Document:

firstbancshares_exh10-2.htm

Exhibit 10.2

 

  

(CDFI Bank/Thrifts

Senior Preferred Stock)

 

UNITED STATES DEPARTMENT OF THE TREASURY

 

1500 PENNSYLVANIA AVENUE, NW

 

WASHINGTON, D.C. 20220

 

Dear Ladies and Gentlemen:

 

The company set forth on the signature page hereto (the “Company”) intends to issue in a private placement the number of shares of a series of its preferred stock set forth on Schedule A hereto (the “Preferred Shares”) and the United States Department of the Treasury (the “Investor”) intends to purchase from the Company the Preferred Shares.

 

The purpose of this letter agreement is to confirm the terms and conditions of the purchase by the Investor of the Preferred Shares.  Except to the extent supplemented or superseded by the terms set forth herein or in the Schedules hereto, the provisions contained in the Securities Purchase Agreement – Standard Terms attached hereto as Exhibit A (the “Securities Purchase Agreement”) are incorporated by reference herein.  Terms that are defined in the Securities Purchase Agreement are used in this letter agreement as so defined.  In the event of any inconsistency between this letter agreement and the Securities Purchase Agreement, the terms of this letter agreement shall govern.

 

Each of the Company and the Investor hereby confirms its agreement with the other party with respect to the issuance by the Company of the Preferred Shares and the purchase by the Investor of the Preferred Shares pursuant to this letter agreement and the Securities Purchase Agreement on the terms specified on Schedule A hereto.

 

This letter agreement (including the Schedules hereto), the Securities Purchase Agreement (including the Annexes thereto) and the Disclosure Schedules (as defined in the Securities Purchase Agreement) constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties, both written and oral, between the parties, with respect to the subject matter hereof. This letter agreement constitutes the “Letter Agreement” referred to in the Securities Purchase Agreement.

 

This letter agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.  Executed signature pages to this letter agreement may be delivered by facsimile and such facsimiles will be deemed as sufficient as if actual signature pages had been delivered.

 

* * *

UST Sequence No. 511

  

  

  

 

In witness whereof, this letter agreement has been duly executed and delivered by the duly authorized representatives of the parties hereto as of the date written below.

 

	
  

	
UNITED STATES DEPARTMENT OF THE TREASURY

 

 

	
  

	
 

	By:________________________________________

	
  

	
      Name:

	
  

	
      Title:

 

 

	
  

	
COMPANY:  THE FIRST BANCSHARES, INC.

 

 

	
  

	
 

	By:________________________________________ 	 	 

	
  

	
      Name:

	
M. Ray Cole, Jr.

	
  

	
      Title:

	
Chief Executive Officer

 

Date:____________________________

UST Sequence No. 511

  

  

 

 

EXHIBIT A

(CDFI Bank/Thrifts

Senior Preferred Stock)

 

SECURITIES PURCHASE AGREEMENT

 

 

STANDARD TERMS

 

UST Sequence No. 511

  

  

  

 

TABLE OF CONTENTS

 

Page

 

ARTICLE I

 

	
1.1

	
Definitions 

	
2

	
1.2

	
Interpretation 

	
4

 

ARTICLE II

 

PURCHASE; CLOSING

 

	
2.1

	
Purchase 

	
4

	
2.2

	
Closing 

	
4

	
2.3

	
Closing Conditions 

	
5

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

	
3.1

	
Representations and Warranties of the Company 

	
7

 

ARTICLE IV

 

COVENANTS

 

	
4.1

	
Affirmative Covenants 

	
14

	
4.2

	
Negative Covenants 

	
21

 

ARTICLE V

 

ADDITIONAL AGREEMENTS

 

	
5.1

	
Purchase for Investment 

	
23

	
5.2

	
Legends 

	
23

	
5.3

	
Transfer of Preferred Shares 

	
24

	
5.4

	
Rule 144; Rule 144A; 4(11⁄2) Transactions 

	
24

	
5.5

	
Depositary Shares 

	
26

	
5.6

	
Expenses and Further Assurances 

	
26

UST Sequence No. 511

  

i

  

 

ARTICLE VI

 

MISCELLANEOUS

 

	
6.1

	
Termination 

	
26

	
6.2

	
Survival 

	
27

	
6.3

	
Amendment 

	
27

	
6.4

	
Waiver of Conditions 

	
28

	
6.5

	
Governing Law; Submission to Jurisdiction, etc 

	
28

	
6.6

	
Notices 

	
28

	
6.7

	
Assignment 

	
29

	
6.8

	
Severability 

	
29

	
6.9

	
No Third Party Beneficiaries 

	
29

	
6.10

	
Specific Performance 

	
29

UST Sequence No. 511

  

ii

  

 

LIST OF ANNEXES

 

ANNEX A:                      FORM OF OFFICER’S CERTIFICATE

ANNEX B:                      FORM OF CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK

ANNEX C:                      FORM OF WAIVER

ANNEX D:                      FORM OF OPINION

ANNEX E:                      REGISTRATION RIGHTS

ANNEX F:                      FORM OF OFFICER’S CERTIFICATE (CDFI REQUIREMENTS)

UST Sequence No. 511

  

iii

  

 

INDEX OF DEFINED TERMS

	
Term

	
Location of Definition

	
Affiliate

	
1.1

	
Agreement

	
Recitals

	
Appropriate Federal Banking Agency

	
1.1

	
Bank Holding Company

	
1.1

	
Bankruptcy Exceptions

	
3.1(e)

	
Benefit Plans

	
2.3(f)

	
Board of Directors

	
3.1(f)

	
Business Combination

	
6.7

	
business day

	
1.2

	
Capitalization Date

	
3.1(b)

	
CDCI

	
Recitals

	
CDFI

	
3.1(d)(ii)

	
CDFI Application

	
2.3(m)

	
CDFI Application Update

	
2.3(m)

	
Certificate of Designations

	
2.3(d)

	
Certified Entity

	
1.1

	
Charter

	
2.3(d)

	
Closing

	
2.2(a)

	
Closing Date

	
2.2(a)

	
Code

	
3.1(n)

	
Common Stock

	
3.1(b)

	
Company

	
Recitals

	
Company Financial Statements

	
2.3 (l)

	
Company Material Adverse Effect

	
1.1

	
Company Reports

	
3.1(i)(i)

	
Company Subsidiary; Company Subsidiaries

	
3.1(e)(ii)

	
Compensation Regulations

	
2.3(f)

	
control; controlled by; under common control with

	
1.1

	
Controlled Group

	
3.1(n)

	
CPP

	
3.1(x)

	
CPP/CDCI Securities

	
3.1(x)

	
Disclosure Schedule

	
1.1

	
Disclosure Update

	
2.3(k)

	
EESA

	
2.3(f)

	
ERISA

	
3.1(n)

	
Exchange Act

	
5.3

	
Federal Reserve

	
1.1

	
Fund

	
3.1(d)(ii)

	
GAAP

	
1.1

	
Governmental Entities

	
2.3(a)

	
Holders

	
5.4(a)

UST Sequence No. 511

  

iv

  

	
Indemnitee

	
5.4(b)

	
Information

	
4.1(c)(iii)

	
Investor

	
Recitals

	
Junior Stock

	
1.1

	
knowledge of the Company; Company’s knowledge

	
1.1

	
Letter Agreement

	
Recitals

	
MHA

	
 4.1(i)

	
officers

	
1.1

	
Parity Stock

	
1.1

	
Plan

	
3.1(n)

	
Preferred Shares

	
Recitals

	
Preferred Stock

	
Recitals

	
Previously Disclosed

	
1.1

	
Proprietary Rights

	
3.1(u)

	
Purchase

	
Recitals

	
Purchase Price

	
2.1

	
Regulatory Agreement

	
3.1(s)

	
Relevant Period

	
2.3(f)

	
Savings and Loan Holding Company

	
1.1

	
Schedules

	
Recitals

	
SEC

	
3.1(k)

	
Section 4.1(e) Employee

	
4.1(e)(ii)

	
Securities Act

	
3.1(a)

	
Senior Executive Officers

	
1.1

	
Share Dilution Amount

	
1.1

	
Signing Date

	
1.1

	
subsidiary

	
1.1

	
Tax; Taxes

	
1.1

	
Transfer

	
5.3

UST Sequence No. 511

  

v

  

 

SECURITIES PURCHASE AGREEMENT – STANDARD TERMS

 

Recitals:

 

WHEREAS, the United States Department of the Treasury (the “Investor”) may from time to time agree to purchase shares of preferred stock from eligible financial institutions which elect to participate in the Community Development Capital Initiative (“CDCI”);

 

WHEREAS, an eligible financial institution electing to participate in the CDCI and issue securities to the Investor shall enter into a letter agreement (the “Letter Agreement”) with the Investor which incorporates this Securities Purchase Agreement – Standard Terms (the eligible financial institution identified in the Letter Agreement, the “Company”);

 

WHEREAS, the Company agrees to support the availability of credit and financial services to underserved populations and communities in the United States to promote the expansion of small businesses and the creation of jobs in such populations and communities;

 

WHEREAS, the Company agrees to work diligently, under existing and any future programs, to modify the terms of residential mortgages as appropriate to strengthen the health of the U.S. housing market;

 

WHEREAS, the Company intends to issue in a private placement the number of shares of the series of its Preferred Stock (“Preferred Stock”) set forth on Schedule A to the Letter Agreement (the “Preferred Shares”) and the Investor intends to purchase (the “Purchase”) from the Company the Preferred Shares; and

 

WHEREAS, the Purchase will be governed by this Securities Purchase Agreement – Standard Terms and the Letter Agreement, including the schedules thereto (the “Schedules”), specifying additional terms of the Purchase. This Securities Purchase Agreement – Standard Terms (including the Annexes hereto) and the Letter Agreement (including the Schedules thereto) are together referred to as this “Agreement”.  All references in this Securities Purchase Agreement – Standard Terms to “Schedules” are to the Schedules attached to the Letter Agreement.

 

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

UST Sequence No. 511

  

1

  

ARTICLE I

1.1    Definitions.    Except as otherwise specified herein or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Agreement.

 

“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.

 

“Appropriate Federal Banking Agency” means the “appropriate Federal banking agency” with respect to the Company or such Company Subsidiaries, as applicable, as defined in Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. Section 1813(q)).

 

“Bank Holding Company” means a company registered as such with the Board of Governors of the Federal Reserve System (the “Federal Reserve”) pursuant to 12 U.S.C. §1842 and the regulations of the Federal Reserve promulgated thereunder.

 

“Certified Entity” means the Company or, if the Company itself has not been certified by the Fund as a CDFI, each Affiliate of the Company that has been certified by the CDFI  and is specified on Schedule A of the Letter Agreement.

 

“Company Material Adverse Effect” means a material adverse effect on (i) the business, results of operation or financial condition of the Company and its consolidated subsidiaries and each Certified Entity taken as a whole; provided, however, that Company Material Adverse Effect shall not be deemed to include the effects of (A) changes after the date of the Letter Agreement (the “Signing Date”) 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, (B) changes or proposed changes after the Signing Date in generally accepted accounting principles in the United States (“GAAP”), or authoritative interpretations thereof, or (C) changes or proposed changes after the Signing Date 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 (A), (B) and (C), 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 U.S. banking or financial services organizations); or (ii) the ability of the Company to consummate the Purchase and other transactions contemplated by this Agreement and perform its obligations hereunder or thereunder on a timely basis.

 

“Disclosure Schedule” means that certain schedule to this Agreement delivered to the Investor on or prior to the Signing Date, setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in Section 3.1.

UST Sequence No. 511

  

2

  

 

“Junior Stock” means Common Stock and any other class or series of stock of the Company the terms of which expressly provide that it ranks junior to the Preferred Shares as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Company.

 

“knowledge of the Company” or “Company’s knowledge” means the actual knowledge after reasonable and due inquiry of the “officers” (as such term is defined in Rule 3b-2 under the Exchange Act) of the Company.

 

“Parity Stock” means any class or series of stock of the Company the terms of which do not expressly provide that such class or series will rank senior or junior to the Preferred Shares as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Company (in each case without regard to whether dividends accrue cumulatively or non-cumulatively).

 

“Previously Disclosed” means information set forth on the Disclosure Schedule or the Disclosure Update, as applicable; provided, however, that disclosure in any section of such Disclosure Schedule or Disclosure Update, as applicable, shall apply only to the indicated section of this Agreement except to the extent that it is reasonably apparent from the face of such disclosure that such disclosure is relevant to another section of this Agreement; provided, further, that the existence of Previously Disclosed information, pursuant to a Disclosure Update, shall neither obligate the Investor to consummate the Purchase nor limit or affect any rights of or remedies available to the Investor.

 

“Savings and Loan Holding Company” means a company registered as such with the Office of Thrift Supervision pursuant to 12 U.S.C. §1467(a) and the regulations of the Office of Thrift Supervision promulgated thereunder.

 

“Senior Executive Officers” means the Company’s “senior executive officers” as defined in Section 111 of EESA and the Compensation Regulations.

 

“Share Dilution Amount” means the increase in the number of diluted shares outstanding (determined in accordance with GAAP, and as measured from the date of the Company’s most recent consolidated financial statements prior to the Closing Date) resulting from the grant, vesting or exercise of equity-based compensation to employees and equitably adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction.

 

“Subsidiary” means any corporation, partnership, joint venture, limited liability company or other entity (x) of which such person or a subsidiary of such person is a general partner or (y) of which a majority of the voting securities or other voting interests, or 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.

UST Sequence No. 511

  

3

  

 

“Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalty or addition imposed by any Governmental Entity.

 

1.2    Interpretation.    When a reference is made in this Agreement to “Recitals”, “Articles”, “Sections”, or “Annexes” such reference shall be to a Recital, Article or Section of, or Annex to, this Securities Purchase Agreement – Standard Terms, and a reference to “Schedules” shall be to a Schedule to the Letter Agreement, in each case, unless otherwise indicated.  The terms defined in the singular have a comparable meaning when used in the plural, and vice versa.  References to “herein”, “hereof”, “hereunder” and the like refer to this Agreement as a whole and not to any particular section or provision, unless the context requires otherwise. The table of contents and headings contained in this Agreement are for reference purposes only and are not part of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed followed by the words “without limitation”.  No rule of construction against the draftsperson shall be applied in connection with the interpretation or enforcement of this Agreement, as this Agreement is entered into between sophisticated parties advised by counsel.  All references to “$” or “dollars” mean the lawful currency of the United States of America.  Except as expressly stated in this Agreement, all references to any statute, rule or regulation are to the statute, rule or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, include any rules and regulations promulgated under the statute) and to any section of any statute, rule or regulation include any successor to the section.  References to a “business day” shall mean any day except Saturday, Sunday and any day on which banking institutions in the State of New York or the District of Columbia generally are authorized or required by law or other governmental actions to close.

 

 

ARTICLE II

 

PURCHASE; CLOSING

 

2.1     Purchase.    On the terms and subject to the conditions set forth in this Agreement, the Company agrees to sell to the Investor, and the Investor agrees to purchase from the Company, at the Closing (as hereinafter defined), the Preferred Shares for the price set forth on Schedule A (the “Purchase Price”).

 

2.2    Closing.    (a)  On the terms and subject to the conditions set forth in this Agreement, the closing of the Purchase (the “Closing”) will take place at the location specified in Schedule A, at the time and on the date set forth in Schedule A or as soon as practicable thereafter, or at such other place, time and date as shall be agreed between the Company and the Investor.  The time and date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.

UST Sequence No. 511

  

4

  

 

        (b)    Subject to the fulfillment or waiver of the conditions to the Closing in Section 2.3, at the Closing the Company will deliver the Preferred Shares as evidenced by one or more certificates dated the Closing Date and bearing appropriate legends as hereinafter provided for, in exchange for payment in full of the Purchase Price by wire transfer of immediately available United States funds to a bank account designated by the Company on Schedule A.

 

2.3    Closing Conditions.    The obligation of the Investor to consummate the Purchase is subject to the fulfillment (or waiver by the Investor) at or prior to the Closing of each of the following conditions:

 

(a)   (i) any approvals or authorizations of all United States and other governmental, regulatory or judicial authorities (collectively, “Governmental Entities”) required for the consummation of the Purchase shall have been obtained or made in form and substance reasonably satisfactory to each party and shall be in full force and effect and all waiting periods required by United States and other applicable law, if any, shall have expired and (ii) no provision of any applicable United States or other law and no judgment, injunction, order or decree of any Governmental Entity shall prohibit the purchase and sale of the Preferred Shares as contemplated by this Agreement;

 

(b)    (i) the representations and warranties of the Company set forth in  Section 3.1 shall be true and correct in all respects as though made on and as of the Closing Date (other than representations and warranties that by their terms speak as of another date, which representations and warranties shall be true and correct in all respects as of such other date) and (ii) the Company shall have performed in all respects all obligations required to be performed by it under this Agreement at or prior to the Closing;

 

(c)    the Company shall have delivered to the Investor a certificate signed on behalf of the Company by a Senior Executive Officer certifying to the effect that the conditions set forth in Section 2.3(b) have been satisfied, in substantially the form attached hereto as Annex A;

 

(d)    the Company shall have duly adopted and filed with the Secretary of State of its jurisdiction of organization or other applicable Governmental Entity an amendment to its certificate or articles of incorporation, articles of association, or similar organizational document (“Charter”) in substantially the form attached hereto as Annex B (the “Certificate of Designations”) and the Company shall have delivered to the Investor a copy of the filed Certificate of Designations with appropriate evidence from the Secretary of State or other applicable Governmental Entity that the filing has been accepted, or if a filed copy is unavailable, a certificate signed on behalf of the Company by a Senior Executive Officer certifying to the effect that the filing of the Certificate of Designation has been accepted, in substantially the form attached hereto as Annex A;

 

(e)    the Company shall have delivered to the Investor true, complete and correct certified copies of the Charter and bylaws of the Company;

UST Sequence No. 511

  

5

  

 

(f)    (i) the Company shall have effected such changes to its compensation, bonus, incentive and other benefit plans, arrangements and agreements (including golden parachute, severance and employment agreements) (collectively, “Benefit Plans”) with respect to its Senior Executive Officers and any other employee of the Company or its Affiliates subject to 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 (“EESA”), as implemented by any guidance, rule or regulation thereunder, as the same shall be in effect from time to time (collectively, the “Compensation Regulations”) (and to the extent necessary for such changes to be legally enforceable, each of its Senior Executive Officers and other employees shall have duly consented in writing to such changes), as may be necessary, during the period in which any obligation of the Company arising from financial assistance under the Troubled Asset Relief Program remains outstanding (such period, as it may be further described in the Compensation Regulations, the “Relevant Period”), in order to comply with Section 111 of EESA or the Compensation Regulations, and (ii) the Investor shall have received a certificate signed on behalf of the Company by a Senior Executive Officer certifying to the effect that the condition set forth in Section 2.3(f)(i) has been satisfied, in substantially the form attached hereto as Annex A;

 

(g)    each of the Company’s Senior Executive Officers and any other employee of the Company or its Affiliates subject to Section 111 of EESA shall have delivered to the Investor a written waiver in the form attached hereto as Annex C releasing the Investor and the Company from any claims that such Senior Executive Officer or other employee may otherwise have as a result of the modification of, or the agreement of the Company hereunder to modify, the terms of any Benefit Plans with respect to its Senior Executive Officers or other employees to eliminate any provisions of such Benefit Plans that would not be in compliance with the requirements of Section 111 of EESA as implemented by the Compensation Regulations;

 

(h)    the Company shall have delivered to the Investor a written opinion from counsel to the Company (which may be internal counsel), addressed to the Investor and dated as of the Closing Date, in substantially the form attached hereto as Annex D;

 

(i)    the Company shall have delivered certificates in proper form or, with the prior consent of the Investor, evidence of shares in book-entry form, evidencing the Preferred Shares to Investor or its designee(s);

 

(j)    the Company and the Company Subsidiaries shall have taken all necessary action to ensure that the Company and the Company Subsidiaries and their executive officers, respectively, are in compliance with (i) all guidelines put forth by the Investor with respect to transparency, reporting and monitoring and (ii) the provisions of EESA and any federal law respecting EESA, including the Employ American Workers Act (Section 1611 of Division A, Title XVI of the American Recovery and Reinvestment Act of 2009), Public Law No. 111-5, effective as of February 17, 2009, and all rules, regulations and guidance issued thereunder;

UST Sequence No. 511

  

6

  

 

(k)    the Company shall have delivered to the Investor a copy of the Disclosure Schedule on or prior to the Signing Date and, to the extent that any information set forth on the Disclosure Schedule needs to be updated or supplemented to make it true, complete and correct as of the Closing Date, (i) the Company shall have delivered to the Investor an update to the Disclosure Schedule (the “Disclosure Update”), setting forth any information necessary to make the Disclosure Schedule true, correct and complete as of the Closing Date and (ii) the Investor, in its sole discretion, shall have approved the Disclosure Update, provided, however, that the delivery and acceptance of the Disclosure Update shall not limit or affect any rights of or remedies available to the Investor;

 

(l)    the Company shall have delivered to the Investor on or prior to the Signing Date each of the consolidated financial statements of the Company and its consolidated subsidiaries for each of the last three completed fiscal years of the Company (which shall be audited to the extent audited financial statements are available prior to the Signing Date) and each completed quarterly period since the last completed fiscal year (collectively, the “Company Financial Statements”); and

 

(m)    the Company shall have delivered to the Investor prior to the Signing Date either (i) a true, complete and correct certified copy of each CDFI Certification Application that each Certified Entity submitted to the Fund in connection with its certification as a CDFI along with any updates to the CDFI Certification Application necessary to make it true, complete and correct as of the Signing Date or (ii), to the extent a copy of the CDFI Certification Application that any Certified Entity submitted to the Fund in connection with its certification as a CDFI is not available, a newly completed CDFI Certification Application with respect to such Certified Entity true, complete and correct as of the Signing Date (the CDFI Certification Application delivered to the Investor pursuant to this Section 2.3(m), the “CDFI Application”), and, to the extent any information set forth in the CDFI Application is not true, complete and correct as of the Closing Date, the Company shall have delivered to the Investor an update to the CDFI Application (the “CDFI Application Update”), setting forth any information necessary to make the information set forth in the CDFI Application true, correct and complete as of the Closing Date.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

3.1    Representations and Warranties of the Company.    Except as Previously Disclosed, the Company represents and warrants to the Investor that as of the Signing Date and as of the Closing Date (or such other date specified herein):

 

(a)    Organization, Authority and Significant Subsidiaries.  The Company has been duly incorporated and is validly existing and in good standing under the laws of its jurisdiction of organization, with the necessary power and authority to own, operate and lease its properties and conduct its business in all material respects as it is being currently conducted, and except as has not, individually or in the aggregate, had and would not reasonably be expected to have a Company Material Adverse Effect, 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 any business so as to require such qualification; each Certified Entity (if not the Company) and each subsidiary of the Company that would be considered a “significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X under the Securities Act of 1933 (the “Securities Act”), has been duly organized and is validly existing in good standing under the laws of its jurisdiction of organization.  The Charter and bylaws of the Company and each Certified Entity (if not the Company), copies of which have been provided to the Investor prior to the Signing Date, are true, complete and correct copies of such documents as in full force and effect as of the Signing Date and as of the Closing Date.

