Exhibit 10.46
PURCHASE AGREEMENT
AMONG
TEMECULA VALLEY BANCORP INC.,
TEMECULA VALLEY STATUTORY TRUST V
AND
TWE, LTD.,
AS PURCHASER
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Dated as of September 27, 2006
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PURCHASE AGREEMENT
($12,000,000 TRUST PREFERRED SECURITIES)
THIS PURCHASE AGREEMENT, dated as of September 27, 2006, is entered into
among, Temecula Valley Bancorp Inc., a California corporation (the "Company"),
Temecula Valley Statutory Trust V, a Delaware statutory trust (the "Trust," and,
together with the Company, the "Sellers"), and TWE, Ltd., an exempted company
incorporated under the laws of the Cayman Islands (including any assignee
thereof, the "Purchaser").
WITNESSETH:
WHEREAS, the Sellers propose to issue and sell 12,000 Floating Rate
Preferred Securities of the Trust, having a stated liquidation amount of $1,000
per preferred security, bearing a variable rate of interest per annum, reset
quarterly, equal to LIBOR (as defined in the Indenture (as defined below)) plus
1.60% (the "Preferred Securities");
WHEREAS, the entire proceeds from the sale of the Preferred Securities will
be combined with the entire proceeds from the sale by the Trust to the Company
of its common securities (the "Common Securities"), and will be used by the
Trust to purchase $12,372,000 in principal amount of the unsecured junior
subordinated notes of the Company (the "Junior Subordinated Notes");
WHEREAS, the Preferred Securities and the Common Securities of the Trust
will be issued pursuant to the Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of the Closing Date (as defined below), among the Company,
as depositor, Wilmington Trust Company, as property trustee (in such capacity,
the "Property Trustee"), and as Delaware trustee (in such capacity, the
"Delaware Trustee"), the Administrative Trustees named therein (in such
capacities, the "Administrative Trustees"), and the holders from time to time of
undivided beneficial interests in the assets of the Trust;
WHEREAS, the Preferred Securities will be fully and unconditionally
guaranteed on a subordinated basis by the Company with respect to distributions
and amounts payable upon liquidation, redemption or repayment (the "Guarantee")
pursuant and subject to the Guarantee Agreement (the "Guarantee Agreement"), to
be dated as of the Closing Date and executed and delivered by the Company and
Wilmington Trust Company, as guarantee trustee (the "Guarantee Trustee"), for
the benefit from time to time of the holders of the Preferred Securities; and
WHEREAS, the Junior Subordinated Notes will be issued pursuant to a Junior
Subordinated Indenture, dated as of the Closing Date (the "Indenture"), between
the Company, and Wilmington Trust Company, as indenture trustee (in such
capacity, the "Indenture Trustee").
NOW, THEREFORE, in consideration of the mutual agreements and subject to
the terms and conditions herein set forth, the parties hereto agree as follows:
Section 1. Definitions. The Preferred Securities, the Common
Securities and the Junior Subordinated Notes are collectively referred to herein
as the "Securities." This Purchase Agreement, the Indenture, the Trust
Agreement, the Guarantee Agreement and the Securities are collectively referred
to herein as the "Operative Documents." All other capitalized terms used but not
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defined in this Purchase Agreement shall have the meanings ascribed thereto in
the Indenture.
Section 2. Purchase and Sale of the Preferred Securities.
2.1 The Sellers agree to sell to the Purchaser, and the Purchaser
agrees to purchase from the Sellers, the Preferred Securities for an aggregate
amount (the "Purchase Price") equal to $12,000,000. In connection with the
purchase of the Preferred Securities, the Company shall pay no fee to its
introducing agent (the "Introducing Agent") for services rendered (the "Fee").
The Purchaser shall be responsible for the following expenses: (i) any rating
agency costs and expenses, and (ii) the Fee payable to the Introducing Agent;
provided that the Introducing Agent has an agreement with the Purchaser; but
shall not be responsible for any fees and expenses set forth in Section 7
hereof, unless otherwise provided therein. The Trust shall use the Purchase
Price, together with the proceeds from the sale of the Common Securities, to
purchase the Junior Subordinated Notes.
2.2 Delivery or transfer of, and payment for, the Preferred
Securities shall be made at 11:00 A.M. New York City time, on September 27,
2006, or such later date (not later than October 27, 2006) as the parties may
designate (such date and time of delivery and payment for the Preferred
Securities being herein called the "Closing Date"). On the Closing Date, the
Preferred Securities shall be transferred and delivered to the Purchaser, or its
designee, against the payment of the Purchase Price to the Sellers made by wire
transfer in immediately available funds to a U.S. account designated in writing
by the Company.
2.3 Delivery of the Preferred Securities shall be made at such
location, and in such names and denominations, as the Purchaser shall designate
in advance of the Closing Date. The Company and the Trust agree to have the
Preferred Securities available for inspection and checking by the Purchaser in
New York, New York, not later than 2:00 P.M. New York time, on the business day
prior to the Closing Date. The closing for the purchase and sale of the
Preferred Securities shall occur at the offices of Thacher Proffitt & Wood LLP,
Two World Financial Center, New York, New York 10281, or such other place as the
parties hereto shall agree.
2.4 The Preferred Securities shall be sold by the Trust, directly or
indirectly, to the Purchaser without registration of any of the Preferred
Securities, the Junior Subordinated Notes 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 Sellers and the Purchaser have
entered into this Agreement to set forth their understanding as to their
relationship and their respective rights, duties and obligations.
2.5 Upon original issuance thereof, the Preferred Securities and
Junior Subordinated Notes certificates shall each contain a legend as required
pursuant to any of the Operative Documents, including without limitation, a
legend stating that the offer, sale or transfer of the Preferred Securities or
the Junior Subordinated Notes, as the case may be, will be made only (a) to the
issuer thereof, (b) to a person that the transferor reasonably believe is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
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Act) in a transaction meeting the requirements of Rule 144A, or (c) to an
institutional "accredited investor" within the meaning of subparagraph (a) (1),
(2), (3) or (7) of Rule 501 under the Securities Act that is acquiring the
Preferred Securities or the Junior Subordinated Notes, as the case may be, for
its own account, or for the account of such an "accredited investor," for
investment purposes and not with a view to, or for offer or sale in connection
with, any distribution thereof in violation of the Securities Act, in each case
in accordance with any applicable securities laws of any state of the United
States or any other applicable jurisdiction and, in the case of (c) above,
subject to the right of the Trust and/or the Company, as applicable, to require
an opinion of counsel and other information satisfactory to each of them.
Section 3. Closing Conditions. The obligations of the parties under
this Agreement on the Closing Date are subject to the following conditions:
3.1 Accuracy of Representations and Warranties. The representations
and warranties contained in this Agreement, and the statements of the Sellers
made in any certificates pursuant to this Agreement, shall be accurate as of the
date of delivery of the Preferred Securities.
3.2 Opinions of Counsel. On the Closing Date, the Purchaser shall
have received the following favorable opinions or certificate, as the case may
be, each dated as of the Closing Date: (a) from Thacher Proffitt & Wood LLP,
special counsel for the Purchaser and addressed to the Purchaser in
substantially the form set forth on Exhibit A-1 attached hereto and incorporated
herein by this reference, (b) an opinion from McAndrews, Allen & Matson, counsel
for the Sellers, addressed to the Purchaser in substantially the form set forth
on Exhibit A-2 attached hereto and incorporated herein by this reference, (c)
from Thacher Proffitt & Wood LLP, special tax counsel for the Purchaser and
addressed to the Purchaser in substantially the form set forth on Exhibit A-3
attached hereto and incorporated herein by this reference, (d) from Morris,
James, Hitchens & Williams LLP, special Delaware counsel to the Trust and
addressed to the Purchaser and the Sellers, in substantially the form set forth
on Exhibit A-4 attached hereto and incorporated herein by this reference, and
(e) from Morris, James, Hitchens & Williams LLP, special counsel to the
Indenture Trustee, the Property Trustee, the Delaware Trustee and the Guarantee
Trustee and addressed to the Purchaser and the Sellers, in substantially the
form set forth on Exhibit A-5 attached hereto and incorporated herein by this
reference. Each certificate or opinion addressed to the Purchaser shall state
that the first entity, if any, to which the Purchaser transfers any of the
Preferred Securities, and, if such transferee is a warehouse entity, the next
subsequent transferee that is not a warehouse entity (each, a "Subsequent
Purchaser") shall be entitled to rely on such opinion.
