INVESTMENT AGREEMENT
Exhibit 10.2
This INVESTMENT AGREEMENT (this “Agreement”) dated as of June 7, 2008, is by and among
Guaranty Financial Group Inc., a Delaware corporation (the “Company”), and High River Limited
Partnership, Icahn Partners LP, Icahn Partners Master Fund LP, Icahn Partners Master Fund II LP,
and Icahn Partners Master Fund III LP (each individually and collectively, the “Investor”).
RECITALS
WHEREAS, the Company intends to sell to the Investor, and the Investor intends to purchase
from the Company, shares of a series of convertible perpetual cumulative preferred stock (the
“Convertible Preferred Stock”), to be evidenced by share certificates incorporating the terms and
attributes set forth in Exhibit A (the “Certificate of Designations”), all on the terms and
subject to the conditions set forth herein.
WHEREAS, the Company intends to sell to the investors set forth on Schedule 1
(collectively with the Investor, the “Holders”), and each such investor intends to purchase from
the Company, shares of Convertible Preferred Stock for the applicable purchase price set forth on
Schedule 1. Such purchases and sales will be on the same terms and conditions as set forth
herein pursuant to investment agreements in the same form as this Agreement, with any changes
thereto as disclosed to the Investor prior to the date hereof, entered into by the Company and such
investors on or prior to the date hereof (collectively, the “Investment Agreements”).
NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained,
the parties hereto hereby agree as follows:
AGREEMENT
Section 1. Definitions. The following terms used herein will have the meanings set forth
below or in the section cross-referenced below, as applicable:
“Additional Securities” has the meaning set forth in Section 10(a).
“Affiliate” has the meaning set forth in Rule 12b-2 under the Exchange Act; provided, that
when used with respect to the Investor, the term “Affiliate” will not include any entities that are
publicly traded or as to which the Investor may have fiduciary duties.
“Agency” has the meaning set forth in Section 3(q).
“Agreement” has the meaning set forth in the preamble and as this Agreement may be amended,
modified or supplemented.
“Bank” means Guaranty Bank, FSB, a wholly-owned subsidiary of the Company.
“Benefit Plan” means all employee welfare benefit plans within the meaning of Section 3(1) of
ERISA, all employee pension benefit plans within the meaning of Section 3(2) of ERISA, including,
but not limited to, plans that provide retirement income or result in a deferral of income by
employees for periods extending to termination of employment or beyond, and plans that provide
medical, surgical, or hospital care benefits or benefits in the event of sickness, accident,
disability, death or unemployment, and all other employee benefit agreements or arrangements,
including, but not limited to, all bonus, incentive, deferred compensation, vacation, stock
purchase, stock option, stock award, severance, employment, change of control, golden-parachute,
consulting, dependent care, cafeteria, employee assistance, scholarship, or fringe benefit or
similar plans, programs, agreements or policies, in all cases whether written, unwritten or
otherwise, funded or unfunded, and whether or not ERISA is applicable to such plan, program,
agreement or policy.
“Board of Directors” means the Board of Directors of the Company.
“Business Day” means any day that is not a Saturday, a Sunday or a day on which banking
institutions are required or permitted by law or other governmental action to be closed in the
State of New York.
“California Taxes” means the California franchise tax (California Revenue and Taxation Code
section 23101 et. seq.) and the California corporation income tax (California Revenue and Taxation
Code section 23501 et. seq.)
“Certificate of Designations” has the meaning set forth in the recitals.
“Closing” has the meaning set forth in Section 2(b).
“Closing Date” has the meaning set forth in Section 2(b).
“Code” means the Internal Revenue Code of 1986, as amended, in effect on the date hereof.
“Commission” means the United States Securities and Exchange Commission, or any successor
agency thereto.
“Common Stock” means the common stock, par value $1.00 per share, of the Company.
“Company” has the meaning set forth in the preamble.
“Company Financial Statements” has the meaning set forth in Section 3(f).
“Company Regulatory Approvals” means the Stockholder Approval, the OTS Approval, the filing of
a Biographical Form and Certificate of License Qualification with the Texas Department of Insurance
and the filing of the Certificate of Designations with the Secretary of State of the State of
Delaware by the Company.
“Company SEC Documents” has the meaning set forth in Section 3(e).
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“Company Significant Agreement” means any contract or agreement that is a “material contract”
within the meaning of Item 601(b)(10) of Regulation S-K to be performed in whole or in part after
the date of this Agreement.
“Conversion Shares” means the shares of Common Stock issuable or to be issued upon conversion
of the Preferred Shares.
“Convertible Preferred Stock” has the meaning set forth in the recitals.
“Disclosure Schedule” means the Disclosure Schedule dated as of the date hereof.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated by the Commission thereunder.
“Form Agreement” has the meaning set forth in Section 6(a).
“GAAP” has the meaning set forth in Section 3(f).
“Governmental Entity” means any court, administrative agency or commission or other
governmental authority or instrumentality, whether federal, state, local or foreign, and any
applicable industry self-regulatory organization, including the OTS.
“HOLA” has the meaning set forth in Section 3(a).
“Holders” has the meaning set forth in the recitals.
“Insurer” has the meaning set forth in Section 3(q).
“Investment Agreements” has the meaning set forth in the recitals.
“Investor” has the meaning set forth in the preamble.
“Issuer Sale Transaction” has the meaning set forth in Section 9(a).
“Loan Investor” has the meaning set forth in Section 3(q).
“Material Adverse Effect” or “Material Adverse Change” means any circumstance, event, change,
development or effect that, individually or in the aggregate, (i) is material and adverse to the
business, assets, results of operations or financial condition of the Company and its subsidiaries
taken as a whole or (ii) would materially impair the ability of the Company to perform its
obligations under this Agreement or to consummate the Closing; provided, however, that in
determining whether a Material Adverse Effect or Material Adverse Change has occurred, there will
be excluded any effect to the extent resulting from the following: (a) changes, after the date
hereof, in generally accepted accounting principles or regulatory accounting principles generally
applicable to banks, savings associations or their holding companies, (b) changes, after the date
hereof, in laws, rules and regulations of general applicability or interpretations thereof
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by Governmental Entities, (c) actions or omissions of the Company expressly required by the
terms of this Agreement or any capital transaction disclosed before the date of this Agreement or
taken with the prior written consent of the Investor, (d) changes in general economic, monetary or
financial conditions, including changes in prevailing interest rates, credit markets, secondary
mortgage market conditions or housing price appreciation/depreciation trends, (e) changes in the
market price or trading volumes of the Common Stock or the Company’s other securities (but not the
underlying causes of such changes), (f) the failure of the Company to meet any internal or public
projections, forecasts, estimates or guidance (including guidance as to “earnings drivers”) for any
period ending on or after December 31, 2007 (but not the underlying causes of such failure), (g)
changes in global or national political conditions, including the outbreak or escalation of war or
acts of terrorism, (h) the entering into by the Company of any Regulatory Agreement (but not the
regulatory effect or implications of such Regulatory Agreement or the underlying causes therefor),
and (i) the public disclosure of this Agreement or the transactions contemplated hereby; except,
with respect to clauses (a), (b), (d) and (g), to the extent that
the effects of such changes have a disproportionate effect on the Company and its subsidiaries,
taken as a whole, relative to other banks, savings associations and their holding companies
generally.
“NYSE” means the New York Stock Exchange.
“OTS” means the United States Office of Thrift Supervision.
“OTS Approval” means, to the extent required by applicable law, a determination by OTS that
the Investor has rebutted the presumption of control under 12 CFR § 574.
“Person” means an individual, corporation, partnership, association, joint stock company,
limited liability company, joint venture, trust, Governmental Entity, unincorporated organization
or other legal entity.
“Preferred Purchase Price” means the purchase price of Preferred Shares, which is $51.70 per
each Preferred Share.
“Preferred Shares” has the meaning set forth in Section 2(a).
