COMMUNITY BANKS, INC. 10,000 Capital Securities Fixed/Floating Rate Capital Securities (Liquidation Amount $1,000.00 per Capital Security) PLACEMENT AGREEMENT
EXHIBIT
1.1
COMMUNITY
BANKS, INC.
10,000
Capital Securities
Fixed/Floating
Rate Capital Securities
(Liquidation
Amount $1,000.00 per Capital Security)
____________________
January
30, 2006
Ladies
and Gentlemen:
Community
Banks, Inc., a Pennsylvania corporation (the “Company”), and its financing
subsidiary, CMTY Capital Statutory Trust III, a Delaware statutory trust (the
“Trust,” and hereinafter together with the Company, the “Offerors”), hereby
confirm their agreement (this “Agreement”) with you as placement agents (the
“Placement Agents”), as follows:
Section
1. Issuance
and Sale of Securities.
1.1. Introduction.
The
Offerors propose to issue and sell at the Closing (as defined in Section 2.3.1
hereof) 10,000 of the Trust’s Fixed/Floating Rate Capital Securities, with a
liquidation amount of $1,000.00 per capital security (the “Capital Securities”),
to ______________________ __________________ (the “Purchaser”) pursuant to the
terms of a Subscription Agreement entered into, or to be entered into on or
prior to the Closing Date (as defined in Section 2.3.1 hereof), between the
Offerors and the Purchaser (the “Subscription Agreement”), the form of which is
attached hereto as Exhibit
A
and incorporated herein by this reference.
1.2. Operative
Agreements.
The
Capital Securities shall be fully and unconditionally guaranteed on a
subordinated basis by the Company with respect to distributions and amounts
payable upon liquidation, redemption or repayment (the “Guarantee”) pursuant and
subject to the Guarantee Agreement (the “Guarantee Agreement”), to be dated as
of the Closing Date and executed and delivered by the Company and Wilmington
Trust Company (“WTC”), as trustee (the “Guarantee Trustee”), for the benefit
from time to time of the holders of the Capital Securities. The entire proceeds
from the sale by the Trust to the holders of the Capital Securities shall be
combined with the entire proceeds from the sale by the Trust to the Company
of
its common securities (the “Common Securities”), and shall be used by the Trust
to purchase $10,310,000.00 in principal amount of the Fixed/Floating Rate Junior
Subordinated Deferrable Interest Debentures (the “Debentures”) of the Company.
The Capital Securities and the Common Securities for the Trust shall be issued
pursuant to an Amended and Restated Declaration of Trust among WTC, as Delaware
trustee (the “Delaware Trustee”), WTC, as institutional trustee (the
“Institutional Trustee”), the Administrators named therein, and the Company, to
be dated as of the Closing Date and in substantially the form heretofore
delivered to the Placement Agents (the “Trust
Agreement”).
The Debentures shall be issued pursuant to an Indenture (the “Indenture”), to be
dated as of the Closing Date, between the Company and WTC, as indenture trustee
(the “Indenture Trustee”). The documents identified in this Section 1.2 and in
Section 1.1 are referred to herein as the “Operative
Documents.”
1.3. Rights
of Purchaser.
The
Capital Securities shall be offered and sold by the Trust directly to the
Purchaser without registration of any of the Capital Securities, the Debentures
or the Guarantee under the Securities Act of 1933, as amended (the “Securities
Act”), or any other applicable securities laws in reliance upon exemptions from
the registration requirements of the Securities Act and other applicable
securities laws. The Offerors agree that this Agreement shall be incorporated
by
reference into the Subscription Agreement and the Purchaser shall be entitled
to
each of the benefits of the Placement Agents and the Purchaser under this
Agreement and shall be entitled to enforce obligations of the Offerors under
this Agreement as fully as if the Purchaser were a party to this Agreement.
The
Offerors and the Placement Agents have entered into this Agreement to set forth
their understanding as to their relationship and their respective rights, duties
and obligations.
1.4. Legends.
Upon
original issuance thereof, and until such time as the same is no longer required
under the applicable requirements of the Securities Act, the Capital Securities
and Debentures certificates shall each contain a legend as required pursuant
to
any of the Operative Documents.
Section
2. Purchase
of
Capital Securities.
2.1. Exclusive
Rights; Purchase Price.
From
the date hereof until the Closing Date (which date may be extended by mutual
agreement of the Offerors and the Placement Agents), the Offerors hereby grant
to the Placement Agents the exclusive right to arrange for the sale of the
Capital Securities to the Purchaser at a purchase price of $1,000.00 per Capital
Security.
2.2. Subscription
Agreement.
The
Offerors hereby agree to evidence their acceptance of the subscription by
countersigning a copy of the Subscription Agreement and returning the same
to
the Placement Agents.
2.3. Closing
and Delivery of Payment.
2.3.1. Closing;
Closing Date.
The
sale and purchase of the Capital Securities by the Offerors to the Purchaser
shall take place at a closing (the “Closing”) at the offices of Xxxxx, Xxxx
& Xxxxxxxx, X.X., at 10:00 a.m. (St. Louis time) on January 31, 2006, or
such other business day as may be agreed upon by the Offerors and the Placement
Agents (the “Closing Date”); provided,
however,
that in no event shall the Closing Date occur later than February 7, 2006 unless
consented to by the Purchaser. Payment by the Purchaser shall be payable in
the
manner set forth in the Subscription Agreement and shall be made prior to or
on
the Closing Date.
2.3.2. Delivery.
The
certificate for the Capital Securities shall be in definitive form, registered
in the name of the Purchaser, or the Purchaser’s designee, and in the aggregate
amount of the Capital Securities purchased by the Purchaser.
2.3.3. Transfer
Agent.
The
Offerors shall deposit the certificate representing the Capital Securities
with
the Institutional Trustee or other appropriate party prior to the Closing
Date.
2.4. Costs
and Expenses.
Whether
or not this Agreement is terminated or the sale of the Capital Securities is
consummated, the Company hereby covenants and agrees that it shall pay or cause
to be paid (directly or by reimbursement) all reasonable costs and expenses
incident to the performance of the obligations of the Offerors under this
Agreement, including all fees, expenses and disbursements of
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2.5. Failure
to Close.
If
any of the conditions to the Closing specified in this Agreement shall not
have
been fulfilled to the satisfaction of the Placement Agents or if the Closing
shall not have occurred on or before 10:00 a.m. (St. Louis time) on February
7,
2006, then each party hereto, notwithstanding anything to the contrary in this
Agreement, shall be relieved of all further obligations under this Agreement
without thereby waiving any rights it may have by reason of such nonfulfillment
or failure; provided,
however,
that the obligations of the parties under Sections 2.4, 7.5 and 9 shall not
be
so relieved and shall continue in full force and effect.
Section
3. Closing
Conditions.
The
obligations of the Purchaser and the Placement Agents on the Closing Date shall
be subject to the accuracy, at and as of the Closing Date, of the
representations and warranties of the Offerors contained in this Agreement,
to
the accuracy, at and as of the Closing Date, of the statements of the Offerors
made in any certificates pursuant to this Agreement, to the performance by
the
Offerors of their respective obligations under this Agreement, to compliance,
at
and as of the Closing Date, by the Offerors with their respective agreements
herein contained, and to the following further conditions:
3.1. Opinions
of Counsel.
