SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported):
March 31,
2010
United
Community Banks, Inc.
(Exact
name of registrant as specified in its charter)
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Georgia
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No. 0-21656
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No. 58-180-7304
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(State
or other jurisdiction of
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(Commission
File Number)
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(IRS
Employer
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incorporation)
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Identification
No.)
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63
Highway 515, P.O. Box 398
Blairsville,
Georgia 30512
(Address
of principal executive offices)
(706)
781-2265
(Registrant's
telephone number, including area code)
Not
applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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q
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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q
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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q
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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q
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240-13e-4(c))
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Item
1.01 Entry
into a Material Definitive Agreement
On April
1, 2010, United Community Bank (“Bank”), a
wholly owned subsidiary of United Community Banks, Inc. (“United” or
“Company”),
entered into an asset purchase and sale agreement (the “Asset Purchase
Agreement”) with Fletcher International Inc. and certain affiliates
thereof who will become parties thereto as purchasers (collectively, the “Purchasers”). Pursuant
to the Asset Purchase Agreement, Fletcher International Inc. will make a
$10 million deposit (the “Deposit”)
and Bank has agreed to sell to the Purchasers certain non-performing commercial
and residential mortgage loans and other real estate owned, or “OREO,”
properties (collectively, the “Purchased
Assets”) with an aggregate purchase price equal to Bank’s
carrying value of approximately $100 million with closing dates on
or around April 30, 2010 (the “Asset
Sale”). In connection with the Asset Sale, the Bank will loan
to the Purchasers 80% of the purchase price to acquire the Purchased Assets,
with the remaining 20% paid in cash by such Purchasers. The
Purchasers are required to have at least 17.5% of the carrying value of the
Purchased Assets, up front, to pre-fund the estimated three years’ worth of
carry costs related to such assets.
Also on
April 1, 2010, United and Fletcher International, Ltd. (“Fletcher”)
entered into a securities purchase agreement (the “Securities
Purchase Agreement”) pursuant to which Fletcher agrees to purchase from
the Company, and the Company agrees to issue and sell to Fletcher, 65,000 shares
of United’s Series C convertible preferred stock, par value $1.00 per share (the
“Convertible
Preferred Stock”), at a purchase price of $1,000 per share, for an
aggregate purchase price of $65 million. Fletcher is required to
purchase the Convertible Preferred Stock by May 26, 2012, subject to
limited extensions upon certain events specified in the Securities Purchase
Agreement (the “Securities
Sale”). The Convertible Preferred Stock will initially bear
interest at a rate equal to the lesser of 12% per annum and LIBOR + 8% per
annum. If at Company’s annual shareholders meeting, the Shareholder
Approval (as defined below) is received, the Convertible Preferred Stock will
bear interest at a rate equal to the lesser of 8% and LIBOR + 4% per
annum. If all conditions precedent to Fletcher's obligations to
purchase the Convertible Preferred Stock have been satisfied and Fletcher has
not purchased all of the Convertible Preferred Stock by May 26, 2011, it must
pay United 5% of the commitment amount not purchased by such date, and it must
pay United an additional 5% of the commitment amount not purchased by May 26,
2012.
The
Securities Purchase Agreement provides that the Company shall not effect any
conversion or redemption of the Convertible Preferred Stock, and Fletcher shall
not have the right to convert or redeem any portion of the Convertible Preferred
Stock, into Common Stock to the extent such conversion or redemption would
result in aggregate issuances to Fletcher of in excess of 9.75% (which may be
reduced by Fletcher) of the number of shares of Common Stock that would be
outstanding after giving effect to such conversion or redemption. In
the event that the Company cannot effect a conversion or redemption of the
Convertible Preferred Stock into Common Stock due to the limit described in the
immediately preceding sentence, the conversion or redemption shall be effected
into an equal number of shares of Junior Preferred Stock; provided, however,
that in no event shall the Company effect any conversion or redemption of the
Convertible Preferred Stock or exercise of the Warrant to the extent such
conversion, redemption or exercise would result in aggregate issuances to
Fletcher of in excess of thirty-three and thirty-three one hundredths percent
(33.33%) of the Total Equity of the Company. For purposes of the
preceding sentence, “Total Equity” means the value as reflected on the balance
sheet of the Company of all shares of common, preferred and other equity capital
of the Company outstanding as of the date of determination.
The
Convertible Preferred Stock is redeemable by Fletcher at any time into common
stock, par value $1.00 per share (“Common
Stock”), or Junior Preferred Stock, at $5.25 per share of Common Stock or
one-hundredth of a share of Junior Preferred Stock (equal to 12,380,952 shares
of Common Stock), subject to certain adjustments (the “Redemption
Price”). After May 26, 2015, on any date on which the average
closing stock price for United's Common Stock for the twenty five business days
ending on and including the third business day before such date exceeds the
Conversion Price by one hundred percent (100%), United will have the option to
convert all of the then outstanding Convertible Preferred Stock into Common
Stock or Junior Preferred Stock at $6.02 per share of Common Stock or
one-hundredth of a share of Junior Preferred Stock, subject to certain
adjustments (equal to 10,797,342 shares of Common Stock). Each share
of Junior Preferred Stock will be convertible into one hundred shares of
United’s Common Stock after United receives shareholder approval to authorize
additional Common Stock for issuance.
Concurrently
with payment of the Deposit under the Asset Purchase Agreement by Fletcher
International Inc., Fletcher will receive a warrant (the “Warrant”)
to purchase non-voting Common Stock Equivalent Junior Preferred Stock, par value
$1.00 per share, of the Company (“Junior Preferred
Stock”). The warrant amount shall initially equal $15
million. The warrant amount will (i) be increased by $.15
for each $1.00 of assets purchased pursuant to the Asset Purchase Agreement up
to a total increase of $15 million and (ii) be increased on a dollar for dollar
basis by the aggregate dollar amount of the Convertible Preferred Stock
purchased under the Securities Purchase Agreement in excess of $30
million. The warrant price for the first $30 million of the warrant
amount shall be $4.25 for each one-hundredth of a share of Junior Preferred
Stock (equal to 3,529,412 shares of Common Stock). The warrant price
for the warrant amount in excess of $30 million shall be $6.02 for each
one-hundredth of a share of Junior Preferred Stock (equal to 5,813,953 shares of
Common Stock). The Warrant may only be exercised via cashless
exercise and is exercisable for nine years following its issuance, subject to
limited extension upon certain events specified in the Warrant.
The
issuance of the securities described above and the increase in the Company's
authorized Common Stock in connection with such issuances require Company
shareholder approval pursuant to the Listing Requirements of the Nasdaq Global
Select Market (the “Shareholder
Approval”), which will be sought at United’s Annual Meeting of
shareholders to be held on May 26, 2010. All dates described in this
Form 8-K assume the receipt of the Shareholder Approval at such
meeting. If the Shareholder Approval is not received, the Securities
Purchase Agreement provides that the Company shall not effect any conversion or
redemption of the Convertible Preferred Stock or any exercise of the Warrant,
and Fletcher shall not have the right to convert or redeem the Convertible
Preferred Stock or exercise any portion of the Warrant, to the extent such
action would result in issuances to Fletcher of Common Stock and Junior
Preferred Stock (measured on an as converted basis) in excess of 19.99% of the
shares of Common Stock outstanding as of the date of the Securities Purchase
Agreement. Further, the Securities Purchase Agreement provides that
the Company shall not effect any conversion or redemption of the Convertible
Preferred Stock or any exercise of the Warrant, and Fletcher shall not have the
right to convert or redeem the Convertible Preferred Stock or exercise any
portion of the Warrant, to the extent the number of shares of Common Stock and
Junior Preferred Stock beneficially owned by Fletcher immediately following such
action would exceed 9.90% (which may be increased by Fletcher) of aggregate
number of shares of Common Stock and Junior Preferred Stock (measured on an as
converted basis) outstanding after giving effect to such action.
The
descriptions of the Asset Purchase Agreement, Securities Purchase Agreement and
Warrant above are summaries and are qualified in their entirety by reference to
the full text of such agreements, which are attached hereto as
Exhibits 1.1, 1.2 and 1.3, respectively, and are incorporated herein by
reference.
Item
5.03 Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal Year
Effective March
31, 2010, in connection with the Securities Sale, United filed with the
Secretary of State of the State of Georgia a Certificate of Designation of the
Junior Preferred Stock (the “Certificate of
Designation”) amending the Articles of Incorporation of United to create,
authorize and provide for the issuance of the Junior Preferred Stock as a new
series of United’s existing preferred stock. As authorized and
approved by Board of Directors of United, the Certificate of Designation
authorizes the issuance of 1,000,000 shares of Junior Preferred Stock having the
powers, preferences, participation and other special rights, qualifications,
limitations, restrictions and other designations as set forth in the Certificate
of Designation. United also filed on such date with the Secretary of
State of the State of Georgia a Certificate of Rights and Preferences (the
“Certificate of
Rights and Preferences”) of the Convertible Preferred Stock, amending the
Articles of Incorporation of United to create, authorize and provide for the
issuance of the Convertible Preferred Stock as a new series of United’s existing
preferred stock. As authorized and approved by Board of Directors of
United, the Certificate of Rights and Preferences authorizes the issuance of
65,000 shares of Convertible Preferred Stock having the powers, preferences,
participation and other special rights, qualifications, limitations,
restrictions and other designations as set forth in the Certificate of Rights
and Preferences.
The
Certificate of Designation and Certificate of Rights and Preferences are
attached hereto as Exhibits 4.1 and 4.2, respectively, and are incorporated
herein by reference.
Item
8.01 Other
Events
On April
1, 2010, Company issued a press release that announced the Asset Sale and
Securities Sale described above. A copy of the press release is
furnished as Exhibit 99.1 hereto and incorporated by reference
herein.
Item
9.01 Financial
Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Discription
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1.1
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Asset
Purchase Agreement, dated April 1, 2010 by and among United Community Bank
and Fletcher International, Inc., and certain affiliates thereof who may
become parties thereto as purchasers.
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1.2
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Securities
Purchase Agreement, dated April 1, 2010 between United Community Banks,
Inc. and Fletcher International, Ltd.
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1.3
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Form
of Warrant to be granted by United Community Banks, Inc. to Fletcher
International, Ltd.
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4.1
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Certificate
of Designation of the Common Stock Equivalent Junior Preferred Stock,
dated March 31, 2010.
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4.2
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Form
of Certificate of Rights and Preferences of the Series C Convertible
Preferred Stock.
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99.1
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Press
Release of United Community Banks, Inc., dated April 1,
2010.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
/s/ Rex S. Schuette
Rex
S. Schuette
Executive Vice President and
Chief Financial Officer
April 1,
2010
Exhibit
1.1
EXECUTION
COPY
ASSET PURCHASE AND SALE AGREEMENT
________________________________________
UNITED
COMMUNITY BANK,
a
bank organized under the laws of the State of Georgia,
FLETCHER
INTERNATIONAL, INC.,
a
Delaware corporation,
and
each
affiliate of Fletcher International, Inc. that becomes a party
to
this Agreement by entering into a Joinder Agreement
________________________________________
Dated
as of April 1, 2010
TABLE
OF CONTENTS
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Exhibit
A
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List
of Offered Assets
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Exhibit
B-1
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The
Loan File
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Exhibit
B-2
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The
Property File
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Exhibit
C-1
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Representations
and Warranties of the Seller regarding Assets that are Commercial Mortgage
Loans
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Exhibit
C-2
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Representations
and Warranties of the Seller regarding Assets that are Residential
Loans
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Exhibit
C-3
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Representations
and Warranties of the Seller regarding Assets that are REO
Properties
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Exhibit
D
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Form
of Bill of Sale
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Exhibit
E
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Form
of Joinder
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Exhibit
F
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Form
of Disclosure of information on lead-based paint and lead based paint
hazard.
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Exhibit
G
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Form
of Administration and Servicing Agreement
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●
Schedule A, Reported Information
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Exhibit
H
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Form
of Certificate of the Seller
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Exhibit
I
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Form
of Opinion of Seller
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Exhibit
J
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Form
of Loan Agreement
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ii
ASSET
PURCHASE AND SALE AGREEMENT
This
ASSET PURCHASE AND SALE AGREEMENT (as amended, restated, or otherwise modified
and in effect from time to time, this “Purchase Agreement”),
is dated as of April 1, 2010 (the “Commitment Date”),
among UNITED COMMUNITY BANK, a bank organized under the laws of the
State of Georgia, as Seller, Fletcher International, Inc., a Delaware
corporation (“Fletcher”), and each
affiliate of Fletcher that becomes a party to this Purchase Agreement as a
purchaser (each, a “Purchaser”) by
entering into a Joinder (as defined herein) to this Purchase
Agreement.
BACKGROUND
Concurrently
with the execution of this Purchase Agreement, Fletcher International, Ltd., a
company domiciled in Bermuda, and United Community Banks, Inc., a corporation
organized under the laws of the State of Georgia (“UCBI”), will enter
into the Securities Purchase Agreement, dated as of the date hereof, pursuant to
which (a) Fletcher International, Ltd. will agree to purchase from
UCBI, and UCBI will agree to issue and sell to Fletcher International, Ltd.,
from time to time, in whole or in part, sixty-five thousand shares of UCBI’s
Series C convertible preferred stock, par value one dollar ($1.00) per share and
(b) upon receipt of the Deposit (as defined herein), UCBI will issue a warrant
to Fletcher International, Ltd. evidencing rights to purchase from UCBI, subject
to certain terms and conditions, securities issued by UCBI.
The
Seller, an affiliate of UCBI, wishes to sell, and Fletcher, through one or more
of its affiliates, wishes to purchase, subject to the terms and conditions set
forth in this Purchase Agreement, certain non-performing commercial and
residential mortgage loans, REO properties and related property. Each
such purchase of assets will be funded in part (80%) by funds loaned
to the applicable Purchaser by United Community Bank as lender pursuant to a
loan agreement to be entered into with such Purchaser.
Each
Purchaser will initially appoint United Community Bank as its administrator and
servicer pursuant to a servicing agreement between United Community
Bank and such Purchaser to service, manage, restructure and sell the assets at
the direction of the Purchaser.
Now,
therefore, in consideration of the premises and the mutual agreements set forth
herein, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties agree as follows:
SECTION 1. Usages and
Definitions.
Capitalized
terms used but not otherwise defined in this Purchase Agreement are defined
herein and in Appendix
A. Appendix
A also contains rules as to usage applicable to this Purchase Agreement.
Appendix A is
incorporated by reference into this Purchase Agreement.
SECTION 2. Commitment; Selection and
Purchases of Assets; Optional Exchange and Pre-Closing
Substitutions.
(a) Subject
to the terms and provisions of this Purchase Agreement and the satisfaction of
the conditions described herein, the Seller hereby agrees to sell, transfer,
assign, set over and otherwise convey to one or more Purchasers, and Fletcher
agrees to cause one or more of its affiliates, each as a Purchaser, to purchase,
between $99,500,000 and $100,500,000 by Carrying Value of Offered Assets (or
such other amount as may be agreed upon in writing by the Seller and Fletcher)
in one or more Closings. After the Commitment Date and throughout the
Substitution Period, the Seller shall update the information regarding the
Offered Assets set forth in Exhibit A and shall
promptly, and in any event prior to any purchase of an Offered Asset, notify
each applicable Purchaser of any change in such information. Fletcher
will select or to cause one or more of the Purchasers to select the Offered
Assets which are to be purchased by sending written notice to the Seller by
April 12, 2010. To the extent Fletcher and the Purchasers have not
selected Offered Assets for purchase that have a total Carrying Value of at
least $99,500,000 on or prior to April 12, 2010, the Seller may, in its sole
discretion, by written notice to Fletcher not later than April 14, 2010, select
the remaining Offered Assets to be purchased such that the total Carrying Value
of the Offered Assets to be purchased is between $99,500,000 and $100,500,000.
Each of the Seller and each applicable Purchaser shall use commercially
reasonable efforts to complete the purchase of all Offered Assets
selected for purchase on April 30, 2010 or as soon as reasonably practicable
thereafter, and in any event, by May 31, 2010.
(b) A
Purchaser may exchange any Offered Asset selected for purchase for one or more
Offered Assets by written notice to the Seller at any time on or prior to April
23, 2010 (an “Optional
Exchange”). If a Purchaser elects to make an
Optional Exchange, the Purchaser shall use commercially reasonable efforts to
complete its due diligence of additional Offered Assets prior to the intended
Closing Date so that such additional Offered Assets may be purchased on such
Closing Date, and, if such additional Offered Assets are not
purchased on such Closing Date, the Seller and the Purchaser shall use
commercially reasonable efforts to effect the Closing with respect to any such
additional Offered Asset as soon as reasonably practicable, and in any event by
May 31, 2010.
(c) The
Seller shall notify Fletcher and the applicable Purchaser if it obtains
knowledge that any Asset or Offered Asset is a Breaching Asset. From
April 23, 2010 until May 31, 2010, if a Purchaser obtains knowledge that an
Asset or an Offered Asset is a Breaching Asset, the Purchaser may exchange
such Breaching Asset for one or more Offered Assets (a “Pre-Closing
Substitution”). If a Purchaser elects to make a Pre-Closing
Substitution, the Purchaser shall use commercially reasonable efforts to
complete its due diligence of additional Offered Assets prior to the intended
Closing Date so that such additional Offered Assets may be purchased on such
Closing Date, and, if such Offered Assets are not purchased on such Closing
Date, the Seller and the Purchaser shall use commercially reasonable efforts to
effect the Closing with respect to any such additional Offered Assets as soon as
reasonably practicable, and in any event by May 31, 2010.
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(d) If an
Offered Asset exchanged for a Breaching Asset pursuant to the terms of clause (c) above is
determined by a Purchaser to be a Breaching Asset prior to its purchase,
the procedures set forth in clause (c) above
shall be repeated.
(e) The
Assets sold in a particular Closing will be identified in the Asset List
attached as Schedule A to the applicable Bill of Sale to be executed between the
Seller and the related Purchaser. Subject to the terms and provisions
of this Purchase Agreement and the applicable Bill of Sale, the Seller will
sell, transfer, set over and otherwise convey the Assets identified in Schedule
A to such Bill of Sale to the related Purchaser, including (1) all interest and
principal received with respect to such Assets after the related Cut-off Date or
received on or before the related Cut-off Date but not posted until after the
related Cut-off Date; (2) any funds held in escrow, reserve or other accounts by
the Seller with respect to such Assets; (3) all related title, hazard, or other
insurance policies of any nature pertaining to such Assets, (4) all documents
related to the Mortgage Asset, including the Loan Files, the Property Files and
the Servicing Files, (5) the servicing rights appurtenant to such Assets and (6)
all proceeds derived in any way from any of the foregoing, all on the terms set
forth in this Purchase Agreement and the applicable Bill of Sale, and agrees
that it will from time to time execute and deliver to the related Purchaser or
its designee such instruments of further assurance and other instruments and
will take such other action as the related Purchaser may reasonably request in
order to evidence the purchase evidenced by such Bill of Sale. On the
related Closing Date, the related Purchaser shall pay the applicable Purchase
Price for such Assets to the Seller in accordance with Section
8(c).
(f)
In
connection with each of the Seller’s assignments of Assets pursuant to subsection (e) above,
the Seller will release the Loan File for each Mortgage Loan and the Property
File for each REO Property to the applicable Purchaser. Upon the sale
of any Assets to a Purchaser, the ownership of all related Mortgage Notes, all
related Mortgages, all related Loan Files and all related Property Files, as
applicable, shall vest immediately in the Purchaser, and the ownership of all
records and documents with respect to the Assets prepared by or which come into
possession of the Seller or the Servicer shall vest immediately in the
Purchaser, and shall be retained and maintained by the Lender as bailee pursuant
to the terms of the Loan Agreement. Notwithstanding the foregoing, a
Purchaser may, at its own expense, appoint a custodian to take possession of the
Loan Files and Property Files relating to its Assets; provided that such
Purchaser, the Lender and the custodian enter into a custodial agreement
reasonably acceptable to such parties.
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(g) It is
acknowledged and agreed by the Seller that the Purchaser or its agents
may perform a due diligence review of the Loan Files and Property
Files to enable the Purchaser or its agents to confirm on or before the 60th day
following the related Closing Date that each of the documents and instruments
set forth in Exhibits B-1 and
B-2, as
applicable, has been delivered by the Seller with respect to each such Loan File
or Property File. In the event Seller fails to so deliver each such Loan File or
Property File to the Purchaser, the Purchaser and its successors and assigns
shall be entitled to pursue rights and remedies, including the rights or
remedies in respect of such failure provided in Section 7 hereof. If
the Seller cannot deliver, or cause to be delivered, as to each Mortgage
File, the original or a copy of any of the documents or instruments
referred to in clauses (b), (c), (f) or
(g) of Exhibit B-1, or
in clause (d)
of Exhibit B-2,
as applicable, with evidence of recording thereon, solely because of a delay
caused by the public recording or filing office where such document or
instrument has been delivered for recordation or filing, or because such
original recorded document has been lost or returned from the recording or
filing office and subsequently lost, as the case may be, the delivery
requirements of Section 2(f) shall be
deemed to have been satisfied as to such missing item, and such missing item
shall be deemed to have been included in the related Loan File or Property File,
as applicable, provided that a copy
of such document or instrument (without evidence of recording or filing
thereon, but certified (which certificate may relate to multiple documents
and/or instruments) by the Seller to be a true and complete copy of the
original thereof submitted for recording or filing, as the case may be) has been
delivered to or at the direction of the Purchaser, and either the original of
such missing document or instrument, or a copy thereof, with evidence of
recording or filing, as the case may be, thereon, is delivered to or at the
direction of the Purchaser (or any subsequent owner of the affected Assets)
within 180 days of the Closing Date (or within such longer period after the
Closing Date as the related Purchaser (or such subsequent owner) may consent to,
which consent shall not be unreasonably withheld so long as the Seller has
provided the related Purchaser (or such subsequent owner) with evidence of such
recording or filing, as the case may be, or has certified to the related
Purchaser (or such subsequent owner) as to the occurrence of such recording or
filling, as the case may be, and is, as certified to the related Purchaser (or
such subsequent owner) no less often than quarterly, in good faith attempting to
obtain from the appropriate county recorder’s or filing office such original or
copy). If the Seller cannot deliver, or cause to be delivered, as to the Assets,
the original or a copy of the related lender’s Title Insurance Policy referred
to in clause
(e) of
Exhibit B-1 or clause (h) of Exhibit B-2 solely
because such policy has not yet been issued, the delivery requirements of
Section 2(f)
shall be deemed to be satisfied as to such missing item, and such missing item
shall be deemed to have been included in the related Loan File or Property File,
as applicable, provided that the
Seller has delivered to the Purchaser a commitment for title insurance
“marked-up” at the Closing, and the Seller shall deliver to or at the direction
of the Purchaser (or any subsequent owner of the affected Asset), promptly
following the receipt thereof, such Title Insurance Policy.
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(h) As to the
Assets, the Seller shall be responsible for all costs associated with the
recording or filing, as the case may be, of each assignment referred to in clauses (b), (c) and (f) of
Exhibit B-1 and
each UCC financing statement, if any, referred to in clause (g) of Exhibit B-1;
provided that
the Seller shall not be responsible for actually recording or filing any such
document or instrument. If any such document or instrument is lost or returned
unrecorded or unfiled, as the case may be, because of a defect therein, the
Seller shall promptly prepare or cause the preparation of a substitute therefor
or cure or cause the curing of such defect as the case may be, and shall
thereafter deliver the substitute or corrected document to or at the direction
of the Purchaser (or any subsequent owner of the affected Assets) for recording
or filing, as appropriate at the Seller’s expense.
(i)
All
documents and records in the Seller’s possession (or under its control)
relating to Assets that are not required to be a part of a Loan File in
accordance with Exhibit B-1 or
part of a Property File in accordance with Exhibit B-2 or are
reasonably required to service the Assets (all such other documents and records,
the
“Servicing File”),
together with all escrow payments, reserve funds and other comparable funds in
the possession of the Seller (or under its control) with respect to the Assets,
if any, shall be delivered by the Seller to the Servicer on the related Closing
Date.
(j)
Through
the related Closing Date, the Seller shall assume all risk of loss to the
Mortgaged Properties and REO Properties. From and after the related
Closing Date, the applicable Purchaser will assume all risk of loss to the
Mortgaged Properties and REO Properties.
(k) The
Seller’s records will reflect the transfer of Assets to a Purchaser as a
sale.
(l)
All
Collections received by the Seller shall be held by the Servicer without set off
or counterclaim and shall be reported to the Purchaser and deposited to the
Purchaser’s Collection Account within two Business Days of receipt
thereof
(m) It is
intended that the conveyance of the Seller’s right, title and interest in and to
the Assets pursuant to this Purchase Agreement and the related Bill of Sale
shall constitute, and shall be construed as, a purchase and sale and not a
secured borrowing. However, if such conveyance is deemed to be a secured
borrowing, it is intended that the rights and obligations of the parties to such
loan shall be established pursuant to the terms of this Purchase Agreement and
the related Bill of Sale, and the Seller hereby grants to the related Purchaser
a first priority security interest in all of the Seller’s right, title and
interest in and to the Assets specified in the related Bill of Sale, whether now
existing or hereafter acquired.
5
(n) No more
than five Persons may become a party to this Purchase Agreement as a
Purchaser. Each Purchaser will, to the extent reasonably practicable,
(i) purchase a substantially equivalent percentage of the total Carrying Value
of the Offered Assets selected for purchase and (ii) purchase a substantially
equivalent mix of Mortgage Loans and REO Properties.
SECTION 3. Interim Period
Activities.
(a) During
the Interim Period, the Seller shall service the Offered Assets in accordance
with Accepted Servicing Practices and all applicable federal, state and local
laws, including without limitation, maintaining in full force and effect the
hazard insurance policies, except that, with respect to Offered Assets that are
REO Properties, the Seller shall only make repairs for noticed code violations,
weather preservation, property security and demolition orders consistent with a
reasonably prudent course of business, and the Seller shall not list any such
REO Properties with a listing agent, and shall not otherwise engage a broker for
any such REO Property or enter into any brokerage agreements except as may be
agreed to in writing by the applicable Purchaser. To the extent that
the Seller has taken any such action with respect to Offered Assets that are REO
Properties in violation of the preceding sentence during the Interim Period, the
Seller shall notify the related Purchaser in writing prior to the related
Closing Date and the related Purchaser in its sole discretion may purchase such
Offered Asset, exchange such Offered Asset in an Optional Exchange or designate
such Offered Asset as a Breaching Asset.
(b) During
the Interim Period, with respect to any mortgage loan that is an Offered Asset,
the Seller shall not, without the prior written consent of the applicable
Purchaser (i) modify such mortgage loan (including, without limitation, a
release of any collateral or any party from liability on or with respect to such
mortgage loan), (ii) forgive principal in respect of such mortgage loan, (iii)
accept a deed-in-lieu of foreclosure with respect to such mortgage loan, (iv)
conduct any short sale in respect of the Mortgaged Property, (v) commence any
foreclosure with respect to such mortgage loan or bankruptcy proceeding against
the related Mortgagor, (vi) settle or compromise any condemnation or insurance
claim or proceeding in respect of such mortgage loan, (vii) settle or
compromise, or make any offers to settle or compromise, any existing litigation
or other proceedings in respect of such mortgage loan, or (viii) take any action
to materially impair any interest of a Purchaser in such mortgage loan or any
interest therein. To the extent that the Seller has taken any action
described in clauses
(i) through (viii) of the
preceding sentence in respect of any mortgage loan that is an Offered Asset
during the Interim Period, the Seller shall notify the related Purchaser in
writing prior to the related Closing Date and the related Purchaser in its sole
discretion may purchase such Offered Asset, exchange such Offered Asset in an
Optional Exchange or designate such Offered Asset as a Breaching
Asset.
6
(c) During
the Interim Period, with respect to any REO Property that is an Offered Asset,
the Seller shall not, without the prior written consent of the applicable
Purchaser (i) settle or compromise any condemnation or insurance claim or
proceeding in respect of such REO Property, (ii) settle or compromise, or make
any offers to settle or compromise, any existing litigation or other proceedings
in respect of such REO Property, or (iii) take any action to materially impair
any interest of a Purchaser in such REO Property. To the extent that
the Seller has taken any action described in clauses (i) through
(iii) of the
preceding sentence in respect of any REO Property that is an Offered Asset
during the Interim Period, the Seller shall notify the related Purchaser in
writing prior to the related Closing Date and the related Purchaser in its sole
discretion may purchase such Offered Asset, exchange such Offered Asset in an
Optional Exchange or designate such Offered Asset as a Breaching
Asset.
(d) The
Seller shall use commercially reasonable efforts to notify foreclosure and
bankruptcy attorneys retained with respect to any mortgage loan that has been
designated as an Asset to be purchased to stay, adjourn or otherwise postpone or
extend the deadline to perform all actions enforcing any of the Seller’s rights
and remedies under any of the related Mortgage Loan Documents; provided, that if any
such action will impair or irrevocably waive any rights of the Seller or
discharge or release any Mortgagor, then such action shall not be taken without
the prior written consent of the applicable Purchaser which may be withheld in
its sole and absolute discretion. In addition, each such attorney
shall be instructed to bill the Seller for fees, expenses and disbursement
incurred up until the related Closing Date.
(e) If the
Seller receives title to a Mortgaged Property during the Interim Period as a
result of foreclosure, deed-in-lieu of foreclosure, power of sale or otherwise,
such Mortgaged Property shall be an REO Property and shall be sold to a
Purchaser pursuant to the representations and warranties contained in Section 5 and such
other provisions as relate to the sale of REO Property. The Seller
shall be responsible for delivering to the related Purchaser an unrecorded Deed,
where applicable, with respect to such REO Property, together with the other
documents in the Property File on the Closing Date.
SECTION 4. Examination of Loan
Files and Due Diligence Review.
The
Seller shall reasonably cooperate with any examination of the Loan Files,
Property Files and Servicing Files that may be undertaken by or on behalf of any
Purchaser either before or after the related Closing Date. The fact that a
Purchaser has conducted or has failed to conduct any partial or complete
examination of the Loan Files, Property Files and/or Servicing Files shall not
affect the Purchaser’s right to pursue any right or remedy, including the rights
and remedies provided in Section 7 for a
breach of the Seller’s representations, warranties and covenants set forth in or
contemplated by Section
5.
7
SECTION 5. Representations, Warranties
and Covenants of the Seller.
(a) The
Seller hereby makes, as of the Commitment Date and each applicable Closing Date
(or as of such other date specifically provided in the particular representation
or warranty), to and for the benefit of Fletcher and the related Purchaser, and
their successors and assigns, each of the representations and warranties set
forth in Exhibits C-1,
C-2 and C-3, as applicable, and
indicated on Exhibit A.
(b) In
addition, the Seller, as of the Commitment Date and each Closing Date, hereby
represents and warrants to, and covenants with, Fletcher and each Purchaser
that:
(i)
The
Seller is duly incorporated and is validly existing in good standing as a state
chartered bank under the laws of the State of Georgia. The Seller is
in compliance with the laws of each State in which any Assets are located to the
extent necessary to perform its obligations under this Purchase
Agreement.
(ii) The
execution and delivery by the Seller of this Purchase Agreement and the
performance by Seller of all of its obligations hereunder have been duly
authorized by all requisite corporate action and no further consent or
authorization of the Seller, its Board of Directors or sole stockholder is
required.
(iii) The
Seller has full banking power and authority to (A) own and operate its
properties and assets and execute and deliver this Purchase Agreement and each
Bill of Sale, (B) perform its obligations hereunder and (C) carry on its
business as presently conducted and as presently proposed to be
conducted. The Seller and its subsidiaries are duly licensed,
qualified and authorized to do business and are in good standing in all
jurisdictions in which the nature of their activities and of their properties
(both owned and leased) makes such licensing, qualification or authorization
necessary, except where the failure to do would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse
Effect.
(iv) This
Purchase Agreement has been duly executed and delivered by the Seller, and when
this Purchase Agreement is duly authorized, executed and delivered by the
Purchaser, will be a valid and binding agreement enforceable against the Seller
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights generally and to general principles of equity.
8
(v)
Neither
the execution and delivery by the Seller of this Purchase Agreement nor the
performance by the Seller of any of its obligations hereunder violates,
conflicts with, results in a breach of, or constitutes a default (or an event
which with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) or creates any rights in respect of any Person
under (A) the articles of incorporation or by-laws (or other comparable
documents) of the Seller or any of its Affiliates, (B) any decree, judgment,
order, law, treaty, rule, regulation or determination of any court, governmental
agency or body, or arbitrator having jurisdiction over the Seller or any of its
Affiliates or any of their respective properties or assets, or (C) the terms of
any bond, debenture, indenture, credit agreement, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, lease,
mortgage, deed of trust or other instrument to which the Seller or any of its
Affiliates is a party, by which the Seller or any of its Affiliates is bound, or
to which any of the properties or assets of the Seller or any of its Affiliates
is subject.
(vi) There is
no pending or, to the best knowledge of the Seller, threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Seller or any of its Affiliates that
would affect the execution by the Seller of, or the performance by the Seller of
any of its obligations under, this Purchase Agreement.
(vii) The
Seller has not incurred debt, and does not intend to incur debt, beyond its
ability to pay such debt as it matures. For purposes of this
paragraph, “debt” means any liability on a claim, and “claim” means (x) a right
to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured, or (y) a right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured. With
respect to any such contingent liabilities, such liabilities are computed at the
amount which, in light of all the facts and circumstances existing at the time,
represents the amount which can reasonably be expected to become an actual or
matured liability.
(viii) The
Seller is receiving fair consideration from the Purchaser or its Affiliates for
the Assets sold and the agreements, covenants, representations and warranties
made by the Seller to the Purchaser. The Seller is not transferring
any Asset with any intent to hinder, delay or fraud any of its
creditors. The Seller has obtained the consents to the sale of the
Assets from all of its required secured lenders.
(ix)
The
Seller possesses all material certificates, authorizations and permits issued by
the appropriate federal, state or foreign regulatory authorities necessary to
conduct its business. The Seller is not in violation of any material
judgment, decree or order or any statute, ordinance, rule or regulation
applicable to it.
9
(x)
The
Seller is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
businesses in which the Seller is engaged.
(xi)
The
Seller is not, and is not an affiliate of, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.
(xii) The
Seller has not dealt with any broker, investment banker, agent or other person,
other than the Purchaser and its affiliates, that may be entitled to any
commission or compensation in connection with the sale of the Assets or the
consummation of any of the other transactions contemplated hereby.
(xiii)
No
consent, approval, authorization or order of any court, governmental agency or
other body is required for execution and delivery by the Seller of this Purchase
Agreement or any Bill of Sale or the performance by the Seller of any of its
obligations hereunder. No registration or filing with, or notice to,
any governmental authority or court is required, under federal or state law
(including, with respect to any bulk sale laws), for the execution delivery and
performance of or compliance by the Seller with this Purchase Agreement or the
consummation by the Seller of any transaction contemplated hereby, other
than (1) the filing or recording of financing statements, instruments of
assignment and other similar documents necessary in connection with the
Seller’s sale of the Assets to the Purchasers and (2) such consents, approvals,
authorizations, qualifications, registrations, filings or notices as have been
obtained or made.
(xiv)
If a
third party, including a potential purchaser of the Assets, inquires, the Seller
will promptly indicate that the Assets have been sold to a Purchaser
and the Seller will not claim any ownership interest in the
Assets.
(xv)
The
Seller’s records (including for purposes of GAAP) will reflect the transfer of
the Assets to the Purchaser as a sale.
(xvi) Each
obligor of an Asset (if any) will be notified of the sale of such Asset
contemplated hereby.
(c)
Upon
discovery by any of the parties hereto of a breach or defect of any of the
representations and warranties made pursuant to and set forth in subsection
(b) above or a breach or defect of any of the representations and warranties
made pursuant to subsection (a) above and set forth in Exhibits C-1, C-2 and C-3, as applicable,
which has a material adverse effect on the Seller’s ability to perform its
obligations hereunder or the value of any Asset, the party discovering such
breach or defect shall give prompt written notice to the other party hereto and
its assigns.
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SECTION 6. Representations, Warranties
and Covenants of Fletcher.
Fletcher,
as of the Commitment Date and each applicable Closing Date, hereby represents
and warrants to the Seller that:
(a)
Fletcher
has been duly incorporated and is validly existing and in good standing under
the laws of the State of Delaware.
(b)
The
execution, delivery and performance of this Purchase Agreement by Fletcher have
been duly authorized by all requisite corporate action and no further consent or
authorization of Fletcher, its Board of Directors or its stockholders is
required. This Purchase Agreement has been duly executed and
delivered by Fletcher and, when duly authorized, executed and delivered by the
Seller, will be a valid and binding agreement enforceable against Fletcher in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights generally and to general principles of equity.
SECTION 7. Post-Closing Substitution of
Assets.
(a)
Within 90
days of receipt of written notice or knowledge by the Seller of a breach or
defect of any representation or warranty made pursuant to Section 5(a) and set
forth in Exhibits C-1, C-2 and C-3 that causes an
Asset to be a Breaching Asset, the Seller shall use commercially reasonable
efforts to cure such defect or breach, as the case may be, in all material
respects. For any such breach or defect for which the Seller has
received written notice or has knowledge thereof during the three-year period
following the affected Asset’s Closing Date (the “Substitution
Period”), if the Seller fails to cure such defect or breach within such
90-day period in all material respects, the related Purchaser
may exchange such Breaching Asset for one or more Offered Assets that
have an aggregate Carrying Value that is equal to or greater than the
then-current Carrying Value of the Breaching Asset that is being exchanged by
written notice to the Seller (a “Post-Closing
Substitution”); provided, that if the
aggregate Carrying Value of all Offered Assets exchanged in Post-Closing
Substitutions by all Purchasers after May 31, 2010 exceeds $15 million, or if
written notice of such exchange is delivered to the Seller after September 30,
2010, a Purchaser may only exchange Breaching Assets for which the applicable
breaches would have a material adverse effect to the Purchaser. The
Seller and the related Purchaser shall execute and deliver any and all such
additional assignments, deeds, instruments of transfer and other documents as
may be reasonably required in order to complete the exchange
transactions. The Seller shall be responsible for, and shall pay when
due and payable, all transfer, filing and recording fees and taxes, costs and
expenses, and any state or county documentary taxes, if any, with respect to the
filing or recording of any document or instrument contemplated hereby in
connection with such substitution, and shall be responsible for recording any
documents evidencing the transfers. In connection with any exchange
of assets contemplated by this Section 7, the Seller
and the related Purchaser shall tender promptly or cause to be tendered promptly
to the other party, the related Loan File, Property File and Servicing File, as
applicable.
11
(b) If the
Seller defaults on its obligations to substitute any Breaching Asset in
accordance with Section 7(a) or
disputes its obligation to cure or to exchange the affected Assets in accordance
with such subsection, the Purchaser or its successors and assigns may take such
action as is appropriate to enforce such payment or performance, including,
without limitation, the institution and prosecution of appropriate
proceedings. To the extent the Purchaser or its successors and
assigns prevail in such proceeding, the Seller shall reimburse the Purchaser or
its successors and assigns, as applicable, for all necessary and reasonable
costs and expenses incurred in connection with the enforcement of such
obligation of the Seller to cure or substitute the Breaching Asset in accordance
with this Section
7.
(c) At all
times during the Substitution Period, the Seller shall maintain a list of at
least $25,000,000 in Carrying Value of Offered Assets, excluding Breaching
Assets, by updating the list of Offered Assets in Exhibit
A. Initially, such list will consist of the Offered Assets not
purchased by the Purchasers, excluding Breaching Assets.
SECTION 8. Initial Deposit; Payment of
Purchase Price; UCB Breaches; Liquidated Damages.
(a) On
or about April 1,
2010 (but in no event later than April 5, 2010), Fletcher, on behalf of itself
and the Purchasers, shall remit $10 million (the “Deposit”) to the
Seller by wire transfer of immediately available funds to an interest-bearing
savings account specified in writing by the Seller (the “Deposit Account”),
which funds shall be held by the Seller in trust in accordance with the terms
and conditions of this Section
8.
(b)
Interest
earned on the Deposit shall be for the account of Fletcher and the Purchasers
and shall be distributed at the direction of Fletcher.
