Document:

Exhibit 10.3

 

[OLD SECOND BANCORP LETTERHEAD]

 

January   , 2009

 

VIA
CERTIFIED MAIL, RETURN RECEIPT REQUESTED

 

[Name of Executive]

[Street Address]

[City, State  Zip]

 

Dear [Insert Name]:

 

Old Second Bancorp, Inc. (the “Company”)
anticipates entering into a Letter Agreement and Securities Purchase Agreement
(collectively, the “Participation Agreement”)
with the United States Department of Treasury (“Treasury”)
that provides for the Company’s participation in the Treasury’s TARP Capital
Purchase Program (the “CPP”).  If the Company does not participate or ceases
at any time to participate in the CPP, this letter shall be of no further force
and effect.

 

For the Company to participate in the CPP and as a condition to the
closing of the investment contemplated by the Participation Agreement, the
Company is required to establish specified standards for incentive compensation
to its senior executive officers and to make changes to its compensation
arrangements.  To comply with these
requirements, and in consideration of the benefits that you will receive as a
result of the Company’s participation in the CPP, you agree as follows:

 

(1)                                  No Golden Parachute Payments. 
The Company is prohibiting any golden parachute payment to you during
any “CPP Covered Period.”  A “CPP Covered Period” is any period during which (A) you
are a senior executive officer and (B) Treasury holds an equity or debt
position acquired from the Company in the CPP.

 

(2)                                  Recovery of Bonus and Incentive
Compensation.  Any bonus and incentive compensation paid to
you during a CPP Covered Period is subject to recovery or “clawback” by the
Company if the payments were based on materially inaccurate financial
statements or any other materially inaccurate performance metric criteria.

 

(3)                                  Compensation Program Amendments. 
Each of the Company’s compensation, bonus, incentive and other benefit
plans, arrangements and agreements (including golden parachute, severance and
employment agreements) (collectively, “Benefit Plans”)
with respect to you is hereby amended to the extent necessary to give effect to
provisions (1) and (2).

 

In addition, the Company is required to review its Benefit Plans to
ensure that they do not encourage senior executive officers to take unnecessary
and excessive risks that threaten the value of the Company.  To the extent any such review requires
revisions to any Benefit Plan with respect to you, you and the Company agree to
negotiate such changes promptly and in good faith.

 

(4)                                  Definitions and Interpretation. 
This letter shall be interpreted as follows:

 

·                                                “Senior
executive officer” means the Company’s “senior executive officers” as defined
in subsection 111(b)(3) of EESA.

 

 

·                                                “Golden
parachute payment” is used with same meaning as in Section 111(b)(2)(C) of
EESA.

 

·                                                “EESA”
means the Emergency Economic Stabilization Act of 2008 as implemented by
guidance or regulation issued by the Department of Treasury and as published in
the Federal Register on October 20, 2008.

 

·                                                The
term “Company” includes any entities treated as a single employer with the
Company under 31 C.F.R. § 30.1(b) (as in effect on the Closing Date).  You are also delivering a waiver pursuant to
the Participation Agreement, and, as between the Company and you, the term “employer”
in that waiver will be deemed to mean the Company as used in this letter.

 

·                                                The
term “CPP Covered Period” shall be limited by, and interpreted in a manner
consistent with, 31 C.F.R. § 30.11 (as in effect on the Closing Date).

 

·                                                Provisions
(1) and (2) of this letter are intended to, and will be interpreted,
administered and construed to, comply with Section 111 of EESA (and, to
the maximum extent consistent with the preceding, to permit operation of the
Benefit Plans in accordance with their terms before giving effect to this
letter).

 

(5)                                  Miscellaneous. 
To the extent not subject to federal law, this letter will be governed
by and construed in accordance with the laws of the State of Illinois.  This letter may be executed in two or more
counterparts, each of which will be deemed to be an original.  A signature transmitted by facsimile will be
deemed an original signature.

 

The Board appreciates the
concessions you are making and looks forward to your continued leadership
during these financially turbulent times.

 

	
   

  	
  Yours sincerely,

  
	
   

  	
   

  	
   

  
	
   

  	
  OLD SECOND BANCORP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

Intending to be legally bound, I agree with an

accept the foregoing terms on the date set

forth below

 

 

	
   

  	
   

  
	
  [Insert Executive’s Name]

  	
   

  
	
   

  
	
  Date: January    , 2009

  
	
   

  
	
  cc: [Insert Name], via Hand DeliveryExhibit 4.1

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, 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.  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.

 

WARRANT

 

to
purchase

 

303,083

 

Shares
of Common Stock

 

of

 

SCBT
FINANCIAL CORPORATION

 

Issue
Date: JANUARY 16, 2009

 

1.        Definitions.  Unless
the context otherwise requires, when used herein the following terms shall have
the meanings indicated.

 

“Affiliate”
has the meaning ascribed to it in the Purchase Agreement.

