▇▇▇▇▇ BANCORP, INC.
3,000 Capital Securities
Floating Rate Capital Securities
(Liquidation Amount $1,000.00 per Capital Security)
PLACEMENT AGREEMENT
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June 13, 2007
FTN Financial Capital Markets
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇ Bancorp, Inc., a New Jersey corporation (the "Company"), and its
financing subsidiary, ▇▇▇▇▇ Capital Trust III, a Delaware statutory trust (the
"Trust," and hereinafter together with the Company, the "Offerors"), hereby
confirm their agreement (this "Agreement") with you as placement agents (the
"Placement Agents"), as follows:
SECTION 1. ISSUANCE AND SALE OF SECURITIES.
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1.1. INTRODUCTION. The Offerors propose to issue and sell at the
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Closing (as defined in Section 2.3.1 hereof) 3,000 of the Trust's Floating Rate
Capital Securities, with a liquidation amount of $1,000.00 per capital security
(the "Capital Securities"), to Preferred Term Securities XXVI, Ltd., a company
with limited liability established under the laws of the Cayman Islands (the
"Purchaser") pursuant to the terms of a Subscription Agreement entered into, or
to be entered into on or prior to the Closing Date (as defined in Section 2.3.1
hereof), between the Offerors and the Purchaser (the "Subscription Agreement"),
the form of which is attached hereto as Exhibit A and incorporated herein by
this reference.
1.2. OPERATIVE AGREEMENTS. The Capital Securities shall be fully and
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unconditionally guaranteed on a subordinated basis by the Company with respect
to distributions and amounts payable upon liquidation, redemption or repayment
(the "Guarantee") pursuant and subject to the Guarantee Agreement (the
"Guarantee Agreement"), to be dated as of the Closing Date and executed and
delivered by the Company and Wilmington Trust Company ("WTC"), as trustee (the
"Guarantee Trustee"), for the benefit from time to time of the holders of the
Capital Securities. The entire proceeds from the sale by
the Trust to the holders of the Capital Securities shall be combined with the
entire proceeds from the sale by the Trust to the Company of its common
securities (the "Common Securities"), and shall be used by the Trust to purchase
$3,093,000.00 in principal amount of the Floating Rate Junior Subordinated
Deferrable Interest Debentures (the "Debentures") of the Company. The Capital
Securities and the Common Securities for the Trust shall be issued pursuant to
an Amended and Restated Declaration of Trust among WTC, as Delaware trustee (the
"Delaware Trustee"), WTC, as institutional trustee (the "Institutional
Trustee"), the Administrators named therein, and the Company, to be dated as of
the Closing Date and in substantially the form heretofore delivered to the
Placement Agents (the "Trust Agreement"). The Debentures shall be issued
pursuant to an Indenture (the "Indenture"), to be dated as of the Closing Date,
between the Company and WTC, as indenture trustee (the "Indenture Trustee"). The
documents identified in this Section 1.2 and in Section 1.1 are referred to
herein as the "Operative Documents."
1.3. RIGHTS OF PURCHASER. The Capital Securities shall be offered and
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sold by the Trust directly to the Purchaser without registration of any of the
Capital Securities, the Debentures or the Guarantee under the Securities Act of
1933, as amended (the "Securities Act"), or any other applicable securities laws
in reliance upon exemptions from the registration requirements of the Securities
Act and other applicable securities laws. The Offerors agree that this Agreement
shall be incorporated by reference into the Subscription Agreement and the
Purchaser shall be entitled to each of the benefits of the Placement Agents and
the Purchaser under this Agreement and shall be entitled to enforce obligations
of the Offerors under this Agreement as fully as if the Purchaser were a party
to this Agreement. The Offerors and the Placement Agents have entered into this
Agreement to set forth their understanding as to their relationship and their
respective rights, duties and obligations.
1.4. LEGENDS. Upon original issuance thereof, and until such time as
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the same is no longer required under the applicable requirements of the
Securities Act, the Capital Securities and Debentures certificates shall each
contain a legend as required pursuant to any of the Operative Documents.
SECTION 2. PURCHASE OF CAPITAL SECURITIES.
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2.1. EXCLUSIVE RIGHTS; PURCHASE PRICE. From the date hereof until the
---------------------------------
Closing Date (which date may be extended by mutual agreement of the Offerors and
the Placement Agents), the Offerors hereby grant to the Placement Agents the
exclusive right to arrange for the sale of the Capital Securities to the
Purchaser at a purchase price of $1,000.00 per Capital Security.
2.2. SUBSCRIPTION AGREEMENT. The Offerors hereby agree to evidence
-----------------------
their acceptance of the subscription by countersigning a copy of the
Subscription Agreement and returning the same to the Placement Agents.
2.3. CLOSING AND DELIVERY OF PAYMENT.
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2.3.1. CLOSING; CLOSING DATE. The sale and purchase of the Capital
---------------------
Securities by the Offerors to the Purchaser shall take place at a closing (the
"Closing") at the offices of ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇.▇., at 10:00 a.m. (St.
Louis time) on June 21, 2007, or such other business day as may be agreed upon
by the Offerors and the Placement Agents (the "Closing Date"); provided,
however, that in no event shall the Closing Date occur later than June 29, 2007
unless consented to by the Purchaser. Payment by the Purchaser shall be payable
in the manner set forth in the Subscription Agreement and shall be made prior to
or on the Closing Date.
2.3.2. DELIVERY. The certificate for the Capital Securities shall
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be in definitive form, registered in the name of the Purchaser, or the
Purchaser's designee, and in the aggregate amount of the Capital Securities
purchased by the Purchaser.
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2.3.3. TRANSFER AGENT. The Offerors shall deposit the certificate
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representing the Capital Securities with the Institutional Trustee or other
appropriate party prior to the Closing Date.
2.4. COSTS AND EXPENSES. Whether or not this Agreement is terminated or
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the sale of the Capital Securities is consummated, the Company hereby covenants
and agrees that it shall pay or cause to be paid (directly or by reimbursement)
all reasonable costs and expenses incident to the performance of the obligations
of the Offerors under this Agreement, including all fees, expenses and
disbursements of counsel and accountants for the Offerors; all reasonable
expenses incurred by the Offerors incident to the preparation, execution and
delivery of the Trust Agreement, the Indenture, and the Guarantee; and all other
reasonable costs and expenses incident to the performance of the obligations of
the Company hereunder and under the Trust Agreement.
2.5. FAILURE TO CLOSE. If any of the conditions to the Closing
------------------
specified in this Agreement shall not have been fulfilled to the satisfaction of
the Placement Agents or if the Closing shall not have occurred on or before
10:00 a.m. (St. Louis time) on June 29, 2007, then each party hereto,
notwithstanding anything to the contrary in this Agreement, shall be relieved of
all further obligations under this Agreement without thereby waiving any rights
it may have by reason of such nonfulfillment or failure; provided, however, that
the obligations of the parties under Sections 2.4, 7.5 and 9 shall not be so
relieved and shall continue in full force and effect.
SECTION 3. CLOSING CONDITIONS. The obligations of the Purchaser and the
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Placement Agents on the Closing Date shall be subject to the accuracy, at and as
of the Closing Date, of the representations and warranties of the Offerors
contained in this Agreement, to the accuracy, at and as of the Closing Date, of
the statements of the Offerors made in any certificates pursuant to this
Agreement, to the performance by the Offerors of their respective obligations
under this Agreement, to compliance, at and as of the Closing Date, by the
Offerors with their respective agreements herein contained, and to the following
further conditions:
3.1. OPINIONS OF COUNSEL. On the Closing Date, the Placement Agents
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shall have received the following favorable opinions, each dated as of the
Closing Date: (a) from ▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇, PC, counsel for the Offerors and
addressed to the Purchaser, the Placement Agents and WTC in substantially the
form set forth on Exhibit B-1 attached hereto and incorporated herein by this
reference, (b) from ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A., special Delaware counsel to
the Offerors and addressed to the Purchaser, the Placement Agents and the
Offerors, in substantially the form set forth on Exhibit B-2 attached hereto and
incorporated herein by this reference and (c) from ▇▇▇▇▇, Rice & ▇▇▇▇▇▇▇▇, ▇.▇.,
special tax counsel to the Offerors, and addressed to the Placement Agents and
the Offerors, addressing the items set forth on Exhibit B-3 attached hereto and
incorporated herein by this reference, subject to the receipt by ▇▇▇▇▇, Rice &
▇▇▇▇▇▇▇▇, ▇.▇. of a representation letter from the Company in the form set forth
in Exhibit B-3 completed in a manner reasonably satisfactory to ▇▇▇▇▇, Rice &
▇▇▇▇▇▇▇▇, ▇.▇. (collectively, the "Offerors' Counsel Opinions"). In rendering
the Offerors' Counsel Opinions, counsel to the Offerors may rely as to factual
matters upon certificates or other documents furnished by officers, directors
and trustees of the Offerors (copies of which shall be delivered to the
Placement Agents and the Purchaser) and by government officials, and upon such
other documents as counsel to the Offerors may, in their reasonable opinion,
deem appropriate as a basis for the Offerors' Counsel Opinions. Counsel to the
Offerors may specify the jurisdictions in which they are admitted to practice
and that they are not admitted to practice in any other jurisdiction and are not
experts in the law of any other jurisdiction. If the Offerors' counsel is not
admitted to practice in the State of New York, the opinion of Offerors' counsel
may assume, for purposes of the opinion, that the laws of the State of New York
are substantively identical, in all respects material to the opinion, to the
internal laws of the state in which such counsel is admitted to practice. Such
Offerors' Counsel Opinions shall not state that they are to be governed or
qualified by, or that they are otherwise subject to, any treatise, written
policy or other document relating
3
to legal opinions, including, without limitation, the Legal Opinion Accord of
the ABA Section of Business Law (1991).
3.2. OFFICER'S CERTIFICATE. At the Closing Date, the Purchaser and the
---------------------
Placement Agents shall have received certificates from an authorized officer of
the Company, dated as of the Closing Date, stating that (i) the representations
and warranties of the Offerors set forth in Section 5 hereof are true and
correct as of the Closing Date and that the Offerors have complied with all
agreements and satisfied all conditions on their part to be performed or
satisfied at or prior to the Closing Date, (ii) since the date of this Agreement
the Offerors have not incurred any liability or obligation, direct or
contingent, or entered into any material transactions, other than in the
ordinary course of business, which is material to the Offerors, and (iii)
covering such other matters as the Placement Agents may reasonably request.
3.3. ADMINISTRATOR'S CERTIFICATE. At the Closing Date, the Purchaser
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and the Placement Agents shall have received a certificate of one or more
Administrators of the Trust, dated as of the Closing Date, stating that the
representations and warranties of the Trust set forth in Section 5 are true and
correct as of the Closing Date and that the Trust has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date.
