f) The Company shall not permit any officer, director, underwriter, broker or
any other person acting on behalf of the Company to use any free writing
prospectus (as defined in Rule 405 under the Securities Act) in connection with
any registration statement covering Registrable Common Stock, without the prior
written consent of Purchaser and any underwriter.
9. Registration Expenses.
(a) All expenses incident to the Company’s performance of or compliance with
this Agreement, including, without limitation, all registration and filing fees
(including SEC registration fees and FINRA filing fees), fees and expenses of
compliance with securities or blue sky laws, listing application fees, printing
expenses, transfer agent’s and registrar’s fees, cost of distributing
Prospectuses in preliminary and final form as well as any supplements thereto,
and fees and disbursements of counsel for the Company and all accountants and
other Persons retained by the Company (all such expenses being herein called
“Registration Expenses”) (but not including any underwriting discounts or
commissions or transfer taxes, if any, attributable to the sale of Registrable
Common Stock), shall be borne by the Company. In addition, the Company shall pay
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any annual audit or quarterly review, the expense of any liability
insurance and the expenses and fees for listing the securities to be registered
on each securities exchange on which they are to be listed.
(b) The Company shall pay, or shall reimburse Purchaser for, the reasonable fees
and disbursements of one law firm chosen by Purchaser as its counsel in
connection with each Registration Statement and sale of Registrable Common Stock
pursuant thereto.

 

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(c) The obligation of the Company to bear the expenses described in Section 9(a)
and to pay or reimburse Purchaser for the expenses described in Section 9(b)
shall apply irrespective of whether any sales of Registrable Common Stock
ultimately take place.
10. Indemnification.
(a) The Company shall indemnify, to the fullest extent permitted by law,
Purchaser and its officers, directors, employees and Affiliates and each Person
who controls Purchaser (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses arising out of or based upon
any untrue or alleged untrue statement of material fact contained in any
Registration Statement, Prospectus, preliminary Prospectus or any “issuer free
writing prospectus” (as defined in Securities Act Rule 433) or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading or any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or applicable “blue sky” laws, except insofar
as the same are made in reliance and in conformity with information relating to
Purchaser furnished in writing to the Company by Purchaser expressly for use
therein. In connection with an underwritten offering, the Company shall
indemnify such underwriter(s), their officers, employees and directors and each
Person who controls such underwriter(s) (within the meaning of the Securities
Act) at least to the same extent as provided above with respect to the
indemnification of Purchaser.
(b) In connection with any Registration Statement in which Purchaser is
participating, Purchaser shall furnish to the Company in writing such
information as the Company reasonably determines, based on the advice of
counsel, is required to be included in any such Registration Statement or
Prospectus and shall indemnify, to the fullest extent permitted by law, the
Company, its officers, employees, directors, Affiliates, and each Person who
controls the Company (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses arising out of or based upon
any untrue or alleged untrue statement of material fact contained in the
Registration Statement, Prospectus or preliminary Prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that the same are made in reliance and in
conformity with information relating to Purchaser furnished in writing to the
Company by Purchaser expressly for use therein.
(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party’s reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party shall not
be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be

 

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unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel (in addition to any local counsel) for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party there may be one or
more legal or equitable defenses available to such indemnified party that are in
addition to or may conflict with those available to another indemnified party
with respect to such claim. Failure to give prompt written notice shall not
release the indemnifying party from its obligations hereunder.
(d) The indemnification provided for under this Agreement shall remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities.
(e) If the indemnification provided for in or pursuant to this Section 10 is due
in accordance with the terms hereof, but is held by a court to be unavailable or
unenforceable in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified Person as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that result in
such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
on the one hand and of the indemnified party on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party, and by such party’s relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. In no event shall
the liability of Purchaser be greater in amount than the amount of net proceeds
received by Purchaser upon such sale.
11. Rule 144.
The Company covenants that it will file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and it will take such further action as Purchaser
may reasonably request to make available adequate current public information
with respect to the Company meeting the current public information requirements
of Rule 144(c) under the Securities Act, to the extent required to enable
Purchaser to sell Registrable Common Stock without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or
(ii) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of Purchaser, the Company will deliver to Purchaser a written statement
as to whether it has complied with such information and requirements.

 

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12. Transfer of Registration Rights.
(a) Purchaser may transfer all or any portion of its then-remaining rights under
this Agreement to any transferee who acquires at least ten percent (10%) of the
Stock Consideration (each, a “transferee”). Any transfer of registration rights
pursuant to this Section 12 shall be effective upon receipt by the Company of
(x) written notice from Purchaser stating the name and address of any transferee
and identifying the amount of Registrable Common Stock with respect to which the
rights under this Agreement are being transferred and the nature of the rights
so transferred and (y) a written agreement from the transferee to be bound by
all of the terms of this Agreement. In connection with any such transfer, the
term “Purchaser” as used in this Agreement shall, where appropriate to assign
such rights to such transferee, be deemed to refer to the transferee holder of
such Registrable Common Stock. Purchaser and such transferees may exercise the
registration rights hereunder in such proportion (not to exceed the
then-remaining rights hereunder) as they shall agree among themselves.
(b) After such transfer, Purchaser shall retain its rights under this Agreement
with respect to all other Registrable Common Stock owned by Purchaser. Upon the
request of Purchaser, the Company shall execute a Registration Rights Agreement
with such transferee or a proposed transferee substantially similar to the
applicable sections of this Agreement.
13. Conversion or Exchange of Other Securities.
If Purchaser offers Registrable Common Stock by forward sale, or any options,
rights, warrants or other securities issued by it or any other person that are
offered with, convertible into or exercisable or exchangeable for any
Registrable Common Stock, the Registrable Common Stock subject to such forward
sale or underlying such options, rights, warrants or other securities shall be
eligible for registration pursuant to Sections 2, 3 and 4 of this Agreement.
14. Miscellaneous.
(a) Notices. All notices, requests, consents and other communications required
or permitted hereunder shall be in writing and shall be hand delivered or mailed
postage prepaid by registered or certified mail or by facsimile transmission
(with immediate telephone confirmation thereafter) and, in the case of
Purchaser, shall also be sent via e-mail,