On
the Closing Date, the Placement Agents shall have received the following
favorable opinions, each dated as of the Closing Date: (a) from Mette, Xxxxx
& Xxxxxxxx, counsel for the Offerors and addressed to the Purchaser, the
Placement Agents and WTC in substantially the form set forth on Exhibit
B-1
attached hereto and incorporated herein by this reference, (b) from Xxxxxxxx,
Xxxxxx & Finger, P.A., special Delaware counsel to the Offerors and
addressed to the Purchaser, the Placement Agents and the Offerors, in
substantially the form set forth on Exhibit
B-2
attached hereto and incorporated herein by this reference and (c) from Xxxxx,
Xxxx & Xxxxxxxx, X.X., special tax counsel to the Offerors, and addressed to
the Placement Agents and the Offerors, addressing the items set forth on
Exhibit
B-3
attached hereto and incorporated herein by this reference, subject to the
receipt by Xxxxx, Rice & Xxxxxxxx, X.X. of a representation letter from the
Company in the form set forth in Exhibit
B-3
completed in a manner reasonably satisfactory to Xxxxx, Rice & Xxxxxxxx,
X.X. (collectively, the “Offerors’ Counsel Opinions”). In rendering the
Offerors’ Counsel Opinions, counsel to the Offerors may rely as to factual
matters upon certificates or other documents furnished by officers, directors
and trustees of the Offerors (copies of which shall be delivered to the
Placement Agents and the Purchaser) and by government officials, and upon such
other documents as counsel to the Offerors may, in their reasonable opinion,
deem appropriate as a basis for the Offerors’ Counsel Opinions. Counsel to the
Offerors may specify the jurisdictions in which they are admitted to practice
and that they are not admitted to practice in any other jurisdiction and are
not
experts in the law of any other jurisdiction. If
the Offerors’ counsel is not admitted to practice in the State of New York, the
opinion of Offerors’ counsel may assume, for purposes of the opinion, that the
laws of the State of New York are substantively identical, in all respects
material to the opinion, to the internal laws of the state in which such counsel
is admitted to practice. Such Offerors’ Counsel Opinions shall not state that
they are to be governed or qualified by, or that they are otherwise subject
to,
any treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section
of
Business Law (1991).
3.2. Officer’s
Certificate.
At
the Closing Date, the Purchaser and the Placement Agents shall have received
certificates from an authorized officer of the Company, dated as of the Closing
Date, stating that (i) the representations and warranties of the Offerors set
forth in Section 5 hereof are true and correct as of the Closing Date and that
the Offerors have complied with all agreements and satisfied all
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3.3. Administrator’s
Certificate.
At
the Closing Date, the Purchaser
and the Placement Agents shall have received a certificate of one or more
Administrators of the Trust, dated as of the Closing Date, stating that the
representations and warranties of the Trust set forth in Section 5 are true
and
correct as of the Closing Date and that the Trust has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date.
3.4. Purchase
Permitted by Applicable Laws; Legal Investment.
The
purchase of and payment for the Capital Securities as described in this
Agreement and pursuant to the Subscription Agreement shall (a) not be prohibited
by any applicable law or governmental regulation, (b) not subject the Purchaser
or the Placement Agents to any penalty or, in the reasonable judgment of the
Purchaser and the Placement Agents, other onerous conditions under or pursuant
to any applicable law or governmental regulation, and (c) be permitted by the
laws and regulations of the jurisdictions to which the Purchaser and the
Placement Agents are subject.
3.5. Consents
and Permits.
The
Company and the Trust shall have received all consents, permits and other
authorizations, and made all such filings and declarations, as may be required
from any person or entity pursuant to any law, statute, regulation or rule
(federal, state, local and foreign), or pursuant to any agreement, order or
decree to which the Company or the Trust is a party or to which either is
subject, in connection with the transactions contemplated by this
Agreement.
3.6. Information.
Prior
to or on the Closing Date, the Offerors shall have furnished to the Placement
Agents such further information, certificates, opinions and documents addressed
to the Purchaser and the Placement Agents, which the Placement Agents may
reasonably request, including, without limitation, a complete set of the
Operative Documents or any other documents or certificates required by this
Section 3; and all proceedings taken by the Offerors in connection with the
issuance, offer and sale of the Capital Securities as herein contemplated shall
be reasonably satisfactory in form and substance to the Placement
Agents.
If
any condition specified in this Section 3 shall not have been fulfilled when
and
as required in this Agreement, or if any of the opinions or certificates
mentioned above or elsewhere in this Agreement shall not be reasonably
satisfactory in form and substance to the Placement Agents, this Agreement
may
be terminated by the Placement Agents by notice to the Offerors at any time
at
or prior to the Closing Date. Notice of such termination shall be given to
the
Offerors in writing or by telephone or facsimile confirmed in
writing.
Section
4. Conditions
to the Offerors’ Obligations.
The
obligations of the Offerors to sell the Capital Securities to the Purchaser
and
consummate the transactions contemplated by this Agreement shall be subject
to
the accuracy, at and as of the Closing Date, of the representations and
warranties of the Placement Agents contained in this Agreement and to the
following further conditions:
4.1. Executed
Agreement.
The
Offerors shall have received from the Placement Agents an executed copy of
this
Agreement.
4.2. Fulfillment
of Other Obligations.
The
Placement Agents shall have fulfilled all of their other obligations and duties
required to be fulfilled under this Agreement prior to or at the
Closing.
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Section
5. Representations
and Warranties of the Offerors.
Except
as set forth on the Disclosure Schedule (as defined in Section 11.1) attached
hereto, if any, the Offerors jointly and severally represent and warrant to
the
Placement Agents and the Purchaser as of the date hereof and as of the Closing
Date as follows:
5.1. Securities
Law Matters.
(a) Neither
the Company nor the Trust, nor any of their “Affiliates” (as defined in Rule
501(b) of Regulation D under the Securities Act (“Regulation D”)), nor any
person acting on any of their behalf has, directly or indirectly, made offers
or
sales of any security, or solicited offers to buy any security, under
circumstances that would require the registration under the Securities Act
of
any of the Capital Securities, the Guarantee or the Debentures (collectively,
the “Securities”) or any other securities to be issued, or which may be issued,
by the Purchaser.
(b) Neither
the Company nor the Trust, nor any of their Affiliates, nor any person acting
on
its or their behalf has (i) other than the Placement Agents, offered for sale
or
solicited offers to purchase the Securities, or (ii) engaged in any form of
offering, general solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of any of the
Securities.
(c) The
Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the
Securities Act.
(d) Neither
the Company nor the Trust is or, after giving effect to the offering and sale
of
the Capital Securities and the consummation of the transactions described in
this Agreement, will be an “investment company” or an entity “controlled” by an
“investment company,” in each case within the meaning of Section 3(a) of the
Investment Company Act of 1940, as amended (the “Investment Company Act”),
without regard to Section 3(c) of the Investment Company Act.
(e) Neither
the Company nor the Trust has paid or agreed to pay to any person or entity
(other than the Placement Agents) any compensation for soliciting another to
purchase any of the Securities.
5.2. Organization,
Standing and Qualification of the Trust.
The
Trust has been duly created and is validly existing in good standing as a
statutory trust under the Delaware Statutory Trust Act (the “Statutory Trust
Act”) with the power and authority to own property and to conduct the business
it transacts and proposes to transact and to enter into and perform its
obligations under the Operative Documents. The Trust is duly qualified to
transact business as a foreign entity and is in good standing in each
jurisdiction in which such qualification is necessary, except where the failure
to so qualify or be in good standing would not have a material adverse effect
on
the Trust. The Trust is not a party to or otherwise bound by any agreement
other
than the Operative Documents. The Trust is and will, under current law, be
classified for federal income tax purposes as a grantor trust and not as an
association taxable as a corporation.
5.3. Trust
Agreement.
The
Trust Agreement has been duly authorized by the Company and, on the Closing
Date, will have been duly executed and delivered by the Company and the
Administrators of the Trust, and, assuming due authorization, execution and
delivery by the Delaware Trustee and the Institutional Trustee, will be a valid
and binding obligation of the Company and such Administrators, enforceable
against them in accordance with its terms, subject to (a) applicable bankruptcy,
insolvency, moratorium, receivership, reorganization, liquidation and other
laws
relating to or affecting creditors’ rights generally, and (b) general principles
of equity (regardless of whether considered and applied in a proceeding in
equity or at law) (“Bankruptcy and Equity”). Each of the Administrators of the
Trust is an
5
5.4. Guarantee
Agreement and the Indenture.
