Document:

Unassociated Document

CERTIFICATE OF DESIGNATION

 

OF

 

6.00% SERIES A NONCUMULATIVE CONVERTIBLE

PREFERRED STOCK

 

OF

 

FIRST COMMUNITY BANCSHARES, INC.

 

I, Robert L. Buzzo, the duly appointed Secretary of First Community Bancshares, Inc. (the “Corporation”), a corporation organized and existing under the laws of the State of Nevada, hereby certify that the following resolutions were duly adopted by the Board of Directors of the Corporation pursuant to authority conferred by the Corporation’s Articles of Incorporation, as amended (the “Articles of Incorporation”), at a meeting thereof duly held on April 26, 2011:

RESOLVED, that pursuant to the authority expressly vested in the Board of Directors of the Corporation by Article Fourth of its Articles of Incorporation, the Board of Directors hereby authorizes this Certificate of Designation (the “Certificate”) that is to be filed by the Corporation with the Secretary of State of the State of Nevada creating a series of Preferred Stock of the Corporation with the following preferences, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption:

1.           Designation.  The distinctive designation of the series of Preferred Stock established hereby shall be the “6.00% Series A Noncumulative Convertible Preferred Stock” (the “Series A Preferred Stock”).

2.           Number of Authorized Shares.  The total number of authorized shares of Series A Preferred Stock shall be 25,000 shares, $0.01 par value per share.  The number of authorized shares of Series A Preferred Stock may from time to time be decreased (but not below the number then outstanding) by the Board of Directors.

3.           Dividends.

(a)           The holders of the Series A Preferred Stock (“Holders”) shall be entitled to receive, when, as and if declared by the Corporation’s Board of Directors, out of funds of the Corporation legally available therefor, cash dividends at the rate of 6.00% per annum of the $1,000 stated value per share (the “Stated Value”), or $60.00 per share of Series A Preferred Stock annually.  Such dividends shall be payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing on August 15, 2011 (each, a “Dividend Payment Date”).  If a Dividend Payment Date is not a Business Day (as defined below), then the dividend that otherwise would have been payable on such Dividend Payment Date may be paid on the next succeeding Business Day with the same force and effect as if paid on the Dividend Payment Date, and no interest or additional dividends or other sums shall accrue or be payable on the amount so payable from the Dividend Payment Date to such next succeeding Business Day.  A “Business Day” means any day, other than a Saturday or a Sunday, that is neither a legal holiday nor a day on which banking institutions in the Commonwealth of Virginia are authorized or required by law, regulation or executive order to close.  The amount of any dividend payable on the Series A Preferred Stock for any full Dividend Period or any partial Dividend Period shall be prorated and computed and paid on the basis of a 360-day year and the actual number of days elapsed in the relevant Dividend Period (it being understood that the initial dividend payable on August 15, 2011, if declared, may be for less than a full Dividend Period and will reflect dividends accumulated from and including the Original Issue Date through and including August 15, 2011).  A “Dividend Period” shall mean the period from and including the original date of issuance of the Series A Preferred Stock (the “Original Issue Date”) to and including the first Dividend Payment Date, and each subsequent period from and excluding a Dividend Payment Date to and including the next succeeding Dividend Payment Date.  Declared dividends will be payable to Holders of record as they appear in the shareholder records of the Corporation at the close of business on the applicable record date, which shall be the last day of the calendar month preceding the month in which the Dividend Payment Date falls (each, a “Dividend Record Date”).

  

  

 

(b)           Dividends payable on the Series A Preferred Stock shall not accumulate.

(c)           No dividends on the Series A Preferred Stock shall be declared by the Corporation’s Board of Directors or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness and any related waiver or amendment thereto, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment is restricted or prohibited by law.

(d)           Except as provided in Section 3(e) below, unless dividends on the Series A Preferred Stock for the then current Dividend Period shall have been or are declared and paid in cash, and the Corporation has declared and paid dividends in cash on each Dividend Payment Date for the preceding six (6) Dividend Periods, no dividends shall be declared by the Corporation’s Board of Directors or paid or set apart for payment by the Corporation, and no other distribution of cash or other property may be declared or made, directly or indirectly, on or with respect to any shares of the Corporation’s common stock, $1.00 par value per share (the “Common Stock”), or shares of any other class or series of the Corporation’s capital stock ranking, as to dividends, junior to the Series A Preferred Stock (other than a dividend paid in shares of Common Stock or in shares of any other class or series of the Corporation’s capital stock ranking junior to the Series A Preferred Stock as to dividends and upon liquidation) on the related Dividend Payment Date or during the immediately succeeding Dividend Period, nor shall any shares of Common Stock, or any other shares of capital stock of the Corporation ranking, as to dividends or upon liquidation, on a parity with (“Parity Shares”), or junior to, the Series A Preferred Stock, be redeemed, purchased or otherwise acquired for any consideration (nor shall any funds be paid to or made available for a sinking fund for the redemption or retirement, purchase or reduction of any such shares) by the Corporation (except by conversion into or exchange for other shares of Corporation capital stock ranking junior to the Series A Preferred Stock as to dividends and upon liquidation) on such Dividend Payment Date or during the immediately succeeding Dividend Period.

  

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(e)           When dividends are not paid in full (or a sum sufficient for such full payment is not set apart by the Corporation) upon the Series A Preferred Stock and any other series of preferred stock issued by the Corporation ranking on a parity as to dividends with the Series A Preferred Stock, if any, all dividends declared upon the Series A Preferred Stock and any such other series of Parity Shares shall be declared pro rata so that the amount of dividends declared per share of Series A Preferred Stock and such other series of Parity Shares shall in all cases bear to each other the same ratio that the dividends per share on the Series A Preferred Stock and such other series of Parity Shares bear to each other.

(f)           All dividends paid with respect to shares of the Series A Preferred Stock shall be paid pro rata to the Holders of such shares entitled thereto.  Holders shall not be entitled to any dividend, whether payable in cash, property or shares of any class or series of capital stock (including the Series A Preferred Stock), in excess of the dividends on the Series A Preferred Stock as provided herein.

4.           Liquidation Preference.

(a)           Upon any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation (each, a “Liquidation”), the Holders shall be entitled to be paid out of the assets of the Corporation legally available for distribution to its shareholders a liquidation preference of $1,000.00 per share of Series A Preferred Stock, subject to adjustment from time to time pursuant to Section 7, plus all declared and accrued and unpaid dividends since the last Dividend Payment Date with respect to such shares of Series A Preferred Stock without interest to the date fixed for such Liquidation (the “Liquidation Preference”), before any distribution or payment shall be made to holders of shares of Common Stock or any other class or series of capital stock of the Corporation ranking junior to the Series A Preferred Stock as to liquidation rights.  In the event that, upon such Liquidation, the available assets of the Corporation are insufficient to pay the amount of the liquidating distributions on all outstanding shares of Series A Preferred Stock and the corresponding amounts payable on all Parity Shares, if any, having the same Liquidation Preference, then the Holders and all other such classes or series of Parity Shares shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled, and the Holders will not be entitled to any further participation in any distribution of assets by the Corporation.

