SECURITIES PURCHASE AGREEMENT dated as of October 29, 2009 between Cascade Bancorp and BOTC Holdings LLC
dated as
of October 29, 2009
between
and
BOTC
Holdings LLC
TABLE
OF CONTENTS
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Page
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ARTICLE I
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Purchase;
Closings
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1.1
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Purchase
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2
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1.2
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Closing
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2
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ARTICLE
II
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Representations
and Warranties
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2.1
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Disclosure
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7
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2.2
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Representations
and Warranties of the Company
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8
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2.3
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Representations
and Warranties of the Investor
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26
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ARTICLE
III
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Covenants
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3.1
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Filings;
Other Actions
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26
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3.2
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Expenses
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29
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3.3
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Access,
Information and Confidentiality
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29
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3.4
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Conduct
of the Business
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30
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3.5
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Reasonable
Efforts
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30
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3.6
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Company
Forbearances
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30
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3.7
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Shareholder
Litigation
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32
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ARTICLE
IV
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Additional
Agreements
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4.1
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No
Rights Agreement
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32
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4.2
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Governance
Matters
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33
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4.3
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Legend
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34
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4.4
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Certain
Transactions
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34
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4.5
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Indemnity
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35
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4.6
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Registration
Rights
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37
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4.7
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Market
Stand-off Provision.
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47
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4.8
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Gross-Up
Rights
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48
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4.9
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Anti-Takeover
Matters
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50
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4.10
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Additional
Regulatory Matters.
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51
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4.11
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VCOC
Investor
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52
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-i-
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ARTICLE
V
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Termination
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5.1
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Termination.
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53
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5.2
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Effects
of Termination.
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54
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ARTICLE
VI
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6.1
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Survival
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54
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6.2
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Amendment
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54
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6.3
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Waivers
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54
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6.4
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Counterparts
and Facsimile
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54
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6.5
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Governing
Law
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55
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6.6
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Waiver
of Jury Trial
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55
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6.7
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Notices
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55
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6.8
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Entire
Agreement, Etc.
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56
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6.9
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Other
Definitions
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56
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6.10
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Captions
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57
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6.11
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Severability
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57
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6.12
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No
Third-Party Beneficiaries
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57
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6.13
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Time
of Essence
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58
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6.14
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Public
Announcements
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58
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6.15
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Specific
Performance
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58
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6.16
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No
Obligation
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58
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-ii-
LIST
OF EXHIBITS
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Exhibit
A:
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Form
of Opinion of Counsel
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Exhibit
B:
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Form
of Disclosure Letter of Counsel
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Exhibit
C:
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Form
of Officer’s Certificate from the
Company
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-iii-
INDEX
OF DEFINED TERMS
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Term
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Location
of
Definition
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Additional
Shares
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1.2(b)
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Affiliate
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6.9(2)
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Agreement
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Preamble
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Articles
of Incorporation
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2.2(a)
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Beneficially
Own/Beneficial Owner/Beneficial Ownership
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6.9(9)
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Benefit
Plan
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2.2(p)(1)
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BHC
Act
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2.2(a)
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Board
of Directors
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1.2(c)(1)(ix)
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Business
Combination Exemption Resolution
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4.9(b)
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business
day
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6.9(7)
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CBC
Act
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1.2(c)(1)(xviii)
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Closing
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1.2(a)
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Closing
Date
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1.2(a)
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Code
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2.2(p)(2)
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Common
Stock/Common Shares
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Recitals
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Company
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Preamble
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Company
10-K
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2.2(c)(1)
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Company
Bank
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4.2(a)
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Company
Financial Statements
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2.2(e)
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Company
Preferred Stock
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2.2(c)(1)
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Company
Reports
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2.2(g)(1)
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Company
Restricted Stock
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2.2(c)(1)
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Company
SEC Filings
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2.2(ee)
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Company
Significant Agreement
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2.2(k)
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Company
Stock Option
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2.2(c)(1)
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Company
Stock Option Plans
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2.2(c)(1)
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Company
Subsidiary/Company Subsidiaries
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2.2(b)
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control/controlled
by/under common control with
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6.9(2)
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Covered
Persons
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4.9(b)
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De
Minimis Claim
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4.5(e)
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Designated
Directors
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1.2(c)(1)(x)
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Disclosure
Schedule
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2.1(a)
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ERISA
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2.2(p)(1)
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ERISA
Affiliate
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2.2(p)(2)
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ERISA
Plan
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2.2(p)(3)
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Exchange
Act
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2.2(g)(1)
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FDIC
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2.2(b)
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GAAP
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2.2(f)
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Governmental
Entity
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1.2(c)(1)(i)
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herein/hereof/hereunder
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6.9(5)
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Holder
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4.6(k)(1)
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-iv-
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Term
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Location
of
Definition
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Holders’
Counsel
|
4.6(k)(2)
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including/includes/included/include
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6.9(4)
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Indemnified
Party
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4.5(c)
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Indemnifying
Party
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4.5(c)
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Indemnitee
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4.6(g)(1)
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Information
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3.3(b)
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Intellectual
Property
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2.2(w)
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Investor
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Preamble
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Investor
Nominee
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4.2(a)
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IRS
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2.2(i)
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knowledge
of the Company/Company’s knowledge
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6.9(10)
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Liens
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2.2(b)
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Losses
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4.5(a)
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Market
Price
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4.8(a)
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Material
Adverse Effect
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2.1(b)
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NASDAQ
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1.2(c)(1)(xiv)
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New
Security
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4.8(a)
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OBCA
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2.2(v)
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Order
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1.2(c)(1)(xiii)
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Other
Private Placements
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Recitals
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Recitals
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Pending
Underwritten Offering
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4.6(l)
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Pension
Plan
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2.2(p)(3)
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Per
Share Purchase Price
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1.2(a)
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Permitted
Liens
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2.2(h)
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person
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6.9(8)
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Piggyback
Registration
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4.6(a)(4)
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Plan
Asset Regulations
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4.11
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Pre-Closing
Period
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3.4
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Previously
Disclosed
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2.1(c)
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Public
Offering Price
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1.2(a)
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Purchased
Shares
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1.2(a)
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Purchase
Price
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1.2(a)
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Register/registered/registration
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4.6(k)(3)
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Registrable
Securities
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4.6(k)(4)
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Registration
Deadline
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4.6(a)(1)
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Registration
Expenses
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4.6(k)(5)
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Regulatory
Agreement
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2.2(y)
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Rule
144
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4.6(k)(6)
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Rule
144A
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4.6(k)(6)
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Rule
405
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4.6(k)(6)
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Rule
158
|
4.6(k)(6)
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-v-
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Term
|
Location
of
Definition
|
|
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Rule
159A
|
4.6(k)(6)
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Rule
415
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4.6(k)(6)
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Scheduled
Black-out Period
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4.6(k)(7)
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SEC
|
2.1(c)
|
|
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Securities
|
1.2(b)
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Securities
Act
|
2.2(g)(1)
|
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Selling
Expenses
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4.6(k)(8)
|
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Shareholder
Litigation
|
3.7
|
|
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Shelf
Registration Statement
|
4.6(a)(2)
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Special
Registration
|
4.6(a)(4)
|
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Stockholder
Approvals
|
2.2(d)(1)
|
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subsidiary
|
6.9(1)
|
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Takeover
Law
|
2.2(v)
|
|
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Tax/Taxes
|
2.2(i)
|
|
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Tax
Return
|
2.2(i)
|
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Threshold
Amount
|
4.5(e)
|
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|
Transaction
Documents
|
Recitals
|
|
|
Trust
Preferred Securities Repurchase Agreements
|
1.2(c)(1)(xii)
|
|
|
Unlawful
Gains
|
2.2(n)(5)
|
|
|
VCOC
|
4.11
|
|
|
VCOC
Investor
|
4.11
|
|
|
Voting
Debt
|
|
2.2(c)(1)
|
-vi-
SECURITIES PURCHASE AGREEMENT,
dated as of October 29, 2009 (this “Agreement”), between Cascade
Bancorp, an Oregon corporation, (the “Company”) and BOTC Holdings
LLC, a Delaware limited liability company (the “Investor”).
A. The
Investment. The Company intends to sell to the Investor, and
the Investor intends to purchase from the Company, as an investment in the
Company, the securities as described herein. The securities to be
purchased at the closing are shares of common stock, no par value, of the
Company (“Common Stock”
or “Common
Shares”).
B. Additional Private
Placements. Concurrently with the investment contemplated
herein, the Company has agreed to sell Common Shares in private
placements to other investors (the “Other Private Placements”)
under separate securities purchase agreements (the “Other Securities Purchase
Agreements”), with the closing of such transactions to occur
simultaneously with the closing of this transaction and the Public Offering as
described herein.
C. Public
Offering. Concurrently with the investment contemplated
herein, the Company will sell Common Shares in an underwritten, registered
public offering (the “Public
Offering”), with the closing of such offering to occur simultaneously
with the closing of this transaction as described herein.
D. Transaction
Documents. The term “Transaction Documents” refers
to this Agreement and the Other Securities Purchase Agreement.
NOW, THEREFORE, in
consideration of the premises, and of the representations, warranties, covenants
and agreements set forth herein, the parties agree as follows:
ARTICLE
I
Purchase;
Closings
1.1 Purchase. On
the terms and subject to the conditions set forth herein, the Investor will
purchase from the Company, and the Company will sell to the Investor, a number
of shares of Common Stock as set forth herein.
(a) Subject
to the satisfaction of the conditions to the closing set forth in
Section 1.2(c), the closing shall take place simultaneously with the
closing of the Public Offering and the Other Private Placements or as shall be
agreed upon in writing by the parties hereto, at the offices of the Company
located at 0000 XX Xxxx Xxxxxx, Xxxx, Xxxxxx 00000 or such other location as
agreed by the parties in writing (the “Closing”). The
date of the Closing is referred to as the “Closing
Date.” Subject to the satisfaction of the conditions described
in Section 1.2(c), at the Closing, the Company will deliver to the Investor
one or more certificates representing such number of whole shares of
Common Stock (the “Purchased
Shares”) determined by dividing (i) $40,000,000 by the lesser of (A)
$0.87 per share and (B) the net proceeds per share to the Company in connection
with the Public Offering (the “Public Offering Price”)(the
“Per Share Purchase
Price”), against payment by the Investor of $40,000,000 (the “Purchase Price”) by wire transfer of
immediately available United States funds to a bank account designated by the
Company; provided, that
if the Purchased Shares would be equal to or greater than 25% of any class of
Voting Securities (as defined in the BHC Act) of the Company outstanding at such
time (assuming, for this purpose only, full conversion of all securities owned
by such Investor and its Affiliates that are convertible into or exercisable for
Voting Securities and no conversion by other holders of such convertible
securities), then Investor shall purchase the highest number of shares of Common
Stock at the Per Share Purchase Price (and the Purchase Price shall be reduced
accordingly) such that the Investor will not be deemed to own, control or have
the power to vote, for purposes of the BHC Act (as defined below) or the CBC Act
(as defined below) and the rules and regulations promulgated thereunder, 25% or
more of any class of Voting Securities (as defined in the BHC Act) of the
Company outstanding at such time (assuming, for this purpose only, full
conversion of all securities owned by such Investor and its Affiliates that are
convertible into or exercisable for Voting Securities and no conversion by other
holders of such convertible securities) or otherwise to be deemed to acquire
control of the Company for purposes of the BHC Act or any other federal or state
banking laws or regulations promulgated thereunder.
(b) In
the event that the underwriters in the Public Offering exercise their
over-allotment option to purchase additional shares of Common Stock pursuant to
the underwriting agreement for the Public Offering, then the Company shall
provide written notice to the Investor (which notice shall include the date of
the purchase and the number of shares of Common Stock purchased by the
underwriters) and the Investor shall have the option to purchase, at the Per
Share Purchase Price and on the same terms and conditions as the Purchased
Shares, additional shares of Common Stock (the “Additional Shares” and,
together with the Purchased Shares, the “Securities”) up to the number
of shares of Common Stock, which taken together with the Purchased Shares, would
equal the same percentage of the outstanding shares of Common Stock after the
issuance of the shares of Common Stock pursuant to the over-allotment option as
represented by the Purchased Shares issued pursuant to Section
1.2(a).
-2-
(1) The
obligation of the Investor to consummate the Closing is subject to the
fulfillment prior to or contemporaneously with the Closing of each of the
following conditions:
(i) no
provision of any applicable law or regulation and no judgment, injunction, order
or decree shall prohibit the Closing or shall prohibit or restrict Investor or
its Affiliates from owning, voting, or, subject to the receipt of the
Stockholder Approvals (defined below), converting or exercising, any securities
of the Company in accordance with the terms thereof and no lawsuit shall have
been commenced by any court, administrative agency or commission or other
governmental authority or instrumentality, whether federal, state, local or
foreign, or any applicable industry self-regulatory organization (each, a “Governmental Entity”) seeking
to effect any of the foregoing;
(ii) the
shareholders of Common Shares shall have duly approved the transactions
contemplated hereby, the transactions contemplated by the other Transaction
Documents (to the extent required), and an increase in the number of authorized
Common Shares to 300 million, in each case by the vote required by the Company’s
Articles of Incorporation or the NASDAQ’s listing rules, as applicable, and each
shall have become effective;
(iii) the
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all respects as of the date hereof and as of the Closing
(except to the extent such representations and warranties are made as of a
specified date, in which case such representations and warranties shall be true
and correct in all respects as of such date);
(iv)
the Company shall have performed all obligations
required to be performed by it at or prior to or contemporaneously with the
Closing under this Agreement;
(v)
since the date hereof, there shall not have
occurred any circumstance, event, change, development or effect that,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect on the Company or its principal depository
institution subsidiary;
-3-
(vi)
the Company shall receive proceeds (net of underwriting commissions and
discounts) from the sale of Common Shares of an aggregate amount not less than
$150 million (which includes the Purchase Price), contemporaneously with the
Closing, from the proceeds of the Public Offering, from the Other Private
Placements and from the Investor as contemplated by this Agreement, and all of
such proceeds, other than (A) amounts used to repurchase the trust preferred
securities pursuant to the Trust Preferred Securities Repurchase Agreements and
to pay related fees and expenses (which related fees and expenses shall not
exceed $2.7 million); (B) amounts used to reimburse the Investor and the
investors in the Other Private Placement for their respective fees and expenses
pursuant to this Agreement and the Other Securities Purchase Agreement (which
amounts shall not exceed $2.65 million); (C) amounts to pay expenses related to
the Public Offering, the Special Shareholders Meeting and the transactions
contemplated by this Agreement and the Other Purchase Agreements (which amounts
shall not exceed $1.5 million); and (D) up to $1 million which will remain at
the Company for working capital purposes, shall be contributed as capital to the
Company’s principal depository institution subsidiary;
(vii) the
Company shall have reimbursed the Investor for out-of-pocket fees and expenses
incurred by the Investor in connection with the transaction contemplated hereby
and with any proposed financing thereof, including, but not limited to, fees and
disbursements of legal counsel, accounting and financial advisors, credit review
and investment banking advisors, up to $1,400,000 in the aggregate;
(viii)
Xxxxx Xxxxxx Xxxxxxxx LLP, counsel for the Company, shall have delivered to the
Investor their written opinion, dated the Closing Date, in the form set forth in
Exhibit A
hereto, in form and substance satisfactory to the Investor;
(ix)
Xxxxx Xxxxxx Xxxxxxxx LLP, counsel for the Company, shall have delivered to the
Investor their written opinion and disclosure letter delivered in connection
with the Public Offering, dated the Closing Date, in the form set forth in Exhibit B hereto, in
form and substance satisfactory to the Investor;
(x) Xxxxx
LLP, in their capacity as the Company’s independent public accountants, shall
have delivered to the Investor and to the Investor’s designated directors (the
“Designated Directors”)
on the board of directors of the Company (the “Board of Directors”) a
comfort letter that is addressed to them that is the same as the comfort letter
delivered to the underwriters in connection with the Public Offering, in form
and substance satisfactory to the Investor;
(xi) the
Company shall have delivered to the Investor a duly executed Officer’s
Certificate in the form set forth in Exhibit C
hereto;
(xii) by
November 16, 2009, the Company shall have entered into agreements that are not
subject to any conditions in the control of the holder or termination rights by
such holder to repurchase and cancel at least $66.5 million aggregate
liquidation amount of the outstanding trust preferred securities by issuer
trusts originated by the Company at a discount of not less than 80% of such
aggregate liquidation amount (the “Trust Preferred Securities
Repurchase Agreements”), and, as of the Closing, either (i) the
transactions contemplated by the Repurchase Agreements shall have been
consummated and/or (ii) the Trust Preferred Securities Repurchase Agreements
shall be in full force and effect and shall not have been modified or amended in
any material respect;
-4-
(xiii) the
Company and its Subsidiaries shall be in compliance in all material respects
with the policies and procedures adopted by them and disclosed to the Investor
in the Three Year Financial Plan dated October 24, 2009, and none of such
policies and procedures shall have been revoked or modified in any respect that
would make it materially less likely that the Company and its Subsidiaries will
be able to comply with a cease-and-desist order dated August 27, 2009 against
the Company Bank issued by the FDIC (as defined below) and the Oregon Division
of Finance and Corporate Securities (the “Order”) (or any other
enforcement orders in effect as of the Closing);
(xiv) as
of the close of business on the second business day immediately preceding the
Closing, the Company’s (A) classified assets on its balance sheet shall not be
more than 10% higher than the amount set forth as of September 30, 2009, (B)
non-performing assets on its balance sheet shall not be more than 17.5% higher
than the amount set forth as of September 30, 2009 and (C) the Company’s net
loss, exclusive of tax adjustments or tax expense, for the period October 1,
2009 to the second business day prior to the Closing Date, shall not exceed $25
million;
(xv) the
Company shall have caused the shares of Common Stock issuable at Closing and the
shares of Common Stock to be issued in the Other Private Placements and the
Public Offering to be approved for listing on the National Association of
Securities Dealers Automated Quotation System (“NASDAQ”), subject to official
notice of issuance;
(xvi) the
Company and the Investor shall have obtained the approvals and authorizations
of, filings and registrations with, and notifications to, and, to the extent
required by applicable law or regulation, consents, approvals, or exemptions
from bank regulatory authorities, for the transactions contemplated by the
Transaction Documents;
(xvii) except
as Previously Disclosed (as defined below), no enforcement action shall have
been threatened or issued by any governmental agency with regulatory authority
over the Company and its subsidiaries;
(xviii) the
Investor shall have received written confirmation, satisfactory to it in its
reasonable good faith judgment, from the Federal Reserve to the effect that
neither they, nor any of their respective Affiliates) shall be deemed to
“control” the Company or any of its Subsidiaries after the Closing for purposes
of the Bank Holding Company Act of 1956, as amended (the “BHC Act”), or the Change in
Bank Control Act of 1978, as amended (the “CBC Act”), by reason of the
purchase of the Securities or the consummation of the other transactions
contemplated by this Agreement;
(xix) contemporaneously
with the Closing, the closing of the Other Securities Purchase Agreement shall
occur, and the Company shall receive gross proceeds from the sale of Common
Shares to Xxxxx X. Xxxxxx of not less than $25 million;
-5-
(xx) contemporaneously
with the Closing, the Designated Director shall be appointed to the board of
directors of the Company (the “Board of Directors”)
pursuant to resolutions adopted by the Board of Directors and disclosed to the
Investor prior to the Closing Date;
(xxi) the
Board of Directors and the board of directors of the Bank shall each have passed
a resolution modifying its policy with respect to board service to provide that
the Designated Director and any Investor Nominee shall not be disqualified from
board service by virtue of serving on the board of directors of three or more
public companies so long as such service shall have commenced or continued in
connection with the such person’s professional responsibilities.
