Document:

stlt_ex102.htm

EXHIBIT 10.2
 
Employment Agreement
 
This Employment Agreement (the "Agreement") is made and entered into as of December 28, 2016 (the “Effective Date”), by and between John William Pim an individual (the "Executive"), and Spotlight Innovation Inc., a Nevada corporation (the "Company").
 
WHEREAS, the Company desires to employ the Executive on the terms and conditions set forth herein; and
 
WHEREAS, the Executive desires to be employed by the Company on such terms and conditions.
 
NOW, THEREFORE, in consideration of the mutual covenants, promises, and obligations set forth herein, the parties agree as follows:
 
1. Term. The Executive's employment hereunder shall be effective as of Effective Date and shall continue until the second anniversary thereof, unless terminated earlier pursuant to Section 5 of this Agreement. The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.” This agreement shall replace and supersede any and all prior agreements between the Executive and the Company, including but not limited to the agreement between the Company and Executive dated November 6, 2015, which agreements shall be deemed terminated as of the date hereof.
 
2. Position.
 
During the Employment Term, the Executive shall serve as the Chief Financial Officer of the Company, reporting to the President of the Company (the “Board”). In such position, the Executive shall have such duties, authority, and responsibility as shall be determined from time to time by the President of the Company, which duties, authority, and responsibility are consistent with the Executive’s position. 
 
3. Place of Performance. The principal place of Executive's employment shall be the Company's principal executive office currently located in Urbandale, Iowa; provided that, the Executive may be required to travel on Company business during the Employment Term.
 
4. Compensation.
 
4.1 Base Salary. The Company shall pay the Executive an annual rate of base salary of $120,000 in periodic installments in accordance with the Company's customary payroll practices and applicable wage payment laws, but no less frequently than monthly. The Executive's base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. However, the Executive's base salary may not be decreased during the Employment Term. The Executive's annual base salary, as in effect from time to time, is hereinafter referred to as "Base Salary".
 
	 
	1

	

	 

 
4.2 Annual Bonus. For each calendar year of the Employment Term, the Executive shall be eligible to receive an annual bonus (the "Annual Bonus"). However, the decision to provide any Annual Bonus and the amount and terms of any Annual Bonus shall be in the sole and absolute discretion of the Board. 
 
4.3 Equity Awards. 
 
(a) In consideration of the Executive entering into this Agreement on the Effective Date, the Company will grant the following equity awards to the Executive pursuant to the Company’s 2016 Equity Incentive Plan provided this Agreement remains in effect: 125,000 restricted shares of Common Stock, of which 31,250 shares shall be issued on or about January 2, 2017 (but not prior to January 1, 2017), 31,250 shares will be issued on or about April 2, 2017, 31,250 shares shall be issued on or about July 2, 2017 and 31,250 shares shall be issued on or about September 2, 2017. All other terms and conditions of such awards shall be governed by the terms and conditions of the 2016 Equity Incentive Plan and the applicable award agreement.
 
(b) Subject to Section 4.3(a), during the Employment Term, the Executive shall be eligible to participate in the Company’s 2016 Equity Incentive Plan or any successor plan, subject to the terms of the 2016 Equity Incentive Plan or successor plan, as determined by the Board or the Compensation Committee, in its discretion. 
 
4.4 Fringe Benefits and Perquisites. During the Employment Term, the Executive shall be entitled to fringe benefits and perquisites consistent in accordance with the practices of the Company, and to the extent the Company provides similar benefits or perquisites (or both) to similarly situated executives of the Company.
 
4.5 Employee Benefits. During the Employment Term, the Executive shall be entitled to participate in all employee benefit plans, practices, and programs maintained by the Company, as in effect from time to time (collectively, "Employee Benefit Plans"), on a basis which is no less favorable than is provided to other similarly situated executives of the Company, to the extent consistent with applicable law and the terms of the applicable Employee Benefit Plans. The Company reserves the right to amend or cancel any Employee Benefit Plans at any time in its sole discretion, subject to the terms of such Employee Benefit Plan and applicable law.
 
4.6 Vacation; Paid Time-Off. During the Employment Term, the Executive will be entitled to paid vacation on a basis that is at least as favorable as that provided to other similarly situated executives of the Company. The Executive shall receive other paid time-off in accordance with the Company's policies for executive officers as such policies may exist from time to time.
 
4.7 Business Expenses. The Executive shall be entitled to reimbursement for all reasonable and necessary out-of-pocket business, entertainment, and travel expenses incurred by the Executive in connection with the performance of the Executive's duties hereunder in accordance with the Company's expense reimbursement policies and procedures.
 
	 
	2

	

	 

 
4.8 Indemnification. In the event that the Executive is made a party or threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative, or investigative (a "Proceeding"), other than any Proceeding initiated by the Executive or the Company related to any contest or dispute between the Executive and the Company, or any of its affiliates with respect to this Agreement, or the Executive's employment hereunder, by reason of the fact that the Executive is or was a director or officer of the Company, or any affiliate of the Company, or is or was serving at the request of the Company as a director, officer, member, employee, or agent of another corporation or a partnership, joint venture, trust, or other enterprise, the Executive shall be indemnified and held harmless by the Company to the fullest extent applicable to any other officer or director of the Company from and against any liabilities, costs, claims, and expenses, including all costs and expenses incurred in defense of any Proceeding (including attorneys' fees). 
 
5. Termination of Employment. The Employment Term, and the Executive's employment hereunder may be terminated by either the Company or the Executive at any time and for any reason; provided that, unless otherwise provided herein, either party shall be required to give the other party at least 30 days advance written notice of any termination of the Executive's employment. Upon termination of the Executive's employment during the Employment Term, the Executive shall be entitled to the compensation and benefits described in this Section 5 and shall have no further rights to any compensation or any other benefits from the Company or any of its affiliates. 
 
5.1 Expiration of the Term, for Cause or Without Good Reason. 
 
(a) The Executive's employment hereunder may be terminated upon either party's failure to renew the Agreement in accordance with Section 1, by the Company for Cause or by the Executive without Good Reason. If the Executive's employment is terminated upon either party's failure to renew the Agreement, by the Company for Cause or by the Executive without Good Reason, the Executive shall be entitled to receive:
 
(i) any accrued but unpaid Base Salary and accrued but unused vacation, which shall be paid on the Termination Date (as defined below); 
 
(ii) reimbursement for unreimbursed business expenses properly incurred by the Executive, which shall be subject to and paid in accordance with the Company's expense reimbursement policy; and
 
(iii) such employee benefits (including equity compensation), if any, to which the Executive may be entitled under the Company's employee benefit plans as of the Termination Date; provided that, in no event shall the Executive be entitled to any payments in the nature of severance or termination payments except as specifically provided herein.
 