(c)
On each
Closing Date, to the extent of funds on deposit in the Deposit Account, the
Seller shall apply 10% of the aggregate Purchase Price of the Assets
purchased on such Closing Date from the Deposit Account toward the aggregate
Purchase Price payable to the Seller on such Closing Date. The
remainder of the aggregate Purchase Price payable by a Purchaser on such Closing
Date shall be funded (i) using funds to be advanced to such Purchaser pursuant
to (and subject to the fulfillment of the conditions precedent to such funding
specified in Article IV of) the Loan Agreement entered into by such Purchaser
and the Lender in an amount equal to 80% of the aggregate Purchase Price, and
(ii) after giving effect to the credit of funds in the Deposit Account (if any)
described above and the funds to be advanced to such Purchaser pursuant to the
Loan Agreement as described in clause (i), using
funds available to the Purchaser from other sources other than amounts on
deposit in such Purchaser’s Carry Account; provided, however, that with
respect to a Substitution pursuant to Section 7, the
Purchase Price shall be deemed paid by the substitution of the Breaching Asset
with the exchanged Offered Asset. Upon the occurrence of any of the
following events (each, a “UCB
Breach”):
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(i)
any
Closing contemplated by this Purchase Agreement cannot be completed due to (A) a
material failure by United Community Bank in the performance of its
obligations as Seller under this Purchase Agreement which is not cured within 10
days, (B) a failure by United Community Bank to execute a Loan Agreement in
substantially the form attached to this Purchase Agreement as Exhibit J or such
other form as may be reasonably acceptable to United Community Bank and the
related Purchaser, (C) a material failure of United Community Bank in the
performance of its obligations under any Loan Agreement (assuming the applicable
Purchaser has fulfilled all of its obligations precedent to such performance
under such Loan Agreement), (D) the failure of United Community Bank to enter
into a Servicing Agreement in substantially the form attached to this Purchase
Agreement as Exhibit
G or such other form as may be reasonably acceptable to United Community
Bank and the related Purchaser or (E) a directive issued by the FDIC or any
other regulatory authority;
(ii)
the
appointment of, or the consent by United Community Bank to the appointment of, a
receiver with respect to it or with respect to any substantial part of its
property;
(iii) a final
adjudication of an act by United Community Bank that constitutes fraud or
criminal activity in the performance of its activities with respect to this
Purchase Agreement;
or if any
Closing does not occur before the termination of this Purchase Agreement
pursuant to Section
9(d) for any reason other than a failure on the part of the Purchaser to
fulfill its purchase obligation under this Purchase Agreement and the related
Bill of Sale by such date, all amounts remaining on deposit in the Deposit
Account shall immediately be released to the Purchasers at the direction of
Fletcher, and the Purchasers shall have no further obligations to complete any
further Closings. In the absence of any such events, the Seller shall
be, and hereby is, authorized to retain any funds remaining on deposit in the
Deposit Account after termination of this Purchase Agreement pursuant to Section
9(d). The parties expressly acknowledge that it would be
impractical and extremely difficult to estimate the actual damages the Seller
would suffer if the Purchasers failed to satisfy their purchase obligations and
that the retention of the remaining Deposit is intended not as a penalty, but as
the sole and exclusive remedy (whether at law or in equity) for the Seller’s
lost opportunities and other costs, expenses and damages in connection with this
Purchase Agreement.
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SECTION 9. Closing; Conditions
Precedent; Termination.
(a)
Each
Closing shall be held at the offices of Skadden, Arps, Slate, Meagher & Flom
LLP, Four Times Square, New York, New York 10036 at 10:00 a.m., New York City
time, on April 30, 2010, or, with respect to any Offered Assets selected for
purchase pursuant to Section 2(a) that are
not purchased on such date for any reason, on such later date that is three
Business Days following the satisfaction of the conditions set forth in clause (b) or (c) below (other than
conditions that by their nature are to be satisfied at Closing), or on such
other date or in such other manner as shall be mutually agreed upon in writing
by the Seller and the related Purchaser; provided, however, that Closings may be
delayed in the circumstances contemplated in Section 2 and Substitutions may be effected as contemplated by
Sections 2 and 8. On the related Closing Date, the Seller and
the related Purchaser shall execute and deliver to each party a Bill of Sale for
the related Closing.
(b)
The
obligation of the applicable Purchaser to consummate each Closing shall be
subject to, with respect to the Offered Assets to be purchased at such Closing,
each of the following conditions precedent except to the extent such conditions
are waived in writing by the applicable Purchaser in its sole
discretion:
(i)
All of
the representations and warranties of the Seller specified in this Purchase
Agreement shall be true and correct in all material respects as of the related
Closing Date;
(ii)
All
documents and opinions specified in Section 10 (the
Closing Documents) to be delivered by the Seller on the related Closing
Date shall be duly executed and delivered by all signatories as required
pursuant to the respective terms thereof;
(iii) With
respect to any REO Property which is a residential property to be sold in such
Closing, the Seller and the related Purchaser shall have executed a Disclosure
of Information on Lead-Based Paint and Lead Hazards for REO Properties, in the
form of Exhibit
F attached hereto;
(iv) No UCB
Breach shall have occurred;
(v)
The
Seller shall have delivered and released to the Purchaser or the Purchaser’s
designee, as the case may be, all documents required to be so delivered pursuant
to Section 2 on
the related Closing Date;
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(vi) All other
terms and conditions of this Purchase Agreement and the related Bill of Sale
required to be complied with by the Seller on or before the related Closing Date
shall have been complied with, and the Seller shall have the ability to comply
with all terms and conditions and perform all duties and obligations required to
be complied with or performed after the related Closing Date; and
(vii) The
Purchaser shall be satisfied that all of the conditions precedent described
above have been satisfied.
(c)
The
obligation of the Seller to consummate each Closing shall be subject to, with
respect to the Offered Assets to be purchased at such Closing, each of the
following conditions precedent except to the extent such conditions precedent
are waived in writing by the Seller in its sole discretion:
(i)
All of
the representations and warranties of Fletcher and the applicable Purchaser
specified in this Purchase Agreement or in the related Joinder shall be true and
correct in all material respects as of the related Closing Date;
(ii) All
documents specified in Section 10 (the
Closing Documents) to be delivered by the applicable Purchaser on the
related Closing Date shall be duly executed and delivered by all signatories as
required pursuant to the respective terms thereof;
(iii) All other
terms and conditions of this Purchase Agreement and the related Bill of Sale
required to be complied with by the applicable Purchaser on or before the
related Closing Date shall have been complied with, and the applicable Purchaser
shall have the ability to comply with all terms and conditions and perform all
duties and obligations required to be complied with or performed after the
related Closing Date;
(iv) The
payment (or deemed payment) of the aggregate Purchase Price in accordance with
Section 8(c) of
this Purchase Agreement shall have been received (or deemed received) (including
the payment by the applicable Purchaser of 10% of such Purchase Price that is
not credited from the Deposit or funded by a loan under a Loan Agreement);
and
(v)
The
Seller shall be satisfied that all of the conditions precedent described above
have been satisfied.
15
(d)
This
Purchase Agreement may be terminated at any time prior to the consummation of
all Closings with respect to any future Closings by either Fletcher or the
Seller upon written notice to the other at any time after May 31, 2010;
provided, however, that such right to terminate shall not be available to such
party if the failure of any Closing to occur by such date is the result of one
or more breaches or violations of, or inaccuracy in any covenant, agreement,
representation or warranty of this Purchase Agreement by such party (other than,
with respect to any Offered Asset, a breach of any representation or warranty
set forth in Exhibits
C-1, C-2
or C-3, as
applicable). Notwithstanding the foregoing, all representations,
warranties, covenants and agreements in this Purchase Agreement and any Bill of
Sale as they may relate to any consummated Closing shall survive the termination
of this Purchase Agreement except to the extent expressly provided otherwise
herein.
SECTION 10. Closing
Documents.
The
“Closing
Documents” to be delivered on each Closing Date shall consist of the
following:
(a)
This
Purchase Agreement duly executed and delivered by the Seller and Fletcher, with
a Joinder to the Purchase Agreement duly executed and delivered by the related
Purchaser;
(b)
A
Servicing Agreement, duly executed and delivered by the related Purchaser and
the Servicer;
(c)
A Loan
Agreement, together with any other Loan Documents (as such term in defined in
the Loan Agreement) specified in Section 4.01 of such Loan Agreement, duly
executed and delivered by the Lender and the related Purchaser, as
applicable;
(d)
A
certificate of good standing from the Secretary of State of the State of Georgia
with respect to the Seller;
(e)
All
Assignments of Leases, Rents and Profits, if any, together with an assignment
thereof duly executed by the Seller, assigning to Purchaser all of the Seller’s
right, title and interest therein;
(f)
A
certificate of the Seller substantially in the form of Exhibit H
hereto, executed by an executive officer or authorized signatory of the Seller
and dated the Closing Date, and upon which the Purchaser may rely;
(g)
A written
opinion of counsel for the Seller, opining on issues described
in Exhibit
I and subject to such reasonable assumptions and qualifications as may be
requested by counsel for the Seller and acceptable to counsel for the Purchaser,
dated the applicable Closing Date and addressed to the Purchaser and to
Fletcher;
(h)
With
respect to any REO Properties, the final settlement statement agreed upon in
writing pursuant to Section 12(f);
and
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(i)
Such
other certificates and documents as the Purchaser may reasonably
request.
SECTION 11. Post-Closing
Activities.
(a)
As soon
as reasonably practicable after the Closing Date:
(i)
Each
related Purchaser and the Seller shall (A) with respect to Assets in litigation
(including foreclosure), to the extent necessary or advisable, file appropriate
pleadings with the court that will substitute Purchaser’s attorney for Seller’s
attorney, and remove Seller as a party to the litigation and substitute
Purchaser as the real party in interest; and (B) with respect to Mortgage Loans
with respect to which the related mortgagor is in bankruptcy, mail to each of
the Seller’s bankruptcy attorney, the Seller’s foreclosure attorney, the
mortgagor’s attorney and the bankruptcy trustee a letter advising such attorney
that the Seller has sold the Mortgage Loan on the related Closing Date to the
related Purchaser.
(ii)
Each
related Purchaser and the Seller shall file or cause to be filed, as and when
required by law, all IRS forms 1099, 1099A, 1098 or 1041 and K-1 in relation to
the ownership of the Mortgage Loans for the portion of such year the Mortgage
Loans were owned by the Seller.
(b)
Not later
than the first anniversary of the Closing Date, the Seller shall deliver to the
related Purchaser a statement setting forth any corrections to the amounts
payable by the Seller or the related Purchaser with respect to the Assets but
not included in the amounts referred to in Section 12, together
with the documentation relating to such corrections.
(c)
At any
time, and from time to time after the related Closing Date, upon the reasonable
request of a party hereto, and at the expense of such party, the other party
shall do, execute, acknowledge and deliver, and shall cause to be done,
executed, acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and assurances as may be reasonably
required in order to better assign, transfer, grant, convey, assure and confirm
to Purchaser, and to collect any or all of the Mortgage Loans, manage the REO
Properties or document its ownership to each of the REO Properties as provided
for herein or to effectuate the purpose and carry out the terms of this Purchase
Agreement.
SECTION 12. Other
Expenses.
(a)
Each
party will pay its own expenses (including the fees and expenses of its
attorneys) in connection with the negotiations for, documenting of and closing
of the transactions contemplated by this Purchase Agreement.
17
(b)
In
connection with the transfer of any Mortgage Loan registered with MERS, the
Seller shall, at its own expense, cause the MERS System to indicate that such
Mortgage Loan has been assigned to Purchaser.
(c)
With
respect to each REO Property, the Seller shall pay all real estate transfer
taxes, sales taxes or similar taxes, license and permit assignment fees,
assessments, levies, deductions, fees, withholdings or charges of whatever
nature in connection with the transfer of the REO Property to the
Purchaser.
(d)
The
Seller acknowledges its liability for all real estate taxes, ad valorem taxes,
street vault taxes, personal property taxes and other taxes, assessments and
charges, other municipal and state charges, license and permit fees, water and
sewer rents and all other charges affecting the REO Properties, and any interest
and penalties due thereon (collectively, the “Taxes”) through the
related Closing Date only, whether or not such Taxes are (i) due and payable as
of the related Closing Date, (ii) delinquent as of the related Closing Date or
(iii) billed as of the related Closing Date. The Purchaser shall be
liable for all Taxes on the REO Properties accruing after the related Closing
Date. Taxes paid by the Seller prior to the related Closing Date with
respect to periods that extend beyond the related Closing Date shall be prorated
and adjusted as of the related Closing Date as set forth below.
(e)
With
respect to the REO Properties, the following items for which the Seller has
received notice by the related Closing Date (including any such charges on bills
that relate to all periods prior to the related Closing Date, without regard to
when such costs shall become due and payable), are to be paid by the Seller
through and including the related Closing Date: (i) utilities (including,
without limitation, telephone service, heat, steam, electric power, cable, and
trash removal, fuel, water, water frontage charges and/or meter charges), (ii)
sewer and sanitary charges and taxes thereon, (iii) amounts prepaid or payable
pursuant to the insurance premiums, management or brokerage agreements, service,
supply, security, maintenance or similar agreements, (iv) condominium,
cooperative and home owner association fees, assessments, maintenance and common
charges or (v) any other similar fees or expenses in connection with the
servicing of the REO Properties. The Purchaser shall be responsible
for and shall pay any such charges on bills that relate to all periods after the
related Closing Date, regardless of when such items are due and
payable.
(f)
Upon the
related Closing Date, the items set forth in Sections 12(c), (d) and (e) above,
together with all rents and other payments actually received by the Seller under
the terms of any lease for the month of the Closing, shall be apportioned
between the Seller and the related Purchaser on the basis of a settlement
statement approved in writing by the Seller and the Purchaser. Not
later than five Business Days prior to the related Closing Date, the Seller
shall deliver to such Purchaser a draft settlement statement which shall contain
a list of the items to be apportioned in accordance with Sections 12(c), (d) and (e). Not
later than three Business Days prior to the Closing Date, the Purchaser shall
deliver to the Seller a written statement of objection or agreement to such
settlement statement. If the Purchaser objects to any portion of the
settlement statement, the Seller and the Purchaser shall, reasonably and in good
faith, negotiate and agree upon a final settlement statement. All
other costs, fees and income related to an REO Property shall, unless otherwise
specifically allocated in this Purchase Agreement, be allocated in accordance
with customary practice for properties similar to the REO Property located in
the county in which the REO Property is located.
18
(g)
With
respect to any Asset, the obligations of the Seller and the Purchaser pursuant
to this Section 12
shall survive for a period of 395 days after the related Closing Date,
during which period Seller and Purchaser shall agree on a reconciliation of the
apportionments described herein, if necessary.
SECTION 13. Indemnification.
(a)
The
Seller shall indemnify and hold harmless the Purchaser and its successors and
assigns, from and against any loss, liability, expense, claim, damage or injury
(“Damages”)
suffered or sustained by reason of any acts, omissions or alleged acts or
omissions arising out of any representations and warranties being untrue or
incorrect at the time any such representation or warranty was made, or arising
out of or based on the arrangement created by this Purchase Agreement and the
activities of the Seller taken pursuant hereto, including any judgment, award,
settlement, reasonable attorneys, fees and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim; provided, however, that the
Seller shall not indemnify the Purchaser or its successors and assigns if such
acts, omissions or alleged acts or omissions constitute fraud, willful
misfeasance, bad faith or gross negligence by the Purchaser or were taken at the
direction of or with the consent of the Purchaser. Any
indemnification under this Section 13 shall
survive the termination of this Purchase Agreement for a period of five years;
provided, however, that any
indemnification under this Section 13 with
respect to breaches of Extended Representations and Warranties shall survive
indefinitely, subject to applicable statutes of limitations; and provided, further, that, with
respect to each Asset purchased by a Purchaser hereunder, any indemnification
related thereto under this Section 13 with
respect to breaches of representations and warranties set forth on Exhibits C-1, C-2 or C-3, other than
Extended Representations and Warranties, shall survive the termination of this
Purchase Agreement until the date that is the six (6) month anniversary of the
date such Asset is sold, transferred or otherwise conveyed to a third party, or,
if it is a Mortgage Loan, repaid in full.
(b)
The
Seller shall not have any indemnification obligation under Section 13(a) unless
and until the aggregate amount of Damages incurred by all Purchasers or their
respective successors or assigns in respect of all such acts, omissions or
alleged act or omissions exceeds $1,000,000, whereupon the Purchaser or its
successors or assigns shall be entitled to recover all such Damages to the
extent the aggregate amount of Damages incurred by all Purchasers and their
respective successors or assigns exceeds $1,000,000.
19
(c)
Notwithstanding
anything to the contrary contained in this Purchase Agreement, the Seller shall
not be liable or otherwise responsible for consequential, incidental, special,
indirect, exemplary or punitive damages or for any diminution in value of the
Assets.
(d)
Conduct
of Third Party Claims.
(i)
Whenever
a claim for indemnification shall arise under this Section 13 as a
result of a third-party claim, the party seeking indemnification (the “Indemnified Party”),
shall notify the party from whom such indemnification is sought (the “Indemnifying Party”)
in writing of claim and the facts constituting the basis for such claim in
reasonable detail;
(ii)
Such
Indemnifying Party shall have the right to retain the counsel of its choice in
connection with such claim and to participate at its own expense in the defense
of any such claim; provided, however, that counsel
to the Indemnifying Party shall not (except with the consent of the relevant
Indemnified Party) also be counsel to such Indemnified Party. In no
event shall the Indemnifying Party be liable for fees and expenses of more than
one counsel (in addition to any local counsel) separate from its own counsel for
all Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. Notwithstanding anything to the
contrary in the foregoing, (A) if defendants in any action include any
Indemnified Party and any Indemnifying Party, and any Indemnified Party shall
have been advised by its counsel that there may be material legal defenses
available to such Indemnified Party inconsistent with those available to the
Indemnifying Party, the Indemnified Party shall have the right to employ its own
counsel in such action, and in such case the fees and expenses of the
Indemnified Party’s counsel shall be borne by such Indemnified Party and (B) if
a conflict of interest exists between any Indemnified Party and any such
Indemnifying Party with respect to such claim or the defense thereof, the
Indemnified Party shall have the right to employ its own counsel in such action,
and in such case the fees and expenses of the Indemnified Party’s counsel shall
be borne by the Indemnifying Party; and
(iii)
No
Indemnifying Party shall, without the prior written consent of the Indemnified
Parties (which consent shall not be unreasonably withheld), settle or compromise
or consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification could be
sought under this Section 13 unless
such settlement, compromise or consent (A) includes an unconditional release of
each Indemnified Party from all liability arising out of such litigation,
investigation, proceeding or claim and (B) does not include a statement as to or
an admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Party.
20
SECTION 14. Notices.
All
demands, notices and communications hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered to or mailed, by
certified mail, postage prepaid, by overnight mail or courier service, or
transmitted by facsimile and confirmed by a similar mailed writing as
follows:
If to
Fletcher, to:
Fletcher
International, Inc.
48 Wall
Street
5th
Floor
New York,
NY 10005-2911
Telephone:
( (212) 284-4800
Fax:
(212) 284-4801
Attention: Denis
Kiely
or such
other address or facsimile number as may hereafter be furnished to the Seller in
writing by Fletcher.
If to the
Seller, to:
United
Community Bank
Attn: David
Shearrow
125
Highway 515 East
Blairsville,
GA 30514
Telephone: (706)
781-2265
Fax: (706)
781-6713
with a
copy to:
Kilpatrick
Stockton LLP
1100
Peachtree Street
Suite
2800
Atlanta,
GA 30309
Attn: James
W. Stevens
Telephone: (404)
815-6500
Fax: (404)
541-3400
21
or to
such other address or facsimile number as the Seller may designate in writing to
Fletcher and to each Purchaser.
If to a
Purchaser, to the address and facsimile number designated in its Joinder or to
such other address or facsimile numbers as the Purchaser may designate in
writing to the Seller.
SECTION 15. Representations, Warranties
and Agreements to Survive Delivery.
All
representations, warranties and agreements contained in this Purchase Agreement,
incorporated herein by reference or contained in the certificates of officers of
the Seller submitted pursuant hereto, shall remain operative and in full force
and effect and shall survive delivery of the Assets by the Seller to the
Purchaser or its designee for a period of five years beyond the applicable
Closing Date, other than (i) Extended Representations and Warranties, which
shall survive indefinitely, subject to applicable statutes of limitations, and
(ii) representations and warranties set forth on Exhibits C-1, C-2 or C-3, other than
Extended Representations and Warranties, shall survive the termination of this
Purchase Agreement until the date that is the six (6) month anniversary of the
date such Asset is sold, transferred or otherwise conveyed to a third party, or,
if it is a Mortgage Loan, repaid.
SECTION 16. Severability of
Provisions.
Any part,
provision, representation, warranty or covenant of this Purchase Agreement that
is prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation,
warranty or covenant of this Purchase Agreement that is prohibited or
unenforceable or is held to be void or unenforceable in any particular
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by
applicable law, the parties hereto waive any provision of law which prohibits or
renders void or unenforceable any provision hereof.
SECTION
17. Rights Cumulative;
Waivers.
The
rights of each of the parties under this Purchase Agreement are cumulative and
may be exercised as often as any party considers appropriate. The
rights of each of the parties hereunder shall not be capable of being waived or
varied otherwise than by an express waiver or variation in
writing. Any failure to exercise or any delay in exercising any of
such rights shall not operate as a waiver or variation of that or any other such
right.
22
SECTION 18. Headings.
The
headings of the Sections contained in this Purchase Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Purchase Agreement or any provision hereof.
SECTION 19. Counterparts.
The
parties may execute and deliver this Purchase Agreement as a single document or
in any number of counterparts, manually, by facsimile or by other electronic
means, including contemporaneous xerographic or electronic reproduction by each
party’s respective attorneys. Each counterpart shall be an original,
but a single document or all counterparts together shall constitute one
instrument that shall be the agreement.
SECTION 20. Entire Agreement; Separation
of Agreements.
This
Purchase Agreement (including the Appendix and the Exhibits attached to this
Purchase Agreement) constitutes the entire agreement among the parties with
respect to the subject matter of this Purchase Agreement and supersede all prior
agreements, representations and understandings related to such subject
matters. The parties acknowledge and agree that this Purchase
Agreement and the Securities Purchase Agreement are wholly separate and distinct
agreements that are supported by separate
consideration. Notwithstanding anything to the contrary contained
herein or in the Securities Purchase Agreement, the parties’ obligations under
this Purchase Agreement are separate and distinct from the parties’
obligations under the Securities Purchase Agreement. Accordingly,
breach by any party of any of the provisions of this Purchase
Agreement shall not excuse performance by, or provide the basis for any remedy
for, any party under the Securities Purchase Agreement. Likewise,
breach by either party of any of the provisions of the Securities
Purchase Agreement shall not excuse performance by, or provide the basis for any
remedy for, any party under this Purchase Agreement.
SECTION 21. GOVERNING
LAW.
THIS
PURCHASE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, AND EACH OF THE PARTIES HERETO HEREBY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK
CITY, NEW YORK AND ANY COURT HEARING ANY APPEAL THEREFROM, OVER ANY SUIT, ACTION
OR PROCEEDING AGAINST IT ARISING OUT OF OR BASED UPON THIS PURCHASE AGREEMENT (A
“RELATED
PROCEEDING”). EACH OF THE PARTIES HERETO HEREBY WAIVES ANY
OBJECTION TO ANY RELATED PROCEEDING IN SUCH COURTS WHETHER ON THE GROUNDS OF
VENUE, RESIDENCE OR DOMICILE OR ON THE GROUND THAT THE RELATED PROCEEDING HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
The
Seller and the Purchasers agree to execute and deliver such instruments and take
such further actions as the other party may, from time to time, reasonably
request in order to effectuate the purposes and to carry out the terms of this
Purchase Agreement.
SECTION 23. Successors and
Assigns.
This
Purchase Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns and, with respect to Section 13, will
inure to the benefit of their respective officers, directors, employees,
consultants, agents, attorneys, accountants and affiliates and each Person that
controls (within the meaning of Section 20 of the Securities Exchange Act of
1934, as amended) any of the foregoing Persons, and no other Person will have
any right or obligation hereunder. The rights and obligations of the
Seller and a Purchaser under this Purchase Agreement shall not be assigned by
either such party without the prior written consent of the other such party,
which consent shall not be unreasonably withheld, conditioned or delayed, except
that (a) any person into which the Seller may be merged or consolidated, or any
corporation or other entity resulting from any merger, conversion or
consolidation to which the Seller is a party, or any person succeeding to all or
substantially all of the business of the Seller, shall be the successor to the
Seller hereunder and (b) any person into which a Purchaser may be merged or
consolidated, or any corporation or other entity resulting from any merger,
conversion or consolidation to which such Purchaser is a party, or any person
succeeding to all or substantially all of the business of such Purchaser, shall
be the successor to such Purchaser hereunder. Notwithstanding the
foregoing, the Purchaser may, in whole or in part, in its sole discretion (i)
assign, pledge, hypothecate or transfer this Purchase Agreement or any of the
rights and associated obligations contemplated by this Purchase Agreement to any
other Purchaser or any Fletcher affiliates, parallel investment funds,
co-investment funds or successor investment funds of the Purchaser, and (ii)
pledge or hypothecate any of the rights and associated obligations contemplated
by this Purchase Agreement in connection with financing, derivative or hedging
transactions with respect to this Purchase Agreement, provided, that, any such
assignment, pledge, hypothecation or transfer must comply with applicable
federal and state securities laws. Except as provided in this Section 23, this
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
SECTION 24. Amendments.
This
Agreement may be amended, modified or supplemented in any and all respects, but
only by a written instrument signed by a duly authorized officer of the party
against whom such amendment, waiver, modification or alteration is sought to be
enforced expressly stating that such instrument is intended to amend, modify or
supplement this Agreement.
24
SECTION 25. Reports of the
Seller.
The
Seller and the Servicer shall cooperate with and, upon request, provide to the
Purchaser or to the then current owner such information as may be reasonably
necessary to prepare or cause to be prepared any tax returns that may be
required by applicable federal, state and local law.
SECTION 26. Confidentiality
Prior
to consummation of all of the transactions contemplated by this Purchase
Agreement, the parties to this Purchase Agreement will provide one another with
information which may be deemed by the party providing the information to be
confidential. Each party agrees that it will hold confidential and
protect all information provided to it by the other party to this Purchase
Agreement or such party’s affiliates, except that the obligations contained in
this Section 26
shall not in any way restrict the rights of any party or person to use
information that: (a) was known to such party prior to the disclosure
by the other party; (b) is or becomes generally available to the public other
than by breach of this Purchase Agreement; (c) otherwise becomes lawfully
available to a party to this Purchase Agreement on a non-confidential basis from
a third party who is not under an obligation of confidence to the other party to
this Purchase Agreement or (d) was independently developed by such party without
use of such information, as shown by such party’s files and records or other
evidence in such party’s possession. Notwithstanding the foregoing, a party may
disclose any of such information to directors, officers, employees, agents,
advisors (including legal counsel and accountants) and to its representatives or
representatives of its affiliates, who in each case need to know such
information and who in each case have been informed by the undersigned of the
confidential nature of such information.
If a
party is required by applicable law, regulation, rule or order issued by any
administrative, governmental, regulatory, judicial or stock exchange authority,
or in response to a request from such party’s auditors, to disclose any portion
of such information, the party may disclose such information. If this
Purchase Agreement is terminated, upon request each party hereto agrees to
return or destroy all documents, statements and other written materials, whether
or not confidential, and all copies thereof, provided to it by or on behalf of
the other party to this Agreement except to the extent that such party is
required by law, regulation, internal procedure or court order to retain such
information and such related documents for audit or regulatory
purposes. The provisions of this Section 26 shall
survive termination, for any reason whatsoever, of this Purchase Agreement for
twelve (12) months or until such earlier time as all such information becomes
publicly known and made generally available through no action or inaction of
such party in violation of this Purchase Agreement, and, without limiting the
remedies of the parties hereto in the event of any breach of this Section 26, the
parties hereto will be entitled to seek injunctive relief against the other
party in the event of a breach or threatened breach of this Section
26.
25
SECTION 27. Press
Releases
Prior to
consummation of all of the transactions contemplated by this Purchase Agreement,
the parties to this Purchase Agreement shall each approve the form and substance
of any press release or other public disclosure materially related to this
Purchase Agreement or any other transaction contemplated hereby; provided, however, that nothing
in this Section
27 shall be deemed to prohibit any party from making any disclosure which
its counsel deems necessary or advisable in order to satisfy such party’s
disclosure obligations imposed by law.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
26
IN
WITNESS WHEREOF, the Seller and Fletcher have caused their names to be signed
hereto by their respective duly authorized officers as of the date first above
written.
|
UNITED COMMUNITY
BANK
as Seller
|
|||
|
|
By:
|
/s/ Rex S. Schuette | |
| Name: Rex S. Schuette | |||
| Title: Executive Vice President & Chief Financial Officer | |||
|
FLETCHER INTERNATIONAL,
INC.,
by its duly
authorized investment advisor,
FLETCHER ASSET
MANAGEMENT, INC.
|
|||
|
|
By:
|
/s/ Moez M. Kaba | |
| Name: Moez M. Kaba | |||
| Title: Authorized Signatory | |||
|
|
By:
|
/s Denis J. Kiely
|
|
| Name: Denis J. Kiely | |||
| Title: Director | |||
USAGE
AND SUPPLEMENTAL DEFINITIONS
Usage
The
following rules of construction and usage apply to this Appendix, any agreement
that incorporates this Appendix and any document made or delivered pursuant to
any such agreement:
(a) The term
“documents” includes any and all documents, agreements, instruments,
certificates, notices, reports, statements or other writings however evidenced,
whether in electronic or physical form.
(b) Accounting
terms not defined or not completely defined in this Appendix will be construed
in conformity with GAAP as in effect on the date of the document that
incorporates this Appendix.
(c) References
to “Section,” “Exhibit,” “Schedule” or another subdivision of or to an
attachment are, unless otherwise specified, to an article, section, exhibit,
schedule or subdivision of or an attachment to the document in which such
reference appears.
(d) Any
document defined or referred to in this Appendix or in any document that
incorporates this Appendix means such document as from time to time amended,
modified, supplemented or replaced, including by waiver or consent, and includes
all attachments to and instruments incorporated in such document.
(e) Any
statute defined or referred to in this Appendix or in any document that
incorporates this Appendix means such statute as from time to time amended,
modified, supplemented or replaced, including by succession of comparable
successor statutes, and includes any rules and regulations promulgated under
such statute and any judicial and administrative interpretations of such
statute.
(f) Calculation
of any amount on or as of any date will be determined at or as of the close of
business on such day after the application of any monies, payments and other
transactions to be applied on such day, except that calculations as of the
Cut-off Date will be determined as of the close of business on the day
immediately prior thereto after the application of any monies, payments and
other transactions to be applied on such day.
(g) In the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including,” the word “to” means “to but
excluding” and the word “through” means “to and including.”
(h) All terms
defined in this Appendix apply to the singular and plural forms of such terms
and the term “including” means “including without limitation.”
(i) References
to a Person are also to its permitted successors and assigns.
Appendix
A – 1
Supplemental
Definitions
Whenever
used herein, the following words and phrases, unless the content otherwise
requires, have the following meanings:
“Acceptable Insurer”:
An insurance company which has a claims-paying ability rated at least “A-” by
Fitch, Inc., at least “A2” by Moody’s Investors Service, Inc. or at least “A” by
Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc.
“Accepted Servicing
Practices” has the meaning specified in Section 1 of the
Servicing Agreement.
“Affiliate”: With
respect to any specified Person, any other Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by or under common
control or ownership with such specified Person. For the purposes of
this definition, “control” when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract,
relation to individuals or otherwise, and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.
“ALTA”: The
American Land Title Association or any successor thereto.
“Appraisal”: A
narrative appraisal conducted by a Qualified Appraiser.
“Appraisal Performance
Event”: With respect to any Mortgage Loan, the occurrence of
any of:
(a)
a modification of the terms of such Mortgage Loan which changes the Mortgage
Interest Rate or Mortgage Note Principal Balance (including the accrued and
unpaid interest thereon) or reduces the monthly payment or alters or introduces
any principal amortization feature or extends the term of the Mortgage
Loan,
(b) the
related Mortgagor becoming the subject of a bankruptcy, insolvency or similar
proceeding which, if brought by a third party, is not dismissed within 60 days
or a receiver, conservator or trustee being appointed for the Mortgaged Property
and such appointment continues for 60 days, or
(c) the
related Mortgaged Property becoming REO Property.
“Appraised
Value”: With respect to any Mortgage Loan, the value of the
related Mortgaged Property based upon the most recent appraisal
made.
Appendix
A – 2
“Asset
List”: The list of Assets sold pursuant to the Purchase
Agreement and a Bill of Sale, which shall be prepared by the Seller and attached
as Schedule A
to such Bill of Sale, and which shall set forth, as of the end of the
Business Day immediately prior to the date of the Bill of Sale (unless the
information is expressly stated to be as of the Cut-off Date, in which case, as
of such Cut-off Date) the following information:
(a)
with respect to each Mortgage Loan (if
any):
|
|
(1)
|
the
Mortgage Loan identifying number;
|
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|
(2)
|
the
MERS#, if applicable;
|
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|
(3)
|
the
Mortgagor’s
name;
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(4)
|
the
street address of the Mortgaged Property, including the unit number, if
any, and the city, state and zip code or other description of the
Mortgaged Property’s location (exact
address);
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(5)
|
if
a residential mortgage, a code indicating whether or not the Mortgagor
indicated in his loan application that the Mortgaged Property is
owner-occupied and whether it is the primary residence of the Mortgagor
(to the extent such information is known to the Seller) (property type,
loan type and purpose code
description);
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(6)
|
if
a residential mortgage, the private mortgage insurance coverage and name
of insurer, if any;
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(7)
|
if
a residential dwelling, a code indicating the type of residential dwelling
constituting the Mortgaged Property (to the extent such information is
known to the Seller) (purpose code
description);
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(8)
|
the
property type (purpose code
description);
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(9)
|
the
existence of any Ground Leases;
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(10)
|
the
maturity date;
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(11)
|
the
Mortgage Interest Rate in effect on the Cut-off
Date;
|
|
|
(12)
|
the
date of origination or renewal of the Mortgage
Loan;
|
|
|
(13)
|
the
current payment amount due as of the Cut-off
Date;
|
|
|
(14)
|
the
last payment date and last amount received on which a contractual payment
was actually applied to interest or to the principal balance of the
Mortgage Loan;
|
Appendix
A – 3
|
|
(15)
|
the
original principal balance (note amount) of each Mortgage
Loan;
|
|
|
(16)
|
the
principal balance of the Mortgage Loan (including any accrued and unpaid
interest thereon) as of the close of business on the Cut-off Date (current
payment amount due);
|
|
|
(17)
|
the
contractual delinquency of the Mortgage Loan (0-29 days; 30 to 59 days; 60
to 89 days) as of the Cut-off Date;
|
|
|
(18)
|
a
code indicating whether the Mortgagor is in
bankruptcy;
|
|
|
(19)
|
a
code indicating whether the Mortgage is in foreclosure;
and
|
|
|
(20)
|
the
dollar amount of any delinquency in respect of principal and interest as
of the Cut-off Date (amount is included in current payment amount
due);
|
(b) with
respect to each pool of Mortgage Loans (if any) in the aggregate, (1) the number
of Mortgage Loans; (2) the weighted average maturity of the Mortgage Loans, (3)
the weighted average Mortgage Interest Rate of the Mortgage Loans and (4) the
aggregate Carrying Value of the Mortgage Loans;.
(c) with
respect to each REO Property (if any),
|
|
(1)
|
the
REO Property identifying number;
|
|
|
(2)
|
the
street address of the REO Property, including the unit number, if any, and
the city, state and zip code or other description of the REO Property’s
location;
|
|
|
(3)
|
the
legal address of the REO Property;
|
|
|
(4)
|
property
type;
|
|
|
(5)
|
occupancy
status; and
|
(d) with
respect to the REO Properties (if any) in the aggregate, the aggregate Carrying
Value of such REO Properties.
“Assets”: The
Mortgage Loans and REO Properties that are sold to the Purchasers pursuant to
the Purchase Agreement and which, with respect to each Closing, are identified
in a schedule to a Bill of Sale, together with any related property, including
the related Loan Files, Property Files and Servicing Files.
Appendix
A – 4
“Assignment of Leases, Rents
and Profits”: With respect to any Mortgaged Property, any assignment of
leases, rents and profits or similar agreement executed by the Mortgagor,
assigning to the mortgagee all of the income, rents and profits derived from the
ownership, operation, leasing or disposition of all or a portion of such
Mortgaged Property, in the form which was duly executed, acknowledged and
delivered, as amended, modified, renewed or extended through the date hereof and
from time to time hereafter.
“Breaching
Asset”: An Asset or Offered Asset that is in breach of any
representation or warranty set forth in Exhibits C-1, C-2 or C-3, as applicable
(which representations and warranties for purposes of this definition shall be
deemed to have been made without regard to any qualification of knowledge or
actual knowledge by the Seller).
“Business
Day”: Any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in the New York, New York or the
State of Georgia are authorized or obligated by law, regulation or executive
order to close.
“Carry
Account”: With respect to a Purchaser, the meaning set forth
in such Purchaser’s Loan Agreement.
“Carrying
Value”: With respect to an asset, the Seller’s carrying value
thereof as of the Cut-off Date as determined in accordance with GAAP
consistently applied, all as mutually agreed by the Seller and the Purchaser,
net of any payments applied to principal after the Cut-off Date (payments
received with respect to any Asset shall first be applied to accrued and unpaid
interest on the related Mortgage Note and then applied to principal thereof
unless such asset is a non-performing mortgage loan, in which case payments
received shall first be applied to principal in accordance with GAAP
consistently applied).
“Closing”: The
payment (or deemed payment) of the related Purchase Price and conveyance of the
related Assets as evidenced in a Bill of Sale.
“Closing
Date”: With respect to any Closing or Substitution, the
effective date of such Closing, or with respect to any Substitution, the
effective date of such Substitution.
“Closing
Documents”: The meaning specified in Section 10 of the
Purchase Agreement.
“Collection
Account”: The securities or deposit account established by a
Purchaser for the receipt of collections and the net proceeds of dispositions or
events of loss with respect to such Purchaser’s Assets.
“Collections”: The
meaning specified in Section 2(b) of Exhibit
G.
“Condemnation
Proceeds”: All proceeds paid or awarded in connection with the
full or partial condemnation of, or exercise of eminent domain with respect to,
a Mortgaged Property, to the extent such proceeds are not applied to the
restoration or repair of the related Mortgaged Property or released to the
Mortgagor or any tenants or ground lessors.
Appendix
A – 5
“Cut-off
Date”: The date specified as such in Exhibit A and in the
related Bill of Sale, with respect to each Closing, or such other date as may be
mutually agreed to by the Seller and the Purchaser.
“Default
Interest”: With respect to any Mortgage Loan, interest at the
applicable Default Rate and borne by the applicable Mortgage Note following a
Mortgage Event of Default.
“Default
Rate”: With respect to any Mortgage Loan, the “default rate”,
“default interest rate” or other similar rate at which interest accrues during
the continuance of a Mortgage Event of Default as specified in the related
Mortgage Note, but only to the extent that such interest accrues at a rate in
excess of the Mortgage Interest Rate.
“Environmental
Claim”: Any claim, action, cause of action, suit, proceeding,
investigation, order, demand or notice (written or oral) by any Person alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from the presence, or Release into the environment
of, or exposure to, any Hazardous Substance at a Mortgaged Property, or
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
“Environmental
Law”: Any and all federal, state and local laws, rules or
regulations, any judicial or administrative orders, decrees or judgments
thereunder, and any permits, approvals, licenses, registrations, filings and
authorizations relating to the environment or the Release or threatened Release
of Hazardous Substances into the indoor or outdoor environment including,
without limitation, ambient air, soil, surface water, ground water, wetlands,
land or subsurface strata or otherwise relating to the release of Hazardous
Substances.
“Escrow
Payments”: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
“Extended Representations and
Warranties”: The representations and warranties set forth
in:
(a) paragraphs 1 (Ownership of Assets), 2 (Authority to Transfer
Assets), 13 (Environmental Conditions) and
27 (Litigation) of Exhibit
C-1;
Appendix
A – 6
(b) paragraphs 1 (Ownership of Assets), 2 (Authority to Transfer
Assets), 13 (Environmental Conditions),
14 (Consumer Regulations), 15 (HOEPA) and 29 (Litigation) of Exhibit C-2;
and
(c) paragraphs 1 (Ownership of Assets), 2 (Authority to Transfer
Assets), 7 (Environmental Conditions) and
10 (Litigation) of Exhibit
C-3.
“FDIC”: The
Federal Deposit Insurance Corporation.
“Fletcher”: Fletcher
International, Inc., a Delaware company.
“GAAP”: U.S.
generally accepted accounting principles.
“Ground
Lease”: A ground lease of a Mortgaged Property.
“Hazardous
Substance”: Other than any chemical, material or substance
that is used or stored in a manner that is consistent with, and would not result
in liability under, any applicable Environmental Law, collectively, (a) any
petroleum, petroleum products or waste oils, explosives, radioactive materials,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls (“PCBs”), lead in
drinking water, radon and lead-based paint, (b) any chemicals or other materials
or substances defined as or included in the definition of “hazardous
substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous
wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,”
“contaminants,” “pollutants,” or words of similar import under any Environmental
Law and (c) any other chemical or any other material or substance, exposure to
which is prohibited, limited or regulated under any Environmental
Law.
“HOEPA”: The
meaning specified in paragraph 15 of Exhibit
C-2.
“Immaterial
Modification”: Any immaterial modification, waiver or amendment of a
Mortgage Loan that is not a Material Modification and that would not adversely
affect the interests of the Purchaser in such Mortgage Loan, including, without
limitation: (i) waivers of minor covenant defaults (other than financial
covenants), including late financial statements, (ii) grants of easements that
do not materially adversely affect the use, operation or value of any Mortgaged
Property or the obligation of a Mortgagor to pay the related Mortgage Loan and
(iii) any other modifications, waivers or amendments that the Servicer
determines, in accordance with Accepted Servicing Practices, are of a routine
nature and which are made in accordance with Accepted Servicing
Practices. In no event shall any Immaterial Modification result in
the extension of the maturity date of a Mortgage Loan, a reduction in the
Mortgage Interest Rate borne by a Mortgage Loan or the contractual payment
payable on a Mortgage Loan or a deferral or forgiveness of interest on or
principal of a Mortgage Loan or a modification or waiver of any other monetary
term of a Mortgage Loan relating to the timing or amount of any payment of
principal or interest.