3.3 Officer's Certificate. The Company shall have furnished to the
Purchaser a certificate of the Company, signed by its Chief Executive Officer,
President or an Executive Vice President and by the Chief Financial Officer,
Treasurer or Assistant Treasurer of the Company, and the Trust shall have
furnished to the Purchaser a certificate of the Trust, signed by an
Administrative Trustee of the Trust, in each case dated the Closing Date, and,
in the case of the Company, as to 3.3.1 and 3.3.2 below and, in the case of the
Trust, as to 3.3.1 below:
3.3.1 the representations and warranties in this Agreement are true and
correct on and as of the Closing Date with the same effect as if made on the
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Closing Date, and the Company and the Trust have complied with all the
agreements and satisfied all the conditions on either of their part to be
performed or satisfied at or prior to the Closing Date; and
3.3.2 since the date of the Interim Financial Statements (as defined
below), there has been no material adverse change in the condition (financial or
other), earnings, business, prospects or assets of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions
occurring in the ordinary course of business.
3.4 No Subsequent Change. Subsequent to the execution of this
Agreement, there shall not have been any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
earnings, business, prospects or assets of the Company and its subsidiaries,
whether or not occurring in the ordinary course of business, the effect of which
is, in the Purchaser's judgment, so material and adverse as to make it
impractical or inadvisable to proceed with the purchase of the Preferred
Securities.
3.5 Purchase Permitted by Applicable Laws; Legal Investment. The
purchase of and payment for the Preferred Securities as described in this
Agreement shall (a) not be prohibited by any applicable law or governmental
regulation, (b) not subject the Purchaser to any penalty or, in the reasonable
judgment of the Purchaser, 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 is subject.
3.6 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.
3.7 Information. Prior to or on the Closing Date, the Sellers shall
have furnished to the Purchaser and its counsel such further information,
certificates, opinions and documents as the Purchaser or its counsel may
reasonably request.
Each certificate signed by any trustee of the Trust or any officer of the
Company and delivered to the Purchaser or its counsel in connection with the
Operative Documents and the transactions contemplated hereby and thereby shall
be deemed to be a representation and warranty of the Trust and/or the Company,
as the case may be, and not by such trustee or officer in any individual
capacity.
Section 4. Representations and Warranties of the Sellers. The Sellers
jointly and severally represent and warrant to the Purchaser as of the date
hereof and as of the Closing Date as follows:
4.1 Securities Laws 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 (except for the Introducing
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Agent, as to which neither the Company nor the Trust make any representation)
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 Securities.
(b) Neither the Company nor the Trust, nor any of their Affiliates,
nor any person acting on its or their behalf (except for the Purchaser and the
Introducing Agent, as to which neither the Company nor the Trust make any
representation) has (i) offered for sale or solicited offers to purchase the
Securities, (ii) engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with any offer or
sale of any of the Securities, or (iii) engaged in any "directed selling
efforts" within the meaning of Regulation S under the Securities Act
("Regulation S") with respect to the Securities.
(c) The Securities (i) are not and have not been listed on a national
securities exchange registered under Section 6 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or quoted on a U.S. automated interdealer
quotation system and (ii) are not of an open-end investment company, unit
investment trust or face-amount certificate company that are, or are required to
be, registered under Section 8 of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and the Securities otherwise satisfy the
eligibility requirements of Rule 144A(d)(3) promulgated pursuant to the
Securities Act ("Rule 144A(d)(3)").
(d) Neither the Company nor the Trust is, and, immediately following
consummation of the transactions contemplated hereby and the application of the
net proceeds therefrom, neither the Company nor the Trust 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.
(e) Neither the Company nor the Trust has paid or agreed to pay to
any person or entity, directly or indirectly, any fees or other compensation for
soliciting another to purchase any of the Securities, except for the Fee and/or
any other fee payable to the Company's Introducing Agent; provided, that such
Introducing Agent has an agreement with the Purchaser.
4.2 Standing and Qualification of the Trust. The Trust has been duly
created and is validly existing in good standing as a statutory trust under the
Delaware Statutory Trust Act, 12 Del. C. ss.3801, et seq. (the "Statutory Trust
Act") with all requisite 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 to which it is a party. 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 condition (financial or otherwise), earnings, business, prospects
or assets of the Trust, whether or not occurring in the ordinary course of
business. The Trust is not a party to, or otherwise bound by, any agreement
other than the Operative Documents. The Trust is, and under current law will
continue to be, classified for federal income tax purposes as a grantor trust
and not as an association or publicly traded partnership taxable as a
corporation.
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4.3 Trust Agreement. The Trust Agreement has been duly authorized by
the Company and, on the Closing Date specified in Section 2.2, will have been
duly executed and delivered by the Company and the Administrative Trustees of
the Trust, and, assuming due authorization, execution and delivery by the
Property Trustee and the Delaware Trustee, will be a legal, valid and binding
obligation of the Company and the Administrative Trustees, enforceable against
them in accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and to general principles
of equity. Each of the Administrative Trustees of the Trust is an employee of
the Company or one of its subsidiaries and has been duly authorized by the
Company to execute and deliver the Trust Agreement. To the knowledge of the
Company and the Trust, the Trust is not in violation of any provision of the
Statutory Trust Act.
4.4 Guarantee Agreement and the Indenture. The Guarantee Agreement
and the Indenture have 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 legal, valid and binding obligation of the Company enforceable against
it in accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and to general principles
of equity.
4.5 Preferred Securities and Common Securities. The Preferred
Securities and the Common Securities have been duly authorized by the Trust and,
when issued and delivered against payment therefor on the Closing Date to the
Purchaser in accordance with this Agreement, in the case of the Preferred
Securities, and to the Company in accordance with the Common Securities
Subscription Agreement between the Company and the Trust, dated as of the
Closing Date, in the case of the Common Securities, will be validly issued,
fully paid and nonassessable and will represent undivided beneficial interests
in the assets of the Trust entitled to the benefits of the Trust Agreement,
enforceable against the Trust in accordance with their terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general principles of equity. The issuance of the Securities is
not 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 (each, a "Lien").
4.6 Junior Subordinated Notes. The Junior Subordinated Notes have
been duly authorized by the Company and, on 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 to the Trust against payment therefor in
accordance with the Junior Subordinated Note Subscription Agreement between the
Company and the Trust, dated as of the Closing Date, will constitute legal,
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 applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity.
4.7 Purchase Agreement. This Agreement has been duly authorized,
executed and delivered by the Company and the Trust and constitutes the legal,
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valid and binding obligation of the Company and the Trust, enforceable against
the Company and the Trust in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general principles of equity.
4.8 Defaults. Neither the issue and sale of the Common Securities,
the Preferred Securities or the Junior Subordinated Notes, nor the purchase of
the Junior Subordinated Notes by the Trust, the execution and delivery of and
compliance with the Operative Documents by the Company or the Trust, to the
extent a party thereto, the consummation of the transactions contemplated herein
or therein, or the use of the proceeds therefrom, (i) will conflict with or
constitute a breach of, or a default under, the Trust Agreement or the charter
or bylaws of the Company or any subsidiary of the Company or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any government,
governmental authority, agency or instrumentality or court, domestic or foreign,
having jurisdiction over the Trust or the Company or any of its subsidiaries, or
their respective properties or assets (collectively, "Governmental Entities"),
(ii) will conflict with or constitute a violation or breach of, or a default or
Repayment Event (as defined below) under, or result in the creation or
imposition of any Lien upon any property or assets of the Trust, the Company or
any of its subsidiaries pursuant to any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which (A) the Trust,
the Company or any of its subsidiaries is a party or by which it or any of them
may be bound, or (B) any of the property or assets of any of them is subject, or
any judgment, order or decree of any court, Governmental Entity or arbitrator,
except, in the case of this clause (ii), for such conflicts, breaches,
violations, defaults, Repayment Events (as defined below) or Liens which (X)
would not, singly or in the aggregate, adversely affect the consummation of the
transactions contemplated by the Operative Documents and (Y) would not, singly
or in the aggregate, have a material adverse effect on the condition (financial
or otherwise), earnings, business, liabilities, prospects and assets (taken as a
whole) or business prospects of the Company and its subsidiaries taken as a
whole, whether or not occurring in the ordinary course of business (a "Material
Adverse Effect") or (iii) require the consent, approval, authorization or order
of any court or Governmental Entity. As used herein, a "Repayment Event" means
any event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Trust or the Company or any of its subsidiaries prior
to its scheduled maturity.
4.9 Organization, Standing and Qualification of the Company. The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of California, with all requisite corporate power
and authority to own, lease and operate 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.
4.10 Subsidiaries of the Company. The Company has no subsidiaries
that are material to its business, financial condition or earnings other than
those subsidiaries listed in Schedule I attached hereto (the "Significant
Subsidiaries"). 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
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transact. Each Significant Subsidiary 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.
4.11 Government Licenses; Laws. Each of the Trust, the Company and
each of its subsidiaries hold all necessary approvals, authorizations, orders,
licenses, certificates and permits (collectively, "Government Licenses") of and
from Governmental Entities necessary to conduct its respective business as now
being conducted, and neither the Trust, the Company nor any of its subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such Government License, except where the failure to be so
licensed or approved or the receipt of an unfavorable decision, ruling or
finding, would not, singly or in the aggregate, have a Material Adverse Effect;
all of the Government Licenses are valid and in full force and effect, except
where the invalidity or the failure of such Government Licenses to be in full
force and effect, would not, 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, judgments, orders, decrees and consents,
except where the failure to be in compliance would not, singly or in the
aggregate, have a Material Adverse Effect.