 

“Appraisal Procedure”
means a procedure whereby two independent appraisers, one chosen by the Company
and one by the Original Warrantholder, shall mutually agree upon the
determinations then the subject of appraisal. 
Each party shall deliver a notice to the other appointing its appraiser
within 15 days after the Appraisal Procedure is invoked.  If within 30 days after appointment of the
two appraisers they are unable to agree upon the amount in question, a third
independent appraiser shall be chosen within 10 days thereafter by the mutual
consent of such first two appraisers. 
The decision of the third appraiser so appointed and chosen shall be
given within 30 days after the selection of such third appraiser.  If three appraisers shall be appointed and
the determination of one appraiser is disparate from the middle determination
by more than twice the amount by which the other determination is

 

 

disparate from the middle determination, then the determination of such
appraiser shall be excluded, the remaining two determinations shall be averaged
and such average shall be binding and conclusive upon the Company and the
Original Warrantholder; otherwise, the average of all three determinations
shall be binding upon the Company and the Original Warrantholder.  The costs of conducting any Appraisal
Procedure shall be borne by the Company.

 

“Board of Directors”
means the board of directors of the Company, including any duly authorized
committee thereof.

 

“Business
Combination” means a merger, consolidation, statutory share exchange
or similar transaction that requires the approval of the Company’s stockholders.

 

“business
day” means any day except Saturday, Sunday and any day on which
banking institutions in the State of New York generally are authorized or
required by law or other governmental actions to close.

 

“Capital
Stock” means (A) with respect to any Person that is a
corporation or company, any and all shares, interests, participations or other
equivalents (however designated) of capital or capital stock of such Person and
(B) with respect to any Person that is not a corporation or company, any and
all partnership or other equity interests of such Person.

 

“Charter”
means, with respect to any Person, its certificate or articles of
incorporation, articles of association, or similar organizational document.

 

“Common
Stock” has the meaning ascribed to it in the Purchase Agreement.

 

“Company”
means the Person whose name, corporate or other organizational form and
jurisdiction of organization is set forth in Item 1 of Schedule A hereto.

 

“conversion”
has the meaning set forth in Section 13(B).

 

“convertible
securities” has the meaning set forth in Section 13(B).

 

“CPP”
has the meaning ascribed to it in the Purchase Agreement.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

 

“Exercise
Price” means the amount set forth in Item 2 of Schedule A hereto.

 

“Expiration
Time” has the meaning set forth in Section 3.

 

“Fair
Market Value” means, with respect to any security or other property,
the fair market value of such security or other property as determined by the
Board of Directors, acting in good faith or, with respect to Section 14,
as determined by the Original Warrantholder acting in good faith. For so long
as the Original Warrantholder holds this Warrant or any portion thereof, it may
object in writing to the Board of Director’s calculation of fair market value
within 10 days of receipt of written notice thereof.  If the Original Warrantholder and the Company
are 

 

2

 

unable to agree on fair market value during the 10-day period following
the delivery of the Original Warrantholder’s objection, the Appraisal Procedure
may be invoked by either party to determine Fair Market Value by delivering
written notification thereof not later than the 30th day after delivery of the Original Warrantholder’s objection.

 

“Governmental
Entities” has the meaning ascribed to it in the Purchase Agreement.

 

“Initial
Number” has the meaning set forth in Section 13(B).

 

“Issue Date”
means the date set forth in Item 3 of Schedule A hereto.

 

“Market
Price” means, with respect to a particular security, on any given
day, the last reported sale price regular way or, in case no such reported sale
takes place on such day, the average of the last closing bid and ask prices
regular way, in either case on the principal national securities exchange on
which the applicable securities are listed or admitted to trading, or if not
listed or admitted to trading on any national securities exchange, the average
of the closing bid and ask prices as furnished by two members of the Financial
Industry Regulatory Authority, Inc. selected from time to time by the
Company for that purpose.  “Market Price”
shall be determined without reference to after hours or extended hours trading.
If such security is not listed and traded in a manner that the quotations
referred to above are available for the period required hereunder, the Market
Price per share of Common Stock shall be deemed to be (i) in the event
that any portion of the Warrant is held by the Original Warrantholder, the fair
market value per share of such security as determined in good faith by the
Original Warrantholder or (ii) in all other circumstances, the fair market
value per share of such security as determined in good faith by the Board of
Directors in reliance on an opinion of a nationally recognized independent
investment banking corporation retained by the Company for this purpose and
certified in a resolution to the Warrantholder. 
For the purposes of determining the Market Price of the Common Stock on
the “trading day” preceding, on or following the occurrence of an event, (i) that
trading day shall be deemed to commence immediately after the regular scheduled
closing time of trading on the New York Stock Exchange or, if trading is closed
at an earlier time, such earlier time and (ii) that trading day shall end
at the next regular scheduled closing time, or if trading is closed at an
earlier time, such earlier time (for the avoidance of doubt, and as an example,
if the Market Price is to be determined as of the last trading day preceding a
specified event and the closing time of trading on a particular day is 4:00 p.m.
and the specified event occurs at 5:00 p.m. on that day, the Market Price
would be determined by reference to such 4:00 p.m. closing price).

 

“Ordinary
Cash Dividends” means a regular quarterly cash dividend on shares of
Common Stock out of surplus or net profits legally available therefor
(determined in accordance with generally accepted accounting principles in
effect from time to time), provided
that Ordinary Cash Dividends shall not include any cash dividends paid
subsequent to the Issue Date to the extent the aggregate per share dividends
paid on the outstanding Common Stock in any quarter exceed the amount set forth
in Item 4 of Schedule A hereto, as adjusted for any stock split, stock
dividend, reverse stock split, reclassification or similar transaction.

 

“Original
Warrantholder” means the United States Department of the Treasury.  Any actions specified to be taken by the
Original Warrantholder hereunder may only be taken by such 

 

3

 

Person and not by any other Warrantholder.