Appendix
A – 7
“Independent”: When
used with respect to any specified Person, means such a Person who does not have
any direct financial interest or any material indirect financial interest in any
Mortgagor, the Seller, the Servicer or any of their respective
Affiliates.
“Insurance
Proceeds”: Proceeds of any title policy, hazard policy or
insurance policy covering a Mortgage Loan, if any, to the extent such proceeds
are not to be applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the terms of the related
Mortgage.
“Interested
Person”: As of any date of determination and with respect to
any Mortgage Loan or related Mortgaged Property or REO Property, the Seller, the
Servicer or any of their respective Affiliates.
“Interim
Period”: With respect to any Asset, the period beginning on
and including the Commitment Date and ending on but excluding the Closing Date
on which such Asset is purchased by a Purchaser.
“Joinder”: An
agreement substantially in the form of Exhibit E or such
other form as mutually acceptable to the Seller and the Person entering into
such agreement (as evidenced by their execution thereof) pursuant to which the
Person other than the Seller agrees that it will be deemed to be a party to and
a Purchaser under the Purchase Agreement upon execution of a Bill of
Sale.
“Lender”: United
Community Bank, as lender pursuant to a Loan Agreement.
“Liquidation
Expenses”: Reasonable, customary and necessary out-of-pocket
costs and expenses incurred by the Servicer on behalf of the Purchaser in
connection with the liquidation of a Mortgage Loan or the liquidation of a REO
Property, including, without limitation, legal fees and expenses, committee or
referee fees, brokerage commissions and conveyance taxes.
“Liquidation
Proceeds”: Cash (other than Insurance Proceeds or Condemnation
Proceeds) received in connection with the liquidation of a Mortgage Loan,
whether through the sale or assignment of such Mortgage Loan, judicial
foreclosure, foreclosure sale, sale of REO Property, or otherwise, or the sale
of the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan, other than amounts required to be paid to the
related Mortgagor pursuant to law or the terms of such Mortgage
Loan.
“Loan
Agreement”: A loan agreement entered into between United
Community Bank, as lender, and a Purchaser, substantially in the form of Exhibit J to the
Purchase Agreement unless another form is mutually agreed upon between such
lender and such Purchaser, pursuant to which United Community Bank will lend 80%
of the aggregate Purchase Price of the Assets purchased by such
Purchaser.
Appendix
A – 8
“Loan
File”: The meaning specified in Exhibit B-1 to the
Purchase Agreement.
“Major
Lease”: A material lease at a Mortgaged Property with respect
to which the related Mortgage Loan Documents grant the Mortgage Lender the right
to consent to the execution, termination or renewal of such lease.
“Material Adverse
Effect”: Any material adverse effect with respect to (a) the
business, properties, assets, operations, results of operations, revenues or
condition, financial or otherwise, of the Seller or the Servicer, as applicable
and its subsidiaries taken as a whole, (b) the legality, validity or
enforceability of the Purchase Agreement, the Servicing Agreement or the Loan
Agreement or (c) the Seller’s or the Servicer’s ability, as applicable, to
perform fully on a timely basis its obligations under the Purchase Agreement or
the Servicing Agreement, as applicable.
“Material
Modification”: A material modification, waiver or
amendment of a Mortgage Loan, excluding Immaterial Modifications but including,
without limitation:
(i) any
modification of, or waiver with respect to, such Mortgage Loan that would result
in the extension of the maturity date thereof, a reduction in the Mortgage
Interest Rate borne thereby or the contractual payment payable thereon or a
deferral or forgiveness of interest on or principal of such Mortgage Loan, a
modification or waiver of any other monetary term or material non-monetary term
of such Mortgage Loan, including, without limitation, any such modification or
waiver relating to the timing or amount of any payment of principal and interest
or a modification or waiver of any provision of such Mortgage Loan which
restricts the related Mortgagor from incurring additional
indebtedness;
(ii) any
modification or amendment of, or waiver with respect to, such Mortgage Loan that
would result in a discounted pay-off of such Mortgage Loan;
(iii) any
modification, waiver or amendment that would result in any release of the
related Mortgagor from liability with respect to such Mortgage
Loan;
(iv) any
modification, waiver or amendment of a “due-on-sale” or “due-on-encumbrance”
clause (other than a waiver of such a clause where such clause is not
exercisable under applicable law) for a Mortgage Loan;
(v) any
modification, waiver or amendment of the insurance requirements for the
Mortgaged Property related to a Mortgage Loan;
(vi) any
modification, waiver or amendment that would result in any substitution or
release of Mortgage Collateral Security for such Mortgage Loan; or
Appendix
A – 9
(vii) any
release of any Mortgage Collateral Security other than in connection with a
payment in full of all amounts owing under the related Mortgage, a sale of an
Asset or a substitution of an Asset pursuant to a Post-Closing
Substitution.
“MERS” means Mortgage
Electronic Registration Systems, Inc. or any successor or assign
thereto.
“MERS System” means
the electronic system of recording transfers of mortgages maintained by
MERS.
“MIN”: The
meaning specified in Exhibit B-1 to the
Purchase Agreement.
“MOM
Loan”: The meaning specified in Exhibit B-1 to the
Purchase Agreement.
“Mortgage”: The
mortgage, deed of trust or other instrument and riders thereto securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note or which secures the interest
of a Mortgagor as a lessee under a Ground Lease.
“Mortgage
Account”: With respect to any Mortgage Loan, any cash
collateral account, escrow account or reserve account or similar account
established pursuant to the related Mortgage or other Mortgage Loan
Document.
“Mortgage Collateral
Assignment”: Each instrument assigning or otherwise
transferring the Seller’s right, title and interest in and to a Mortgage and any
other Mortgage Collateral Security to the Purchaser, which instruments shall
comply in form and substance with any requirements contained in a related
Mortgage Loan Document.
“Mortgage Collateral
Security”: Any right, interest, document, instrument or
property given as security for or in guaranty of the Mortgage Loan (including,
without limitation, the Mortgages, the Assignment of Leases, Rents and Profits,
all Mortgage Accounts maintained with respect to such Mortgage Loan and the cash
and investments credited thereto, and the rights of the mortgagee under the
Required Insurance Policies and Title Insurance Policies), together with any
supplement or amendment thereto and as amended from time to time
hereafter.
“Mortgage Event of
Default”: With respect to a Mortgage Loan, an “event of
default” as defined or described in the related Mortgage.
“Mortgage Interest
Rate”: With respect to any Mortgage Loan, the “Mortgage
Interest Rate,” “Interest Rate.” “Applicable Interest Rate” or words
of similar meaning as defined in the related Mortgage Loan Documents (without
giving effect to any Default Interest).
Appendix
A – 10
“Mortgage
Lender”: The lender of a Mortgage Loan. Upon the
conveyance of a Mortgage Loan to the Purchaser pursuant to this Purchase
Agreement, the Purchaser shall be the Mortgage Lender until such loan is sold or
is reconveyed to the Seller pursuant to a Post-Closing
Substitution.
“Mortgage
Loan”: A commercial or residential mortgage loan which is the
subject of this Purchase Agreement as identified on the Asset List attached as
Schedule A to a
Bill of Sale, which Mortgage Loan includes without limitation the Mortgage Loan
Documents, the Loan File, the Servicing File, all payments received with respect
to such mortgage loan, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds, all liens and security
interests securing payment of the Mortgage Note and all other rights, benefits,
proceeds and obligations arising from or in connection with such mortgage
loan.
“Mortgage Loan
Documents”: With respect to a Mortgage Loan, the original
related Mortgage Note (or if the original note is missing, a lost note affidavit
with customary indemnification) with applicable addenda and riders, the original
related security instrument, any required addenda and riders, any related
assignments and any intervening related assignments and the related Title
Insurance Policy (other than any internal underwriting analysis of the Seller;
provided, however, the
Purchaser may have access to such analysis for its review).
“Mortgage
Note”: The promissory note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage and riders
thereto.
“Mortgaged
Property”: The real property securing repayment of the debt
evidenced by a Mortgage Note.
“Mortgagor”: The
obligor on a Mortgage Note.
“Net Liquidation
Proceeds”: The amount derived by subtracting the Liquidation
Expenses from the Liquidation Proceeds. Net Liquidation Proceeds with
respect to any Mortgage Loan shall be applied first to interest, expenses and
other non-principal amounts due on such Mortgage Loan (except for Default
Interest) and then to principal.
“Offered
Assets”: The Mortgage Loans and REO Properties that are
offered for sale to the Purchasers pursuant to the Purchase Agreement and which
are identified and described in Exhibit A to the
Purchase Agreement, as such Exhibit may be updated from time to time, together
with any related property, including the related Loan Files, Property Files and
Servicing Files.
“Officer’s
Certificate”: A certificate signed by the President and Chief
Executive Officer or any Executive Vice President, and delivered to the
Purchaser as required by this Purchase Agreement.
Appendix
A – 11
“Opinion of
Counsel”: A written opinion of counsel, who may be an employee
of the Seller, reasonably acceptable to the Purchaser.
“Optional
Exchange”: The meaning specified in Section 2(b) of the
Purchase Agreement.
“Permitted
Encumbrances”: With respect to a Mortgaged Property or an REO
Property, (a) the lien of current real and personal property taxes, water rates,
sewer rents and assessments or payments to the taxing authority in lieu thereof
not yet due or delinquent, (b) covenants, conditions and restrictions, rights of
way easements and other matters of public record or reflected on the related
survey, (c) encumbrances and exceptions specifically referred to in the Title
Insurance Policy issued or, as evidenced by a “marked-up” commitment for title
insurance, to be issued in respect of the Mortgaged Property or REO Property, as
applicable, (d) rights of tenants as tenants only and (e) where a Mortgaged
Property or REO Property is a condominium unit, the lien of a condominium
association on such Mortgaged Property or REO Property for unpaid maintenance or
common expense assessments which in either case are not yet due and
payable.
“Person”: Any
individual, corporation, partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof.
“Post-Closing
Substitution”: With respect to a substitution of a Breaching
Asset by a Purchaser after such Breaching Asset’s Closing Date, the meaning
specified in Section
7(a) of the Purchase Agreement.
“Pre-Closing
Substitution”: With respect to a substitution of a Breaching
Asset by a Purchaser prior to such Breaching Asset’s Closing Date, the meaning
specified in Section
2(c) of the Purchase Agreement.
“Principal
Balance”: As to each Mortgage Loan, the actual outstanding
principal balance of the Mortgage Loan at the Cut-off Date after giving effect
to payments of principal and to all amounts attributable to principal collected
from or on behalf of the Mortgagor, including the principal portion of
Liquidation Proceeds, Condemnation Proceeds, and Insurance Proceeds, in each
case in accordance with GAAP consistently applied.
“Principal
Prepayment”: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled due date, including
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
Appendix
A – 12
“Property
File”: The meaning specified in Exhibit B-2 to the
Purchase Agreement.
“Purchase
Agreement”: The Asset Purchase and Sale Agreement dated as
of April 1, 2010, among United Community Bank, a bank organized under the
laws of the State of Georgia, as Seller, Fletcher International, Inc., a
Delaware company, and each affiliate of Fletcher International, Inc. that
becomes a party to such agreement as a purchaser, as amended, modified or
otherwise in effect.
“Purchase
Price”: With respect to any Asset, the Carrying Value thereof
as of the related Cut-off Date.
“Purchaser”: An
affiliate of Fletcher International, Inc., that has become a party to the
Purchase Agreement by entering into a Joinder thereto.
“Qualified
Appraiser”: An appraiser who is Independent, a member in good
standing of the Appraisal Institute with an MAI membership designation and who
is on the Seller’s approved appraiser list.
“Release”: Any
release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the indoor or outdoor
environment, including, without limitation, the movement of Hazardous Substances
through ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata.
“REO
Disposition”: The final sale of any REO Property.
“REO Disposition
Proceeds”: All amounts received with respect to an REO
Disposition.
“REO
Property”: A Mortgaged Property acquired through foreclosure,
deed in lieu of foreclosure, power of sale or otherwise.
“Required Insurance
Policy”: Any insurance policy which is required to be
maintained from time to time under a Mortgage or other Mortgage Loan
Document.
“Securities Purchase
Agreement”: The Securities Purchase Agreement, dated as of
April 1, 2010, between United Community Banks, Inc., a corporation organized
under the laws of Georgia, and Fletcher International, Ltd., a company domiciled
in Bermuda, as amended, restated or otherwise modified and in effect from time
to time.
“Seller”: United
Community Bank, in its capacity as seller pursuant to the Purchase Agreement and
each Bill of Sale.
Appendix
A – 13
“Servicer”: United
Community Bank, in its capacity as servicer pursuant to a Servicing Agreement
entered into with a Purchaser, or any of its successors or permitted
assigns.
“Servicer Event of
Default”: The meaning specified in Section 27 of the
Servicing Agreement.
“Servicing
Agreement”: A servicing agreement between United Community
Bank and a Purchaser substantially in the form of Exhibit G to the
Purchase Agreement unless another form is mutually agreed upon between such
United Community Bank and such Purchaser, pursuant to which United Community
Bank will service, manage, restructure and sell the Purchaser’s Assets at the
direction of the Purchaser.
“Servicing
File:” The meaning specified in Section 2(i) of the
Purchase Agreement.
“Sub-Servicer”: Any
Person with which the Servicer has entered into a Sub-Servicing Agreement and
which satisfies the requirements set forth in the Servicing
Agreement.
“Sub-Servicing
Agreement”: A written contract between the Servicer and any
Person relating to the servicing or the administration of an Asset as an agent
of the Servicer.
“Substitution”: A
Pre-Closing Substitution pursuant to Section 2(c) of the
Purchase Agreement or a Post-Closing Substitution pursuant to Section 7 of the
Purchase Agreement, as applicable.
“Substitution
Period”: The meaning specified in Section 7(a) of the
Purchase Agreement.
“Taxes”: The
meaning specified in Section 12(d) of the
Purchase Agreement.
“Title Insurance
Policy”: With respect to (i) each Mortgage Loan, the ALTA (or
equivalent) mortgagee title insurance policy or policies issued with respect to
the Mortgaged Property for such Mortgage Loan and insuring the first priority
mortgage lien in favor of the Purchaser pursuant to the related Mortgage and
containing certain endorsements and affirmative assurances and (ii) each REO
Property, the ALTA (or equivalent) owner’s title insurance policy or policies
issued with respect to the REO Property and insuring title in favor of the
Purchaser and containing certain endorsements and affirmative
assurances.
“UCB
Breach”: The occurrence of any event specified in Section 8(d) of the
Purchaser Agreement.
“UCBI”: United
Community Banks, Inc., a corporation organized under the laws of the State of
Georgia.
Appendix
A – 14
“USAP”: Uniform
Single Attestation for Mortgage Bankers.
“Use”: With
respect to any Hazardous Substance, the generation, manufacture, processing,
distribution, handling, use, treatment, recycling or storage of such Hazardous
Substance.
Appendix
A – 15
REPRESENTATIONS
AND WARRANTIES OF THE SELLER
REGARDING
ASSETS THAT ARE COMMERCIAL MORTGAGE LOANS
With respect to the Assets, as of the
Closing Date (except as may be specified in the representation and warranty and
except for the exceptions specifically agreed upon by the Purchaser in writing),
the Seller represents and warrants as to such Assets:
1. Ownership of
Assets. Immediately prior to the transfer thereof to the
Purchaser, the Seller had good and marketable title to, and was the sole owner
and holder of, such Assets, free and clear of any and all liens, encumbrances
and other interests on, in or to such Asset other than Permitted
Encumbrances.
2. Authority to Transfer
Assets. The Seller has full right and authority to sell,
assign and transfer such Assets.
3. Asset List. The
information pertaining
to such Assets set forth in the Asset List is true and correct in all material
respects as of the related Closing Date.
4. Permitted
Encumbrances. Subject to the disclosures under the “Lien
Releases” representation in paragraph 30 below,
if any, the related Mortgage constitutes a valid first lien upon the related
Mortgaged Property, including all buildings located thereon and all fixtures
attached thereto, such lien being subject only to Permitted
Encumbrances. The Permitted Encumbrances do not materially interfere
with the security intended to be provided by the related Mortgage or the current
use or operation of the related Mortgaged Property.
5. Title
Insurance. The lien of the related Mortgage is insured by a
mortgagee Title Insurance Policy, or its equivalent as adopted in the applicable
jurisdiction, issued by a nationally recognized title insurance company,
insuring the originator of such Mortgage Loan, its successors and assigns, as to
the first priority lien of the Mortgage in the original principal amount of the
Mortgage Loan, subject only to Permitted Encumbrances (or, if a Title Insurance
Policy has not yet been issued in respect of the Mortgage Loan, a policy meeting
the foregoing description is evidenced by a commitment for title insurance
“marked-up” at the closing of such loan). Each Title Insurance Policy
(or, if it has yet to be issued, the coverage to be provided thereby) is in full
force and effect, all premiums thereon have been paid and no material claims
have been made thereunder and no claims have been paid thereunder. The Seller
has not, by act or omission, done anything that would materially impair the
coverage under such Title Insurance Policy.
6. No Waivers by Seller of Material
Defaults. The Seller has not waived any material default, breach,
violation or event of acceleration existing under the related Mortgage or
Mortgage Note. Notwithstanding anything to the contrary contained in this
representation and warranty, this representation and warranty does not address
or otherwise cover any default, breach, violation or event of acceleration that
specifically pertains to any matter otherwise covered or addressed by any other
representation or warranty made by the Seller as specified in this Exhibit C-1; and a
breach by a Mortgagor of any representation or warranty contained in any
Mortgage Loan Document shall not constitute a non-monetary default, breach,
violation or event of acceleration for purposes of this representation if the
subject matter of such representation or warranty is also covered or addressed
by any representation or warranty made in this Exhibit
C-1.
Exhibit C
– 1 – 1
7. No Offsets, Defenses or
Counterclaims. There is no material valid offset,
defense or counterclaim to such Mortgage Loan.
8. Condition of Property;
Condemnation. To the Seller’s actual knowledge, the related Mortgaged
Property is free and clear of any damage that would materially and adversely
affect its value as security for such Mortgage Loan unless there has been
already escrowed 100% of the amounts required to make any necessary repairs to
correct such material damage. There are no proceedings for the condemnation of
all or any material portion of the related Mortgaged Property.
9. Compliance with Usury Laws.
Such Mortgage Loan complied with, or was exempt from, all applicable usury laws
in effect as of its date of origination or the Loan File contains an opinion to
that effect.
10. Full Disbursement of Mortgage Loan
Proceeds. The proceeds of such Mortgage Loan have been fully disbursed
and there is no requirement applicable to the holder of the Mortgage Loan for
future advances thereunder.
11. Enforceability. Each related
Mortgage Note, related Mortgage and related Assignment of Leases, Rents and
Profits (if any) is the legal, valid and binding obligation of the maker thereof
(subject to any non-recourse provisions contained in any of the foregoing
agreements and any applicable state anti-deficiency or market value limit
deficiency legislation), enforceable in accordance with its terms, except as
such enforcement may be limited by anti-deficiency, bankruptcy, insolvency,
reorganization, receivership, moratorium, redemption, liquidation or other laws
relating to or affecting the rights of creditors generally and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
Exhibit C
– 1 – 2
12. Insurance. The
improvements upon the related Mortgaged Property are insured against loss by a
fire and extended perils policy providing coverage against loss or damage
included within the “all risk of physical loss” or the equivalent thereof, in an
amount (subject to a customary deductible) at least equal to the lesser of (1)
the outstanding principal amount of such Mortgage Loan, (2) 100% of the full
actual replacement cost or value of the improvements located on such Mortgaged
Property (exclusive of costs of excavations, foundations and underground
utilities and footings) and (3) the full insurable actual cash value of such
improvements, and the related hazard insurance policy contains appropriate
endorsements to avoid the application of co-insurance and does not permit
reduction in insurance proceeds for depreciation. If any portion of the
improvements on the related Mortgaged Property was, at the time of the
origination of such Mortgage Loan, in an area identified in the Federal Register
by the Federal Emergency Management Agency as having “special flood hazards,” a
flood insurance policy meeting any requirements of the then current guidelines
of the Federal Insurance Administration is in effect with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(1) the outstanding principal amount of such Mortgage Loan, (2) the full
insurable actual cash value of such Mortgaged Property, (3) the maximum amount
of insurance available under the National Flood Insurance Act of 1968, as
amended, and (4) 100% of the full actual replacement cost or value of the
improvements located on such Mortgaged Property. The loan documents
require the Mortgagor to maintain (or to cause the applicable tenant to
maintain) the insurance referred to in this paragraph in respect of the
Mortgaged Property, and all such insurance required by the loan documents to be
maintained is in full force and affect and names the originator of such Mortgage
Loan as mortgagee, loss payee or additional insured. Each such insurance policy
requires prior notice to the holder of the Mortgage of termination or
cancellation, and no such notice has been received, including any notice of
nonpayment of premiums, that has not been cured.
13. Environmental
Conditions. As of the Closing Date, (i) there are no material
adverse environmental conditions or circumstances affecting such Mortgaged
Property; (ii) no Mortgaged Property is subject to a notice, Environmental
Claim, request for information or order from or agreement with a government
authority or any other Person respecting the Release or threatened Release of a
Hazardous Substance; (iii) there has been no Release of Hazardous Substances on,
at or under any Mortgaged Property which would reasonably be expected to result
in the imposition of any material liability or any Environmental Claim; (iv)
there are no judicial or administrative proceedings or any other Environmental
Claims pending or threatened alleging any violation or failure to comply with
any Environmental Law, or with respect to any release of any Hazardous Substance
from any Mortgaged Property; (v) there are no past or present Releases of any
Hazardous Substances that could form the basis of any Environmental Claim
against any Person or entity whose liability for any Environmental Claim the
Seller has retained or assumed either contractually or by operation of law, or
otherwise result in any costs or liabilities under Environmental Laws; and (vi)
none of the Mortgaged Properties are subject to any removal or remediation of
any Hazardous Substances or are subject to notice to or approval from any
governmental authority pertaining to environmental matters.
14. No Cross-Collateralization with
Other Mortgage Loans. Such Mortgage Loan is not
cross-collateralized with any other mortgage loan not sold to the
Purchaser.
Exhibit C
– 1 – 3
15. Waivers and
Modifications. The terms of the related Mortgage and the
related Mortgage Note have not been impaired, waived, altered or modified in any
material respect, except as specifically set forth in the related Loan
File.
16. Taxes and
Assessments. There are no delinquent taxes or governmental
assessments affecting the related Mortgaged Property that on or before the
Closing Date became due and owing, which are or may become a lien of priority
equal to or higher than the lien of the related Mortgage except such as have
been paid, or an escrow of funds in an amount sufficient to cover such payments
has been established. For purposes of this representation and
warranty, real property taxes and assessments shall not be considered unpaid
until the date on which interest and/or penalties would be payable
thereon.
17. Valid
Assignment. The assignment of the Mortgage related to each
Mortgage Loan, constitutes the legal, valid and binding assignment of such
Mortgage from the Seller to the Purchaser subject to the exceptions described in
paragraph 11
(Enforceability) above.
The Assignment of Leases, Rents and Profits, if any, set forth in the Mortgage
or separate from the related Mortgage and related to and delivered in connection
with each Mortgage Loan establishes and creates a valid and, subject only to the
(i) Permitted Encumbrances, (ii) the exceptions set forth in paragraph 11 (Enforceability) above and
(iii) a license granted to the related Mortgagor to exercise certain rights and
to perform certain obligations of the lessor under such leases, including the
right to operate the related Mortgaged Property as of the date of origination of
each Mortgage Loan, enforceable first priority lien and first priority security
interest in the related Mortgagor’s interest in all leases, subleases, licenses
or other agreements assigned thereunder from time to time, to the extent
permitted by law, pursuant to which any person is entitled to occupy, use or
possess all or any portion of the real property subject to the related Mortgage,
and each assignor thereunder has the full right to assign the same, to the
extent permitted by law. The related assignment of any Assignment of Leases,
Rents and Profits, not included in a Mortgage, executed and delivered in favor
of the Purchaser constitutes a legal, valid and binding assignment, subject to
the exceptions described in paragraph 11 (Enforceability)
above.
18. Escrows. There are
no cash, escrow or reserve deposits relating to such Mortgage Loan that are, as
of the Closing Date, required to be deposited with the mortgagee or its
agent.
19. No Material
Encroachments. As of the date of origination of a Mortgage
Loan, no improvement that was included for the purpose of determining the
Appraised Value of the related Mortgaged Property at the time of origination of
such Mortgage Loan lay outside the boundaries and building restriction lines of
such property (unless affirmatively covered by the Title Insurance Policy
referred to in paragraph 5 (Title
Insurance) above), and no improvements on adjoining properties encroached
upon such Mortgaged Property. The improvements located on or forming
part of such Mortgaged Property comply in all material respects with applicable
zoning laws and ordinances (except to the extent that they may constitute legal
nonconforming uses).
Exhibit C
– 1 – 4
20. Inspection. In
connection with the origination of each Mortgage Loan, the Seller inspected or
caused to be inspected (either directly by the Seller, by its correspondent or
by a third party) the Mortgaged Property.
21. No Equity Participation or
Contingent Interest. No Mortgage Loan contains an equity
participation by the Seller, or provides for any contingent or additional
interest in the form of participation in the cash flow of the related Mortgaged
Property. No Mortgage Loan provides for negative amortization.
22. No Advances of Funds. No
holder of the Mortgage Loan has advanced funds or induced, solicited or
knowingly received any advance of funds from a party other than the owner of the
related Mortgaged Property (other than a tenant required to make its lease
payments directly to the holder of the related Mortgage Loan), directly or
indirectly, for the payment of any amount required by the Mortgage
Loan.
23. Licenses, Permits, Etc. All
licenses, permits and authorizations required by applicable laws for the use of
the related Mortgaged Property as it is currently operated have been obtained
and maintained in accordance with applicable laws, except for such licenses,
permits and authorizations the failure of which to obtain would not materially
adversely affect the value, use or operation of the Mortgaged
Property.
24. Servicing. The servicing and
collection practices used by the Seller and its designees with respect to the
Mortgage Loan have been in all material respects legal and have met customary
standards utilized by commercial banks in the area in which the Mortgaged
Property is located for servicing of commercial mortgage loans.
25. Customary Remedies. The
related Mortgage or Mortgage Note, together with applicable state law, contains
customary and enforceable provisions (subject to the exceptions set forth in
paragraph 11
(Enforceability) above)
such as to render the rights and remedies of the holders thereof adequate for
the practical realization against the related Mortgaged Property of the
principal benefits of the security intended to be provided thereby.
26. Insurance and Condemnation
Proceeds. The related Mortgage or other related loan document
provides that insurance proceeds and condemnation proceeds will be applied to
either restore or repair the Mortgaged Property or repay the principal of the
Mortgage Loan, with, in some cases, the related Mortgagor (or the tenant or
master lessee at the Mortgaged Property which maintains such insurance) being
entitled to receive proceeds in excess of the amount utilized to restore or
repair the Mortgaged Property.
Exhibit C
– 1 – 5
27. Litigation. To the
Seller’s actual knowledge, there are no pending actions, suits or proceedings by
or before any court or governmental authority against or affecting the related
Mortgagor or the related Mortgaged Property that, if determined adversely to
such Mortgagor or Mortgaged Property, would materially and adversely affect the
value, use or operation of the Mortgaged Property.
28. Leasehold
Estate. Each Mortgaged Property consists of either (1) the
related Mortgagor’s fee simple estate in real estate or (2) if the related
Mortgage Loan is secured in whole or in part by the interest of a Mortgagor as a
lessee under a Ground Lease and not by the fee simple interest, the related
Mortgagor’s interest in the Ground Lease and the following apply to such Ground
Lease:
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a.
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Such
Ground Lease or a memorandum thereof has been or will be duly recorded;
such Ground Lease (or the related estoppel letter or lender protection
agreement between the Seller and related lessor) permits the interest of
the lessee thereunder to be encumbered by the related
Mortgage;
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b.
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The
lessee’s interest in such Ground Lease is not subject to any liens or
encumbrances superior to, or of equal priority with, the related Mortgage,
other than the ground lessor’s related fee interest and Permitted
Encumbrances;
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c.
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The
Mortgagor’s interest in such Ground Lease is assignable to the Purchaser
and its successors and assigns upon notice to, but without the consent of,
the lessor thereunder (or, if such consent is required, it has been
obtained prior to the Closing Date) and, in the event that it is so
assigned, is further assignable by the Purchaser and its successors and
assigns upon notice to, but without the need to obtain the consent of,
such lessor;
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d.
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Such
Ground Lease is in full force and effect, no notice of an event of default
has occurred thereunder and, to the Seller’s actual knowledge, there
exists no condition that, but for the passage of time or the giving of
notice, or both, would result in an event of default under the terms of
such Ground Lease;
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e.
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Such
Ground Lease, or an estoppel letter or other agreement, requires the
lessor under such Ground Lease to give notice of any default by the lessee
to the mortgagee, provided that the mortgagee has provided the lessor with
notice of its lien in accordance with the provisions of such Ground Lease,
and such Ground Lease, or an estoppel letter or other agreement, further
provides that no notice of termination given under the Ground Lease is
effective against the mortgagee unless a copy has been delivered to the
mortgagee;
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Exhibit C
– 1 – 6
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f.
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A
mortgagee is permitted a reasonable opportunity (including, where
necessary, sufficient time to gain possession of the interest of the
lessee under such Ground Lease) to cure any default under such Ground
Lease which is curable after the receipt of notice of any such default,
before the lessor thereunder may terminate such Ground
Lease;
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g.
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Such
Ground Lease has an original term (including any extension options set
forth therein) which extends not less than twenty years beyond the
maturity date of the related Mortgage
Loan;
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h.
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Under
the terms of such Ground Lease and the related Mortgage, taken together,
any related insurance proceeds, will be applied either to the repair or
restoration of all or part of the related Mortgaged Property, with the
mortgagee or a trustee appointed by it having the right to hold and
disburse such proceeds as the repair or restoration progresses (except in
such cases where a provision entitling another party to hold and disburse
such proceeds would not be viewed as commercially unreasonable by a
prudent commercial mortgage lender), or to the payment of the outstanding
principal amount of the Mortgage Loan together with any accrued interest
thereon, with, in some cases, the related Mortgagor being entitled to
receive proceeds in excess of the amount utilized to restore or repair the
Mortgaged Property;
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i.
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Such
Ground Lease requires the lessor to enter into a new lease with the Seller
or its successors or assigns in the event of a termination of the Ground
Lease by reason of a default by the Mortgagor under the Ground Lease,
including rejection of the Ground Lease in a bankruptcy proceeding;
and
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j.
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Such
Ground Lease does not impose restrictions on subletting portions of the
premised demised under the Ground Lease without the consent of the lessor
(except in the case where such consent cannot be unreasonably
withheld).
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29. Deed of Trust. If the related
Mortgage is a deed of trust, to the Seller’s actual knowledge, a trustee, duly
qualified under applicable law to serve as such, is properly designated and
serving under such Mortgage.
30. Lien Releases. The related
Mortgage Note or Mortgage does not require the holder thereof to release all or
any portion of the Mortgaged Property from the lien of the related Mortgage,
except upon payment in full of all amounts due under such Mortgage Loan which
have been allocated to such Mortgaged Property upon the payment of specified
release consideration, satisfaction of a debt service coverage ratio test and
subject to the satisfaction of certain customary criteria set forth in the
related loan agreement.
31. Origination of
Loans. Other than approved exceptions, each Mortgage Loan
complies in all material respects with the Seller’s underwriting policies in
effect as of such loan’s origination date.
Exhibit C
– 1 – 7
32. Priority of Adjustable Rate
Loans. All terms of the loan documents pertaining to interest
rate adjustments, payment adjustments and principal balance adjustments are
enforceable and will not affect the priority of the mortgage lien.
33. Assignability of Mortgage
Loans. The note and mortgage contain no provision limiting the
right or ability of the Seller to assign, transfer and convey the note or
mortgage to the Purchaser other than provisions that have been complied
with.
34. Due-on-Sale Clauses. Each
related Mortgage or loan agreement contains provisions for the acceleration of
the unpaid balance of such Mortgage Loan, if, without prior consent of lender or
satisfaction of certain conditions, the related Mortgaged Property or interest
therein is directly or indirectly transferred or sold or encumbered in
connection with subordinate financing.
35. Subordinate Financing. No
Mortgagor is permitted to incur indebtedness subordinate to the related Mortgage
Loan and secured by the related Mortgaged Property.
36. Appraisal. The
Seller has obtained an Appraisal of the related Mortgaged Property within 12
months of the applicable Closing Date. As of the date of such
Appraisal, the Carrying Value of the related Mortgage did not exceed the value
of such Mortgaged Property as determined by such Appraisal.
Exhibit C
– 1 – 8
EXHIBIT
C-2
REPRESENTATIONS
AND WARRANTIES OF THE SELLER
REGARDING
ASSETS THAT ARE RESIDENTIAL MORTGAGE LOANS
With
respect to the Assets that are residential mortgage loans, as of the Closing
Date (except as may be specified in the representation and warranty and except
for the exceptions specifically agreed upon by the Purchaser in writing, the
Seller represents and warrants as to such Assets:
1. Ownership of
Assets. Immediately prior to the transfer thereof to the
Purchaser, the Seller had good and marketable title to, and was the sole owner
and holder of, such Assets, free and clear of any and all liens, encumbrances
and other interests on, in or to such Asset other than Permitted
Encumbrances.
2. Authority to Transfer
Assets. The Seller has full right and authority to sell,
assign and transfer such Assets.
3. Asset List. The
information pertaining to such Assets set forth in the Asset List is true and
correct in all material respects as of the related Closing
Date.
4. Permitted
Encumbrances. Subject to the disclosures under paragraph 32 (Lien Releases) below, if any,
the related Mortgage constitutes a valid first lien upon the related Mortgaged
Property, including all buildings located thereon and all fixtures attached
thereto, such lien being subject only to Permitted Encumbrances. The Permitted
Encumbrances do not materially interfere with the security intended to be
provided by the related Mortgage or the current use or operation of the related
Mortgaged Property.
5. Title
Insurance. The lien of the related Mortgage is insured by a
mortgagee Title Insurance Policy, or its equivalent as adopted in the applicable
jurisdiction, issued by a nationally recognized title insurance company,
insuring the originator of such Mortgage Loan, its successors and assigns, as to
the first priority lien of the Mortgage in the original principal amount of the
Mortgage Loan, subject only to Permitted Encumbrances (or, if a Title Insurance
Policy has not yet been issued in respect of the Mortgage Loan, a policy meeting
the foregoing description is evidenced by a commitment for title insurance “marked-up” at the closing of
such loan). Each Title Insurance Policy (or, if it has yet to be
issued, the coverage to be provided thereby) is in full force and effect, all
premiums thereon have been paid and no material claims have been made thereunder
and no claims have been paid thereunder. The Seller has not, by act or omission,
done anything that would materially impair the coverage under such Title
Insurance Policy.
Exhibit C
– 2 – 1
6. No Waivers by Seller of Material
Defaults. The Seller has not waived any material default, breach,
violation or event of acceleration existing under the related Mortgage or
Mortgage Note. Notwithstanding anything to the contrary contained in this
representation and warranty, this representation and warranty does not address
or otherwise cover any default, breach, violation or event of acceleration that
specifically pertains to any matter otherwise covered or addressed by any other
representation or warranty made by the Seller as specified in this Exhibit C-2; and a
breach by a Mortgagor of any representation or warranty contained in any
Mortgage Loan Document shall not constitute a non-monetary default, breach,
violation or event of acceleration for purposes of this representation if the
subject matter of such representation or warranty is also covered or addressed
by any representation or warranty made in this Exhibit
C-2.
7. No Offsets, Defenses or
Counterclaims. There is no valid offset, defense or counterclaim to such
Mortgage Loan.
8. Condition of Property;
Condemnation. To the Seller’s actual knowledge, the related Mortgaged
Property is free and clear of any damage that would materially and adversely
affect its value as security for such Mortgage Loan unless there has been
already escrowed 100% of the amounts required to make any necessary repairs to
correct such material damage. There are no proceedings for the condemnation of
all or any material portion of the related Mortgaged
Property.
9. Compliance with Usury Laws.
Such Mortgage Loan complied with, or was exempt from, all applicable usury laws
in effect as of its date of origination or the Loan File contains an opinion to
that effect.
10. Full Disbursement of Mortgage Loan
Proceeds. The proceeds of such Mortgage Loan have been fully disbursed
and there is no requirement applicable to the holder of the Mortgage Loan for
future advances thereunder.
11. Enforceability. Each related
Mortgage Note and each related Mortgage is the legal, valid and binding
obligation of the maker thereof (subject to any non-recourse provisions
contained in any of the foregoing agreements and any applicable state
anti-deficiency or market value limit deficiency legislation), enforceable in
accordance with its terms, except as such enforcement may be limited by
anti-deficiency, bankruptcy, insolvency, reorganization, receivership,
moratorium, redemption, liquidation or other laws relating to or affecting the
rights of creditors generally and by general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at
law).
Exhibit C
– 2 – 2
12. Insurance. The
improvements upon the related Mortgaged Property are insured against loss by a
fire and extended perils policy providing coverage against loss or damage
included within the “all risk of
physical loss” or the equivalent
thereof, in an amount (subject to a customary deductible) at least equal to the
lesser of (1) the outstanding principal amount of such Mortgage Loan, (2) 100%
of the full actual replacement cost or value of the improvements located on such
Mortgaged Property (exclusive of costs of excavations, foundations and
underground utilities and footings) and (3) the full insurable actual cash value
of such improvements, and the related hazard insurance policy contains
appropriate endorsements to avoid the application of co-insurance and does not
permit reduction in insurance proceeds for depreciation. If any portion of the
improvements on the related Mortgaged Property was, at the time of the
origination of such Mortgage Loan, in an area identified in the Federal Register
by the Federal Emergency Management Agency as having “special flood
hazards,” a
flood insurance policy meeting any requirements of the then current guidelines
of the Federal Insurance Administration is in effect with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(1) the outstanding principal amount of such Mortgage Loan, (2) the full
insurable actual cash value of such Mortgaged Property, (3) the maximum amount
of insurance available under the National Flood Insurance Act of 1968, as
amended, and (4) 100% of the replacement cost or value of the improvements
located on such Mortgaged Property. The loan documents require the
Mortgagor to maintain (or to cause the applicable tenant to maintain) the
insurance referred to in this paragraph in respect of the Mortgaged Property,
and all such insurance required by the loan documents to be maintained is in
full force and affect and names the originator of such Mortgage Loan as
mortgagee, loss payee or additional insured. Each such insurance policy requires
prior notice to the holder of the Mortgage of termination or cancellation, and
no such notice has been received, including any notice of nonpayment of
premiums, that has not been cured.
13. Environmental
Conditions. As of the Closing Date, (i) there are no material
adverse environmental conditions or circumstances affecting such Mortgaged
Property; (ii) no Mortgaged Property is subject to a notice, Environmental
Claim, request for information or order from or agreement with a government
authority or any other Person respecting the Release or threatened Release of a
Hazardous Substance; (iii) there has been no Release of Hazardous Substances on,
at or under any Mortgaged Property which would reasonably be expected to result
in the imposition of any liability or any Environmental Claim; (iv) there are no
judicial or administrative proceedings or any other Environmental Claims pending
or threatened alleging any violation or failure to comply with any Environmental
Law, or with respect to any release of any Hazardous Substance from any
Mortgaged Property; and (v) none of the Mortgaged Properties are subject to any
removal or remediation of any Hazardous Substances or are subject to notice to
or approval from any governmental authority pertaining to environmental
matters. The Mortgaged Property complies with all applicable laws,
rules and regulations, including but not limited to those relating to
environmental matters, including but not limited to those relating to radon,
asbestos and lead paint and neither the Seller nor, to the Seller’s knowledge,
the Mortgagor, has received any notice of any violation or potential violation
of such law;
Exhibit C
– 2 – 3
14. Consumer
Regulations. Each Mortgage Loan complied in all material
respects with any and all requirements of federal, state or local laws or
regulations, including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, predatory lending, abusive
lending, fair lending, fair credit reporting, unfair collection practice, equal
credit opportunity, fair housing and disclosure laws and regulations, applicable
to the solicitation, origination, collection and servicing of such Mortgage
Loan; and any obligations of the holder of the Mortgage Note, Mortgage and other
loan documents have been complied with in all material respects and the
consummation of the transaction contemplated hereby will not involve the
violation of any such laws or regulations;
15. HOEPA. No Mortgage
Loan is subject to the provisions of the Homeownership and Equity Protection Act
of 1994 (“HOEPA”) as
amended or has an “annual percentage rate” or “total points and fees” payable by
the mortgagor (as each such term is defined under HOEPA) that equal or exceed
the applicable thresholds defined under HOEPA (Section 32 of Regulation Z, 12
C.F.R. Section 226.32(a)(1)(i) and (ii)) or is considered a “high cost,”
“predatory” or “abusive” loan (or a similarly designated loan using different
terminology) under any state, county or municipal laws or ordinances, including
without limitation, the provisions of the Georgia Fair Lending Act or any other
statute or regulation providing “assignee” or “originator” liability to
holders of such mortgage loans;
16. No Cross-Collateralization with
Other Mortgage Loans. Such Mortgage Loan is not
cross-collateralized with any other mortgage loan not sold to the
Purchaser.