“Registrable Securities” means all shares of Common Stock issued or issuable directly or
indirectly with respect to the shares of Convertible Preferred Stock by way of conversion or
exchange thereof or share dividend or share split or in connection with a combination of shares,
recapitalization, reclassification, merger, amalgamation, arrangement, consolidation, or other
reorganization. As to any securities constituting Registrable Securities, such securities will
cease to be Registrable Securities when (i) a registration statement with respect to the sale by
the holder thereof is declared effective under the Securities Act and such securities have been
disposed of in accordance with such registration statement, (ii) they have been acquired by the
Company, (iii) they have been sold to the public pursuant to Rule 144 or other exemption from
registration under the Securities Act, or (iv) they are able to be sold in their entirety by the
Investor or transferee holding such securities pursuant to Rule 144 under the Securities Act
without volume or other limitations.
“Registration Notice” has the meaning set forth in Section 10(a).
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“Regulation S-K” means Regulation S-K, which specifies the standard instructions for filing
forms with the Commission under the Securities Act and the Exchange Act.
“Regulation S-X” means Regulation S-X, which specifies the specific format and content of
financial reports for filings with the Commission under the Securities Act and Exchange Act.
“Regulatory Agreement” has the meaning set forth in Section 3(r).
“Regulatory Approvals” means the receipt of approvals and authorizations of, filings and
registrations with or notifications to, to the extent applicable and required to permit the
Investor to acquire the Preferred Shares and to convert the Investor’s Preferred Shares into
Conversion Shares and to own such Conversion Shares without the Investor being in violation of
applicable law, including the Stockholder Approval, the OTS Approval, the filing of a Biographical
Form and Certificate of License Qualification with the Texas Department of Insurance, and the
filing of the Certificate of Designations with the Secretary of State of the State of Delaware by
the Company.
“Required Registration” has the meaning set forth in Section 10(a).
“Rights Agreement” means the rights agreement of the Company dated December 11, 2007, as may
be amended or modified.
“Rights Offering” means the distribution by the Company to holders of its Common Stock of
record rights to subscribe for and purchase shares of Common Stock, all as described in that
certain registration statement on Form S-1, file No. 333-150558, as the same may be amended or
supplemented from time-to-time.
“Rule 144” means Rule 144 promulgated under the Securities Act that may at any time permit the
Investor to sell securities of the Company to the public without registration.
“Xxxxxxxx-Xxxxx Act” has the meaning set forth in Section 3(v).
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated by the Commission thereunder.
“Spin-Off” means the transaction by which shares of Common Stock were distributed to
stockholders of Temple-Inland, which transaction was completed on December 28, 2007.
“Standstill” has the meaning set forth in Section 9(a).
“Stockholder Approval” means approval by stockholders of the Company of the conversion of the
Preferred Shares into Conversion Shares as required by the New York Stock Exchange Listed Company
Manual.
“Tax Matters Agreement” means the Tax Matters Agreement by and among Temple-Inland Inc.,
Forestar Real Estate Group Inc, and the Company, dated as of December 11, 2007.
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“Taxes” means all taxes, charges, levies, penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority, including any income, excise, property,
sales, transfer, franchise, payroll, withholding, social security or other taxes, together with any
interest or penalties attributable thereto, all liabilities in respect of such taxes, charges,
penalties or other assessments arising as a result of being a member of any affiliated,
consolidated, combined, unitary or similar group, under Treasury Regulations Section 1.1502-6 or
similar provisions under applicable state, local or foreign tax laws and any payments made or owing
to any other Person measured by such taxes, charges, levies, penalties or other assessment, whether
pursuant to a tax indemnity agreement, tax sharing agreement, including the Tax Matters Agreement
and the Temple-Inland Inc. Tax Allocation Policy (as defined in the Tax Matters Agreement), or
otherwise (other than pursuant to commercial agreements or Benefit Plans).
“Tax Return” means any return, report, information return or other document (including any
related or supporting information) required to be filed with any taxing authority with respect to
Taxes, any claims for refunds of Taxes and any amendments or supplements to any of the foregoing.
“Temple-Inland” means Temple-Inland Inc., the former parent corporation of the Company.
“Texas Franchise Tax” means the Texas franchise tax (Tex. Tax Code Xxx. Section 171.001, et.
seq.)
“Third-Party Tender Offer” has the meaning set forth in Section 9(a).
“Voting Securities” means securities of the Company with the power to vote with respect to the
election of directors generally, including the Common Stock.
Section 2. Purchase; Closing.
(a) On the terms and subject to the conditions set forth herein, the Investor hereby agrees,
to purchase from the Company, and the Company hereby agrees to sell to the Investor, a number of
shares of Convertible Preferred Stock equal to the dollar amount set forth opposite the Investor’s
name on Schedule 1 divided by the Preferred Purchase Price per share (the “Preferred
Shares”).
(b) Closing. Subject to the satisfaction or waiver of the conditions set forth in
Section 7, the closing of the purchase of the Preferred Shares hereunder (the “Closing”)
will occur at the Dallas, Texas offices of Fulbright & Xxxxxxxx L.L.P. two Business Days after the
satisfaction or waiver of the conditions set forth in Section 7 or such other date that the
parties may agree. The day the Closing occurs is the “Closing Date.”
Section 3. Representations and Warranties of the Company. The Company represents and
warrants to the Investor as follows:
(a) Organization and Authority. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and each of the
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Company’s material subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization or incorporation, as applicable, and each of the
Company and the Company’s material subsidiaries is duly qualified to do business and is in good
standing in all jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified, and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted. The Company is a savings
and loan holding company under the Home Owners’ Loan Act of 1933, as amended (“HOLA”). The Bank is
a federally chartered stock savings bank duly organized, validly existing and in good standing
under HOLA. The deposit accounts of the Bank are insured up to applicable limits by the Deposit
Insurance Fund, which is administered by the Federal Deposit Insurance Corporation, and no
proceedings for the termination or revocation of such insurance are pending or, to the knowledge of
the Company, threatened. The Federal Stock Savings Bank Charter of the Bank complies in all
material respects with applicable law. The Company owns beneficially and of record all of the
outstanding equity interests of the Bank and its other material subsidiaries free of any lien or
encumbrance, and there are no outstanding options, warrants, convertible securities or other
instruments or agreements pursuant to which a person or entity other than the Company has the right
or obligation to acquire equity interests of the Bank or any of its other material subsidiaries.
(b) Authorization. This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes a binding obligation of the Company enforceable against it
in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity). All of the Preferred Shares to be issued to the Investor
hereunder, and the Conversion Shares to be issued to the Investor upon conversion of the Preferred
Shares, will be duly authorized for issuance prior to the Closing Date (except that the issuance of
the Conversion Shares will be subject to the Stockholder Approval) and, when issued, paid for and
delivered as set forth herein or in the Certificate of Designations, as applicable, the Preferred
Shares and the Conversion Shares will be validly issued, fully paid and non-assessable.
(c) Capitalization. The authorized capital stock of the Company consists of
200,000,000 shares of Common Stock and 25,000,000 shares of preferred stock, $0.01 par value per
share, of which, as of May 31, 2008 (i) 44,630,665 shares of Common Stock are issued and
outstanding, (ii) 95,848 shares of Common Stock are issued and held in treasury, (iii) 2,100,570
shares of Common Stock are reserved for issuance upon exercise of options and other awards granted
under the Company’s stock option and incentive plans, (iv) no shares of preferred stock are issued
and outstanding, and (v) 200,000 shares of preferred stock are reserved for issuance pursuant to
the Rights Agreement. As of the date hereof, the Company has not issued any shares of capital
stock since May 31, 2008, other than shares of Common Stock upon exercise of options and other
awards granted under the Company’s stock option and incentive plans. All of the outstanding shares
of Common Stock have been duly authorized, are validly issued, fully paid and nonassessable and
were offered, sold and issued in compliance with all applicable federal and state securities laws
and without violating any contractual obligation or any other preemptive or similar rights.
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(d) No Conflicts. Except as disclosed in the Disclosure Schedule, the issuance and
sale of the Preferred Shares and the Conversion Shares, the execution, delivery and performance by
the Company of this Agreement, the compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated will not (i) conflict with
or result in a breach or violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company is a party or by which the Company is bound or to which any of the property or
assets of the Company is subject, (ii) result in any violation of the provisions of any of the
organizational or governing documents of the Company or any statute, order, rule or regulation of
any court or governmental agency or body having jurisdiction over the Company or any of its
properties, or (iii) require any consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body having jurisdiction over the
Company or any of its properties, except for the Company Regulatory Approvals.