(b)           Written notice of any Liquidation, stating the payment date or dates and the place or places on and at which the amounts distributable as a result thereof shall be payable, shall be given by first class mail, postage paid, not less than 30 nor more than 60 days prior to the first payment date stated therein, to each record Holder at the respective addresses of such Holders as they appear on the Corporation’s stock transfer records.

(c)           After payment to the Holders of the full liquidation amounts provided in this Section 4, the Holders, as such, will have no right or claim to any of the remaining assets of the Corporation.

  

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(d)           Neither the sale, conveyance, exchange or transfer (for cash, shares of stock, other securities or other consideration) of all or substantially all the assets or business of the Corporation (other than in connection with a Liquidation of the Corporation) nor the merger or consolidation of the Corporation into or with any other entity shall be deemed to be a Liquidation for the purposes of this Section 4; provided, however, that if, in connection with a cash merger or other cash transaction, the cash receivable in exchange for or upon the conversion of each share of the Series A Preferred Stock would be less than the Liquidation Preference, then such cash merger or transaction shall be treated as a Liquidation of the Corporation, with the rights as provided in Section 4(a).

5.           Voting Rights.

(a)           Holders shall not have any voting rights, except as set forth in this Certificate and as otherwise required by the laws of the State of Nevada from time to time.

(b)           So long as any shares of Series A Preferred Stock remain outstanding, the Corporation shall not: (i) without the affirmative vote or consent of the Holders of a majority of the total outstanding shares of Series A Preferred Stock and of any Parity Shares, if any, given in person or by proxy, either in writing or at a meeting (voting together as a single class with all other series of Parity Shares of the Corporation upon which like voting rights have been conferred or are exercisable without regard to series), authorize or create any class or series of shares of capital stock ranking senior to the Series A Preferred Stock with respect to payment of dividends or the distribution of assets upon the Liquidation of the Corporation, or reclassify any authorized shares of capital stock of the Corporation into such shares, or create, authorize or issue any obligation or security convertible into, exchangeable for, or evidencing the right to purchase any shares of capital stock ranking senior in priority to the Series A Preferred Stock; or (ii) without the affirmative vote or consent of the Holders of a majority of the outstanding Series A Preferred Stock, voting as a separate class, amend, alter or repeal the provisions of, or add any provision to, the Articles or this Certificate, whether by merger, consolidation, statutory share exchange or sale, transfer or conveyance of all or substantially all of its assets, or otherwise, so as to materially and adversely affect any right, preference, privilege or voting or other powers of the shares of Series A Preferred Stock or the Holders thereof; and provided, further, that the creation or issuance of any class or series of shares of the capital stock of the Corporation which ranks senior to the Series A Preferred Stock with respect to the payment of dividends or distributions of assets upon Liquidation shall be deemed to materially and adversely affect such rights, preferences, privileges or voting or other powers of shares of Series A Preferred Stock, and the Holders shall have the right to vote on any such creation or issuance as a separate class.

(c)           On each matter submitted to a vote of the Holders in accordance with Section 5(b), or as otherwise required by law, each share of Series A Preferred Stock shall be entitled to one vote, except that when any other series of preferred stock of the Corporation has the right to vote with the Series A Preferred Stock as a single class on any matter, the Series A Preferred Stock and such other series shall have with respect to such matters, the aggregate number of votes in the same proportion to all votes of preferred stock as the total Liquidation Preference of all shares of the Series A Preferred Stock bears to the aggregate liquidation preference of all outstanding shares of preferred stock.  With respect to each share of Series A Preferred Stock, the Holder thereof may designate a proxy, with each such proxy having the right to vote on behalf of the Holder.

  

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6.           Conversion.

(a)           Subject to any applicable regulatory approvals, each share of Series A Preferred Stock may be converted at any time into 69 shares of Common Stock, subject to adjustment as provided in Section 7 below (the “Conversion Shares”); provided, however, that cash shall be paid in lieu of any fractional share of Common Stock as provided in Section 6(e) below.

(b)           The conversion right of a Holder pursuant to Section 6(a) above shall be exercised by the Holder by the delivery to the Corporation at any time during usual business hours at the Corporation’s principal place of business of a written notice to the Corporation that the Holder elects to convert the number of its shares of the Series A Preferred Stock specified in such notice.  If the shares of the Series A Preferred Stock that the Holder wishes to convert are represented by one or more physical certificates, the Holder shall be required to surrender such physical certificate or certificates to the Corporation.  Upon receipt by the Corporation of such physical certificate, the shares of Common Stock and any cash in lieu of any fractional share due to such Holder surrendering physical certificates shall be delivered to the Holder and each surrendered physical certificate shall be canceled and retired.  Immediately prior to the close of business on the date of receipt by the Corporation or its duly appointed transfer agent, if any, of notice of conversion of shares of the Series A Preferred Stock, each converting Holder shall be deemed to be the holder of record of Common Stock issuable upon conversion of such Holder’s shares of Series A Preferred Stock notwithstanding that the share register of the Corporation shall then be closed or that, if applicable, physical certificates representing such Common Stock shall not then be actually delivered to such Holder.  On the date of any conversion, all rights of any Holder with respect to the shares of the Series A Preferred Stock so converted, including the rights, if any, to receive distributions of the Corporation’s assets (including, but not limited to, the Liquidation Preference) or notices from the Corporation, will terminate, except only for the rights of any such Holder to (i) receive physical certificates (if applicable) for the number of whole shares of Common Stock into which such shares of the Series A Preferred Stock have been converted and any cash in lieu of any fractional share as provided in Section 6(e), and (ii) exercise the rights to which he, she or it is entitled as a holder of Common Stock into which such shares of the Series A Preferred Stock have been converted.

(c)           Subject to any applicable regulatory approval, each share of Series A Preferred Stock that has not been converted into Conversion Shares prior to May 20, 2016, shall be mandatorily converted into 69 Conversion Shares, subject to adjustment as provided in Section 7 below; provided, however, that cash shall be paid in lieu of any fractional share of Common Stock as provided in Section 6(e) below.

 

  

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(d)           On May 20, 2016, each Holder of Series A Preferred Stock shall be deemed to be the holder of record of Common Stock issuable upon conversion of such Holder’s shares of Series A Preferred Stock notwithstanding that the share register of the Corporation shall then be closed or that, if applicable, physical certificates representing such Common Stock shall not then be actually delivered to such Holder.  On May 20, 2016, all rights of any Holder with respect to the shares of the Series A Preferred Stock, including the rights, if any, to receive distributions of the Corporation’s assets (including, but not limited to, the Liquidation Preference) or notices from the Corporation, will terminate, except only for the rights of any such Holder to (i) receive physical certificates (if applicable) for the number of whole shares of Common Stock into which such shares of the Series A Preferred Stock have been converted and any cash in lieu of any fractional share as provided in Section 6(e), and (ii) exercise the rights to which he, she or it is entitled as a holder of Common Stock into which such shares of the Series A Preferred Stock have been converted.