3.4. PURCHASE PERMITTED BY APPLICABLE LAWS; LEGAL INVESTMENT. The
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purchase of and payment for the Capital Securities as described in this
Agreement and pursuant to the Subscription Agreement shall (a) not be prohibited
by any applicable law or governmental regulation, (b) not subject the Purchaser
or the Placement Agents to any penalty or, in the reasonable judgment of the
Purchaser and the Placement Agents, other onerous conditions under or pursuant
to any applicable law or governmental regulation, and (c) be permitted by the
laws and regulations of the jurisdictions to which the Purchaser and the
Placement Agents are subject.
3.5. CONSENTS AND PERMITS. The Company and the Trust shall have
----------------------
received all consents, permits and other authorizations, and made all such
filings and declarations, as may be required from any person or entity pursuant
to any law, statute, regulation or rule (federal, state, local and foreign), or
pursuant to any agreement, order or decree to which the Company or the Trust is
a party or to which either is subject, in connection with the transactions
contemplated by this Agreement.
3.6. SALE OF PURCHASER SECURITIES. The Purchaser shall have sold
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securities issued by the Purchaser in an amount such that the net proceeds of
such sale shall be (i) available on the Closing Date and (ii) in an amount
sufficient to purchase the Capital Securities and all other capital or similar
securities contemplated in agreements similar to this Agreement and the
Subscription Agreement.
3.7. INFORMATION. Prior to or on the Closing Date, the Offerors shall
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have furnished to the Placement Agents such further information, certificates,
opinions and documents addressed to the Purchaser and the Placement Agents,
which the Placement Agents may reasonably request, including, without
limitation, a complete set of the Operative Documents or any other documents or
certificates required by this Section 3; and all proceedings taken by the
Offerors in connection with the issuance, offer and sale of the Capital
Securities as herein contemplated shall be reasonably satisfactory in form and
substance to the Placement Agents.
If any condition specified in this Section 3 shall not have been
fulfilled when and as required in this Agreement, or if any of the opinions or
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Placement Agents, this
Agreement may be terminated by the Placement Agents by notice to the Offerors at
any time at or prior to the Closing Date. Notice of such termination shall be
given to the Offerors in writing or by telephone or facsimile confirmed in
writing.
4
SECTION 4. CONDITIONS TO THE OFFERORS' OBLIGATIONS. The obligations of the
-----------------------------------------
Offerors to sell the Capital Securities to the Purchaser and consummate the
transactions contemplated by this Agreement shall be subject to the accuracy, at
and as of the Closing Date, of the representations and warranties of the
Placement Agents contained in this Agreement and to the following further
conditions:
4.1. EXECUTED AGREEMENT. The Offerors shall have received from the
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Placement Agents an executed copy of this Agreement.
4.2. FULFILLMENT OF OTHER OBLIGATIONS. The Placement Agents shall have
--------------------------------
fulfilled all of their other obligations and duties required to be fulfilled
under this Agreement prior to or at the Closing.
Section 5. REPRESENTATIONS AND WARRANTIES OF THE OFFERORS. Except as set forth
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on the Disclosure Schedule (as defined in Section 11.1) attached hereto, if any,
the Offerors jointly and severally represent and warrant to the Placement Agents
and the Purchaser as of the date hereof and as of the Closing Date as follows:
5.1. SECURITIES LAW MATTERS.
----------------------
(a) Neither the Company nor the Trust, nor any of their "Affiliates"
(as defined in Rule 501(b) of Regulation D under the Securities Act ("Regulation
D")), nor any person acting on any of their behalf has, directly or indirectly,
made offers or sales of any security, or solicited offers to buy any security,
under circumstances that would require the registration under the Securities Act
of any of the Capital Securities, the Guarantee or the Debentures (collectively,
the "Securities") or any other securities to be issued, or which may be issued,
by the Purchaser.
(b) Neither the Company nor the Trust, nor any of their Affiliates, nor
any person acting on its or their behalf has (i) other than the Placement
Agents, offered for sale or solicited offers to purchase the Securities, (ii)
engaged or will engage, in any "directed selling efforts" within the meaning of
Regulation S under the Securities Act ("Regulation S") with respect to the
Securities, or (iii) engaged in any form of offering, general solicitation or
general advertising (within the meaning of Regulation D) in connection with any
offer or sale of any of the Securities.
(c) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(d) Neither the Company nor the Trust is or, after giving effect to the
offering and sale of the Capital Securities and the consummation of the
transactions described in this Agreement, will be an "investment company" or an
entity "controlled" by an "investment company," in each case within the meaning
of Section 3(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), without regard to Section 3(c) of the Investment
Company Act.
(e) Neither the Company nor the Trust has paid or agreed to pay to any
person or entity (other than the Placement Agents) any compensation for
soliciting another to purchase any of the Securities.
5.2 ORGANIZATION, STANDING AND QUALIFICATION OF THE TRUST. The Trust
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has been duly created and is validly existing in good standing as a statutory
trust under the Delaware Statutory Trust Act (the "Statutory Trust Act") with
the power and authority to own property and to conduct the business it transacts
and proposes to transact and to enter into and perform its obligations under the
Operative Documents. The Trust is duly qualified to transact business as a
foreign entity and is in good standing in each jurisdiction in which such
qualification is necessary, except where the failure to so qualify or be in good
standing would not have a material adverse effect on the Trust. The Trust is not
a party to or
5
otherwise bound by any agreement other than the Operative Documents. The Trust
is and will, under current law, be classified for federal income tax purposes as
a grantor trust and not as an association taxable as a corporation.
5.3. TRUST AGREEMENT. The Trust Agreement has been duly authorized by
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the Company and, on the Closing Date, will have been duly executed and delivered
by the Company and the Administrators of the Trust, and, assuming due
authorization, execution and delivery by the Delaware Trustee and the
Institutional Trustee, will be a valid and binding obligation of the Company and
such Administrators, enforceable against them in accordance with its terms,
subject to (a) applicable bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation and other laws relating to or affecting creditors'
rights generally, and (b) general principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law) ("Bankruptcy and
Equity"). Each of the Administrators of the Trust is an employee or a director
of the Company or of a financial institution subsidiary of the Company and has
been duly authorized by the Company to execute and deliver the Trust Agreement.
5.4 GUARANTEE AGREEMENT AND THE INDENTURE. Each of the Guarantee and
---------------------------------------
the Indenture has been duly authorized by the Company and, on the Closing Date
will have been duly executed and delivered by the Company, and, assuming due
authorization, execution and delivery by the Guarantee Trustee, in the case of
the Guarantee, and by the Indenture Trustee, in the case of the Indenture, will
be a valid and binding obligation of the Company enforceable against it in
accordance with its terms, subject to Bankruptcy and Equity.
5.5. CAPITAL SECURITIES AND COMMON SECURITIES. The Capital Securities
-----------------------------------------
and the Common Securities have been duly authorized by the Trust Agreement and,
when issued and delivered against payment therefor on the Closing Date to the
Purchaser, in the case of the Capital Securities, and to the Company, in the
case of the Common Securities, will be validly issued and represent undivided
beneficial interests in the assets of the Trust. None of the Capital Securities
or the Common Securities is subject to preemptive or other similar rights. On
the Closing Date, all of the issued and outstanding Common Securities will be
directly owned by the Company free and clear of any pledge, security interest,
claim, lien or other encumbrance.
5.6. DEBENTURES. The Debentures have been duly authorized by the
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Company and, at the Closing Date, will have been duly executed and delivered to
the Indenture Trustee for authentication in accordance with the Indenture, and,
when authenticated in the manner provided for in the Indenture and delivered
against payment therefor by the Trust, will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture enforceable
against the Company in accordance with their terms, subject to Bankruptcy and
Equity.
5.7. POWER AND AUTHORITY. This Agreement has been duly authorized,
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executed and delivered by the Company and the Trust and constitutes the valid
and binding obligation of the Company and the Trust, enforceable against the
Company and the Trust in accordance with its terms, subject to Bankruptcy and
Equity.
5.8. NO DEFAULTS. The Trust is not in violation of the Trust Agreement
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or, to the knowledge of the Administrators, any provision of the Statutory Trust
Act. The execution, delivery and performance by the Company or the Trust of this
Agreement or the Operative Documents to which it is a party, and the
consummation of the transactions contemplated herein or therein and the use of
the proceeds therefrom, will not conflict with or constitute a breach of, or a
default under, or result in the creation or imposition of any lien, charge or
other encumbrance upon any property or assets of the Trust, the Company or any
of the Company's Subsidiaries (as defined in Section 5.11 hereof) pursuant to
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Trust, the Company or any of its Subsidiaries is a party
or by which it or any of them may be bound, or to which any of the property or
6
assets of any of them is subject, except for a conflict, breach, default, lien,
charge or encumbrance which could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect nor will such action result in any
violation of the Trust Agreement or the Statutory Trust Act or require the
consent, approval, authorization or order of any court or governmental agency or
body. As used herein, the term "Material Adverse Effect" means any one or more
effects that individually or in the aggregate are material and adverse to the
Offerors' ability to consummate the transactions contemplated herein or in the
Operative Documents or any one or more effects that individually or in the
aggregate are material and adverse to the condition (financial or otherwise),
earnings, affairs, business, prospects or results of operations of the Company
and its Subsidiaries taken as whole, whether or not occurring in the ordinary
course of business.
5.9. ORGANIZATION, STANDING AND QUALIFICATION OF THE COMPANY. The
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Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of New Jersey, with all requisite corporate power
and authority to own its properties and conduct the business it transacts and
proposes to transact, and is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the nature of its
activities requires such qualification, except where the failure of the Company
to be so qualified would not, singly or in the aggregate, have a Material
Adverse Effect.
5.10. SUBSIDIARIES OF THE COMPANY. Each of the Company's significant
---------------------------
subsidiaries (as defined in Section 1-02(w) of Regulation S-X to the Securities
Act (the "Significant Subsidiaries")) is listed in Exhibit C attached hereto and
incorporated herein by this reference. Each Significant Subsidiary has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction in which it is chartered or organized, with all requisite power and
authority to own its properties and conduct the business it transacts and
proposes to transact, and is duly qualified to transact business and is in good
standing as a foreign entity in each jurisdiction where the nature of its
activities requires such qualification, except where the failure of any such
Significant Subsidiary to be so qualified would not, singly or in the aggregate,
have a Material Adverse Effect. All of the issued and outstanding shares of
capital stock of the Significant Subsidiaries (a) have been duly authorized and
are validly issued, (b) are fully paid and nonassessable, and (c) are wholly
owned, directly or indirectly, by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, restriction upon voting or
transfer, preemptive rights, claim, equity or other defect.
