Document:

exh10-3.htm

 

Exhibit 10.3

 

	  
	  

STOCK PURCHASE AGREEMENT

dated as of August 12, 2013

by and between

ANCHOR BANCORP WISCONSIN INC.

and

THE UNDERSIGNED INDIVIDUAL OR ENTITY

	  
	  

 

 

  

  

  

TABLE OF CONTENTS

Page

	
ARTICLE I

	  	  	  
	
Purchase; Closing

	  	  	  
	
1.1

	
Purchase

	
2

	
1.2

	
Closing

	
2

	  	  	  
	
ARTICLE II

	  	  	  
	
Representations and Warranties

	  	  	  
	
2.1

	
Disclosure

	
4

	
2.2

	
Representations and Warranties of the Company

	
6

	
2.3

	
Representations and Warranties of the Investor

	
25

	  	  	  
	
ARTICLE III

	  	  	  
	
Covenants

	  	  	  
	
3.1

	
Filings; Other Actions

	
29

	
3.2

	
Access, Information and Confidentiality

	
30

	
3.3

	
Reasonable Best Efforts

	
31

	  	  	  
	
ARTICLE IV

	  	  	  
	
Additional Agreements

	  	  	  
	
4.1

	
Governance Matters

	
31

	
4.2

	
Transfers; Legend; Form D

	
32

	
4.3

	
Indemnity

	
33

	
4.4

	
Preemptive Rights

	
35

	
4.5

	
Registration Rights

	
36

	
4.6

	
Takeover Laws; No Rights Triggered

	
47

	
4.7

	
Avoidance of Control

	
48

	  	  	  
	
ARTICLE V

	  	  	  
	
Termination

	  	  	  
	
5.1

	
Termination

	
49

	
5.2

	
Effects of Termination

	
49

	
5.3

	
Automatic Termination

	
49

	
5.4

	
Notice of Other Terminations

	
49

 

 

  

i

  

 

	
ARTICLE VI

	  	  	  
	
Miscellaneous

	  	  	  
	
6.1

	
Survival

	
49

	
6.2

	
Expenses

	
50

	
6.3

	
Amendment

	
50

	
6.4

	
Waivers

	
50

	
6.5

	
Counterparts and Facsimile

	
50

	
6.6

	
Governing Law

	
50

	
6.7

	
Waiver of Jury Trial

	
50

	
6.8

	
Notices

	
50

	
6.9

	
Entire Agreement, Etc.

	
51

	
6.10

	
Other Definitions

	
52

	
6.11

	
Captions

	
53

	
6.12

	
Severability

	
53

	
6.13

	
No Third-Party Beneficiaries

	
53

	
6.14

	
Time of Essence

	
53

	
6.15

	
Public Announcements

	
53

	
6.16

	
Specific Performance

	
54

 

 

  

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INDEX OF DEFINED TERMS

 

	
Term

	
Location of Definition

	  	  
	
Affiliate

	
6.10(a)

	
Agency

	
2.2(z)(4)

	
Agreement

	
Introduction

	
Amended Charter

	
Recitals

	
Articles of Incorporation

	
2.2(a)(2)

	
Bank

	
2.1(b)

	
Bankruptcy Case

	
Recitals

	
Bankruptcy Code

	
Recitals

	
Bankruptcy Court

	
Recitals

	
Beneficial Owner

	
6.10(h)

	
Beneficial Ownership

	
6.10(h)

	
Beneficially Own

	
6.10(h)

	
Benefit Plan

	
2.2(p)(1)

	
Board of Directors

	
Recitals

	
BSA

	
2.2(n)(1)

	
Burdensome Condition

	
2.2(e)

	
business day

	
6.10(f)

	
Closing

	
1.2(a)

	
Closing Date

	
1.2(a)

	
Code

	
2.2(i)

	
Common Stock

	
Recitals

	
Company

	
Introduction

	
Company 10-K

	
2.2(c)(1)

	
Company Financial Statements

	
2.2(f)

	
Company Preferred Stock

	
2.2(c)(1)

	
Company Reports

	
2.2(g)(1)

	
Company Restricted Stock

	
2.2(c)(1)

	
Company Rights Agreement

	
2.2(v)(2)

	
Company Significant Agreement

	
2.2(k)(1)

	
Company Stock Option

	
2.2(c)(1)

	
Company Stock Option Plans

	
2.2(c)(1)

	
Company Subsidiaries

	
2.2(b)(1)

	
Company Subsidiary

	
2.2(b)(1)

	
Company’s knowledge

	
6.10(i)

	
control

	
6.10(a)

	
controlled by

	
6.10(a)

	
CRA

	
2.2(n)(7)

	
Credit Agreement

	
Recitals

	
De Minimis Claim

	
4.3(d)

	
Debt Issuance

	
Recitals

	
Delaware Conversion

	
Recitals

	
Disclosure Schedule

	
2.1(a)

  

iii

  

	
Environmental Laws

	
2.2(u)

	
ERISA

	
2.2(p)(1)

	
ERISA Affiliate

	
2.2(p)(2)

	
ERISA Plan

	
2.2(p)(3)

	
Exchange Act

	
2.2(g)(1)

	
Exempted Issuance

	
4.4(d)

	
Expedited Issuance

	
4.4(e)

	
FDI Act

	
2.2(b)(2)

	
FDIC

	
2.2(b)(2)

	
Federal Reserve

	
2.2(e)

	
GAAP

	
2.1(b)

	
Governmental Approval

	
6.10(j)

	
Governmental Entity

	
2.2(d)(3)

	
HOLA

	
2.2(a)(2)

	
Holder

	
4.5(k)(1)

	
Holders’ Counsel

	
4.5(k)(2)

	
Indemnified Party

	
4.3(b)

	
Indemnifying Party

	
4.3(b)

	
Indemnitee

	
4.5(g)(1)

	
Information

	
3.2(b)

	
Insurer

	
2.2(z)(4)

	
Intellectual Property

	
2.2(w)(2)

	
Investment

	
Recitals

	
Investment Manager

	
2.3(f)

	
Investor

	
Introduction

	
Investor Designated Director

	
4.5(a)(3)(ii)

	
IRS

	
2.2(i)

	
knowledge of the Company

	
6.10(i)

	
Lenders

	
Recitals

	
Liens

	
1.2(b)(1)

	
Loan Investor

	
2.2(z)(4)

	
Loans

	
2.2(z)(1)

	
Losses

	
4.3(a)

	
Material Adverse Effect

	
2.1(b)

	
New Issuance

	
4.4(a)

	
New Security

	
4.4(a)

	
Observer

	
4.5(a)(3)(ii)

	
OCC

	
2.2(e)

	
OFAC

	
2.2(n)(6)

	
Other Private Placements

	
Recitals

	
PATRIOT Act

	
2.2(n)(1)

	
Pending Underwritten Offering

	
4.5(l)

	
Pension Plan

	
2.2(p)(3)

	
Per Share Purchase Price

	
Recitals

	
Permitted Liens

	
2.2(h)

	
Permitted Transferee

	
4.2(a)

  

iv

  

	
person

	
6.10(g)

	
Petition Date

	
Recitals

	
Piggyback Registration

	
4.5(a)(4)

	
Placement Agent

	
2.2(y)

	
Plan of Reorganization

	
Recitals

	
Preemptive Amount

	
4.4(a)

	
Preemptive Rights

	
4.4(b)

	
Preemptive Rights Notice

	
4.4(a)

	
Previously Disclosed

	
2.1(c)

	
Primary Investment Transactions

	
Recitals

	
Purchase Price

	
1.2(b)(2)

	
Purchased Shares

	
1.1

	
Qualifying Ownership Interest

	
3.2(a)

	
Register

	
4.5(k)(3)

	
registered

	
4.5(k)(3)

	
Registrable Securities

	
4.5(k)(4)

	
registration

	
4.5(k)(3)

	
Registration Expenses

	
4.5(k)(5)

	
Regulatory Agreement

	
2.2(x)

	
Required Approvals

	
2.2(e)

	
Rights Agent

	
2.2(v)(2)

	
Rule 144

	
4.5(k)(6)

	
Rule 144A

	
4.5(k)(6)

	
Rule 158

	
4.5(k)(6)

	
Rule 159A

	
4.5(k)(6)

	
Rule 405

	
4.5(k)(6)

	
Rule 415

	
4.5(k)(6)

	
Rule 424

	
4.5(k)(6)

	
Scheduled Black-out Period

	
4.5(k)(7)

	
SEC

	
2.1(c)

	
Secondary Investors

	
Recitals

	
Secondary Treasury Sales

	
Recitals

	
Securities Act

	
2.2(g)(1)

	
Selling Expenses

	
4.5(k)(8)

	
Senior Debt Settlement

	
Recitals

	
Shelf Registration Statement

	
4.5(a)(2)

	
Special Registration

	
4.5(i)

	
Takeover Law

	
2.2(v)(1)

	
TARP Exchange

	
Recitals

	
TARP Preferred Stock

	
Recitals

	
TARP Warrant

	
Recitals

	
Tax

	
2.2(i)

	
Tax Return

	
2.2(i)

	
Taxes

	
2.2(i)

	
Threshold Amount

	
4.3(d)

	
Transaction Deadline

	
5.1(b)

  

v

  

	
Transactions

	
1.2(c)(1)

	
Treasury

	
Recitals

	
Treasury Issuance

	
Recitals

	
Treasury Regulation

	
2.2(i)

	
U.S. Bank

	
Recitals

	
under common control with

	
6.10(a)

	
Unlawful Gains

	
2.2(n)(4)

	
Voting Debt

	
2.2(c)(1)

  

vi

  

STOCK PURCHASE AGREEMENT, dated as of August 12, 2013 (this “Agreement”), by and between Anchor BanCorp Wisconsin Inc., a Wisconsin corporation (the “Company”), and the undersigned individual or entity (the “Investor”).

RECITALS:

 

	
  

	
A.

	
Bankruptcy Case.  The Company intends to file a voluntary bankruptcy petition (the “Bankruptcy Case”) under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (the “Bankruptcy Code”), in the United States Bankruptcy Court for the Western District of Wisconsin (the “Bankruptcy Court”) not later than the business day immediately following the date this Agreement is executed and delivered by the parties hereto (such business day, the “Petition Date”).  The Company intends for the Transactions (as defined below) to be effected under a plan of reorganization of the Company to be confirmed by order of the Bankruptcy Court (the “Plan of Reorganization”).  A draft of the Plan of Reorganization has been provided to the Investor prior to delivery of the Investor’s executed signature page hereto.

 

	
  

	
B.

	
Investment.  Following the confirmation of the Plan of Reorganization by the Bankruptcy Court, the Company intends to sell to the Investor, and the Investor intends to purchase from the Company, as an investment in the Company, at the Closing (as defined below) a number of shares of common stock, par value $0.10, of the Company (the “Common Stock”) as determined in accordance with Section 1.1 at a price per share of Common Stock equal to $0.10 (the “Per Share Purchase Price”) on the terms and conditions described herein (collectively, the “Investment”).

 

	
  

	
C.

	
Other Private Placements.  Contemporaneously with the Investment, the Company intends to sell in several other private placement transactions to other investors to be identified by the Company shares of Common Stock at the Per Share Purchase Price contemporaneously with the closing of the Investment contemplated herein (collectively, the “Other Private Placements”).  The Investment and the Other Private Placements are collectively referred to as the “Primary Investment Transactions.”

 

	
  

	
D.

	
Senior Debt.  In connection with the Primary Investment Transactions and under the Plan of Reorganization, the Company intends to settle in full all of the Company’s obligations (including with respect to unpaid principal balance, accrued but unpaid interest thereon and all administrative and other fees or penalties) under the Amended and Restated Credit Agreement, dated as of June 9, 2008 (as amended from time to time, the “Credit Agreement”), among the Company, U.S. Bank National Association, as administrative agent (“U.S. Bank”), and the lenders from time to time party thereto (collectively with U.S. Bank, the “Lenders”), for an amount of cash equal to $49,000,000 (plus expense reimbursement as contemplated under the Credit Agreement) (the “Senior Debt Settlement”).  On or prior to the Petition Date, the Company received from the Lenders written consents to vote (including written ballots themselves) in sufficient amount and number to cause the class of Lenders under the Plan of Reorganization to accept such Plan of Reorganization.

 

  

  

  

	
  

	
E.

	
U.S. Treasury.  In connection with the Primary Investment Transactions and under the Plan of Reorganization, the Company intends to (i) exchange the 110,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series B of the Company (the “TARP Preferred Stock”) currently held by the United States Department of the Treasury (the “Treasury”) for 60,000,000 shares of Common Stock in the aggregate (the “Treasury Issuance”) and (ii) cancel the related warrant to purchase 7,399,103 shares of Common Stock at an exercise price of $2.23 per share held by the Treasury (the “TARP Warrant”) in its entirety (collectively, the “TARP Exchange”).  Immediately following the TARP Exchange, it is expected that the Treasury will sell to one or more investors to be identified by the Company and acceptable to the Treasury (the “Secondary Investors”) the shares of Common Stock delivered to the Treasury in connection with the TARP Exchange at a purchase price per share equal to the Per Share Purchase Price (collectively, the “Secondary Treasury Sales”).

 

	
  

	
F.

	
Debt Issuance.  In connection with the Primary Investment Transactions, the Company intends to issue to certain investors up to $30 million of newly-issued unsecured indebtedness, on the terms contemplated by Exhibit A (the “Debt Issuance”).

 

	
  

	
G.

	
Delaware Conversion and Amended Charter.  Under the Plan of Reorganization, the Company will (i) convert from a Wisconsin corporation to a Delaware corporation in accordance with Section 265 of the Delaware General Corporation Law (the “Delaware Conversion”) and (ii) file the Articles of Incorporation in the form contemplated by Exhibit B (the “Amended Charter”) with the Secretary of State of the State of Delaware in order to, among other things, increase the number of authorized shares of Common Stock to at least 2,000,000,000 shares or such larger number as the board of directors of the Company (the “Board of Directors”) determines is necessary to effectuate the Primary Investment Transactions and the TARP Exchange and adopt certain restrictions on acquisitions and dispositions of securities and to make certain other changes.

 

NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements set forth herein, the parties agree as follows:

 

ARTICLE I

 

PURCHASE; CLOSING

 

1.1           Purchase.  On the terms and subject to the conditions set forth herein, the Investor will purchase from the Company, and the Company will issue and sell to the Investor, the number of shares of Common Stock specified on the Investor’s signature page hereto (such shares of Common Stock issued and sold to the Investor, the “Purchased Shares”).

 

1.2           Closing.

 

(a)           Subject to the satisfaction (or, to the extent permitted, waiver) of the conditions set forth in Section 1.2(c), the closing of the Investment (the “Closing”) shall take place contemporaneously with the closing of the Other Private Placements at the offices of

 

  

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Skadden, Arps, Slate, Meagher & Flom LLP located at Four Times Square, New York, New York, 10036, or remotely via the electronic or other exchange of documents and signature pages, as soon as practicable, but in no event later than the second (2nd) business day after the satisfaction or waiver of the conditions set forth in Section 1.2(c) (excluding conditions that, by their terms, cannot be satisfied until the Closing, but the Closing shall be subject to the satisfaction or waiver of those conditions), or at such other place or such other date as agreed to by the parties hereto.  The date of the Closing is referred to as the “Closing Date.”

 

(b)           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 the Investor the Purchased Shares, free and clear of any lien, adverse right or claim, charge, option, pledge, covenant, title defect, security interest or other encumbrances of any kind (other than restrictions on transfer imposed by applicable securities laws or as contemplated by this Agreement) (“Liens”), as evidenced by one or more certificates dated the Closing Date and bearing the appropriate legends as herein provided;

 

(2)           the Investor 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 purchase price specified on the Investor’s signature page hereto (the “Purchase Price”); it being understood and agreed that the Investor must have received the Purchased Shares (pursuant to its written delivery instructions provided to the Company prior to the Closing) prior to being obligated to wire such funds;

 

(3)           the Company will deliver to the Investor a certificate signed on behalf of the Company by a senior executive officer certifying to the effect that (A) the representations and warranties of the Company set forth in Section 2.2 of this Agreement that (i) are not made as of a specific date shall have been true and correct as of the date of this Agreement and shall be true and correct as of the Closing Date as though made as of the Closing Date, and (ii) are made as of a specific date shall have been true and correct as of such specific date, in each case, except where the failure to be true and correct (without regard to any materiality or Material Adverse Effect (as defined below) qualifications contained therein) has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (and except that (x) the representations and warranties of the Company set forth in Sections 2.2(a), 2.2(b)(1) and (2), 2.2(d), 2.2(f) and 2.2(v) shall be true and correct in all material respects, (y) the representations and warranties of the Company set forth in Sections 2.2(b)(3), 2.2(j)(3), 2.2(q) and 2.2(y) shall be true and correct in all respects, and (z) the representations and warranties of the Company set forth in Section 2.2(c)(1) shall be true and correct except to a de minimis extent) and (B) the Company has performed in all material respects all obligations required to be performed by it at or prior to the Closing under this Agreement; and

 

(4)           the Investor will deliver to the Company a certificate signed by the Investor certifying to the effect that (A) the representations and warranties of the Investor set forth in Section 2.3 of this Agreement that (i) are not made as of a specific date shall

 

  

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have been true and correct in all material respects as of the date of this Agreement and shall be true and correct in all material respects as of the Closing Date as though made as of the Closing Date, and (ii) are made as of a specific date shall have been true and correct in all material respects as of such specific date, in each case, without regard to any materiality qualifications contained therein, except to the extent that any inaccuracies in such representations and warranties, taken as a whole, are not reasonably expected to materially and adversely affect the Investor’s ability to consummate the transactions contemplated by this Agreement in a timely manner and (B) the Investor has performed in all material respects all obligations required to be performed by it at or prior to the Closing under this Agreement.

 

(c)           Closing Conditions.  The obligation of the Investor, on the one hand, and the Company, on the other hand, to effect the Closing is subject to the satisfaction or written waiver by the Investor and the Company prior to the Closing of the following conditions:

 

(1)           the Plan of Reorganization effecting the Primary Investment Transactions, the Senior Debt Settlement, the TARP Exchange, the Debt Issuance, the Delaware Conversion and the Amended Charter (collectively, the “Transactions”) shall have been confirmed by the Bankruptcy Court;

 

(2)           the Company shall receive contemporaneously with the Closing, or shall have received prior to the Closing, gross proceeds of not less than $170,000,000 and not more than $180,000,000 from the Primary Investment Transactions and the price per share of Common Stock sold in the Other Private Placements shall be no less than the Per Share Purchase Price (assuming in each case that the Investment has been consummated);

 

(3)           substantial consummation of the Plan of Reorganization shall have occurred; and

 

(4)           the Bank shall have a Tier 1 (Core) Capital Ratio of at least eight percent (8%) and a Total Risk-Based Capital Ratio of at least twelve percent (12%) as measured on a pro forma basis (A) using the Bank’s balance sheet as of the month end immediately prior to the Closing Date and (B) assuming the consummation of the Transactions as contemplated herein and the application of either “recapitalization” or “fresh start” accounting under GAAP, in each case.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES

 

2.1           Disclosure.

 

(a)           On or prior to the date of this Agreement, the Company delivered to the Investor a schedule (the “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 or to one or more of its covenants contained in this Agreement; provided, however, that notwithstanding anything in this Agreement to the contrary,

 

  

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the mere inclusion of an item in such schedule shall not be deemed an admission that such item represents a material exception or material fact, event, or circumstance or that such item has had or would reasonably be expected to have a Material Adverse Effect.

 

(b)           As used in this Agreement, the term “Material Adverse Effect” means any fact, event, change, condition, development, circumstance or effect that, individually or in the aggregate, (1) would reasonably be expected to be material and adverse to the business, assets, liabilities, properties, results of operations or condition (financial or otherwise) of the Company and the Company Subsidiaries, taken as a whole, other than any such fact, event, change, condition, development, circumstance or effect attributable to, resulting from, arising out of or relating to (i) the Bankruptcy Case, (ii) any change or proposed change, after the date hereof, in banking or similar laws, rules or regulations of general applicability or interpretations thereof by Governmental Entities, (iii) any change, after the date hereof, in U.S. generally accepted accounting principles (“GAAP”) or interpretations thereof, (iv) changes, after the date hereof, affecting the financial services industry generally, the United States economy or general economic conditions, including changes in prevailing interest rates, credit markets, secondary or mortgage market conditions or housing price appreciation/depreciation trends, including changes to any previously correctly applied asset marks resulting therefrom, (v) national or international political or social conditions, including the engagement by the United States in hostilities or escalation thereof, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices, (vi) the failure of the Company to meet any internal or public projections, forecasts, estimates or guidance for any period ending after March 31, 2013; provided that the exception in this clause (vi) shall not prevent or otherwise affect a determination that any fact, event, change, condition, development, circumstance or effect underlying such a failure has resulted in, or contributed to, a Material Adverse Effect, (vii) any actions taken with the prior written consent of the Investor, (viii) the Regulatory Agreements applicable to the Company or AnchorBank, fsb (the “Bank”), or (ix) compliance with the terms of, or the taking of any action required by, this Agreement, except in the case of the foregoing clauses (ii), (iii), (iv) or (v), to the extent any fact, event, change, condition, development, circumstance or effect referred to therein has or would reasonably be expected to have a disproportionate impact on the business, assets, liabilities, properties, results of operations or condition (financial or otherwise) of the Company and the Company Subsidiaries, taken as a whole, relative to other similarly situated industry participants, or (2) would materially impair the ability of the Company to perform its obligations under this Agreement or to consummate the Closing.

 

(c)           “Previously Disclosed” with regard to the Company (1) means information set forth on its Disclosure Schedule corresponding to the provision of this Agreement to which such information relates; provided that information which is reasonably apparent on its face that it relates to another provision of this Agreement, shall also be deemed to be Previously Disclosed with respect to such other provision and (2) includes information publicly disclosed by the Company in the Company Reports (as defined below) filed by it with or furnished to the U.S. Securities and Exchange Commission (the “SEC”) on or after March 31, 2012 (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors,” any disclosure of risks included in any “forward-looking statements” or any

 

  

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other statements or disclaimers that are predictive, qualitative, subjective or forward-looking in nature) prior to July 19, 2013.

 

2.2           Representations and Warranties of the Company.  Except as Previously Disclosed, the Company represents and warrants as of the date of this Agreement and as of the Closing (except to the extent made only as of a specified date, in which case as of such date) to the Investor that:

 

(a)           Organization and Authority.

 

(1)           As of the date of this Agreement, the Company is a corporation duly organized and validly existing under the laws of the State of Wisconsin, 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 failure to be so qualified would have or reasonably be expected to have a Material Adverse Effect and has corporate power and authority to own its properties and assets and to carry on its business as it is now being conducted.  As of the Closing, as a result of the Delaware Conversion, and subject to confirmation of the Plan of Reorganization by the Bankruptcy Court, the Company shall be a corporation duly organized and validly existing under the laws of the State of Delaware, duly qualified to do business and 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 failure to be so qualified would have or reasonably be expected to have a Material Adverse Effect and will have corporate power and authority to own its properties and assets and to carry on its business as it is then being conducted.

 

(2)           The Company is duly registered as a savings and loan holding company under the Home Owners’ Loan Act (the “HOLA”) .  The Company has Previously Disclosed true, correct and complete copies of the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”) and the Company’s bylaws as amended through the date of this Agreement.   The Company is not in violation of any of the provisions of the Articles of Incorporation or its bylaws.

 

(b)           Company’s Subsidiaries.

 

(1)           The Company has Previously Disclosed a true, complete and correct list of all of its subsidiaries as of the date of this Agreement (individually, a “Company Subsidiary” and, collectively, the “Company Subsidiaries”), all shares of the outstanding capital stock of each of which are owned directly or indirectly by the Company.  No equity security of any Company Subsidiary is or may be required to be issued by reason of any option, warrant, scrip, preemptive right, right to subscribe to, gross-up right, call or commitment of any character whatsoever relating to, or security or right convertible into, shares of any capital stock of such Company Subsidiary, and there are no contracts, commitments, understandings or arrangements by which any Company Subsidiary is bound to issue additional shares of its capital stock, or any option, warrant or right to purchase or acquire any additional shares of its capital stock.  All of such shares so owned by the Company are duly authorized and validly issued, fully paid and

 

  

6

  

nonassessable and are owned by it free and clear of any Liens with respect thereto.  Each Company Subsidiary is an entity duly organized, validly existing, duly qualified to do business and in good standing under the laws of its jurisdiction of organization, and has corporate or other appropriate organizational power and authority to own or lease its properties and assets and to carry on its business as it is now being conducted.  Except in respect of the Company Subsidiaries, the Company does not own beneficially, directly or indirectly, more than five percent (5%) of any class of equity securities or similar interests of any corporation, bank, business trust, association or similar organization, and is not, directly or indirectly, a partner in any partnership or party to any joint venture.

 

(2)           The Bank is duly organized and validly existing as a federal savings association and its deposit accounts are insured by the Federal Deposit Insurance Corporation (the “FDIC”) to the fullest extent permitted by the Federal Deposit Insurance Act (the “FDI Act”) and the rules and regulations of the FDIC thereunder, and all premiums and assessments required to be paid in connection therewith have been paid when due.  The Company has Previously Disclosed true, correct and complete copies of the charter and bylaws of the Bank as amended through the date of this Agreement.  No Company Subsidiary is in violation of any of the provisions of its articles of incorporation or bylaws.

 

(3)           The Company beneficially and of record owns all of the outstanding capital stock of the Bank.

 

(c)           Capitalization.