4.12 Stock. All of the issued and outstanding shares of capital stock
of the Company and each of its subsidiaries are validly issued, fully paid and
nonassessable; all of the issued and outstanding capital stock of each
subsidiary of the Company is owned by the Company, directly or through
subsidiaries, free and clear of any Lien, claim or equitable right; and none of
the issued and outstanding capital stock of the Company or any subsidiary was
issued in violation of any preemptive or similar rights arising by operation of
law, under the charter or by-laws of such entity or under any agreement to which
the Company or any of its subsidiaries is a party.
4.13 Property. Each of the Trust, the Company and each subsidiary of
the Company has good and marketable title to all of its respective real and
personal properties, in each case free and clear of all Liens and defects,
except for those that would not, singly or in the aggregate, have a Material
Adverse Effect; and all of the leases and subleases under which the Trust, the
Company or any subsidiary of the Company holds properties are in full force and
effect, except where the failure of such leases and subleases to be in full
force and effect would not, singly or in the aggregate, have a Material Adverse
Effect and none of the Trust, the Company or any subsidiary of the Company has
any notice of any claim of any sort that has been asserted by anyone adverse to
the rights of the Trust, the Company or any subsidiary of the Company under any
such leases or subleases, or affecting or questioning the rights of such entity
to the continued possession of the leased or subleased premises under any such
lease or sublease, except for such claims that would not, singly or in the
aggregate, have a Material Adverse Effect.
4.14 Conflicts, Authorizations and Approvals. Neither the Company nor
any of its subsidiaries is (i) in violation of its respective charter, bylaws or
similar organizational documents or (ii) in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which either the Company or any such subsidiary is a party or by
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which it or any of them may be bound or to which any of the property or assets
of any of them is subject, except, in the case of clause (ii), where such
default would not, singly or in the aggregate, have a Material Adverse Effect.
No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any Governmental Entity, other than
those that have been made or obtained, is necessary or required for the
performance by the Trust or the Company of their respective obligations under
the Operative Documents, as applicable, or the consummation by the Trust and the
Company of the transactions contemplated by the Operative Documents.
4.15 Holding Company Registration and Deposit Insurance. The Company
is duly registered as a bank holding company under the Bank Holding Company Act
of 1956, as amended (the "Bank Holding Company Act"), and the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve"), 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
proceeding for the termination of such insurance is pending or, to the knowledge
of the Company or the Trust after due inquiry, threatened.
4.16 Financial Statements.
(a) The audited consolidated financial statements (including the
notes thereto) and schedules of the Company and its consolidated subsidiaries at
and for the three fiscal years ended December 31, 2005 (the "Financial
Statements") and the interim unaudited consolidated financial statements of the
Company and its consolidated subsidiaries at and for the six months ended June
30, 2006 (the "Interim Financial Statements") provided to the Purchaser are the
most recently available audited and unaudited consolidated financial statements
of the Company and its consolidated subsidiaries, respectively, and fairly
present in all material respects, in accordance with U.S. generally accepted
accounting principles ("GAAP"), the financial position of the Company and its
consolidated subsidiaries, and the results of operations and changes in
financial condition as of the dates and for the periods therein specified,
subject, in the case of Interim Financial Statements, to year-end adjustments
(which are expected to consist solely of normal recurring adjustments). Such
consolidated financial statements and schedules have been prepared in accordance
with GAAP consistently applied throughout the periods involved (except as
otherwise noted therein).
(b) The Company's report on FRY-9C, dated June 30, 2006 (the
"FRY-9C"), provided to the Purchaser is the most recently available such report,
and the information therein fairly presents in all material respects the
financial position of the Company and its subsidiaries. None of the Company or
any of its subsidiaries has been requested by a Governmental Entity to
republish, restate or refile any regulatory or financial report.
(c) Since the respective dates of the Financial Statements and
Interim Financial Statements and the FRY-9C, there has not been (A) any material
adverse change or development with respect to the condition (financial or
otherwise), earnings, business, assets or business prospects of the Company and
its subsidiaries, taken as a whole, whether or not occurring in the ordinary
course of business or (B) any dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock other than regular
quarterly dividends on the Company's common stock.
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(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 of the Securities and Exchange Commission ("SEC") thereunder.
4.17 Regulatory Enforcement Matters. None of the Trust, the Company
nor any of its subsidiaries, nor any of their respective officers, directors,
employees or representatives, is subject or is party to, or has received any
notice from any Regulatory Agency (as defined below) that any of them will
become subject or party to any investigation with respect to, any
cease-and-desist order, agreement, civil monetary penalty, 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 a recipient of
any supervisory letter from, or has adopted any board resolutions at the request
or suggestion of, any Regulatory Agency that, in any such case, 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
management or their business (each, a "Regulatory Action"), nor has the Trust,
the Company or any of its subsidiaries been advised by any Regulatory Agency
that it is considering issuing or requesting any such Regulatory Action; and
there is no unresolved violation, criticism or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations of
the Trust, the Company or any of its subsidiaries, except where such unresolved
violation, criticism or exception would not, singly or in the aggregate, have a
Material Adverse Effect. If the Company is a bank holding company that is
subject to the Bank Holding Company Act, it is a "well-run" bank holding company
that satisfies the criteria of the Federal Reserve's regulations at 12 C.F.R.
ss.225.14(c). Each of the Company's subsidiaries that is a depository
institution, the accounts of which are insured by the FDIC (i) is
"well-capitalized" within the meaning of 12 U.S.C. ss.1831o and applicable
implementing regulations thereunder; and (ii) is not, and has not been notified
by any Regulatory Agency that it is, in "troubled condition" within the meaning
of 12 U.S.C. ss.1831i and applicable implementing regulations thereunder. As
used herein, the term "Regulatory Agency" means any federal or state agency
charged with the supervision or regulation of depositary institutions or holding
companies of depositary institutions, or engaged in the insurance of depositary
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 Trust, the Company or any of its
subsidiaries.
4.18 No Undisclosed Liabilities. None of the Trust, 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 that could give rise to any such liability),
except for (i) liabilities set forth in the Financial Statements or the Interim
Financial Statements and (ii) normal fluctuations in the amount of the
liabilities referred to in clause (i) above occurring in the ordinary course of
business of the Trust, the Company and all of its subsidiaries since the date of
the most recent balance sheet included in such Financial Statements.
11
4.19 Litigation. There is no action, suit or proceeding before or by
any Governmental Entity, arbitrator or court, domestic or foreign, now pending
or, to the knowledge of the Company or the Trust after due inquiry, threatened
against or affecting the Trust or the Company or any of its subsidiaries, except
for such actions, suits or proceedings that, if adversely determined, would not,
singly or in the aggregate, adversely affect the consummation of the
transactions contemplated by the Operative Documents or have a Material Adverse
Effect; and the aggregate of all pending legal or governmental proceedings to
which the Trust or the Company or any of its subsidiaries is a party or of which
any of their respective properties or assets is subject, including ordinary
routine litigation incidental to the business, are not expected to result in a
Material Adverse Effect.
4.20 No Labor Disputes. No labor dispute with the employees of the
Trust, the Company or any of its subsidiaries exists or, to the knowledge of the
executive officers of the Trust or the Company, is imminent, except those which
would not, singly or in the aggregate, have a Material Adverse Effect.
4.21 Filings with the SEC. The documents of the Company filed with
the SEC in accordance with the Exchange Act, from and including the commencement
of the fiscal year covered by the Company's most recent Annual Report on Form
10-K, at the time they were or hereafter are filed by the Company with the SEC
(collectively, the "1934 Act Reports"), complied and will comply in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the SEC thereunder (the "1934 Act Regulations"), and did not, and, at the
date of this Agreement and on the Closing Date, do not and will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and other than
such instruments, agreements, contracts and other documents as are filed as
exhibits to the Company's Annual Report on Form 10-K, Quarterly Reports on Form
10-Q or Current Reports on Form 8-K, there are no instruments, agreements,
contracts or documents of a character described in Item 601 of Regulation S-K
promulgated by the SEC to which the Company or any of its subsidiaries is a
party. The Company is in compliance with all currently applicable requirements
of the Exchange Act and the 1934 Act Regulations that were added by the
Sarbanes-Oxley Act of 2002.
4.22 Deferral of Interest Payments on Junior Subordinated Notes. The
Company has no present intention to exercise its option to defer payments of
interest on the Junior Subordinated Notes as provided in the Indenture. The
Company believes that the likelihood that it would exercise its rights to defer
payments of interest on the Junior Subordinated Notes as provided in the
Indenture at any time during which the Junior Subordinated Notes 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 Junior Subordinated Notes.