 

“Permitted
Transactions” has the meaning set forth in Section 13(B).

 

“Person” has the
meaning given to it in Section 3(a)(9) of the Exchange Act and as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.

 

“Per Share Fair Market
Value” has the meaning set forth in Section 13(C).

 

“Preferred Shares” means the perpetual
preferred stock issued to the Original Warrantholder on the Issue Date pursuant
to the Purchase Agreement.

 

“Pro Rata Repurchases”
means any purchase of shares of Common Stock by the Company or any Affiliate
thereof pursuant to (A) any tender offer or exchange offer subject to Section 13(e) or
14(e) of the Exchange Act or Regulation 14E promulgated thereunder or (B) any
other offer available to substantially all holders of Common Stock, in the case
of both (A) or (B), whether for cash, shares of Capital Stock of the
Company, other securities of the Company, evidences of indebtedness of the
Company or any other Person or any other property (including, without
limitation, shares of Capital Stock, other securities or evidences of
indebtedness of a subsidiary), or any combination thereof, effected while this
Warrant is outstanding.  The “Effective Date” of a Pro Rata Repurchase
shall mean the date of acceptance of shares for purchase or exchange by the
Company under any tender or exchange offer which is a Pro Rata Repurchase or
the date of purchase with respect to any Pro Rata Repurchase that is not a
tender or exchange offer.

 

“Purchase
Agreement” means the Securities Purchase Agreement – Standard Terms
incorporated into the Letter Agreement, dated as of the date set forth in Item
5 of Schedule A hereto, as amended from time to time, between the Company and
the United States Department of the Treasury (the “Letter Agreement”), including all annexes and schedules
thereto.

 

“Qualified
Equity Offering” has the meaning ascribed to it in the Purchase
Agreement.

 

“Regulatory Approvals”
with respect to the Warrantholder, means, to the extent applicable and required
to permit the Warrantholder to exercise this Warrant for shares of Common Stock
and to own such Common Stock without the Warrantholder being in violation of
applicable law, rule or regulation, the receipt of any necessary approvals
and authorizations of, filings and registrations with, notifications to, or
expiration or termination of any applicable waiting period under, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder.

 

“SEC”
means the U.S. Securities and Exchange Commission.

 

“Securities
Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

 

“Shares”
has the meaning set forth in Section 2.

 

“trading day”
means (A) if the shares of Common Stock are not traded on any national 

 

4

 

or regional securities exchange or association or over-the-counter
market, a business day or (B) if the shares of Common Stock are traded on
any national or regional securities exchange or association or over-the-counter
market, a business day on which such relevant exchange or quotation system is
scheduled to be open for business and on which the shares of Common Stock (i) are
not suspended from trading on any national or regional securities exchange or
association or over-the-counter market for any period or periods aggregating
one half hour or longer; and (ii) have traded at least once on the
national or regional securities exchange or association or over-the-counter
market that is the primary market for the trading of the shares of Common
Stock.

 

“U.S. GAAP”
means United States generally accepted accounting principles.

 

“Warrantholder”
has the meaning set forth in Section 2.

 

“Warrant”
means this Warrant, issued pursuant to the Purchase Agreement.

 

2.        Number
of Shares; Exercise Price.  This certifies that, for value
received, the United States Department of the Treasury or its permitted assigns
(the “Warrantholder”) is
entitled, upon the terms and subject to the conditions hereinafter set forth,
to acquire from the Company, in whole or in part, after the receipt of all
applicable Regulatory Approvals, if any, up to an aggregate of the number of
fully paid and nonassessable shares of Common Stock set forth in Item 6 of
Schedule A hereto, at a purchase price per share of Common Stock equal to the
Exercise Price.  The number of shares of
Common Stock (the “Shares”) and
the Exercise Price are subject to adjustment as provided herein, and all
references to “Common Stock,” “Shares” and “Exercise Price” herein shall be
deemed to include any such adjustment or series of adjustments.

 

3.        Exercise
of Warrant; Term.  Subject to Section 2, to the extent
permitted by applicable laws and regulations, the right to purchase the Shares
represented by this Warrant is exercisable, in whole or in part by the Warrantholder,
at any time or from time to time after the execution and delivery of this
Warrant by the Company on the date hereof, but in no event later than 5:00 p.m.,
New York City time on the tenth anniversary of the Issue Date (the “Expiration Time”), by (A) the
surrender of this Warrant and Notice of Exercise annexed hereto, duly completed
and executed on behalf of the Warrantholder, at the principal executive office
of the Company located at the address set forth in Item 7 of Schedule A hereto
(or such other office or agency of the Company in the United States as it may
designate by notice in writing to the Warrantholder at the address of the
Warrantholder appearing on the books of the Company), and (B) payment of
the Exercise Price for the Shares thereby purchased:

 

(i)         by having the Company withhold, from
the shares of Common Stock that would otherwise be delivered to the
Warrantholder upon such exercise, shares of Common stock issuable upon exercise
of the Warrant equal in value to the aggregate Exercise Price as to which this
Warrant is so exercised based on the Market Price of the Common Stock on the
trading day on which this Warrant is exercised and the Notice of Exercise is
delivered to the Company pursuant to this Section 3, or

 

(ii)        with the consent of both the Company and
the Warrantholder, by tendering in cash, by certified or cashier’s check
payable to the order of the Company, or by wire 

 

5

 

transfer of immediately available funds to an account designated by the
Company.