 

UST Sequence No. 511

  

7

  

(b)    Capitalization.  The authorized capital stock of the Company, and the outstanding capital stock of the Company (including securities convertible into, or exercisable or exchangeable for, capital stock of the Company) as of the most recent fiscal month-end preceding the Signing Date (the “Capitalization Date”) is set forth on Schedule B.  The outstanding shares of capital stock of the Company have been duly authorized and are validly issued and outstanding, fully paid and nonassessable, and subject to no preemptive rights (and were not issued in violation of any preemptive rights). As of the Signing Date, the Company does not have outstanding any securities or other obligations providing the holder the right to acquire its common stock (“Common Stock”) or other capital stock that is not reserved for issuance as specified on Schedule B, and the Company has not made any other commitment to authorize, issue or sell any Common Stock or other capital stock.  Since the Capitalization Date, the Company has not issued any shares of Common Stock or other capital stock, other than (i) shares issued upon the exercise of stock options or delivered under other equity-based awards or other convertible securities or warrants which were issued and outstanding on the Capitalization Date and disclosed on Schedule B, and (ii) shares disclosed on Schedule B.  Each holder of 5% or more of any class of capital stock of the Company and such holder’s primary address are set forth on Schedule B.

 

(c)    Preferred Shares.  The Preferred Shares have been duly and validly authorized, and, when issued and delivered pursuant to this Agreement, such Preferred Shares will be duly and validly issued and fully paid and non-assessable, will not be issued in violation of any preemptive rights, and will rank pari passu with or senior to all other series or classes of Preferred Stock, whether or not designated, issued or outstanding, with respect to the payment of dividends and the distribution of assets in the event of any dissolution, liquidation or winding up of the Company.

 

(d)    Community Development Financial Institution Status; Domestic Ownership.

 

(i)    The Company collectively with all of its “Affiliates” (within the meaning of 12 C.F.R. 1805.104) satisfies the requirements of 12 C.F.R. 1805.200(b).

 

(ii)   Each Certified Entity (A) is a regulated community development financial institution (a “CDFI”) currently certified by the Community Development Financial Institution Fund (the “Fund”) of the United States Department of the Treasury pursuant to 12 C.F.R. 1805.201(a) as having satisfied the eligibility requirements of the Fund’s Community Development Financial Institutions Program and (B) satisfies the eligibility requirements for a CDFI set forth in 12 C.F.R. 1805.201 (b)(1) – (6).

 

(iii)   The Company is not a Bank Holding Company, Savings and Loan Holding Company, bank or savings association controlled (within the meaning of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)(2)) and 12 C.F.R. 225(a)(i) in the case of Bank Holding Companies and banks and the Home Owners’ Loan Act of 1933 (12 U.S.C. 1467a (a)(2)) and 12 C.F.R. 583.7 in the case of Savings and Loan Holding Companies and savings associations) by a foreign bank or company.

 

UST Sequence No. 511

  

8

  

(e)    Authorization, Enforceability.

 

(i)  The Company has the corporate power and authority to execute and deliver this Agreement and to carry out its obligations hereunder (which includes the issuance of the Preferred Shares).  The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and its stockholders, and no further approval or authorization is required on the part of the Company.  This Agreement is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to any limitations by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles, regardless of whether such enforceability is considered in a  proceeding at law or in equity (“Bankruptcy Exceptions”).

 

(ii)  The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby and compliance by the Company with the provisions hereof, will not (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of, any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any subsidiary of the Company or Certified Entity (if not the Company) (each subsidiary or Certified Entity, a “Company Subsidiary” and, collectively, the “Company Subsidiaries”) under any of the terms, conditions or provisions of (x) its organizational documents or (y) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company or any Company Subsidiary is a party or by which it or any Company Subsidiary may be bound, or to which the Company or any Company Subsidiary or any of the properties or assets of the Company or any Company Subsidiary may be subject, or (B) subject to compliance with the statutes and regulations referred to in the next paragraph, violate any statute, rule or regulation or any judgment, ruling, order, writ, injunction or decree applicable to the Company or any Company Subsidiary or any of their respective properties or assets except, in the case of clauses (A)(y) and (B), for those occurrences that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

(iii)  Other than the filing of the Certificate of Designations with the Secretary of State of its jurisdiction of organization or other applicable Governmental Entity, such filings and approvals as are required to be made or obtained under any state “blue sky” laws and such as have been made or obtained, no notice to, filing with, exemption or review by, or authorization, consent or approval of, any Governmental Entity is required to be made or obtained by the Company in connection with the consummation by the Company of the Purchase except for any such notices, filings, exemptions, reviews, authorizations, consents and approvals the failure of which to make or obtain would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

(f)    Anti-takeover Provisions and Rights Plan.  The Board of Directors of the Company (the “Board of Directors”) has taken all necessary action to ensure that the transactions contemplated by this Agreement and the consummation of the transactions contemplated hereby will be exempt from any anti-takeover or similar provisions of the Company’s Charter and bylaws, and any other provisions of any applicable “moratorium”, “control share”, “fair price”, “interested stockholder” or other anti-takeover laws and regulations of any jurisdiction.

 

(g)    No Company Material Adverse Effect.  Since the last day of the last completed fiscal period for which financial statements are included in the Company Financial Statements, no fact, circumstance, event, change, occurrence, condition or development has occurred that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect, except as disclosed on Schedule C.

 

(h)    Company Financial Statements.  The Company Financial Statements present fairly in all material respects the consolidated financial position of the Company and its consolidated subsidiaries as of the dates indicated therein and the consolidated results of their operations for the periods specified therein; and except as stated therein, such financial statements (i) were prepared in conformity with GAAP applied on a consistent basis (except as may be noted therein) and (ii) have been prepared from, and are in accordance with, the books and records of the Company and the Company Subsidiaries.

 

(i)    Reports.

 

(i)  Since December 31, 2008, the Company and each Company Subsidiary has filed all reports, registrations, documents, filings, statements and submissions, together with any amendments thereto, that it was required to file with any Governmental Entity (the foregoing, collectively, the “Company Reports”) and has paid all fees and assessments due and payable in connection therewith, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.  As of their respective dates of filing, the Company Reports complied in all material respects with all statutes and applicable rules and regulations of the applicable Governmental Entities.

 

(ii)  The records, systems, controls, data and information of the Company and the Company Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company or the Company Subsidiaries or their accountants (including all means of access thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have a material adverse effect on the system of internal accounting controls described below in this Section 3.1(i)(ii).  The Company (A) has implemented and maintains adequate disclosure controls and procedures to ensure that material information relating to the Company, including the consolidated Company Subsidiaries, is made known to the chief executive officer and the chief financial officer of the Company by others within those entities, and (B) has disclosed, based on its most recent evaluation prior to the Signing Date, to the Company’s outside auditors and the audit committee of the Board of Directors (x) any significant deficiencies and material weaknesses in the design or operation of internal controls that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

UST Sequence No. 511

  

9

  

(j)      No Undisclosed Liabilities.  Neither the Company nor any of the Company Subsidiaries has any liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) which are not properly reflected or reserved against in the Company Financial Statements to the extent required to be so reflected or reserved against in accordance with GAAP, except for (i) liabilities that have arisen since the last fiscal year end in the ordinary and usual course of business and consistent with past practice and (ii) liabilities that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

(k)    Offering of Securities.  Neither the Company nor any person acting on its behalf has taken any action (including any offering of any securities of the Company under circumstances which would require the integration of such offering with the offering of any of the Preferred Shares under the Securities Act, and the rules and regulations of the Securities and Exchange Commission (the “SEC”) promulgated thereunder), which might subject the offering, issuance or sale of any of the Preferred Shares to Investor pursuant to this Agreement to the registration requirements of the Securities Act.

 

(l)    Litigation and Other Proceedings.  Except (i) as set forth on Schedule D or (ii) as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, there is no (A) pending or, to the knowledge of the Company, threatened, claim, action, suit, investigation or proceeding, against the Company or any Company Subsidiary or to which any of their assets are subject nor is the Company or any Company Subsidiary subject to any order, judgment or decree or (B) unresolved violation, criticism or exception by any Governmental Entity with respect to any report or relating to any examinations or inspections of the Company or any Company Subsidiaries.

 

(m)    Compliance with Laws.  Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company and the Company Subsidiaries have all permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings, applications and registrations with, Governmental Entities that are required in order to permit them to own or lease their properties and assets and to carry on their business as presently conducted and that are material to the business of the Company or such Company Subsidiary.  Except as set forth on Schedule E, the Company and the Company Subsidiaries have complied in all respects and are not in default or violation of, and none of them is, to the knowledge of the Company, under investigation with respect to or, to the knowledge of the Company, have been threatened to be charged with or given notice of any violation of, any applicable domestic (federal, state or local) or foreign law, statute, ordinance, license, rule, regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental Entity, other than such noncompliance, defaults or violations that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.  Except for statutory or regulatory restrictions of general application or as set forth on Schedule E, no Governmental Entity has placed any restriction on the business or properties of the Company or any Company Subsidiary that would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

UST Sequence No. 511

  

10

  

(n)    Employee Benefit Matters.  Except as would not reasonably be expected to have, either individually or in the aggregate, a Company Material Adverse Effect: (i) each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) providing benefits to any current or former employee, officer or director of the Company or any member of its “Controlled Group” (defined as any organization which is a member of a controlled group of corporations within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the “Code”)) that is sponsored, maintained or contributed to by the Company or any member of its Controlled Group and for which the Company or any member of its Controlled Group would have any liability, whether actual or contingent (each, a “Plan”) has been maintained in compliance with its terms and with the requirements of all applicable statutes, rules and regulations, including ERISA and the Code; (ii) with respect to each Plan subject to Title IV of ERISA (including, for purposes of this clause (ii), any plan subject to Title IV of ERISA that the Company or any member of its Controlled Group previously maintained or contributed to in the six years prior to the Signing Date), (1) no “reportable event” (within the meaning of Section 4043(c) of ERISA), other than a reportable event for which the notice period referred to in Section 4043(c) of ERISA has been waived, has occurred in the three years prior to the Signing Date or is reasonably expected to occur, (2) no “accumulated funding deficiency” (within the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not waived, has occurred in the three years prior to the Signing Date or is reasonably expected to occur, (3) the fair market value of the assets under each Plan exceeds the present value of all benefits accrued under such Plan (determined based on the assumptions used to fund such Plan) and (4) neither the Company nor any member of its Controlled Group has incurred in the six years prior to the Signing Date, or reasonably expects to incur, any liability under Title IV of ERISA (other than contributions to the Plan or premiums to the Pension Benefit Guaranty Corporation in the ordinary course and without default) in respect of a Plan (including any Plan that is a “multiemployer plan”, within the meaning of Section 4001(c)(3) of ERISA); and (iii) each Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service with respect to its qualified status that has not been revoked, or such a determination letter has been timely applied for but not received by the Signing Date, and nothing has occurred, whether by action or by failure to act, which could reasonably be expected to cause the loss, revocation or denial of such qualified status or favorable determination letter.

UST Sequence No. 511

  

11

  

 

(o)    Taxes.  Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) the Company and the Company Subsidiaries have filed all federal, state, local and foreign income and franchise Tax returns (together with any schedules and attached thereto) required to be filed through the Signing Date, subject to permitted extensions, and have paid all Taxes due thereon, (ii) all such Tax returns (together with any schedules and attached thereto) are true, complete and correct in all material respects and were prepared in compliance with all applicable laws and (iii) no Tax deficiency has been determined adversely to the Company or any of the Company Subsidiaries, nor does the Company have any knowledge of any Tax deficiencies.

 

(p)    Properties and Leases.  Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company and the Company Subsidiaries have good and marketable title to all real properties and all other properties and assets owned by them, in each case free from liens (including, without limitation, liens for Taxes), encumbrances, claims and defects that would affect the value thereof or interfere with the use made or to be made thereof by them.  Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company and the Company Subsidiaries hold all leased real or personal property under valid and enforceable leases with no exceptions that would interfere with the use made or to be made thereof by them.

 

(q)    Environmental Liability.  Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect:

 

(i)  there is no legal, administrative, or other proceeding, claim or action of any nature seeking to impose, or that would reasonably be expected to result in the imposition of, on the Company or any Company Subsidiary, any liability relating to the release of hazardous substances as defined under any local, state or federal environmental statute, regulation or ordinance, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, pending or, to the Company’s knowledge, threatened against the Company or any Company Subsidiary;

 

(ii)  to the Company’s knowledge, there is no reasonable basis for any such proceeding, claim or action; and

 

(iii)  neither the Company nor any Company Subsidiary is subject to any agreement, order, judgment or decree by or with any court, Governmental Entity or third party imposing any such environmental liability.

 

(r)    Risk Management Instruments.  Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, all derivative instruments, including, swaps, caps, floors and option agreements, whether entered into for the Company’s own account, or for the account of one or more of the Company Subsidiaries or its or their customers, were entered into (i) only in the ordinary course of business, (ii) in accordance with prudent practices and in all material respects with all applicable laws, rules, regulations and regulatory policies and (iii) with counterparties believed to be financially responsible at the time; and each of such instruments constitutes the valid and legally binding obligation of the Company or one of the Company Subsidiaries, enforceable in accordance with its terms, except as may be limited by the Bankruptcy Exceptions.  Neither the Company or the Company Subsidiaries, nor, to the knowledge of the Company, any other party thereto, is in breach of any of its obligations under any such agreement or arrangement other than such breaches that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

UST Sequence No. 511

  

12

  

(s)    Agreements with Regulatory Agencies.  Except as set forth on Schedule F, neither the Company nor any Company Subsidiary is subject to any material cease-and-desist or other similar order or enforcement action issued by, or is a party to any material written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any capital directive by, or since December 31, 2006, has adopted any board resolutions at the request of, any Governmental Entity that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its liquidity and funding policies and practices, its ability to pay dividends, its credit, risk management or compliance policies or procedures, its internal controls, its management or its operations or business (each item in this sentence, a “Regulatory Agreement”), nor has the Company or any Company Subsidiary been advised since December 31, 2006, by any such Governmental Entity that it is considering issuing, initiating, ordering, or requesting any such Regulatory Agreement.  The Company and each Company Subsidiary is in compliance in all material respects with each Regulatory Agreement to which it is party or subject, and neither the Company nor any Company Subsidiary has received any notice from any Governmental Entity indicating that either the Company or any Company Subsidiary is not in compliance in all material respects with any such Regulatory Agreement.

 

(t)    Insurance.  The Company and the Company Subsidiaries are insured with reputable insurers against such risks and in such amounts as the management of the Company reasonably has determined to be prudent and consistent with industry practice.  The Company and the Company Subsidiaries are in material compliance with their insurance policies and are not in default under any of the material terms thereof, each such policy is outstanding and in full force and effect, all premiums and other payments due under any material policy have been paid, and all claims thereunder have been filed in due and timely fashion, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

(u)    Intellectual Property.  Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) the Company and each Company Subsidiary owns or otherwise has the right to use, all intellectual property rights, including all trademarks, trade dress, trade names, service marks, domain names, patents, inventions, trade secrets, know-how, works of authorship and copyrights therein, that are used in the conduct of their existing businesses and all rights relating to the plans, design and specifications of any of its branch facilities (“Proprietary Rights”) free and clear of all liens and any claims of ownership by current or former employees, contractors, designers or others and (ii) neither the Company nor any of the Company Subsidiaries is materially infringing, diluting, misappropriating or violating, nor has the Company or any of the Company Subsidiaries received any written (or, to the knowledge of the Company, oral) communications alleging that any of them has materially infringed, diluted, misappropriated or violated, any of the Proprietary Rights owned by any other person.  Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, to the Company’s knowledge, no other person is infringing, diluting, misappropriating or violating, nor has the Company or any or the Company Subsidiaries sent any written communications since January 1, 2007, alleging that any person has infringed, diluted, misappropriated or violated, any of the Proprietary Rights owned by the Company and the Company Subsidiaries.

UST Sequence No. 511

  

13

  

(v)    Brokers and Finders.  The Investor has no liability for any amounts that any broker, finder or investment banker is entitled to for any financial advisory, brokerage, finder’s or other fee or commission in connection with this Agreement or the transactions contemplated hereby based upon arrangements made by or on behalf of the Company or any Company Subsidiary.

 

(w)    Disclosure Schedule.  The Company has delivered the Disclosure Schedule and, if applicable, the Disclosure Update to the Investor and the information contained in the Disclosure Schedule, as modified by the information contained in the Disclosure Update, if applicable, is true, complete and correct.

 

(x)    CPP/CDCI Securities.  To the extent that the Company participated in the Troubled Asset Relief Program Capital Purchase Program (“CPP”) or the CDCI prior to the Signing Date and the Company has any Preferred Stock or other securities issued in connection with its participation in the CPP or the CDCI (the “CPP/CDCI Securities”) outstanding, the Company has (i) not breached any representation, warranty or covenant set forth in any of the documents governing the CPP/CDCI Securities or its sale to Investor and (ii) paid to Investor all accrued and unpaid dividends and/or interest then due on the CPP/CDCI Securities.

 

ARTICLE IV

COVENANTS

 

4.1    Affirmative Covenants.    The Company hereby covenants and agrees with Investor that:

 

(a)    Commercially Reasonable Efforts.  Subject to the terms and conditions of this Agreement, each of the parties will use its commercially reasonable efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws, so as to permit consummation of the Purchase as promptly as practicable and otherwise to enable consummation of the transactions contemplated hereby and shall use commercially reasonable efforts to cooperate with the other party to that end.

 

(b)    Certain Notifications Until Closing.  From the Signing Date until the Closing, the Company shall promptly notify the Investor of (i) any fact, event or circumstance of which it is aware and which would reasonably be expected to cause any representation or warranty of the Company contained in this Agreement to be untrue or inaccurate in any material respect or to cause any covenant or agreement of the Company contained in this Agreement not to be complied with or satisfied in any material respect and (ii) except as Previously Disclosed, any fact, circumstance, event, change, occurrence, condition or development of which the Company is aware and which, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect; provided, however, that delivery of any notice pursuant to this Section 4.1(b) shall not limit or affect any rights of or remedies available to the Investor.

UST Sequence No. 511

  

14

  

(c)    Access, Information and Confidentiality.

 

(i)  From the Signing Date until the date when the Investor owns an amount of Preferred Shares having an aggregate liquidation value of less than 10% of the Purchase Price, the Company will permit the Investor and its agents, consultants, contractors and advisors (x) acting through the Appropriate Federal Banking Agency, or otherwise to the extent necessary to evaluate, manage, or transfer its investment in the Company, to examine the corporate books, Tax returns (including all schedules and attached thereto) and other information reasonably requested by Investor relating to Taxes and make copies thereof and to discuss the affairs, finances and accounts of the Company and the Company Subsidiaries with the principal officers of the Company, all upon reasonable notice and at such reasonable times and as often as the Investor may reasonably request and (y) to review any information material to the Investor’s investment in the Company provided by the Company to its Appropriate Federal Banking Agency.  Any investigation pursuant to this Section 4.1(c) shall be conducted during normal business hours and in such manner as not to interfere unreasonably with the conduct of the business of the Company, and nothing herein shall require the Company or any Company Subsidiary to disclose any information to the Investor to the extent (A) prohibited by applicable law or regulation, or (B) that such disclosure would reasonably be expected to cause a violation of any agreement to which the Company or any Company Subsidiary is a party or would cause a risk of a loss of privilege to the Company or any Company Subsidiary (provided that the Company shall use commercially reasonable efforts to make appropriate substitute disclosure arrangements under circumstances where the restrictions in this clause (i) apply).

 

(ii)  From the Signing Date until the date on which all of the Preferred Shares have been redeemed in whole, the Company will deliver, or will cause to be delivered, to the Investor:

 

    (A)  as soon as available after the end of each fiscal year of the Company, and in any event within 90 days thereafter, a consolidated balance sheet of the Company as of the end of such fiscal year, and consolidated statements of income, retained earnings and cash flows of the Company for such year, in each case prepared in accordance with GAAP and setting forth in each case in comparative form the figures for the previous fiscal year of the Company and which shall be audited to the extent audited financial statements are available;1

UST Sequence No. 511

  

15

  

    (B)  as soon as available after the end of the first, second and third quarterly periods in each fiscal year of the Company, a copy of any quarterly reports provided to other stockholders of the Company or Company management by the Company;

 

    (C)  as soon as available after the Company receives any assessment of the Company’s internal controls, a copy of such assessment;

 

    (D)  annually on a date specified by the Investor, a completed survey, in a form specified by the Investor, providing, among other things, a description of how the Company has utilized the funds the Company received hereunder in connection with the sale of the Preferred Shares and the effects of such funds on the operations and status of the Company;

 

    (E)  as soon as such items become effective, any amendments to the Charter, bylaws or other organizational documents of the Company; and

 

    (F)  at the same time as such items are sent to any stockholders of the Company, copies of any information or documents sent by the Company to its stockholders.

 

(iii)  The Investor will use reasonable best efforts to hold, and will use reasonable best efforts to cause its agents, consultants, contractors and advisors and United States executive branch officials and employees, to hold, in confidence all non-public records, books, contracts, instruments, computer data and other data and information (collectively, “Information”) concerning the Company furnished or made available to it by the Company or its representatives pursuant to this Agreement (except to the extent that such information can be shown to have been (i) previously known by such party on a non-confidential basis, (ii) in the public domain through no fault of such party or (iii) later lawfully acquired from other sources by the party to which it was furnished (and without violation of any other confidentiality obligation)); provided that nothing herein shall prevent the Investor from disclosing any Information to the extent required by applicable laws or regulations or by any subpoena or similar legal process.  The Investor understands that the Information may contain commercially sensitive confidential information entitled to an exception from a Freedom of Information Act request.

 

 1 To the extent that the Company informed the Investor on the Signing Date that it does not prepare financial statements in accordance with GAAP in the ordinary course, the Investor may consider other annual financial reporting packages acceptable to it in its sole discretion.