17. Waivers and
Modifications. The terms of the related Mortgage and the
related Mortgage Note have not been impaired, waived, altered or modified in any
material respect, except as specifically set forth in the related Loan
File.
18. Taxes and
Assessments. There are no delinquent taxes or governmental
assessments affecting the related Mortgaged Property that on or before the
Closing Date became due and owing which are or may become a lien of priority
equal to or higher than the lien of the related Mortgage except such as have
been paid, or an escrow of funds in an amount sufficient to cover such payments
has been established. For purposes of this representation and
warranty, real property taxes and assessments shall not be considered unpaid
until the date on which interest and/or penalties would be payable
thereon.
19. Valid
Assignment. The assignment of the Mortgage related to each
Mortgage Loan, constitutes the legal, valid and binding assignment of such
Mortgage from the Seller to the Purchaser subject to the exceptions described in
paragraph 11
(Enforceability)
above.
20. Escrows. There are
no cash, escrow or reserve deposits relating to such Mortgage Loan that are, as
of the Closing Date, required to be deposited with the mortgagee or its
agent.
21. No Material
Encroachments. As of the date of origination of a Mortgage
Loan, no improvement that was included for the purpose of determining the
Appraised Value of the related Mortgaged Property at the time of origination of
such Mortgage Loan lay outside the boundaries and building restriction lines of
such property (unless affirmatively covered by the Title Insurance Policy
referred to in paragraph 5 (Title Insurance) above), and
no improvements on adjoining properties encroached upon such Mortgaged
Property. The improvements located on or forming part of such
Mortgaged Property comply in all material respects with applicable zoning laws
and ordinances (except to the extent that they may constitute legal
nonconforming uses).
Exhibit C
– 2 – 4
22. Inspection. In
connection with the origination of each Mortgage Loan, the Seller inspected or
caused to be inspected (either directly by the Seller, by its correspondent or
by a third party) the Mortgaged Property.
23. No Equity Participation or
Contingent Interest. No Mortgage Loan contains an equity
participation by the Seller, or provides for any contingent or additional
interest in the form of participation in the cash flow of the related Mortgaged
Property. No Mortgage Loan provides for negative
amortization.
24. No Advances of Funds. No
holder of the Mortgage Loan has advanced funds or induced, solicited or
knowingly received any advance of funds from a party other than the owner of the
related Mortgaged Property (other than a tenant required to make its lease
payments directly to the holder of the related Mortgage Loan), directly or
indirectly, for the payment of any amount required by the Mortgage
Loan.
25. Licenses, Permits, Etc. All
licenses, permits and authorizations required by applicable laws for the use of
the related Mortgaged Property as it is currently operated have been obtained
and maintained in accordance with applicable laws except for such licenses,
permits and authorizations the failure of which to obtain would not materially
adversely affect the value, use or operation of the Mortgaged
Property.
26. Servicing. The servicing and
collection practices used by the Seller and its designees with respect to the
Mortgage Loan have been in all material respects legal and have met customary
standards utilized by commercial banks in the area in which the Mortgaged
Property is located for servicing of commercial mortgage
loans.
27. Customary Remedies. The
related Mortgage or Mortgage Note, together with applicable state law, contains
customary and enforceable provisions (subject to the exceptions set forth in
paragraph 11
(Enforceability) above)
such as to render the rights and remedies of the holders thereof adequate for
the practical realization against the related Mortgaged Property of the
principal benefits of the security intended to be provided
thereby.
28. Insurance and Condemnation
Proceeds. The related Mortgage or other related loan document
provides that insurance proceeds and condemnation proceeds will be applied to
either restore or repair the Mortgaged Property or repay the principal of the
Mortgage Loan, with, in some cases, the related Mortgagor (or the tenant or
master lessee at the Mortgaged Property which maintains such insurance) being
entitled to receive proceeds in excess of the amount utilized to restore or
repair the Mortgaged Property.
Exhibit C
– 2 – 5
29. Litigation. To the
Seller’s actual knowledge, there are no pending actions, suits or proceedings by
or before any court or governmental authority against or affecting the related
Mortgagor or the related Mortgaged Property that, if determined adversely to
such Mortgagor or Mortgaged Property, would materially and adversely affect the
value, use or operation of the Mortgaged Property.
30. Leasehold
Estate. Each Mortgaged Property consists of either (1) the
related Mortgagor’s fee simple estate in real estate or (2) if the related
Mortgage Loan is secured in whole or in part by the interest of a Mortgagor as a
lessee under a Ground Lease and not by the fee simple interest, the related
Mortgagor’s interest in the Ground Lease and the following apply to such Ground
Lease:
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a.
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Such
Ground Lease or a memorandum thereof has been or will be duly recorded;
such Ground Lease (or the related estoppel letter or lender protection
agreement between the Seller and related lessor) permits the interest of
the lessee thereunder to be encumbered by the related
Mortgage;
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b.
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The
lessee’s interest in such Ground Lease is not subject to any liens or
encumbrances superior to, or of equal priority with, the related Mortgage,
other than the ground lessor’s related fee interest and Permitted
Encumbrances;
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c.
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The
Mortgagor’s interest in such Ground Lease is assignable to the Purchaser
and its successors and assigns upon notice to, but without the consent of,
the lessor thereunder (or, if such consent is required, it has been
obtained prior to the Closing Date) and, in the event that it is so
assigned, is further assignable by the Purchaser and its successors and
assigns upon notice to, but without the need to obtain the consent of,
such lessor;
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d.
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Such
Ground Lease is in full force and effect, no notice of an event of default
has occurred thereunder and, to the Seller’s actual knowledge, there
exists no condition that, but for the passage of time or the giving of
notice, or both, would result in an event of default under the terms of
such Ground Lease;
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e.
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Such
Ground Lease, or an estoppel letter or other agreement, requires the
lessor under such Ground Lease to give notice of any default by the lessee
to the mortgagee, provided that the mortgagee has provided the lessor with
notice of its lien in accordance with the provisions of such Ground Lease,
and such Ground Lease, or an estoppel letter or other agreement, further
provides that no notice of termination given under the Ground Lease is
effective against the mortgagee unless a copy has been delivered to the
mortgagee;
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f.
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A
mortgagee is permitted a reasonable opportunity (including, where
necessary, sufficient time to gain possession of the interest of the
lessee under such Ground Lease) to cure any default under such Ground
Lease which is curable after the receipt of notice of any such default,
before the lessor thereunder may terminate such Ground
Lease;
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Exhibit C
– 2 – 6
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g.
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Such
Ground Lease has an original term (including any extension options set
forth therein) which extends not less than twenty years beyond the
maturity date of the related Mortgage
Loan;
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h.
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Under
the terms of such Ground Lease and the related Mortgage, taken together,
any related insurance proceeds, will be applied either to the repair or
restoration of all or part of the related Mortgaged Property, with the
mortgagee or a trustee appointed by it having the right to hold and
disburse such proceeds as the repair or restoration progresses (except in
such cases where a provision entitling another party to hold and disburse
such proceeds would not be viewed as commercially unreasonable by a
prudent commercial mortgage lender), or to the payment of the outstanding
principal amount of the Mortgage Loan together with any accrued interest
thereon, with, in some cases, the related Mortgagor being entitled to
receive proceeds in excess of the amount utilized to restore or repair the
Mortgaged Property;
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i.
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Such
Ground Lease requires the lessor to enter into a new lease with the Seller
or its successors or assigns in the event of a termination of the Ground
Lease by reason of a default by the Mortgagor under the Ground Lease,
including rejection of the Ground Lease in a bankruptcy proceeding;
and
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j.
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Such
Ground Lease does not impose restrictions on subletting portions of the
premised demised under the Ground Lease without the consent of the lessor
(except in the case where such consent cannot be unreasonably
withheld).
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31. Deed of Trust. If the related
Mortgage is a deed of trust, to the Seller’s actual knowledge, a trustee, duly
qualified under applicable law to serve as such, is properly designated and
serving under such Mortgage.
32. Lien Releases. The related
Mortgage Note or Mortgage does not require the holder thereof to release all or
any portion of the Mortgaged Property from the lien of the related Mortgage,
except upon payment in full of all amounts due under such Mortgage Loan which
have been allocated to such Mortgaged Property upon the payment of specified
release consideration, satisfaction of a debt service coverage ratio test and
subject to the satisfaction of certain customary criteria set forth in the
related loan agreement.
33. Origination of
Loans. Other than approved exceptions, each Mortgage Loan
complies with the Seller’s underwriting policies in all material respects effect
as of such loan’s origination date.
Exhibit C
– 2 – 7
34. Qualification To Do
Business. To the extent required under applicable law, the
originator of the Mortgage Note was authorized to transact and do business in
the jurisdiction where the Mortgaged Property is located while each was
holder.
35. Priority of Adjustable Rate
Loans. All terms of the loan documents pertaining to interest
rate adjustments, payment adjustments and principal balance adjustments are
enforceable and will not affect the priority of the mortgage
lien.
36. Assignability of Mortgage
Loans. The note and mortgage contain no provision limiting the
right or ability of the Seller to assign, transfer and convey the note or
mortgage to the Purchaser other than provisions that have been complied
with.
37. Due-on-Sale Clauses. Each
related Mortgage or loan agreement contains provisions for the acceleration of
the unpaid balance of such Mortgage Loan, if, without prior consent of lender or
satisfaction of certain conditions, the related Mortgaged Property or interest
therein is directly or indirectly transferred or sold or encumbered in
connection with subordinate financing.
38. Appraisal. The
Seller has obtained an Appraisal of the related Mortgaged Property within 12
months of the applicable Closing Date. As of the date of such
Appraisal, the Carrying Value of the related Mortgage did not exceed the value
of such Mortgaged Property as determined by such Appraisal.
Exhibit C
– 2 – 8
Exhibit
C-3
REPRESENTATIONS
AND WARRANTIES OF THE SELLER
REGARDING
ASSETS THAT ARE REO PROPERTIES
With
respect to the Assets that are REO Properties, as of the Closing Date (except as
may be specified in the representation and warranty and except for the
exceptions specifically agreed upon by the Purchaser in writing), the Seller
represents and warrants as to such Assets:
1. Ownership of
Assets. Immediately prior to the transfer thereof to the
Purchaser, the Seller has good and marketable title to, and is the sole
beneficial owner and holder of, such Assets, free and clear of any and all
liens, encumbrances and other interests on, in or to such Assets (pending
completion of Deed transfers after foreclosure sales and, in the case of each
REO Property that is a condominium unit, any rights of first refusal of the
related condominium associations; provided, however, that no such
right of first refusal shall affect the sale of the REO Property from the Seller
to the Purchaser) other than Permitted Encumbrances.
2. Authority to Transfer
Assets. The Seller has full right and authority to sell,
assign and transfer such Assets.
3. Asset List. The
information pertaining to such Assets set forth in the Asset List is true and
correct in all material respects as of the related Closing
Date.
4. Permitted
Encumbrances. Each REO Property is subject only to the
Permitted Encumbrances. The Permitted Encumbrances do not materially
adversely affect the value, use or operation of the REO
Property.
5. Condition of Property;
Condemnation. To the Seller’s actual knowledge, the REO Property is free
and clear of any damage that would materially adversely affect the value, use or
operation of the REO Property and the Seller has no actual knowledge of any
other fact(s) relating to the physical condition of the REO Property, which in
the Seller’s reasonable judgment has or could reasonably be expected to
materially adversely affect the value, use or operation of the REO
Property. There are no pending proceedings, and the Seller has not
received any notice of any threatened proceedings, for the condemnation, eminent
domain or similar proceedings or actions affecting any material
portion of the REO Property.
6. Insurance. The
improvements upon the REO Property are insured against loss by a fire and
extended perils policy providing coverage against loss or damage included within
the “all risk
of physical loss” or the equivalent
thereof, in an amount (subject to a customary deductible) at least equal to 100%
of the full actual replacement cost or value of the improvements located on such
REO Property (exclusive of costs of excavations, foundations and underground
utilities and footings). If any portion of the improvements on the
REO Property are in an area identified in the Federal Register by the Federal
Emergency Management Agency as having “special flood hazards,” a flood insurance
policy meeting any requirements of the then current guidelines of the Federal
Insurance Administration is in effect with a generally acceptable insurance
carrier, in an amount representing coverage not less than the least of (1) the
full insurable actual cash value of such REO Property, (2) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended,
and (3) 100% of the full actual replacement cost or value of the improvements
located on such REO Property.
Exhibit C
– 3 – 1
7. Environmental Conditions. As
of the Closing Date, (i) there are no material adverse environmental conditions
or circumstances affecting such REO Property; (ii) no REO Property is subject to
a notice, Environmental Claim, request for information or order from or
agreement with a government authority or any other Person respecting the Release
or threatened Release of a Hazardous Substance; (iii) there has been no Release
of Hazardous Substances on, at or under any REO Property which would reasonably
be expected to result in the imposition of any material liability or any
Environmental Claim; (iv) there are no judicial or administrative proceedings or
any other Environmental Claims pending or threatened alleging any violation or
failure to comply with any Environmental Law, or with respect to any release of
any Hazardous Substance from any REO Property; and (v) the REO Property is not
subject to any removal or remediation of any Hazardous Substances or are subject
to notice to or approval from any governmental authority pertaining to
environmental matters. The REO Property complies with all applicable
laws, rules and regulations, including but not limited to those relating to
environmental matters, including but not limited to those relating to radon,
asbestos and lead paint and neither the Seller nor, to the Seller’s knowledge,
the mortgagor, has received any notice of any violation or potential violation
of such law;
8. Taxes and
Assessments. All real property taxes including supplemental or
other taxes, if any, government assessments, insurance premiums, water, sewer
and municipal charges, condominium or cooperative charges and assessments,
leasehold payments or ground rents, affecting or related to the REO Property,
which became due and payable on or before the Closing Date, have been paid by
the Seller. There are no delinquent taxes or governmental assessments
affecting the REO Property and the Seller is not currently contesting such taxes
or rollback of any taxes. For purposes of this representation and
warranty, real property taxes and assessments shall not be considered unpaid
until the date on which interest and/or penalties would be payable
thereon.
9. No Material
Encroachments. No improvement that was included for the
purpose of determining the Appraised Value of the related REO Property as of the
last appraisal lay outside the boundaries and building restriction lines of such
property, and no improvements on adjoining properties encroached upon such REO
Property. The improvements located on or forming part of such REO
Property comply in all material respects with applicable zoning laws and
ordinances (except to the extent that they may constitute legal nonconforming
uses).
Exhibit C
– 3 – 2
10. Licenses, Permits, Etc. All
licenses, permits and authorizations required by applicable laws for the use of
the REO Property as it is currently operated have been obtained and maintained
in accordance with applicable laws, except for such licenses, permits and
authorizations the failure of which to obtain would not materially adversely
affect the value, use or operation of the REO Property.
11. Litigation. To
the Seller’s actual knowledge, there are no pending actions, suits or
proceedings by or before any court or governmental authority against or
affecting any portion of the REO Property or the Seller’s rights therein, that,
if determined adversely to the owner, would materially adversely affect the
value, use or operation of the REO Property.
12. Eviction
Notices. Each eviction proceeding relating to an REO Property
has been properly commenced and the Seller is not aware of any valid defense or
counterclaim by anyone with respect thereto. The REO Property has
been serviced and maintained in compliance with all applicable laws and
regulations.
13. Type. Except as
reflected on the Asset Schedule, no REO Property is a cooperative nor a
hotel-condo unit.
14. Condominiums. Solely
with respect to REO Properties which are condominium units, (i) the Seller is
not a “sponsor” or a nominee of a
“sponsor” under any plan of
condominium organization affecting the unit and the ownership and sale of any
condominium unit will not violate any federal, state or local law or regulation
regarding condominiums or require registration, qualification or similar action
under such law or regulation, (ii) all condominium charges and assessment which
became due and payable on or before the Closing Date have been paid by the
Seller and (iii) the condominium declaration with respect to such REO Property
is in full force and effect.
15. Listing
Agreements. The Seller has provided Purchaser with a copy of
each listing agreement with any real estate broker with respect to the REO
Property. Each such listing agreement may be terminated without any
cost or expense to Purchaser.
16. Sale
Contracts. The Seller has not accepted or executed any
contract of sale with respect to the REO Property.
17. Agreements with Governmental
Authorities. The Seller has not entered into any unrecorded
commitment or agreement with any governmental authority affecting the REO
Property and which could reasonably be expected to have a material adverse
effect on the ownership, value or operation of the REO
Property.
18. Rights to
Purchase. There are no options, rights of first refusal or
similar rights in favor of any person or entity to purchase or otherwise acquire
the REO Property or any portion thereof or interest therein.
Exhibit C
– 3 – 3
19. Foreign
Person. The Seller is not a “foreign
person”
within the meaning of Section 1445(f) of the Internal Revenue Code of 1986, as
amended.
20. Personal
Property. The inventory of personal property related to the
REO Property, if any, as attached to the Bill of Sale will set forth a true and
correct inventory of all of such personal property to be conveyed by the Seller
to the Purchaser pursuant to the provisions of this Purchase
Agreement. Upon the execution and delivery of the Bill of Sale, all
of the Seller’s right, title and interest in and to such personal property will
be transferred to the Purchaser free and clear of all claims, demands, liens
(including inchoate liens) and interests of all parties whatsoever, except for
any liens approved by the Purchaser in writing. The Seller owns title
to all of the personal property related to the REO Property.
21. Separate Tax
Lot. The REO Property constitutes one or more separate tax
lots for real estate tax assessment purposes.
22. Violations. The
Seller has not received written notice of any uncured violation of record from a
governmental authority having jurisdiction over the REO Property concerning any
zoning, building, fire, life/safety or health code, regulation, ordinance,
statute or law applicable to the REO Property or any portion
thereof. Further, to the actual knowledge of the Seller there are no
violations of record of any applicable legal requirements affecting all or any
portion of the REO Property which would materially adversely affect the value,
use or operation of the REO Property.
23. Appraisal. The
Seller has obtained an Appraisal of the REO Property within 12 months of the
applicable Closing Date. As of the date of such Appraisal, the
Carrying Value of the REO Property did not exceed the value of such the REO
Property as determined by such Appraisal.
Exhibit
C – 3 – 4
Exhibit
1.2
EXECUTION
COPY
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”)
dated as of April 1, 2010 is entered into by and between United Community Banks,
Inc., a corporation organized under the laws of Georgia (together with its
successors, the “Company”),
and Fletcher International, Ltd., a company domiciled in Bermuda (together with
its successors, “Fletcher”).
The
parties hereto agree as follows:
1.
Purchase
and Sale. In
consideration of and upon the basis of the representations, warranties and
agreements and subject to the terms and conditions set forth in this
Agreement:
(a) Subject
to satisfaction or, if applicable, waiver of the relevant conditions set forth
in Sections 12 and 13 hereof and subject to the provisions of Section 6(a)
hereof, Fletcher agrees to purchase from the Company, and the Company agrees to
issue and sell to Fletcher (each an “Investment”),
from time to time, in whole or in part, Sixty-Five Thousand (65,000) shares of
the Company’s Series C convertible preferred stock, par value One Dollar ($1.00)
per share (the “Preferred
Stock”), at a purchase price of One Thousand Dollars ($1,000) per share
(the “Investment
Price”) for an aggregate purchase price of Sixty-Five Million Dollars
($65,000,000) (the “Aggregate
Investment Commitment”). To effect any Investment, Fletcher
shall deliver a written notice substantially in the form attached hereto as
Annex
A (an “Investment
Notice”) to the Company from time to time during the period commencing on
and including the date of this Agreement and ending no later than 11:59 p.m. New
York City time on the date that is the two year anniversary of the Stockholder
Consent Date (as defined below), subject to extension as set forth herein (the
“Investment
Period”). Subject to satisfaction or, if applicable, waiver of
the relevant conditions set forth in Sections 12 and 13 hereof, the closing of
each Investment (each, a “Closing”)
shall take place at 9:30 a.m. New York City time on the date that is three (3)
Business Days (as defined below) following and excluding the date of delivery of
the Investment Notice or on such other date as Fletcher and the Company shall
mutually agree (each such date and time being referred to herein as a “Closing
Date”). Subject to the provisions of Sections 1(c) and 10(b)
hereof, on or prior to the expiration of the Investment Period, Fletcher shall
have consummated Investments in an aggregate amount equal to the Aggregate
Investment Commitment. For the avoidance of doubt, subject to the
provisions of Sections 1(c) and 10(b) hereof, the Aggregate Investment
Commitment shall be reduced on a dollar-for-dollar basis by the Investment
Amount (as defined below) paid on each Investment.
(b) The
Investment Period shall be extended by one (1) Business Day for each Business
Day:
(i) that the
Registration Statement (as defined below) is not effective and available for the
issuance of any Preferred Stock or Warrants for a period of more than seven (7)
days (each, a “Registration
Failure”); or
(ii) at any
time after the One Year Anniversary Date (as defined below) but before the date
that is sixty (60) days before the expiration of the Investment Period,
occurring during the period (x) commencing on the earlier of the day on which
the Company restates or announces its intention to restate any portion of the
Company Financial Statements (as defined below), and (y) ending on the date on
which the Company files quarterly or annual financial statements that constitute
a Restatement (as defined below) on a Form 10-K, Form 10-Q, Form 8-K or any
other filing with the United States Securities and Exchange Commission (the
“SEC”)
(and if the Company makes multiple filings of a Restatement with the SEC, the
last of such dates) (the “Restatement
Filing Date”).
If (i)
the Company restates or announces its intention to restate any portion of the
Company Financial Statements (as defined below) less than sixty (60) days before
the expiration of the Investment Period, (ii) the Company has restated or
announced its intention to restate any portion of the Company Financial
Statements and the Restatement Filing Date is not at least sixty (60) days
before the expiration of the Investment Period, or (iii) the Company fails to
maintain the effectiveness and availability of the Registration Statement for
the issuance of all Preferred Stock and Warrants issuable under this Agreement,
then the Investment Period shall be extended to a date that is at least sixty
(60) days after the later of the Restatement Filing Date or the remediation of
the failure described in clause (iii) of this paragraph.
(c) If the
conditions set forth in Section 12 hereof are not satisfied or waived on or
prior to 9:30 a.m. New York City time on the relevant Investment Closing Date or
if the Company fails to perform its obligations on any Investment Closing Date
(including delivery of all shares of Preferred Stock issuable on such date) for
any reason other than Fletcher’s failure to satisfy the conditions required by
Section 13 hereof, then in addition to all remedies available to Fletcher at law
or in equity, Fletcher may, at its sole option, and at any time, withdraw the
Investment Notice by written notice to the Company and, after such withdrawal,
shall have no further obligations with respect to such Investment
Notice. Upon any such withdrawal, the Aggregate Investment Commitment
shall be reduced on a dollar-per-dollar basis by the Investment Amount (as
defined below) set forth in the withdrawn Investment Notice.
(d) In
addition, upon receipt of the Deposit (as defined in the Asset Purchase and Sale
Agreement, defined below), the Company will issue to Fletcher a warrant (the
“Warrant”)
evidencing rights to purchase from the Company, subject to the terms and
conditions set forth in the Warrant, securities as set forth therein. Fletcher
shall have the right to exercise rights under the Warrant in the manner, and
subject to the terms, specified in the Warrant.
(e) As used
herein,
(i) the term
“Articles
of Incorporation” means the
Restated Articles of Incorporation of the Company, as
amended;
(ii) the term
“Business
Day” means any day on which the Common Stock may be traded on Nasdaq (as
defined below) or, if not admitted for trading on Nasdaq, on any day other than
a Saturday, Sunday or holiday on which banks in New York City are required or
permitted to be closed;
2
(iii) the term
“Common
Stock Equivalent Junior Preferred Stock” means a new class of non-voting
preferred stock, par value One Dollar ($1.00) per share, of the Company to be
created pursuant to the Junior Preferred Certificate;
(iv) the term
“Common
Stock
Equivalent Junior Preferred
Shares” means the shares of Common Stock Equivalent Junior Preferred
Stock issuable upon conversion or redemption of, or as a dividend under, the
Preferred Stock, upon exercise of the Warrant, and all other Common Stock
Equivalent Junior Preferred Stock issuable under this Agreement, the Series C
Certificate, the Junior Preferred Certificate or the
Warrant;
(v)
the term
“Common
Shares” means the shares of Common Stock issuable upon conversion or
redemption of, or as a dividend under, the Preferred Stock, upon exercise of the
Warrant, the shares of Common Stock issuable upon conversion of the Common Stock
Equivalent Junior Preferred Stock and all other Common Stock issuable under this
Agreement, the Series C Certificate, the Junior Preferred Certificate or the
Warrant;
(vi)
the term
“Common
Stock” means the Company’s common stock, par value One Dollar ($1.00) per
share;
(vii) the term
“Company
Financial Statements” means all financial statements (including the notes
thereto) filed by the Company with the SEC (other than pursuant to Form
8-K);
(viii) the term
“Daily
Market Price” means, on any date, the amount per share of the Common
Stock (or, for purposes of determining the Daily Market Price of the common
stock of an Acquiring Person or its Parent (each as defined below), the common
stock of such Acquiring Person or its Parent), equal to (A) the daily
volume-weighted average price of one share of Common Stock (or the common stock
of an Acquiring Person or its Parent), calculated to the nearest ten thousandth
(i.e., four decimal places (.xxxx)), on Nasdaq or, if no sale takes place on
such date, the average of the closing bid and asked prices, calculated to the
nearest ten thousandth (i.e., four decimal places (.xxxx)), on Nasdaq thereof on
such date, in each case as reported by Bloomberg, L.P. (or by such other Person
as Fletcher and the Company may agree), or (B) if such Common Stock (or the
common stock of an Acquiring Person or its Parent) is not then listed or
admitted to trading on Nasdaq, the higher of (x) the book value per share
thereof as determined by any firm of independent public accountants of
recognized standing selected by the Company and reasonably acceptable to
Fletcher as of the last calendar day of the most recent month ending before the
date as of which the determination is to be made and (y) the fair market value
per share thereof determined in good faith by an independent, nationally
recognized appraisal firm selected by Fletcher and reasonably acceptable to the
Company (whose fees and expenses shall be borne by the Company), subject in each
case to adjustment for stock splits, recombinations, stock dividends and the
like;
(ix) the term
“Investment
Amount” means, with respect to any Investment, the aggregate amount paid,
deemed to be paid, or to be paid by Fletcher on the relevant Closing
Date;
3
(x) the term
“Investment
Securities” means the Preferred Stock, the Warrant and all Common Shares
and Common Stock Equivalent Junior Preferred Shares;
(xi)
“Junior
Preferred Certificate” means the Certificate of Designation of the Common
Stock Equivalent Junior Preferred Stock of the Company, attached hereto as Annex
J.
(xii) the term
“Material
Adverse Effect” means any material adverse effect with respect to (A) the
business, properties, assets, operations, results of operations, revenues or
condition, financial or otherwise, of the Company and its subsidiaries taken as
a whole, (B) the legality, validity or enforceability of the Agreement, the
Series C Certificate, the Junior Preferred Certificate, the Warrant, the
Registration Statement or the Prospectus (as defined below), or (C) the
Company’s ability to perform fully on a timely basis its obligations under the
Agreement, the Certificate of Rights and Preferences or the
Warrant;
(xiii) the term
“Nasdaq”
means the Nasdaq Global Select Market, but if the Nasdaq Global Select Market is
not then the principal U.S. trading market for the Common Stock, then “Nasdaq”
shall be deemed to mean the principal U.S. national securities exchange (as
defined in the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) on which the Common Stock, or such other applicable common stock,
is then traded, or if such Common Stock, or such other applicable common stock,
is not then listed or admitted to trading on any national securities exchange,
then the OTC Bulletin Board or other trading market that is then the principal
market on which such stock is then traded;
(xiv) the term
“Parent”
means, as to any Acquiring Person, any Person that (A) controls the Acquiring
Person directly or indirectly through one or more intermediaries, (B) is
required to include the Acquiring Person in the consolidated financial
statements contained in such Parent’s Annual Report on Form 10-K (if the Parent
is required to file such a report) or would be required to so include the
Acquiring Person in such Parent’s consolidated financial statements if they were
prepared in accordance with U.S. generally accepted accounting principals and
(C) is not itself included in the consolidated financial statements of any
other Person (other than its consolidated subsidiaries).
(xv) the term
“Person”
means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, limited liability company, joint venture, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
(xvi) the term
“Series
C Certificate” means the Certificate of Rights and Preferences of Series
C Convertible Preferred Stock of the Company attached hereto as Annex
B;
2.
Asset
Purchases.
Concurrently
with the execution of this Agreement, the Company and an affiliate of Fletcher
have executed that certain Asset Purchase and Sale Agreement providing for the
Company’s sale of certain assets to Fletcher or its affiliates (the “Asset
Purchase and Sale Agreement”).
4
3. Closings. Unless
otherwise agreed by the parties, each Closing shall take place via facsimile on
each Closing Date in the manner set forth below. At each Closing, the
following deliveries shall be made:
(a) Preferred
Stock. The Company shall deliver to Fletcher, at the Company’s
expense, that number of shares of Preferred Stock specified in the relevant
Investment Notice. Such shares shall be issued in the name of and
delivered to Fletcher and registered by the Company in its stockholder register
in the name of Fletcher or as otherwise instructed by Fletcher in
writing.
(b)
Purchase
Price. Fletcher shall cause to be wire transferred to the
Company, in accordance with the wire instructions set forth in Annex
E hereto, the Investment Amount set forth in the Investment Notice in
immediately available United States funds.
(c) Closing
Documents. The closing documents required by Sections 12 and
13 shall be delivered to Fletcher and the Company,
respectively.
The
deliveries specified in this Section 3 shall be deemed to occur simultaneously
as part of a single transaction, and no delivery shall be deemed to have been
made until all such deliveries have been made.
4.
Representations
and Warranties of the Company. The
Company hereby represents and warrants to Fletcher on the date hereof, on each
Closing Date, on each Warrant Closing Date (as defined in the Warrant) and on
each Conversion Closing Date and Redemption Closing Date (each as defined in the
Certificate of Rights and Preferences) as follows:
(a) The
Company has duly authorized the sale and issuance of all Investment Securities
issuable under this Agreement, the Series C Certificate, the Junior Preferred
Certificate and the Warrant (the “Offering”). The
Offering has been registered under the Securities Act of 1933, as amended (the
“Securities
Act”) pursuant to the Company’s Registration Statement on S-3/A
(Registration No. 333-159958) and Registration Statement on S-3 filed as of the
date hereof, each as amended or replaced (together, the “Registration
Statement”).
(b) The
Company has been duly incorporated and is validly existing in good standing
under the laws of the state of Georgia. The Company is duly
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended (the “BHCA”). Each
of the subsidiaries of the Company that is a bank has been duly organized and is
validly existing in good standing under all applicable laws.
(c) Except as
otherwise contemplated by this Agreement and the requirement that the Company
obtain Stockholder Consent, the execution, delivery and performance of this
Agreement, the Series C Certificate, the Junior Preferred Certificate and the
Warrant (including the authorization, sale, issuance and delivery of the
Investment Securities issuable hereunder and thereunder) have been duly
authorized by all requisite corporate action and no further consent or
authorization of the Company, its Board of Directors or its stockholders is
required.
5
(d) This
Agreement has been duly executed and delivered by the Company and, when this
Agreement is duly authorized, executed and delivered by Fletcher, will be a
valid and binding agreement enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity. The issuance of the
Investment Securities is not and will not be subject to any preemptive right or
rights of first refusal that have not been properly waived or complied
with.
(e) Except as
otherwise contemplated by this Agreement and the requirement that the Company
obtain Stockholder Consent (as defined below) and designate the Common Stock
Equivalent Junior Preferred Stock, the Company has full corporate power and
authority necessary to (i) own and operate its properties and assets, execute
and deliver this Agreement, the Series C Certificate, the Junior Preferred
Certificate and the Warrant, (ii) perform its obligations hereunder and under
the Series C Certificate, the Junior Preferred Certificate and the Warrant
(including, but not limited to, the issuance of the Investment Securities
issuable hereunder and under the Series C Certificate, the Junior Preferred
Certificate and the Warrant) and (iii) carry on its business as presently
conducted and as presently proposed to be conducted. The Company and
its subsidiaries are duly licensed, qualified and authorized to do business and
are in good standing as foreign corporations in all jurisdictions in which the
nature of their activities and of their properties (both owned and leased) makes
such licensing, qualification or authorization necessary, except where the
failure to do so would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect.
(f) No
consent, approval, authorization or order of any court, governmental agency or
other body is required for execution and delivery by the Company of this
Agreement or the performance by the Company of any of its obligations hereunder
and under the Series C Certificate, the Junior Preferred Certificate and the
Warrant.
(g) Except as
otherwise contemplated by this Agreement and the requirement that the Company
obtain the Stockholder Consent, neither the execution and delivery by the
Company of this Agreement, the Series C Certificate, the Junior Preferred
Certificate or the Warrant nor the performance by the Company of any of its
obligations hereunder or under the Series C Certificate, the Junior Preferred
Certificate or the Warrant:
(i) violates,
conflicts with, results in a breach of, or constitutes a default (or an event
which with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) or creates any rights in respect of any Person
under (A) the articles of incorporation or by-laws (or other comparable
documents) of the Company or any of its subsidiaries, (B) any decree, judgment,
order, law, treaty, rule, regulation or determination of any court, governmental
agency or body, or arbitrator having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets, (C) the terms of
any bond, debenture, indenture, credit agreement, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, lease,
mortgage, deed of trust or other instrument to which the Company or any of its
subsidiaries is a party, by which the Company or any of its subsidiaries is
bound, or to which any of the properties or assets of the Company or any of its
subsidiaries is subject, (D) the terms of any “lock-up” or similar provision of
any underwriting or similar agreement to which the Company or any of its
subsidiaries is a party or (E) any rule or regulation of the Financial Industry
Regulatory Authority, Inc. (successor entity to National Association of
Securities Dealers, Inc.) (“FINRA”)
or Nasdaq; or
6
(ii) results
in the creation or imposition of any lien, charge or encumbrance upon any
Investment Securities or upon any of the properties or assets of the Company or
any of its subsidiaries.
(h) When
issued to Fletcher against payment therefor, the Investment Securities issuable
hereunder or under the Series C Certificate, the Junior Preferred Certificate or
the Warrant:
(i) will have
been duly and validly authorized, duly and validly issued, fully paid and
non-assessable;
(ii) will be
free and clear of any security interests, liens, claims or other encumbrances;
and
(iii) will not
have been issued or sold in violation of any preemptive or other similar rights
of the holders of any securities of the Company.
(i) The
Company satisfies all continued listing criteria of the Nasdaq Global Select
Market, the Nasdaq Global Market or the New York Stock
Exchange. There is no present set of facts or circumstances that will
(with the passage of time or the giving of notice or both or neither) cause the
Common Stock to be delisted from such market. All Common Shares will,
when issued, be duly listed and admitted for trading on all of the markets where
shares of Common Stock are traded, including the Nasdaq Global Select
Market.
(j) There is
no pending or, to the best knowledge of the Company, threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or any of its affiliates that
would affect the execution by the Company of, or the performance by the Company
of its obligations under, this Agreement, the Series C Certificate, the Junior
Preferred Certificate or the Warrant.
7
(k) Reports
(i) Since
January 1, 2008, none of the Company’s filings with the SEC under the Securities
Act or under Section 13 or 15(d) of the Exchange Act, including the financial
statements, schedules, exhibits and results of the Company’s operations and cash
flow contained therein (each an “SEC
Filing”), contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements, in the light
of the circumstances under which they were made, not
misleading. Since January 1, 2008, there has not been any pending or,
to the best knowledge of the Company, threatened action, suit, proceeding or
investigation before any court, governmental agency or body, or arbitrator
having jurisdiction over the Company or any of its subsidiaries that will or is
reasonably likely to result in a Material Adverse Effect, except as disclosed in
the Company’s SEC Filings on or before the date immediately prior to and
excluding the date hereof. Since the date of the Company’s most
recent SEC Filing, there has not been, and the Company is not aware of, any
development or condition that is reasonably likely to result in, any material
change in the condition, financial or otherwise, or in the business affairs,
assets, revenues, operations or prospects of the Company and its subsidiaries,
whether or not arising in the ordinary course of business. The
Company’s SEC Filings made before and excluding the date hereof fully disclose
all material information concerning the Company and its subsidiaries required by
all statutes and applicable rules and regulations of the
SEC.
(ii) Since
January 1, 2008, the Company and each of its subsidiaries has timely filed all
material reports, registrations, documents, filings, statements and submissions,
together with any amendments thereto, that it was required to file with any
governmental entity, including, without limitation, (A) the Federal Reserve
Board, (B) the Federal Deposit Insurance Corporation (the “FDIC”)
and (C) and other federal, state or local authority regulating financial
institutions (the foregoing collectively, the “Company
Reports”) and has paid all material fees and assessments due and payable
in connection therewith. As of their respective filing dates, the
Company Reports complied in all material respects with all statutes and
applicable rules and regulations of the applicable governmental
entities. To the knowledge of the Company, as of the date of this
Agreement, there are no outstanding material comments of any governmental entity
with respect to any Company Report. The Company Reports were complete
and accurate in all material respects as of their respective dates, or the dates
of their respective amendments. Except for normal examinations
conducted by a governmental entity in the regular course of the business of the
Company and its subsidiaries, no governmental entity has initiated any
proceeding or, to the knowledge of the Company, investigation into the business
or operations of the Company or any of its subsidiaries since January
1, 2008. There is no material unresolved violation, criticism or
exception by any governmental entity with respect to any report or statement
relating to any examinations of the Company or any of its
subsidiaries. The deposit accounts of each subsidiary of the Company
that is a bank are insured to the fullest extent permitted by law by the Deposit
Insurance Fund, which is administered by the FDIC, all premiums and assessments
required to be paid in connection therewith have been paid when due and no
proceedings for the termination or revocation of such insurance are pending or,
to the knowledge of the Company, threatened.
8
(l) Immediately
prior to the first Closing Date, the authorized capital stock of the Company
consists of One Hundred Million (100,000,000) shares of Common Stock, par value
$1.00 per share and Ten Million (10,000,000) shares of preferred stock, of which
287,411 shares are designated Series A Non-Cumulative Preferred Stock, par value
$1.00 per share (“Series
A Preferred Stock”), and
180,000 shares are designated Fixed Rate Cumulative Perpetual Preferred Stock,
Series B, par value $1.00 per share (“Series
B Preferred Stock”). As
of March 22, 2010, (i) 94,174,096 shares of Common Stock are issued and
outstanding and (A) 5,365,082 shares of Common Stock are currently reserved
and subject to issuance upon the exercise of outstanding stock options, warrants
or other convertible rights, (B) 262,002 shares of Common Stock are currently
reserved and subject to issuance under the Company’s deferred
compensation plan, and (C) 145,502
shares of Common Stock are currently reserved and subject to issuance upon
vesting of restricted stock and restricted stock units (ii) no
shares of Common Stock are held in the treasury of the Company, (iii) 21,700
shares of Series A Preferred Stock are issued, and outstanding and (iv) 180,000
shares of Series B Preferred Stock are issued and outstanding. All of
the outstanding shares of Common Stock and Series A Preferred Stock and Series B
Preferred Stock are, and all shares of capital stock which may be issued
pursuant to outstanding stock options, warrants or other convertible rights will
be, when issued and paid for in accordance with the respective terms thereof,
duly authorized, validly issued, fully paid and non-assessable, free of any
preemptive rights in respect thereof and issued in compliance with all
applicable state and federal laws concerning issuance of
securities. As of the date hereof, except as set forth above, and
except for shares of Common Stock or other securities issued upon conversion,
exchange, exercise or purchase associated with the securities, options,
warrants, rights and other instruments referenced above, no shares of capital
stock or other voting securities of the Company were outstanding, no equity
equivalents, interests in the ownership or earnings of the Company or other
similar rights were outstanding, and there were no existing options, warrants,
calls, subscriptions or other rights or agreements or commitments relating to
the capital stock of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue, transfer, sell or redeem any shares
of capital stock, or other equity interest in, the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement or commitment.
(m) Solvency. The
consolidated balance sheet of the Company dated as of December 31, 2009, and the
consolidated statement of income, the consolidated statement of changes in
shareholders’ equity and the consolidated statement of cash flows of the Company
for the year ended December 31, 2009 and the notes thereto, as included in the
Company’s SEC Filings, present fairly, in all material respects, the financial
position of the Company as of the date thereof and for the period covered
thereby. The Company has not incurred debt, and does not intend to
incur debt, beyond its ability to pay such debt as it matures. For
purposes of this paragraph, “debt” means any liability on a claim, and “claim”
means (x) a right to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured, or (y) a right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured,
or unsecured. With respect to any such contingent liabilities, such
liabilities are computed at the amount which, in light of all the facts and
circumstances existing at the time, represents the amount which can reasonably
be expected to become an actual or matured liability.
