Exhibit 1.1
CAROLINA BANK HOLDINGS, INC.
Common Stock
($1.00 par value)
UNDERWRITING AGREEMENT
____________, 2002
XxXxxxxx & Company, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Gentlemen:
Carolina Bank Holdings, Inc., a corporation organized under North Carolina
law ("the Company" or the "Company"), proposes to employ you ("you" or the
"Underwriter") as agent of the Company, to assist in the sale on a best efforts
basis of up to 700,000 shares of the Company's Common Stock, par value $1.00
(the "Common Stock") (the "Firm Shares"), in a public offering (the "Offering").
In addition, the Company may increase the Offering by up to an additional
105,000 shares of Common Stock (the "Additional Shares"). The Firm Shares and
the Additional Shares are collectively referred to as the "Shares."
You have advised the Company that you are authorized to enter into this
Agreement and that you are willing to sell the Shares on a best efforts basis as
agent for the Company.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the Company
and the Underwriter hereby agree as follows:
1. Representations and Warranties of the Company. The Company represents
and warrants as follows:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form SB-2 (File No. 333-______), including a preliminary
prospectus, relating to the Shares. Such registration statement as amended at or
after the time that it becomes effective is referred to collectively as the
"Registration Statement," and the prospectus in the form filed with the
Commission as part of the Registration Statement or pursuant to its Rule 424(b),
if any, including any amendment or supplement thereto, after the Registration
Statement becomes effective are referred to collectively as the "Prospectus."
(b) Each Prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment or supplement thereto when so filed
complied in all material respects with the provisions of the Securities Act;
except that this representation and warranty
XxXxxxxx & Company, Inc.
____________, 2002
Page 2
does not apply to statements in or omissions from information relating to the
Underwriter in the last paragraph on the front cover of the Prospectus and in
the section of the Prospectus entitled "Underwriting", which were made in
reliance upon and conformity with information furnished to the Company by the
Underwriter expressly for use therein.
(c) The Registration Statement in the form in which it becomes
effective and also in such form as it may be when any post-effective amendment
thereto shall become effective, and the Prospectus filed as part of the
Registration Statement and in the form filed with the Commission under its Rule
424(b), if any, will comply in all material respects with the provisions of the
Securities Act and will not contain at any such times 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 not misleading, except that this
representation and warranty does not apply to statements in or omissions from
information relating to the Underwriter in the last paragraph on the front cover
of the Prospectus and in the section of the Prospectus entitled "Underwriting",
which were made in reliance upon and conformity with information furnished to
the Company in writing by the Underwriter expressly for use therein.
(d) The Company has the capitalization set forth in the Prospectus
under the caption "Capitalization." All of the outstanding shares of Common
Stock are duly authorized and validly issued, fully paid and non-assessable and
free of preemptive or similar rights. The Shares to be issued and sold by the
Company have been duly authorized, and upon delivery to the subscribers therefor
(the "Subscribers") against payment therefor in accordance with the terms
hereof, will have been validly issued and fully paid and will be nonassessable
and free of preemptive or similar rights; and the Common Stock conforms in all
material respects to the description thereof in the Registration Statement and
the Prospectus.
(e) The Company and its wholly owned subsidiaries, Carolina Bank (the
"Bank") and CBHI Capital Trust I (the "Trust" and together with the Bank, the
"Subsidiaries"), are duly organized and validly existing and in good standing
under North Carolina and Delaware law, respectively. There are no other
subsidiaries of the Company and there are no subsidiaries of the Subsidiaries.
The Company and the Subsidiaries are duly qualified to do business and are in
good standing in all jurisdictions that require such qualification or in which
the failure to qualify in such jurisdictions could have, in the aggregate,
material adverse effect on the business, condition or properties of the Company
or the Subsidiaries. The Company and the Subsidiaries hold all material
licenses, certificates and permits from governmental authorities necessary for
the conduct of their businesses as described in the Prospectus and own, or
possess adequate rights to use, all material rights necessary for the conduct of
their business and have not received any notice of conflict with the asserted
rights of others in respect thereof; and the Company and the Subsidiaries have
the corporate power and authority to own their properties and conduct their
businesses as described in the Prospectus.
(f) All of the outstanding shares of capital stock of the
Subsidiaries are owned by the Company (except for ______ shares of preferred
stock of the Trust), have been duly authorized and are validly issued, fully
paid and nonassessable (except as provided in N.C.G.S. 53-42) and are owned by
the Company free and clear of any lien, claim, security interest or other
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____________, 2002
Page 3
encumbrance. None of the Company's issued and outstanding shares of Common Stock
was issued in violation of the Securities Act.
(g) The Company and the Subsidiaries have good and marketable title
to all property described in the Prospectus as being owned by them, free and
clear of all liens, claims, security interests or other encumbrances except such
as are described in the Registration Statement and the Prospectus (or in a
document filed as an exhibit to the Registration Statement) or such as are not
material and do not interfere in any material respect with the use of the
property or the conduct of the business of the Company and the Subsidiaries
taken as a whole, and the property held under lease by the Company or the
Subsidiaries is held under valid and enforceable leases with only such
exceptions as in the aggregate are not material and do not interfere in any
material respect with the conduct of the business of the Company and the
Subsidiaries taken as a whole; provided that no representation or warranty is
made hereby to the title of the lessor of any such property.