UST Sequence No. 511

  

16

  

(iv)  The Investor’s information rights pursuant to Section 4.1(c)(ii)(A), (B), (C), (E) and (F) and the Investor’s right to receive certifications from the Company pursuant to Section 4.1(d)(ii) may be assigned by the Investor to a transferee or assignee of the Preferred Shares with a liquidation preference of no less than an amount equal to 2% of the initial aggregate liquidation preference of the Preferred Shares.

 

(v)  From the Signing Date until the date when the Investor no longer owns any Preferred Shares, the Company shall permit, and shall cause each of the Company’s Subsidiaries to permit (A) the Investor and its agents, consultants, contractors and advisors, (B) the Special Inspector General of the Troubled Asset Relief Program, and (C) the Comptroller General of the United States access to personnel and any books, papers, records or other data, in each case, to the extent relevant to ascertaining compliance with the financing terms and conditions; provided that prior to disclosing any information pursuant to clause (B) or (C), the Special Inspector General of the Troubled Asset Relief Program and the Comptroller General of the United States shall have agreed, with respect to documents obtained under this Agreement in furtherance of its function, to follow applicable law and regulation (and the applicable customary policies and procedures) regarding the dissemination of confidential materials, including redacting confidential information from the public version of its reports and soliciting the input from the Company as to information that should be afforded confidentiality, as appropriate.

 

(vi)  Nothing in this Section shall be construed to limit the authority that the Special Inspector General of the Troubled Asset Relief Program, the Comptroller General of the United States or any other applicable regulatory authority has under law.

 

(d)    CDFI Requirements.

 

(i)  From the Signing Date until the date on which all of the Preferred Shares have been redeemed in whole, each Certified Entity shall (A) be certified by the Fund as a CDFI; (B) together with its Affiliates collectively meet the eligibility requirements of 12 C.F.R. 1805.200(b); (C) have a primary mission of promoting community development, as may be determined by Investor from time to time, based on criteria set forth in 12 C.F.R. 1805.201(b)(1); (D) provide Financial Products, Development Services, and/or other similar financing as a predominant business activity in arm’s-length transactions; (E) serve a Target Market by serving one or more Investment Areas and/or Targeted Populations as may be determined by Investor from time to time, substantially in the manner set forth in 12 C.F.R. 1805.201(b)(3); (F) provide Development Services in conjunction with its Financial Products, directly, through an Affiliate or through a contract with a third-party provider; (G) maintain accountability to residents of the applicable Investment Area(s) or Targeted Population(s) through representation on its governing Board of Directors or otherwise; and (H) remain a non-governmental entity which is not an agency or instrumentality of the United States of America, or any State or political subdivision thereof, as described in 12 C.F.R. 1805.201(b)(6) and within the meaning of any supplemental regulations or interpretations of 12 C.F.R. 1805.201(b)(6) or such supplemental regulations published by the Fund.  Notwithstanding any other provision hereof, as used in this Section 4.1(d), the terms “Affiliates”; “Financial Products”; “Development Services”; “Target Market”; “Investment Areas”; and “Targeted Populations” have the meanings ascribed to such terms in 12 C.F.R. 1805.104.

UST Sequence No. 511

  

17

  

(ii)  From the Signing Date until the date on which all of the Preferred Shares have been redeemed in whole, the Company shall deliver to Investor (1) (x) on the date that is 180 days after the Closing Date and (y) annually on the same date on which the Company delivers the documentation required under Section 4.1(c)(ii)(A) to the Investor, a certificate signed on behalf of the Company by a Senior Executive Officer, in substantially the form attached hereto as Annex F, certifying (A) that the Company and each Certified Entity remains in compliance with the covenants set forth in Section 4.1(d)(i); (B) that the information in the CDFI Application, as modified by any updates to the CDFI Application provided by the Company to the Investor on or prior to the date of such certificate, with respect to the covenants set forth in Section 4.1(d)(i)(B) and Section 4.1(d)(i)(D) remains true, correct and complete as of such date or, to the extent any information set forth in the CDFI Application, as modified by any updates to the CDFI Application provided by the Company to the Investor on or prior to the date of such certificate, with respect to such covenants needs to be updated or supplanted to make it true, complete and correct as of such date, that an updated narrative to the CDFI Application setting forth any information necessary to make the information set forth in the CDFI Application is true, complete and correct as of such date; (C) either (a) that the contracts and material agreements entered into by each Certified Entity with respect to Development Services previously disclosed to the Investor remain in effect or (b) that attached are any new contracts and material agreements entered into by the Certified Entity with respect to Development Services; (D) a list of the names and addresses of the individuals which comprise the board of directors of each Certified Entity as of such date and, to the extent any of such individuals was not a member of the board of directors of such Certified Entity as of the last certification to the Investor, a narrative describing such individual’s relationship to the applicable Investment Area(s) and Targeted Population(s) or, if such Certified Entity maintains accountability to residents of the applicable Investment Area(s) or Target Population(s) through means other than representation on its governing board of directors and such means have changed since the date of the last certification to the Investor, a narrative describing such change; (E) that each Certified Entity is not an agency of the United States of America, or any State or political subdivision thereof, as described in 12 C.F.R. 1805.201(b)(6) and within the meaning of any supplemental regulations or interpretations of 12 C.F.R. 1805.201(b)(6) or such supplemental regulations published by the Fund and (F) that the Company remains in compliance with the covenants set forth in Section 4.1(f) and Section 4.1(m) and (2) within five (5) business days of receipt, copies of any notices, correspondence or other written communication between each Certified Entity and the Fund, including any form that such Certified Entity is required to provide to the Fund due to the occurrence of a “Material Event” within the meaning of the Fund’s CDFI Certification Procedures.

UST Sequence No. 511

  

18

  

(iii)  The Company shall immediately notify the Investor upon the occurrence of any breach of any of the covenants set forth in Section 4.1(d).

 

(c)    Executive Compensation.

 

(i)  Benefit Plans.  During the Relevant Period, the Company shall take all necessary action to ensure that the Benefit Plans of the Company and its Affiliates comply in all respects with, and shall take all other actions necessary to comply with, Section 111 of EESA as implemented by the Compensation Regulations, and neither the Company nor any of its Affiliates shall adopt any new Benefit Plan (x) that does not comply therewith or (y) that does not expressly state and require that such Benefit Plan and any compensation thereunder shall be subject to any relevant Compensation Regulations adopted, issued or released on or after the date any such Benefit Plan is adopted.  To the extent that EESA and/or the Compensation Regulations are amended or otherwise change during the Relevant Period in a manner that requires changes to then-existing Benefit Plans, or that requires other actions, the Company and its Affiliates shall effect such changes to its or their Benefit Plans, and take such other actions, as promptly as practicable after it has actual knowledge of such amendments or changes in order to be in compliance with this Section 4.1(e) (and shall be deemed to be in compliance for a reasonable period to effect such changes).  In addition, the Company and its Affiliates shall take all necessary action, other than to the extent prohibited by applicable law or regulation applicable outside of the United States, to ensure that the consummation of the transactions contemplated by this Agreement will not accelerate the vesting, payment or distribution of any equity-based awards, deferred cash awards or any nonqualified deferred compensation payable by the Company or any of its Affiliates.

 

(ii)  Additional Waivers.  After the Closing Date, in connection with the hiring or promotion of a Section 4.1(e) Employee and/or the promulgation of applicable Compensation Regulations or otherwise, to the extent any Section 4.1(e) Employee shall not have executed a waiver in a form satisfactory to the Investor with respect to the application to such Section 4.1(e) Employee of the Compensation Regulations, the Company shall use its best efforts to (x) obtain from such Section 4.1(e) Employee a waiver in substantially the form attached hereto as Annex C and (y) deliver such waiver to the Investor as promptly as possible, in each case within sixty days of such Section 4.1(e) Employee’s becoming subject to the requirements of this section.  “Section 4.1(e) Employee” means (A) each Senior Executive Officer and (B) any other employee of the Company or any of its Affiliates determined at any time to be subject to Section 111 of EESA as implemented by the Compensation Regulations.

 

(iii)  Clawback.  In the event that any Section 4.1(e) Employee receives a payment in contravention of the provisions of this Section 4.1(e), the Company shall promptly provide such individual with written notice that the amount of such payment must be repaid to the Company in full within fifteen business days following receipt of such notice or such earlier time as may be required by the Compensation Regulations and shall promptly inform the Investor (x) upon discovering that a payment in contravention of this Section 4.1(e) has been made and (y) following the repayment to the Company of such amount, and shall take such other actions as may be necessary to comply with the Compensation Regulations.

UST Sequence No. 511

  

19

  

(iv)  Limitation on Deductions.  During the Relevant Period, the Company agrees that it shall not claim a deduction for remuneration for federal income tax purposes in excess of $500,000 for each Senior Executive Officer that would not be deductible if Section 162(m)(5) of the Code applied to the Company.

 

(f)    Bank and Thrift Holding Company Status.  If the Company is a Bank Holding Company or a Savings and Loan Holding Company on the Signing Date, then the Company shall maintain its status as a Bank Holding Company or Savings and Loan Holding Company, as the case may be, for as long as the Investor owns any Preferred Shares.  The Company shall redeem all Preferred Shares held by the Investor prior to terminating its status as a Bank Holding Company or Savings and Loan Holding Company, as applicable.

 

(g)    Predominantly Financial.  For as long as the Investor owns any Preferred Shares, the Company, to the extent it is not itself an insured depository institution, agrees to remain predominantly engaged in financial activities.  A company is predominantly engaged in financial activities if the annual gross revenues derived by the company and all subsidiaries of the company (excluding revenues derived from subsidiary depository institutions), on a consolidated basis, from engaging in activities that are financial in nature or are incidental to a financial activity under subsection (k) of Section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) represent at least 85 percent of the consolidated annual gross revenues of the company.

 

(h)    Capital Covenant.  From the Signing Date until the date on which all of the Preferred Shares have been redeemed in whole, the Company and the Company Subsidiaries shall maintain such capital as may be necessary to meet the minimum capital requirements of the Appropriate Federal Banking Agency, as in effect from time to time.

 

(i)    HAMP Modifications.  The Company shall take all necessary action to ensure that (A) from and after the date the Company or any Company Subsidiary that services residential mortgage loans has 100 or more residential mortgage loans not owned or guaranteed by Fannie Mae or Freddie Mac which have been past due for 60 or more days, the Company or such Company Subsidiary shall, to the extent such programs are open for participation, (1) participate in the United States Department of the Treasury’s Making Home Affordable (“MHA”) program, including MHA’s Second Lien Modification Program and (2) immediately execute a Commitment to Purchase Financial Instrument and Servicer Participation Agreement (in such form as may be set forth on the MHA website at www.hmpadmin.com from time to time) with Fannie Mae (acting as the United States Department of the Treasury’s fiscal agent) and (B) if the Company or any Company Subsidiary owns mortgage loans that are serviced by a non-affiliated mortgage servicer, the Company or such Company Subsidiary shall consent to any MHA modification request made by such mortgage servicer.

UST Sequence No. 511

  

20

  

(j)    Reporting Requirements.  Prior to the date on which all of the Preferred Shares have been redeemed in whole, the Company covenants and agrees that, at all times on or after the Closing Date, (i) to the extent it is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, it shall comply with the terms and conditions set forth in Annex E or (ii) as soon as practicable after the date that the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, it shall comply with the terms and conditions set forth in Annex E.

 

(k)    Compliance with Employ American Workers Act.  The Company shall agree to comply, and take all necessary action to ensure that any Company Subsidiary complies, in all respects with the provisions of EESA and any federal law respecting EESA, including the Employ American Workers Act (Section 1611 of Division A, Title XVI of the American Recovery and Reinvestment Act of 2009), Public Law No. 111-5, effective as of February 17, 2009, as implemented by any rules, regulation or guidance thereunder, as such may be amended or supplemented from time to time, and any applicable guidance of the United States Department of the Treasury with respect thereto.

 

(l)    Transfer of Proceeds to Certified Entities.  If the Company is not a Certified Entity, the Company shall immediately transfer to its related Certified Entities, as capital contributions, any proceeds it receives in connection with the sale of Preferred Shares.

 

(m)    Control by Foreign Bank or Company.  Prior to the date on which all of the Preferred Shares have been redeemed in whole, the Company shall not be controlled (within the meaning of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)(2)) and 12 C.F.R. 225(a)(i) in the case of Bank Holding Companies and banks and the Home Owners’ Loan Act of 1933 (12 U.S.C. 1467a(a)(2)) and 12 C.F.R. 583.7 in the case of Savings and Loan Holding Companies and savings associations) by a foreign bank or company.

 

4.2    Negative Covenants.  The Company hereby covenants and agrees with the Investor that:

 

(a)    Certain Transactions.

 

(i)  The Company shall not merge or consolidate with, or sell, transfer or lease all or substantially all of its property or assets to, any other party unless the successor, transferee or lessee party (or its ultimate parent entity), as the case may be (if not the Company), expressly assumes the due and punctual performance and observance of each and every covenant, agreement and condition of this Agreement to be performed and observed by the Company.

 

(ii)  Without the prior written consent of the Investor, until such time as the Investor shall cease to own any Preferred Shares, the Company shall not permit any of its “significant subsidiaries” (as such term is defined in Rule 12b-2 promulgated under the Exchange Act) to (i) engage in any merger, consolidation, statutory share exchange or similar transaction following the consummation of which such significant subsidiary is not wholly-owned by the Company, (ii) dissolve or sell all or substantially all of its assets or property other than in connection with an internal reorganization or consolidation involving wholly-owned subsidiaries of the Company or (iii) issue or sell any shares of its capital stock or any securities convertible or exercisable for any such shares, other than issuances or sales in connection with an internal reorganization or consolidation involving wholly-owned subsidiaries of the Company.

UST Sequence No. 511

  

21

  

(b)    Restriction on Dividends and Repurchases.

 

(i)  The Company covenants and agrees that it shall not violate any of the restrictions on dividends, distributions, redemptions, repurchases, acquisitions and related actions set forth in the Certificate of Designations, which are incorporated by reference herein as if set forth in full.

 

(ii)  During the period beginning on the eighth anniversary of the Closing and ending on the date on which the Investor no longer owns any of the Preferred Shares, neither the Company nor any Company Subsidiary shall, without the consent of the Investor, (i) declare or pay any dividend or make any distribution on capital stock or other equity securities of any kind of the Company or any Company Subsidiary; or (ii) redeem, purchase or acquire any shares of Common Stock or other capital stock or other equity securities of any kind of the Company or any Company Subsidiary, or any trust preferred securities issued by the Company or any Affiliate of the Company, other than (A) redemptions, purchases or other acquisitions of the Preferred Shares, (B) regular dividends on shares of preferred stock in accordance with the terms thereof and which are permitted under the terms of the Preferred Shares, or (C) dividends or distributions by any wholly-owned Company Subsidiary.

 

(c)    Related Party Transactions.  Until such time as the Investor ceases to own any debt or equity securities of the Company, including the Preferred Shares, the Company and the Company Subsidiaries shall not enter into transactions with Affiliates or related persons (within the meaning of Item 404 under the SEC’s Regulation S-K) unless (A) such transactions are on terms no less favorable to the Company and the Company Subsidiaries than could be obtained from an unaffiliated third party, and (B) have been approved by the audit committee of the Board of Directors or comparable body of independent directors of the Company, or if there are no independent directors, the Board of Directors, provided that the Board of Directors shall maintain written documentation which supports its determination that the transaction meets the requirements of clause (A) of this Section 4.2(c).

 

(d)    Restriction on Repurchase of Preferred Shares Not Held by Investor.  Prior to the date on which the Investor no longer owns any of the Preferred Shares the Company shall not repurchase, redeem, call or otherwise reacquire any Preferred Shares from any holder thereof, whether by means of open market purchase, negotiated transaction, or otherwise, unless it offers to repurchase, redeem, call or otherwise reacquire a ratable portion of the Preferred Shares, as the case may be, then held by the Investor on the same terms and conditions.

 

UST Sequence No. 511

  

22

  

 

ARTICLE V

 

ADDITIONAL AGREEMENTS

 

5.1    Purchase for Investment.   The Investor acknowledges that the Preferred Shares have not been registered under the Securities Act or under any state securities laws. The Investor (a) is acquiring the Preferred Shares pursuant to an exemption from registration under the Securities Act solely for investment with no present intention to distribute them to any person in violation of the Securities Act or any applicable U.S. state securities laws, (b) will not sell or otherwise dispose of any of the Preferred Shares, except in compliance with the registration requirements or exemption provisions of the Securities Act and any applicable U.S. state securities laws, and (c) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of the Purchase and of making an informed investment decision.

 

5.2    Legends.   (a)  The Investor agrees that all certificates or other instruments representing the Preferred Shares will bear a legend substantially to the following effect:

 

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS. EACH PURCHASER OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT IS NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.  ANY TRANSFEREE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THE SECURITIES REPRESENTED BY THIS INSTRUMENT EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT WHICH IS THEN EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO THE ISSUER OR (D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

UST Sequence No. 511

  

23

  

 

THIS INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF THESE SECURITIES AND THE INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER.  THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT.  ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.”

 

(b)    In the event that any Preferred Shares (i) become registered under the Securities Act or (ii) are eligible to be transferred without restriction in accordance with Rule 144 or another exemption from registration under the Securities Act (other than Rule 144A), the Company shall issue new certificates or other instruments representing such Preferred Shares, which shall not contain the applicable legends in Section 5.2(a) above; provided that the Investor surrenders to the Company the previously issued certificates or other instruments.

 

5.3    Transfer of Preferred Shares.   Subject to compliance with applicable securities laws, the Investor shall be permitted to transfer, sell, assign or otherwise dispose of (“Transfer”) all or a portion of the Preferred Shares at any time, and the Company shall take all steps as may be reasonably requested by the Investor to facilitate the Transfer of the Preferred Shares, including without limitation, as set forth in Section 5.4, provided that the Investor shall not Transfer any Preferred Shares if such transfer would require the Company to be subject to the periodic reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the Company was not already subject to such requirements.  In furtherance of the foregoing, the Company shall provide reasonable cooperation to facilitate any Transfers of the Preferred Shares, including, as is reasonable under the circumstances, by furnishing such information concerning the Company and its business as a proposed transferee may reasonably request and making management of the Company reasonably available to respond to questions of a proposed transferee in accordance with customary practice, subject in all cases to the proposed transferee agreeing to a customary confidentiality agreement.

 

5.4    Rule 144; Rule 144A; 4(11⁄2) Transactions.  (a) At all times after the Signing Date, the Company covenants that (1) it will, upon the request of the Investor or any subsequent holders of the Preferred Shares (“Holders”), use its reasonable best efforts to (x), to the extent any Holder is relying on Rule 144 under the Securities Act to sell any of the Preferred Shares, make “current public information” available, as provided in Section (c)(1) of Rule 144 (if the Company is a “Reporting Issuer” within the meaning of Rule 144) or in Section (c)(2) of Rule 144 (if the Company is a “Non-Reporting Issuer” within the meaning of Rule 144), in either case for such time period as necessary to permit sales pursuant to Rule 144, (y), to the extent any Holder is relying on the so-called “Section 4(11⁄2)” exemption to sell any of its Preferred Shares, prepare and provide to such Holder such information, including the preparation of private offering memoranda or circulars or financial information, as the Holder may reasonably request to enable the sale of the Preferred Shares pursuant to such exemption, or (z) to the extent any Holder is relying on Rule 144A under the Securities Act to sell any of its Preferred Shares, prepare and provide to such Holder the information required pursuant to Rule 144A(d)(4), and

UST Sequence No. 511

  

24

  

 

(2) it will take such further action as any Holder may reasonably request from time to time to enable such Holder to sell Preferred Shares without registration under the Securities Act within the limitations of the exemptions provided by (i) the provisions of the Securities Act or any interpretations thereof or related thereto by the SEC, including transactions based on the so-called “Section 4(11⁄2)” and other similar transactions, (ii) Rule 144 or 144A under the Securities Act, as such rules may be amended from time to time, or (iii) any similar rule or regulation hereafter adopted by the SEC; provided that the Company shall not be required to take any action described in this Section 5.4(a) that would cause the Company to become subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act if the Company was not subject to such requirements prior to taking such action.  Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements and, if not, the specifics thereof.

 

(b)    The Company agrees to indemnify Investor, Investor’s officers, directors, employees, agents, representatives and Affiliates, and each person, if any, that controls Investor within the meaning of the Securities Act (each, an “Indemnitee”), against any and all losses, claims, damages, actions, liabilities, costs and expenses (including reasonable fees, expenses and disbursements of attorneys and other professionals incurred in connection with investigating, defending, settling, compromising or paying any such losses, claims, damages, actions, liabilities, costs and expenses), joint or several, arising out of or based upon any untrue statement or alleged untrue statement of material fact contained in any document or report provided by the Company pursuant to this Section 5.4 or any omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(c)    If the indemnification provided for in Section 5.4(b) is unavailable to an Indemnitee with respect to any losses, claims, damages, actions, liabilities, costs or expenses referred to therein or is insufficient to hold the Indemnitee harmless as contemplated therein, then the Company, in lieu of indemnifying such Indemnitee, shall contribute to the amount paid or payable by such Indemnitee as a result of such losses, claims, damages, actions, liabilities, costs or expenses in such proportion as is appropriate to reflect the relative fault of the Indemnitee, on the one hand, and the Company, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, actions, liabilities, costs or expenses as well as any other relevant equitable considerations.  The relative fault of the Company, on the one hand, and of the Indemnitee, on the other hand, shall be determined by reference to, among other factors, whether the untrue statement of a material fact or omission to state a material fact relates to information supplied by the Company or by the Indemnitee and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission;  the Company and Investor agree that it would not be just and equitable if contribution pursuant to this Section 5.4(c) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 5.4(b).  No Indemnitee guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from the Company if the Company was not guilty of such fraudulent misrepresentation.

UST Sequence No. 511

  

25

  

 

5.5    Depositary Shares.  Upon request by the Investor at any time following the Closing Date, the Company shall promptly enter into a depositary arrangement, pursuant to customary agreements reasonably satisfactory to the Investor and with a depositary reasonably acceptable to the Investor, pursuant to which the Preferred Shares may be deposited and depositary shares, each representing a fraction of a Preferred Share, as specified by the Investor, may be issued. From and after the execution of any such depositary arrangement, and the deposit of any Preferred Shares, as applicable, pursuant thereto, the depositary shares issued pursuant thereto shall be deemed “Preferred Shares” and, as applicable, “Registrable Securities” for purposes of this Agreement.