(e)           No fractional shares or securities representing fractional shares of Common Stock shall be issued upon any conversion of any shares of the Series A Preferred Stock.  If more than one share of the Series A Preferred Stock held by the same Holder shall be subject to conversion at one time, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate Liquidation Preference of all of such shares of the Series A Preferred Stock as of the conversion date.  If the conversion of any share or shares of the Series A Preferred Stock results in a fraction, an amount equal to such fraction multiplied by the last reported sale price of the Common Stock on such national securities exchange or automated quotation system on which the Common Stock is then listed or authorized for quotation or, if the Common Stock is not so listed or authorized for quotation, an amount determined in good faith by the Corporation’s Board of Directors to be the fair value of the Common Stock at the close of business on the trading day immediately preceding the conversion date, shall be paid to such Holder in cash by the Corporation.

(f)           The Corporation shall reserve out of the authorized but unissued shares of its Common Stock sufficient shares of such Common Stock to provide for the conversion of shares of Series A Preferred Stock from time to time as such shares of Series A Preferred Stock are presented for conversion.  The Corporation shall take all action necessary so that all Conversion Shares will upon issue be validly issued, fully paid and nonassessable, and free from all liens and charges in respect of the issuance or delivery thereof.

7.           Adjustments to Conversion Shares.  The number of Conversion Shares shall be subject to adjustment as follows:

(a)          In case the Corporation shall at any time or from time to time:

(i)           pay a dividend (or other distribution) payable in shares of Common Stock on any class of capital stock (which, for purposes of this Section 7 shall include, without limitation, any dividends or distributions in the form of options, warrants or other rights to acquire capital stock) of the Corporation (other than the issuance of shares of Corporation Common Stock in connection with the conversion of the Series A Preferred Stock and other than pursuant to any dividend reinvestment plan or employee or director incentive or benefit plan or arrangement of Corporation, including any employment, severance or consulting agreement);

  

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(ii)          subdivide the outstanding shares of Common Stock into a larger number of shares;

(iii)         combine the outstanding shares of Common Stock into a smaller number of shares; or

(iv)         issue any shares of capital stock in a reclassification of the Common Stock;

then, and in each such case, the number of Conversion Shares in effect immediately prior to such event shall be adjusted (and any other appropriate actions shall be taken by the Corporation) so that the Holder of shares of Series A Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock that such Holder would have owned or would have been entitled to receive upon or by reason of any of the events described above, had such share of the Series A Preferred Stock been converted into shares of Common Stock immediately prior to the occurrence of such event. An adjustment made pursuant to this Section 7(a) shall become effective retroactively (x) in the case of any such dividend or distribution, to the day immediately following the close of business on the record date for the determination of holders of Common Stock entitled to receive such dividend or distribution or (y) in the case of any such subdivision, combination or reclassification, to the close of business on the day upon which such corporate action becomes effective.

(b)          Notwithstanding anything herein to the contrary, no adjustment under this Section 7 need be made to the number of Conversion Shares unless such adjustment would require an increase or decrease of at least 1% of the number of Conversion Shares then in effect.  Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment, if any, which, together with any adjustment or adjustments so carried forward, shall amount to an increase or decrease of at least 1% of such number of Conversion Shares.

(c)          Upon any increase or decrease in the number of Conversion Shares pursuant to this Section 7, the Corporation promptly shall deliver to each Holder an Officers’ Certificate describing in reasonable detail the event requiring the increase or decrease in the number of Conversion Shares and the method of calculation thereof and specifying the increased or decreased number of Conversion Shares in effect following such adjustment.

(d)          For purposes of this Section 7, the number of shares of the Common Stock at any time outstanding shall not include shares held in treasury of the Corporation.

 

  

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8.           Optional Redemption by the Corporation.

(a)           Shares of Series A Preferred Stock shall not be redeemable, in whole or in part, by the Corporation prior to May 20, 2014 (the “Redemption Availability Date”).  On and after such Redemption Availability Date, the Corporation may, at its option and subject to prior approval of the Board of Governors of the Federal Reserve System or its delegee (or any successor regulatory authority) (the “Federal Reserve”), redeem the shares of Series A Preferred Stock at any time and from time to time, in whole or in part, at a price per share (the “Redemption Price”), payable in cash, of the Liquidation Preference per preferred share, together with all accrued but unpaid dividends since the last scheduled Dividend Payment Date on the date fixed for redemption (the “Redemption Date”), to the fullest extent the Corporation has funds legally available therefor.  The Series A Preferred Stock will not be subject to any sinking fund or mandatory redemption provisions.

(b)           A notice of redemption shall be mailed by the Corporation, postage paid, not more than 60 days prior to the Redemption Date, to each record Holder of shares of Series A Preferred Stock at the respective addresses of such Holders as they appear on the Corporation’s stock transfer records.  In addition to any information required by law, such notice shall state: (i) the Redemption Date; (ii) the number of shares of Series A Preferred Stock to be redeemed; (iii) the Redemption Price; and (iv) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price. If fewer than all the shares of Series A Preferred Stock held by any Holder are to be redeemed, the notice mailed to such Holder shall also specify the number of shares of Series A Preferred Stock to be redeemed from such Holder.  No failure to provide such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series A Preferred Stock, except as to the Holder to whom the Corporation has failed to give notice or except as to the Holder to whom notice was defective.  In order to facilitate the redemption of shares of Series A Preferred Stock, the Corporation’s Board of Directors may fix a record date for the determination of the shares of Series A Preferred Stock to be redeemed, such record date not to be less than 30 or more than 60 days prior to the date fixed for such redemption.  Nothing contained herein shall preclude a Holder from exercising his or her conversion right pursuant to Section 6(a) hereof on any day prior to the Redemption Date.

(c)           All shares of the Series A Preferred Stock redeemed or repurchased pursuant to this Section 8 shall be retired and canceled and shall not be available for reissuance.

9.           Consolidation, Merger or Sale of Assets.  In the event of any consolidation or merger of the Corporation with or into another entity or any merger of another entity with or into the Corporation (other than a consolidation or merger in which the Corporation is the resulting or surviving entity and which does not result in any reclassification or change of outstanding Common Stock), or in the event of any sale, lease or other disposition to another entity of all or substantially all of the assets of the Corporation (computed on a consolidated basis) (any of the foregoing, a “Transaction”), each share of the Series A Preferred Stock then outstanding shall, without the consent of any Holder, become convertible at any time, at the option of the Holder thereof, only into the kind and amount of securities (of the Corporation or another issuer), cash and other property receivable upon such Transaction by a holder of the number of shares of Common Stock into which such share of the Series A Preferred Stock could have been converted immediately prior to such Transaction, after giving effect to any adjustment event.  The provisions of this Section 9 and any equivalent thereof in any such securities similarly shall apply to successive Transactions.  The provisions of this Section 9 shall be the sole right of the Holders in connection with any Transaction and such Holders shall have no separate vote thereon.

  

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10.         Ranking.  In respect of rights to the payment of dividends and the distribution of assets in the event of any Liquidation of the Corporation, the shares of the Series A Preferred Stock shall rank senior and prior to the Common Stock and to any other shares of capital stock of the Corporation, subject to any Parity Shares which may be issued from time to time or to any senior securities to the extent approved by the affirmative vote of the Series A Preferred Stock required by Section 5 above.  The Series A Preferred Stock will rank junior to all of the Corporation’s indebtedness.