 

If the Warrantholder does not exercise this
Warrant in its entirety, the Warrantholder will be entitled to receive from the
Company within a reasonable time, and in any event not exceeding three business
days, a new warrant in substantially identical form for the purchase of that
number of Shares equal to the difference between the number of Shares subject
to this Warrant and the number of Shares as to which this Warrant is so
exercised.  Notwithstanding anything in
this Warrant to the contrary, the Warrantholder hereby acknowledges and agrees
that its exercise of this Warrant for Shares is subject to the condition that
the Warrantholder will have first received any applicable Regulatory Approvals.

 

4.        Issuance
of Shares; Authorization; Listing.  Certificates for Shares
issued upon exercise of this Warrant will be issued in such name or names as
the Warrantholder may designate and will be delivered to such named Person or
Persons within a reasonable time, not to exceed three business days after the
date on which this Warrant has been duly exercised in accordance with the terms
of this Warrant.  The Company hereby
represents and warrants that any Shares issued upon the exercise of this Warrant
in accordance with the provisions of Section 3 will be duly and validly
authorized and issued, fully paid and nonassessable and free from all taxes,
liens and charges (other than liens or charges created by the Warrantholder,
income and franchise taxes incurred in connection with the exercise of the
Warrant or taxes in respect of any transfer occurring contemporaneously
therewith). The Company agrees that the Shares so issued will be deemed to have
been issued to the Warrantholder as of the close of business on the date on
which this Warrant and payment of the Exercise Price are delivered to the
Company in accordance with the terms of this Warrant, notwithstanding that the
stock transfer books of the Company may then be closed or certificates
representing such Shares may not be actually delivered on such date.  The Company will at all times reserve and
keep available, out of its authorized but unissued Common Stock, solely for the
purpose of providing for the exercise of this Warrant, the aggregate number of
shares of Common Stock then issuable upon exercise of this Warrant at any
time.  The Company will (A) procure,
at its sole expense, the listing of the Shares issuable upon exercise of this
Warrant at any time, subject to issuance or notice of issuance, on all
principal stock exchanges on which the Common Stock is then listed or traded
and (B) maintain such listings of such Shares at all times after
issuance.  The Company will use
reasonable best efforts to ensure that the Shares may be issued without
violation of any applicable law or regulation or of any requirement of any
securities exchange on which the Shares are listed or traded.

 

5.        No
Fractional Shares or Scrip.  No fractional Shares or scrip
representing fractional Shares shall be issued upon any exercise of this
Warrant.  In lieu of any fractional Share
to which the Warrantholder would otherwise be entitled, the Warrantholder shall
be entitled to receive a cash payment equal to the Market Price of the Common
Stock on the last trading day preceding the date of exercise less the pro-rated
Exercise Price for such fractional share.

 

6.        No
Rights as Stockholders; Transfer Books.  This Warrant does not
entitle the Warrantholder to any voting rights or other rights as a stockholder
of the Company prior to the date of exercise hereof. The Company will at no
time close its transfer books against transfer of this Warrant in any manner
which interferes with the timely exercise of this Warrant.

 

6

 

7.        Charges,
Taxes and Expenses.  Issuance of certificates for Shares to the
Warrantholder upon the exercise of this Warrant shall be made without charge to
the Warrantholder for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company.

 

8.        Transfer/Assignment.

 

(A)     Subject
to compliance with clause (B) of this Section 8, this Warrant and all
rights hereunder are transferable, in whole or in part, upon the books of the
Company by the registered holder hereof in person or by duly authorized
attorney, and a new warrant shall be made and delivered by the Company, of the
same tenor and date as this Warrant but registered in the name of one or more
transferees, upon surrender of this Warrant, duly endorsed, to the office or
agency of the Company described in Section 3.  All expenses (other than stock transfer
taxes) and other charges payable in connection with the preparation, execution
and delivery of the new warrants pursuant to this Section 8 shall be paid
by the Company.

 

(B)      The
transfer of the Warrant and the Shares issued upon exercise of the Warrant are
subject to the restrictions set forth in Section 4.4 of the Purchase
Agreement.  If and for so long as
required by the Purchase Agreement, this Warrant shall contain the legends as
set forth in Sections 4.2(a) and 4.2(b) of the Purchase Agreement.

 

9.        Exchange
and Registry of Warrant.  This Warrant is exchangeable, upon the
surrender hereof by the Warrantholder to the Company, for a new warrant or
warrants of like tenor and representing the right to purchase the same
aggregate number of Shares.  The Company
shall maintain a registry showing the name and address of the Warrantholder as
the registered holder of this Warrant. This Warrant may be surrendered for exchange
or exercise in accordance with its terms, at the office of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry.

 

10.      Loss,
Theft, Destruction or Mutilation of Warrant.  Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in the case of any such loss,
theft or destruction, upon receipt of a bond, indemnity or security reasonably
satisfactory to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company shall make and deliver,
in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of
like tenor and representing the right to purchase the same aggregate number of
Shares as provided for in such lost, stolen, destroyed or mutilated Warrant.

 

11.      Saturdays,
Sundays, Holidays, etc.  If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a business day, then such action may be taken or such right may be
exercised on the next succeeding day that is a business day.