At Closing, the Company will deliver a
certificate of the Chief Executive Officer or the Chief Financial Officer
certifying compliance with each of the above conditions and upon the request of
the Investor shall provide sufficient detail that the Investor may verify
compliance.
(2) The
obligation of the Company to consummate the Closing is subject to the
fulfillment prior to the Closing of each of the following
conditions:
(i) the
representations and warranties of the Investor set forth in Section 2.3 of
this Agreement shall be true and correct in all respects as of the date hereof
and as of the Closing (except to the extent such representations and warranties
are made as of a specified date, in which case such representations and
warranties shall be true and correct in all respects as of such
date);
(ii) the
Company shall receive proceeds (net of underwriting commissions and discounts)
from the sale of Common Shares of an aggregate amount not less than $150 million
(which includes the Purchase Price), contemporaneously with the Closing, from
the proceeds of the Public Offering, from the Other Private Placements and from
the Investor as contemplated by this Agreement;
(iii) the
Company and the Investor shall have obtained the approvals and authorizations
of, filings and registrations with, and notifications to, and, to the extent
required by applicable law or regulation, consents, approvals, or exemptions
from bank regulatory authorities, for the transactions contemplated by the
Transaction Documents; and
(iv) the
Investor shall have performed all obligations required to be performed by it at
or prior to the Closing under this Agreement.
-6-
ARTICLE
II
2.1 Disclosure.
(a) On
or prior to the date of this Agreement, the Company delivered to the Investor a
schedule (“Disclosure
Schedule”) setting forth, among other things, items the disclosure of
which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 2.2 or to one or more of
its covenants contained in Article III; provided, however, that notwithstanding
anything in this Agreement to the contrary, the mere inclusion of an item in
such schedule shall not be deemed an admission that such item represents a
material exception or material fact, event, or circumstance or that such item
has had or would reasonably be expected to have a Material Adverse Effect on the
Company.
(b) “Material Adverse Effect”
means, with respect to the Investor, only clause (2) that follows, or, with
respect to the Company, both clauses (1) and (2) that follow, any
circumstance, event, change, development or effect that, individually or in the
aggregate (1) is or would reasonably be expected to be material and adverse
to the financial position, results of operations, business, management or
condition (financial or otherwise) of the Company and its subsidiaries taken as
a whole, or (2) would materially impair the ability of either the Investor
or the Company, respectively, to perform its respective obligations under this
Agreement or otherwise materially threaten or materially impede the consummation
of the transactions contemplated by this Agreement; provided, however, that in determining
whether a Material Adverse Effect has occurred, there shall be excluded any
effect to the extent resulting from the following: (A) changes, after the date
hereof, in generally accepted accounting principles or regulatory accounting
principles generally applicable to banks, savings associations or their holding
companies, (B) actions or omissions of the Company expressly required by the
terms of this Agreement or taken with the prior written consent of each
Investor, (C) changes, after the date hereof, in the market price or trading
volumes of the Common Stock or the Company’s other securities (but not the
underlying causes of such changes), (D) changes in global or national political
conditions, including the outbreak or escalation of war or acts of terrorism,
and (E) the public disclosure of this Agreement or the transactions contemplated
hereby; except, with respect to clauses (A), and (D), to the extent that the
effects of such changes have a disproportionate effect on the Company and the
Company Subsidiaries, taken as a whole, relative to other banks, savings
associations and their holding companies generally, and with respect to clause
(E), to the extent that such public disclosure results in additional
restrictions or sanctions against the Company or the Bank by a regulatory
authority.
(c) “Previously Disclosed” with
regard to the Company means (1) information set forth on its Disclosure Schedule
corresponding to the provision of this Agreement to which such information
relates; provided that
information which is reasonably apparent on its face that it relates to another
provision of this Agreement, shall also be deemed to be Previously Disclosed
with respect to such other provision and (2) includes information publicly
disclosed by the Company in the Company Reports filed by it with or furnished to
the U.S. Securities and Exchange Commission (the “SEC”) or in the Registration
Statement on Form S-1 (Reg. No. 333-162377), including amendments thereto filed
prior to the date hereof, and publicly available prior to the date of this
Agreement (excluding any risk factor disclosures contained in such documents
under the heading “Risk Factors,” any disclosure of risks included in any
“forward-looking statements” or any other disclaimer that are non-specific and
predictive or forward-looking in nature and any exhibits thereto and documents
incorporated by reference therein).
-7-
2.2 Representations and
Warranties of the Company. Except
as Previously Disclosed, the Company represents and warrants as of the date of
this Agreement and as of the Closing (except to the extent made only as of a
specified date, in which case as of such date) to the Investor
that:
(a) Organization and
Authority. The Company is a corporation duly organized and
validly existing under the laws of the State of Oregon, is duly qualified to do
business and is in good standing in all jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and failure to be so qualified would have a Material Adverse Effect on
the Company and has corporate power and authority to own its properties and
assets and to carry on its business as it is now being conducted. The
Company is duly registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended, or any successor statute (the “BHC Act”). The
Company has furnished or made available to the Investor, prior to the date
hereof, true, correct and complete copies of the Company’s Articles of
Incorporation, as amended on April 21, 1997 (the “Articles of Incorporation”)
and bylaws as amended through the date of this Agreement.
(b) Company’s
Subsidiaries. The Company has Previously Disclosed a true,
complete and correct list of all of its subsidiaries as of the date of this
Agreement (individually, a “Company Subsidiary” and,
collectively, the “Company
Subsidiaries”), all shares of the outstanding capital stock of each of
which are owned directly or indirectly by the Company. No equity
security of any Company Subsidiary is or may be required to be issued by reason
of any option, warrant, scrip, preemptive right, right to subscribe to, gross-up
right, call or commitment of any character whatsoever relating to, or security
or right convertible into, shares of any capital stock of such Company
Subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Company Subsidiary is bound to issue additional shares
of its capital stock, or any option, warrant or right to purchase or acquire any
additional shares of its capital stock. All of such shares so owned
by the Company are duly authorized and validly issued, fully paid and
nonassessable and are owned by it free and clear of any lien, adverse right or
claim, charge, option, pledge, covenant, title defect, security interest or
other encumbrances of any kind (“Liens”) with respect
thereto. Each Company Subsidiary is an entity duly organized, validly
existing, duly qualified to do business and in good standing under the laws of
its jurisdiction of organization, and has corporate or other appropriate
organizational power and authority to own or lease its properties and assets and
to carry on its business as it is now being conducted, except as would not
reasonably be expected to have a Material Adverse Effect on the
Company. Except in respect of the Company Subsidiaries, the Company
does not own beneficially, directly or indirectly, more than 5% of any class of
equity securities or similar interests of any corporation, bank, business trust,
association or similar organization, and is not, directly or indirectly, a
partner in any partnership or party to any joint venture. The
Company’s principal depository institution subsidiary is duly organized and
validly existing as an Oregon state-chartered commercial bank and its deposit
accounts are insured by the Federal Deposit Insurance Corporation (the “FDIC”) to the fullest extent
permitted by the Federal Deposit Insurance Act and the rules and regulations of
the FDIC thereunder, and all premiums and assessments required to be paid in
connection therewith have been paid when due. The Company has
furnished or made available to the Investor, prior to the date hereof, true,
correct and complete copies of the charter and bylaws of the Company’s principal
depository institution subsidiary as amended through the date of this
Agreement.
-8-
(c) Capitalization.
(1) As
of the date hereof, the authorized capital stock of the Company consists of
45,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, no
par value (the “Company
Preferred Stock”). As of the date hereof, there are 28,151,480
shares of Common Stock outstanding and no shares of Company Preferred Stock
outstanding. From the date of this Agreement through the Closing
Date, except in connection with the Transaction Documents, the Other Private
Placements, the Public Offering and the transactions contemplated hereby
(including any repurchase of Trust Preferred Securities) and thereby, the
Company shall not have (i) issued or authorized the issuance of any shares
of Common Stock or Company Preferred Stock, or any securities convertible into
or exchangeable or exercisable for shares of Common Stock or Company Preferred
Stock (other than shares issued upon the exercise of Company Stock Options),
(ii) reserved for issuance any shares of Common Stock or Company Preferred
Stock or (iii) repurchased or redeemed, or authorized the repurchase or
redemption of, any shares of Common Stock or Company Preferred
Stock. As of the date hereof, there are (i) [outstanding stock
options issued under the Company’s 1994 Incentive Stock Option Plan, as amended
or supplemented as filed as exhibits 10.1 and 10.2 to the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008 (the “Company 10-K”), Deferred
Compensation Plans as filed as exhibit 10.3 to the Company 10-K, 2002 Equity
Incentive Plan, as filed as exhibit 10.4 to the Company 10-K (together, the
“Company Stock Option
Plans”) to purchase an aggregate of 1,004,914 shares of the Common Stock
(each, a “Company Stock
Option”), (ii) an aggregate of 143,545 shares of restricted stock
(“Company Restricted
Stock”) outstanding under the Company Stock Option Plans and (iii)
1,338,921 shares of the Common Stock reserved for issuance under the Company
Stock Option Plans. Other than in respect of awards outstanding under
or pursuant to the Company Stock Option Plans, no shares of Common Stock or
Company Preferred Stock are reserved for issuance. All of the issued
and outstanding shares of Common Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Each Company
Stock Option (i) was granted in compliance with all applicable laws and all of
the terms and conditions of the Company Stock Option Plans pursuant to which it
was issued, (ii) has an exercise price per share of Common Stock equal to or
greater than the fair market value of a share of Common Stock on the date of
such grant and (iii) has a grant date identical to the date on which the Board
of Directors or compensation committee of the Board of Directors actually
awarded such Company Stock Option. Neither the Company nor any of its
officers, directors, or employees is a party to any right of first refusal,
right of first offer, proxy, voting agreement, voting trust, registration rights
agreement, or shareholders agreement with respect to the sale or voting of any
securities of the Company. No bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which the stockholders
of the Company may vote (“Voting Debt”) are issued and
outstanding. Except as set forth elsewhere in this
Section 2.2(c), the Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, repurchase rights,
commitments, or agreements of any character calling for the purchase or issuance
of, or securities or rights convertible into or exchangeable or exercisable for,
any shares of Common Stock or Company Preferred Stock or any other equity
securities of the Company or Voting Debt or any securities representing the
right to purchase or otherwise receive any shares of capital stock of the
Company (including any rights plan or agreement). The Company has
Previously Disclosed all shares of Company capital stock that have been
purchased, redeemed or otherwise acquired, directly or indirectly, by the
Company or any Company Subsidiary since December 31, 2008 and all dividends or
other distributions that have been declared, set aside, made or paid to the
stockholders of the Company since that date.
-9-
(2) Section
2.2(c)(2) of the Company’s Disclosure Schedule sets forth the following
information with respect to each Company Stock Option and share of Company
Restricted Stock, which is true and correct as of the date of this Agreement:
(i) the name of each holder of Company Stock Options and Company Restricted
Stock and (ii) the number of shares of Common Stock subject to such Company
Stock Option and the number of shares of Company Restricted Stock, and, as
applicable, the grant date, exercise price, number of shares vested or not
otherwise subject to restrictions, vesting schedule and the Company Stock Option
Plan under which such Company Stock Options or shares of Company Restricted
Stock were granted.
(1) The
Company has the corporate power and authority to enter into or issue this
Agreement and the other Transaction Documents and, subject to obtaining the
Stockholder Approvals (defined below) to carry out its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement
and the other Transaction Documents by the Company and the consummation of the
transactions contemplated hereby and thereby, including the issuance of Common
Stock in accordance with the terms of this Agreement and the increase in the
authorized shares of the Company, have been duly authorized by the affirmative
vote of at least a majority of the directors on the Board of
Directors. This Agreement and the other Transaction Documents have
been duly and validly executed and delivered by the Company and, assuming due
authorization, execution and delivery of this Agreement by the Investor, are
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by the failure to obtain the Stockholder Approvals, by bankruptcy,
insolvency, moratorium, reorganizations, fraudulent transfer or similar laws
relating to or affecting creditors generally or by general equitable principles
(whether applied in equity or at law). No other corporate proceedings
are necessary for the execution and delivery by the Company of this Agreement
and the other Transaction Documents, the performance by the Company of its
obligations hereunder and thereunder or the consummation by the Company of the
transactions contemplated hereby and thereby, subject to receipt of the
Stockholder Approvals. The only vote of the stockholders of the
Company required to approve (i) the amendment of the Articles of Incorporation
to increase the number of authorized shares of Common Stock to at least such
number as shall be sufficient to permit the issuance of Common Stock
contemplated in this Agreement, the issuance of Common Stock in connection with
the Other Private Placements and the issuance of Common Stock in connection with
the Public Offering is that more votes are cast for such proposal than against
the proposal, and (ii) the issuance of such authorized shares of Common Stock
for purposes of rule 5635 of NASDAQ’s listing rules is a majority of the votes
cast on such proposal (such stockholder approval to amend the Articles of
Incorporation, and to issue the Common Stock, (the “Stockholder
Approvals”). The Board of Directors has resolved that the
transactions contemplated hereby, by the Other Private Placements and by the
Public Offering are in the best interests of stockholders of the Company and has
determined unanimously to recommend to the stockholders the approval of the
actions with respect to the Stockholder Approvals.