Items 5.1(a)(i) through 5.1(a)(iii) are referred to herein collectively as the "Accrued Amounts".
 
	 
	3

	

	 

 
(b) For purposes of this Agreement, "Cause" shall mean:
 
(i) the Executive's willful failure to perform his duties (other than any such failure resulting from incapacity due to physical or mental illness);
 
(ii) the Executive's willful failure to comply with any valid and legal directive of the President of the Company;
 
(iii) the Executive's willful engagement in dishonesty, illegal conduct, or misconduct, which is, in each case, materially injurious to the Company or its affiliates;
 
(iv) the Executive's embezzlement, misappropriation, or fraud, whether or not related to the Executive's employment with the Company;
 
(v) the Executive's conviction of, or plea of, guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes a misdemeanor involving moral turpitude;
 
(vi) the Executive's violation of a material policy of the Company;
 
(vii) the Executive's willful unauthorized disclosure of Confidential Information (as defined below);
 
(viii) the Executive's material breach of any material obligation under this Agreement or any other written agreement between the Executive and the Company; or
 
(ix) any material failure by the Executive to comply with the Company's written policies or rules, as they may be in effect from time to time during the Employment Term, if such failure causes material/reputational or financial harm to the Company.
 
For purposes of this provision, no act or failure to act on the part of the Executive shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.
 
Termination of the Executive's employment shall not be deemed to be for Cause unless and until the Company delivers to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the Board, finding that the Executive has engaged in the conduct described in any of (i)-(ix) above. 
 
	 
	4

	

	 

 
(c) For purposes of this Agreement, "Good Reason" shall mean the occurrence of any of the following, in each case during the Employment Term without the Executive's written consent:
 
(i) a material reduction in the Executive's Base Salary other than a general reduction in Base Salary that affects all similarly situated executives in substantially the same proportions;
 
(ii) a relocation of the Executive's principal place of employment by more than 100 miles; 
 
(iii) any material breach by the Company of any material provision of this Agreement or any material provision of any other agreement between the Executive and the Company;
 
(iv) the Company's failure to obtain an agreement from any successor to the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place, except where such assumption occurs by operation of law;
 
(v) a material, adverse change in the Executive's title, authority, duties, or responsibilities (other than temporarily while the Executive is physically or mentally incapacitated or as required by applicable law) taking into account the Company's size, status as a public company, and capitalization as of the date of this Agreement; or
 
(vi) a material adverse change in the reporting structure applicable to the Executive.
 
5.2 Without Cause or for Good Reason. The Employment Term and the Executive's employment hereunder may be terminated by the Executive for Good Reason or by the Company without Cause. In the event of such termination, the Executive shall be entitled to receive the Accrued Amounts, and subject to his execution of a release of claims in favor of the Company, its affiliates and their respective officers and directors in a form provided by the Company (the "Release") and such Release becoming effective within 30 days following the Termination Date (such 30-day period, the "Release Execution Period"), the Executive shall be entitled to receive the following: 
 
(a) a lump sum payment equal to three months of the Executive's Base Salary for the year in which the Termination Date occurs, which shall be paid within 30 days following the Termination Date;
 
(b) If the Executive timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), the Company shall reimburse the Executive for the monthly COBRA premium paid by the Executive for himself and his dependents. Such reimbursement shall be paid to the Executive on the first day of the month immediately following the month in which the Executive timely remits the premium payment. The Executive shall be eligible to receive such reimbursement until the earliest of: (i) the eighteen-month anniversary of the Termination Date; (ii) the date the Executive is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which the Executive becomes eligible to receive substantially similar coverage from another employer or other source. Notwithstanding the foregoing, if the Company's making payments under this Section 5.2(b) would violate the nondiscrimination rules applicable to non-grandfathered plans under the Affordable Care Act (the "ACA"), or result in the imposition of penalties under the ACA and the related regulations and guidance promulgated thereunder), the parties agree to reform this Section 5.2(b) in a manner as is necessary to comply with the ACA.
 
	 
	5

	

	 

 
(c) The treatment of any outstanding equity awards shall be determined in accordance with the terms of the 2016 Equity Incentive Plan and the applicable award agreements.
 
5.3 Death or Disability. 
 
(a) The Executive's employment hereunder shall terminate automatically upon the Executive's death during the Employment Term, and the Company may terminate the Executive's employment on account of the Executive's Disability (as defined below). 
 
(b) If the Executive's employment is terminated during the Employment Term on account of the Executive's death or Disability (as defined below), the Executive (or the Executive's estate and/or beneficiaries, as the case may be) shall be entitled to receive the Accrued Amounts.
 
Notwithstanding any other provision contained herein, all payments made in connection with the Executive's Disability (as defined below) shall be provided in a manner which is consistent with federal and state law.
 
(c) For purposes of this Agreement, "Disability" shall mean the Executive's inability, due to physical or mental incapacity, to perform the essential functions of his job, with or without reasonable accommodation, for one hundred eighty (180) days out of any three hundred sixty-five (365) day period. Any question as to the existence of the Executive's Disability as to which the Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Executive and the Company. If the Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Executive shall be final and conclusive for all purposes of this Agreement.
 
	 
	6

	

	 

 
5.4 Change in Control Termination. 
 
(a) Notwithstanding any other provision contained herein, if the Executive's employment hereunder is terminated by the Executive for Good Reason or by the Company without Cause (other than on account of the Executive's death or Disability), in each case within twelve (12) months following a Change in Control, the Executive shall be entitled to receive the Accrued Amounts and subject to his execution of a Release which becomes effective within 30 days following the Termination Date, the Executive shall be entitled to receive a lump sum payment equal to the Executive's Base Salary for three months immediately preceding the Termination Date , which shall be paid within 30 days following the Termination Date.
 
(b) If the Executive timely and properly elects health continuation coverage under COBRA, the Company shall reimburse the Executive for the monthly COBRA premium paid by the Executive for himself and his dependents. Such reimbursement shall be paid to the Executive on the first day of the month immediately following the month in which the Executive timely remits the premium payment. The Executive shall be eligible to receive such reimbursement until the earliest of: (i) the eighteen-month anniversary of the Termination Date; (ii) the date the Executive is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which the Executive becomes eligible to receive substantially similar coverage from another employer or other source. Notwithstanding the foregoing, if the Company's making payments under this Section 5.4(b) would violate the nondiscrimination rules applicable to non-grandfathered plans under the ACA, or result in the imposition of penalties under the ACA, the parties agree to reform this Section 5.4(b) in a manner as is necessary to comply with the ACA.
 
