SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement
(this “Agreement”) is dated as of January 27, 2014, by and among
Southern First Bancshares, Inc., a South Carolina corporation (the “Company”),
and each purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).
RECITALS
A. The Company and each Purchaser are
executing and delivering this Agreement in reliance upon the exemption from
securities registration afforded by Section 4(2) of the Securities Act of 1933
(the “Securities Act”), and Rule 506 of Regulation D (“Regulation D”)
as promulgated by the United States Securities and Exchange Commission (the “Commission”)
under the Securities Act.
B. Each Purchaser, severally and not
jointly, wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, that aggregate number of shares of the
Company’s common stock, par value $0.01 per share (the “Common Stock”),
set forth below such Purchaser’s name on the signature page of this Agreement
(which aggregate amount for all Purchasers together shall be 475,000 shares of
Common Stock and shall be collectively referred to herein as the “Common
Shares”). The Board of Governors of the Federal Reserve System (the “FRB”)
has not objected to any Purchaser’s entry into this Agreement or the
consummation of the transactions contemplated thereby, notwithstanding any
conditions applicable to Purchaser set forth in any passivity and
anti-association letter provided to the FRB.
C. The Company has engaged Sandler
O’Neill + Partners, L.P. as its exclusive financial advisor (the “Financial
Advisor”) for the offering of the Common Shares and the TARP Preferred
Redemption (as defined below).
D. Contemporaneously with the
execution and delivery of this Agreement, the parties hereto are executing and
delivering a Registration Rights Agreement, substantially in the form attached
hereto as Exhibit A (the “Registration Rights Agreement”),
pursuant to which, among other things, the Company will agree to provide
certain registration rights with respect to the Common Shares under the
Securities Act and the rules and regulations promulgated thereunder and
applicable state securities laws.
NOW, THEREFORE, IN CONSIDERATION of
the mutual covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Company and the Purchasers hereby agree as follows:
ARTICLE 1:
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DEFINITIONS
1.1
Definitions. In addition to the terms defined
elsewhere in this Agreement, for all purposes of this Agreement, the following
terms shall have the meanings indicated in this Section 1.1:
“Affiliate” means, with respect
to any Person, any other Person that, directly or indirectly through one or
more intermediaries, Controls, is controlled by or is under common control with
such Person, as such terms are used in and construed under Rule 405 under the
Securities Act.
“Articles of Incorporation”
means the Articles of Incorporation of the Company and all amendments thereto,
as the same may be amended from time to time.
“Bank” means Southern First
Bank, the Company’s Subsidiary insured depository institution.
“Bylaws” means the Bylaws of
the Company and all amendments thereto, as the same may be amended from time to
time.
“Business Day” means a day,
other than a Saturday or Sunday, on which banks in South Carolina are open for
the general transaction of business.
“Closing” means the closing of
the purchase and sale of the Common Shares pursuant to this Agreement.
“Closing Date” means the date
of this Agreement or such other date as the parties may agree.
“Code” means the Internal
Revenue Code of 1986, including the regulations and published interpretations
thereunder.
“Common Stock” has the meaning
set forth in the Recitals, and also includes any securities into which the
Common Stock may hereafter be reclassified or changed.
“Company Counsel” means Nelson Mullins
Riley & Scarborough LLP.
“Company’s Knowledge” means
with respect to any statement made to the knowledge of the Company, that the
statement is based upon the actual knowledge of the executive officers of the
Company having responsibility for the matter or matters that are the subject of
the statement after reasonable investigation.
“Control” (including the terms
“controlling”, “controlled by” or “under common control with”) means the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
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“DTC” means The Depository
Trust Company.
“ERISA” means the Employee
Retirement Income Security Act of 1974, including the regulations and published
interpretations thereunder.
“ERISA Affiliate”, as applied
to the Company, means any Person under common control with the Company, who
together with the Company, is treated as a single employer within the meaning
of Section 414(b), (c), (m) or (o) of the Code.
“Exchange Act” means the
Securities Exchange Act of 1934 or any successor statute, and the rules and
regulations promulgated thereunder.
“FDIC” means the Federal
Deposit Insurance Corporation.
“GAAP” means U.S. generally
accepted accounting principles, as applied by the Company.
“Lien” means any lien, charge,
claim, encumbrance, security interest, right of first refusal, preemptive right
or other restrictions of any kind.
“Material Adverse Effect” means
any result, occurrence, fact, change, event or effect that has, or could
reasonably be expected to have, (i) a material and adverse effect on the
legality, validity or enforceability of this Agreement or the Registration
Rights Agreement, (ii) a material and adverse effect on the results of
operations, assets, properties, business, condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) any adverse
impairment to the Company’s ability to perform in any material respect on a
timely basis its obligations under this Agreement or the Registration Rights
Agreement; provided, that in determining whether a Material Adverse Effect has
occurred, there shall be excluded any effect to the extent resulting from the
following: (A) changes, after the date hereof, in U.S. GAAP or regulatory
accounting principles generally applicable to banks, savings associations or
their holding companies, (B) changes, after the date hereof, in applicable
laws, rules and regulations or interpretations thereof by any court,
administrative agency or other governmental authority, whether federal, state,
local or foreign, or any applicable industry self-regulatory organization, (C)
actions or omissions of the Company expressly required by the terms of this
Agreement or taken with the prior written consent of an affected Purchaser, (D)
changes, after the date hereof, in general economic, monetary or financial
conditions, (E) changes in global or national political conditions, including
the outbreak or escalation of war or acts of terrorism and (F) the public
disclosure of this Agreement or the transactions contemplated hereby; except,
with respect to clauses (A), (B), (D) and (E), to the extent that the effects
of such changes have a disproportionate effect on the Company and the
Subsidiaries, taken as a whole, relative to other similarly situated banks,
savings associations or their holding companies generally.
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“Material Contract” means any
contract of the Company that was filed, or should have been filed, as an
exhibit to the SEC Reports pursuant to Item 601 of Regulation S-K.
“Multiemployer Plan” means a
“multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the
Company or any ERISA Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions within the
preceding six years.
“OCC” means the Office of the
Comptroller of the Currency.
“Pension Plan” means any
employee pension benefit plan within the meaning of Section 3(2) of ERISA,
other than a Multiemployer Plan, which is subject to the provisions of Title IV
of ERISA or Section 412 of the Code or Section 302 of ERISA and which (i) is
maintained for employees of the Company or any of its ERISA Affiliates or (ii)
has at any time during the last six years been maintained for the employees of
the Company or any current or former ERISA Affiliate.
“Person” means an individual,
corporation, partnership, limited liability company, trust, business trust,
association, joint stock company, joint venture, sole proprietorship,
unincorporated organization or governmental authority.
“Principal Trading Market”
means the Trading Market on which the Common Stock is primarily listed on and
quoted for trading, which, as of the date of this Agreement and the Closing
Date, is the NASDAQ Global Market.
“Proceeding” means an action,
claim, suit or proceeding (including, without limitation, an investigation or
partial proceeding, such as a deposition), whether commenced or threatened.
“Purchase Price” means $13.00
per Common Share.
“Registration Statement” means
a registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Purchasers of the Registrable
Securities (as defined in the Registration Rights Agreement).
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“Required Approvals” means,
collectively: (i) the filing with the Commission of one or more Registration
Statements in accordance with the requirements of the Registration Rights
Agreement, (ii) filings required by applicable state securities laws, (iii) the
filing of a Notice of Exempt Offering of Securities on Form D with the
Commission under Regulation D of the Securities Act, (iv) the filing of any
requisite notices and/or application(s) to the Principal Trading Market for the
listing of the Common Shares for trading or quotation, as the case may be,
thereon in the time and manner required thereby, (v) the filings required in
accordance with Section 4.6 of this Agreement and (vi) those that have been made
or obtained prior to the date of this Agreement.
“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule.