11.         Headings, etc.  The headings hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.  The words “include,” “including” and derivatives thereof shall be without limitation by reason of enumeration or otherwise, the singular shall include the plural and vice versa.

12.         Severability of Provisions.  If any preferences or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of the shares of Series A Preferred Stock set forth in this Amendment are invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other preferences or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications or terms or conditions of redemption of the shares of Series A Preferred Stock set forth in this Certificate of Designation that can be given effect without giving effect to the invalid, unlawful or unenforceable provision shall, nevertheless, remain in full force and effect and no preferences or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of the shares of Series A Preferred Stock herein set forth shall be deemed dependent upon any other provision hereof unless so expressed herein.

13.         No Preemptive Rights.  Holders of Series A Preferred Stock shall not be entitled to preemptive rights to subscribe for or acquire any unissued shares of the Corporation’s preferred stock of any class or series (whether now or hereafter authorized) or securities of the Corporation convertible into or carrying a right to subscribe to or acquire shares of the Corporation’s preferred stock of any class or series.

IN WITNESS WHEREOF, the Corporation has authorized and caused this Certificate to be executed by its Chief Executive Officer and attested to by its Secretary, as of this 20th day of May 2011.

	
Attest:

	 	
FIRST COMMUNITY BANCSHARES, INC.

	  	  	 	  	  
	
By:

	
/s/ Robert L. Buzzo

	 	
By:

	
/s/ John M. Mendez

	  	
Robert L. Buzzo

	 	  	
John M. Mendez

	  	
Secretary

	 	  	
President and Chief Executive Officer

 

  

-9-Unassociated Document

   

STOCK SUBSCRIPTION AGREEMENT

 

by and between

 

FIRST COMMUNITY BANCSHARES, INC.

 

and

 

THE PURCHASER REFERRED TO HEREIN

 

Dated as of

 

May 20, 2011

 

  

  

  

TABLE OF CONTENTS

	
1.

	
PURCHASE AND SALE OF PREFERRED SHARES.

	
1

	  	
(a)

	
Purchase of Preferred Shares.

	
1

	  	
(b)

	
Form of Payment

	
2

	  	  	  	  
	
2.

	
PURCHASER’S REPRESENTATIONS AND WARRANTIES.

	
2

	  	
(a)

	
No Public Sale or Distribution; No Other Agreements with Respect to Shares

	
2

	  	
(b)

	
Purchaser Status

	
3

	  	
(c)

	
General Solicitation

	
3

	  	
(d)

	
Reliance on Exemptions

	
3

	  	
(e)

	
Review of Information and Consultation with Advisors

	
3

	  	
(f)

	
No Reliance

	
4

	  	
(g)

	
No Public Market; No Governmental Review; Preferred Shares Not Insured

	
4

	  	
(h)

	
No Conflicts

	
5

	  	
(i)

	
Investment Risk

	
5

	  	
(j)

	
Residency

	
5

	  	
(k)

	
Organization; Authorization

	
5

	  	
(l)

	
Ownership of Preferred Shares, shares of Common Stock and Non-Exercise of Controlling Influence

	
6

	  	
(m)

	
Legends.

	
6

	  	  	  
	
3.

	
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

	
7

	  	
(a)

	
Organization and Qualification

	
7

	  	
(b)

	
Authorization; Enforcement; Validity

	
7

	  	
(c)

	
Capitalization; Issuance of Preferred Shares

	
8

	  	
(d)

	
No Conflicts

	
8

	  	
(e)

	
No Violation

	
9

	  	
(f)

	
No Registration

	
9

	  	
(g)

	
No General Solicitation

	
9

	  	
(h)

	
No Integrated Offering

	
9

	  	
(i)

	
Financial Statements

	
9

	  	
(j)

	
Regulatory Permits

	
10

	  	  	  
	
4.

	
COVENANTS.

	
10

	  	
(a)

	
Further Action

	
10

	  	
(b)

	
Expenses

	
10

	  	  	  
	
5.

	
CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

	
10

	  	  	  
	
6.

	
CONDITIONS TO THE PURCHASER’S OBLIGATION TO PURCHASE.

	
11

	  	  	  
	
7.

	
TERMINATION.

	
11

	  	
(a)

	
Termination

	
11

	  	
(b)

	
Effects of Termination

	
12

	 	 	 
	8.	MISCELLANEOUS.	
12

  

- i -

  

	  	
(a)

	
Governing Law; Jurisdiction; Jury Trial

	
12

	  	
(b)

	
Counterparts

	
12

	  	
(c)

	
Headings

	
12

	  	
(d)

	
Severability

	
12

	  	
(e)

	
Entire Agreement; Amendments

	
12

	  	
(f)

	
Notices

	
13

	  	
(g)

	
Successors and Assigns

	
14

	  	
(h)

	
No Third Party Beneficiaries

	
14

	  	
(i)

	
Survival.

	
14

	  	
(j)

	
Further Assurances

	
14

	  	
(k)

	
No Strict Construction

	
14

	
SCHEDULE I

	
Summary Instruction Sheet for the Purchaser

	  	  
	
EXHIBIT A

	
Registration Rights Agreement

	
EXHIBIT B

	
Escrow Agreement

	
EXHIBIT C

	
Accredited Investor Questionnaire

  

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STOCK SUBSCRIPTION AGREEMENT

 

This STOCK SUBSCRIPTION AGREEMENT (the “Agreement”), dated as of May 20, 2011, is by and between First Community Bancshares, Inc., (the “Company”), and the investor identified on the signature page hereto (the “Purchaser”).

 

WHEREAS:

 

A.           The Offering.  The Board of Directors of the Company has authorized the Company to conduct a private placement (the “Private Placement”) of its 6.00% Series A Noncumulative Convertible Preferred Stock (“Series A Preferred Stock”) and, under certain circumstances, its 6.00% Series B Noncumulative Convertible Preferred Stock (“Series B Preferred Stock” and, collectively with the Series A Preferred Stock, the “Preferred Stock”).  The Preferred Stock is to be offered and sold to accredited investors (collectively, the “Investors”).  The aggregate amount of all shares of Preferred Stock sold to all Investors shall collectively be referred to herein as the “Preferred Shares.”  The Company has engaged The Orr Group, LLC as its placement agent (the “Placement Agent”) for the offering of the Preferred Shares on a “best efforts” basis. 

 

B.           The Subscription.  The Company and the Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the 1933 Act (“Regulation D”).  The Purchaser wishes to purchase from the Company, and the Company wishes to issue and sell to the Purchaser, upon the terms and conditions stated in this Agreement, shares of Preferred Stock in the aggregate number indicated below such Purchaser’s name on the signature page of this Agreement.  

 

C.           Registration Rights.  Contemporaneously with the execution and delivery of this Agreement, the Company will enter into a Registration Rights Agreement with and for the benefit of the Investors, substantially in the form attached as Exhibit A hereto (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain registration rights with respect to the shares of the Company’s common stock, par value $1.00 per share (“Common Stock”), into which the Preferred Shares may be converted under the 1933 Act and applicable state securities laws.