(e) Reports. Since December 28, 2007, the Company has filed with the Commission all
forms, reports, schedules, statements and other documents required to be filed by it through the
date hereof under the Exchange Act or the Securities Act (all such documents, as supplemented and
amended since the time of filing, collectively with the registration statement relating to the
Rights Offering, the “Company SEC Documents”). The Company SEC Documents, including all financial
statements and schedules included in the Company SEC Documents, at the time filed or, in the case
of any Company SEC Document amended or superseded by a filing prior to the date of this Agreement,
then on the date of such amending or superseding filing, and, in the case of registration
statements and proxy statements, on the dates of effectiveness and the dates of mailing,
respectively, (i) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading, and (ii) complied in all
material respects with the applicable requirements of the Exchange Act and the Securities Act, as
applicable.
(f) Financial Statements. The Company’s financial statements, including the notes
thereto, included in the Company SEC Documents (the “Company Financial Statements”) have been
prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) consistently
applied (except as may be indicated in the notes and schedules thereto) during the periods involved
and present fairly the Company’s consolidated financial position at the dates thereof and of its
operations and cash flows for the periods then ended (subject, in the case of unaudited statements,
to normal audit adjustments and the provisions of Regulation S-X). Since the date of the most
recent balance sheet included in the Company Financial Statements, (i) the Company has not effected
any change in any method of accounting or accounting practice, except for any such change required
because of a concurrent change in GAAP, nor has it been advised by its independent registered
accounting firm or any Governmental Entity that any such change in method of accounting or
accounting practice is appropriate, and (ii) there has been no Material Adverse Change.
(g) No Undisclosed Liabilities. Neither the Company nor any of its material
subsidiaries has any liabilities or obligations of any nature (absolute, accrued, contingent or
otherwise) that are not properly reflected or reserved against in the Company Financial Statements
to the extent required to be so reflected or reserved against in accordance with
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GAAP, except for (i) liabilities that have arisen since March 31, 2008 in the ordinary and
usual course of business and consistent with past practice, (ii) contractual liabilities under
agreements entered into in the ordinary course of business or that are disclosed in the Company SEC
Documents, and (iii) liabilities that have not had and would not reasonably be expected to have a
Material Adverse Effect.
(h) Company Significant Agreements. Except as disclosed in the Disclosure Schedule,
each of the Company Significant Agreements is valid and binding on the Company or its subsidiaries,
as applicable, and in full force and effect; the Company and each of its subsidiaries, as
applicable, are in all material respects in compliance with and have in all material respects
performed all obligations required to be performed by them to date under each Company Significant
Agreement; and as of the date hereof, neither the Company nor any of its subsidiaries has received
notice of any material violation or default (or any condition which with the passage of time or the
giving of notice would cause such a violation of or a default) by any party under any Company
Significant Agreement.
(i) Governmental Consents. Other than the Company Regulatory Approvals, and the
securities or blue sky laws of the various states, no material notice to, registration, declaration
or filing with, exemption or review by, or authorization, order, consent or approval of, any
Governmental Entity, nor expiration or termination of any statutory waiting periods, is necessary
for the consummation by the Company of the transactions contemplated by this Agreement.
(j) Controls and Procedures. The Company (i) has implemented and maintains disclosure
controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material
information relating to the Company, including its subsidiaries, is made known to the chief
executive officer and the chief financial officer of the Company by others within those entities,
and (ii) has disclosed, based on its most recent evaluation prior to the date hereof, to the
Company’s outside auditors and the audit committee of the Board of Directors (A) any significant
deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report financial
information and (B) any fraud, whether or not material, that involves management or other employees
who have a significant role in the Company’s internal controls over financial reporting.
(k) Properties and Leases. The Company and its subsidiaries have good and marketable
title to all real properties and all other material properties and assets that purport to be owned
by them, in each case free from liens, encumbrances, claims and defects that would affect the value
thereof or interfere with the use made or to be made thereof by them, but subject to liens on the
assets of the Bank and RWHC, Inc., a subsidiary of the Company, in favor of the Federal Home Loan
Bank of Dallas, which do not materially affect the value of such properties in the aggregate to the
Bank and its subsidiaries considered as one enterprise. The Company and its subsidiaries hold all
leased real or personal property under valid and enforceable leases with no exceptions that would
interfere with the use made or to be made thereof by them, and neither the Company nor any
subsidiary has any notice of any claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any such subsidiary under any such leases, or affecting or questioning the
rights of such entity to the continued possession of the leased
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premises, except for such claims that would not, singly or in the aggregate, have a Material
Adverse Effect.
(l) Taxes. (i) Each of the Company and its material subsidiaries has (A) duly and
timely filed (including pursuant to applicable extensions granted without penalty) all material Tax
Returns required to be filed by it and (B) paid in full all Taxes due or made adequate provision
in the financial statements of the Company (in accordance with GAAP) for any such Taxes, whether or
not shown as due on such Tax Returns; (ii) no material deficiencies for any Taxes have been
proposed, asserted or assessed in writing against or with respect to any Taxes due by or Tax
Returns of the Company or any of its material subsidiaries, which deficiencies have not since been
resolved, except for Taxes proposed, asserted or assessed that are being contested in good faith by
appropriate proceedings and for which reserves adequate in accordance with GAAP have been provided;
and (iii) there are no material liens for Taxes upon the assets of either the Company or its
material subsidiaries except for statutory liens for current Taxes not yet due or liens for Taxes
that are being contested in good faith by appropriate proceedings and for which reserves adequate
in accordance with GAAP have been provided.
(m) Litigation and Other Proceedings. There is no pending or, to the knowledge of the
Company, threatened, claim, action, suit, investigation or proceeding, against the Company or any
of its subsidiaries or to which any of their assets are subject, nor is the Company or any of its
subsidiaries subject to any order, judgment or decree, in each case except as would not reasonably
be expected to have a Material Adverse Effect.
(n) Compliance with Laws. The Company and each of its subsidiaries have all material
permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings,
applications and registrations with, Governmental Entities that are required in order to permit
them to own or lease their properties and assets and to carry on their business as presently
conducted. The Company and each of its subsidiaries has complied in all material respects and is
not in default or violation in any respect of, and none of them is, to the knowledge of the
Company, under investigation with respect to or, to the knowledge of the Company, has been
threatened to be charged with or given notice of any material violation of, any applicable material
domestic (federal, state or local) or foreign law, statute, ordinance, license, rule, regulation,
policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental
Entity.
(o) Insurance. The Company and each of its material subsidiaries are presently
insured, and since December 27, 2007 have been insured, for reasonable amounts with financially
sound and reputable insurance companies against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily be insured.
(p) Anti-takeover Provisions Not Applicable. The Board of Directors has taken all
necessary action to ensure that the transactions contemplated by this Agreement will be deemed
approved by the Board of Directors for the purposes of Section 203 of the Delaware General
Corporation Law.
(q) Mortgage Banking Business. Except as has not had and would not reasonably be
expected to have a Material Adverse Effect:
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(i) The Company and each of its subsidiaries has complied with, and all documentation
in connection with the origination, processing, underwriting and credit approval of any
mortgage loan originated, purchased or serviced by the Company or any of its subsidiaries
satisfied, (A) all applicable federal, state and local laws, rules and regulations with
respect to the origination, insuring, purchase, sale, pooling, servicing, subservicing, or
filing of claims in connection with mortgage loans, including all laws relating to real
estate settlement procedures, consumer credit protection, truth in lending laws, usury
limitations, fair housing, transfers of servicing, collection practices, equal credit
opportunity and adjustable rate mortgages, (B) the responsibilities and obligations relating
to mortgage loans set forth in any agreement between the Company or any of its subsidiaries
and any Agency, Loan Investor or Insurer, (C) the applicable rules, regulations, guidelines,
handbooks and other requirements of any Agency, Loan Investor or Insurer and (D) the terms
and provisions of any mortgage or other collateral documents and other loan documents with
respect to each mortgage loan.
