Document:

ffis_ex101.htm

Exhibit 10.1 

 

SECURITIES PURCHASE AGREEMENT

 

 

by and among

 

 

THE UNITED STATES DEPARTMENT OF THE TREASURY,

 

 

FIRST-CITIZENS BANK & TRUST COMPANY

 

 

and

 

 

1ST FINANCIAL SERVICES CORPORATION

 

 

Dated as of October 15, 2013

 

 

 

  

  

  

 

TABLE OF CONTENTS

 

	 	 	 	 	Page
	 	 	 	 	 
	 ARTICLE I	 	 DEFINITIONS 	 	1
	 	 	 	 	 
	 Section 1.01 	 	 Definitions of Certain Terms.	 	1
	 Section 1.02 	 	 Interpretation.	 	3
	 	 	 	 	 
	 ARTICLE II 	 	 THE SECURITIES PURCHASE	 	3
	 	 	 	 	 
	 Section 2.01 	 	 Purchase and Sale of the Shares and the Warrant. 	 	3
	 Section 2.02 	 	 Closing of the Securities Purchase. 	 	3
	 	 	 	 	 
	 ARTICLE III	 	 REPRESENTATIONS AND WARRANTIES	 	4
	 	 	 	 	 
	 Section 3.01 	 	 Representations and Warranties of the Purchaser.	 	4
	 Section 3.02	 	 Representations and Warranties of the Company. 	 	4
	 	 	 	 	 
	 ARTICLE IV	 	 COVENANTS	 	5
	 	 	 	 	 
	 Section 4.01 	 	 Forbearances of the Seller. 	 	5
	 Section 4.02	 	 Further Action. 	 	5
	 Section 4.03 	 	 Merger Agreement. 	 	5
	 Section 4.04 	 	 Merger. 	 	5
	 Section 4.05 	 	 Remaining Certification and Disclosure Requirements. 	 	6
	 Section 4.06	 	 Transferability Restrictions Related to Long-Term Restricted Stock.  	 	6
	 Section 4.07	 	 Executive Compensation.  	 	6
	 	 	 	 	 
	 ARTICLE V 	 	 CONDITIONS TO THE CLOSING	 	6
	 	 	 	 	 
	 Section 5.01	 	 Conditions to Each Party’s Obligations.	 	6
	 Section 5.02	 	 Conditions to Obligations of the Seller.	 	7
	 	 	 	 	 
	 ARTICLE VI	 	 TERMINATION	 	8
	 	 	 	 	 
	 Section 6.01 	 	 Termination Events.	 	8
	 Section 6.02 	 	 Effect of Termination. 	 	8
	 	 	 	 	 
	 ARTICLE VII 	 	  MISCELLANEOUS	 	8
	 	 	 	 	 
	 Section 7.01 	 	 Waiver; Amendment.	 	8
	 Section 7.02 	 	 Counterparts.	 	9
	 Section 7.03 	 	 Governing Law; Choice of Forum; Waiver of Jury Trial. 	 	9
	 Section 7.04 	 	 Expenses. 	 	9
	 Section 7.05 	 	 Notices.  	 	10
	 Section 7.06	 	 Entire Understanding; No Third Party Beneficiaries. 	 	11
	 Section 7.07 	 	 Assignment. 	 	11
	 Section 7.08	 	 Severability.	 	11

 

  

i

  

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (as amended, supplemented or otherwise modified from time to time, this “Agreement”) is dated as of October 15, 2013, by and among the United States Department of the Treasury (the “Seller”), First-Citizens Bank & Trust Company, a state-chartered bank organized under the laws of the State of North Carolina (the “Purchaser”) and 1st Financial Services Corporation, a North Carolina corporation (the “Company”).

 

RECITALS

 

WHEREAS, the Seller is currently the owner of and holds (i) 16,369 shares of Class B Preferred Stock, Series A, of the Company (the “Shares”) and (ii) a ten-year warrant to purchase 276,815 shares of Company Common Stock (the “Warrant”);

 

WHEREAS, on August 28, 2013, the Purchaser, the Company and Mountain 1st Bank & Trust Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, among other things and subject to the terms and conditions set forth therein, (i) the Company will merge with and into the Purchaser, with the Purchaser continuing thereafter as the surviving corporation and (ii) each outstanding share of Common Stock will convert into the right to receive the Merger Consideration (as defined in the Merger Agreement) (collectively, the “Merger”); and

 

WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from the Seller, subject to the terms and conditions contained in this Agreement, all of the Shares and the Warrant (the “Securities Purchase”).

 

NOW, THEREFORE, in consideration of the premises, and of the various representations, warranties, covenants and other agreements and undertakings of the parties hereto, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

AGREEMENT

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01   Definitions of Certain Terms.