 

(1)           As of the date hereof, the authorized capital stock of the Company consists of 100,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.10 (the “Company Preferred Stock”).  As of the date hereof, there are 21,247,225 shares of Common Stock outstanding and 110,000 shares of TARP Preferred Stock and no other Company Preferred Stock outstanding, and the TARP Warrant allows for the purchase of 7,399,103 shares of Common Stock by the Treasury at an exercise price of $2.23 per share.  As of the date hereof, there are (i) outstanding stock options issued under the Company’s 2001 Stock Option Plan for Non-Employee Directors, as amended or supplemented, as filed as exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year ended March 31, 2013 (the “Company 10-K”), and under the Company’s 1995 Stock Option Plan for Non-Employee Directors, as amended or supplemented, as filed as exhibit 10.4 to the Company 10-K, to purchase an aggregate of 80,000 shares of the Common Stock (each, a “Company Stock Option”) and (ii) an aggregate of 40,345 shares of restricted stock (“Company Restricted Stock”) outstanding under the Company’s 2004 Equity Incentive Plan, as filed as exhibit 10.10 to the Company 10-K (together with the 2001 Stock Option Plan for Non-Employee Directors and the 1995 Stock Option Plan for Non-Employee Directors, the “Company Stock Option Plans”) and (iii) 1,240,314 shares of Common Stock reserved for issuance under the Company Stock Option Plans.  As of the date hereof, other than in respect of the TARP Warrant, the Company Rights Agreement, awards outstanding under or pursuant to the Company Stock Option Plans and for purposes of the Transactions, no shares of Common Stock or Company Preferred Stock are reserved for issuance.  All of

 

  

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the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof.  Except in connection with the Transactions, neither the Company nor any of its officers, directors, or employees is a party to any right of first refusal, right of first offer, proxy, voting agreement, voting trust, registration rights agreement, or shareholders agreement with respect to the sale or voting of any securities of the Company.  No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which the stockholders of the Company may vote (“Voting Debt”) are issued and outstanding.  Except as set forth elsewhere in this Section 2.2(c), or in connection with the Transactions, or as Previously Disclosed, and subject to confirmation of the Plan of Reorganization by the Bankruptcy Court, the Company does not have and is not bound by any outstanding subscriptions, options, warrants, calls, repurchase rights, commitments, or agreements of any character calling for the purchase or issuance of, or securities or rights convertible into or exchangeable or exercisable for, any shares of 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).  There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of shares of Common Stock pursuant to the Primary Investment Transactions.

 

(2)           Section 2.2(c)(2) of the Disclosure Schedule sets forth the following information with respect to each Company Stock Option and share of Company Restricted Stock, which is true and correct as of the date of this Agreement:  (A) the name of each holder of Company Stock Options and Company Restricted Stock and (B) the number of shares of Common Stock subject to such Company Stock Option and the number of shares of Company Restricted Stock, and, as applicable, the grant date, exercise price, number of shares vested or not otherwise subject to restrictions, vesting schedule and the Company Stock Option Plan under which such Company Stock Options or shares of Company Restricted Stock were granted.  Each Company Stock Option (i) was granted in compliance with all applicable laws and all of the terms and conditions of the Company Stock Option Plans pursuant to which it was issued, (ii) has an exercise price per share of Common Stock equal to or greater than the fair market value of a share of Common Stock on the date of such grant and (iii) has a grant date identical to the date on which the Board of Directors or compensation committee of the Board of Directors actually awarded such Company Stock Option.

 

(d)           Authorization.  Subject to the confirmation of the Plan of Reorganization by the Bankruptcy Court:

 

(1)           The Company has the corporate power and authority to enter into this Agreement and the agreements for the other Transactions and, subject to the completion of the Delaware Conversion and effectiveness of the Amended Charter, to carry out its obligations hereunder and thereunder.  The execution, delivery and performance of this Agreement and the agreements for the other Transactions by the Company and the consummation of the transactions contemplated hereby and thereby, including the issuance of the Purchased Shares in accordance with the terms of this

 

  

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Agreement, have been duly authorized by the affirmative vote of at least a majority of the directors on the Board of Directors.  This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery of this Agreement by the Investor, is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by the failure to complete the Delaware Conversion or cause the Amended Charter to become effective or by general equitable principles (whether applied in equity or at law).  No other corporate proceedings or stockholder actions are necessary for the execution and delivery by the Company of this Agreement or the agreements for the other Transactions, the performance by the Company of its obligations hereunder or thereunder or the consummation by the Company of the transactions contemplated hereby or thereby.

 

(2)           Neither the execution and delivery by the Company of this Agreement, the performance by the Company of its obligations hereunder nor the consummation of the transactions contemplated hereby, nor compliance by the Company with any of the provisions of any of the foregoing, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of, any Lien, upon any of the properties or assets of the Company or any Company Subsidiary under any of the terms, conditions or provisions of (i) subject to completion of the Delaware Conversion and the effectiveness of the Amended Charter, its Articles of Incorporation or bylaws (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 the Company or any Company Subsidiary is a party or by which it may be bound, or to which the Company or any Company Subsidiary or any of the properties or assets of the Company or any Company Subsidiary may be subject, or (B) assuming that the Governmental Approvals contemplated by clause (3) are duly obtained, violate in any material respect any ordinance, permit, concession, grant, franchise, law, statute, rule or regulation or any judgment, ruling, order, writ, injunction or decree applicable to the Company or any Company Subsidiary or any of their respective properties.

 

(3)           Other than the securities or blue sky laws of the various states and filings, notices, approvals or clearances required under federal or state banking laws or the Regulatory Agreements, no notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any court, administrative agency or commission or other governmental authority or instrumentality, whether federal, state, local or foreign, or any applicable industry self-regulatory organization (each, a “Governmental Entity”), or expiration or termination of any statutory waiting period, is necessary for the consummation by the Company of the Transactions.

 

(e)           Knowledge as to Required Approvals.  As of the date of this Agreement, the Company has no knowledge of any reason relating to the Company or any Company Subsidiary why the Required Approvals will not be obtained without the imposition of any

 

  

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Burdensome Condition.  “Required Approvals” means all Governmental Approvals of the Board of Governors of the Federal Reserve System (the “Federal Reserve”) or the Office of the Comptroller of the Currency (the “OCC”) required to have been obtained at or prior to the Closing Date for the consummation or effectiveness (as applicable) of the Transaction.  “Burdensome Condition” means, with respect to the Investor, (A) any restraint or condition imposed by or contained in any Required Approval that would reasonably be expected to impair in any material respect the benefits to the Investor of the Investment or (B) any capital or other support requirements imposed on the Investor or its Affiliates by any Required Approval, in each case except for standard passivity and anti-association commitments to the Federal Reserve

 

(f)           Financial Statements; Accounting Treatment of the Transactions.  Each of the consolidated balance sheets of the Company and the Company Subsidiaries and the related consolidated statements of income, stockholders’ equity and cash flows, together with the notes thereto, included in any Company Report filed with the SEC on or after March 31, 2010 and prior to the date of this Agreement (collectively, the “Company Financial Statements”), (1) have been prepared from, and are in accordance with, the books and records of the Company and the Company Subsidiaries, (2) complied, as of their respective date of such filing, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (3) have been prepared in accordance with GAAP applied on a consistent basis and (4) present fairly in all material respects the consolidated financial position of the Company and the Company Subsidiaries at the dates and the consolidated results of operations, changes in stockholders’ equity and cash flows of the Company and the Company Subsidiaries for the periods stated therein (subject to the absence of notes and non-material year-end audit adjustments in the case of unaudited Company Financial Statements).

 

(g)           Reports.

 

(1)           Since March 31, 2010, the Company and each Company Subsidiary have timely filed all reports, registrations, documents, filings, statements and submissions together with any required amendments thereto, that it was required to file with any Governmental Entity (the foregoing, collectively, the “Company Reports”) and have paid all fees and assessments due and payable in connection therewith.  As of their respective filing dates, the Company Reports complied in all material respects with all statutes and applicable rules and regulations of the applicable Governmental Entities, as the case may be.  As of the date of this Agreement, there are no outstanding comments from the SEC or any other Governmental Entity with respect to any Company Report.  The Company Reports, including the documents incorporated by reference in each of them, each contained all of the information required to be included in it, and as of the date 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 necessary in order to make the statements made in it not misleading and complied as to form in all material respects with the applicable requirements of the Securities Act of 1933, as amended, or any successor statute (the “Securities Act”), and the Securities Exchange Act of 1934, as amended, or any successor statute (the “Exchange Act”).  As of the date of this Agreement, no executive officer of the

 

  

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Company has failed to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002.

 

(2)           The records, systems, controls, data and information of the Company and the Company Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company or the Company Subsidiaries or accountants (including all means of access thereto and therefrom), except for any nonexclusive ownership and nondirect control that would not reasonably be expected to have a material adverse effect on the system of internal accounting controls described below in this Section 2.2(g).  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 its consolidated subsidiaries, is made known to the chief executive officer and the chief financial officer of the Company by others within those entities, (B) has implemented and maintains internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) and (C) has disclosed, based on its most recent evaluation prior to the date of this Agreement, 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 control over financial reporting 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.  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 of 2002, without qualification, when next due.  Since December 31, 2009, (i) neither the Company nor any Company Subsidiary nor, to the knowledge of the Company, any director, officer, employee, auditor, accountant or representative of the Company or any Company 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 or any Company Subsidiary or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any Company Subsidiary has engaged in questionable accounting or auditing practices, and (ii) no attorney representing the Company or any Company Subsidiary, whether or not employed by the Company or any Company 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 Board of Directors or any committee thereof or to any director or officer of the Company.

 

(h)           Properties and Leases.  Except for any Permitted Liens (as defined below), the Company and each Company Subsidiary have good title free and clear of any Liens to all the real and personal property reflected in the Company’s consolidated balance sheet as of March 31, 2013 included in the Company 10-K for the period then ended, and all real and personal property acquired since such date, except such real and personal property as has been repossessed or as

 

  

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has been disposed of in the ordinary course of business.  For purposes of this Agreement, “Permitted Liens” means (1) Liens for taxes and other governmental charges and assessments arising in the ordinary course which are not yet due and payable, (2) Liens of landlords and Liens of carriers, warehousemen, mechanics and materialmen and other like Liens arising in the ordinary course of business for sums not yet due and payable and (3) other Liens or imperfections on property which are not material in amount and do not materially detract from the value of or materially impair the existing use of the property affected by such Lien or imperfection.  Except as has not had or would not be expected to have a Material Adverse Effect, all leases of real property and all other leases pursuant to which the Company or such Company Subsidiary, as lessee, leases real or personal property are valid and effective in accordance with their respective terms and there is not, under any such lease, any existing material default by the Company or such Company Subsidiary or any event which, with notice or lapse of time or both, would constitute such a material default.

 

(i)           Taxes.  Each of the Company and the Company Subsidiaries has timely filed all federal, state, county, local and foreign Tax Returns (as defined below) required to be filed by it, and all such filed Tax Returns are true, correct and complete in all material respects, and paid all Taxes (as defined below) owed by it and no material Taxes owed by it or assessments received by it are delinquent.  With respect to Taxes not yet due, the Company has made adequate provision in the financial statements of the Company (in accordance with GAAP).  The federal income Tax Returns of the Company and the Company Subsidiaries for the fiscal year ended March 31, 2009, and for all fiscal years prior thereto, are for the purposes of routine audit by the Internal Revenue Service (the “IRS”) closed because of the expiration of the statute of limitations, and no claims for additional Taxes for such fiscal years are pending.  Neither the Company nor any Company Subsidiary has waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency, in each case that is still in effect, or has pending a request for any such extension or waiver.  Neither the Company nor any Company Subsidiary is a party to any pending action or proceeding for the assessment or collection of Taxes and no material deficiencies have been proposed in writing by any Governmental Entity in connection with an audit or examination of the Tax Returns of the Company or any Company Subsidiary which has not been settled, resolved and fully satisfied, or for which reserves adequate in accordance with GAAP have not been provided on the Company Financial Statements.  Each of the Company and the Company Subsidiaries has withheld and paid all material Taxes that it is required to withhold from amounts owing to employees, creditors or other third parties.  Neither the Company nor any Company Subsidiary is a party to, is bound by or has any material obligation under, any Tax sharing or Tax indemnity agreement or similar contract or arrangement other than any contract or agreement between or among the Company and any Company Subsidiary.  Neither the Company nor any Company Subsidiary has participated in any “reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4, or any other transaction requiring disclosure under analogous provisions of state, local or foreign law.  Neither the Company nor any Company Subsidiary has liability for the Taxes of any person other than the Company or any Company Subsidiary under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law) as a transferee, successor or otherwise.  Neither the Company nor any Company Subsidiary has been a “distributing corporation” or a “controlled corporation” in any distribution in which the parties to such distribution treated the distribution as one to which Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”), is applicable.  The Company has not been a United

 

  

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States real property holding corporation within the meaning of Section 897 of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.  Neither the Company nor any Company Subsidiary has undergone an “ownership change” within the meaning of Code Section 382(g), and the consummation of the Transactions should not cause an “ownership change” within the meaning of Code Section 382(g).  Neither the Company nor any Company Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any period (or any portion thereof) ending after the Closing as a result of any: (1) installment sale or other open transaction disposition made on or prior to the Closing; (2) prepaid amount received on or prior to the Closing; (3) written and legally binding agreement with a Governmental Entity relating to Taxes for any taxable period ending on or before the Closing; (4) change in method of accounting in any taxable period ending on or before the Closing; or (5) election under Section 108(i) of the Code, in each case except in the ordinary course of business consistent with past practice.  For the purpose of this Agreement, the term “Tax” (including, with correlative meaning, the term “Taxes”) shall mean any and all domestic or foreign, federal, state, local or other taxes, customs, duties, governmental fees or other like assessments or charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Entity, including taxes on or with respect to income, franchises, windfall or other profits, gross receipts, property, transfer, sales, use, license, alternative or add on minimum, escheatment or unclaimed property, capital stock, payroll, employment, unemployment, social security, workers’ compensation or net worth, and taxes in the nature of excise, withholding, ad valorem or value added or similar taxes, and the term “Tax Return” means any return, report, information return or other document (including any related or supporting information, and attachments and exhibits) filed or required to be filed with respect to Taxes, including, without limitation, all information returns relating to Taxes of third parties, any claims for refunds of Taxes and any amendment or supplements to any of the foregoing.  “Treasury Regulation” means any final, proposed or temporary regulation of the Treasury under the Code and any successor regulation.

 

(j)           Absence of Certain Changes.  Since March 31, 2013 through the date of this Agreement, (1) the Company has not, and no Company Subsidiary has, made or declared any distribution or dividend in cash or in kind to its stockholders or issued or repurchased any shares of its capital stock or other equity interests, (2) the business and operations of the Company and the Company Subsidiaries have been conducted in the ordinary course of business consistent with past practice, and (3) there has not occurred any circumstance, event, change, development or effect that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and which is continuing.

 

(k)           Commitments and Contracts.

 

(1)           The Company has Previously Disclosed or provided to the Investor or its representatives, prior to the date hereof, true, correct, and complete copies of each of the following to which the Company or any Company Subsidiary is a party or subject (whether written or oral, express or implied) (each, a “Company Significant Agreement”):

 

(i)           any material employment contract or understanding (including any understandings or obligations with respect to severance or

 

  

13

  

termination pay, liabilities or fringe benefits) with any present or former officer, director or employee (other than those that are terminable at will by the Company or such Company Subsidiary);

 

(ii)           any material plan, contract or understanding providing for any bonus, pension, option, deferred compensation, retirement payment, profit sharing or similar arrangement with respect to any present or former officer, director or employee;

 

(iii)           any contract containing covenants that limit the ability of the Company or any Company Subsidiary to compete in any line of business or with any person or which involve any restriction of the geographical area in which, or method by which or with whom, the Company or any Company Subsidiary may carry on its business (other than as may be required by law or applicable regulatory authorities), and any contract that would require the disposition of any material assets or line of business of the Company or any Company Subsidiary;

 

(iv)           any joint venture, partnership, strategic alliance or other similar contract (including any franchising agreement, but in any event excluding introducing broker agreements); and any contract 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 or contains continuing material indemnity obligations of the Company or any of the Company Subsidiaries; and

 

(v)           any other contract or agreement which is a “material contract” within the meaning of Item 601(b)(10) of Regulation S-K.

 

(2)           Each of the Company Significant Agreements is valid and binding on the Company and the Company Subsidiaries, as applicable, and in full force and effect.  The Company and each of the Company Subsidiaries, as applicable, are in compliance in all material respects with and have performed in all material respects all obligations required to be performed by them to date under each Company Significant Agreement.  Neither the Company nor any of the Company Subsidiaries has received notice of any violation or default (or any condition which 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.  No party to a Company Significant Agreement has provided notice to the Company or any Company Subsidiary that it intends to terminate a Company Significant Agreement or not renew such agreement at the expiration of the current term.

 

(3)           Other than those contemplated by the Transactions, there are no transactions or series of related transactions, agreements, arrangements or understandings, nor are there any currently proposed transactions, or series of related transactions between the Company or any Company Subsidiaries, on the one hand, and the Company,

 

  

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any current or former director or executive officer of the Company or any Company Subsidiaries or any person who beneficially owns five percent (5%) or more of the Common Stock (or any of such person’s immediate family members or Affiliates) (other than Company Subsidiaries), on the other hand, except for deposit relationships or loan transactions arising in the ordinary course of business.

 

(l)           Exemption from Registration.  Assuming the accuracy of Investor’s representations contained in Section 2.3, the offer and sale of the Purchased Shares, as provided in this Agreement, are exempt from the registration requirements of the Securities Act, and are otherwise in compliance with the Securities Act.

 

(m)           Litigation and Other Proceedings; No Undisclosed Liabilities.

 

(1)           There is no pending claim, action, suit, investigation or proceeding against the Company or any Company Subsidiary, nor is any such claim, action, suit, investigation or proceeding, to the knowledge of the Company, threatened, nor is the Company or any Company Subsidiary subject to any order, judgment or decree, in each case, except as has not had and would not reasonably be expected to have a Material Adverse Effect.

 

(2)           Neither the Company nor any of the Company Subsidiaries has any liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) which are not properly reflected or reserved against in the financial statements described in Section 2.2(f) to the extent required to be so reflected or reserved against in accordance with GAAP, except for liabilities that have arisen since March 31, 2013 in the ordinary and usual course of business and consistent with past practice and that have not had and would not reasonably be expected to have a Material Adverse Effect.

 

(n)           Compliance with Laws and Other Matters; Insurance.  The Company and each Company Subsidiary:

 

(1)           in the conduct of its business has been, since March 31, 2011, and is in compliance in all material respects with all, and the condition and use of its properties has not, since March 31, 2011, and does not violate or infringe in any material respect any, applicable domestic (federal, state or local) or foreign laws, statutes, ordinances, licenses, rules, regulations, judgments, demands, writs, injunctions, orders or decrees applicable thereto or to employees conducting its business, including the Troubled Asset Relief Program, the Sarbanes-Oxley Act of 2002, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Bank Secrecy Act of 1970 (the “BSA”), the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001 (the “PATRIOT Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, all other applicable fair lending laws or other laws relating to discrimination and applicable privacy and customer information requirements contained in any federal or state privacy law or regulations, including Title V of the Gramm-Leach-Bliley Act of 1999;

 

  

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(2)           has all material permits, licenses, franchises, authorizations, orders, and approvals of, and has made all material filings, applications, and registrations with, Governmental Entities that are required in order to permit it to own or lease its properties and assets and to carry on its business as presently conducted and that are material to the business of the Company or such Company Subsidiary; all such material permits, licenses, certificates of authority, orders and approvals are in full force and effect, and all such material filings, applications and registrations are current, and, to the knowledge of the Company, no suspension or cancellation of any of them is threatened;

 

(3)           has been, since March 31, 2011, compliant and currently is complying in all material respects with and, to the knowledge of the Company, has not been, since March 31, 2011, and is not under investigation with respect to, nor has been threatened in writing by any Governmental Entity to be charged with or given notice of any material violation of, any applicable federal, state, local and foreign laws, regulations, rules, judgments, injunctions or decrees;

 

(4)           has not, nor has any other person on behalf of the Company or any Company Subsidiary that qualifies as a “financial institution” under U.S. anti-money laundering laws, in each case since March 31, 2010, knowingly acted, by itself or in conjunction with another, in any act in connection with the concealment of any currency, securities or other proprietary interest that is the result of a felony as defined in U.S. anti-money laundering laws (“Unlawful Gains”), nor knowingly accepted, transported, stored, dealt in or brokered any sale, purchase or any transaction of other nature for Unlawful Gains;

 

(5)           is presently insured, and since March 31, 2011 (or during such lesser period of time as the Company has owned such Company Subsidiary) has been insured, for reasonable amounts with, to the knowledge of the Company, financially sound and reputable insurance companies against such risks as companies engaged in a similar business would, in accordance with industry practice, customarily be insured;

 

(6)           (A) is not aware of any facts or circumstances that would cause it to believe that any non-public customer information has been disclosed to or accessed by an unauthorized third-party in a manner that would cause it to undertake any material remedial action; (B) has adopted and implemented in all material respects an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply with the PATRIOT Act and such anti-money laundering program meets the requirements in all material respects of Section 352 of the PATRIOT Act and the regulations thereunder, and it has complied in all respects with any requirements to file reports and other necessary documents as required by the PATRIOT Act and the regulations thereunder; and (C) will not knowingly directly or indirectly use the proceeds of the sale of the Common Shares pursuant to Primary Investment Transactions, or lend, contribute or otherwise make available such proceeds to any Company Subsidiary, joint venture partner or other person, towards any sales or operations in any country sanctioned by U.S. Office of Foreign Asset Control of the Treasury (“OFAC”) or for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC; and

 

  

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(7)           has no knowledge of any facts and circumstances, and has no reason to believe that any facts or circumstances exist, that would cause the Bank: (A) to be deemed not to be in satisfactory compliance with the Community Reinvestment Act of 1977 (the “CRA”) and the regulations promulgated thereunder, or to be assigned a CRA rating by federal or state banking regulators of lower than “satisfactory”; (B) to be operating in violation, in any material respect, of the Bank Secrecy Act of 1970, the PATRIOT Act, any order issued with respect to anti-money laundering by OFAC, or any other anti-money laundering statute, rule or regulation; or (C) not to be in satisfactory compliance, in any material respect, with all applicable privacy of customer information requirements contained in any applicable federal and state privacy laws and regulations as well as the provisions of all information security programs adopted by any such Company Subsidiary.

 

(o)           Labor.  Employees of the Company and the Company 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 or any Company 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, to the Company’s knowledge, 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, strikes, work stoppages, slowdowns, lockouts, arbitrations or grievances, or other labor disputes pending or, to the knowledge of the Company, threatened against or involving the Company or any Company Subsidiary.  Each of the Company and the Company Subsidiaries is in compliance in all material respects with all applicable laws with respect to employment and employment practices, terms and conditions of employment, and wages and hours.  To the Company’s knowledge, no executive officer is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement or any other contract or agreement or any restrictive covenant in favor of a third party, and, to the Company’s knowledge, the continued employment of each such executive officer does not subject the Company or any Company Subsidiary to any liability with respect to any of the foregoing matters.

 

(p)           Company Benefit Plans.

 

(1)           “Benefit Plan” means all employment agreements, employee benefit and compensation plans, programs, agreements, contracts, policies, practices, or other arrangements providing compensation or benefits to any current or former employee, officer, director or consultant of the Company or any Company Subsidiary or any beneficiary or dependent thereof that is sponsored or maintained by the Company or any Company Subsidiary or to which the Company or any Company Subsidiary contributes or is obligated to contribute or is party or for which the Company or any Company Subsidiary has any direct or indirect liability, whether or not written, including without limitation any “employee welfare benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), any “employee pension benefit plan” within the meaning of Section 3(2) of ERISA (whether or not such plan is subject to ERISA) and any material bonus, incentive, deferred compensation, vacation, stock purchase, stock appreciation right, stock option or

 

  

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equity award, equity-based severance, employment, change of control, consulting or fringe benefit plan, program, agreement or policy.  Each Benefit Plan is listed on Section 2.2(p)(1) of the Disclosure Schedule.  True and complete copies of all Benefit Plans listed on Section 2.2(p)(1) of the Disclosure Schedule have been made available to the Investor prior to the date hereof or have been filed with a Company Report.

 

(2)           With respect to each Benefit Plan, (A) the Company and the Company Subsidiaries have complied in all material respects, and are now in material compliance with the applicable provisions of ERISA, the Code and all other 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.  None of the Company or the Company Subsidiaries nor any of their respective ERISA Affiliates (as defined below) has incurred any withdrawal liability as a result of a complete or partial withdrawal from a multiemployer plan, as those terms are defined in Part I of Subtitle E of Title IV of ERISA, that has not been satisfied in full.  “ERISA Affiliate” means any entity, trade or business, whether or not incorporated, which together with the Company and the Company Subsidiaries, would be deemed a “single employer” within the meaning of Section 4001 of ERISA or Sections 414(b), (c), (m) or (o) of the Code.

 

(3)           Each Benefit Plan which is subject to ERISA (an “ERISA Plan”) that is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA (“Pension Plan”) and that is intended to be qualified under Section 401(a) of the Code is so qualified, has received a favorable determination letter from the IRS and nothing has occurred, whether by action or failure to act, that would reasonably be expected to result in revocation of any such favorable determination or the loss of the qualification of such Benefit Plan under Section 401(a) of the Code.  Neither the Company nor any Company Subsidiary has engaged in a transaction with respect to any ERISA Plan that has subjected or could subject the Company or any Company Subsidiary to a material tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA.  Neither the Company nor any Company Subsidiary has incurred or reasonably expects to incur a tax or penalty imposed by Section 4980F of the Code or Section 502 of ERISA.