Each
of the Guarantee and the Indenture has been duly authorized by the Company
and,
on the Closing Date will have been duly executed and delivered by the Company,
and, assuming due authorization, execution and delivery by the Guarantee
Trustee, in the case of the Guarantee, and by the Indenture Trustee, in the
case
of the Indenture, will be a valid and binding obligation of the Company
enforceable against it in accordance with its terms, subject to Bankruptcy
and
Equity.
5.5. Capital
Securities and Common Securities.
The
Capital Securities and the Common Securities have been duly authorized by the
Trust Agreement and, when issued and delivered against payment therefor on
the
Closing Date to the Purchaser, in the case of the Capital Securities, and to
the
Company, in the case of the Common Securities, will be validly issued and
represent undivided beneficial interests in the assets of the Trust. None of
the
Capital Securities or the Common Securities is subject to preemptive or other
similar rights. On the Closing Date, all of the issued and outstanding Common
Securities will be directly owned by the Company free and clear of any pledge,
security interest, claim, lien or other encumbrance.
5.6. Debentures.
The
Debentures have been duly authorized by the Company and, at the Closing Date,
will have been duly executed and delivered to the Indenture Trustee for
authentication in accordance with the Indenture, and, when authenticated in
the
manner provided for in the Indenture and delivered against payment therefor
by
the Trust, will constitute valid and binding obligations of the Company entitled
to the benefits of the Indenture enforceable against the Company in accordance
with their terms, subject to Bankruptcy and Equity.
5.7. Power
and Authority.
This
Agreement has been duly authorized, executed and delivered by the Company and
the Trust and constitutes the valid and binding obligation of the Company and
the Trust, enforceable against the Company and the Trust in accordance with
its
terms, subject to Bankruptcy and Equity.
5.8. No
Defaults.
The
Trust is not in violation of the Trust Agreement or, to the knowledge of the
Administrators, any provision of the Statutory Trust Act. The execution,
delivery and performance by the Company or the Trust of this Agreement or the
Operative Documents to which it is a party, and the consummation of the
transactions contemplated herein or therein and the use of the proceeds
therefrom, will not conflict with or constitute a breach of, or a default under,
or result in the creation or imposition of any lien, charge or other encumbrance
upon any property or assets of the Trust, the Company or any of the Company’s
Subsidiaries (as defined in Section 5.11 hereof) pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Trust, the Company or any of its Subsidiaries is a party or by which it
or
any of them may be bound, or to which any of the property or assets of any
of
them is subject, except for a conflict, breach, default, lien, charge or
encumbrance which could not, singly or in the aggregate, reasonably be expected
to have a Material Adverse Effect nor will such action result in any violation
of the Trust Agreement or the Statutory Trust Act or require the consent,
approval, authorization or order of any court or governmental agency or body.
As
used herein, the term “Material Adverse Effect” means any one or more effects
that individually or in the aggregate are material and adverse to the Offerors’
ability to consummate the transactions contemplated herein or in the Operative
Documents or any one or more effects that individually or in the aggregate
are
material and adverse to the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Company and its
Subsidiaries taken as whole, whether or not occurring in the ordinary course
of
business.
6
5.9. Organization,
Standing and Qualification of the Company.
The
Company has been duly incorporated and is validly existing as a corporation
in
good standing under the laws of Pennsylvania, with all requisite corporate
power
and authority to own its properties and conduct the business it transacts and
proposes to transact, and is duly qualified to transact business and is in
good
standing as a foreign corporation in each jurisdiction where the nature of
its
activities requires such qualification, except where the failure of the Company
to be so qualified would not, singly or in the aggregate, have a Material
Adverse Effect.
5.10. Subsidiaries
of the Company.
Each
of the Company’s significant subsidiaries (as defined in Section 1-02(w) of
Regulation S-X to the Securities Act (the “Significant Subsidiaries”)) is listed
in Exhibit
C
attached hereto and incorporated herein by this reference. Each Significant
Subsidiary has been duly organized and is validly existing and in good standing
under the laws of the jurisdiction in which it is chartered or organized, with
all requisite power and authority to own its properties and conduct the business
it transacts and proposes to transact, and is duly qualified to transact
business and is in good standing as a foreign entity in each jurisdiction where
the nature of its activities requires such qualification, except where the
failure of any such Significant Subsidiary to be so qualified would not, singly
or in the aggregate, have a Material Adverse Effect. All of the issued and
outstanding shares of capital stock of the Significant Subsidiaries (a) have
been duly authorized and are validly issued, (b) are fully paid and
nonassessable, and (c) are wholly owned, directly or indirectly, by the Company
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
restriction upon voting or transfer, preemptive rights, claim, equity or other
defect.
5.11. Permits.
The
Company and each of its subsidiaries (as defined in Section 1-02(x) of
Regulation S-X to the Securities Act) (the “Subsidiaries”) have all requisite
power and authority, and all necessary authorizations, approvals, orders,
licenses, certificates and permits of and from regulatory or governmental
officials, bodies and tribunals, to own or lease their respective properties
and
to conduct their respective businesses as now being conducted, except such
authorizations, approvals, orders, licenses, certificates and permits which,
if
not obtained and maintained, would not, singly or in the aggregate, have a
Material Adverse Effect, and neither the Company nor any of its Subsidiaries
has
received any notice of proceedings relating to the revocation or modification
of
any such authorizations, approvals, orders, licenses, certificates or permits
which, singly or in the aggregate, if the failure to be so licensed or approved
is the subject of an unfavorable decision, ruling or finding, would, singly
or
in the aggregate, have a Material Adverse Effect; and the Company and its
Subsidiaries are in compliance with all applicable laws, rules, regulations
and
orders and consents, the violation of which would, singly or in the aggregate,
have a Material Adverse Effect.
5.12. Conflicts,
Authorizations and Approvals.
Neither
the Company nor any of its Subsidiaries is in violation of its respective
articles or certificate of incorporation, charter or by-laws or similar
organizational documents or in default in the performance or observance of
any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which either the Company or any of its Subsidiaries is a party,
or
by which it or any of them may be bound or to which any of the property or
assets of the Company or any of its Subsidiaries is subject, the effect of
which
violation or default in performance or observance would have, singly or in
the
aggregate, a Material Adverse Effect.
5.13. Holding
Company Registration and Deposit Insurance.
The
Company is duly registered (i) as a bank holding company or financial holding
company under the Bank Holding Company Act of 1956, as amended, and the
regulations of the Board of Governors of the Federal Reserve System (the
“Federal Reserve”) or (ii) as a savings and loan holding company under the Home
Owners’ Loan Act of 1933, as amended, and the regulations of the Office of
Thrift Supervision (the “OTS”), and the deposit accounts of the Company’s
Subsidiary depository institutions are insured by the Federal Deposit
7
5.14. Financial
Statements.
(a) The
consolidated balance sheets of the Company and all of its Subsidiaries as of
December 31, 2004 and December 31, 2003 and related consolidated income
statements and statements of changes in shareholders’ equity for the three years
ended December 31, 2004 together with the notes thereto, and the consolidated
balance sheets of the Company and all of its Subsidiaries as of September 30,
2005 and the related consolidated income statements and statements of changes
in
shareholders’ equity for the nine months then ended, copies of each of which
have been provided to the Placement Agents (together, the “Financial
Statements”), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be disclosed
therein) and fairly present in all material respects the financial position
and
the results of operations and changes in shareholders’ equity of the Company and
all of its Subsidiaries as of the dates and for the periods indicated (subject,
in the case of interim financial statements, to normal recurring year-end
adjustments, none of which shall be material). The books and records of the
Company and all of its Subsidiaries have been, and are being, maintained in
all
material respects in accordance with generally accepted accounting principles
and any other applicable legal and accounting requirements and reflect only
actual transactions.