-10-
(2) Neither
the execution, delivery and performance by the Company of this Agreement, the
Common Stock and the other Transaction Documents, nor the consummation of the
transactions contemplated hereby and thereby, nor the consummation of the
transactions contemplated by any of the Other Private Placements or the Public
Offering, nor compliance by the Company with any of the provisions of any of the
foregoing, will (i) violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration of, or result in the creation of, any Lien, upon any
of the properties or assets of the Company or any Company Subsidiary under any
of the terms, conditions or provisions of (A) subject to the receipt of the
Stockholder Approvals, its Articles of Incorporation or bylaws (or similar
governing documents) or (B) any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which the
Company or any Company Subsidiary is a party or by which it may be bound, or to
which the Company or any Company Subsidiary or any of the properties or assets
of the Company or any Company Subsidiary may be subject, or (ii) subject to
compliance with the statutes and regulations referred to in the next paragraph,
violate any ordinance, permit, concession, grant, franchise, law, statute, rule
or regulation or any judgment, ruling, order, writ, injunction or decree
applicable to the Company or any Company Subsidiary or any of their respective
properties, except in the case of clauses (i)(B) and (ii) for such violations,
conflicts and breaches that are not material.
(3) Other
than the securities or blue sky laws of the various states and filings, notices,
approvals or clearances required under federal or state banking laws, no notice
to, registration, declaration or filing with, exemption or review by, or
authorization, order, consent or approval of, any Governmental Entity, or
expiration or termination of any statutory waiting period, is necessary for the
consummation by the Company of the transactions contemplated by this Agreement
or the other Transaction Documents.
-11-
(1) Since
December 31, 2006, the Company and each Company Subsidiary have filed all
reports, registrations, documents, filings, statements and submissions together
with any required amendments thereto, that it was required to file with any
Governmental Entity (the foregoing, collectively, the “Company Reports”) and have
paid all fees and assessments due and payable in connection
therewith. As of their respective filing dates, the Company Reports
complied in all material respects with all statutes and applicable rules and
regulations of the applicable Governmental Entities, as the case may
be. As of the date of this Agreement, there are no outstanding
comments from the SEC or any other Governmental Entity with respect to any
Company Report. The Company Reports, including the documents
incorporated by reference in each of them, each contained all of the information
required to be included in it and, when it was filed and as of the date of each
such Company Report filed with or furnished to the SEC, such Company Report did
not, as of its date or if amended prior to the date of this Agreement, as of the
date of such amendment, contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements made in it
not misleading and complied as to form in all material respects with the
applicable requirements of the Securities Act of 1933, as amended, or any
successor statute (the “Securities Act”), and the
Securities Exchange Act of 1934, as amended, or any successor statute (the
“Exchange
Act”). No executive officer of the Company has failed in any
respect to make the certifications required of him or her under Section 302
or 906 of the Xxxxxxxx-Xxxxx Act of 2002. There are no facts or
circumstances that would prevent its chief executive officer and chief financial
officer from giving the certifications and attestations required pursuant to
Rules 13a-14 and 15d-14 under the Exchange Act, without qualification, when next
due.
-12-
(2) The
records, systems, controls, data and information of the Company and the Company
Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of the Company or the Company Subsidiaries or accountants (including all means
of access thereto and therefrom). The Company (A) has
implemented and maintains disclosure controls and procedures (as defined in Rule
13a-15(e) of the Exchange Act) to ensure that material information relating to
the Company, including its consolidated subsidiaries, is made known to the chief
executive officer and the chief financial officer of the Company by others
within those entities, and (B) has disclosed, based on its most recent
evaluation prior to the date of this Agreement, to the Company’s outside
auditors and the audit committee of the Board of Directors (x) any
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting (as defined in Rule 13a-15(f) of the
Exchange Act) that are reasonably likely to adversely affect the Company’s
ability to record, process, summarize, and report financial information, and
(y) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal controls over
financial reporting. The Company has no knowledge of any reason that
its outside auditors and its chief executive officer and chief financial officer
will not be able to give the certifications and attestations required pursuant
to the rules and regulations adopted pursuant to Section 404 of the
Xxxxxxxx-Xxxxx Act of 2002, without qualification, when next
due. Since December 31, 2006, (i) neither the Company nor any Company
Subsidiary nor, to the knowledge of the Company, any director, officer,
employee, auditor, accountant or representative of the Company or any Company
Subsidiary has received or otherwise had or obtained knowledge of any material
complaint, allegation, assertion or claim, whether written or oral, regarding
the accounting or auditing practices, procedures, methodologies or methods of
the Company or any Company Subsidiary or their respective internal accounting
controls, including any material complaint, allegation, assertion or claim that
the Company or any Company Subsidiary has engaged in questionable accounting or
auditing practices, and (ii) no attorney representing the Company or any Company
Subsidiary, whether or not employed by the Company or any Company Subsidiary,
has reported evidence of a violation of securities laws, breach of fiduciary
duty or similar violation by the Company or any of its officers, directors,
employees or agents to the Board of Directors or any committee thereof or to any
director or officer of the Company.
-13-
(1) Each
of the Company and the Company Subsidiaries has filed all federal, state,
county, local and foreign material Tax Returns required to be filed by it and
paid all Taxes owed by it and no Taxes owed by it or assessments received by it
are delinquent. The federal income Tax Returns of the Company and the
Company Subsidiaries for the fiscal year ended December 31, 2006, and for all
fiscal years prior thereto, are for the purposes of routine audit by the
Internal Revenue Service (the “IRS”) closed because of the
statute of limitations, and no claims for additional Taxes for such fiscal years
are pending. Neither the Company nor any Company Subsidiary has
waived any statute of limitations with respect to Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency, in each case
that is still in effect, or has pending a request for any such extension or
waiver. Neither the Company nor any Company Subsidiary is a party to
any pending action or proceeding, nor to the Company’s knowledge, is any such
action or proceeding threatened by any Governmental Entity, for the assessment
or collection of Taxes, interest, penalties, assessments or deficiencies and no
material deficiencies have been proposed by any federal, state, local or foreign
taxing authority in connection with an audit or examination of the Tax Returns,
business or properties of the Company or any Company Subsidiary which has not
been settled, resolved and fully satisfied, or for which reserves adequate in
accordance with GAAP have not been provided. Each of the Company and
the Company Subsidiaries has withheld and paid all Taxes that it is required to
withhold from amounts owing to employees, creditors or other third
parties. Neither the Company nor any Company Subsidiary is a party
to, is bound by or has any obligation under, any material Tax sharing or
material Tax indemnity agreement or similar contract or arrangement other than
any contract or agreement between or among the Company and any Company
Subsidiary. Neither the Company nor any Company Subsidiary has
participated in any “reportable transaction” within the meaning of Treasury
Regulations Section 1.6011-4, or any other transaction requiring disclosure
under analogous provisions of state, local or foreign law. Neither
the Company nor any Company Subsidiary has liability for the Taxes of any person
other than the Company or any Company Subsidiary under Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or foreign
law). Neither the Company nor any Company Subsidiary has been a
“distributing corporation” or a “controlled corporation” in any distribution in
which the parties to such distribution treated the distribution as one to which
Section 355 of the Code is applicable. The Company has not been a
United States real property holding corporation
within the meaning of Section 897 of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. For the
purpose of this Agreement, the term “Tax” (including, with
correlative meaning, the term “Taxes”) shall mean any and
all domestic or foreign, federal, state, local or other taxes of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any Governmental Entity,
including taxes on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, unemployment, social security, workers’ compensation or net worth,
and taxes in the nature of excise, withholding, ad valorem or value added or
similar taxes, and the term “Tax Return” means any return,
report, information return or other document (including any related or
supporting information, and attachments and exhibits) required to be filed with
respect to Taxes, including, without limitation, all information returns
relating to Taxes of third parties, any claims for refunds of Taxes and any
amendment or supplements to any of the foregoing.
-14-
(2) To
the knowledge of the Company, the deferred tax asset on the Company’s balance
sheet as of September 30, 2009 (as referenced in Note 8 thereto) does not
require a material valuation reserve at September 30, 2009.
(3) Under
the current tax planning strategy as disclosed to the Investor, the Company
expects that it will receive the income tax refund from the calendar year 2007
included as a refundable income taxes receivable discussed in the notes to the
Company’s financial statements for the period ended September 30,
2009.
(1) Except
as Previously Disclosed, any circumstance, occurrence, or development which,
individually or in the aggregate with other circumstances, occurrences, or
developments, has had or is reasonably likely to have a Material Adverse Effect
on the Company;
(2) any
material damage, destruction, or other casualty loss with respect to any
material asset or property owned, leased, or otherwise used by the Company or
any Company Subsidiary, whether or not covered by insurance; or
(3) any
change in any method of accounting or accounting policies by the
Company.
-15-
(1) any
labor contract or agreement with any labor union;
(2) any
contract or agreement which grants any person a right of first refusal, right of
first offer or similar right with respect to any material properties, assets or
businesses of the Company or the Company Subsidiaries;
(3) any
contract containing covenants that limit the ability of the Company or any
Company Subsidiary to compete in any line of business or with any person or
which involve any restriction of the geographical area in which, or method by
which or with whom, the Company or any Company Subsidiary may carry on its
business (other than as may be required by law or applicable regulatory
authorities); and any contract that could require the disposition of any
material assets or line of business of the Company or any Company
Subsidiary;
(4) any
joint venture, partnership, strategic alliance, or other similar contract
(including any franchising agreement, but in any event, excluding introducing
broker agreements); and any contract relating to the acquisition or disposition
of any material business or material assets (whether by merger, sale of stock or
assets, or otherwise), which acquisition or disposition is not yet complete or
where such contract contains continuing material obligations or contains
continuing indemnity obligations of the Company or any of the Company
Subsidiaries;
(5) any
real property lease and any other lease with annual rental payments aggregating
$1,000,000 or more;
(6) other
than with respect to loans, any contract providing for, or reasonably likely to
result in, the receipt or expenditure of more than $1,000,000 on an annual
basis, including the payment or receipt of royalties or other amounts calculated
based upon revenues or income;
(7) any
contract or arrangement under which the Company or any of the Company
Subsidiaries is licensed or otherwise permitted by a third party to use any
Intellectual Property that is material to its business (except for any
“shrinkwrap” or “click through” license agreements or other agreements for
software that is generally available to the public and has not been customized
for the Company or the Company Subsidiaries) or under which a third party is
licensed or otherwise permitted to use any Intellectual Property owned by the
Company or any of the Company Subsidiaries;
(8) any
contract that by its terms limits the payment of dividends or other
distributions by the Company or any Company Subsidiary;
(9) any
standstill or similar agreement pursuant to which the Company or any Company
Subsidiary has agreed not to acquire assets or securities of another
person;
-16-
(10) any
contract that would prevent, delay or impede the Company’s ability to consummate
the transactions contemplated by this Agreement and the other Transaction
Documents;
(11) any
contract providing for indemnification by the Company or any Company Subsidiary
of any person, except for immaterial contracts entered into in the ordinary
course of business consistent with past practice;
(12) other
than contracts relating to the ordinary course management of credit extensions,
any contract that contains a put, call, or similar right pursuant to which the
Company or any Company Subsidiary could be required to purchase or sell, as
applicable, any equity interests or assets that have a fair market value or
purchase price of more than $250,000; and
(13) any
other contract or agreement which is a “material contract” within the meaning of
Item 601(b)(10) of Regulation S-K.
Each of
the Company Significant Agreements is valid and binding on the Company and the
Company Subsidiaries, as applicable, and in full force and
effect. The Company and each of the Company Subsidiaries, as
applicable, are in compliance in all material respects with and have performed
in all material respects all obligations required to be performed by them to
date under each Company Significant Agreement. Neither the Company
nor any of the Company Subsidiaries knows of, or has received notice of, any
violation or default (or any condition which with the passage of time or the
giving of notice would cause such a violation of or a default) by any party
under any Company Significant Agreement. Consummation of the
transactions contemplated by this Agreement will not place the Company or any of
the Company Subsidiaries in breach or default of any Company Significant
Agreement, or trigger any modification, termination or acceleration
thereunder. Other than those contemplated hereby, there are no
transactions or series of related transactions, agreements, arrangements or
understandings, nor are there any currently proposed transactions, or series of
related transactions between the Company or any Company Subsidiaries, on the one
hand, and the Company, any current or former director or executive officer of
the Company or any Company Subsidiaries or any person who Beneficially Owns 5%
or more of the Common Shares (or any of such person’s immediate family members
or Affiliates) (other than Company Subsidiaries), on the other
hand.
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(1) There
is no pending or, to the knowledge of the Company, threatened, claim, action,
suit, arbitration, mediation, demand, hearing, investigation or proceeding
against the Company or any Company Subsidiary that (A) involves a claim that is
or that could be, if adversely determined, for damages in excess of $100,000, or
(B) individually or in the aggregate, has prevented or materially impaired, or
would reasonably be expected to prevent or materially impair, the ability of the
Company to consummate the transactions contemplated hereby. Neither the Company
nor any Company Subsidiary is subject to any order, judgment or
decree.
(2) Neither
the Company nor any of the Company Subsidiaries has any liabilities or
obligations of any nature (absolute, accrued, contingent, or otherwise) which
are not appropriately reflected or reserved against in the financial statements
described in Section 2.2(f) to the extent required to be so reflected or
reserved against in accordance with GAAP, except for liabilities that have
arisen since September 30, 2009 in the ordinary course of business consistent
with past practice.
(1) in
the conduct of its business is in compliance in all material respects with all,
and the condition and use of its properties does not violate or infringe in any
material respect any, applicable domestic (federal, state or local) or foreign
laws, statutes, ordinances, licenses, rules, regulations, judgments, demands,
writs, injunctions, orders or decrees applicable thereto or to employees
conducting its business, including the Troubled Asset Relief Program, the
Xxxxxxxx-Xxxxx Act of 2002, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, all other applicable
fair lending laws or other laws relating to discrimination and the Bank Secrecy
Act;
(2) has
all material permits, licenses, franchises, authorizations, orders, and
approvals of, and has made all filings, applications, and registrations with,
Governmental Entities that are required in order to permit it to own or lease
its properties and assets and to carry on its business as presently conducted
and that are material to the business of the Company or such Company Subsidiary;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect, and all such filings, applications and
registrations are current, and, to the knowledge of the Company, no suspension
or cancellation of any of them is threatened;
(3) currently
is complying in all material respects with and, to the knowledge of the Company,
is not under investigation with respect to, nor has been threatened by any
Governmental Entity to be charged with or given notice of any material violation
of, all applicable federal, state, local and foreign laws, regulations, rules,
judgments, injunctions or decrees;
(4) has,
except for statutory or regulatory restrictions of general application, not been
placed under any restriction by a Governmental Entity on its business or
properties, and except for routine examinations by applicable Governmental
Entities, as of the date of this Agreement, received no notification or
communication from any Governmental Entity that an investigation by any
Governmental Entity with respect to the Company or any of the Company
Subsidiaries is pending or threatened;
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(5) has
not, since January 1, 2006 nor has any other person on behalf of the Company or
any Company Subsidiary that qualifies as a “financial institution” under the
U.S. Anti-Money Laundering laws, knowingly acted, by itself or in conjunction
with another, in any act in connection with the concealment of any currency,
securities or other proprietary interest that is the result of a felony as
defined in the U.S. Anti-Money Laundering laws (“Unlawful Gains”), nor
knowingly accepted, transported, stored, dealt in or brokered any sale, purchase
or any transaction of other nature for Unlawful Gains;
(6) to
the extent it qualifies as a “financial institution” under the U.S. Anti-Money
Laundering laws, has implemented such anti-money laundering mechanisms and kept
and filed all reports and other necessary documents as required by, and
otherwise complied with, the U.S. Anti-Money Laundering laws and the rules and
regulations thereunder; and
(7) is
presently insured, and during each of the past two calendar years (or during
such lesser period of time as the Company has owned such Company Subsidiary) has
been insured, for reasonable amounts with, to the knowledge of the Company,
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with industry
practice, customarily be insured.
(1) “Benefit Plan” means all
employment agreements, employee benefit and compensation plans, programs,
agreements, contracts, policies, practices, or other arrangements providing
compensation or benefits to any current or former employee, officer, director or
consultant of the Company or any Company Subsidiary or any beneficiary or
dependent thereof that is sponsored or maintained by the Company or any Company
Subsidiary or to which the Company or any Company Subsidiary contributes or is
obligated to contribute or is party, whether or not written, including without
limitation any “employee welfare benefit plan” within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), any
“employee pension benefit plan” within the meaning of Section 3(2) of ERISA
(whether or not such plan is subject to ERISA) and any bonus, incentive,
deferred compensation, vacation, stock purchase, stock appreciation right, stock
option or equity award, equity-based severance, employment, change of control,
consulting or fringe benefit plan, program, agreement or policy. Each
Benefit Plan is listed on Section 2.2(p)(1) of the Company’s Disclosure
Schedule. True and complete copies of all Benefit Plans listed on
Section 2.2(p)(1) of the Company’s Disclosure Schedule have been made
available to the Investor prior to the date hereof or have been filed with a
Company Report.