 

(4)           Neither the Company, any Company Subsidiary nor any ERISA Affiliate (A) sponsors, maintains or contributes to or has within the past six years sponsored, maintained or contributed to a Pension Plan that is subject to Subtitles C or D of Title IV of ERISA or (B) sponsors, maintains or has any liability with respect to or an obligation to contribute to or has within the past six years sponsored, maintained, had any liability with respect to, or had an obligation to contribute to a “multiemployer plan” within the meaning of Section 3(37) of ERISA.

 

(5)           Neither the execution and delivery of this Agreement nor the consummation of the Transactions will, whether alone or in connection with another event, (A) result in any material payment or benefit (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 employee, officer, or director of the Company or any Company Subsidiary from the Company or any Company Subsidiary under any Benefit Plan or any other agreement with any employee,

 

  

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including, for the avoidance of doubt, any employment or change in control agreements, (B) result in payments under any of the Benefit Plans which would not be deductible under Section 162(m) or Section 280G of the Code, (C) result in any acceleration of the time of payment or vesting of any such benefits, including, for the avoidance of doubt, the Company Stock Option Plans, (D) materially increase any compensation or benefits otherwise payable under any Benefit Plan, (E) require the funding or increase in the funding of any such benefits, (F) result in any limitation on the right of the Company or any Company Subsidiary to amend, merge, terminate or receive a reversion of assets from any Benefit Plan or related trust, or (G) result in a violation of the prohibitions under 12 C.F.R. Part 359.

 

(6)           As of the date hereof, there is no pending or, to the knowledge of the Company, threatened, material litigation, claim, action, suit, investigation or proceeding relating to the Benefit Plans.  Neither the Company nor any Company Subsidiary has any obligations for retiree health and life benefits under any Benefit Plan or collective bargaining agreement, except for health continuation coverage as required by Section 4980B of the Code or Part 6 of Title I of ERISA.  The Company and the Company Subsidiaries are in compliance in all material respects with Sections 111 and 302 of the Emergency Economic Stabilization Act of 2008, as amended by the American Recovery and Reinvestment Act of 2009, including all guidance issued thereunder by a Governmental Entity.

 

(7)           Except as would not reasonably be expected to have a Material Adverse Effect, and except for liabilities fully reserved for or identified in the Company Financial Statements, there are no pending or, to the knowledge of the Company, threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations which have been asserted or instituted against (i) the Benefit Plans, (ii) any fiduciaries thereof with respect to their duties to the Benefit Plans, or (iii) the assets of any of the trusts under any of the Benefit Plans.

 

(q)           Status of Purchased Shares.  Subject to confirmation of the Plan of Reorganization by the Bankruptcy Court, the Purchased Shares to be issued pursuant to this Agreement have been, and, subject to the completion of the Delaware Conversion and the effectiveness of the Amended Charter, will be, duly authorized by all necessary corporate action of the Company.  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 and without any personal liability attaching to the ownership thereof, and will not be issued in violation of or subject to preemptive rights of any other shareholder of the Company.

 

(r)           Investment Company.  Neither the Company nor any of the Company Subsidiaries is an “investment company” as defined under the Investment Company Act of 1940, as amended, and neither the Company nor any of the Company Subsidiaries sponsors any person that is such an investment company.

 

  

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(s)           Risk Management; Derivatives.

 

(1)           The Company and the Company Subsidiaries have in place risk management policies and procedures sufficient in scope and operation to protect against risks of the type and in amounts expected to be incurred by persons of similar size and in similar lines of business as the Company and the Company Subsidiaries.

 

(2)           All derivative instruments, including swaps, caps, floors and option agreements, whether entered into for the Company’s own account, or for the account of one or more of the Company Subsidiaries or their customers, were entered into (A) only for purposes of mitigating identified risk and in the ordinary course of business, (B) in accordance with prudent practices and in material compliance with all applicable laws, rules, regulations and regulatory policies, and (C) with counterparties believed by the Company to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of the Company or one of the Company Subsidiaries, enforceable in accordance with its terms.  Neither the Company nor the Company Subsidiaries, nor, to the knowledge of the Company, any other party thereto, is in breach of any of its obligations under any such agreement or arrangement.

 

(t)           Foreign Corrupt Practices and International Trade Sanctions.  Neither the Company nor any Company Subsidiary, nor any of their respective directors, officers, agents, employees or any other persons acting on their behalf (1) has violated the Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-1 et seq., as amended, or any other similar applicable foreign, federal, or state legal requirement, (2) has made or provided, or caused to be made or provided, directly or indirectly, any payment or thing of value to a foreign official, foreign political party, candidate for office or any other person knowing that the person will pay or offer to pay the foreign official, party or candidate, for the purpose of influencing a decision, inducing an official to violate their lawful duty, securing any improper advantage, or inducing a foreign official to use their influence to affect a governmental decision, (3) has paid, accepted or received any unlawful contributions, payments, expenditures or gifts, (4) to the knowledge of the Company, has violated or operated in noncompliance with any export restrictions, money laundering law, anti-terrorism law or regulation, anti-boycott regulations or embargo regulations, or (5) is currently subject to any United States sanctions administered by OFAC.

 

(u)           Environmental Matters.  There is no legal, administrative, or other proceeding, claim or action pending or, to the knowledge of the Company, threatened against the Company or any Company Subsidiary seeking to impose, or that could reasonably be expected to result in the imposition of, on the Company or any Company Subsidiary, any liability relating to the use, disposal or release of hazardous substances or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances under any local, state or federal law, statute, regulation or ordinance, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (collectively, “Environmental Laws”).  Neither the Company nor any Company Subsidiary is subject to any agreement, order, judgment or decree by or with any Governmental Entity or third party imposing any liability under any Environmental Laws.  Neither the Company nor any Company Subsidiary (i) is in violation of any Environmental Laws, (ii) owns or operates any real

 

  

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property contaminated with any substance that is in violation of any Environmental Laws, or (iii) is liable for any off-site disposal or contamination pursuant to any Environmental Laws.

 

(v)           Anti-Takeover Provisions; Rights Plan.

 

(1)           The Board of Directors has taken all necessary action to ensure that, prior to the Closing any “moratorium,” “control share,” “fair price,” “takeover” or “interested stockholder” law (each, a “Takeover Law”) does not and shall not apply to the Primary Investment Transactions, the TARP Exchange and the Secondary Treasury Sales.  In the case that such transactions are subject to such provisions or laws, the Board of Directors shall take all necessary action to ensure that such transactions shall be deemed to be exceptions to such provisions or laws, including, but not limited to, the approval of such transactions as contemplated thereunder.

 

(2)           Prior to the Closing, the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent (the “Rights Agent”), shall have duly executed an amendment to the Rights Agreement, dated as of November 5, 2010, between the Company and the Rights Agent (the “Company Rights Agreement”), and as a result of such amendment (which amendment shall be valid, binding and enforceable and shall not have been revoked, modified or rescinded prior to the Closing), among other things, (i) neither this Agreement nor the consummation of any of the Primary Investment Transactions, the TARP Exchange or the Secondary Treasury Sales will cause the rights issued pursuant to the Company Rights Agreement to become exercisable by the holders thereof, and (ii) none of the Investor or any of its “Permissible Transferees” shall be deemed to be an “Acquiring Person” (as defined in the Company Rights Agreement).

 

(w)           Intellectual Property.

 

(1)           (i) The Company and the Company Subsidiaries own (free and clear of any claims, Liens, exclusive licenses or non-exclusive licenses not granted in the ordinary course of business) or have a valid license to use all Intellectual Property used in or necessary to carry on their business as currently conducted, and (ii) such Intellectual Property referenced in clause (i) above is valid, subsisting and enforceable, and is not subject to any outstanding order, judgment, decree or agreement adversely affecting the Company’s or the Company Subsidiaries’ use of, or rights to, such Intellectual Property.  The Company and the Company Subsidiaries have sufficient rights to use all Intellectual Property used in their business as presently conducted, all of which rights shall survive unchanged the consummation of the Transactions.  Neither the Company nor any Company Subsidiary has received any written notice of infringement or misappropriation of, or any conflict with, the rights of others with respect to any Intellectual Property.  To the Company’s knowledge, no third party has infringed, misappropriated or otherwise violated the Intellectual Property rights of the Company or the Company Subsidiaries.  There is no litigation, opposition, cancellation, proceeding, objection or claim pending, asserted, or, to the Company’s knowledge, threatened in writing against the Company or any Company Subsidiary concerning the ownership, validity, registerability, enforceability, infringement or use of, or licensed right to use, any Intellectual Property.  To the knowledge of the Company, none of the Company or any of the Company

 

  

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Subsidiaries is using or enforcing any Intellectual Property owned by or licensed to the Company or any of the Company Subsidiaries in a manner that would be expected to result in the abandonment, cancellation or unenforceability of such Intellectual Property.

 

(2)           “Intellectual Property” shall mean trademarks, service marks, brand names, domain names, certification marks, trade dress and other indications of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application; inventions, discoveries and ideas, whether patentable or not, in any jurisdiction; patents, applications for patents (including divisions, continuations, continuations in part and renewal applications), and any renewals, extensions or reissues thereof, in any jurisdiction; trade secrets and rights in any jurisdiction to limit the use or disclosure thereof by any person; writings and other works, whether copyrightable or not, in any jurisdiction; and registrations or applications for registration of copyrights in any jurisdiction, and any renewals or extensions thereof; and any similar intellectual property or proprietary rights.

 

(x)           Agreements with Regulatory Agencies.  Neither the Company nor any Company 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 since March 31, 2010, has adopted any board resolutions at the request of, any Governmental Entity that currently restricts the conduct of its business or that relates to its capital adequacy, its liquidity and funding policies and practices, its ability to pay dividends, its credit, risk management or compliance policies, its internal controls, its management, or its operations or business (each item in this sentence, a “Regulatory Agreement”), nor has the Company or any Company Subsidiary been advised since March 31, 2010 by any Governmental Entity that it is considering issuing, initiating, ordering or requesting any such Regulatory Agreement.  Except as Previously Disclosed, the Company and each Company Subsidiary are in compliance with each Regulatory Agreement to which it is party or subject, and neither the Company nor any Company Subsidiary has received any notice from any Governmental Entity indicating that either the Company or any Company Subsidiary is not in compliance in all material respects with any such Regulatory Agreement.

 

(y)           Brokers and Finders.  Except for Sandler O’Neill + Partners, L.P. (the “Placement Agent”), neither the Company nor any Company Subsidiary nor any of their respective officers, directors or employees 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 or any Company Subsidiary, in connection with the Transactions.  Prior to the date of this Agreement, the Company has disclosed to the Investor the economic and other material terms of its arrangements with the Placement Agent in connection with the Transactions.

 

(z)           Loan Portfolio.

 

(1)           Each of the Company and each Company Subsidiary has complied with, and all documentation in connection with the origination, processing, underwriting

 

  

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and credit approval of any loan, lease or other extension of credit or commitment to extend credit (“Loans”) originated, purchased or serviced by the Company or any Company Subsidiary satisfied in all material respects, (i) all applicable laws with respect to the origination, insuring, purchase, sale, pooling, servicing, subservicing or filing of claims in connection with Loans, including all laws relating to real estate settlement procedures, consumer credit protection, truth in lending laws, usury limitations, fair housing, transfers of servicing, collection practices, equal credit opportunity and adjustable rate mortgages, (ii) the responsibilities and obligations relating to Loans set forth in any material contract between the Company or any Company Subsidiary and any Agency, Loan Investor or Insurer, (iii) the applicable rules, regulations, guidelines, handbooks and other requirements of any Agency, Loan Investor or Insurer, and (iv) the terms and provisions of any material mortgage or other collateral documents and other Loan documents with respect to each Loan.

 

(2)           No Agency, Loan Investor or Insurer has (i) claimed in writing that the Company or any Company Subsidiary has violated or has not complied with the applicable underwriting standards with respect to Loans sold by the Company or any Company Subsidiary to a Loan Investor or Agency, or with respect to any sale of Loan servicing rights to a Loan Investor, (ii) imposed in writing restrictions on the activities (including commitment authority) of the Company or any Company Subsidiary or (iii) indicated in writing to the Company or any Company Subsidiary that it has terminated or intends to terminate its relationship with the Company or any Company Subsidiary for poor performance, poor Loan quality or concern with respect to the Company’s or any Company Subsidiary’s compliance with laws.

 

(3)           To the knowledge of the Company, the characteristics of the loan portfolio of the Company have not materially changed from the characteristics of the loan portfolio of the Company as of March 31, 2013 in a manner that could reasonably be expected to result in a Material Adverse Effect with respect to the Company.

 

(4)           For purposes of this Section 2.2(z): (i) “Agency” means the Federal Housing Administration, the Federal Home Loan Mortgage Corporation, the Farmers Home Administration (now known as Rural Housing and Community Development Services), the Federal National Mortgage Association, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture or any other federal or state agency with authority to (A) determine any investment, origination, lending or servicing requirements with regard to Loans originated, purchased or serviced by the Company or any Company Subsidiary or (B) originate, purchase, or service Loans, or otherwise promote lending, including state and local housing finance authorities; (ii)  “Loan Investor” means any person (including an Agency) having a beneficial interest in any Loan originated, purchased or serviced by the Company or any Company Subsidiary or a security backed by or representing an interest in any such Loan; and (iii)  “Insurer” means a person who insures or guarantees for the benefit of the Loan holder all or any portion of the risk of loss upon borrower default on any of the Loans originated, purchased or serviced by the Company or any Company Subsidiary, including the Federal Housing Administration, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture

 

  

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and any private mortgage insurer, and providers of hazard, title or other insurance with respect to such Loans or the related collateral.

 

(aa)           Fiduciary Accounts.  To the knowledge of the Company, the Company and the Company Subsidiaries have, in all material respects, properly administered all accounts for which it acts as a fiduciary, including accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the governing documents, applicable federal and state Law and regulation and common law.  To the knowledge of the Company, none of the Company, the Company Subsidiaries or any director, officer or employee of the Company or the Company Subsidiaries has, in any material respect, committed any breach of trust or fiduciary duty with respect to any such fiduciary account and the accountings for each such fiduciary account are true and correct in all material respects and accurately reflect the assets of such fiduciary account.

 

(bb)           Section 365(o).  Neither the Company nor any Company Subsidiary is subject to any agreement, order, decree, law, regulation, resolution or other commitment that falls within the scope of Section 365(o) of the Bankruptcy Code.

 

(cc)           Transactions With Affiliates and Employees.  Except as contemplated by the Transactions, none of the officers, directors, employees or Affiliates of the Company or any Company Subsidiary is presently a party to any contract, arrangement or transaction with the Company or any Company Subsidiary or to a presently contemplated contract, arrangement or transaction (other than for services as employees, officers and directors) that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated under the Securities Act.

 

(dd)           Off Balance Sheet Arrangements.  There is no transaction, arrangement, or other relationship between the Company (or any Company Subsidiary) and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings and is not so disclosed.

 

(ee)           Absence of Manipulation. The Company has not, and to the knowledge of the Company no one acting on its behalf has, taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Purchased Shares.

 

(ff)           Directors’ and Officers’ Insurance.  The Company (i) maintains directors’ and officers’ liability insurance and fiduciary liability insurance with, to the knowledge of the Company, financially sound and reputable insurance companies with benefits and levels of coverage that have been Previously Disclosed, (ii) has timely paid all premiums on such policies and (iii) there has been no lapse in coverage during the term of such policies.

 

(gg)           Shell Company Status.  The Company is not, and has never been, an issuer identified in Rule 144(i)(1).

 

(hh)           No Other Investor Representations and Warranties.  The Company has not received, and is not relying on, any representations or warranties, written or oral or express or implied, of any nature whatsoever, from the Investor or any other person other in connection with the execution and delivery of this Agreement than as specifically set forth in Section 2.3.

 

  

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2.3           Representations and Warranties of the Investor.  The Investor hereby represents and warrants as of the date of this Agreement and as of the Closing (except to the extent made only as of a specified date, in which case as of such date) to the Company that:

 

(a)           [Reserved].

 

(b)           Authorization.

 

(1)           The Investor has the requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.  The execution, delivery and performance of this Agreement by the Investor and the consummation of the transactions contemplated hereby have been duly authorized by the Investor.  This Agreement has been duly and validly executed and delivered by the Investor and, assuming due authorization, execution and delivery of this Agreement by the Company, is a valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganizations, fraudulent transfer or similar laws relating to or affecting creditors generally or by general equitable principles (whether applied in equity or at law).  No other proceedings are necessary for the execution and delivery by the Investor of this Agreement, the performance by the Investor of its obligations hereunder or the consummation by the Investor of the transactions contemplated hereby.

 

(2)           Neither the execution, delivery and performance by the Investor of this Agreement, nor the consummation of the transactions contemplated hereby, nor compliance by the Investor with any of the provisions of any of the foregoing, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of, any Lien, upon any of the properties or assets of the Investor under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Investor is a party or by which it may be bound, or to which the Investor or any of the properties or assets of the Investor may be subject, or (B) subject to compliance with the statutes and regulations referred to in the next paragraph, and assuming the accuracy of the representations and warranties of the Company and performance of the covenants and agreements of the Company contained herein, violate in any material respect any ordinance, permit, concession, grant, franchise, law, statute, rule or regulation or any judgment, ruling, order, writ, injunction or decree applicable to the Investor or any of its properties, except in the case of clause (A) for such violations, conflicts and breaches that would not have a material and adverse effect on the ability of the Investor to consummate the transactions contemplated by this Agreement in a timely manner.

 

(3)           Other than (i) passivity or anti-association commitments that may be required by the Federal Reserve and (ii) the securities or blue sky laws of the various states and filings, notices, approvals or clearances required under federal or state banking laws, and assuming the accuracy of the representations and warranties of the Company

 

  

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and the performance of the covenants and agreements of the Company contained herein, no 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 the Investor of the transactions contemplated by this Agreement.

 

(c)           Purchase for Investment.

 

(1)           The acquisition of the Purchased Shares by the Investor is for the Investor’s own account, is for investment purposes only, and is not with a view to, nor for offer or sale for the Company in connection with, the distribution of any of the Purchased Shares.  The Investor is not participating and does not have a participation in any such distribution or the underwriting of any such distribution.  The Investor has no present intention of selling or otherwise disposing of any of the Purchased Shares other than in accordance with applicable law.

 

(2)           The Investor is an “accredited investor” as that term is defined in Rule 501 promulgated under the Securities Act.  The Investor has such knowledge and experience in financial and business matters as to be capable of evaluating the risks and merits of this investment.

 

(3)           The Investor is able to bear the economic risk of an investment in the Purchased Shares.  The Investor has conducted its own investigation of the Company, the Company Subsidiaries and the terms of the Purchased Shares.  The Investor has received all the information it considers necessary or appropriate for deciding whether to acquire the Purchased Shares.  The Investor has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Purchased Shares and the business and financial condition of the Company and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to it or to which it had access.  The Investor has not received, and is not relying on, any representations or warranties, written or oral or express or implied, of any nature whatsoever, from the Company or any other person other than as specifically set forth in this Agreement.  Notwithstanding the foregoing, nothing herein shall limit the Investor’s rights with respect to fraud or intentional misrepresentation by the Company in connection with the Transactions or be deemed to be a waiver of any such rights.

 

(4)           The Investor acknowledges that the Purchased Shares have not been and will not be, registered under the Securities Act or the securities laws of any state and therefore cannot be sold unless such Purchased Shares subsequently are registered under the Securities Act and any applicable state securities laws or exemptions from registrations thereunder are available.

 

(5)           The Investor acknowledges that the Company is relying on the foregoing representations and warranties for the purpose of compliance with applicable federal and state securities laws.

 

  

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(d)           Financial Capability.  At Closing, the Investor will have available funds necessary to consummate the Closing on the terms and conditions contemplated by this Agreement and has the ability to bear the economic risks of its prospective investment in the Purchased Shares and can afford the complete loss of such investment.

 

(e)           Investment Decision.

 

(1)           The Investor has independently evaluated the merits of its decision to purchase the Purchased Shares pursuant to this Agreement, and the Investor confirms that it has not relied on the advice of any other person’s business and/or legal counsel in making such decision.  The Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Investor in connection with the purchase of the Purchased Shares constitutes legal, tax or investment advice.  The Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Purchased Shares.  The Investor understands that the Placement Agent has acted solely as the agent of the Company in this placement of the Purchased Shares and the Investor has not relied on the business or legal advice of the Placement Agent or any of its agents, counsel or Affiliates in making its investment decision hereunder, and confirms that none of such persons has made any representations or warranties to the Investor in connection with the transactions contemplated by this Agreement.

 

(2)           The Investor hereby declares and represents that the satisfaction in full of the Company’s obligations under the Credit Agreement and the elimination of the TARP Preferred Stock and the TARP Warrant are critical and integral elements of the transactions contemplated by this Agreement and that, absent the approval and consummation of the satisfaction in full of the Company’s obligations under the Credit Agreement and the elimination of the TARP Preferred Stock and the TARP Warrant under the Plan of Reorganization, the Investor would not be willing to enter into this Agreement and consummate the Investment.

 

(f)           Independence.  The Investor or, in the event that there are investors in the Other Private Placements or the Secondary Treasury Sales that share a common discretionary investment advisor or investment manager with the Investor, such duly appointed investment advisor or investment manager of the Investor acting in its capacity as investment advisor or investment manager of the Investor (the “Investment Manager”) (A) reached its decision to invest in the Company independently from any investor in the Other Private Placements or the Secondary Treasury Sales, (B) has not entered into any agreement or understanding with any investor in the Other Private Placements or the Secondary Treasury Sales to act in concert for the purpose of exercising a controlling influence over the Company or any Company Subsidiary, including any agreements or understandings regarding the voting or transfer of shares of the Company, (C) has not shared due diligence materials prepared by (x) such Investor or any of its advisors or representatives or (y) the Investment Manager, as applicable, with respect to the Company or any Company Subsidiary with any investor in the Other Private Placements or Secondary Treasury Sales (it being understood that the Investment Manager advising or sharing any due diligence materials prepared by it with the investors in the Other Private Placements who share the Investment Manager with the Investor shall not be considered sharing materials in

 

  

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violation of this clause (C), even if such investors receive the identical advice or materials from the Investment Manager as the Investor), (D) has not been induced by, nor has induced, any investor in the Other Private Placements or the Secondary Treasury Sales, to enter into the transactions contemplated by this Agreement or the Other Private Placements or the Secondary Treasury Sales, (E) has not entered into any agreement with respect to the Primary Investment Transactions or the Secondary Treasury Sales other than this Agreement, (F) acknowledges that the right to an Investor Designated Director (as defined below) is being provided to certain investors in the Primary Investment Transactions to permit such person to monitor and protect its economic interest in the Company following the Closing and that the composition of the Board of Directors is generally designed to be commensurate with the ownership percentage held by such persons relative to the other Investors in the Primary Investment Transactions and the Secondary Treasury Sales, subject to applicable regulatory limitations and requirements for passive, non-controlling investors, and (G) reached its decision to invest in the Company without regard to the identity of any particular investor in the Primary Investment Transactions that will have the right to nominate an Investor Designated Director.  Neither the Investor nor any of its Affiliates presently holds or owns any capital stock of the Company and, upon consummation of the Transactions, the Investor and its Affiliates will be treated as owning only the Purchased Shares for purposes of Section 382 of the Code.  No partner, member or other equityholder in the Investor will indirectly own a five percent (5%) or greater interest in the Company solely as a result of such person's interest in the Investor; provided, however, that the foregoing representation shall not be deemed breached if such person will indirectly own a five percent (5%) or greater interest in the Company solely as a result of such person's interest in the Investor if (i) such person has no other direct or indirect interest in the Company and (ii) such person has no partner, member or other equityholder of its own that will indirectly own a five percent (5%) or greater interest in the Company as a result of such person's interest in it.  The Investor agreed to enter into this Agreement based, in part, on its expectation, following its discussions with the Placement Agent and the Company, that the Primary Investment Transactions and the Secondary Treasury Sales would be at least adequately subscribed. Such decisions to enter into this Agreement were not based on the identity of any other investor or potential investor (including whether management of the Company would or would not invest) in the Primary Investment Transactions or the Secondary Treasury Sales.

 

(g)           Knowledge as to Required Approvals.  As of the date of this Agreement, the Investor has no knowledge of any reason relating to the Investor or any of its Affiliates why the Required Approvals will not be obtained without the imposition of any Burdensome Condition.

 

(h)           Brokers and Finders.  The Investor has not 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 Investor in connection with the transactions contemplated by this Agreement.