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser hereby agree as follows:

 

	
  

	
1.

	
PURCHASE AND SALE OF PREFERRED SHARES. 

 

(a)           Purchase of Preferred Shares.

 

On the terms set forth in this Agreement and subject to the satisfaction (or waiver) of the conditions set forth in Sections 5 and 6 below, the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from the Company on the Closing Date (as defined below), the number of Preferred Shares as indicated below such Purchaser’s name on the signature page of this Agreement. 

 

  

  

  

(i)           Closing.  The closing of the purchase and sale of the Preferred Shares referred to in Section 1(a) above (the “Closing”) shall occur at 10:00 a.m., Eastern Time, on a date which is within three (3) business days after the satisfaction (or waiver by the party entitled to waive) of the conditions to the Closing set forth in Sections 5 and 6 below (other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction (or waiver by the party entitled to waive) of those conditions), at the offices of Patton Boggs LLP, 2550 M Street, N.W., Washington, D.C. 20037, or such other date or other location as mutually agreed upon by the Company and the Purchaser.  The date of the Closing is referred to as the “Closing Date.”

 

(ii)           Purchase Price.  The purchase price for the Preferred Shares is $1,000.00 per share, and the aggregate purchase price for the Preferred Shares referred to in Section 1(a) above to be purchased by the Purchaser on the Closing Date (the “Purchase Price”) shall be the amount indicated below the Purchaser’s name on the signature page of this Agreement.  The minimum Purchase Price is $500,000.00, which can be waived in the sole discretion of the Company.

 

(b)           Form of Payment.  The Company has entered into an Escrow Agreement with the Trust and Financial Services Division of First Community Bank, N.A. (“First Community Bank”), as Escrow Agent (“Escrow Agent”), dated as of April 4, 2011 (the “Escrow Agreement”), a copy of which is attached as Exhibit B hereto.  Concurrently with the execution and delivery of this Agreement by the Purchaser, the Purchaser shall deliver the Purchase Price for deposit with the Escrow Agent pursuant to the Escrow Agreement by wire transfer to the following account at First Community Bank; Account Name: First Community Bancshares Escrow Account; ABA No. 051501299; A/C No. 90786.  Subject to the satisfaction or waiver on the Closing Date of the conditions to the Closing set forth in Sections 5 and 6 below, at the Closing, the Company will deliver to the Purchaser the Preferred Shares referred to in Section 1(a) above as evidenced by one or more certificates dated the Closing Date and bearing the appropriate legends and free and clear of all Liens (as defined below).

 

	
  

	
2.

	
PURCHASER’S REPRESENTATIONS AND WARRANTIES.

 

The Purchaser represents and warrants as of the date hereof and as of the Closing Date (except for the representations and warranties that are as of a specific date, which shall be made only as of such date) to the Company that:

 

(a)           No Public Sale or Distribution; No Other Agreements with Respect to Shares.  The Purchaser was contacted by either the Placement Agent or the Company with respect to a potential investment in the Preferred Shares.  The Purchaser understands that the issuance of the Preferred Shares has not been registered under the 1933 Act or any applicable state securities laws and that the Preferred Shares are therefore “restricted securities” under the 1933 Act, and that the Purchaser is acquiring the Preferred Shares in the ordinary course of its business, as principal for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof.  The Purchaser does not presently have any agreement or understanding, directly or indirectly, with any Person (as defined in Section 2(f) hereof) to (i) distribute any of the Preferred Shares; (ii) hold or to dispose of the Preferred Shares, or (iii) acquire any Preferred Shares from any other Person other than pursuant to this Agreement.  In connection herewith, the Purchaser represents that it is familiar with the 1933 Act and applicable state securities law, as presently in effect, and understands the requirements for resale contained therein.  Notwithstanding the foregoing, by making the representations herein, the Purchaser does not agree to hold any of the Preferred Shares for any minimum or other specific term and reserves the right to sell or dispose of the Preferred Shares at any time in accordance with applicable securities laws.

 

  

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(b)           Purchaser Status.  The Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D as promulgated by the U.S. Securities and Exchange Commission under the 1933 Act, and has provided the information in the Accredited Investor Questionnaire attached hereto as Exhibit C.  The Purchaser is not a registered broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended (the “1934 Act”).  To the extent that the Purchaser is utilizing or has utilized a representative to assist it in the evaluation of an investment in the Preferred Shares, the Purchaser has provided the requested information about such representative as set forth on the Purchaser’s signature page hereto.

 

(c)           General Solicitation.  The Purchaser is not purchasing the Preferred Shares as a result of any advertisement, article, notice or other communication regarding the Preferred Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general advertisement.  The Purchaser has not provided or made available the Private Placement Documents (defined below) to any person other than the Purchaser’s professional advisors.

 

(d)           Reliance on Exemptions.  The Purchaser understands that the Preferred Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities and banking laws and regulations, and that the Company and the Placement Agent is relying in part upon the truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Preferred Shares.

 

(e)           Review of Information and Consultation with Advisors.  The Purchaser has, either alone or through its representatives:

 

(i)           consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisers in connection herewith to the extent it has deemed necessary; 

 

(ii)           had a reasonable opportunity to ask such questions as it has deemed necessary of, and to receive answers from, the Company’s senior management concerning the Company, its financial condition and results of operations and the terms and conditions of the Private Placement, and any such questions have been answered to its satisfaction; 

 

  

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(iii)           had the opportunity to review and evaluate the following in connection with its investment decision with respect to the Shares: (A) all publicly available records and filings concerning the Company; (B) the Confidential Investor Information Package dated April 5, 2011 (the “Original Package”) and the Supplement to Confidential Investor Information Package dated April 28, 2011 (“Supplemental Package” and, collectively, the “Presentation”), which summarize the Private Placement (and Purchaser acknowledges that the Presentation materials speak only as of the dates thereof); and (C) this Agreement and the Registration Rights Agreement, including all exhibits and appendices hereto and thereto, (collectively, the “Private Placement Documents”); and

 

(iv)           made its own investment decisions 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, including without limitation the Placement Agent.  The Purchaser understands that its investment in the Preferred Shares involves a high degree of risk and it is able to afford a complete loss of such investment.

 

(f)           No Reliance.  The Purchaser acknowledges that the information in the Private Placement Documents contain all of the material terms and conditions of the proposed Private Placement, and understands and acknowledges that it is the Purchaser’s responsibility to conduct its own independent investigation and evaluation of the Company.  The Purchaser is not relying upon, and has not relied upon, any advice, statement, representation or warranty made by any Person, including, without limitation, the Placement Agent, except for the statements, representations and warranties of the Company made or contained in this Agreement and the other Private Placement Documents.  Furthermore, the Purchaser acknowledges and agrees that: (A) the Placement Agent has not performed any due diligence review on behalf of the Purchaser; (B) the Purchaser has made, and has relied upon, its own independent examination in purchasing the Preferred Shares; and (C) 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 Preferred Shares constitutes legal, tax or investment advice, and the Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary in order to make its investment decision in the Preferred Shares.  For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

 

(g)           No Public Market; No Governmental Review; Preferred Shares Not Insured.  The Purchaser understands that there is no established market for the Preferred Shares and that no public market for the Preferred Shares is likely to develop.  The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Preferred Shares or the fairness or suitability of the investment in the Preferred Shares, nor have such authorities passed upon or endorsed the merits of the offering of the Preferred Shares.  The Purchaser understands that the Preferred Shares are not savings accounts, deposits or other obligations of a depository institution and are not insured by the Federal Deposit Insurance Corporation (the “FDIC”), including the FDIC’s Deposit Insurance Fund, or any other governmental agency.