5.11. PERMITS. The Company and each of its subsidiaries (as defined in
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Section 1-02(x) of Regulation S-X to the Securities Act) (the "Subsidiaries")
have all requisite power and authority, and all necessary authorizations,
approvals, orders, licenses, certificates and permits of and from regulatory or
governmental officials, bodies and tribunals, to own or lease their respective
properties and to conduct their respective businesses as now being conducted,
except such authorizations, approvals, orders, licenses, certificates and
permits which, if not obtained and maintained, would not, singly or in the
aggregate, have a Material Adverse Effect, and neither the Company nor any of
its Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such authorizations, approvals, orders,
licenses, certificates or permits which, singly or in the aggregate, if the
failure to be so licensed or approved is the subject of an unfavorable decision,
ruling or finding, would, singly or in the aggregate, have a Material Adverse
Effect; and the Company and its Subsidiaries are in compliance with all
applicable laws, rules, regulations and orders and consents, the violation of
which would, singly or in the aggregate, have a Material Adverse Effect.
5.12. CONFLICTS, AUTHORIZATIONS AND APPROVALS. Neither the Company nor
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any of its Subsidiaries is in violation of its respective articles or
certificate of incorporation, charter or by-laws or similar organizational
documents or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note,
7
lease or other agreement or instrument to which either the Company or any of its
Subsidiaries is a party, or by which it or any of them may be bound or to which
any of the property or assets of the Company or any of its Subsidiaries is
subject, the effect of which violation or default in performance or observance
would have, singly or in the aggregate, a Material Adverse Effect.
5.13. HOLDING COMPANY REGISTRATION AND DEPOSIT INSURANCE. The Company
---------------------------------------------------
is duly registered (i) as a bank holding company or financial holding company
under the Bank Holding Company Act of 1956, as amended, and the regulations of
the Board of Governors of the Federal Reserve System (the "Federal Reserve") or
(ii) as a savings and loan holding company under the Home Owners' Loan Act of
1933, as amended, and the regulations of the Office of Thrift Supervision (the
"OTS"), and the deposit accounts of the Company's Subsidiary depository
institutions are insured by the Federal Deposit Insurance Corporation ("FDIC")
to the fullest extent permitted by law and the rules and regulations of the
FDIC, and no proceedings for the termination of such insurance are pending or
threatened.
5.14. FINANCIAL STATEMENTS.
--------------------
(a) The consolidated balance sheets of the Company and all of its
Subsidiaries as of December 31, 2006 and December 31, 2005 and related
consolidated income statements and statements of changes in shareholders' equity
for the three years ended December 31, 2006 together with the notes thereto, and
the consolidated balance sheets of the Company and all of its Subsidiaries as of
March 31, 2007 and the related consolidated income statements and statements of
changes in shareholders' equity for the three months then ended, copies of each
of which have been provided to the Placement Agents (together, the "Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be disclosed
therein) and fairly present in all material respects the financial position and
the results of operations and changes in shareholders' equity of the Company and
all of its Subsidiaries as of the dates and for the periods indicated (subject,
in the case of interim financial statements, to normal recurring year-end
adjustments, none of which shall be material). The books and records of the
Company and all of its Subsidiaries have been, and are being, maintained in all
material respects in accordance with generally accepted accounting principles
and any other applicable legal and accounting requirements and reflect only
actual transactions.
(b) The information in the Company's most recently filed (i) FR Y-9C
filed with the Federal Reserve if the Company is a bank holding company, (ii) FR
Y-9SP filed with the Federal Reserve if the Company is a small bank holding
company or (iii) H-(b)11 filed with the OTS if the Company is a savings and loan
holding company (the "Regulatory Report"), previously provided to the Placement
Agents fairly presents in all material respects the financial position of the
Company and, where applicable, all of its Subsidiaries as of the end of the
period represented by such Regulatory Report.
(c) Since the respective dates of the Financial Statements and the
Regulatory Report, there has been no material adverse change or development with
respect to the financial condition or earnings of the Company and all of its
Subsidiaries, taken as a whole.
(d) The accountants of the Company who certified the Financial
Statements are independent public accountants of the Company and its
Subsidiaries within the meaning of the Securities Act and the rules and
regulations thereunder.
5.15. REGULATORY ENFORCEMENT MATTERS. Neither the Company nor any of
-------------------------------
its Subsidiaries is subject or is party to, or has received any notice or advice
that any of them may become subject or party to, any investigation with respect
to, any cease-and-desist order, agreement, consent agreement, memorandum of
understanding or other regulatory enforcement action, proceeding or order with
or by, or is a party to any commitment letter or similar undertaking to, or is
subject to any directive by, or has been since January 1, 2004, a recipient of
any supervisory letter from, or since January 1, 2004, has adopted
8
any board resolutions at the request of, any Regulatory Agency (as defined
below) that currently restricts in any material respect the conduct of their
business or that in any material manner relates to their capital adequacy, their
credit policies, their ability or authority to pay dividends or make
distributions to their shareholders or make payments of principal or interest on
their debt obligations, their management or their business (each, a "Regulatory
Agreement"), nor has the Company or any of its Subsidiaries been advised since
January 1, 2004, by any Regulatory Agency that it is considering issuing or
requesting any such Regulatory Agreement. There is no material unresolved
violation, criticism or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of the Company or any of its
Subsidiaries. As used herein, the term "Regulatory Agency" means any federal or
state agency charged with the supervision or regulation of depository
institutions, bank, financial or savings and loan holding companies, or engaged
in the insurance of depository institution deposits, or any court,
administrative agency or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with respect to the
Company or any of its Subsidiaries. Neither the Company nor any of the
Subsidiaries is currently unable to pay dividends or make distributions to its
shareholders with respect to any class of its equity securities, or prohibited
from paying principal or interest on its debt obligations, due to a restriction
or limitation, whether by statute, contract or otherwise, and, in the reasonable
judgment of the Company's management, neither the Company nor any of the
Subsidiaries will be unable in the foreseeable future to pay dividends or make
distributions with respect to any class of equity securities, or be prohibited
from paying principal or interest on its debt obligations, due to a restriction
or limitation, whether by statute, contract or otherwise.
5.16. NO MATERIAL CHANGE. Since December 31, 2006, there has been no
-------------------
material adverse change or development with respect to the condition (financial
or otherwise), earnings, affairs, business, prospects or results of operations
of the Company or its Subsidiaries on a consolidated basis, whether or not
arising in the ordinary course of business.
5.17. NO UNDISCLOSED LIABILITIES. Neither the Company nor any of its
----------------------------
Subsidiaries has any material liability, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due,
including any liability for taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future
action, suit, proceeding, hearing, charge, complaint, claim or demand against
the Company or its Subsidiaries giving rise to any such liability), except (i)
for liabilities set forth in the Financial Statements and (ii) normal
fluctuation in the amount of the liabilities referred to in clause (i) above
occurring in the ordinary course of business of the Company and all of its
Subsidiaries since the date of the most recent balance sheet included in the
Financial Statements.
5.18. Litigation. No charge, investigation, action, suit or proceeding
----------
is pending or, to the knowledge of the Offerors, threatened against or affecting
the Company or its Subsidiaries or any of their respective properties before or
by any courts or any regulatory, administrative or governmental official,
commission, board, agency or other authority or body, or any arbitrator, wherein
an unfavorable decision, ruling or finding could have, singly or in the
aggregate, a Material Adverse Effect.
5.19. DEFERRAL OF INTEREST PAYMENTS ON DEBENTURES. The Company has no
-------------------------------------------
present intention to exercise its option to defer payments of interest on the
Debentures as provided in the Indenture. The Company believes that the
likelihood that it would exercise its right to defer payments of interest on the
Debentures as provided in the Indenture at any time during which the Debentures
are outstanding is remote because of the restrictions that would be imposed on
the Company's ability to declare or pay dividends or distributions on, or to
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Company's capital stock and on the Company's ability to make any payments of
principal, interest or premium on, or repay, repurchase or redeem, any of its
debt securities that rank pari passu in all respects with, or junior in interest
to, the Debentures.
9
Section 6. REPRESENTATIONS AND WARRANTIES OF THE PLACEMENT AGENTS. Each
------------------------------------------------------------
Placement Agent represents and warrants to the Offerors as to itself (but not as
to the other Placement Agent) as follows:
6.1. ORGANIZATION, STANDING AND QUALIFICATION.
----------------------------------------
(a) FTN Financial Capital Markets is a division of First Tennessee Bank
National Association, a national banking association duly organized, validly
existing and in good standing under the laws of the United States, with full
power and authority to own, lease and operate its properties and conduct its
business as currently being conducted. FTN Financial Capital Markets is duly
qualified to transact business as a foreign corporation and is in good standing
in each other jurisdiction in which it owns or leases property or conducts its
business so as to require such qualification and in which the failure to so
qualify would, individually or in the aggregate, have a material adverse effect
on the condition (financial or otherwise), earnings, business, prospects or
results of operations of FTN Financial Capital Markets.
(b) ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
with full power and authority to own, lease and operate its properties and
conduct its business as currently being conducted. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
is duly qualified to transact business as a foreign corporation and is in good
standing in each other jurisdiction in which it owns or leases property or
conducts its business so as to require such qualification and in which the
failure to so qualify would, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), earnings, business,
prospects or results of operations of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
6.2. POWER AND AUTHORITY. The Placement Agent has all requisite power
-------------------
and authority to enter into this Agreement, and this Agreement has been duly and
validly authorized, executed and delivered by the Placement Agent and
constitutes the legal, valid and binding agreement of the Placement Agent,
enforceable against the Placement Agent in accordance with its terms, subject to
Bankruptcy and Equity and except as any indemnification or contribution
provisions thereof may be limited under applicable securities laws.
6.3. GENERAL SOLICITATION. In the case of the offer and sale of the
---------------------
Capital Securities, no form of general solicitation or general advertising was
used by the Placement Agent or its representatives including, but not limited
to, advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. Neither the Placement Agent nor its
representatives have engaged or will engage in any "directed selling efforts"
within the meaning of Regulation S with respect to the Capital Securities.
6.4. PURCHASER. The Placement Agent has made such reasonable inquiry as
---------
is necessary to determine that the Purchaser is acquiring the Capital Securities
for its own account, that the Purchaser does not intend to distribute the
Capital Securities in contravention of the Securities Act or any other
applicable securities laws, and that the Purchaser is not a "U.S. person" as
that term is defined under Rule 902 of the Securities Act.
6.5. QUALIFIED PURCHASERS. The Placement Agent has not offered or sold
--------------------
and will not arrange for the offer or sale of the Capital Securities except (i)
in an offshore transaction complying with Rule 903 of Regulation S, or (ii) to
those the Placement Agent reasonably believes are "accredited investors" (as
defined in Rule 501 of Regulation D), or (iii) in any other manner that does not
require registration of the Capital Securities under the Securities Act. In
connection with each such sale, the Placement Agent has taken or will take
reasonable steps to ensure that the Purchaser is aware that (a) such sale is
being made in
10
reliance on an exemption under the Securities Act and (b) future transfers of
the Capital Securities will not be made except in compliance with applicable
securities laws.