 

12.      Rule 144
Information.  The Company covenants that it will use its
reasonable best efforts to timely file all reports and other documents required
to be filed by it under the Securities Act and the Exchange Act and the rules and
regulations promulgated by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any 

 

7

 

Warrantholder, make publicly available such information as necessary to
permit sales pursuant to Rule 144 under the Securities Act), and it will
use reasonable best efforts to take such further action as any Warrantholder
may reasonably request, in each case to the extent required from time to time
to enable such holder to, if permitted by the terms of this Warrant and the
Purchase Agreement, sell this Warrant without registration under the Securities
Act within the limitation of the exemptions provided by (A) Rule 144
under the Securities Act, as such rule may be amended from time to time,
or (B) any successor rule or regulation hereafter adopted by the SEC.
Upon the written request of any Warrantholder, the Company will deliver to such
Warrantholder a written statement that it has complied with such requirements.

 

13.      Adjustments
and Other Rights.  The Exercise Price and the number of Shares
issuable upon exercise of this Warrant shall be subject to adjustment from time
to time as follows; provided,
that if more than one subsection of this Section 13 is applicable to a
single event, the subsection shall be applied that produces the largest
adjustment and no single event shall cause an adjustment under more than one
subsection of this Section 13 so as to result in duplication:

 

(A)     Stock
Splits, Subdivisions, Reclassifications or Combinations.  If the
Company shall (i) declare and pay a dividend or make a distribution on its
Common Stock in shares of Common Stock, (ii) subdivide or reclassify the
outstanding shares of Common Stock into a greater number of shares, or (iii) combine
or reclassify the outstanding shares of Common Stock into a smaller number of
shares, the number of Shares issuable upon exercise of this Warrant at the time
of the record date for such dividend or distribution or the effective date of
such subdivision, combination or reclassification shall be proportionately
adjusted so that the Warrantholder after such date shall be entitled to
purchase the number of shares of Common Stock which such holder would have
owned or been entitled to receive in respect of the shares of Common Stock
subject to this Warrant after such date had this Warrant been exercised
immediately prior to such date.  In such
event, the Exercise Price in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision, combination
or reclassification shall be adjusted to the number obtained by dividing (x) the
product of (1) the number of Shares issuable upon the exercise of this
Warrant before such adjustment and (2) the Exercise Price in effect
immediately prior to the record or effective date, as the case may be, for the
dividend, distribution, subdivision, combination or reclassification giving
rise to this adjustment by (y) the new number of Shares issuable upon
exercise of the Warrant determined pursuant to the immediately preceding
sentence.

 

(B)      Certain
Issuances of Common Shares or Convertible Securities.  Until the
earlier of (i) the date on which the Original Warrantholder no longer
holds this Warrant or any portion thereof and (ii) the third anniversary
of the Issue Date, if the Company shall issue shares of Common Stock (or rights
or warrants or other securities exercisable or convertible into or exchangeable
(collectively, a “conversion”)
for shares of Common Stock) (collectively, “convertible
securities”) (other than in Permitted Transactions (as defined
below) or a transaction to which subsection (A) of this Section 13 is
applicable) without consideration or at a consideration per share (or having a
conversion price per share) that is less than 90% of the Market Price on the
last trading day preceding the date of the agreement on pricing such shares (or
such convertible securities) then, in such event:

 

8

 

(A) the number of Shares issuable upon the exercise of this
Warrant immediately prior to the date of the agreement on pricing of such
shares (or of such convertible securities) (the “Initial Number”) shall be increased to the number obtained
by multiplying the Initial Number by a fraction (A) the numerator of which
shall be the sum of (x) the number of shares of Common Stock of the
Company outstanding on such date and (y) the number of additional shares
of Common Stock issued (or into which convertible securities may be exercised
or convert) and (B) the denominator of which shall be the sum of (I) the
number of shares of Common Stock outstanding on such date and (II) the
number of shares of Common Stock which the aggregate consideration receivable
by the Company for the total number of shares of Common Stock so issued (or
into which convertible securities may be exercised or convert) would purchase
at the Market Price on the last trading day preceding the date of the agreement
on pricing such shares (or such convertible securities); and

 

(B) the Exercise Price payable upon exercise of the Warrant shall
be adjusted by multiplying such Exercise Price in effect immediately prior to
the date of the agreement on pricing of such shares (or of such convertible
securities) by a fraction, the numerator of which shall be the number of shares
of Common Stock issuable upon exercise of this Warrant prior to such date and
the denominator of which shall be the number of shares of Common Stock issuable
upon exercise of this Warrant immediately after the adjustment described in
clause (A) above.

 

For purposes of the foregoing, the aggregate
consideration receivable by the Company in connection with the issuance of such
shares of Common Stock or convertible securities shall be deemed to be equal to
the sum of the net offering price (including the Fair Market Value of any
non-cash consideration and after deduction of any related expenses payable to
third parties) of all such securities plus the minimum aggregate amount, if
any, payable upon exercise or conversion of any such convertible securities
into shares of Common Stock; and “Permitted
Transactions” shall mean issuances (i) as consideration for or
to fund the acquisition of businesses and/or related assets, (ii) in
connection with employee benefit plans and compensation related arrangements in
the ordinary course and consistent with past practice approved by the Board of
Directors, (iii) in connection with a public or broadly marketed offering
and sale of Common Stock or convertible securities for cash conducted by the
Company or its affiliates pursuant to registration under the Securities Act or Rule 144A
thereunder on a basis consistent with capital raising transactions by
comparable financial institutions and (iv) in connection with the exercise
of preemptive rights on terms existing as of the Issue Date.  Any adjustment made pursuant to this Section 13(B) shall
become effective immediately upon the date of such issuance.