 

  

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ARTICLE III

 

COVENANTS

 

3.1           Filings; Other Actions.  The Investor, on the one hand, and the Company, on the other hand, will cooperate and consult with the other and use reasonable best efforts to prepare and file all necessary and customary documentation, to effect all necessary and customary applications, notices, petitions, filings and other documents, and to obtain all necessary and customary permits, consents, orders, approvals and authorizations of, or exemptions from, all Governmental Entities (and, solely with respect to the Company, the Bankruptcy Court) and third parties, (i) necessary or advisable to consummate the transactions contemplated by this Agreement (including all transactions that are conditions to Closing hereunder) or the Other Private Placements, and to perform the covenants contemplated by this Agreement to be performed by it and (ii) with respect to the Investor, to the extent typically provided by the Investor to such third parties or Governmental Entities, as applicable, under the Investor’s policies consistently applied and subject to such confidentiality requests as the Investor may reasonably seek.  Each of the parties hereto 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 parties may reasonably request to consummate or implement such transactions or to evidence such events or matters, subject, in each case, to clauses (i) and (ii) of the first sentence of this Section 3.1.  The Investor and the Company will each use its reasonable best efforts to promptly obtain or submit, and the Company and the Investor will cooperate as may reasonably be requested by the Investor or the Company, as the case may be, to help the Investor and the Company promptly obtain or submit, as the case may be, as promptly as practicable, the approvals and authorizations of, any additional filings and registrations with, and any additional notifications to, all notices to and, to the extent required by laws, rules, regulations, consents, approvals or exemptions from Governmental Entities (and, solely with respect to the Company, the Bankruptcy Court) or third parties, subject, in each case, to clauses (i) and (ii) of the first sentence of this Section 3.1.  In furtherance of the foregoing, if required, the Investor and the Company shall make all necessary applications, notices, petitions, filings and other documents in connection with the Required Approvals required to be obtained by it, not later than five (5) business days following the date of this Agreement, and the Investor and the Company shall use, and shall cause their respective Affiliates to use, reasonable best efforts to, as promptly as possible, respond fully to all requests for additional information from the Federal Reserve or the OCC.  The Investor and the Company will each have the right to review in advance, and to the extent practicable, each will consult with the other, in each case subject to applicable laws relating to the exchange of information and confidential information related to the Investor or the Company, all the information (other than confidential 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 (other than public filings with the Bankruptcy Court) in connection with the transactions contemplated by this Agreement; provided, however, that the Company shall not allow any other investor in the Other Private Placements to review any such information relating to the Investor.  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 relating to completion of the transactions contemplated hereby.  The Investor and the Company shall promptly furnish each other to the extent permitted by applicable laws with copies of written

 

  

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communications received by them or their Affiliates from, or delivered by any of the foregoing to, any Governmental Entity (other than public filings with the Bankruptcy Court) in respect of the transactions contemplated by this Agreement; provided that the party delivering any such document may redact any confidential information contained therein.  Notwithstanding anything to the contrary herein, nothing contained in this Agreement shall require the Investor or any of its Affiliates to (i) take any action that would result in the Investor or any of its Affiliates being deemed to control the Company or the Bank for purposes of the Change in Bank Control Act of 1978, the HOLA or the cross-guaranty liability provisions of the FDI Act, or that would require any such entity to register as a savings and loan holding company, (ii) 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 would result in a Burdensome Condition or (iii) provide to the Company any of its, its Affiliates’, its investment advisor’s or its or their control persons’ or equity holders’ nonpublic, proprietary, personal or otherwise confidential information including the identities of limited partners, shareholders or members of the Investor or its Affiliates or their investment advisors.  So long as the Investor holds any securities of the Company, the Company will not, without the consent of the Investor, take any action, directly or indirectly through its subsidiaries or otherwise, that the Board of Directors believes in good faith would reasonably be expected to cause the Investor to be subject to transfer restrictions or other covenants of the FDIC Statement of Policy on Qualifications for Failed Bank Acquisitions as in effect at the time of taking such action or thereunder.

 

3.2           Access, Information and Confidentiality.

 

(a)           From the date of this Agreement, until the date when the Investor no longer beneficially owns at least fifty percent (50%) or more of all of the Purchased Shares (a “Qualifying Ownership Interest”), subject to applicable law or regulatory requirements, the Company will use reasonable efforts to afford the Investor and its representatives (including counsel, accountants, investment advisors and other professionals retained by the Investor) such access during normal business hours to its and the Company Subsidiaries’ books, records, properties and personnel and to such other information as the Investor may reasonably request.

 

(b)           Each party to this Agreement will hold, and will cause its respective subsidiaries and their directors, officers, employees, agents, consultants, and advisors, as applicable, to hold, in strict confidence, unless disclosure to a Governmental Entity (and, solely with respect to the Company, the Bankruptcy Court) is necessary or appropriate in connection with any necessary regulatory approval or unless compelled to disclose by judicial or administrative process or by other requirement of law or the applicable requirements of any Governmental Entity (and, solely with respect to the Company, the Bankruptcy Court), all nonpublic records, books, contracts, instruments, computer data and other data and information (collectively, “Information”) concerning the other party hereto furnished to it by such other party or its representatives pursuant to this Agreement (except to the extent that such Information can be shown to have been (1) previously known by such party on a nonconfidential basis, (2) in the public domain through no fault of such party, or (3) later lawfully acquired from other sources by the party to which it was furnished), and neither party hereto shall release or disclose such Information to any other person, except its auditors, attorneys, financial advisors, other consultants, and advisors and, to the extent permitted above, to bank regulatory authorities.  Prior to any disclosure of Information permitted by the prior sentence, the party proposing to disclose

 

  

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such Information shall, to the extent legally permissible, provide notice to the other party so that the other party may, at its own expense, seek an protective order or other appropriate remedy and/or waive compliance with the provisions of this Section 3.2(b).  If such protective order or other remedy is denied, the party proposing to disclose such Information shall (x) furnish only that portion of the Information that, based upon the advice of counsel, is necessary to be disclosed in connection with such necessary regulatory approval or is compelled to be disclosed by such judicial or administrative process or by such other requirement of law or such applicable requirements and (y) use its reasonable best efforts to obtain assurances that confidential treatment will be accorded to the Information.

 

3.3           Reasonable Best Efforts.  Subject to the other provisions of this Agreement, each of the Company and the Investor agree to use their respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement, including using reasonable best efforts to accomplish the following:  (a) the taking of all reasonable acts necessary to cause the conditions to Closing to be satisfied; (b) the making of all necessary registrations and filings and the taking of all reasonable steps necessary to obtain an approval, order or waiver from, or to avoid an action or proceeding by any Governmental Entity (and, solely with respect to the Company, the Bankruptcy Court) or third party, and the obtaining of all necessary actions or nonactions, waivers, consents and approvals from Governmental Entities (and, solely with respect to the Company, the Bankruptcy Court) or third parties, including the Required Approvals and, solely with respect to the Company, the confirmation of the Plan of Reorganization by the Bankruptcy Court; (c) solely with respect to the Company, the TARP Exchange; (d) solely with respect to the Company, the Senior Debt Settlement; (e) solely with respect to the Company, the Debt Issuance; (f) solely with respect to the Company, the confirmation by the Bankruptcy Court of the Plan of Reorganization; (g) solely with respect to the Company, the Delaware Conversion and the Amended Charter; (h) solely with respect to the Company, file the Bankruptcy Case with the Bankruptcy Court on the Petition Date; (i) solely with respect to the Company, assume this Agreement and the stock purchase agreements in the Other Private Placements under Section 365 of the Bankruptcy Code in the Bankruptcy Case at the confirmation of the Plan of Reorganization; and (j) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement.

 

ARTICLE IV

 

ADDITIONAL AGREEMENTS

 

4.1           Governance Matters.  Subject to the satisfaction of all legal, regulatory and governance requirements, immediately or as promptly as practicable following the Closing, the Company shall cause the Board of Directors to be reconstituted to consist of eight (8) members as follows: Chris Bauer, one representative designated by an investor in the Other Private Placements, one representative designated by another investor in the Other Private Placements, one representative designated by a third investor in the Other Private Placements, and four (4) independent directors reasonably acceptable to the Company.

 

  

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4.2           Transfers; Legend; Form D.

 

(a)           The Investor acknowledges that the Purchased Shares have not been, and, subject to Section 4.5, will not be, registered under the Securities Act or under any state securities laws and agrees (i) that it 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 and (ii) prior to the six (6) month  anniversary of the Closing, it shall not sell or otherwise dispose of any Purchased Shares except to one or more Permitted Transferees who shall have agreed in writing to be bound by the terms of this Agreement pursuant to a joinder agreement reasonably satisfactory to the Company.  Any attempt to sell or otherwise dispose of any Purchased Shares not in compliance with this Agreement shall be null and void ab initio, and the Company shall not, and shall cause any transfer agent not to, give any effect in the Company’s stock records to such attempted sale or disposition.  “Permitted Transferee” shall mean (x) any Person to whom the Common Stock is transferred from the Investor (1) by will or the laws of descent and distribution or (2) by gift for estate-planning purposes without consideration of any kind; provided that, in the case of clause (2), such transferee is the spouse, the lineal descendant, sibling or parent of such Investor or lineal descendent of any of the foregoing, or (y) a trust that is for the exclusive benefit of such Investor or its Permitted Transferees under (x) above; provided that any transfer by the Investor (other than pursuant to clause (x)(1) above) shall not be deemed to have been made to a Permitted Transferee unless such Investor retained any and all voting rights regarding the Common Stock so transferred.

 

(b)           The Investor agrees that all certificates or other instruments representing the Purchased Shares subject to this Agreement will bear a legend substantially to the following effect:

 

“(1) 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.

 

(2) THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS SET FORTH IN A STOCK PURCHASE AGREEMENT, DATED AS OF AUGUST 12, 2013, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.”

 

(c)           Upon request of the Investor, 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 or applicable state laws, as the case may be, the Company shall promptly cause the legend to be removed from any certificate for any Purchased Shares.

 

  

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(d)           The Company agrees to timely file a Form D with respect to the Purchased Shares as required under Regulation D.  The Company, on or before the Closing Date, shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Common Stock for sale to the Investor pursuant to this Agreement under applicable securities or blue sky laws of the states of the United States (or to obtain an exemption from such qualification).  The Company shall make all filings and reports relating to the offer and sale of the Purchased Shares required under applicable securities or blue sky laws of the states of the United States following the Closing Date.

 

4.3           Indemnity.

 

(a)           From and after the Closing, the Company agrees to indemnify and hold harmless the Investor and its Affiliates and each of their respective officers, directors, direct or indirect partners or members, employees, agents and investment advisors, as applicable, to the fullest extent lawful, from and against any and all actions, suits, claims, proceedings, costs, losses, liabilities, damages, expenses (including reasonable attorneys’ fees and disbursements), amounts paid in settlement and other costs (collectively, “Losses”) arising out of or resulting from (1) any inaccuracy in or breach of any of the Company’s representations or warranties in Section 2.2 of this Agreement, (2) the Company’s material breach of any agreements or covenants made by the Company in this Agreement or (3) any Losses arising out of or resulting from any legal, administrative or other proceedings instituted by any Governmental Entity, stockholder of the Company or any other person (other than the Investor and its Affiliates and the Company and the Company Subsidiaries) arising out of the transactions contemplated by this Agreement (other than any Losses attributable to the acts, errors or omissions on the part of the Investor, but not including the transactions contemplated hereby).

 

(b)           A party entitled to indemnification hereunder (each, an “Indemnified Party”) shall give written notice to the party indemnifying it (the “Indemnifying Party”) of any claim with respect to which it seeks indemnification promptly (and in no event more than thirty (30) days) after the discovery by such Indemnified Party of any matters giving rise to a claim for indemnification; provided that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 4.3 unless and to the extent that the Indemnifying Party shall have been materially and adversely prejudiced by the failure of such Indemnified Party to so notify such party.  Such notice shall describe in reasonable detail such claim to the extent known by the Indemnified Party.  In case any such action, suit, claim or proceeding is brought against an Indemnified Party, the Indemnified Party shall be entitled to hire, at the cost and expense of the Indemnifying Party, counsel and conduct the defense thereof; provided, however, that the Indemnifying Party shall be entitled to assume and conduct the defense thereof, unless the counsel to the Indemnified Party advises such Indemnifying Party in writing that such claim involves a conflict of interest (other than one of a monetary nature) that would make it inappropriate for the same counsel to represent both the Indemnifying Party and the Indemnified Party, in which case the Indemnified Party shall be entitled to retain its own counsel at the cost and expense of the Indemnifying Party (except that the Indemnifying Party shall only be liable for the legal fees and expenses of one law firm for all Indemnified Parties, taken together with respect to any single action or group of related actions).  If the Indemnifying Party assumes the defense of any claim, all Indemnified Parties shall thereafter deliver to the Indemnifying Party copies of all notices and documents (including court

 

  

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papers) received by the Indemnified Party relating to the claim, and each Indemnified Party shall cooperate in the defense or prosecution of such claim.  Such cooperation shall include the retention and (upon the Indemnifying Party’s request) the provision to the Indemnifying Party of records and information that are reasonably relevant to such claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.  The Indemnifying Party shall not be liable for any settlement of any action, suit, claim or proceeding effected without its written consent; provided, however, that the Indemnifying Party shall not unreasonably withhold or delay its consent.  The Indemnifying Party further agrees that it will not, without the Indemnified Party’s prior written consent, settle or compromise any claim or consent to entry of any judgment in respect thereof in any pending or threatened action, suit, claim or proceeding in respect of which indemnification has been sought hereunder unless such settlement or compromise (A) includes an unconditional release of such Indemnified Party from all liability arising out of such action, suit, claim or proceeding, (B) provides solely for the payment of money damages and not any injunctive or equitable relief or criminal penalties and (C) does not create any financial or other obligation on the part of an Indemnified Party which would not be indemnified in full by the Indemnifying Party.

 

(c)           For purposes of the indemnity contained in Sections 4.3(a)(1), all qualifications and limitations set forth in the parties’ representations and warranties as to “materiality,” “Material Adverse Effect” and words of similar import, shall be disregarded in determining whether there shall have been any inaccuracy in or breach of any representations and warranties in this Agreement.

 

(d)           The Company shall not be required to indemnify the Indemnified Parties pursuant to Section 4.3(a)(1) (i) with respect to any claim for indemnification if the amount of Losses with respect to such claim are less than $25,000 (any claim involving Losses less than such amount being referred to as a “De Minimis Claim”) and (ii) unless and until the aggregate amount of all Losses incurred with respect to all claims (other than De Minimis Claims) pursuant to Section 4.3(a)(1) exceed an amount equal to the product of (x) 2.85%, multiplied by (y) the Purchase Price (the “Threshold Amount”), in which event the Company shall be responsible for all Losses incurred by the Indemnified Party (without regard to the Threshold Amount).  The cumulative indemnification obligations of the Company hereunder shall in no event exceed the Purchase Price.

 

(e)           In the event of any transfer of the Purchased Shares to a third party that is not an Affiliate of the Investor, the Company shall have no obligations under this Section 4.3 to such transferee.  The indemnity provided for in this Section 4.3 shall be the sole and exclusive monetary remedy of Indemnified Parties after the Closing for any inaccuracy of any of the representations and warranties contained in Sections 2.2 and 2.3 of this Agreement or any other breach of any covenant or agreement contained in this Agreement; provided that nothing herein shall limit in any way any such party’s remedies in respect of fraud, intentional misrepresentation or omission or intentional misconduct by the other party in connection with the transactions contemplated hereby.  No party to this Agreement (or any of its Affiliates) shall, in any event, be liable or otherwise responsible to any other party (or any of its Affiliates) for any punitive damages of such other party (or any of its Affiliates) arising out of or relating to this Agreement or the performance or breach hereof.

 

  

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(f)           Any indemnification payments pursuant to this Section 4.3 shall be treated as an adjustment to the Purchase Price for the Purchased Shares for U.S. federal income and applicable state and local Tax purposes, unless a different treatment is required by applicable law.

 

4.4           Preemptive Rights.

 

(a)           Following the Closing, for so long as the Investor has a Qualifying Ownership Interest, if the Company proposes to issue (a “New Issuance”) any equity (including shares of Common Stock or shares of Company Preferred Stock), or any securities, options or debt that are convertible or exchangeable into equity or that include an equity component (any such security, a “New Security”), the Company shall provide written notice of such proposed New Issuance to the Investor no later than fifteen (15) business days prior to the anticipated issuance date (the “Preemptive Rights Notice”).  The Investor shall have the right to purchase for cash, at the price and on the same terms and conditions and at the same time as the New Issuance, such number of New Securities as are required to enable it to maintain its proportionate Common Stock-equivalent interest in the Company immediately prior to any such issuance of New Securities (the “Preemptive Amount”).  The Preemptive Rights Notice shall set forth all material terms and conditions of the New Issuance, including the number New Securities proposed to be issued, the issue price and the maximum number of New Securities that the Investor may purchase in the New Issuance pursuant to the immediately preceding sentence.

 

(b)           The Investor may elect to participate in the New Issuance to the extent described in Section 4.4(a) by delivering an irrevocable written notice to the Company by the date specified by the Company in the Preemptive Rights Notice (which shall be no later than three (3) business days before the anticipated date of the New Issuance), setting forth the number of shares the Investor wishes to purchase in the New Issuance up to its Preemptive Amount; provided that in order to exercise rights under this Section 4.4 (“Preemptive Rights”), the Investor must execute all customary transaction documentation in connection with such New Issuance on the same terms as any other participant in the New Issuance; provided, further, that in the event that the Company is issuing more than one type or class of New Securities in connection with such New Issuance, the Investor participating in such issuance shall be required to acquire the same percentage of all such types and classes of securities.

 

(c)           The closing of the acceptances of the Preemptive Rights shall take place at the same time as the closing(s) under definitive agreements with other participants in the New Issuance, which in any event shall occur within ninety (90) days after the anticipated date of the New Issuance as set forth in the Preemptive Rights Notice.  In the event that the New Issuance is not consummated within the time frame described above, the Company’s right to consummate such New Issuance shall expire and the Company shall be required to comply with the procedures set forth in this Section 4.4 prior to any subsequent New Issuance.  At the consummation of any New Issuance, the Company shall issue certificates to the Investor promptly following payment by the Investor of the purchase price for such exercise in accordance with the terms and conditions as specified in the Preemptive Rights Notice.

 

(d)           Notwithstanding anything to the contrary herein, the Investor shall not have any Preemptive Rights in connection with (i) any issuance of New Securities to management, consultants, employees, officers or directors of the Company pursuant to

 

  

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management or employee incentive programs or plans approved by the Board of Directors (including any such programs or plans in existence on the date hereof), (ii) any issuance, delivery or sale of New Securities by the Company to any person as consideration in connection with (but not in connection with raising capital to fund) (1) an acquisition or strategic business combination approved by the Board of Directors or (2) an investment by the Company approved by the Board of Directors in any party which is not prior to such transaction an Affiliate of the Company (whether by merger, consolidation, stock swap, sale of assets or securities, or otherwise), (iii) any issuance, delivery or sale of New Securities in any registered public offering or (iv) any issuance of New Securities in connection with any stock split, stock dividend paid on a proportionate basis to all holders of the affected class of capital stock or recapitalization approved by the Board of Directors (any such issuance, an “Exempted Issuance”).

 

(e)           Notwithstanding the foregoing provisions of this Section 4.4, if a majority of the directors of the Board of Directors determines that the Company must issue equity or debt securities on an expedited basis, then the Company may consummate the proposed issuance or sale of such securities (“Expedited Issuance”) and then comply with the provisions of this Section 4.4 provided that (i) the purchaser(s) of such New Securities has consented in writing to the issuance of additional New Securities in accordance with the provisions of this Section 4.4, and (ii) the sale of any such additional New Securities under this Section 4.4(e) to the Investor and certain other investors in the Other Private Placements pursuant to this Section 4.4 and similar provisions in the other stock purchase agreements in the Other Private Placements shall be consummated as promptly as is practicable but in any event no later than ninety (90) days subsequent to the date on which the Company consummates the Expedited Issuance under this Section 4.4(e).  Notwithstanding anything to the contrary herein, the consent of the purchasers of such New Securities shall not be required in connection with any Expedited Issuance undertaken at the written direction of the applicable federal regulator of the Company or the Bank.

 

(f)           In addition, the Investor shall not have any Preemptive Rights in connection with any issuance of New Securities to the extent that a majority of the Board of Directors determines that such issuance would materially increase the risk of or cause an “ownership change” within the meaning of Section 382 of the Code.

 

4.5           Registration Rights.

 

(a)           Registration.

 

(1)           Subject to the terms and conditions of this Agreement, the Company covenants and agrees that as promptly as practicable after the Closing Date (and in any event, no later than the date that is ninety (90) days after the Closing Date), (i) the Company shall have prepared and filed with the SEC one or more Shelf Registration Statements on Form S-1 covering the resale of Registrable Securities and the Company shall use reasonable best efforts to cause such Shelf Registration Statement to be declared or become effective and to keep such Shelf Registration Statement continuously effective and in compliance with the Securities Act and usable for resale of such Registrable Securities for a period from the date of its initial effectiveness until the time as there are no such Registrable Securities remaining (including by refiling such Shelf Registration Statement (or a new Shelf Registration Statement) if the initial Shelf Registration

 

  

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Statement expires) and (ii) the Company shall register the Registrable Securities on Form S-3 promptly after such form is available.

 

(2)           Any registration pursuant to this Section 4.5(a) shall be effected by means of a shelf registration under the Securities Act (a “Shelf Registration Statement”) in accordance with the methods and distribution set forth in the Shelf Registration Statement and Rule 415.  If the Investor or any other holder of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with this Agreement intends to distribute any Registrable Securities by means of an underwritten offering it shall promptly so advise the Company and the Company shall take all reasonable steps to facilitate such distribution, including the actions required pursuant to Section 4.5(c).  The lead underwriters in any such distribution shall be selected by the holders of a majority of the Registrable Securities to be distributed hereunder (provided that such lead underwriters shall be reasonably acceptable to the Company).

 

(3)           The Company shall not be required to effect a registration (including a resale of Registrable Securities from an effective Shelf Registration Statement):

 

(i)           with respect to securities that are not Registrable Securities or with respect to Registrable Securities that cannot be sold under a registration statement as a result of the transfer restrictions set forth herein;

 

(ii)           during any Scheduled Black-out Periods, with respect to any resale of Registrable Securities from an effective Shelf Registration Statement by the Investor only if the Investor, at such time, has contractually designated (1) an individual to serve as a member of the Board of Directors (an “Investor Designated Director”), and such Investor Designated Director has been elected or appointed to the Board of Directors, or (2) an individual to attend meetings of the Board of Directors, the Bank Board or any committees thereof as a non-voting observer (an “Observer”); or

 

(iii)           if the Company has notified the Investor and all other Holders that in the good faith judgment of the Board of Directors, it would be materially detrimental to the Company or its security holders for such registration to be effected at such time, in which event the Company shall have the right to defer such registration for a period of not more than forty five (45) days after receipt of the request of the Investor or any other Holder; provided that such right to delay a registration pursuant to this clause (iii) shall be exercised by the Company (x) only if the Company has generally exercised (or is concurrently exercising) similar black-out rights (if any) against holders of similar securities that have registration rights and (y) not more than two times in any twelve (12)-month period and not more than ninety (90) days in the aggregate in any twelve (12)-month period.

 

  

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The Company shall provide the Investor written notice of any Scheduled Black-out Period, if applicable to such Investor, no later than five (5) business days prior to the commencement of such Scheduled Black-out Period.

 

(4)           If during any period when the Shelf Registration Statement is not effective or available, the Company proposes to register any of its securities, other than a registration pursuant to Section 4.5(a)(1) or a Special Registration, and the registration form to be filed may be used for the registration or qualification for distribution of Registrable Securities, the Company shall give prompt written notice to the Investor and all other Holders of its intention to effect such a registration (but in no event less than ten (10) business days prior to the anticipated filing date) and shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within ten (10) business days after the date of the Company’s notice (a “Piggyback Registration”).  Any such person that has made such a written request may withdraw its Registrable Securities from such Piggyback Registration by giving written notice to the Company and the managing underwriter, if any, on or before the fifth (5th)  business day prior to the planned effective date of such Piggyback Registration.  The Company may terminate or withdraw any registration under this Section 4.5(a)(4) prior to the effectiveness of such registration, whether or not the Investor or any other Holders have elected to include Registrable Securities in such registration.

 

(5)           If the registration referred to in Section 4.5(a)(4) is proposed to be underwritten, the Company shall so advise the Investor and all other Holders as a part of the written notice given pursuant to Section 4.5(a)(4).  In such event, the right of the Investor and all other Holders to registration pursuant to this Section 4.5(a) shall be conditioned upon such persons’ participation in such underwriting and the inclusion of such person’s Registrable Securities in the underwriting, and each such person shall (together with the Company and the other persons distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company.  If any participating person disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Investor.

 

(6)           Except for the registration rights granted to certain other investors in the Other Private Placements, the Company represents and warrants that it has not granted to any holder of its securities and agrees that it shall not grant “piggyback” registration rights to one or more third parties to include their securities in the Shelf Registration Statement or in an underwritten offering under the Shelf Registration Statement pursuant to Section 4.5(a)(2).  If (x) the Company grants “piggyback” registration rights to certain other investors in the Other Private Placements to include their securities in an underwritten offering under the Shelf Registration Statement pursuant to Section 4.5(a)(2) or (y) a Piggyback Registration under Section 4.5(a)(4) relates to an underwritten primary offering on behalf of the Company, and in either case the managing underwriters advise the Company that in their reasonable opinion the number of securities requested to be included in such offering exceeds the number which

 

  

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can be sold without adversely affecting the marketability of such offering (including an adverse effect on the per share offering price), the Company shall include in such registration or prospectus only such number of securities that in the reasonable opinion of such underwriters can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities shall be so included in the following order of priority:  (i) first, in the case of a Piggyback Registration under Section 4.5(a)(4), the securities the Company proposes to sell, (ii) second, Registrable Securities of the Investor and all other Holders who have requested registration of Registrable Securities pursuant to Sections 4.5(a)(2) or 4.5(a)(4) of this Agreement, as applicable, pro rata on the basis of the aggregate number of such securities or shares subject to such request and (iii) third, any other securities of the Company that have been requested to be so included, subject to the terms of this Agreement.

 

(b)           Expenses of Registration.  All Registration Expenses incurred in connection with any registration, qualification or compliance hereunder shall be borne by the Company.  Without limiting the foregoing, the Company shall bear its internal expenses (including all salaries and expenses of their officers and employees performing legal, accounting or other duties) and expenses of any person, including special experts, retained by the Company.  All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the Holders selling in such registration pro rata on the basis of the aggregate number of securities or shares being sold.

 

(c)           Obligations of the Company.  The Company shall use its reasonable best efforts for so long as there are Registrable Securities outstanding, to take such actions as are under its control to remain a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) if it becomes eligible for such status in the future and not become an ineligible issuer (as defined in Rule 405 under the Securities Act).  In addition, whenever required to effect the registration of any Registrable Securities or facilitate the distribution of Registrable Securities pursuant to an effective Shelf Registration Statement, the Company shall, as expeditiously as reasonably practicable:

 

(1)           By 9:30 a.m., New York City time on the first business day after the Effective Date of a Shelf Registration Statement, file a final prospectus with the SEC as required by Rule 424(b) under the Securities Act.