6.6. OFFERING CIRCULARS. Neither the Placement Agent nor its
--------------------
representatives will include any non-public information about the Company, the
Trust or any of their Affiliates in any registration statement, prospectus,
offering circular or private placement memorandum used in connection with any
purchase of Capital Securities without the prior written consent of the Trust
and the Company.
SECTION 7. COVENANTS OF THE OFFERORS. The Offerors covenant and agree with the
-------------------------
Placement Agents and the Purchaser as follows:
7.1. COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. During the period
----------------------------------------------
from the date of this Agreement to the Closing Date, the Offerors shall use
their best efforts and take all action necessary or appropriate to cause their
representations and warranties contained in Section 5 hereof to be true as of
the Closing Date, after giving effect to the transactions contemplated by this
Agreement, as if made on and as of the Closing Date.
7.2. SALE AND REGISTRATION OF SECURITIES. The Offerors and their
--------------------------------------
Affiliates shall not nor shall any of them permit any person acting on their
behalf (other than the Placement Agents), to directly or indirectly (i) sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) that would or could be integrated
with the sale of the Capital Securities in a manner that would require the
registration under the Securities Act of the Securities or (ii) make offers or
sales of any such Security, or solicit offers to buy any such Security, under
circumstances that would require the registration of any of such Securities
under the Securities Act.
7.3. USE OF PROCEEDS. The Trust shall use the proceeds from the sale of
--------------
the Capital Securities and the Common Securities to purchase the Debentures from
the Company.
7.4. INVESTMENT COMPANY. The Offerors shall not engage, or permit any
-------------------
Subsidiary to engage, in any activity which would cause it or any Subsidiary to
be an "investment company" under the provisions of the Investment Company Act.
7.5. REIMBURSEMENT OF EXPENSES. If the sale of the Capital Securities
-------------------------
provided for herein is not consummated (i) because any condition set forth in
Section 3 hereof is not satisfied, or (ii) because of any refusal, inability or
failure on the part of the Company or the Trust to perform any agreement herein
or comply with any provision hereof other than by reason of a breach by the
Placement Agents, the Company shall reimburse the Placement Agents upon demand
for all of their pro rata share of out-of-pocket expenses (including reasonable
fees and disbursements of counsel) in an amount not to exceed $50,000.00 that
shall have been incurred by them in connection with the proposed purchase and
sale of the Capital Securities. Notwithstanding the foregoing, the Company shall
have no obligation to reimburse the Placement Agents for their out-of-pocket
expenses if the sale of the Capital Securities fails to occur because the
condition set forth in Section 3.6 is not satisfied or because either of the
Placement Agents fails to fulfill a condition set forth in Section 4.
7.6. DIRECTED SELLING EFFORTS, SOLICITATION AND ADVERTISING. In
------------------------------------------------------------
connection with any offer or sale of any of the Securities, the Offerors shall
not, nor shall either of them permit any of their Affiliates or any person
acting on their behalf, other than the Placement Agents, to, (i) engage in any
"directed selling efforts" within the meaning of Regulation S, or (ii) engage in
any form of general solicitation or general advertising (as defined in
Regulation D).
7.7. COMPLIANCE WITH RULE 144A(d)(4) UNDER THE SECURITIES ACT. So long
--------------------------------------------------------
as any of the Securities are outstanding and are "restricted securities" within
the meaning of Rule 144(a)(3) under the
11
Securities Act, the Offerors will, during any period in which they are not
subject to and in compliance with Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or the Offerors are not exempt
from such reporting requirements pursuant to and in compliance with Rule
12g3-2(b) under the Exchange Act, provide to each holder of such restricted
securities and to each prospective purchaser (as designated by such holder) of
such restricted securities, upon the request of such holder or prospective
purchaser in connection with any proposed transfer, any information required to
be provided by Rule 144A(d)(4) under the Securities Act, if applicable. This
covenant is intended to be for the benefit of the holders, and the prospective
purchasers designated by such holders, from time to time of such restricted
securities. The information provided by the Offerors pursuant to this Section
7.7 will not, at the date thereof, contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Section 8. COVENANTS OF THE PLACEMENT AGENTS. The Placement Agents covenant and
---------------------------------
agree with the Offerors that, during the period from the date of this Agreement
to the Closing Date, the Placement Agents shall use their best efforts and take
all action necessary or appropriate to cause their representations and
warranties contained in Section 6 to be true as of the Closing Date, after
giving effect to the transactions contemplated by this Agreement, as if made on
and as of the Closing Date. The Placement Agents further covenant and agree not
to engage in hedging transactions with respect to the Capital Securities unless
such transactions are conducted in compliance with the Securities Act.
Section 9. INDEMNIFICATION.
---------------
9.1. INDEMNIFICATION OBLIGATION. The Offerors shall jointly and
----------------------------
severally indemnify and hold harmless the Placement Agents and the Purchaser and
each of their respective agents, employees, officers and directors and each
person that controls either of the Placement Agents or the Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and agents, employees, officers and directors or any such controlling person of
either of the Placement Agents or the Purchaser (each such person or entity, an
"Indemnified Party") from and against any and all losses, claims, damages,
judgments, liabilities or expenses, joint or several, to which such Indemnified
Party may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Offerors), insofar as such losses, claims, damages,
judgments, liabilities or expenses (or actions in respect thereof) arise out of,
or are based upon, or relate to, in whole or in part, (a) any untrue statement
or alleged untrue statement of a material fact contained in any information
(whether written or oral) or documents executed in favor of, furnished or made
available to the Placement Agents or the Purchaser by the Offerors, or (b) any
omission or alleged omission to state in any information (whether written or
oral) or documents executed in favor of, furnished or made available to the
Placement Agents or the Purchaser by the Offerors a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
shall reimburse each Indemnified Party for any legal and other expenses as such
expenses are reasonably incurred by such Indemnified Party in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, judgments, liability, expense or action described in this Section 9.1.
In addition to their other obligations under this Section 9, the Offerors hereby
agree that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of, or based upon, or
related to the matters described above in this Section 9.1, they shall reimburse
each Indemnified Party on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each Indemnified Party
shall promptly return
12
such amounts to the Offerors together with interest, determined on the basis of
the prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by First Tennessee Bank National
Association (the "Prime Rate"). Any such interim reimbursement payments which
are not made to an Indemnified Party within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request.
9.2. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt by
--------------------------------------
an Indemnified Party under this Section 9 of notice of the commencement of any
action, such Indemnified Party shall, if a claim in respect thereof is to be
made against the Offerors under this Section 9, notify the Offerors in writing
of the commencement thereof; but, subject to Section 9.4, the omission to so
notify the Offerors shall not relieve them from any liability pursuant to
Section 9.1 which the Offerors may have to any Indemnified Party unless and to
the extent that the Offerors did not otherwise learn of such action and such
failure by the Indemnified Party results in the forfeiture by the Offerors of
substantial rights and defenses. In case any such action is brought against any
Indemnified Party and such Indemnified Party seeks or intends to seek indemnity
from the Offerors, the Offerors shall be entitled to participate in, and, to the
extent that they may wish, to assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Party; provided, however, if the defendants in
any such action include both the Indemnified Party and the Offerors and the
Indemnified Party shall have reasonably concluded that there may be a conflict
between the positions of the Offerors and the Indemnified Party in conducting
the defense of any such action or that there may be legal defenses available to
it and/or other Indemnified Parties which are different from or additional to
those available to the Offerors, the Indemnified Party shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party.
Upon receipt of notice from the Offerors to such Indemnified Party of their
election to so assume the defense of such action and approval by the Indemnified
Party of counsel, the Offerors shall not be liable to such Indemnified Party
under this Section 9 for any legal or other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso in the preceding
sentence (it being understood, however, that the Offerors shall not be liable
for the expenses of more than one separate counsel representing the Indemnified
Parties who are parties to such action), or (ii) the Offerors shall not have
employed counsel reasonably satisfactory to the Indemnified Party to represent
the Indemnified Party within a reasonable time after notice of commencement of
the action, in each of which cases the fees and expenses of counsel of such
Indemnified Party shall be at the expense of the Offerors.
9.3. CONTRIBUTION. If the indemnification provided for in this Section
------------
9 is required by its terms, but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an Indemnified Party under Section 9.1
in respect of any losses, claims, damages, liabilities or expenses referred to
herein or therein, then the Offerors shall contribute to the amount paid or
payable by such Indemnified Party as a result of any losses, claims, damages,
judgments, liabilities or expenses referred to herein (i) in such proportion as
is appropriate to reflect the relative benefits received by the Offerors, on the
one hand, and the Indemnified Party, on the other hand, from the offering of
such Capital Securities, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Offerors, on the one hand, and the Placement Agents,
on the other hand, in connection with the statements or omissions or
inaccuracies in the representations and warranties herein or other breaches
which resulted in such losses, claims, damages, judgments, liabilities or
expenses, as well as any other relevant equitable considerations. The respective
relative benefits received by the Offerors, on the one hand, and the Placement
Agents, on the other hand, shall be deemed to be in the same proportion, in the
case of the Offerors, as the total price paid to the Offerors for the Capital
Securities sold by the Offerors to the Purchaser (net of the compensation paid
to the Placement Agents hereunder, but before deducting expenses), and in the
case of the Placement Agents, as the compensation received by them, bears to the
13
total of such amounts paid to the Offerors and received by the Placement Agents
as compensation. The relative fault of the Offerors and the Placement Agents
shall be determined by reference to, among other things, whether the untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission of a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Offerors
or the Placement Agents and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The provisions set forth in Section 9.2 with respect to notice of commencement
of any action shall apply if a claim for contribution is made under this Section
9.3; provided, however, that no additional notice shall be required with respect
to any action for which notice has been given under Section 9.2 for purposes of
indemnification. The Offerors and the Placement Agents agree that it would not
be just and equitable if contribution pursuant to this Section 9.3 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in this Section
9.3. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages, judgments, liabilities or expenses referred to in this
Section 9.3 shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim. In no
event shall the liability of the Placement Agents hereunder be greater in amount
than the dollar amount of the compensation (net of payment of all expenses)
received by the Placement Agents upon the sale of the Capital Securities giving
rise to such obligation. No person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation.
9.4. ADDITIONAL REMEDIES. The indemnity and contribution agreements
--------------------
contained in this Section 9 are in addition to any liability that the Offerors
may otherwise have to any Indemnified Party.