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(2) With
respect to each Benefit Plan, (A) the Company and the Company Subsidiaries have
complied, and are now in compliance with the applicable provisions of ERISA, and
the Internal Revenue Code of 1986, as amended (the “Code”) and all other laws and
regulations applicable to such Benefit Plan and (B) each Benefit Plan has been
administered in accordance with its terms. None of the Company or the
Company Subsidiaries nor any of their respective ERISA Affiliates has incurred
any withdrawal liability as a result of a complete or partial withdrawal from a
multiemployer plan, as those terms are defined in Part I of Subtitle E of Title
IV of ERISA, that has not been satisfied in full. “ERISA Affiliate” means any
entity, trade or business, whether or not incorporated, which together with the
Company and the Company Subsidiaries, would be deemed a “single employer” within
the meaning of Section 4001 of ERISA or Sections 414(b), (c), (m) or
(o) of the Code.
(3) Each
Benefit Plan which is subject to ERISA (an “ERISA Plan”) that is an
“employee pension benefit plan” within the meaning of Section 3(2) of ERISA
(“Pension Plan”) and
that is intended to be qualified under Section 401(a) of the Code is so
qualified, has received a favorable determination letter from the IRS and
nothing has occurred, whether by action or failure to act, that could likely
result in revocation of any such favorable determination or opinion letter or
the loss of the qualification of such Benefit Plan under Section 401(a) of
the Code. Neither the Company nor any Company Subsidiary has engaged
in a transaction with respect to any ERISA Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject the
Company or any Company Subsidiary to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of
ERISA. Neither the Company nor any Company Subsidiary has incurred or
reasonably expects to incur a material tax or penalty imposed by Section 4980F
of the Code or Section 502 of ERISA.
(4) Neither
the Company, any Company Subsidiary nor any ERISA Affiliate (x) sponsors,
maintains or contributes to or has within the past six years sponsored,
maintained or contributed to a Pension Plan that is subject to Subtitles C or D
of Title IV of ERISA or (y) sponsors, maintains or has any liability with
respect to or an obligation to contribute to or has within the past six years
sponsored, maintained, had any liability with respect to, or had an obligation
to contribute to a “multiemployer plan” within the meaning of Section 3(37)
of ERISA.
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(5) None
of the execution and delivery of this Agreement, the issuance of Common Stock,
nor the stockholder approval or consummation of the transactions contemplated
hereby, nor the transactions contemplated as part of the Other Private
Placements or the Public Offering, will, whether alone or in connection with
another event, (i) constitute a “change in control” or “change of control”
within the meaning of any Benefit Plan or result in any material payment or
benefit (including without limitation severance, unemployment compensation,
“excess parachute payment” (within the meaning of Section 280G of the
Code), forgiveness of indebtedness or otherwise) becoming due to any current or
former employee, officer, director or consultant of the Company or any Company
Subsidiary from the Company or any Company Subsidiary under any Benefit Plan or
any other agreement with any employee, including, for the avoidance of doubt,
any employment or change in control agreements, (ii) result in payments under
any of the Benefit Plans which would not be deductible under Section 162(m)
or Section 280G of the Code, (iii) materially increase any compensation or
benefits otherwise payable under any Benefit Plan, (iv) result in any
acceleration of the time of payment or vesting of any such benefits, including,
for the avoidance of doubt, the Company Stock Option Plans, (v) require the
funding or increase in the funding of any such benefits, or (vi) result in any
limitation on the right of the Company or any Company Subsidiary to amend,
merge, terminate or receive a reversion of assets from any Benefit Plan or
related trust.
(6) As
of the date hereof, there is no pending or, to the knowledge of the Company,
threatened, litigation relating to the Benefit Plans. Neither the
Company nor any Company Subsidiary has any obligations for retiree health and
life benefits under any ERISA Plan or collective bargaining agreement, except
for health continuation coverage as required by Section 4980B of the Code
or Part 6 of Title I of ERISA and at no expense to the Company and the Company
Subsidiaries.
(7) There
are no pending or, to the knowledge of the Company, threatened claims, lawsuits
or arbitrations which have been asserted or instituted against (i) the Benefit
Plans, (ii) any fiduciaries thereof with respect to their duties to the Benefit
Plans, or (iii) the assets of any of the trusts under any of the Benefit
Plans.
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(1) The
Company and the Company Subsidiaries have in place risk management policies and
procedures sufficient in scope and operation to protect against risks of the
type and in amounts expected to be incurred by persons of similar size and in
similar lines of business as the Company and the Company
Subsidiaries.
(2) All
derivative instruments, including swaps, caps, floors and option agreements,
whether entered into for the Company’s own account, or for the account of one or
more of the Company Subsidiaries or their customers, were entered into
(i) only for purposes of mitigating identified risk and in the ordinary
course of business, (ii) in accordance with prudent practices and in
material compliance with all applicable laws, rules, regulations and regulatory
policies, and (iii) with counterparties believed by the Company to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of the Company or one of the Company Subsidiaries,
enforceable in accordance with its terms. Neither the Company nor the
Company Subsidiaries, nor, to the knowledge of the Company, any other party
thereto, is in breach of any of its obligations under any such agreement or
arrangement.
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-23-
“Intellectual Property” shall
mean trademarks, service marks, brand names, domain names, certification marks,
trade dress and other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application; inventions, discoveries and
ideas, whether patentable or not, in any jurisdiction; patents, applications for
patents (including divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; nonpublic information, trade secrets and confidential information
and rights in any jurisdiction to limit the use or disclosure thereof by any
person; writings and other works, whether copyrightable or not, in any
jurisdiction; and registrations or applications for registration of copyrights
in any jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
-24-
-25-
2.3 Representations and
Warranties of the Investor. The
Investor hereby represents and warrants as of the date of this Agreement, solely
with respect to himself and, where expressly indicated, his Affiliates, to the
Company that:
ARTICLE
III
(a) The
Investor and the Company will cooperate and consult with each other and use
reasonable best efforts to prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions, filings, and other
documents, and to obtain all necessary permits, consents, orders, approvals, and
authorizations of, or any exemption by, all third parties and Governmental
Entities, and expiration or termination of any applicable waiting periods,
necessary or advisable to consummate the transactions contemplated by this
Agreement, to perform covenants contemplated by this Agreement. Each
party shall execute and deliver both before and after the Closing such further
certificates, agreements, and other documents and take such other actions as the
other party may reasonably request to consummate or implement such transactions
or to evidence such events or matters. In particular, the Company
will use its reasonable best efforts to help the Investor promptly obtain or
submit, as the case may be, as promptly as practicable, the approvals and
authorizations of, filings and registrations with, and notifications to, or
expiration or termination of any applicable waiting period, all notices to and,
to the extent required by applicable law or regulation, consents, approvals, or
exemptions from bank regulatory authorities, for the transactions contemplated
by this Agreement. As promptly as practicable after the date hereof,
counsel to the Investor will file with the Federal Reserve a notice pursuant to
the CBC Act with respect to the transactions contemplated by this
Agreement. Subject to Section 4.10(c), the Investor shall use, and
cause its Affiliates to use, commercially reasonable efforts to obtain by
December 8, 2009, a non-objection letter from the Federal Reserve with respect
to such CBC Act notice, including by responding fully to all requests for
additional information from the Federal Reserve, entering into one or more
passivity requirements or rebuttal of control agreements and providing such
other non-control and related commitments as the Federal Reserve may require as
a condition to issuing such a non-objection letter (in each case to the extent
it has not done so prior to the date of this Agreement), it being understood and
agreed by the parties that failure to obtain such letter by December 8, 2009
shall not impose any liability on the Investor. The Investor and the
Company will each have the right to review in advance, and to the extent
practicable, each will consult with the other, in each case subject to
applicable laws relating to the exchange of information and confidential
information related to the Investor, all the information (other than
confidential information) relating to such other party, and any of their
respective Affiliates, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties hereto agrees to act reasonably and as
promptly as practicable. Each party hereto agrees to keep the other
party apprised of the status of matters relating to completion of the
transactions contemplated hereby. The Investor and the Company shall
promptly furnish each other to the extent permitted by applicable laws with
copies of written communications received by them or their Affiliates from, or
delivered by any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated by this Agreement. Notwithstanding the
foregoing, the Investor shall not be required to provide any materials to the
Company that it deems private or confidential nor shall be required to make any
commitments to any Governmental Entity in connection therewith or suffer any
burdensome requirements or restrictions in connection
therewith.
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(b) The
Company shall call a special meeting of its stockholders, as promptly as
practicable, after the date of this Agreement to obtain the Stockholder
Approvals, including, without limitation, amending the Articles of Incorporation
to increase the number of authorized shares of Common Stock to 300 million,
approving the issuance of Common Shares for purposes of rule 5635 of NASDAQ’s
listing rules to the Investor and the investors participating in the Other
Private Placements. The Board of Directors shall unanimously
recommend to the Company’s stockholders that such stockholders provide the
Stockholder Approvals, and shall not modify or withdraw such
resolution. In connection with such meeting, the Company shall
promptly prepare (and the Investor will reasonably cooperate with the Company to
prepare) and file with the SEC a preliminary proxy statement, shall use its
reasonable best efforts to solicit proxies for such stockholder approval, and
shall use its reasonable best efforts to respond promptly to any comments of the
SEC or its staff and to cause a definitive proxy statement related to such
stockholders’ meeting to be mailed to the Company’s stockholders, as promptly as
practicable, after clearance by the SEC. The Company shall notify the
Investor promptly of the receipt of any comments from the SEC or its staff with
respect to the proxy statement and of any request by the SEC or its staff for
amendments or supplements to such proxy statement or for additional information
and will supply the Investor with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to such proxy statement. If at
any time prior to such stockholders’ meeting there shall occur any event that is
required to be set forth in an amendment or supplement to the proxy statement,
the Company shall, as promptly as practicable, prepare and mail to its
stockholders such an amendment or supplement. The Investor and the
Company each agree to correct promptly any information provided by it or on its
behalf for use in the proxy statement if and to the extent that such information
shall have become false or misleading in any material respect, and the Company
shall, as promptly as practicable, prepare and mail to its stockholders an
amendment or supplement to correct such information to the extent required by
applicable laws and regulations. The Company shall consult with the
Investor prior to mailing any proxy statement, or any amendment or supplement
thereto, and provide the Investor with reasonable opportunity to comment
thereon. The directors’ recommendation described in this
Section 3.1 shall be included in the proxy statement filed in connection
with obtaining such stockholder approval. Immediately upon approval
by stockholders of the increase in the Company’s authorized number of shares of
Common Stock as provided above, the Company shall file articles of amendment to
duly amend its Articles of Incorporation to include such
increase.
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(c) The
Company has filed a registration statement relating to the Public Offering with
the SEC (Registration No. 333-162377). The Company shall promptly
prepare (and the Investor will reasonably cooperate with the Company to prepare)
and file with the SEC an amendment to the registration statement (including, for
purposes of this Section 3.1(c), the prospectuses forming a part thereof), and
shall use its reasonable best efforts to respond to any comments of the SEC or
its staff The Company shall notify the Investor promptly of the
receipt of any comments from the SEC or its staff with respect to the
registration statement and of any request by the SEC or its staff for amendments
or supplements to such registration statement or for additional information and
will supply the Investor with copies of all correspondence between the Company
or any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to such registration statement. If there
shall occur any event that is required to be set forth in an amendment or
supplement to the registration statement, the Company shall, as promptly as
practicable, prepare and file such an amendment or supplement. The
Investor and the Company each agree to correct promptly any information provided
by it or on its behalf for use in the registration statement if and to the
extent that such information shall have become false or misleading in any
material respect, and the Company shall, as promptly as practicable, prepare and
file with the SEC an amendment or supplement to correct such information to the
extent required by applicable laws and regulations. The Company shall
consult with the Investor prior to filing any registration statement, or any
amendment or supplement thereto, and provide the Investor with reasonable
opportunity to comment thereon.
(d) Each
party agrees, upon request, to furnish the other party with all information
concerning itself, its subsidiaries, Affiliates, directors, officers, partners,
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with the proxy statement in connection with such
stockholders’ meeting and any other statement, filing, notice, or application
made by or on behalf of such other party or any of its subsidiaries to any
Governmental Entity in connection with this Agreement.
(e) From
the date of this Agreement, until the Closing, the Company shall not, directly
or indirectly, amend, modify, or waive, and the Board of Directors shall not
recommend approval of any proposal to the stockholders having the effect of
amending, modifying, or waiving any provision in the Articles of Incorporation
or bylaws of the Company in any manner adverse to the Investor or any other
holder of Common Stock issued pursuant to this Agreement, including, for the
avoidance of doubt, any amendment, modification, or waiver that has the effect
of exempting any person (other than the Investor or any other holder of the
Securities issued pursuant to this Agreement) from the stock ownership
restrictions set forth in Article X of the Articles of
Incorporation.
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(f) The
Company shall take all actions necessary to ensure that none of the execution
and delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, nor the consummation of the transactions contemplated as
part of the Other Private Placements or the Public Offering, nor the Stockholder
Approvals will constitute a “change in control” or “change of control” within
the meaning of any Benefit Plan.
3.2 Expenses. On
the earlier of the Closing Date and the termination of this Agreement,
other than a termination under circumstances that are directly and solely
attributable to a material breach by the Investor, the Company shall directly
reimburse the Investor for all out-of-pocket fees and expenses incurred in
connection with due diligence efforts, the negotiation and preparation of the
Transaction Documents and undertaking of the transactions contemplated by the
Transaction Documents, including, but not limited to, the Investor’s accounting,
financial and investment banking advisors, legal counsel and credit review, but
excluding the purchase or exercise price for any of the Securities, in an
aggregate amount not to exceed $1,400,000. The Company shall be responsible for
all closing and annual administrative fees and expenses including all costs
incurred to register the Registrable Securities and to obtain the Stockholder
Approvals, the fees and expenses of any Company advisors (including Company
counsel, the Company’s accounting and financial advisors and other professional
fees), SEC registration fees and related expenses, and fees and expenses of any
broker or finders. Other than as set forth in this Section 3.2
and Section 4.6(b), each of the parties will
bear and pay all other costs and expenses incurred by it or him or on its or his
behalf in connection with the transactions contemplated under this
Agreement.
(a) From
the date of this Agreement, until the date when the shares of Common Stock owned
by the Investor in the aggregate represent less than 4.9% of all of the
outstanding Common Shares (counting for such purposes all shares of Common Stock
into or for which the Securities owned by the Investor are directly or
indirectly convertible or exercisable and excluding as shares owned and
outstanding all Common Shares issued by the Company after the Closing Date other
than as contemplated by this Agreement and the Securities), the Company will
ensure that upon reasonable notice, the Company and its subsidiaries will afford
to the Investor and his representatives (including employees of the Investor,
and counsel, accountants, financial and investment banking advisors and other
professionals retained by the Investor) such access during normal business hours
to its books, records, properties and personnel and to such other information as
the Investor may reasonably request.
(b) Each
party to this Agreement will hold, and will cause its respective subsidiaries
and their directors, officers, employees, agents, consultants, and advisors to
hold, in strict confidence, unless disclosure to a Governmental Entity is
necessary or appropriate in connection with any necessary regulatory approval or
unless compelled to disclose by judicial or administrative process or, in the
written opinion of its counsel, by other requirement of law or the applicable
requirements of any Governmental Entity, all nonpublic records, books,
contracts, instruments, computer data and other data and information
(collectively, “Information”) concerning the
other party hereto furnished to it by such other party or its representatives
pursuant to this Agreement (except to the extent that such information can be
shown to have been (1) previously known by such party on a nonconfidential
basis, (2) in the public domain through no fault of such party, or (3) later
lawfully acquired from other sources by the party to which it was furnished),
and neither party hereto shall release or disclose such Information to any other
person, except its auditors, attorneys, financial advisors, other consultants,
and advisors and, to the extent permitted above, to bank regulatory
authorities.
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3.4 Conduct of the
Business. Prior
to the earlier of the Closing Date and the termination of this Agreement
pursuant to Section 5.1 (the “Pre-Closing Period”), the
Company shall, and shall cause each Company Subsidiary to, (i) conduct its
business in the ordinary course consistent with past practice, (ii) use
reasonable best efforts to preserve intact its current business organizations
and its rights and permits issued by Governmental Entities, keep available the
services of its current officers and key employees and preserve its
relationships with customers, suppliers, Governmental Entities and others having
business dealings with it to the end that its goodwill and ongoing businesses
shall be unimpaired and (iii) not take any action that would reasonably be
expected to materially adversely affect or materially delay the receipt of any
approvals of any Governmental Entity required to consummate the transactions
contemplated hereby or by the other Transaction Documents or materially
adversely affect or materially delay the consummation of the transactions
contemplated hereby or by the other Transaction Documents.