 

(2)           Provide to each Holder a copy of any disclosure regarding the plan of distribution or the selling Holder, in each case, with respect to such Holder, at least three (3) business days in advance of any filing with the SEC of any registration statement or any amendment or supplement thereto that amends such information.

 

(3)           Prepare and file with the SEC a prospectus supplement with respect to a proposed offering of Registrable Securities pursuant to an effective registration statement and, subject to this Section 4.5(c), keep such registration statement effective or such prospectus supplement current.

 

  

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(4)           Prepare and file with the SEC such amendments and supplements to the applicable registration statement and the prospectus or prospectus supplement used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

 

(5)           Furnish to the Holders and any underwriters such number of correct and complete copies of the applicable registration statement and each such amendment and supplement thereto (including in each case all exhibits) and of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned or to be distributed by them.

 

(6)           Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holders or any managing underwriter(s), to keep such registration or qualification in effect for so long as such registration statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such Holder; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

 

(7)           Notify each Holder of Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the applicable prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing (which notice shall not contain any material non-public information).

 

(8)           Give written notice to the Holders:

 

	
  

	
(A)

	
when any registration statement filed pursuant to Section 4.5(a) or any amendment thereto has been filed with the SEC (except for any amendment effected by the filing of a document with the SEC pursuant to the Exchange Act) and when such registration statement or any post-effective amendment thereto has become effective;

 

	
  

	
(B)

	
of any request by the SEC for amendments or supplements to any registration statement or the prospectus included therein or for additional information;

 

	
  

	
(C)

	
of the issuance by the SEC of any stop order suspending the effectiveness of any registration statement or the initiation of any proceedings for that purpose;

 

  

40

  

	
  

	
(D)

	
of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

 

	
  

	
(E)

	
of the happening of any event that requires the Company to make changes in any effective registration statement or the prospectus related to the registration statement in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made); and

 

	
  

	
(F)

	
if at any time the representations and warranties of the Company contained in any underwriting agreement contemplated by Section 4.5(c)(12) cease to be true and correct, in each case which notice shall not contain any material nonpublic information.

 

(9)           Use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any registration statement referred to in Section 4.5(c)(8)(C) at the earliest practicable time.

 

(10)           Upon the occurrence of any event contemplated by Section 4.5(c)(7) or 4.5(c)(8)(E) and subject to the Company’s rights under Section 4.5(d), the Company shall promptly prepare a post-effective amendment to such registration statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to the Holders and any underwriters, the prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(11)           Use reasonable best efforts to procure the cooperation of the Company’s transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical stock certificates into book-entry form in accordance with any procedures reasonably requested by the Holders or any managing underwriter(s).

 

(12)           If an underwritten offering is requested pursuant to Section 4.5(a)(2), enter into an underwriting agreement in customary form, scope and substance and take all such other actions reasonably requested by the Holders of a majority of the Registrable Securities being sold in connection therewith or by the managing underwriter(s), if any, to expedite or facilitate the underwritten disposition of such Registrable Securities, and in connection therewith in any underwritten offering (including making members of management and executives of the Company available to participate in “road shows,” similar sales events and other marketing activities), (i) make

 

  

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such representations and warranties to the Holders that are selling stockholders and the managing underwriter(s), if any, with respect to the business of the Company and the Company Subsidiaries, and the Shelf Registration Statement, prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in customary form, substance and scope, and, if true, confirm the same if and when requested, (ii) use its reasonable best efforts to furnish the underwriters with opinions of counsel to the Company, addressed to the managing underwriter(s), if any, covering the matters customarily covered in such opinions requested in underwritten offerings, (iii) use its reasonable best efforts to obtain “cold comfort” letters from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any business acquired by the Company for which financial statements and financial data are included in the Shelf Registration Statement) who have certified the financial statements included in such Shelf Registration Statement, addressed to each of the managing underwriter(s), if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters, (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures customary in underwritten offerings, and (v) deliver such documents and certificates as may be reasonably requested by the Holders of a majority of the Registrable Securities being sold in connection therewith, their counsel and the managing underwriter(s), if any, to evidence the continued validity of the representations and warranties made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company.

 

(13)           Make available for inspection by a representative of Holders that are selling stockholders, the managing underwriter(s), if any, and any attorneys or accountants retained by such Holders or managing underwriter(s), at the offices where normally kept, during reasonable business hours, financial and other records, pertinent corporate documents and properties of the Company, and cause the officers, directors and employees of the Company to supply all information, in each case, reasonably requested by any such representative, managing underwriter(s), attorney or accountant in connection with such Shelf Registration Statement.

 

(14)           Cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed or, if no similar securities are then listed on any securities exchange, use its reasonable best efforts to cause all such Registrable Securities to be listed on the New York Stock Exchange or the NASDAQ, as determined by the Company, including, but not limited to, using commercially reasonable efforts to effect a reverse stock split (including any shareholder approvals in connection therewith), at a ratio sufficient to satisfy the minimum bid price requirements for listing the Common Stock on the New York Stock Exchange or the NASDAQ.

 

(15)           If requested by Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith, or the managing underwriter(s), if any, promptly include in a prospectus supplement or amendment such information as the Holders of a majority of the Registrable Securities being registered and/or sold in

 

  

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connection therewith or managing underwriter(s), if any, may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such prospectus supplement or such amendment as soon as practicable after the Company has received such request.

 

(16)           Timely provide to its security holders earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

 

(d)           Suspension of Sales.  During (i) any Scheduled Black-out Period (other than with respect to any resale of Registrable Securities from an effective Shelf Registration Statement if the Investor, at such time, does not have an Investor Designated Director or has not appointed an Observer) or (ii) upon receipt of written notice from the Company that a registration statement, prospectus or prospectus supplement contains or may contain an untrue statement of a material fact or omits or may omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that circumstances exist that make inadvisable use of such registration statement, prospectus or prospectus supplement, each Holder of Registrable Securities shall forthwith discontinue disposition of Registrable Securities pursuant to such registration statement until termination of such Scheduled Black-out Period (if applicable) or until such Holder has received copies of a supplemented or amended prospectus or prospectus supplement, or until such Holder is advised in writing by the Company that the use of the prospectus and, if applicable, prospectus supplement may be resumed, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the prospectus and, if applicable, prospectus supplement covering such Registrable Securities current at the time of receipt of such notice.  The total number of days that any such suspension under clause (ii) of the foregoing may be in effect in any twelve (12)-month period shall not exceed ninety (90) days.

 

(e)           Termination of Registration Rights.  A Holder’s registration rights as to any securities held by such Holder (and its Affiliates, partners, members and former members) shall not be available unless such securities are Registrable Securities.

 

(f)           Furnishing Information.

 

(1)           Neither the Investor nor any Holder shall use any free writing prospectus (as defined in Rule 405) in connection with the sale of Registrable Securities without the prior written consent of the Company.

 

(2)           It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 4.5(c) that the Investor and/or the selling Holders and the underwriters, if any, shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registered offering of their Registrable Securities.

 

  

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(g)           Indemnification.

 

(1)           The Company agrees to indemnify each Holder and, if a Holder is a person other than an individual, such Holder’s officers, directors, employees, agents, representatives, investment advisors and Affiliates, and each person, if any, that controls a Holder within the meaning of the Securities Act (each, an “Indemnitee”), against any and all Losses, joint or several, arising out of or based upon any untrue statement or alleged untrue statement of material fact contained in any registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto or any documents incorporated therein by reference or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto); or any omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that the Company shall not be liable to such Indemnitee in any such case to the extent that any such Losses arise out of or are based upon (i) an untrue statement or omission made in such registration statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto), in reliance upon and in conformity with information regarding such Indemnitee or its plan of distribution or ownership interests which was furnished in writing to the Company by such Indemnitee expressly for use in connection with such registration statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto, or (ii) offers or sales effected by or on behalf such Indemnitee “by means of” (as defined in Rule 159A) a “free writing prospectus” (as defined in Rule 405) that was not authorized in writing by the Company.  In the event of any third party claim asserted against any Indemnitee, the procedures set forth in Section 4.3(b) shall apply to the defense of any such claim.

 

(2)           If the indemnification provided for in Section 4.5(g)(1) is unavailable to an Indemnitee with respect to any Losses or is insufficient to hold the Indemnitee harmless as contemplated therein, then the Company, in lieu of indemnifying such Indemnitee, shall contribute to the amount paid or payable by such Indemnitee as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnitee, on the one hand, and the Company, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of the Company, on the one hand, and of the Indemnitee, on the other hand, shall be determined by reference to, among other factors, whether the untrue statement of a material fact or omission to state a material fact relates to information supplied by the Company or by the Indemnitee and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; the Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 4.5(g)(2) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 4.5(g)(1).  No Indemnitee guilty of fraudulent

 

  

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misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from the Company if the Company was not guilty of such fraudulent misrepresentation.

 

(3)           The indemnity and contribution agreements contained in this Section 4.5(g) are in addition to any liability that the Company may have to the Indemnitees and are not in diminution or limitation of the indemnification provisions under Section 4.3 of this Agreement.

 

(h)           Assignment of Registration Rights.  The rights of the Investor to registration of Registrable Securities pursuant to Section 4.5(a) may be assigned by the Investor to a transferee or assignee of Registrable Securities to which (i) there is transferred to such transferee no less than twenty five percent (25%) of all Registrable Securities held by it and (ii) such Transfer is permitted under the terms hereof; provided, however, that the transferor shall, within ten (10) days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the number and type of Registrable Securities that are being assigned.

 

(i)           Holdback.  With respect to any underwritten offering of Registrable Securities by the Investor or other Holders pursuant to this Section 4.5, the Company agrees not to effect (other than pursuant to such registration or pursuant to a Special Registration) any public sale or distribution, or to file any Shelf Registration Statement (other than such registration or a Special Registration) covering any of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the period not to exceed ten (10) days prior and sixty (60) days following the effective date of such offering or such longer period up to ninety (90) days as may be requested by the managing underwriter.  The Company also agrees to cause each of its directors and senior executive officers to execute and deliver customary lockup agreements in such form and for such time period up to ninety (90) days as may be requested by the managing underwriter.  “Special Registration” means the registration of (i) equity securities and/or options or other rights in respect thereof solely registered on Form S-4 or Form S-8 (or successor form) or (ii) shares of equity securities and/or options or other rights in respect thereof to be offered to directors, members of management, employees, consultants, customers, lenders or vendors of the Company or Company Subsidiaries or in connection with dividend reinvestment plans.

 

(j)           Rule 144.  With a view to making available to the Investor and Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its reasonable best efforts to:

 

(1)           make and keep adequate and current public information with respect to the Company available, as those terms are understood and defined in Rule 144(c)(1) or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of this Agreement;

 

(2)           file with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act, and if at any time the

 

  

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Company is not required to file such reports, make available, upon the request of any Holder, such information necessary to permit sales pursuant to Rule 144A (including the information required by Rule 144A(d)(4) and the Securities Act);

 

(3)           so long as the Investor or a Holder owns any Registrable Securities, furnish to the Investor or such Holder forthwith upon request:  (x) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act, and of the Exchange Act; (y) a copy of the most recent annual or quarterly report of the Company; and (z) such other reports and documents as the Investor or Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration; and

 

(4)           to take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act.

 

(k)           As used in this Section 4.5, the following terms shall have the following respective meanings:

 

(1)           “Holder” means the Investor and any other holder of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with Section 4.5(h) hereof.

 

(2)           “Holders’ Counsel” means one counsel for the selling Holders chosen by Holders holding a majority interest in the Registrable Securities being registered.

 

(3)           “Register,” “registered” and “registration” shall refer to a registration effected by preparing and (a) filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of effectiveness of such registration statement or (b) filing a prospectus and/or prospectus supplement in respect of an appropriate effective registration statement on Form S-3.

 

(4)           “Registrable Securities” means (A) all Common Stock held by the Investor from time to time and (B) any equity securities issued or issuable directly or indirectly with respect to the Common Stock referred to in the foregoing clause (a) by way of conversion, exercise or exchange thereof or stock dividend or stock split or in connection with a combination of shares, recapitalization, reclassification, merger, amalgamation, arrangement, consolidation or other reorganization, provided that, once issued, such securities shall not be Registrable Securities when (i) they are sold pursuant to an effective registration statement under the Securities Act, (ii) they may be sold pursuant to Rule 144 without limitation thereunder on volume or manner of sale and without the requirement for the Company to be in compliance with the current public information requirements under Rule 144(c)(1) (or Rule 144(i)(2), if applicable), (iii) they shall have ceased to be outstanding or (iv) they have been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the

 

  

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transferee of the securities.  No Registrable Securities may be registered under more than one registration statement at one time.

 

(5)           “Registration Expenses” means all expenses incurred by the Company in effecting any registration pursuant to this Agreement (whether or not any registration or prospectus becomes effective or final) or otherwise complying with its obligations under this Section 4.5, including, without limitation, all registration, filing and listing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses, expenses incurred in connection with any “road show,” the reasonable fees and disbursements of Holders’ Counsel (not to exceed $50,000), and expenses of the Company’s independent accountants in connection with any regular or special reviews or audits incident to or required by any such registration, but shall not include Selling Expenses.

 

(6)           “Rule 144,” “Rule 144A,” “Rule 158,” “Rule 159A,” “Rule 405”, “Rule 415” and “Rule 424”mean, in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.

 

(7)           “Scheduled Black-out Period” means the period from and including the fifteenth (15th) day of the third (3rd) month of a fiscal quarter of the Company to and including the business day after the day on which the Company publicly releases its earnings for such fiscal quarter.

 

(8)           “Selling Expenses” means all discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder (other than the fees and disbursements of Holders’ Counsel included in Registration Expenses).

 

(l)           At any time, any holder of Registrable Securities (including any Holder) may elect to forfeit its rights set forth in this Section 4.5 from that date forward; provided, that a Holder forfeiting such rights shall nonetheless be entitled to participate under Sections 4.5(a)(4)-(6) in any Pending Underwritten Offering to the same extent that such Holder would have been entitled to if the holder had not withdrawn; and provided, further, that no such forfeiture shall terminate a Holder’s rights or obligations under Section 4.5(f) with respect to any prior registration or Pending Underwritten Offering.  “Pending Underwritten Offering” means, with respect to any Holder forfeiting its rights pursuant to this Section 4.5(l), any underwritten offering of Registrable Securities in which such Holder has advised the Company of its intent to register its Registrable Securities either pursuant to Section 4.5(a)(2) or Section 4.5(a)(4) prior to the date of such Holder’s forfeiture.

 

4.6           Takeover Laws; No Rights Triggered.

 

(a)           If any Takeover Law may become, or may purport to be, applicable to the Transactions, the Company and the members of the Board of Directors shall grant such approvals and take such actions as are necessary so that the Transactions may be consummated, as promptly as practicable, on the terms contemplated by this Agreement, as the case may be,

 

  

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and otherwise act to eliminate or minimize the effects of any Takeover Law on any of the Transactions.

 

(b)           The Company and the Board of Directors hereby agree not to deem or treat the Investor and each of its “Permissible Transferees” as an “Acquiring Person” (as defined in the Company Rights Agreement) as a result of the consummation of the Transactions, including the purchase of the Purchased Shares or the transfer of any Purchased Shares to a “Permissible Transferee.”

 

4.7           Avoidance of Control.

 

(a)           Each of the Company and the Investor agrees to cooperate and use its reasonable best efforts to ensure that none of the Investor nor any of its Affiliates will become, control, or be deemed to control a “savings and loan holding company” within the meaning of the HOLA.  The Company shall not knowingly take any action which would reasonably be expected to result in any of the Investor or its Affiliates becoming, or controlling, a “savings and loan holding company” within the meaning of the HOLA.

 

(b)           Notwithstanding anything to the contrary in this Agreement, neither the Company nor any Company Subsidiary shall knowingly take any action (including any redemption, repurchase, or recapitalization of Common Stock or securities or rights, options or warrants to purchase Common Stock, or securities of any type whatsoever that are, or may become, convertible into or exchangeable into or exercisable for Common Stock in each case, where the Investor is not given the right to participate in such redemption, repurchase or recapitalization to the extent of the Investor’s pro rata portion), that would reasonably be expected to pose a substantial risk that (i) the Investor’s equity of the Company (together with equity of the Company owned by the Investor’s Affiliates (as such term is used under the HOLA)) would exceed 24.99% of the Company’s total equity or (ii) the Investor’s ownership of any class of voting securities of the Company (together with the ownership by Investor’s Affiliates (as such term is used under the HOLA) of voting securities of the Company) would exceed 9.9% of such class, in each case without the prior written consent of Investor.

 

(c)           The Investor shall not take, permit or allow any action that would cause any Company Subsidiary to become a “commonly controlled insured depository institution” (as that term is defined for purposes of 12 U.S.C. §1815(e), as may be amended or supplemented from time to time, and any successor thereto) with respect to any institution that is not a direct or indirect Company Subsidiary.

 

(d)           In the event that either party hereto, as applicable, breaches its obligations under this Section 4.7 or believes that it is reasonably likely to breach such obligations, it shall immediately notify the other party and shall cooperate in good faith with such other party to modify an ownership or other arrangements or take any other action, in each case, as is necessary to cure or avoid such breach.

 

  

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ARTICLE V

 

TERMINATION

 

5.1           Termination.  This Agreement may be terminated prior to the Closing:

 

(a)           by mutual written consent of the Investor and the Company; or

 

(b)           by the Company or the Investor, upon written notice to the other party, in the event that the Closing does not occur on or before the one hundred eightieth (180th) day following the date of this Agreement (the “Transaction Deadline”); provided, however, that the right to terminate this Agreement pursuant to this Section 5.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date.

 

5.2           Effects of Termination.  In the event of any termination of this Agreement as provided in Section 5.1, this Agreement (other than Section 3.2(b), this Section 5.2 and ARTICLE VI (other than Sections 6.1 and 6.2) and all applicable defined terms, 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 for willful breach of this Agreement.

 

5.3           Automatic Termination.  This Agreement shall terminate automatically without further action by the Company or the Investor if during the pendency of the Bankruptcy Case an order shall be entered by the Bankruptcy Court (a) appointing a trustee under Chapter 7 or Chapter 11 of the Bankruptcy Code in the Bankruptcy Case, (b) appointing an examiner with enlarged powers (beyond those set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) relating to the operation of the business under Section 1106(b) of the Bankruptcy Code in the Bankruptcy Case, or (c) dismissing (under Section 1112 of the Bankruptcy Code or otherwise) or converting the Bankruptcy Case to a Chapter 7 case.

 

5.4           Notice of Other Terminations.  The Company shall promptly notify the Investor if any of the Other Private Placements are terminated.

 

ARTICLE VI

 

MISCELLANEOUS

 

6.1           Survival.  Each of the Company’s representations and warranties set forth in this Agreement shall survive the Closing under this Agreement but only for a period of eighteen (18) months following the Closing Date (or until final resolution of any claim or action arising from the breach of any such representation and warranty, if notice of such breach was provided prior to the end of such period) and thereafter shall expire and have no further force and effect; provided that the representations and warranties in Sections 2.2(a), 2.2(b), 2.2(c), 2.2(d), 2.2(f), 2.2(q), 2.2(v), and 2.2(y) shall survive indefinitely and the representations and warranties in Sections 2.2(i), 2.2(p) and 2.2(u) shall survive until ninety (90) days after the expiration of the applicable statutory periods of limitations.  None of the Investor’s representations and warranties set forth in this Agreement shall survive the Closing.  Except as otherwise provided herein, all

 

  

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covenants and agreements contained herein shall survive for the duration of any statutes of limitations applicable thereto or until, by their respective terms, they are no longer operative.

 

6.2           Expenses.  Each of the parties will bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated pursuant to this Agreement.

 

6.3           Amendment.  No amendment of this Agreement will be effective with respect to any party unless made in writing and signed by a duly authorized representative of such party.

 

6.4           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 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 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.

 

6.5           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 transmission or by e-mail delivery of a .PDF data file and such signatures will be deemed as sufficient as if actual signature pages had been delivered.

 

6.6           Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State.  The parties hereto irrevocably and unconditionally agree that any suit or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby will be tried exclusively in the U.S. District Court for the Southern District of New York or, if that court does not have subject matter jurisdiction, in any state court located in The City and County of New York and the parties agree to submit to the jurisdiction of, and to venue in, such courts; provided that, during the pendency of the Bankruptcy Case, any suit or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby will be tried exclusively in the Bankruptcy Court.

 

6.7           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.

 

6.8           Notices.  Any notice, request, instruction or other document to be given hereunder by any party to the other 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, facsimile or e-mail, upon confirmation of receipt, (b) on the first (1st) business day following the date of dispatch if

 

  

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delivered by a recognized next-day courier service, or (c) on the third (3rd) 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.

 

(1)           If to the Investor, to the addresses and individuals as identified on the Investor’s signature page hereto.

(2)           If to the Company:

 

Anchor BanCorp Wisconsin Inc.

25 West Main Street

Madison, Wisconsin 53703

Attn:  Mark D. Timmerman

Phone:  (608) 252-8784

Facsimile:  (608) 252-8783

Email:           mtimmerman@anchorbank.com

with copies to (which copies alone shall not constitute notice):

 

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Attn:           William S. Rubenstein

Sven G. Mickisch

Phone:  (212) 735-3000

Facsimile:  (212) 735-2000

Email:           William.Rubenstein@skadden.com

Sven.Mickisch@skadden.com

And

 

Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue

Suite 3400

Los Angeles, California 90071

Attn:           Van C. Durrer II

Phone:  (213) 687-5000

Facsimile:  (213) 687-5600

Email:           Van.Durrer@skadden.com

 

6.9           Entire Agreement, Etc.  This Agreement (including the Exhibits, Schedules, and Disclosure Schedules hereto) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, between the parties, with respect to the subject matter hereof; the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and their permitted assigns.  For the avoidance of doubt, the Company agrees that the Investor may assign its rights under this Agreement to any Affiliate and any such

 

  

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transferee shall be included in the term “Investor”; provided that no such assignment by the Investor shall relieve the Investor of any of its liabilities or obligations hereunder.

 

6.10           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.  When used herein:

 

(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 and/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”;

 

(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)           the words “it” or “its” are deemed to mean “him” or “her” and “his” or “her”, as applicable, when referring to an individual;

 

(f)           “business day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York or the State of Wisconsin generally are authorized or required by law or other governmental actions to close;

 

(g)           “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;

 

(h)           “Beneficially Own”, “Beneficial Owner” and “Beneficial Ownership” are defined in Rules 13d-3 and 13d-5 of the Exchange Act;

 

(i)           “knowledge of the Company” or “Company’s knowledge” means the actual knowledge after due inquiry of any of the executive officers of the Company; and

 

  

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(j)           the term “Governmental Approval” means any notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any Governmental Entity, or the expiration or termination of any statutory waiting periods.

 

6.11           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.

 

6.12           Severability.  If any provision of this Agreement or the application thereof to any person (including the officers and directors of the Investor and the Company) 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.  Nothing contained in this Agreement shall be construed to require the Company or the Board of Directors or any other person or entity to take any action or fail to take any action that is contrary to law, whether statutory, common law or otherwise.

 

6.13           No Third-Party Beneficiaries.  Nothing contained in this Agreement, expressed or implied, is intended to confer or shall confer upon any person, other than the express parties hereto, any benefit, right or remedies, except that the provisions of Sections 4.3 and 4.5 shall inure to the benefit of the persons referred to in those Sections, including any Indemnified Parties or Holders.  The representations and warranties set forth in ARTICLE II and the covenants set forth in ARTICLE III and ARTICLE IV have been made solely for the benefit of the parties to this Agreement and (a) may be intended not as statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (b) have been qualified by reference to the Disclosure Schedule, which contains certain disclosures that are not reflected in the text of this Agreement; and (c) may apply standards of materiality in a way that is different from what may be viewed as material by shareholders of, or other investors in, the Company.

 

6.14           Time of Essence.  Time is of the essence in the performance of each and every term of this Agreement.

 

6.15           Public Announcements.  Subject to each party’s disclosure obligations imposed by law or regulation (including in connection with the Bankruptcy Case), each of 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 or the Other Private Placements, and no party hereto will make any such news release or public disclosure without first consulting with the other party hereto and receiving its consent (which shall not be unreasonably withheld, conditioned, or delayed), and each party shall coordinate with the other with respect to any such news release or public disclosure.

 

  

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6.16           Specific Performance.  The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms.  It is accordingly agreed that the parties shall be entitled to specific performance of the terms hereof without the necessity of providing any bond or other security, this being in addition to any other remedies to which they are entitled at law or equity.

 

*  *  *

 

  

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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.

 

 

	  	
ANCHOR BANCORP WISCONSIN INC.

	  	  	  	  
	  	
By:

	  	  
	  	  	
 

	Name:	 	
Mark D. Timmerman

	  	  	  	Title:  	 	
Executive Vice President, Secretary and General Counsel

 

 

 

 

 

 

[Signature Page to Stock Purchase Agreement]

  

 

  

	  	
[INVESTOR]

	 	 
	  	
By:

	 	  
	  	
 

	 	
Name:

	  	  	 	
Title:

	  	  	 	  
	 	 	 	 
	 	 	 	 

 

	  	
Number of Purchased Shares:

	  	 	
 

	  	
Per Share Purchase Price:

	  	 $	
0.10

	  	
Total Purchase Price:

	  	 $	
 

	 	 
	  	
Information for Notices:

	 	 

	  	
 

	 	  
	  	
Attn:

	 	  
	  	
Phone:

	 	  
	  	
Facsimile:

	 	  
	  	
Email:

	 	  

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

	 	 

	  	
 

	 	  
	  	
Attn:

	 	  
	  	
Phone:

	 	  
	  	
Facsimile:

	 	  
	  	
Email:

	 	  

 

 

[Signature Page to Stock Purchase Agreement]exh10-4.htm

Exhibit 10.4

$[           ]

 

Anchor BanCorp Wisconsin Inc.