 

  

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(h)           No Conflicts.  The execution, delivery and performance by the Purchaser of the applicable Private Placement Documents and the consummation by the Purchaser of the transactions contemplated hereby and thereby will not (i) if an entity, result in a violation of the organizational documents of the Purchaser, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Purchaser is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities and banking laws and regulations, assuming the correctness of the representations and warranties made by the Company herein) applicable to the Purchaser, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Purchaser to perform its obligations hereunder and thereunder.

 

(i)           Investment Risk.  The Purchaser understands that (i) its investment in the Preferred Shares involves a high degree of risk, (ii) no representation is being made as to the business or prospects of the Company after completion of the Private Placement or the future value of the Preferred Shares, and (iii) no representation is being made as to any projections or estimates delivered to or made available to the Purchaser of the Company’s future assets, liabilities, shareholders’ equity, regulatory capital ratios, net interest income, net income or any component of any of the foregoing or any ratios derived therefrom.

 

(j)           Residency.  The Purchaser has, if an entity, its principal place of business or, if an individual, its primary residence, in the jurisdiction indicated below the Purchaser’s name on the signature pages hereto.

 

(k)           Organization; Authorization.  The Purchaser, if an entity, is duly organized, validly existing and in good standing (to the extent such concept is applicable) under the laws of the jurisdiction in which it is organized and has the requisite organizational power and authority to carry on its business as now being conducted.  The Purchaser, if an entity, has the requisite organizational power and authority to enter into and perform its obligations under the Private Placement Documents and to consummate the transactions contemplated by such Private Placement Documents.  The execution and delivery of the applicable Private Placement Documents by the Purchaser and performance by the Purchaser of the transactions contemplated thereby have been duly authorized by all necessary corporate or, if the Purchaser is not a corporation, such partnership, limited liability company or other applicable like action, on the part of the Purchaser, and no further consent or authorization in connection therewith is required by the Purchaser, its Board of Directors or its shareholders, or if the Purchaser is not a corporation, such partnership, limited liability company or other applicable like action, on the part of the Purchaser.  The applicable Private Placement Documents have been (or upon delivery will have been) duly executed by the Purchaser, and, when delivered by the Purchaser in accordance with the terms thereof, will constitute the legal, valid and binding obligations of the Purchaser, enforceable against it in accordance with their respective terms, subject to (i) the application of bankruptcy, receivership, conservatorship, reorganization, insolvency and similar laws affecting creditors’ rights generally and (ii) equitable principles being applied at the discretion of a court before which any proceeding may be brought (the “Bankruptcy and Equity Exception”), and except that rights to indemnification and contribution thereunder may be limited by virtue of public policy under federal or state securities and banking laws.

 

  

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(l)           Ownership of Preferred Shares, shares of Common Stock and Non-Exercise of Controlling Influence.  Assuming the accuracy of the representations of the Company and the Private Placement Documents, after giving effect to the purchase of the Preferred Shares hereunder and assuming conversion of all of such Purchaser’s Preferred Shares into Common Stock but not assuming the conversion of any other Purchaser’s Preferred Shares into Common Stock, and given any other ownership or deemed ownership of the Common Stock, the Purchaser, either acting alone or together with any other Person that may be affiliated with the Purchaser, or deemed to be acting in concert with the Purchaser, will not beneficially own or be deemed to beneficially own shares of Common Stock in the aggregate in excess of 9.9% of the Company’s total issued and outstanding Common Stock.  Without limiting the foregoing, the Purchaser represents and warrants that:  (i) the Purchaser has no present intention of acquiring control of the Company, as “control” is defined in Section 2(a)(2) of the Bank Holding Company Act of 1956, as amended (the “BHC Act”), and the implementing regulations of the Board of Governors of the Federal Reserve System (“FRB”) at 12 C.F.R. 225.2(e)(1) (“Control”); (ii) the Purchaser is not participating and has not participated with any Person (other than the other Purchasers) in any joint activity or parallel action towards a common goal between or among such Persons of acquiring Control of the Company; (iii) assuming the accuracy of the representations and warranties of the Company and the Private Placement Documents, no other Person holding Common Stock or Series A Preferred Stock of the Company or, to the knowledge of the Purchaser, presently proposing to acquire Common Stock or Preferred Shares of the Company is (x) under common Control with the Purchaser, or (y) a controlling shareholder, partner, trustee, officer, or director of the Purchaser or has policy-making functions with respect to the Purchaser.

 

(m)          Legends. 

 

(i)           Each Purchaser agrees to the imprinting, so long as is required by this Section 2(m), of a legend on any of the Preferred Shares purchased pursuant to this Agreement and the shares of Common Stock exercisable upon conversion of the Preferred Shares in substantially the following form: 

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

  

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(ii)           Certificates evidencing the Preferred Shares purchased pursuant to this Agreement and the shares of Common Stock issuable upon conversion of the Preferred Shares shall not contain any legend (including the legend set forth in Section 2(m)), (i) while a registration statement covering the resale of such security is effective under the 1933 Act, or (ii) following any sale of such securities pursuant to Rule 144 (or any successor rule), or (iii) if such securities are eligible for sale under Rule 144(k) (or any successor rule), or (iv) if such legend is not required under applicable requirements of the 1933 Act (including judicial interpretations and pronouncements issued by the staff of the Commission).  The Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent if required by such transfer agent to effect the removal of the legend hereunder.  The Company agrees that at such time as such legend is no longer required under this Section 2(m), it will, no later than three business days following the delivery by a Purchaser to the Company or its transfer agent of a certificate representing securities issued with a restrictive legend, deliver or cause to be delivered to such Purchaser a certificate representing such securities that is free from all restrictive and other legends.

 

	 	
3.

	
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company hereby represents and warrants as of the date hereof and as of the Closing Date (except for the representations and warranties that are as of a specific date which shall be made only as of that date) to the Purchaser that: 

 

(a)           Organization and Qualification.  The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Nevada.  The Company has the requisite corporate power and authority to carry on its business as now being conducted, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts its business in a manner or to an extent that would require such qualification, other than such failures to be so qualified or in good standing as, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the business, results of operations, prospects or financial condition of the Company or its ability to perform its obligations under this Agreement and the other Private Placement Documents.