3.5 Reasonable
Efforts. The
Company agrees to use its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the Investor in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement, the Other Private Placements and the Public
Offering, including using reasonable best efforts to accomplish the
following: (a) the taking of all reasonable acts necessary to
cause the conditions to Closing to be satisfied; (b) the mailing of the
definitive proxy statement to the Company’s stockholders promptly following
clearance from the SEC; (c) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings and the taking of all
reasonable steps necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by any Governmental Entity; (d) the obtaining of all
necessary consents, approvals or waivers from third parties; (e) to cause the
transactions contemplated by the Trust Preferred Securities Repurchase
Agreements to be consummated prior to the Closing Date; and (f) the
execution and delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement, the Other Private Placements and the Public Offering.
3.6 Company
Forbearances. During
the Pre-Closing Period, the Company shall not, and shall not permit any Company
Subsidiary to:
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(a) (i)
adjust, split, combine or reclassify any of its capital stock other than in
connection with the reverse
stock split described in the proxy statement filed pursuant to Section 14(a) of
the Exchange Act on October 29, 2009 affecting the Common Stock, the
terms of which shall be subject to the prior written consent of the Investor;
(ii) set any record or payment dates for the payment of any dividends or
distributions on its capital stock or make, declare or pay any dividend or make
any other distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities or
obligations convertible into or exercisable or exchangeable for any shares of
its capital stock or stock appreciation rights or grant any person any right to
acquire any shares of its capital stock; or (iii) issue or commit to issue any
additional shares of capital stock (except pursuant to the exercise of options
and restricted stock unit grants outstanding as of the date hereof and disclosed
in the Company Disclosure Schedule), convertible debt or any securities
convertible into or exercisable or exchangeable for, or any rights, warrants or
options to acquire, any additional shares of capital stock (including options)
or convertible debt;
(b)
(i) increase the compensation or benefits of any employee of the Company or any
Company Subsidiary (except (x) for increases in salary or wages of employees of
the Company or any Company Subsidiary in the ordinary course of business
consistent with past practice, provided that no such
increase shall result in an annual adjustment of more than 5% of the aggregate
base salary and wages payable by the Company and its Subsidiaries during 2008
and (y) pursuant to the Company’s Benefit Plans as described on the Company’s
Disclosure Schedule; (ii) except as required by Law, grant any severance or
termination pay to any employee of the Company or any Company Subsidiary except
pursuant to the terms of any Plan in effect on the date of this Agreement and
which was made available to the Investor prior to the date of this Agreement and
disclosed in the Company’s Disclosure Schedule; (iii) loan or advance any money
or other property to any employees of the Company or any Company Subsidiary
other than in the ordinary course of business consistent with past practice;
(iv) (x) establish, adopt, enter into, amend or terminate, or (y) grant (other
than in the ordinary course of business consistent with past practice), any
waiver or consent under any Benefit Plan or any plan, agreement, program,
policy, trust, fund or other arrangement that would be a Benefit Plan if it were
in existence as of the date of this Agreement; or (v) grant any equity or
equity-based awards (including options and restricted stock units);
(c)
(i) incur any indebtedness for borrowed money, other than (x) deposit
liabilities, FHLB advances, advances from the Federal Reserve discount window,
Fed funds purchases and reverse repurchase agreements, in each case entered into
in the ordinary course of business consistent with past practice and, in the
case of reverse repurchase agreements, with a final maturity of five years or
less, or (y) indebtedness incurred in the ordinary course of business consistent
with past practice in order to finance working capital (subject in the case of
this clause (y) to an aggregate maximum amount of $5,000,000), (ii) guarantee,
endorse or assume responsibility for, the obligations of any person other than
any wholly-owned Subsidiary of the Company (other than the endorsement of checks
and other negotiable instruments in the normal process of collection) or (iii)
redeem, repurchase, prepay, defease, or cancel, or modify in any material
respect the terms of, indebtedness for borrowed money, other than (x) deposit
liabilities, FHLB advances and reverse repurchase agreements in each case in the
ordinary course of business consistent with past practice or (y) in accordance
with the terms of the applicable instrument as in effect on the date
hereof;
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(d) (i) settle
any action involving claims against the Company or any Company Subsidiary
resulting in monetary damages or other payments in excess of $100,000, or (ii)
agree or consent to the issuance of any order restricting or otherwise affecting
its business or operations, or, in each case, that would cause the Company or
any Company Subsidiary to breach a representation, warranty or covenant
contained in this Agreement or would otherwise adversely affect the rights of
the Investor under this Agreement;
(e) amend
its certificate of incorporation, bylaws or similar governing documents (other
than for the purpose of effectuating the transactions contemplated by the
Transaction Documents), or enter into a plan of consolidation, merger, share
exchange, reorganization or complete or partial liquidation with any person
(other than consolidations, mergers or reorganizations solely among wholly-owned
Subsidiaries of the Company), or a letter of intent or agreement in principle
with respect thereto;
(f) make
any changes in its accounting methods or method of Tax accounting, practices or
policies, except as may be required under Law or GAAP, in each case following
consultation with the Company’s independent public accountants;
(g) except
as required by Law, make or change any Tax election, file any amended Tax
Returns, settle or compromise any material Tax liability of the Company or any
of its Subsidiaries, agree to an extension or waiver of the statute of
limitations with respect to the assessment or determination of Taxes of the
Company or any of its Subsidiaries, enter into any closing agreement with
respect to any Tax or surrender any right to claim a Tax refund;
or
(h) agree
to, or make any commitment to, take any of the actions prohibited by this
Section 3.6 or that would otherwise materially adversely affect or materially
delay the consummation of the transactions contemplated hereby or by the other
Transaction Documents.
3.7 Shareholder
Litigation. The Company shall promptly
inform Investor of any claim, action, suit, arbitration, mediation, demand,
hearing, investigation or proceeding (“Shareholder
Litigation”) against the Company, any
Company
Subsidiary or any of the past or present executive officers or directors of the
Company or any Company Subsidiary that is threatened or initiated by or on
behalf of any stockholder of the Company in connection with or relating to the
Order, the Public Offering or the transactions
contemplated hereby or by the Other Securities Purchase
Agreement. The Company shall consult with Investor and keep Investor
informed of all material filings and developments relating to any such
Shareholder Litigation.
ARTICLE
IV
4.1 No Rights
Agreement. From
the date hereof through such time during which the Investor owns at least 5% of
the outstanding shares of Common Stock of the Company, the Company shall not
enter into any poison pill agreement, stockholders’ rights plan or similar
agreement that shall limit the rights of the Investor and his Affiliates and
associates to hold any shares of Common Stock or acquire additional securities
of the Company unless such poison pill agreement, stockholders’ rights plan or
similar agreement grants an exemption or waiver to the Investor and his
affiliates and associates and any group in which the Investor may become a
member of, immediately effective upon execution of such plan or agreement that
would allow the Investor and his Affiliates and associates to acquire such
additional securities of the Company.
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(a) The
Company and its Board of Directors shall, and the Company shall cause the Bank
of the Cascades (the “Company
Bank”), an Oregon chartered stock bank and a wholly owned subsidiary of
the Company, and its board of directors to, appoint one designee of the Investor
to each of the Board of Directors and the board of directors of the Company
Bank, effective as of the Closing. Thereafter, for so long as the
Investor, together with its Affiliates, owns at least 5% or more of all of the
outstanding shares of Common Stock, at any election of directors of the Company
or the Company Bank, the Investor shall have the right to nominate one candidate
for election to each of the Board of Directors and the board of directors of the
Company Bank, as a candidate recommended by the Board of Directors, and the
Company and the Company Bank shall cause such person (or any substitute or
replacement designated or nominated by the Investor) to be recommended by its
respective board of directors and to be elected a Director of the Company and of
the Company Bank. Any person nominated or designated pursuant to this
Section 4.2 shall be an “Investor
Nominee”. Notwithstanding anything to the contrary in the
Articles of Incorporation, bylaws, or any other policies of the Company, the
Company Bank, the Board of Directors or the board of directors of the Company
Bank, Investor Nominees shall be elected by plurality of the votes cast by the
Common Shares entitled to vote at a meeting at which a quorum is
present.
(b) Notwithstanding
anything to the contrary contained herein, if any Investor Nominee resigns or is
unable to continue to serve as a Director of the Company or as a Director of the
Company Bank, the Investor may designate a replacement Director and the relevant
board of directors shall elect such person a Director; provided, however, that in each case,
the Investor remains entitled to nominate and designate Directors pursuant to
this Section 4.2 and such action is taken in accordance with this Section 4.2;
and provided further,
however, that the
replacement Director designated pursuant to this Section 4.2(b) must be
reasonably acceptable to the remaining members of the Board of Directors (or
nominating committee thereof), and, without the consent of the Board of
Directors (or nominating committee thereof), shall not include any individual
who is an Affiliate of a competitor of the Company.
(c) Any
Director of the Company may be removed from the Board of Directors or from the
board of directors of the Company Bank in accordance with applicable law and the
governing documents of the Company or of the Company Bank, as applicable; provided, however, that with respect to
a Director nominated or designated pursuant to this Section 4.2, any such
removal shall require the prior written consent of the Investor unless such
removal is required by applicable law or such Director is no longer qualified to
serve as a Director pursuant to applicable SEC or regulatory requirements, or a
generally applicable policy of the Board of Directors.
(d) Any
vacancies on the Board of Directors and on the board of directors of the Company
Bank shall be filled in accordance with the applicable bylaws and, if the
vacancy is with respect to a Director originally nominated or designated by the
Investor, this Section 4.2.
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(e) The
Company, the Board of Directors and the board of directors of the Company Bank
shall ensure that any Directors nominated or designated pursuant to this Section
4.2 shall enjoy the same rights, capacities, entitlements
and compensation as any other members of the Board of Directors and the board of
directors of Company Bank, as applicable.
(f)
Effective as of the next annual meeting of shareholders
following the date of this Agreement, the number of directors on the Board of
Directors shall not exceed nine (9).
(g)
The Company and the Board of Directors shall not take any action that would
result in any amendment to the governing documents of the Company or the Company
Bank inconsistent with the provisions of this Section 4.2.
(h) For
so long as the Investor, together with its Affiliates, owns 5% or more of all of
the outstanding shares of Common Stock, the Company shall not amend its
governing documents to amend the current mandatory retirement age for the Board
of Directors.
(a) The
Investor agrees that all certificates or other instruments representing the
Securities subject to this Agreement will bear a legend substantially to the
following effect:
“THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR 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.”
(b) Upon
request of the Investor, upon receipt by the Company of an opinion of counsel
reasonably satisfactory to the Company to the effect that such legend is no
longer required under the Securities Act or applicable state laws, as the case
may be, the Company shall promptly cause the legend to be removed from any
certificate for any Securities. The Investor acknowledges that the
Securities have not been registered under the Securities Act or under any state
securities laws and agrees that he will not sell or otherwise dispose of any of
the Securities, except in compliance with the registration requirements or
exemption provisions of the Securities Act and any other applicable securities
laws.
4.4 Certain
Transactions. The
Company will not merge or consolidate into, or sell, transfer or lease all or
substantially all of its property or assets to, any other party unless the
successor, transferee or lessee party, as the case may be (if not the Company),
expressly assumes the due and punctual performance and observance of each and
every covenant and condition of this Agreement to be performed and observed by
the Company.
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(a) The
Company agrees to indemnify and hold harmless the Investor and his Affiliates
and each of their respective officers, directors, partners, employees and
agents, to the fullest extent lawful, from and against any and all actions,
suits, claims, proceedings, costs, losses, liabilities, damages, expenses
(including attorneys’ fees and disbursements), amounts paid in settlement and
other costs (collectively, “Losses”)
arising out of or resulting from (1) any inaccuracy in or breach of the
Company’s representations or warranties in Section 2.2 of this
Agreement, (2) the Company’s breach of agreements or covenants made by the
Company in this Agreement or (3) any Losses arising out of or resulting
from any legal, administrative or other proceedings instituted by any
Governmental Entity, stockholder of the Company or any other person (other than
the Investor and his Affiliates and the Company and the Company Subsidiaries)
arising out of the transactions contemplated by this Agreement and the terms of
the Securities (other than any Losses attributable to the acts, errors or
omissions on the part of the Investor, but not including the transactions
contemplated hereby).
(b) The
Investor agrees to indemnify and hold harmless each of the Company and its
Affiliates and each of their respective officers, directors, partners, employees
and agents, to the fullest extent lawful, from and against any and all Losses
arising out of or resulting from (1) any inaccuracy in or breach of the
Investor’s representations or warranties in this Agreement or (2) the
Investor’s breach of agreements or covenants made by the Investor in this
Agreement.
(c) A
party entitled to indemnification hereunder (each, an “Indemnified
Party”) shall give written notice to the party indemnifying it (the
“Indemnifying
Party”) of any claim with respect to which it seeks indemnification
promptly after the discovery by such Indemnified Party of any matters giving
rise to a claim for indemnification; provided that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 4.5 unless and to
the extent that the Indemnifying Party shall have been actually prejudiced by
the failure of such Indemnified Party to so notify such party. Such
notice shall describe in reasonable detail such claim. In case any
such action, suit, claim or proceeding is brought against an Indemnified Party,
the Indemnified Party shall be entitled to hire, at the cost and expense of the
Indemnifying Party counsel and conduct the defense thereof; provided, however, that
the Indemnifying Party shall only be liable for the legal fees and expenses of
one law firm for all Indemnified Parties, taken together with regard to any
single action or group of related actions, upon agreement by the Indemnified
Parties and the Indemnifying Parties. If the Indemnifying Party
assumes the defense of any claim, all Indemnified Parties shall thereafter
deliver to the Indemnifying Party copies of all notices and documents (including
court papers) received by the Indemnified Party relating to the claim, and any
Indemnified Party shall cooperate in the defense or prosecution of such
claim. Such cooperation shall include the retention and (upon the
Indemnifying Party’s request) the provision to the Indemnifying Party of records
and information that are reasonably relevant to such claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Indemnifying
Party shall not be liable for any settlement of any action, suit, claim or
proceeding effected without its written consent; provided, however, that
the Indemnifying Party shall not unreasonably withhold, delay or condition its
consent. The Indemnifying Party further agrees that it will not,
without the Indemnified Party’s prior written consent (which shall not be
unreasonably withheld or delayed), settle or compromise any claim or consent to
entry of any judgment in respect thereof in any pending or threatened action,
suit, claim or proceeding in respect of which indemnification has been sought
hereunder unless such settlement or compromise includes an unconditional release
of such Indemnified Party from all liability arising out of such action, suit,
claim or proceeding.
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(d) For
purposes of the indemnity contained in Sections 4.5(a)(1) and
4.5(b)(1), all qualifications and limitations set forth in
the parties’ representations and warranties as to “materiality,” “Material
Adverse Effect” and words of similar import, shall be disregarded in determining
whether there shall have been any inaccuracy in or breach of any representations
and warranties in this Agreement.
(e) The
Company shall not be required to indemnify the Indemnified Parties pursuant to
Section 4.5(a)(1), disregarding all qualifications or limitations set forth in
such representation and warranties as to “materiality,” “Material Adverse
Effect” and words of similar import, (1) with respect to any claim for
indemnification if the amount of Losses with respect to such claim are less than
$50,000 (any claim involving Losses less than such amount being referred to as a
“De Minimis
Claim”) and (2) unless and until the aggregate amount of all Losses
incurred with respect to all claims (other than De Minimis Claims) pursuant to
Section 4.5(a)(1) exceed $250,000 (the “Threshold
Amount”), in which event the Company shall be responsible for the entire
amount of such Losses. No Investor shall be required to indemnify the
Indemnified Parties pursuant to Section 4.5(b)(1), disregarding all
qualifications or limitations set forth in such representation and warranties as
to “materiality,” “Material Adverse Effect” and words of similar import, (1)
with respect to any De Minimis Claim and (2) unless and until the aggregate
amount of all Losses incurred with respect to all claims (other than De Minimis
Claims) pursuant to Section 4.5(b)(1) exceed the Threshold Amount, in which
event such Investor shall be responsible for the entire amount of such
Losses.
(f) The
obligations of the Indemnifying Party under this Section 4.5 shall survive
the transfer or redemption of the Common Stock issued pursuant to this
Agreement, or the Closing or termination of this Agreement; provided that
in the event of any transfer of the Common Stock to a third party that is not an
Affiliate of the transferor, the Indemnifying Party shall have no obligations
under this Section 4.5 to such
transferee. The indemnity provided for in this Section 4.5 shall be the
sole and exclusive monetary remedy of Indemnified Parties after the Closing for
any inaccuracy of any of the representations and warranties contained in
Sections 2.2 and Sections 2.3 of this
Agreement or any other breach of any covenant or agreement contained in this
Agreement; provided that
nothing herein shall limit in any way any such parties’ remedies in respect of
fraud, intentional misrepresentation or omission or intentional misconduct by
the other party in connection with the transactions contemplated
hereby. No party to this Agreement (or any of its Affiliates) shall,
in any event, be liable or otherwise responsible to any other party (or any of
its Affiliates) for any consequential or punitive damages of such other party
(or any of its Affiliates) arising out of or relating to this Agreement or the
performance or breach hereof. The indemnification rights contained in
this Section 4.5 are not limited
or deemed waived by any investigation or knowledge by the Indemnified Party
prior to or after the date hereof.