 

Senior Notes due [       ]

 

PURCHASE AGREEMENT

 

[              ], 2013

Ladies and Gentlemen:

 

Anchor BanCorp Wisconsin Inc., a Wisconsin corporation (the “Company”), hereby agrees with the several purchasers named in Schedule I hereto (the “Purchasers”) as follows:

 

1.      Issuance of Notes. Subject to the terms and conditions herein contained, the Company proposes to issue and sell to the Purchasers up to $[       ] aggregate principal amount of the Company’s Senior Notes due [       ] (each a “Note” and, collectively, the “Notes”).  The coupon rate on the Notes will be [       ]% per annum if the yield on the current five-year U.S. Treasury note (the “UST Rate”) is not greater than [       ]% as indicated on the Bloomberg reference page BBT at 12:00 p.m., New York, New York time on the second business day prior to the Closing Date (as defined herein) (the “Determination Time”); provided, however, that if the UST Rate is greater than [       ]% at the Determination Time, then the coupon rate to be paid (out to the second decimal point) on the Notes will increase by the corresponding increase in the UST Rate over [       ]%, up to a maximum coupon rate on the Notes of [       ]%.  The Notes will be issued pursuant to an Indenture, substantially in the form attached hereto as Exhibit A (the “Indenture”), to be dated on or about the Closing Date, between the Company and Wilmington Trust, National Association, as trustee (the “Trustee”).

 

On or prior to the date hereof, the Company delivered to the Purchasers a letter (a “Disclosure Letter”) 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 3; provided that information which is reasonably apparent on its face that it relates to another provision of this Agreement, shall also be deemed to be Previously Disclosed (as defined below) information with respect to such other provision. All references in this Agreement to information which has been “Previously Disclosed” means information set forth in the Disclosure Letter or in (i) the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013 (“Form 10-K”), as filed by it with the Securities and Exchange Commission (“SEC”), (ii) the Company’s Annual Report on Form 10-K/A for the fiscal year ended March 31, 2013, as filed by it with the SEC or (iii) any Current Report on Form 8-K, as filed or furnished by the Company with the SEC since April 1, 2013 (the foregoing, collectively, the “Company Reports”).

 

This Agreement, the Indenture and the Notes are collectively referred to herein as the “Documents,” and the transactions contemplated thereby and in the Stock Purchase Agreements, each dated of even date herewith, by and between the parties listed thereto (the “Stock Purchase Agreements”), are collectively referred to herein as the “Transactions.”  Following the date of this Agreement and prior to the Closing Date, subject to the approval of the Company, if there

 

  

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are any additional purchasers of the Notes, such purchasers shall enter into a joinder agreement to this Agreement, the form of which is attached hereto as Exhibit B (the “Joinder Agreement”), pursuant to which such purchasers shall become parties to this Agreement.

 

2.      Purchase, Sale and Delivery. On the basis of the representations, warranties, agreements and covenants herein contained and subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each Purchaser, severally and not jointly, and each Purchaser, severally and not jointly, agrees to purchase from the Company, at a purchase price of 100% of the aggregate principal amount thereof, the aggregate principal amount of the Notes set forth in Schedule I opposite the name of such Purchaser, plus any additional principal amount of Notes which such Purchaser may become obligated to purchase pursuant to the provisions of Section 10 hereof. Subject to the satisfaction (or, to the extent permitted, waiver) of the conditions set forth in Section 6 hereof, delivery to the Purchasers of and payment for the Notes shall be made at a closing (the “Closing”) to take place contemporaneously with the closing of the transactions contemplated by the Securities Purchase Agreements at the offices of Skadden, Arps, Slate, Meagher & Flom LLP located at Four Times Square, New York, New York, 10036 (or at such other place as shall be reasonably acceptable to the Purchasers), as soon as practicable, but in no event later than the second business day after the satisfaction or waiver of the conditions set forth in Section 6 hereof (excluding conditions that, by their terms, cannot be satisfied until the Closing, but the Closing shall be subject to the satisfaction or waiver of those conditions).  The date of the Closing is referred to as the “Closing Date.”

 

Subject to Section 5(c)(i) , the Notes to be purchased by the Purchasers hereunder will be represented by one or more global certificates in book-entry form which will be deposited by or on behalf of the Company through the facilities of The Depository Trust Company (“DTC”) or its designated custodian, and registered in the name of Cede & Co.  Such global certificate or certificates representing the Notes shall be registered in such name or names and denominations as such Purchasers may request, against payment by such Purchasers of the purchase price therefor by immediately available federal funds bank wire transfer to such bank account or accounts as the Company shall designate to the Purchasers at least two business days prior to the Closing. The global certificates representing the Notes shall be made available to the Purchasers for inspection at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York 10036 (or such other place as shall be reasonably acceptable to the Purchasers) not later than 10:00 a.m., New York, New York time one business day immediately preceding the Closing Date.

 

3.      Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the Purchasers that, as of the date hereof and as of the Closing Date:

 

(a)      Reporting Compliance. The Company is subject to, and is in compliance in all material respects with, the reporting requirements of Section 13 and Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder (collectively, the “Exchange Act”). The Company Reports, at the time they were or hereafter are filed or furnished with the SEC, complied in all material respects with the requirements of the Exchange Act and did not and do not include any untrue statement of a material fact or omit to state a material fact necessary to

 

  

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make the statements therein, in the light of the circumstances under which they were made, not misleading.  As of the date of this Agreement, no executive officer of the Company has failed to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002.

 

(b)      Preparation of Financial Statements. Each of the consolidated balance sheets of the Company and the Subsidiaries and the related consolidated statements of income, stockholders’ equity and cash flows, together with the notes thereto, included in any Company Report filed with the SEC on or after March 31, 2010 and prior to the date of this Agreement (collectively, the “Financial Statements”), (1) have been prepared from, and are in accordance with, the books and records of the Company and the Subsidiaries, (2) complied, as of their respective date of such filing, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (3) have been prepared in accordance with GAAP applied on a consistent basis and (4) present fairly in all material respects the consolidated financial position of the Company and the Subsidiaries at the dates and the consolidated results of operations, changes in stockholders’ equity and cash flows of the Company and the Subsidiaries for the periods stated therein (subject to the absence of notes and non-material year-end audit adjustments in the case of unaudited Company Financial Statements).  All other financial, statistical and market and industry data and forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act) contained in the Company Reports are fairly and accurately presented, in all material respects, are based on or derived from sources that the Company believes to be reliable and accurate and are presented on a reasonable basis. To the extent applicable, all disclosures contained in the Company Reports regarding “non-GAAP financial measures” (as such term is defined by the SEC’s rules and regulations) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Exchange Act, as applicable, in all material respects.

 

(c)      Disclosure Controls and Procedures.   The records, systems, controls, data and information of the Company and the Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company or the Subsidiaries or accountants (including all means of access thereto and therefrom), except for any nonexclusive ownership and nondirect control that would not reasonably be expected to have a material adverse effect on the system of internal accounting controls described below in this Section 3(c).  The Company (A) has implemented and maintains an effective system of “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 its consolidated subsidiaries, is made known to the chief executive officer and the chief financial officer of the Company by others within those entities, (B) has implemented and maintains internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) and (C) has disclosed, based on its most recent evaluation prior to the date of this Agreement, 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 control over

 

  

3

  

 

financial reporting 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.  The statements relating to disclosure controls and procedures made by the principal executive officers (or their equivalents) and principal financial officers (or their equivalents) of the Company in the certifications required by the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”) are complete and correct in all material respects. 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.  Since December 31, 2009, (i) neither the Company nor any Subsidiary nor, to the knowledge of the Company, any director, officer, employee, auditor, accountant or representative of the Company 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 or any Subsidiary or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any Subsidiary has engaged in questionable accounting or auditing practices, and (ii) no attorney representing the Company or any Subsidiary, whether or not employed by the Company 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 Board of Directors or any committee thereof or to any director or officer of the Company.

 

(d)      Independent Accountants. McGladrey LLP (“McGladrey”), the Company’s independent auditor, who has certified and expressed its opinion with respect to the audited financial statements and related notes contained the Company Reports, is (i) an independent registered public accounting firm with respect to the Company and the Subsidiaries within the applicable rules and regulations adopted by the SEC and as required by the Securities Act, (ii) in compliance with the applicable requirements relating to the qualification of accountants under Regulation S-X and (iii) a registered public accounting firm as defined by the Public Company Accounting Oversight Board whose registration has not been suspended or revoked and who has not requested such registration to be withdrawn. To the Company’s knowledge, McGladrey is not and has not been in violation of the auditor independence requirements of the Sarbanes-Oxley Act in respect of the Company.

 

(e)      No Material Adverse Change. Subsequent to the respective dates as of which information is contained in the Company Reports, except as Previously Disclosed, (i) neither the Company nor any of the Subsidiaries has incurred any liabilities, direct or contingent, including without limitation any losses or interference with its business from fire, explosion, flood, earthquakes, accident or other calamity, whether or not covered by insurance, or from any strike, labor dispute or court or governmental action, order or decree, that are material, individually or in the aggregate, to the Company and the

 

  

4

  

 

Subsidiaries, taken as a whole, or has entered into any transactions not in the ordinary course of business, (ii) neither the Company nor any of the Subsidiaries has made or declared any distribution or dividend in cash or in kind to their respective stockholders or issued or repurchased any shares of their respective capital stock or other equity interests, and (iii) there has not been any material adverse change in the business, assets, liabilities, properties, results of operations or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole (each of clauses (i), (ii) and (iii), a “Material Adverse Change”).

 

(f)      Subsidiaries. Each of the Company’s subsidiaries that is a “significant subsidiary” as defined in Rule 1-02 of Regulation S-X (each a “Subsidiary” and collectively, the “Subsidiaries”) is listed on Schedule II attached hereto.

 

(g)      Incorporation and Good Standing of the Company and its Subsidiaries; Material Adverse Effect.  As of the date of this Agreement, the Company and each of the Subsidiaries (i) has been organized or formed, as the case may be, is validly existing, duly qualified to do business and is in good standing under the laws of its jurisdiction of organization, (ii) has all requisite power and authority to carry on its business and to own, lease and operate its properties and assets as it is now being conducted and (iii) is duly qualified or licensed to do business and is in good standing as a foreign corporation, partnership or other entity as the case may be, authorized to do business in each jurisdiction in which the nature of such businesses or the ownership or leasing of such properties requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect (as defined herein).  As used in this Agreement, the term “Material Adverse Effect” means any fact, event, change, condition, development, circumstance or effect that, individually or in the aggregate, (1) would reasonably be expected to be material and adverse to the business, assets, liabilities, properties, results of operations or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, other than any such fact, event, change, condition, development, circumstance or effect attributable to, resulting from, arising out of or relating to (i) the Company’s anticipated voluntary bankruptcy petition under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101, et seq., in the United States Bankruptcy Court for the Western District of Wisconsin (the “Bankruptcy Court”), (ii) any change or proposed change, after the date hereof, in banking or similar laws, rules or regulations of general applicability or interpretations thereof by Governmental Authorities (as defined herein), (iii) any change, after the date hereof, in GAAP or interpretations thereof, (iv) changes, after the date hereof, affecting the financial services industry generally, the United States economy or general economic conditions, including changes in prevailing interest rates, credit markets, secondary or mortgage market conditions or housing price appreciation/depreciation trends, including changes to any previously correctly applied asset marks resulting therefrom, (v) national or international political or social conditions, including the engagement by the United States in hostilities or escalation thereof, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices, (vi) the failure of the Company to meet any internal or public projections, forecasts, estimates or guidance for any period ending after March 31, 2013; provided that the exception in

 

  

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this clause (vii) shall not prevent or otherwise affect a determination that any fact, event, change, condition, development, circumstance or effect underlying such a failure has resulted in, or contributed to, a Material Adverse Effect, (viii) any actions taken with the prior written consent of the Purchaser, (ix) the Regulatory Agreements (defined herein) applicable to the Company or the Bank (as defined herein), or (x) compliance with the terms of, or the taking of any action required by, this Agreement, except in the case of the foregoing clauses (ii), (iii), (iv) or (v), to the extent any fact, event, change, condition, development, circumstance or effect referred to therein has or would reasonably be expected to have a disproportionate impact on the business, assets, liabilities, properties, results of operations or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, relative to other similarly situated industry participants, or (2) would materially impair the ability of the Company and the Subsidiaries to perform their respective obligations under the Documents or to consummate the Closing.

 

The Company is a savings and loan holding company under the Home Owners’ Loan Act (the “HOLA”).  As of the Closing Date, as a result of the Delaware Conversion (as defined herein), and subject to confirmation of the Plan of Reorganization (as defined herein) by the Bankruptcy Court, the Company shall be a corporation duly organized and validly existing under the laws of the State of Delaware, duly qualified to do business and 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 failure to be so qualified would have or reasonably be expected to have a Material Adverse Effect and will have corporate power and authority to own its properties and assets and to carry on its business as it is then being conducted.  AnchorBank, fsb (the “Bank”) is validly existing as a federal savings association and its charter is in full force and effect.  The Bank’s deposit accounts are insured by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (the “FDIC”) to the fullest extent permitted by Federal Deposit Insurance Act and the rules and regulations of the FDIC thereunder, and all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceeding for the revocation or termination of such insurance has been instituted or is pending or, to the knowledge of the Company, is threatened or contemplated.  Under the Plan of Reorganization, the Company will (i) convert from a Wisconsin corporation to a Delaware corporation in accordance with Section 265 of the Delaware General Corporation Law (the “Delaware Conversion”) and (ii) amend and restate the Articles of Incorporation  (the “Amended Charter”) in order to, among other things, increase the number of authorized shares of Common Stock to at least 2,000,000,000 shares or such larger number as the board of directors of the Company (the “Board of Directors”) determines is necessary to effectuate the Transactions and adopt certain restrictions on acquisitions and dispositions of securities and to make certain other changes.

 

(h)      Capitalization and Other Capital Stock Matters. All of the issued and outstanding shares of capital stock of the Company and each of the Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable and were not issued in violation of, and are not subject to, any preemptive or similar rights. All of the outstanding shares of capital stock or other equity interests of each of the Subsidiaries are owned, directly or indirectly, by the Company, free and clear of all liens, security interests, mortgages, pledges, charges, equities, claims or restrictions on transferability or

 

  

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encumbrances of any kind (collectively, “Liens”), other than those imposed by the Securities Act and the securities or “Blue Sky” laws of certain U.S. state jurisdictions. Except as Previously Disclosed, there are no outstanding (A) options, warrants or other rights to purchase from the Company or any of the Subsidiaries, (B) agreements, contracts, arrangements or other obligations of the Company or any of the Subsidiaries to issue or (C) other rights to convert any obligation into or exchange any securities for, in the case of each of clauses (A) through (C), shares of capital stock of or other ownership or equity interests in the Company or any of the Subsidiaries.

 

(i)      Legal Power and Authority. Subject to the confirmation of a plan of reorganization of the Company (the “Plan of Reorganization”) by order of the Bankruptcy Court, the Company has the corporate power and authority to enter into this Agreement and, subject to the completion of the Delaware Conversion and effectiveness of the Amended Charter, to carry out its obligations hereunder and thereunder.  The execution, delivery and performance of this Agreement, have been duly authorized by the affirmative vote of at least a majority of the directors on the Board of Directors.  No other corporate proceedings or stockholder actions are necessary for the execution and delivery by the Company of this Agreement, the performance by the Company of its obligations hereunder or the consummation by the Company of the transactions contemplated hereby.

 

(j)      The Agreement and the Indenture. This Agreement has been duly and validly authorized, executed and delivered by the Company. The Indenture has been duly and validly authorized by the Company. The Indenture, when executed and delivered by the Company and the Trustee, will constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance, fraudulent transfer or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity (whether applied by a court of law or equity) and the discretion of the court before which any proceeding therefor may be brought.

 

(k)      Notes. The Notes have been duly and validly authorized by the Company and when issued and delivered to and paid for by the Purchasers in accordance with the terms of this Agreement and the Indenture, will have been duly executed, authenticated, issued and delivered and will constitute legal, valid and binding obligations of the Company, entitled to the benefit of the Indenture, and enforceable against the Company in accordance with their terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance, fraudulent transfer or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity (whether applied by a court of law or equity) and the discretion of the court before which any proceeding therefor may be brought. When executed and delivered, the Notes will be substantially in the form contemplated by the Indenture.

 

(l)      Compliance with Existing Instruments. Neither the Company nor any of the Subsidiaries is (i) in violation of its certificate of incorporation, bylaws or other organizational documents (the “Charter Documents”); (ii) except as Previously

 

  

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Disclosed, in violation of any U.S. federal, state or local statute, law (including, without limitation, common law) or ordinance, or any judgment, decree, rule, regulation, order or injunction (collectively, “Applicable Law”) of any court, administrative agency or commission or other governmental authority or instrumentality, whether federal, state, local or foreign, or any applicable industry self-regulatory organization (each, a “Governmental Authority”), applicable to any of them or any of their respective properties; or (iii) except as Previously Disclosed, in breach of or default under any material bond, debenture, note, loan or other evidence of indebtedness, indenture, mortgage, deed of trust, lease or any other agreement or instrument (in each case, excluding deposits) to which any of them is a party or by which any of them or their respective property is bound (collectively, the “Applicable Agreements”), except, in the case of clauses (ii) and (iii) for such violations, breaches or defaults that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as Previously Disclosed, all Applicable Agreements are in full force and effect and are legal, valid and binding obligations. There exists no condition that, with the passage of time or otherwise, would constitute (a) a violation of such Charter Documents or Applicable Laws, (b) a breach of or default or a “Debt Repayment Triggering Event” (as defined below) under any Applicable Agreement or (c) result in the imposition of any penalty or the acceleration of any indebtedness. As used herein, a “Debt Repayment Triggering Event” means any event or condition that gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of the Subsidiaries or any of their respective properties.

 

(m)      No Conflicts.  Except as Previously Disclosed, neither the execution and delivery by the Company of the Documents, the performance by the Company of its obligations thereunder nor the consummation of the Transactions, nor compliance by the Company with any of the provisions of any of the foregoing, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of, a Lien on any assets of the Company or any of the Subsidiaries, the imposition of any penalty or a Debt Repayment Triggering Event under or pursuant to (i) subject to completion of the Delaware Conversion and the effectiveness of the Amended Charter, the Charter Documents, (ii) any material Applicable Agreement or (B) violate in any material respect (i) any Applicable Law or (ii) any order, writ, judgment, injunction, decree, determination or award binding upon or affecting the Company. After consummation of the Transactions, no Default (as defined in the Indenture) or Event of Default (as defined in the Indenture) will exist.

 

(n)      No Consents. No notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any Governmental Authority, or expiration or termination of any statutory waiting period, is necessary for the consummation by the Company of the Transactions, other than (i) the securities or blue sky laws of the various states and filings, notices, approvals or

 

  

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clearances required under federal or state banking laws or the Regulatory Agreements (as defined here), (ii) those that have already been obtained and are in full force and effect and (iii) those that are required or permitted to be obtained after the date hereof, including the filing of a Current Report on Form 8-K with the SEC as may be required under the Securities Act and the Exchange Act and the receipt of the Required Approvals (as defined herein), as the case may be, regarding the Documents and the Transactions.

 

(o)      No Material Applicable Laws or Proceedings. (i) No Applicable Law shall have been enacted, adopted, passed or issued, (ii) no stop order suspending the qualification or exemption from qualification of any of the Notes in any jurisdiction shall have been issued and no proceeding for that purpose shall have been commenced or, to the Company’s knowledge, after due inquiry, be pending or contemplated as of the Closing Date and (iii) except as Previously Disclosed, there is no action, claim, suit, demand, hearing, notice of violation or deficiency, or proceeding pending or, to the knowledge of the Company or any of the Subsidiaries, after due inquiry, threatened or contemplated by Governmental Authorities or threatened by others (collectively, “Proceedings”) that, with respect to clauses (i), (ii) and (iii) of this paragraph (A) would, as of the date hereof and on the Closing Date, restrain, enjoin, prevent or interfere with the consummation of the Transactions or (B) would, individually or in the aggregate, have a Material Adverse Effect.

 

(p)      Knowledge as to Required Approvals.  As of the date of this Agreement, the Company has no knowledge of any reason relating to the Company or any Subsidiary why the Required Approvals (as defined herein) will not be obtained without the imposition of any Burdensome Condition (as defined herein).

 

(q)           All Necessary Permits. The Company and each Subsidiary has all material permits, licenses, franchises, authorizations, orders, and approvals of, and has made all material filings, applications, and registrations with, Governmental Authorities that are required in order to permit it to own or lease its properties and assets and to carry on its business as presently conducted and that are material to the business of the Company or such Subsidiary; all such material permits, licenses, certificates of authority, orders and approvals are in full force and effect, and all such material filings, applications and registrations are current, and, to the knowledge of the Company, no suspension or cancellation of any of them is threatened.

 

(r)      Properties and Leases. Except for any Permitted Liens (as defined herein), the Company and the Subsidiaries have good title free and clear of any Liens to all real and personal property reflected in the Company’s consolidated balance sheet as of March 31, 2013 included in the Form 10-K for the period then ended, and all real and personal property acquired since such date, except such real and personal property as has been repossessed or as has been disposed of in the ordinary course of business and, as of the Closing Date, all such real and personal property will be free and clear of all Liens.  “Permitted Liens“ means (1) Liens for taxes and other governmental charges and assessments arising in the ordinary course which are not yet due and payable, (2) Liens of landlords and Liens of carriers, warehousemen, mechanics and materialmen and other like Liens arising in the ordinary course of business for sums not yet due and payable and

 

  

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(3) other Liens or imperfections on property which are not material in amount and do not materially detract from the value of or materially impair the existing use of the property affected by such Lien or imperfection.  Except as has not had or would not be expected to have a Material Adverse Effect, all leases of real property and all other leases pursuant to which the Company or such Subsidiary, as lessee, leases real or personal property are valid and effective in accordance with their respective terms and there is not, under any such lease, any existing material default by the Company or such Subsidiary or any event which, with notice or lapse of time or both, would constitute such a material default.

 

(s)      Tax Law Compliance. Each of the Company and the Subsidiaries has timely filed all federal, state, county, local and foreign Tax Returns (as defined herein) required to be filed by it, and all such filed Tax Returns are true, correct and complete in all material respects, and paid all Taxes (as defined herein) owed by it and no material Taxes owed by it or assessments received by it are delinquent.  With respect to Taxes not yet due, the Company has made adequate provision in the financial statements of the Company (in accordance with GAAP).  The federal income Tax Returns of the Company and the Company for the fiscal year ended March 31, 2010, and for all fiscal years prior thereto, are for the purposes of routine audit by the Internal Revenue Service (the “IRS“) closed because of the expiration of the statute of limitations, and no claims for additional Taxes for such fiscal years are pending.  Neither the Company nor any Subsidiary has waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency, in each case that is still in effect, or has pending a request for any such extension or waiver.  Neither the Company nor any Subsidiary is a party to any pending action or proceeding for the assessment or collection of Taxes and no material deficiencies have been proposed in writing by any Governmental Authority in connection with an audit or examination of the Tax Returns of the Company or any Subsidiary which has not been settled, resolved and fully satisfied, or for which reserves adequate in accordance with GAAP have not been provided on the Financial Statements.  Each of the Company and the Subsidiaries has withheld and paid all material Taxes that it is required to withhold from amounts owing to employees, creditors or other third parties.  Neither the Company nor any Subsidiary is a party to, is bound by or has any material obligation under, any Tax sharing or Tax indemnity agreement or similar contract or arrangement other than any contract or agreement between or among the Company and any Subsidiary.  Neither the Company nor any Subsidiary has participated in any “reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4, or any other transaction requiring disclosure under analogous provisions of state, local or foreign law.  Neither the Company nor any Subsidiary has liability for the Taxes of any person other than the Company or any Subsidiary under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law) as a transferee, successor or otherwise.  Neither the Company nor any Subsidiary has been a “distributing corporation” or a “controlled corporation” in any distribution in which the parties to such distribution treated the distribution as one to which Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”), is applicable.  The Company has not been a United States real property holding corporation within the meaning of Section 897 of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.  Neither the Company nor any Subsidiary has undergone an “ownership change” within the meaning of Code Section 382(g), and the

 

  

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consummation of the Transactions should not cause an “ownership change” within the meaning of Code Section 382(g).  Neither the Company nor any Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any period (or any portion thereof) ending after the Closing as a result of any: (1) installment sale or other open transaction disposition made on or prior to the Closing; (2) prepaid amount received on or prior to the Closing; (3) written and legally binding agreement with a Governmental Authority relating to Taxes for any taxable period ending on or before the Closing; (4) change in method of accounting in any taxable period ending on or before the Closing; or (5) election under Section 108(i) of the Code.  For the purpose of this Agreement, the term “Tax” (including, with correlative meaning, the term “Taxes”) shall mean any and all domestic or foreign, federal, state, local or other taxes, customs, duties, governmental fees or other like assessments or charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority, including taxes on or with respect to income, franchises, windfall or other profits, gross receipts, property, transfer, sales, use, license, alternative or add on minimum, escheatment or unclaimed property, capital stock, payroll, employment, unemployment, social security, workers’ compensation or net worth, and taxes in the nature of excise, withholding, ad valorem or value added or similar taxes, and the term “Tax Return” means any return, report, information return or other document (including any related or supporting information, and attachments and exhibits) filed or required to be filed with respect to Taxes, including, without limitation, all information returns relating to Taxes of third parties, any claims for refunds of Taxes and any amendment or supplements to any of the foregoing.  “Treasury Regulation” means any final, proposed or temporary regulation of the Treasury under the Code and any successor regulation.