“SEC Reports” means all
reports, schedules, forms, statements and other documents (including the
exhibits thereto and documents incorporated by reference therein) required to
be filed by the Company under the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, since January 1, 2011.
“Series T Preferred Stock”
means the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series T,
having a liquidation preference of $1,000 per share.
“South Carolina Courts” means
the courts of the State of South Carolina and the United States District Court
located in the city of Greenville, South Carolina.
“State Board” means the South
Carolina State Board of Financial Institutions.
“Subscription Amount” means
with respect to each Purchaser, the aggregate amount to be paid for the Common
Shares purchased hereunder as indicated on such Purchaser’s signature page to
this Agreement next to the heading “Aggregate Purchase Price (Subscription
Amount)”.
“Subsidiary” means any entity
in which the Company, directly or indirectly, owns sufficient capital stock or
holds a sufficient equity or similar interest such that it is consolidated with
the Company in the financial statements of the Company.
“TARP Preferred Redemption”
means the redemption by the Company of 4,057 shares of the Series T Preferred
Stock held by EJF Debt Opportunities Master Fund, L.P. at a redemption price of
$1,000 per share.
“Trading Day” means (i) a day
on which the Common Stock is listed or quoted and traded on its Principal
Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock
is not listed on a Trading Market (other than the OTC Bulletin Board), a day on
which the Common Stock is traded in the over-the-counter market, as reported by
the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any
Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported in the “pink sheets” by OTC Markets Group,
Inc. (or any similar organization or agency succeeding to its functions of
reporting prices); provided , that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
shall mean a Business Day.
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“Trading Market” means
whichever of the NASDAQ Global Select Market, the NASDAQ Global Market, the
NASDAQ Capital Market or the OTC Bulletin Board on which the Common Stock is
listed or quoted for trading on the date in question.
“Transaction Documents” means
this Agreement, the schedules and exhibits attached hereto, the Registration
Rights Agreement and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
“Transfer Agent” means
Registrar and Transfer Company, or any successor transfer agent for the
Company.
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ARTICLE 2:
PURCHASE AND SALE
2.1
Purchase of
Common Shares; Closing.
(a)
Subject to the
terms and conditions set forth in this Agreement, at the Closing the Company
shall issue and sell to each Purchaser, and each Purchaser shall, severally and
not jointly, purchase from the Company, the number of Common Shares set forth
below such Purchaser’s name on the signature page of this Agreement at a per
Common Share price equal to the Purchase Price. Concurrent with the Company’s
receipt of the Subscription Amount from each Purchaser, the Company shall
instruct the Transfer Agent to issue, in book-entry form, the number of Common
Shares specified on such Purchaser’s signature page hereto (or, if the Company
and such Purchaser shall have agreed, as indicated on such Purchaser’s signature
page hereto, that such Purchaser will receive Common Shares in certificated
form, then the Company shall instead instruct the Transfer Agent to issue such
specified Common Shares in certificated form (the “Stock Certificates”))
registered in the name of such Purchaser, or as otherwise set forth on the
Stock Certificate Questionnaire included as Exhibit B-2 hereto.
(b)
The Closing of the
purchase and sale of the Common Shares shall take place on the Closing Date at
the Greenville, South Carolina office of Nelson Mullins Riley & Scarborough
LLP or remotely by facsimile transmission or other electronic means or at such
location as the parties may mutually agree.
2.2
Closing
Deliveries.
(a)
On or prior to the
Closing, the Company shall issue, deliver or cause to be delivered to each
Purchaser the following (the “Company Deliverables”):
(i)
this Agreement,
duly executed by the Company;
(ii)
the Company shall
cause the Transfer Agent to issue, in book-entry form the number of Common
Shares specified on such Purchaser’s signature page hereto (or, if the Company
and such Purchaser shall have agreed, as indicated on such Purchaser’s
signature pages hereto, that such Purchaser will receive Stock Certificates for
their Common Shares, then the Company shall instead instruct the Transfer Agent
to issue such specified Stock Certificates registered in the name of such
Purchaser or as otherwise set forth on the Stock Certificate Questionnaire);
(iii)
a legal opinion of
Company Counsel, dated as of the Closing Date and in the form attached hereto
as Exhibit C, executed by such counsel and addressed to the Purchasers;
(iv)
the Registration
Rights Agreement, duly executed by the Company (which shall be delivered on the
date hereof); and
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(v)
a certificate of
the Secretary of the Company, in the form attached hereto as Exhibit D
(the “Secretary’s Certificate”), dated as of the Closing Date, (a)
certifying the resolutions adopted by the Board of Directors of the Company or
a duly authorized committee thereof approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the Common
Shares, (b) certifying the current versions of the Articles of Incorporation
and Bylaws, and (c) certifying as to the signatures and authority of persons
signing the Transaction Documents and related documents on behalf of the
Company.
(b)
Each Purchaser
shall deliver or cause to be delivered to the Company, on or prior to the
Closing Date, the following (the “Purchaser Deliverables”):
(i)
this Agreement,
duly executed by such Purchaser;
(ii)
the Registration
Rights Agreement, duly executed by such Purchaser;
(iii)
a fully completed
and duly executed Accredited Investor Questionnaire, reasonably satisfactory to
the Company, and the Stock Certificate Questionnaire in the forms attached hereto
as Exhibits B-1 and B-2, respectively; and
(iv)
its Subscription
Amount, in United States dollars and in immediately available funds, in the
amount indicated below such Purchaser’s name on the applicable signature page
hereto under the heading “Aggregate Purchase Price (Subscription Amount)” by
wire transfer to the Company in accordance with the Company’s written
instructions.
ARTICLE 3:
REPRESENTATIONS AND WARRANTIES
3.1
Representations
and Warranties of the Company.
The Company hereby represents and warrants to each of the Purchasers that:
(a)
Subsidiaries. The Company has no direct or
indirect Subsidiaries other than as set forth in Exhibit E. The Company
owns, directly or indirectly, all of the capital stock (except for any
preferred securities issued by Subsidiaries that are trusts) or comparable
equity interests of each Subsidiary free and clear of any and all Liens, and
all the issued and outstanding shares of capital stock or comparable equity
interest of each Subsidiary are validly issued and are fully paid, non-assessable
(to the extent such concept is applicable to an equity interest of a
Subsidiary) and free of preemptive and similar rights to subscribe for or
purchase securities.
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(b)
Organization
and Qualification.
The Company and each of its “Significant Subsidiaries” (as defined in
Rule 1-02 of Regulation S-X) is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own or lease and use its properties and assets
and to carry on its business as currently conducted. Neither the Company nor
any Significant Subsidiary is in violation of any of the provisions of its
respective articles or certificate of incorporation, bylaws or other
organizational or charter documents. The Company and each of its Subsidiaries
is duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case
may be, would not in the reasonable judgment of the Company be expected to have
a Material Adverse Effect. The Company is duly registered as a bank holding
company under the Bank Holding Company Act of 1956 (the “BHCA”). The
Company’s depository institution Subsidiary’s deposit accounts are insured up
to applicable limits by the FDIC. The Company has conducted its business in
compliance with all applicable federal, state and foreign laws, orders,
judgments, decrees, rules, regulations and applicable stock exchange
requirements, including all laws and regulations restricting activities of bank
holding companies and banking organizations, except for any noncompliance that,
individually or in the aggregate, has not had and would not be reasonably
expected to have a Material Adverse Effect.
(c)
Authorization;
Enforcement; Validity.
The Company has the requisite corporate power and authority to enter into and
to consummate the transactions contemplated by each of the Transaction
Documents to which it is a party and otherwise to carry out its obligations
hereunder and thereunder, including, without limitation, to issue the Common
Shares in accordance with the terms hereof. The Company’s execution and
delivery of each of the Transaction Documents to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby
(including, but not limited to, the sale and delivery of the Common Shares)
have been duly authorized by all necessary corporate action on the part of the
Company, and no further corporate action is required by the Company, its Board
of Directors or its shareholders in connection therewith other than in
connection with the Required Approvals. Each of the Transaction Documents to
which it is a party has been (or upon delivery will have been) duly executed by
the Company and is, or when delivered in accordance with the terms hereof, will
constitute the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except (i) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law. There are no shareholder
agreements, voting agreements, or other similar arrangements with respect to
the Company’s Common Stock to which the Company is a party or, to the Company’s
Knowledge, between or among any of the Company’s shareholders.
