January 30, 2009
January
30, 2009
United
States Department of the Treasury
0000
Xxxxxxxxxxxx Xxxxxx, XX
Washington,
D.C. 20220
000 X.
Xxxxx Xxxxxx
Visalia,
CA 93291
Ladies
and Gentlemen:
Reference
is made to that certain Letter Agreement incorporating the Securities Purchase
Agreement – Standard Terms dated of even date herewith (the “Securities Purchase
Agreement”) by and among United States Department of Treasury (“Investor”) and Valley
Commerce Bancorp (“Company”). Investor and
Company desire to set forth herein certain additional agreements regarding
Company’s commitment to the holder of the Preferred Shares after the closing of
the transactions contemplated by the Securities Purchase
Agreement. Terms that are defined in the Securities Purchase
Agreement are used in this letter agreement as so defined.
In order
to comply with California Corporations Code §212(a), the Company has modified
section 7(b) of the Standard Provisions of each of the Certificate of
Designations attached as Annex A and Annex B to the
Securities Purchase Agreement (collectively, the “Certificates of
Designations”) to provide in pertinent part as follows:
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“Whenever,
at any time or times, dividends payable on the shares of Designated
Preferred Stock have not been paid for an aggregate of six quarterly
Dividend Periods or more, whether or not consecutive, the holders of the
Designated Preferred Stock shall have the right, with holders of shares of
any one or more other classes or series of Voting Parity Stock outstanding
at the time, voting together as a class, to elect two
directors…”
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By its
execution hereof, the Company hereby confirms and agrees that as of the date
hereof and at all times while any shares of the Designated Preferred Stock (as
defined in each Certificate of Designations) are outstanding or issuable upon
exercise of the Warrant it shall maintain a range of directors of the Company
that will permit the holder of the Preferred Shares to elect two directors in
accordance with said sections 7(b). Currently Section 2.2 (the “Applicable Provision”) of the
Company’s bylaws (the “Bylaws”) provides for a range
of directors of no less than eight (8) and no more than fifteen
(15). At all times while any shares of the Designated Preferred Stock
are outstanding, the Company shall not fill more than thirteen (13) director
positions. In the event the Company desires to increase the number of
directors beyond thirteen (13), then the Company shall be required to amend the
Bylaws to increase the maximum directors to always allow for at least two open
director seats for the holders of the Preferred Shares to elect in accordance
with Section 7(b) of the Standard Terms of the Certificate of
United
States Department of Treasury
January
30, 2009
Determination
of Preferences of Series B Fixed Rate Cumulative Perpetual Preferred Stock of
Valley Commerce Bancorp and Section 7(b) of the Standard Terms of the
Certificate of Determination of Preferences of Series C Fixed Rate Cumulative
Perpetual Preferred Stock of Valley Commerce Bancorp (and to amend the bylaws to
provide that such provision may not be modified, amended or repealed by the
Company’s board of directors (or any committee thereof) or without the
affirmative vote and approval of (x) the stockholders and (y) the holders of at
least a majority of the shares of Designated Preferred Stock outstanding at the
time of such vote and approval).
In
addition, by its execution hereof, the Company hereby confirms and agrees that
it will, within 15 days after the date of this letter agreement, amend the
Applicable Provision by adding the following sentence at the end
thereof:
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“Notwithstanding
anything in these bylaws to the contrary, for so long as the Corporation’s
Fixed Rate Cumulative Perpetual Preferred Stock, Series B and the
Corporation’s Fixed Rate Cumulative Perpetual Preferred Stock, Series C
(collectively, the “Designated Preferred
Stock”) (or any warrant to purchase any of the Designated Preferred
Stock) is outstanding: (i) whenever, at any time or times,
dividends payable on the shares of Designated Preferred Stock have not
been paid for an aggregate of six quarterly Dividend Periods (as defined
in the Certificate of Determination for the Designated Preferred Stock) or
more, whether or not consecutive, the authorized number of directors shall
automatically be increased by two (but shall in no event be increased to a
number of directors that is greater than the maximum number of directors
set forth in this Section 2.2 of these bylaws); and (ii) this sentence may
not be modified, amended or repealed by the Corporation’s board of
directors (or any committee thereof) or without the affirmative vote and
approval of (x) the stockholders and (y) the holders of at least a
majority of the shares of Designated Preferred Stock outstanding at the
time of such vote and approval.
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The
parties hereto acknowledge that there would be no adequate remedy at law if the
Company fails to perform any of its obligations under this letter agreement and
that the Investor may be irreparably harmed by any such failure, and accordingly
agree that the Investor, in addition to any other remedy to which it may be
entitled at law or in equity, to the fullest extent permitted and enforceable
under applicable law shall be entitled to compel specific performance of the
obligations of the Company under this letter agreement without the necessity of
proving the inadequacy of monetary damages as a remedy or the posting of a
bond.
This
letter agreement and the Certificates of Designations constitute the entire
agreement, and supersedes all other prior agreements, understandings,
representations and warranties, both written and oral, between the parties with
respect to the subject matter hereof.
This
letter agreement may be executed in counterparts, each of which shall be deemed
an original and all of which shall together constitute one and the same
instrument. This letter agreement shall be governed in all respects,
including as to validity, interpretation and effect, by
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United
States Department of Treasury
January
30, 2009
the
internal laws of the State of California, without giving effect to the conflict
of laws rules thereof.
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of this page intentionally left blank]
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In
witness whereof, this letter agreement has been duly executed by the authorized
representatives of the parties hereto as of the date first above
written.
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By:
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/s/
Xxxxxx X. Xxxxxx
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Name:
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Xxxxxx
X. Xxxxxx
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Title:
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President
and Chief Executive Officer
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By:
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/s/
Xxx X. Xxxxxxxx
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Name:
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Xxx
X. Xxxxxxxx
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Title:
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Executive
Vice President and Chief Financial Officer
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UNITED
STATES DEPARTMENT OF THE TREASURY
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By:
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/s/ Xxxx Xxxxxxxx | ||
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Name:
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Xxxx Xxxxxxxx | ||
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Title:
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Interim Assistant Secretary for Financial Stability |
2.2 Number. The
number of the corporation’s directors shall be not less than eight nor more than
fifteen, the exact number within such minimum and maximum limits to be fixed and
determined from time to time by resolution of a majority of the full Board or by
resolution of a majority of the shareholders at any meeting
thereof. Notwithstanding anything in these bylaws to the contrary,
for so long as the Series B or Series C Fixed Rate Cumulative Perpetual
Preferred Stock (the “Designated Preferred Stock”)
is outstanding: (i) whenever, at any time or times, dividends payable on
the shares of Designated Preferred Stock have not been paid for an aggregate of
six quarterly Dividend Periods (as defined in the applicable Certificate of
Determination for the Designated Preferred Stock) or more, whether or not
consecutive, the authorized number of directors shall automatically be increased
by two (but shall in no event be increased to a number of directors that is
greater than the maximum number of directors set forth in Section 2.2 of
these bylaws); and (ii) this sentence may not be modified, amended or
repealed by the board of directors (or any committee thereof) or without the
affirmative vote and approval of (x) the stockholders and (y) the
holders of at least a majority of the shares of Designated Preferred Stock
outstanding at the time of such vote and approval.