(c) For purposes of this Agreement, "Change in Control" shall mean the occurrence of any of the following after the Effective Date:
 
(i) one person (or more than one person acting as a group) acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of such corporation; provided that, a Change in Control shall not occur if any person (or more than one person acting as a group) owns more than 50% of the total fair market value or total voting power of the Company's stock and acquires additional stock;
 
(ii) one person (or more than one person acting as a group) acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition) ownership of the Company's stock possessing 30% or more of the total voting power of the stock of such corporation;
 
(iii) a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election; or
 
(iv) the sale of all or substantially all of the Company's assets.
 
	 
	7

	

	 

 
5.5 Notice of Termination. Any termination of the Executive's employment hereunder by the Company or by the Executive during the Employment Term (other than termination pursuant to Section 5.3(a) on account of the Executive's death) shall be communicated by written notice of termination ("Notice of Termination") to the other party hereto in accordance with Section 18. The Notice of Termination shall specify: 
 
(a) The termination provision of this Agreement relied upon; 
 
(b) To the extent applicable, the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated; and
 
(c) The applicable Termination Date.
 
5.6 Termination Date. The Executive's "Termination Date" shall be: 
 
(a) If the Executive's employment hereunder terminates on account of the Executive's death, the date of the Executive's death; 
 
(b) If the Executive's employment hereunder is terminated on account of the Executive's Disability, the date that it is determined that the Executive has a Disability;
 
(c) If the Company terminates the Executive's employment hereunder for Cause, the date the Notice of Termination is delivered to the Executive;
 
(d) If the Company terminates the Executive's employment hereunder without Cause, the date specified in the Notice of Termination, which shall be no less than 30 days following the date on which the Notice of Termination is delivered; provided that, the Company shall have the option to provide the Executive with a lump sum payment equal to 30 days' Base Salary in lieu of such notice, which shall be paid in a lump sum on the Executive's Termination Date and for all purposes of this Agreement, the Executive's Termination Date shall be the date on which such Notice of Termination is delivered;
 
(e) If the Executive terminates his employment hereunder with or without Good Reason, the date specified in the Executive's Notice of Termination, which shall be no less than 30 days following the date on which the Notice of Termination is delivered; provided that, the Company may waive all or any part of the 30 day notice period for no consideration by giving written notice to the Executive and for all purposes of this Agreement, the Executive's Termination Date shall be the date determined by the Company; and
 
	 
	8

	

	 

 
(f) If the Executive's employment hereunder terminates because either party provides notice of non-renewal pursuant to Section1, the Renewal Date immediately following the date on which the applicable party delivers notice of non-renewal. 
 
Notwithstanding anything contained herein, the Termination Date shall not occur until the date on which the Executive incurs a "separation from service" within the meaning of Section 409A.
 
5.7 Mitigation. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and any amounts payable pursuant to this Section 5 shall not be reduced by compensation the Executive earns on account of employment with another employer.
 
5.8 Resignation of All Other Positions. Upon termination of the Executive's employment hereunder for any reason, the Executive, effective on the Termination Date shall be deemed to have resigned from all positions that the Executive holds as an officer or member of the Board (or a committee thereof) of the Company or any of its affiliates.
 
6. Cooperation. The parties agree that certain matters in which the Executive will be involved during the Employment Term may necessitate the Executive's cooperation in the future. Accordingly, following the termination of the Executive's employment for any reason, to the extent reasonably requested by the Board, the Executive shall cooperate with the Company in connection with matters arising out of the Executive's service to the Company; provided that, the Company shall make reasonable efforts to minimize disruption of the Executive's other activities. The Company shall reimburse the Executive for reasonable expenses incurred in connection with such cooperation and, to the extent that the Executive is required to spend substantial time on such matters, the Company shall compensate the Executive at an hourly rate based on the Executive's Base Salary on the Termination Date.
 
7. Confidential Information. The Executive understands and acknowledges that during the Employment Term, he will have access to and learn about Confidential Information, as defined below.
 
7.1 Confidential Information Defined. 
 
(a) Definition.
 
For purposes of this Agreement, "Confidential Information" includes, but is not limited to, all information not generally known to the public, in spoken, printed, electronic or any other form or medium, relating directly or indirectly to: business processes, practices, methods, policies, plans, publications, documents, research, operations, services, strategies, techniques, agreements, contracts, terms of agreements, transactions, potential transactions, negotiations, pending negotiations, know-how, trade secrets, , databases, manuals, records, articles, systems, material, sources of material, supplier information, vendor information, financial information, results, accounting information, accounting records, legal information, marketing information, advertising information, pricing information, credit information, design information, payroll information, staffing information, personnel information, employee lists, supplier lists, vendor lists, developments, reports, internal controls, security procedures, graphics, drawings, sketches, market studies, sales information, revenue, costs, formulae, notes, communications, algorithms, product plans, designs, styles, models, ideas, audiovisual programs, inventions, unpublished patent applications, original works of authorship, discoveries, experimental processes, experimental results, specifications, customer information, manufacturing information, factory lists, distributor lists, and buyer lists of the Company or its businesses or any existing or prospective customer, supplier, investor or other associated third party, or of any other person or entity that has entrusted information to the Company in confidence. 
 
	 
	9

	

	 

 
The Executive understands that the above list is not exhaustive, and that Confidential Information also includes other information that is marked or otherwise identified as confidential or proprietary, or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and circumstances in which the information is known or used. 
 
The Executive understands and agrees that Confidential Information includes information developed by him in the course of his employment by the Company as if the Company furnished the same Confidential Information to the Executive in the first instance. Confidential Information shall not include information that is generally available to and known by the public at the time of disclosure to the Executive; provided that, such disclosure is through no direct or indirect fault of the Executive or person(s) acting on the Executive's behalf.
 
(b) Company Creation and Use of Confidential Information.
 
The Executive understands and acknowledges that the Company has invested, and continues to invest, substantial time, money, and specialized knowledge into developing its resources, and training its employees. The Executive understands and acknowledges that as a result of these efforts, the Company has created, and continues to use and create Confidential Information. This Confidential Information provides the Company with a competitive advantage over others in the marketplace. 
 
(c) Disclosure and Use Restrictions.
 