 

  For purposes of this Agreement, the following terms are used with the meanings assigned below (such definitions to be equally applicable to both the singular and plural forms of the terms herein defined):

 

“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.

 

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

 

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banking organizations in the State of North Carolina are required or authorized by Law to be closed.

 

“Closing” has the meaning set forth in Section 2.02(A).

 

“Closing Date” has the meaning set forth in Section 2.02(A).

 

“Company” has the meaning set forth in the introductory paragraph to this Agreement.

 

  

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“Company Common Stock” means the common stock, par value $5.00 per share, of the Company.

 

“Company Material Adverse Effect” means a material adverse effect on the business, results of operations or financial condition of the Company and its consolidated Subsidiaries taken as a whole; provided, however, that Company Material Adverse Effect shall not be deemed to include the effects of (i) changes after the date hereof in general business, economic or market conditions (including changes generally in prevailing interest rates, credit availability and liquidity, currency exchange rates and price levels or trading volumes in the United States or foreign securities or credit markets), or any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism, in each case generally affecting the industries in which the Company and its Subsidiaries operate, (ii) changes or proposed changes after the date hereof in United States generally accepted accounting principles or regulatory accounting requirements, or authoritative interpretations thereof, (iii) changes or proposed changes after the date hereof in securities, banking and other Laws of general applicability or related policies or interpretations of Governmental Entities (in the case of each of these clauses (i), (ii) and (iii), other than changes or occurrences to the extent that such changes or occurrences have or would reasonably be expected to have a materially disproportionate adverse effect on the Company and its consolidated Subsidiaries taken as a whole relative to comparable United States banking or financial services organizations), or (iv) changes in the market price or trading volume of the Company Common Stock or any other equity, equity-related or debt securities of the Company or its consolidated Subsidiaries (it being understood and agreed that the exception set forth in this clause (iv) does not apply to the underlying reason giving rise to or contributing to any such change).

 

“Compensation Regulations” means any guidance, rule or regulation, as the same shall be in effect from time to time, promulgated pursuant to or implementing Section 111 of the Emergency Economic Stabilization Act of 2008, as amended by the American Recovery and Reinvestment Act of 2009, or otherwise from time to time.

 

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

 

“Governmental Entity” means any court, administrative agency or commission or other governmental or regulatory authority or instrumentality or self-regulatory organization.

 

“Law” means any law, statute, code, ordinance, rule, regulation, judgment, order, award, writ, decree or injunction issued, promulgated or entered into by or with any Governmental Entity.

 

“Liens” means any liens, licenses, pledges, charges, encumbrances, adverse rights or claims and security interests whatsoever.

 

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

 

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

 

“Purchase Price” has the meaning set forth in Section 2.01.

 

“Purchaser” has the meaning set forth in the introductory paragraph to this Agreement.

 

“Regulatory Event” means, with respect to the Company, that (i) the Federal Deposit Insurance Corporation or any other applicable Governmental Entity shall have been appointed as conservator or receiver for the Company or any Subsidiary; (ii) the Company or any Subsidiary shall have been considered in “troubled condition” for the purposes of 12 U.S.C. Sec. 1831i or any regulation promulgated thereunder; (iii) the Company or any Subsidiary shall qualify as “Undercapitalized,” “Significantly Undercapitalized,” or “Critically Undercapitalized” as those terms are defined in 12 U.S.C. Sec. 1831o or other applicable Law; or (iv) the Company or any Subsidiary shall have become subject to any formal or informal regulatory action requiring the Company or any Subsidiary to materially improve its capital, liquidity or safety and soundness.

 

“Relevant Period” means the period in which any obligation of the Company arising from financial assistance under the Troubled Asset Relief Program remains outstanding, as it may be further described in the Compensation Regulations.

 

“Securities Purchase” has the meaning set forth in the recitals in this Agreement.

 

“Seller” has the meaning set forth in the introductory paragraph to this Agreement.

 

“Shares” has the meaning set forth in the recitals to this Agreement.

 

  

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“Subsidiary” means, with respect to any person, any bank, corporation, partnership, joint venture, limited liability company or other organization, whether incorporated or unincorporated, (i) of which such person or a subsidiary of such person is a general partner or managing member or (ii) at least a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or persons performing similar functions with respect to such entity is directly or indirectly owned by such person and/or one or more subsidiaries thereof.

 

“Warrant” has the meaning set forth in the recitals to this Agreement.

 

Section 1.02    Interpretation.