4.23 Tax Returns. The Company and each of the Significant Subsidiaries
have timely and duly filed all Tax Returns (defined below) required to be filed
12
by them, and all such Tax Returns are true, correct and complete in all material
respects. The Company and each of the Significant Subsidiaries have timely and
duly paid in full all material Taxes required to be paid by them (whether or not
such amounts are shown as due on any Tax Return). There are no federal, state,
or other Tax audits or deficiency assessments proposed or pending with respect
to the Company or any of the Significant Subsidiaries, and no such audits or
assessments are threatened. As used herein, the terms "Tax" or "Taxes" mean (i)
all federal, state, local, and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto, imposed by any
Governmental Entity, and (ii) all liabilities in respect of such amounts arising
as a result of being a member of any affiliated, consolidated, combined, unitary
or similar group, as a successor to another person or by contract. As used
herein, the term "Tax Returns" means all federal, state, local, and foreign Tax
returns, declarations, statements, reports, schedules, forms, and information
returns and any amendments thereto filed or required to be filed with any
Governmental Entity.
4.24 Taxes. The Trust is not subject to United States federal income
tax with respect to income received or accrued on the Junior Subordinated Notes,
interest payable by the Company on the Junior Subordinated Notes is deductible
by the Company, in whole or in part, for United States federal income tax
purposes, and the Trust is not, or will not be within ninety (90) days of the
date hereof, subject to more than a de minimis amount of other taxes, duties or
other governmental charges. There are no rulemaking or similar proceedings
before the United States Internal Revenue Service or comparable federal, state,
local or foreign government bodies which involve or affect the Company or any
subsidiary, which, if the subject of an action unfavorable to the Company or any
subsidiary, could result in a Material Adverse Effect.
4.25 Books and Records. The books, records and accounts of the
Company and its subsidiaries accurately and fairly reflect, in reasonable
detail, the transactions in, and dispositions of, the assets of, and the results
of operations of, the Company and its subsidiaries. The Company and each of its
subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
accordance with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
4.26 Insurance. The Company and the Significant Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts in all material respects as are customary in the
businesses in which they are engaged or propose to engage after giving effect to
the transactions contemplated hereby, including, but not limited to, real or
personal property owned or leased against theft, damage, destruction, act of
vandalism and all other risks customarily insured against. All policies of
insurance and fidelity or surety bonds insuring the Company or any of the
Significant Subsidiaries, the Company's or Significant Subsidiaries' respective
businesses, assets, employees, officers and directors are in full force and
effect. The Company and each of the Significant Subsidiaries are in compliance
with the terms of such policies and instruments in all material respects.
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Neither the Company nor any Significant Subsidiary has reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a Material
Adverse Effect. Within the past twelve months, neither the Company nor any
Significant Subsidiary has been denied any insurance coverage which it has
sought or for which it has applied.
4.27 Corporate Funds. The Company and its subsidiaries or any person
acting on behalf of the Company and its subsidiaries including, without
limitation, any director, officer, agent or employee of, the Company or its
subsidiaries has not, directly or indirectly, while acting on behalf of the
Company and its subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
4.28 OSHA Compliance. Neither the Company nor any of its subsidiaries
is in violation of any federal or state law or regulation relating to
occupational safety and health and the Company and its subsidiaries have
received all permits, licenses or other approvals required of them under
applicable federal and state occupational safety and health and environmental
laws and regulations to conduct their respective businesses, and the Company and
each of its subsidiaries is in compliance with all terms and conditions of any
such permit, license or approval, except any such violation of law or
regulation, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or
approvals which would not, singly or in the aggregate result in a Material
Adverse Effect.
4.29 Information. The information provided by the Company and the
Trust pursuant to this Agreement does not, as of the date hereof, and will not,
as of the Closing Date, contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
Section 5. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants to, and agrees with, the Company and the Trust
as follows:
5.1 The Purchaser understands and acknowledges that the Preferred
Securities, the Junior Subordinated Notes and the Guarantee (i) have not been
registered under the Securities Act, or any other applicable securities law,
(ii) are being offered for sale by the Trust or the Company, as the case may be,
in transactions not requiring registration under the Securities Act and (iii)
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.
5.2 The Purchaser is purchasing the Preferred Securities for its own
account and not with a view to, or for offer or sale in connection with, any
14
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 Preferred 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. The
Purchaser understands that no public market exists for any of the Preferred
Securities, and that it is unlikely that a public market will ever exist for the
Preferred Securities.
5.3 The Purchaser represents and warrants that (a) it has consulted
with its own legal, regulatory, tax, business, investment, financial and
accounting advisers in connection herewith to the extent it has deemed
necessary; (b) it has had a reasonable opportunity to ask questions of and
receive answers from officers and representatives of the Sellers concerning
their respective financial condition and results of operations and the purchase
of the Preferred Securities and any such questions have been answered to its
satisfaction; (c) it has had the opportunity to review all publicly available
records and filings concerning the Sellers and it has carefully reviewed such
records and filings that it considers relevant to making an investment decision;
and (d) it has made its own investment decisions based upon its own judgment,
due diligence and advice from such advisers as it has deemed necessary and not
upon any view expressed by the Sellers.
5.4 The Purchaser is (i) an institutional "accredited investor"
within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of
Regulation D under the Securities Act, and (ii) a "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act.
Section 6. Covenants of the Sellers. The Sellers covenant and agree
with the Purchaser as follows:
6.1 Compliance with Representations and Warranties. During the
period from the date of this Agreement to the Closing Date, the Sellers shall
use their best efforts and take all action necessary or appropriate to cause
their representations and warranties contained in Section 4 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.
6.2 Sale and Registration of Securities. Neither the Company nor the
Trust will, nor will either of them permit any of their Affiliates to, nor will
any of them permit any person acting on its or their behalf (other than the
Introducing Agent and its affiliates) to, directly or indirectly, (i) resell any
Preferred Securities that have been acquired by any of them, (ii) 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 Preferred Securities in any manner that would require the
registration of the Securities under the Securities Act or (iii) make offers or
sales of any such Security, or solicit offers to buy any such Security, under
any circumstances that would require the registration of any of such Securities
under the Securities Act.
6.3 Clearing and Settlement. The Company and the Trust will cooperate
with the Purchaser (or any holder of the Preferred Securities) and use all
15
commercially reasonable efforts to make the Preferred Securities eligible for
clearance and settlement as book-entry securities through the facilities of the
Depository Trust Company ("DTC") and listed for trading through the PORTAL
Market ("PORTAL"), and will execute, deliver and comply with all representations
made to, and agreements with, DTC and PORTAL. This Section 6.3 will survive
delivery of and payment for the Preferred Securities.
6.4 Integration. Neither the Company nor the Trust will, until one
hundred eighty (180) days following the Closing Date, without the Purchaser's
prior written consent, offer, sell, contract to sell, grant any option to
purchase or otherwise dispose of, directly or indirectly, (i) any Preferred
Securities or other securities of the Trust other than as contemplated by this
Agreement or (ii) any other securities convertible into, or exercisable or
exchangeable for, any Preferred Securities or other securities of the Trust.
6.5 Qualification of Securities. The Company and the Trust will
arrange for the qualification of the Preferred Securities for sale under the
laws of such jurisdictions as the Purchaser may designate and will maintain such
qualifications in effect so long as required for the sale of the Preferred
Securities. The Company or the Trust, as the case may be, will promptly advise
the Purchaser of the receipt by the Company or the Trust, as the case may be, of
any notification with respect to the suspension of the qualification of the
Preferred Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
6.6 Use of Proceeds. The Trust shall use the proceeds from the sale
of the Preferred Securities and the Common Securities to purchase the Junior
Subordinated Notes from the Company.
6.7 Investment Company. So long as any of the Securities are
outstanding, (i) the Securities shall not be listed on a national securities
exchange registered under Section 6 of the Exchange Act or quoted in a U.S.
automated interdealer quotation system, (ii) neither the Company nor the Trust
shall be an open-end investment company, unit investment trust or face-amount
certificate company that is, or is required to be, registered under Section 8 of
the Investment Company Act, and, the Securities shall otherwise satisfy the
eligibility requirements of Rule 144A(d)(3) and (iii) neither the Company nor
the Trust shall 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.
6.8 Solicitation and Advertising. Neither the Company nor the Trust
will, nor will either of them permit any of their Affiliates or any person
acting on their behalf (other than the Introducing Agent and its affiliates), to
(i) engage in any "directed selling efforts" within the meaning of Regulation S
under the Securities Act or (ii) engage in any form of "general solicitation or
general advertising" (within the meaning of Regulation D) in connection with any
offer or sale of any of the Securities.