(b) The
information in the Company’s most recently filed (i) FR Y-9C filed with the
Federal Reserve if the Company is a bank holding company, (ii) FR Y-9SP filed
with the Federal Reserve if the Company is a small bank holding company or
(iii)
H-(b)11 filed with the OTS if the Company is a savings and loan holding company
(the “Regulatory Report”), previously provided to the Placement Agents fairly
presents in all material respects the financial position of the Company and,
where applicable, all of its Subsidiaries as of the end of the period
represented by such Regulatory Report.
(c) Since
the respective dates of the Financial Statements and the Regulatory Report,
there has been no material adverse change or development with respect to the
financial condition or earnings of the Company and all of its Subsidiaries,
taken as a whole.
(d) The
accountants of the Company who certified the Financial Statements are
independent public accountants of the Company and its Subsidiaries within the
meaning of the Securities Act and the rules and regulations
thereunder.
5.15. Exchange
Act Reporting.
The
reports filed with the Securities and Exchange Commission (the “Commission”) by
the Company under the Securities Exchange Act of 1934, as amended (the “1934
Act”) and the regulations thereunder at the time they were filed with the
Commission complied as to form in all material respects with the requirements
of
the 1934 Act and such reports did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which they
were
made, not misleading.
5.16. Regulatory
Enforcement Matters.
Neither
the Company nor any of its Subsidiaries is subject or is party to, or has
received any notice or advice that any of them may become subject or party
to,
any investigation with respect to, any cease-and-desist order, agreement,
consent agreement, memorandum of understanding or other regulatory enforcement
action, proceeding or order with or by, or is a party to any commitment letter
or similar undertaking to, or is subject to any directive by, or has been since
January 1, 2003, a recipient of any supervisory letter from, or since January
1,
2003, has adopted any board resolutions at the request of, any Regulatory Agency
(as defined below) that currently restricts in any material respect the conduct
of their business or that in any material manner relates to their capital
adequacy, their credit policies, their ability or authority to pay dividends
or
make distributions to their
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5.17. No
Material Change.
Since
December 31, 2004, there has been no material adverse change or development
with
respect to the condition (financial or otherwise), earnings, affairs, business,
prospects or results of operations of the Company or its Subsidiaries on a
consolidated basis, whether or not arising in the ordinary course of
business.
5.18. No
Undisclosed Liabilities.
Neither
the Company nor any of its Subsidiaries has any material liability, whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for taxes (and there
is no past or present fact, situation, circumstance, condition or other basis
for any present or future action, suit, proceeding, hearing, charge, complaint,
claim or demand against the Company or its Subsidiaries giving rise to any
such
liability), except (i) for liabilities set forth in the Financial Statements
and
(ii) normal fluctuation in the amount of the liabilities referred to in clause
(i) above occurring in the ordinary course of business of the Company and all
of
its Subsidiaries since the date of the most recent balance sheet included in
the
Financial Statements.
5.19. Litigation.
No
charge, investigation, action, suit or proceeding is pending or, to the
knowledge of the Offerors, threatened against or affecting the Company or its
Subsidiaries or any of their respective properties before or by any courts
or
any regulatory, administrative or governmental official, commission, board,
agency or other authority or body, or any arbitrator, wherein an unfavorable
decision, ruling or finding could have, singly or in the aggregate, a Material
Adverse Effect.
5.20. Deferral
of Interest Payments on Debentures.
The
Company has no present intention to exercise its option to defer payments of
interest on the Debentures as provided in the Indenture. The Company believes
that the likelihood that it would exercise its right to defer payments of
interest on the Debentures as provided in the Indenture at any time during
which
the Debentures are outstanding is remote because of the restrictions that would
be imposed on the Company’s ability to declare or pay dividends or distributions
on, or to redeem, purchase, acquire or make a liquidation payment with respect
to, any of the Company’s capital stock and on the Company’s ability to make any
payments of principal, interest or premium on, or repay, repurchase or redeem,
any of its debt securities that rank pari
passu
in all respects with, or junior in interest to, the Debentures.
Section
6. Representations
and Warranties of the Placement Agents.
Each
Placement Agent represents and warrants to the Offerors as to itself (but not
as
to the other Placement Agent) as follows:
9
6.1. Organization,
Standing and Qualification.
(a) [Placement
Agent] is a division of _____________________, a national banking association
duly organized, validly existing and in good standing under the laws of the
United States, with full power and authority to own, lease and operate its
properties and conduct its business as currently being conducted. [Placement
Agent] is duly qualified to transact business as a foreign corporation and
is in
good standing in each other jurisdiction in which it owns or leases property
or
conducts its business so as to require such qualification and in which the
failure to so qualify would, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), earnings, business,
prospects or results of operations of [Placement Agent].
(b) [Placement
Agent] is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York, with full power and authority to own,
lease and operate its properties and conduct its business as currently being
conducted. [Placement Agent] is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in which it
owns
or leases property or conducts its business so as to require such qualification
and in which the failure to so qualify would, individually or in the aggregate,
have a material adverse effect on the condition (financial or otherwise),
earnings, business, prospects or results of operations of [Placement
Agent].
6.2. Power
and Authority.
The
Placement Agent has all requisite power and authority to enter into this
Agreement, and this Agreement has been duly and validly authorized, executed
and
delivered by the Placement Agent and constitutes the legal, valid and binding
agreement of the Placement Agent, enforceable against the Placement Agent in
accordance with its terms, subject to Bankruptcy and Equity and except as any
indemnification or contribution provisions thereof may be limited under
applicable securities laws.
6.3. General
Solicitation.
In
the case of the offer and sale of the Capital Securities, no form of general
solicitation or general advertising was used by the Placement Agent or its
representatives including, but not limited to, advertisements, articles, notices
or other communications published in any newspaper, magazine or similar medium
or broadcast over television or radio or any seminar or meeting whose attendees
have been invited by any general solicitation or general
advertising.
6.4. Purchaser.
The
Placement Agent has made such reasonable inquiry as is necessary to determine
that the Purchaser is acquiring the Capital Securities for its own account,
except as contemplated in Section 7.8 hereto, and that the Purchaser does not
intend to distribute the Capital Securities in contravention of the Securities
Act or any other applicable securities laws.
6.5. Qualified
Purchasers.
The
Placement Agent has not offered or sold and will not arrange for the offer
or
sale of the Capital Securities except (i) to those the Placement Agent
reasonably believes are “accredited investors” (as defined in Rule 501 of
Regulation D), or (ii) in any other manner that does not require registration
of
the Capital Securities under the Securities Act. In connection with each such
sale, the Placement Agent has taken or will take reasonable steps to ensure
that
the Purchaser is aware that (a) such sale is being made in reliance on an
exemption under the Securities Act and (b) future transfers of the Capital
Securities will not be made except in compliance with applicable securities
laws.
6.6. Offering
Circulars.
Neither
the Placement Agent nor its representatives will include any non-public
information about the Company, the Trust or any of their Affiliates in any
registration statement, prospectus, offering circular or private placement
memorandum used in connection with any purchase of Capital Securities without
the prior written consent of the Trust and the Company.
10
Section
7. Covenants
of the Offerors.
The
Offerors covenant and agree with the Placement Agents and the Purchaser as
follows:
7.1. Compliance
with Representations and Warranties.
During
the period from the date of this Agreement to the Closing Date, the Offerors
shall use their best efforts and take all action necessary or appropriate to
cause their representations and warranties contained in Section 5 hereof to
be
true as of the Closing Date, after giving effect to the transactions
contemplated by this Agreement, as if made on and as of the Closing
Date.