 

  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The term “person” as used in this Agreement shall mean any individual, corporation, limited liability company, limited or general partnership, joint venture, government or any agency or political subdivision thereof, or any other entity or any group (as defined in Section 13(d)(3) of the Exchange Act) comprised of two or more of the foregoing.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  In this Agreement, all references to “dollars” or “$” are to United States dollars.  This Agreement and any documents or instruments delivered pursuant hereto or in connection herewith shall be construed without regard to the identity of the person who drafted the various provisions of the same.  Each and every provision of this Agreement and such other documents and instruments shall be construed as though all of the parties participated equally in the drafting of the same.  Consequently, the parties acknowledge and agree that any rule of construction that a document is to be construed against the drafting party shall not be applicable either to this Agreement or such other documents and instruments.

 

ARTICLE II

 

THE SECURITIES PURCHASE

 

Section 2.01   Purchase and Sale of the Shares and the Warrant.

 

  Subject to, and on the terms and conditions of, this Agreement, effective at the Closing, the Purchaser will purchase from the Seller, and the Seller will sell, transfer, convey, assign and deliver to the Purchaser, all of the Shares and the Warrant, free and clear of all Liens.  The aggregate purchase price for the Shares, including all accrued and unpaid dividends on the Shares through and including the Closing Date, and the Warrant shall be an amount in cash equal to Eight Million Dollars ($8,000,000) ( the “Purchase Price”).

 

Section 2.02   Closing of the Securities Purchase.

 

  (A)  Subject to Article V, the closing of the Securities Purchase (the “Closing”) shall be held (1) immediately prior to the filing of the articles of merger with the State of North Carolina pursuant to which the Merger will be consummated or (2) at such other time or date that is agreed to in writing by the Seller and the Purchaser (the date on which the Closing occurs, the “Closing Date”).  The Closing shall be held at such place as the Seller and the Purchaser shall mutually agree in writing.

 

(B) At the Closing, or simultaneously therewith, the following shall occur:

 

(1) the Seller will deliver to the Purchaser certificates for the Shares and the Warrant, duly endorsed in blank or accompanied by stock powers duly endorsed in blank or other required instruments of transfer; and

 

(2) the Purchaser will pay the Purchase Price to the Seller, by wire transfer in immediately available funds, to an account designated in writing by the Seller to the Purchaser, such designation to be made not later than two (2) Business Days prior to the Closing Date.

 

  

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ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Section 3.01   Representations and Warranties of the Purchaser.

 

  The Purchaser hereby represents and warrants to the Seller as follows:

 

(A) Existence and Power.  The Purchaser is duly organized and validly existing as a state-chartered bank under the Laws of the State of North Carolina and has all requisite power and authority to execute and deliver this Agreement and, assuming that the consents, approvals, filings and registrations referred to in Section 3.01(D) are received or made (as applicable), to consummate the transactions contemplated by this Agreement.

 

(B) Authorization.  The execution and delivery of this Agreement, and the consummation by the Purchaser of the transactions contemplated hereby, have been duly and validly approved by all necessary corporate action of the Purchaser, and no other corporate or shareholder proceedings on the part of the Purchaser are necessary to approve this Agreement or to consummate the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by the Purchaser, and (assuming the due authorization, execution and delivery of this Agreement by the Seller and the Company) this Agreement constitutes a valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except as enforcement may be limited by general principles of equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency and similar Laws affecting creditors’ rights and remedies generally.

 

(C) Non-Contravention.  Neither the execution and delivery of this Agreement nor the consummation by the Purchaser of the transactions contemplated hereby, will violate any provision of the charter or bylaws or similar governing documents of the Purchaser or, assuming that the consents, approvals, filings and registrations referred to in Section 3.01(D) are received or made (as applicable), applicable Law.

 

(D) Consents and Approvals.  Except for any consents, approvals, filings or registrations required in connection with the transactions contemplated by the Merger Agreement, and required filings with and approvals of bank regulatory authorities, if any, under applicable banking law and regulations for Purchaser’s purchase of the Shares and the Warrant, no consents or approvals of, or filings or registrations with, any Governmental Entity or of or with any other third party by and on behalf of the Purchaser are necessary in connection with the execution and delivery by the Purchaser of this Agreement and the consummation by the Purchaser of the transactions contemplated hereby.

 

(E)  Securities Matters.  The Shares and the Warrant are being acquired by the Purchaser for its own account and without a view to the public distribution or sale of the Shares or the Warrant.

 

(F) Availability of Funds.  The Purchaser has, and will have as of the Closing, sufficient funds available to consummate the transactions contemplated hereunder.

 

Section 3.02 Representations and Warranties of the Company.

 

  The Company hereby represents and warrants to the Seller and the Purchaser as follows:

 

(A) Existence and Power.  The Company is duly organized and validly existing as a corporation under the Laws of the State of North Carolina and has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated by this Agreement.