6.9 Compliance with Rule 144A(d)(4) under the Securities Act. So long
as any of the Securities are outstanding and are "restricted securities" within
the meaning of Rule 144(a)(3) under the Securities Act, the Sellers will, during
any period in which they are not subject to and in compliance with Section 13 or
15(d) of the Exchange Act, or the Sellers are not exempt from such reporting
16
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. The information
provided by the Sellers pursuant to this Section 6.9 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. If the Company and the
Trust are required to register under the Exchange Act, such reports filed in
compliance with Rule 12g3-2(b) shall be sufficient information as required
above. This covenant is intended to be for the benefit of the Purchaser, the
holders of the Securities, and the prospective purchasers designated by such
holders, from time to time, of the Securities.
6.10 Reports.
(i) The Company shall furnish to (i) the Purchaser and any subsequent
holder of the Securities, and (ii) any beneficial owner of the Securities
reasonably identified to the Company (which identification may be made by either
such beneficial owner or by the Purchaser) (collectively, the "Report
Recipients"), a duly completed and executed certificate in the form attached
hereto as Exhibit B, including the financial statements referenced in such
Exhibit, which certificate and financial statements shall be so furnished by the
Company or the Trust not later than forty-five (45) days after the end of each
of the first three fiscal quarters of each fiscal year of the Company and not
later than ninety (90) days after the end of each fiscal year of the Company. If
the Company intends to file its annual and quarterly information with the SEC in
electronic form pursuant to Regulation S T of the Commission using the
Commissioner's Electronic Data Gathering, Analysis and Retrieval ("EDGAR")
system, the Company shall notify the Report Recipients in the manner prescribed
herein of each such annual and quarterly filing. The Report Recipients are
hereby authorized and directed to access the EDGAR system for purposes of
retrieving the financial information so filed. The Report Recipients shall have
no duty to search for or obtain any electronic or other filings that the Company
makes with the Commission, regardless of whether such filings are periodic,
supplemental or otherwise. Delivery of reports, information and documents to the
Report Recipients pursuant to this Section 6.10 shall be solely for purposes of
compliance with this Section 6.10, and only those reports, information and
documents timely filed shall be considered compliant with the delivery
requirements of this Section 6.10. A Report Recipient's receipt of such reports,
information and documents shall not constitute notice to it of the content
thereof or any matter determinable from the content thereof, including the
Company's compliance with any of its covenants hereunder.
(ii) The Report Recipients agree to hold all information contained in
any financial statements provided to them pursuant to this Section 6.10 which
are not filed with or furnished to the Commission through EDGAR or otherwise
made publicly available by the Company ("Confidential Financial Statements"), in
confidence and will not directly or indirectly, transfer, publish or disclose
any such information, to any other person or entity without the prior written
consent of the Company, except and only to the extent as may be required by law
or judicial process (in which case the Report Recipients shall provide notice of
such compelled disclosure to the Company prior to (or, in the case of an on-site
governmental authority or agency examination, to the extent practicable) such
disclosure); provided that the Report Recipients shall be permitted to use such
17
information for the purpose of preparing and disclosing aggregate information
that is not specific to the Company. The Company agrees to promptly provide such
Confidential Financial Statements to a prospective purchaser of the Preferred
Securities who expressly agrees (orally or in writing) to maintain its
confidentiality. The Company shall place a conspicuous legend as to
confidentiality on any Confidential Financial Statements made available
hereunder.
Section 7. Payment of Expenses. The Company hereby covenants and
agrees that it shall pay or cause to be paid (directly or by reimbursement) all
costs and expenses incident to the performance of the obligations of the Sellers
under this Agreement, whether or not the transactions contemplated herein are
consummated or this Agreement is terminated, including (i) all costs and
expenses incident to the authorization, issuance, sale and delivery of the
Preferred Securities and any taxes payable in connection therewith; (ii) the
fees and expenses of qualifying the Preferred Securities under the securities
laws of the several jurisdictions as provided in Section 6.5; (iii) the fees and
expenses of the counsel, the accountants and any other experts or advisors
retained by the Company or the Trust, which counsel fees and expenses incurred
in connection with the closing of the transactions contemplated hereby, in an
amount up to $10,000, shall be reimbursed by the Purchaser on the Closing Date;
and; (iv) the fees and all reasonable expenses of the Guarantee Trustee, the
Property Trustee, the Delaware Trustee, the Indenture Trustee and any other
trustee or paying agent appointed under the Operative Documents, except that any
acceptance fee and annual administrative fees of any such trustee and the fees
and disbursements of counsel to such trustees incurred in connection with the
closing of the transactions contemplated hereby shall be paid by the Purchaser
on the Closing Date.
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Section 8. Indemnification & Contribution.
8.1 Indemnification.
8.1.1 The Company and the Trust agree jointly and severally to indemnify
and hold harmless the Purchaser, a Subsequent Purchaser and their respective
affiliates (collectively, the "Indemnified Parties") and the Indemnified
Parties' respective directors, officers, employees and agents and each person
who "controls" the Indemnified Parties within the meaning of either the
Securities Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any information or documents furnished or made
available to the Purchaser by or on behalf of the Company, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (iii) the breach
or alleged breach of any representation, warranty or agreement of either Seller
contained herein, and agrees to reimburse each such Indemnified Party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to any
liability which the Company or the Trust may otherwise have.
8.1.2 Promptly after receipt by an Indemnified Party under this Section 8
of notice of the commencement of any action, such Indemnified Party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, promptly notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve the indemnifying party from liability under Section 8.1.1 above unless
and to the extent that such failure results in the forfeiture by the
indemnifying party of material rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any Indemnified
Party other than the indemnification obligation provided in Section 8.1.1 above.
The Purchaser shall be entitled to appoint counsel to represent the Indemnified
Party in any action for which indemnification is sought. An indemnifying party
may participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the Indemnified Party) also be counsel to the Indemnified Party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all Indemnified Parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. An indemnifying party will not,
without the prior written consent of the Indemnified Parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Parties
are actual or potential parties to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Party from all liability arising out of such claim, action,
suit or proceeding.
8.2 Contribution.
19
8.2.1 In order to provide for just and equitable contribution in
circumstances under which the indemnification provided for in Section 8.1 hereof
is for any reason held to be unenforceable for the benefit of an Indemnified
Party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such Indemnified Party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Sellers, on the one
hand, and the Purchaser, on the other hand, from the offering of the Securities
or (ii) if the allocation provided by clause (i) 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
Sellers, on the one hand, and the Purchaser, on the other hand, in connection
with the statements, omissions or breaches, which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
8.2.2 The relative benefits received by the Sellers, on the one hand, and
the Purchaser, on the other hand, in connection with the offering of the
Securities shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Securities (before deducting expenses)
received by the Sellers and the Fee received by the Purchaser bear to the
aggregate of such net proceeds and the Fee.
8.2.3 The Sellers and the Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 8.2 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 8.2. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an Indemnified Party and referred to above in this Section 8.2 shall be
deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement, omission or alleged omission or breach or
alleged breach.
8.2.4 Notwithstanding any provision of this Section 8 to the contrary, the
Purchaser shall not be required to contribute any amount in excess of the amount
of the Fee.
8.2.5 No person 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 guilty of such fraudulent misrepresentation.
8.2.6 For purposes of this Section 8.2, each person, if any, who controls
the Purchaser within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act and the respective partners, directors, officers,
employees and agents of the Purchaser or any such controlling person shall have
the same rights to contribution as the Purchaser, while each officer and
director of the Company, each trustee of the Trust and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Sellers.
20
8.3 Additional Remedies. The indemnity and contribution agreements
contained in this Section 8 are in addition to any liability that the Sellers
may otherwise have to any Indemnified Party.
8.4 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 8.1 through 8.3 hereof.
Section 9. Rights and Responsibilities of Purchaser.
9.1 Reliance. In performing its duties under this Agreement, the
Purchaser shall be entitled to rely upon any notice, signature or writing which
it shall in good faith believe to be genuine and to be signed or presented by a
proper party or parties. The Purchaser may rely upon any opinions or
certificates or other documents delivered by the Sellers or their counsel or
designees to the Purchaser.
9.2 Rights of Purchaser. In connection with the performance of its
duties under this Agreement, the Purchaser shall not be liable for any error of
judgment or any action taken or omitted to be taken unless the Purchaser was
grossly negligent or engaged in willful misconduct in connection with such
performance or non-performance. No provision of this Agreement shall require the
Purchaser to expend or risk its own funds or otherwise incur any financial
liability in connection with the performance of any of its duties hereunder.