(ii) No Agency, Loan Investor or Insurer has (A) claimed in writing that the Company or
any of its subsidiaries has violated or has not complied with the applicable underwriting
standards with respect to mortgage loans sold by the Company or any of its subsidiaries to a
Loan Investor or Agency, or with respect to any sale of mortgage servicing rights to a Loan
Investor, (B) imposed in writing restrictions on the activities (including commitment
authority) of the Company or any of its subsidiaries or (C) indicated in writing to the
Company or any of its subsidiaries that it has terminated or intends to terminate its
relationship with the Company or any of its subsidiaries for poor performance, poor loan
quality or concern with respect to the Company’s or any of its subsidiaries’ compliance with
laws.
(iii) For purposes of this Section 3(q): (A) “Agency” means the Federal
Housing Administration, the Federal Home Loan Mortgage Corporation, the Farmers Home
Administration (now known as Rural Housing and Community Development Services), the Federal
National Mortgage Association, the Federal National Mortgage Association, the United States
Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of
Agriculture or any other federal or state agency with authority to (i) determine any
investment, origination, lending or servicing requirements with regard to mortgage loans
originated, purchased or serviced by the Company or any of its Subsidiaries or (ii)
originate, purchase, or service mortgage loans, or otherwise promote mortgage lending,
including state and local housing finance authorities; (B) “Loan Investor” means any person
(including an Agency) having a beneficial interest in any mortgage loan originated,
purchased or serviced by the Company or any of its subsidiaries or a security backed by or
representing an interest in any such mortgage loan; and (C) “Insurer” means a person who
insures or guarantees for the benefit of the mortgagee all or any portion of the risk of
loss upon borrower default on any of the mortgage loans originated, purchased or serviced by
the Company or any of its subsidiaries, including the Federal Housing Administration, the
United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S.
Department of Agriculture and any private mortgage insurer, and providers of hazard, title
or other insurance with respect to such mortgage loans or the related collateral
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(r) Agreements with Regulatory Agencies. Except as disclosed in the Disclosure
Schedule, neither the Company nor any of its subsidiaries is subject to any cease-and-desist or
other similar order or enforcement action issued by, or is a party to any written agreement,
consent agreement or memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any capital directive of, any Governmental Entity that in
a material manner relates to its capital adequacy, its liquidity and funding policies and
practices, its ability to pay dividends, its credit, risk management or compliance policies, its
internal controls, its management or its operations or business, including compliance with
applicable bank secrecy, anti-money laundering and consumer protection laws, regulations and
interpretations of any Governmental Entity (a “Regulatory Agreement”).
(s) Off-Balance Sheet Arrangements. There is no transaction, arrangement or other
relationship between the Company and an unconsolidated or other off-balance sheet entity that is
required to be disclosed by the Company in its Company SEC Documents and is not so disclosed or
that otherwise would be reasonably likely to have a Material Adverse Effect. There are no such
transactions, arrangements or other relationships with the Company that may create contingencies or
liabilities that are not otherwise disclosed by the Company in its Company SEC Documents.
(t) Private Placement. Assuming the accuracy of each of the representations and
warranties set forth in Section 4, the offer and issuance by the Company of the Convertible
Preferred Stock and the Preferred Shares is exempt from registration under the Securities Act.
(u) No Integrated Offering. None of the Company, its subsidiaries, any of their
Affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under circumstances that would
require registration of the issuance of any of the Convertible Preferred Stock or the Preferred
Shares under the Securities Act, whether through integration with prior offerings or otherwise.
None of the Company, its subsidiaries, their Affiliates and any Person acting on their behalf will
take any action or steps referred to in the preceding sentence that would require registration of
the issuance of any of the Convertible Preferred Stock or the Preferred Shares under the Securities
Act or cause the offering of the Convertible Preferred Stock and the Preferred Shares to be
integrated with other offerings for purposes of any such applicable stockholder approval
provisions.
(v) Xxxxxxxx-Xxxxx. Solely to the extent that the Xxxxxxxx-Xxxxx Act of 2002, as
amended, and the rules and regulations promulgated by the Commission and NYSE thereunder
(collectively, the “Xxxxxxxx-Xxxxx Act”) has been applicable to the Company, there is and has been
no failure on the part of the Company to comply in all material respects with any provision of the
Xxxxxxxx-Xxxxx Act.
(w) Investment Company Status. The Company is not, and upon consummation of the sale
of the Convertible Preferred Stock or the Preferred Shares will not be, an “investment company,” a
company controlled by an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for, an “investment company” as such terms are defined in the Investment
Company Act of 1940, as amended.
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(x) Listing Requirements. The Company is in compliance with the requirements of the
NYSE for continued listing of the Common Stock thereon. The Company has taken no action designed
to, or, to its knowledge, likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act or the listing of the Common Stock on the NYSE, nor has the Company
received any notification that the Commission or the NYSE is contemplating terminating such
registration or listing. The transactions contemplated by this Agreement will not contravene the
rules and regulations of the NYSE.
(y) U.S. Real Property Holding Corporation Status. The Company is not, nor has ever
been, a U.S. real property holding corporation within the meaning of Section 897 of the Code of
1986, as amended.
(z) Shell Company Status. The Company is not, nor has ever been, an issuer of the
type described in Rule 144(i)(l) under the Securities Act.
(aa) Investment Agreements. All of the Investment Agreements with all Holders (other
than the Investor) are in the same form as, and contain the same terms and conditions as, this
Agreement, except for such modifications and changes to any Investment Agreement as disclosed to
the Investor prior to the execution of this Agreement by the Investor.
Section 4. Representations and Warranties of Investor. The Investor represents and
warrants to the Company as follows:
(a) Organization and Authority. The Investor is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization, and has all requisite power
and authority to enter into and perform its obligations under this Agreement.
(b) Authorization. This Agreement has been duly and validly authorized, executed and
delivered by the Investor and constitutes a binding obligation of the Investor enforceable against
it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is
sought in a proceeding at law or in equity).
(c) Purchase for Investment. The Investor acknowledges that neither the Preferred
Shares nor the Conversion Shares have been registered under the Securities Act or under any state
securities laws. The Investor (i) is acquiring the Preferred Shares, and will acquire the
Conversion Shares pursuant to an exemption from registration under the Securities Act solely for
investment with no present intention to distribute any of the Preferred Shares or the Conversion
Shares to any Person, (ii) will not sell or otherwise dispose of any of the Preferred Shares or the
Conversion Shares, except in compliance with the registration requirements or exemption provisions
of the Securities Act and any other applicable securities laws, (iii) has such knowledge and
experience in financial and business matters and in investments of this type that it is capable of
evaluating the merits and risks of its investment in the Preferred Shares and the Conversion Shares
and of making an informed investment decision, (iv) is an “accredited investor” (as that term is
defined by Rule 501 of the Securities Act), and (v) except as otherwise
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disclosed to the Company in writing prior to the date hereof, is a “qualified institutional
buyer” within the meaning of Rule 144A promulgated under the Act.
(d) Sufficient Funds. The Investor has and will have prior to the Closing Date,
sufficient cash, available lines of credit or other sources of immediately available funds to
enable it to timely deliver to the Company the aggregate Preferred Purchase Price payable hereunder
by the Investor.
(e) No Prior Understandings. Prior to the Spin-Off, neither the Investor nor any
Person acting on behalf of the Investor, with the Investor’s explicit or implicit permission, had
an agreement, understanding, arrangement, or substantial negotiations with any Person acting on
behalf of Temple-Inland or the Company regarding the Rights Offering or any other acquisition of
shares of Common Stock, Convertible Preferred Stock or other equity interests in the Company.
(f) Ownership. As of the close of business on the Business Day immediately preceding
the date hereto, the Investor beneficially owns (as determined in accordance with Rule 13d-3 under
the Exchange Act) the number of shares of Common Stock set forth next to the Investor’s name on
Schedule 1 and, other than as set forth on Schedule 1, does not beneficially own
(as determined in accordance with Rule 13d-3 under the Exchange Act) or have the right to vote with
respect to any equity securities of the Company.