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(d)
No Conflicts. The execution, delivery and
performance by the Company of the Transaction Documents to which it is a party
and the consummation by the Company of the transactions contemplated hereby or
thereby (including, without limitation, the issuance of the Common Shares) do
not and will not (i) conflict with or violate any provisions of the Company’s
or any Subsidiary’s articles or certificate of incorporation, bylaws or
otherwise result in a violation of the organizational documents of the Company
or any Subsidiary, (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would result in a default) under,
result in the creation of any Lien upon any of the properties or assets of the
Company or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any Material
Contract, or (iii) subject to the Required Approvals, conflict with or result
in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company is subject (including federal and state securities laws and regulations
and the rules and regulations thereunder, assuming, without investigation, the
correctness of the representations and warranties made by the Purchasers
herein, of any self-regulatory organization to which the Company or its
securities are subject, including all applicable Trading Markets), or by which
any property or asset of the Company is bound or affected, except in the case
of clauses (ii) and (iii) such as would not have or reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
(e)
Filings,
Consents and Approvals.
Neither the Company nor any of its Subsidiaries is required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents
(including, without limitation, the issuance of the Common Shares), other than
the Required Approvals.
(f)
Issuance of the
Common Shares. The
issuance of the Common Shares has been duly authorized and the Common Shares,
when issued and paid for in accordance with the terms of the Transaction
Documents, will be duly and validly issued, fully paid and non-assessable and
free and clear of all Liens, other than restrictions on transfer provided for
in the Transaction Documents or imposed by applicable securities laws, and
shall not be subject to preemptive or similar rights. Assuming, without
investigation, the accuracy of the representations and warranties of the
Purchasers in this Agreement, the Common Shares will be issued in compliance
with all applicable federal and state securities laws and, in that regard, no
registration under the Securities Act is required for the offer and sale of the
Common Shares by the Company to the Purchasers pursuant to this Agreement.
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(g)
Capitalization. As of the date hereof, the
authorized capital stock of the Company consists of 10,000,000 shares of Common
Stock, par value $0.01 per share, and 10,000,000 shares of preferred stock,
$0.01 par value per share (the “Preferred Stock”). As of the date of
this Agreement, there are 4,319,750 shares of Common Stock issued and
outstanding and 15,299 shares of Preferred Stock issued and outstanding. Other
than awards outstanding under or pursuant to equity or incentive plans or
arrangements described in the SEC Reports, in respect of which an aggregate of
776,255 shares of Common Stock have been reserved for issuance pursuant to such
awards, no shares of Common Stock are reserved for issuance. No bonds,
debentures, notes or other indebtedness having the right to vote on any matters
on which the shareholders of the Company may vote are issued or outstanding.
Except as described above, there are no shares of Common Stock subject to
restricted stock awards covering shares of Common Stock or other rights (or
units) covering shares of Common Stock. All of the outstanding shares of
capital stock of the Company are duly authorized, validly issued, fully paid
and non-assessable, have been issued in compliance in all material respects
with all applicable federal and state securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase any capital stock of the Company. Except as
specified in this Section 3.1(g): (i) no shares of the Company’s outstanding
capital stock are subject to preemptive rights or any other similar rights;
(ii) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, or exercisable or exchangeable for, any shares of
capital stock of the Company, or contracts, commitments, understandings or
arrangements by which the Company is or may become bound to issue additional
shares of capital stock of the Company or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company; (iii) there are no material outstanding
debt securities, notes, credit agreements, credit facilities or other
agreements, documents or instruments evidencing indebtedness of the Company or
by which the Company is bound that are not described in the SEC Reports; (iv)
except for the Registration Rights Agreement, there are no agreements or
arrangements under which the Company is obligated to register the sale of any
of its securities under the Securities Act; (v) there are no outstanding
securities or instruments of the Company that contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company is or may become bound to redeem a security
of the Company that are not described in the SEC Reports; (vi) the Company does
not have any stock appreciation rights or “phantom stock” plans or agreements
or any similar plan or agreement that are not described in the SEC Reports; and
(vii) the Company has no liabilities or obligations required to be disclosed in
the SEC Reports but not so disclosed in the SEC Reports, which, individually,
or in the aggregate, will have or would reasonably be expected to have a
Material Adverse Effect. There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Common Shares.
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(h)
SEC Reports. The Company has filed all SEC
Reports on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective filing dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted 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.
(i)
Financial
Statements. The
financial statements of the Company and its Subsidiaries included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
balance sheet of the Company and its consolidated Subsidiaries taken as a whole
as of and for the dates thereof and the results of operations and cash flows
for the periods then ended, subject, in the case of unaudited statements, to
normal, year-end audit adjustments, which would not be material, either
individually or in the aggregate.
(j)
Tax Matters. The Company and each of its
Subsidiaries has (i) filed all material foreign, U.S. federal, state and local
tax returns, information returns and similar reports that are required to be
filed, and all such tax returns are true, correct and complete in all material
respects, and (ii) paid all material taxes required to be paid by it and any
other material assessment, fine or penalty levied against it other than taxes
(x) currently payable without penalty or interest, or (y) being contested in
good faith by appropriate proceedings.
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(k)
Material
Changes. Since the
date of the latest audited financial statements included within the SEC
Reports, except as disclosed in subsequent SEC Reports filed prior to the date
hereof, (i) there have been no events, occurrences or developments that have
had or would reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect, (ii) the Company has not incurred any
material liabilities (contingent or otherwise) other than (A) trade payables,
accrued expenses and other liabilities incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or required to
be disclosed in filings made with the Commission, (iii) the Company has not
altered materially its method of accounting or the manner in which it keeps its
accounting books and records, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its shareholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its Common Stock, (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except Common Stock issued pursuant to existing
Company option plans or equity based plans disclosed in the SEC Reports, and
(vi) there has not been any material change or amendment to, or any waiver of
any material right by the Company under, any Material Contract under which the
Company or any of its Subsidiaries is bound or subject. Except for the transactions
contemplated by this Agreement (including, for the avoidance of doubt, the
consummation of the TARP Preferred Redemption and any of the transactions
contemplated thereunder), no event, liability or development has occurred or
exists with respect to the Company or its Subsidiaries or their respective
business, properties, operations or financial condition that would be required
to be disclosed by the Company under applicable securities laws at the time
this representation is made that has not been publicly disclosed at least one
Trading Day prior to the date that this representation is made.
(l)
Regulatory
Permits. The Company
and each of its Subsidiaries possess or have applied for all certificates,
authorizations, consents and permits issued by the appropriate federal, state,
local or foreign regulatory authorities necessary to conduct their respective
businesses as currently conducted and as described in the SEC Reports, except
where the failure to possess such permits, individually or in the aggregate, has
not and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect (“Material Permits”), and (i)
neither the Company nor any of its Subsidiaries has received any notice in
writing of proceedings relating to the revocation or material adverse
modification of any such Material Permits and (ii) the Company is unaware of
any facts or circumstances that would give rise to the revocation or material
adverse modification of any Material Permits.
(m)
Insurance. The Company and the Bank are insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as the Company believes to be prudent and customary
in the businesses and locations in which the Company and the Bank are engaged.
Neither the Company nor the Bank has received any notice of cancellation of any
such insurance, nor, to the Company’s Knowledge, will it or the Bank be unable
to renew their respective existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect.
(n)
Transactions
With Affiliates and Employees.