The Executive agrees and covenants: (i) to treat all Confidential Information as strictly confidential; (ii) not to directly or indirectly disclose, publish, communicate, or make available Confidential Information, or allow it to be disclosed, published, communicated, or made available, in whole or part, to any entity or person whatsoever (including other employees of the Company) not having a need to know and authority to know and use the Confidential Information in connection with the business of the Company and, in any event, not to anyone outside of the direct employ of the Company except as required in the performance of the Executive's authorized employment duties to the Company or with the prior consent of the President of the Company acting on behalf of the Company in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent); and (iii) not to access or use any Confidential Information, and not to copy any documents, records, files, media, or other resources containing any Confidential Information, or remove any such documents, records, files, media, or other resources from the premises or control of the Company, except as required in the performance of the Executive's authorized employment duties to the Company or with the prior consent of the President of the Company acting on behalf of the Company in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent. Nothing herein shall be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation, or order. The Executive shall promptly provide written notice of any such order to the President.
 
	 
	10

	

	 

 
(d) Notice of Immunity Under the Economic Espionage Act of 1996, as amended by the Defend Trade Secrets Act of 2016 ("DTSA"). Notwithstanding any other provision of this Agreement: 
 
(i) The Executive will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that:
 
(A) is made (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or 
 
(B) is made in a complaint or other document filed under seal in a lawsuit or other proceeding.
 
(ii) If the Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Executive may disclose the Company's trade secrets to the Executive's attorney and use the trade secret information in the court proceeding if the Executive:
 
(A) files any document containing trade secrets under seal; and
 
(B) does not disclose trade secrets, except pursuant to court order.
 
8. Restrictive Covenants
 
8.1 Acknowledgement. The Executive understands that the nature of the Executive's position gives him access to and knowledge of Confidential Information and places him in a position of trust and confidence with the Company. The Executive understands and acknowledges that the intellectual services he provides to the Company are unique, special, or extraordinary.
 
The Executive further understands and acknowledges that the Company’s ability to reserve these for the exclusive knowledge and use of the Company is of great competitive importance and commercial value to the Company, and that improper use or disclosure by the Executive is likely to result in unfair or unlawful competitive activity. 
 
	 
	11

	

	 

 
8.2 Non-Competition. Because of the Company legitimate business interest as described herein and the good and valuable consideration offered to the Executive, during the Employment Term and for one year thereafter, to run consecutively, beginning on the last day of the Executive's employment with the Company, for any reason or no reason and whether employment is terminated at the option of the Executive or the Company, the Executive agrees and covenants not to engage in Prohibited Activity within the United States.
 
For purposes of this Section 8, "Prohibited Activity" is activity in which the Executive contributes his knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, employee, partner, director, stockholder, officer, volunteer, intern, or any other similar capacity to an entity engaged in the same or similar business as the Company, including those engaged in the business of bioscience. Prohibited Activity also includes activity that may require or inevitably requires disclosure of trade secrets, proprietary information or Confidential Information.
 
Nothing herein shall prohibit the Executive from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that the Executive is not a controlling person of, or a member of a group that controls, such corporation.
 
This Section 8 does not, in any way, restrict or impede the Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order. The Executive shall promptly provide written notice of any such order to the Chief Executive Officer
 
8.3. Non-Solicitation of Employees. The Executive agrees and covenants not to directly or indirectly solicit, hire, recruit, attempt to hire or recruit, or induce the termination of employment of any employee of the Company for period of one year, to run consecutively, beginning on the last day of the Executive's employment with the Company.
 
8.4 Non-Solicitation of Customers. The Executive understands and acknowledges that because of the Executive's experience with and relationship to the Company, he will have access to and learn about much or all of the Company’s customer information. "Customer Information" includes, but is not limited to, names, phone numbers, addresses, e-mail addresses, order history, order preferences, chain of command, pricing information, and other information identifying facts and circumstances specific to the customer and relevant to sales. 
 
	 
	12

	

	 

 
The Executive understands and acknowledges that loss of this customer relationship and/or goodwill will cause significant and irreparable harm. 
 
The Executive agrees and covenants, for a period of one year, to run consecutively, beginning on the last day of the Executive's employment with the Company, not to directly or indirectly solicit, contact (including but not limited to e-mail, regular mail, express mail, telephone, fax, and instant message), attempt to contact, or meet with the Company's current customers for purposes of offering or accepting goods or services similar to or competitive with those offered by the Company.
 
9. Non-Disparagement. The Executive agrees and covenants that he will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments, or statements concerning the Company or its businesses, or any of its employees or officers. 
 
This Section 9 does not, in any way, restrict or impede the Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order. The Executive shall promptly provide written notice of any such order to the Chief Executive Officer.
 
10. Proprietary Rights.
 
10.1 Work Product. The Executive acknowledges and agrees that all right, title, and interest in and to all writings, works of authorship, technology, inventions, discoveries, processes, techniques, methods, ideas, concepts, research, proposals, materials, and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived, or reduced to practice by the Executive individually or jointly with others during the period of his employment by the Company and relate in any way to the business or contemplated business, products, activities, research, or development of the Company or result from any work performed by the Executive for the Company (in each case, regardless of when or where prepared or whose equipment or other resources is used in preparing the same), all rights and claims related to the foregoing, and all printed, physical and electronic copies, and other tangible embodiments thereof (collectively, "Work Product"), as well as any and all rights in and to US and foreign (a) patents, patent disclosures and inventions (whether patentable or not), (b) trademarks, service marks, trade dress, trade names, logos, corporate names, and domain names, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing, (c) copyrights and copyrightable works (including computer programs), and rights in data and databases, (d) trade secrets, know-how, and other confidential information, and (e) all other intellectual property rights, in each case whether registered or unregistered and including all registrations and applications for, and renewals and extensions of, such rights, all improvements thereto and all similar or equivalent rights or forms of protection in any part of the world (collectively, "Intellectual Property Rights"), shall be the sole and exclusive property of the Company.
 
	 
	13

	

	 

 
For purposes of this Agreement, Work Product includes, but is not limited to, Company information, including plans, publications, research, strategies, techniques, agreements, documents, contracts, terms of agreements, negotiations, know-how, work in process, databases, manuals, results, developments, reports, graphics, market studies, formulae, notes, communications, algorithms, product plans, product designs, models, inventions, unpublished patent applications, original works of authorship, discoveries, experimental processes, experimental results, specifications, manufacturing information, marketing information, advertising information, and sales information. 
 
10.2 Work Made for Hire; Assignment. The Executive acknowledges that, by reason of being employed by the Company at the relevant times, to the extent permitted by law, all of the Work Product consisting of copyrightable subject matter is "work made for hire" as defined in 17 U.S.C. § 101 and such copyrights are therefore owned by the Company. To the extent that the foregoing does not apply, the Executive hereby irrevocably assigns to the Company, for no additional consideration, the Executive's entire right, title, and interest in and to all Work Product and Intellectual Property Rights therein, including the right to sue, counterclaim, and recover for all past, present, and future infringement, misappropriation, or dilution thereof, and all rights corresponding thereto throughout the world. Nothing contained in this Agreement shall be construed to reduce or limit the Company's rights, title, or interest in any Work Product or Intellectual Property Rights so as to be less in any respect than that the Company would have had in the absence of this Agreement. 
 