Section 10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Purchaser, by notice given to the
Company and the Trust prior to delivery of and payment for the Preferred
Securities, if prior to such time (i) a downgrading shall have occurred in the
rating accorded the Company's debt securities or preferred stock by any
"nationally recognized statistical rating organization," as that term is used by
the SEC in Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, or such organization
shall have publicly announced that it has under surveillance or review, with
possible negative implications, its rating of the Company's debt securities or
preferred stock, (ii) the Trust shall be unable to sell and deliver to the
Purchaser at least $12,000,000 stated aggregate liquidation value of Preferred
Securities, (iii) the Company or any of its subsidiaries that is an insured
depository institution shall cease to be "adequately-capitalized" within the
meaning of 12 U.S.C. Section 1831 and applicable regulations adopted thereunder,
or any formal administrative or judicial action is taken by any appropriate
federal banking agency against the Company or any such insured subsidiary for
unsafe and unsound banking practices, or violations of law, (iv) a suspension or
material limitation in trading in securities generally shall have occurred on
the New York Stock Exchange, (v) a suspension or material limitation in trading
in any of the Company's securities shall have occurred on the exchange or
quotation system upon which the Company's securities are traded, if any, (vi) a
general moratorium on commercial banking activities shall have been declared
either by federal or California authorities or (vii) there shall have occurred
any outbreak or escalation of hostilities, or declaration by the United States
of a national emergency or war or other calamity or crisis the effect of which
on financial markets is such as to make it, in the Purchaser's judgment,
impracticable or inadvisable to proceed with the offering or delivery of the
Preferred Securities.
21
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 4 hereof. The
Disclosure Schedule shall be arranged in paragraphs corresponding to the section
numbers contained in Section 4. 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 4 hereof unless such
information is specifically included on the Disclosure Schedule in accordance
with the provisions of this Section 11.1.
11.2 Notices. All communications hereunder will be in writing and
effective only on receipt, and will be mailed, delivered by hand or courier or
sent by facsimile and confirmed:
If to the Purchaser, to:
TWE, Ltd.
c/o Maples Finance Limited
P.O. Box 1093 GT
Queensgate House
South Church Street
George Town
Grand Cayman, Cayman Islands
Facsimile: (345) 945-7100
Telephone: (345) 945-7099
Attention: The Directors
with a copy to:
Thacher Proffitt & Wood LLP
Two World Financial Center
New York, New York 10281
Facsimile: (212) 912-7751
Telephone: (212) 912-7400
Attention: Mark I. Sokolow, Esq.
if to the Sellers, to:
22
Temecula Valley Bancorp Inc.
Temecula Valley Statutory Trust V
27710 Jefferson Avenue #A100
Temecula, CA 92590
Facsimile: (951) 694-9141
Telephone: (951) 694-9040
Attention: Chairman, Chief Executive Officer and
President
with a copy to:
McAndrews, Allen & Matson
1100 South Coast Highway, Suite 308
Laguna Beach, CA 92651
Facsimile: (949) 497-0291
Telephone: (949) 497-0292
Attention: Stephanie E. Allen
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
Purchaser, the Sellers, and their respective counsel, may change their
respective notice addresses, from time to time, by written notice to all of the
foregoing persons.
11.3 Parties in Interest, Successors and Assigns. This Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person other than
the parties hereto and the affiliates, directors, officers, employees, agents
and controlling persons referred to in Section 8 hereof, their successors,
assigns, heirs and legal representatives, and any Subsequent Purchaser, any
right or obligation hereunder. None of the rights or obligations of the Company
or the Trust under this Agreement may be assigned, whether by operation of law
or otherwise, without the Purchaser's prior written consent. The rights and
obligations of the Purchaser under this Agreement may be assigned without the
Company's or the Trust's consent; provided that the assignee assumes the
obligations of the Purchaser under this Agreement.
11.4 Recourse Limited. No recourse shall be had to any subscriber,
officer, director, employee, trustee, equity holder, certificate holder,
incorporator or agent of the Purchaser or its successors or assigns for any
obligations hereunder. The Sellers, severally and jointly, further agree (i) not
to take any action in respect of any claims hereunder against any subscriber,
officer, director, employee, trustee, equity holder, certificate holder,
incorporator or agent of the Purchaser or any of its successors or assigns that
is an investment vehicle issuing collateralized debt obligations and (ii) not to
institute against any successor or assign of the Purchaser that is an investment
vehicle issuing collateralized debt obligations any insolvency, bankruptcy,
23
reorganization, liquidation or similar proceedings in any jurisdiction until one
year and one day or, if longer, the applicable preference period then in effect,
as the case may be, shall have elapsed since the final payments to the holders
of the securities issued by such investment vehicle.
11.5 Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
by each of the parties hereto.
11.6 Counterparts and Facsimile. This Agreement may be executed by
any one or more of the parties hereto in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument. This Agreement may be executed
by any one or more of the parties hereto by facsimile which shall be effective
as delivery of a manually executed counterpart hereof.
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 WILL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW).
11.9 Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY OR
AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT MAY
BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE
COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT.
11.10 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.
11.11 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
24
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 Purchaser's rights and privileges
shall be enforceable to the fullest extent permitted by law.
11.12 Survival. The respective agreements, representations,
warranties, indemnities and other statements of the Company and the Trust and
their respective officers or trustees and of the Purchaser set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Purchasers, the Company or the
Trust or any of their respective officers, directors, trustees or controlling
persons, and will survive delivery of and payment for the Preferred Securities.
The provisions of Sections 2.1, 7 and 8 shall survive the termination or
cancellation of this Agreement.
Signatures appear on the following page
25
IN WITNESS WHEREOF, this Purchase Agreement has been entered into as of the
date first written above.
TEMECULA VALLEY BANCORP INC.
By: /s/ Stephen H. Wacknitz
------------------------------------
Stephen H. Wacknitz
Chairman, Chief Executive Officer
and President
TEMECULA VALLEY STATUTORY TRUST V,
By: TEMECULA VALLEY BANCORP INC.,
as Depositor
By: /s/ Donald A. Pitcher
------------------------------------
Donald A. Pitcher
Executive Vice President, Chief
Financial Officer and Secretary
TWE, LTD., as Purchaser,
By: Trapeza Capital Management, LLC,
as Portfolio Manager
By: /s/ John M. Stein
------------------------------------
John M. Stein
Managing Director
26
Schedule [I/II]
List of Significant Subsidiaries
Temecula Valley Bank
27
EXHIBIT A-1
FORM OF THACHER PROFFITT & WOOD LLP OPINION
Pursuant to Section 3.2(a) of the Purchase Agreement, Thacher Proffitt
& Wood LLP, special counsel for the Purchaser, shall deliver an opinion to the
effect that:
(i) the Company and each Significant Subsidiary is validly existing as a
corporation in good standing under the laws of the jurisdiction in which it
is chartered or organized;
(ii) the Company has corporate power and authority to (a) execute and deliver,
and to perform its obligations under, the Operative Documents to which it
is a party and (b) issue and perform its obligations under the Notes;
(iii) neither the issue and sale of the Common Securities, the Preferred
Securities or the Junior Subordinated Notes, nor the purchase by the Trust
of the Junior Subordinated Notes, nor the execution and delivery of, and
compliance with, the Operative Documents to which each is a party by, the
Company or the Trust, nor the consummation of the transactions
contemplated thereby will constitute a breach or violation of the Trust
Agreement or the charter or by-laws of the Company;
(iv) the Amended and Restated Trust Agreement has been duly authorized, executed
and delivered by the Company and duly executed and delivered by the
Administrative Trustees;
(v) each of the Guarantee and the Indenture has been duly authorized, executed
and delivered by the Company and, assuming it has been duly authorized,
executed and delivered by the Guarantee Trustee and the Indenture Trustee,
respectively, constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity;
(vi) the Junior Subordinated Notes have been duly authorized and executed by the
Company and delivered to the Indenture Trustee for authentication in
accordance with the Indenture and, when authenticated in accordance with
the provisions of the Indenture and delivered to the Trust against payment
therefor, will constitute legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable against
the Company in accordance with their terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general principles of equity;
(vii) the Trust is not, and, following the issuance of the Preferred Securities
and the consummation of the transactions contemplated by the Operative
Documents and the application of the proceeds therefrom, the Trust will
not be, an "investment company" or an entity "controlled" by an
"investment company," in each case within the meaning of the Investment
Company Act;
(viii) assuming (a) the accuracy of the representations and warranties, and
compliance with the agreements contained in the Purchase Agreement and
(b) that the Preferred Securities are sold in a manner contemplated by,
and in accordance with the Purchase Agreement and the Amended and
A-1-1
Restated Trust Agreement, it is not necessary in connection with the
offer, sale and delivery of the Preferred Securities by the Trust to the
Purchaser, to register any of the Securities under the Securities Act or
to require qualification of the Indenture under the Trust Indenture
Act of 1939, as amended;
(ix) the Purchase Agreement has been duly authorized, executed and delivered by
the Company and the Trust; and,
(x) the Indenture constitutes a valid and binding instrument of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its
terms, except as rights to indemnity and contribution thereunder may be
limited under applicable law or public policy, and subject to the
qualifications that (i) enforcement thereof may be limited by bankruptcy,
insolvency, receivership, reorganization, liquidation, voidable preference,
moratorium or other laws (including the laws of fraudulent conveyance and
transfer) or judicial decisions affecting the enforcement of creditors'
rights generally or the reorganization of financial institutions and (ii)
the enforceability of the Indenture Trustee's obligations thereunder is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and to
the effect of certain laws and judicial decisions upon the availability and
enforceability of certain remedies, including the remedies of specific
performance and self-help.