 

(t)      Intellectual Property Rights. (i) Each of the Company and the Subsidiaries own (free and clear of any claims, Liens, exclusive licenses or non-exclusive licenses not granted in the ordinary course of business) or have a valid license to use all trademarks, service marks, brand names, domain names, certification marks, trade dress and other indications of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application; inventions, discoveries and ideas, whether patentable or not, in any jurisdiction; patents, applications for patents (including divisions, continuations, continuations in part and renewal applications), and any renewals, extensions or reissues thereof, in any jurisdiction; trade secrets and rights in any jurisdiction to limit the use or disclosure thereof by any person; writings and other works, whether copyrightable or not, in any jurisdiction; and registrations or applications for registration of copyrights in any jurisdiction, and any renewals or extensions thereof; and any similar intellectual property or proprietary rights (collectively, “Intellectual Property”) used in or necessary to carry on their business as currently conducted, and (ii) such Intellectual Property referenced in clause (i) above is valid, subsisting and enforceable, and is not subject to any outstanding order, judgment, decree or agreement adversely affecting the Company’s or the Subsidiaries’ use of, or rights to, such Intellectual Property.  The Company and the Subsidiaries have sufficient rights to use all Intellectual Property used in their business as presently conducted, all of which rights shall survive unchanged the consummation of the

 

  

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Transactions.  Neither the Company nor any Subsidiary has received any written notice of infringement or misappropriation of, or any conflict with, the rights of others with respect to any Intellectual Property.  To the Company’s knowledge, no third party has infringed, misappropriated or otherwise violated the Intellectual Property rights of the Company or any Subsidiary.  There is no litigation, opposition, cancellation, proceeding, objection or claim pending, asserted, or, to the Company’s knowledge, threatened in writing against the Company or any Subsidiary concerning the ownership, validity, registerability, enforceability, infringement or use of, or licensed right to use, any Intellectual Property.  To the knowledge of the Company, none of the Company or any Subsidiary is using or enforcing any Intellectual Property owned by or licensed to the Company or any Subsidiary in a manner that would be expected to result in the abandonment, cancellation or unenforceability of such Intellectual Property.

 

(u)      Litigation and Other Proceedings; No Undisclosed Liabilities.  There is no pending claim, action, suit, investigation or proceeding against the Company or any Subsidiary, nor is any such claim, action, suit, investigation or proceeding, to the knowledge of the Company, threatened, nor is the Company or any Subsidiary subject to any order, judgment or decree, in each case, except as has not had and would not reasonably be expected to have a Material Adverse Effect.  Neither the Company nor any of the Subsidiaries has any liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) which are not properly reflected or reserved against in the financial statements described in Section 3(b) to the extent required to be so reflected or reserved against in accordance with GAAP, except for liabilities that have arisen since March 31, 2013 in the ordinary and usual course of business and consistent with past practice and that have not had and would not reasonably be expected to have a Material Adverse Effect.

 

(v)      ERISA Matters. Each of the Company, the Subsidiaries and each ERISA Affiliate (as hereinafter defined) has fulfilled its obligations, if any, under the minimum funding standards of Section 302 of the United States Employee Retirement Income Security Act of 1974, as amended (“ERISA”) with respect to each “pension plan” (as defined in Section 3(2) of ERISA), subject to Section 302 of ERISA, which the Company, the Subsidiaries or any ERISA Affiliate sponsors or maintains, or with respect to which it has (or within the last three years had) any obligation to make contributions, and each such plan is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code of 1986, as amended (the “Code”). None of the Company; the Subsidiaries or any ERISA Affiliate has incurred any unpaid liability to the Pension Benefit Guaranty Corporation (other than for the payment of premiums in the ordinary course) or to any such plan under Title IV of ERISA. “ERISA Affiliate” means a corporation, trade or business that is, along with the Company or any Subsidiary, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in Section 414 of the Code or Section 4001 of ERISA.

 

(w)      Labor Matters. Employees of the Company 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 or any Subsidiary has made a pending demand for recognition or

 

  

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certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or, to the Company’s knowledge, 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, strikes, work stoppages, slowdowns, lockouts, arbitrations or grievances, or other labor disputes pending or, to the knowledge of the Company, threatened against or involving the Company or any Subsidiary.  Each of the Company and the Subsidiaries is in compliance in all material respects with all applicable laws with respect to employment and employment practices, terms and conditions of employment, and wages and hours.  To the Company’s knowledge, no executive officer is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement or any other contract or agreement or any restrictive covenant in favor of a third party, and, to the Company’s knowledge, the continued employment of each such executive officer does not subject the Company or any Subsidiary to any liability with respect to any of the foregoing matters.

 

(x)      Compliance with Environmental Laws. To the knowledge of the Company, there is no legal, administrative, or other proceeding, claim or action pending or threatened against the Company or any Subsidiary seeking to impose, or that could reasonably be expected to result in the imposition of, on the Company or any Subsidiary, any liability relating to the use, disposal or release of hazardous substances or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances under any local, state or federal law, statute, regulation or ordinance, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (collectively, “Environmental Laws”).  Neither the Company nor any Subsidiary is subject to any agreement, order, judgment or decree by or with any Governmental Authority or third party imposing any liability under any Environmental Laws.  Neither the Company nor any Subsidiary (i) is in violation of any Environmental Laws, (ii) owns or operates any real property contaminated with any substance that is in violation of any Environmental Laws, or (iii) is liable for any off-site disposal or contamination pursuant to any Environmental Laws.

 

(y)      Accounting System. The Company and each of the Subsidiaries make and keep accurate books and records and maintain a system of internal accounting controls and procedures sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorization, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any material differences.

 

(z)      No Price Stabilization or Manipulation. Neither the Company nor any of its affiliates has and, to the Company’s knowledge, after due inquiry, no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization

 

  

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or manipulation of the price of any security of the Company, whether to facilitate the sale or resale of any of the Notes or otherwise, (ii) sold, bid for, purchased, or paid anyone any compensation for soliciting purchases of, any of the Notes, or (iii) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company, other than, with respect to clauses (ii) and (iii), Sandler O’Neill & Partners, L.P. (the “Placement Agent”).

 

(aa)      Investment Company Act. Neither the Company nor any of its Subsidiaries is an “investment company” that is required to be registered under the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder (collectively, the “Investment Company Act”); and following the Closing, the Company and the Subsidiaries will conduct their businesses in a manner so as not to be required to register under the Investment Company Act.

 

(bb)      Agreements with Regulatory Agencies.  Except as Previously Disclosed, neither the Company nor 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 since March 31, 2010, has adopted any board resolutions at the request of, any Governmental Authorities that currently restricts the conduct of its business or that relates to its capital adequacy, its liquidity and funding policies and practices, its ability to pay dividends, its credit, risk management or compliance policies, its internal controls, its management, or its operations or business (each item in this sentence, a “Regulatory Agreement”), nor has the Company or any Subsidiary been advised since March 31, 2010 by any Governmental Authority that it is considering issuing, initiating, ordering or requesting any such Regulatory Agreement.  Except as Previously Disclosed, the Company and each Subsidiary are in compliance with each Regulatory Agreement to which it is party or subject, and neither the Company nor any has received any notice from any Governmental Authority indicating that either the Company or any Subsidiary is not in compliance in all material respects with any such Regulatory Agreement.

 

(cc)      Brokers and Finders.  Except for the Placement Agent, neither the Company nor any Subsidiary nor any of their respective officers, directors or employees 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 or any Subsidiary, in connection with the Transactions.  Prior to the date of this Agreement, the Company has disclosed to the Purchaser the economic and other material terms of its arrangements with the Placement Agent in connection with the Transactions.

 

(dd)      Loan Portfolio.

 

(1)      Each of the Company and each Subsidiary has complied with, and all documentation in connection with the origination, processing, underwriting and credit approval of any loan, lease or other extension of credit or commitment to extend credit (“Loans”) originated, purchased or serviced by the Company or any Subsidiary satisfied

 

  

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in all material respects, (i) all applicable laws with respect to the origination, insuring, purchase, sale, pooling, servicing, subservicing or filing of claims in connection with Loans, including all laws relating to real estate settlement procedures, consumer credit protection, truth in lending laws, usury limitations, fair housing, transfers of servicing, collection practices, equal credit opportunity and adjustable rate mortgages, (ii) the responsibilities and obligations relating to Loans set forth in any material contract between the Company or any Subsidiary and any Agency  (as defined herein), Loan Investor or Insurer, (iii) the applicable rules, regulations, guidelines, handbooks and other requirements of any Agency, Loan Investor (as defined herein) or Insurer (as defined herein), and (iv) the terms and provisions of any material mortgage or other collateral documents and other Loan documents with respect to each Loan.

 

(2)      No Agency, Loan Investor or Insurer has (i) claimed in writing that the Company or any Subsidiary has violated or has not complied with the applicable underwriting standards with respect to Loans sold by the Company or any Subsidiary to a Loan Investor or Agency, or with respect to any sale of Loan servicing rights to a Loan Investor, (ii) imposed in writing restrictions on the activities (including commitment authority) of the Company or any Subsidiary or (iii) indicated in writing to the Company or any Subsidiary that it has terminated or intends to terminate its relationship with the Company or any Subsidiary for poor performance, poor Loan quality or concern with respect to the Company’s or any Subsidiary’s compliance with laws.

 

(3)      To the knowledge of the Company, the characteristics of the loan portfolio of the Company have not materially changed from the characteristics of the loan portfolio of the Company as of March 31, 2013 in a manner that could reasonably be expected to result in a Material Adverse Effect with respect to the Company.

 

For purposes of this Section 2(ee): (i) “Agency” means the Federal Housing Administration, the Federal Home Loan Mortgage Corporation, the Farmers Home Administration (now known as Rural Housing and Community Development Services), the Federal National Mortgage Association, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture or any other federal or state agency with authority to (A) determine any investment, origination, lending or servicing requirements with regard to Loans originated, purchased or serviced by the Company or any Subsidiary or (B) originate, purchase, or service Loans, or otherwise promote lending, including state and local housing finance authorities; (ii)  “Loan Investor” means any person (including an Agency) having a beneficial interest in any Loan originated, purchased or serviced by the Company or any Subsidiary or a security backed by or representing an interest in any such Loan; and (iii)  “Insurer” means a person who insures or guarantees for the benefit of the Loan holder all or any portion of the risk of loss upon borrower default on any of the Loans originated, purchased or serviced by the Company or any Subsidiary, including the Federal Housing Administration, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture and any private mortgage insurer, and providers of hazard, title or other insurance with respect to such Loans or the related collateral.

 

  

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(ee)      No Restrictions on Payments of Dividends. As of the Closing Date, except as Previously Disclosed and for any Regulatory Agreement, there will be no encumbrances or restrictions on the ability of any Subsidiary of the Company (i) to pay dividends or make other distributions on such Subsidiary’s capital stock or to pay any indebtedness to the Company or any other Subsidiary of the Company, (ii) to make loans or advances or pay any indebtedness to, or investments in, the Company or any other Subsidiary or (iii) to transfer any of its property or assets to the Company or any other Subsidiary of the Company.

 

(ff)      Sarbanes-Oxley. There is and has been no failure on the part of the Company and the Subsidiaries or any of the officers and directors of the Company or any of the Subsidiaries, in their capacities as such, to comply with the applicable provisions of the Sarbanes-Oxley Act.

 

(gg)      Risk Management; Derivatives.  The Company and the Subsidiaries have in place risk management policies and procedures sufficient in scope and operation to protect against risks of the type and in amounts expected to be incurred by persons of similar size and in similar lines of business as the Company and the Subsidiaries.  All derivative instruments, including swaps, caps, floors and option agreements, whether entered into for the Company’s own account, or for the account of one or more of the Subsidiaries or their customers, were entered into (A) only for purposes of mitigating identified risk and in the ordinary course of business, (B) in accordance with prudent practices and in material compliance with all applicable laws, rules, regulations and regulatory policies, and (C) with counterparties believed by the Company to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of the Company or one of the Subsidiaries, enforceable in accordance with its terms.  Neither the Company nor the Subsidiaries, nor, to the knowledge of the Company, any other party thereto, is in breach of any of its obligations under any such agreement or arrangement.

 

(hh)      Compliance with Laws and Other Matters; Insurance.  The Company and each Subsidiary:

 

(1)      in the conduct of its business has been, since March 31, 2011, and is in compliance in all material respects with all, and the condition and use of its properties has not, since March 31, 2011, and does not violate or infringe in any material respect any, applicable domestic (federal, state or local) or foreign laws, statutes, ordinances, licenses, rules, regulations, judgments, demands, writs, injunctions, orders or decrees applicable thereto or to employees conducting its business, including the Troubled Asset Relief Program, the Sarbanes-Oxley Act of 2002, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Bank Secrecy Act of 1970 (the “BSA”), the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001 (the “PATRIOT Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, all other applicable fair lending laws or other laws relating to discrimination and applicable privacy and customer

 

  

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information requirements contained in any federal or state privacy law or regulations, including Title V of the Gramm-Leach-Bliley Act of 1999;

 

(2)      has been, since March 31, 2011, compliant and currently is complying in all material respects with and, to the knowledge of the Company, has not been, since March 31, 2011, and is not under investigation with respect to, nor has been threatened in writing by any Governmental Authorities to be charged with or given notice of any material violation of, any applicable federal, state, local and foreign laws, regulations, rules, judgments, injunctions or decrees;

 

(3)      has not, nor has any other person on behalf of the Company or any Subsidiary that qualifies as a “financial institution” under U.S. anti-money laundering laws, in each case since March 31, 2010, knowingly acted, by itself or in conjunction with another, in any act in connection with the concealment of any currency, securities or other proprietary interest that is the result of a felony as defined in U.S. anti-money laundering laws (“Unlawful Gains”), nor knowingly accepted, transported, stored, dealt in or brokered any sale, purchase or any transaction of other nature for Unlawful Gains;

 

(4)      is presently insured, and since March 31, 2011 (or during such lesser period of time as the Company has owned such Subsidiary) has been insured, for reasonable amounts with, to the knowledge of the Company, financially sound and reputable insurance companies against such risks as companies engaged in a similar business would, in accordance with industry practice, customarily be insured;

 

(5)      (A) is not aware of any facts or circumstances that would cause it to believe that any non-public customer information has been disclosed to or accessed by an unauthorized third-party in a manner that would cause it to undertake any material remedial action; (B) has adopted and implemented in all material respects an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply with the PATRIOT Act and such anti-money laundering program meets the requirements in all material respects of Section 352 of the PATRIOT Act and the regulations thereunder, and it has complied in all respects with any requirements to file reports and other necessary documents as required by the PATRIOT Act and the regulations thereunder; and (C) will not knowingly directly or indirectly use the proceeds of the sale of the Common Shares pursuant to Primary Investment Transactions, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other person, towards any sales or operations in any country sanctioned by U.S. Office of Foreign Asset Control of the Treasury (“OFAC”) or for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC; and

 

(6)      has no knowledge of any facts and circumstances, and has no reason to believe that any facts or circumstances exist, that would cause the Bank: (A) to be deemed not to be in satisfactory compliance with the Community Reinvestment Act of 1977 (the “CRA”) and the regulations promulgated thereunder, or to be assigned a CRA rating by federal or state banking regulators of lower than “satisfactory”; (B) to be operating in violation, in any material respect, of the Bank Secrecy Act of 1970, the

 

  

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PATRIOT Act, any order issued with respect to anti-money laundering by OFAC, or any other anti-money laundering statute, rule or regulation; or (C) not to be in satisfactory compliance, in any material respect, with all applicable privacy of customer information requirements contained in any applicable federal and state privacy laws and regulations as well as the provisions of all information security programs adopted by any such Subsidiary.

 

(ii)      Foreign Corrupt Practices and International Trade Sanctions.  Neither the Company nor any Subsidiary, nor any of their respective directors, officers, agents, employees or any other persons acting on their behalf (1) has violated the Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-1 et seq., as amended, or any other similar applicable foreign, federal, or state legal requirement, (2) has made or provided, or caused to be made or provided, directly or indirectly, any payment or thing of value to a foreign official, foreign political party, candidate for office or any other person knowing that the person will pay or offer to pay the foreign official, party or candidate, for the purpose of influencing a decision, inducing an official to violate their lawful duty, securing any improper advantage, or inducing a foreign official to use their influence to affect a governmental decision, (3) has paid, accepted or received any unlawful contributions, payments, expenditures or gifts, (4) to the knowledge of the Company, has violated or operated in noncompliance with any export restrictions, money laundering law, anti-terrorism law or regulation, anti-boycott regulations or embargo regulations, or (5) is currently subject to any United States sanctions administered by OFAC.

 

(jj)      Stamp Taxes. There are no stamp or other issuance or transfer taxes or duties or other similar fees or charges required to be paid in connection with the execution and delivery of this Agreement or the issuance or sale of the Notes.

 

(kk)      Derivative Financial Instruments. Any and all material swaps, caps, floors, futures, forward contracts, option agreements (other than stock options issued to the Company’s employees, directors, agents or consultants) and other derivative financial instruments, contracts or arrangements, whether entered into for the account of the Company or one of the Subsidiaries or for the account of a customer of the Company or one of the Subsidiaries, were entered into in the ordinary course of business and in accordance with Applicable Laws, rules, regulations and policies of all applicable regulatory agencies and with counterparties believed by the Company to be financially responsible at the time. The Company and each of the Subsidiaries have duly performed in all material respects all of their obligations thereunder to the extent that such obligations to perform have accrued, and there are no breaches, violations or defaults or allegations or assertions of such by any party thereunder which would, singly or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(ll)      Fiduciary Accounts.  To the knowledge of the Company, the Company and the Subsidiaries have, in all material respects, properly administered all accounts for which it acts as a fiduciary, including accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the governing documents, applicable federal and state Law and regulation and common law.  To the knowledge of the Company, none of the

 

  

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Company, the Subsidiaries or any director, officer or employee of the Company or the Subsidiaries has, in any material respect, committed any breach of trust or fiduciary duty with respect to any such fiduciary account and the accountings for each such fiduciary account are true and correct in all material respects and accurately reflect the assets of such fiduciary account.

 

(mm)      Section 365(o).  Neither the Company nor any Subsidiary is subject to any agreement, order, decree, law, regulation, resolution or other commitment that falls within the scope of Section 365(o) of the Bankruptcy Code.

 

(nn)      Transactions With Affiliates and Employees. Except as contemplated by the Transactions, none of the officers, directors, employees or Affiliates of the Company or any Subsidiary is presently a party to any contract, arrangement or transaction with the Company or any Subsidiary or to a presently contemplated contract, arrangement or transaction (other than for services as employees, officers and directors) that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated under the Securities Act.

 

(oo)      Off Balance Sheet Arrangements.  There is no transaction, arrangement, or other relationship between the Company (or any Subsidiary) and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings and is not so disclosed.

 

(pp)      Directors’ and Officers’ Insurance.  The Company (i) maintains directors’ and officers’ liability insurance and fiduciary liability insurance with, to the knowledge of the Company, financially sound and reputable insurance companies with benefits and levels of coverage that have been Previously Disclosed, (ii) has timely paid all premiums on such policies and (iii) there has been no lapse in coverage during the term of such policies.

 

(qq)      Shell Company Status.  The Company is not, and has never been, an issuer identified in Rule 144(i)(1).

 

(rr)      No Other Investor Representations and Warranties.  The Company has not received, and is not relying on, any representations or warranties, written or oral or express or implied, of any nature whatsoever, from the Purchaser or any other person other in connection with the execution and delivery of this Agreement than as specifically set forth in Section 4 of this Agreement.

 

(ss)      Certificates. Each certificate signed by any officer of the Company or any of the Subsidiaries and delivered to the Purchasers shall be deemed a representation and warranty by the Company or any such Subsidiary (and not individually by such officer) to the Purchasers with respect to the matters covered thereby.

 

4.      Representations and Warranties of Purchasers. Each of the Purchasers represents and warrants to, and agrees with, the Company that, as of the date hereof and as of the Closing Date:

 

  

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(a)      Legal Power and Authority.  The Purchaser has the requisite corporate, partnership, limited liability company or other power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Transactions.

 

(b)      The Agreement. This Agreement has been duly and validly authorized, executed and delivered by the Purchaser.

 

(c)      No Conflicts. Neither the execution, delivery and performance by the Purchaser of the Documents to which it is a party, nor the consummation of the Transactions, nor compliance by the Purchaser with any of the provisions of any of the foregoing, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of, any Lien, upon any of the properties or assets of the Purchaser under any of the terms, conditions or provisions of (i) its certificate of limited partnership or partnership agreement or similar government documents or (ii) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Purchaser is a party or by which it may be bound, or to which the Purchaser or any of the properties or assets of the Purchaser may be subject, or (B) subject to compliance with the statutes and regulations referred to in the next paragraph, and assuming the accuracy of the representations and warranties of the Company and performance of the covenants and agreements of the Company contained herein, violate in any material respect any ordinance, permit, concession, grant, franchise, law, statute, rule or regulation or any judgment, ruling, order, writ, injunction or decree applicable to the Purchaser or any of its properties, except in the case of clause (A)(ii) for such violations, conflicts and breaches that would not have a material and adverse effect on the ability of the Purchaser to consummate the transactions contemplated by the Documents to which it is a party in a timely manner.

 

(d)      Investment.  The acquisition of the Notes by the Purchaser is for the Purchaser’s own account, is for investment purposes only, and is not with a view to, nor for offer or sale for the Company in connection with, the distribution of any of the Notes.  The Purchaser is not participating and does not have a participation in any such distribution or the underwriting of any such distribution.  Such Purchaser does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participation to such person or entity or to any third person or entity with respect to the Notes other than as set forth in this Agreement.

 

(e)      Knowledge and Experience.

 

(i)      The Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company such that the Purchaser is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests in connection with such an investment. The Purchaser is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act. The

 

  

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Purchaser is able to bear the economic risk of holding the Notes indefinitely, or losing its entire investment in the Company, which is not disproportionate to the Purchaser’s net worth.

 

(ii)      The Purchaser acknowledges that such Purchaser and its advisors have been furnished with all materials relating to the business, finances and operations of the Company that have been requested by such Purchaser or its advisors and has been given the opportunity to ask questions of, and to receive answers from, persons acting on behalf of the Company concerning terms and conditions of the transactions contemplated by this Agreement in order to make an informed and voluntary decision to enter into such Agreement. Notwithstanding the foregoing, such Purchaser acknowledges that, at the request of such Purchaser, the Company has not disclosed or provided any material nonpublic information in its possession to such Purchaser and that, notwithstanding the withholding of any such material nonpublic information by the Company at the request of such Purchaser, such Purchaser desire to enter into this Agreement and the Transactions. Such Purchaser acknowledges that it has reviewed the materials posted in the Company’s online data room, including the risk factors, the Disclosure Letter and the Company Reports.

 

(iii)      The Purchaser has made its own investment decision based upon its own judgment, due diligence and advice from such advisers as it has deemed necessary and not upon any view expressed by any other person or entity, including, without limitation, the Placement Agent. Neither such inquiries nor any other due diligence investigations conducted by such Purchaser or its advisors or representatives, if any, shall modify, amend or affect the Purchaser’s right to rely on the Company’s representations and warranties contained herein. The Purchaser is not relying upon, and has not relied upon, any advice, statement, representation or warranty made by any person or entity by or on behalf of the Company, including, without limitation, the Placement Agent, except for the express statements, representations and warranties of the Company made or contained in this Agreement. Furthermore, the Purchaser acknowledges that: (1) the Placement Agent has not performed any due diligence review on behalf of the Purchaser; (2) nothing in this Agreement or any other materials presented by or on behalf of the Company to the Purchaser in connection with the purchase of the Notes constitutes legal, tax or investment advice and such Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Notes; and (3) the Purchaser received or had access to all of the information such Purchaser deemed necessary in order to make its decision to invest in the Notes.  The Placement Agent and its affiliates (and their respective officers, directors, employees, agents, advisors, attorneys and consultants) are third-party beneficiaries to this Section 4.

 

(f)      Financial Capability.  At Closing, the Purchaser will have available funds necessary to consummate the Closing on the terms and conditions contemplated by this Agreement and has the ability to bear the economic risks of its prospective investment in the Notes and can afford the complete loss of such investment.

 

  

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(g)      Knowledge as to Required Approvals.  As of the date of this Agreement, the Purchaser has no knowledge of any reason relating to the Purchaser or any of its Affiliates why the Required Approvals will not be obtained without the imposition of any Burdensome Condition.

 

(h)      Brokers and Finders.  Neither the Purchaser nor any of its respective officers, directors or employees 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 Purchaser in connection with the transactions contemplated hereby.

 

5.      Covenants.

 

(a)      Legends.

 

(i)      The Purchasers acknowledge that the Notes have not been registered under the Securities Act or under any state securities laws and agree that all certificates or other instruments representing the Notes will bear the restrictive legend set forth in the Indenture.

 

(ii)      In the event that any of the Notes (1) are sold pursuant to a registration statement under the Securities Act or (2) are eligible to be transferred without restriction in accordance with Rule 144 under the Securities Act, the Company shall promptly issue new certificates or other instruments representing such Notes, which shall not contain the restrictive legend described in (i) above provided that the Purchasers surrender to the Company any previously issued certificates or other instruments. Each Purchaser acknowledges its primary responsibilities under the Securities Act and, accordingly, will not sell or otherwise transfer the Notes or any interest therein without complying with the requirements of the Securities Act and the rules and regulations promulgated thereunder and the requirements set forth in this Agreement. Except as otherwise provided below, while the below-referenced registration statement remains effective, each Purchaser may sell Notes in accordance with the plan of distribution contained in the registration statement and if it does so it shall comply therewith and with the related prospectus delivery requirements unless an exemption therefrom is available or unless the Notes are sold pursuant to Rule 144. Each Purchaser, severally and not jointly with the other Purchasers, agrees that if it is notified by the Company in writing at any time that the registration statement registering the resale of the Notes is not effective or that the prospectus included in such registration statement no longer complies with the requirements of Section 10 of the Securities Act, such Purchaser will refrain from selling such Notes until such time as such Purchaser is notified by the Company that such registration statement is effective or such prospectus is compliant with Section 10 of the Exchange Act, unless such Purchaser is able to, and does, sell such Notes pursuant to (x) an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act ad in accordance with applicable state securities or blue sky laws, as evidenced by a legal opinion of counsel

 

  

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reasonably satisfactory to the Company, if requested, or (y) Rule 144 under the Securities Act.