 

5.6    Expenses and Further Assurances.  (a) Unless otherwise provided in this Agreement, 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 under this Agreement, including fees and expenses of its own financial or other consultants, investment bankers, accountants and counsel.

 

(b)    The Company shall, at the Company’s sole cost and expense, (i) furnish to the Investor all instruments, documents and other agreements required to be furnished by the Company pursuant to the terms of this Agreement, including, without limitation, any documents required to be delivered pursuant to Section 5.4 above, or which are reasonably requested by the Investor in connection therewith; (ii) execute and deliver to the Investor such documents, instruments, certificates, assignments and other writings, and do such other acts necessary or desirable, to evidence, preserve and/or protect the Preferred Shares purchased by the Investor, as Investor may reasonably require; and (iii) do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of this Agreement, as the Investor shall reasonably require from time to time.

 

ARTICLE VI

MISCELLANEOUS

 

6.1    Termination.  This Agreement shall terminate upon the earliest to occur of:

 

(a)    termination at any time prior to the Closing:

 

(i)  by either the Investor or the Company if the Closing shall not have occurred by the 30th calendar day following the Signing Date; provided, however, that in the event the Closing has not occurred by such 30th calendar day, the parties will consult in good faith to determine whether to extend the term of this Agreement, it being understood that the parties shall be required to consult only until the fifth calendar day after such 30th calendar day and not be under any obligation to extend the term of this Agreement thereafter; provided, further, that the right to terminate this Agreement under this Section 6.1(a)(i) shall not be available to any party whose breach of any representation or warranty or failure to perform any obligation under this Agreement shall have caused or resulted in the failure of the Closing to occur on or prior to such date; or

UST Sequence No. 511

  

26

  

 

(ii)  by either the Investor or the Company in the event that any Governmental Entity shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable; or

 

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

 

(b)    the date on which all of the Preferred Shares have been redeemed in whole; or

 

(c)    the date on which the Investor has transferred all of the Preferred Shares to third parties which are not Affiliates of the Investor; or

 

(d)    if the Closing shall not have occurred by September 30, 2010, on such date.

 

In the event of termination of this Agreement as provided in this Section 6.1, this Agreement shall forthwith become void and there shall be no liability on the part of either party hereto except that nothing herein shall relieve either party from liability for any breach of this Agreement.

 

6.2    Survival.

 

(a)    This Agreement and all representations, warranties, covenants and agreements made herein shall survive the Closing without limitation.

 

(b)    The covenants set forth in Article IV and Annex E and the agreements set forth in Article V shall, to the extent such covenants do not explicitly terminate at such time as the Investor no longer owns any Preferred Shares, survive the termination of this Agreement pursuant to Section 6.1(c) hereof without limitation until the date on which all of the Preferred Shares have been redeemed in whole.

 

6.3    Amendment.  No amendment of any provision of this Agreement will be effective unless made in writing and signed by an officer or a duly authorized representative of each party; provided that for so long as the Preferred Shares are outstanding, the Investor may at any time and from time to time unilaterally amend Section 4.1(d) to the extent the Investor deems necessary, in its sole discretion, to comply with, or conform to, any changes after the Signing Date in any federal statutes, any rules and regulations promulgated thereunder and any other publications or interpretative releases of the Fund governing CDFIs, including, without limitation, any changes in the criteria for certification as a CDFI by the Fund.  No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative of any rights or remedies provided by law.

UST Sequence No. 511

  

27

  

 

6.4    Waiver of Conditions.  The conditions to each party’s obligation to consummate the Purchase are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable law. No waiver will be effective unless it is in a writing signed by a duly authorized officer of the waiving party that makes express reference to the provision or provisions subject to such waiver.

 

6.5    Governing Law; Submission to Jurisdiction, etc.  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 jurisdiction and venue of the United States District Court for 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 Purchase contemplated hereby and (b) that notice may be served upon (i) the Company at the address and in the manner set forth for notices to the Company in Section 6.6 and (ii) the Investor at the address and in the manner set forth for notices to the Company in Section 6.6, but otherwise in accordance with federal law. 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 PURCHASE CONTEMPLATED HEREBY.

 

6.6    Notices.  Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (a) on the date of delivery if delivered personally, or by facsimile, upon confirmation of receipt, or (b) on the second business day following the date of dispatch if delivered by a recognized next day courier service.  All notices to the Company shall be delivered as set forth in Schedule A, or pursuant to such other instruction as may be designated in writing by the Company to the Investor.  All notices to the Investor shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the Investor to the Company.

 

UST Sequence No. 511

  

28

  

	
  

	
If to the Investor:

 

	
 

	
United States Department of the Treasury

	
  

	
1500 Pennsylvania Avenue, NW

	
  

	
Washington, D.C. 20220

Attention:  Chief Counsel, Office of Financial Stability

Facsimile:  (202) 927-9225

E-mail:  CDCINotice@do.treas.gov

 

	
  

	
with a copy to:

 

E-mail:  OFSChiefCounselNotices@do.treas.gov

 

6.7    Assignment.  Neither this Agreement nor any right, remedy, obligation nor liability arising hereunder or by reason hereof shall be assignable by any party hereto without the prior written consent of the other party, and any attempt to assign any right, remedy, obligation or liability hereunder without such consent shall be void, except (a) an assignment, in the case of a merger, consolidation, statutory share exchange or similar transaction that requires the approval of the Company’s stockholders (a “Business Combination”) where such party is not the surviving entity, or a sale of substantially all of its assets, to the entity which is the survivor of such Business Combination or the purchaser in such sale, (b) an assignment of certain rights as provided in Sections 4.1(c) or 4.1(j) or Annex E or (c) an assignment by the Investor of this Agreement to an Affiliate of the Investor; provided that if the Investor assigns this Agreement to an Affiliate, the Investor shall be relieved of its obligations under this Agreement but (i) all rights, remedies and obligations of the Investor hereunder shall continue and be enforceable by such Affiliate, (ii) the Company’s obligations and liabilities hereunder shall continue to be outstanding and (iii) all references to the Investor herein shall be deemed to be references to such Affiliate.

 

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

 

6.9    No Third Party Beneficiaries.  Other than as expressly provided herein, nothing contained in this Agreement, expressed or implied, is intended to confer upon any person or entity other than the Company and the Investor (and any Indemnitee) any benefit, right or remedies.

 

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

 

 

 

*  *  *

UST Sequence No. 511

  

29

  

 

 

ANNEX A

 

 

 

 

FORM OF OFFICER’S CERTIFICATE

 

OFFICER’S CERTIFICATE

 

OF

 

[COMPANY]

 

 In connection with that certain letter agreement, dated  [____________], 2010 (the “Agreement”) by and between [COMPANY] (the “Company”) and the United States Department of the Treasury which incorporates that certain Securities Purchase Agreement –Standard Terms referred to therein (the “Standard Terms”), the undersigned does hereby certify as follows:

 

1. I am a duly elected/appointed [____________] of the Company.

 

2. The representations and warranties of the Company set forth in Section 3.1 of the Standard Terms are true and correct in all respects as though as of the date hereof (other than representations and warranties that by their terms speak as of another date, which representations and warranties shall be true and correct in all respects as of such other date) and the Company has performed in all material respects all obligations required to be performed by it under the Agreement.

 

3. The Certificate of Designations, a true, complete and correct copy of which is attached as Exhibit A hereto, has been filed with, and accepted by, the Secretary of State of the State of [___________].

 

4. The Company has effected such changes to its Benefit Plans with respect to its Senior Executive Officers and any other employee of the Company or its Affiliates subject to Section 111 of EESA, as implemented by any Compensation Regulations (and to the extent necessary for such changes to be legally enforceable, each of its Senior Executive Officers and other employees has duly consented in writing to such changes), as may be necessary, during the Relevant Period, in order to comply with Section 111 of EESA or the Compensation Regulations.

 

The foregoing certifications are made and delivered as of [_________] pursuant to Section 2.3 of the Standard Terms.

UST Sequence No. 511

  

A-1

  

 

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Standard Terms.

 

[SIGNATURE PAGE FOLLOWS]

UST Sequence No. 511

  

A-2

  

 

 

 IN WITNESS WHEREOF, this Officer’s Certificate has been duly executed and delivered as of the [__] day of [__________], 20[__].

 

	
  

	
[COMPANY]

 

 

	
  

	
 

	 By:___________________________________

	
  

	
       Name:

	
  

	
       Title:

UST Sequence No. 511

  

A-3

  

 

 

EXHIBIT A

 

UST Sequence No. 511

Exh. A-1  

  

  

 

 

ANNEX B

 

FORM OF CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK

 

[SEE ATTACHED]

UST Sequence No. 511

B-1  

  

  

 

 

ANNEX C

 

 

 

FORM OF WAIVER

 

In consideration for the benefits I will receive as a result of the participation of [NAME OF COMPANY] (together with its subsidiaries and affiliates, the “Company”) in the United States Department of the Treasury’s (“Treasury”) Community Development Capital Initiative and/or any other economic stabilization program implemented by Treasury under the Emergency Economic Stabilization Act of 2008 (as amended, supplemented or otherwise modified, “EESA”) (any such initiative or program, including the Community Development Capital Initiative, a “Program”), I hereby voluntarily waive any claim against the United States (and each of its departments and agencies) or the Company or any of its directors, officers, employees and agents for any changes to my compensation or benefits that are required to comply with the executive compensation and corporate governance requirements of Section 111 of EESA, as implemented by any guidance or regulation thereunder, including the rules set forth in 31 C.F.R. Part 30, or any other guidance or regulations under EESA, and the applicable requirements of the Securities Purchase Agreement by and between the Company and Treasury dated as of [         ], 2010, as amended (such requirements, the “Limitations”).

 

I acknowledge that the Limitations may require modification or termination of the employment, compensation, bonus, incentive, severance, retention and other benefit plans, arrangements, policies and agreements (including so-called “golden parachute” agreements), whether or not in writing, that I may have with the Company or in which I may participate as they relate to the period the United States holds any equity or debt securities of the Company acquired through a Program or for any other period applicable under such Program or Limitations, as the case may be, and I hereby consent to all such modifications.

 

This waiver includes all claims I may have under the laws of the United States or any other jurisdiction (whether or not in existence as of the date hereof) related to the requirements imposed by the Limitations, including without limitation a claim for any compensation or other payments or benefits I would otherwise receive, any challenge to the process by which the Limitations are or were adopted and any tort or constitutional claim about the effect of the Limitations on my employment relationship and I hereby agree that I will not at any time initiate, or cause or permit to be initiated on my behalf, any such claim against the United States (or any of its departments or agencies) or the Company or any of its directors, officers, employees or agents in or before any local, state, federal or other agency, court or body.

 

I agree that, in the event and to the extent that the Compensation Committee of the Board of Directors of the Company or similar governing body (the “Committee”) reasonably determines that any compensatory payment or benefit provided to me, including any bonus or incentive compensation based on materially inaccurate financial statements or performance criteria, would cause the Company to fail to be in compliance with the Limitations (such payment or benefit, an “Excess Payment”), upon notification from the Company, I shall repay such Excess Payment to the Company within 15 business days.  In addition, I agree that the Company shall have the right to postpone any such payment or benefit for a reasonable period of time to enable the Committee to determine whether such payment or benefit would constitute an Excess Payment.

UST Sequence No. 511

  

C-1

  

 

I understand that any determination by the Committee as to whether or not, including the manner in which, a payment or benefit needs to be modified, terminated or repaid in order for the Company to be in compliance with Section 111 of EESA and/or the Limitations shall be a final and conclusive determination of the Committee which shall be binding upon me.  I further understand that the Company is relying on this letter from me in connection with its participation in a Program.

 

In witness whereof, I execute this waiver on my own behalf, thereby communicating my acceptance and acknowledgement to the provisions herein.

 

	
  

	
Respectfully,

 

 

	
  

	
 

	 By:_________________________________________

	
  

	
       Name:

	
  

	
       Title:

	
  

	
       Date:

UST Sequence No. 511

  

C-2

  

 

 

ANNEX D

 

FORM OF OPINION

 

(a)           The Company has been duly formed and is validly existing as a [TYPE OF ORGANIZATION] and is in good standing under the laws of the jurisdiction of its organization.  The Company has all necessary power and authority to own, operate and lease its properties and to carry on its business as it is being conducted.

 

(b)           The Company has been duly qualified as a foreign entity for the transaction of business and is in good standing under the laws of [_____________], [_____________] and [_____________].

 

(c)           The Preferred Shares have been duly and validly authorized, and, when issued and delivered pursuant to the Agreement, the Preferred Shares will be duly and validly issued and fully paid and non-assessable, will not be issued in violation of any preemptive rights, and will rank pari passu with or senior to all other series or classes of Preferred Stock issued on the Closing Date with respect to the payment of dividends and the distribution of assets in the event of any dissolution, liquidation or winding up of the Company.

 

(d)           The Company has the corporate power and authority to execute and deliver the Agreement and to carry out its obligations thereunder (which includes the issuance of the Preferred Shares).

 

(e)           The execution, delivery and performance by the Company of the Agreement and the consummation of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of the Company and its stockholders, and no further approval or authorization is required on the part of the Company, including, without limitation, by any rule or requirement of any national stock exchange.

 

(f)           The Agreement is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles, regardless of whether such enforceability is considered in a proceeding at law or in equity.

 

(g)           The execution and delivery by the Company of this Agreement and the performance by the Company of its obligations thereunder (i) do not require any approval by any Governmental Entity to be obtained on the part of the Company, except those that have been obtained, (ii) do not violate or conflict with any provision of the Charter, (iii) do not violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of, any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any Company Subsidiary under any of the terms, conditions or provisions of its organizational documents or under any agreement, contract,

UST Sequence No. 511

  

D-1

  

 

indenture, lease, mortgage, power of attorney, evidence of indebtedness, letter of credit, license, instrument, obligation, purchase or sales order, or other commitment, whether oral or written, to which it is a party or by which it or any of its properties is bound or (iv) do not conflict with, breach or result in a violation of, or default under any judgment, decree or order known to us that is applicable to the Company and, pursuant to any applicable laws, is issued by any Governmental Entity having jurisdiction over the Company.

 

(h)           Other than the filing of the Certificate of Designations with the Secretary of State of its jurisdiction of organization or other applicable Governmental Entity, such filings and approvals as are required to be made or obtained under any state “blue sky” laws and such consents and approvals that have been made or obtained, no notice to, filing with, exemption or review by, or authorization, consent or approval of, any Governmental Entity is required to be made or obtained by the Company in connection with the consummation by the Company of the Purchase.

 

(i)           The Company is not nor, after giving effect to the issuance of the Preferred Shares pursuant to the Agreement, would be on the date hereof an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

 

(j)           Each Certified Entity (A) is a regulated community development financial institution (a “CDFI”) currently certified by the Community Development Financial Institution Fund (the “Fund”) of the United States Department of the Treasury pursuant to 12 C.F.R. 1805.201(a) and (B) satisfies all of the eligibility requirements of the Fund’s Community Development Financial Institutions Program for a CDFI.

UST Sequence No. 511

  

D-2

  

 

 

ANNEX E

 

REGISTRATION RIGHTS

 

1.1           Definitions.  Terms not defined in this Annex shall have the meaning ascribed to such terms in the Agreement. As used in this Annex E, the following terms shall have the following respective meanings:

 

(a)           “Holder” means the Investor and any other holder of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with Section 1.9 hereof.

 

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

 

(c)           “Pending Underwritten Offering” means, with respect to any Holder forfeiting its rights pursuant to Section 1.11 of this Annex E, any underwritten offering of Registrable Securities in which such Holder has advised the Company of its intent to register its Registrable Securities either pursuant to Section 1.2(b) or Section 1.2(d) of this Annex E prior to the date of such Holder’s forfeiture.

 

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

 

(e)           “Registrable Securities” means (A) all Preferred Shares and (B) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in the foregoing clause (A) by way of conversion, exercise or exchange thereof, or share dividend or share split or in connection with a combination of shares, recapitalization, reclassification, merger, amalgamation, arrangement, consolidation or other reorganization, provided that, once issued, such securities will not be Registrable Securities when (1) they are sold pursuant to an effective registration statement under the Securities Act, (2) they shall have ceased to be outstanding or (3) they have been sold in any transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of the securities.  No Registrable Securities may be registered under more than one registration statement at any one time.

UST Sequence No. 511

  

E-1

  

 

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

 

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

 

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

 

(i)           “Special Registration” means the registration of (A) equity securities and/or options or other rights in respect thereof solely registered on Form S-4 or Form S-8 (or successor form) or (B) shares of equity securities and/or options or other rights in respect thereof to be offered to directors, members of management, employees, consultants, customers, lenders or vendors of the Company or Company Subsidiaries or in connection with dividend reinvestment plans.

 

1.2           Registration.

 

(a)           The Company covenants and agrees that as promptly as practicable after the date that the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act (and in any event no later than 30 days thereafter), the Company shall prepare and file with the SEC a Shelf Registration Statement covering all Registrable Securities (or otherwise designate an existing shelf registration on an appropriate form under Rule 415 under the Securities Act (a “Shelf Registration Statement”) filed with the SEC to cover the Registrable Securities), and, to the extent the Shelf Registration Statement has not theretofore been declared effective or is not automatically effective upon such filing, the Company shall use reasonable best efforts to cause such Shelf Registration Statement to be declared or become effective and to keep such Shelf Registration Statement continuously effective and in compliance with the Securities Act and usable for resale of such Registrable Securities for a period from the date of its initial effectiveness until such time as there are no Registrable Securities remaining (including by refiling such Shelf Registration Statement (or a new Shelf Registration Statement) if the initial Shelf Registration Statement expires).  Notwithstanding the foregoing, if the Company is not eligible to file a registration statement on Form S-3, then the Company shall not be obligated to file a Shelf Registration Statement unless and until requested to do so in writing by the Investor.

UST Sequence No. 511

  

E-2

  

 

(b)           Any registration pursuant to Section 1.2(a) of this Annex E shall be effected by means of a Shelf Registration Statement on an appropriate form under Rule 415 under the Securities Act (a “Shelf Registration Statement”).  If the Investor or any other Holder intends to distribute any Registrable Securities by means of an underwritten offering it shall promptly so advise the Company and the Company shall take all reasonable steps to facilitate such distribution, including the actions required pursuant to Section 1.2(d) of this Annex E; provided that the Company shall not be required to facilitate an underwritten offering of Registrable Securities unless (i) the expected gross proceeds from such offering exceed $200,000 or (ii) such underwritten offering includes all of the outstanding Registrable Securities held by such Holder.   The lead underwriters in any such distribution shall be selected by the Holders of a majority of the Registrable Securities to be distributed.

 

(c)           The Company shall not be required to effect a registration (including a resale of Registrable Securities from an effective Shelf Registration Statement) or an underwritten offering pursuant to Section 1.2 of this Annex E:  (A) with respect to securities that are not Registrable Securities; or (B) if the Company has notified the Investor and all other Holders that in the good faith judgment of the Board of Directors, it would be materially detrimental to the Company or its securityholders for such registration or underwritten offering to be effected at such time, in which event the Company shall have the right to defer such registration for a period of not more than 45 days after receipt of the request of the Investor or any other Holder; provided that such right to delay a registration or underwritten offering shall be exercised by the Company (1) only if the Company has generally exercised (or is concurrently exercising) similar black-out rights against holders of similar securities that have registration rights and (2) not more than three times in any 12-month period and not more than 90 days in the aggregate in any 12-month period.

 

(d)           If during any period when an effective Shelf Registration Statement is not available, the Company proposes to register any of its equity securities, other than a registration pursuant to Section 1.2(a) of this Annex E or a Special Registration, and the registration form to be filed may be used for the registration or qualification for distribution of Registrable Securities, the Company will give prompt written notice to the Investor and all other Holders of its intention to effect such a registration (but in no event less than ten days prior to the anticipated filing date) and will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within ten business days after the date of the Company’s notice (a “Piggyback Registration”).  Any such person that has made such a written request may withdraw its Registrable Securities from such Piggyback Registration by giving written notice to the Company and the managing underwriter, if any, on or before the fifth business day prior to the planned effective date of such Piggyback Registration.  The Company may terminate or withdraw any registration under this Section 1.2(d) prior to the effectiveness of such registration, whether or not Investor or any other Holders have elected to include Registrable Securities in such registration.

UST Sequence No. 511

  

E-3

  

 

(e)           If the registration referred to in Section 1.2(d) of this Annex E is proposed to be underwritten, the Company will so advise Investor and all other Holders as a part of the written notice given pursuant to Section 1.2(d) of this Annex E.  In such event, the right of Investor and all other Holders to registration pursuant to Section 1.2 of this Annex E will be conditioned upon such persons’ participation in such underwriting and the inclusion of such person’s Registrable Securities in the underwriting if such securities are of the same class of securities as the securities to be offered in the underwritten offering, and each such person will (together with the Company and the other persons distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company; provided that the Investor (as opposed to other Holders) shall not be required to indemnify any person in connection with any registration. If any participating person disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the managing underwriters and the Investor (if the Investor is participating in the underwriting).

 

(f)           If either (x) the Company grants “piggyback” registration rights to one or more third parties to include their securities in an underwritten offering under the Shelf Registration Statement pursuant to Section 1.2(b) of this Annex E or (y) a Piggyback Registration under Section 1.2(d) of this Annex E relates to an underwritten offering on behalf of the Company, and in either case the managing underwriters advise the Company that in their reasonable opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the marketability of such offering (including an adverse effect on the per share offering price), the Company will include in such offering only such number of securities that in the reasonable opinion of such managing underwriters can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority: (A) first, in the case of a Piggyback Registration under Section 1.2(d) of this Annex E, the securities the Company proposes to sell, (B) then the Registrable Securities of the Investor and all other Holders who have requested inclusion of Registrable Securities pursuant to Section 1.2(b) or Section 1.2(d) of this Annex E, as applicable, pro rata on the basis of the aggregate number of such securities or shares owned by each such person and (C) lastly, any other securities of the Company that have been requested to be so included, subject to the terms of this Agreement; provided, however, that if the Company has, prior to the Signing Date, entered into an agreement with respect to its securities that is inconsistent with the order of priority contemplated hereby then it shall apply the order of priority in such conflicting agreement to the extent that it would otherwise result in a breach under such agreement.