10.3 Further Assurances; Power of Attorney. During and after his employment, the Executive agrees to reasonably cooperate with the Company to (a) apply for, obtain, perfect, and transfer to the Company the Work Product as well as any and all Intellectual Property Rights in the Work Product in any jurisdiction in the world; and (b) maintain, protect and enforce the same, including, without limitation, giving testimony and executing and delivering to the Company any and all applications, oaths, declarations, affidavits, waivers, assignments, and other documents and instruments as shall be requested by the Company. The Executive hereby irrevocably grants the Company power of attorney to execute and deliver any such documents on the Executive's behalf in his name and to do all other lawfully permitted acts to transfer the Work Product to the Company and further the transfer, prosecution, issuance, and maintenance of all Intellectual Property Rights therein, to the full extent permitted by law, if the Executive does not promptly cooperate with the Company's request (without limiting the rights the Company shall have in such circumstances by operation of law). The power of attorney is coupled with an interest and shall not be affected by the Executive's subsequent incapacity.
 
	 
	14

	

	 

 
10.4 No License. The Executive understands that this Agreement does not, and shall not be construed to, grant the Executive any license or right of any nature with respect to any Work Product or Intellectual Property Rights or any Confidential Information, materials, software, or other tools made available to him by the Company.
 
11. Security.
 
11.1 Security and Access. The Executive agrees and covenants to comply with all Company security policies and procedures as in force from time to time.
 
11.2 Exit Obligations. Upon (a) voluntary or involuntary termination of the Executive's employment or (b) the Company's request at any time during the Executive's employment, the Executive shall (i) provide or return to the Company any and all Company property, and all Company documents and materials belonging to the Company and stored in any fashion, including but not limited to those that constitute or contain any Confidential Information or Work Product, that are in the possession or control of the Executive, whether they were provided to the Executive by the Company or any of its business associates or created by the Executive in connection with his employment by the Company; and (ii) delete or destroy all copies of any such documents and materials not returned to the Company that remain in the Executive's possession or control, including those stored on any non-Company devices, networks, storage locations, and media in the Executive's possession or control.
 
12. Governing Law: Jurisdiction and Venue. This Agreement, for all purposes, shall be construed in accordance with the laws of Iowa without regard to conflicts of law principles. Any action or proceeding by either of the parties to enforce this Agreement shall be brought only in a state or federal court located in the State of Iowa, county of Polk. The parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.
 
13. Entire Agreement. Unless specifically provided herein, this Agreement contains all of the understandings and representations between the Executive and the Company pertaining to the subject matter hereof and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter. The parties mutually agree that the Agreement can be specifically enforced in court and can be cited as evidence in legal proceedings alleging breach of the Agreement. 
 
14. Modification and Waiver. No provision of this Agreement may be amended or modified unless such amendment or modification is agreed to in writing and signed by the Executive and the Company. No waiver by either of the parties of any breach by the other party hereto of any condition or provision of this Agreement to be performed by the other party hereto shall be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time, nor shall the failure of or delay by either of the parties in exercising any right, power, or privilege hereunder operate as a waiver thereof to preclude any other or further exercise thereof or the exercise of any other such right, power, or privilege.
 
	 
	15

	

	 

 
15. Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be enforceable only if modified, or if any portion of this Agreement shall be held as unenforceable and thus stricken, such holding shall not affect the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the parties with any such modification to become a part hereof and treated as though originally set forth in this Agreement. 
 
The parties further agree that any such court is expressly authorized to modify any such unenforceable provision of this Agreement in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement, or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law. 
 
The parties expressly agree that this Agreement as so modified by the court shall be binding upon and enforceable against each of them. In any event, should one or more of the provisions of this Agreement be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions hereof, and if such provision or provisions are not modified as provided above, this Agreement shall be construed as if such invalid, illegal, or unenforceable provisions had not been set forth herein.
 
16. Captions. Captions and headings of the sections and paragraphs of this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the caption or heading of any section or paragraph.
 
17. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
 
18. Section 409A.
 
18.1 General Compliance. This Agreement is intended to comply with Section 409A or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a "separation from service" under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.
 
	 
	16

	

	 

 
18.2 Specified Employees. Notwithstanding any other provision of this Agreement, if any payment or benefit provided to the Executive in connection with his termination of employment is determined to constitute "nonqualified deferred compensation" within the meaning of Section 409A and the Executive is determined to be a "specified employee" as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the Termination Date or, if earlier, on the Executive's death (the "Specified Employee Payment Date"). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment shall be paid to the Executive in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.
 
18.3 Reimbursements. To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:
 
(a) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;
 
(b) any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and
 
(c) any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.
 
18.4 Tax Gross-ups. Any tax gross-up payments provided under this Agreement shall be paid to the Executive on or before December 31 of the calendar year immediately following the calendar year in which the Executive remits the related taxes.
 
19. Successors and Assigns. This Agreement is personal to the Executive and shall not be assigned by the Executive. Any purported assignment by the Executive shall be null and void from the initial date of the purported assignment. The Company may assign this Agreement to any successor or assign (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company. This Agreement shall inure to the benefit of the Company and permitted successors and assigns.
 
20. Notice. Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, or by overnight carrier to the parties at the addresses set forth below (or such other addresses as specified by the parties by like notice):
 
	 
	17

	

	 

 
If to the Company:
Spotlight Innovation Inc.
11147 Aurora Avenue
Aurora Business Park, Building 3
Urbandale, Iowa 50322
If to the Executive:
 
John William Pim
11147 Aurora Avenue
Aurora Business Park, Building 3
Urbandale, Iowa 50322
 
21. Withholding. The Company shall have the right to withhold from any amount payable hereunder any Federal, state, and local taxes in order for the Company to satisfy any withholding tax obligation it may have under any applicable law or regulation.
 
22. Survival. Upon the expiration or other termination of this Agreement, the respective rights and obligations of the parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the parties under this Agreement.
 