9.5. ADDITIONAL INDEMNIFICATION. The Company shall indemnify and hold
---------------------------
harmless the Trust against all loss, liability, claim, damage and expense
whatsoever, as due from the Trust under Sections 9.1 through 9.4 hereof.
SECTION 10. RIGHTS AND RESPONSIBILITIES OF PLACEMENT AGENTS.
-----------------------------------------------
10.1. RELIANCE. In performing their duties under this Agreement, the
--------
Placement Agents shall be entitled to rely upon any notice, signature or writing
which they shall in good faith believe to be genuine and to be signed or
presented by a proper party or parties. The Placement Agents may rely upon any
opinions or certificates or other documents delivered by the Offerors or their
counsel or designees to either the Placement Agents or the Purchaser.
10.2. RIGHTS OF PLACEMENT AGENTS. In connection with the performance of
--------------------------
their duties under this Agreement, the Placement Agents shall not be liable for
any error of judgment or any action taken or omitted to be taken unless the
Placement Agents were grossly negligent or engaged in willful misconduct in
connection with such performance or non-performance. No provision of this
Agreement shall require the Placement Agents to expend or risk their own funds
or otherwise incur any financial liability on behalf of the Purchaser in
connection with the performance of any of their duties hereunder. The Placement
Agents shall be under no obligation to exercise any of the rights or powers
vested in them by this Agreement.
SECTION 11. MISCELLANEOUS.
-------------
11.1. DISCLOSURE SCHEDULE. The term "Disclosure Schedule," as used
--------------------
herein, means the schedule, if any, attached to this Agreement that sets forth
items the disclosure of which is necessary or appropriate as an exception to one
or more representations or warranties contained in Section 5 hereof; provided,
that any item set forth in the Disclosure Schedule as an exception to a
representation or
14
warranty shall be deemed an admission by the Offerors that such item represents
an exception, fact, event or circumstance that is reasonably likely to result in
a Material Adverse Effect. The Disclosure Schedule shall be arranged in
paragraphs corresponding to the section numbers contained in Section 5. Nothing
in the Disclosure Schedule shall be deemed adequate to disclose an exception to
a representation or warranty made herein unless the Disclosure Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of the
immediately preceding sentence, the mere listing (or inclusion of a copy) of a
document or other item in the Disclosure Schedule shall not be deemed adequate
to disclose an exception to a representation or warranty made herein unless the
representation or warranty has to do with the existence of the document or other
item itself. Information provided by the Company in response to any due
diligence questionnaire shall not be deemed part of the Disclosure Schedule and
shall not be deemed to be an exception to one or more representations or
warranties contained in Section 5 hereof unless such information is specifically
included on the Disclosure Schedule in accordance with the provisions of this
Section 11.1.
11.2. LEGAL EXPENSES. At Closing, the Placement Agents shall provide a
--------------
credit for the Offerors' transaction-related legal expenses in the amount of
$10,000.00.
11.3. NON-DISCLOSURE. Except as required by applicable law, including
--------------
without limitation securities laws and regulations promulgated thereunder, (i)
the Offerors shall not, and will cause their advisors and representatives not
to, issue any press release or other public statement regarding the transactions
contemplated by this Agreement or the Operative Documents prior to or on the
Closing Date and (ii) following the Closing Date, the Offerors shall not include
in any press release, other public statement or other communication regarding
the transactions contemplated by this Agreement or the Operative Documents, any
reference to the Placement Agents, WTC, the Purchaser, the term "PreTS" or any
derivations thereof, or the terms and conditions of this Agreement or the
Operative Documents. Notwithstanding anything to the contrary, the Offerors may
(1) consult any tax advisor regarding U.S. federal income tax treatment or tax
structure of the transaction contemplated under this Agreement and the Operative
Documents and (2) disclose to any and all persons, without limitation of any
kind, the U.S. Federal income tax structure (in each case, within the meaning of
Treasury Regulation ss. 1.6011-4) of the transaction contemplated under this
Agreement and the Operative Documents and all materials of any kind (including
opinions or other tax analyses) that are provided to you relating to such tax
treatment and tax structure. For this purpose, "tax structure" is limited to any
facts relevant to the U.S. federal income tax treatment of the transaction and
does not include information relating to identity of the parties.
11.4. NOTICES. Prior to the Closing, and thereafter with respect to
-------
matters pertaining to this Agreement only, all notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telex, telecopier or overnight air courier guaranteeing next
day delivery:
if to the Placement Agents, to:
FTN Financial Capital Markets
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, General Counsel
with a copy to:
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
and
Sidley Austin LLP
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: 212-839-5599
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
if to the Offerors, to:
▇▇▇▇▇ Bancorp, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇, PC
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. Spidi
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
All such notices and communications shall be deemed to have been duly
given (i) at the time delivered by hand, if personally delivered, (ii) five
business days after being deposited in the mail, postage prepaid, if mailed,
(iii) when answered back, if telexed, (iv) the next business day after being
telecopied, or (v) the next business day after timely delivery to a courier, if
sent by overnight air courier guaranteeing next day delivery. From and after the
Closing, the foregoing notice provisions shall be superseded by any notice
provisions of the Operative Documents under which notice is given. The Placement
Agents, the Offerors, and their respective counsel, may change their respective
notice addresses from time to time by written notice to all of the foregoing
persons.
16
11.5. PARTIES IN INTEREST, SUCCESSORS AND ASSIGNS. Except as expressly
--------------------------------------------
set forth herein, this Agreement is made solely for the benefit of the Placement
Agents, the Purchaser and the Offerors and any person controlling the Placement
Agents, the Purchaser or the Offerors and their respective successors and
assigns; and no other person shall acquire or have any right under or by virtue
of this Agreement. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties.
11.6. COUNTERPARTS. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.
11.7. Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
11.8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAWS PERTAINING TO CONFLICTS
OF LAWS) OF THE STATE OF NEW YORK.
11.9. ENTIRE AGREEMENT. This Agreement, together with the Operative
----------------
Documents and the other documents delivered in connection with the transactions
contemplated by this Agreement, is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, together with the Operative Documents and the other
documents delivered in connection with the transaction contemplated by this
Agreement, supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
11.10. SEVERABILITY. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected, it being intended that all of the Placement Agents' and the
Purchaser's rights and privileges shall be enforceable to the fullest extent
permitted by law.
11.11. SURVIVAL. The Placement Agents and the Offerors, respectively,
--------
agree that the representations, warranties and agreements made by each of them
in this Agreement and in any certificate or other instrument delivered pursuant
hereto shall remain in full force and effect and shall survive the delivery of,
and payment for, the Capital Securities.
Signatures appear on the following page
17
If this Agreement is satisfactory to you, please so indicate by signing
the acceptance of this Agreement and deliver such counterpart to the Offerors
whereupon this Agreement will become binding between us in accordance with its
terms.
Very truly yours,
▇▇▇▇▇ BANCORP, INC.
By: /s/
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
▇▇▇▇▇ CAPITAL TRUST III
By: /s/
-------------------------------------------
Name:
-----------------------------------------
Title: Administrator
CONFIRMED AND ACCEPTED,
as of the date first set forth above
FTN FINANCIAL CAPITAL MARKETS,
a division of First Tennessee Bank National Association,
as a Placement Agent
By: /s/
--------------------------------------------------------------------
Name:
------------------------------------------------------------------
Title:
-----------------------------------------------------------------
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.,
a New York corporation, as a Placement Agent
By: /s/
--------------------------------------------------------------------
Name:
------------------------------------------------------------------
Title:
-----------------------------------------------------------------
18
EXHIBIT A
---------
FORM OF SUBSCRIPTION AGREEMENT
------------------------------
▇▇▇▇▇ CAPITAL TRUST III
▇▇▇▇▇ BANCORP, INC.
SUBSCRIPTION AGREEMENT
June 21, 2007
THIS SUBSCRIPTION AGREEMENT (this "Agreement") made among ▇▇▇▇▇ Capital
Trust III (the "Trust"), a statutory trust created under the Delaware Statutory
Trust Act (Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. ▇▇.▇▇. 3801,
et seq.), ▇▇▇▇▇ Bancorp, Inc., a New Jersey corporation, with its principal
offices located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"
and, collectively with the Trust, the "Offerors"), and Preferred Term Securities
XXVI, Ltd. (the "Purchaser").
RECITALS:
A. The Trust desires to issue 3,000 of its Floating Rate Capital
Securities (the "Capital Securities"), liquidation amount $1,000.00 per Capital
Security, representing an undivided beneficial interest in the assets of the
Trust (the "Offering"), to be issued pursuant to an Amended and Restated
Declaration of Trust (the "Declaration") by and among the Company, Wilmington
Trust Company ("WTC"), the administrators named therein, and the holders (as
defined therein), which Capital Securities are to be guaranteed by the Company
with respect to distributions and payments upon liquidation, redemption and
otherwise pursuant to the terms of a Guarantee Agreement between the Company and
WTC, as trustee (the "Guarantee"); and
B. The proceeds from the sale of the Capital Securities will be
combined with the proceeds from the sale by the Trust to the Company of its
common securities, and will be used by the Trust to purchase an equivalent
amount of Floating Rate Junior Subordinated Deferrable Interest Debentures of
the Company (the "Debentures") to be issued by the Company pursuant to an
indenture to be executed by the Company and WTC, as trustee (the "Indenture");
and
C. In consideration of the premises and the mutual representations and
covenants hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF CAPITAL SECURITIES
1.1. Upon the execution of this Agreement, the Purchaser hereby agrees
to purchase from the Trust 3,000 Capital Securities at a price equal to
$1,000.00 per Capital Security (the "Purchase Price") and the Trust agrees to
sell such Capital Securities to the Purchaser for said Purchase Price. The
rights and preferences of the Capital Securities are set forth in the
Declaration. The Purchase Price is payable in immediately available funds on
June 21, 2007, or such other business day as may be designated by the Purchaser,
but in no event later than June 29, 2007 (the "Closing Date"). The Offerors
shall provide the Purchaser wire transfer instructions no later than 1 day
following the date hereof.
1.2. The certificate for the Capital Securities shall be delivered by
the Trust on the Closing Date to the Purchaser or its designee.
A-1
1.3. The Placement Agreement, dated June 13, 2007 (the "Placement
Agreement"), among the Offerors and the Placement Agents identified therein
includes certain representations and warranties, covenants and conditions to
closing and certain other matters governing the Offering. The Placement
Agreement is hereby incorporated by reference into this Agreement and the
Purchaser shall be entitled to each of the benefits of the Placement Agents and
the Purchaser under the Placement Agreement and shall be entitled to enforce the
obligations of the Offerors under such Placement Agreement as fully as if the
Purchaser were a party to such Placement Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PURCHASER
2.1. The Purchaser understands and acknowledges that neither the
Capital Securities, the Debentures nor the Guarantee have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable securities law, are being offered for sale by the Trust in
transactions not requiring registration under the Securities Act, and may not be
offered, sold, pledged or otherwise transferred by the Purchaser except in
compliance with the registration requirements of the Securities Act or any other
applicable securities laws, pursuant to an exemption therefrom or in a
transaction not subject thereto.