(h) There are no legal or governmental proceedings pending, or to the
knowledge of the Company threatened, required to be described in the
Registration Statement or the Prospectus that are not described as required, and
there is no contract or document of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described or filed as required.
(i) Neither the Company nor either Subsidiary is in violation of its
articles of incorporation or bylaws or other organizational document or
operating agreement or in default in any material respect in the performance of
any obligation, agreement or condition contained in any bond, debenture, note or
any other evidence of indebtedness or in any agreement, indenture, lease or
other instrument to which the Company or a Subsidiary is a party or by which its
assets are bound. Neither the issuance nor the sale of the Shares nor the
execution and delivery of this Agreement nor the performance of the obligations
of the Company set forth herein nor the consummation of the transactions herein
contemplated requires any consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental body (except
such as may be required under the Securities Act or other securities laws or
Blue Sky laws) or will conflict with or constitute a breach of, or default
under, the articles of incorporation or bylaws or other organizational document
or operating agreement of the Company or a Subsidiary, or constitute a breach or
default under any agreement, indenture or other instrument to which the Company
or a Subsidiary is a party or by which either of them or their property is
bound, or any law, administrative regulation or ruling or court decree
applicable to the Company or the Subsidiaries or any of their properties, which
breach or default would have a material adverse effect on the business,
condition or properties of the Company and the Subsidiaries taken as a whole.
(j) Except as disclosed in the Registration Statement and the
Prospectus, subsequent to the respective dates as of which such information is
given in the Registration Statement and the Prospectus, neither the Company nor
a Subsidiary has incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business, that is
material to the Company and the Subsidiaries taken as a whole, and there has not
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____________, 2002
Page 4
been any material change in the capital stock, or material increase in the
short-term debt or long-term debt, of the Company or the Subsidiaries, or any
material adverse change, or any development involving a prospective material
adverse change, in the condition (financial or otherwise), business, properties,
net worth or results of operations of the Company and the Subsidiaries taken as
a whole.
(k) Cherry, Bekaert & Holland, LLP, who have certified certain of the
financial statements filed with the Commission as part of the Registration
Statement and the Prospectus, have consented in writing to the inclusion of
their report in the Prospectus and are independent public accountants as
required by the Securities Act.
(l) The Company's consolidated financial statements, together with
related schedules and notes, forming part of the Registration Statement and the
Prospectus, present fairly the financial position and the results of operations
of the Company and the Subsidiaries at the respective dates or for the
respective periods to which they apply; said statements and related notes have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the financial and statistical information and data set forth in the
Registration Statement and the Prospectus is fairly presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company and the Subsidiaries. The Company and the Subsidiaries have no material
contingent obligations that are not disclosed in the Registration Statement and
the Prospectus.
(m) No holders of securities of the Company have rights to the
registration of such securities in the Offering.
(n) The Company and the Subsidiaries have filed all federal, state
and foreign income tax returns that are required to be filed and have paid all
taxes indicated by said returns and all assessments received by them or any of
them to the extent that such taxes have become due, and are not being contested
in good faith.
(o) The Company and the Subsidiaries hold all material licenses,
certificates and permits from governmental authorities that are necessary to the
conduct of their respective businesses; and neither the Company nor a Subsidiary
has received any notice of proceedings relating to revocation or modification of
any such license, certificate or permit.
(p) The Company and each Subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; all policies of insurance and fidelity or surety bonds insuring the
Company or a Subsidiary or their respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and the
Subsidiaries are in compliance with the terms of such policies and instruments
in all material respects; and there are no claims by the Company or the
Subsidiaries under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights clause;
neither the Company nor a Subsidiary has been refused any insurance coverage
sought or
XxXxxxxx & Company, Inc.
____________, 2002
Page 5
applied for; and neither the Company nor a Subsidiary has any 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 on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and the Subsidiaries taken as a whole,
whether or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus (exclusive of any
amendment or supplement thereto).
(q) No Subsidiary is currently prohibited, directly or indirectly,
from paying any dividends to the Company, except as described in or contemplated
by the Prospectus.
(r) The Company and each Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset 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.
(s) The Company has not taken, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected to
cause or result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares.