 

(B) Authorization.  The execution and delivery of this Agreement, and the consummation by the Company of the transactions contemplated hereby, have been duly and validly approved by all necessary corporate action of the Company, and no other corporate or shareholder proceedings on the part of the Company are necessary to approve this Agreement or to consummate the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by the Company, and (assuming the due authorization, execution and delivery of this Agreement by the Seller and the Purchaser) this Agreement constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforcement may be limited by general principles of equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency and similar Laws affecting creditors’ rights and remedies generally.

 

(C) Non-Contravention.  Neither the execution and delivery of this Agreement nor the consummation by the Company of the transactions contemplated hereby, will violate any provision of the charter or bylaws or similar governing documents of the Company or, assuming that the consents, approvals, filings and registrations referred to in Section 3.02(D) are received or made (as applicable), applicable Law.

 

  

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(D) Consents and Approvals.  Except for any consents, approvals, filings or registrations required in connection with the transactions contemplated by the Merger Agreement, no consents or approvals of, or filings or registrations with, any Governmental Entity or of or with any other third party by and on behalf of the Company are necessary in connection with the execution and delivery by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby.

 

ARTICLE IV

 

COVENANTS

 

Section 4.01   Forbearances of the Seller.

 

  From the date hereof until the Closing, without the prior written consent of the Purchaser, the Seller will not:

 

(A) directly or indirectly transfer, sell, assign, distribute, exchange, pledge, hypothecate, mortgage, encumber or otherwise dispose of or engage in or enter into any hedging transactions with respect to, any of the Shares, the Warrant or any portion thereof or interest therein (other than pursuant to the Securities Purchase);

 

(B) exercise the Warrant, in whole or in part; or

 

(C) agree, commit to or enter into any agreement to take any of the actions referred to in Section 4.01(A) or Section 4.01(B).

 

Notwithstanding the foregoing, the Seller may undertake any of the actions set forth in Section 4.01(A) with an Affiliate of the Seller so long as this Agreement is assigned to such Affiliate in accordance with Section 7.07 of this Agreement.  For the avoidance of doubt, until the Closing, except as expressly set forth in this Section 4.01, the Seller shall continue to be able to exercise all rights and privileges with respect to the Shares and the Warrant.

 

Section 4.02    Further Action.

 

  The Seller, the Purchaser and the Company (A) shall each execute and deliver, or shall cause to be executed and delivered, such documents and other instruments and shall take, or shall cause to be taken, such further action as may be reasonably necessary to carry out the provisions of this Agreement and give effect to the transactions contemplated by this Agreement and (B) shall refrain from taking any actions that could reasonably be expected to impair, delay or impede the Closing or the consummation of the transactions contemplated by this Agreement (except as expressly permitted by the Merger Agreement).

 

Section 4.03   Merger Agreement.

 

  The Purchaser will not agree to any amendment, modification or waiver of any provision of the Merger Agreement (other than corrections of obvious errors, if any, appropriate changes in the terms thereof to reflect the terms of this Agreement and Purchaser’s purchase of the Shares and Warrant from the Seller prior to completion of the Merger, or other ministerial amendments) to the extent such amendment, modification or waiver would adversely affect the Seller, without the prior written consent of the Seller.

 

Section 4.04   Merger.

 

  The Purchaser shall (i) keep the Seller reasonably apprised of its progress in obtaining necessary regulatory approvals for the Merger, (ii) deliver to the Seller copies of any written notices the Purchaser and the Company deliver to one another under the Merger Agreement to the extent such notices relate to such approvals, the failure to obtain any such approvals or the termination of the Merger Agreement and (iii) provide at least seven (7) days’ prior written notice of the anticipated Closing Date to the Seller.  The Company shall give the Seller prompt written notice of the approval of the Merger by the holders of the Company Common Stock.

 

  

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Section 4.05   Remaining Certification and Disclosure Requirements.

 

  The Company and the Purchaser acknowledge, the Company agrees to comply with, and following the Closing, the Purchaser agrees to cause the Company and its successors to comply with, the certification and disclosure requirements set forth in the Compensation Regulations, including without limitation those submissions that are required with respect to the final portion of the Relevant Period (see, for example, Sections 30.7(c) and (d), Sections 30.11(b) and (c) and Section 30.15(a)(3) of the Compensation Regulations and FAQ-14 in the Frequently Asked Questions to the Compensation Regulations, available at www.financialstability.gov).

 

Section 4.06   Transferability Restrictions Related to Long-Term Restricted Stock.