7.2. Sale
and Registration of Securities.
The Offerors and their Affiliates shall not nor shall any of them permit any
person acting on their behalf (other than the Placement Agents, with the
Offerors' prior written consent), to directly or indirectly (i) sell, offer
for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Securities Act) that would or could be integrated with the
sale of the Capital Securities in a manner that would require the registration
under the Securities Act of the Securities or (ii) make offers or sales of
any
such Security, or solicit offers to buy any such Security, under circumstances
that would require the registration of any of such Securities under the
Securities Act.
7.3. Use
of Proceeds.
The
Trust shall use the proceeds from the sale of the Capital Securities and the
Common Securities to purchase the Debentures from the Company.
7.4. Investment
Company.
The
Offerors shall not engage, or permit any Subsidiary to engage, in any activity
which would cause it or any Subsidiary to be an “investment company” under the
provisions of the Investment Company Act.
7.5. Reimbursement
of Expenses.
If
the sale of the Capital Securities provided for herein is not consummated (i)
because any condition set forth in Section 3 hereof is not satisfied, or (ii)
because of any refusal, inability or failure on the part of the Company or
the
Trust to perform any agreement herein or comply with any provision hereof other
than by reason of a breach by the Placement Agents, the Company shall reimburse
the Placement Agents upon demand for all of their pro rata share of
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
in an amount not to exceed $50,000.00 that shall have been incurred by them
in
connection with the proposed purchase and sale of the Capital Securities.
Notwithstanding the foregoing, the Company shall have no obligation to reimburse
the Placement Agents for their out-of-pocket expenses if the sale of the Capital
Securities fails to occur because the Placement Agents fail to fulfill a
condition set forth in Section 4.
7.6. Solicitation
and Advertising.
In
connection with any offer or sale of any of the Securities, the Offerors shall
not, nor shall either of them permit any of their Affiliates or any person
acting on their behalf, other than the Placement Agents with the Offerors'
prior written consent, to engage in any form of general soliciation or
general advertising (as defined in Regulation D).
7.7. Compliance
with Rule 144A(d)(4) under the Securities Act.
So
long as any of the Securities are outstanding and are “restricted securities”
within the meaning of Rule 144(a)(3) under the Securities Act, the Offerors
will, during any period in which they are not subject to and in compliance
with
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or the Offerors are not exempt from such reporting requirements
pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act,
provide to each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities, upon
the
request of such holder or prospective purchaser in connection with any proposed
transfer, any information required to be provided by Rule 144A(d)(4) under
the
Securities Act, if applicable. This covenant is intended to be for the benefit
of the holders, and the prospective purchasers designated by such holders,
from
time to time of such restricted securities. The information provided by the
Offerors pursuant to this Section 7.7
11
7.8. Transfer
Notice.
The
Offerors acknowledge that the Purchaser may transfer the Capital Securities,
in
whole or in part, at any time and from time to time following the Closing Date
by delivering the notice (the “Transfer Notice”) attached as Exhibit
B
to the Master Custodian Agreement, dated May 27, 2004, as amended, and attached
as Exhibit
A
to the Subscription Agreement. In order to facilitate such transfer, the Company
shall execute in blank five additional Capital Securities certificates, to
be
delivered at Closing, such certificates to be completed with the name of the
transferee(s) to which the Capital Securities, in whole or in part, will be
transferred upon the receipt of a Transfer Notice and authenticated by the
Institutional Trustee at the time of each such transfer.
7.9. Quarterly
Reports.
Within
50 days of the end of each calendar year quarter and within 100 days of the
end
of each calendar year during which the Debentures are issued and outstanding
and
Purchaser holds any of the Capital Securities, the Offerors shall submit to
Purchaser a completed quarterly report in the form attached hereto as
Exhibit
D
as well as a copy of the applicable Regulatory Report for the Company. If the
Purchaser transfers the Capital Securities as contemplated under Section 7.8,
in
addition to the reporting obligations of the Offerors to Purchaser provided
for
in this Section 7.9, the Offerors shall submit to the trustee designated in
the
Transfer Notice such periodic reports as may be required by such trustee in
the
form and at such times as such trustee may require. The Offerors acknowledge
and
agree that such designated trustee and its successors and assigns are third
party beneficiaries of this Section 7.9.
Section
8. Covenants
of the Placement Agents.
The
Placement Agents covenant and agree with the Offerors that, during the period
from the date of this Agreement to the Closing Date, the Placement Agents shall
use their best efforts and take all action necessary or appropriate to cause
their representations and warranties contained in Section 6 to be true as of
the
Closing Date, after giving effect to the transactions contemplated by this
Agreement, as if made on and as of the Closing Date. The Placement Agents
further covenant and agree not to engage in hedging transactions with respect
to
the Capital Securities unless such transactions are conducted in compliance
with
the Securities Act.
Section
9. Indemnification.
9.1. Indemnification
Obligation.
The
Offerors
shall jointly and severally indemnify and hold harmless the Placement Agents
and
the Purchaser and each of their respective agents, employees, officers and
directors and each person that controls either of the Placement Agents or the
Purchaser within the meaning of Section 15 of the Securities Act or Section
20
of the Exchange Act, and agents, employees, officers and directors or any such
controlling person of either of the Placement Agents or the Purchaser (each
such
person or entity, an “Indemnified Party”) from and against any and all losses,
claims, damages, judgments, liabilities or expenses, joint or several, to which
such Indemnified Party may become subject under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, or at common law
or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Offerors), insofar as such losses,
claims, damages, judgments, liabilities or expenses (or actions in respect
thereof) arise out of, or are based upon, or relate to, in whole or in part,
(a)
any untrue statement or alleged untrue statement of a material fact contained
in
any information (whether written or oral) or documents executed
in favor of, furnished or made available to the Placement Agents or the
Purchaser by the Offerors, or (b) any omission or alleged omission to state
in
any information (whether written or oral) or documents executed
in favor of, furnished or made available to the Placement Agents or the
Purchaser by the Offerors a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
each Indemnified Party for any legal and other
12
expenses
as such expenses are reasonably incurred by such Indemnified Party in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, judgments, liability, expense or action described in this Section
9.1. In addition to their other obligations under this Section 9, the Offerors
hereby agree that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of, or based
upon, or related to the matters described above in this Section 9.1, they shall
reimburse each Indemnified Party on a quarterly basis for all reasonable legal
or other expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety and enforceability
of the possibility that such payments might later be held to have been improper
by a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each Indemnified Party
shall promptly return such amounts to the Offerors together with interest,
determined on the basis of the prime rate (or other commercial lending rate
for
borrowers of the highest credit standing) announced from time to time by
_____________ (the “Prime Rate”). Any such interim reimbursement payments which
are not made to an Indemnified Party within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request.
9.2. Conduct
of Indemnification Proceedings.