2.2. The Purchaser represents, warrants and certifies that (i) it is
not a "U.S. person" as such term is defined in Rule 902 under the Securities
Act, (ii) it is not acquiring the Capital Securities for the account or benefit
of any such U.S. person, (iii) the offer and sale of Capital Securities to the
Purchaser constitutes an "offshore transaction" under Regulation S of the
Securities Act, and (iv) it will not engage in hedging transactions with regard
to the Capital Securities unless such transactions are conducted in compliance
with the Securities Act and the Purchaser agrees to the legends and transfer
restrictions set forth on the Capital Securities certificate.
2.3. The Purchaser represents and warrants that it is purchasing the
Capital Securities for its own account, for investment, and not with a view to,
or for offer or sale in connection with, any distribution thereof in violation
of the Securities Act or other applicable securities laws, subject to any
requirement of law that the disposition of its property be at all times within
its control and subject to its ability to resell such Capital Securities
pursuant to an effective registration statement under the Securities Act or
under Rule 144A or any other exemption from registration available under the
Securities Act or any other applicable Securities law.
2.4. The Purchaser represents and warrants that it has full power and
authority to execute and deliver this Agreement, to make the representations and
warranties specified herein, and to consummate the transactions contemplated
herein and it has full right and power to subscribe for Capital Securities and
perform its obligations pursuant to this Agreement.
2.5. The Purchaser, a Cayman Islands Company whose business includes
issuance of certain notes and acquiring the Capital Securities and other similar
securities, represents and warrants that it has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of purchasing the Capital Securities, has had the opportunity to ask
questions of, and receive answers and request additional information from, the
Offerors and is aware that it may be required to bear the economic risk of an
investment in the Capital Securities.
2.6. The Purchaser represents and warrants that no filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental body, agency or court having jurisdiction over the
Purchaser, other than those that have been made or obtained, is necessary or
A-2
required for the performance by the Purchaser of its obligations under this
Agreement or to consummate the transactions contemplated herein.
2.7. The Purchaser represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Purchaser.
2.8. The Purchaser represents and warrants that (i) the Purchaser is
not in violation or default of any term of its Memorandum of Association or
Articles of Association, of any provision of any mortgage, indenture, contract,
agreement, instrument or contract to which it is a party or by which it is bound
or of any judgment, decree, order, writ or, to its knowledge, any statute, rule
or regulation applicable to the Purchaser which would prevent the Purchaser from
performing any material obligation set forth in this Agreement; and (ii) the
execution, delivery and performance of and compliance with this Agreement, and
the consummation of the transactions contemplated herein, will not, with or
without the passage of time or giving of notice, result in any such material
violation, or be in conflict with or constitute a default under any such term,
or the suspension, revocation, impairment, forfeiture or non-renewal of any
permit, license, authorization or approval applicable to the Purchaser, its
business or operations or any of its assets or properties which would prevent
the Purchaser from performing any material obligations set forth in this
Agreement.
2.9. The Purchaser represents and warrants that the Purchaser is an
exempted company with limited liability duly incorporated, validly existing and
in good standing under the laws of the jurisdiction where it is organized, with
full power and authority to perform its obligations under this Agreement.
2.10. The Purchaser understands and acknowledges that the Company will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations, warranties and agreements and agrees that, if any of the
acknowledgments, representations, warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate, it
shall promptly notify the Company.
2.11. The Purchaser understands that no public market exists for any of
the Capital Securities, and that it is unlikely that a public market will ever
exist for the Capital Securities.
ARTICLE III
MISCELLANEOUS
3.1. Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, international courier or delivered by hand against written
receipt therefor, or by facsimile transmission and confirmed by telephone, to
the following addresses, or such other address as may be furnished to the other
parties as herein provided:
To the Offerors: ▇▇▇▇▇ Bancorp, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
To the Purchaser: Preferred Term Securities XXVI, Ltd.
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇ House
South Church Street
A-3
▇▇▇▇▇▇ Town, Grand Cayman
Cayman Islands
Attention: The Directors
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Unless otherwise expressly provided herein, notices shall be deemed to
have been given on the date of mailing, except notice of change of address,
which shall be deemed to have been given when received.
3.2. This Agreement shall not be changed, modified or amended except by
a writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
3.3. Upon the execution and delivery of this Agreement by the
Purchaser, this Agreement shall become a binding obligation of the Purchaser
with respect to the purchase of Capital Securities as herein provided.
3.4. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
3.5. The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
3.6. This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
3.7. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Offerors' and the Purchaser's rights and
privileges shall be enforceable to the fullest extent permitted by law.
Signatures appear on the following page
A-4
IN WITNESS WHEREOF, I have set my hand the day and year first written
above.
PREFERRED TERM SECURITIES XXVI, LTD.
By: /s/
--------------------------------------------------
Print Name:
-----------------------------------------
Title:
----------------------------------------------
IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the
day and year first written above.
▇▇▇▇▇ BANCORP, INC.
By: /s/
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
▇▇▇▇▇ CAPITAL TRUST III
By: /s/
------------------------------------------
Name:
----------------------------------------
Title: Administrator
▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF COMPANY COUNSEL OPINION
-------------------------------
June 21, 2007
Preferred Term Securities XXVI, Ltd. FTN Financial Capital Markets
c/o Maples Finance Limited ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
P. O. Box 1093 GT ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Town, Grand Cayman
Cayman Islands
Wilmington Trust Company ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to ▇▇▇▇▇ Bancorp, Inc. (the "Company"), a New
Jersey corporation in connection with a certain Placement Agreement, dated June
13, 2007, (the "Placement Agreement"), between the Company and ▇▇▇▇▇ Capital
Trust III (the "Trust"), on one hand, and FTN Financial Capital Markets and
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. (the "Placement Agents"), on the other hand.
Pursuant to the Placement Agreement, and subject to the terms and conditions
stated therein, the Trust will issue and sell to Preferred Term Securities XXVI,
Ltd. (the "Purchaser"), $3,000,000.00 aggregate principal amount of Floating
Rate Capital Securities (liquidation amount $1,000.00 per capital security) (the
"Capital Securities").
Capitalized terms used herein and not otherwise defined shall have the
same meanings ascribed to them in the Placement Agreement.
The law covered by the opinions expressed herein is limited to the law
of the United States of America and of the State of New Jersey.
We have made such investigations of law as, in our judgment, were
necessary to render the following opinions. We have also reviewed (a) the
Company's Articles of Incorporation, as amended, and its By-Laws, as amended;
and (b) such corporate documents, records, information and certificates of the
Company and the Subsidiaries, certificates of public officials or government
authorities and other documents as we have deemed necessary or appropriate as a
basis for the opinions hereinafter expressed. As to certain facts material to
our opinions, we have relied, with your permission, upon statements,
certificates or representations, including those delivered or made in connection
with the above-referenced transaction, of officers and other representatives of
the Company and the Subsidiaries and the Trust.
As used herein, the phrases "to the best of our knowledge" or "known to
us" or other similar phrases mean the actual knowledge of the attorneys who have
had active involvement in the transactions described above or who have prepared
or signed this opinion letter, or who otherwise have devoted substantial
attention to legal matters for the Company.
B-1-1
Based upon and subject to the foregoing and the further qualifications
set forth below, we are of the opinion as of the date hereof that:
1. The Company is validly existing and in good standing under the laws
of the State of New Jersey and is duly registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended. Each of the Significant
Subsidiaries is validly existing and in good standing under the laws of its
jurisdiction of organization. Each of the Company and the Significant
Subsidiaries has full corporate power and authority to own or lease its
properties and to conduct its business as such business is currently conducted
in all material respects. To the best of our knowledge, all outstanding shares
of capital stock of the Significant Subsidiaries have been duly authorized and
validly issued, and are fully paid and nonassessable except to the extent such
shares may be deemed assessable under 12 U.S.C. Section 1831o or 12 U.S.C.
Section 55, and are owned of record and beneficially, directly or indirectly, by
the Company.
2. The issuance, sale and delivery of the Debentures in accordance with
the terms and conditions of the Placement Agreement and the Operative Documents
have been duly authorized by all necessary actions of the Company. The issuance,
sale and delivery of the Debentures by the Company and the issuance, sale and
delivery of the Capital Securities and the Common Securities by the Trust do not
give rise to any preemptive or other rights to subscribe for or to purchase any
shares of capital stock or equity securities of the Company or the Significant
Subsidiaries pursuant to the corporate Articles of Incorporation or Charter,
By-Laws or other governing documents of the Company or the Significant
Subsidiaries, or, to the best of our knowledge, any agreement or other
instrument to which either the Company or the Subsidiaries is a party or by
which the Company or the Significant Subsidiaries may be bound.
3. The Company has all requisite corporate power to enter into and
perform its obligations under the Placement Agreement and the Subscription
Agreement, and the Placement Agreement and the Subscription Agreement have been
duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company enforceable
in accordance with their terms, except as the enforcement thereof may be limited
by general principles of equity and by bankruptcy or other laws affecting
creditors' rights generally, and except as the indemnification and contribution
provisions thereof may be limited under applicable laws and certain remedies may
not be available in the case of a non-material breach.
4. Each of the Indenture, the Trust Agreement and the Guarantee
Agreement has been duly authorized, executed and delivered by the Company, and
is a valid and legally binding obligation of the Company enforceable in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity.
5. The Debentures have been duly authorized, executed and delivered by
the Company, are entitled to the benefits of the Indenture and are legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity.
6. To the best of our knowledge, neither the Company, the Trust, nor
any of the Subsidiaries is in breach or violation of, or default under, with or
without notice or lapse of time or both, its Articles of Incorporation or
Charter, By-Laws or other governing documents (including without limitation, the
Trust Agreement). The execution, delivery and performance of the Placement
Agreement and the
B-1-2
Operative Documents and the consummation of the transactions contemplated by the
Placement Agreement and the Operative Documents do not and will not (i) result
in the creation or imposition of any material lien, claim, charge, encumbrance
or restriction upon any property or assets of the Company or the Subsidiaries,
or (ii) conflict with, constitute a material breach or violation of, or
constitute a material default under, with or without notice or lapse of time or
both, any of the terms, provisions or conditions of (A) the Articles of
Incorporation or Charter, By-Laws or other governing documents of the Company or
the Subsidiaries, or (B) to the best of our knowledge, any material contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease,
franchise, license or any other agreement or instrument to which the Company or
the Subsidiaries is a party or by which any of them or any of their respective
properties may be bound or (C) any order, decree, judgment, franchise, license,
permit, rule or regulation of any court, arbitrator, government, or governmental
agency or instrumentality, domestic or foreign, known to us having jurisdiction
over the Company or the Subsidiaries or any of their respective properties
which, in the case of each of (i) or (ii) above, is material to the Company and
the Subsidiaries on a consolidated basis.