(g) No Conflict. Except for the OTS Approval, the filing of a Biographical Form and
Certificate of License Qualification with the Texas Department of Insurance, and the filing of the
Certificate of Designations with the Secretary of State of the State of Delaware, the execution,
delivery and performance by the Investor of this Agreement and the consummation by it of the
transactions contemplated hereby will not require any material Regulatory Approvals or otherwise
violate any statute, order, rule or regulation of any Governmental Entity having jurisdiction over
the Investor or any of its properties.
(h) No Broker. The Investor has not employed any broker or finder in connection with
the transactions contemplated by this Agreement.
(i) Non-Reliance. The Investor is not relying upon, and has not relied upon, any
statement, representation or warranty made by any Person, including Xxxxx, Xxxxxxxx & Xxxxx, Inc.,
except for the statements, representations and warranties by the Company contained in this
Agreement. The Investor represents and warrants that (i) no Person other than the Investor,
including Xxxxx, Xxxxxxxx & Xxxxx, Inc., has performed any due diligence review by or on behalf of
the Investor, (ii) the Investor has made, and has relied solely upon, its own examination of the
Company and the terms of the securities in making its investment decision with respect to the
securities, and (iii) the Investor has had the opportunity to ask questions of the Company and has
been provided with all information by the Company that the Investor deemed necessary in order to
make its investment decision. The Investor further acknowledges that any such Person, including
Xxxxx, Xxxxxxxx & Xxxxx, Inc., is a third-party beneficiary to the representations and warranties
of the Investor in this Section 4(i).
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Section 5. Deliveries at Closing.
(a) Company Deliverables. At the Closing, the Company will deliver to the Investor
the following:
(i) Certificates representing the Preferred Shares; and
(ii) A certificate of a senior officer of the Company on its behalf to the effect that
(A) the representations and warranties of the Company in Section 3 are true and
correct on and as of the Closing Date as if made on such date, except for representations
and warranties made as of a specified date, which will be true and correct as of such
specified date, and except, in all cases, as would not result in a Material Adverse Change,
and (B) the Company has complied in all material respects with its obligations hereunder
that are required to be complied with by it at or prior to the Closing.
(b) Investor Deliverables. At the Closing, the Investor will deliver to the Company
the following:
(i) Payment of the aggregate Preferred Purchase Price for the Investor as set forth in
Schedule 1 in United States dollars by means of wire transfers of immediately
available funds to an account specified in writing by the Company; and
(ii) A certificate of a senior officer of the Investor on its behalf to the effect that
(A) the representations and warranties of the Investor contained in Section 4 are
true and correct on and as of the Closing Date as if made on such date, except for
representations and warranties made as of a specified date, which will be true and correct
as of such specified date, and except, in all cases, as would not, individually or in the
aggregate, materially impair the ability of the Investor to perform its obligations
hereunder or to consummate the Closing, and (B) the Investor has complied in all material
respects with its obligations hereunder that are required to be complied with by it at or
prior to the Closing.
Section 6. Covenants.
(a) Regulatory Approvals. The Company and the Investor will use commercially
reasonable best efforts to obtain, as promptly as practicable, all governmental,
quasi-governmental, court or regulatory approvals, consents or statements of non-objection
necessary on its part to allow the Company to issue and the Investor to acquire the Preferred
Shares and Conversion Shares it will or may acquire or control, as the case may be, or to own or
control the Preferred Shares, the Conversion Shares or any other shares of Common Stock to be
issued by the Company or owned or controlled by the Investor following the date hereof, including
any approvals, consents or statements of non-objection required by any state or federal banking
regulatory authority, including the Regulatory Approvals applicable to them. In performing its
obligations under this Section 6(a), each of the Company and the Investor will cooperate
with the other, provide each other to the extent reasonably practicable with advance notice of and
an opportunity to comment to the non-confidential portions of all regulatory filings, applications
and support materials, and will provide each other with advance notice of and an opportunity to
- 15 -
participate in any meetings (including telephonic conferences) with any regulatory authorities
regarding any such approvals to the extent they do not involve such party’s confidential
information. Without limiting the foregoing, unless otherwise waived by the Company, the Investor
agrees, as and to the extent required by applicable law, that it will as promptly as practicable
prepare, file and prosecute with the OTS a submission rebutting the presumption of control of the
Company as provided in 12 CFR §574.4(e) and offer to enter into the Rebuttal of Control Agreement
required by 12 CFR §574.100 as such agreement may be modified from time to time by the OTS (the
“Form Agreement”), as may be amended or modified by the Investor and the OTS to reflect the
business and structure of the Investor; provided, the Investor shall use its commercially
reasonable best efforts to conform with the requirements of the Form Agreement. The Investor also
agrees that it will take no action that would result in the Investor becoming a “savings and loan
holding company” as that term is defined in the Home owners Loan Act and 12 CFR Part 574 and that,
beginning on the date of filing the submission described in the immediately preceding sentence with
the OTS, prior to the Closing, it will take no action that would cause it not to be able to fully
comply with the terms of such Rebuttal of Control Agreement. The Company will cooperate with the
Investor and the Company will use commercially reasonable best efforts in assisting the Investor in
performing its obligations under this Section 6(a), including, if requested by the
Investor, entering into a compliance agreement with the Investor designed to reduce the likelihood
of transactions with Affiliates of the Investor that would be prohibited pursuant to the terms of
any Rebuttal of Control Agreement entered into by the Investor and the OTS. The Company and the
Investor shall, promptly upon receipt of each Regulatory Approval applicable to it, provide written
notice to the other party of such receipt.
(b) Cooperation. The Investor will, and will cause its Affiliates to, cooperate with
the Company and use commercially reasonable efforts to take, or cause to be taken, all commercially
reasonable actions in order to facilitate the successful consummation of the transactions
contemplated hereby. The Company will, and will cause its Affiliates to (i) cooperate with the
Investor and use commercially reasonable efforts to take, or cause to be taken, all commercially
reasonable actions in order to facilitate the successful consummation of the transactions
contemplated hereby, and (ii) assist the Investor in any appearances and proceedings before and
consents, approvals, or waivers sought from any Governmental Entity with respect to the
consummation of the transactions contemplated hereby.
(c) Legends. (i) The Investor agrees that all certificates or other instruments
representing the Preferred Shares and the Conversion Shares subject to this Agreement will bear a
legend substantially to the following effect:
(A) THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND
MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A
REGISTRATION STATEMENT RELATING THERETO IN EFFECT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
OR SUCH LAWS.
- 16 -
(B) THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A VOTING
AGREEMENT AND TRANSFER AND OTHER RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT,
DATED AS OF JUNE 7, 2008, COPIES OF WHICH ARE ON FILE WITH THE ISSUER.
(ii) Upon request of the Investor, upon (x) receipt by the Company of an opinion of
counsel reasonably satisfactory to the Company to the effect that such legend is no longer
required under the Securities Act and applicable state laws, or (y) the Investor providing
the Company with reasonable assurance that the securities can be sold, assigned or
transferred pursuant to Rule 144, the Company will promptly cause clause (A) of the
legend to be removed from any certificate for any Preferred Shares or Conversion Shares to
be transferred by the Investor in accordance with the terms of this Agreement and clause
(B) of the legend will be removed upon the expiration of such transfer and other
restrictions set forth in this Agreement. The Investor acknowledges that neither the
Preferred Shares nor the Conversion Shares have been registered under the Securities Act or
under any state securities laws and the Investor agrees that it will not sell or otherwise
dispose of any of the Preferred Shares or Conversion Shares, except in compliance with the
registration requirements or exemption provisions of the Securities Act and any other
applicable securities laws.
(d) No Other Preferred. Until such time as all of the Preferred Shares have been
converted into shares of Common Stock, the Company shall not, without the prior written consent of
the Holders owning at least 51% of the then outstanding shares of Convertible Preferred Stock,
create, authorize or designate any preferred stock of any class or series having any designations,
preferences, relative, participating, optional or other rights ranking senior to or on parity with
those of the Convertible Preferred Stock.
(e) Contribution of Proceeds. Upon the conversion of the Preferred Shares into
Conversion Shares, the Company promptly will contribute the net proceeds (taking into account all
fees and payment of any dividend on the Preferred Shares) to the Bank.
Section 7. Conditions to Closing.