 

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

UST Sequence No. 511

  

E-4

  

 

1.4           Obligations of the Company.  Whenever required to effect the registration of any Registrable Securities or facilitate the distribution of Registrable Securities pursuant to an effective Shelf Registration Statement, the Company shall, as expeditiously as reasonably practicable:

 

(a)           Prepare and file with the SEC a prospectus supplement or post-effective amendment with respect to a proposed offering of Registrable Securities pursuant to an effective registration statement, subject to Section 1.4 of this Annex E, keep such registration statement effective and keep such prospectus supplement current until the securities described therein are no longer Registrable Securities.

 

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

 

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

 

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

 

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

UST Sequence No. 511

  

E-5

  

 

(f)           Give written notice to the Holders:

 

(i)           when any registration statement filed pursuant to Section 4.1(j) of the Agreement or any amendment thereto has been filed with the SEC (except for any amendment effected by the filing of a document with the SEC pursuant to the Exchange Act) and when such registration statement or any post-effective amendment thereto has become effective;

 

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

 

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

 

(iv)           of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the applicable Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

 

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

 

(vi)           if at any time the representations and warranties of the Company contained in any underwriting agreement contemplated by Section 1.4(j) of this Annex E cease to be true and correct.

 

(g)           Use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any registration statement referred to in Section 1.4(f)(iii) of this Annex E at the earliest practicable time.

 

(h)           Upon the occurrence of any event contemplated by Section 1.4(e) or 1.4(f)(v) of this Annex E, promptly prepare a post-effective amendment to such registration statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to the Holders and any underwriters, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.  If the Company notifies the Holders in accordance with Section 1.4(f)(v) to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Holders and any underwriters shall suspend use of such prospectus and use their reasonable best efforts to return to the Company all copies of such prospectus (at the Company’s expense) other than permanent file copies then in such Holders’ or underwriters’ possession.  The total number of days that any such suspension may be in effect in any 12-month period shall not exceed 90 days.

UST Sequence No. 511

  

E-6

  

 

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

 

(j)           If an underwritten offering is requested pursuant to Section 1.2(b) of this Annex E, enter into an underwriting agreement in customary form, scope and substance and take all such other actions reasonably requested by the Holders of a majority of the Registrable Securities being sold in connection therewith or by the managing underwriter(s), if any, to expedite or facilitate the underwritten disposition of such Registrable Securities, and in connection therewith in any underwritten offering (including making members of management and executives of the Company available to participate in “road shows”, similar sales events and other marketing activities), (A) make such representations and warranties to the Holders that are selling stockholders and the managing underwriter(s), if any, with respect to the business of the Company and its subsidiaries, and the Shelf Registration Statement, prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in customary form, substance and scope, and, if true, confirm the same if and when requested, (B) use its reasonable best efforts to furnish the underwriters with opinions of counsel to the Company, addressed to the managing underwriter(s), if any, covering the matters customarily covered in such opinions requested in underwritten offerings, (C) use its reasonable best efforts to obtain “cold comfort” letters from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any business acquired by the Company for which financial statements and financial data are included in the Shelf Registration Statement) who have certified the financial statements included in such Shelf Registration Statement, addressed to each of the managing underwriter(s), if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters, (D) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures customary in underwritten offerings (provided that the Investor shall not be obligated to provide any indemnity), and (E) deliver such documents and certificates as may be reasonably requested by the Holders of a majority of the Registrable Securities being sold in connection therewith, their counsel and the managing underwriter(s), if any, to evidence the continued validity of the representations and warranties made pursuant to clause (A) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company.

 

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

UST Sequence No. 511

  

E-7

  

 

(l)           Use reasonable best efforts to cause all such Registrable Securities to be listed on each national securities exchange on which similar securities issued by the Company are then listed or, if no similar securities issued by the Company are then listed on any national securities exchange, use its reasonable best efforts to cause all such Registrable Securities to be listed on such securities exchange as the Investor may designate.

 

(m)           If requested by Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith, or the managing underwriter(s), if any, promptly include in a prospectus supplement or amendment such information as the Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith or managing underwriter(s), if any, may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such prospectus supplement or such amendment as soon as practicable after the Company has received such request.

 

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

 

1.5           Suspension of Sales.  Upon receipt of written notice from the Company that a registration statement, prospectus or prospectus supplement contains or may contain an untrue statement of a material fact or omits or may omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that circumstances exist that make inadvisable use of such registration statement, prospectus or prospectus supplement, the Investor and each Holder of Registrable Securities shall forthwith discontinue disposition of Registrable Securities until the Investor and/or Holder has received copies of a supplemented or amended prospectus or prospectus supplement, or until the Investor and/or such Holder is advised in writing by the Company that the use of the prospectus and, if applicable, prospectus supplement may be resumed, and, if so directed by the Company, the Investor and/or such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in the Investor and/or such Holder’s possession, of the prospectus and, if applicable, prospectus supplement covering such Registrable Securities current at the time of receipt of such notice.  The total number of days that any such suspension may be in effect in any 12-month period shall not exceed 90 days.

 

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

 

1.7           Furnishing Information.

 

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

UST Sequence No. 511

  

E-8

  

 

(b)           It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 1.4 of this Annex E that Investor and/or the selling Holders and the underwriters, if any, shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registered offering of their Registrable Securities.

 

1.8           Indemnification.

 

(a)           The Company agrees to indemnify each Holder and, if a Holder is a person other than an individual, such Holder’s officers, directors, employees, agents, representatives and Affiliates, and each person, if any, that controls a Holder within the meaning of the Securities Act (each, an “Indemnitee”), against any and all losses, claims, damages, actions, liabilities, costs and expenses (including reasonable fees, expenses and disbursements of attorneys and other professionals incurred in connection with investigating, defending, settling, compromising or paying any such losses, claims, damages, actions, liabilities, costs and expenses), joint or several, arising out of or based upon any untrue statement or alleged untrue statement of material fact contained in any registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto or any documents incorporated therein by reference or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto); or any omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, that the Company shall not be liable to such Indemnitee in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon (A) an untrue statement or omission made in such registration statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto), in reliance upon and in conformity with information regarding such Indemnitee or its plan of distribution or ownership interests which was furnished in writing to the Company by such Indemnitee for use in connection with such registration statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto, or (B)  offers or sales effected by or on behalf of such Indemnitee “by means of” (as defined in Rule 159A) a “free writing prospectus” (as defined in Rule 405) that was not authorized in writing by the Company.

 

(b)           If the indemnification provided for in Section 1.8(a) of this Annex E is unavailable to an Indemnitee with respect to any losses, claims, damages, actions, liabilities, costs or expenses referred to therein or is insufficient to hold the Indemnitee harmless as contemplated therein, then the Company, in lieu of indemnifying such Indemnitee, shall contribute to the amount paid or payable by such Indemnitee as a result of such losses, claims, damages, actions, liabilities, costs or expenses in such proportion as is appropriate to reflect the relative fault of the Indemnitee, on the one hand, and the Company, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, actions, liabilities, costs or expenses as well as any other relevant equitable considerations.  The relative fault of the Company, on the one hand, and of the Indemnitee, on the other hand, shall be determined by reference to, among other factors, whether the untrue statement of a material fact or omission to state a material fact relates to information supplied by the Company or by the Indemnitee and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission;  the Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 1.8(b) of this Annex E were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 1.8(a) of this Annex E.  No Indemnitee guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from the Company if the Company was not guilty of such fraudulent misrepresentation.

UST Sequence No. 511

  

E-9

  

 

1.9           Assignment of Registration Rights.  The rights of the Investor to registration of Registrable Securities pursuant to Section 1.2 of this Annex E may be assigned by the Investor to a transferee or assignee of Registrable Securities; provided, however, the transferor shall, within ten days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the number and type of Registrable Securities that are being assigned.

 

1.10           Clear Market.  With respect to any underwritten offering of Registrable Securities by the Investor or other Holders pursuant to this Annex E, the Company agrees not to effect (other than pursuant to such registration or pursuant to a Special Registration) any public sale or distribution, or to file any Shelf Registration Statement (other than such registration or a Special Registration) covering any preferred stock of the Company or any securities convertible into or exchangeable or exercisable for preferred stock of the Company, during the period not to exceed ten days prior and 60 days following the effective date of such offering or such longer period up to 90 days as may be requested by the managing underwriter for such underwritten offering.  The Company also agrees to cause such of its directors and senior executive officers to execute and deliver customary lock-up agreements in such form and for such time period up to 90 days as may be requested by the managing underwriter.

 

1.11           Forfeiture of Rights.  At any time, any holder of Registrable Securities (including any Holder) may elect to forfeit its rights set forth in this Annex E from that date forward; provided, that a Holder forfeiting such rights shall nonetheless be entitled to participate under Section 1.2(d) – (f) of this Annex E in any Pending Underwritten Offering to the same extent that such Holder would have been entitled to if the holder had not withdrawn; and provided, further, that no such forfeiture shall terminate a Holder’s rights or obligations under Section 1.7 of this Annex E with respect to any prior registration or Pending Underwritten Offering.

 

1.12           Specific Performance.  The parties hereto acknowledge that there would be no adequate remedy at law if the Company fails to perform any of its obligations under this Annex E and that the Investor and the Holders from time to time may be irreparably harmed by any such failure, and accordingly agree that the Investor and such Holders, in addition to any other remedy to which they may be entitled at law or in equity, to the fullest extent permitted and enforceable under applicable law shall be entitled to compel specific performance of the obligations of the Company under this Annex E in accordance with the terms and conditions of this Annex E.

UST Sequence No. 511

  

E-10

  

 

1.13           No Inconsistent Agreements.  The Company shall not, on or after the Signing Date, enter into any agreement with respect to its securities that may impair the rights granted to the Investor and the Holders under this Annex E or that otherwise conflicts with the provisions hereof in any manner that may impair the rights granted to the Investor and the Holders under this Annex E.  In the event the Company has, prior to the Signing Date, entered into any agreement with respect to its securities that is inconsistent with the rights granted to the Investor and the Holders under this Annex E (including agreements that are inconsistent with the order of priority contemplated by Section 1.2(f) of Annex E) or that may otherwise conflict with the provisions hereof, the Company shall use its reasonable best efforts to amend such agreements to ensure they are consistent with the provisions of this Annex E.

 

1.14           Certain Offerings by the Investor.  An “underwritten” offering or other disposition shall include any distribution of such securities on behalf of the Investor by one or more broker-dealers, an “underwriting agreement” shall include any purchase agreement entered into by such broker-dealers, and any “registration statement” or “prospectus” shall include any offering document approved by the Company and used in connection with such distribution.

UST Sequence No. 511

  

E-11

  

 

 

ANNEX F

 

OFFICER’S CERTIFICATE

 

OF

 

[COMPANY]

 

 In connection with that certain letter agreement, dated  [____________], 2010 (the “Agreement”) by and between [COMPANY] (the “Company”) and the United States Department of the Treasury (“Investor”) which incorporates that certain Securities Purchase Agreement –Standard Terms referred to therein (the “Standard Terms”), the undersigned does hereby certify as follows:

 

1. I am a duly elected/appointed [____________] of the Company.

 

2. Each Certified Entity (as defined in the Standard Terms) (A) is certified by the Community Development Financial Institution Fund (the “Fund”) of the United States Department of the Treasury as a regulated community development financial institution (a “CDFI”); (B) together with its Affiliates collectively meets the eligibility requirements of 12 C.F.R. 1805.200(b); (C) has a primary mission of promoting community development, as may be determined by Investor from time to time, based on criteria set forth in 12 C.F.R. 1805.201(b)(1); (D) provides Financial Products, Development Services, and/or other similar financing as a predominant business activity in arm’s-length transactions; (E) serves a Target Market by serving one or more Investment Areas and/or Targeted Populations in the manner set forth in 12 C.F.R. 1805.201(b)(3); (F) provides Development Services in conjunction with its Financial Products, directly, through an Affiliate or through a contract with a third-party provider; (G) maintains accountability to residents of the applicable Investment Area(s) or Targeted Population(s) through representation on its governing Board of Directors or otherwise; and (H) remains a non-governmental entity which is not an agency or instrumentality of the United States of America, or any State or political subdivision thereof, as described in 12 C.F.R. 1805.201(b)(6) and within the meaning of any supplemental regulations or interpretations of 12 C.F.R. 1805.201(b)(6) or such supplemental regulations published by the Fund.  As used herein, the terms “Affiliates”; “Financial Products”; “Development Services”; “Target Market”; “Investment Areas”; and “Targeted Populations” have the meanings ascribed to such terms in 12 C.F.R. 1805.104.

 

3. The information set forth in the CDFI Certification Application delivered to the Investor pursuant to Section 2.3(m) of the Standard Terms (the “CDFI Application”), as modified by any updates to the CDFI Application provided on [Insert Date(s)] by the Company to the Investor on or prior to the date hereof, with respect to the covenants set forth in Section 4.1(d)(i)(B) and Section 4.1(d)(i)(D) of the Standard Terms remains true, correct and complete as of the date hereof.

UST Sequence No. 511

  

F-1

  

 

4. The contracts and material agreements entered into by each Certified Entity with respect to Development Services previously disclosed to the Investor remain in effect   and copies of any new contracts and material agreements entered into by the Certified Entity with respect to Development Services are attached hereto as Exhibit A.

 

5. Attached hereto as Exhibit B is (A) a list of the names and addresses of the individuals which comprise the board of directors of each Certified Entity as of the date hereof, (B) to the extent any member of the board of directors listed on Exhibit B was not a member of the board of directors as of the last certification provided to the Investor pursuant to Section 4.1(d)(ii) of the Standard Terms, a narrative describing such individual’s relationship to the applicable Investment Area(s) and Targeted Population(s) and (C) to the extent any Certified Entity maintains accountability to residents of the applicable Investment Area(s) or Target Population(s) through means other than representation on its governing board of directors and such means have changed since the date of the last certification provided to the Investor pursuant to Section 4.1(d)(ii) of the Standard Terms on [Insert Date], a narrative describing such change.

 

6. Each Certified Entity is not an agency of the United States of America, or any State or political subdivision thereof, as described in 12 C.F.R. 1805.201(b)(6) and within the meaning of any supplemental regulations or interpretations of 12 C.F.R. 1805.201(b)(6) or such supplemental regulations published by the Fund.

 

7. [Insert if the Company was a Bank Holding Company or a Savings and Loan Holding Company on the Signing Date:  The Company is and has been at all times since the date of the last certification provided to the Investor pursuant to Section 4.1(d)(ii) of the Standard Terms, a [Insert if the Company is a Bank Holding Company: Bank Holding Company] [Insert if the Company is a Savings and Loan Holding Company: Savings and Loan Holding Company].]  The Company is not, and has not been at any time since the date of the last certification provided to the Investor pursuant to Section 4.1(d)(ii) of the Standard Terms on [Insert Date], controlled (within the meaning of [Insert for banks and Bank Holding Companies: the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)(2)) and 12 C.F.R. 225(a)(i)][Insert for savings associations and Savings and Loan Holding Companies: the Home Owners’ Loan Act of 1933 (12 U.S.C. 1467a (a)(2)) and 12 C.F.R. 583.7]) by a foreign bank or company.

 

The foregoing certifications are made and delivered as of [_________] pursuant to Section 4.1(d)(ii) of the Standard Terms.

 

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Standard Terms.

 

[SIGNATURE PAGE FOLLOWS]

UST Sequence No. 511

  

F-2

  

 

IN WITNESS WHEREOF, this Officer’s Certificate has been duly executed and delivered as of the [__] day of [__________], 20[__].

 

	
  

	
[COMPANY]

 

 

	
  

	
 

	 By:___________________________________

	
  

	
       Name:

	
  

	
       Title:

UST Sequence No. 511

  

F-3

  

 

 

EXHIBIT A

 

NEW CONTRACTS AND MATERIAL AGREEMENTS

UST Sequence No. 511

Exh. A-1  

  

  

 

 

EXHIBIT B

 

BOARD OF DIRECTORS

 

CERTIFIED ENTITY: [CERTIFIED ENTITY]2

	
NAME

	
ADDRESS

	
NARRATIVE3

	  	  	  
	  	  	  
	  	  	  
	  	  	  
	  	  	  

 

 

  

 

 

2 Include chart for each Certified Entity.

  

3 To the extent (x) any of the individuals was not a member of the board of directors of such Certified Entity as of the last certification to the Investor, include a narrative describing such individual’s relationship to the applicable Investment Area(s) and Targeted Population(s) or, (y) if such Certified Entity maintains accountability to residents of the applicable Investment Area(s) or Target Population(s) through means other than representation on its governing board of directors and such means have changed since the date of the last certification to the Investor, a narrative describing such change.

UST Sequence No. 511

Exh. B-1  

  

  

 

 

SCHEDULE A

 

ADDITIONAL TERMS AND CONDITIONS

 

Company Information:

 

Name of the Company:                                                                                     The First Bancshares, Inc.

 

Corporate or other organizational form of Company:                                   Corporation

 

Jurisdiction of Organization of Company:                                                      State of Mississippi

 

Appropriate Federal Banking Agency of Company:                                    Board of Governors of the Federal Reserve System

 

Name of Certified Entities:                                                                                 N/A

 

Corporate or other organizational form of each Certified Entity:

 

Jurisdiction of Organization of each Certified Entity:

 

Appropriate Federal Banking Agency of each Certified Entity:

 

	
  

	
Notice Information:

	
Dee Dee Lowery

	
  

	
The First Bancshares, Inc.

	
  

	
P. O. Box 15549

	
  

	
Hattiesburg, MS  39404

 

	
  

	
With a copy to:

	
Craig N. Landrum, Esq.

	
  

	
Watkins Ludlam Winter & Stennis, P.A.

	
  

	
Post Office Box 427

	
  

	
Jackson, MS  39205-0427

 

Terms of the Purchase:

 

	
  

	
Series of Preferred Stock Purchased:

	
Fixed Rate Cumulative Perpetual Preferred Stock, Series CD

 

	
  

	
Per Share Liquidation Preference of

 

	
                Preferred Stock:

	
$1,000 per share

 

Number of Shares of Preferred Stock Purchased:                           12,123 shares

 

Dividend Payment Dates on the Preferred Stock: Payable quarterly in arrears on February 15, May 15, August 15 and  November 15 of each year.

UST Sequence No. 511

  

  

  

 

Purchase Price:                                                                                     $12,123,000

 

Closing:

 

	
  

	
Location of Closing:

	
Cadwalader, Wickersham & Taft LLP

	
  

	
One World Financial Center

	
  

	
New York, NY 10281

 

	
  

	
Time of Closing:

	
9:00 a.m. Eastern Daylight Time

 

	
  

	
Date of Closing:

	
September 29, 2010

UST Sequence No. 511

  

  

  

 

	
Wire Information for Closing:

	
ABA Number:             065306192

	  	
Bank:                            Mississippi National Bankers Bank

	  	
Account Name:            The First, A National Banking 

                                        Association

	  	
Account Number:        065303360

	  	
Beneficiary:                  The First Bancshares, Inc.

                                        (Acct. No. 2500262)

	  	  
	
Contact for Confirmation of Wire Information:

	  

 

Primary Contact:                 Alicia Foster

Title:                                      Wire Clerk

office phone:                          601.450.9829

cell phone:                              601.297.7295

email address:                        afoster@thefirstbank.com

 

Secondary Contact:               Valerie Rayborn

Title:                                        Assistant Vice President, Operations

office phone:                           601.450.9826

cell phone:                               601.794.7209

email address:                         vrayborn@thefirstbank.com

 

UST Sequence No. 511

  

  

  

 

 

SCHEDULE B

 

CAPITALIZATION

 

Capitalization Date:                                                                                                                           August 31, 2010

 

Common Stock

 

Par value:                                                                                                                                               $1.00

 

Total Authorized:                                                                                                            10,000,000 shares

 

Outstanding:                                                                                                                      3,019,869 shares

 

	
  

	
Subject to warrants, options, convertible

	
  

	
securities, etc.:                                                                                                                         54,705 shares

 

Reserved for benefit plans and other issuances:                                                              12,353 shares

 

Remaining authorized but unissued:                                                                              6,913,073 shares

 

	
  

	
Shares issued after Capitalization Date (other

	
  

	
than pursuant to warrants, options,

	
  

	
convertible securities, etc. as set forth

	
  

	
above):                                                                                                                                           None

 

Preferred Stock

 

Par value:                                                                                                                                  No par value

 

Total Authorized:                                                                                                            10,000,000 shares

 

Outstanding (by series):                                                                                                         5,000 shares

 

Reserved for issuance:                                                                                                                       None

 

Remaining authorized but unissued:                                                                             9,995,000 shares

 

Holders of 5% or more of any class of capital stock                                       Primary Address

 

	
United States Department of the Treasury

	
Attention:  Chief Counsel, Office of Financial Stability

	
(100% of Preferred Stock)

	

1500 Pennsylvania Avenue, NW

	
 

	
Washington, D.C.  20220

 

 

 

UST Sequence No. 511

  

  

  

 

 

SCHEDULE C

 

MATERIAL ADVERSE EFFECT

 

List any exceptions to the representation and warranty in Section 3.1(g) of the Securities Purchase Agreement – Standard Terms.

 

 

 

If none, please so indicate by checking the box:  x

UST Sequence No. 511

  

  

  

 

 

SCHEDULE D

 

LITIGATION

 

List any exceptions to the representation and warranty in Section 3.1(l) of the Securities Purchase Agreement – Standard Terms.

 

 

 

If none, please so indicate by checking the box:  o

 

 

 

Welch Litigation

 

The litigation described below has been disclosed previously in the Company’s filings with the Securities and Exchange Commission, including the Company’s September 30, 2008, Form 10-Q filing, which was filed on November 14, 2008.  However, the Company has not yet filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2008.  Because the definition of “Previously Disclosed” in Section 2.1(b) of the Securities Purchase Agreement encompasses only disclosures made in the Annual Report on Form 10-K for the Company’s most recently completed fiscal year (or subsequent filings), the Company makes the following disclosure pursuant to Section 2.2(l):

 

On October 8, 2007, The First Bancshares, Inc. (the “Company”) and its subsidiary, The First, A National Banking Association (the “Bank”) were formally named as defendants and served with a First Amended Complaint in litigation styled Nick D. Welch v. Oak Grove Land Company, Inc., Fred McMurry, David E. Johnson, J. Douglas Seidenburg, The First, a National Banking Association, The First Bancshares, Inc., and John Does 1 through 10, Civil Action No. 2006-236-CV4, pending in the Circuit Court of Jones County, Mississippi, Second Judicial District (the “First Amended Complaint”).  The First Amended Complaint was filed against the named defendants by Nick D. Welch (“Welch”), a former member of the Bank’s Advisory Board, and a shareholder of the Company who was until February 2, 2006, the largest individual holder of Company stock.