 

  The Company and the Purchaser acknowledge that any long-term restricted stock (as defined in Section 30.1 of the Compensation Regulations) awarded by the Company that has otherwise vested may not become transferable, or payable in the case of a restricted stock unit, at any time earlier than as permitted under the schedule set forth in the definition of long-term restricted stock in Section 30.1 of the Compensation Regulations.  For this purpose, aggregate financial assistance received (for purposes of the definition of long-term restricted stock) includes the full original liquidation amount with respect to 16,369 Shares (see FAQ-15 in the Frequently Asked Questions to the Compensation Regulations, available at www.financialstability.gov).  Upon the sale of the Shares to the Purchaser, in the event that any long-term restricted stock awarded by the Company is not permitted to become transferable, or payable in the case of a restricted stock unit, under the schedule set forth in the definition of long-term restricted stock in Section 30.1 of the Compensation Regulations, the Company shall cancel such long-term restricted stock and/or restricted stock units.

 

Section 4.07   Executive Compensation.

 

  Neither the Company nor the Purchaser shall take any action that will result in, nor will the Company or the Purchaser permit, directly or indirectly, the acceleration, vesting, enhancement or increase in the payments or benefits that would otherwise become due as a result of the consummation of the Merger to any current or former executive officers of the Company.

 

ARTICLE V

 

CONDITIONS TO THE CLOSING

 

Section 5.01   Conditions to Each Party’s Obligations.

 

  The respective obligations of each of the Purchaser and the Seller to consummate the Securities Purchase are subject to the fulfillment, or written waiver by the Purchaser and the Seller, prior to the Closing, of each of the following conditions:

 

(A) Satisfaction of Conditions Precedent to the Merger. All conditions precedent to the Merger set forth in the Merger Agreement (other than those conditions that by their nature are to be satisfied at the closing of the Merger) shall have been satisfied or waived.

 

(B) Regulatory Approvals.  All regulatory approvals required to consummate the Securities Purchase shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired or been terminated.

 

(C) No Injunctions or Restraints; Illegality.  No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Securities Purchase shall be in effect.  No Law shall have been enacted, entered, promulgated or enforced by any Governmental Entity which prohibits or makes illegal the consummation of the Securities Purchase.

 

  

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Section 5.02    Conditions to Obligations of the Seller.

 

  The obligation of the Seller to consummate the Securities Purchase is also subject to the fulfillment, or written waiver by the Seller, prior to the Closing, of the following conditions:

 

(A) Other Events.  None of the following shall have occurred since the date hereof:

 

(1) the Company or any of its Subsidiaries shall have (a) dissolved (other than pursuant to a consolidation, amalgamation or merger); (b) become insolvent or unable to pay its debts or failed or admitted in writing its inability generally to pay its debts as they become due; (c) made a general assignment, arrangement or composition with or for the benefit of its creditors; (d) instituted or have instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition shall have been presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition shall have resulted in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; (e) had a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (f) sought or shall have become subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (g) had a secured party take possession of all or substantially all its assets or had a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets; (h) caused or shall have been subject to any event with respect to which, under the applicable laws of any jurisdiction, had an analogous effect to any of the events specified in clauses (a) to (g) (inclusive); or (i) taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts;

 

(2) a Governmental Entity in any jurisdiction shall have (a) commenced an action or proceeding against the Company or any of its Subsidiaries; or (b) issued or entered a temporary restraining order, preliminary or permanent injunction or other order binding upon the Company or any of its Subsidiaries, which in the case of (a) and (b) shall have had or shall be reasonably expected to have a Company Material Adverse Effect;

 

(3) any fact, circumstance, event, change, occurrence, condition or development shall have occurred that, individually or in the aggregate, shall have had or shall be reasonably likely to have a Company Material Adverse Effect; or

 

(4) any Regulatory Event not otherwise existing on the date hereof.

 

(B) Representations and Warranties.  The representations and warranties set forth in Article III of this Agreement shall be true and correct as though made on and as of the Closing Date.

 

(C) Consents and Approvals.  All consents and approvals of, and filings and registrations with, all Governmental Entities and of or with any other third party by and on behalf of the Company and the Purchaser that are necessary in connection with the execution and delivery by the Company and the Purchaser of this Agreement and the consummation by the Company and the Purchaser of the transactions contemplated hereby shall have been obtained or made, as applicable, and shall remain in full force and effect.

 

(D) Performance Obligations.  The Purchaser shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing.

 

(E) Closing Certificate.  The Purchaser shall deliver to the Seller a certificate, signed on behalf of the Purchaser by a senior executive officer thereof, dated as of the Closing Date, certifying to the effect that all conditions precedent to the Closing have been satisfied.

 

  

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ARTICLE VI

 

TERMINATION

 

Section 6.01   Termination Events.