 

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(a) If to Purchaser to it at:
North American Financial Holdings, Inc.
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

(b) If to the Company:
Green Bankshares, Inc.
100 North Main Street
Greeneville, Tennessee 37743
Attention:      [•]
Telephone:    [•]
Fax:               [•]
with a copy (which copy alone shall not constitute notice):
Bass, Berry & Sims PLC
150 Third Avenue South, Suite 2800
Nashville, TN 37201
Attention:      D. Scott Holley
Telephone:    (615) 742-7721
Fax:               (615) 742-2813
or at such other address as such party each may specify by written notice to the
others, and each such notice, request, consent and other communication shall for
all purposes of the Agreement be treated as being effective or having been given
when delivered personally, upon one business day after being deposited with a
courier if delivered by courier, upon receipt of facsimile confirmation if
transmitted by facsimile, or, if sent by mail, at the earlier of its receipt or
72 hours after the same has been deposited in a regularly maintained receptacle
for the deposit of United States mail, addressed and postage prepaid as
aforesaid.

 

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(b) No Waivers. No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
(c) Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. If the outstanding Common Stock is converted into or
exchanged or substituted for other securities issued by any other Person, as a
condition to the effectiveness of the merger, consolidation, reclassification,
share exchange or other transaction pursuant to which such conversion, exchange,
substitution or other transaction takes place, such other Person shall
automatically become bound hereby with respect to such other securities
constituting Registrable Common Stock and, if requested by Purchaser or a
permitted transferee, shall further evidence such obligation by executing and
delivering to Purchaser and such transferee a written agreement to such effect
in form and substance satisfactory to Purchaser.
(d) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed entirely within such State.
(e) Jurisdiction. The parties hereby irrevocably and unconditionally consent to
submit to the exclusive jurisdiction of the federal courts of the United States
of America located in the State of Delaware, or, if jurisdiction in such federal
courts is not available, the courts of the State of Delaware, for any actions,
suits or proceedings arising out of or relating to this Agreement and the
transactions contemplated hereby, and each party hereby irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum. Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 14(a) shall be deemed effective service of process on such party.
(f) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(g) Counterparts; Effectiveness. This Agreement may be executed in any number of
counterparts (including by facsimile) and by different parties hereto in
separate counterparts, with the same effect as if all parties had signed the
same document. All such counterparts shall be deemed an original, shall be
construed together and shall constitute one and the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.

 

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(h) Entire Agreement. This Agreement contains the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes and
replaces all other prior agreements, written or oral, among the parties hereto
with respect to the subject matter hereof.
(i) Captions. The headings and other captions in this Agreement are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any provision of this Agreement.
(j) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated 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 a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
(k) Amendments. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to or departures from the provisions hereof may not be given, without
the written consent of the Company and Purchaser.
(l) Aggregation of Stock. All Registrable Common Stock held by or acquired by
any Affiliated Persons will be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
(m) Equitable Relief. The parties hereto agree that legal remedies may be
inadequate to enforce the provisions of this Agreement and that equitable
relief, including specific performance and injunctive relief, may be used to
enforce the provisions of this Agreement.

 

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IN WITNESS WHEREOF, this Registration Rights Agreement has been duly executed
and delivered by the duly authorized officers of the parties hereto as of the
date first herein above written.

            GREEN BANKSHARES, INC.
      By:           Name:           Title:           NORTH AMERICAN FINANCIAL
HOLDINGS, INC.
      By:           Name:           Title:        

[Signature Page to Registration Rights Agreement]

 

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Exhibit D
Subsequent Transactions
Merger of the Bank
The Bank and a Subsidiary of the Purchaser (the “Purchaser Entity”) propose to
engage in a merger transaction pursuant to an agreement and plan of merger on
terms and conditions reasonably satisfactory to Purchaser, the Company and the
Bank in which merger transaction each share of capital stock of the Bank will be
exchanged for shares of capital stock of the Purchaser Entity at an exchange
ratio that is equal to the ratio of the tangible book value per share of the
Bank to the tangible book value per share of the Purchaser Entity. In the event
that the financial terms of such merger transaction are materially different
than as set forth in the preceding sentence such that they are not within the
approval of the Board of Directors of the Bank and the Company as of the date
hereof, the Board of Directors of the Bank and the Board of Directors of the
Company following the Closing shall approve the terms of such merger prior to
its consummation.
Merger of the Company
Subsequent to the merger of the Bank and the Purchaser Entity, the Purchaser
intends to cause the Company to merge with and into Purchaser in a
stock-for-stock transaction on terms and conditions reasonably satisfactory to
Purchaser in which transaction the Purchaser expects the merger to be effected
based on the ratio of the relative tangible book values per share of the
Purchaser and the Company. In the event that the financial terms of such merger
transaction are materially different than as set forth in the preceding sentence
such that they are not within the approval of the Board of Directors of the
Company as of the date hereof, the Board of Directors of the Company after the
Closing shall approve the terms of such merger prior to its consummation.

 

Exhibit D