(g) Any
indemnification payments pursuant to this Section 4.5 shall be treated
as an adjustment to the Purchase Price for the Securities for U.S. federal
income and applicable state and local Tax purposes, unless a different treatment
is required by applicable law.
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(1) Subject
to the terms and conditions of this Agreement, the Company covenants and agrees
that as promptly as practicable after the Closing Date (and in any event no
later than the date that is 30 days after the Closing Date (the “Registration
Deadline”)), the Company shall have prepared and filed with the SEC a
Shelf Registration Statement (defined below) covering all Registrable Securities
(or otherwise designate an existing Shelf Registration Statement filed with the
SEC to cover the Registrable Securities), and, to the extent the Shelf
Registration Statement has not theretofore been declared effective or is not
automatically effective upon such filing, the Company shall use reasonable best
efforts to cause such Shelf Registration Statement to be declared or become
effective not later than the Registration Deadline and to keep such Shelf
Registration Statement continuously effective and in compliance with the
Securities Act and usable for resale of such Registrable Securities for a period
from the date of its initial effectiveness until such time as there are no
Registrable Securities remaining (including by refiling such Shelf Registration
Statement (or a new Shelf Registration Statement) if the initial Shelf
Registration Statement expires). If the Company is a well-known
seasoned issuer (as defined in Rule 405 under the Securities Act) at the time of
filing of the Shelf Registration Statement with the SEC, such Shelf Registration
Statement shall be designated by the Company as an automatic Shelf Registration
Statement.
(2) Any
registration pursuant to this Section 4.6(a) shall be
effected by means of a shelf registration under the Securities Act (a “Shelf Registration
Statement”) in accordance with the methods and distribution set forth in
the Shelf Registration Statement and Rule 415. If the Investor or any
other Holder of Registrable Securities to whom the registration rights conferred
by this Agreement have been transferred in compliance with this Agreement
intends to distribute any Registrable Securities by means of an underwritten
offering it shall promptly so advise the Company and the Company shall take all
reasonable steps to facilitate such distribution, including the actions required
pursuant to Section 4.6(c); provided, that
the Company shall not be required to facilitate an underwritten offering of
Registrable Securities unless the expected gross proceeds from such offering
exceed $1,000,000. The lead underwriters in any such distribution
shall be selected by the holders of a majority of the Registrable Securities to
be distributed and be reasonably acceptable to the Company.
(3) The
Company shall not be required to effect a registration (including a resale of
Registrable Securities from an effective Shelf Registration Statement) or an
underwritten offering pursuant to this Section 4.6(a): (i)
with respect to securities that are not Registrable Securities; (ii) during any
Scheduled Black-out Period; or (iii) if the Company has notified the Investor
and all other Holders that in the good faith judgment of the Board of Directors,
it would be materially detrimental to the Company or its security holders for
such registration or underwritten offering to be effected at such time, in which
event the Company shall have the right to defer such registration or
underwritten offering for a period of not more than 30 days after receipt of the
request of the Investor or any other Holder; provided that
such right to delay a registration or underwritten offering shall be exercised
by the Company (A) only if the Company has generally exercised (or is
concurrently exercising) similar black-out rights against holders of similar
securities that have registration rights and (B) not more than twice in any
12-month period and not more than 60 days in the aggregate in any 12-month
period.
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(4) After
the Closing Date, whenever the Company proposes to register any of its equity
securities, other than a registration pursuant to Section 4.6(a)(1) or a
Special Registration, and the registration form to be filed may be used for the
registration or qualification for distribution of Registrable Securities, the
Company will give prompt written notice to the Investor and all other Holders of
its intention to effect such a registration (but in no event less than 15 days
prior to the anticipated filing date) and (subject to clause (6) below) will
include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within ten
business days after the date of the Company’s notice (a “Piggyback
Registration”). Any such person that has made such a written
request may withdraw its Registrable Securities from such Piggyback Registration
by giving written notice to the Company and the managing underwriter, if any, on
or before the fifth day prior to the planned effective date of such Piggyback
Registration. The Company may terminate or withdraw any registration under this
Section 4.6(a)(4) prior to
the effectiveness of such registration, whether or not the Investor or any other
Holders have elected to include Registrable Securities in such
registration. “Special
Registration” means the registration of (i) equity securities and/or
options or other rights in respect thereof solely registered on Form S-4 or Form
S-8 (or successor form) or (ii) shares of equity securities and/or options or
other rights in respect thereof to be offered to directors, members of
management, employees, consultants, customers, lenders or vendors of the Company
or Company Subsidiaries or in connection with dividend reinvestment
plans.
(5) If
the registration referred to in Section 4.6(a)(4) is
proposed to be underwritten, the Company will so advise the Investor and all
other Holders as a part of the written notice given pursuant to Section 4.6(a)(4). In
such event, the right of the Investor and all other Holders to registration
pursuant to this Section 4.6(a) will be
conditioned upon such persons’ participation in such underwriting and the
inclusion of such persons’ Registrable Securities in the underwriting, and each
such person will (together with the Company and the other persons distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by the Company. If any participating person disapproves
of the terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the
Investor.
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(6) The
Company represents and warrants that it has not granted to any holder of its
securities and agrees that it shall not grant “piggyback” registration rights to
one or more third parties to include their securities in the Shelf Registration
Statement or in an underwritten offering under the Shelf Registration Statement
pursuant to Section 4.6(a)(2). If
a Piggyback Registration under Section 4.6(a)(4) relates to
an underwritten primary offering on behalf of the Company, and in either case
the managing underwriters advise the Company that in their reasonable opinion
the number of securities requested to be included in such offering exceeds the
number which can be sold without adversely affecting the marketability of such
offering (including an adverse effect on the per share offering price), the
Company will include in such registration or prospectus only such number of
securities that in the reasonable opinion of such underwriters can be sold
without adversely affecting the marketability of the offering (including an
adverse effect on the per share offering price), which securities will be so
included in the following order of priority: (i) first, in the case of a
Piggyback Registration under Section 4.6(a)(4), the securities
the Company proposes to sell, (ii) second, Registrable Securities of the
Investor and all other Holders who have requested registration of Registrable
Securities pursuant to Section 4.6(a)(2) or
4.6(a)(4),
as applicable, pro rata on the
basis of the aggregate number of such securities or shares owned by each such
person and (iii) third, any other securities of the Company that have been
requested to be so included, subject to the terms of this
Agreement.
(1) Prepare
and file with the SEC a prospectus supplement with respect to a proposed
offering of Registrable Securities pursuant to an effective registration
statement, subject to this Section 4.6(c), and keep such
registration statement effective or such prospectus supplement current until the
securities described therein are no longer Registrable
Securities.
(2) Prepare
and file with the SEC such amendments and supplements to the applicable
registration statement and the prospectus or prospectus supplement used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
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(3) Furnish
to the Holders and any underwriters such number of copies of the applicable
registration statement and each such amendment and supplement thereto (including
in each case all exhibits) and of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned or to be distributed by
them.
(4) Use
its reasonable best efforts to register and qualify the securities covered by
such registration statement under such other securities or blue sky laws of such
jurisdictions as shall be reasonably requested by the Holders or any managing
underwriter(s), to keep such registration or qualification in effect for so long
as such registration statement remains in effect, and to take any other action
which may be reasonably necessary to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such Holder; provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(5) Notify
each Holder of Registrable Securities at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the applicable prospectus, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.
(6) Give
written notice to the Holders:
(i) when
any registration statement filed pursuant to Section 4.6(a) or any
amendment thereto has been filed with the SEC (except for any amendment effected
by the filing of a document with the SEC pursuant to the Exchange Act) and when
such registration statement or any post-effective amendment thereto has become
effective;
(ii)
of any request by the SEC for amendments or supplements to any
registration statement or the prospectus included therein or for additional
information;
(iii) of
the issuance by the SEC of any stop order suspending the effectiveness of any
registration statement or the initiation of any proceedings for that
purpose;
(iv) of
the receipt by the Company or its legal counsel of any notification with respect
to the suspension of the qualification of the Common Stock for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose;
(v)
of the happening of any event that requires the Company to make changes in any
effective registration statement or the prospectus related to the registration
statement in order to make the statements therein not misleading (which notice
shall be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made); and
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(vi) if
at any time the representations and warranties of the Company contained in any
underwriting agreement contemplated by Section 4.6(c)(10) cease to
be true and correct.
(7) Use
its reasonable best efforts to prevent the issuance or obtain the withdrawal of
any order suspending the effectiveness of any registration statement referred to
in Section 4.6(c)(6)(iii) at
the earliest practicable time.
(8) Upon
the occurrence of any event contemplated by Section 4.6(c)(5) or
4.6(c)(6)(v), promptly prepare a post-effective amendment to such
registration statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered to the Holders and any
underwriters, the prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If the Company notifies the Holders in accordance with
Section 4.6(c)(6)(v) to
suspend the use of the prospectus until the requisite changes to the prospectus
have been made, then the Holders and any underwriters shall suspend use of such
prospectus and use their reasonable best efforts to return to the Company all
copies of such prospectus (at the Company’s expense) other than permanent file
copies then in such Holder’s or underwriter’s possession. The total
number of days that any such suspension may be in effect in any 180-day period
shall not exceed 30 days.
(9) Use
best efforts to procure the cooperation of the Company’s transfer agent in
settling any offering or sale of Registrable Securities, including with respect
to the transfer of physical stock certificates into book-entry form in
accordance with any procedures reasonably requested by the Holders or any
managing underwriter(s).
(10) If
an underwritten offering is requested pursuant to Section 4.6(a)(2), enter into an
underwriting agreement in customary form, scope and substance and take all such
other actions reasonably requested by the Holders of a majority of the
Registrable Securities being sold in connection therewith or by the managing
underwriter(s), if any, to expedite or facilitate the underwritten disposition
of such Registrable Securities, and in connection therewith in any underwritten
offering (including making members of management and executives of the Company
available to participate in “road shows,” similar sales events and other
marketing activities), (i) make such representations and warranties to the
Holders that are selling stockholders and the managing underwriter(s), if any,
with respect to the business of the Company and its subsidiaries, and the Shelf
Registration Statement, prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in customary form,
substance and scope, and, if true, confirm the same if and when requested, (ii)
furnish the underwriters with opinions of counsel to the Company, addressed to
the managing underwriter(s), if any, covering the matters customarily covered in
such opinions requested in underwritten offerings, (iii) obtain “comfort”
letters from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of any business
acquired by the Company for which financial statements and financial data are
included in the Shelf Registration Statement) who have certified the financial
statements included in such Shelf Registration Statement, addressed to each of
the managing underwriter(s), if any, such letters to be in customary form and
covering matters of the type customarily covered in “comfort” letters, (iv) if
an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures customary in underwritten offerings,
and (v) deliver such documents and certificates as may be reasonably requested
by the Holders of a majority of the Registrable Securities being sold in
connection therewith, their counsel and the managing underwriter(s), if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company.
-41-
(11) Make
available for inspection by a representative of Holders that are selling
stockholders, the managing underwriter(s), if any, and any attorneys or
accountants retained by such Holders or managing underwriter(s), at the offices
where normally kept, during reasonable business hours, financial and other
records, pertinent corporate documents and properties of the Company, and cause
the officers, directors and employees of the Company to supply all information
in each case reasonably requested (and of the type customarily provided in
connection with due diligence conducted in connection with a registered public
offering of securities) by any such representative, managing underwriter(s),
attorney or accountant in connection with such Shelf Registration
Statement.
(12) Cause
all such Registrable Securities to be listed on each securities exchange on
which similar securities issued by the Company are then listed or, if no similar
securities issued by the Company are then listed on any securities exchange, use
its reasonable best efforts to cause all such Registrable Securities to be
listed on the New York Stock Exchange or NASDAQ, as determined by the
Company.
(13) If
requested by Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith, or the managing underwriter(s),
if any, promptly include in a prospectus supplement or amendment such
information as the Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith or managing underwriter(s), if
any, may reasonably request in order to permit the intended method of
distribution of such securities and make all required filings of such prospectus
supplement or such amendment as soon as practicable after the Company has
received such request.
(14) Timely
provide to its security holders earning statements satisfying the provisions of
Section 11(a) of
the Securities Act and Rule 158 thereunder.
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(1) The
Company agrees to indemnify each Holder and, if a Holder is a person other than
an individual, such Holder’s officers, directors, employees, agents,
representatives and Affiliates, and each person, if any, that controls a Holder
within the meaning of the Securities Act (each, an “Indemnitee”),
against any and all Losses, joint or several, arising out of or based upon any
untrue statement or alleged untrue statement of material fact contained in any
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto or any documents
incorporated therein by reference or contained in any free writing prospectus
(as such term is defined in Rule 405) prepared by the Company or authorized by
it in writing for use by such Holder (or any amendment or supplement thereto);
or any omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, that
the Company shall not be liable to such Indemnitee in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon (i) an untrue
statement or omission made in such registration statement, including any such
preliminary prospectus or final prospectus contained therein or any such
amendments or supplements thereto or contained in any free writing prospectus
(as such term is defined in Rule 405) prepared by the Company or authorized by
it in writing for use by such Holder (or any amendment or supplement thereto),
in reliance upon and in conformity with information regarding such Indemnitee or
its plan of distribution or ownership interests which was furnished in writing
to the Company by such Indemnitee for use in connection with such registration
statement, including any such preliminary prospectus or final prospectus
contained therein or any such amendments or supplements thereto, or
(ii) offers or sales effected by or on behalf such Indemnitee “by
means of” (as defined in Rule 159A) a “free writing prospectus” (as defined in
Rule 405) that was not authorized in writing by the Company.
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(2) If
the indemnification provided for in Section 4.6(g)(1) is
unavailable to an Indemnitee with respect to any Losses or is insufficient to
hold the Indemnitee harmless as contemplated therein, then the Company, in lieu
of indemnifying such Indemnitee, shall contribute to the amount paid or payable
by such Indemnitee as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the Indemnitee, on the one hand,
and the Company, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand,
and of the Indemnitee, on the other hand, shall be determined by reference to,
among other factors, whether the untrue statement of a material fact or omission
to state a material fact relates to information supplied by the Company or by
the Indemnitee and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
the Company and each Holder agree that it would not be just and equitable if
contribution pursuant to this Section 4.6(g)(2) were
determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 4.6(g)(1). No
Indemnitee guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of
the Securities Act) shall be entitled to contribution from the Company if the
Company was not guilty of such fraudulent misrepresentation.
(h) Assignment of
Registration Rights. The rights of the Investor to
registration of Registrable Securities pursuant to Section 4.6 may be assigned
by the Investor to a transferee or assignee of Registrable Securities to which
there is transferred to such transferee no less than $1,000,000 in Registrable
Securities; provided, however, that
the transferor shall, within ten days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee
and the number and type of Registrable Securities that are being
assigned.
(i) Holdback. With
respect to any underwritten offering of Registrable Securities by the Investor
or other Holders pursuant to Section 4.6, the Company agrees
not to effect (other than pursuant to such registration or pursuant to a Special
Registration) any public sale or distribution, or to file any Shelf Registration
Statement (other than such registration or a Special Registration) covering any
of its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the period not to exceed 30 days prior
and 90 days following the effective date of such offering or such longer period
up to 180 days as may be requested by the managing underwriter. The
Company also agrees to cause each of its directors and senior executive officers
to execute and deliver customary lockup agreements in such form and for such
time period up to 180 days as may be requested by the managing
underwriter.
(1) make
and keep public information available, as those terms are understood and defined
in Rule 144(c)(1) or any similar or analogous rule promulgated under the
Securities Act, at all times after the effective date of this
Agreement;
-44-
(2) file
with the SEC, in a timely manner, all reports and other documents required of
the Company under the Exchange Act, and if at any time the Company is not
required to file such reports, make available, upon the request of any Holder,
such information necessary to permit sales pursuant to Rule 144A (including the
information required by Rule 144A(d)(4) and the Securities Act);
(3) so
long as the Investor or a Holder owns any Registrable Securities, furnish to the
Investor or such Holder forthwith upon request: a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 under
the Securities Act, and of the Exchange Act; a copy of the most recent annual or
quarterly report of the Company; and such other reports and documents as the
Investor or Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such securities without
registration; and
(4) take
such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act.
(k) As
used in this Section 4.6, the following terms
shall have the following respective meanings:
(1) “Holder” means
the Investor, any other holder of Registrable Securities to whom the
registration rights conferred by this Agreement have been transferred in
compliance with Section 4.6(h) hereof.