[signature page follows]

	 
	18

	

	 

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

		By:	/s/ John M. Krohn
	
	 
	Name: 
	John M. Krohn
	 

	 
	Title: 
	President and COO
	 

 
	
	EXECUTIVE
	
	 
	 
		
		
Signature: 
	/s/ John William Pim	 
	 
	Print Name: 
	John William Pim	

 
 
	19Exhibit 4.1

 

EXECUTION VERSION

 

FIRST SUPPLEMENTAL INDENTURE

 

THIS FIRST SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”) is dated as of January 3, 2017, among South State Corporation, a South Carolina corporation (“South State”), Southeastern Bank Financial Corporation, a Georgia corporation (“Southeastern”), and U.S. Bank National Association (herein, the “Trustee”).

 

RECITALS

 

WHEREAS, Southeastern and U.S. Bank National Association entered into that certain Indenture, dated as of December 5, 2005 (the “Original Indenture”), pursuant to which Southeastern has duly authorized the issuance of its Junior Subordinated Debt Securities due December 15, 2035 (the “Debt Securities”);

 

WHEREAS, South State and Southeastern entered into that certain Agreement and Plan of Merger, dated as of June 16, 2016, by and between Southeastern and South State (the “Merger Agreement”);

 

WHEREAS, on the date of this Supplemental Indenture, subject to the terms and conditions of the Merger Agreement, Southeastern will merge with and into South State, with South State being the surviving corporation (the “Merger”), whereupon the separate corporate existence of Southeastern will cease;

 

WHEREAS, Section 11.02 of the Original Indenture (as amended hereby, the “Indenture”) provides that South State shall expressly assume, by a supplemental indenture executed and delivered to the Trustee by South State, the due and punctual payment of the principal of and premium, if any, and interest on all of the Debt Securities and the due and punctual performance and observance of all of the covenants and conditions of the Indenture to be performed or observed by Southeastern;

 

WHEREAS, Section 9.01 of the Original Indenture authorizes, without the consent of Securityholders, the execution of a supplemental indenture to evidence the succession of another corporation to Southeastern, and the assumption by the successor corporation of the covenants, agreements and obligations of Southeastern under the Original Indenture;

 

WHEREAS, Southeastern has delivered to the Trustee an Officers’ Certificate stating, as applicable and subject to the terms provided therein, that this Supplemental Indenture complies with the requirements of Article IX of the Original Indenture, and an Opinion of Counsel that this Supplemental Indenture is authorized or permitted by, and conforms to the terms of Article IX and that it is proper for the Trustee under the provisions of Article IX to join in the execution of this Supplemental Indenture, and the Merger and the assumption permitted or required by the terms of Article XI of the Original Indenture comply with the provisions of Article XI of the Indenture; and

 

 

WHEREAS, capitalized terms used and not otherwise defined herein shall have the respective meanings assigned to such terms in the Indenture.

 

NOW, THEREFORE, in compliance with Section 11.02 of the Original Indenture, and in consideration of the covenants contained herein and intending to be legally bound hereby, South State, Southeastern and the Trustee, for the benefit of the Securityholders, agree as follows:

 

1.                                      Assumption of Payment and Performance.  South State hereby expressly assumes the due and punctual payment of the principal of and premium, if any, and interest on all of the Debt Securities and the due and punctual performance and observance of all of the covenants and conditions of the Indenture on the part of Southeastern to be performed or observed.

 

2.                                      Effect of Supplemental Indenture.  Upon the execution of this Supplemental Indenture, (i) the Original Indenture has been and hereby is modified in accordance herewith; (ii) this Supplemental Indenture forms a part of the Indenture for all purposes; (iii) except as modified and amended by this Supplemental Indenture, the Indenture shall continue in full force and effect; (iv) the Debt Securities shall continue to be governed by the Indenture; and (v) every Securityholder heretofore or hereafter under the Indenture shall be bound by this Supplemental Indenture.

 

3.                                      Notation on Debt Securities.  Debt Securities authenticated and delivered on or after the date hereof shall bear the following notation, which may be printed or typewritten thereon:

 

“Effective January 3, 2017, Southeastern Bank Financial Corporation, a Georgia corporation (“Southeastern”), was merged with and into South State Corporation, a South Carolina corporation (“South State”), with South State as the surviving corporation.  Pursuant to the First Supplemental Indenture dated as of January 3, 2017, South State assumed the obligations of Southeastern and the performance of every covenant and condition of the Indenture on the part of Southeastern to be performed or observed.”

 

If South State shall so determine, new Debt Securities so modified as to conform to the Indenture as hereby supplemented, in form satisfactory to the Trustee, may at any time hereafter be prepared and executed by South State and authenticated and delivered by the Trustee or the Authenticating Agent in exchange for the Debt Securities then outstanding, and thereafter the notation herein provided shall no longer be required.  Anything herein or in the Indenture to the contrary notwithstanding, the failure to affix the notation herein provided as to any Debt Security or to exchange any Debt Security for a new Debt Security modified as herein provided shall not affect any of the rights of the holder of such Debt Security.

 

4.                                      South State Representations.  South State represents and warrants that:

 

(a)                     it has all necessary power and authority to execute and deliver this Supplemental Indenture and to perform the covenants and obligations of the Indenture;

 

2

 

(b)                     it is the successor of Southeastern pursuant to a valid merger effected in accordance with applicable law;

 

(c)                      it is a corporation organized and existing under the laws of the State of South Carolina; and

 

(d)                     this Supplemental Indenture is executed and delivered pursuant to Section 9.01 of the Indenture and does not require the consent of the holders of the Debt Securities.

 

5.                                      Conditions to Effectiveness.  This Supplemental Indenture shall become effective simultaneously with the effectiveness of the Merger, provided, that:

 

(a)                     the Trustee shall have executed a counterpart of this Supplemental Indenture and shall have received a counterpart of this Supplemental Indenture executed by each of Southeastern and South State;

 

(b)                     the Trustee shall have received an Officers’ Certificate substantially in the form attached hereto as Exhibit A;

 

(c)                      the Trustee shall have received an Opinion of Counsel substantially in the form attached hereto as Exhibit B; and

 

(d)                     Southeastern and South State shall have each duly executed and filed executed Articles of Merger with the Secretary of State of the State of South Carolina and a Certificate of Merger with the Secretary of State of the State of Georgia in connection with the Merger.

 

6.                                      The Trustee.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by South State.

 

7.                                      Notices.  Any notice or demand which by any provision of the Indenture is required or permitted to be given or served by the Trustee or by the Securityholders on South State may be given or served in writing, duly signed by the party giving such notice, and shall be delivered by facsimile (which telecopy shall be followed by notice delivered or mailed by first class mail) or mailed by first class mail to South State at:

 

South State Corporation

520 Gervais Street

Columbia, South Carolina 29201

Attention:  Keith S. Rainwater

Telephone:  (803) 231-3539

Email:  Keith.Rainwater@southstatebank.com

 

8.                                      Governing Law.  This Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of laws principles thereof other than Section 5-1401 of the New York General Obligations Law.