 

(C)      Other
Distributions.  In case the Company shall fix a record date for
the making of a distribution to all holders of shares of its Common Stock of
securities, evidences of indebtedness, assets, cash, rights or warrants
(excluding Ordinary Cash Dividends, dividends of its Common Stock and other
dividends or distributions referred to in Section 13(A)), in each such
case, the Exercise Price in effect prior to such record date shall be reduced
immediately thereafter to the price determined by multiplying the Exercise
Price in effect immediately prior to the reduction by the quotient of (x) the
Market Price of the Common Stock on the last trading day preceding the first
date on which the Common Stock trades regular way on the principal 

 

9

 

national securities exchange on which the Common Stock is listed or
admitted to trading without the right to receive such distribution, minus the
amount of cash and/or the Fair Market Value of the securities, evidences of
indebtedness, assets, rights or warrants to be so distributed in respect of one
share of Common Stock (such amount and/or Fair Market Value, the “Per Share Fair Market Value”) divided by (y) such
Market Price on such date specified in clause (x); such adjustment shall be
made successively whenever such a record date is fixed.  In such event, the number of Shares issuable
upon the exercise of this Warrant shall be increased to the number obtained by
dividing (x) the product of (1) the number of Shares issuable upon
the exercise of this Warrant before such adjustment, and (2) the Exercise
Price in effect immediately prior to the distribution giving rise to this
adjustment by (y) the new Exercise Price determined in accordance with the
immediately preceding sentence.  In the
case of adjustment for a cash dividend that is, or is coincident with, a
regular quarterly cash dividend, the Per Share Fair Market Value would be reduced
by the per share amount of the portion of the cash dividend that would
constitute an Ordinary Cash Dividend. In the event that such distribution is
not so made, the Exercise Price and the number of Shares issuable upon exercise
of this Warrant then in effect shall be readjusted, effective as of the date
when the Board of Directors determines not to distribute such shares, evidences
of indebtedness, assets, rights, cash or warrants, as the case may be, to the
Exercise Price that would then be in effect and the number of Shares that would
then be issuable upon exercise of this Warrant if such record date had not been
fixed.

 

(D)      Certain Repurchases of Common Stock.  In
case the Company effects a Pro Rata Repurchase of Common Stock, then the
Exercise Price shall be reduced to the price determined by multiplying the
Exercise Price in effect immediately prior to the Effective Date of such Pro
Rata Repurchase by a fraction of which the numerator shall be (i) the
product of (x) the number of shares of Common Stock outstanding
immediately before such Pro Rata Repurchase and (y) the Market Price of a
share of Common Stock on the trading day immediately preceding the first public
announcement by the Company or any of its Affiliates of the intent to effect
such Pro Rata Repurchase, minus (ii) the aggregate purchase price of the
Pro Rata Repurchase, and of which the denominator shall be the product of (i) the
number of shares of Common Stock outstanding immediately prior to such Pro Rata
Repurchase minus the number of shares of Common Stock so repurchased and (ii) the
Market Price per share of Common Stock on the trading day immediately preceding
the first public announcement by the Company or any of its Affiliates of the
intent to effect such Pro Rata Repurchase. 
In such event, the number of shares of Common Stock issuable upon the
exercise of this Warrant shall be increased to the number obtained by dividing (x) the
product of (1) the number of Shares issuable upon the exercise of this
Warrant before such adjustment, and (2) the Exercise Price in effect
immediately prior to the Pro Rata Repurchase giving rise to this adjustment by (y) the
new Exercise Price determined in accordance with the immediately preceding
sentence.  For the avoidance of doubt, no
increase to the Exercise Price or decrease in the number of Shares issuable
upon exercise of this Warrant shall be made pursuant to this Section 13(D).

 

(E)      Business Combinations.  In
case of any Business Combination or reclassification of Common Stock (other
than a reclassification of Common Stock referred to in Section 13(A)), the
Warrantholder’s right to receive Shares upon exercise of this Warrant shall be
converted into the right to exercise this Warrant to acquire the number of
shares of stock or other securities or property (including cash) which the
Common Stock issuable (at the time of such Business Combination or
reclassification) upon exercise of this Warrant immediately prior to such 

 

10

 

Business Combination or reclassification would have been entitled to
receive upon consummation of such Business Combination or reclassification; and
in any such case, if necessary, the provisions set forth herein with respect to
the rights and interests thereafter of the Warrantholder shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably be, to the
Warrantholder’s right to exercise this Warrant in exchange for any shares of
stock or other securities or property pursuant to this paragraph.  In determining the kind and amount of stock,
securities or the property receivable upon exercise of this Warrant following
the consummation of such Business Combination, if the holders of Common Stock
have the right to elect the kind or amount of consideration receivable upon
consummation of such Business Combination, then the consideration that the
Warrantholder shall be entitled to receive upon exercise shall be deemed to be
the types and amounts of consideration received by the majority of all holders
of the shares of common stock that affirmatively make an election (or of all
such holders if none make an election).