(2) “Holders’
Counsel” means one counsel for the selling Holders chosen by Holders
holding a majority interest in the Registrable Securities being
registered.
(3) “Register,”
“registered,”
and “registration”
shall refer to a registration effected by preparing and (a) filing a
registration statement in compliance with the Securities Act and applicable
rules and regulations thereunder, and the declaration or ordering of
effectiveness of such registration statement or (b) filing a prospectus and/or
prospectus supplement in respect of an appropriate effective registration
statement on Form S-3 or other form approved by the holders of a majority of
Registrable Securities available for sales of securities pursuant to Rule 415
under the Securities Act.
(4) “Registrable
Securities” means (A) all Common Stock held by the Investor from
time to time, and (B) any equity securities issued or issuable directly or
indirectly with respect to the securities referred to in the foregoing clause
(A) by way of conversion, exercise or exchange thereof or stock dividend or
stock split or in connection with a combination of shares, recapitalization,
reclassification, merger, amalgamation, arrangement, consolidation or other
reorganization, provided that,
once issued, such securities will not be Registrable Securities when (i) they
are sold pursuant to an effective registration statement under the Securities
Act, (ii) they shall have ceased to be outstanding; or (iii) they have been
sold in a private transaction in which the transferor’s rights under this
Agreement are not assigned to the transferee of the securities. No
Registrable Securities may be registered under more than one registration
statement at one time.
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(5) “Registration
Expenses” means all expenses incurred by the Company in effecting any
registration pursuant to this Agreement (whether or not any registration or
prospectus becomes effective or final) or otherwise complying with its
obligations under this Section 4.6, including, without
limitation, all registration, filing and listing fees (including filings made
with the Financial Industry Regulatory Authority), printing expenses (including
printing of prospectuses and certificates for the Securities), the Company’s
expenses for messenger and delivery services and telephone, fees and
disbursements of counsel for the Company, blue sky fees and expenses, expenses
incurred by the Company in connection with any “road show,” the fees and
disbursements of Holders’ Counsel, and expenses of the Company’s independent
accountants in connection with any regular or special reviews or audits incident
to or required by any such registration, but shall not include Selling Expenses
and the compensation of regular employees of the Company, which shall be paid in
any event by the Company.
(6) “Rule 144,”
“Rule
144A,” “Rule 158,”
“Rule
159A,” “Rule 405” and
“Rule
415” mean, in each case, such rule promulgated under the Securities Act
(or any successor provision), as the same shall be amended from time to
time.
(7) “Scheduled Black-out
Period” means the period from and including the last day of a fiscal
quarter of the Company to and including the business day after the day on which
the Company publicly releases its earnings for such fiscal quarter.
(8) “Selling
Expenses” means all discounts, selling commissions and stock transfer
taxes applicable to the sale of Registrable Securities and fees and
disbursements of counsel for any Holder (other than the fees and disbursements
of Holders’ Counsel included in Registration Expenses), other than $25,000 of
fees and disbursements of Holders’ Counsel, which shall be reimbursed by the
Company pursuant to Section 4.6(b).
(l) At
any time, any holder of Securities (including any Holder) may elect to forfeit
its rights set forth in this Section 4.6 from that date
forward; provided, that
a Holder forfeiting such rights shall nonetheless be entitled to participate
under Sections 4.6(a)(4)-(6) in any Pending Underwritten Offering to the same
extent that such Holder would have been entitled to if the holder had not
withdrawn; and provided, further, that
no such forfeiture shall terminate a Holder’s rights or obligations under
Section 4.6(f) with respect
to any prior registration or Pending Underwritten Offering. “Pending Underwritten
Offering” means, with respect to any Holder forfeiting its rights
pursuant to this Section 4.6(l), any underwritten
offering of Registrable Securities in which such Holder has advised the Company
of its intent to register its Registrable Securities either pursuant to
Section 4.6(a)(2) or
4.6(a)(4) prior to the date of such Holder’s
forfeiture.
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4.7 Market
Stand-off Provision. The Investor hereby agrees that, until the
90th
day after the Closing (or such lesser time as permitted by the underwriters),
the Investor shall not, without the prior written consent of Xxxxx, Xxxxxxxx
& Xxxxx, Inc. (“Xxxxx Xxxxxxxx”) and the Company, directly or indirectly,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of, or otherwise dispose of or transfer any shares of
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock, whether now owned, acquired pursuant to this Agreement or
hereafter acquired by the undersigned or with respect to which the undersigned
has, acquires pursuant to this Agreement or hereafter acquires the power of
disposition, or file, or request that the Company file, any registration
statement under the Securities Act, as amended, with respect to any of the
foregoing, or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of Common Stock, whether any such swap or transaction
is to be settled by delivery of Common Stock or other securities, in cash or
otherwise. In the event that either (i) during the period that begins
on the date that is 15 calendar days plus three (3) business days before the
last day of the 90 day restricted period and ends on the last day of the 90 day
restricted period, the Company issues an earnings release or material news or a
material event relating to the Company occurs, or (ii) prior to the expiration
of the 90 day restricted period, the Company announces that it will release
earnings results during the 16 day period beginning on the last day of the 90
day restricted period, the restrictions set forth herein will continue to apply
until the expiration of the date that is 15 calendar days plus three (3)
business days after the date on which the earnings release is issued or the
material news or event related to the Company occurs. The Company
shall promptly notify Xxxxx Xxxxxxxx of any earnings releases, news or events
that may give rise to an extension of the initial restricted
period. For the avoidance of doubt and notwithstanding Section
6.12 of
this Agreement, Xxxxx Xxxxxxxx shall be an express third party beneficiary of
this Section 4.7. In the event the restrictions in this Section
4.7 are waived for any investor in the Other Private Placements, such
restrictions shall be deemed automatically waived for the
Investor.
-47-
-48-
-49-
4.9 Anti-Takeover
MattersTakeover Laws;
No Rights Triggered. If any Takeover Law may become, or may
purport to be, applicable to the transactions contemplated or permitted by this
Agreement, the Company and the members of the Board of Directors shall grant
such approvals and take such actions as are necessary so that the transactions
contemplated or permitted by this Agreement, the other Transaction Documents may
be consummated, as promptly as practicable, on the terms contemplated by this
Agreement and the other respective Transaction Documents, as the case may be,
and otherwise act to eliminate or minimize the effects of any Takeover Law on
any of the transactions contemplated or permitted by this Agreement and the
other Transaction Documents.
“RESOLVED,
that pursuant to Section 60.835 of the Oregon Business Corporation Act (“OBCA”),
the Board of Directors of the Corporation, for the specific purpose of
establishing an irrevocable exemption from Section 60.835 of the OBCA, hereby
approves thereunder (i) the entering into, and all of the transactions relating
to and contemplated or permitted by, the Securities Purchase Agreement, between
the Corporation and BOTC Holdings LLC, including, without limitation, (A) the
assignment of any rights thereunder, (B) any person or entity becoming an
“interested shareholder” as defined in Section 60.825 of the OBCA including,
without limitation, BOTC Holdings LLC, any present or future affiliates or
associates of BOTC Holdings LLC, any trust BOTC Holdings LLC has or may
establish (whether individually or in another capacity) (collectively, the
“Covered
Persons”) and (C) the transfer of any shares of common stock or other
securities of the Corporation in accordance with the terms and conditions of the
Securities Purchase Agreement, (ii) any transaction in which any Covered Person
becomes an “interested shareholder” as defined in Section 60.825 of the OBCA or
acquires additional shares of common stock or other securities of the
Corporation thereafter and (iii) any “business combination” as defined in
Section 60.825 of the OBCA involving any Covered Person.”
-50-
(a) Each
of the Company and the Investor agrees to cooperate and use its reasonable best
efforts to ensure, including by communicating with each other with respect to
their respective purchases of Common Stock, that none of the Investor nor any of
its Affiliates will become, or control, a “bank holding company” within the
meaning of the BHC Act and the CBC Act.
(b) The
Company shall not knowingly take any action which would reasonably be expected
to pose a substantial risk that any of the Investor or its Affiliates will
become, or control, a “bank holding company” within the meaning of the BHC or
the CBC Act, including undertaking any redemption, recapitalization, or
repurchase of Common Stock, of securities or rights, options, or warrants to
purchase Common Stock, or securities of any type whatsoever that are, or may
become, convertible into or exchangeable into or exercisable for Common Stock in
each case, where the Investor is not given the right to participate in such
redemption, recapitalization, or repurchase to the extent of the Investor’s
pro rata
proportion.
(c) Notwithstanding
anything in this Agreement to the contrary, in no event will the Investor or any
of his Affiliates be obligated to:
(1) Without
limiting clause (2) below, (A) propose or accept any divestiture of any of the
Investor’s or any of his Affiliates’ assets, or (B) accept any operational
restriction on the Investor’s or any of his Affiliates’ business, or agree to
take any action that limits the Investor’s or his Affiliates’ commercial
practices in any way (except as they relate to the Company and the Company
Subsidiaries) ) including, without limitation, by requiring the modification of
governance, fee or carried interest arrangements with respect to, or otherwise
by imposing any capital or other requirements on, the Investor or any of its
Affiliates, (C) agree to provide capital to, or otherwise maintain or
contribute, directly or indirectly, to the capital of, the Company or any
Company Subsidiary (including the Company Bank) other than the aggregate amount
of the Purchase Price, or (D) register as a bank holding company, in each case
in order to obtain any consent, acceptance or approval of any Governmental
Entity to consummate the transactions contemplated by this Agreement;
or
(2) Propose
or agree to accept any term or condition or otherwise modify the terms of this
Agreement, including, for the avoidance of doubt, the terms or the amount of the
Securities to be delivered by the Company under this Agreement, to obtain any
consent, acceptance, approval of any Governmental Entity to the consummation of
the transactions contemplated by this Agreement if such term, condition,
modification or confirmation would (A) materially adversely affect (with respect
to the Investor or his Affiliates) any material term of the transactions, or (B)
reasonably be expected to adversely affect (with respect to the Investor or his
Affiliates) any material financial term of the transactions contemplated by this
Agreement or the anticipated benefits to the Investor and its Affiliates
hereunder.
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4.11 VCOC Investor. Investor and, at the Investor’s request, each
Affiliate thereof that directly or indirectly has an interest in the Investor,
the Company or the Company Bank, in each case that is intended to qualify as a
“venture capital operating company” as defined in the regulations (the “Plan Asset
Regulations”) issued by the Department of Labor at Section 2510.3 101 of
Part 2510 of Chapter XXV, Title 29 of the Code of Federal Regulations, as the
same may be amended from time to time (a “VCOC” and each
such person a “VCOC
Investor”), will have customary and appropriate VCOC rights (including
consultation rights, inspection and access rights, and rights to receive
materials for all meetings of the Board of Directors or the board of directors
of the Company Bank (as well as committees of each such board), and the right to
audited and unaudited financial statements, annual budget and other financial
and operations information, including advance notification of and consultation
with respect to significant corporate actions) relating to inspection,
information and consultation with respect to the Company or the Company Bank;
provided
that this Section 4.11 shall not entitle the Investor to designate any
members of the Board of Directors or of the board of directors of the Company
Bank. The Company shall, and shall cause the Company Bank to, consider in good
faith the recommendations of any VCOC Investor or its designated representative
in connection with the matters on which it is consulted as described above,
recognizing that the ultimate discretion with respect to all such matters shall
be retained by the Company or the Company Bank, as applicable. In the event the
Company or the Company Bank ceases to qualify as an “operating company” (as
defined in the first sentence of 2510.3-101(c)(1) of the Plan Asset Regulations)
or the investment in the Company or the Company Bank by a VCOC Investor does not
qualify as a venture capital investment as defined in the Plan Asset
Regulations, then the Company and the Investor will, and the Company will cause
the Company Bank to, cooperate in good faith to take all reasonable actions
necessary to preserve the VCOC status of each VCOC Investor, it being understood
that such reasonable actions shall not require a VCOC Investor to purchase or
sell any investments. The Company shall cause the Company Bank to
enter into an agreement with each VCOC Investor that provides the rights set
forth in this Section 4.11, effective as of the Closing.
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ARTICLE
V
5.1 Termination.
This
Agreement may be terminated prior to the Closing:
(a) by
mutual written consent of the Investor and the Company;
(b) by
the Company, upon written notice to the Investor, in the event that the
conditions of Closing set forth in Section 1.2(c)(2) are not
satisfied on or before December 31, 2009;
(c) by
the Investor, upon written notice to the Company, in the event that the
conditions of Closing set forth in Section 1.2(c)(1) are not
satisfied on or before December 31, 2009;
(d) by
the Company or the Investor, upon written notice to the other parties, in the
event that any Governmental Entity shall have issued any order, decree or
injunction or taken any other action restraining, enjoining or prohibiting any
of the transactions contemplated by this Agreement, and such order, decree,
injunction or other action shall have become final and
nonappealable;
(e) by
the Investor, if the Investor or any of its Affiliates receives written notice
from or is otherwise advised by the Federal Reserve that the Federal Reserve
will not issue a non-objection letter with respect to the CBC Act notice filed
by the Investor or otherwise indicates that it will deem the Investor or any of
its affiliates to control Company for purposes of the BHC Act or CBC
Act;
(f) by
the Investor, if the Investor or any of its Affiliates receives notice from or
is otherwise advised by the FDIC that the contribution by the Company to its
principal depository institution Subsidiary contemplated by Section
1.2(c)(1)(vi) would
not satisfy the “Leverage
Capital Ratio” and
other capital requirements of the FDIC set forth in paragraph 4 of the Order, or
comparable requirements in any other enforcement order issued by a federal or
state banking regulator
between the date of this agreement and the Closing;
or
(g) by
the Investor, if a “change in control” within the meaning of any Benefit Plan
occurs on or after the date hereof but prior to the Closing
Date.
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5.2 Effects of
Termination. In
the event of any termination of this Agreement as provided in Section 5.1,
this Agreement (other than Section 3.2, Section 4.5, this Section 5.2 and
Article VI (other than Section 6.1) and all applicable defined terms, which
shall remain in full force and effect) shall forthwith become wholly void and of
no further force and effect; provided that nothing herein
shall relieve any party from liability for willful breach of this
Agreement.
ARTICLE
VI
6.1 Survival. Each
of the representations and warranties set forth in this Agreement shall survive
the Closing under this Agreement but only for a period of 24 months following
the Closing Date (or until final resolution of any claim or action arising from
the breach of any such representation and warranty, if notice of such breach was
provided prior to the end of such period) and thereafter shall expire and have
no further force and effect; provided that the
representations and warranties in Sections 2.2(a), 2.2(b), 2.2(c), 2.2(d)
and 2.3(a) shall survive indefinitely and the representations and warranties in
Sections 2.2(i),
2.2(p) and 2.2(u) shall survive until 90 days after the expiration of the
applicable statutory periods of limitations. Except as otherwise
provided herein, all covenants and agreements contained herein shall survive for
the duration of any statutes of limitations applicable thereto or until, by
their respective terms, they are no longer operative.
6.2 Amendment. No
amendment or waiver of this Agreement will be effective with respect to any
party unless made in writing and signed by an officer of a duly authorized
representative of such party.
6.3 Waivers. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The conditions to each
party’s obligation to consummate the Closing are for the sole benefit of such
party and may be waived by such party in whole or in part to the extent
permitted by applicable law. No waiver of any party to this Agreement
will be effective unless it is in a writing signed by a duly authorized officer
of the waiving party that makes express reference to the provision or provisions
subject to such waiver.
6.4 Counterparts and
Facsimile. For
the convenience of the parties hereto, this Agreement may be executed in any
number of separate counterparts, each such counterpart being deemed to be an
original instrument, and all such counterparts will together constitute the same
agreement. Executed signature pages to this Agreement may be
delivered by facsimile and such facsimiles will be deemed as sufficient as if
actual signature pages had been delivered.
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6.5 Governing
Law. This
Agreement will be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such State. The parties hereto irrevocably
and unconditionally agree that any suit or proceeding arising out of or relating
to this Agreement and the transactions contemplated hereby will be tried
exclusively in the U.S. District Court for the Southern District of New York or,
if that court does not have subject matter jurisdiction, in any state court
located in The City and County of New York and the parties agree to submit to
the jurisdiction of, and to venue in, such courts.
6.6 Waiver of Jury
Trial. EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
6.7 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 telecopy or facsimile,
upon confirmation of receipt, (b) on the first business day following the date
of dispatch if delivered by a recognized next-day courier service, or (c) on the
third business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All
notices hereunder shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such
notice.