Except as set forth in the SEC Reports and other than the grant of stock
options or other equity awards pursuant to equity or incentive plans or
arrangements described in the SEC Reports, none of the officers or directors of
the Company and, to the Company’s Knowledge, none of the employees of the
Company, is presently a party to any transaction with the Company or to a
presently contemplated transaction (other than for services as employees,
officers and directors) that would be required to be disclosed pursuant to Item
404 of Regulation S-K promulgated under the Securities Act.
(o)
Sarbanes-Oxley;
Disclosure Controls.
The Company is in compliance in all material respects with all of the
provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it. The
Company maintains disclosure controls and procedures (as such term is defined
in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), and such disclosure
controls and procedures are effective.
13
(p)
Certain Fees. No person will have, as a result of
the transactions contemplated by this Agreement, any valid right, interest or
claim against or upon the Company or a Purchaser for any commission, fee or
other compensation pursuant to any agreement, arrangement or understanding
entered into by or on behalf of the Company, other than the Financial Advisor’s
fees which are being paid by the Company and the legal fees of Purchasers which
are being reimbursed by the Company pursuant to Section 5.1 of this Agreement.
The Company shall indemnify, pay, and hold each Purchaser harmless against, any
liability, loss or expense (including, without limitation, attorneys’ fees and
out-of-pocket expenses) arising in connection with any such right, interest or
claim.
(q)
Principal
Trading Market. The
issuance and sale of the Common Shares hereunder does not contravene the rules
and regulations of the Principal Trading Market.
(r)
Listing and
Maintenance Requirements.
The Company’s Common Stock is registered pursuant to Section 12(b) of the
Exchange Act, and the Company has taken no action designed to terminate the
registration of the Common Stock under the Exchange Act nor has the Company
received any written notification that the Commission is contemplating
terminating such registration. The Company has not, in the 12 months preceding
the date hereof, received written notice from any Trading Market on which the
Common Stock is listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such Trading Market.
The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance in all material respects with the listing
and maintenance requirements for continued trading of the Common Stock on the
Principal Trading Market.
(s)
Unlawful
Payments. Neither the
Company nor any of its Subsidiaries, nor to the Company’s Knowledge, any
directors, officers, employees, agents or other Persons acting at the direction
of or on behalf of the Company or any of its Subsidiaries has, in the course of
its actions for, or on behalf of, the Company: (a) directly or indirectly, used
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to foreign or domestic political activity; (b) made
any direct or indirect unlawful payments to any foreign or domestic
governmental officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds; (c) violated any provision of the
Foreign Corrupt Practices Act of 1977, or (d) made any other unlawful bribe,
rebate, payoff, influence payment, kickback or other material unlawful payment
to any foreign or domestic government official or employee.
14
(t)
Application of
Takeover Protections; Rights Agreements. The Company has not adopted any shareholder rights plan
or similar arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Company. The Company and its Board
of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s Articles of Incorporation or other
organizational documents or the laws of South Carolina or otherwise which is or
could become applicable to any Purchaser solely as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s
issuance of the Common Shares and any Purchaser’s ownership of the Common
Shares.
(u)
Disclosure. The Company confirms that neither it
nor, to the Company’s Knowledge, any of its officers or directors nor any other
Person acting on its or their behalf, including the
Financial Advisor, has provided any Purchaser or its respective agents
or counsel with any information that it believes constitutes or could
reasonably be expected to constitute material, non-public information except
insofar as the existence, provisions and terms of the Transaction Documents and
the transactions contemplated hereunder may constitute such information, all of
which will be disclosed by the Company in the Press Release as contemplated by
Section 4.6 hereof. The Company understands and confirms that each of the
Purchasers will rely on the representations in this Section 3.1(dd) in
effecting transactions in securities of the Company. No event or circumstance
has occurred or information exists with respect to the Company or any of its
Subsidiaries or its or their business, properties, operations or financial
conditions, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed, except for the announcement of this Agreement and
related transactions and/or as may otherwise be disclosed on the Press Release
issued pursuant to Section 4.6.
(v)
Acknowledgment
Regarding Purchasers’ Purchase of Common Shares. The Company acknowledges and agrees
that each of the Purchasers is acting solely in the capacity of an arm’s length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by any of the Purchasers
or any of their respective representatives or agents in connection with the
Transaction Documents and the transactions contemplated thereby is merely
incidental to the Purchasers’ purchase of the Common Shares.
(w)
Money
Laundering Laws. The
operations of each of the Company and any Subsidiary are in compliance in all
material respects with the money laundering statutes of applicable
jurisdictions, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any
applicable governmental agency (collectively, the “Money Laundering Laws”)
and to the Company’s Knowledge, no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the
Company and/or any Subsidiary with respect to the Money Laundering Laws is
pending or threatened.
15
(x)
Reports,
Registrations and Statements.
Since December 31, 2010, the Company and each Subsidiary have filed all
material reports, registrations and statements, together with any required
amendments thereto, that it was required to file with the FRB, the OCC, the
FDIC, the State Board and any other applicable federal or state securities or
banking authorities, except where the failure to file any such report,
registration or statement would not have or reasonably be expected to have a
Material Adverse Effect. All such reports and statements filed with any such
regulatory body or authority are collectively referred to herein as the “Company
Reports.” As of their respective dates, the Company Reports complied as to
form in all material respects with all the rules and regulations promulgated by
the FRB, the OCC, the FDIC, the State Board and any other applicable foreign,
federal or state securities or banking authorities, as the case may be.
(y)
Agreements with
Regulatory Agencies; Compliance with Certain Banking Regulations. Neither the Company nor any
Subsidiary is subject to any cease-and-desist or other similar public order or
enforcement action issued by, or is a party to any public written agreement,
consent agreement or memorandum of understanding with, or is a party to any
public commitment letter or similar undertaking to, or has adopted any board
resolutions at the request of, or is subject to any public capital directive by
any governmental entity that currently restricts in any material respect the
conduct of its business or that in any 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 (each item in this
sentence, a “Regulatory Agreement”), nor has the Company or any
Subsidiary been advised in writing by any governmental entity that it intends
to issue, initiate, order, or request any such Regulatory Agreement. For the
avoidance of doubt, nothing in this paragraph shall be interpreted to require
the Company or the Company Subsidiaries to disclose any confidential
supervisory information.
To the Company’s Knowledge, there are
no facts or circumstances that would cause its Subsidiary banking institutions:
(i) to be deemed not to be in satisfactory compliance with the Community
Reinvestment Act (the “CRA”) and the regulations promulgated thereunder
or to be assigned a CRA rating by federal or state banking regulators of lower
than “satisfactory”; (ii) to be operating in violation, in any material
respect, of the Bank Secrecy Act, the Patriot Act, any order issued with
respect to anti-money laundering by OFAC, or any other anti-money laundering
statute, rule or regulation; or (iii) not to be in satisfactory compliance, in
any material respect, with all applicable privacy of customer information
requirements contained in any applicable federal and state privacy laws and
regulations as well as the provisions of all information security programs
adopted by the Subsidiary.
16
(z)
No General Solicitation
or General Advertising.
Neither the Company nor, to the Company’s Knowledge, any Person acting on its
behalf has engaged or will engage in any form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) in connection with any offer or sale of the Common Shares.
(aa)
ERISA. The Company and each ERISA Affiliate
is in compliance in all material respects with all presently applicable
provisions of ERISA. Neither Company nor any of its Subsidiaries sponsor a
Pension Plan.
(bb)
No Additional
Agreements; No Additional Sales.
The Company has no other agreements or understandings (including, without
limitation, side letters) with any Purchaser to purchase Common Shares on terms
that are different from those set forth herein. The Company has no agreements
or understandings with any Person (other than the Purchasers) to purchase
shares of Common Stock (other than agreements or understandings with employees,
directors, and officers with respect to stock options and restricted stock
agreements pursuant to equity or incentive plans or arrangements described in
the SEC Reports).
3.2
Representations
and Warranties of the Purchasers.