(n) Equivalent
Value. As of each Closing Date, under the terms of this
Agreement, the Company is receiving fair consideration from Fletcher for the
agreements, covenants, representations and warranties made by the Company to
Fletcher.
(o) No
Non-Public Information. Fletcher has not requested from the
Company, and the Company has not furnished to Fletcher, any material non-public
information concerning the Company or its subsidiaries.
9
(p) Restatement
Notices. As of each Closing Date and each closing under the
Warrant, as applicable, the Company has provided Fletcher with all Restatement
Notices (as defined below) required to be delivered following a Restatement (as
defined below).
(q) Application
of Takeover Protections. There is no control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
charter documents or the laws of its state of incorporation that is or would
become applicable to Fletcher as a result of Fletcher and the Company fulfilling
their obligations or exercising their rights under this Agreement, the Series C
Certificate, the Junior Preferred Certificate or the Warrant, including, without
limitation, as a result of the Company’s issuance of the Preferred Stock, Common
Stock and Common Stock Equivalent Junior Preferred Stock issuable hereunder and
thereunder and Fletcher’s ownership of the Preferred Stock, Common Stock and
Common Stock Equivalent Junior Preferred Stock issuable hereunder and
thereunder.
(r) Backdating
of Options. The exercise price of each Company option has been
no less than the fair market value of a share of Common Stock as determined on
the date of grant of such Company option. All grants of Company
options were validly issued and properly approved by the Board of Directors of
the Company (or a duly authorized committee or subcommittee thereof) in material
compliance with all applicable legal requirements and recorded on the Company’s
financial statements in accordance with U.S. generally accepted accounting
principles, and no such grants involved any “back dating,” “forward dating” or
similar practices with respect to the effective date of
grant.
(s) Regulatory
Permits. The Company possesses all material certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct its business. The Company
is not in violation of any material judgment, decree or order or any statute,
ordinance, rule or regulation applicable to it.
(t) Foreign
Corrupt Practices. Neither the Company nor any director,
officer, agent, employee or other Person acting on behalf of the Company has, in
the course of its actions for, or on behalf of, the Company (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.
(u) Sarbanes-Oxley
Act. The Company is in compliance in all material respects
with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that
are effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the date
hereof.
10
(v) Transactions
With Affiliates. Except as disclosed in the Company’s SEC
Filings, and other than the grant of stock options and restricted and
non-restricted stock grants disclosed that are required to be publicly
disclosed, none of the officers, directors or employees of the Company is
presently a party to any transaction with the Company (other than for ordinary
course services as employees, officers or directors) required to be disclosed
pursuant to Regulation S-K Item 404, including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any such officer, director or employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in which any such
officer, director, or employee has a substantial interest or is an officer,
director, trustee or partner, which such transaction would be required to be
disclosed.
(w) Insurance. The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
businesses in which the Company is engaged.
(x) Employee
Relations. The Company is not a party to any collective
bargaining agreement. The Company is in compliance with all federal,
state, local and foreign laws and regulations respecting labor, employment and
employment practices and benefits, terms and conditions of employment and wages
and hours, except where failure to be in compliance would not reasonably be
expected to result in a Material Adverse Effect.
(y)
Intellectual
Property Rights. Except as disclosed in the Company’s SEC
Filings or as would not reasonably be expected to result in a Material Adverse
Effect: (i) the Company owns or possesses adequate rights or licenses to
use all trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, trade secrets and other
intellectual property rights (“Intellectual
Property Rights”) necessary to conduct its business as now conducted;
(ii) the Company does not have any knowledge of any infringement by the
Company of Intellectual Property Rights of others, nor does the Company have
reason to believe that the Company has infringed or would infringe on the
Intellectual Property Rights of others; (iii) there is no claim, action or
proceeding against the Company regarding its Intellectual Property Rights; (iv)
the Company has no knowledge of any infringement or improper use by any third
party of any of the Company’s Intellectual Property Rights; and (v) the Company
has taken reasonable security measures to protect the secrecy, confidentiality
and value of all of its Intellectual Property Rights. Notwithstanding anything
in this Section 4(y) to the contrary, the Company may consummate a spin-off or
enter into partnership, license and collaboration agreements and other similar
arrangements.
(z) Environmental
Laws. The Company (i) is in compliance with any and all
Environmental Laws (as hereinafter defined), (ii) has received all permits,
licenses or other approvals required of it under applicable Environmental Laws
to conduct its respective businesses and (iii) is in compliance with all terms
and conditions of any such permit, license or approval, where, in each of the
foregoing clauses (i) - (iii), the failure to so comply could be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.
The term “Environmental
Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or toxic
or hazardous substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued, entered
into, promulgated or approved thereunder.
11
(aa) Investment
Company. The Company is not, and is not an affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.
(bb) Tax
Status. Except as would not have a Material Adverse Effect,
the Company (i) has made or filed all foreign, federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject, (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and (iii) has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply.
(cc) Internal
Accounting and Disclosure Controls. The Company maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management’s general or specific authorization and (iv)
the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference. The Company maintains “disclosure
controls and procedures” (as such term is defined in Rule 13a-15 under the
Exchange Act) that are effective in ensuring that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the SEC, including, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions
regarding required disclosure.
(dd) Off
Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company and an unconsolidated or
other off balance sheet entity that is required to be disclosed by the Company
in the Company’s SEC Filings and is not so disclosed or that otherwise would
have a Material Adverse Effect.
12
(ee) Subsidiaries. As
of the Closing Date, the Company has no directly held subsidiary other than
those listed on Exhibit 21 to the Company’s Annual Report on Form 10−K for the
year ended December 31, 2009. The Company is the beneficial owner
(and the Company or a subsidiary is the record owner) of all of the equity
interests in the Company’s subsidiaries and holds such equity interests free and
clear of all encumbrances except as are imposed by applicable securities
laws.
(ff) Finders’
Fees. Except for Sandler O’Neill & Partners, L.P., whose
fees will be paid by the Company, there is no investment banker, broker, finder
or other intermediary that has been retained by or is authorized to act on
behalf of the Company or any of its affiliates who might be entitled to any fee
or commission from the Company or any of its affiliates in connection with the
transactions contemplated hereby.
(gg) Placement
Agent’s
Fees. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions, in
each case payable to third parties retained by the Company, relating to or
arising out of the Offering pursuant to this Agreement. The Company
shall pay, and hold Fletcher harmless against, any liability, loss or expense
(including, without limitation, reasonable attorney’s fees and out-of-pocket
expenses) arising in connection with any such claim for fees arising out of the
Offering pursuant to this Agreement.
(hh) No
Integrated Offering. Neither the Company, nor any Person
acting on its behalf, has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security, under circumstances
that would cause the Offering to be integrated with prior offerings by the
Company for purposes of the Securities Act or the rules and regulations of FINRA
or Nasdaq.
(ii) Transfer
Taxes. All stock transfer or other taxes (other than income or
similar taxes) which are required to be paid in connection with the Offering
will be, or will have been, fully paid or provided for by the Company, and all
laws imposing such taxes will be or will have been complied
with.
(jj) Manipulation
of Price. The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the Offering or (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases for the
Offering.
(kk) Anti-dilution
Provisions. Except as provided in Section 13(B) of that
certain Warrant to Purchase Common Stock of the Company, issued December 5,
2008, to the United States Department of the Treasury, there is no
anti-dilution provision under any agreement to which the Company is party or to
which any assets of the Company are subject that is or would become effective as
a result of Fletcher and the Company fulfilling their obligations or exercising
their rights under this Agreement, the Certificate of Rights and Preferences and
the Warrant, including, without limitation, as a result of the Company’s
issuance or Fletcher’s ownership of the Preferred Stock or Warrant issuable
hereunder or any Common Shares or Common Stock Equivalent Junior Preferred
Shares.
13
5.
Registration
Provisions.
(a) The
Company will keep the Registration Statement continuously effective (unless
under applicable law it or any other registration statement filed pursuant to
this Agreement expires, in which case the Company will prepare and file a
replacement registration statement and use its reasonable best efforts to cause
such replacement registration statement to be declared or become effective and
to thereafter keep it continually effective) for so long as any Investment
Securities continue to be issuable hereunder or under the Certificate of Rights
and Preferences or the Warrant. In the event that the Company fails
to maintain the effectiveness and availability of the Registration Statement at
any time during the period described above, the Company will promptly provide
notice thereof to Fletcher.
(b) The
Company will prepare and file with the SEC such amendments and supplements to,
or replacements of, the Registration Statement and the prospectus used in
connection with the Registration Statement (as so amended and supplemented from
time to time, the “Prospectus”
) as may be necessary to comply with the provisions of the Securities Act with
respect to the issuance of all Investment Securities issuable to Fletcher
hereunder or under the Certificate of Rights and Preferences or the
Warrant.
(c) The
Company will cause all Common Shares to be listed on the Nasdaq Global Select
Market, Nasdaq Global Market or the New York Stock Exchange and each other
securities exchange or quotation service on which similar securities issued by
the Company are listed or qualified in the future.
(d) The
Company will provide a transfer agent for all Common Shares and Common Stock
Equivalent Junior Preferred Shares and a CUSIP number for all Common Shares and
Common Stock Equivalent Junior Preferred Shares.
(e) The
Company will otherwise comply with all applicable rules and regulations of the
SEC, FINRA and Nasdaq.
14
(f) In
addition to any other remedies available to Fletcher under this Agreement, under
the Series C Certificate, under the Junior Preferred Certificate, under the
Warrant or at law or equity, if there is a Registration Failure, then the
Company shall pay to Fletcher an amount equal to the Registration Failure
Percentage multiplied by the Registration Failure Amount with respect to each
thirty (30)-day period or part thereof during which a Registration Failure shall
have occurred or be continuing. Separate payment shall be due for
each such thirty (30)-day period and no credit shall be given for any payment
made in any prior period. For the avoidance of doubt, the parties
agree and acknowledge that the only thirty (30)-day period for which the
payments in this Section 5(f) shall be pro rated is the first thirty (30)-day
period, and the full amount of the payment for any thirty (30)-day period
described above shall become due if the Registration Failure continues on the
first day of each such thirty (30)-day period (i.e., for a Registration Failure
continuing on day 31, 61, 91, 121, 151, etc.). The Registration
Failure shall be deemed to be continuing unless and until timely payment has
been made under this Section 5(f). The payments described above shall be made by
wire transfer of immediately available funds no later than five (5) days after
and excluding the earlier of (x) the date on which the Registration Failure
shall have been cured and (y) the last day of each thirty (30)-day period after
the occurrence of a Registration Failure. For purposes of this
Section 5(f), the term “Registration Failure Percentage” means the amount set
forth in the following table:
|
Number
of Days During Which
a
Registration Failure Shall
Have
Occurred or Been
Continuing
|
Registration
Failure
Percentage
|
||||
|
1-30
|
1/30
of 1.00% per day
|
||||
|
31
|
1.00%
|
||||
|
61
|
2.00%
|
||||
|
91
|
2.00%
|
||||
|
121
|
3.00%
|
||||
|
151
|
3.00%
|
||||
|
181
|
4.00%
|
||||
|
211
|
4.00%
|
||||
| Thereafter | The registration failure percentage shall increase by 1.00% upon each successive 60-day period (i.e., on days 271, 331, 391, etc.). | ||||
15
For
purposes of this Section 5(f), the term “Registration
Failure Amount” means the Aggregate Investment Commitment as of the date
of the Registration Failure.
(g) The
Company shall not grant any right of registration under the Securities Act
relating to any of its securities to any Person other than Fletcher if such
rights would reasonably be expected to cause the Company to fail to honor any
rights of Fletcher under this Agreement.
6.
Limits
With Respect to Shares Held or Shares Issuable.
(a) The
Company and its board of directors shall call a stockholders’ meeting for the
purpose of voting on (i) the approval of the issuance of all Investment
Securities issued or issuable under this Agreement, the Series C Certificate,
the Junior Preferred Certificate and the Warrant and (ii) an increase in the
authorized Common Stock to 300,000,000 shares (the “Stockholder
Consent”), which meeting shall be held on or before June 30, 2010, and
shall otherwise use its best efforts (including engaging Georgeson Shareholder
Services or another nationally-recognized proxy solicitor) to obtain the
Stockholder Consent on or before June 30, 2010 (the date on which the
Stockholder Consent is obtained is referred to herein as the “Stockholder
Consent Date”), including by (x) soliciting proxies to vote for the
Stockholder Consent, (y) recommending to the Company’s stockholders that such
stockholders give the Stockholder Consent and (z) not withdrawing such
recommendation. Until the Stockholder Consent is obtained, the
Company shall not effect any conversion or redemption of the Preferred Stock or
any exercise of the Warrant, and Fletcher shall not have the right to convert or
redeem any portion of the Preferred Stock or exercise any portion of the Warrant
to the extent such conversion, redemption or exercise would result in issuances
under this Agreement, the Series C Certificate, the Junior Preferred Certificate
and the Warrant of an aggregate number of shares of Common Stock and Common
Stock Equivalent Junior Preferred Stock (measured on an as converted basis) in
excess of nineteen and ninety-nine one-hundredths percent (19.99%) of the shares
of Common Stock outstanding as of the date hereof, except that in the event of a
Change of Control (as hereinafter defined), the total number of shares of common
stock of the Acquiring Person issued or issuable hereunder shall not exceed a
number equal to nineteen and ninety-nine one-hundredths percent (19.99%) of the
outstanding common stock (or other, most widely-held class of security) of the
Acquiring Person.
16
(b) The
Company shall not effect any conversion or redemption of the Preferred Stock or
any exercise of the Warrant, and Fletcher shall not have the right to convert or
redeem any portion of the Preferred Stock or exercise any portion of the
Warrant, to the extent the number of shares of Common Stock and Common Stock
Equivalent Junior Preferred Stock beneficially owned (calculated in accordance
with Rule 13d-3 promulgated under the Exchange Act) by Fletcher immediately
following such conversion, redemption or exercise would exceed nine and nine
tenths percent (9.90%) of the aggregate number of shares of Common Stock and
Common Stock Equivalent Junior Preferred Stock (measured on an as
converted basis) outstanding after giving effect to such conversion, redemption
or exercise (the “Maximum
Number”). Unless expressly waived in writing by Fletcher, the
Company shall deliver to Fletcher on or before the tenth (10th) day of each
calendar month commencing with the month of April 2010 a notice (an “Outstanding
Share Notice”) stating the aggregate number of shares of Common Stock and
Common Stock Equivalent Junior Preferred Stock outstanding as of the last day of
the preceding month and the increase (an “Increase”)
or decrease (a “Decrease”),
if any, in the aggregate number of shares of Common Stock and Common Stock
Equivalent Junior Preferred Stock from the number of shares reported on the
preceding Outstanding Share Notice (or, in the case of the first Outstanding
Share Notice, the number of shares of Common Stock and Common Stock Equivalent
Junior Preferred Stock outstanding as reported in Section 4(l)). The
Maximum Number shall also be increased on the sixty-fifth (65th) day after
Fletcher delivers a written notice (a “65-Day
Notice”) to the Company designating a greater Maximum
Number. A 65-Day Notice may be given by Fletcher at any time and from
time to time on one or more occurrences.
(c) The
Company shall not effect any conversion or redemption of the Preferred Stock,
and Fletcher shall not have the right to convert or redeem any portion of the
Preferred Stock, into Common Stock to the extent such conversion or redemption
would result in aggregate issuances to Fletcher under this Agreement, the
Certificate of Rights and Preferences and the Warrant of in excess of nine and
seventy-five one hundredths percent (9.75%) (the “Maximum
Voting Stock Amount”) of the number of shares of Common Stock that will
be outstanding after giving effect to such conversion or
redemption. The holders of more than fifty percent (50%) of the then
outstanding Preferred Stock shall have the right to permanently reduce the
percentage used in the determination of the Maximum Voting Stock Amount to four
and seventy-five one hundredths percent (4.75%) at any time, effective upon
delivery of written notice of such election to the Company. In the
event that the Company cannot effect a conversion or redemption of the Preferred
Stock pursuant to the terms of this Section 6(c), the conversion or redemption
shall be effected into an equal number of shares of Common Stock Equivalent
Junior Preferred Stock of the Company; provided, however, that in no event shall
the Company effect any conversion or redemption of the Preferred Stock or
exercise of the Warrant to the extent such conversion, redemption or exercise
would result in aggregate issuances to Fletcher under this Agreement, the
Certificate of Rights and Preferences and the Warrant of in excess of
thirty-three and thirty-three one hundredths percent (33.33%) of the Total
Equity of the Company. For purposes of the preceding sentence, “Total
Equity” means the value as reflected on the balance sheet of the Company of all
shares of common, preferred and other equity capital of the Company outstanding
as of the date of determination.
17
(d) Any
shares of Common Stock, Common Stock Equivalent Junior Preferred Stock or other
consideration (in the form of cash, securities or other assets per Common Share
issuable to a holder of shares of Common Stock or Common Stock Equivalent Junior
Preferred Stock in connection with a Change of Control) that would have been
issued to Fletcher upon conversion or redemption of any Preferred Stock, or as
dividends on the Preferred Stock or upon exercise of the Warrant but for one or
more of the limitations contained in this Section 6 shall be deferred and shall
be delivered to Fletcher promptly and in any event no later than three (3)
Business Days after the date such limitations cease to restrict the issuance of
such shares or other consideration (whether due to an increase in the Maximum
Number so as to permit such issuance, the disposition by Fletcher of shares of
Common Stock or Common Stock Equivalent Junior Preferred Stock or any other
reason) unless the Company has withdrawn the applicable Conversion Notice or
Fletcher has withdrawn the applicable Redemption Notice (each as defined in the
Certificate of Rights and Preferences) or Warrant Exercise Notice (as defined in
the Warrant). During the time of any such deferral, the Company shall
no longer be obligated to pay any dividend on the Preferred Stock or provide or
recognize any other preferences, limitations, powers or other rights provided
under the Series C Certificate to the extent that, if the Preferred Stock would
have been converted or redeemed, Fletcher would beneficially own Common Stock
and Common Stock Equivalent Junior Preferred Stock that would exceed the Maximum
Number.
7.
Representations
and Warranties of Fletcher. Fletcher
hereby represents and warrants to the Company on the date hereof, on each
Closing Date, on each Warrant Closing Date and on each Conversion Closing Date
and Redemption Closing Date (each as defined in the Certificate of Rights and
Preferences) as follows:
(a) Fletcher
has been duly incorporated and is validly existing and in good standing under
the laws of Bermuda.
(b) The
execution, delivery and performance of this Agreement by Fletcher have been duly
authorized by all requisite corporate action and no further consent or
authorization of Fletcher, its Board of Directors or its stockholders is
required. This Agreement has been duly executed and delivered by
Fletcher and, when duly authorized, executed and delivered by the Company, will
be a valid and binding agreement enforceable against Fletcher in accordance with
its terms, subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity.
18
(c) Fletcher
understands that no United States federal or state agency has passed on,
reviewed or made any recommendation or endorsement of the Investment
Securities.
(d) Fletcher
will have on each Closing Date sufficient immediately-available funds in cash to
enable Fletcher to pay the Investment Amount to be paid on such Closing
Date.
8.
Future
Equity Issuances.
(a) Notice
and Participation Rights. During the Investment Period and for
one (1) year thereafter (the “Future
Equity Issuance Notice Period”), if the Company intends to engage in any
sale or issuance to any Person (other than Fletcher or its affiliates) of any
shares of, or securities convertible into, exercisable or exchangeable for, or
whose value is derived in whole or in part from, any shares of any class of the
Company’s capital stock at a price per share less than the then applicable
Conversion Price, other than any issuance or sale (i) to any wholly-owned
subsidiary, (ii) pursuant to a stock option plan, employee stock purchase plan
or restricted stock plan approved by the Board of Directors, or (iii) upon the
exercise or conversion of any options (other than options issued to employees or
directors pursuant to a stock option plan, employee stock purchase plan or
restricted stock plan), warrants or convertible notes outstanding on the date of
this Agreement, in each case in accordance with the terms of such options,
warrants or convertible notes in effect on the date of this Agreement (a “Future
Equity Issuance”), the Company shall promptly notify Fletcher that the
Company intends to effect a Future Equity Issuance (the “Future
Equity Issuance Notice”). If,
within two (2) Business Days after and excluding the date of receipt of such
notice, Fletcher notifies the Company in writing that Fletcher would like to be
informed of the terms and conditions of such Future Equity Issuance, then the
Company shall promptly provide Fletcher with a written description of the terms
and conditions of such proposed Future Equity Issuance, including a description
of the capital stock to be sold or issued, the investor or investors in the
Future Equity Issuance, the price, the quantity and all other information
reasonably necessary for Fletcher to make an informed decision on whether it
desires to participate in the Future Equity Issuance (the “Future
Equity Issuance Description”). If Fletcher notifies the
Company in writing that Fletcher elects to purchase all or a portion of the
capital stock that the Company intends to sell or issue in the Future Equity
Issuance (which election shall include the number of shares of such capital
stock that Fletcher intends to purchase) by 11:59 p.m., New York City time, on
the third (3rd) Business Day after and excluding the date of the Future Equity
Issuance Description, then the Company shall not consummate such Future Equity
Issuance without selling Fletcher the capital stock that it elected to purchase
at or prior to the consummation of such Future Equity Issuance or promptly
thereafter at a closing date and place established prior to such consummation,
which purchase shall be at the price and on the other terms and conditions of
the Future Equity Issuance. If Fletcher does not elect to receive a
Future Equity Issuance Description with respect to a Future Equity Issuance,
then promptly, and no later than one (1) Business Day after and excluding, the
date of announcement of such Future Equity Issuance (or, if such Future Equity
Issuance is not required to be publicly announced, the date of closing of such
Future Equity Issuance), the Company shall provide Fletcher with a written
description of the material terms of such Future Equity
Issuance.
19
(b) No
Integrated Offering. Notwithstanding the foregoing, the
Company shall ensure that no Person acting on its behalf shall sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
that may be integrated with the Offering for purposes of the Securities Act or
the rules and regulations of FINRA or Nasdaq.
9.
Covenants. The
Company covenants and agrees with Fletcher as follows:
(a) For so
long as Fletcher has the right to purchase any Investment Securities and for a
period of one (1) year thereafter, the Company will use its best efforts
to, (i) except as otherwise provided in Section 5 hereof, maintain the
effectiveness of the Registration Statement with respect to the shares of
Preferred Stock and Warrants issuable under this Agreement and the Warrant; and
(ii) cause the representations and warranties contained in paragraphs (o), (hh),
(jj) or (kk) of Section 4 hereof to be and remain true and correct, except those
representations and warranties which address matters only as of a particular
date, which shall be true and correct as of such date. For so long as
Fletcher owns any Investment Securities and for a period of one (1) year
thereafter, the Company will use its best efforts to (i) maintain the
eligibility of the Common Stock for listing on the Nasdaq Global Select Market,
Nasdaq Global Market or New York Stock Exchange; (ii) regain the eligibility of
the Common Stock for listing or quotation on the Nasdaq Global Select Market,
Nasdaq Global Market or New York Stock Exchange in the event that the Common
Stock is delisted by the Nasdaq Global Select Market, Nasdaq Global Market or
New York Stock Exchange or any other applicable market or exchange; and (iii)
obtain a listing on Nasdaq Global Market or the New York Stock Exchange if the
Common Stock is delisted by the Nasdaq Global Select Market.
(b) If a
Restatement occurs, the Company shall deliver to Fletcher a Restatement Notice
within three (3) Business Days of such Restatement.
(c) The
Company will provide Fletcher with a reasonable opportunity, which shall not be
less than two (2) full Business Days, to review and comment on any public
disclosure by the Company of information regarding this Agreement and the
transactions contemplated hereby, before such public
disclosure.
(d) The
Company will make all filings required by law to be filed by it with respect to
the transactions contemplated hereby.
(e) The
Company will comply with the terms and conditions of the Series C Certificate,
the Junior Preferred Certificate and the Warrant.
20
(f) For so
long as Fletcher owns any Investment Securities, within five (5) Business Days
after the filing of each of its quarterly reports on Form 10-Q with the SEC, the
Company shall deliver to Fletcher a certificate of the Chief Executive Officer
and Chief Financial Officer of the Company stating that, based on
their knowledge, the final consolidated unaudited financial statements including
the footnotes thereto contained therein fairly present in all material respects
the financial condition in conformity with accounting principles generally
accepted in the United States, results of operations and cash flows of the
Company as of and for the periods presented therein.
(g) The
Company shall use its commercially reasonable efforts to cause the Common Shares
to be eligible for book-entry transfer through The Depository Trust Company (or
any successor thereto) as soon as practicable after the date of this Agreement
and thereafter to use its commercially reasonable efforts to maintain such
eligibility.
(h) The
Company shall at all times reserve for issuance such number of its shares of
Preferred Stock, Common Stock Equivalent Junior Preferred Stock and, after
Stockholder Consent is obtained, Common Stock as shall from time to time be
sufficient to satisfy its obligation to deliver such shares under this
Agreement, the Series C Certificate, the Junior Preferred Certificate and the
Warrant. In the event the number of shares of Common Stock, Common
Stock Equivalent Junior Preferred Stock or other securities issued and issuable
under this Agreement, the Series C Certificate, the Junior Preferred Certificate
and the Warrant exceeds the authorized number of shares of Common Stock (after
Stockholder Consent is received), Common Stock Equivalent Junior Preferred Stock
(after such stock is designated pursuant to Section 9(k)) or other securities,
the Company shall promptly take all actions necessary to increase the authorized
number of shares of Common Stock and Common Stock Equivalent Junior Preferred
Stock.
(i) Unless
expressly waived by Fletcher, the Company shall deliver an Outstanding Share
Notice to Fletcher on or before the tenth (10th) day of each calendar month
pursuant to Section 6(b).
(j) The
Company shall cooperate in good faith to assist with any assignment, pledge,
hypothecation or transfer of the Investment Securities, including without
limitation making its representatives available for discussions with lenders and
assignees and promptly processing requests to retitle the Investment
Securities.
(k) The
Company shall designate the Common Stock Equivalent Junior Preferred Stock by
filing the Articles of Amendment related thereto with the Secretary of State of
the State of Georgia as promptly as reasonably practicable after the
announcement of this Agreement and not later than the earlier of (i) ten (10)
Business Days after the date hereof or (ii) the date the Warrant is
issued. The Company shall not register the Common Stock Equivalent
Junior Preferred Stock pursuant to Section 12 of the Exchange Act without the
prior written consent of Fletcher.
(l) The
Company shall not authorize more than 65,000 shares of Preferred Stock or issue
shares of Preferred Stock other than pursuant to this
Agreement.
21
10. Change
of Control.
(a) In the
event of a Change of Control, in addition to the rights contained in this
Agreement, Fletcher shall have the rights set forth in the Series C Certificate,
the Junior Preferred Certificate and the Warrant regarding Changes of
Control. The Company agrees that: (i) it shall deliver to Fletcher
written notice (a “Change
of Control Notice”) of any proposed Change of Control (which notice shall
specify the expected effective date of such Change of Control) promptly
following public disclosure of such proposed Change of Control and in any event
not later than fifteen (15) Business Days prior to the expected effective date
of the proposed Change of Control; and (ii) it will not enter into an agreement
resulting in a Change of Control unless such agreement expressly obligates the
Acquiring Person to assume upon consummation of the Change of Control all of the
Company’s obligations under this Agreement, the Certificate of Rights and
Preferences and the Warrant. On or before the date an agreement is
entered into with an Acquiring Person resulting in a Change of Control, the
Company shall deliver to Fletcher written notice that the Acquiring Person has
agreed to assume such obligations and regardless of whether such express
assumption occurs or if no such agreement exists, the Acquiring Person shall be
bound by such obligations.
(b) In the
event that a proposed Change of Control is publicly disclosed or a Change of
Control Notice is delivered (or an event shall have occurred that would, with or
without the passage of time, require the delivery of a Change of Control
Notice), on and after the date of such announcement or, if earlier, the date of
such event, Fletcher shall not be obligated to consummate any further
Investments, but rather shall have the right to consummate any Investments in
its sole discretion.
(c) Between
the date a proposed Change of Control is publicly disclosed or Change of Control
Notice is delivered (or an event shall have occurred that would, with or without
the passage of time, require the delivery of a Change of Control Notice) and the
effective date of the Change of Control, Fletcher shall continue to have the
right to submit to the Company an Investment Notice and consummate any
Investment, in Fletcher’s sole discretion, in accordance with the terms and
conditions of this Agreement. In addition, Fletcher at its sole
option may elect to submit to the Company a special notice (a “Contingent
Investment Notice”) to effect an Investment for all or part of the
remaining Aggregate Investment Commitment in connection with such Change of
Control; in which case, notwithstanding the provisions of Section 3
hereof:
(i)
the
effectiveness of such contingent investment shall be conditional upon the
effectiveness of the Change of Control; and
(ii)
the
shares of Preferred Stock issuable upon such contingent investment shall be
treated as outstanding as of immediately before such Change of Control for all
purposes under the Series C Certificate, including all rights with respect
thereto under Section 6(F) of the Series C Certificate. Without
limiting the generality of the foregoing, the Company shall honor any Contingent
Notice (as defined in the Certificate of Rights and Designations) by Fletcher to
redeem the shares of Preferred Stock issuable pursuant to this Section 10(c) in
connection with such Change of Control.
22
(d)
“Change
of Control” means (i) an acquisition of more than fifty percent
(50%) of the equity securities of the Company (measured by vote or value) by
means of merger or other form of corporate reorganization in which outstanding
shares of the Company are exchanged for securities or other consideration
issued, or caused to be issued, by the Acquiring Person or its Parent,
Subsidiary or Affiliate (each as defined in Rule 12b-2 of the Exchange Act),
other than a restructuring by the Company where outstanding shares of the
Company are exchanged for shares of the Acquiring Person on a one-for-one basis
and, immediately following the exchange, former stockholders of the Company own
all of the outstanding shares of the Acquiring Person on the same pro rata basis
as prior to the exchange, (ii) a sale or other disposition of all or
substantially all of the assets of the Company (on a consolidated basis) in a
single transaction or series of related transactions, (iii) any tender
offer, exchange offer, stock purchase or other transaction or event or series of
related transactions or events by or involving the Company in which a single
entity or group becomes the direct or indirect owner of more than fifty percent
(50%) of the equity securities of the Company (measured by vote or value), or
(iv) a capital reorganization or reclassification of the Common Stock or other
securities (other than a reorganization or reclassification in which the Common
Stock or other securities are not converted into or exchanged for cash or other
property, and, immediately after consummation of such transaction, the
stockholders of the Company immediately prior to such transaction own the Common
Stock, other securities or other voting stock of the Company in substantially
the same proportions relative to each other as such stockholders owned
immediately prior to such transaction). Notwithstanding anything
contained herein to the contrary, a change in the state of incorporation of the
Company shall not in and of itself constitute a Change of
Control.
(e) “Acquiring
Person” means, in connection with any Change of Control any of the
following, at Fletcher’s election, (i) the continuing or surviving Person of a
consolidation or merger with the Company (if other than the Company), (ii) the
transferee of all or substantially all of the properties or assets of the
Company, (iii) the corporation consolidating with or merging into the Company in
a consolidation or merger in connection with which the Common Stock is changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, (iv) the entity or group acting in concert acquiring or
possessing the power to cast the majority of the eligible votes at a meeting of
the Company’s stockholders at which directors are elected, or, (v) in the case
of a capital reorganization or reclassification, the Company, or (vi) at
Fletcher’s election, any Person that (x) controls the Acquiring Person directly
or indirectly through one or more intermediaries, (y) is required to include the
Acquiring Person in the consolidated financial statements contained in such
Person’s Annual Report on Form 10-K (if such Person is required to file such a
report) or would be required to so include the Acquiring Person in such Person’s
consolidated financial statements if they were prepared in accordance with U.S.
generally accepted accounting principles and (z) is not itself included in the
consolidated financial statements of any other Person (other than its
consolidated subsidiaries).
11. Restatements.
(a) If a
Restatement occurs, the Company shall deliver to Fletcher, a written notice in
the form attached hereto as Annex
C (a “Restatement
Notice”) within three (3) Business Days after such Restatement,
stating the date on which a Restatement has
occurred and
including the
documents in which the Restatement was publicly disclosed.
23
(b) “Restatement
” means the earlier of (i) the announcement by the Company of its
intention to restate any portion of the Company Financial Statements and (ii)
the actual restatement by the Company of any portion of the Company Financial
Statements.
12. Conditions
Precedent to Fletcher’s
Obligations. The
obligations of Fletcher hereunder are subject to the performance by the Company
of its obligations hereunder and to the satisfaction of the following additional
conditions precedent, unless expressly waived in writing by
Fletcher:
(a) (i) from
and after the date of this Agreement through and including each Closing Date or
Warrant Closing Date, (A) the representations and warranties made by the Company
in paragraphs (a), (b), (c), (d), (e), (f), (g), (h), (i), (l) and (kk) of
Section 4 of this Agreement shall be true and correct (except those
representations and warranties which address matters only as of a particular
date, which shall be true and correct as of such date) and (B) all other
representations and warranties made by the Company in this Agreement shall be
true and correct in all material respects (except those representations and
warranties qualified by material, materiality, Material Adverse Effect or
similar expressions, which shall be true and correct in all respects and those
representations and warranties which address matters only as of a particular
date, which shall be true and correct as of such date); (ii) from and after the
date of this Agreement through and including each Closing Date or Warrant
Closing Date, the Company shall have complied fully with all of the covenants
and agreements in this Agreement and the Warrant; (iii) on each Closing Date or
Warrant Closing Date, the Company shall not possess any negative, material
non-public information other than as shall have been filed with the SEC at least
five (5) Business Days prior to and excluding the Closing Date or Warrant
Closing Date; and (iv) on each Closing Date or Warrant Closing Date, Fletcher
shall have received a certificate of the Chief Executive Officer and the Chief
Financial Officer of the Company dated such date confirming the matters set
forth in the preceding clauses (i), (ii) and (iii).
(b) On each
Closing Date, Conversion Closing Date, Redemption Closing Date (each as defined
in the Certificate of Rights and Preferences) and Warrant Closing Date, the
Company shall have delivered to Fletcher an opinion of Kilpatrick Stockton LLP,
reasonably satisfactory to Fletcher, dated the date of delivery, confirming in
substance the matters covered by paragraphs (a), (b), (c), (d), (e), (f), (g),
(h), (i), (l) and (kk) of Section 4 hereof.
(c)
No
Registration Failure shall have occurred that is continuing.
(d)
A
Prospectus in form and substance reasonably satisfactory to Fletcher shall have
been filed on or before the date that is one Business Day prior to the first
Closing Date and shall remain available and in effect on each Closing
Date.
24
(e) The
Company shall have submitted to the Nasdaq Global Select Market a correct and
complete Notice for Listing of Additional Shares by no later than ten (10)
Business Days after the date hereof.
(f) From and
after the date of this Agreement through and including each Closing Date and
Warrant Closing Date, all shares of Common Stock issued and issuable hereunder
or under the Series C Certificate, the Junior Preferred Certificate or the
Warrant shall be duly listed and admitted for trading on the Nasdaq Global
Select Market, Nasdaq Global Market or the New York Stock
Exchange.
(g) On each
Closing Date and Warrant Closing Date, Fletcher shall have received from the
transfer agent of the Company a certificate with respect to the total number of
shares of Common Stock and Common Stock Equivalent Junior Preferred Stock
outstanding as of a date on or around Closing Date.
(h) From and
after the date of this Agreement through and including the Closing Date and
Warrant Closing Date, there shall not have been a
Restatement.
(i) On or
before the Closing Date, the Company shall have filed with the Georgia Secretary
of State the Series C Certificate and the Junior Preferred
Certificate.
(j) The
Stockholder Consent shall have been obtained on or prior to June 30,
2010.
For the
avoidance of doubt, Fletcher may waive or refuse to waive any of the foregoing
conditions in its sole discretion with respect to any Closing without being
obligated to waive or refuse to waive any of the foregoing conditions with
respect to any other Closing.
13. Conditions
Precedent to the Company’s
Obligations.
The
obligations of the Company hereunder are subject to the performance by Fletcher
of its obligations hereunder and to the satisfaction (unless expressly waived in
writing by the Company) of the additional conditions precedent that, on each
Closing Date or Warrant Closing Date: (a)(i) the representations and warranties
made by Fletcher in paragraphs (a), (b) and (d) of Section 7 of this Agreement
shall be true and correct (except those representations and warranties which
address matters only as of a particular date, which shall be true and correct as
of such date) and (ii) all other representations and warranties made by Fletcher
in this Agreement shall be true and correct in all material respects (except
those representations and warranties which address matters only as of a
particular date, which shall be true and correct as of such date); (b) Fletcher
shall have complied fully with all the covenants and agreements in this
Agreement; and (c) the Company shall have received on each such date a
certificate of an appropriate officer of Fletcher dated such date confirming (a)
and (b). For the avoidance of doubt, the Company may waive or refuse
to waive any of the foregoing conditions in its sole discretion with respect to
any Closing without being obligated to waive or refuse to waive any of the
foregoing conditions with respect to any other Closing.
25
14. Fees
and Expenses. Each
of Fletcher and the Company agrees to pay its own expenses incident to the
performance of its obligations hereunder, including, but not limited to the
fees, expenses and disbursements of such party’s counsel, except as is otherwise
expressly provided in this Agreement. Notwithstanding the foregoing,
the Company shall pay all fees and expenses associated with the filing of any
Registration Statement, including, without limitation, all fees and expenses
associated with any FINRA filing, if applicable.
15. Non-Performance.
(a) By
the Company. If the Company, at any time, shall fail to
deliver the Investment Securities required to be delivered to Fletcher pursuant
to this Agreement, the Series C Certificate, the Junior Preferred Certificate or
the Warrant, in accordance with the terms and conditions of this Agreement, the
Series C Certificate, the Junior Preferred Certificate or the Warrant, as the
case may be, for any reason other than the failure of any condition precedent to
the Company’s obligations hereunder or the failure by Fletcher to comply with
its obligations hereunder, then the Company shall (without limitation to
Fletcher’s other remedies at law or in equity):
(i)
indemnify
and hold Fletcher harmless against any loss, claim or damage arising from or as
a result of such failure by the Company (regardless of whether any of the
foregoing results from a third-party claim or otherwise);
and
(ii) reimburse
Fletcher for all of its reasonable out-of-pocket expenses (which includes fees
and expenses of its counsel) incurred by Fletcher in connection with this
Agreement, the Series C Certificate, the Junior Preferred Certificate, the
Warrant and the transactions contemplated herein and therein (regardless of
whether any of the foregoing results from a third-party claim or
otherwise).
(b) By
Fletcher. If, as of the One Year Anniversary Date, Fletcher
shall have failed to effect Investments equal to the Aggregate Investment
Commitment for any reason other than (i) the failure of any condition precedent
to Fletcher’s obligations hereunder, (ii) the failure by the Company to comply
with its obligations hereunder, or (iii) delivery of a Change of Control Notice
or the occurrence of an event that would require the delivery of a Change of
Control Notice, then on the Business Day immediately following, Fletcher shall
pay to the Company an amount equal to Five Percent (5%) of the amount of the
Aggregate Investment Commitment not subject to clauses (i), (ii) or (iii) that
has not been satisfied by Fletcher as of such date. If, as of the
last day of the Investment Period, Fletcher shall have failed to effect
Investments equal to the Aggregate Investment Commitment for any reason other
than as set forth in clauses (i), (ii) or (iii) of the immediately preceding
sentence, then on the Business Day immediately following, Fletcher shall pay to
the Company an amount equal to Five Percent (5%) of the amount of the Aggregate
Investment Commitment not subject to clauses (i), (ii) or (iii) of the
immediately preceding sentence that has not been satisfied by Fletcher as of
such date. All payments pursuant to this Section 15(b) shall be made
by wire transfer on the next Business Day of immediately available United States
funds in accordance with the wire transfer instructions set forth on Annex E
hereto. Notwithstanding Section 16(b), this Section 15(b) shall be
the Company’s sole remedy against Fletcher for any failure to comply with its
obligation to effect the Investments required to be made under this
Agreement. For purposes of this Section 15(b), the term “One
Year Anniversary Date” shall mean (x) if the Investment Period has not
been extended pursuant to Section 1(b), the one year anniversary of the
Stockholder Consent Date, and (y) if the Investment Period has been extended
pursuant to Section 1(b), the date that is X number of Business Days after the
one year anniversary of the Stockholder Consent Date, where X is equal to the
number of Business Days by which the Investment Period has been
extended.
26
16. Indemnification.
(a) Indemnification
of Fletcher. The Company hereby agrees to indemnify Fletcher
and each of its officers, directors, employees, consultants, agents, attorneys,
accountants and affiliates and each Person that controls (within the meaning of
Section 20 of the Exchange Act) any of the foregoing Persons (each a “Fletcher
Indemnified Party”) against any claim, demand, action, liability,
damages, loss, cost or expense (including, without limitation, reasonable legal
fees and expenses incurred by such Person in investigating or defending any of
the foregoing regardless of whether the foregoing results from a third-party
claim or otherwise) (all of the foregoing, including associated costs and
expenses being referred to herein as “Damages”),
that it may incur in connection with any of the transactions contemplated hereby
arising out of or based upon:
(i)
any
untrue or alleged untrue statement of a material fact in a SEC Filing by the
Company or any of its affiliates or any Person acting on its or their behalf or
omission or alleged omission to state therein any material fact necessary in
order to make the statements, in light of the circumstances under which they
were made, not misleading by the Company or any of its affiliates or any Person
acting on its or their behalf;
(ii) any of
the representations or warranties made by the Company herein being untrue or
incorrect at the time such representation or warranty was made;
and
(iii) any
breach or non-performance by the Company of any of its covenants, agreements or
obligations under this Agreement, the Certificate of Rights and Preferences or
the Warrant;
provided,
however,
that the foregoing indemnity shall not apply to any Damages to the extent that
they arise out of, or are based upon, the gross negligence or willful misconduct
of Fletcher in connection therewith.