 

(F)      Rounding of Calculations; Minimum
Adjustments.  All calculations under this Section 13 shall
be made to the nearest one-tenth (1/10th) of a cent or to the nearest
one-hundredth (1/100th) of a share, as the case may be.  Any provision of this Section 13 to the
contrary notwithstanding, no adjustment in the Exercise Price or the number of
Shares into which this Warrant is exercisable shall be made if the amount of
such adjustment would be less than $0.01 or one-tenth (1/10th) of a share of
Common Stock, but any such amount shall be carried forward and an adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate $0.01 or 1/10th of a share of
Common Stock, or more.

 

(G)      Timing
of Issuance of Additional Common Stock Upon Certain Adjustments.  In
any case in which the provisions of this Section 13 shall require that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event (i) issuing to
the Warrantholder of this Warrant exercised after such record date and before
the occurrence of such event the additional shares of Common Stock issuable
upon such exercise by reason of the adjustment required by such event over and
above the shares of Common Stock issuable upon such exercise before giving
effect to such adjustment and (ii) paying to such Warrantholder any amount of
cash in lieu of a fractional share of Common Stock; provided, however,
that the Company upon request shall deliver to such Warrantholder a due bill or
other appropriate instrument evidencing such Warrantholder’s right to receive
such additional shares, and such cash, upon the occurrence of the event
requiring such adjustment.

 

(H)      Completion
of Qualified Equity Offering.  In the event the Company (or any
successor by Business Combination) completes one or more Qualified Equity
Offerings on or prior to December 31, 2009 that result in the Company (or
any such successor ) receiving aggregate gross proceeds of not less than 100%
of the aggregate liquidation preference of the Preferred Shares (and any
preferred stock issued by any such successor to the Original Warrantholder
under the CPP), the number of shares of Common Stock underlying the portion of
this Warrant then held by the Original Warrantholder shall be thereafter
reduced by a number of shares of Common Stock equal to the product of (i) 0.5
and (ii) the number of shares underlying 

 

11

 

the Warrant on the Issue Date (adjusted to take into account all other
theretofore made adjustments pursuant to this Section 13).

 

(I)       Other Events.  For so
long as the Original Warrantholder holds this Warrant or any portion thereof,
if any event occurs as to which the provisions of this Section 13 are not
strictly applicable or, if strictly applicable, would not, in the good faith
judgment of the Board of Directors of the Company, fairly and adequately
protect the purchase rights of the Warrants in accordance with the essential
intent and principles of such provisions, then the Board of Directors shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of the Board of Directors, to protect such purchase rights
as aforesaid.  The Exercise Price or the
number of Shares into which this Warrant is exercisable shall not be adjusted
in the event of a change in the par value of the Common Stock or a change in
the jurisdiction of incorporation of the Company.

 

(J)       Statement Regarding Adjustments.  Whenever
the Exercise Price or the number of Shares into which this Warrant is
exercisable shall be adjusted as provided in Section 13, the Company shall
forthwith file at the principal office of the Company a statement showing in
reasonable detail the facts requiring such adjustment and the Exercise Price
that shall be in effect and the number of Shares into which this Warrant shall
be exercisable after such adjustment, and the Company shall also cause a copy
of such statement to be sent by mail, first class postage prepaid, to each
Warrantholder at the address appearing in the Company’s records.

 

(K)      Notice
of Adjustment Event.  In the event that the Company shall propose
to take any action of the type described in this Section 13 (but only if
the action of the type described in this Section 13 would result in an
adjustment in the Exercise Price or the number of Shares into which this
Warrant is exercisable or a change in the type of securities or property to be
delivered upon exercise of this Warrant), the Company shall give notice to the
Warrantholder, in the manner set forth in Section 13(J), which notice
shall specify the record date, if any, with respect to any such action and the
approximate date on which such action is to take place.  Such notice shall also set forth the facts
with respect thereto as shall be reasonably necessary to indicate the effect on
the Exercise Price and the number, kind or class of shares or other securities
or property which shall be deliverable upon exercise of this Warrant.  In the case of any action which would require
the fixing of a record date, such notice shall be given at least 10 days prior
to the date so fixed, and in case of all other action, such notice shall be
given at least 15 days prior to the taking of such proposed action. Failure to
give such notice, or any defect therein, shall not affect the legality or
validity of any such action.

 

(L)      Proceedings Prior to Any Action
Requiring Adjustment.  As a condition precedent to the taking of
any action which would require an adjustment pursuant to this Section 13,
the Company shall take any action which may be necessary, including obtaining
regulatory, New York Stock Exchange, NASDAQ Stock Market or other applicable
national securities exchange or stockholder approvals or exemptions, in order
that the Company may thereafter validly and legally issue as fully paid and
nonassessable all shares of Common Stock that the Warrantholder is entitled to
receive upon exercise of this Warrant pursuant to this Section 13.

 

12

 

(M)     Adjustment
Rules.  Any adjustments pursuant to this Section 13 shall be
made successively whenever an event referred to herein shall occur.  If an adjustment in Exercise Price made
hereunder would reduce the Exercise Price to an amount below par value of the
Common Stock, then such adjustment in Exercise Price made hereunder shall
reduce the Exercise Price to the par value of the Common Stock.

 

14.      Exchange.  At any time
following the date on which the shares of Common Stock of the Company are no
longer listed or admitted to trading on a national securities exchange (other
than in connection with any Business Combination), the Original Warrantholder
may cause the Company to exchange all or a portion of this Warrant for an economic
interest (to be determined by the Original Warrantholder after consultation
with the Company) of the Company classified as permanent equity under U.S. GAAP
having a value equal to the Fair Market Value of the portion of the Warrant so
exchanged.  The Original Warrantholder
shall calculate any Fair Market Value required to be calculated pursuant to
this Section 14, which shall not be subject to the Appraisal Procedure.