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of New York, the Delaware General Corporation
Law and the federal laws of the United States; (B) as to matters involving the
application of laws of any jurisdiction other than the State of New York and the
Delaware General Corporation Law or the federal laws of the United States, (i)
rely, to the extent deemed proper and specified in such opinion, upon the
opinion of other counsel of good standing believed to be reliable and who are
satisfactory to the Purchaser or (ii) assume such law is substantially similar
to the law of the State of New York and, (C) as to matters of fact, rely to the
extent deemed proper, on certificates of responsible officers of the Company and
public officials.
A-1-2
EXHIBIT A-2
FORM OF COMPANY COUNSEL OPINION
OR OFFICERS' CERTIFICATE
Pursuant to Section 3.2(b) of the Purchase Agreement, either (i) counsel
for the Company shall deliver an opinion, or (ii) the [General Counsel/Chief
Legal Officer] of the Company shall deliver an opinion, or, (iii) if the Company
does not have a General Counsel or Chief Legal Officer, the [Chief Executive
Officer/President/Executive Vice President] and [Chief Financial
Officer/Treasurer/Assistant Treasurer] of the Company shall provide an Officers'
Certificate, to the effect that:
(i) all of the issued and outstanding shares of capital stock of each
Significant Subsidiary are owned of record by the Company, and the issuance
of the Preferred Securities and the Common Securities is not subject to any
contractual preemptive rights known to such [counsel/officer];
(ii) no consent, approval, authorization or order of any court or governmental
authority is required for the issue and sale of the Common Securities, the
Preferred Securities or the Junior Subordinated Notes, the purchase by the
Trust of the Junior Subordinated Notes, the execution and delivery of and
compliance with the Operative Documents by the Company or the Trust or the
consummation of the transactions contemplated in the Operative Documents,
except such approvals (specified in such [opinion/certificate]) as have
been obtained;
(iii) to the knowledge of such [counsel/officer], there is no action, suit or
proceeding before or by any government, governmental instrumentality,
arbitrator or court, domestic or foreign, now pending or threatened
against or affecting the Trust or the Company or any Significant
Subsidiary that could adversely affect the consummation of the
transactions contemplated by the Operative Documents or could have a
Material Adverse Effect;
(iv) the Company is duly registered as a bank holding company under the Bank
Holding Company Act and the regulations thereunder of the Federal Reserve
Board, and the deposit accounts of the Company's banking subsidiary are
insured by the FDIC to the fullest extent permitted by law and the rules
and regulations of the FDIC, and no proceeding for the termination of such
insurance are pending or, to such person's knowledge, threatened;
(v) The execution, delivery and performance of the Operative Documents, as
applicable, by the Company and the Trust and the consummation by the
Company and the Trust of the transactions contemplated by the Operative
Documents, as applicable, (a) will not result in any violation of the
charter or bylaws of the Company, the charter or bylaws of any Significant
Subsidiary, the Amended and Restated Trust Agreement or the Certificate of
Trust, and (b) will not conflict with, or result in a breach of any of the
terms or provisions of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or
result in the creation or imposition of any lien, charge and encumbrance
upon any assets or properties of the Company or any Significant Subsidiary
under, (A) any agreement, indenture, mortgage or instrument that the
Company or any Significant Subsidiary is a party to or by which it may be
A-2-1
bound or to which any of its assets or properties may be subject, or (B)
any existing applicable law, rule or administrative regulation [for General
Counsel only: except that I express no opinion with respect to the
securities laws of the State of Delaware] of any court or governmental
agency or authority having jurisdiction over the Company or any Significant
Subsidiary or any of their respective assets or properties, except in case
of (b), where any such violation, conflict, breach, default, lien, charge
or encumbrance, would not have a material adverse effect on the assets,
properties, business, results of operations or financial condition of the
Company and its subsidiaries, taken as whole.
All terms used but not defined herein shall have the meanings assigned to
them in the Purchase Agreement. A Subsequent Purchaser shall be entitled to rely
on this [opinion/certificate].
[Applies only to in-house counsel opinion] [In rendering such opinions,
such counsel may (A) state that the above is limited to the laws of the States
of [Jurisdiction of bar admission], (B) rely as to matters of fact, to the
extent deemed proper, on certificates of responsible officers of the Company and
public officials.]
A-2-2
EXHIBIT A-3
FORM OF TAX COUNSEL OPINION
Pursuant to Section 3.2(c) of the Purchase Agreement, Thacher Proffitt &
Wood LLP, special tax counsel for the Purchaser, shall deliver an opinion to the
effect that:
(i) the Trust will be classified for United States federal income tax purposes
as a grantor trust and not as an association or a publicly traded
partnership taxable as a corporation; and
(ii) for United States federal income tax purposes, the Junior Subordinated
Notes will constitute indebtedness of the Company.
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of New York and the federal laws of the United
States and (B) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Company and public officials.
A-3-1
EXHIBIT A-4
FORM OF DELAWARE COUNSEL TRUST OPINION
Pursuant to Section 3.2(d) of the Purchase Agreement, Morris, James,
Hitchens & Williams LLP, special Delaware counsel for the Trust, shall deliver
an opinion to the effect that:
(i) The Trust has been duly created and is validly existing in good standing as
a statutory trust under the Delaware Statutory Trust Act, and 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.
(ii) Under the Delaware Statutory Trust Act and the Amended and Restated Trust
Agreement, the Trust has the trust power and authority (i) to own property
and conduct its business, all as described in the Amended and Restated
Trust Agreement, (ii) to execute and deliver, and to perform its
obligations under, each of the Purchase Agreement, the Common Securities
Subscription Agreement, the Junior Subordinated Note Subscription
Agreement, the Preferred Securities and the Common Securities, and (iii) to
purchase and hold the Junior Subordinated Notes.
(iii) Under the Delaware Statutory Trust Act, the certificate attached to the
Amended and Restated Trust Agreement as Exhibit C is an appropriate form
of certificate to evidence ownership of the Preferred Securities. The
Preferred Securities have been duly authorized by the Amended and Restated
Trust Agreement and, when issued in accordance with the Amended and
Restated Trust Agreement and delivered against payment therefor in
accordance with the Amended and Restated Trust Agreement and the Purchase
Agreement, the Preferred Securities will be validly issued and (subject to
the qualifications set forth in this paragraph) fully paid and
nonassessable and will represent undivided beneficial interests in the
assets of the Trust, and the Preferred Security Holders will be entitled
to the benefits of the Amended and Restated Trust Agreement. The
Preferred Security Holders 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. The Preferred Security
Holders may be obligated to make payments or provide indemnity or security
as set forth in the Amended and Restated Trust Agreement.
(iv) The Common Securities have been duly authorized by the Amended and Restated
Trust Agreement and, when issued in accordance with the Amended and
Restated Trust Agreement and delivered against payment therefore in
accordance with the Amended and Restated Trust Agreement and the Common
Securities Subscription Agreement, will be validly issued and will
represent undivided beneficial interests in the assets of the Trust, and
the Common Security Holder will be entitled to the benefits of the Amended
and Restated Trust Agreement.
(v) Under the Delaware Statutory Trust Act and the Amended and Restated Trust
Agreement, the issuance of the Preferred and the Common Securities is not
subject to preemptive or other similar rights.
A-4-1
(vi) Under the Delaware Statutory Trust Act and the Amended and Restated Trust
Agreement, the execution and delivery by the Trust of the Purchase
Agreement, the Common Securities Subscription Agreement and the Junior
Subordinated Note Subscription Agreement, 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.
(vii) The Amended and Restated Trust Agreement constitutes a legal, valid and
binding obligation of the Company and the Trustees, enforceable against
the Company and the Trustees in accordance with its terms.
(viii) The issuance and sale by the Trust of the Preferred Securities and the
Common Securities, the purchase by the Trust of the Junior Subordinated
Notes, the execution, delivery and performance by the Trust of the
Purchase Agreement, the Common Securities Subscription Agreement and the
Junior Subordinated Note Subscription Agreement, the consummation by the
Trust of the transactions contemplated by the Purchase Agreement, the
Common Securities Subscription Agreement and the Junior Subordinated Note
Subscription Agreement, and compliance by the Trust with its obligations
thereunder are not prohibited by (i) the Certificate of Trust or the
Amended and Restated Trust Agreement, or (ii) any law or regulation of
the State of Delaware applicable to the Trust.
(ix) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any Delaware court or Delaware
governmental authority or Delaware agency is required solely in connection
with the issuance and sale by the Trust of the Trust Securities, the
purchase by the Trust of the Junior Subordinated Notes, the execution,
delivery and performance by the Trust of the Purchase Agreement, the Common
Securities Subscription Agreement and the Junior Subordinated Note
Subscription Agreement, the consummation by the Trust of the transactions
contemplated by the Purchase Agreement, and compliance by the Trust with
its obligations thereunder.