(b) Indemnification
of the Company. Fletcher hereby agrees to indemnify the
Company and each of its officers, directors, employees, consultants, agents,
attorneys, accountants and affiliates and each Person that controls (within the
meaning of Section 20 of the Exchange Act) any of the foregoing Persons against
any Damages that it may incur in connection with any of the transactions
contemplated hereby arising out of or based upon:
(i)
any
untrue or alleged untrue statement of a material fact included in an SEC filing
by the Company with the written consent of or at the direction of Fletcher
therefor by or about Fletcher or any of its affiliates or any Person acting on
its or their behalf or omission or alleged omission to state any such material
fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading by Fletcher or any of
its affiliates or any Person acting on its or their behalf;
27
(ii) any of
the representations or warranties made by Fletcher herein being untrue or
incorrect at the time such representation or warranty was made;
and
(iii)
any
breach or non-performance by Fletcher of any of its covenants, agreements or
obligations under this Agreement;
provided,
however,
that the foregoing indemnity shall not apply to any Damages to the extent that
they arise out of, or are based upon, the gross negligence or willful misconduct
of the Company in connection therewith.
(c) Notwithstanding
anything to the contrary contained in this Agreement, neither the Company nor
Fletcher shall be liable or otherwise responsible for consequential, incidental,
special, indirect, exemplary or punitive damages, provided that, notwithstanding
the foregoing, neither the Company nor Fletcher waives actual or compensatory
damages, including actual or compensatory damages measured by diminution in
value of the shares of Preferred Stock, Common Shares or Common Stock Equivalent
Junior Preferred Shares.
(d) Conduct
of Third Party Claims.
(i)
Whenever
a claim for indemnification shall arise under this Section 16 as a result of a
third-party claim, the party seeking indemnification (the “Indemnified
Party”), shall notify the party from whom such indemnification is sought
(the “Indemnifying
Party”) in writing of the claim and the facts constituting the basis for
such claim in reasonable detail;
(ii) Such
Indemnifying Party shall have the right to retain the counsel of its choice in
connection with such claim and to participate at its own expense in the defense
of any such claim; provided,
however,
that counsel to the Indemnifying Party shall not (except with the consent of the
relevant Indemnified Party) also be counsel to such Indemnified
Party. In no event shall the Indemnifying Party be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from its own counsel for all Indemnified Parties in connection with any
one action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances;
and
(iii) No
Indemnifying Party shall, without the prior written consent of the Indemnified
Parties (which consent shall not be unreasonably withheld), settle or compromise
or consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification could be
sought under this Section 16 unless such settlement, compromise or consent (A)
includes an unconditional release of each Indemnified Party from all liability
arising out of such litigation, investigation, proceeding or claim and (B) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any Indemnified Party.
28
17. Survival
of the Representations and Warranties. The
respective representations and warranties made herein by or on behalf of the
parties hereto shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or any
officer, director or employee of, or Person controlling or under common control
with, such party and will survive delivery of and payment for any Investment
Securities issuable hereunder and for one (1) year thereafter.
18.
Notices. All
communications hereunder shall be in writing and delivered as set forth
below.
(a) If sent
to Fletcher, all communications will be deemed delivered: if delivered by hand,
on the day received by Fletcher; if sent by reputable overnight courier, on the
next Business Day; and if transmitted by facsimile to Fletcher, on the date
transmitted (provided
such facsimile is later confirmed), in each case to the address set forth in
Annex
D hereto (unless otherwise notified in writing of a substitute
address).
(b) If sent
to the Company, all communications will be deemed delivered: if delivered by
hand, on the day received by the Company; if sent by reputable overnight
courier, on the next Business Day; and if transmitted by facsimile to the
Company, on the date transmitted (provided such facsimile is later confirmed),
in each case to the following address (unless otherwise notified in writing of a
substitute address):
United
Community Banks, Inc.
125
Highway 515 East
Blairsville,
Georgia 30512
Attention: Rex
S. Schuette
Telephone:
(706) 745-2265
Facsimile: (706)
745-9046
with a
copy to (which copy shall not constitute notice):
Kilpatrick
Stockton LLP
1100
Peachtree Street
Suite
2800
Atlanta,
Georgia 30309
Attention: James
W. Stevens
Telephone:
(404) 815-6270
Facsimile:
(404) 541-3400
(c)
To the
extent that any funds shall be delivered to the Company by wire transfer, unless
otherwise instructed by the Company, such funds should be delivered in
accordance with the wire instructions set forth in Annex
E.
(d) If the
Company does not agree and acknowledge the delivery of any 65-Day Notice under
this Agreement by 11:59 p.m., New York City time, on the Business Day following
the date of delivery of such notice, such non-response by the Company shall be
deemed to be agreement and acknowledgment by the Company with the terms of such
notice.
29
19.
Miscellaneous.
(a) The
parties may execute and deliver this Agreement as a single document or in any
number of counterparts, manually, by facsimile or by other electronic means,
including contemporaneous xerographic or electronic reproduction by each party’s
respective attorneys. Each counterpart shall be an original, but a
single document or all counterparts together shall constitute one instrument
that shall be the agreement.
(b) This
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns and, with respect to Section 16
hereof, will inure to the benefit of their respective officers, directors,
employees, consultants, agents, attorneys, accountants and affiliates and each
Person that controls (within the meaning of Section 20 of the Exchange Act) any
of the foregoing Persons, and no other Person will have any right or obligation
hereunder. Except as set forth herein, neither the Company nor
Fletcher may assign or transfer this Agreement without the written consent of
the other party hereto, which consent shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding the foregoing, Fletcher may,
in whole or in part, in its sole discretion (i) assign, pledge, hypothecate or
transfer the Investment Securities, (ii) assign, pledge, hypothecate or transfer
this Agreement or any of the rights and associated obligations contemplated by
this Agreement (including, but not limited to, the Investment Securities) to any
affiliates, parallel investment funds, co-investment funds or successor
investment funds of Fletcher, and (iii) pledge or hypothecate any of the rights
and associated obligations contemplated by this Agreement (including, but not
limited to, the Investment Securities) in connection with financing, derivative
or hedging transactions with respect to this Agreement and the Investment
Securities, provided,
that,
any such assignment, pledge, hypothecation or transfer must comply with
applicable federal and state securities laws. No Person acquiring
Common Stock or Common Stock Equivalent Junior Preferred Stock from Fletcher
will thereby obtain any of the rights contained in this Agreement but an
acquirer of Preferred Stock or the Warrant will have the rights of Fletcher
contained in this Agreement to the extent that the Series C Certificate or the
Warrant, respectively, define the rights of the Holder of such securities by
express reference to this Agreement. This Agreement, together with
the Series C Certificate, the Junior Preferred Certificate and the Warrant,
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties hereto with respect
to the subject matter of this Agreement. Except as provided in this
Section 19(b), this Agreement is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.
(c) This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York, and each of the parties hereto hereby submits to
the exclusive jurisdiction of any state or federal court in New York City, New
York and any court hearing any appeal therefrom, over any suit, action or
proceeding against it arising out of or based upon this Agreement (a “Related
Proceeding”). Each of the parties hereto hereby waives any
objection to any Related Proceeding in such courts whether on the grounds of
venue, residence or domicile or on the ground that the Related Proceeding has
been brought in an inconvenient forum.
30
(d) Each
party represents and acknowledges that, in the negotiation and drafting of this
Agreement and the other instruments and documents required or contemplated
hereby, it has been represented by and relied upon the advice of counsel of its
choice. Each party hereby affirms that its counsel has had a
substantial role in the drafting and negotiation of this Agreement and such
other instruments and documents. Therefore, each party agrees that no
rule of construction to the effect that any ambiguities are to be resolved
against the drafter shall be employed in the interpretation of this Agreement
and such other instruments and documents.
(e) Without
prejudice to other rights or remedies hereunder, interest shall be due on any
amount that is due pursuant to this Agreement or the Warrant and has not been
paid when due (or the cash equivalent of Preferred Stock which the Company fails
to deliver as required by the terms of this Agreement or of Common Shares or
Common Stock Equivalent Junior Preferred Shares which the Company fails to
deliver pursuant to this Agreement, the Series C Certificate, the Junior
Preferred Certificate or the Warrant), calculated for the period from and
including the due date to but excluding the date on which such amount is paid at
the lower of (i) twelve percent (12%) or (ii) the prime rate of U.S. money
center banks as published in The Wall Street Journal (or if The Wall Street
Journal does not exist or publish such information, then the average of the
prime rates of three (3) U.S. money center banks agreed to by the parties) plus
nine percent (9%) or such lesser amount as is permitted under applicable usury
or other law. For the avoidance of doubt, this Section 19(e) shall
not apply to any unpaid dividend on the Preferred Stock.
(f) Fletcher
and the Company stipulate that the remedies at law of the parties hereto in the
event of any default or threatened default by either party in the performance of
or compliance with any of the terms of this Agreement, the Series C Certificate,
the Junior Preferred Certificate and the Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
(g) Any and
all remedies set forth in this Agreement, the Series C Certificate, the Junior
Preferred Certificate and the Warrant: (i) shall be in addition to
any and all other remedies Fletcher or the Company may have at law or in equity,
(ii) shall be cumulative, and (iii) may be pursued successively or concurrently
as each of Fletcher and the Company may elect. The exercise of any
remedy by Fletcher or the Company shall not be deemed an election of remedies or
preclude Fletcher or the Company, respectively, from exercising any other
remedies in the future. The parties acknowledge and agree that this
Agreement and the Asset Purchase and Sale Agreement are wholly
separate and distinct agreements that are supported by separate
consideration. Notwithstanding anything to the contrary contained
herein or in the Asset Purchase and Sale Agreement, the parties’ obligations
under this Agreement are separate and distinct from the parties’ obligations
under the Asset Purchase and Sale Agreement. Accordingly, breach by
either party of any of the provisions of this Agreement shall not
excuse performance by, or provide the basis for any remedy for, either party
under the Asset Purchase and Sale Agreement. Likewise, breach by
either party of any of the provisions of the Asset Purchase and Sale Agreement
shall not excuse performance by, or provide the basis for any remedy for, either
party under this Agreement.
31
(h)
The
Company agrees that the parties have negotiated in good faith and at arms’
length concerning the transactions contemplated herein, and that Fletcher would
not have agreed to the terms of this Agreement without each and every of the
terms, conditions, protections and remedies provided herein and in the Series C
Certificate, the Junior Preferred Certificate and the Warrant. Except
as specifically provided otherwise in this Agreement, the Series C Certificate,
the Junior Preferred Certificate and the Warrant, the Company’s obligations to
indemnify and hold Fletcher harmless in accordance with Section 16 of this
Agreement are obligations of the Company that the Company promises to pay to
Fletcher when and if they become due. The Company shall record any
such obligations on its books and records in accordance with U.S. generally
accepted accounting principles.
(i) This
Agreement may be amended, modified or supplemented in any and all respects, but
only by a written instrument signed by Fletcher and the Company expressly
stating that such instrument is intended to amend, modify or supplement this
Agreement.
(j) Each of
the parties will cooperate with the others and use its best efforts to prepare
all necessary documentation, to effect all necessary filings, and to obtain all
necessary permits, consents, approvals and authorizations of all governmental
bodies and other third-parties necessary to consummate the transactions
contemplated by this Agreement.
(k) Prior to
consummation of all of the transactions contemplated by this Agreement, the
parties to this Agreement will provide one another with information which may be
deemed by the party providing the information to be
confidential. Each party agrees that it will hold confidential and
protect all information provided to it by the other party to this Agreement or
such party’s affiliates, except that the obligations contained in this Section
19(k) shall not in any way restrict the rights of any party or person to use
information that: (a) was known to such party prior to the disclosure
by the other party; (b) is or becomes generally available to the public other
than by breach of this Agreement; or (c) otherwise becomes lawfully available to
a party to this Agreement on a non-confidential basis from a third party who is
not under an obligation of confidence to the other party to this
Agreement. If this Agreement is terminated, upon request each party
hereto agrees to return or destroy all written confidential materials and all
copies thereof, provided to it by or on behalf of the other party to this
Agreement, except to the extent required by law; provided,
however,
that Fletcher shall have the right to retain one copy of such confidential
materials for legal archival purposes. The provisions of this Section
19(k) shall survive termination, for any reason whatsoever, of this Agreement,
and, without limiting the remedies of the parties hereto in the event of any
breach of this Section 19(k), the parties hereto will be entitled to seek
injunctive relief against the other party in the event of a breach or threatened
breach of this Section 19(k).
(l) Prior to
consummation of all of the transactions contemplated by this Agreement, the
parties to this Agreement shall each approve the form and substance of any press
release or other public disclosure materially related to this Agreement or any
other transaction contemplated hereby; provided, however, that nothing in this
Section 19(l) shall be deemed to prohibit any party from making any disclosure
which its counsel deems necessary or advisable in order to satisfy such party’s
disclosure obligations imposed by law.
32
(m) For
purposes of this Agreement, except as otherwise expressly provided or unless the
context otherwise requires: (i) the terms defined in this Agreement have the
meanings assigned to them in this Agreement and include the plural as well as
the singular, and the use of any gender herein shall be deemed to include the
other gender and neuter gender of such term; (ii) accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with U.S.
generally accepted accounting principles; (iii) references herein to “Articles”,
“Sections”, “Subsections”, “Paragraphs” and other subdivisions without reference
to a document are to designated Articles, Sections, Subsections, Paragraphs and
other subdivisions of this Agreement, unless the context shall otherwise
require; (iv) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions; (v) the words “herein”, “hereof”, “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; (vi) the term “include” or “including” shall mean without limitation;
(vii) the table of contents to this Agreement and all section titles or captions
contained in this Agreement or in any Schedule or Annex hereto or referred to
herein are for convenience only and shall not be deemed a part of this Agreement
and shall not affect the meaning or interpretation of this Agreement;
(viii) any agreement, instrument or statute defined or referred to herein
means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statues and references to all attachments thereto and instruments
incorporated therein; and (ix) references to a Person are also to its permitted
successors and assigns and, in the case of an individual, to his or her heirs
and estate, as applicable.
(n) If any
term or other provision of this Agreement is invalid, illegal or incapable of
being enforced by any rule of law or public policy all other conditions and
provisions of this Agreement shall nevertheless remain in full force and
effect. If the final judgment of a court of competent jurisdiction or
other authority declares that any term or provision hereof is invalid, void or
unenforceable, the parties agree that the court making such determination shall
have the power to reduce the scope, duration, area or applicability of the term
or provision, to delete specific words or phrases, or to replace any invalid,
void or unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.
(o) Time
shall be of the essence in this Agreement.
(p) All
dollar ($) amounts set forth herein and in the Warrant refer to United States
dollars. All payments hereunder and thereunder will be made in lawful
currency of the United States of America.
33
(q) Notwithstanding
anything herein to the contrary, if the Company at any time subdivides (by any
stock split, stock dividend, recapitalization, reorganization, reclassification
or otherwise) the shares of Common Stock or Common Stock Equivalent Junior
Preferred Stock into a greater number of shares, then, after the date of record
for effecting each such subdivision, all measurements and references herein
related to share prices for such securities will be proportionately decreased
and all references to share numbers for such securities herein will be
proportionately increased.
[SIGNATURE
PAGE FOLLOWS]
34
IN WITNESS WHEREOF,
the parties hereto have duly executed and delivered this Agreement, all as of
the date first set forth above.
|
UNITED
COMMUNITY BANKS, INC.
|
|||
|
By:
|
/s/
Jimmy C. Tallent
|
||
|
Name:
Jimmy C. Tallent
|
|||
|
Title:
President & Chief Executive Officer
|
|||
|
FLETCHER
INTERNATIONAL, LTD.,
|
|||
|
by
its duly authorized investment advisor,
|
|||
|
FLETCHER
ASSET MANAGEMENT, INC.
|
|||
|
By:
|
/s/ Moez M. Kaba | ||
|
Name:
Moez M. Kaba
|
|||
|
Title:
Authorized Signatory
|
|||
|
By:
|
/s/ Denis J. Kiely | ||
|
Name:
Denis J. Kiely
|
|||
|
Title:
Director
|
|||
|
Signature
Page to Agreement
|
|||
TABLE
OF CONTENTS
| Page | |||
|
1.
|
PURCHASE
AND SALE
|
1
|
|
|
2.
|
ASSET
PURCHASES
|
4
|
|
|
3.
|
CLOSINGS
|
5
|
|
|
4.
|
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
|
5
|
|
|
5.
|
REGISTRATION
PROVISIONS
|
14
|
|
|
6.
|
LIMITS
WITH RESPECT TO SHARES HELD OR SHARES ISSUABLE
|
16
|
|
|
7.
|
REPRESENTATIONS
AND WARRANTIES OF FLETCHER
|
18
|
|
|
8.
|
FUTURE
EQUITY ISSUANCES
|
19
|
|
|
9.
|
COVENANTS
|
20
|
|
|
10.
|
CHANGE
OF CONTROL
|
22
|
|
|
11.
|
RESTATEMENTS
|
23
|
|
|
12.
|
CONDITIONS
PRECEDENT TO FLETCHER’S OBLIGATIONS
|
24
|
|
|
13.
|
CONDITIONS
PRECEDENT TO THE COMPANY’S OBLIGATIONS
|
25
|
|
|
14.
|
FEES
AND EXPENSES
|
26
|
|
|
15.
|
NON-PERFORMANCE
|
26
|
|
|
16.
|
INDEMNIFICATION
|
27
|
|
|
17.
|
SURVIVAL
OF THE REPRESENTATIONS AND WARRANTIES
|
29
|
|
|
18.
|
NOTICES
|
29
|
|
|
19.
|
MISCELLANEOUS
|
30
|
i
|
ANNEX
A
|
FORM
OF INVESTMENT NOTICE
|
|
ANNEX
B
|
FORM
OF CERTIFICATE OF RIGHTS AND PREFERENCES
|
|
ANNEX
C
|
FORM
OF RESTATEMENT NOTICE
|
|
ANNEX
D
|
NOTICE
ADDRESS
|
|
ANNEX
E
|
COMPANY
WIRE INSTRUCTIONS
|
|
ANNEX
F
|
FORM
OF PREFERRED STOCK CONVERSION NOTICE
|
|
ANNEX
G
|
FORM
OF PREFERRED STOCK CONVERSION DELIVERY NOTICE
|
|
ANNEX
H
|
FORM
OF PREFERRED STOCK REDEMPTION NOTICE
|
|
ANNEX
I
|
FORM
OF PREFERRED STOCK REDEMPTION DELIVERY NOTICE
|
|
ANNEX
J
|
FORM
OF CERTIFICATE OF DESIGNATION
|
ii
INDEX
|
Page
|
||
|
65-Day
Notice
|
17
|
|
|
Acquiring
Person
|
23
|
|
|
Aggregate
Investment Commitment
|
1
|
|
|
Agreement
|
1
|
|
|
Articles
of Incorporation
|
2
|
|
|
Asset
Purchase and Sale Agreement
|
5
|
|
|
BHCA
|
5
|
|
|
Business
Day
|
2
|
|
|
Change
of Control
|
23
|
|
|
Change
of Control Notice
|
22
|
|
|
Closing
|
1
|
|
|
Closing
Date
|
1
|
|
|
Common
Shares
|
3
|
|
|
Common
Stock
|
3
|
|
|
Common
Stock
Equivalent Junior Preferred Shares
|
3
|
|
|
Common
Stock Equivalent Junior
Preferred Stock
|
3
|
|
|
Company
|
1
|
|
|
Company
Financial Statements
|
3
|
|
|
Company
Reports
|
8
|
|
|
Contingent
Investment Notice
|
22
|
|
|
Daily
Market Price
|
3
|
|
|
Damages
|
27
|
|
|
Decrease
|
17
|
|
|
Environmental
Laws
|
11
|
|
|
Exchange
Act
|
4
|
|
|
FDIC
|
8
|
|
|
FINRA
|
7
|
|
|
Fletcher
|
1
|
|
|
Fletcher
Indemnified Party
|
27
|
|
|
Future
Equity Issuance
|
19
|
|
|
Future
Equity Issuance Notice
|
19
|
|
|
Future
Equity Issuance Notice Period
|
19
|
|
|
Hazardous
Materials
|
12
|
|
|
Increase
|
17
|
|
|
Indemnified
Party
|
28
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Indemnifying
Party
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28
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Intellectual
Property Rights
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11
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Investment
|
1
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Investment
Amount
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3
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Investment
Notice
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1
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Investment
Period
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1
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Investment
Price
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1
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iii
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Investment
Securities
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4
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Material
Adverse Effect
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4
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Maximum
Number
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17
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Maximum
Voting Stock Amount
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17
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Nasdaq
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4
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Offering
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5
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Outstanding
Share Notice
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17
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Parent
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4
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Person
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4
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Preferred
Stock
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1
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Prospectus
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14
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Registration
Failure
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1
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Registration
Statement
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5
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Related
Proceeding
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30
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Restatement
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24
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Restatement
Filing Date
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2
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Restatement
Notice
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23
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SEC
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2
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SEC
Filing
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7
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Securities
Act
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5
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Series
A Preferred Stock
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8
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Series
B Preferred Stock
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8
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Series
C Certificate
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4
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Stockholder
Consent
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16
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Stockholder
Consent Date
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16
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Warrant
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2
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iv
Exhibit
1.3
EXECUTION COPY
WARRANTS
TO PURCHASE
SHARES
OF COMMON STOCK
OF
UNITED COMMUNITY BANKS, INC.
United
Community Banks, Inc., a Georgia corporation (together with its successors, the
“Company”), for
value received, hereby certifies that Fletcher International, Ltd., a company
domiciled in Bermuda (together with its successors, “Fletcher” and
Fletcher or any Person to whom Fletcher sells, exchanges, transfers, assigns,
gives, pledges, encumbers, hypothecates, alienates or distributes, whether
directly or indirectly, this Certificate or any right or interest herein or with
respect hereto, the “Holder”), is entitled
to purchase from the Company up to the Warrant Amount (as defined below) of duly
authorized, validly issued, fully paid and nonassessable shares of the Company’s
Common Stock Equivalent Junior Preferred Stock, par value $1.00 per share, (the
“Common Stock
Equivalent Junior Preferred Stock”), at the then-prevailing Warrant Price
(as defined below) at any time or from time to time during the Warrant Term (as
defined below), all subject to the terms, conditions and adjustments set forth
below in this warrant certificate (this “Certificate”) and in
the Securities Purchase Agreement, dated as of April 1, 2010, between the
Company and Fletcher (as it may be amended from time to time, the “Agreement”). All
capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Agreement.
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1.
|
Warrants.
|
The
warrants represented hereby (the “Warrants”) have been
issued pursuant to the Agreement, and are subject to the terms and conditions
thereof. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings set forth in the Agreement. A copy of
the Agreement may be obtained at no cost by the Holder upon written request to
the Secretary of the Company at the principal executive offices of the
Company.
1.1 General; Warrant Price;
Warrant Term.
(a) The
Warrants entitle the Holder to purchase newly-issued shares of Common Stock
Equivalent Junior Preferred Stock in accordance with Section 1.5 hereof and
Section 6 of the Agreement. The warrant amount shall (i) equal
Fifteen Million Dollars ($15,000,000) on the date hereof, (ii) be increased by
$0.15 for each $1.00 of assets purchased pursuant to the Asset Purchase and Sale
Agreement (as defined in the Agreement) up to a total increase of Fifteen
Million Dollars ($15,000,000) and (iii) be increased on a dollar for dollar
basis by the aggregate dollar amount of the Series C convertible preferred
stock, par value $1.00 per share, of the Company (the “Preferred Stock”)
purchased under the Agreement in excess of Thirty Million Dollars
($30,000,000). The first Thirty Million Dollars ($30,000,000) of the
warrant amount shall be referred to herein as the “Initial Warrant
Amount”. The warrant amount in excess of the Initial Warrant
Amount shall be referred to herein as the “Additional Warrant
Amount”. The Additional Warrant Amount, together with the Initial Warrant
Amount, shall be referred to herein as the “Warrant
Amount”. The Warrant Amount shall be reduced by the aggregate
Warrant Price deemed paid at each Warrant Closing (as defined
below). The “Warrant Price” means
a price per one-hundredth (1/100th) of a share of Common Stock Equivalent Junior
Preferred Stock as of each Warrant Closing Date equal to (i) Four Dollars and
Twenty-Five Cents ($4.25) with respect to the Initial Warrant Amount and (ii)
Six Dollars and Two Cents ($6.02) with respect to the Additional Warrant Amount,
in each case subject to adjustment as set forth herein and in the
Agreement.
(b) The
Warrants may be exercised (in whole or in part) at any time or from time to time
during the Warrant Term. The “Warrant Term” shall
mean the period beginning on the date hereof and ending at 11:59 p.m. New York
City time on the ninth (9th)
anniversary of the Stockholder Consent Date (as defined in the
Agreement).
1.2 Manner of
Exercise.
(a) The
Warrants may be exercised by the Holder, in whole or in part, from time to time,
on any day during the Warrant Term, by delivery of a notice in substantially the
form attached to this Certificate (or a reasonable facsimile thereof) duly
executed by the Holder (a “Warrant Exercise
Notice”).
(b) The
Warrant Exercise Notice shall designate the aggregate Warrant Amount to be
exercised, the Warrant Price and the number of shares of Common Stock Equivalent
Junior Preferred Stock to be received upon such exercise. The closing
of each exercise (each a “Warrant Closing”)
shall take place (i) on the third (3rd)
Business Day after and excluding the date of the Warrant Exercise Notice or (ii)
on any other date upon which the exercising Holder and the Company mutually
agree (the “Warrant
Closing Date”).
1.3 Conditions to
Closing.
(a) Conditions Precedent to
Holder’s Obligation to Close. It shall be a condition to each
Holder’s obligation to close on each Warrant Closing Date that each of the
conditions set forth in Section 12 of the Agreement is satisfied, unless waived
by such Holder (which waiver may be made or not made in Holder’s sole
discretion, and any waiver shall apply solely to the Warrant Closing or Warrant
Closings specified by such Holder and shall not obligate such Holder to make or
not make any subsequent waiver).
(b) Conditions Precedent to
Company’s Obligation to Close. The obligations of the Company
hereunder are subject to the performance by the Holder of its obligations
hereunder and to the satisfaction (unless expressly waived in writing by the
Company) of the additional conditions set forth in Section 13 of the
Agreement.
(c) Agreement to Cause
Conditions to be Satisfied. The Company with respect to
Section 1.3(a) hereof and the Holder with respect to Section 1.3(b) hereof shall
each use commercially reasonable efforts to cause each of the foregoing
conditions to be satisfied at the earliest possible date.
2
(d) Withdrawal of
Notice. If the conditions set forth in Section 1.3(a) hereof
are not satisfied or waived prior to the second (2nd)
Business Day following and excluding the date of the Warrant Exercise Notice
(except for those conditions which by their terms can be satisfied only on the
Warrant Closing Date) or if the Company fails to perform its obligations on any
Warrant Closing Date (including but not limited to delivery of all shares of
Common Stock Equivalent Junior Preferred Stock issuable on such date) for any
reason other than the Holder’s failure to satisfy the conditions required by
Section 1.3(b) hereof, then in addition to all remedies available to the Holder
at law or in equity, such Holder may, at its sole option, and at any time,
withdraw the Warrant Exercise Notice by written notice to the Company regardless
of whether such condition has been satisfied or waived as of the withdrawal date
and, after such withdrawal, shall have no further obligations with respect to
such Warrant Exercise Notice and may submit a Warrant Exercise Notice on any
future date with respect to such Warrants and the Warrant Price for the amount
of such subsequent Warrant Exercise Notice equal to or less than the previously
withdrawn Warrant Exercise Notice shall be the lesser of (i) the Warrant Price
in the withdrawn Warrant Exercise Notice and (ii) the Warrant Price in effect as
of the subsequent Warrant Exercise Notice Date.
1.4 When Exercise
Effective.
Each
exercise of any Warrant shall be deemed to have been effected on the Warrant
Closing Date upon the deemed receipt of the relevant Warrant Price and the
Person (as defined in the Agreement) or Persons in whose name or names any
certificate or certificates representing the Common Stock Equivalent Junior
Preferred Stock shall be issuable upon such exercise as provided in Section 1.5
hereof shall be deemed to have become the holder(s) of record
thereof.
1.5 Delivery of Common Stock and
Payment.
(a) Subject
to Section 1.3 hereof and Section 6 of the Agreement, on a Warrant Closing Date,
the Company shall deliver an amount of duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock Equivalent Junior Preferred Stock
(the “Settlement
Stock”) equal to “X” where:
X = [(N x
D) – (N x P)] / P
N = the
number of one-hundredths (1/100ths) of a share of Common Stock Equivalent Junior
Preferred Stock equal to the Warrant Amount to be exercised pursuant to such
Warrant Exercise Notice divided by the Warrant Price with respect to such
Warrant Exercise Notice
D = Daily
Market Price (as defined in the Agreement) on the third (3rd)
Business Day before, and excluding, the date of the Warrant Exercise
Notice
P =
Warrant Price with respect to such Warrant Exercise Notice
3
(b) The
Company shall issue and deliver the Settlement Stock pursuant to Section 1.7
hereof on the relevant Warrant Closing Date. Upon receipt of the
Settlement Stock on the Warrant Closing Date, (i) that amount of Warrants as
specified for exercise in the Warrant Exercise Notice shall be deemed exercised
and (ii) that amount of cash that would have been paid by the Holder on the
relevant Warrant Closing Date if the Warrant Price specified in the Warrant
Exercise Notice were paid in cash shall be deemed paid by the Holder and
received by the Company.
(c) In
determining whether the limitations described in Section 6 of the Agreement have
been reached, computation shall be made based on the number of shares of
Settlement Stock actually issued on a Warrant Closing Date.
1.6 Adjustment to Warrant
Price. Notwithstanding anything herein to the contrary, if the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the shares of
common stock, par value $1.00 per share, of the Company (“Common Stock”) and/or
Common Stock Equivalent Junior Preferred Stock into a greater number of shares,
then, after the date of record for effecting each such subdivision, all
measurements and references herein related to share prices (including the
Warrant Price) for such securities will be proportionately decreased and all
references to share numbers for such securities herein will be proportionately
increased.
1.7 Delivery of Common Stock and
Dividend Payment.
(a) On
the Warrant Closing Date, the Company at its expense (including payment by it of
any applicable issue taxes) shall cause to be issued in the name of and
delivered to the exercising Holder or as such Holder may direct, at the election
of such Holder:
(i) via
the Depository Trust Company’s Deposit and Withdrawal at Custodian (or DWAC)
system the number of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock Equivalent Junior Preferred Stock to which
such Holder shall be entitled upon such exercise plus, in lieu of any fractional
share, other than fractional shares in increments of one hundredth (1/100th) of
a share, of Common Stock Equivalent Junior Preferred Stock to which such Holder
would otherwise be entitled, cash in an amount equal to the same fraction of the
Daily Market Price on the date of the Warrant Exercise Notice, and a certificate
from the Company stating the new Warrant Amount reflecting a reduction in each
of the dollar amounts in the definition of Warrant Amount, on a
dollar-for-dollar basis, for each dollar deemed paid; and
4
(ii) dividends
or other distributions declared on the Common Stock and Common Stock Equivalent
Junior Preferred Stock in an amount equal to the product of (x) the aggregate
amount of all per-share dividends or distributions other than the Ordinary Cash
Dividends paid on the Common Stock and Common Stock Equivalent Junior Preferred
Stock multiplied by (y) the gross number of one-hundredths (1/100th) of
a share of Common Stock Junior Equivalent Junior Preferred Stock that would have
been issuable on the relevant Warrant Closing Date if payment of the Warrant
Price specified in the Warrant Exercise Notice were paid in cash (the “Dividend
Payment”). To the extent that the Dividend Payment consists of
cash, the Company may pay such amount (a) by wire transfer of immediately
available funds to such Holder or (b) if the Daily Market Price on the date the
relevant Investment Notice is delivered is greater than the Warrant Price, by
delivering a number of shares of Common Stock Equivalent Junior Preferred Stock
equal to the cash portion of the Dividend Payment divided by the Warrant
Price. To the extent that the Dividend Payment consists of securities
or other non-cash property, the Company shall deliver such securities or other
non-cash property to such Holder; provided that if such
securities or other non-cash property would have a reduced value if delivery is
so delayed (for example only and not by way of limitation, a short-term right to
purchase securities), then proper provision shall be made to deliver to Holder
the sum of (i) the fair value of such securities or other non-cash property
measured as of the distribution date and (ii) the appreciation, if any, in value
of such securities through the date of delivery. For example only and
not by way of limitation, if the Company distributes a short-term right to
purchase securities to other equity holders, it shall deliver to Holder the
value Holder would have received had Holder exercised such right plus the
appreciation, if any, had Holder held the purchased securities through the date
on which such fair value is delivered to Holder. In the event that
Holder and the Company mutually agree that it would be impractical for the
Company to distribute identical securities or other non-cash property to Holder,
then Holder and the Company shall work together in good faith to determine a
fair and equivalently valued substitute therefor. “Ordinary Cash
Dividend” means all quarterly cash dividends out of capital surplus or
restated earnings legally available therefore (determined in accordance with
generally accepted accounting principles, consistently applied), in an amount
and frequency consistent with past practice.
1.8 Extension of Warrant
Term.
The Warrant Term shall be extended by
one (1) Business Day for each Business Day: (i) that the Registration Statement
(as defined in the Agreement) is not effective and available for the issuance of
any Preferred Stock and Warrants for a period of more than ninety (90) days in
the aggregate, whether continuous or non-continuous; or (ii) at any time after
the One Year Anniversary Date (as defined in the Agreement) but before the date
this is sixty (60) days before the expiration of the Investment Period (as
defined in the Agreement), occurring during the period (x) commencing on the
earlier of the day on which the Company restates or announces its intention to
restate any portion of the Company Financial Statements, and (y) ending on the
date on which the Company files quarterly or annual financial statements that
constitute a Restatement (as defined in the Agreement) on a Form 10-K, Form
10-Q, Form 8-K or any other filing with the SEC (and if the Company makes
multiple filings of a Restatement with the SEC, the last of such dates) (the
“Restatement Filing
Date”). If (i) the Company restates or announces its intention
to restate any portion of the Company Financial Statements (as defined in the
Agreement) less than sixty (60) days before the expiration of the Warrant Term,
(ii) the Company has restated or announced its intention to restate any portion
of the Company Financial Statements and the Restatement Filing Date is not at
least sixty (60) days before the expiration of the Warrant Term, or (iii) there
is any Registration Failure (as defined in the Agreement) during the sixty (60)
days immediately preceding the expiration of the Warrant Term, the Warrant Term
shall be extended to a date that is at least sixty (60) days after the later of
the Restatement Filing Date or the remediation of the failure described in
clause (iii) of this Section 1.8.
5
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2.
|
Reservation of
Shares.
|
For so
long as the Warrant Amount represented hereby has not been exercised in full,
the Company shall at all times prior to the end of the Warrant Term reserve and
keep available, free from pre-emptive
rights, out of its authorized but unissued capital stock, the number of shares
Common Stock Equivalent Junior Preferred Stock deliverable upon exercise of this
Certificate and, after the Company has obtained the approval of the Company
stockholders to increase the authorized number of shares of Common Stock, the
number of shares Common Stock deliverable upon conversion of such shares of
Common Stock Equivalent Junior Preferred Stock. In the event the
number of shares of Common Stock, Common Stock Equivalent Junior Preferred Stock
or other securities issued and issuable under this Certificate, the Agreement,
the Certificate of Rights and Preferences of the Series C Convertible Preferred
Stock and Certificate of Designation of Common Stock Equivalent Junior Preferred
Stock of the Company exceeds the authorized number of shares of Common Stock,
Common Stock Equivalent Junior Preferred Stock or other securities, the Company
shall promptly take all actions necessary to increase the authorized number of
shares of Common Stock, Common Stock Equivalent Junior Preferred Stock or other
securities.
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3.
|
Report as to
Adjustments.
|
In each
case of any adjustment or readjustment of the Warrant Amount, the Warrant Term,
the Warrant Price or any other adjustment or readjustment pursuant to the terms
of the Agreement or this Certificate, or upon the written request at any time of
any Holder, the Company at its expense will promptly compute such adjustment or
readjustment (the “Company Calculation”)
in accordance with the terms of this Certificate and the Agreement and cause the
Company’s Chief Financial Officer to verify such computation and prepare a
report setting forth such adjustment or readjustment and showing in reasonable
detail the method of calculation thereof and the facts upon which such
adjustment or readjustment is based, including a statement of (i) the Warrant
Amount, (ii) the Warrant Term and (iii) the Warrant Price in effect immediately
prior to such adjustment or readjustment (as adjusted and readjusted, as
applicable). The Company will forthwith deliver a copy of each such
report to each Holder and will also keep copies of all such reports at its
principal office and will cause the same to be available for inspection at such
office during normal business hours by any Holder. The Holder may
dispute the Company Calculation by providing its computation of such adjustment
or readjustment (the “Holder Calculation”)
and requesting in writing that the Company’s independent certified public
accountants verify the Company Calculation. The Holder shall be
responsible for the costs and expenses of such accountants if the difference
between the computation of the adjustment or readjustment by such accountants
(the “Accountant
Calculation”) and the Holder Calculation is greater than the difference
between the Accountant Calculation and the Company Calculation, and otherwise
the Company shall bear such costs and expenses.
6
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4.
|
Taxes.
|
The
Company shall pay all documentary stamp taxes (if any) attributable to the
issuance of Common Stock Equivalent Junior Preferred Stock upon each exercise of
the Warrants by the Holder; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the registration of any certificates for
Common Stock Equivalent Junior Preferred Stock in a name other than that of a
Holder upon each exercise of Warrants, and the Company shall not be required to
issue or deliver a Certificate evidencing Warrants or certificates for Common
Stock Equivalent Junior Preferred Stock unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the reasonable satisfaction of the Company
that such tax has been paid.
|
5.
|
Change of
Control.
|
5.1 Change of Control
Notice.
The Company shall deliver to the Holder
written notice (the “Change of Control
Notice”) of any proposed Change of Control (which notice shall specify
the expected effective date of such Change of Control) promptly following public
disclosure of such proposed Change of Control and in any event not later than
fifteen (15) Business Days prior to the expected effective date of the proposed
Change of Control. The Company shall not enter into an agreement with
any Acquiring Person that may result in a Change of Control unless such
agreement expressly requires the Acquiring Person to comply with the provisions
of this Warrant. Upon the mutual written agreement of the Holder and
the Company, on or before the consummation of such Change of Control, the
Company shall pay to the Holder an amount of cash equal to the fair market value
of the Warrant immediately prior to the Change of Control, to be determined by a
qualified valuation firm selected by the Holder and reasonably acceptable to the
Company, by such method as the Holder and the Company may reasonably
agree. For the avoidance of doubt, in the event that the Holder and
the Company agree to have the Company pay the fair market value of the Warrant
as determined above, the Warrant will be redeemed upon the Company making such
payment and no additional payment from the Company or the Holder shall be
required in connection with such redemption. In the event that the
Holder and the Company do not agree to have the Company pay the fair market
value of the Warrant as determined above, the Holder thereof shall, following
the occurrence of a Change of Control, automatically have equivalent rights
under this Certificate with respect to the Acquiring Person from and after the
effective date of the Change of Control, regardless of whether the Acquiring
Person expressly assumes the Company’s obligations and (i) all references to the
Company in this Certificate shall be references to the Acquiring Person, (ii)
all references to Common Stock and Common Stock Equivalent Junior Preferred
Stock in this Certificate shall be references to the securities for which the
Common Stock and Common Stock Equivalent Junior Preferred Stock are exchanged in
the Change of Control (or if none, the most widely-held class of voting
securities of the Acquiring Person), and (iii) if the Acquiring Person is an
entity other than the Company, all references to the Warrant Price in this
Certificate shall be references to the Stock Adjustment Measuring Price (as
defined below).
7
5.2 Contingent Warrant
Exercise.