(a) The obligations of the Investor to consummate the purchase of the Preferred Shares at the
Closing are subject to the fulfillment, prior to or on the Closing Date, of the following
conditions:
(i) The representations and warranties of the Company in Section 3 shall be
true and correct (without giving effect to any qualification as to materiality or Material
Adverse Effect set forth therein) as of the date hereof and at and as of the Closing Date,
except for representations and warranties made as of a specific date, which will be made as
of such specified date, except, in each case, where the failure of such representations or
warranties to be true and correct (without giving effect to any qualification as to
materiality or Material Adverse Effect set forth therein) would not result in a Material
Adverse Change;
- 17 -
(ii) The Company shall have complied in all material respects with its obligations
hereunder that are required to be complied with at or prior to the Closing;
(iii) No judgment, injunction, decree or other legal restraint shall prohibit, or have
the effect of rendering unachievable, the consummation of the transactions contemplated by
this Agreement;
(iv) The Company will have received from Fulbright & Xxxxxxxx L.L.P. an opinion that
with respect to the Spin-Off, the issuance of the Convertible Preferred Shares, as provided
herein, will not result in Distribution Taxes (as such term is defined in that certain Tax
Matters Agreement by and among Temple-Inland, Forestar Real Estate Group Inc., and the
Company, dated as of December 11, 2007) imposed under the Code, the Texas Franchise Tax or
the California Taxes, and a copy of such opinion will be furnished to the Investor prior to
the Closing Date;
(v) The Investor will have received from Fulbright & Xxxxxxxx L.L.P. an opinion, in
reasonable form and containing reasonable qualifications and limitations, with respect to
the matters set forth in Sections 3(a) (organization and authority), Section
3(b) (authorization and enforceability) and Section 3(c) (capitalization, but
not with respect to the last sentence thereof);
(vi) Subsequent to the execution of this Agreement, there shall not have occurred a
Material Adverse Change;
(vii) The Company shall have obtained all material Regulatory Approvals applicable to
it (other than the Stockholder Approval) and the Investor shall have obtained all material
Regulatory Approvals applicable to it (other than the Stockholder Approval), which
Regulatory Approvals shall be reasonable in form and substance;
(viii) The closing and funding of the issuance of units comprised of a fixed ratio of
subordinated notes issued by the Bank and shares of Convertible Preferred Stock for an
aggregate cash purchase price of no less than $275,000,000 pursuant to the Purchase
Agreement, dated the date hereof, among the Bank and the other purchasers named therein will
occur prior to, or simultaneously with, the Closing; and
(ix) The closing and funding under all Investment Agreements will occur simultaneously
with the Closing and the sale of Convertible Preferred Stock thereunder and under this
Agreement will have an aggregate purchase price of no less than $286,621,387.80.
(b) The obligations of the Company to consummate the sale of the Preferred Shares at the
Closing are subject to the fulfillment, prior to or on the Closing Date, of the following
conditions:
(i) The representations and warranties of the Investor in Section 4 shall be
true and correct (without giving effect to any qualification as to materiality set forth
therein) as of the date hereof and at and as of the Closing Date, except for representations
and warranties made as of a specific date, which will be made as of such specified date,
- 18 -
except, in each case, where the failure of such representations or warranties to be
true and correct (without giving effect to any qualification as to materiality set forth
therein) would not result in a Material Adverse Change;
(ii) The Investor shall have complied in all material respects with its obligations
hereunder that are required to be complied with at or prior to the Closing; and
(iii) No judgment, injunction, decree or other legal restraint shall prohibit, or have
the effect of rendering unachievable, the consummation of the transactions contemplated by
this Agreement; and
(iv) The Company shall have obtained all material Regulatory Approvals applicable to it
(other than the Stockholder Approval) and the Investor shall have obtained all material
Regulatory Approvals applicable to it (other than the Stockholder Approval), which
Regulatory Approvals shall be reasonable in form and substance.
Section 8. Termination.
(a) This Agreement may be terminated at any time prior to the Closing Date by the Company, by
written notice to the Investor if there is a material breach of this Agreement by the Investor that
is not cured within five days after written notice by the Company of such material breach. This
Agreement may be terminated at any time by the Investor if there is a breach of this Agreement by
the Company that constitutes a Material Adverse Change that is not cured within five days after
written notice by the Investor of such breach.
(b) This Agreement may be terminated by the Company or the Investor by written notice thereof
to the other party if the Closing has not occurred within six months after the date of this
Agreement, which six month period may be extended by the Investor, at its option, for an additional
two months.
Section 9. Additional Covenants.
(a) Standstill. The Investor and the Company agree that the one year period specified
in the first sentence of Section 6 (Standstill) (the “Standstill”) of that certain Confidentiality
Agreement by and between the Company and the Investor will expire on December 31, 2008, and, the
Standstill will not apply to purchases by the Investor of Common Stock and any other securities or
instruments convertible into or exchangeable for Common Stock to the extent such purchases result
in the Investor having beneficial ownership (as determined in accordance with Rule 13d-3 under the
Exchange Act) of less than 19.9% of the issued and outstanding shares of Common Stock (assuming for
this purpose, full conversion of the Convertible Preferred Stock). In addition, the Standstill
will automatically become inoperative and of no force or effect if (i) any Person or “group”
(within the meaning of Section 13(d)(3) of the Exchange Act) shall have acquired or entered into a
definitive agreement to acquire more than 20% of the equity securities of the Company or assets of
the Company or its subsidiaries representing more than 20% of the consolidated earning power of the
Company and its subsidiaries (an “Issuer Sale Transaction”), (ii) a third party makes a tender
offer for more than 20% of the equity securities of the Company (a “Third-Party Tender Offer”) and
the Company files a Schedule 14D-9 with respect to such
- 19 -
offer that does not recommend that the Company’s stockholders reject such offer, (iii) the
Company effects a transaction, or series of related transactions, involving the issuance of
securities representing 15% or more (assuming the conversion of all convertible securities issued
in such transaction or series of related transactions) of the pro-forma outstanding equity
securities of the Company, unless the Investor is offered the opportunity to participate in, or
does in fact participate in, such transaction and, such opportunity if accepted by the Investor
would result in the Investor beneficially owning equity securities of the Company representing at
least the same percentage of the outstanding equity securities of the Company that it beneficially
owned immediately prior to such transaction, (iv) any Person or “group” (within the meaning of
Section 13(d)(3) of the Exchange Act) commences a solicitation of proxies or written consents to
elect to the Board of Directors any individuals or slate of individuals in a contest with any
individuals or slate of individuals whose nomination has been approved by the Nominating and
Corporate Governance Committee (or its equivalent) of the Board of Directors, or (v) termination of
the Rights Agreement or an increase in the triggering threshold thereunder to a percentage in
excess of 20%, in which case the percentage limitation in the first sentence of this Section
9(a) will be increased to 1/10% less than such revised triggering threshold. Notwithstanding
the foregoing or any other provision of this Agreement, the Investor will not be required to (x)
vote any shares or other voting equity securities of the Company that it beneficially owns in favor
of, or provide a consent or proxy approving, any Issuer Sale Transaction, or (y) tender any equity
securities of the Company in response to a Third-Party Tender Offer.
(b) Reservation for Issuance. The Company will at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the purpose of effecting the
conversion of the Preferred Shares, the full number of Conversion Shares. Additionally, the
Company will at all times prior to the Closing reserve and keep available, out of its authorized
but unissued shares of preferred stock, solely for the purpose of issuing the Preferred Shares at
the Closing, a sufficient number of shares of preferred stock to allow the issuance of all shares
of Preferred Stock necessary to be issued to the Holders.
(c) Exchange Listing. The Company will promptly use its reasonable best efforts to
cause the Conversion Shares to be approved for listing on the NYSE, subject to official notice of
issuance and upon receipt of the Stockholder Approval.