Promptly
after receipt by an Indemnified Party under this Section 9 of notice of the
commencement of any action, such Indemnified Party shall, if a claim in respect
thereof is to be made against the Offerors under this Section 9, notify the
Offerors in writing of the commencement thereof; but, subject to Section 9.4,
the omission to so notify the Offerors shall not relieve them from any liability
pursuant to Section 9.1 which the Offerors may have to any Indemnified Party
unless and to the extent that the Offerors did not otherwise learn of such
action and such failure by the Indemnified Party results in the forfeiture
by
the Offerors of substantial rights and defenses. In case any such action is
brought against any Indemnified Party and such Indemnified Party seeks or
intends to seek indemnity from the Offerors, the Offerors shall be entitled
to
participate in, and, to the extent that they may wish, to assume the defense
thereof with counsel reasonably satisfactory to such Indemnified Party;
provided,
however,
if the defendants in any such action include both the Indemnified Party and
the
Offerors and the Indemnified Party shall have reasonably concluded that there
may be a conflict between the positions of the Offerors and the Indemnified
Party in conducting the defense of any such action or that there may be legal
defenses available to it and/or other Indemnified Parties which are different
from or additional to those available to the Offerors, the Indemnified Party
shall have the right to select separate counsel to assume such legal defenses
and to otherwise participate in the defense of such action on behalf of such
Indemnified Party. Upon receipt of notice from the Offerors to such Indemnified
Party of their election to so assume the defense of such action and approval
by
the Indemnified Party of counsel, the Offerors shall not be liable to such
Indemnified Party under this Section 9 for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the
defense
or investigation
thereof unless (i) the Indemnified Party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
in the preceding sentence (it being understood, however, that the Offerors
shall
not be liable for the expenses of more than one separate counsel representing
the Indemnified Parties who are parties to such action), or (ii) the Offerors
shall not have employed counsel reasonably satisfactory to the Indemnified
Party
to represent the Indemnified Party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses of
counsel of such Indemnified Party shall be at the expense of the
Offerors.
9.3. Contribution.
If
the indemnification provided for in this Section 9 is required by its terms,
but
is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an Indemnified Party under Section 9.1 in respect of any losses,
claims, damages, liabilities or expenses referred to herein or therein, then
the
Offerors shall contribute to the amount paid or payable by such Indemnified
Party as a result of any losses, claims, damages, judgments, liabilities or
expenses referred to
13
herein
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Offerors, on the one hand, and the Indemnified Party, on the
other hand, from the offering of such Capital Securities, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Offerors,
on
the one hand, and the Placement Agents, on the other hand, in connection with
the statements or omissions or inaccuracies in the representations and
warranties herein or other breaches which resulted in such losses, claims,
damages, judgments, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Offerors, on the one hand, and the Placement Agents, on the other hand, shall
be
deemed to be in the same proportion, in the case of the Offerors, as the total
price paid to the Offerors for the Capital Securities sold by the Offerors
to
the Purchaser (net of the compensation paid to the Placement Agents hereunder,
but before deducting expenses), and in the case of the Placement Agents, as
the
compensation received by them, bears to the total of such amounts paid to the
Offerors and received by the Placement Agents as compensation. The relative
fault of the Offerors and the Placement Agents shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or the omission or alleged omission of a material fact or
the
inaccurate or the alleged inaccurate representation and/or warranty relates
to
information supplied by the Offerors or the Placement Agents and the parties’
relative intent, knowledge, access to information and opportunity to correct
or
prevent such statement or omission. The provisions set forth in Section 9.2
with
respect to notice of commencement of any action shall apply if a claim for
contribution is made under this Section 9.3; provided,
however,
that no additional notice shall be required with respect to any action for
which
notice has been given under Section 9.2 for purposes of indemnification. The
Offerors and the Placement Agents agree that it would not be just and equitable
if contribution pursuant to this Section 9.3 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 this Section 9.3. The amount paid
or
payable by an Indemnified Party as a result of the losses, claims, damages,
judgments, liabilities or expenses referred to in this Section 9.3 shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such Indemnified Party in connection
with
investigating or defending any such action or claim. In no event shall the
liability of the Placement Agents hereunder be greater in amount than the dollar
amount of the compensation (net of payment of all expenses) received by the
Placement Agents upon the sale of the Capital Securities giving rise to such
obligation. No person found guilty of fraudulent misrepresentation (within
the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation.
9.4. Additional
Remedies.
The
indemnity and contribution agreements contained in this Section 9 are in
addition to any liability that the Offerors may otherwise have to any
Indemnified Party.
9.5. Additional
Indemnification.
The
Company shall indemnify and hold harmless the Trust against all loss, liability,
claim, damage and expense whatsoever, as due from the Trust under Sections
9.1
through 9.4 hereof.
Section
10. Rights
and Responsibilities of Placement
Agents.
10.1. Reliance.
In
performing their duties under this Agreement, the Placement Agents shall be
entitled to rely upon any notice, signature or writing which they shall in
good
faith believe to be genuine and to be signed or presented by a proper party
or
parties. The Placement Agents may rely upon any opinions or certificates or
other documents delivered by the Offerors or their counsel or designees to
either the Placement Agents or the Purchaser.
10.2. Rights
of Placement Agents.
In
connection with the performance of their duties under this Agreement, the
Placement Agents shall not be liable for any error of judgment or any action
taken or
14
Section
11. Miscellaneous.
11.1. Disclosure
Schedule.
The
term “Disclosure Schedule,” as used herein, means the schedule, if any, attached
to this Agreement that sets forth items the disclosure of which is necessary
or
appropriate as an exception to one or more representations or warranties
contained in Section 5 hereof; provided,
that any item set forth in the Disclosure Schedule as an exception to a
representation or warranty shall be deemed an admission by the Offerors that
such item represents an exception, fact, event or circumstance that is
reasonably likely to result in a Material Adverse Effect. The Disclosure
Schedule shall be arranged in paragraphs corresponding to the section numbers
contained in Section 5. Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein
unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the immediately preceding sentence, the mere listing
(or inclusion of a copy) of a document or other item in the Disclosure Schedule
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein unless the representation or warranty has to do with the
existence of the document or other item itself. Information provided by the
Company in response to any due diligence questionnaire shall not be deemed
part
of the Disclosure Schedule and shall not be deemed to be an exception to one
or
more representations or warranties contained in Section 5 hereof unless such
information is specifically included on the Disclosure Schedule in accordance
with the provisions of this Section 11.1.
11.2. Legal
Expenses.
At
Closing, the Placement Agents shall provide a credit for the Offerors’
transaction-related legal expenses in the amount of $10,000.00.
11.3. Non-Disclosure.
Except
as required by applicable law, including without limitation securities laws
and
regulations promulgated thereunder, (i) the Offerors shall not, and will cause
their advisors and representatives not to, issue any press release or other
public statement regarding the transactions contemplated by this Agreement
or
the Operative Documents prior to or on the Closing Date and (ii) following
the
Closing Date, the Offerors shall not include in any press release, other public
statement or other communication regarding the transactions contemplated by
this
Agreement or the Operative Documents, any reference to the Placement Agents,
WTC, the Purchaser, the term “PreTS” or any derivations thereof, or the terms
and conditions of this Agreement or the Operative Documents. Notwithstanding
anything to the contrary, the Offerors may (1) consult any tax advisor regarding
U.S. federal income tax treatment or tax structure of the transaction
contemplated under this Agreement and the Operative Documents and (2) disclose
to any and all persons, without limitation of any kind, the U.S. Federal income
tax structure (in each case, within the meaning of Treasury Regulation §
1.6011-4) of the transaction contemplated under this Agreement and the Operative
Documents and all materials of any kind (including opinions or other tax
analyses) that are provided to you relating to such tax treatment and tax
structure. For this purpose, “tax structure” is limited to any facts relevant to
the U.S. federal income tax treatment of the transaction and does not include
information relating to identity of the parties.
11.4. Notices.
Prior
to the Closing, and thereafter with respect to matters pertaining to this
Agreement only, all notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier or overnight air courier guaranteeing next day delivery:
15
if
to the Placement Agents, to:
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
and
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
with
a copy to:
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
.
and
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
if
to the Offerors, to:
Community
Banks, Inc.
000
Xxxx Xxxx Xxxxx, Xxxxxx Xxxxx
Xxxxxxxxxx,
Xxxxxxxxxxxx 00000
Telecopier:
000-000-0000
Telephone:
000-000-0000
Attention:
V. Xxxxxxx Xxxxxx
16
with
a copy to:
Mette,
Xxxxx & Xxxxxxxx
0000
Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx,
Xxxxxxxxxxxx 00000
Telecopier:
000-000-0000
Telephone:
000-000-0000
Attention:
Xxxxxxx Xxx, Esq.