 

  This Agreement may be terminated at any time prior to the Closing:

 

(A) by mutual written agreement of the Purchaser and the Seller; or

 

(B) by the Purchaser, upon written notice to the Seller, or by the Seller, upon written notice to the Purchaser, in the event that the Closing Date does not occur on or before April 30, 2014; provided, however, that the respective rights to terminate this Agreement pursuant to this Section 6.01(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 Date to occur on or prior to such date.

 

This Agreement shall automatically terminate upon the termination of the Merger Agreement in accordance with its terms.

 

Section 6.02   Effect of Termination.

 

  In the event of termination of this Agreement as provided in Section 6.01, this Agreement shall forthwith become void and have no effect, and none of the Seller, the Company, the Purchaser, any affiliates of the Seller, Company or the Purchaser or any officers, directors or employees of the Seller, the Company or the Purchaser or any of their respective affiliates shall have any liability of any nature whatsoever hereunder, or in connection with the transactions contemplated hereby, except that this Section 6.02 and Sections 7.03, 7.04, 7.05 and 7.06 shall survive any termination of this Agreement.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.01   Waiver; Amendment.

 

  Any provision of this Agreement may be (A) waived in writing by the party benefiting by the provision, or (B) amended or modified at any time by an agreement in writing signed by each of the parties hereto.  Neither any failure nor any delay by any party in exercising any right, power or privilege under this Agreement or any of the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege.

 

  

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Section 7.02   Counterparts.

 

  This Agreement may be executed by facsimile or other electronic means and in counterparts, all of which shall be considered an original and one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

 

Section 7.03   Governing Law; Choice of Forum; Waiver of Jury Trial.

 

(A)  This Agreement and any claim, controversy or dispute arising under or related to this Agreement, the relationship of the parties, and/or the interpretation and enforcement of the rights and duties of the parties shall be enforced, governed, and construed in all respects (whether in contract or in tort) in accordance with the federal law of the United States if and to the extent such law is applicable, and otherwise in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State.  Each of the parties hereto agrees (a) to submit to the exclusive jurisdictions and venue of the United States District Court of the District of Columbia and the United States Court of Federal Claims for any and all civil actions, suits or proceedings arising out of or relating to this Agreement or the transactions contemplated hereby, and (b) that notice may be served upon (i) the Purchaser at the address and in the manner set forth for notices to the Purchaser in Section 7.05, (ii) the Company at the address and in the manner set forth for notices to the Company in Section 7.05 and (iii) the Seller at the address and in the manner set forth for notices to the Seller in Section 7.05, but otherwise in accordance with federal law.

 

(B) To the extent permitted by applicable Law, each of the parties hereto hereby unconditionally waives trial by jury in any civil legal action or proceeding relating to this Agreement or the transactions contemplated hereby.

 

Section 7.04    Expenses.

 

  If requested by the Seller, the Purchaser shall pay all reasonable out of pocket and documented costs and expenses associated with this Agreement and the transactions contemplated by this Agreement, including, but not limited to, the reasonable fees, disbursements and other charges of the Seller’s legal counsel and financial advisors.

 

  

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Section 7.05    Notices.

 

  All notices and other communications hereunder shall be in writing and shall be deemed given on the date of delivery if delivered personally or telecopied (upon telephonic confirmation of receipt), on the first Business Day following the date of dispatch if delivered by a recognized next day courier service, or on the third Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid.  All notices hereunder shall be delivered as set forth below or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

 

	
  

	
If to the Purchaser to:

	
  

	
First-Citizens Bank & Trust Company

	
  

	
4300 Six Forks Road

	
  

	
Raleigh, North Carolina 27609

	
  

	
Facsimile:  (919) 716-7518

	
  

	
Attention:  Barry P. Harris, IV, Chief Legal Officer

	
  

	
Barry.Harris@firstcitizens.com

	
  

	
 

With a copy to:

	
  

	
Ward and Smith, P.A.

	
  

	
1001 College Court

	
  

	
New Bern, North Carolina 28562

	
  

	
Facsimile:  (252) 672-5477

	
  

	
Attention:  William R. Lathan, Jr.

	
  

	
wrl@wardandsmith.com

 

	
  

	
If to the Company to:

 

	
  

	
1st Financial Services Corporation

	
  

	
101 Jack Street

	
  

	
Hendersonville, North Carolina 28792

	
  

	
Facsimile:  (828) 697-3091.