 

The First Amended Complaint served upon the Company and Bank is similar to a complaint filed by Welch against the other named defendants on April 11, 2006.  The other named defendants, each of whom deny any liability to Welch, include Oak Grove Land Company, Inc., a shareholder of the Company; Fred McMurry, Director of the Company and the Bank, and an affiliate of Oak Grove Land Company, Inc.; David E. Johnson, Director and Chairman of the Company and the Bank; and J. Douglas Seidenburg, Director of the Company and the Bank. The First Amended Complaint contains allegations of fraud in connection with Welch’s private sale of approximately

UST Sequence No. 511

  

  

  

69,000 shares (representing approximately 5%) of the Company’s common stock to the named defendants (other than the Company or the Bank) in a privately negotiated transaction.  In summary the First Amended Complaint alleges that one or more of the named defendants withheld information concerning the Company’s potential NASDAQ listing and its 2-for-1 stock split, both of which were publicly announced by the Company on February 22, 2006.  The First Amended Complaint further alleges that Welch would not have sold his stock, or at least would not have sold his stock at the $2,005,785.00 ($29.00 per share) price negotiated by Welch, had he been informed of these potential events.

 

Welch filed his Second Amended Complaint on January 29, 2010, adding as defendant Kansas Bankers Surety Company, the insurance carrier providing Directors, Officers, and Employees Indemnity coverage for Messrs. McMurry, Johnson, and Seidenburg.  This Complaint requests a declaratory ruling that the subject policy provided by the Bank to its Board Members provides coverage for the claims made by Welch in the First and Second Amended Complaints.  The Second Amended Complaint does not allege any additional allegations against the Company or the Bank.

 

The allegations by Welch against the Company and the Bank include counts of 1) Intentional Misrepresentation and Omission; 2) Negligent Misrepresentation and/or Omission; 3) Breach of Fiduciary Duty; 4) Breach of Duty of Good Faith and Fair Dealing; and 5) Civil Conspiracy.  The First Amended Complaint served by Welch on October 8, 2007, added the Company and the Bank as defendants in this ongoing litigation.  The First Amended Complaint seeks damages from all the defendants, including $2,420,775.00 (representing the alleged difference between the price at which Welch sold his stock and the “high price” of the Company’s stock following the Company’s 2-for-1 stock split on March 15, 2006), annual dividends for the year 2006 in the amount of $.30 per share, punitive damages, and attorneys’ fees and costs.  Each of the Company and the Bank deny any liability to Welch, and they intend to defend vigorously against this lawsuit.

UST Sequence No. 511

  

  

  

 

 

SCHEDULE E

 

COMPLIANCE WITH LAWS

 

List any exceptions to the representation and warranty in the second sentence of Section 3.1(m) of the Securities Purchase Agreement – Standard Terms.

 

 

 

If none, please so indicate by checking the box:  x

 

 

 

List any exceptions to the representation and warranty in the last sentence of Section 3.1(m) of the Securities Purchase Agreement – Standard Terms.

 

 

 

If none, please so indicate by checking the box:  x

UST Sequence No. 511

  

  

  

 

 

SCHEDULE F

 

REGULATORY AGREEMENTS

 

List any exceptions to the representation and warranty in Section 3.1(s) of the Securities Purchase Agreement – Standard Terms.

 

 

 

If none, please so indicate by checking the box:  x

 

 

 

Safety and Soundness Plan

 

The Company is a party to a commitment letter in the form of a Safety and Soundness Plan, the terms of which are confidential.

 

 

UST Sequence No. 511Exhibit
10.41

 

TORNIER N.V.

2010 INCENTIVE PLAN

 

1.             BACKGROUND
AND PURPOSE

 

The
purpose of this Plan is to promote the interests of the Company and its
Affiliates by authorizing the Committee to grant Awards to Eligible Recipients
in order to (i) attract and retain such individuals, (ii) provide an
additional incentive to such individuals to work to increase the value of
Stock, and (iii) provide such individuals with a stake in the future of
the Company which corresponds to the stake of each of the Company’s
shareholders.  The Plan shall become
effective as of the Effective Date, provided, however,
that no grants of Awards shall be made under this Plan until the IPO Effective
Date.  As of the IPO Effective Date, no
further grants shall be made under the Prior Plan.

 

2.             DEFINITIONS

 

2.1.          Adverse Action.  Adverse Action means any action or conduct by
a Participant that the Committee, in its sole discretion, determines to be
injurious, detrimental, prejudicial, or adverse to the interests of the Company
or any Affiliate, including: (i) disclosing confidential information of
the Company or any Affiliate to any person not authorized by the Company or
Affiliate to receive it, (ii) engaging, directly or indirectly, in any
commercial activity that in the judgment of the Committee competes with the
business of the Company or any Affiliate, or (iii) interfering with the
relationships of the Company or any Affiliate and their respective employees,
independent contractors, customers, prospective customers, and vendors.

 

2.2.          Affiliate.  Affiliate means any other entity that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company and any other
entity determined by the Committee to be an “Affiliate” for purposes of this
Plan.

 

2.3.          Award.  Award means, individually or collectively, an
Option, Stock Appreciation Right, Stock Grant, Stock Unit Grant, Cash-Based
Award, or Other Stock-Based Award, in each case granted to an Eligible
Recipient pursuant to this Plan.

 

2.4.          Award Agreement.  Award Agreement means either: (i) a
written or electronic agreement entered into by the Company and a Participant
setting forth the terms and provisions applicable to an Award granted under
this Plan, including any amendment or modification thereof, or (ii) a
written or electronic certificate or statement issued by the Company to a
Participant describing the terms and provisions of such an Award, including any
amendment or modification thereof.  The
Committee may provide for the use of electronic, Internet, or other
non-paper Award Agreements, and the use of electronic, Internet, or other
non-paper means for the acceptance thereof and actions thereunder by a
Participant.

 

2.5.          Board.  Board means the Management Board of the
Company or any successor thereto, provided, that
if the Management Board does not exist, “Board” means the Board of Directors of
the Company.

 

 

2.6.          Cash-Based Award.  Cash-Based Award means an Award, denominated
and paid in cash, not otherwise described by the terms of this Plan, granted
pursuant to Section 9.1 of this Plan.

 

2.7.          Cause.  Cause means with respect to any Participant: (i) the
Participant has engaged in conduct that in the judgment of the Committee
constitutes gross negligence, misconduct, or gross neglect in the performance
of the Participant’s duties and responsibilities, including any breach of the
policies of the Company, including but not limited to the Company’s Code of
Conduct on Insider Trading and Confidentiality and the Company’s Code of
Conduct on Interactions with Health Care Professionals, and conduct resulting
or intending to result directly or indirectly in gain or personal enrichment
for the Participant at the Company’s expense, (ii) the Participant has
been convicted of or has pled guilty to a felony for fraud, embezzlement, or
theft, (iii) the Participant has engaged in a breach of any policy of the
Company for which termination of employment or service is a permissible
consequence, or (iv) the Participant has engaged in any conduct that would
constitute “cause” under the terms of his or her employment or consulting
agreement, if any; provided, however, that if, subsequent to the
Participant’s voluntary termination for any reason or involuntary termination
by the Employer without Cause, it is discovered that the Participant’s
employment could have been terminated for Cause, such Participant’s employment
shall be deemed to have been terminated for Cause for all purposes under this
Plan.

 

2.8.          Change in Control.  Change in Control means (i) the
acquisition (other than from the Company) after the date hereof by any person,
entity, or “group” within the meaning of Section 13(d)(3) or 14(d)(2) of
the 1934 Act (excluding, for this purpose, the Company or its subsidiaries, any
employee benefit plan of the Company or its Affiliates) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifty
percent (50%) or more of either the then-outstanding ordinary shares or the
combined voting power of the Company’s then-outstanding capital stock entitled
to vote generally in the election of directors, (ii) individuals who, as
of the date hereof, constitute the Board (the “Incumbent Board”) ceasing
for any reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of the Company) shall be, for purposes of this
Plan, considered as though such person were a member of the Incumbent Board, (iii) consummation
of a reorganization, merger, or consolidation, in each case, with respect to
which persons who were the shareholders of the Company immediately prior to
such reorganization, merger, or consolidation do not, immediately thereafter,
own more than fifty percent (50%) of the combined voting power entitled to vote
generally in the election of directors of the then-outstanding voting
securities of the reorganized, merged, consolidated, or other surviving
corporation (or its direct or indirect parent corporation), (iv) approval
by the shareholders of the Company of a liquidation or dissolution of the
Company, or (v) the consummation of the sale of all or substantially all
of the assets of the Company with respect to which persons who were the
shareholders of the Company immediately prior to such sale do not, immediately
thereafter, own more than fifty percent (50%) of the combined voting power
entitled to vote generally in the election of directors

 

2

 

of
the then-outstanding voting securities of the acquiring corporation (or its
direct or indirect parent corporation).

 

2.9.          Code.  Code means the Internal Revenue Code of 1986,
as amended.  Any reference to a section
of the Code herein shall be deemed to include a reference to any applicable
regulations thereunder and any successor or amended section of the Code.

 

2.10.        Committee.  Committee means the Compensation Committee of
the Board or a subcommittee thereof, or any other committee comprised solely of
directors designated by the Board to administer this Plan who are (i) “non-employee
directors” within the meaning of Rule 16b-3 under the Exchange Act and (ii) “independent
directors” as defined in the Listing Rules of the Nasdaq Global Market (or
other applicable exchange or market on which the Stock may be traded or
quoted).  The members of the Committee
shall be appointed from time to time by and shall serve at the discretion of
the Board.  If the Committee does not
exist or cannot function for any reason, the Board may take any action under
this Plan that would otherwise be the responsibility of the Committee, except
as otherwise provided in the Plan.  Any
action duly taken by the Committee shall be valid and effective, whether or not
the members of the Committee at the time of such action are later determined
not to have satisfied the requirements of membership provided herein.

 

2.11.        Company.  Company means Tornier N.V., a public limited
liability company (naamloze vennootschap)
organized under the laws of The Netherlands or any successor thereto.

 

2.12.        Consultant.  Consultant means a person engaged to provide
consulting or advisory services (other than as an Employee or a Non-Employee
Director) to the Company or any Affiliate that: (i) are not in connection
with the offer and sale of the Company’s securities in a capital raising
transaction, and (ii) do not directly or indirectly promote or maintain a
market for the Company’s securities.

 

2.13.        Director.  Director means any member of the Board.

 

2.14.        Disability.  Disability means any medically determinable
physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than twelve (12) months
and which renders a Participant unable to engage in any substantial gainful
activity.  The Committee shall determine
whether a Participant has a Disability. 
If a Participant disputes such determination, the issue shall be
submitted to a competent licensed physician appointed by the Board, and the
physician’s determination as to whether a Participant has a Disability shall be
binding on the Company and the Participant.

 

2.15.        Disqualifying Disposition.  Disqualifying Disposition means any disposition
(including any sale) of Stock acquired upon the exercise of an ISO made within
the period that ends either (i) two (2) years after the date the
Participant was granted the ISO or (ii) one (1) year after the date
the Participant acquired Stock by exercising the ISO.

 

2.16.        Effective Date.  Effective Date means the date on which the
Plan is approved by a majority of the Company’s shareholders.

 

3

 

2.17.        Eligible Recipients.  Eligible Recipients means all Employees, all
Non-Employee Directors, and all Consultants.

 

2.18.        Employee.  Employee means any individual performing
services for the Company or an Affiliate and designated as an employee of the
Company or an Affiliate on the payroll records thereof.  An Employee shall not include any individual
during any period he or she is classified or treated by the Company or an
Affiliate as an independent contractor, a consultant, or any employee of an
employment, consulting, or temporary agency or any other entity other than the
Company or an Affiliate, without regard to whether such individual is
subsequently determined to have been, or is subsequently retroactively
reclassified as a common-law employee of the Company or an Affiliate during
such period.  An individual shall not
cease to be an Employee in the case of: (i) any leave of absence approved
by the Company, or (ii) transfers between locations of the Company or
between the Company or any Affiliate. 
For purposes of ISOs, no such leave may exceed ninety (90) days, unless
reemployment upon expiration of such leave is guaranteed by statute or
contract.  If reemployment upon
expiration of a leave of absence approved by the Company or an Affiliate, as
applicable, is not so guaranteed, then three (3) months following the
ninety-first (91st) day of such leave, any ISO held by a Participant shall
cease to be treated as an ISO and shall be treated for tax purposes as a
Non-ISO.  Neither service as a
Non-Employee Director nor payment of a Non-Employee Director’s retainer or
other fee by the Company shall be sufficient to constitute “employment” by the
Company.

 

2.19.        Fair Market Value.  Fair Market Value means with respect to the
Stock, as of any date: (i) the closing sale price of the Stock as of such
date at the end of the regular trading session, as reported by the Nasdaq Stock
Market, the New York Stock Exchange, the American Stock Exchange, or any
national securities exchange on which the Stock is then listed (or, if no
shares were traded on such date, as of the next preceding date on which there
was such a trade), (ii) if the Stock is not so listed, admitted to
unlisted trading privileges, or reported on any national exchange, the closing
sale price as of such date at the end of the regular trading session, as reported
by the OTC Bulletin Board or the Pink Sheets LLC, or other comparable service
(or, if no shares were traded or quoted on such date, as of the next preceding
date on which there was such a trade or quote); or (iii) if the Stock is
not so listed or reported, such price as the Committee determines in good faith
in the exercise of its reasonable discretion, and consistent with the
definition of “fair market value” under Section 409A of the Code.  If determined by the Committee, such
determination shall be final, conclusive, and binding for all purposes and on
all persons, including the Company, the shareholders of the Company, the
Participants, and their respective successors-in-interest.  No member of the Committee shall be liable
for any determination regarding the Fair Market Value of the Stock that is made
in good faith.

 

2.20.        Full Value Award.  Full Value Award means an Award other than in
the form of an Option or Stock Appreciation Right, and which is settled by the
issuance of shares of Stock.

 

2.21.        Grant Date.  Grant Date means the date an Award is granted
to a Participant pursuant to this Plan.

 

2.22.        IPO.  IPO means an initial underwritten public
offering of the Company’s equity securities pursuant to an effective Form S-1
registration statement filed under the 1933 Act.

 

4

 

2.23.        IPO Effective Date.  IPO Effective Date means the effective date
of an IPO.

 

2.24.        ISO.  ISO means an option granted under this Plan
to purchase Stock which is intended to satisfy the requirements of Section 422
of the Code.

 

2.25.        1933 Act.  1933 Act means the Securities Act of 1933, as
amended.  Any reference to a section of
the 1933 Act herein shall be deemed to include a reference to any applicable
regulations thereunder and any successor or amended section of the 1933 Act.

 

2.26.        1934 Act.  1934 Act means the Securities Exchange Act of
1934, as amended.  Any reference to a
section of the 1934 Act herein shall be deemed to include a reference to any
applicable regulations thereunder and any successor or amended section of the
1934 Act.

 

2.27.        Non-Employee Director.  Non-Employee Director means any Director who
is not an Employee of the Company or an Affiliate of the Company.

 

2.28.        Non-ISO.  Non-ISO means an option granted under this
Plan to purchase Stock which is not intended to satisfy the requirements of Section 422
of the Code.

 

2.29.        Option.  Option means an ISO or a Non-ISO.

 

2.30.        Other Stock-Based Award.  Other Stock-Based Award means an equity-based
or equity-related Award not otherwise described by the terms of this Plan,
granted pursuant to Section 9.2 of this Plan.

 

2.31.        Participant.  Participant means an Eligible Recipient who
receives one or more Awards under this Plan.

 

2.32.        Performance Goals.  Performance Goals mean with respect to any
applicable Award, one or more targets, goals, or levels of attainment required
to be achieved in terms of the specified performance measures (as determined by
the Committee in its sole discretion) during the specified Performance Period,
as set forth in the related Award Agreement.

 

2.33.        Performance Period.  Performance Period means the period of time,
as determined by the Committee, during which the Performance Goals must be met
in order to determine the degree of payout or vesting with respect to an Award.

 

2.34.        Plan.  Plan means this Tornier N.V. 2010 Incentive
Plan, as the same may be amended from time to time.

 

2.35.        Prior Plan.  Prior Plan means the Tornier B.V. Stock
Option Plan, which was adopted effective as of July 18, 2006, as amended.

 

2.36.        Retirement.  Retirement means, unless otherwise defined in
an Award Agreement or in a written employment, services, or other agreement
between the Participant and the Company or an Affiliate, “Retirement” as
defined from time to time for purposes of this Plan by the Committee or by the
Company’s chief human resources officer or other person performing that
function.

 

5

 

2.37.        Rule 16b-3.  Rule 16b-3 means the exemption under Rule 16b-3
to Section 16(b) of the 1934 Act or any successor to such rule.

 

2.38.        Stock.  Stock means the ordinary shares of the
Company, with a par value per share as defined in the articles of association
of the Company, or the number and kind of shares or other securities into which
such Stock may be changed in accordance with Section 3.5 of this Plan.

 

2.39.        Stock Appreciation Right.  Stock Appreciation Right means a right which
is granted under Section 7 of this Plan to receive the appreciation in a
share of Stock.

 

2.40.        Stock-Based Award.  Stock-Based Award means any equity-based or
equity-related Award made pursuant to this Plan, including Options, Stock
Appreciation Rights, Stock Grants, Stock Unit Grants, and Other Stock-Based
Awards.

 

2.41.        Stock Grant.  Stock Grant means a grant under Section 8
of this Plan which is designed to result in the issuance of the number of
shares of Stock described in such grant rather than a payment in cash based on
the Fair Market Value of such shares of Stock.

 

2.42.        Stock Unit Grant.  Stock Unit Grant means a grant under Section 8
of this Plan which is designed to result in the payment of cash based on the
Fair Market Value of the number of shares of Stock described in such grant
rather than the issuance of the number of shares of Stock described in such
grant.

 

2.43.        Ten Percent Shareholder.  Ten Percent Shareholder means an individual
who owns (after taking into account the attribution rules of Section 424(d) of
the Code) more than ten percent (10%) of the total combined voting power of all
classes of shares of either the Company, an Affiliate or a “parent corporation”
(within the meaning of Section 424(e) of the Code).

 

3.             SHARES
AVAILABLE FOR ISSUANCE; GRANT LIMITS AND ADJUSTMENTS

 

3.1.          Stock Available for Issuance.  Subject to adjustment as provided in Section 3.5,
the maximum number of shares of Stock that shall be available for issuance
under this Plan shall be the sum of:

 

(a)           The number of shares of
Stock available for grant under the Prior Plan as of the IPO Effective Date
(not including any shares of Stock that are subject to outstanding “options”
(as defined in the Prior Plan) under the Prior Plan as of the IPO Effective
Date, or any shares of Stock that were issued pursuant to options granted under
the Prior Plan prior to the IPO Effective Date); and

 

(b)           The number of shares of
Stock underlying options which have been granted pursuant to the Prior Plan and
are outstanding as of the IPO Effective Date that remain undelivered following
any expiration, cancellation, forfeiture, cash settlement, or other termination
of such options following the IPO Effective Date; and

 

6

 

(c)           The number of shares of
Stock issued or subject to Awards granted under the Plan in connection with the
settlement, assumption, or substitution of outstanding awards or obligations to
grant future awards as a condition of the Company and/or any Affiliate(s) acquiring,
merging, or consolidating with another entity; and

 

(d)           The number of shares that
are unallocated and available for grant under a stock plan assumed by the
Company or any Affiliate(s) in connection with the merger, consolidation,
or acquisition of another entity by the Company and/or any of its Affiliates,
based on the applicable exchange ratio and other transaction terms, but only to
the extent that such shares may be utilized by the Company or its Affiliates
following the transaction pursuant to the rules and regulations of the
Nasdaq Global Market (or other applicable market or exchange on which the
Company’s Stock may be quoted or traded);

 

provided, however, that no more than the maximum number of
shares of Stock authorized for issuance under this Plan may be issued pursuant
to Full Value Awards and no more than the maximum number of shares of Stock
authorized for issuance under this Plan may be issued in connection with the
exercise of ISOs.

 

3.2.          Source of Stock.  The shares of Stock described in Section 3.1
shall be reserved to the extent that the Company deems appropriate from authorized
but unissued shares of Stock and from shares of Stock which have been
reacquired by the Company.

 

3.3.          Accounting for Awards.  The Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for example,
in the case of tandem or substitute awards) and make adjustments if the number
of shares of Stock actually delivered differs from the number of shares
previously counted in connection with an Award. 
If an Award expires or is canceled, forfeited, settled in cash, or
otherwise terminated without a delivery to the Participant of the full number
of shares to which the Award related, the shares subject to such Award shall,
to the extent of such expiration, cancellation, forfeiture, cash settlement or termination,
again be available for grant.  Shares
withheld in payment of the exercise price or taxes relating to an Award and
shares equal to the number surrendered in payment of any exercise price or
taxes relating to an Award shall be deemed to constitute shares not delivered
to the Participant and shall be deemed to again be available for Awards under
the Plan; provided, however, that such shares
shall not become available for issuance hereunder if either (i) the
applicable shares are withheld or surrendered following the termination of the
Plan, or (ii) at the time the applicable shares are withheld or
surrendered, it would constitute a material revision of the Plan subject to
shareholder approval under any then-applicable rules of the national
securities exchange on which the Stock is listed.

 

3.4.          Use of Proceeds.  The proceeds which the Company receives from
the sale of any shares of Stock under this Plan shall be used for general
corporate purposes and shall be added to the general funds of the Company.

 

7

 

3.5.          Adjustments to Stock and Awards.

 

(a)           In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin off) or any
other similar change in the corporate structure or shares of the Company after
the date of grant of any Award, or in the event of any change in applicable
laws or circumstances that results in or could result in, in either case, the
substantial dilution or enlargement of the rights intended to be granted to, or
available for, Participants in the Plan, the Committee (or, if the Company is
not the surviving corporation in any such transaction, the board of directors
of the surviving corporation) shall make appropriate adjustment (which
determination shall be conclusive) as to: (i) the number and kind of
securities or other property (including cash) available for issuance or payment
under this Plan, including the sublimits set forth in Section 3.1, and (ii) in
order to prevent dilution or enlargement of the rights of Participants, the
number and kind of securities or other property (including cash) subject to
outstanding Awards and the exercise price of outstanding Awards.  The determination of the Committee as to the
foregoing adjustments, if any, shall be final, conclusive, and binding on
Participants under this Plan.