(x) The Preferred Security Holders (other than those Preferred Security Holders
who reside or are domiciled in the State of Delaware) will have no
liability for income taxes imposed by the State of Delaware solely as a
result of their participation in the Trust and the Trust will not be liable
for any income tax imposed by the State of Delaware.
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware and (B) rely as to matters of fact,
to the extent deemed proper, on certificates of responsible officers of the
Company and public officials.
A-4-2
EXHIBIT A-5
FORM OF TRUSTEE COUNSEL OPINION
Pursuant to Section 3.2(e) of the Purchase Agreement, Morris, James,
Hitchens & Williams LLP, special counsel for the Property Trustee, the Guarantee
Trustee, the Delaware Trustee and the Indenture Trustee, shall deliver an
opinion to the effect that:
(i) Wilmington Trust Company is duly incorporated and validly existing as a
Delaware banking corporation in good standing under the laws of the State
of Delaware with trust powers and its principal place of business in the
State of Delaware.
(ii) Wilmington Trust Company has requisite corporate power and authority to
execute and deliver, and to perform its obligations under, the Amended and
Restated Trust Agreement, the Guarantee Agreement and the Indenture.
(iii) The execution, delivery, and performance by Wilmington Trust Company of
the Amended and Restated Trust Agreement, the Guarantee Agreement and the
Indenture have been duly authorized by all necessary corporate action on
the part of Wilmington Trust Company, and the Amended and Restated Trust
Agreement, the Guarantee Agreement and the Indenture have been duly
executed and delivered by Wilmington Trust Company.
(iv) The Amended and Restated Trust Agreement is a legal, valid and binding
obligation of Wilmington Trust Company, enforceable against Wilmington
Trust Company, in accordance with its terms.
(v) No approval, authorization or other action by, or filing with, any
governmental authority or agency under any law or regulation of the State
of Delaware or the United States of America governing the trust powers of
Wilmington Trust Company is required solely in connection with the
execution, delivery and performance by Wilmington Trust Company of the
Amended and Restated Trust Agreement, the Guarantee Agreement and the
Indenture, except for the filing of the Certificate of Trust with the
Secretary of State, which Certificate of Trust has been duly filed with the
Secretary of State.
(vi) The execution, delivery and performance of the Amended and Restated Trust
Agreement, the Guarantee Agreement and the Indenture by Wilmington Trust
Company are not prohibited by (i) the Charter or Bylaws of Wilmington Trust
Company, (ii) any law or regulation of the State of Delaware or the United
States of America governing the trust powers of Wilmington Trust Company,
or (iii) to our knowledge (based and relying solely on the Officer
Certificates), any agreements or instruments to which Wilmington Trust
Company is a party or by which Wilmington Trust Company is bound or any
judgment or order applicable to Wilmington Trust Company.
(vii) The Junior Subordinated Notes delivered on the date hereof have been
authenticated by due execution thereof and delivered by Wilmington Trust
Company, as Indenture Trustee, in accordance with the Company Order. The
A-5-1
Preferred Securities delivered on the date hereof have been authenticated
by due execution thereof and delivered by Wilmington Trust Company, as
Property Trustee, in accordance with the Trust Order.
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware and the federal laws of the United
States governing the trust powers of Wilmington Trust Company and (B) rely as to
matters of fact, to the extent deemed proper, on certificates of responsible
officers of Wilmington Trust Company and public officials.
A-5-2
Exhibit B
FORM OF OFFICER'S CERTIFICATE
The undersigned, the [Chief Financial Officer] [Treasurer] [Executive Vice
President] hereby certifies, pursuant to Section 6.10 of the Purchase Agreement,
dated as of September 27, 2006, that as of _________, 20___ the Company had the
following ratios and balances:
BANK HOLDING COMPANY
As of [Quarterly Financial Dates]
Tier 1 Risk Weighted Assets %
-----------
Ratio of Double Leverage %
-----------
Non-Performing Assets to Loans and OREO %
-----------
Tangible Common Equity as a Percentage of Tangible Assets %
-----------
Ratio of Reserves to Non-Performing Loans %
-----------
Ratio of Net Charge-Offs to Loans %
-----------
Return on Average Assets (annualized) %
-----------
Net Interest Margin (annualized) %
-----------
Efficiency Ratio %
-----------
Ratio of Loans to Assets %
-----------
Ratio of Loans to Deposits %
-----------
Double Leverage (exclude trust preferred as equity) %
-----------
Total Assets $
-----------
Year to Date Income $
-----------
* A table describing the quarterly report calculation procedures is attached.
[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Company and its consolidated subsidiaries for the
three years ended _______, 20__.]
[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and
consolidating financial statements (including the balance sheet and income
statement) of the Company and its consolidated subsidiaries for the fiscal
quarter and [six/nine] month period ended _______, 20___.]
B-1
The financial statements fairly present in all material respects, in accordance
with U.S. generally accepted accounting principles ("GAAP"), the financial
position of the Company and its consolidated subsidiaries, and the results of
operations and changes in financial condition as of the date, and for the [___
quarter interim] [annual] period ended _______, 20__, and such financial
statements have been prepared in accordance with GAAP consistently applied
throughout the period involved (expect as otherwise noted therein).
IN WITNESS WHEREOF, the undersigned has executed this Officer's Certificate
as of this _____ day of _____________, 20__
---------------------------------
Name:
Title:
Temecula Valley Bancorp Inc.
27710 Jefferson Avenue #A100
Temecula, CA 92590
Tel: (951) 694-9040
B-2
FINANCIAL DEFINITIONS
BANK HOLDING COMPANY
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Report Item Corresponding FRY-9C or LP Line Items with Line Item Description of Calculation
corresponding Schedules
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Tier 1 Risk Weighted BHCK7206 Tier 1 Risk Ratio: Core Capital (Tier 1)/
Assets Risk-Adjusted Assets
Schedule HC-R
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Ratio of Double (BHCP0365)/(BCHCP3210) Total equity investments in subsidiaries divided
Leverage by the total equity capital. This field is
Schedule PC in the LP calculated at the parent company level.
"Subsidiaries" include bank, bank holding
company, and non-bank subsidiaries.
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Non-Performing Assets (BHCK5525-BHCK3506+BHCK5526- Total Nonperforming Assets (NPLs+Foreclosed Real
to Loans and OREO BHCK3507+BHCK2744/(BHCK2122+BHCK2744) Estate+Other Nonaccrual & Repossessed
Assets)/Total Loans+Foreclosed Real Estate
Schedules HC-C, HC-M & HC-N
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Tangible Common (BHDM3210-BHCK3163)/(BHCK2170-BHCK3163) (Equity Capital - Goodwill)/(Total Assets -
Equity as a Goodwill)
Percentage of Schedule HC
Tangible Assets
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Ratio of Reserves to (BHCK3123+BHCK3128)/(BHCK5525- Total Loan Loss and Allocated Transfer Risk
Non-Performing Loans BHCK3506+BHCK5526-BHCK3507) Reserves/Total Nonperforming Loans (Nonaccrual
+ Restructured)
Schedules HC & HC-N & HC-R
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Ratio of Net (BHCK4635-BHCK4605)/(BHCK3516) Net charge offs for the period as a percentage
Charge-Offs to Loans of average loans.
Schedules HI-B & HC-K
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Return on Average (BHCK4340/BHCK3368) Net Income as a percentage of Assets.
Assets (annualized)
Schedules HI & HC-K
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Net Interest Margin (BHCK4519/(BHCK3515+BHCK3365+BHCK3516+ (Net Interest Income Fully Taxable Equivalent,
(annualized) BHCK3401+BHCKB985) if available/Average Earning Assets)
Schedules HI Memorandum and HC-K
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Efficiency Ratio (BHCK4093)/(BHCK4519+BHCK4079) (Non-interest Expense)/(Net Interest Income
Fully Taxable Equivalent, if available, plus
Schedule HI Non-interest Income)
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Ratio of Loans to (BHCKB528+BHCK5369)/(BHCK2170) Total Loans & Leases (Net of Unearned Income &
Assets Gross of Reserve)/Total Assets
Schedule HC
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Ratio of Loans to (BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+ Total Loans & Leases (Net of Unearned Income &
Deposits BHFN6631+BHFN6636) Gross of Reserve)/Total Deposits (Includes
Domestic and Foreign Deposits)
Schedule HC
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1
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Total Assets (BHCK2170) The sum of total assets. Includes cash and
balances due from depository institutions;
Schedule HC securities; federal funds sold and securities
purchased under agreements to resell; loans and
lease financing receivables; trading assets;
premises and fixed assets; other real estate
owned; investments in unconsolidated subsidiaries
and associated companies; customer's liability on
acceptances outstanding; intangible assets; and
other assets.
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2