 

3

 

9.                                      Successors and Assigns.  This Supplemental Indenture shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto and the holders of any Debt Securities then outstanding.

 

10.                               Headings. The headings used in this Supplemental Indenture are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Supplemental Indenture.

 

11.                               Counterparts.  This Supplemental Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument.

 

[Signature page follows.]

 

4

 

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

 

	
 
    	
SOUTH STATE CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ John C. Pollok
    
	
 
    	
Name:
    	
John C. Pollok
    
	
 
    	
Title:
    	
Chief Financial Officer   and Chief Operating Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SOUTHEASTERN BANK   FINANCIAL CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Darrell R. Rains
    
	
 
    	
Name:
    	
Darrell R. Rains
    
	
 
    	
Title: 
    	
Executive Vice   President and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
U.S. BANK NATIONAL   ASSOCIATION, not in its individual capacity, but solely as Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Steven J. Gomes
    
	
 
    	
Name: 
    	
Steven J. Gomes
    
	
 
    	
Title: 
    	
Vice President
    

 

[Signature Page to Southeastern Bank Financial Trust I First Supplemental Indenture]

 

 

Exhibit A

 

Officers’ Certificate

 

 

OFFICERS’ CERTIFICATE

 

Southeastern Bank Financial Statutory Trust I Supplemental Indenture

 

Each of the undersigned, Ronald L. Thigpen, President, Chief Operating Officer and Assistant Corporate Secretary of Southeastern Bank Financial Corporation, a Georgia corporation (the “Company”) and Darrell R. Rains, Executive Vice President and Chief Financial Officer of the Company, pursuant to Sections 9.05 and 14.06 of the Indenture, dated as of December 15, 2005 (the “Indenture”), by and between the Company and U.S. Bank National Association, as Trustee (the “Trustee”), does hereby certify, on behalf of the Company in each of their respective capacities as an officer of the Company and not individually, that:

 

(A)                               South State Corporation (the “Successor Company”) and the Company have entered into an Agreement and Plan of Merger, dated as of June 16, 2016, which contemplates the merger of the Company with and into the Successor Company (the “Merger”), and have executed Articles of Merger to be filed with the Secretary of State of the State of South Carolina and a Certificate of Merger to be filed with the Secretary of State of the State of Georgia, in each case, on January 3, 2017;

 

(B)                               I have read and am familiar with the provisions of the Indenture and the First Supplemental Indenture, dated as of January 3, 2017 (the “Supplemental Indenture”), by and among the Company, the Successor Company and the Trustee, including all covenants and conditions precedent provided for therein;

 

(C)                               My statements and opinions contained herein are based on my examination or investigation of the provisions of the Indenture, including all covenants and conditions precedent provided for therein and the definitions relating thereto, and the Supplemental Indenture, as well as such other instruments, agreements and documents as I have deemed necessary or appropriate to certify as to the matters set forth herein;

 

(D)                               In my opinion, I have made such examination or investigation as is necessary to enable me to express an informed opinion as to whether or not the covenants and the conditions precedent provided for in the Indenture relating to the Merger and the Supplemental Indenture have been complied with and I have an informed opinion as to the Merger and the Supplemental Indenture; and

 

(E)                                In my opinion, all conditions precedent and covenants provided for in the Indenture relating to the Merger and the Supplemental Indenture have been complied with.

 

(F)                                 After giving effect to the Merger, no Default or Event of Default shall have occurred or be continuing.

 

Capitalized terms used but not defined herein shall have the meaning assigned to them in the Indenture.

 

 

IN WITNESS WHEREOF, I have hereunder signed my name on behalf of the Company (and not on my individual behalf) this 3rd day of January, 2017.

 

	
 
    	
/s/ Ronald L. Thigpen
    
	
 
    	
By:
    	
Ronald L. Thigpen
    
	
 
    	
President, Chief   Operating Officer and Assistant
   Corporate Secretary
    
	
 
    	
 
    
	
 
    	
/s/ Darrell R. Rains
    
	
 
    	
By:
    	
Darrell R. Rains
    
	
 
    	
Executive Vice   President and Chief Financial Officer
    

 

 

Exhibit B

 

Opinion of Counsel

 

 

[Bryan Cave LLP Letterhead]

 

January 3, 2017

 

U.S. Bank National Association, as Trustee

One Federal Street

Third Floor

Boston, Massachusetts 02110

Attention:  Steven Gomes

 

Re:                             Southeastern Bank Financial Statutory Trust I Supplemental Indenture

 

Ladies and Gentlemen:

 

We have acted as special counsel to Southeastern Bank Financial Corporation, a bank holding company incorporated in the State of Georgia (the “Company”), in connection with the merger of the Company with and into South State Corporation, a South Carolina corporation (the “Successor Company”) (the “Merger”), and the execution by the Company and the Successor Company of that certain First Supplemental Indenture, dated as of the date hereof (the “Supplemental Indenture”), entered into with respect to that certain Indenture, dated as of December 5, 2005 (the “Indenture”), by and between the Company and U.S. Bank National Association (the “Trustee”), pursuant to which the Junior Subordinated Debt Securities due December 15, 2035 (the “Debt Securities”) were issued.  For purposes of this opinion letter, “Transactions” means (a) the Merger by the Company, and (b) the execution of the Supplemental Indenture by the Trustee.

 

We are providing this opinion to you at the request of the Company pursuant to Sections 9.05, 11.03 and 14.06 of the Indenture.  Except as otherwise indicated, capitalized terms used in this opinion and defined in the Indenture will have the meanings given in the Indenture.

 

In connection with this opinion, and as the basis for the opinions contained herein, we have examined, among other things, the following documents:

 

a.                          Copy of the executed Indenture, and we have read the covenants and conditions thereof with respect to the Transactions, and the definitions relating thereto;

b.                          Copy of the executed Supplemental Indenture;

c.                           Officers’ Certificate of the Successor Company dated January 3, 2017;

d.                          Officers’ Certificate of the Company dated January 3, 2017;

e.                           Resolutions of the Board of Directors of the Successor Company dated December 15, 2016;

f.                            Executed Articles of Merger of the Company and the Successor Company dated January 3, 2017 (the “Articles of Merger”);

g.                           Certificate of good standing of the Company dated as of December 27, 2016; and

h.                          Certificate of good standing of the Successor Company dated as of December 21, 2016.