 

(b)      Registration.

 

(i)      Subject to the terms and conditions of this Agreement, the Company covenants and agrees that as promptly as practicable after the Closing Date (and in any event no later than 90 days after the Closing Date), the Company shall prepare and file with the SEC a shelf registration on an appropriate form under Rule 415 under the Securities Act (a “Shelf Registration Statement”) covering all of the Registrable Securities (as defined below), and, to the extent the Shelf Registration Statement has not theretofore been declared effective, the Company shall use commercially reasonable efforts to cause such Shelf Registration Statement to be declared or become effective as promptly as practicable (and in any event no later than 180 days after the Closing Date) and to keep such Shelf Registration Statement continuously effective and in compliance with the Securities Act and usable for the resale of such Registrable Securities for a period from the date of its initial effectiveness until such time as there are no Registrable Securities remaining (including by refiling such Shelf Registration Statement (or a new Registration Statement) if the initial Registration Statement expires). Notwithstanding the foregoing, if the Company shall no longer be eligible to file a Shelf Registration Statement, then the Company shall not be obligated to file or keep effective a Shelf Registration Statement and the Company shall not be required to effect any other registration with respect to the Registrable Securities unless and until requested to do so in writing by the Purchasers or Holders; provided, that, in such event that the Company becomes no longer eligible to file a Shelf Registration Statement, any Purchaser or Holder shall have the right to demand the registration (a “Demand Registration”) of the Registrable Securities, and, in such event, the Company shall file with the SEC a registration statement (a “Demand Registration Statement”) on an appropriate form covering all Registrable Securities no less than 30 days following the Company’s receipt of notice of such demand from any Purchaser or Holder, and further to the extent the Demand Registration Statement has not theretofore been declared effective, the Company shall use commercially reasonable efforts to cause such Demand Registration Statement to be declared or become effective as promptly as practicable (and in any event no later than 45 days after the Company’s receipt of notice of such demand from any Purchaser or Holder).

 

(ii)      The Company shall not be required to effect a registration with respect to securities that are not Registrable Securities, or if the Company has notified the Purchasers and all other Holders that in the good faith judgment of its Board of Directors, it would be materially detrimental to the Company or its securityholders for such registration to be effected at such time, in which event the Company shall have the right to defer such registration for a period of not more than 90 days after receipt of the request of any Purchaser or any other Holder.

 

  

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(iii)      All Registration Expenses incurred in connection with any registration, qualification or compliance hereunder shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the holders of the securities so registered pro rata on the basis of the aggregate offering or sale price of the securities so registered.

 

(iv)      The Company shall use its commercially reasonable efforts, for so long as there are Registrable Securities outstanding, to take such actions as are under its control to not become an ineligible issuer (as defined in Rule 405 under the Securities Act). In addition, whenever required to effect the registration of any Registrable Securities or facilitate the distribution of Registrable Securities pursuant to an effective Shelf Registration Statement or Demand Registration Statement, the Company shall, as expeditiously as reasonably practicable;

 

(1)      furnish to the Holders and any underwriters such number of copies of the applicable registration statement and each such amendment and supplement thereto (including in each case all exhibits) and of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned or to be distributed by them.

 

(2)      use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders or any underwriter, to keep such registration or qualification in effect for so long as such registration statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such Holder; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; and

 

(3)      notify each Holder of Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the applicable prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

(4)      give commercially reasonable written notice to the Holders:

 

(A)      when any registration statement filed pursuant to Section 5(b)(i) or any amendment thereto has been filed with the SEC (except for any amendment effected by the filing of a

 

  

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document with the SEC pursuant to the Exchange Act) and when such registration statement or any post-effective amendment thereto has become effective;

 

(B)      of any request by the SEC for amendments or supplements to any registration statement or the prospectus included therein or for additional information;

 

(C)      of the issuance by the SEC of any stop order suspending the effectiveness of any registration statement or the initiation of any proceedings for that purpose;

 

(D)      of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Common Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

 

(E)      of the happening of any event that requires the Company to make changes in any effective registration statement or the prospectus related to the registration statement in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made).

 

(v)      Furnishing of Information.

 

(1)      Neither the Purchasers nor any Holder shall use any free writing prospectus (as defined in Rule 405 under the Securities Act) in connection with the sale of Registrable Securities without the prior written consent of the Company.

 

(2)      It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 5(b) the Purchasers and/or the selling Holders and the underwriters, if any, shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registered offering of their Registrable Securities.

 

(vi)      With a view to making available to the Purchasers and Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its commercially reasonable efforts to:

 

(1)      make and keep public information available, as those terms are understood and defined in Rule 144(c)(1) or any similar or analogous rule promulgated under the Securities Act, at all times after the date of this Agreement;

 

  

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(2)      (A) file with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act, and (B) if at any time the Company is not required to file such reports, make available, upon the request of any Holder, such information necessary to permit sales pursuant to Rule 144A under the Securities Act (including the information required by Rule 144A(d)(4) under the Securities Act);

 

(3)      so long as any Purchaser or a Holder owns any Registrable Securities, furnish to the Purchasers or such Holder forthwith upon request: (A) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act, and of the Exchange Act; (B) a copy of the most recent annual or quarterly report of the Company; and (C) such other reports and documents as any Purchaser or Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities to the public without registration; and

 

(4)      take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act.

 

(vii)      The rights to cause the Company to register the Registrable Securities granted pursuant to Section 5(b)(i) may be assigned or otherwise conveyed, in a transaction which complies with the requirements of the Securities Act and all applicable state securities laws, by a Purchaser to a transferee or assignee of the ten percent (10%) or more of the Notes.

 

(viii)      As used in this Section, the following terms shall have the following respective meanings:

 

(1)      “Holder” means the Purchasers and any other holder of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with this Agreement.

 

(2)      “Holders’ Counsel” means one counsel for the selling Holders chosen by Holders holding a majority interest in the Registrable Securities being registered.

 

(3)      “Registrable Securities” means all Notes, provided that, once issued, such securities will not be Registrable Securities when (A) they are sold pursuant to an effective registration statement under the Securities Act, (B) they may be sold pursuant to Rule 144 under the Securities Act without limitation thereunder on volume and without the requirement for the Company to be in compliance with the current public information required under Rule 144(c)(1), (C) they shall have ceased to be outstanding or (D) they have been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the

 

  

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transferee of the securities. No Registrable Securities may be registered under more than one registration statement at any one time.

 

(4)      “Registration Expenses” mean all expenses incurred by the Company in effecting any registration pursuant to this Agreement (whether or not any registration or prospectus becomes effective or final) or otherwise complying with its obligations under this Section 5(b), including all registration, filing and listing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses, expenses incurred in connection with any “road show”, the reasonable fees and disbursements of Holders’ Counsel, and expenses of the Company’s independent accountants in connection with any regular or special reviews or audits incident to or required by any such registration, but shall not include Selling Expenses.

 

(5)      “Selling Expenses” mean all discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder (other than the fees and disbursements of Holders’ Counsel included in Registration Expenses).

 

(c)      DTC.

 

(i)      The Company agrees to use its commercially reasonable efforts to have the global certificate or certificates representing the Notes made eligible for clearance and settlement through DTC as of the Closing; provided, however, that if DTC determines, in its sole discretion, that the Notes cannot be made eligible for clearance and settlement through DTC, the parties agree that the Company shall deliver to the respective Purchasers of the Notes one or more certificates representing the Notes in definitive form, registered in such name or names and denominations as such Purchasers may request, against payment by such Purchasers as set forth in Section 2.  To the extent the Notes are delivered in definitive form, the parties agree to make any changes to the Indenture necessary to effect the same.

 

(ii)      As promptly as practicable after any registration statement filed pursuant to Section 5(b) hereof is declared effective, the Company shall use commercially reasonable efforts to ensure the Registrable Securities shall be eligible for clearance, settlement and trading in “book-entry” form through the facilities of DTC.  The Registrable Securities will be represented by one or more definitive global certificates in book-entry form and will be deposited by or on behalf of the Company with DTC or its designated custodian, and registered in the name of Cede & Co.

 

(d)      Payment of Expenses. Whether or not the Transactions are consummated or this Agreement is terminated, the Company agrees to pay (i) all costs, expenses, fees and taxes incident to and in connection with the negotiation, printing, processing and

 

  

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distribution (including, without limitation, word processing and duplication costs) and delivery of, each of the Documents, and the preparation, issuance and delivery of the Notes, (ii) all fees and expenses of the counsel, accountants and any other experts or advisors retained by the Company, (iii) all fees and expenses (including fees and expenses of counsel) of the Company in connection with approval of the Registrable Securities by DTC for book-entry transfer, (iv) all fees charged by rating agencies in connection with the rating of the Notes, and (v) all fees and expenses (including reasonable fees and expenses of counsel) of the Trustee.

 

(e)      Transaction Documents. The parties agree to do and perform all things required to be done and performed under the Documents prior to and after the Closing Date.

 

(f)      Stabilization or Manipulation. The Company agrees not to take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of the Notes or any other reference security, whether to facilitate the sale or resale of the Notes or otherwise.

 

(g)      Stamp Taxes. The Company agrees pay all stamp or other issuance or transfer taxes or duties other similar fees or charges which may be imposed by any governmental or regulatory authority in connection with the execution and delivery of this Agreement or the issuance or sale of the Notes.

 

(h)      Reporting Requirements. The Company, until the completion of the distribution of the Notes, will file all documents required to be filed with the SEC pursuant to the Exchange Act within the time periods required by the Exchange Act.

 

6.      Conditions. The obligations of the Purchasers to purchase the Notes under this Agreement are subject to the performance by the Company of the covenants and obligations hereunder and the satisfaction of each of the following conditions:

 

(a)      Representations, Warranties and Agreements. All the representations and warranties of the Company contained in this Agreement and in each of the other Documents shall be true and correct in all material respects as of the date hereof and on the Closing Date. On or prior to the Closing Date, the Company shall have performed or complied with all of the agreements and satisfied all conditions on their respective parts to be performed, complied with or satisfied pursuant to the Documents (other than conditions to be satisfied by such other parties, which the failure to so satisfy would not, individually or in the aggregate, have a Material Adverse Effect).

 

(b)      Closing Deliverables. Each Purchaser shall have received on the Closing Date:

 

(i)      Officers’ Certificate. A certificate dated the Closing Date, signed by (1) the Chief Executive Officer and (2) the principal financial or accounting officer of the Company, on behalf of the Company, to the effect that (A) the representations and warranties set forth in Section 3 hereof, in each of the Documents are true and correct in all material respects with the same force and

 

  

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effect as though expressly made at and as of the Closing Date, (B) the Company has performed and complied with all agreements and satisfied all conditions in all material respects on its part to be performed or satisfied at or prior to the Closing Date, (C) on the Closing Date, since the date hereof or since the date of the most recent financial statement in the Company Reports, no event or events have occurred, no information has become known nor does any condition exist that, individually or in the aggregate, would have a Material Adverse Effect, (D) except as contemplated by the Transactions and the draft Plan of Reorganization provided to each Purchaser, since the date of the most recent financial statements in the Company Reports, neither the Company nor any other Subsidiary has incurred any liabilities or obligations, direct or contingent, not in the ordinary course of business, that are material to the Company and the Subsidiaries, taken as a whole, or entered into any transactions not in the ordinary course of business that are material to the business, condition (financial or otherwise) or results of operations of the Company and the Subsidiaries, taken as a whole, and there has not been any change in the capital stock or long-term indebtedness of the Company or any other Subsidiary that is material to the business, condition (financial or otherwise) or results of operations of the Company and the Subsidiaries, taken as a whole, and (E) the sale of the Notes has not been enjoined (temporarily or permanently).

 

(ii)      Secretary’s Certificate. A certificate, dated the Closing Date, executed by the Secretary of the Company, certifying such matters as the applicable Purchaser may reasonably request.

 

(iii)      Good Standing Certificates. Certificates, dated as of a date within five days prior to the Closing Date or such other date as is reasonably practical, evidencing qualification of the Company as a (1) domestic corporation in good standing issued by the Secretary of State of the State of Delaware, and (2) foreign corporation in good standing issued by the Secretaries of State (or comparable office) of each of the jurisdictions in which the Company is operates.

 

(iv)      Executed Documents. Each Purchaser shall have received fully executed originals of each Document (each of which shall be in full force and effect), and each certificate, letter and other document to be delivered in connection with the Transactions.

 

(v)      Delivery of Notes.  The Company shall have executed and delivered to the Purchasers one or more certificates representing the Notes (in global form or definitive form as set forth in Section 5(c)) purchased by such Purchasers.

 

(c)      No Material Adverse Change. Subsequent to the respective dates as of which information is given in the Company Reports, there shall not have been any Material Adverse Change that would be reasonably expected to (1) make it impracticable or inadvisable to proceed with the offering, sale or delivery of the Notes on the terms and

 

  

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in the manner contemplated by this Agreement, or (2) materially impair the investment quality of any of the Notes.

 

(d)      No Hostilities. There shall not exist any outbreak or escalation of hostilities or other national or international calamity or crisis, including acts of terrorism, or material adverse change or disruption in economic conditions in, or in the financial markets of, the United States (it being understood that any such change or disruption shall be relative to such conditions and markets as in effect on the date hereof), if the effect of such outbreak, escalation, calamity, crisis, act or material adverse change in the economic conditions in, or in the financial markets of, the United States would be reasonably expected to make it impracticable or inadvisable to market or proceed with the offering or delivery of the Notes or to enforce contracts for the sale of any of the Notes.

 

(e)      Banking Moratorium. There shall not exist (1) a declaration of a banking moratorium by any Governmental Authority has occurred or the taking of any action by any Governmental Authority after the date hereof in respect of its monetary or fiscal affairs or (2) a material disruption in settlement or clearing services that, in the case of clause (1) of this paragraph, that could reasonably be expected to have a material adverse effect on the financial markets in the United States.

 

(f)      Required Approvals.  All Governmental Approvals of the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and the Office of the Comptroller of the Currency (the “OCC”) required to have been obtained at or prior to the Closing Date for the consummation or effectiveness (as applicable) of the applicable Transactions shall have been obtained and shall be in full force and effect (such Governmental Approvals, the “Required Approvals”); provided, however, that, with respect to the Purchaser, (A) no Required Approval shall impose or contain any restraint or condition that would reasonably be expected to impair in any material respect the benefits to the Purchaser of the Investment and (B) no Required Approval shall require any modification of governance arrangements with respect to, or impose any capital or other support requirements on, the Purchaser or any of its Affiliates (each, a “Burdensome Condition”).

 

(g)      Indebtedness.  On the Closing Date, the Company shall have no outstanding Indebtedness (as defined in the Indenture), except Indebtedness resulting from the issuance of the Notes.

 

(h)      Confirmation of the Plan of Reorganization.  The Plan of Reorganization effecting the Transactions shall have been confirmed by the Bankruptcy Court and shall have been substantially consummated.

 

(i)      Transactions under the Stock Purchase Agreements.  Contemporaneously with the Closing, the Company shall consummate the transactions contemplated by the Stock Purchase Agreements and shall have received proceeds of such issuance in an amount not less than $[       ] million.

 

  

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(j)      Purchase of Notes.  The Company shall have confirmed in writing to the Purchasers that it will be issuing an aggregate of not less than $[       ] aggregate principal amount of Notes on the Closing Date pursuant to this Agreement.

 

(k)      Indenture.  The Purchasers shall have received the Indenture duly executed and delivered by the Company and the Trustee, and the Notes shall have been (i) duly executed by the Company and (ii) authenticated by the Trustee.

 

7.      Indemnification and Contribution.

 

(a)      Indemnification by the Company. The Company agrees to indemnify and hold harmless each Purchaser, its affiliates, directors, officers, partners, employees and agents, and each person, if any, who controls any Purchaser within the meaning of Section 15 of the Securities Act against any losses, claims, damages or liabilities of any kind to which each Purchaser, affiliate, director, officer, partner, employee, agent or such controlling person may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company, insofar as any such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon:

 

(i)      any untrue statement or alleged untrue statement of a material fact contained in any Company Report or any registration statement, prospectus or any amendment or supplement thereto filed or prepared pursuant to Section 5(b) hereof (a “Registration Document”);

 

(ii)      the omission or alleged omission to state, in any Company Report or any Registration Document thereto, a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or

 

(iii)      any failure by the Company duly to perform or observe any term, provision, covenant, agreement or condition required to be performed or observed under this Agreement.

 

Subject to the provisions hereof, the Company will reimburse, as incurred, each Purchaser and its affiliates, directors, officers, employees, agents and each such controlling persons for any legal or other expenses incurred by such person in connection with investigating, defending against, settling, compromising, paying or appearing as a third-party witness in connection with any such loss, claim, damage, liability, expense or action in respect thereof; provided, however, the Company will not be liable to the extent that (1) any untrue statements or omissions, or alleged untrue statements or omissions, in any Registration Document are based solely upon information regarding a Purchaser furnished to the Company by such Purchaser expressly for use therein, or to the extent that such information relates to such Purchaser or such Purchaser’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved by such Purchaser expressly for use in the Registration Document, or (2) the use by such

 

  

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Purchaser of an outdated or defective prospectus that is a Registration Document after the Company has notified such Purchaser in writing that such prospectus is outdated or defective and prior to the receipt by such Purchaser of an amended or supplemented prospectus, but only if and to the extent that following the receipt of the amended or supplemented prospectus the misstatement or omission giving rise to such loss, claim, damage, liability, expense or action in respect thereof would have been corrected. The indemnity agreement set forth in this Section shall be in addition to any liability that the Company and the Bank may otherwise have to the indemnified parties.

 

(b)      Notifications and Other Indemnification Procedures. As promptly as reasonably practicable after receipt by an indemnified party under this Section of notice of the commencement of any action for which such indemnified party is entitled to indemnification under this Section, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section, notify the indemnifying party of the commencement thereof in writing; but the omission to so notify the indemnifying party (i) will not relieve such indemnifying party from any liability under Section 7(a) unless and only to the extent it is materially prejudiced as a proximate result thereof and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in Section 7(a). In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may elect, jointly with any other indemnifying party similarly notified by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the defendants in any such action include both the indemnified party and the indemnifying party, and the indemnified party shall have concluded that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be one or more legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party, or (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after receipt by the indemnifying party of notice of the institution of such action, then, in each such case, the indemnifying party shall not have the right to direct the defense of such action on behalf of such indemnified party or parties and such indemnified party or parties shall have the right to select separate counsel to defend such action on behalf of such indemnified party or parties at the expense of the indemnifying party. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and reasonable approval by such indemnified party of counsel appointed to defend such action, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the immediately preceding sentence (it being understood, however, that in connection

 

  

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with such action the indemnifying party shall not be liable for the fees and expenses of more than one separate counsel (in addition to local counsel) in any one action or separate but substantially similar actions in the same jurisdiction arising out of the same general allegations or circumstances) or (ii) the indemnifying party has authorized in writing the employment of counsel for the indemnified party at the expense of the indemnifying party, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party and shall be paid as they are incurred. After such notice from the indemnifying party to such indemnified party, the indemnifying party will not be liable for the costs and expenses of any settlement of such action effected by such indemnified party without the prior written consent of the indemnifying party (which consent shall not be unreasonably withheld), unless such indemnifying party waived in writing its rights under this Section, in which case the indemnified party may affect such a settlement without such consent.

 

(c)      Settlements. No indemnifying party shall be liable under this Section for any settlement of any claim or action (or threatened claim or action) effected without its written consent, which shall not be unreasonably withheld, but if a claim or action settled with its written consent, or if there be a final judgment for the plaintiff with respect to any such claim or action, each indemnifying party jointly and severally agrees, subject to the exceptions and limitations set forth above, to indemnify and hold harmless each indemnified party from and against any and all losses, claims, damages or liabilities (and legal and other expenses as set forth above) incurred by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement or compromise of any pending or threatened proceeding in respect of which the indemnified party is or could have been a party, or indemnity could have been sought hereunder by the indemnified party, unless such settlement (A) includes an unconditional written release of the indemnified party, in form and substance satisfactory to the indemnified party, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of the indemnified party. Notwithstanding the foregoing, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for legal or other expenses as contemplated by Section 7(c), the indemnifying party agrees that it shall be liable for any settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement or compromise of, or consent to the entry of such judgment.

 

8.      Termination. (A) The Purchasers may terminate this Agreement (i) at any time prior to the Closing Date by written notice signed by all Purchasers to the Company if any of the events described in Sections 6(b)(v) (No Material Adverse Change), 6(b)(vi) (No Hostilities) or 6(b)(vii) (Banking Moratorium) shall have occurred of if the Purchasers shall decline to purchase the Notes for any reason permitted by this Agreement or (ii) on the Closing Date if any condition described in Section 6 is not fulfilled or waived in writing by the Purchasers on or prior to the

 

  

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Closing Date. Any termination pursuant to this Section shall be without liability on the part of (a) the Company to the Purchasers, except that the Company shall be obligated to reimburse the expenses of the Purchasers pursuant to Section 5(d) hereof or (b) the Purchasers to the Company, except, in the case of each of clauses (a) and (b), that the provisions of Sections 8 and 9 hereof shall at all times be effective and shall survive such termination.

 

(B)      In addition, this Agreement may be terminated prior to the Closing by the Company or the Investor, upon written notice to the other party, in the event that the Closing does not occur on or before the one hundred eightieth (180th) day following the date of this Agreement; provided, however, that the right to terminate this Agreement pursuant to this Section 8(B) shall not be available to any party whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date.

 

9.      Survival. The representations and warranties, covenants, indemnities and contribution and expense reimbursement provisions and other agreements of the Company and the Bank, as applicable, set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, and will survive, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of the Purchasers, (ii) the acceptance of the Notes, and payment for them hereunder, and (iii) any termination of this Agreement.

 

10.      Miscellaneous.

 

(a)      Notices. Notices given pursuant to any provision of this Agreement shall be addressed as follows: (i) if to the Company, to: Anchor BanCorp Wisconsin Inc., 25 West Main Street, Madison, Wisconsin 53703, Attention: Mark D. Timmerman, with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP, Attention: Sven G. Mickisch and Michael J. Zeidel, and (ii) if to the Purchasers, to their respective addresses listed in Schedule I (or in any case to such other address as the person to be notified may have requested in writing).

 

(b)      Beneficiaries. This Agreement has been and is made solely for the benefit of and shall be binding upon the Company, the Bank, the Purchasers and to the extent provided in Section 6 hereof, the controlling persons, affiliates, officers, directors, partners, employees, representatives and agents referred to in Section 6 hereof and their respective heirs, executors, administrators, successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The term “successors and assigns” shall not include a purchaser of any of the Notes from any Purchaser merely because of such purchase.

 

(c)      Governing Law; Jurisdiction; Waiver of Jury Trial; Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. The Company and each Purchaser hereby expressly and irrevocably (i) submits to the non-exclusive jurisdiction of the federal courts sitting in the City of New York in any suit or proceeding arising out of or relating to this Agreement or the Transactions, and (ii) waives (a) its right to a trial by jury in any legal action or proceeding relating to this Agreement, the Transactions or any course of conduct, course

 

  

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of dealing, statements (whether verbal or written) or actions of the Purchasers and for any counterclaim related to any of the foregoing and (b) any obligation which it may have or hereafter may have to the laying of venue of any such litigation brought in any such court referred to above and any claim that any such litigation has been brought in an inconvenient forum.

 

(d)      Entire Agreement; Counterparts. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

(e)      Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

(f)      Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

(g)      Amendment. This Agreement may be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may be given, provided that the same are in writing and signed by all of the signatories hereto.

 

(h)      Default by a Purchaser. If any one or more Purchasers shall fail to purchase and pay for any of the Notes agreed to be purchased by such Purchaser or Purchasers hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Purchasers shall be obligated severally to take up and pay for (in the respective proportions which the amount of Notes set forth opposite their names in Schedule I hereto bears to the aggregate amount of Notes set forth opposite the names of all the remaining Purchasers) the Notes which the defaulting Purchaser or Purchasers agreed but failed to purchase; provided, however, that in the event that the aggregate amount of Notes which the defaulting Purchaser or Purchasers agreed but failed to purchase shall exceed 10% of the aggregate amount of Notes set forth in Schedule I hereto, the remaining Purchasers shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Notes, and if such nondefaulting Purchasers do not purchase all the Notes, this Agreement will terminate without liability to any nondefaulting Purchaser or the Company. In the event of a default by any Purchaser as set forth in this Section 10, the Closing Date shall be postponed for such period, not exceeding seven days, as the

 

  

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Company shall determine in order that the required changes in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting Purchaser of its liability, if any, to the Company and any nondefaulting Purchaser for damages occasioned by its default hereunder.

 

  

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Please confirm that the foregoing correctly sets forth the agreement between the Company and the Purchasers.

 

	  	
ANCHOR BANCORP WISCONSIN INC.

	 	 
	  	
By:

	 	 
	  	
Name:

	 	Mark D. Timmerman
	  	
Title:

	 	Executive Vice President, Secretary and General Counsel

 

  

  

  

 

Accepted and Agreed to:

 

	
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