 

(b)           Notwithstanding anything
else herein to the contrary, without affecting the number of shares of Stock
reserved or available hereunder and the sublimits in Section 3.1, the
Committee may authorize the issuance or assumption of benefits under this Plan
in connection with any merger, consolidation, acquisition of property or stock,
or reorganization upon such terms and conditions as it may deem appropriate,
subject to compliance with the rules under Sections 409A, 422 and 424
of the Code, as and where applicable.

 

4.             COMMITTEE

 

4.1.          Plan Administration.  This Plan shall be administered by the
Committee; provided, however, that the Board may,
in its sole discretion, take any action delegated to the Committee under this
Plan as it may deem necessary. 
Notwithstanding anything in the Plan to the contrary, to the extent
required by the laws of The Netherlands, Awards granted pursuant to this Plan
(to the extent they constitute Options or other rights to acquire shares of
Stock or Stock Grants) shall be deemed to have been granted subject to the
approval of such Award (including its terms and conditions as established by
the Committee) by the Board (if and to the extent the Company’s general meeting
of shareholders has delegated such authority to the Board) or by the Company’s
general meeting of shareholders itself (if and to the extent the Company’s
general meeting of shareholders has not delegated such authority to the Board),
and no Awards shall be effective until such approval, as applicable, is
received.  The Committee acting in its
sole discretion shall exercise such powers and take such action as expressly
called for under this Plan and, further, the Committee shall have the power to
interpret this Plan and (subject to Section 12 and Section 17 herein
and Rule 16b-3) to take such other action in the administration and
operation of this Plan as the Committee deems equitable under the
circumstances, which action shall be binding on the Company, on each affected
Participant, and on each other person directly or indirectly affected by such
action.  The Committee shall not be
obligated to treat Participants or Eligible Recipients uniformly, and
determinations made under this Plan may be made by the 

 

8

 

Committee
selectively among Participants or Eligible Recipients, whether or not such
Participants and Eligible Recipients are similarly situated.  Furthermore, the Committee as a condition to
making any grant under this Plan to any Eligible Recipient shall have the right
to require him or her to execute an agreement which makes the Eligible
Recipient subject to non-competition provisions and other restrictive covenants
which run in favor of the Company.

 

4.2.          Participants Based Outside of the United
States.  In addition
to the authority of the Committee under Section 4.1 and notwithstanding
any other provision of the Plan, the Committee may, in its sole discretion,
amend the terms of the Plan or Awards with respect to Participants resident
outside of the United States or employed by a non-U.S. Affiliate in order to
comply with local legal requirements, to otherwise protect the Company’s or
Affiliate’s interests, or to meet objectives of the Plan, and may, where
appropriate, establish one or more subplans (including the adoption of any
required rules and regulations) for the purposes of qualifying for
preferred tax treatment under foreign tax laws. 
The Committee shall have no authority, however, to take action pursuant
to this Section 4.2: (i) to reserve shares or grant Awards in excess
of the limitations provided in this Plan, (ii) to grant an Option or Stock
Appreciation Right having an exercise price less than one hundred percent
(100%) of the Fair Market Value of one share of Stock on the Grant Date in
violation of this Plan, or (iii) for which shareholder approval would then
be required pursuant to Section 17.2.

 

5.             ELIGIBILITY

 

Only
Employees shall be eligible for the grant of ISOs under this Plan.  All Eligible Recipients shall be eligible for
the grant of Non-ISOs, Stock Appreciation Rights, Cash-Based Awards, Other
Stock-Based Awards, and for Stock Grants and Stock Unit Grants under this Plan.

 

6.             OPTIONS

 

6.1.          Grant; Award Agreement.  The Committee acting in its sole discretion
shall have the right to grant Options to Eligible Recipients under this Plan to
purchase shares of Stock subject to such terms and conditions, consistent with
the other provisions of this Plan, as may be determined by the Committee in its
sole discretion.  Each grant of an Option
to an Eligible Recipient shall be evidenced by an Award Agreement, and each
Award Agreement shall set forth whether the Option is an ISO or a Non-ISO and
shall set forth such other terms and conditions of such grant as the Committee
acting in its sole discretion deems consistent with the terms of this Plan; provided, however, that if the Committee grants an ISO and
a Non-ISO to an Employee on the same date, the right of the Employee to
exercise the ISO shall not be conditioned on his or her failure to exercise the
Non-ISO.  To the extent that any ISO (or
portion thereof) granted under this Plan ceases for any reason to qualify as an
“incentive stock option” for purposes of Section 422 of the Code, such ISO
(or portion thereof) shall continue to be outstanding for purposes of this Plan
but shall thereafter be deemed to be a Non-ISO.

 

6.2.          $100,000 Limit.  To the extent the aggregate Fair Market Value
(determined as of the date of grant) of Stock for which ISOs are exercisable
for the first time by any Participant during any calendar year (under all plans
of the Company and its Affiliates) exceeds $100,000, such excess ISOs shall be
treated as Non-ISOs.

 

9

 

6.3.          Exercise Price.  The per share price to be paid by a
Participant upon exercise of an Option granted pursuant to this Section 6
shall be determined by the Committee in its sole discretion at the time of
grant; provided, however, that other than with
respect to any substitute Award described in Section 3.1, such price shall
not be less than one hundred percent (100%) of the Fair Market Value of one
share of Stock on the Grant Date and; provided, further,
that if the Option is an ISO granted to an Employee who is a Ten Percent
Shareholder, the per share price for each share of Stock subject to such ISO
shall be no less than one hundred ten percent (110%) of the Fair Market Value
of a share of Stock on the date such ISO is granted.

 

6.4.          Payment.

 

(a)           The exercise price of an
Option shall be payable in full upon the exercise of such Option in cash
(including check, bank draft, or money order); provided,
however, that the Committee, in its sole discretion, may allow such
payments to be made, in whole or in part, by (i) by a “net exercise” of
the Option (as further described in paragraph (b), below), (ii) through
cashless exercise procedure which is effected by an unrelated broker through a
sale of Stock in the open market, (iii) by a combination of such methods;
or (iv) any other method approved or accepted by the Committee in its sole
discretion.

 

(b)           In the case of a “net
exercise” of an Option, a Participant shall receive the number of shares of
Stock underlying the Options so exercised reduced by the number of shares of
Stock equal to the aggregate exercise price of the Options divided by the Fair
Market Value on the date of exercise (the “Reduced Shares”).  In the event of a “net exercise” of an
Option, Options to purchase the Reduced Shares shall be cancelled in exchange
for the right to receive an amount (the “Redemption Amount”) equal to the Fair
Market Value of the Reduced Shares on the date of exercise.  The Redemption Amount shall automatically be
applied by the Company to satisfy the amount the Participant is required to pay
to exercise the Options.  Thereafter, the
Participant shall receive the number of shares of Stock remaining after such
Reduced Shares have been cancelled. 
Shares of Stock shall no longer be outstanding under an Option (and
shall therefore not thereafter be exercisable) following the exercise of such
Option to the extent of (i) shares cancelled to pay the exercise price of
an Option under the “net exercise,” (ii) shares actually delivered to the
Participant as a result of such exercise and (iii) any shares withheld for
purposes of tax withholding.

 

6.5.          Exercisability and Duration.  An Option shall become exercisable at such
times and in such installments and upon such terms and conditions as may be
determined by the Committee in its sole discretion at the time of grant and as
set forth in the related Award Agreement, including (i) the achievement of
one or more Performance Goals, or that (ii) the Participant remain in
continuous employment or service with the Company or an Affiliate for a certain
period; provided, however, that no Option shall
be exercisable after ten (10) years from the Grant Date (five (5) years
from the Grant Date in the case of an ISO that is granted to a Ten Percent
Shareholder on the date the Option is granted).

 

10

 

6.6.          Manner of Exercise.  An Option may be exercised by a Participant
in whole or in part from time to time, subject to the conditions contained in
this Plan and in the Award Agreement evidencing such Option, by delivery in
person, by facsimile or electronic transmission, or through the mail of written
notice of exercise to the Company at its principal executive office (or to the
Company’s designee as may be established from time to time by the Company and
communicated to Participants) and by paying in full the total exercise price
for the shares of Stock to be purchased in accordance with Section 6.4 of
this Plan.

 

6.7.          Disqualifying Disposition.  Each Participant who receives an ISO shall
notify the Company in writing immediately after the Participant makes a
Disqualifying Disposition of any Stock acquired pursuant to the exercise of an
ISO.

 

7.             STOCK
APPRECIATION RIGHTS

 

7.1.          Grant; Award Agreement.  The Committee acting in its sole discretion
shall have the right to grant Stock Appreciation Rights to Eligible Recipients
under this Plan subject to such terms and conditions, consistent with the other
provisions of this Plan, as may be determined by the Committee in its sole
discretion.  Each Stock Appreciation
Right grant shall be evidenced by an Award Agreement or, if such Stock
Appreciation Right is granted as part of an Option, shall be evidenced by an
Award Agreement for the related Option.

 

7.2.          Exercise Price.  The exercise price of a Stock Appreciation
Right shall be determined by the Committee, in its sole discretion, at the time
of grant; provided, however, that other than with
respect to any substitute Award described in Section 3.1, such price shall
not be less than one hundred percent (100%) of the Fair Market Value of one
share of Stock on the Grant Date.

 

7.3.          Exercisability and Duration.  A Stock Appreciation Right shall become
exercisable at such times and in such installments as may be determined by the
Committee in its sole discretion at the time of grant and as set forth in the
related Award Agreement, including (i) the achievement of one or more
Performance Goals, or that (ii) the Participant remain in continuous
employment or service with the Company or an Affiliate for a certain period; provided, however, that no Stock Appreciation Right shall be
exercisable after ten (10) years from its Grant Date.

 

7.4.          Manner of Exercise.  A Stock Appreciation Right shall be exercised
by giving notice in the same manner as for Options, as set forth in Section 6.6,
subject to any other terms and conditions consistent with the other provisions
of this Plan as may be determined by the Committee in its sole discretion.

 

7.5.          Settlement.  Upon the exercise of a Stock Appreciation
Right, a Participant shall be entitled to receive payment from the Company in
an amount determined by multiplying:

 

(a)           The excess of the Fair
Market Value of a share of Stock on the date of exercise over the per share
exercise price; by

 

(b)           The number of shares of
Stock with respect to which the Stock Appreciation Right is exercised.

 

11

 

7.6.          Form of Payment.  Payment, if any, with respect to a Stock
Appreciation Right settled in accordance with Section 7.5 shall be made in
accordance with the terms of the applicable Award Agreement, in cash, shares of
Stock, or a combination thereof, as the Committee determines in its sole
discretion.

 

8.             STOCK
GRANTS AND STOCK UNIT GRANTS

 

8.1.          Grant; Award Agreement.  The Committee acting in its sole discretion
shall have the right to make Stock Grants and Stock Unit Grants to Eligible
Recipients, subject to such terms and conditions, consistent with the other
provisions of this Plan, as may be determined by the Committee in its sole
discretion.  Each Stock Grant and each
Stock Unit Grant shall be evidenced by an Award Agreement, and each Award
Agreement shall set forth the conditions, if any, under which Stock shall be
issued under the Stock Grant or cash shall be paid under the Stock Unit Grant
and the conditions under which the Participant’s interest in any Stock which
has been issued shall become non-forfeitable.

 

8.2.          Conditions.

 

(a)           Conditions to Issuance of Stock.  The Committee acting in its sole discretion
may make the issuance of Stock under a Stock Grant subject to the satisfaction
of one or more conditions which the Committee deems appropriate under the
circumstances for Participants generally or for a Participant in particular,
and the related Award Agreement shall set forth each such condition and the
deadline for satisfying each such condition. 
Stock subject to a Stock Grant shall be issued in the name of a Participant
only after each such condition, if any, has been timely satisfied.  In addition to any restrictions set forth in
a Participant’s Award Agreement, until such time that the Stock underlying a
Stock Grant has vested pursuant to the terms of the Award Agreement, the
Participant shall not be permitted to sell, transfer, pledge, or otherwise
encumber such Stock.  The Committee shall
take into account compliance with local laws relating to payment for shares of
Stock in connection with any Stock Grant made under the Plan, to the extent
applicable.

 

(b)           Conditions on Forfeiture of Stock or Cash Payment.  The Committee acting in its sole discretion
may make any cash payment due under a Stock Unit Grant or Stock issued in the
name of a Participant under a Stock Grant non-forfeitable subject to the
satisfaction of one or more conditions, including the achievement of one or
more Performance Goals, that the Committee acting in its sole discretion deems
appropriate under the circumstances for Participants generally or for a
Participant in particular, and the related Award Agreement shall set forth each
such condition, if any, and the deadline, if any, for satisfying each such
condition.  A Participant’s
non-forfeitable interest in the shares of Stock underlying a Stock Grant or the
cash payable under a Stock Unit Grant shall depend on the extent to which he or
she timely satisfies each such condition.

 

8.3.          Satisfaction of Forfeiture Conditions.  A share of Stock shall cease to be subject to
a Stock Grant at such time as a Participant’s interest in such Stock becomes
non-forfeitable under this Plan, and the certificate or other evidence of
ownership representing such share shall be transferred to the Participant as
soon as practicable thereafter.

 

12

 

8.4.          Section 83(b) Election.  If a Participant makes an election pursuant
to Section 83(b) of the Code with respect to a Stock Grant, the
Participant must file, within thirty (30) days following the Grant Date of the
Stock Grant, a copy of such election with the Company and with the Internal
Revenue Service, in accordance with the regulations under Section 83 of
the Code.  The Committee may provide in
the Award Agreement that the Stock Grant is conditioned upon the Participant’s
making or refraining from making an election with respect to the Award under Section 83(b) of
the Code.

 

9.                                      CASH-BASED
AWARDS AND OTHER STOCK-BASED AWARDS

 

9.1.          Cash-Based Awards.  Subject to such terms and conditions,
consistent with the other provisions of this Plan, as may be determined by the
Committee in its sole discretion, the Committee, at any time and from time to
time, may grant Cash-Based Awards to Participants in such amounts and upon such
terms as the Committee shall determine, subject to limitations under applicable
law.  The terms and conditions applicable
to such Awards shall be determined by the Committee and evidenced by Award
Agreements.

 

9.2.          Other Stock-Based Awards.  Subject to such terms and conditions,
consistent with the other provisions of this Plan, as may be determined by the
Committee in its sole discretion, the Committee may grant Other Stock-Based
Awards not otherwise described by the terms of this Plan (including the grant
or offer for sale of unrestricted shares of Stock) in such amounts and subject
to such terms and conditions as the Committee shall determine, subject to
limitations under applicable law.  Such
Other Stock-Based Awards may involve the transfer of actual shares of Stock to
Participants or payment in cash or otherwise of amounts based on the value of
shares of Stock, and may include Stock-Based Awards designed to comply with or
take advantage of the applicable local laws of jurisdictions other than the
United States.

 

9.3.          Value of Cash-Based Awards and Other
Stock-Based Awards.  Each
Cash-Based Award shall specify a payment amount or payment range as determined
by the Committee in its sole discretion. 
Each Other Stock-Based Award shall be expressed in terms of shares of
Stock or units based on shares of Stock, as determined by the Committee in its
sole discretion.  The Committee may
establish Performance Goals in its sole discretion for any Cash-Based Award or
any Other Stock-Based Award.  If the
Committee exercises its discretion to establish Performance Goals for any such
Awards, the number or value of Cash-Based Awards or Other Stock-Based Awards
that shall be paid out to the Participant shall depend on the extent to which
the Performance Goals and any other non-performance terms have been met.

 

9.4.          Payment of Cash-Based Awards and Other
Stock-Based Awards. 
Payment, if any, with respect to an Cash-Based Award or an Other
Stock-Based Award shall be made in accordance with the terms of the Award, in
cash for any Cash-Based Award and in cash or shares of Stock for any Other
Stock-Based Award, as the Committee determines in its sole discretion, except
to the extent that a Participant has properly elected to defer payment that may
be attributable to an Cash-Based Award or Other Stock-Based Award under a
Company deferred compensation plan or arrangement.

 

13

 

10.                               DIVIDEND
EQUIVALENTS

 

Any
Participant selected by the Committee may be granted dividend equivalents based
on the dividends declared on shares of Stock that are subject to any Award, to
be credited as of dividend payment dates, during the period between the date
the Award is granted and the date the Award is exercised, vests, or expires, as
determined by the Committee.  Such
dividend equivalents shall be converted to cash or additional shares of Stock
by such formula and at such time and subject to such limitations as may be
determined by the Committee. 
Notwithstanding the foregoing or any other provision of this Plan to the
contrary, the Committee shall not grant dividend equivalents based on the
dividends declared on shares of Stock that are subject to an Option or Stock
Appreciation Right.  Dividend equivalents
shall be accrued for the account of the Participant and shall be paid to the
Participant on the date on which the corresponding Awards are exercised,
settled, paid, or become free of restrictions, as applicable.  Dividend equivalents shall be subject to
forfeiture to the same extent that the corresponding Awards are subject to
forfeiture as provided in this Plan or any Award Agreement.

 

11.                               EFFECT
OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE

 

11.1.        Termination Due to Death or Disability.  Unless otherwise expressly provided by the
Committee in its sole discretion in an Award Agreement, and subject to Sections
11.3 and 11.5, in the event a Participant’s employment or other service with
the Company and all Affiliates is terminated by reason of death or Disability:

 

(a)           All outstanding Options and
Stock Appreciation Rights held by the Participant as of the effective date of
such termination shall, to the extent exercisable as of such termination,
remain exercisable for a period of one (1) year after such termination
(but in no event after the expiration date of any such Option or Stock
Appreciation Right) and Options and Stock Appreciation Rights not exercisable
as of such termination shall be terminated and forfeited;

 

(b)           All outstanding Stock Grants
and Stock Unit Grants held by the Participant as of the effective date of such
termination that have not vested as of the date of such termination, and all
outstanding but unpaid Cash-Based Awards and Other Stock-Based Awards held by
the Participant as of the effective date of such termination, shall be
terminated and forfeited; provided, however,
that with respect to any such Awards the vesting of which is based on the
achievement of Performance Goals, if a Participant’s employment or other
service with the Company or any Affiliate, as the case may be, is terminated by
reason of death or Disability prior to the end of the Performance Period of
such Award, but after the conclusion of a portion of the Performance Period
(but in no event less than one (1) year), the Committee may, in its sole
discretion, cause shares of Stock to be delivered or payment made with respect
to the Participant’s Award, but only if otherwise earned for the entire
Performance Period and only with respect to the portion of the applicable
Performance Period completed at the date of such event, with proration based on
full fiscal years only and no shares to be delivered for partial fiscal
years.  The Committee shall consider the
provisions of Section 11.5 and shall have the discretion to consider any
other fact or circumstance in making its decision as to whether to deliver such
shares of Stock or other payment, including whether the Participant again
becomes employed.  If the effective date 

 

14

 

of such termination is on or after the end of the
Performance Period applicable to an Award which vests based on the achievement of
Performance Goals, then any such Award held by a Participant shall be paid to
the Participant in accordance with the payment terms of such Award.

 

11.2.        Termination for Reasons Other than Death,
Disability, or Actions Constituting Cause or Adverse Action.  Unless otherwise expressly provided by the
Committee in its sole discretion in an Award Agreement, and subject to Sections
11.3 and 11.5 of this Plan, in the event a Participant’s employment or other
service with the Company and all Affiliates is terminated for any reason other
than (i) death, (ii) Disability, or (iii) due to actions
constituting Cause or Adverse Action:

 

(a)           All outstanding Options and
Stock Appreciation Rights held by the Participant as of the effective date of
such termination shall, to the extent exercisable as of such termination,
remain exercisable for a period of three (3) months after such termination
(but in no event after the expiration date of any such Option or Stock
Appreciation Right) and Options and Stock Appreciation Rights not exercisable
as of such termination shall be terminated and forfeited.

 

(b)           All Stock Grants and Stock
Unit Grants held by the Participant as of the effective date of such
termination that have not vested as of such termination, and all outstanding unpaid
Cash-Based Awards and Other Stock-Based Awards held by the Participant as of
the effective date of such termination, shall be terminated and forfeited; provided, however, that with respect to any such Awards the
vesting of which is based on the achievement of Performance Goals, if the
effective date of such termination is on or after the end of the Performance
Period applicable to an Award which vests based on the achievement of
Performance Goals, then any such Award held by a Participant shall be paid to
the Participant in accordance with the payment terms of such Award.

 

11.3.        Modification of Rights upon Termination.  Notwithstanding the other provisions of this Section 11,
upon a Participant’s termination of employment or other service with the Company
or any Affiliate, as the case may be, the Committee may, in its sole discretion
(which may be exercised at any time on or after the Grant Date, including
following such termination) cause Options or Stock Appreciation Rights (or any
part thereof) held by such Participant as of the effective date of such
termination to terminate, become or continue to become exercisable or remain
exercisable following such termination of employment or service, and Stock
Grants, Stock Unit Grants, Cash-Based Awards, and Other Stock-Based Awards held
by such Participant as of the effective date of such termination to terminate,
vest, or become free of restrictions and conditions to payment, as the case may
be, following such termination of employment or service, in each case in the
manner determined by the Committee; provided, however,
that (i) no Option or Stock Appreciation Right may remain exercisable
beyond its expiration date, (ii) the Committee may not take any action not
permitted pursuant to Section 17.5 herein, and (iii) any such action
by the Committee adversely affecting any outstanding Award shall not be
effective without the consent of the affected Participant (subject to the right
of the Committee to take whatever action it deems appropriate under Section 3.5,
11.5, 12, or 17).

 

15

 

11.4.        Determination of Termination of Employment or
Other Service.  Unless the
Committee otherwise determines in its sole discretion, a Participant’s
employment or other service shall, for purposes of this Plan, be deemed to have
terminated on the date recorded on the personnel or other records of the
Company or the Affiliate for which the Participant provides employment or other
service, as determined by the Committee in its sole discretion based upon such
records.  Notwithstanding the foregoing,
if payment of an Award that is subject to Section 409A of the Code is
triggered by a termination of a Participant’s employment or other service, such
termination shall also constitute a “separation from service” within the
meaning of Section 409A of the Code, and any change in employment status
that constitutes a “separation from service” under Section 409A of the
Code shall be treated as a termination of employment or service, as the case
may be.