Between the date a proposed Change of
Control is publicly disclosed or Change of Control Notice is delivered (or an
event shall have occurred that would, with or without the passage of time,
require the delivery of a Change of Control Notice) and the effective date of
the Change of Control, each Holder at its sole option shall continue to have the
right to submit to the Company a Warrant Exercise Notice in accordance with the
terms and conditions hereof. In addition, each Holder at its sole
option may elect to submit to the Company a special notice (a “Contingent Warrant Exercise
Notice”) to exercise all or part of its unexercised Warrants (including
any Warrants issued in connection with a Contingent Investment Notice (as
defined in the Agreement) under the Agreement) in connection with such Change of
Control; in which case, notwithstanding the provisions of Section 1.4
hereof:
(a) the
effectiveness of such contingent exercise shall be conditional upon the
effectiveness of the Change of Control;
(b) such
Holder shall have the right to deliver a notice to withdraw such Contingent
Warrant Exercise Notice until the effective date of such Change of
Control;
(c) all
references to Nasdaq in this Certificate shall be references to the principal
U.S. trading market (or if the securities of the Acquiring Person are traded on
a non-U.S. trading market, at the Holder’s election, the principal U.S. or
foreign trading market) for the securities for which the Common Stock and Common
Stock Equivalent Junior Preferred Stock are exchanged in the Change of Control
(or if none, the most widely held class of voting securities of the Acquiring
Person), and
(d) if
such Contingent Warrant Exercise Notice shall not have been withdrawn, then on
the effective date of such Change of Control, the Holder of such Warrants shall
receive the same consideration, in the form of cash, securities or other assets
(the “Acquisition
Consideration”) per share of Common Stock Equivalent Junior Preferred
Stock issuable to any other holder of shares of Common Stock in connection with
such Change of Control based upon the number of shares of Common Stock
Equivalent Junior Preferred Stock into which such Holder’s Warrants would be
exercisable if such Holder had exercised such Warrants on the Business Day
immediately preceding the date on which such Change of Control
occurs. Upon the effective date of such Change of Control, such
Holder’s Warrants tendered for exercise pursuant to a Warrant Exercise Notice or
Contingent Warrant Exercise Notice shall be fully exercised and shall no longer
permit such Holder to exercise such Warrants into Common Stock Equivalent Junior
Preferred Stock.
8
5.3 Definitions.
(a) “Acquiring Person” has
the meaning set forth in the Agreement.
(b) “Change of Control”
has the meaning set forth in the Agreement.
(c) “Stock Adjustment Measuring
Price” means each of (i) the Warrant Price applicable to the Initial
Warrant Amount and (ii) the Warrant Price applicable to the Additional Warrant
Amount shall be adjusted by multiplying such prices in effect immediately
preceding and excluding the date on which the Change of Control is consummated
by a fraction,
(i) the
numerator of which is the Daily Market Price of the securities for which Common
Stock is exchanged in the Change of Control (or if none, the most widely-held
class of voting securities of the Acquiring Person) determined as of the
Business Day immediately preceding and excluding the date on which the Change of
Control is consummated; and
(ii) the
denominator of which is the Daily Market Price of the Common Stock of the
Company determined as of the Business Day immediately preceding and excluding
the date on which the Change of Control is consummated.
|
6.
|
Non-Circumvention.
|
The
Company hereby covenants and agrees that the Company will not, by amendment of
its articles of incorporation, bylaws or through any reorganization, transfer of
assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale
of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, and will at all
times in good faith carry out all the provisions of this Warrant and take all
action as may be required to protect the rights of the
Holder. Without limiting the generality of the foregoing, the Company
(i) shall not increase the par value of any shares of Common Stock Equivalent
Junior Preferred Stock receivable upon the exercise of this Warrant above the
Warrant Price then in effect, (ii) shall take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock Equivalent Junior Preferred
Stock upon the exercise of this Warrant, and (iii) shall, so long as the
Warrants represented by this Certificate are outstanding, take all action
necessary to reserve and keep available out of its authorized and unissued
shares of Common Stock Equivalent Junior Preferred Stock, solely for the purpose
of effecting the exercise of the Warrants represented by this Certificate, one
hundred percent (100%) of the number of shares of Common Stock Equivalent Junior
Preferred Stock issuable upon exercise of the Warrants represented by this
Certificate then outstanding (without regard to any limitations on
exercise).
|
7.
|
Lost or Stolen
Certificate.
|
In case
this Certificate shall be mutilated, lost, stolen or destroyed, the Company may
in its discretion issue in exchange and substitution for and upon cancellation
of the mutilated Certificate, or in lieu of and substitution for the Certificate
lost, stolen or destroyed, a new Certificate of like tenor, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft
or destruction of such Certificate. Applicants for a substitute
Certificate shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe.
9
|
8.
|
Transfer
Agent.
|
The
Company (and any successor) shall serve as agent for the Warrant under this
Warrant and shall at all times maintain a register of the holders of the
Warrant.
|
9.
|
Notices.
|
(a) All
notices and other communications under this Certificate shall be in writing and
shall be delivered by either a nationally recognized overnight courier, postage
prepaid, or transmitted by facsimile, in each case to the addresses as provided
below:
(i) If to the
Company:
United Community Banks,
Inc.
125 Highway 515
East
Blairsville,
Georgia 30512
Attention: Rex
S. Schuette
Telephone: (706)
745-2265
Facsimile: (706)
745-9046
(ii) If to a Holder,
at the address of such Holder as listed in the Stock Register, or to such other
address as the Holder shall have designated by notice similarly given to the
Transfer Agent.
(b) Any
such notice or communication shall be deemed received (i) when made, if by hand
delivery, and upon confirmation of receipt, if made by facsimile and in each
case if such notice is received on or before 11:59 p.m. New York City time,
otherwise, such notice shall be deemed to be received the following Business
Day, (ii) one (1) Business Day after being deposited with a next-day courier,
return receipt requested, postage prepaid or (iii) three (3) Business Days after
being sent by certified or registered mail, return receipt requested, postage
prepaid, in each case addressed as above (or to such other addresses as the
Company or a Holder may designate in writing from time to time).
(c) If
the Company does not agree and acknowledge the delivery of any Warrant Exercise
Notice under this Certificate, in each case by 11:59 p.m., New York City time,
on the Business Day following the date of delivery of such notice, such
non-response by the Company shall be deemed to be agreement and acknowledgment
by the Company with the terms of such notice.
10
|
10.
|
Construction.
|
For
purposes of this Certificate, except as otherwise expressly provided or unless
the context otherwise requires: (a) the terms defined in this
Certificate have the meanings assigned to them in this Certificate and include
the plural as well as the singular, and the use of any gender herein shall be
deemed to include the other gender and neuter gender of such term; (b)
accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with U.S. generally accepted accounting principles; (c) references
herein to “Articles”, “Sections”, “Subsections”, “Paragraphs” and other
subdivisions without reference to a document are to designated Articles,
Sections, Subsections, Paragraphs and other subdivisions of this Certificate,
unless the context shall otherwise require; (d) a reference to a Subsection
without further reference to a Section is a reference to such Subsection as
contained in the same Section in which the reference appears, and this rule
shall also apply to Paragraphs and other subdivisions; (e) the words “herein”,
“hereunder” and other words of similar import refer to this Certificate as a
whole and not to any particular provision; (f) the term “include” or “including”
shall mean without limitation; (g) the table of contents to this Certificate and
all section titles or captions contained in this Certificate or in any Exhibit
or Schedule hereto or referred to herein are for convenience only and shall not
be deemed a part of this Certificate and shall not affect the meaning or
interpretation of this Certificate; (h) any agreement, instrument or statute
defined or referred to herein means such agreement, instrument or statute as
amended, modified or supplemented from time to time, including (in the case of
agreements or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and references to all attachments
thereto and instruments incorporated therein; and (i) references to a Person are
also to its permitted successors and assigns and, in the case of an individual,
to his or her heirs and estate, as applicable.
|
11.
|
Severability of
Provisions.
|
If any
right, preference, or limitation of the Warrants set forth in this Certificate
(as such Certificate may be amended from time to time) is invalid, unlawful, or
incapable of being enforced by reason of any rule of law or public policy, all
other rights, preferences, and limitations set forth in this Certificate (as so
amended) which can be given effect without the invalid, unlawful or
unenforceable right, preference, or limitation will, nevertheless, remain in
full force and effect, and no right, preference, or limitation set forth in this
Certificate shall be deemed dependent upon any other such right, preference, or
limitation unless so expressed in this Certificate.
|
12.
|
Specific
Performance.
|
The
Holder and the Company stipulate that the remedies at law of the parties hereto
in the event of any default or threatened default by either party in the
performance of or compliance with any of the terms hereof are not and will not
be adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
11
|
13.
|
Nonperformance.
|
If
the Company, at any time, shall fail to deliver the shares of Common Stock
Equivalent Junior Preferred Stock required to be delivered to the Holder
pursuant hereto for any reason other than the failure of any condition precedent
to the Company’s obligations hereunder or the failure by the Holder to comply
with its obligations hereunder, then the Company shall (without limitation to
the Holder’s other remedies at law or in equity): (i) indemnify and hold the
Holder harmless against any loss, claim or damage arising from or as a result of
such failure by the Company (regardless of whether any of the foregoing results
from a third-party claim or otherwise) and (ii) reimburse the Holder for all of
its reasonable out-of-pocket expenses (which includes fees and expenses of its
counsel) incurred by the Holder in connection herewith and the transactions
contemplated herein (regardless of whether any of the foregoing results from a
third-party claim or otherwise).
|
14.
|
Assignment.
|
The
Holder may, in its sole discretion, freely assign, pledge, hypothecate or
transfer all Warrants.
This
Certificate shall not be valid unless signed by the Company.
[Remainder
of Page Left Blank Intentionally]
12
IN
WITNESS WHEREOF, United Community Banks, Inc. has caused this Warrant to be
signed by its duly authorized officer.
Dated:
| UNITED COMMUNITY BANKS, INC. | |||
|
|
By:
|
||
| Name: | |||
| Title: | |||
ATTEST:
Secretary
Exhibit 4.1
CERTIFICATE
OF DESIGNATION
OF
COMMON
STOCK EQUIVALENT JUNIOR PREFERRED STOCK
OF
UNITED
COMMUNITY BANKS, INC.
Pursuant
to Section 14-2-602 of
the
Georgia
Business Corporation Code
United
Community Banks, Inc., a corporation organized under the laws of the State of
Georgia (the “Corporation”),
does hereby certify that:
1. At a
meeting duly convened and held on March 26, 2010, the Board of Directors of the
Corporation (the “Board”)
duly adopted the following resolutions authorizing the issuance and sale by the
Corporation of a series of the Corporation’s preferred stock, $1.00 par value
per share, to be known as the Common Stock Equivalent Junior Preferred
Stock:
“RESOLVED,
that the powers, preferences, participation and other special rights,
qualifications, limitations, restrictions and other designations of the
Corporation’s Common Stock Equivalent Junior Preferred Stock, including those
established by the Board and the number of authorized shares thereof, are
authorized and approved as set forth in the Certificate of Designation attached
hereto as Exhibit
A, which is incorporated herein and made a part of these resolutions by
reference.”
2. Attached hereto, and
thereby made a part hereof, is such Exhibit
A from the Board’s resolution designating the Common Stock Equivalent
Junior Preferred Stock.
IN
WITNESS WHEREOF, this Certificate of Designation is executed on behalf of
the Corporation by its duly authorized officer this 31st day
of March, 2010.
| UNITED COMMUNITY BANKS, INC. | |||
|
|
By:
|
/s/ Rex S. Schuette | |
| Name: Rex S. Schuette | |||
| Title: Executive Vice President & CFO | |||
Exhibit
A
CERTIFICATE
OF DESIGNATION
OF
COMMON
STOCK EQUIVALENT
JUNIOR
PREFERRED STOCK
OF
UNITED
COMMUNITY BANKS, INC.
Pursuant
to the authority vested in the Board of Directors (the “Board”)
by the Restated Articles of Incorporation of United Community Banks, Inc. (the
“Corporation”),
as amended (the “Articles
of Incorporation”), the Board does hereby designate, create, authorize
and provide for the issue of a series of preferred stock, $1.00 par value per
share, which shall be designated as “Common Stock Equivalent Junior Preferred
Stock” (the “Junior
Preferred Stock”), consisting of 1,000,000 shares having the
following powers, preferences, participation and other special
rights, qualifications, limitations, restrictions and other
designations:
Section
I. Definitions
“Acquiring
Person” has the meaning specified in Section VI(c).
“Applicable
Conversion Rate” means the Initial Conversion Rate, subject to adjustment
pursuant to Section II(b), as applicable, for any such event occurring
subsequent to the initial determination of such rate.
“Board”
has the meaning specified in the preamble.
“Articles
of Incorporation” has the meaning specified in the preamble.
“Capacity
Amendment” means an amendment to the Articles of Incorporation increasing
the number of shares of Common Stock that the Corporation is authorized to issue
to more than 100,000,000.
“Change
of Control” has the meaning specified in Section VI(b).
“Common
Dividend Equivalent Amount” has the meaning specified in Section
III(a).
“Common
Stock” means the Common Stock, $1.00 par value per share, of the
Corporation.
“Conversion
Date” means, with respect to a share of Junior Preferred Stock, the date
on which such share is converted into Common Stock.
“Convertible
Holder” means a Holder, other than the initial Holder or an affiliate
thereof, who acquires one or more shares of Junior Preferred Stock following a
Permitted Transfer.
“Conversion
Notice” shall mean the notice given by a Convertible Holder to the
Corporation, specifying the number of shares of Junior Preferred Stock to be
converted into Common Stock and certifying that such Person is a Convertible
Holder.
“Corporation”
has the meaning specified in the preamble.
1
“Exchange
Property” has the meaning specified in Section VI(a).
“Holder”
means a Person in whose name any shares of Junior Preferred Stock are
registered, which may be treated by the Corporation as the absolute owner of
such shares for all purposes.
“Initial
Conversion Rate” means, for each share of Junior Preferred Stock, one
hundred (100) shares of Common Stock.
“Issue
Date” means the date that the Junior Preferred Stock is first
issued.
“Junior
Preferred Stock” has the meaning specified in the preamble.
“Junior
Stock” shall mean any class of capital stock or series of Preferred Stock
of the Corporation established by the Board after the Issue Date, the terms of
which do not expressly provide that such class or series ranks senior to or on
parity with the Junior Preferred Stock as to dividend rights or rights upon the
liquidation, winding-up or dissolution of the Corporation.
“Liquidation
Event” has the meaning specified in Section V(a).
“Parity
Stock” shall mean any class of capital stock or series of Preferred Stock
established by the Board after the Issue Date, the terms of which expressly
provide that such class or series will rank on parity with the Junior Preferred
Stock as to dividend rights or rights upon the liquidation, winding-up or
dissolution of the Corporation.
“Permitted
Transfer” means a sale or other transfer (i) to an affiliate of the
initial Holder or to the Corporation; (ii) in a widespread public distribution;
(iii) in transfer in which no transferee (or group of associated transferees)
would receive 2 percent or more of any class of voting securities of the
Corporation; or (iv) to a transferee that would control more than 50 percent of
the voting securities of the Corporation without any transfer from the initial
Holder.
“Person”
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited liability
company or trust.
“Record
Date” means, with respect to any dividend, distribution or other
transaction or event in which the holders of the Common Stock (or other
applicable security) have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security) is
exchanged for or converted into any combination of cash, securities or other
property, the date fixed for determination of holders of the Common Stock (or
other applicable security) entitled to receive such cash, securities or other
property (whether such date is fixed by the Board or a duly authorized committee
of the Board or by statute, contract or otherwise).
“Senior
Stock” shall mean each class of capital stock or series of Preferred
Stock established by the Board after the Issue Date, the terms of which
expressly provide that such class or series will rank senior to the Junior
Preferred Stock as to dividend rights or rights upon the liquidation, winding-up
or dissolution of the Corporation.
“Stockholder
Approval” means the requisite approval by the stockholders of the
Corporation of the Capacity Amendment.
“Transfer
Agent” shall mean the Corporation’s duly appointed transfer agent,
registrar, redemption, conversion and dividend disbursing agent for the Junior
Preferred Stock and transfer agent and registrar for any Common Stock issued
upon conversion of the Junior Preferred Stock, or any successor duly appointed
by the Corporation.
2
Section
II.
Conversion
(a) No
share of Junior Preferred Stock (or fraction thereof) may be converted into
Common Stock unless held by a Convertible Holder. Each share of
Junior Preferred Stock (or fraction thereof) held by a Convertible Holder shall
be convertible at any time following the Stockholder Approval into a number of
shares of Common Stock equal to the product of (i) the fraction of a share of
Junior Preferred Stock converted and (ii) the Applicable Conversion Rate in
effect on the Conversion Date, plus cash in lieu of any fractional shares of
Common Stock pursuant to Section II(c)(iv). For all purposes with
respect to the conversion of Junior Preferred Stock, references herein to
“Common Stock” shall include and mean any cash, securities or other property
(including payments of cash in lieu of fractional shares of Common Stock) that
may be due upon such conversion and references to “Junior Preferred Stock” shall
include and mean any fractional shares thereof.
(b) Adjustments
to Conversion Rate. If, at any time while Junior Preferred Stock
remains outstanding, (i) the Corporation issues to holders of the Common Stock
as a class shares of Common Stock or other securities of the Corporation as a
dividend or distribution on the Common Stock, or (ii) the Corporation effects a
share split or share combination of the Common Stock, (each, an “Adjustment
Event”), then the Corporation shall adjust the Initial Conversion Rate or
Applicable Conversion Rate, as applicable, or other terms of the Junior
Preferred Stock in effect immediately prior to such event so that each Holder of
shares of Junior Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock that such
Holder would have owned or would have been entitled to receive upon or by reason
of any of the events described above, had such shares of the Junior Preferred
Stock been converted into shares of Common Stock immediately prior to the
occurrence of such event. An adjustment made pursuant to this Section
II(b) shall become effective retroactively (x) in the case of any such dividend
or distribution, to the day immediately following the close of business on the
Record Date for the determination of holders of Common Stock entitled to receive
such dividend or distribution or (y) in the case of any such subdivision, split,
combination or reclassification, to the close of business on the day upon which
such corporate action becomes effective.
(c) Shares
of Junior Preferred Stock shall be converted into shares of Common Stock in
accordance with the following procedures:
(i) At
all times after the Stockholder Approval, a Convertible Holder may exercise a
conversion right by the delivery of a Conversion Notice to the office of the
Transfer Agent during normal business hours and (if so required by the
Corporation or the Transfer Agent) an instrument of transfer, in form
satisfactory to the Corporation and to the Transfer Agent, duly executed by such
Convertible Holder or his duly authorized attorney, and funds in the amount of
any applicable transfer tax (unless provision satisfactory to the Corporation is
otherwise made therefor), if required pursuant to Section
II(c)(iii).
3
(ii) As
promptly as practicable after the delivery of a Conversion Notice and the
payment in cash of any amount required by the provisions of Sections 2(c)(i) and
2(c)(iii), the Corporation will deliver or cause to be delivered at the office
of the Transfer Agent to or upon the written order of the Convertible Holder,
certificates or a confirmation of book-entry transfer of shares representing the
number of fully paid and non-assessable shares of Common Stock issuable upon
such conversion, issued in such name or names as the Convertible Holder may
direct. Such conversion shall be deemed to have been made immediately prior to
the close of business on the date of the delivery of the Conversion Notice, and
all rights of the Convertible Holder shall cease with respect to such shares of
Junior Preferred Stock at such time and the Person or Persons in whose name or
names the shares of Common Stock issued upon conversion are to be issued shall
be treated for all purposes as having become the record holder or holders of
such shares of Common Stock at such time; provided, however, that any delivery
of a Conversion Notice and payment on any date when the stock transfer books of
the Corporation shall be closed shall constitute the Person or Persons in whose
name or names the shares of Common Stock are to be issued as the record holder
or holders thereof for all purposes immediately prior to the close of business
on the next succeeding day on which such stock transfer books are
open.
(iii) The
issuance of shares of Common Stock upon conversion of shares of Junior Preferred
Stock shall be made without charge for any stamp or other similar tax in respect
of such issuance. However, if any such shares to be issued upon conversion are
to be issued in a name other than that of the Holder of the share or shares of
Junior Preferred Stock converted, the person or persons requesting the issuance
thereof shall pay to the Corporation the amount of any tax which may be payable
in respect of any transfer involved in such issuance, or shall establish to the
satisfaction of the Corporation that such tax has been paid.
(iv) No
fractional shares of Common Stock or scrip shall be issued upon conversion of
shares of Junior Preferred Stock. If more than one share of Junior Preferred
Stock shall be surrendered for conversion at any one time by the same Holder,
the number of full shares of Common Stock issuable upon conversion thereof shall
be computed on the basis of the aggregate number of shares of Junior Preferred
Stock so surrendered. Instead of any fractional shares of Common Stock that
would otherwise be issuable upon conversion of any shares of Junior Preferred
Stock, the Corporation shall pay to the Holder an amount in cash in respect of
such fractional interest equal to the value of such fractional interest based on
the closing sales price of the Common Stock on such national securities exchange
or automated quotation system on which the Common Stock is then listed or
authorized for quotation or, if the Common Stock is not so listed or authorized
for quotation, an amount determined in good faith by the Board to be the fair
value of the Common Stock at the close of business on the business day
immediately preceding the applicable Conversion Date.
(v) At
all times after the Stockholder Approval, the Corporation shall be required to
reserve or keep available, out of its authorized but unissued Common Stock, or
have sufficient authorized Common Stock to cover, the shares of Common Stock
deliverable upon the conversion of the Junior Preferred Stock The
Corporation shall take all action necessary so that all shares of Common Stock
that may be issued upon conversion of shares of Junior Preferred Stock will upon
issue be validly issued, fully paid and nonassessable, and free from all liens
and charges in respect of the issuance or delivery thereof.
4
(d) From
and after a Conversion Date, dividends hereunder shall no longer accrue with
respect to shares of Junior Preferred Stock converted on such date, and such
converted shares of Junior Preferred Stock shall cease to be outstanding,
subject to the rights of Holders of such Junior Preferred Stock to receive any
previously accrued and unpaid dividends on such shares and any other payments to
which they are otherwise entitled pursuant to Section III or Section
VI.
Section
III.
Dividend Rights
(a) From
and after the Issue Date, (i) Holders shall be entitled to receive, when, as and
if declared by the Board or any duly authorized committee of the Board, but only
out of assets legally available therefor, all dividends or other distributions
in the form of cash or assets (other than shares of Common Stock) declared and
paid or made in respect of the shares of Common Stock, at the same time and on
the same terms as holders of Common Stock, in an amount per one-hundredth of a
share of Junior Preferred Stock equal to the product of (A) the Applicable
Conversion Rate then in effect and (B) any per share dividend or other
distribution in the form of cash or assets (other than shares of Common Stock)
declared and paid or made in respect of each share of Common Stock (the “Common
Equivalent Dividend Amount”), and (ii) no cash dividend or other cash
distribution shall be declared and paid or made in respect of Common Stock
unless the Board or any duly authorized committee of the Board declares and pays
to Holders of the Junior Preferred Stock, at the same time and on the same terms
as holders of Common Stock, the Common Equivalent Dividend Amount per
one-hundredth of a share of Junior Preferred Stock. Notwithstanding any
provision in this Section III(a) to the contrary, Holders of the Junior
Preferred Stock shall not be entitled to receive any dividend or other
distribution in the form of cash or assets (other than shares of Common Stock)
paid or made with respect to the Common Stock after the Issue Date (x) if the
Record Date for determination of holders of Common Stock entitled to receive
such dividend or distribution occurs prior to the Issue Date, or (y) with
respect to shares of Junior Preferred Stock converted on or prior to such Record
Date.
(b) Each
dividend or other distribution pursuant to Section III(a) above will be payable
to Holders of record of Junior Preferred Stock as they appear in the records of
the Corporation at the close of business on the Record Date for the
corresponding dividend or distribution to the holders of shares of Common
Stock.
(c) To
the extent the Corporation declares dividends on the Junior Preferred Stock and
Common Stock but does not make full payment of such declared dividends, the
Corporation will allocate the dividend payments on a pro rata basis among the
holders of shares of Junior Preferred Stock and the holders of Common Stock so
that the amount of dividends actually paid per share on the Junior Preferred
Stock and Common Stock shall in all cases bear to each other the same ratio as
the then Applicable Conversion Rate. The foregoing right shall not be cumulative
and shall not in any way create any claim or right in favor of Holders in the
event that dividends have not been declared or paid in respect of any prior
calendar quarter.
(d) Holders
of Junior Preferred Stock shall not be entitled to any dividends, whether
payable in cash, securities or other property, on the Junior Preferred Stock
other than dividends (if any) declared and payable on Junior Preferred Stock as
specified in this Section III and dividends of Common Stock or other securities
of the Corporation pursuant to Section II(b).
5
(e) Notwithstanding
any provision in this Certificate of Designation to the contrary, Holders of
Junior Preferred Stock shall not be entitled to receive any dividends with
respect to any such shares converted into Common Stock, except to the extent
that any such dividends have been declared by the Board or any duly authorized
committee of the Board (and the Record Date for such dividend occurs) after the
Issue Date and prior to the applicable Conversion Date of such
shares.
Section
IV. Voting
(a) Shares
of Junior Preferred Stock shall have no voting rights except as set forth in
Section IV(b) or as otherwise required by Georgia law from time to time. In
exercising the voting rights set forth in Section IV(b), each Holder shall be
entitled to one vote for each share of Junior Preferred Stock held by such
Holder.
(b) So
long as any shares of Junior Preferred Stock remain outstanding, unless a
greater percentage shall then be required by law, the Corporation shall not,
without the affirmative vote or written consent of the Holders (voting or
consenting separately as one class) of at least a majority of the outstanding
shares of Junior Preferred Stock, amend, alter or repeal or otherwise change
(including in connection with any merger, consolidation or other similar
transaction) any provision of the Articles of Incorporation, including this
Certificate of Designation, if the amendment, authorization or repeal would
significantly and adversely affect the rights or preferences of the Junior
Preferred Stock. Notwithstanding the foregoing, except as otherwise
required by law, the Corporation may, without the consent of any Holder,
authorize, increase the authorized amount of, or issue shares of Senior Stock or
Parity Stock, and in taking such actions, the Corporation shall not be deemed to
have significantly adversely affected the existing terms of the Junior Preferred
Stock.
Section
V. Liquidation
(a) In
the event of any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, which occurs while any Junior
Preferred Stock remains outstanding (each a “Liquidation
Event”), Holders of shares of Junior Preferred Stock shall, subject to
the prior rights of any holders of Senior Stock, be entitled to receive and be
paid out of the assets of the Corporation available for distribution to its
stockholders, for each such share (or fraction thereof), a liquidating
distribution in an amount equal to that received by holders of the Common Stock
for each share of Common Stock into which such share of Junior Preferred Stock
(or fraction thereof) was convertible at the Applicable Conversion Rate
immediately prior to such Liquidation Event.
(b) If,
in any distribution described in Section V(a) above, the assets of the
Corporation or proceeds thereof are not sufficient to pay in full the amounts
payable with respect to all outstanding shares of Junior Preferred Stock and the
corresponding amounts payable with respect to the Common Stock or any other
Parity Stock as to such distribution, Holders of Junior Preferred Stock and the
holders of Common Stock or any other Parity Stock shall share ratably in any
such distribution in proportion to the full respective distributions to which
they are entitled.
(c) For
purposes of this Section V, neither the sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all or
substantially all of the property and assets of the Corporation (other than in
connection with the voluntary or involuntary liquidation, winding up or
dissolution of the Corporation) nor the merger, consolidation or any other
business combination transaction of the Corporation into or with any other
corporation or Person shall be deemed to be a voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Corporation.
6
(d) In
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, the Corporation shall, within ten (10) days after the date
the Board approves such action, or at least twenty (20) days prior to any
stockholder’s meeting called to approve such action, if applicable, or within
twenty (20) days after the commencement of any involuntary proceeding, whichever
is earlier, give each Holder initial written notice of the proposed
action. Such initial written notice shall describe the material terms
and conditions of such proposed action.
Section
VI. Adjustments
for Change of Control
(a)
Upon the
occurrence of a Change of Control (as defined herein) while any shares of Junior
Preferred Stock remain outstanding, each share of Junior Preferred Stock (or
fraction thereof) outstanding immediately prior to such Change of Control shall,
without the consent of Holders, become convertible into the types and amounts of
securities, cash, and other property that is or was receivable in such Change of
Control by a holder of the number of shares of Common Stock into which such
share of Junior Preferred Stock (or fraction thereof) was convertible
immediately prior to such Change of Control (such securities, cash, and other
property, the “Exchange
Property”);
provided,
however,
that if receipt of the Exchange Property would cause the Holder to
the Holder to acquire control of a bank, as “control” is defined in Section
2(a)(2) of the Bank Holding Company Act of 1956, as amended, and the
implementing regulations of the Board of Governors of the Federal Reserve
System, require the Holder to file a Change in Bank Control Act notice or
require the Holder to make any similar regulatory filing, proper provision shall
be made for such Holder to receive shares of non-voting securities in lieu of
any voting securities included in the Exchange Property, the terms of which
non-voting securities shall be as nearly equivalent as practicable to those of
the Junior Preferred Stock.
(b)
A “Change
of Control” shall mean:
(i) an
acquisition of more than fifty percent (50%) of the equity securities of the
Corporation (measured by vote or value) by means of merger or other form of
corporate reorganization in which outstanding shares of the Corporation are
exchanged for securities or other consideration issued, or caused to be issued,
by the Acquiring Person (as defined below) or its Parent, Subsidiary or
Affiliate (each as defined in Rule 12b-2 of the Exchange
Act);
(ii) a
sale or other disposition of all or substantially all of the assets of the
Corporation (on a consolidated basis) in a single transaction or series of
related transactions;
(iii) any
tender offer, exchange offer, stock purchase or other transaction or event or
series of related transactions or events by or involving the Corporation in
which a single entity or group becomes the direct or indirect owner of more than
fifty percent (50%) of the equity securities of the Corporation (measured by
vote or value);
(iv) a capital
reorganization or reclassification of the Common Stock or other
securities.
Notwithstanding
anything contained herein to the contrary, a change in the state of
incorporation of the Corporation shall not in and of itself constitute a Change
of Control.
7
(c) “Acquiring
Person” means, in connection with any Change of Control any of the
following, at the Holder’s election, (i) the continuing or surviving Person of a
consolidation or merger with the Corporation (if other than the Corporation),
(ii) the transferee of all or substantially all of the properties or assets of
the Corporation, (iii) the corporation consolidating with or merging into the
Corporation in a consolidation or merger in connection with which the Common
Stock is changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (iv) the entity or group acting in concert
acquiring or possessing the power to cast the majority of the eligible votes at
a meeting of the Corporation’s stockholders at which directors are elected, or,
(v) in the case of a capital reorganization or reclassification, the
Corporation, or (vi) at the Holder’s election, any Person that (x) controls the
Acquiring Person directly or indirectly through one or more intermediaries, (y)
is required to include the Acquiring Person in the consolidated financial
statements contained in such Person’s Annual Report on Form 10 K (if such Person
is required to file such a report) or would be required to so include the
Acquiring Person in such Person’s consolidated financial statements if they were
prepared in accordance with U.S. generally accepted accounting principles and
(z) is not itself included in the consolidated financial statements of any other
Person (other than its consolidated subsidiaries).
(d) If
holders of shares of Common Stock have the opportunity to elect the form of
consideration to be received in a Change of Control, the Holders of Junior
Preferred Stock shall be entitled to receive the same
election.
(e) The
Corporation (or any successor) shall, within 20 days of the occurrence of any
Change of Control or, if earlier, the date on which similar notice is given to
holders of Common Stock, provide written notice to the Holders of such
occurrence and of the type and amount of the cash, securities or other property
that constitutes the Exchange Property. Failure to deliver such
notice shall not affect the operation of this Section VI.
Section
VII. Reports
as to Adjustments
Whenever
the number of shares of Common Stock into which the shares of Junior Preferred
Stock are convertible is adjusted as provided in Section II(b), the Corporation
shall, as soon as is reasonable practicable, compute such adjustment and furnish
to the Holders a certificate of the Corporation, setting forth the number of
shares of Common Stock into which each share of Junior Preferred Stock (or
fraction thereof) is convertible as a result of such adjustment, a brief
statement of the facts requiring such adjustment, the computation thereof and
when such adjustment will become effective.
Section
VIII. Transfer
Restrictions
Shares of
Junior Preferred Stock may not be transferred to any Person other than pursuant
to a Permitted Transfer, and any attempt to transfer one or more shares of
Junior Preferred Stock (or fraction thereof) to a Person other than pursuant to
a Permitted Transfer shall be void and of no effect.
Section
IX. Exclusion
of Other Rights
Except as
may otherwise be required by law, shares of Junior Preferred Stock shall not
have any powers, preferences, participation and other special rights,
qualifications, limitations, restrictions and other designations, other than
those specifically set forth herein (as this Certificate of Designation may be
amended from time to time) and in the Articles of Incorporation. The shares of
Junior Preferred Stock shall have no preemptive or subscription
rights.
8
Section
X. Severability
of Provisions
If any
powers, preferences, participation and other special rights, qualifications,
limitations, restrictions and other designations of the Junior Preferred Stock
set forth in this Certificate of Designation (as this Certificate of Designation
may be amended from time to time) is invalid, unlawful or incapable of being
enforced by reason of any rule of law or public policy, all other powers,
preferences, participation and other special rights, qualifications,
limitations, restrictions and other designations of the Junior Preferred Stock
set forth in this Certificate of Designation (as so amended) which can be given
effect without the invalid, unlawful or unenforceable powers, preferences,
participation and other special rights, qualifications, limitations,
restrictions and other designations of the Junior Preferred Stock shall,
nevertheless, remain in full force and effect, and no powers, preferences,
participation and other special rights, qualifications, limitations,
restrictions and other designations of the Junior Preferred Stock herein set
forth shall be deemed dependent upon any other such powers, preferences,
participation and other special rights, qualifications, limitations,
restrictions and other designations of the Junior Preferred Stock unless so
expressed herein.
Section
XI. Rank
Notwithstanding
anything set forth in the Articles of Incorporation or this Certificate of
Designation to the contrary, the Board or any authorized committee of the Board,
without the vote of Holders of the Junior Preferred Stock, may authorize and
issue additional shares of stock ranking junior or senior to, or on parity with,
the Junior Preferred Stock as to dividends and the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation or any other powers, preferences, participation and
other special rights, qualifications, limitations, restrictions and other
designations.
Section
XII. No
Redemption
The
Corporation may not, at any time, redeem the outstanding shares of the Junior
Preferred Stock, except upon the unanimous consent of the Holders of all
outstanding shares of Junior Preferred Stock.
Section
XIII. Repurchases
Subject
to the limitations imposed herein, the Corporation may purchase and sell shares
of Junior Preferred Stock (or fraction thereof) from time to time to such
extent, in such manner, and upon such terms as the Board or any duly authorized
committee of the Board may determine.
Section
XIV. No Sinking
Fund
Shares of
Junior Preferred Stock are not subject to the operation of a sinking fund or any
similar provisions.
Section
XV.
Notices
All
notices, requests and other communications to a Holder of Junior Preferred Stock
shall be in writing (including facsimile transmission) and shall be given at the
address of such Holder as shown on the books of the Corporation. A Holder of
Junior Preferred Stock may waive any notice required hereunder by a writing
signed before or after the time required for notice or the action in question.
Notice shall be deemed given on the earlier of the date received or three
business days after the date such notice is mailed by first-class mail, postage
prepaid.
9
Exhibit
4.2
FORM
OF
CERTIFICATE
OF RIGHTS AND PREFERENCES
OF
SERIES
C CONVERTIBLE PREFERRED STOCK
OF
UNITED
COMMUNITY BANKS, INC.
March
[●], 2010
Pursuant
to Section 14-2-602 of the Georgia Business Corporation Code and Article V of
the Restated Articles of Incorporation, as amended, of United Community Banks,
Inc., a corporation organized and existing under the laws of the State of
Georgia (the “Company”),
hereby certifies that the following resolution was duly adopted by the Board of
Directors of the Company effective as of March [●], 2010 pursuant to authority
conferred upon the Board of Directors by the Restated Articles of Incorporation
of the Company, as amended, which authorize the issuance of up to Ten Million
(10,000,000) shares of preferred stock, par value $1.00 per share.
RESOLVED,
that pursuant to authority expressly granted to and vested in the Board of
Directors of the Company and pursuant to the provisions of the Articles of
Incorporation, the Board of Directors hereby creates a series of preferred
stock, herein designated and authorized as the Series C Convertible Preferred
Stock, par value $1.00 per share, which shall consist of Sixty-Five Thousand
(65,000) of the shares of preferred stock which the Company now has authority to
issue, and the Board of Directors hereby fixes the powers, designations and
preferences and the relative, participating, optional and other special rights
of the shares of such series, and the qualifications, limitations and
restrictions thereof as follows:
1. Number. The
number of shares constituting the Series C Convertible Preferred Stock shall be
Sixty-Five Thousand (65,000), all of which are issuable solely under the
Agreement.
2. Definitions. Unless
the context otherwise requires, when used herein the following terms shall have
the meaning indicated.
“Acquiring
Person” has the meaning set forth in the Agreement.
“Acquisition
Consideration” is defined in Section
6(f)(iii)(C).
“Agreement”
means the Securities Purchase Agreement dated as of April 1, 2010, by and
between the Company and Fletcher pursuant to which Sixty-Five Thousand (65,000)
shares of Series C Preferred Stock and a warrant are to be issued by the
Company, including all schedules, annexes and exhibits thereto, and as such
agreement may be amended from time to time.
“Articles
of Incorporation” means the Restated Articles of Incorporation of the
Company, as amended.
“Board”
means the Board of Directors of the Company.
1
“Business
Day” means any day on which the Common Stock may be traded on the Nasdaq,
or if not admitted for trading on the Nasdaq, on any day other than a Saturday,
Sunday or holiday on which banks in New York City are required or permitted to
be closed.
“Capital
Stock” means (i) with respect to any Person that is a corporation, any
and all shares, interests, participations or other equivalents (however
designated) of capital or capital stock of such Person and (ii) with respect to
any Person that is not a corporation, any and all partnership, limited
partnership, limited liability company or other equity interests of such
Person.
“Certificate
of Rights and Preferences” means this Certificate of Rights and
Preferences of the Series C Preferred Stock.
“Change
of Control” has the meaning set forth in the Agreement.
“Change
of Control Notice” is defined in Section
6(f)(i).
“Common
Stock Equivalent Junior Preferred Stock” means the Company’s Common Stock
Equivalent Junior Preferred Stock, par value $1.00 per share, issuable pursuant
to Section 6 of the Agreement, and any Capital Stock for or into which such
Common Stock Equivalent Junior Preferred Stock hereafter is exchanged,
converted, reclassified or recapitalized by the Company or pursuant to a Change
of Control (or, at the election of the Holder, the Capital Stock of any
Acquiring Person from and after the consummation of a Change of
Control).
“Common
Stock” means the Company’s common stock, par value $1.00 per share, and
any Capital Stock for or into which such common stock hereafter is exchanged,
converted, reclassified or recapitalized by the Company or pursuant to a Change
of Control (or, at the election of the Holder, the Capital Stock of any
Acquiring Person from and after the consummation of a Change of
Control).
“Company”
means United Community Banks, Inc., a Georgia corporation (or any Acquiring
Person from and after the consummation of a Change of Control).
“Contingent
Notice” is defined in Section
6(f)(iii).
“Conversion
Closing Date” is defined in Section
6(a)(i).
“Conversion
Notice” is defined in Section
6(a)(i).
“Conversion
Notice Date” is defined in Section
6(a)(i).
“Conversion
Price” means Six Dollars and Two Cents ($6.02), subject to adjustment as
set forth herein.
“Conversion
Stock Amount” is defined in Section
6(a)(ii).
“Daily
Market Price” has the meaning set forth in the Agreement.
2
“Dividend
Payment Date” is defined in Section
3(a).
“Dividend
Period” is defined in Section
3(a).
“Dividend
Rate” means (i) prior to receipt of the Stockholder Consent, a rate equal
to One Thousand Dollars ($1,000) per share multiplied by the lesser of (a)
twelve percent (12%) per annum and (b) the sum of the three (3)-month London
Interbank Offer Rate (LIBOR) determined as of the first day of the Dividend
Period (or if the first day of the Dividend Period is not a Business Day, then
the first Business Day after the first day of the Dividend Period) plus eight
percent (8%) per annum, subject to Section
3(c); and (ii) after receipt of the Stockholder Consent, a rate equal to
One Thousand Dollars ($1,000) per share multiplied by the lesser of (a) eight
percent (8%) per annum and (b) the sum of the three (3)-month London Interbank
Offer Rate (LIBOR) determined as of the first day of the Dividend Period (or if
the first day of the Dividend Period is not a Business Day, then the first
Business Day after the first day of the Dividend Period) plus four percent (4%)
per annum, subject to Section
3(c).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Fletcher”
means Fletcher International, Ltd. a company domiciled in Bermuda, together with
its successors.
“Holder”
shall mean Fletcher and any one or more Persons to whom Fletcher sells,
exchanges, transfers, assigns, gives, pledges, encumbers, hypothecates,
alienates or distributes, whether directly or indirectly, any or all the Series
C Preferred Stock or all or any portion of the right to purchase the Series C
Preferred Stock under the Agreement.
“Investment
Period” has the meaning set forth in the Agreement.
“Issue
Date” means with respect to any shares of Series C Preferred Stock the
original date of issuance of such shares of Series C Preferred
Stock.
“Junior
Securities” means Capital Stock that, with respect to dividends and
distributions upon Liquidation, ranks junior to the Series C Preferred Stock,
including but not limited to Common Stock, Common Stock Equivalent Junior
Preferred Stock and any other class or series of Capital Stock issued by the
Company or any Subsidiary of the Company on or after the date of the Agreement,
but excluding any Parity Securities and Senior Securities issued (i) to Fletcher
or its authorized assignees under the Agreement, (ii) with the approval of the
Holders of a Majority of the Series C Preferred Stock or (iii) upon the
conversion, redemption or exercise of securities described in clause (i) or (ii)
in accordance with the terms thereof.