 

We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such other corporate records, agreements and instruments of the Company and the Successor Company, certificates of public officials and officers of the Company and the Successor Company, and such other documents, records and instruments, and we have made such legal and factual inquiries as we have

 

 

deemed necessary or appropriate as a basis for us to render the opinions hereinafter expressed.  In our examination of the foregoing, we have assumed the genuineness of all signatures, the legal competence and capacity of natural persons, the authenticity of documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies or by facsimile or other means of electronic transmission, or which we obtained from sites maintained by a court or governmental authority or regulatory body and the authenticity of the originals of such latter documents.  If any document we examined in printed, word processed or similar form has been filed with such court or governmental authority or regulatory body, we have assumed that the document so filed is identical to the document we examined except for formatting changes.  We have relied without independent investigation as to matters of fact upon statements of governmental officials and upon certificates and statements of appropriate representatives or agents of the Company and the Successor Company.

 

In connection herewith: (a) we have not reviewed any other documents or agreements other than as set forth above (each an “Opinion Document”) and, in particular, we have not reviewed any document, agreement or law referred to or incorporated by reference into, any Opinion Document, (b) we have assumed that there are no documents or agreements that we have not reviewed that would have any effect on the opinions herein contained, (c) we have assumed that all of the documents referred to in this opinion letter have been duly authorized by, have been duly executed and delivered by, and constitute the valid, binding, and enforceable obligations of all of the parties to such documents, all of the signatories to such documents have been duly authorized and all such parties are duly organized and validly existing and have the power and authority (corporate or other) to execute, deliver and perform pursuant to such documents, (d) we have assumed that the Company and the Successor Company are in compliance with the Articles of Merger, and (e) we have assumed that the Company and the Successor Company are in compliance with, and the Merger and the Articles of Merger are and will be in compliance with, all applicable laws, rules and regulations.

 

For purposes of rendering this opinion, we assume that the Articles of Merger will be duly filed with the Secretary of State of the State of South Carolina and a Certificate of Merger will be duly filed with the Secretary of State of the State of Georgia, that the Merger will be fully effective as set forth in such filings, and that the Supplemental Indenture will become effective simultaneously with the effectiveness of the Merger.  Also, we have relied, without independent verification, on the validity of the certifications, representations and warranties of the Company and the Successor Company as provided in the Supplemental Indenture and in the Officers’ Certificates furnished pursuant to the requirements of Sections 6.07, 9.05, 11.03 and 14.06 of the Indenture.

 

We have made such examination or investigation as is necessary to enable us to express an informed opinion as to whether or not the covenants and conditions set forth in the Indenture relating to the Transactions have been complied with and, based upon the foregoing and in reliance thereon, and subject to the assumptions, comments, qualifications, limitations and exceptions set forth herein, we are of the opinion that:

 

1.                                      The Supplemental Indenture (a) complies with the requirements of Article IX of the Indenture, and (b) is authorized or permitted by, and conforms to, the terms of Article IX of the Indenture.

 

2.                                      All conditions precedent to the execution of the Supplemental Indenture by the Trustee contained in Article IX of the Indenture have been complied with.

 

2

 

3.                                      It is proper for the Trustee under the provisions of Article IX of the Indenture to join in the execution of the Supplemental Indenture.

 

4.                                      All conditions precedent to the Merger by the Company contained in Section 11.01 of the Indenture have been complied with.

 

In addition to the assumptions, comments, qualifications, limitations and exceptions set forth above, the opinions set forth herein are further limited by, subject to and based upon the following assumptions, comments, qualifications, limitations and exceptions:

 

a.                                           Our opinions herein reflect only the application of applicable New York State law (excluding (A) all laws, rules and regulations of cities, counties and other political subdivisions of such State and (B) the securities, blue sky, environmental, employee benefit, pension, antitrust and tax laws of such State, as to which we express no opinion) as applied by courts located in New York without regard for principles of conflict of laws or choice of law that would require application of any other law, and we do not express any opinions herein covering any other law.  The opinions set forth herein are made as of the date hereof and are subject to, and may be limited by, future changes in the factual matters set forth herein, and we undertake no duty to advise you of the same.  The opinions expressed herein are based upon the law in effect (and published or otherwise generally available) on the date hereof, and we assume no obligation to revise or supplement these opinions should such law be changed by legislative action, judicial decision or otherwise.  In rendering our opinions, we have not considered, and hereby disclaim any opinion as to, the application or impact of any laws, cases, decisions, rules or regulations of any other jurisdiction, court or administrative agency.

 

b.                                      Our opinions contained herein are limited by (i) applicable bankruptcy, insolvency, reorganization, receivership, moratorium or similar laws affecting or relating to the rights and remedies of creditors generally including, without limitation, laws relating to fraudulent transfers or conveyances, preferences and equitable subordination, (ii) general principles of equity (regardless of whether considered in a proceeding in equity or at law), and (iii) an implied covenant of good faith and fair dealing.

 

c.                                       Our opinions are further subject to the effect of generally applicable rules of law arising from statutes, judicial and administrative decisions, and the rules and regulations of governmental authorities that: (i) limit or affect the enforcement of provisions of a contract that purport to require waiver of the obligations of good faith, fair dealing, diligence and reasonableness; (ii) limit the availability of a remedy under certain circumstances where another remedy has been elected; (iii) limit the enforceability of provisions releasing, exculpating, or exempting a party from, or requiring indemnification of a party for, liability for its own action or inaction, to the extent the action or inaction involves negligence, recklessness, willful misconduct or unlawful conduct; (iv) may, where less than all of the contract may be unenforceable, limit the enforceability of the balance of the contract to circumstances in which the unenforceable portion is not an essential part of the agreed exchange; and (v) govern and afford judicial discretion regarding the determination of damages and entitlement to attorneys’ fees.

 

3

 

We do not render any opinions except as set forth above.  This opinion letter is being delivered by us solely for the benefit of the Trustee pursuant to the provisions of Sections 9.05, 11.03 and 14.06 of the Indenture.  By your acceptance of this opinion letter, you agree that it may not be relied upon, circulated, quoted or otherwise referred to by any other person or for any other purpose without our prior written consent in each instance.

 

This letter and the opinions expressed herein speak only as of the date of this letter.  By your acceptance of this opinion letter, you acknowledge and agree that (i) we have no obligation to update this opinion letter for subsequent events or legal developments after the date of this letter, and (ii) we have not completed any procedures or considered any information regarding the Company that has arisen or may arise subsequent to the date of this letter.

 

	
 
    	
Very truly   yours,
    
	
 
    	
 
    
	
 
    	
/s/ Bryan   Cave LLP
    

 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00265-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00265-of-00352.parquet"}]]