Each Purchaser hereby, for itself and for no other Purchaser, represents and
warrants to the Company as follows:
(a)
Organization;
Authority. Such
Purchaser is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization with the requisite corporate,
partnership or limited liability company power and authority to enter into and
to consummate the transactions contemplated by the applicable Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution, delivery and performance by such Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or, if such Purchaser is not a corporation, such partnership, limited
liability company or other applicable like action, on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement has
been duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of, creditors’ rights and remedies
or by other equitable principles of general application.
17
(b)
No Conflicts. The execution, delivery and
performance by such Purchaser of this Agreement and the Registration Rights
Agreement and the consummation by such Purchaser of the transactions
contemplated hereby and thereby will not (i) result in a violation of the
organizational documents of such Purchaser (if such Purchaser is an entity),
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which such Purchaser is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to such Purchaser,
except in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of such
Purchaser to perform its obligations hereunder.
(c)
Investment
Intent. Such
Purchaser understands that the Common Shares are “restricted securities” and
have not been registered under the Securities Act or any applicable state
securities law and is acquiring the Common Shares as principal for its own
account and not with a view to, or for, distributing or reselling such Common
Shares or any part thereof in violation of the Securities Act or any applicable
state securities laws, provided, that by making the representations herein,
other than as set forth herein, such Purchaser does not agree to hold any of
the Common Shares for any minimum period of time and reserves the right at all
times to sell or otherwise dispose of all or any part of such Common Shares
pursuant to an effective registration statement under the Securities Act or
under an exemption from such registration and in compliance with applicable
federal and state securities laws. Such Purchaser is acquiring the Common
Shares hereunder in the ordinary course of its business. Such Purchaser does
not presently have any agreement, plan or understanding, directly or
indirectly, with any Person to distribute or effect any distribution of any of
the Common Shares (or any securities which are derivatives thereof) to or
through any Person or entity.
(d)
Purchaser
Status. At the time
such Purchaser was offered the Common Shares, it was, and at the date hereof it
is, an “accredited investor” as defined in Rule 501(a) under the Securities
Act. Such Purchaser has provided the information in the Accredited Investor
Questionnaire attached hereto as Exhibit B-1.
(e)
Reliance. The Company and the Financial
Advisor (on behalf of its client) will be entitled to rely upon this Agreement
and is irrevocably authorized to produce this Agreement or a copy hereof to (A)
any regulatory authority having jurisdiction over the Company and its
affiliates and (B) any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby, in
each case, to the extent required by any court or governmental authority to
which the Company is subject, provided that the Company provides the Purchaser
with prior written notice of such disclosure to the extent practicable and
allowed by applicable law.
18
(f)
General
Solicitation.
Purchaser: (i) became aware of the offering of the Common Shares, and the
Common Shares were offered to Purchaser, solely by direct contact between
Purchaser and the Company or the Financial Advisor, and not by any other means,
including any form of “general solicitation” or “general advertising” (as such
terms are used in Regulation D promulgated under the Securities Act and
interpreted by the Commission); (ii) reached its decision to invest in the
Company independently from any other Purchaser; (iii) has entered into no
agreements with shareholders of the Company or other subscribers for the
purpose of controlling the Company or any of its subsidiaries; and (iv) has
entered into no agreements with shareholders of the Company or other
subscribers regarding voting or transferring Purchaser’s interest in the
Company.
(g)
Direct Purchase. Purchaser is purchasing Common
Shares directly from the Company. The Financial Advisor has not made any
representations, declarations or warranties to Purchaser, express or implied,
regarding the Common Shares, the Company or the Company’s offering of the
Common Shares, and the Financial Advisor has not offered to sell, or solicited
an offer to buy, any of the Common Shares that Purchaser proposes to acquire
from the Company hereunder.
(h)
Experience and
Financial Capability of Such Purchaser.
Such Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters so
as to be capable of evaluating the merits and risks of the prospective
investment in the Common Shares, and has so evaluated the merits and risks of
such investment. Such Purchaser has available funds necessary to consummate the
Closing on the terms and conditions contemplated by this Agreement and is able
to bear the economic risk of an investment in the Common Shares and, at the
present time, is able to afford a complete loss of such investment.
(i)
Access to
Information. Such
Purchaser acknowledges that it has been afforded (i) the opportunity to ask
such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Common Shares and the merits and risks of investing in the
Common Shares and any such questions have been answered to such Purchaser’s
reasonable satisfaction; (ii) access to information about the Company and the
Subsidiaries and their respective financial condition, results of operations,
business, properties and management sufficient to enable it to evaluate its
investment; (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense
that is necessary to make an informed investment decision with respect to the
investment; and (iv) the opportunity to ask questions of management and any
such questions have been answered to such Purchaser’s reasonable satisfaction.
Neither such inquiries nor any other investigation conducted by or on behalf of
such Purchaser or its representatives or counsel shall modify, amend or affect
such Purchaser’s right to rely on the truth, accuracy and completeness of the
Company’s representations and warranties contained in the Transaction
Documents. Such Purchaser has sought such accounting, legal and tax advice as
it has considered necessary to make an informed decision with respect to its
acquisition of the Common Shares. Purchaser acknowledges that neither the
Company nor the Financial Advisor has made any representation, express or
implied, with respect to the accuracy, completeness or adequacy of any
available information except, with respect to the Company, as expressly set
forth in the SEC Reports or to the extent such information is covered by the
representations and warranties of the Company contained in Section 3.1.
19
(j)
Brokers and
Finders. Other than
the Financial Advisor, no Person will have, as a result of the transactions
contemplated by the Transaction Documents, any right, interest or claim against
or upon the Company or any Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Purchaser.
(k)
Independent
Investment Decision.
Such Purchaser has independently evaluated the merits of its decision to
purchase Common Shares pursuant to the Transaction Documents, and such
Purchaser confirms that it has not relied on the advice of any other
Purchaser’s business and/or legal counsel in making such decision. Such
Purchaser understands that nothing in this Agreement or any other materials
presented by or on behalf of the Company to the Purchaser in connection with
the purchase of the Common Shares constitutes legal, regulatory, tax or
investment advice. Such Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Common Shares. Such Purchaser understands
that the Financial Advisor has acted solely as the agent of the Company in this
offering of the Common Shares and such Purchaser has not relied on any
statement, representation or warranty including any business or legal advice of
the Financial Advisor or any of either of its agents, counselor Affiliates in
making its investment decision hereunder, and confirms that none of such
Persons has made any representations or warranties to such Purchaser in
connection with the transactions contemplated by the Transaction Documents.
(l)
ERISA. (i) If Purchaser is, or is acting on
behalf of, an ERISA Entity (as defined below), Purchaser represents and
warrants that on the date hereof;
(A) The decision to invest
assets of the ERISA Entity in the Common Shares was made by fiduciaries
independent of the Company or its affiliates, which fiduciaries are duly
authorized to make such investment decisions and who have not relied on any
advice or recommendations of the Company or its affiliates;
(B) Neither the Company nor any
of its agents, representatives or affiliates have exercised any discretionary
authority or control with respect to the ERISA Entity’s investment in the
Common Shares;
(C) The purchase and holding of
the Common Shares will not constitute a nonexempt prohibited transaction under
ERISA or Section 4975 of the Code or a similar violation under any applicable
similar laws; and
(D) The terms of the Transaction
Documents comply with the instruments and applicable laws governing such ERISA
Entity.
20
(ii) For the purpose of this
paragraph, the term “ERISA Entity” will mean (A) an “employee benefit
plan” within the meaning of Section 3(3) of ERISA subject to Title I of ERISA,
(B) a “plan” within the meaning of Section 4975(e)(1) of the Code and (C) any
person whose assets are deemed to be “plan assets” within the meaning of ERISA
Section 3(42) and 29 C.F.R. § 2510.3-101 or otherwise under ERISA.
