COMMUNITY BANKS, INC. 20,000 Capital Securities Fixed/Floating Rate Capital Securities (Liquidation Amount $1,000.00 per Capital Security) PLACEMENT AGREEMENT
Exhibit
1.1
COMMUNITY
BANKS, INC.
20,000
Capital Securities
Fixed/Floating
Rate Capital Securities
(Liquidation
Amount $1,000.00 per Capital Security)
____________________
March 8,
2007
FTN
Financial Capital Markets
000
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxxx 00000
Xxxxx,
Xxxxxxxx & Xxxxx, Inc.
000
0xx Xxxxxx
0xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Ladies
and Gentlemen:
Community
Banks, Inc., a Pennsylvania corporation (the “Company”), and its financing
subsidiary, CMTY Capital Statutory Trust V, 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) 20,000 of the Trust’s Fixed/Floating Rate Capital Securities, with a
liquidation amount of $1,000.00 per capital security (the “Capital Securities”),
to First Tennessee Bank National Association (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 $20,619,000.00 in principal amount of the Fixed/Floating Rate Junior
Subordinated
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
March 9, 2007, 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 March 16, 2007
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
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 counsel and
accountants for the Offerors; all reasonable expenses incurred by the Offerors
incident to the preparation, execution and delivery of the Trust Agreement,
the
Indenture, and the Guarantee; and all other reasonable costs and expenses
incident to the performance of the obligations of the Company hereunder and
under the Trust Agreement.
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
March 16, 2007, 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
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
conditions on their part to be performed or satisfied at or prior to the Closing
Date, (ii) since the date of this Agreement the Offerors have not incurred
any liability or obligation, direct or contingent, or entered into any material
transactions, other than in the ordinary course of business, which is material
to the Offerors, and (iii) covering such other matters as the Placement
Agents may reasonably request.
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
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.
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’
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
7
5.14. Financial
Statements.
(a) The
consolidated balance sheets of the Company and all of its Subsidiaries as of
December 31, 2006 and December 31, 2005 and related consolidated
income statements and statements of changes in shareholders’ equity for the
three years ended December 31, 2006 together with the notes thereto, 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. 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
8
5.17. No
Material Change.
Since
December 31, 2006, 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) FTN
Financial Capital Markets is a division of First Tennessee Bank National
Association, 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. FTN Financial Capital Markets 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 FTN Financial Capital Markets.
(b) Xxxxx,
Xxxxxxxx & Xxxxx, Inc. 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. Xxxxx, Xxxxxxxx & Xxxxx, Inc. 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 Xxxxx, Xxxxxxxx & Xxxxx,
Inc.
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 solicitation 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 will not, at the date
thereof, contain any 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.
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
12
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
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:
FTN
Financial Capital Markets
000
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxxx 00000
Telecopier:
000-000-0000
Telephone:
000-000-0000
Attention:
Xxxxx X. Xxxxxxx
and
Xxxxx,
Xxxxxxxx & Xxxxx, Inc.
000
0xx Xxxxxx
0xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Telecopier:
000-000-0000
Telephone:
000-000-0000
Attention:
Xxxxxxxx Xxxxxxxx, General Counsel
with
a copy to:
Xxxxx,
Xxxx & Xxxxxxxx, X.X.
000
Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx,
Xxxxxxxx 00000
Telecopier:
000-000-0000
Telephone:
000-000-0000
Attention:
Xxxxxx X. Xxx, Esq.
and
Sidley
Austin LLP
000
0xx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Telecopier:
000-000-0000
Telephone:
000-000-0000
Attention:
Xxxxxxx Xxxxxx, Esq.
if
to the Offerors, to:
Community
Banks, Inc.
000
Xxxx Xxxx Xxxxx, 0xx 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 X. 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 V
By:_________________________________
Name:_______________________________
Title:
Administrator
CONFIRMED
AND ACCEPTED,
as
of the date first set forth above
FTN
FINANCIAL CAPITAL MARKETS,
a
division of First Tennessee Bank National Association,
as
a Placement Agent
By:______________________________________
Name:____________________________________
Title:_____________________________________
XXXXX,
XXXXXXXX & XXXXX, INC.,
a
New York corporation, as a Placement Agent
By:
______________________________________
Name:____________________________________
Title:_____________________________________
19
EXHIBIT
A
FORM
OF SUBSCRIPTION AGREEMENT
CMTY
CAPITAL STATUTORY TRUST V
COMMUNITY
BANKS, INC.
SUBSCRIPTION
AGREEMENT
March 9,
2007
THIS
SUBSCRIPTION AGREEMENT
(this “Agreement”) made among CMTY Capital Statutory Trust V (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, 0xx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000 (the “Company” and, collectively with the Trust, the “Offerors”), and
First Tennessee Bank National Association (the “Purchaser”).
RECITALS:
A. The
Trust desires to issue 20,000 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 1 |
PURCHASE
AND SALE OF CAPITAL SECURITIES
1.1. Upon
the execution of this Agreement, the Purchaser hereby agrees to purchase from
the Trust 20,000 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 March 9, 2007, or such other
business day as may be designated by the Purchaser, but in no event later than
March 16, 2007 (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
A-1
1.3. The
Placement Agreement, dated March 8, 2007 (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, 0xx Xxxxx
Xxxxxxxxxx,
Xxxxxxxxxxxx 00000
Attention:
V. Xxxxxxx Xxxxxx
Fax:
000-000-0000
To
the Purchaser: First
Tennessee Bank National Association
000
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxxx 00000
Attention:
Xxxxx Xxxx
Fax:
000-000-0000
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.
FIRST
TENNESSEE BANK NATIONAL ASSOCIATION
By:_________________________________
Print
Name: __________________________
Title:
_______________________________
COMMUNITY
BANKS, INC.
By:_____________________________________
Name:___________________________________
Title:____________________________________
CMTY
CAPITAL STATUTORY TRUST V
By:_____________________________________
Name:___________________________________
Title:
Administrator
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