 

15.      No Impairment.  The
Company will not, by amendment of its Charter or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in taking of all such action as may be
necessary or appropriate in order to protect the rights of the Warrantholder.

 

16.      Governing Law.  This Warrant will be governed by and construed 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 Company and the Warrantholder agrees (a) to submit to
the exclusive jurisdiction and venue of the United States District Court for
the District of Columbia for any civil action, suit or proceeding arising out
of or relating to this Warrant or the transactions contemplated hereby, and (b) that
notice may be served upon the Company at the address in Section 20 below
and upon the Warrantholder at the address for the Warrantholder set forth in
the registry maintained by the Company pursuant to Section 9 hereof.  To the extent permitted by applicable law,
each of the Company and the Warrantholder hereby unconditionally waives trial
by jury in any civil legal action or proceeding relating to the Warrant or the
transactions contemplated hereby or thereby.

 

17.      Binding Effect.  This
Warrant shall be binding upon any successors or assigns of the Company.

 

18.      Amendments.  This Warrant
may be amended and the observance of any term of this Warrant may be waived
only with the written consent of the Company and the Warrantholder.

 

19.      Prohibited Actions.  The
Company agrees that it will not take any action which would entitle the
Warrantholder to an adjustment of the Exercise Price if the total number of
shares of Common Stock issuable after such action upon exercise of this
Warrant, together with 

 

13

 

all shares of Common Stock then outstanding and all shares of Common
Stock then issuable upon the exercise of all outstanding options, warrants,
conversion and other rights, would exceed the total number of shares of Common
Stock then authorized by its Charter.

 

20.      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 hereunder shall be delivered as set forth in Item 8 of Schedule A
hereto, or pursuant to such other instructions as may be designated in writing
by the party to receive such notice.

 

21.      Entire Agreement.  This
Warrant, the forms attached hereto and Schedule A hereto (the terms of which
are incorporated by reference herein), and the Letter Agreement (including all
documents incorporated therein), contain the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements or undertakings with respect thereto.

 

[Remainder of page intentionally left blank]

 

14

 

[Form of
Notice of Exercise]

Date:                       

 

TO:         SCBT FINANCIAL CORPORATION

 

RE:          Election to Purchase
Common Stock

 

The undersigned, pursuant to the provisions
set forth in the attached Warrant, hereby agrees to subscribe for and purchase
the number of shares of the Common Stock set forth below covered by such
Warrant.  The undersigned, in accordance
with Section 3 of the Warrant, hereby agrees to pay the aggregate Exercise
Price for such shares of Common Stock in the manner set forth below. A new
warrant evidencing the remaining shares of Common Stock covered by such
Warrant, but not yet subscribed for and purchased, if any, should be issued in
the name set forth below.

 

	
  Number of Shares of Common Stock

  	
   

  	
   

  

 

	
  Method of Payment of Exercise Price (note
  if cashless exercise pursuant to Section 3(i) of the Warrant or
  cash exercise pursuant to 

  
	
  Section 3(ii) of the Warrant,
  with consent of the Company and the Warrantholder)

  	
   

  

 

	
  Aggregate Exercise Price:

  	
   

  	
   

  

 

	
   

  	
  Holder:

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

15

 

IN WITNESS WHEREOF, the Company has caused
this Warrant to be duly executed by a duly authorized officer.

 

Dated:  January 16,
2009

 

	
   

  	
  SCBT FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert R. Hill, Jr.

  
	
   

  	
  Name: Robert R. Hill, Jr.

  
	
   

  	
  Title:   President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John C. Pollok

  
	
   

  	
  Name: John C. Pollok

  
	
   

  	
  Title:Senior Vice President and Chief
  Financial Officer

  

 

[Signature
Page to Warrant]

 

16

 

SCHEDULE
A

 

Item 1

Name: SCBT FINANCIAL CORPORATION

Corporate or other organizational form: Corporation

Jurisdiction of organization: South Carolina

 

Item 2

Exercise Price: $32.06

 

Item 3

Issue Date: January 16, 2009

 

Item 4

Amount of last dividend declared prior to the Issue Date:  $.17 per share dividend to holders of common
stock

 

Item 5

Date of Letter Agreement between the Company and the United States
Department of the Treasury: January16, 2009

 

Item 6

Number of shares of Common Stock: 303,083

 

Item 7

	
  Company’s address:

  	
  520 Gervais Street

  
	
   

  	
  Columbia, South Carolina 29201

  

 

Item 8

	
  Notice information:

  	
  Robert R. Hill, Jr.

  
	
   

  	
  President and Chief Executive Officer

  
	
   

  	
  SCBT Financial Corporation

  
	
   

  	
  520 Gervais Street

  
	
   

  	
  Columbia, South Carolina 29201

  
	
   

  	
  (803) 231-3581

  
	
   

  	
   

  
	
   

  	
  With a Copy to:

  
	
   

  	
   

  
	
   

  	
  John M. Jennings, Esq.

  
	
   

  	
  Nelson Mullins Riley & Scarborough
  LLP

  
	
   

  	
  Suite 900

  
	
   

  	
  104 S. Main Street

  
	
   

  	
  Greenville, South Carolina 29601

  
	
   

  	
  (864) 250-2207

  

 

17

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