(d) Stockholder Meeting. The Company will call a special meeting of its stockholders,
as promptly as practicable following the Closing Date to approve the conversion of the Preferred
Shares into Common Stock for purposes of complying with the requirements of the NYSE, and use
commercially reasonable efforts to take any other action necessary to effect such conversion. The
Board of Directors will recommend to the Company’s stockholders that such stockholders vote in
favor of the proposals required by this Section 9(d). In connection with such meeting, the
Company will promptly prepare and file with the Commission a preliminary proxy statement, will use
its reasonable best efforts to respond to any comments of the Commission or its staff and to cause
a definitive proxy statement related to such stockholders’ meeting to be mailed to the Company’s
stockholders not more than five Business Days after clearance thereof by the Commission staff, and
will use its reasonable best efforts to solicit proxies for such stockholder approval. In the
event that the approvals necessary to permit the Preferred Shares to be converted into Common Stock
are not obtained at such special
- 20 -
stockholders meeting, the Company will include a proposal to approve (and the Board of
Directors, to the extent it is consistent with its fiduciary duties, will recommend approval of)
such issuance at a meeting of its stockholders no less than once in each subsequent six-month
period beginning on January 1, 2009 and ending on the earlier of (i) the date such approval is
obtained or made, or (ii) May 31, 2012, and if Stockholder Approval has not been obtained by May
31, 2012, the Company will cause all Preferred Shares to be listed on each securities exchange on
which similar securities issued by the Company are then listed or, if no similar securities issued
by the Company are then listed on any securities exchange, use its reasonable best efforts to cause
all such Preferred Shares to be listed on the NYSE or the NASDAQ stock market, as determined by the
Company.
(e) Voting Agreement. As a material inducement to the Company’s entering into this
Agreement and issuing and selling the Preferred Shares to the Investor, the Investor irrevocably
covenants and agrees to vote and to execute written consents, and to cause its Affiliates to vote
and execute written consents, at any meeting of the stockholders of the Company or in any action
taken by the stockholders without a meeting, with respect to all Voting Securities over which the
Investor or any of its Affiliates has voting power (i) in favor of the Stockholder Approval, and
(ii) against any action, agreement or proposal that would result in the Stockholder Approval not
being obtained acting with the intent of hindering, delaying, frustrating, impairing or making
futile or less likely the Stockholder Approval. Upon the execution of this Agreement, the Investor
hereby revokes any and all other proxies and voting agreements given by the Investor with respect
to its Voting Securities and the Investor will cause its Affiliates to revoke any and all other
proxies and voting agreements given by such Affiliate with respect to its Voting Securities. As of
the date hereof, the Investor has voting power with respect to all shares of Common Stock set forth
opposite the Investor’s name on Schedule 1. The agreements and restrictions set forth in
this Section 9(e) will be binding on any transferee of the Preferred Shares, and the
Investor agrees that it will, as a condition to the transfer of the Preferred Shares require that
any transferee of such Preferred Shares take such Preferred Shares subject to the terms of this
Section 9(e). This agreement to vote is irrevocable and coupled with an interest and will
expire upon termination of this Agreement, upon the receipt of the Stockholder Approval, or the
expiration of any period beyond which agreements to vote are not enforceable under applicable law,
whichever comes first.
(f) Reports Under the Exchange Act. With a view to making available to the Investor
the benefits of Rule 144, the Company agrees to (i) make and keep public information available, as
those terms are understood and defined in Rule 144, (ii) file with the Commission in a timely
manner all reports and other documents required of the Company under the Securities Act and the
Exchange Act so long as the Company remains subject to such requirements and the filing of such
reports and other documents is required for the applicable provisions of Rule 144; and
(iii) furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon
request (A) a written statement by the Company, if true, that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (B) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents so filed by the
Company, and (C) such other information as may be reasonably requested to permit the Investors to
sell such securities pursuant to Rule 144 without registration.
- 21 -
(g) Investment Agreements. Without the prior consent of the Investor, which consent
will not be unreasonably delayed, the Company will not amend, modify or supplement any Investment
Agreement.
(h) Disclosure of Material Non-Public Information. The next Business Day following
the execution and delivery of this Agreement, the Company agrees to file a Current Report on Form
8-K regarding the transactions contemplated by this Agreement and the Investment Agreements. The
Company hereby represents and warrants to the Investor that, upon the filing of such Form 8-K, the
Company will have disclosed in the Company SEC Documents all material non-public information that
the Company had previously provided to the Investor.
Section 10. Registration Rights.
(a) Required Registration. Any Holder or Holders owning at least 15% of the
Registrable Securities then outstanding, will have the right, by written notice (the “Registration
Notice”) to the Company, to require the Company to use reasonable efforts to register (the
“Required Registration”) under the Securities Act Registrable Securities with an anticipated
aggregate offering price, net of underwriting discounts and commissions, of at least $50,000,000;
provided that the Company will be obligated to register such Registrable Securities pursuant to
this Section 10(a) on only two occasions, as long as each Holder will have been given
notice of and the opportunity to participate in each such registration. The Company will be
entitled to sell shares of Voting Securities (to be newly issued or from shares held in treasury)
pursuant to such Required Registration and any Holder will be entitled to sell any shares of Voting
Securities held by such Holder which are not Registrable Securities (the “Additional Securities”);
provided, that if the managing underwriter will advise the Company in writing that, in its opinion,
the number of securities requested and otherwise proposed to be included in such offering exceeds
the number that can be sold without adversely affecting the marketability of the offering, the
Company will include in such registration to the extent of the number which the Company is so
advised can be sold in such offering, first, the Registrable Securities the requesting Holders
propose to sell in such registration; second, the Additional Securities that any Holders propose to
sell in such registration; and third the Registrable Securities of the Company that the Company
proposes to include in such registration, which, in the opinion of such managing underwriter, can
be sold without having the adverse effect referred to above. Upon receipt of such Registration
Notice, the Company will, as promptly as practicable, prepare and file with the SEC and use its
reasonable efforts to cause to become effective promptly, a registration statement under the
Securities Act registering the Registrable Securities specified in the Registration Notice;
provided, however, that the Company will be entitled to defer any such filing (i) which would
result in an effective registration statement within six months of an underwritten offering by the
Company of its equity securities for its own account or (ii) for a period of up to 180 days upon a
determination by the Board of Directors that the filing of a registration statement at such time
would be detrimental to the Company due to the pendency of a material acquisition or financing or
for other reasonable cause.
(b) Form S-3 Registration. If the Company receives from the Investor a written
request that the Company effect a registration on Form S-3, the Company will (i) promptly give
written notice of the proposed registration to all other Holders; (ii) as soon as practicable, file
such registration for the sale and distribution of all or such portion of the Investor’s
Registrable
- 22 -
Securities as are specified in such request, together with all or such portion of the
Registrable Securities of any other Holders joining in such request as are specified in a written
request given within 15 days after receipt of such written notice from the Company; provided,
however, that the Company will not be obligated to effect any such registration pursuant to this
Section 10(b): (A) if Form S-3 is not then available for such offering by the Holders;
(B) if the Holders, together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public (net of any underwriters’ discounts or commissions) of
less than $5,000,000; (C) if the Board of Directors determines that the filing of a registration
statement at such time would be detrimental to the Company due to the pendency of a material
acquisition or financing or for other reasonable cause, in which event the Company will have the
right to defer the filing of the Form S-3 for a period of not more than 180 days after receipt of
the request of the Holders under this Section 10(b); provided, however, that the Company
will not utilize this deferral right more than once in any 12 month period and provided further
that the Company will not register any securities for the account of itself or any other equity
holder during such 180 day period (other than a registration relating solely to the sale of
securities to bona fide employees of the Company pursuant to an equity incentive plan, equity
purchase or similar plan); (D) if the Company has, within the 12 month period preceding the date of
such request, already effected two registrations on Form S-3 for the Holders pursuant to this
Section 10(b); or (E) in any particular jurisdiction in which the Company would be required
to qualify to do business or to execute a general consent to service of process in effecting such
registration, qualification or compliance. Subject to the foregoing, the Company will file a
registration statement on Form S-3 covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the requests of the Holders. If the Investor
intends to distribute the Registrable Securities covered by its request for registration by means
of an underwriting, it will so advise the Company as part of their request made pursuant to this
Section 2.10(b) and the Company will include such information in the written notice
referred to in clause (i) above.