(m)
Reliance on
Exemptions. Such
Purchaser understands that the Common Shares being offered and sold to it in
reliance on specific exemptions from the registration requirements of U.S.
federal and state securities laws and that the Company is relying upon, among
other things, the truth and accuracy of, and such Purchaser’s compliance with,
the representations, warranties, agreements, acknowledgements and
understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to
acquire the Common Shares.
(n)
No Governmental
Review. Such
Purchaser understands that no U.S. federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Common Shares or the fairness or suitability of the
investment in the Common Shares nor have such authorities passed upon or
endorsed the merits of the offering of the Common Shares. Purchaser understands
that the Common Shares are not savings accounts, deposits or other obligations
of any bank and are not insured by the FDIC, including the FDIC’s Deposit
Insurance Fund, or any other governmental agency.
(o)
Consents. Assuming the accuracy of the
representations and warranties of the Company and the other parties to the
Transaction Documents, and except for the consent of the FRB (which consent has
been obtained), no approval, consent, exemption, authorization, or other action
by, or notice to, or filing with, any governmental entity or authority or any
other person or entity in respect of any law or regulation is necessary or
required, and no lapse of a waiting period under law applicable to such
Purchaser is necessary or required, in each case in connection with the
execution, delivery or performance by such Purchaser of this Agreement or the
purchase of the Common Shares contemplated hereby.
(p)
Residency. Such Purchaser’s office in which
its investment decision with respect to the Common Shares was made is located
in the jurisdiction immediately below such Purchaser’s name on its signature
page hereto.
21
(q)
Regulatory
Matters. Purchaser
understands and acknowledges that: (i) the Company is a registered bank holding
company under the BHCA, and is subject to regulation by the FRB; (ii)
acquisitions of interests in bank holding companies are subject to the BHCA and
the Change in Bank Control Act (the “CIBCA”) and may be reviewed by the
FRB to determine the circumstances under which such acquisitions of interests
will result in Purchaser becoming subject to the BHCA or, except for the
consent of the FRB (which consent has been obtained), subject to the prior
notice requirements of the CIBCA. Assuming the accuracy of the representations
and warranties of the Company contained herein, Purchaser represents that: (A)
neither it nor its Affiliates will, as a result of the transactions contemplated
herein, be deemed to (i) own or control 10% or more of any class of voting
securities of the Company or (ii) otherwise control the Company for purposes of
the BHCA or CIBCA, and (B) to its knowledge, the purchase of such Common Shares
shall not (i) cause such Purchaser or any of its Affiliates to violate any bank
regulation or (ii) require such Purchaser or any of its Affiliates to file a
prior notice with the Federal Reserve or its delegee under the CIBCA or the
BHCA or obtain the prior approval of any bank regulator. Purchaser is not
participating and has not participated with any other investor in the offering
of the Common Shares in any joint activity or parallel action towards a common
goal between or among such investors of acquiring control of the Company. The
Purchaser currently owns the number of shares of Common Stock set forth below
such Purchaser's name on the signature page of this Agreement.
(r)
No Discussions. Purchaser has not discussed the
Offering with any other party or potential investors (other than the Company,
the Financial Advisor, any other Purchaser, and Purchaser’s authorized
representatives), except as expressly permitted under the terms of this
Agreement.
(s)
Knowledge as to
Conditions. Purchaser
does not know of any reason why any regulatory approvals and, to the extent
necessary, any other approvals, authorizations, filings, registrations, and
notices required or otherwise a condition to the consummation by it of the
transactions contemplated by this Agreement will not be obtained.
The Company and each of the Purchasers
acknowledge and agree that no party to this Agreement has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Article 3 and the
Transaction Documents.
22
ARTICLE
4:
OTHER AGREEMENTS OF THE PARTIES
4.1
Transfer
Restrictions.
(a)
Compliance with
Laws. Notwithstanding
any other provision of this Article 4, each Purchaser covenants that the Common
Shares may be disposed of only pursuant to an effective registration statement
under, and in compliance with the requirements of, the Securities Act, or
pursuant to an available exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act, and in compliance with any
applicable state, federal or foreign securities laws. In connection with any
transfer of the Common Shares other than (i) pursuant to an effective
registration statement, (ii) to the Company or (iii) pursuant to Rule 144
(provided that the transferor provides the Company with reasonable assurances
(in the form of a seller representation letter and, if applicable, a broker
representation letter) that such securities may be sold pursuant to such rule),
the Company may require the transferor thereof to provide to the Company and
the Transfer Agent, at the transferor’s expense, an opinion of counsel selected
by the transferor, which counsel must be reasonably acceptable to the Company
and the Transfer Agent, and the form and substance of which opinion shall be
reasonably satisfactory to the Company and the Transfer Agent, to the effect
that such transfer does not require registration of such transferred Common
Shares under the Securities Act. As a condition of transfer (other than
pursuant to clauses (i), (ii) or (iii) of the preceding sentence), any such
transferee shall agree in writing to be bound by the terms of this Agreement
and shall have the rights of a Purchaser under this Agreement and the
Registration Rights Agreement with respect to such transferred Common Shares.
(b)
Legends. Certificates evidencing the Common
Shares shall bear any legend as required by the “blue sky” laws of any state
and a restrictive legend in substantially the following form (and, with respect
to Common Shares held in book-entry form, the Transfer Agent will record such a
legend on the share register), until such time as they are not required under
Section 4.1(c) or applicable law:
23
THE ISSUANCE OF THE SECURITIES HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
WHICH COUNSEL AND OPINION MUST BE REASONABLY SATISFACTORY TO THE COMPANY AND
ITS TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT
(PROVIDED THAT THE TRANSFEROR PROVIDES THE COMPANY WITH REASONABLE ASSURANCES
(IN THE FORM OF A SELLER REPRESENTATION LETTER AND, IF APPLICABLE, A BROKER
REPRESENTATION LETTER) THAT THE SECURITIES MAY BE SOLD PURSUANT TO SUCH RULE).
NO REPRESENTATION IS MADE BY THE ISSUER AS TO THE AVAILABILITY OF THE EXEMPTION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALES OF THESE SECURITIES.
(c)
Removal of
Legends. The
restrictive legend set forth in Section 4.1(b) above shall be removed and the
Company shall issue a certificate without such restrictive legend or any other
restrictive legend to the holder of the applicable Common Shares upon which it
is stamped or issue to such holder by electronic delivery at the applicable
balance account at DTC, if (i) such Common Shares are registered for resale
under the Securities Act, (ii) such Common Shares are sold or transferred
pursuant to Rule 144 (if the transferor is not an Affiliate of the Company), or
(iii) such Common Shares are eligible for sale under Rule 144, without the
requirement for the Company to be in compliance with the current public
information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) as
to such securities and without volume or manner-of-sale restrictions. Following
the earlier of (i) the Effective Date (as defined in the Registration Rights
Agreement) or (ii) Rule 144 becoming available for the resale of Common Shares
(if the holder of the Common Shares is not an Affiliate of the Company),
without the requirement for the Company to be in compliance with the current
public information required under 144(c)(1) (or Rule 144(i)(2), if applicable)
as to the Common Shares and without volume or manner-of-sale restrictions, the
Company shall instruct the Transfer Agent to remove the legend from the Common
Shares and shall cause its counsel to issue any legend removal opinion required
by the Transfer Agent. Any fees (with respect to the Transfer Agent, Company
Counsel or otherwise) associated with the issuance of such opinion or the
removal of such legend shall be borne by the Company. If a legend is no longer
required pursuant to the foregoing, the Company will no later than three
Trading Days following the delivery by a Purchaser to the Company or the
Transfer Agent (with notice to the Company) of a legended certificate or
instrument representing such Common Shares (endorsed or with stock powers
attached, signatures guaranteed, and otherwise in form necessary to affect the
reissuance and/or transfer) and a representation letter to the extent required
by Section 4.1(a), deliver or cause to be delivered to such Purchaser a
certificate or instrument (as the case may be) representing such Common Shares
that is free from all restrictive legends. The Company may not make any
notation on its records or give instructions to the Transfer Agent that enlarge
the restrictions on transfer set forth in this Section 4.1(c). Certificates for
Common Shares free from all restrictive legends may be transmitted by the
Transfer Agent to the Purchasers by crediting the account of the Purchaser’s
prime broker with DTC as directed by such Purchaser.