 

(b)           Authorization; Enforcement; Validity.  The Company has the requisite corporate power and authority to enter into and perform its obligations under the Private Placement Documents and to sell and issue the Preferred Shares in accordance with the terms hereof and thereof.  The execution and delivery of the applicable Private Placement Documents by the Company and the consummation by the Company of the transactions contemplated by the Private Placement Documents have been duly authorized by the Company’s Board of Directors and no further consent or authorization in connection therewith is required by the Company or its Board of Directors.  The applicable Private Placement Documents have been (or upon delivery will have been) duly executed and, and when delivered by the Company in accordance with the terms thereof, will constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to the Bankruptcy and Equity Exception and except that rights to indemnification and contribution thereunder may be limited by virtue of public policy under federal or state securities and banking laws.

 

  

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(c)           Capitalization; Issuance of Preferred Shares.  Immediately prior to the Closing, the authorized capital stock of the Company consists of 50,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock, of which there were 17,868,673 shares of Common Stock and no shares of Preferred Stock issued and outstanding as of March 1, 2011.  As of the date of this Agreement, as well as immediately prior to the Closing, all outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and non-assessable and none of the outstanding shares of Common Stock has been issued in violation of preemptive rights or any similar rights of any Person.  The Preferred Shares to be issued and sold to the Investors by the Company in the Private Placement shall have been duly authorized and, when issued and delivered to the Investors against full payment therefor in accordance with the terms hereof, will be validly issued, fully paid and nonassessable and free of any preemptive or similar rights.  The shares of Common Stock to be issued upon conversion of the Preferred Shares shall have been properly reserved for issuance.  The delivery of the certificates for the Preferred Shares being issued and sold pursuant to the terms of this Agreement will pass valid title to such Preferred Shares, free and clear of any Liens or defect in title to the Purchasers.  The certificates for the Preferred Shares being sold hereby will be in valid and sufficient form.  No holder of securities or obligations of the Company has rights to the registration of any securities of the Company as a result of or in connection with the consummation of the Private Placement, except as contemplated by the Registration Rights Agreement.  For purposes of this Agreement, “Lien” means a mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing), or any other arrangement pursuant to which title to the property is retained by or vested in a third party for security purposes.

 

(d)           No Conflicts.  None of the sale of the Preferred Shares nor the execution, delivery or performance of the applicable Private Placement Documents by the Company, (a) requires any consent, approval, authorization or other order of or registration or filing with, any applicable governmental agency, authority or instrumentality having supervisory or regulatory authority with respect to the Company (each, a “Governmental Entity” and, collectively, “Governmental Entities”) or any third party, (b) conflicts with or will conflict with or constitutes or will constitute a breach of, or a default under, the Company’s Articles of Incorporation, as amended (“Articles of Incorporation”), or the Company’s Bylaws (“Bylaws”), (c) violates any law applicable to the Company or any of its properties or (d) results in a breach of, default, event of default, or Debt Repayment Triggering Event under, or results in the creation or imposition of any Lien upon, any property or assets of the Company pursuant to, or requires the consent of any other party to, any (x) obligation, agreement, indenture, bond, debenture, note, instrument or any other evidence of indebtedness to which the Company is a party or as to which any of its assets are subject, or (y) any other contract or agreement to which the Company is a party or as to which any of its assets are subject ((x) and (y) collectively, the “Existing Instruments”), except, in the cases of clauses (a), (c) and (d) above, for such conflicts, breaches, defaults or Liens, that will not, individually or in the aggregate, have a material adverse effect on the Company’s business, results of operations, prospects or financial condition, or which would prevent, or reasonably likely prevent, the parties from consummating the Private Placement.  As used herein, a “Debt Repayment Triggering Event” shall mean any event or condition that gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture, lease or other evidence of indebtedness or obligation, whether secured or unsecured (or any indenture trustee or other Person acting on such holder’s behalf) the right to accelerate any payment or maturity of such indebtedness or obligation, to require the Company to repurchase, redeem or repay of all or a portion of such indebtedness or obligation, or to increase the interest rates or charges or fees on any such indebtedness or obligation.

 

  

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(e)           No Violation.  The Company is not in breach of or in default under (i) the Articles of Incorporation or the Bylaws, (ii) any law or any order, rule or regulation of any Governmental Entity applicable to the Company or any of its properties, or (iii) any of the Existing Instruments, except in the case of (ii) or (iii) above for any breaches or defaults that would not, individually or in the aggregate, have a material adverse effect on the Company’s business, results of operations, prospects or financial condition, or which would not prevent, or reasonably likely prevent the parties from consummating the Private Placement.

 

(f)           No Registration.  Assuming the accuracy of the representations and warranties made by the Purchaser herein and similar representations by the other Investors contained in subscription agreements substantially similar to this Agreement (collectively, the “Subscription Agreements”), the offer and sale of the Preferred Shares in the manner contemplated by the Subscription Agreements, including this Agreement, are exempt from the registration requirements of the 1933 Act, and all applicable securities laws.

 

(g)           No General Solicitation.  Neither the Company nor any of its Affiliates, nor, to the Company’s knowledge, any Person acting on its or their behalf, has engaged in any form of “general solicitation” or “general advertising” (within the meaning of Rule 502 of Regulation D) in connection with the sale of the Preferred Shares in the Private Placement.

 

(h)           No Integrated Offering.  Neither the Company nor any of its Affiliates, nor any Person acting on its or their behalf, has, directly or indirectly, at any time within the past six months, made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Preferred Shares under applicable federal securities laws, whether through integration with prior offerings or otherwise.  None of the Company, its Affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of the issuance of any of the Preferred Shares under applicable federal and state securities laws.  An “Affiliate” shall mean, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such other Person.  For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with respect to any Person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such Person, whether through the ownership of voting securities by contract or otherwise.

 

(i)           Financial Statements.  From and after December 31, 2007, all financial statements of the Company complied in all material respects with applicable accounting requirements, and have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) consistently applied during the periods involved (except (i) as may be otherwise disclosed in such financial statements or the notes thereto, (ii) with respect to financial statements which have been subsequently restated and (iii) in the case of unaudited interim financial statements, to the extent they may exclude footnotes, may be subject to customary year-end adjustments or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

  

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(j)           Regulatory Permits.  The Company possesses all material certificates, authorizations and permits issued by applicable Government Entities necessary to conduct its business as presently conducted.  The Company has not received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit, except for such revocation or modification that would not, individually or in the aggregate, have a material adverse effect on the Company’s business, results of operations, prospects or financial condition or which would not prevent, or reasonably likely prevent the parties from consummating the Private Placement.

 

4.            COVENANTS.

 

(a)           Further Action.  The Company agrees to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws, so as to permit consummation of the issuance of the Preferred Shares as promptly as practicable and otherwise to enable consummation of the proposed Private Placement.

 

(b)           Expenses.  Each of the parties hereto will bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated by the Private Placement, including fees and expenses of its own financial or other consultants, investment bankers, accountants and counsel.

 

	 	
5.

	
CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

The obligation of the Company hereunder to issue and sell the Preferred Shares to the Purchaser at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Purchaser with prior written notice thereof:

 

(a)           The Purchaser shall have duly executed each of the Private Placement Documents to which it is a party and delivered the same to the Company.