 

11.5.        Additional Forfeiture Events.

 

(a)           Effect of Actions Constituting Cause or Adverse
Action.  Notwithstanding anything in
this Plan to the contrary and in addition to the other rights of the Committee
under this Section 11.5, if a Participant is determined by the Committee,
acting in its sole discretion, to have taken any action that would constitute
Cause or an Adverse Action during or within one (1) year after the
termination of employment or other service with the Company or an Affiliate,
irrespective of whether such action or the Committee’s determination occurs
before or after termination of such Participant’s employment or other service
with the Company or any Affiliate and irrespective of whether or not the
Participant was terminated as a result of such Cause or Adverse Action, (i) all
rights of the Participant under this Plan and any Award Agreements evidencing
an Award then held by the Participant shall terminate and be forfeited without
notice of any kind, and (ii) the Committee in its sole discretion shall
have the authority to rescind the exercise, vesting or issuance of, or payment
in respect of, any Awards of the Participant that were exercised, vested or
issued, or as to which such payment was made, during such period and to require
the Participant to pay to the Company, within ten (10) days of receipt
from the Company of notice of such rescission, any amount received or the
amount of any gain realized as a result of such rescinded exercise, vesting,
issuance or payment (including any dividend equivalents paid or other
distributions made with respect to any shares subject to any Award).  The Company shall be entitled to withhold and
deduct from future wages of the Participant (or from other amounts that may be
due and owing to the Participant from the Company or an Affiliate) or make
other arrangements for the collection of all amounts necessary to satisfy such
payment obligations.  Unless otherwise
provided by the Committee in an applicable Award Agreement, this Section 11.5(a) shall
not apply to any Participant following a Change in Control.

 

(b)           Forfeiture of Awards under Sarbanes-Oxley Act.  If the Company is required to prepare an
accounting restatement due to the material noncompliance of the Company, as a
result of misconduct, with any financial reporting requirement under the
securities laws, then any Participant who is one of the individuals subject to
automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002
shall reimburse the Company with respect to any Award received by such
individual under this Plan during the twelve (12) month period following the
first public issuance or filing with the Securities and Exchange Commission, as
the case may be, of the financial document embodying such financial reporting
requirement.

 

16

 

12.                               CHANGE
IN CONTROL

 

12.1.        Acceleration of Vesting.  Without limiting the authority of the
Committee under Sections 3.5 and 4.1 of this Plan, if a Change in Control of
the Company occurs, then, unless otherwise provided by the Committee in its
sole discretion either in the Award Agreement evidencing an Award at the time
of grant or at any time after the grant of an Award, (i) all outstanding
Options and Stock Appreciation Rights shall become immediately exercisable in
full and shall remain exercisable for the remainder of their terms, regardless
of whether the Participant to whom such Options or Stock Appreciation Rights
have been granted remains in employment or service with the Company or any
Affiliate, (ii) all restrictions and vesting requirements applicable to
any Award based solely on the continued service of the Participant shall
terminate, and (iii) all Awards the vesting or payment of which are based
on Performance Goals shall vest as though such Performance Goals were fully
achieved at target and shall become immediately payable; provided,
however, that no Award that provides for a deferral of compensation
within the meaning of Section 409A of the Code shall be accelerated upon
the occurrence of a Change in Control unless the event or circumstances
constituting the Change in Control also constitute a “change in the ownership”
of the Company, a “change in the effective control” of the Company or a “change
in the ownership of a substantial portion of the assets” of the Company, in
each case as determined under Section 409A of the Code.  The treatment of any other Awards in the
event of a Change in Control shall be as determined by the Committee in
connection with the grant thereof, as reflected in the applicable Award
Agreement.

 

12.2.        Alternative Treatment of Stock-Based Awards.  In connection with a Change in Control, the
Committee in its sole discretion, either in an Award Agreement at the time of
grant of a Stock-Based Award or at any time after the grant of such an Award,
may determine that any or all outstanding Stock-Based Awards granted under this
Plan, whether or not exercisable or vested, as the case may be, shall be
canceled and terminated and that in connection with such cancellation and termination
the holder of such Stock-Based Award shall receive for each share of Stock
subject to such Award a cash payment (or the delivery of shares, other
securities or a combination of cash, shares and securities with a fair market
value (as determined by the Committee in good faith) equivalent to such cash
payment) equal to the difference, if any, between the consideration received by
shareholders of the Company in respect of a share of Stock in connection with
such Change in Control and the purchase price per share, if any, under the
Award, multiplied by the number of shares of Stock subject to such Award (or in
which such Award is denominated); provided, however,
that if such product is zero ($0) or less or to the extent that the Award is
not then exercisable, the Award may be canceled and terminated without payment
therefor.  If any portion of the
consideration pursuant to a Change in Control may be received by holders of
shares of Stock on a contingent or delayed basis, the Committee may, in its
sole discretion, determine the fair market value per share of such
consideration as of the time of the Change in Control on the basis of the
Committee’s good faith estimate of the present value of the probable future
payment of such consideration. 
Notwithstanding the foregoing, any shares of Stock issued pursuant to a
Stock-Based Award that immediately prior to the effectiveness of the Change in
Control are subject to no further restrictions pursuant to this Plan or an
Award Agreement (other than pursuant to the securities laws) shall be deemed to
be outstanding shares of Stock and receive the same consideration as other
outstanding shares of Stock in connection with the Change in Control.

 

12.3.        Limitation on Change in Control Payments.  Notwithstanding anything in Section 12.1
or 12.2 to the contrary, if, with respect to a Participant, the acceleration of
the 

 

17

 

vesting
of an Award as provided in Section 12.1 or the payment of cash in exchange
for all or part of a Stock-Based Award as provided in Section 12.2 (which
acceleration or payment could be deemed a “payment” within the meaning of Section 280G(b)(2) of
the Code), together with any other “payments” that such Participant has the
right to receive from the Company or any corporation that is a member of an “affiliated
group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of
the Code) of which the Company is a member, would constitute a “parachute
payment” (as defined in Section 280G(b)(2) of the Code), then the “payments”
to such Participant pursuant to Section 12.1 or 12.2 shall be reduced (or
acceleration of vesting eliminated) to the largest amount as shall result in no
portion of such “payments” being subject to the excise tax imposed by Section 4999
of the Code; provided, however, that such
reduction shall be made only if the aggregate amount of the payments after such
reduction exceeds the difference between (i) the amount of such payments
absent such reduction, minus (ii) the aggregate amount of the excise tax
imposed under Section 4999 of the Code attributable to any such excess
parachute payments, and provided further that such payments shall be reduced
(or acceleration of vesting eliminated) in the following order: (a) Options
with an exercise price above fair market value that have a positive value for
purposes of Section 280G of the Code, (b) pro rata among Awards that
constitute deferred compensation under Section 409A of the Code, and (c) finally,
among the Awards that are not subject to Section 409A of the Code.  Notwithstanding the foregoing sentence, if a
Participant is subject to a separate agreement with the Company or an Affiliate
that expressly addresses the potential application of Section 280G or 4999
of the Code, then this Section 12.3 shall not apply and any “payments” to
a Participant pursuant to Section 12.1 or 12.2 shall be treated as “payments”
arising under such separate agreement.

 

13.                               PAYMENT
OF WITHHOLDING TAXES

 

13.1.        General Rules.  The Company is entitled to (i) withhold
and deduct from future wages of the Participant (or from other amounts that may
be due and owing to the Participant from the Company or an Affiliate), or make
other arrangements for the collection of, all amounts the Company reasonably
determines are required to satisfy any and all federal, foreign, state, and
local withholding and employment related tax requirements attributable to an
Award, including the grant, exercise, vesting or settlement of, or payment of
dividend equivalents with respect to, an Award or a disqualifying disposition
of shares received upon exercise of an ISO, or (ii) require the
Participant promptly to remit the amount of such withholding to the Company
before taking any action, including issuing any shares of Stock, with respect
to an Award.  When withholding for taxes
is effected under this Plan, it shall be withheld only up to the minimum
required tax withholding rates or such other rate that will not trigger a
negative accounting impact on the Company.

 

13.2.        Special Rules.  The Committee may, in its sole discretion and
upon terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or employment
related tax obligation described in Section 13.1 by withholding shares of
Stock underlying an Award, electing to tender, or by attestation as to
ownership of, other shares of Stock held by a Participant, by delivery of a
Broker Exercise Notice, or a combination of such methods.  For purposes of satisfying a Participant’s
withholding or employment-related tax obligation, shares of Stock withheld by
the Company or tendered or covered by an attestation shall be valued at their
Fair Market Value.

 

18

 

14.                               NON-TRANSFERABILITY

 

14.1.        General Rule.  Except as provided in Section 14.2, no
Award shall be transferable by a Participant other than by will or by the laws
of descent and distribution, and any Option or Stock Appreciation Right shall
be exercisable during a Participant’s lifetime only by the Participant.  The person or persons to whom an Award is
transferred by will or by the laws of descent and distribution or pursuant to Section 14.2,
thereafter shall be treated as the Participant.

 

14.2.        Transfers to Family Members.  A Non-ISO may be transferred by a Participant
to a “family member” (as defined in Rule 701(c)(3) of the 1933 Act)
of such Participant or to a trust exclusively for the benefit of one or more of
such family members of such Participant; provided, however,
that such transfer is made as a gift without consideration, and such transfer
complies with applicable securities laws.

 

15.                               SECURITIES
REGISTRATION

 

As
a condition to the receipt of shares of Stock under this Plan, a Participant
shall, if so requested by the Company, agree to hold such shares of Stock for
investment and not with a view of resale or distribution to the public and, if
so requested by the Company, shall deliver to the Company a written statement
satisfactory to the Company to that effect. 
Furthermore, if so requested by the Company, a Participant shall make a
written representation to the Company that he or she shall not sell or offer
for sale any of such Stock unless a registration statement shall be in effect
with respect to such Stock under the 1933 Act and any applicable state
securities law or he or she shall have furnished to the Company an opinion in
form and substance satisfactory to the Company of legal counsel satisfactory to
the Company that such registration is not required.  Certificates or other evidence of ownership
representing the Stock transferred upon the exercise of an Option or Stock
Appreciation Right or upon the lapse of the forfeiture conditions, if any, on
any Stock Grant may at the discretion of the Company bear a legend to the
effect that such Stock has not been registered under the 1933 Act or any
applicable state securities law and that such Stock cannot be sold or offered
for sale in the absence of an effective registration statement as to such Stock
under the 1933 Act and any applicable state securities law or an opinion in
form and substance satisfactory to the Company of legal counsel satisfactory to
the Company that such registration is not required.

 

16.                               LIFE OF
PLAN

 

Subject
to earlier termination as provided in Section 17 below, this Plan shall
terminate at midnight on the tenth (10th) anniversary of the Effective Date.  No Award shall be granted after termination
of this Plan, but Awards outstanding upon termination of this Plan shall remain
outstanding in accordance with their applicable terms and conditions and the
terms and conditions of this Plan.

 

17.                               AMENDMENT,
MODIFICATION, OR TERMINATION

 

17.1.        Generally.  Subject to other subsections of this Section 17
and Section 17.3, the Board at any time may suspend or terminate this Plan
(or any portion thereof) or terminate any outstanding Award Agreement and the
Committee, at any time and from time to time, may amend this Plan or amend or
modify the terms of an outstanding Award. 
The Committee’s 

 

19

 

power
and authority to amend or modify the terms of an outstanding Award includes the
authority to modify the number of shares of Stock or other terms and conditions
of an Award, extend the term of an Award, accelerate the exercisability or
vesting or otherwise terminate any restrictions relating to an Award, accept
the surrender of any outstanding Award or, to the extent not previously
exercised or vested, authorize the grant of new Awards in substitution for
surrendered Awards; provided, however,
that the amended or modified terms are permitted by this Plan as then in effect
and that any Participant adversely affected by such amended or modified terms
has consented to such amendment or modification.

 

17.2.        Shareholder Approval.  No amendments to this Plan shall be effective
in respect of any jurisdiction without approval of the Company’s shareholders
if shareholder approval of the amendment is then required pursuant to Section 422
of the Code, the rules of the primary stock exchange or stock market on
which the Stock is then traded, applicable United States state corporate laws
or regulations, applicable United States federal laws or regulations, or the
applicable laws of any foreign country or jurisdiction where Awards are, or
shall be, granted under this Plan.

 

17.3.        Awards Previously Granted.  Notwithstanding any other provision of this
Plan to the contrary, no termination, suspension, or amendment of this Plan may
adversely affect any outstanding Award without the consent of the affected
Participant; provided, however, that this
sentence shall not impair the right of the Committee to take whatever action it
deems appropriate under Sections 3.5, 11.5, 12 or 17.4 of this Plan.

 

17.4.        Amendments to Conform to Law.  Notwithstanding any other provision of this
Plan to the contrary, the Committee may amend this Plan or an Award Agreement,
to take effect retroactively or otherwise, as deemed necessary or advisable for
the purpose of conforming this Plan or an Award Agreement to any present or
future law relating to plans of this or similar nature, including Section 422
and 409A of the Code and Rule 16b-3 of the Exchange Act, and to the
administrative regulations and rulings promulgated thereunder.  By accepting an Award under this Plan, a
Participant agrees to any amendment made pursuant to this Section 17.4 to
any Award granted under this Plan without further consideration or action.

 

17.5.        Waiver, Lapse or Acceleration of
Exercisability or Vesting.  Notwithstanding any other provision of this
Plan, the Committee shall not have the authority to waive, lapse, or accelerate
the exercisability or vesting of any Award held by any Participant who is an
Employee, except (i) in connection with the death, Disability, or Retirement
of the Participant or a Change in Control or (ii) to the extent that the
number of shares of Stock covered by such waived, lapsed, or accelerated Award
(together with the number of shares of Stock covered by all other Awards, the
exercisability or vesting of which previously have been waived, lapsed, or
accelerated by the Committee under this Plan) do not exceed ten percent (10%)
of the total number of shares of Stock authorized for Awards under this Plan.

 

18.                               DEFERRED
COMPENSATION

 

It
is intended that all Awards issued under this Plan be in a form and
administered in a manner that shall comply with the requirements of Section 409A
of the Code, or the requirements of an exception to Section 409A of the
Code, and the Award Agreements and this 

 

20

 

Plan
shall be construed and administered in a manner that is consistent with and
gives effect to such intent.  The
Committee is authorized to adopt rules or regulations deemed necessary or
appropriate to qualify for an exception from or to comply with the requirements
of Section 409A of the Code. 
Notwithstanding anything in this Section 18 to the contrary, with
respect to any Award subject to Section 409A of the Code, no amendment to
or payment under such Award shall be made except and only to the extent
permitted under Section 409A of the Code. 
Neither the Committee nor the Company shall be liable to anyone for any
federal, state, local, or foreign taxes, interest, or penalties incurred by
anyone in connection with the participation in or receipt of benefits under the
Plan, including, but not limited to, any taxes, interest, or penalties incurred
on account of the failure of the Plan or the operation of the Plan to comply
with, or be exempt from, Section 409A.

 

19.                               MISCELLANEOUS

 

19.1.        Shareholder Rights.  Except as otherwise specifically provided in
the Plan or in an Award Agreement, no person shall be entitled to the rights
and privileges of share ownership in respect of shares of Stock that are
subject to Awards hereunder until such shares have been issued to that
person.  Specifically, no Participant
shall have any rights as a shareholder of the Company as a result of the grant
of an Option or a Stock Appreciation Right pending the actual delivery of the
Stock subject to such Option or Stock Appreciation Right to such
Participant.  A Participant’s rights as a
shareholder in the shares of Stock that remain subject to forfeiture under Section 8.2(b) shall
be set forth in the related Award Agreement.

 

19.2.        No Contract of Employment.  No individual shall have any claim or right
to be granted an Award under the Plan or, having been selected for the grant of
an Award, to be selected for a grant of any other Award.  Neither the Plan nor any action taken
hereunder shall be construed as giving any individual any right to be retained
in the employ or service of the Company or an Affiliate of the Company.  The grant of an Award to a Participant under
this Plan shall not constitute a contract of employment or a right to continue
to serve on the Board and shall not confer on a Participant any rights upon his
or her termination of employment or service in addition to those rights, if
any, expressly set forth in this Plan or the related Award Agreement.

 

19.3.        Construction.  All references to Sections are to Sections of
this Plan unless otherwise indicated. 
Each term set forth in Section 2 shall, unless otherwise stated,
have the meaning set forth opposite such term for purposes of this Plan and,
for purposes of such definitions, the singular shall include the plural and the
plural shall include the singular.  In
this Plan, except where otherwise indicated by clear contrary intention, “including”
(and with correlative meaning “include”) means including without limiting the
generality of any description preceding such term, and “or” is used in the
inclusive sense of “and/or”.  Wherever
possible, each provision of this Plan and any Award Agreement shall be
interpreted so that it is valid under the applicable law.  If any provision of this Plan or any Award
Agreement is to any extent invalid under the applicable law that provision
shall still be effective to the extent it remains valid.  The remainder of this Plan and the Award
Agreement also shall continue to be valid, and the entire Plan and Award
Agreement shall continue to be valid in other jurisdictions.  If there is any conflict between the terms of
this Plan and the terms of any Award Agreement, the terms of this Plan shall
control.

 

21

 

19.4.        Other Conditions.  Each Award Agreement may require that a
Participant (as a condition to the exercise of an Option or a Stock
Appreciation Right or the issuance of Stock or cash subject to any other Award)
enter into any agreement or make such representations prepared by the Company,
including any agreement which restricts the transfer of Stock acquired pursuant
to the exercise of an Option or a Stock Appreciation Right or a Stock Grant or
other Award or provides for the repurchase of such Stock by the Company.

 

19.5.        Rule 16b-3.  The Committee shall have the right to amend
any Award to withhold or otherwise restrict the transfer of any Stock or cash
under this Plan to a Participant as the Committee deems appropriate in order to
satisfy any condition or requirement under Rule 16b-3 to the extent Section 16
of the 1934 Act might be applicable to such grant or transfer.

 

19.6.        Coordination with Employment Agreements and
Other Agreements.  If the
Company enters into an employment agreement or other agreement with a
Participant which expressly provides for the acceleration in vesting of an
outstanding Award or for the extension of the deadline to exercise any rights
under an outstanding Award, any such acceleration or extension shall be deemed effected
pursuant to, and in accordance with, the terms of such outstanding Award and
this Plan even if such employment agreement or other agreement is first
effective after the date the outstanding Award was granted; provided, however, no extension of the deadline to exercise
any rights under an outstanding Option or Stock Appreciation Right shall be
permitted to the extent such extension would cause the Option or Stock
Appreciation Right to become subject to the requirements of Section 409A
of the Code.

 

19.7.        Fractional Shares.  No fractional shares of Stock shall be issued
or delivered under this Plan or any Award. 
The Committee shall determine whether cash, other Awards, or other
property shall be issued or paid in lieu of fractional shares of Stock or whether
such fractional shares of Stock or any rights thereto shall be forfeited or
otherwise eliminated by rounding up or down.

 

19.8.        Unfunded Plan.  Participants shall have no right, title, or
interest whatsoever in or to any investments that the Company or its Affiliates
may make to aid it in meeting its obligations under this Plan.  Nothing contained in this Plan, and no action
taken pursuant to its provisions, shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the Company and any
Participant, beneficiary, legal representative, or any other individual.  To the extent that any individual acquires a
right to receive payments from the Company or any Affiliate under this Plan,
such right shall be no greater than the right of an unsecured general creditor
of the Company or the Affiliate, as the case may be.  All payments to be made hereunder shall be
paid from the general funds of the Company or the Affiliate, as the case may be,
and no special or separate fund shall be established and no segregation of
assets shall be made to assure payment of such amounts except as expressly set
forth in this Plan.

 

19.9.        Relationship to Other Benefits.  No payment under this Plan shall be taken
into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare, or benefit plan of the
Company or any Affiliate unless provided otherwise in such plan.

 

22

 

19.10.      Governing Law.  Except to the extent expressly provided
herein or in connection with other matters of corporate governance and
authority (all of which shall be governed by the laws of the Company’s
jurisdiction of incorporation), the validity, construction, interpretation, administration
and effect of this Plan and any rules, regulations, and actions relating to
this Plan shall be governed by and construed exclusively in accordance with the
laws of the State of Delaware, notwithstanding the conflicts of laws principles
of any jurisdictions.  Unless otherwise
provided in an Award Agreement, recipients of an Award under this Plan are
deemed to submit to the exclusive jurisdiction and venue of the federal or
state courts of the State of Delaware to resolve any and all issues that may
arise out of or relate to this Plan or any related Award Agreement.

 

19.11.      Successors.  All obligations of the Company under this
Plan with respect to Awards granted hereunder shall be binding on any successor
to the Company, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business or assets of the Company.

 

19.12.      Delivery and Execution of Electronic
Documents.  To the
extent permitted by applicable law, the Company may: (i) deliver by email
or other electronic means (including posting on a Web site maintained by the
Company or by a third party under contract with the Company) all documents
relating to this Plan or any Award hereunder (including prospectuses required
by the Securities and Exchange Commission) and all other documents that the
Company is required to deliver to its security holders (including annual
reports and proxy statements), and (ii) permit Participants to use
electronic, internet, or other non-paper means to execute applicable Plan
documents (including Award Agreements) and take other actions under this Plan
in a manner prescribed by the Committee.

 

19.13.      No Liability of Committee Members.  No member of the Committee shall be
personally liable by reason of any contract or other instrument executed by
such member or on his behalf in his capacity as a member of the Committee or
for any mistake of judgment made in good faith, and the Company shall indemnify
and hold harmless each member of the Committee and each other employee,
officer, or director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against all costs and expenses (including counsel fees) and liabilities
(including sums paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless arising out of such person’s
own fraud or willful misconduct; provided, however,
that approval of the Board shall be required for the payment of any amount in
settlement of a claim against any such person. 
The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company’s certificate or articles of incorporation or by-laws, each as may be
amended from time to time, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.

 

19.14.      Payments Following Accidents or Illness.  If the Committee shall find that any person
to whom any amount is payable under the Plan is unable to care for his affairs
because of illness or accident, or is a minor, or has died, then any payment
due to such person or his estate (unless a prior claim therefor has been made
by a duly appointed legal representative) may, if the Committee so directs the
Company, be paid to his spouse, child, relative, an institution 

 

23

 

maintaining
or having custody of such person, or any other person deemed by the Committee
to be a proper recipient on behalf of such person otherwise entitled to
payment.  Any such payment shall be a
complete discharge of the liability of the Committee and the Company therefor.

 

19.15.      Reliance on Reports.  Each member of the Committee and each member
of the Board shall be fully justified in relying, acting or failing to act, and
shall not be liable for having so relied, acted, or failed to act in good
faith, upon any report made by the independent public accountant of the Company
and its Affiliates and upon any other information furnished in connection with
the Plan by any person or persons other than such member.

 

19.16.      Titles and Headings.  The titles and headings of the sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.

 

*        *        *

 

24

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}]]