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(d)
Acknowledgement. Each Purchaser hereunder acknowledges
its primary responsibilities under the Securities Act and accordingly will not
sell or otherwise transfer the Common Shares or any interest therein without
complying with the requirements of the Securities Act and the rules and
regulations promulgated thereunder and the requirements set forth in this
Agreement. Except as otherwise provided below, while the Registration Statement
remains effective, each Purchaser hereunder may sell the Common Shares in
accordance with the plan of distribution contained in the Registration
Statement and if it does so it will comply therewith and with the related
prospectus delivery requirements unless an exemption therefrom is available or
unless the Common Shares are sold pursuant to Rule 144. Each Purchaser,
severally and not jointly with the other Purchasers, agrees that if it is
notified by the Company in writing at any time that the Registration Statement
registering the resale of the Common Shares is not effective or that the
prospectus included in such Registration Statement no longer complies with the
requirements of Section 10 of the Securities Act, such Purchaser will refrain
from selling such Common Shares until such time as such Purchaser is notified
by the Company that such Registration Statement is effective or such prospectus
is compliant with Section 10 of the Exchange Act, unless such Purchaser is able
to, and does, sell such Common Shares pursuant to an available exemption from
the registration requirements of Section 5 of the Securities Act.
4.2
Acknowledgment of
Dilution. The Company
acknowledges that the issuance of the Common Shares may result in dilution of
the outstanding shares of Common Stock. The Company further acknowledges that
its obligations under the Transaction Documents, including without limitation
its obligation to issue the Common Shares pursuant to the Transaction
Documents, are unconditional and absolute and not subject to any right of set
off, counterclaim, delay or reduction, regardless of the effect of any such
dilution or any claim the Company may have against any Purchaser and regardless
of the dilutive effect that such issuance may have on the ownership of the
other shareholders of the Company.
4.3
Furnishing of
Information. In order
to enable the Purchasers to sell the Common Shares under Rule 144 of the
Securities Act, for a period of one year following the Closing Date, the
Company shall maintain the registration of the Common Stock under Section 12(b)
or 12(g) of the Exchange Act and timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange Act. During
such one year period, if the Company is not required to file reports pursuant
to such laws, it will prepare and furnish to the Purchasers and make publicly
available the information described in Rule 144(c)(2), if the provision of such
information will allow resales of the Common Shares pursuant to Rule 144.
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4.4
Form D and Blue
Sky. The Company
agrees to timely file a Form D with respect to the Common Shares as required
under Regulation D. The Company, on or before the Closing Date, shall take such
action as the Company shall reasonably determine is necessary in order to
obtain an exemption for or to qualify the Common Shares for sale to the
Purchasers at the Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States (or to
obtain an exemption from such qualification). The Company shall make all
filings and reports relating to the offer and sale of the Common Shares
required under applicable securities or Blue Sky laws of the states of the
United States following the Closing Date.
4.5
No Integration. The Company shall not, and shall use
its commercially reasonable efforts to ensure that no Affiliate of the Company
shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Securities Act) that
will be integrated with the offer or sale of the Common Shares in a manner that
would require the registration under the Securities Act of the sale of the
Common Shares to the Purchasers.
4.6
Securities Laws
Disclosure; Publicity.
On or before 9:00 a.m., New York City time, on the second Trading Day immediately
following the date of this Agreement, the Company shall issue one or more press
releases (collectively, the “Press Release”) disclosing the material
terms of the transactions contemplated hereby, including, without limitation,
the issuance of the Common Shares, the material terms of the TARP Preferred
Redemption, and any other material, nonpublic information that the Company may
have provided to any Purchaser at any time prior to the filing of the Press
Release. On or before 5:30 p.m., New York City time, on the fourth Trading Day
immediately following the date of this Agreement, the Company will file a
Current Report on Form 8-K with the Commission describing the terms of the
Transaction Documents. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser or any Affiliate or investment
adviser of any Purchaser, or include the name of any Purchaser or any Affiliate
or investment adviser of any Purchaser in any press release or filing with the
Commission (other than the Registration Statement) or Trading Market, without
the prior written consent of such Purchaser, except (i) as required by federal
securities law in connection with (A) any registration statement contemplated
by the Registration Rights Agreement and (B) the filing of final Transaction
Documents with the Commission and (ii) to the extent such disclosure is
required by law, at the request of the Staff of the Commission or Trading
Market regulations, in which case the Company shall provide the Purchasers with
prior written notice of such disclosure permitted under this subclause (ii) to
the extent practicable and allowed by applicable law. From and after the
issuance of the Press Release, no Purchaser shall be in possession of any
material, non-public information received from the Company, any Subsidiary or
any of their respective officers, directors or employees or the Financial
Advisor that is not disclosed in the Press Release. Each Purchaser, severally
and not jointly with other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in this Section 4.6, such Purchaser will maintain the
confidentiality of all disclosures made to it in connection with this transaction
(including the existence and terms of this transaction).
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4.7
Non-Public
Information. Except
with the express written consent of such Purchaser and unless prior thereto
such Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information, the Company shall use its best
efforts not to, and shall use its best efforts to cause each Subsidiary and
each of their respective officers, directors, employees and agents, not to, and
each Purchaser shall not directly solicit the Company, any of its Subsidiaries
or any of their respective officers, directors, employees or agents to provide
any Purchaser with any material, non-public information regarding the Company
or any of its Subsidiaries from and after the filing of the Press Release.
4.8
Indemnification.
(a)
Indemnification
of Purchasers. In
addition to the indemnity provided in the Registration Rights Agreement, the
Company will indemnify and hold each Purchaser and its directors, officers,
shareholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling person (each, an “Indemnified
Person”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Indemnified Person may suffer or incur as
a result of (i) any breach of any of the representations, warranties, covenants
or agreements made by the Company in this Agreement or in the other Transaction
Documents or (ii) any action instituted against a Indemnified Person in any
capacity, or any of them or their respective affiliates, by any shareholder of
the Company who is not an affiliate of such Indemnified Person, with respect to
any of the transactions contemplated by this Agreement. The Company will not be
liable to any Indemnified Person under this Agreement to the extent, but only
to the extent that a loss, claim, damage or liability is attributable to any
Indemnified Person’s breach of any of the representations, warranties,
covenants or agreements made by such Indemnified Person in this Agreement or in
the other Transaction Documents or attributable to the gross negligence or
willful misconduct on the part of such Indemnified Person.
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(b)
Conduct of
Indemnification Proceedings.
Promptly after receipt by any Indemnified Person of notice of any demand, claim
or circumstances which would or might give rise to a claim or the commencement
of any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 4.8(a), such Indemnified Person shall promptly
notify the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided, that
the failure of any Indemnified Person so to notify the Company shall not
relieve the Company of its obligations hereunder except to the extent that the
Company is actually and materially and adversely prejudiced by such failure to
notify (as determined by a court of competent jurisdiction, which determination
is not subject to appeal or further review). In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless: (i) the Company and the Indemnified Person shall have mutually agreed
to the retention of such counsel; (ii) the Company shall have failed promptly
to assume the defense of such proceeding and to employ counsel reasonably
satisfactory to such Indemnified Person in such proceeding; or (iii) in the
reasonable judgment of counsel to such Indemnified Person, representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them; provided, that the Indemnifying
Party shall not be liable for the fees and expenses of more than one separate
firm of attorneys at any time for all Indemnified Parties. The Company shall
not be liable for any settlement of any proceeding affected without its written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned. Without the prior written consent of the Indemnified Person, which
consent shall not be unreasonably withheld, delayed or conditioned, the Company
shall not effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability arising out of such proceeding.