	
  

	
Attention:  Michael G. Mayer, Chief Executive Officer

	
  

	
 

With a copy to:

 

	
  

	
Brooks, Pierce, McLendon, Humphrey & Leonard, LLP

	
  

	
2000 Renaissance Plaza

	
  

	
230 North Elm Street

	
  

	
Greensboro, North Carolina 27401

	
  

	
Facsimile: (336) 232-9123

	
  

	
Attention:  Robert A. Singer

	
  

	
 

If to the Seller to:

 

	
  

	
United States Department of the Treasury

	
  

	
1500 Pennsylvania Avenue, NW

	
  

	
Washington, D.C.  20220

	
  

	
Facsimile:  (202) 927-9225

	
  

	
Attention:  Chief Counsel Office of Financial Stability

	
  

	
 

With a copy to:

 

	
  

	
Cadwalader, Wickersham & Taft LLP

	
  

	
One World Financial Center

	
  

	
New York, New York  10281

	
  

	
Facsimile:  (212) 504-6666

	
  

	
Attention: William P. Mills

 

  

10

  

Section 7.06   Entire Understanding; No Third Party Beneficiaries.

 

  This Agreement (together with the documents, agreements and instruments referred to herein) represents the entire understanding of the parties with respect to the subject matter hereof and supersedes any and all other oral or written agreements heretofore made with respect to the subject matter hereof.  Nothing in this Agreement, expressed or implied, is intended to confer upon any person, other than the parties hereto, any rights or remedies hereunder.

 

Section 7.07   Assignment.

 

  Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any party hereto without the prior written consent of the other parties, and any attempt to assign any right, remedy, obligation or liability hereunder without such consent shall be null and void; provided, however, that the Seller may assign this Agreement to an Affiliate of the Seller.  If the Seller assigns this Agreement to an Affiliate, the Seller shall be relieved of its obligations and liabilities under this Agreement but (i) all rights, remedies, obligations and liabilities of the Seller hereunder shall continue and be enforceable by and against and assumed by such Affiliate, (ii) the Purchaser’s obligations and liabilities hereunder shall continue to be outstanding and (iii) all references to the Seller herein shall be deemed to be references to such Affiliate.  The Seller will give the Purchaser and the Company notice of any such assignment; provided, that the failure to provide such notice shall not void any such assignment.

 

Section 7.08   Severability.

 

  Any term or provision of this Agreement which is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid, illegal or unenforceable the remaining terms and provisions of this Agreement. or affecting the validity, legality or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction, and if any provision of this Agreement is determined to be so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable, in all cases so long as neither the economic nor legal substance of the transactions contemplated hereby is affected in any manner materially adverse to any party or its shareholders.  Upon any 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.

 

[Remainder of page intentionally left blank]

  

11

  

 

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

 

	 	
1st FINANCIAL SERVICES CORPORATION

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name:  Michael G. Mayer

	 
	 	 	
Title:    Chief Executive Officer

	 
	 	 	 	 
	 	
FIRST-CITIZENS BANK & TRUST COMPANY

	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	
Name:  Glenn D. McCoy

	 
	 	 	
Title:    Executive Vice President and

	 
	 	 	
Chief Financial Officer

	 
	 	 	 	 
	 	
UNITED STATES DEPARTMENT OF THE TREASURY

	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	
Name:  Timothy G. Massad

	 
	 	 	
Title:    Assistant Secretary for Financial

	 
	 	 	
Stability

	 

 

 

 

12ffis_ex102.htm

Exhibit 10.2

 

AMENDMENT AND ACKNOWLEDGEMENT

AGREEMENT

                1st Financial Services Corporation (the “Company”), Mountain 1st Bank & Trust Company (the “Bank”) and Vincent K. Rees (the “Employee”) agree as follows:

 

WHEREAS, the Company, the Bank and the Employee are parties to an Employment Agreement dated November 13, 2008 (the “Employment Agreement”); and

 

WHEREAS, the Bank and the Employee are parties to a Salary Continuation Agreement dated March 26, 2008 (the “SERP”); and

 

WHEREAS, the Company is a participant in the Troubled Assets Relief Program (TARP) Capital Purchase Program (“TARP Program”) and is subject to the rules and guidance issued under the TARP Program; and

 

WHEREAS, the Company and the Bank have agreed to merge with and into First-Citizens Bank & Trust Company (“First Citizens”) pursuant to an Agreement and Plan of Merger (the “Merger”); and

 

WHEREAS, consummation of the Merger requires the consent and approval of the United States Department of the Treasury (the "UST") as the holder of all preferred stock issued by the Company under the TARP Program; and

 

WHEREAS, as a means of securing UST's consent to the Merger, the Company, First Citizens and the UST propose to enter into a Securities Purchase Agreement (the “SPA”) which contemplates that First Citizens will purchase the Company's outstanding preferred stock from the UST immediately prior to completion of the Merger; and

 

WHEREAS, the Employee acknowledges that certain payments provided for in his Employment Agreement and his SERP as described in this Agreement are prohibited by, and may not be made under, applicable rules and guidance issued under the TARP Program to which the Company and the Bank are subject; and, as a condition of its consent to the Merger and entry into the SPA, UST requires that each of the Company and First Citizens agree that it will not, before or after the Merger, take any action that will result in, nor directly or indirectly permit, the acceleration, vesting enhancement or increase in the payments or benefits that would otherwise become due as a result of consummation of the Merger, including without limitation the payments described in this Agreement, to any current or former executive officers of the Company or the Bank; and