“Liquidation”
means the voluntary or involuntary liquidation, dissolution or winding up of the
Company; provided,
however,
that a consolidation, merger or share exchange shall not be deemed a
Liquidation, nor shall a sale, assignment, conveyance, transfer, lease or other
disposition by the Company of all or substantially all of its assets, which does
not involve a distribution by the Company of cash or other property to the
holders of Common Stock and Common Stock Equivalent Junior Preferred Stock, be
deemed to be a Liquidation.
3
“Liquidation
Preference” is defined in Section
4.
“Majority
of the Series C Preferred Stock” means more than fifty percent (50%) of
the then outstanding shares of Series C Preferred Stock.
“Maximum
Number” has the meaning set forth in the Agreement.
“Nasdaq”
has the meaning set forth in the Agreement.
“Ordinary
Cash Dividend” means all quarterly cash dividends out of capital surplus
or retained earnings legally available therefore (determined in accordance with
generally accepted accounting principles, consistently applied), in an amount
and frequency consistent with past practice.
“Parent”
means, as to any Acquiring Person, any Person that (i) controls the Acquiring
Person directly or indirectly through one or more intermediaries, (ii) is
required to include the Acquiring Person in the consolidated financial
statements contained in such Parent’s Annual Report on Form 10-K (if the Parent
is required to file such a report) or would be required to so include the
Acquiring Person in such Parent’s consolidated financial statements if they were
prepared in accordance with U.S. generally accepted accounting principles and
(iii) is not itself included in the consolidated financial statements of any
other Person (other than its consolidated subsidiaries).
“Parity
Securities” means any class or series of Capital Stock that, with respect
to dividends or distributions upon Liquidation, is pari
passu with the Series C Preferred Stock.
“Person”
means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, limited liability company, joint venture, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
“Preferred
Stock” means the Company’s preferred stock authorized pursuant to the
provisions of the Articles of Incorporation.
“Prevailing
Market Price” means, with respect to any reference date, the average of
the Daily Market Prices of the Common Stock (or, for purposes of determining the
Prevailing Market Price of the common stock of an Acquiring Person or its Parent
under Section
6(f), the common stock of such Acquiring Person or such Parent) for the
twenty-five (25) Business Days ending on and including the third (3rd)
Business Day before such reference date.
“Redemption
Closing Date” is defined in Section
6(b)(i).
“Redemption
Notice” is defined in Section
6(b)(i).
“Redemption
Price” means Five Dollars and Twenty-Five Cents ($5.25), subject to
adjustment as set forth herein.
“Redemption
Stock Amount” is defined in Section
6(b)(ii).
4
“Restatement”
has the meaning set forth in the Agreement.
“SEC”
means the Securities and Exchange Commission.
“Securities
Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.
“Senior
Securities” means any class or series of Capital Stock that, with respect
to dividends or distributions upon Liquidation, ranks senior to the Series C
Preferred Stock.
“Series
C Preferred Stock” means the Series C Convertible Preferred Stock of the
Company or successor as contemplated by Section
6(f).
“Stated
Value” is an amount equal to One Thousand Dollars ($1,000) per share of
Series C Preferred Stock plus (x) any unpaid dividends on the Series C Preferred
Stock (as of the date of determination, which for purposes of Sections
6(a) and 6(b)
shall be the Conversion Closing Date and Redemption Closing Date, respectively),
whether or not declared and whether or not earnings are available in respect of
such dividends (i.e., the Stated Value shall increase in each Dividend Period by
the Dividend Rate if and to the extent that dividends for such Dividend Period
are not declared and paid by the respective Dividend Payment Date) and
(y) any unpaid dividends declared on the Common Stock and Common Stock
Equivalent Junior Preferred Stock in an amount equal to the product of (A) the
per-share dividend other than the Ordinary Cash Dividend paid on Common Stock
and Common Stock Equivalent Junior Preferred Stock multiplied by (B) the
number of shares of Common Stock and/or the number of one-hundredths of a share
of Common Stock Equivalent Junior Preferred Stock issuable upon redemption or
conversion (whichever number of shares is greater) of a share of Series C
Preferred Stock on the date such dividend is declared on the Common Stock and
Common Stock Equivalent Junior Preferred Stock. In the event the
Company shall declare a distribution on the Common Stock and Common Stock
Equivalent Junior Preferred Stock payable in securities or property other than
cash, the value of such securities or property will be the fair market
value. Any securities shall be valued as follows: (i) if traded on a
national securities exchange (as defined in the Exchange Act), the value shall
be deemed to be the average of the closing prices of the securities on such
exchange or system over the twenty-five (25) Business Day period ending three
(3) calendar days prior to such declaration; (ii) if actively traded
over-the-counter, the value shall be deemed to be the average of the closing bid
or sale prices (whichever is applicable) over the twenty-five (25) Business Day
period ending three (3) calendar days prior to such declaration; and (iii) if
there is no active public market, the value shall be the fair market value
thereof, as determined in good faith by the Board.
“Stockholder
Consent” has the meaning set forth in the Agreement.
“Stockholder
Consent Date” has the meaning set forth in the Agreement.
“Subsidiary”
of a Person means (i) a corporation, a majority of whose stock with voting
power, under ordinary circumstances, to elect directors is at the time of
determination, directly or indirectly, owned by such Person or by one or more
Subsidiaries of such Person, or (ii) any other entity (other than a corporation)
in which such Person or one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination thereof has a least a majority
ownership interest.
5
The
foregoing definitions will be equally applicable to both the singular and plural
forms of the defined terms.
3. Dividends
and Distributions.
(a) Holders
shall be entitled to receive out of the assets of the Company legally available
for that purpose, cash dividends at the Dividend Rate to be paid in accordance
with the terms of this Section
3. In addition, Holders for each share of Series C Preferred
Stock then owned by such Holder shall be entitled to receive out of the assets
of the Company legally available for that purpose, dividends or other
distributions declared on the Common Stock and Common Stock Equivalent Junior
Preferred Stock in the same form as such dividends or distributions in an amount
equal to the product of (x) the amount of any per-share dividend or distribution
other than the Ordinary Cash Dividends paid on the Common Stock and Common Stock
Equivalent Junior Preferred Stock multiplied by (y) the number of shares of
Common Stock and/or the number of one-hundredths of a share of Common Stock
Equivalent Junior Preferred Stock issuable upon redemption or conversion
(whichever number of shares is greater) of a share of the Series C Preferred
Shares on the date such dividend is declared, to be paid in accordance with the
terms of this Section
3. Such dividends shall be payable quarterly in arrears, when
and as declared by the Board (or a duly appointed committee of directors), on
April 15, July 15, October 15 and January 15 of each year commencing on
April 15, 2010 and, in the case of dividends resulting from dividends or
distributions declared on Common Stock and Common Stock Equivalent Junior
Preferred Stock, no later than the date on which such dividends or distributions
are paid to holders of the Common Stock and Common Stock Equivalent Junior
Preferred Stock (each such date being herein referred to as a “Dividend
Payment Date”). The period from the Issue Date to
March 31, 2010, and each quarterly period between consecutive Dividend
Payment Dates shall hereinafter be referred to as a “Dividend
Period.” The dividend for any Dividend Period for any share of
Series C Preferred Stock that is not outstanding on every calendar day of the
Dividend Period shall be prorated based on the number of calendar days such
share was outstanding during the period. Each such dividend shall be
paid to the Holders of record of the Series C Preferred Stock as their names
appear on the share register of the Company on the Dividend Payment
Date. Dividends on account of arrears for any past Dividend Periods
may be declared and paid at any time, without reference to any Dividend Payment
Date (including, without limitation, for purposes of computing the Stated Value
of any shares of Series C Preferred Stock in connection with the conversion or
redemption thereof or any Liquidation of the Company), to Holders of record on a
date designated by the Board, not exceeding thirty (30) calendar days preceding
the payment date thereof, as may be fixed by the Board. For purposes
of determining the amount of dividends accrued as of the first Dividend Payment
Date and as of any date that is not a Dividend Payment Date, such amount shall
be calculated on the basis of the Dividend Rate for the actual number of
calendar days elapsed from and including the Issue Date (in case of the first
Dividend Payment Date and any date prior to the first Dividend Payment Date) or
the last preceding Dividend Payment Date (in case of any other date) to the date
as of which such determination is to be made, based on a three hundred sixty
five (365) day year.
6
(b) So
long as any shares of the Series C Preferred Stock shall be outstanding,
(i) the Company shall not and shall not allow its Subsidiaries (other than
direct or indirect wholly-owned Subsidiaries) to declare or pay any dividend
whatsoever, whether in cash, property or otherwise, set aside any cash or
property for the payment of any dividends, or make any other distribution on any
Junior Securities or Parity Securities and (ii) the Company shall not and
shall not allow its Subsidiaries to repurchase, redeem or otherwise acquire for
value or set aside any cash or property for the repurchase or redemption of any
Junior Securities or Parity Securities, unless in each such case all dividends
to which the Holders of the Series C Preferred Stock shall have been entitled to
receive for all previous Dividend Periods shall have been paid and dividends on
the Series C Preferred Stock for the subsequent four Dividend Periods shall have
been designated and set aside in cash.
(c) Notwithstanding
anything herein to the contrary, whenever, at any time or times after the
Company has obtained the approval of the stockholders of the Company to increase
the authorized number of shares of Common Stock, the Company shall fail to
redeem any Series C Preferred Stock by the date it is obligated to do so under
Section
6(b) hereof and such failure is ongoing, then (x) the Dividend Rate with
respect to such Series C Preferred Stock that is subject to such redemption
shall mean a rate equal to twenty two percent (22%) per annum times the Stated
Value until such date that the failure to redeem no longer exists.
(d) The
Company shall be entitled to deduct and withhold from any dividend on the Series
C Preferred Stock such amounts as the Company is required to deduct and withhold
with respect to such dividend under the Internal Revenue Code of 1986, as
amended, or any other provision of state, local or foreign tax law.
7
4. Liquidation
Preference. In the event of any Liquidation, after payment or
provision for payment by the Company of the debts and other liabilities of the
Company and the liquidation preference of any Senior Securities that rank senior
to the Series C Preferred Stock with respect to distributions upon Liquidation,
each Holder shall be entitled to receive an amount in cash for each share of the
then outstanding Series C Preferred Stock held by such Holder equal to the
greater of (a) the Stated Value per share to and including the date full payment
is tendered to the Holders with respect to such Liquidation and (b) the amount
the Holders would have received if the Holders had converted all outstanding
shares of Series C Preferred Stock into Common Stock and/or Common Stock
Equivalent Junior Preferred Stock in accordance with the provisions of Section
6(a) hereof or redeemed all outstanding shares of Series C Preferred
Stock into Common Stock and/or Common Stock Equivalent Junior Preferred Stock
under Section 6(b)
hereof (whichever is greater), in each case as of the Business Day immediately
preceding the date of such Liquidation (such greater amount being referred to
herein as the “Liquidation
Preference”), before any distribution shall be made to the holders of any
Junior Securities (and any Senior Securities or Parity Securities that, with
respect to distributions upon Liquidation, rank junior to the Series C Preferred
Stock) upon the Liquidation of the Company. In case the assets of the
Company available for payment to the Holders are insufficient to pay the full
Liquidation Preference on all outstanding shares of the Series C Preferred Stock
and all outstanding shares of Parity Securities and Senior Securities that, with
respect to distributions upon Liquidation, are pari
passu with the Series C Preferred Stock in the amounts to which the
holders of such shares are entitled, then the entire assets of the Company
available for payment to the Holders and to the holders of such Parity
Securities and Senior Securities shall be distributed ratably among the Holders
of the Series C Preferred Stock and the holders of such Parity Securities and
Senior Securities, based upon the aggregate amount due on such shares upon
Liquidation. Written notice of any Liquidation of the Company,
stating a payment date and the place where the distributable amounts shall be
payable, shall be given by facsimile and overnight delivery not less than ten
(10) calendar days prior to the payment date stated therein, to the Holders of
record of the Series C Preferred Stock, if any, at their respective addresses as
the same shall appear on the books of the Company.
5. Voting
Rights. The Holders shall have the following voting rights
with respect to the Series C Preferred Stock:
(a) Each
share of Series C Preferred Stock shall entitle the holder thereof to the voting
rights specified in Section
5(b) and no other voting rights except as required by law.
(b) The
consent of the Holders of at least a Majority of the Series C Preferred Stock,
voting separately as a single class with one vote per share, in person or by
proxy, either in writing without a meeting or at an annual or a special meeting
of such Holders called for the purpose, shall be necessary to amend, alter or
repeal, by way of merger or otherwise, any of the provisions of the Articles of
Incorporation, including the Certificate of Rights and Preferences, or Bylaws of
the Company so as to significantly and adversely affect any of the rights or
preferences of the Holders of the Series C Preferred Stock. Without limiting the
generality of the preceding sentence, such change includes any action that
would:
(i) Reduce
the Dividend Rate on the Series C Preferred Stock or defer the date from which
dividends will accrue, or cancel accrued and unpaid dividends, or change the
relative seniority rights of the holders of Series C Preferred Stock as to the
payment of dividends in relation to the holders of any other Capital Stock of
the Company;
(ii) Reduce
the amount payable to the holders of the Series C Preferred Stock upon the
voluntary or involuntary liquidation, dissolution, or winding up of the Company,
or change the relative seniority of the liquidation preferences of the holders
of the Series C Preferred Stock to the rights upon liquidation of the holders of
any other Capital Stock of the Company;
8
(iii) Make
the Series C Preferred Stock redeemable at the option of the
Company;
(iv) Authorize,
create or issue any shares of Senior Securities (or amend the provisions of any
existing class of Capital Stock to make such class of Capital Stock a class of
Senior Securities); or
(v)
Decrease (other than by redemption or conversion) the total number of authorized
shares of Series C Preferred Stock.
6. Conversion
and Redemption.
(a) Procedure
for Conversion at the Option of the Company.
(i) General. Subject
to Section
6(c) hereof, on or after the five year anniversary of the
Stockholder Consent Date, on any date on which the Prevailing Market Price
exceeds the Conversion Price by one hundred percent (100%) or more, the
Company shall have the option to convert all, but not less than all, of the then
outstanding shares of Series C Preferred Stock by delivering a duly executed
written Preferred Stock conversion notice, substantially in the form attached as
Annex F to the Agreement (the “Conversion
Notice” and the date such notice is deemed delivered hereunder, the
“Conversion
Notice Date”), by facsimile, mail or overnight courier delivery, to the
Holder. The closing of such conversion shall take place, subject to the
satisfaction or waiver of the conditions set forth in Section 6(a)(iii),
(a) on the twentieth (20th)
Business Day following and excluding the Conversion Notice Date or (b) any other
date upon which the exercising Holder and the Company mutually agree (the “Conversion
Closing Date”). The Conversion Notice shall apply only to shares of
Series C Preferred Stock for which no Redemption Notice has been tendered to the
Company before the twentieth (20th)
Business Day after the Conversion Notice Date, regardless of when the applicable
redemption is consummated.
(ii) Conversion
for stock. Subject to Section
6(c) hereof, such shares of stock shall be converted into that number of
shares of Common Stock and/or number of one-hundredths (1/100th) of
a share of Common Stock Equivalent Junior Preferred Stock equal to (a) the
aggregate Stated Value of such shares divided by (b) the Conversion Price (the
“Conversion
Stock Amount”). On the Conversion Closing Date, the Holder
shall surrender the certificate representing the shares of Series C Preferred
Stock to be converted to the Company at the address set forth for notices to the
Company specified in Section 18 of the Agreement, and the Company shall deliver
to such Holder as specified in the Conversion Notice the Conversion Stock Amount
of duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock and/or Common Stock Equivalent Junior Preferred Stock.
9
(iii) Closing
conditions. It shall be a condition of the converting Holder’s
obligation to close that each of the following is satisfied, unless expressly
waived by such Holder in writing (which Holder may do or refrain from doing in
its sole discretion):
(A) (w)
the representations and warranties made by the Company in the Agreement shall be
true and correct as of the Conversion Closing Date, except those representations
and warranties that address matters only as of a particular date, which shall be
true and correct as of such date; (x) the Company shall have complied fully
with all of the covenants and agreements in the Agreement; (y) all shares of
Common Stock to be issued upon such conversion shall be duly listed and admitted
to trading on the Nasdaq Global Select Market, the Nasdaq Global Market or the
New York Stock Exchange; and (z) such Holder shall have received a certificate
of the Chief Executive Officer and the Chief Financial Officer of the Company
dated such date and to the effect of clauses (x), (y) and (z).
(B) On
the Conversion Closing Date, the Company shall have delivered to the Holder
(x) a Conversion Notice, substantially in the form attached as Annex G to
the Agreement and (y) the legal opinion described in Section 12(b) of the
Agreement.
(C) If
the issuance of Common Stock or Common Stock Equivalent Junior Preferred Stock
would cause the number of shares of Common Stock and Common Stock Equivalent
Junior Preferred Stock held by any Holder to exceed the Maximum Number then
delivery of such shares of Common Stock or Common Stock Equivalent Junior
Preferred Stock shall be deferred pursuant to Section 6(d) of the
Agreement. Notwithstanding anything herein to the contrary, in such
event, the Company shall no longer be obligated to pay any dividend on the
Series C Preferred Stock or provide or recognize any other preferences,
limitations, powers or other rights provided by this Certificate of Rights and
Preferences to the extent that, if the Series C Preferred Stock would have been
converted, the Holder would beneficially own Common Stock and Common Stock
Equivalent Junior Preferred Securities that would exceed the Maximum
Number.
The
Company shall use its best efforts to cause each of the foregoing conditions to
be satisfied at the earliest practicable date after a Conversion
Notice. If such conditions are not satisfied or waived prior to the
twentieth (20th)
Business Day following and excluding the date the Conversion Notice is
delivered, then the Company may, at its sole option, and at any time, withdraw
the Conversion Notice by written notice to the Holder regardless of whether such
conditions have been satisfied or waived as of the withdrawal date and, after
such withdrawal, shall have no further obligations with respect to such
Conversion Notice and may submit a Conversion Notice with respect to the shares
referenced in the withdrawn Conversion Notice pursuant to Section
6(a)(i) hereof, subject to the closing conditions in this Section
6(a)(iii).
10
(iv) Holder
of record. Each conversion of Series C Preferred Stock shall
be deemed to have been effected immediately before the close of business on the
Business Day on which the Conversion Notice is delivered (except, that, for
purposes of calculation of the Stated Value, dividends shall accrue until and
including the Conversion Closing Date), and at such time the Person or Persons
in whose name or names any certificate or certificates for shares of Common
Stock or Common Stock Equivalent Junior Preferred Securities shall be issuable
upon such conversion as provided in Section
6(a)(ii) shall be deemed to have become the holder or holders of record
thereof.
(b) Procedure
for Redemption at the Option of the Holder.
(i)
General. Subject
to Section
6(c) hereof, at any time after the Company has obtained the approval of
the stockholders of the Company to increase the authorized number of shares of
Common Stock, a Holder of Series C Preferred Stock may at the option of the
Holder require the Company to redeem any or all shares of Series C Preferred
Stock held by such Holder for Common Stock and/or Common Stock Equivalent Junior
Preferred Stock on one or more occasions by delivering an optional redemption
notice (a “Redemption
Notice”) to the Company substantially in the form attached as Annex H to
the Agreement; provided, however, that until the Company has obtained the
approval of the stockholders of the Company to increase the authorized number of
shares of Common Stock, a Holder of Series C Preferred Stock may require the
Company to redeem any or all of such shares of Series C Preferred Stock for
Common Stock Equivalent Junior Preferred Stock. The closing of such
redemption shall take place, subject to the satisfaction or waiver of the
conditions set forth in Section 6(b)(iii)
(a) on the second (2nd)
Business Day, or if the Holder so elects, the third (3rd)
Business Day, following and excluding the date the Redemption Notice is
delivered or (b) any other date upon which the exercising Holder and the Company
mutually agree (the “Redemption
Closing Date”).
(ii)
Redemption
for stock. Subject to Section
6(c) hereof, such shares of Series C Preferred Stock shall be redeemed
into that number of shares of Common Stock and/or number of one-hundredths
(1/100th) of
a share of Common Stock Equivalent Junior Preferred Stock equal to (a) the
aggregate Stated Value of such shares divided by (b) the Redemption Price (the
“Redemption
Stock Amount”). On the Redemption Closing Date, the Holder
shall surrender the certificate representing the shares of Series C Preferred
Stock to be redeemed to the Company at the address set forth for notices to the
Company specified in Section 18 of the Agreement and the Company shall deliver
to such Holder as specified in the Redemption Notice the Redemption Stock Amount
of duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock and/or Common Stock Equivalent Junior Preferred Stock.
11
(iii) Closing
conditions. It shall be a condition of the redeeming Holder’s
obligation to close that each of the following is satisfied, unless expressly
waived by such Holder in writing:
(A) (w)
the representations and warranties made by the Company in the Agreement shall be
true and correct as of the Redemption Closing Date, except those representations
and warranties that address matters only as of a particular date, which shall be
true and correct as of such date; (x) the Company shall have complied fully
with all of the covenants and agreements in the Agreement; (y) all shares of
Common Stock to be issued upon such redemption shall be duly listed and admitted
to trading on the Nasdaq Global Select Market, the Nasdaq Global Market or the
New York Stock Exchange; and such Holder shall have received a certificate of
the Chief Executive Officer and (z) the Chief Financial Officer of the Company
dated such date and to the effect of clauses (w), (x) and (y).
(B) On
the Redemption Closing Date, the Company shall have delivered to the Holder
(x) a Preferred Stock redemption delivery notice, substantially in the form
attached as Annex I to the Agreement and (y) the legal opinion described in
Section 12(b) of the Agreement.
(C) As
of the Redemption Closing Date, the Company shall have notified the Holder of
all Restatements.
(D) If
the issuance of Common Stock or Common Stock Equivalent Junior Preferred Stock
would cause the number of shares of Common Stock and Common Stock Equivalent
Junior Preferred Stock held by any Holder to exceed the Maximum Number then
delivery of such shares of Common Stock or Common Stock Equivalent Junior
Preferred Stock shall be deferred pursuant to Section 6(d) of the
Agreement. Notwithstanding anything herein to the contrary, in such
event, the Company shall no longer be obligated to pay any dividend on the
Preferred Stock or provide or recognize any other preferences, limitations,
powers or other rights provided by this Certificate of Rights and Preferences to
the extent that, if the Series C Preferred Stock would have been redeemed, the
Holder would beneficially own Common Stock and Common Stock Equivalent Junior
Preferred Securities that would exceed the Maximum Number.
12
(iv) Holder
of record. Each redemption of Series C Preferred Stock shall
be deemed to have been effected immediately before the close of business on the
Business Day on which the Redemption Notice is delivered (except, that, for the
purposes of calculation of the Stated Value, dividends shall accrue until and
including the Redemption Closing Date), and at such time the Person or Persons
in whose name or names any certificate or certificates for shares of Common
Stock (or Other Securities) shall be issuable upon such redemption as provided
in Section
6(b)(ii) shall be deemed to have become the holder or holders of record
thereof. The foregoing notwithstanding, such redemption shall not be
deemed effective if and as of the date that the Holder delivers written notice
of withdrawal to the Company as set forth in Section
6(b)(v) below.
(v) Withdrawal
of Redemption Notice. If the conditions set forth in Section
6(b)(iii) are not satisfied or waived on or prior to the Redemption
Closing Date or if the Company fails to perform its obligations on any
Redemption Closing Date (including delivery of all shares of Series C Preferred
Stock issuable on such date), then in addition to all remedies available to
Holder at law or in equity, Holder may, at its sole option, and at any time,
withdraw the Redemption Notice by written notice to the Company regardless of
whether such conditions have been satisfied or waived as of the withdrawal date
and, after such withdrawal, shall have no further obligations with respect to
such Redemption Notice and may submit a Redemption Notice on any future date
with respect to such Series C Preferred Stock and the Redemption Price for such
subsequent Redemption Notice shall be the lesser of (x) the Redemption Price in
the withdrawn Redemption Notice and (y) the Redemption Price in effect as of the
date of the subsequent Redemption Notice. If the Company fails to
deliver (A) shares of Common Stock as provided in Section
6(b) on or before the later of the twentieth (20th)
Business Day following and excluding (1) the Redemption Closing Date or
(2) three (3) Business Days after the Stockholder Consent Date (if and to
the extent such approval is required to issue such shares of Common Stock) or
(B) shares of Common Stock Equivalent Junior Preferred Stock on or before the
twentieth (20th)
Business Day following and excluding the Redemption Closing Date, then the
Redemption Price shall equal the lesser of Four Dollars and Forty-One Cents
($4.41) and the Redemption Price in effect immediately before such
date.
(vi) Partial
redemption. If any redemption is for only part of the shares
represented by the certificate surrendered, the Company shall deliver on the
Redemption Closing Date a new Series C Preferred Stock certificate of like
tenor, calling in the aggregate on the face or faces thereof for the number of
shares of Series C Preferred Stock in the name and to an address specified by
the Holder.
13
(c)
Maximum
Voting Stock Amount. The Company shall not effect any
conversion or redemption of the Series C Preferred Stock, and the Holders shall
not have the right to convert or redeem any portion of the Series C Preferred
Stock, into Common Stock to the extent such conversion, redemption or exercise
would result in aggregate issuances upon conversion or redemption of the Series
C Preferred Stock in excess of nine and seventy-five one hundredths percent
(9.75%)(the “Maximum
Voting Stock Amount”) of the number of shares of Common Stock that would
be outstanding after giving effect to such conversion or
redemption. Holders of a Majority of the Series C Preferred Stock
shall have the right to permanently reduce the percentage used in the
determination of the Maximum Voting Stock Amount to four and seventy-five one
hundredths percent (4.75%) at any time, effective upon delivery of written
notice of such election to the Company. In the event that the Company
cannot effect a conversion or redemption of the Series C Preferred Stock into
Common Stock pursuant to the terms of this Section 6(c), the conversion or
redemption shall be effected into an equal number of shares of Common Stock
Equivalent Junior Preferred Stock of the Company.
(d) The
Company shall at all times reserve for issuance such number of its shares of
Common Stock and Common Stock Equivalent Junior Preferred Stock as shall be
required under the Agreement. The Company will procure, at its sole
expense, the listing of the Common Stock issuable upon conversion or redemption
of the Series C Preferred Stock (including upon the conversion of Common Stock
Equivalent Junior Preferred Stock issuable upon the conversion or redemption of
the Series C Preferred Stock) and shares issuable as dividends hereunder,
subject to issuance or notice of issuance, on all stock exchanges and quotation
systems on which the Common Stock is then listed or quoted, no later than the
date on which such Series C Preferred Stock is issued to the Holder and
thereafter shall use its best efforts to prevent delisting or removal from
quotation of such shares. The Company will pay any and all
documentary stamp or similar issue or transfer taxes that may be payable in
respect of the issuance or delivery of shares of Common Stock and/or Common
Stock Equivalent Junior Preferred Stock on conversion or redemption of shares of
the Series C Preferred Stock. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer
involving the issue and delivery of shares of Common Stock and/or Common Stock
Equivalent Junior Preferred Stock in a name other than that in which the shares
of Series C Preferred Stock so converted or redeemed were registered, and no
such issue and delivery shall be made unless and until the person requesting
such issue has paid to the Company the amount of any such tax, or has
established, to the reasonable satisfaction of the Company, that such tax has
been paid.
(e) No
fractional shares or scrip representing fractional shares of Common Stock or,
other than fractional shares in increments of one-hundredth (1/100th) of
a share, of Common Stock Equivalent Junior Preferred Stock shall be issued upon
the conversion or redemption of the Series C Preferred Stock. If any
such conversion or redemption would otherwise require the issuance of a
fractional share of Common Stock or, other than fractional shares in increments
of one-hundredth (1/100th) of
a share, of Common Stock Equivalent Junior Preferred Stock, an amount equal to
such fraction multiplied by the current Daily Market Price per share of Common
Stock on the date of conversion or redemption shall be paid to the Holder in
cash by the Company. If more than one share of Series C Preferred
Stock shall be surrendered for conversion or redemption at one time by or for
the same Holder, the number of shares of Common Stock and/or Common Stock
Equivalent Junior Preferred Stock issuable upon conversion or redemption thereof
shall be computed on the basis of the aggregate number of shares of Series C
Preferred Stock so surrendered.
14
(f) Change
of Control.
(i) If
the Company on or after the date of the Agreement is party to any Change of
Control, proper provision shall be made so that, upon the basis and the terms
and in the manner provided herein, the Holder of each unconverted and unredeemed
share of Series C Preferred Stock, upon conversion or redemption thereof at any
time after the consummation of such Change of Control, shall be entitled to, and
appropriate adjustments will be made to ensure that the Holder will receive,
equivalent rights as those provided in this Certificate of Rights and
Preferences, including, without limitation, the voting, dividend, conversion,
redemption and liquidation rights contained herein with respect to the Acquiring
Person. The Company shall, prior to the consummation of any Change of
Control, provide that each Person (other than the Company) that may be required
to deliver any stock, securities, cash or property upon conversion of Series C
Preferred Stock as provided herein shall assume, by written instrument delivered
to, and reasonably satisfactory to, the Holders of a Majority of the Series C
Preferred Stock, (a) the obligations of the Company under this Certificate of
Rights and Preferences (and if the Company shall survive the consummation of
such transaction, such assumption shall be in addition to, and shall not release
the Company from, any continuing obligations of the Company under this
Certificate of Rights and Preferences) and (b) the obligation to deliver to the
Holders of Series C Preferred Stock such shares of stock, securities, cash or
property as, in accordance with the provisions of this Certificate of Rights and
Preferences, such Holders may be entitled to receive, and such Person shall have
similarly delivered to such Holders an opinion of counsel for such Person, which
counsel shall be reasonably satisfactory to Holders of a Majority of the Series
C Preferred Stock, stating that the rights of such Holders under this
Certificate of Rights and Preferences shall thereafter continue in full force
and effect with respect to such Acquiring Person in accordance with the terms
hereof.
(ii) In
the event of a Change of Control, all references to the Conversion Price or the
Redemption Price herein shall be references to the Stock Adjustment Measuring
Price. “Stock
Adjustment Measuring Price” means an amount equal to the Conversion Price
or the Redemption Price, as applicable, multiplied by a fraction,
(A) the
numerator of which is the Daily Market Price of the securities for Common Stock
is exchanged in the Change of Control (or if none, the most widely-held class of
voting securities of the Acquiring Person) determined as of the Business Day
immediately preceding and excluding the date on which the Change of Control is
consummated; and
15
(B) the
denominator of which is the Daily Market Price of the Common Stock of the
Company determined as of the Business Day immediately preceding and excluding
the date on which the Change of Control is consummated.
(iii) Prior
to the effective date of a Change of Control, the Company shall continue to have
the right to submit to each Holder Conversion Notices and each Holder shall
continue to have the right to submit to the Company Redemption Notices and
consummate closings of any such conversions or redemptions, in each party’s sole
discretion, in accordance with the terms and conditions of this Certificate of
Rights and Preferences. In addition, the Holder at its sole option
may elect to submit to the Company a special notice (a “Contingent
Notice”) to redeem the Series C Preferred Stock (including any Series C
Preferred Stock issued pursuant to a Contingent Investment Notice (as defined in
the Agreement) under the Agreement) in whole or in part in connection with such
Change of Control; in which case, notwithstanding anything to the contrary
herein:
(A) the
effectiveness of such contingent redemption shall be conditional upon the
effectiveness of the Change of Control;
(B) until
the effective date of such Change of Control, the Holder shall have the right to
deliver a notice to withdraw such Contingent Notice; and
(C) if
such Contingent Notice shall not have been withdrawn, then on the effective date
of such Change of Control, such Holder shall receive the same consideration, in
the form of cash, securities or other assets (the “Acquisition
Consideration”) per share of Common Stock and Common Stock Equivalent
Junior Preferred Stock issuable to any other holder of shares of Common Stock
and Common Stock Equivalent Junior Preferred Stock in connection with such
Change of Control based upon the number of shares of Common Stock and Common
Stock Equivalent Junior Preferred Stock which the Holder would have held if the
Holder had consummated such redemption on the Business Day immediately preceding
the date on which such Change of Control occurs.
7. Status
of Converted and Redeemed Shares; Limitations on Series C Preferred
Stock. The Company shall return to the status of unauthorized
and undesignated shares of Preferred Stock each share of Series C Preferred
Stock which shall be converted, redeemed or for any other reason acquired by the
Company, and such shares thereafter may have such characteristics and
designations as the Board may determine (subject to Section
5 hereof),
provided, however,
that no share of Series C Preferred Stock which shall be converted, redeemed or
otherwise acquired by the Company shall thereafter be reissued, sold or
transferred by the Company as Series C Preferred Stock. The Company
will not issue any further shares of Series C Preferred
Stock.
16
8. Subdivision
of Common Stock. Notwithstanding anything herein to the
contrary, if the Company at any time subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or otherwise) the
shares of Common Stock and/or Common Stock Equivalent Junior Preferred Stock
into a greater number of shares, then, after the date of record for effecting
each such subdivision, all measurements and references herein related to share
prices for such securities will be proportionately decreased and all references
to share numbers for such securities herein will be proportionately
increased.
9. Nonperformance. If
the Company, shall (i) at any time fail to deliver the shares of Common Stock
Equivalent Junior Preferred Stock required to be delivered to the Holder
pursuant hereto or (ii) at any time after the Company has obtained the approval
of the stockholders of the Company to increase the authorized number of shares
of Common Stock, fail to deliver the shares of Common Stock or required to be
delivered to the Holder pursuant hereto, for any reason other than the failure
of any condition precedent to the Company’s obligations hereunder or the failure
by the Holder to comply with its obligations hereunder, then the Company shall
(without limitation to the Holder’s other remedies at law or in equity): (i)
indemnify and hold the Holder harmless against any loss, claim or damage arising
from or as a result of such failure by the Company (regardless of whether any of
the foregoing results from a third-party claim or otherwise) and (ii) reimburse
the Holder for all of its reasonable out-of-pocket expenses (which includes fees
and expenses of its counsel) incurred by the Holder in connection herewith and
the transactions contemplated herein (regardless of whether any of the foregoing
results from a third-party claim or otherwise).
10. Assignment. The
Holder may, in its sole discretion, freely assign, pledge, hypothecate or
transfer all shares of Series C Preferred Stock.
[The rest
of this page is intentionally left blank.]
17
IN
WITNESS WHEREOF, this Certificate of Rights and Preferences has been signed on
behalf of the Company by its Chief Financial Officer and attested to by its
Corporate Secretary, all as of the date first set forth above.
| UNITED COMMUNITY BANKS, INC. | |||
| Name: | Rex S. Schuette | ||
| Title: | Chief Financial Officer | ||
| Name: | Lori McKay | ||
| Title: | Corporate Secretary | ||
[Signature
Page to Certificate of Rights and Preferences]
18
Exhibit 99.1
For Immediate
Release
April
1, 2010
| For more information: | Rex S. Schuette |
| Chief Financial Officer | |
| 706-781-2265 | |
| rex_schuette@ucbi.com |
UNITED
COMMUNITY BANKS, INC. ANNOUNCES THE
SALE
OF 25 PERCENT OF ITS NON-PERFORMING ASSETS
AND
A $65 MILLION CAPITAL FACILITY
BLAIRSVILLE,
GA, April 1, 2010 – United Community Banks, Inc. (Nasdaq: UCBI, “United”)
announced today that it has entered into a securities purchase agreement with
Fletcher International, Ltd. (“Fletcher”) and its wholly owned subsidiary,
United Community Bank, has entered into an asset purchase and sale agreement
with Fletcher International, Inc. and certain affiliates thereof (the
“Purchasers”).
United
Community Bank (“Bank”) has agreed to sell to the Purchasers $100 million of
certain non-performing commercial and residential mortgage loans and other real
estate owned properties with an aggregate sales price equal to the Bank’s
carrying value. In connection with the asset sale, which is scheduled
to close on or before April 30, 2010, the Bank will receive a $10 million
deposit from Fletcher and the Bank will loan the Purchasers $80 million, in
aggregate, to acquire the purchased assets, with the remainder paid in
cash. The Purchasers will also deposit $17.5 million upon the
purchase of the assets, to pre-fund the estimated three years of interest and
other related carry costs. As part of the asset sale, Fletcher will
receive a $30 million warrant to purchase common stock equivalent junior
preferred stock that is equal to, after exercise, 7,058,824 shares of United’s
common stock at an exercise price of $4.25 per common share assuming the
exercise price was paid in cash.
“This is
a very unique and attractive transaction for United and its shareholders,”
stated Jimmy Tallent, president and chief executive officer of
United. “It allows us to sell $100 million of our more illiquid
non-performing assets in our non-Atlanta markets while avoiding any additional
charge-offs and credit costs. This is particularly attractive due to
the lack of investors in these markets and the difficulty we have experienced in
successfully selling lots, raw land, and other properties. This
transaction helps to significantly reduce our non- performing assets by about
25%, allowing us to achieve our goal of reducing non-performing assets at the
highest economic value to our shareholders while preserving our capital
position.”
Also on
April 1, 2010, United and Fletcher entered into a securities purchase agreement
pursuant to which during the next two years, Fletcher has the right to purchase
up to $65 million of United’s Series C Convertible Preferred Stock (the
“Convertible Preferred Stock”). After shareholder approval, the
Convertible Preferred Stock will bear interest equal to LIBOR + 4 percent per
annum with a cap of 8 percent and is convertible by Fletcher into United’s
common stock at $5.25 per share. If Fletcher has not purchased all of the
Convertible Preferred Stock by May 26, 2011, it must pay United 5 percent
of the commitment amount not purchased by such date, and it must pay United an
additional 5 percent of the commitment amount not purchased by May 26,
2012.
“The
securities facility with Fletcher provides United with access to additional
capital at a cost that we believe is very attractive and, coupled with the asset
sale, will allow us to be more proactive in pursuing market opportunities,”
stated Tallent. “We believe that
United currently maintains a sound capital position and as a result of this
facility, we have enhanced our capital base.”
As part
of the securities transaction, the initial warrant issued to Fletcher in
connection with the asset sale will be increased upon Fletcher purchasing
Convertible Preferred Stock by an amount equal to $1.00 for each $1.00 of
Convertible Preferred Stock purchased in excess of $30 million with a maximum of
an additional $35 million of warrants being granted to purchase common stock
equivalent junior preferred stock. This $35 million warrant, after
exercise, is equal to 5,813,953 shares of United’s common stock at an exercise
price of $6.02 per common share assuming the exercise price was paid in cash.
The warrant has a life of nine years and may only be exercised by way of a
cashless exercise. The net shares to be delivered upon cashless exercise will be
less than what would have been issuable if the warrant had been exercisable for
cash.
“We have
been working with Fletcher on this transaction for some time,” stated
Tallent. “Creating a structure that provides an opportunity for new
capital combined with the sale of non-performing assets at book value that is
both innovative and strategic. We very much appreciate the commitment by
Fletcher and we very much welcome them as shareholders of United.”
“Community
banks are the engines that power local economies, which, in turn, provide jobs,
homes, and security to people around the country,” said Denis J. Kiely, Director
of Fletcher Asset Management, Inc. “With these concurrent investments,
we hope to free capital on United's balance sheet to allow it to
continue and expand its investment in its communities and fulfillment
of its mission.”
The
securities transactions described above are subject to United’s shareholder
approval pursuant to the Listing Requirements of the Nasdaq Global Select
Market, which will be sought at United’s Annual Meeting of shareholders to be
held on May 26, 2010. If shareholder approval is not received,
the Securities Purchase Agreement provides that in no event will Fletcher be
issued in excess of 19.99 percent of United’s outstanding common stock, that the
preferred stock dividend rate would be LIBOR + 8 percent with a cap of 12
percent, and investments by Fletcher may be delayed. Further, the
Securities Purchase Agreement contains a restriction that Fletcher may not own
more that 9.75 percent of United’s outstanding common stock at any
time.
About United Community
Banks, Inc.
Headquartered
in Blairsville, United Community Banks is the third-largest bank holding company
in Georgia. United Community Banks has assets of $8.0 billion and operates 27
community banks with 107 banking offices located throughout north Georgia, the
Atlanta region, coastal Georgia, western North Carolina and east Tennessee. The
company specializes in providing personalized community banking services to
individuals and small to mid-size businesses. United Community Banks also offers
the convenience of 24-hour access through a network of ATMs, telephone and
on-line banking. United Community Banks common stock is listed on the Nasdaq
Global Select Market under the symbol UCBI. Additional information may be found
at the company’s web site at www.ucbi.com.
About Fletcher Asset
Management, Inc.
Founded
in 1991, SEC-Registered Investment Advisor Fletcher Asset Management Inc.,
Fletcher International, Ltd., Fletcher International, Inc. and other affiliates
in the United States and Europe seek consistent investment returns from their
supportive direct investments in responsible companies and in select private
investment funds. More than 50 direct investments have strengthened promising
companies helping to secure more than 50,000 jobs and develop and deliver
important products and services. Additional information is available
at www.fletcher.com.