4.9
Listing of
Common Stock. The
Company will use its reasonable best efforts to list the Common Shares on the
NASDAQ Global Market and maintain the listing of the Common Stock on the NASDAQ
Global Market.
4.10 Use of Proceeds. The Company intends to use the net
proceeds from the sale of the Common Shares hereunder for the purpose of
redeeming 4,057 shares of the Series T Preferred Stock in the TARP Preferred
Redemption and related transaction fees and expenses and for general corporate
purposes.
4.11 Limitation on Beneficial Ownership. No Purchaser (and its Affiliates or
any other Persons with which it is acting in concert) will be entitled to
purchase a number of Common Shares that would result in such Purchaser
becoming, directly or indirectly, the beneficial owner (as determined under
Rule 13d-3 under the Exchange Act) of more than 9.9% of the number of shares of
Common Stock issued and outstanding.
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ARTICLE 5:
MISCELLANEOUS
5.1
Fees and
Expenses. Except as
set forth in this Section 5.1, the parties hereto shall be responsible for the
payment of all expenses incurred by them in connection with the preparation and
negotiation of the Transaction Documents and the consummation of the
transactions contemplated hereby. The Company shall reimburse the Purchasers
for their reasonable legal fees and expenses in an amount not to exceed $25,000
associated with the negotiation of the Transaction Documents (including,
without limitation, this Agreement and the Registration Rights Agreement) and
the consummation of the transactions contemplated hereby (including, without
limitation, the sale and issuance of the Common Shares to the Purchasers
pursuant to the terms of this Agreement and the filing with the Commission of
one or more Registration Statements in accordance with the requirements of the
Registration Rights Agreement). The Company shall pay all amounts owed to the
Financial Advisor relating to or arising out of the transactions contemplated
hereby. The Company shall pay all Transfer Agent fees, stamp taxes and other
taxes and duties levied in connection with the sale and issuance of the Common
Shares to the Purchasers.
5.2
Entire
Agreement. The
Transaction Documents, together with the Exhibits and Schedules thereto,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements, understandings, discussions
and representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the Company
and the Purchasers will execute and deliver to the other such further documents
as may be reasonably requested in order to give practical effect to the
intention of the parties under the Transaction Documents.
5.3
Notices. Any and all notices or other
communications or deliveries required or permitted to be provided hereunder
shall be in writing and shall be deemed given and effective on the earliest of
(a) the date of transmission, if such notice or communication is delivered via
facsimile or e-mail (provided the sender receives a machine-generated
confirmation of successful facsimile transmission or e-mail notification or
confirmation of receipt of an e-mail transmission) at the facsimile number or
e-mail address specified in this Section prior to 5:00 p.m., New York City
time, on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day
or later than 5:00 p.m., New York time, on any Trading Day, (c) if sent by U.S.
nationally recognized overnight courier service with next day delivery
specified (receipt requested) the Trading Day following delivery to such
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as follows:
If to the Company: Southern
First Bancshares, Inc.
100
Verdae Boulevard, Suite 100
Greenville,
South Carolina 29606
Attention:
Mr. Michael D. Dowling
Fax:
(864) 679-9403
mdowling@southernfirst.com
With a copy to: Nelson
Mullins Riley & Scarborough LLP
Poinsett Plaza, Suite 900
104 South Main Street
Greenville, SC 29601
Attn: Mr. Benjamin A.
Barnhill, Esq.
Fax: (864) 250-2373
Ben.Barnhill@nelsonmullins.com
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If to a Purchaser: To
the address set forth under such Purchaser’s name on the signature page hereof;
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
5.4
Amendments;
Waivers; No Additional Consideration.
No amendment or waiver of any provision of this Agreement will be effective
with respect to any party unless made in writing and signed by an officer or a
duly authorized representative of such party. No consideration shall be offered
or paid to any Purchaser to amend or consent to a waiver or modification of any
provision of any Transaction Document unless the same consideration is also
offered to all Purchasers who then hold Common Shares.
5.5
Construction. The headings herein are for
convenience only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof. The language used in
this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied
against any party. This Agreement shall be construed as if drafted jointly by
the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement or any of the Transaction Documents.
5.6
Successors and
Assigns. The
provisions of this Agreement shall inure to the benefit of and be binding upon
the parties and their successors and permitted assigns. This Agreement, or any
rights or obligations hereunder, may not be assigned by the Company without the
prior written consent of the Purchasers. Any Purchaser may assign its rights
hereunder in whole or in part to any Person to whom such Purchaser assigns or
transfers any Common Shares in compliance with the Transaction Documents and
applicable law, provided such transferee shall agree in writing to be bound,
with respect to the transferred Common Shares, by the terms and conditions of
this Agreement that apply to the “Purchasers”.
5.7
No Third-Party
Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and their
respective successors and permitted assigns and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person, other than, solely
with respect to the provisions of Section 4.8, the Indemnified Persons.
30
5.8
Governing Law. This Agreement will be governed by
and construed in accordance with the laws of the State of South Carolina
applicable to contracts made and to be performed entirely within such State.
Each party agrees that all Proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective Affiliates, employees or agents) may be commenced on a non-exclusive
basis in the South Carolina Courts. Each party hereto hereby irrevocably
submits to the non-exclusive jurisdiction of the South Carolina Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such South Carolina Court, or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
5.9
Survival. Subject to applicable statutes of
limitations, the representations and warranties and agreements and covenants
contained herein shall survive the Closing and the delivery of the Common
Shares; provided, that the representations and warranties of the Company and
each Purchaser shall survive the Closing and the delivery of Common Shares for
a period of one year.
5.10 Execution. This Agreement may be executed in
two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party, it being understood
that the parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, or by e-mail delivery of a
“.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.11 Severability. If any provision of this Agreement
is held to be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affected or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision that is a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
31
5.12 Replacement of Common Shares. If any certificate or instrument
evidencing any Common Shares is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company and the Transfer Agent of such loss, theft or
destruction and the execution by the holder thereof of a customary lost
certificate affidavit of that fact and an agreement to indemnify and hold
harmless the Company and the Transfer Agent for any losses in connection
therewith or, if required by the Transfer Agent, a bond in such form and amount
as is required by the Transfer Agent. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Common Shares. If a
replacement certificate or instrument evidencing any Common Shares is requested
due to a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
5.13 Remedies. In addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, each of the Purchasers and the Company may be entitled to specific
performance under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any
breach of obligations described in the foregoing sentence and hereby agree to
waive in any action for specific performance of any such obligation (other than
in connection with any action for a temporary restraining order) the defense
that a remedy at law would be adequate.
5.14 Payment Set Aside. To the extent that the Company makes
a payment or payments to any Purchaser pursuant to any Transaction Document or
a Purchaser enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside, recovered from, disgorged by or are required to be refunded, repaid or
otherwise restored to the Company, a trustee, receiver or any other person
under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of
any such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
32
5.15 Independent Nature of Purchasers’
Obligations and Rights.
The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser
shall be responsible in any way for the performance of the obligations of any
other Purchaser under any Transaction Document. The decision of each Purchaser
to purchase Common Shares pursuant to the Transaction Documents has been made
by such Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations or condition
(financial or otherwise) of the Company or any Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser and any of its agents or employees shall have any
liability to any other Purchaser (or any other Person) relating to or arising
from any such information, materials, statement or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
the Transaction Documents. Each Purchaser acknowledges that no other Purchaser
has acted as agent for such Purchaser in connection with making its investment
hereunder and that no Purchaser will be acting as agent of such Purchaser in
connection with monitoring its investment in the Common Shares or enforcing its
rights under the Transaction Documents. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. It is expressly understood
and agreed that each provision contained in this Agreement is between the
Company and a Purchaser, solely, and not between the Company and the Purchasers
collectively and not between and among the Purchasers.
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