(1) If
to the Investor:
BOTC
Holdings LLC
c/o
Lightyear Capital LLC
000 Xxxx
Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
Attn:
Xxxx X. Xxxxxxx
Facsimile: (000)
000-0000
with a
copy to (which copy alone shall not constitute notice):
Xxxxxxx
Xxxxxxx & Xxxxxxxx LLP
000
Xxxxxxxxx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attn: Xxxxxxxx
X. Xxxxxxxxxx, Esq.
Facsimile: (000)
000-0000
(2) If
to the Company:
0000 X.X.
Xxxx Xxxxxx
Xxxx,
Xxxxxx 00000
Attn: Chief
Executive Officer
Facsimile: (000)
000-0000
with
copies to (which copy alone shall not constitute notice):
Xxxxx
Xxxxxx Xxxxxxxx LLP
0000
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxx 00000
Attn: Xxxxx
X. Xxxxxx
Facsimile: (000)
000-0000
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6.8 Entire Agreement,
Etc. This
Agreement (including the Exhibits, Schedules, and Disclosure Schedules hereto)
constitutes the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties, both written and oral, between
the parties, with respect to the subject matter hereof; the terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and their permitted
assigns. For the avoidance of doubt, the Company agrees that the
Investor may assign its rights and obligations under this Agreement to any
Affiliate and any such transferee shall be included in the term
“Investor”.
6.9 Other
Definitions. Wherever
required by the context of this Agreement, the singular shall include the plural
and vice versa, and the masculine gender shall include the feminine and neuter
genders and vice versa, and references to any agreement, document or instrument
shall be deemed to refer to such agreement, document or instrument as amended,
supplemented or modified from time to time. All article, section,
paragraph or clause references not attributed to a particular document shall be
references to such parts of this Agreement, and all exhibit, annex and schedule
references not attributed to a particular document shall be references to such
exhibits, annexes and schedules to this Agreement. When used
herein:
(1) the
term “subsidiary” means
those corporations, banks, savings banks, associations and other persons of
which such person owns or controls 25% or more of the outstanding equity
securities either directly or indirectly through an unbroken chain of entities
as to each of which 25% or more of the outstanding equity securities is owned
directly or indirectly by its parent or otherwise controlled by such parent and
any entity that would be a “subsidiary” for purposes of the BHC Act; provided, however, that there shall not
be included any such entity to the extent that the equity securities of such
entity were acquired in satisfaction of a debt previously contracted in good
faith or are owned or controlled in a bona fide fiduciary
capacity;
(2) the
term “Affiliate” means,
with respect to any person, any person directly or indirectly controlling,
controlled by or under common control with, such other person. For
purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”)
when used with respect to any person, means the possession, directly or
indirectly, of the power to cause the direction of management and/or policies of
such person, whether through the ownership of voting securities by contract or
otherwise or for purposes of the BHC Act or the CBC Act;
(3) the
word “or” is not exclusive;
(4) the
words “including,” “includes,” “included” and “include” are deemed to be
followed by the words “without
limitation”;
-56-
(5) the
terms “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
section, paragraph or subdivision;
(6) the
words “it” or “its” are deemed to mean
“him” or “her” and “his” or “her”, as applicable, when
referring to an individual;
(7) “business day” means any day
except Saturday, Sunday and any day which shall be a legal holiday or a day on
which banking institutions in the State of New York or the State of Oregon
generally are authorized or required by law or other governmental actions to
close;
(8) “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;
(9) “Beneficially Own,” “Beneficial Owner” and “Beneficial Ownership” are
defined in Rules 13d-3 and 13d-5 of the Exchange Act; and
(10) “knowledge of the Company” or
“Company’s knowledge”
means the actual knowledge after due inquiry of the executive officers of the
Company.
6.10 Captions. The
article, section, paragraph and clause captions herein are for convenience of
reference only, do not constitute part of this Agreement and will not be deemed
to limit or otherwise affect any of the provisions hereof.
6.11 Severability. If
any provision of this Agreement or the application thereof to any person
(including the officers and directors of the Investor and the Company) or
circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of
such provision to persons or circumstances other than those as to which it has
been held invalid or unenforceable, will remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination, the parties shall negotiate in good faith in an effort to agree
upon a suitable and equitable substitute provision to effect the original intent
of the parties.
6.12 No Third-Party
Beneficiaries. Nothing
contained in this Agreement, expressed or implied, is intended to confer or
shall confer upon any person other than the express parties hereto, any benefit
right or remedies, except that the provisions of Sections 4.2, 4.3, 4.5, 4.6,
4.7, 4.8 and 4.11 shall inure to the benefit of the persons referred to in those
Sections, including any Holders. The representations and warranties
set forth in Article II and the covenants set forth in Articles III and IV have
been made solely for the benefit of the parties to this Agreement and (a) may be
intended not as statements of fact, but rather as a way of allocating the risk
to one of the parties if those statements prove to be inaccurate; (b) have been
qualified by reference to the Disclosure Schedules of each party, each of which
contains certain disclosures that are not reflected in the text of this
Agreement; and (c) may apply standards of materiality in a way that is different
from what may be viewed as material by shareholders of, or other investors in,
the Company.
-57-
6.13 Time of
Essence. Time
is of the essence in the performance of each and every term of this
Agreement.
6.14 Public
Announcements. Subject
to each party’s disclosure obligations imposed by law or regulation, each of the
parties hereto will cooperate with each other in the development and
distribution of all news releases and other public information disclosures with
respect to this Agreement and any of the transactions contemplated by this
Agreement or the other Transaction Documents, and no party hereto will make any
such news release or public disclosure without first consulting with the other
party hereto and receiving its consent (which shall not be unreasonably
withheld, conditioned, or delayed), and each party shall coordinate with the
other with respect to any such news release or public disclosure.
6.15 Specific
Performance. The
parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms. It is accordingly agreed that the parties shall be
entitled to seek specific performance of the terms hereof, this being in
addition to any other remedies to which they are entitled at law or
equity.
6.16 No
Obligation. It
is understood and agreed that unless and until there is a definitive executed
Agreement among the parties with respect to the transactions contemplated
herein, no party shall be under any legal obligation of any kind hereunder with
respect to such transactions or otherwise, and by virtue of any written or oral
expressions by the parties’ respective representatives.
* * *
-58-
IN WITNESS WHEREOF, this
Agreement has been duly executed and delivered by the duly authorized officers
of the parties hereto as of the date first herein above written.
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By:
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/s/ Xxxxxxxx X. Xxxx | ||
|
Name:
|
Xxxxxxxx
X. Xxxx
|
||
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Title:
|
Chief
Executive Officer
|
||
[Signature
Page to Securities Purchase Agreement]
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BOTC
HOLDINGS LLC
|
|||
|
By:
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/s/ Xxxxxxx Kaconi | ||
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Name:
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Xxxxxxx Kaconi | ||
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Title:
|
|||
[Signature Page to Securities
Purchase Agreement]
EXHIBIT
A: Form of Opinion of Counsel
____________
[●], 2009
To the
Investors listed on Schedule A
attached
hereto
Ladies
and Gentlemen:
We have
acted as counsel to Cascade Bancorp, an Oregon corporation (the “Company”), for purposes of
rendering an opinion of counsel in connection with the Company’s issuance on the
date hereof to the Investors listed on Schedule A attached hereto (collectively,
the “Investors” and
each individually, an “Investor”) of [●]
shares of common stock, no par value, of the Company (the “Common Stock”) pursuant to
Securities Purchase Agreements, dated as of October 29, 2009, between the
Company and each Investor (the “Agreements”) (the “Offering”). This
opinion is being furnished in connection with Closing of the transactions
contemplated by the Agreements. Capitalized terms used herein which
are not otherwise defined shall have the meanings given to them in the
Agreements.
The law
covered by the opinions expressed herein is limited to Oregon Revised Statute
and the federal laws of the United States of America.
This
opinion letter is to be interpreted in accordance with the Guidelines for the
Preparation of Closing Opinions issued by the Committee on Legal Opinions of the
American Bar Association’s Business Law Section as published in 57 Business
Lawyer 875 (February 2002) and the State on the Role of Customary Practice in
the Preparation and Understanding of Third-Party Legal Opinions published in 63
The Business Lawyer 1277 (August 2008).
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A.
|
For
purposes of this opinion letter, we have relied with your permission on the
following assumptions:
|
A-1
|
As
to matters of fact material to the opinions expressed herein, we have
relied upon the statements or certificates of the Company and you pursuant
to the Agreements and upon certificates and statements of government
officials and of officers of the Company. In addition, we have examined
originals or copies of documents, corporate records and other writings
that we consider relevant for the purposes of this opinion. In such
examination, we have assumed that the signatures on documents and
instruments examined by us are authentic, that each is what it purports to
be, and that all documents and instruments submitted to us as copies or
facsimiles conform with the originals, which facts we have not
independently verified.
|
Exhibit
A – 1
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A-2
|
In
making our examination of documents, we have further assumed that (i) each
party to such documents (other than the Company in connection with the
Agreements) had the power, legal competence and capacity to enter into and
perform all of such party’s obligations thereunder, (ii) each party to
such documents (other than the Company in connection with the Agreements)
has duly authorized, executed and delivered such documents, (iii) each of
such documents is enforceable against and binding upon the parties thereto
(other than the Company in connection with the Agreements), (iv) there is
no fact or circumstance relating to you or your business that might
prevent you from enforcing any of the rights provided for in the
Agreements, (v) there has not been any mutual mistake of fact or
misunderstanding, fraud, duress or undue influence, (vi) the conduct of
the parties to the Agreements has complied with any requirement of good
faith, fair dealing and conscionability, and (vi) you, and any agent
acting for you in connection with the transactions contemplated by the
Agreements, have acted in good faith and without notice of any defense
against the enforcement of any rights created by the Agreements. We have
also assumed that there are no extrinsic agreements or understandings
among the parties to the Agreements that would modify or interpret the
terms of the Agreements or the respective rights or obligations of the
parties thereunder.
|
|
B.
|
Based
upon the foregoing, and subject to the assumptions, exceptions, limitations and
qualifications stated herein, it is our opinion that:
|
B-1
|
The
Company has been duly organized and is validly existing as a corporation
under the laws of the State of
Oregon.
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B-2
|
All
of the issued shares of capital stock of the Company, including the shares
of Common Stock issued pursuant to the Agreements, have been duly
authorized and, when issued
pursuant to the Agreements upon receipt of the consideration provided for
therein, will be validly issued, fully paid and
nonassessable.
|
|
B-3
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It
is not necessary to register the shares of Common Stock issued pursuant to
the Agreements under the Securities
Act of 1933 in connection with the offer, sale and delivery of the shares
of Common Stock by the Company to the Investors in accordance with
the Agreements.
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B-4
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The
Company’s authorized equity capitalization is as set forth in Section
2.2(c) of the Securities Purchase
Agreement.
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B-5
|
Each
of the Agreements has been duly
authorized, executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.
|
Exhibit
A – 2
|
B-6
|
The
sale and issuance of the shares of Common Stock will not be subject to any
preemptive rights, rights of first offer or similar rights of any person
under (a) the certificate of incorporation of the Company as currently in
effect (the “Charter”), (b) the
bylaws of the Company as currently in effect (the “Bylaws”), or (c) any
Company Significant Agreement.
|
|
B-7
|
The
sale and issuance of the Common Stock, in accordance with the Agreements
and the execution, delivery and performance by the Company of its
obligations under the Agreements will not violate (a) the Charter, (b) the
Bylaws, (c) applicable laws of the State of Oregon, (d) applicable federal
laws of the United States or (e) any Company Significant
Agreement.
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|
B-8
|
No
consent, approval, authorization or order of, or filing with, any Federal
or Oregon governmental authority or regulatory body is required to be
obtained or made by the Company for the consummation by the Company of the
transactions contemplated by the Agreements, including, without
limitation, each Other Private Placement and the Public Offering, in
connection with the offering, issuance and sale of the Common Stock,
except for the filing of a Form D pursuant to federal and applicable state
blue sky laws and such as have been
obtained.
|
|
B-9
|
The
only vote of the stockholders of the Company required to approve (i) the
amendment of the Articles of Incorporation to increase the number of
authorized shares of Common Stock to at least such number as shall be
sufficient to permit the issuance of Common Stock contemplated in the
Agreements, the issuance of Common Stock in connection with the Other
Private Placements and the issuance of Common Stock in connection with the
Public Offering is that more votes are cast for such proposal than are
cast against such proposal and (ii) the issuance of such authorized shares
of Common Stock for purposes of rule 5635 of NASDAQ’s listing rules is a
majority of the votes cast on such
proposal.
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C-1
|
In
giving our opinion in B-1 with respect to the valid existence of the
Company, we are relying solely and without independent investigation on
our review and examination of the certificate of the Secretary of State of
the State of Oregon.
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|
C-2
|
Insofar as
performance by the Company of its obligations under the Agreements is
concerned, we express no opinion as to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equitable principles, whether considered in proceedings at law or
equity.
|
|
D.
|
In
addition to the foregoing, the opinions expressed above are specifically subject
to the following exclusions:
Exhibit
A – 3
|
D-1
|
We
have assumed, and express no opinion with respect to, (a) the correctness,
accuracy and completeness of representations and warranties made by you
and set forth in the Agreements or otherwise made, orally or in writing,
in connection with the offering of the Common Stock and (b) the validity
of any wire transfers, drafts or checks tendered by
you.
|
|
D-2
|
We
express no opinion as to whether the members of the Company’s Board of
Directors have complied with their fiduciary duties in connection with the
authorization and performance of the
Agreements.
|
The
opinions set forth in Part B may be relied upon by you only in connection with
the Agreements and the transactions described therein, and may not be used or
relied upon by you for any other purpose or by any other person for any purpose
whatsoever without, in each instance, our prior written consent.
This
letter speaks as of the time of its delivery on the date set forth herein. We
undertake no obligation to advise you as to subsequent occurrences or
discoveries.
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Very
truly yours,
|
|
|
Xxxxx
Xxxxxx Xxxxxxxx LLP
|
Exhibit
A – 4
EXHIBIT
B: Form of Disclosure Letter of Counsel
Although
we have not undertaken to determine independently and do not assume any
responsibility for the accuracy, completeness or fairness of any of the
statements made in the Registration Statement, the Time of Sale Prospectus, or
the Prospectus, and the documents incorporated by reference therein, and any
further amendments or supplements thereto, as applicable, except to the extent
set forth in Paragraph [ ] and Paragraph [ ], we have
reviewed the Registration Statement, the Time of Sale Prospectus, and the
Prospectus, certain corporate and other records and documents furnished to us by
the Company, as well as the documents delivered to you at the Closing, and
participated in conferences with representatives of the Company, their
accountants, you and your counsel at which the contents of the Registration
Statement, the Time of Sale Prospectus, and the Prospectus and related matters
were discussed and reviewed. On the basis of the information that was
developed in the course of the performance of the services referred to above, we
advise you that nothing has come to our attention that has caused us to believe
that (i) the documents incorporated by reference in the Prospectus relating to
the Offered Shares or any further amendment or supplement thereto made by the
Company prior to the Applicable Time, when such documents became effective or
were so filed under the Exchange Act contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made when such documents were so filed, not misleading, (ii) any part of
the Registration Statement, when such part became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
the Time of Sale Prospectus, as of the Applicable Time and as of the Closing
Date, contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the light of
circumstances under which they were made, not misleading, or (iv) as of its
date, as of the Applicable Time and as of the Closing Date, the Prospectus
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. We
further advise you that we have no knowledge of any amendment to the
Registration Statement required to be filed or of any contracts or other
documents of a character required to be filed as an exhibit to the Registration
Statement or required to be incorporated by reference into the Prospectus or
required to be described in the Registration Statement, the Base Prospectus or
the Prospectus which are not filed or incorporated by reference or described as
required.
Exhibit B
EXHIBIT
C: Form of Officer’s Certificate from the Company
OFFICER’S
CERTIFICATE
_______________
[●], 2009
The
undersigned, the Chief Executive Officer of Cascade Coast Bancorp, an Oregon
corporation (the “Company”), pursuant to
Section 1.2(c)(1)(xi) of the Securities Purchase Agreement, dated as of October
29, 2009 (the “Agreement”) between the
Company and BOTC Holdings LLC (the “Investor”), hereby certifies
to the Investor that:
1. The
Company has performed all obligations required to be performed by it at or prior
to or contemporaneously with the Closing under the Agreement.
2. The
representations and warranties of the Company set forth in Section 2.2 of the
Agreement were true and correct in all respects as of the date of the Agreement
and are true and correct as of the Closing (except to the extent such
representations and warranties are made as of a specific date, in which case
such representations and warranties were true and correct in all respects as of
such date).
Capitalized
terms used but not defined herein shall have the meanings given to such terms in
the Agreement.
[Signature
Page Follows]
Exhibit
C
[Company
Officer’s Certificate]
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By:
|
||
|
Name: Xxxxxxxx
X. Xxxx
|
||
|
Title: Chief
Executive Officer
|
Exhibit C