All
such notices and communications shall be deemed to have been duly given (i)
at
the time delivered by hand, if personally delivered, (ii) five business days
after being deposited in the mail, postage prepaid, if mailed, (iii) when
answered back, if telexed, (iv) the next business day after being telecopied,
or
(v) the next business day after timely delivery to a courier, if sent by
overnight air courier guaranteeing next day delivery. From and after the
Closing, the foregoing notice provisions shall be superseded by any notice
provisions of the Operative Documents under which notice is given. The Placement
Agents, the Offerors, and their respective counsel, may change their respective
notice addresses from time to time by written notice to all of the foregoing
persons.
11.5. Parties
in Interest, Successors and Assigns.
Except
as expressly set forth herein, this Agreement is made solely for the benefit
of
the Placement Agents, the Purchaser and the Offerors and any person controlling
the Placement Agents, the Purchaser or the Offerors and their respective
successors and assigns; and no other person shall acquire or have any right
under or by virtue of this Agreement. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the
parties.
11.6. Counterparts.
This
Agreement may be executed by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
11.7. Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
11.8. Governing
Law.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AND NOT THE LAWS PERTAINING TO CONFLICTS OF LAWS) OF THE STATE OF NEW
YORK.
11.9. Entire
Agreement.
This
Agreement, together with the Operative Documents and the other documents
delivered in connection with the transactions contemplated by this Agreement,
is
intended by the parties as a final expression of their agreement and intended
to
be a complete and exclusive statement of the agreement and understanding of
the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, together
with
the Operative Documents and the other documents delivered in connection with
the
transaction contemplated by this Agreement, supersedes all prior agreements
and
understandings between the parties with respect to such subject
matter.
11.10. Severability.
In
the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that all of the Placement Agents’ and the Purchaser’s rights and
privileges shall be enforceable to the fullest extent permitted by
law.
17
11.11. Survival.
The
Placement Agents and the Offerors, respectively, agree that the representations,
warranties and agreements made by each of them in this Agreement and in any
certificate or other instrument delivered pursuant hereto shall remain in full
force and effect and shall survive the delivery of, and payment for, the Capital
Securities.
Signatures
appear on the following page
18
If
this Agreement is satisfactory to you, please so indicate by signing the
acceptance of this Agreement and deliver such counterpart to the Offerors
whereupon this Agreement will become binding between us in accordance with
its
terms.
Very
truly yours,
COMMUNITY
BANKS, INC.
By:_____________________________________
Name:___________________________________
Title:____________________________________
CMTY
CAPITAL STATUTORY TRUST III
By:______________________________________
Name:____________________________________
Title:
Administrator
CONFIRMED
AND ACCEPTED,
as
of the date first set forth above
[Placement
Agent] as a Placement Agent
By:_________________________________________
Name:_______________________________________
Title:________________________________________
[Placement
Agent] as a Placement Agent
By:_________________________________________
Name:_______________________________________
Title:________________________________________
19
EXHIBIT
A
FORM
OF SUBSCRIPTION AGREEMENT
CMTY
CAPITAL STATUTORY TRUST III
COMMUNITY
BANKS, INC.
SUBSCRIPTION
AGREEMENT
January
__, 2006
THIS
SUBSCRIPTION AGREEMENT
(this “Agreement”) made among CMTY Capital Statutory Trust III (the “Trust”), a
statutory trust created under the Delaware Statutory Trust Act (Chapter 38
of
Title 12 of the Delaware Code, 12 Del. C. §§ 3801, et
seq.),
Community Banks, Inc., a Pennsylvania corporation, with its principal offices
located at 000 Xxxx Xxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000
(the “Company” and, collectively with the Trust, the “Offerors”), and
______________________ (the “Purchaser”).
RECITALS:
A. The
Trust desires to issue 10,000 of its Fixed/Floating Rate Capital Securities
(the
“Capital Securities”), liquidation amount $1,000.00 per Capital Security,
representing an undivided beneficial interest in the assets of the Trust (the
“Offering”), to be issued pursuant to an Amended and Restated Declaration of
Trust (the “Declaration”) by and among the Company, Wilmington Trust Company
(“WTC”), the administrators named therein, and the holders (as defined therein),
which Capital Securities are to be guaranteed by the Company with respect to
distributions and payments upon liquidation, redemption and otherwise pursuant
to the terms of a Guarantee Agreement between the Company and WTC, as trustee
(the “Guarantee”); and
B. The
proceeds from the sale of the Capital Securities will be combined with the
proceeds from the sale by the Trust to the Company of its common securities,
and
will be used by the Trust to purchase an equivalent amount of Fixed/Floating
Rate Junior Subordinated Deferrable Interest Debentures of the Company (the
“Debentures”) to be issued by the Company pursuant to an indenture to be
executed by the Company and WTC, as trustee (the “Indenture”); and
C. In
consideration of the premises and the mutual representations and covenants
hereinafter set forth, the parties hereto agree as follows:
ARTICLE
I
PURCHASE
AND SALE OF CAPITAL SECURITIES
1.1. Upon
the execution of this Agreement, the Purchaser hereby agrees to purchase from
the Trust 10,000 Capital Securities at a price equal to $1,000.00 per Capital
Security (the “Purchase Price”) and the Trust agrees to sell such Capital
Securities to the Purchaser for said Purchase Price. The rights and preferences
of the Capital Securities are set forth in the Declaration. The Purchase Price
is payable in immediately available funds on January 31, 2006, or such other
business day as may be designated by the Purchaser, but in no event later than
February 7, 2006 (the “Closing Date”). The Offerors shall provide the Purchaser
wire transfer instructions no later than 1 day following the date
hereof.
1.2. As
a condition to its purchase of the Capital Securities, Purchaser shall enter
into the Joinder Agreement to the Master Custodian Agreement, the form of which
is attached hereto as Exhibit A
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1.3. The
Placement Agreement, dated January 30, 2006 (the “Placement Agreement”), among
the Offerors and the placement agents identified therein (the “Placement
Agents”) includes certain representations and warranties, covenants and
conditions to closing and certain other matters governing the Offering. The
Placement Agreement is hereby incorporated by reference into this Agreement
and
the Purchaser shall be entitled to each of the benefits of the Placement Agents
and the Purchaser under the Placement Agreement and shall be entitled to enforce
the obligations of the Offerors under such Placement Agreement as fully as
if
the Purchaser were a party to such Placement Agreement.
1.4. Anything
herein or in the Placement Agreement notwithstanding, the Offerors acknowledge
and agree that, so long as Purchaser holds some or all of the Capital
Securities, the Purchaser may in its discretion from time to time transfer
or
sell, or sell or grant participation interests in, some or all of such Capital
Securities to one or more parties, provided that any such transaction complies,
as applicable, with the registration requirements of the Securities Act of
1933,
as amended (the “Securities Act”) and any other applicable securities laws, is
pursuant to an exemption therefrom, or is otherwise not subject
thereto.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
2.1. The
Purchaser understands and acknowledges that none of the Capital Securities,
the
Debentures or the Guarantee have been registered under the Securities Act or
any
other applicable securities law, are being offered for sale by the Trust in
transactions not requiring registration under the Securities Act, and may not
be
offered, sold, pledged or otherwise transferred by the Purchaser except in
compliance with the registration requirements of the Securities Act or any
other
applicable securities laws, pursuant to an exemption therefrom or in a
transaction not subject thereto.
2.2. The
Purchaser represents and warrants that, except as contemplated under Section
1.4
hereof, it is purchasing the Capital Securities for its own account, for
investment, and not with a view to, or for offer or sale in connection with,
any
distribution thereof in violation of the Securities Act or other applicable
securities laws, subject to any requirement of law that the disposition of
its
property be at all times within its control and subject to its ability to resell
such Capital Securities pursuant to an effective registration statement under
the Securities Act or under Rule 144A or any other exemption from registration
available under the Securities Act or any other applicable securities
law.