 

WHEREAS, the Boards of Directors of the Company and the Bank are authorized to eliminate certain of the above payments by their own action and without the Employee's consent, and the Company, the Bank and the Employee are entering into this Amendment and Acknowledgement Agreement (the “Agreement”) to effect the above elimination in order to obtain UST's consent to the Merger and for the Company to comply with the rules of the TARP Program and for the Company and First Citizens to comply with the provisions of the SPA imposed by the UST; and

 

  

  

 

              NOW, THEREFORE, the parties hereto agree as follows:

 

1.           Amendment to the Agreement.  Acting pursuant to Section 5.4 of the Employment Agreement, the Boards of Directors of the Company and the Bank have directed the Company and the Bank to modify the Employment Agreement by deleting Sections 5.1, 5.2 and 5.3 thereof (collectively the “Change of Control Payments”).  The Company, the Bank and the Employee acknowledge and agree that this Agreement effects such modification and that Sections 5.1, 5.2 and 5.3 of the Employment Agreement hereby are deleted, that such modification is required for the Company to comply with the TARP Program and the rules issued thereunder and that the Employee has no right or power to object to, or to prevent, such modification.

 

The Company and the Employee further acknowledge and agree that the provisions of the SPA imposed by UST upon First Citizens and the Company establish that the Change of Control Payments may not and will not become payable or distributable by reason of the Merger at any time following the Merger.

 

Except as otherwise provided in Paragraph 3 below, no other amendment or modification to the Employment Agreement is intended to be effected herein.

 

2.           SERP.  The Bank and the Employee acknowledge and agree the TARP Program and the rules issued thereunder prohibit the implementation of Sections 2.4 and 7.14 of the SERP as a consequence of the Merger (collectively, the “Lump Sum Payments”).  The Bank and the Employee further acknowledge and agree that the provisions of the SPA imposed by the UST upon First Citizens and the Company establish that the Lump Sum Payments may not and will not be payable or distributable by reason of the Merger at any time following the Merger.  Accordingly, Sections 2.4 and 7.14 of the SERP are hereby deleted.

 

Except as otherwise provided in Paragraph 3 below, no other amendment or modification to the SERP is intended herein.

 

3.           Acknowledgement and Waiver.  The Employee acknowledges and agrees that the provisions of Sections 1 and 2 of this Agreement are required by the TARP Program and the rules issued thereunder and UST’s imposition of the continuing effect of such rules issued under the TARP Program through the SPA.

 

Accordingly, the Employee hereby waives, relinquishes and releases all rights to assert claims, claims for relief, suits, demands, actions or causes of action against the Company, the Bank and/or First Citizens, whether before or following consummation of the Merger, by reason of the provisions of this Agreement and/or the failure or forbearance of any of them to make the Change of Control Payments or the Lump Sum Payments.

 

  

2

  

 

Further, in addition to the Change in Control Payments and the Lump Sum Payments, in the event that, whether before or following consummation of the Merger, UST notifies the Company or First Citizens that any other payments or benefits provided for under the Employment Agreement or the SERP that are not described in this Agreement are, or were when made or provided, prohibited by the TARP Program and applicable rules and guidance issued thereunder, or by the terms of the SPA, the Employee hereby waives, relinquishes and releases all rights to assert claims, claims for relief, suits, demands, actions or causes of action against the Company, the Bank and/or First Citizens, whether before or following consummation of the Merger, by reason of the provisions of this Agreement and/or the failure or forbearance of any of them to make or provide any such other payments or benefits; and if, at the time of such notification by UST, any such other prohibited payments or benefits previously have been made or provided by the Company, the Bank or First Citizens and UST requires that such payments or benefits be repaid by, or recovered from, the Employee, the Employee hereby undertakes to repay to the Company or the Bank, or to pay to First Citizens after the Merger, the amount of any such prohibited payments or the value of any such benefits.

 

The Employee acknowledges that each of the Company, the Bank and First Citizens will rely on the Employee's agreements contained herein in entering into the SPA and proceeding with the Merger.

 

First Citizens is an intended third party beneficiary of the provisions of this Agreement.

 

Effective this the 14th day of October, 2013.

 

	 	
1st FINANCIAL SERVICES CORPORATION

	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

	 	
MOUNTAIN 1st BANK & TRUST COMPANY

	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

	 	 	 	 
	 	
Vincent K. Rees

	 	 (SEAL)
	 	 	 	 
	 	 	 	 

3

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