 

(b)           The Purchaser shall have duly executed a fully completed Accredited Investor Questionnaire in the form attached hereto as Exhibit C.

 

(c)           The Purchaser shall have delivered the Purchase Price to the Escrow Agent for deposit with the Escrow Agent pursuant to the Escrow Agreement by means of a wire transfer to the following account at First Community Bank; Account Name: First Community Bancshares Escrow Account; ABA No. 051501299; A/C No. 90786.

 

(d)           The representations and warranties of the Purchaser contained in Section 2 of this Agreement shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date), and the Purchaser shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by the applicable Private Placement Documents to be performed, satisfied or complied with by the Purchaser at or prior to the Closing Date.

 

(e)           No provision of any applicable law or regulation and no judgment, injunction, order or decree of any Governmental Entity shall prohibit the Closing and no lawsuit or formal administrative proceeding shall have been commenced by any Governmental Entity seeking to effect any of the foregoing.

 

  

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6.            CONDITIONS TO THE PURCHASER’S OBLIGATION TO PURCHASE.

 

The obligation of the Purchaser to purchase the Preferred Shares at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Purchaser’s sole benefit and may be waived by the Purchaser at any time in its sole discretion by providing the Company with prior written notice thereof:

 

(a)           The Company shall have duly executed and delivered to the Purchaser each of the Private Placement Documents which the Company has entered into with the Purchaser.

 

(b)           The representations and warranties of the Company contained in Section 3 of this Agreement shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality, which shall be true and correct in all respects), as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date), and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by the applicable Private Placement Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date.

 

(c)           The Company shall have delivered or cause to have delivered to the Purchaser the number of the Preferred Shares indicated below the Purchaser’s name on the signature page to this Agreement, registered in the name of the Purchaser.

 

(d)           No provision of any applicable law or regulation and no judgment, injunction, order or decree of any Governmental Entity shall prohibit the Closing and no lawsuit or formal administrative proceeding shall have been commenced by any Governmental Entity seeking to effect any of the foregoing.

 

7.           TERMINATION.

 

(a)           Termination.  This Agreement may be terminated and the sale and purchase of the Preferred Shares abandoned at any time prior to the Closing:

 

(i)           by mutual written agreement of the Company and the Purchaser; or

 

(ii)           if the Closing shall not have occurred on or before June 30, 2011 for any reason, including but not limited to the Company’s or the Purchaser’s failure to satisfy the conditions set forth in Sections 5 and 6 above (and the nonbreaching party’s failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement with respect to such breaching party without liability of any party to any other party.

 

  

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(b)           Effects of Termination.  In the event of any termination of this Agreement as provided in Section 7(a), this Agreement (other than Section 8, 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 breach of this Agreement prior to such termination.

 

8.            MISCELLANEOUS.

 

(a)           Governing Law; Jurisdiction; Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the Commonwealth of Virginia, without giving effect to any choice of law or conflict of law provision or rule (whether of the Commonwealth of Virginia or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the Commonwealth of Virginia.  Each party hereby irrevocably submits to the exclusive jurisdiction of the federal courts sitting in Richmond, Virginia, of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  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.

 

(b)           Counterparts.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.

 

(c)           Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

(d)           Severability.  If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

(e)           Entire Agreement; Amendments.  This Agreement and the other Private Placement Documents, together with the appendices and exhibits hereto and thereto, supersede all other prior oral or written agreements between the Purchaser, the Company, their Affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Private Placement Document and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters.  No amendment to this Agreement may limit the right of the Purchaser to waive any provision which it has the right to waive, and no provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Purchaser.  No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.

 

  

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(f)           Notices.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one business day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

First Community Bancshares, Inc.

One Community Place

Bluefield, Virginia  24605

	
Telephone:

	
(276) 326-9000

	
Facsimile:

	
(276) 326-9010

	
Attention: 

	
President and Chief Executive Officer

with copies to:

 

Patton Boggs LLP

2550 M Street, N.W.

Washington, DC 20037

	
Telephone:

	
(202) 457-6000

	
Facsimile:

	
(202) 457-6315

	
Attention:

	
Norman B. Antin, Esq.

	  	
Jeffrey D. Haas, Esq.

 

If to the Purchaser, to its address and facsimile number set forth under such Purchaser’s name on the signature page hereto, with copies to such Purchaser’s representative as set forth under such Purchaser’s name on the signature page hereto, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (A), (B) or (C) above, respectively.

 

  

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(g)           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.  The Company shall not assign this Agreement or any rights or obligations hereunder.  The Purchaser may assign some or all of its rights hereunder without the consent of the Company if in compliance with this Agreement and applicable law, in which event such assignee shall be deemed to be a Purchaser hereunder with respect to such assigned rights and shall be bound by the terms and conditions of this Agreement that apply to Purchasers.

 

(h)           No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than the Placement Agent who is a third party beneficiary of this Agreement, including without limitation, Section 2(f) hereof.

 

(i)           Survival. 

 

(i)           The representations and warranties of the parties shall not survive the Closing Date; provided, further, that nothing herein shall limit in any way any party’s remedies in respect of fraud by any other party in connection with the transactions contemplated hereby.

 

(ii)           All of the covenants or other agreements of the parties contained in this Agreement shall survive until fully performed or fulfilled, unless and to the extent that non-compliance with such covenants or agreements is (i) waived in writing by the party entitled to such performance, or (ii) otherwise specifically permitted by this Agreement.

 

(j)           Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated by the Private Placement Documents.

 

(k)           No Strict Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

[Signatures appear on the following pages.]

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	  	
FIRST COMMUNITY BANCSHARES,

INC.

	  	  	  
	  	
By: 

	  

[Remainder of page intentionally left blank.]

[Signature page for the Purchaser appears on the following page.]

Company Signature Page to Agreement

  

 

  

	  	
NAME OF PURCHASER:

	  	  	  	  
	  	  
	  	  	  	  
	  	
By: 

	  
	  	  	  	  
	  	  	
Name:

	  
	  	  	  	  
	  	  	
Title:

	  
	  	  	  	  
	  	  	
Address:

	  
	  	  	  	  
	  	  	
Contact Name:

	  
	  	  	  	  
	  	  	
Telephone:

	  
	  	  	  	  
	  	  	
Facsimile:

	  
	  	  	  	  
	  	  	
E-mail:

	  

	  	  	
Number of Preferred Shares:

	  

	  	  	
Purchase Price Per Preferred Share: $1,000.00

	  	  	
Aggregate Purchase Price: $

	  

	  	  	
Tax ID No. (for entities):

	  

	  	  	
Social Security Number

	  
	  	  	
(for natural persons):

	  

	  	  	
Form of Ownership (Individual, JTWROS,

TIC, Trust, Corporation, LLC, Partnership, LP,

	  	  	
LLP, etc.) 

	  

Information about Purchaser Representative:

	
Name:

	  	  
	
Title:

	  	  
	
Address:

	  	  
	
Telephone: 

	  	  
	
Facsimile:

	  	  
	
E-mail:

	  	  

Purchaser Signature Page to Agreement

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