2.3. The
Purchaser represents and warrants that neither the Offerors nor the Placement
Agents are acting as a fiduciary or financial or investment adviser for the
Purchaser.
2.4. The
Purchaser represents and warrants that it is not relying (for purposes of making
any investment decision or otherwise) upon any advice, counsel or
representations (whether written or oral) of the Offerors or of the Placement
Agents.
2.5. The
Purchaser represents and warrants that (a) it has consulted with its own legal,
regulatory, tax, business, investment, financial and accounting advisers in
connection herewith to the extent it has deemed necessary, (b) it has had a
reasonable opportunity to ask questions of and receive answers from officers
and
representatives of the Offerors concerning their respective financial condition
and results of operations and the purchase of the Capital Securities, and any
such questions have been
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2.6. The
Purchaser represents and warrants that it is a “qualified institutional buyer”
as defined under Rule 144A under the Securities Act. If the Purchaser is a
dealer of the type described in paragraph (a)(1)(ii) of Rule 144A under the
Securities Act, it owns and invests on a discretionary basis not less than
U.S.
$25,000,000.00 in securities of issuers that are not affiliated with it. The
Purchaser is not a participant-directed employee plan, such as a 401(k) plan,
or
any other type of plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E)
of
Rule 144A, or a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A
that holds the assets of such a plan, unless investment decisions with respect
to the plan are made solely by the fiduciary, trustee or sponsor of such
plan.
2.7. The
Purchaser represents and warrants that on each day from the date on which it
acquires the Capital Securities through and including the date on which it
disposes of its interests in the Capital Securities, either (i) it is not (a)
an
“employee benefit plan” (as defined in Section 3(3) of the United States
Employee Retirement Income Security Act of 1974, as amended (“ERISA”))
which is subject to the provisions of Part 4 of Subtitle B of Title I of ERISA,
or any entity whose underlying assets include the assets of any such plan (an
“ERISA
Plan”),
(b) any other “plan” (as defined in Section 4975(e)(1) of the United States
Internal Revenue Code of 1986, as amended (the “Code”))
which is subject to the provisions of Section 4975 of the Code or any entity
whose underlying assets include the assets of any such plan (a “Plan”),
(c) an entity whose underlying assets include the assets of any such ERISA
Plan
or other Plan by reason of Department of Labor regulation section 2510.3-101
or
otherwise, or (d) a governmental or church plan that is subject to any federal,
state or local law which is substantially similar to the provisions of Section
406 of ERISA or Section 4975 of the Code (a “Similar
Law”);
or (ii) the purchase, holding and disposition of the Capital Securities by
it
will satisfy the requirements for exemptive relief under Prohibited Transaction
Class Exemption (“PTCE”)
00-00, XXXX 00-0, XXXX 91-38, XXXX 00-00, XXXX 96-23 or a similar exemption,
or,
in the case of a plan subject to a Similar Law, will not result in a non-exempt
violation of such Similar Law.
2.8. The
Purchaser represents and warrants that it is acquiring the Capital Securities
as
principal for its own account for investment and, except as contemplated under
Section 1.4 hereof, not for sale in connection with any distribution thereof.
It
was not formed solely for the purpose of investing in the Capital Securities,
and additional capital or similar contributions were not specifically solicited
from any person owning a beneficial interest in it for the purpose of enabling
it to purchase any Capital Securities. The Purchaser is not a (i) partnership,
(ii) common trust fund or (iii) special trust, pension, profit sharing or other
retirement trust fund or plan in which the partners, beneficiaries or
participants, as applicable, may designate the particular investments to be
made
or the allocation of any investment among such partners, beneficiaries or
participants, and except as contemplated under Section 1.4 hereof, it agrees
that it shall not hold the Capital Securities for the benefit of any other
person and shall be the sole beneficial owner thereof for all purposes and
that
it shall not sell participation interests in the Capital Securities or enter
into any other arrangement pursuant to which any other person shall be entitled
to a beneficial interest in the distribution on the Capital Securities. The
Capital Securities purchased directly or indirectly by the Purchaser constitute
an investment of no more than 40% of its assets. The Purchaser understands
and
agrees that any purported transfer of the Capital Securities to a purchaser
which would cause the representations and warranties of Section 2.6 and this
Section 2.8 to be inaccurate shall be null and void ab
initio
and the Offerors retain the right to resell any Capital Securities sold to
non-permitted transferees.
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2.9. The
Purchaser represents and warrants that it has full power and authority to
execute and deliver this Agreement, to make the representations and warranties
specified herein, and to consummate the transactions contemplated herein and
it
has full right and power to subscribe for Capital Securities and perform its
obligations pursuant to this Agreement.
2.10. The
Purchaser represents and warrants that no filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of,
any
governmental body, agency or court having jurisdiction over the Purchaser,
other
than those that have been made or obtained, is necessary or required for the
performance by the Purchaser of its obligations under this Agreement or to
consummate the transactions contemplated herein.
2.11. The
Purchaser represents and warrants that this Agreement has been duly authorized,
executed and delivered by the Purchaser.
2.12. The
Purchaser understands and acknowledges that the Company will rely upon the
truth
and accuracy of the foregoing acknowledgments, representations, warranties
and
agreements and agrees that, if any of the acknowledgments, representations,
warranties or agreements deemed to have been made by it by its purchase of
the
Capital Securities are no longer accurate, it shall promptly notify the
Company.
2.13. The
Purchaser understands that no public market exists for any of the Capital
Securities, and that it is unlikely that a public market will ever exist for
the
Capital Securities.
ARTICLE
III
MISCELLANEOUS
3.1. Any
notice or other communication given hereunder shall be deemed sufficient if
in
writing and sent by registered or certified mail, return receipt requested,
international courier or delivered by hand against written receipt therefor,
or
by facsimile transmission and confirmed by telephone, to the following
addresses, or such other address as may be furnished to the other parties as
herein provided:
To
the Offerors: Community
Banks, Inc.
000
Xxxx Xxxx Xxxxx, Xxxxxx Xxxxx
Xxxxxxxxxx,
Xxxxxxxxxxxx 00000
Attention:
V. Xxxxxxx Xxxxxx
Fax:
000-000-0000
To
the Purchaser:
_________________________
_________________________
_________________________
Unless
otherwise expressly provided herein, notices shall be deemed to have been given
on the date of mailing, except notice of change of address, which shall be
deemed to have been given when received.
3.2. This
Agreement shall not be changed, modified or amended except by a writing signed
by the parties to be charged, and this Agreement may not be discharged except
by
performance in accordance with its terms or by a writing signed by the party
to be
charged.
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3.3. Upon
the execution and delivery of this Agreement by the Purchaser, this Agreement
shall become a binding obligation of the Purchaser with respect to the purchase
of Capital Securities as herein provided.
3.4. NOTWITHSTANDING
THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO,
THE
PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
3.5. The
parties agree to execute and deliver all such further documents, agreements
and
instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.
3.6. This
Agreement may be executed in one or more counterparts each of which shall be
deemed an original, but all of which shall together constitute one and the
same
instrument.
3.7. In
the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that all of the Offerors’ and the Purchaser’s rights and privileges
shall be enforceable to the fullest extent permitted by law.
Signatures
appear on the following page
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IN
WITNESS WHEREOF,
this Agreement is agreed to and accepted as of the day and year first written
above.
By:___________________________________
Print
Name:_____________________________
Title:__________________________________
COMMUNITY
BANKS, INC.
By:_________________________________
Name:_______________________________
Title:________________________________
CMTY
CAPITAL STATUTORY TRUST III
By:__________________________________
Name:_______________________________
Title:
Administrator
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