(c) Incidental Registration Rights. In addition to the provisions contained in
Sections 10(a) and 10(b), if the Company will at any time seek to register under
the Securities Act for sale to the public in an underwritten offering any of its equity securities
(other than a registration on Form S-4 or Form S-8, or any successor or other forms promulgated for
similar purposes) and if the form of registration statement proposed to be used may be used for the
registration of Registrable Securities, on each such occasion it will promptly furnish the Investor
with prior written notice thereof. At the written request of the Investor, given (i) at a time
when the Investor beneficially owns 5% or more of the outstanding Voting Securities and (ii) within
five days after the receipt of such notice, to register any of the Investor’s Registrable
Securities, the Company will cause such Registrable Securities, for which registration will have
been requested, to be included in such registration statement in an amount so as to permit the sale
or other disposition by the Investor as part of such underwritten public offering of such
Registrable Securities as are registered, provided, that if the managing underwriter will advise
the Company in writing that, in its opinion, the number of securities requested and otherwise
proposed to be included in such offering exceeds the number that can be sold without adversely
affecting the marketability of the offering, the Company will include in such registration to the
extent of the number which the Company is so advised can be sold in such offering, first, the
securities the Company proposes to sell in such registration and second, the Registrable Securities
of the Investor that the Investor has requested to be included in such registration, which, in the
opinion
- 23 -
of such managing underwriter, can be sold without having the adverse effect referred to above.
If a Required Registration is an underwritten offering and the managing underwriters advise the
Company in writing that in their opinion the number of Registrable Securities and, if permitted
hereunder, other securities requested to be included in such offering exceeds the number of
Registrable Securities and other securities, if any, which can be sold in an orderly manner in such
offering within a price range acceptable to the holders of Registrable Securities initially
requesting such Required Registration, without adversely affecting the marketability of the
offering, the Company will include in such registration prior to the inclusion of any securities
that are not Registrable Securities, the number of Registrable Securities requested to be included
by the holders of Registrable Securities pro rata among the respective holders thereof on the basis
of the number of Registrable Securities owned by each such holder.
(d) Expenses. All expenses incurred by the Company in complying with this Section
10, including all registration and filing fees, printing expenses, fees and disbursements of
counsel (including one counsel for all of the Holders) and independent public accountants for the
Company, fees of the Financial Industry Regulatory Authority, listing or quotation fees, and fees
of transfer agents and registrars, will be borne in full by the Company. The Investor will be
responsible for all underwriting commissions, transfer taxes, discounts and fees with respect to
Registrable Securities and the fees and expenses of accountants for the Investor and any counsel
hired by the Investor in addition to the one counsel of the Holders paid for by the Company.
(e) Listing. The Company will cause all Registrable Securities registered as provided
in this Section 10 to be listed on each securities exchange on which similar securities
issued by the Company are then listed or, if no similar securities issued by the Company are then
listed on any securities exchange, use its reasonable best efforts to cause all such Registrable
Securities to be listed on the NYSE or the NASDAQ stock market, as determined by the Company.
(f) Indemnification. The Company will enter into customary and reasonable
indemnification and contribution agreements with any underwriter and the Investor in the event of
an underwritten offering.
Section 11. Survival. The representations and warranties of the Company contained in this
Agreement or in any certificate delivered hereunder will terminate on and as of the Closing, except
for the representations and warranties set forth in Section 3(a) (organization and
authority) and Section 3(b) (authorization), which will survive indefinitely.
Section 12. Notices. All notices, communications and deliveries required or permitted by
this Agreement will be made in writing signed by the party making the same, will specify the
Section of this Agreement pursuant to which it is given or being made and will be deemed given or
made (i) on the date delivered if delivered by telecopy or in person, (ii) on the third Business
Day after it is mailed if mailed by registered or certified mail (return receipt requested) (with
postage and other fees prepaid) or (iii) on the day after it is delivered, prepaid, to an overnight
express delivery service that confirms to the sender delivery on such day, as follows:
- 24 -
(a) if to the Company, at:
Guaranty Financial Group Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with a copy (which will not constitute notice) to:
Fulbright & Xxxxxxxx L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
(b) if to the Investor, as set forth on Schedule 1.
or to such other representative or at such other address of a party as such party hereto may
furnish to the other parties in writing in accordance with this Section 12. If notice is
given pursuant to this Section 12 of any assignment to a permitted successor or assign of a
party hereto, the notice will be given as set forth above to such successor or permitted assign of
such party.
Section 13. Assignment. This Agreement will be binding upon, and will inure to the benefit
of and be enforceable by, the parties hereto and their respective successors and assigns.
Section 14. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto in respect of the subject matter contained herein. This
Agreement supersedes all prior written and prior or contemporaneous oral agreements and
understandings between the parties with respect to the subject matter of this Agreement.
Section 15. Governing Law; Jurisdiction. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES
OF CONFLICTS OF LAW THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. ANY
LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS
AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR NEW YORK
COUNTY, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK. BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
Section 16. Severability. If any provision of this Agreement or the application thereof to
any Person or circumstances is determined by a court of competent jurisdiction to be invalid, void
or
- 25 -
unenforceable, the remaining provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or unenforceable, will remain
in full force and effect and will in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination, the parties will negotiate in good faith in
an effort to agree upon a suitable and equitable substitute provision to effect the original intent
of the parties.
Section 17. Expenses. Except as set forth herein, each of the Company and the Investor
will pay its respective fees and expenses related to the transactions contemplated by this
Agreement.
Section 18. Miscellaneous.
(a) Construction.
(i) the word “or” will not be exclusive;
(ii) inclusion of items in a list will not be deemed to exclude other terms of similar
import;
(iii) all parties will be considered to have drafted this Agreement together, with the
benefit of counsel, and no provision will be strictly construed against any Person by reason
of having drafted such provision;
(iv) the word “include” and its correlatives means to include without limitation;
(v) terms that imply gender will include all genders;
(vi) defined terms will have their meanings in the plural and singular case;
(vii) references to Sections, Articles, Annexes and Exhibits are to the Sections,
Articles, Annexes and Exhibits to this Agreement;
(viii) financial terms that are not otherwise defined have the meanings ascribed to
them under United States generally accepted accounting principles as of the date of this
Agreement;
(ix) the use of “will” as an auxiliary will not be deemed to be a mere prediction of
future occurrences; and
(x) the headings in this Agreement are for purposes of reference only and will not
limit or otherwise affect the meaning of this Agreement.
(b) Counterparts. This Agreement may be executed in any number of counterparts, each
of which will be deemed to be an original, but all of which, when taken together, will constitute
one and the same instrument.
- 26 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered
as of the date first above written.
| GUARANTY FINANCIAL GROUP INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Xxxxxx X. Xxxxx, | ||||
| Senior Executive Vice President and Chief Financial Officer |
||||
Signature Page to Investment Agreement
| INVESTOR HIGH RIVER LIMITED PARTNERSHIP |
||||
| By: Xxxxxx Investments LLC, | ||||
| its General Partner | ||||
| By: Barberry Corp., its sole member | ||||
| By: | /s/ Xxxxx Xxxxx | |||
| Name: | Xxxxx Xxxxx | |||
| Title: | Treasurer | |||
Signature Page to Investment Agreement
| INVESTOR ICAHN PARTNERS LP |
||||
| By: | /s/ Xxxxx Xxxxxxx | |||
| Name: | Xxxxx Xxxxxxx | |||
| Title: | Authorized Signatory | |||
Signature Page to Investment Agreement
| INVESTOR ICAHN PARTNERS MASTER FUND LP |
||||
| By: | /s/ Xxxxx Xxxxxxx | |||
| Name: | Xxxxx Xxxxxxx | |||
| Title: | Authorized Signatory | |||
Signature Page to Investment Agreement
| INVESTOR ICAHN PARTNERS MASTER FUND II LP |
||||
| By: | /s/ Xxxxx Xxxxxxx | |||
| Name: | Xxxxx Xxxxxxx | |||
| Title: | Authorized Signatory | |||
Signature Page to Investment Agreement
| INVESTOR ICAHN PARTNERS MASTER FUND III LP |
||||
| By: | /s/ Xxxxx Xxxxxxx | |||
| Name: | Xxxxx Xxxxxxx | |||
| Title: | Authorized Signatory | |||
Signature Page to Investment Agreement
Schedule 1
(See attached)
Exhibit A
Certificate of Designations
(See attached)