7. Except for filings, registrations or qualifications that may be
required by applicable securities laws, no authorization, approval, consent or
order of, or filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is required under
the laws of the State of New Jersey in connection with the transactions
contemplated by the Placement Agreement and the Operative Documents in
connection with the offer and sale of the Capital Securities as contemplated by
the Placement Agreement and the Operative Documents.
8. To the best of our knowledge (i) no action, suit or proceeding at
law or in equity is pending or threatened to which the Company, the Trust or the
Subsidiaries are or may be a party, and (ii) no action, suit or proceeding is
pending or threatened against or affecting the Company, the Trust or the
Subsidiaries or any of their properties, before or by any court or governmental
official, commission, board or other administrative agency, authority or body,
or any arbitrator, wherein an unfavorable decision, ruling or finding could
reasonably be expected to have a material adverse effect on the consummation of
the transactions contemplated by the Placement Agreement and the Operative
Documents or the issuance and sale of the Capital Securities as contemplated
therein or the condition (financial or otherwise), earnings, affairs, business,
or results of operations of the Company, the Trust and the Subsidiaries on a
consolidated basis.
9. Assuming the truth and accuracy of the representations and
warranties of the Placement Agents in the Placement Agreement and the Purchaser
in the Subscription Agreement, it is not necessary in connection with the
offering, sale and delivery of the Capital Securities, the Debentures and the
Guarantee Agreement (or the Guarantee) to register the same under the Securities
Act of 1933, as amended, under the circumstances contemplated in the Placement
Agreement and the Subscription Agreement.
10. Neither the Company nor the Trust is or after giving effect to the
offering and sale of the Capital Securities and the consummation of the
transactions described in the Placement Agreement will be, an "investment
company" or an entity "controlled" by an "investment company," in each case
within the meaning of the Investment Company Act of 1940, as amended, without
regard to Section 3(c) of such Act.
The opinion expressed in the first two sentences of numbered paragraph
1 of this opinion is based solely upon certain certificates and confirmations
issued by the applicable governmental officer or authority with respect to each
of the Company and the Significant Subsidiaries.
With respect to the foregoing opinions, since no member of this firm is
actively engaged in the practice of law in the States of Delaware or New York,
we do not express any opinions as to the laws of
B-1-3
such states and have (i) relied, with your approval, upon the opinion of
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A. with respect to matters of Delaware law and (ii)
assumed, with your approval and without rendering any opinion to such effect,
that the laws of the State of New York, in all respects material to this
opinion, are substantively identical to the laws of the State of New Jersey,
without regard to conflict of law provisions.
The opinions expressed herein are rendered to you solely pursuant to
Section 3.1(a) of the Placement Agreement. As such, they may be relied upon by
you only and may not be used or relied upon by any other person for any purpose
whatsoever without our prior written consent.
Very truly yours,
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF DELAWARE COUNSEL OPINION
--------------------------------
To Each of the Persons
Listed on Schedule A Hereto
Re: ▇▇▇▇▇ Capital Trust III
-----------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for ▇▇▇▇▇ Capital Trust III,
a Delaware statutory trust (the "Trust"), in connection with the matters set
forth herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust (the "Certificate of Trust"),
as filed in the office of the Secretary of State of the State of Delaware (the
"Secretary of State") on [FILE DATE], 2007;
(b) The Declaration of Trust, dated as of [FILE DATE], 2007, among
▇▇▇▇▇ Bancorp, Inc., a New Jersey corporation (the "Company"), Wilmington Trust
Company, a Delaware banking corporation ("WTC"), as trustee and the
administrators named therein (the "Administrators");
(c) The Amended and Restated Declaration of Trust of the Trust, dated
as of June 21, 2007 (including the form of Capital Securities Certificate
attached thereto as Exhibit A-1 and the terms of the Capital Securities attached
as Annex I) (the "Declaration of Trust"), among the Company, as sponsor, WTC, as
Delaware trustee (the "Delaware Trustee") and institutional trustee (the
"Institutional Trustee"), the Administrators and the holders, from time to time,
of undivided beneficial interests in the assets of the Trust;
(d) The Placement Agreement, dated June 13, 2007 (the "Placement
Agreement"), among the Company, the Trust, and FTN Financial Capital Markets and
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., as placement agents;
(e) The Subscription Agreement, dated June 21, 2007 (the "Subscription
Agreement"), among the Trust, the Company and Preferred Term Securities XXVI,
Ltd. (the documents identified in items (c) through (e) being collectively
referred to as the "Operative Documents");
(f) The Capital Securities being issued on the date hereof (the
"Capital Securities");
(g) The Common Securities being issued on the date hereof (the "Common
Securities") (the documents identified in items (f) and (g) being collectively
referred to as the "Trust Securities"); and
(h) A Certificate of Good Standing for the Trust, dated June 20, 2007,
obtained from the Secretary of State.
B-2-1
Capitalized terms used herein and not otherwise defined are used as
defined in the Declaration of Trust, except that reference herein to any
document shall mean such document as in effect on the date hereof. This opinion
is being delivered pursuant to Section 3.1 of the Placement Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (h) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (h) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration
of Trust constitutes the entire agreement among the parties thereto with respect
to the subject matter thereof, including with respect to the creation,
operation, and termination of the Trust, and that the Declaration of Trust and
the Certificate of Trust are in full force and effect and have not been amended
further, (ii) that there are no proceedings pending or contemplated, for the
merger, consolidation, liquidation, dissolution or termination of the Trust,
(iii) except to the extent provided in paragraph 1 below, the due creation, due
formation or due organization, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, formation or organization, (iv) that each
party to the documents examined by us is qualified to do business in each
jurisdiction where such qualification is required generally or necessary in
order for such party to enforce its rights under the documents examined by us,
(v) the legal capacity of each natural person who is a party to the documents
examined by us, (vi) except to the extent set forth in paragraph 2 below, that
each of the parties to the documents examined by us has the power and authority
to execute and deliver, and to perform its obligations under, such documents,
(vii) except to the extent provided in paragraph 3 below, that each of the
parties to the documents examined by us has duly authorized, executed and
delivered such documents, (viii) the receipt by each Person to whom a Capital
Security is to be issued by the Trust (the "Capital Security Holders") of a
Capital Security Certificate for the Capital Security and the payment for the
Capital Securities acquired by it, in accordance with the Declaration of Trust
and the Subscription Agreement, (ix) that the Capital Securities are issued and
sold to the Holders of the Capital Securities in accordance with the Declaration
of Trust and the Subscription Agreement, (x) the receipt by the Person (the
"Common Securityholder") to whom the common securities of the Trust representing
common undivided beneficial interests in the assets of the Trust (the "Common
Securities" and, together with the Capital Securities, the "Trust Securities")
are to be issued by the Trust of a Common Security Certificate for the Common
Securities and the payment for the Common Securities acquired by it, in
accordance with the Declaration of Trust, (xi) that the Common Securities are
issued and sold to the Common Securityholder in accordance with the Declaration
of Trust, (xii) that each of the parties to the documents reviewed by us has
agreed to and received the stated consideration for the incurrence of its
obligations under such documents, (xiii) that each of the documents reviewed by
us (other than the Declaration of Trust) is a legal, valid, binding and
enforceable obligation of the parties thereto in accordance with the terms
thereof and (xiv) that the Trust derives no income from or connected with
sources within the State of Delaware and has no assets, activities (other than
having a trustee and the filing of documents with the Secretary of State) or
employees in the State of Delaware. We have not participated in the preparation
of any offering materials with respect to the Trust Securities and assume no
responsibility for its contents.
B-2-2
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder that are
currently in effect.
We express no opinion as to (i) the effect of suretyship defenses, or
defenses in the nature thereof, with respect to the obligations of any
applicable guarantor, joint obligor, surety, accommodation party, or other
secondary obligor or any provisions of the Declaration of Trust with respect to
indemnification or contribution and (ii) the accuracy or completeness of any
exhibits or schedules to the Operative Documents. No opinion is given herein as
to the choice of law or internal substantive rules of law that any court or
other tribunal may apply to the transactions contemplated by the Operative
Documents.
We express no opinion as to the enforceability of any particular
provision of the Declaration of Trust or the other Operative Documents relating
to remedies after default.
We express no opinion as to the enforceability of any particular
provision of any of the Operative Documents relating to (i) waivers of rights to
object to jurisdiction or venue, or consents to jurisdiction or venue, (ii)
waivers of rights to (or methods of) service of process, or rights to trial by
jury, or other rights or benefits bestowed by operation of law, (iii) waivers of
any applicable defenses, setoffs, recoupments, or counterclaims, (iv) waivers or
variations of provisions which are not capable of waiver or variation under the
Uniform Commercial Code ("UCC") of the State, (v) the grant of powers of
attorney to any person or entity, or (vi) exculpation or exoneration clauses,
indemnity clauses, and clauses relating to releases or waivers of unmatured
claims or rights.
We have made no examination of, and no opinion is given herein as to
the Trustee's or the Trust's title to or other ownership rights in, or the
existence of any liens, charges or encumbrances on, or adverse claims against,
any asset or property held by the Institutional Trustee or the Trust. We express
no opinion as to the creation, validity, attachment, perfection or priority of
any mortgage, security interest or lien in any asset or property held by the
Institutional Trustee or the Trust.
We express no opinion as to the effect of events occurring,
circumstances arising, or changes of law becoming effective or occurring, after
the date hereof on the matters addressed in this opinion letter, and we assume
no responsibility to inform you of additional or changed facts, or changes in
law, of which we may become aware.
We express no opinion as to any requirement that any party to the
Operative Documents (or any other persons or entities purportedly entitled to
the benefits thereof) qualify or register to do business in any jurisdiction in
order to be able to enforce its rights thereunder or obtain the benefits
thereof.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a statutory trust under the Delaware Statutory Trust Act (12 Del. C.
ss. 3801, et seq.) (the "Act"). All filings required under the laws of the State
of Delaware with respect to the creation and valid existence of the Trust as a
statutory trust have been made.
B-2-3
2. Under the Declaration of Trust and the Act, the Trust has the trust
power and authority to (A) execute and deliver the Operative Documents, (B)
perform its obligations under such Operative Documents and (C) issue the Trust
Securities.
3. The execution and delivery by the Trust of the Operative Documents,
and the performance by the Trust of its obligations thereunder, have been duly
authorized by all necessary trust action on the part of the Trust.
4. The Declaration of Trust constitutes a legal, valid and binding
obligation of the Company, the Trustees and the Administrators, and is
enforceable against the Company, the Trustees and the Administrators, in
accordance with its terms.
5. Each of the Operative Documents constitutes a legal, valid and
binding obligation of the Trust, enforceable against the Trust, in accordance
with its terms.
6. The Capital Securities have been duly authorized for issuance by the
Declaration of Trust, and, when duly executed and delivered to and paid for by
the purchasers thereof in accordance with the Declaration of Trust, the
Subscription Agreement and the Placement Agreement, the Capital Securities will
be validly issued, fully paid and, subject to the qualifications set forth in
paragraph 8 below, nonassessable undivided beneficial interests in the assets of
the Trust and will entitle the Capital Securities Holders to the benefits of the
Declaration of Trust. The issuance of the Capital Securities is not subject to
preemptive or other similar rights under the Act or the Declaration of Trust.
7. The Common Securities have been duly authorized for issuance by the
Declaration of Trust and, when duly executed and delivered to the Company as
Common Security Holder in accordance with the Declaration of Trust, will be
validly issued, fully paid and, subject to paragraph 8 below and Section 9.1(b)
of the Declaration of Trust (which provides that the Holder of the Common
Securities are liable for debts and obligations of Trust), nonassessable
undivided beneficial interests in the assets of the Trust and will entitle the
Common Security Holder to the benefits of the Declaration of Trust. The issuance
of the Common Securities is not subject to preemptive or other similar rights
under the Act or the Declaration of Trust.
8. Under the Declaration of Trust and the Act, the Holders of the
Capital Securities, as beneficial owners of the Trust, will be entitled to the
same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware. We note that the Holders of the Capital Securities and the Holder
of the Common Securities may be obligated, pursuant to the Declaration of Trust,
(A) to provide indemnity and/or security in connection with and pay taxes or
governmental charges arising from transfers or exchanges of Capital Security
Certificates and the issuance of replacement Capital Security Certificates, and
(B) to provide security or indemnity in connection with requests of or
directions to the Institutional Trustee to exercise its rights and powers under
the Declaration of Trust.
9. Neither the execution, delivery and performance by the Trust of the
Operative Documents, nor the consummation by the Trust of any of the
transactions contemplated thereby, requires the consent or approval of, the
authorization of, the withholding of objection on the part of, the giving of
notice to, the filing, registration or qualification with, or the taking of any
other action in respect of, any governmental authority or agency of the State of
Delaware, other than the filing of the Certificate of Trust with the Secretary
of State (which Certificate of Trust has been duly filed).
10. Neither the execution, delivery and performance by the Trust of the
Trust Documents, nor the consummation by the Trust of the transactions
contemplated thereby, (i) is in
B-2-4
violation of the Declaration of Trust or of any law, rule or regulation of the
State of Delaware applicable to the Trust or (ii) to the best of our knowledge,
without independent investigation, violates, contravenes or constitutes a
default under, or results in a breach of or in the creation of any lien (other
than as permitted by the Operative Documents) upon any property of the Trust
under any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, bank loan or credit agreement, license or other agreement or
instrument to which the Trust is a party or by which it is bound.
11. Assuming that the Trust will not be taxable as a corporation for
federal income tax purposes, but rather will be classified for such purposes as
a grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue
Code of 1986, as amended, the Trust will not be subject to any tax, fee or
governmental charge under the laws of the State of Delaware.
The opinions expressed in paragraph 4, 5, 6, 7 and 8 above are subject,
as to enforcement, to the effect upon the Declaration of Trust of (i)
bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation,
fraudulent conveyance and transfer, and other similar laws relating to or
affecting the rights and remedies of creditors generally, (ii) principles of
equity, including applicable law relating to fiduciary duties (regardless of
whether considered and applied in a proceeding in equity or at law), and (iii)
the effect of applicable public policy on the enforceability of provisions
relating to indemnification or contribution.
CIRCULAR 230 NOTICE. Any advice contained in this communication with
respect to any federal tax matter was not intended or written to be used, and it
cannot be used by any taxpayer, for the purpose of avoiding penalties that the
Internal Revenue Service may impose on the taxpayer. If any such advice is made
to any person other than to our client for whom the advice was prepared, the
advice expressed above is being delivered to support the promotion or marketing
(by a person other than ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger) of the transaction or matter
discussed or referenced, and such taxpayer should seek advice based on the
taxpayer's particular circumstances from an independent tax advisor.
In basing the opinions set forth herein on "our knowledge," the words
"our knowledge" signify that no information has come to the attention of the
attorneys in the firm who are directly involved in the representation of the
Trust in this transaction that would give us actual knowledge that any such
opinions are not accurate. Except as otherwise stated herein, we have undertaken
no independent investigation or verification of such matters.
We consent to your relying as to matters of Delaware law upon this
opinion in connection with the Placement Agreement. We also consent to ▇▇▇▇▇,
Rice & ▇▇▇▇▇▇▇▇, ▇.▇.'s and ▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇, PC's relying as to matters of
Delaware law upon this opinion in connection with opinions to be rendered by
them on the date hereof pursuant to the Placement Agreement. Except as stated
above, without our prior written consent, this opinion may not be furnished or
quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
B-2-5
SCHEDULE A
----------
Wilmington Trust Company
FTN Financial Capital Markets
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
Preferred Term Securities XXVI, Ltd.
Preferred Term Securities XXVI, Inc.
▇▇▇▇▇ Bancorp, Inc.
B-2-6
EXHIBIT B-3
-----------
TAX COUNSEL OPINION ITEMS
-------------------------
1. The Debentures will be classified as indebtedness of the Company for
U.S. federal income tax purposes.
2. The Trust will be characterized as a grantor trust and not as an
association taxable as a corporation for U.S. federal income tax
purposes.
▇-▇-▇
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Representations Concerning the Issuance of Junior Subordinated
Deferrable Interest Debentures (the "Debentures") to ▇▇▇▇▇ Capital
Trust III (the "Trust") and Sale of Trust Securities (the "Trust
Securities") of the Trust
Ladies and Gentlemen:
In accordance with your request, ▇▇▇▇▇ Bancorp, Inc. (the "Company")
hereby makes the following representations in connection with the preparation of
your opinion letter as to the United States federal income tax consequences of
the issuance by the Company of the Debentures to the Trust and the sale of the
Trust Securities.
Company hereby represents that:
1. The sole assets of the Trust will be the Debentures, any interest
paid on the Debentures to the extent not distributed, proceeds of the
Debentures, or any of the foregoing.
2. The Company intends to use the net proceeds from the sale of the
Debentures for general corporate purposes.
3. The Trust was not formed to conduct any trade or business and is not
authorized to conduct any trade or business. The Trust exists for the exclusive
purposes of (i) issuing and selling the Trust Securities, (ii) using the
proceeds from the sale of Trust Securities to acquire the Debentures, and (iii)
engaging only in activities necessary or incidental thereto.
4. The Company has not entered into an agency agreement with the Trust
or authorized the trustee to act as its agent in dealing with third parties. To
the Company's knowledge, after due inquiry, the Trust has not acted as the agent
of the Company or of anyone else in dealing with third parties.
5. The Trust was formed to facilitate direct investment in the assets
of the Trust, and the existence of multiple classes of ownership is incidental
to that purpose. There is no intent to provide holders of such interests in the
Trust with diverse interests in the assets of the Trust.
6. The Company intends to create a debtor-creditor relationship between
the Company, as debtor, and the Trust, as a creditor, upon the issuance and sale
of the Debentures to the Trust by the Company. The Company will (i) record and
at all times continue to reflect the Debentures as indebtedness on its separate
books and records for financial accounting purposes, and (ii) treat the
Debentures as indebtedness for all United States tax purposes.
7. During each year, the Trust's income will consist solely of payments
made by the Company with respect to the Debentures. Such payments will not be
derived from the active conduct of a financial business by the Trust. Both the
Company's obligation to make such payments and the measurement of the amounts
payable by the Company are defined by the terms of the Debentures. Neither the
Company's obligation to make such payments nor the measurement of the amounts
payable by the Company is dependent on income or profits of Company or any
affiliate of the Company.
B-3-2
8. The Company expects that it will be able to make, and will make,
timely payment of amounts identified by the Debentures as principal and interest
in accordance with the terms of the Debentures with available capital or
accumulated earnings.
9. The Company presently has no intention to defer interest payments on
the Debentures, and it considers the likelihood of such a deferral to be remote
because, if it were to exercise its right to defer payments of interest with
respect to the Debentures, it would not be permitted to declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any capital stock of the Company or any
affiliate of the Company (other than payments of dividends or distributions to
the Company or payments of dividends from direct or indirect subsidiaries of the
Company to their parent corporations, which also shall be direct or indirect
subsidiaries of the Company) or make any payment of principal of or interest or
premium, if any, on or repay, repurchase, or redeem any debt securities of the
Company or any affiliate of the Company that rank pari passu in all respects
with or junior in interest to the Debentures, in each case subject to limited
exceptions stated in Section 2.11 of the Indenture to be entered into in
connection with the issuance of the Debentures.
10. The Company has no present intention (a) to take the position that
a deferral of interest payments on the Debentures is not a remote contingency,
or (b) to make an explicit disclosure on the Company's tax return, under Reg.
ss. 1.1275-2(h)(5) that its determination as holder with respect to remote
contingency status is different from its determination as issuer.
11. Immediately after the issuance of the Debentures, the
debt-to-equity ratio of the Company (as determined for financial accounting
purposes, but excluding deposit liabilities from the Company's debt) will be
within standard depository institution industry norms and, in any event, will be
no higher than four to one (4 : 1).
12. To the best of our knowledge, the Company is currently in
compliance with all federal, state, and local capital requirements, except to
the extent that failure to comply with any such requirements would not have a
material adverse effect on the Company and its affiliates.
13. The Company will not issue any class of common stock or preferred
stock senior to the Debentures during their term.
14. The Internal Revenue Service has not challenged the interest
deduction on any class of the Company's subordinated debt in the last ten (10)
years on the basis that such debt constitutes equity for federal income tax
purposes.
The above representations are accurate as of the date below and will
continue to be accurate through the issuance of the Trust Securities, unless you
are otherwise notified by us in writing. The undersigned understands that you
will rely on the foregoing in connection with rendering certain legal opinions,
and possesses the authority to make the representations set forth in this letter
on behalf of the Company.
Very truly yours,
▇▇▇▇▇ BANCORP, INC.
Date: June 18, 2007 By: /s/
-----------------------------------
Title: __________________________________
B-3-3
EXHIBIT C
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SIGNIFICANT SUBSIDIARIES
------------------------
▇▇▇▇▇ Bank
C-1