(t) The Company and the Subsidiaries own, possess, license or have
other rights to use, on reasonable terms, all patents, patent applications,
trade and service marks, trade and service xxxx registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, know-how and other
intellectual property (collectively, the "Intellectual Property") necessary for
the conduct of the Company's business as now conducted or as proposed in the
Prospectus to be conducted. Except as set forth in the Prospectus, (i) there are
no rights of third parties to any such Intellectual Property; (ii) there is no
material infringement by third parties of any such Intellectual Property; (iii)
there is no pending or threatened action, suit, proceeding or claim by others
challenging the Company's or a Subsidiary's rights in or to any such
Intellectual Property, and the Company is unaware of any facts which would form
a reasonable basis for any such claim; (iv) there is no pending or threatened
action, suit, proceeding or claim by others challenging the validity or scope of
any such Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; and (v) there is no pending or
threatened action, suit, proceeding or claim by others that the Company or a
Subsidiary infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of others, and the Company is unaware
of any other fact which would form a reasonable basis for any such claim.
(u) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company
XxXxxxxx & Company, Inc.
____________, 2002
Page 6
on the other hand, which is required to be described in the Prospectus which is
not so fully and accurately described.
(v) All legal or governmental proceedings, contracts, leases or
documents of a character required to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the Registration Statement
have been so described or filed as required.
(w) The Company is not and, after giving effect to the offer and sale
of the Shares, will not be an "investment company" or an entity "controlled" by
an "investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(x) Any statistical and market-related data included in the
Prospectus are based on or derived from sources that the Company believes to be
reliable and accurate, and the Company has obtained the written consent to the
use of such data from such sources to the extent required.
(y) Except as fully and accurately described in the Registration
Statement and Prospectus: (i) the Company is in compliance in all material
respect with all rules, laws and regulations relating to the use, treatment,
storage and disposal of toxic substances and protection of health or the
environment ("Environmental Laws"); (ii) the Company has not received any notice
from any foreign, federal, state or local governmental authority or third party
of an asserted claim under Environmental Laws; (iii) the Company will not be
required to make any material capital expenditures to comply with Environmental
Laws; and (iv) no property which is, or was previously, owned, leased or
occupied by the Company has been designated as a Superfund site pursuant to the
Comprehensive Response, Compensation, and Liability Act of 1980, as amended, or
otherwise designated as a contaminated site under applicable foreign, federal,
state or local law.
(z) This Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding obligation of the Company, enforceable
in accordance with its terms.
(aa) All employee benefit plans established, maintained or contributed
to by the Company or a Subsidiary comply in all material respects with the
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and no such plan incurred or assumed any "accumulated funding
deficiency" within the meaning of Section 302 of ERISA or has incurred or
assumed any material liability to the Pension Benefit Guaranty Corporation.
2. Sale of the Shares. On the basis of the representations, warranties
and covenants herein contained, and subject to the conditions herein set forth,
the Company agrees to issue and sell through the Underwriter in the Offering up
to 700,000 of the Firm Shares. In addition, the Company agrees to issue and sell
through the Underwriter up to 105,000 Additional Shares as may be determined in
the Company's sole discretion. All Shares to be offered and sold in the Offering
shall be issued and sold through the Underwriter, as agent for the Company, to
the public and the Underwriter agrees to use its best efforts to sell the Shares
as agent for the
XxXxxxxx & Company, Inc.
____________, 2002
Page 7
Company, at the price per share set forth on the cover page of the Final
Prospectus for the Offering (the "Offering Price"). The Company agrees to pay
the Underwriter a commission ("Selling Commission) equal to five percent (5%) of
the Offering Price of all Shares sold through the Underwriter in the Offering.
It shall be the Underwriter's responsibility to compensate any selected dealers
out of the commissions that it receives from the Company. The Underwriter may
reject any offer to purchase the Shares made through the Underwriter or a
selected dealer, in whole or in part, and any such rejection shall not be deemed
a breach of the Underwriter's agreement contained herein.
3. Sales by the Underwriter. It is understood that, after the
Registration Statement becomes effective, the Underwriter proposes to sell the
Shares to the public as agent for the Company upon the terms and conditions set
forth in the Prospectus. The escrow procedures established by the Underwriter
shall comply with Commission Rule 15c2-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). All subscribers to whom
the Underwriter directly sells Shares shall be instructed to make their check
for payment of the Shares payable to "Carolina Bank Holdings, Inc. Escrow
Account." In addition, the Underwriter shall comply with Rule 15c2-4. The
Underwriter shall transmit all funds it receives from subscribers to SunTrust
Bank, the escrow agent (the "Escrow Agent") by noon of the next business day
following receipt thereof. Only broker/dealers who are either (i) members in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD") that are registered with the NASD and maintain net capital pursuant to
Rule 15c3-1 promulgated under the Exchange Act of not less than $25,000 or (ii)
dealers with their principal places of business located outside the United
States, its territories and its possessions and not registered as brokers or
dealers under the Exchange Act, who have agreed not to make any sales within the
United States, its territories or its possessions or to persons who are
nationals thereof or residents therein shall be designated selected dealers by
the Underwriter. The Underwriter shall require all selected dealers to comply
with Rule 15c2-4.
4. Payment and Delivery. The Underwriter shall direct the Escrow Agent to
make payment for the Shares sold hereunder by wire transfer. Such payment is to
be made at the offices of Carolina Bank Holdings, Inc., 0000 Xxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, at 10:00 a.m. local time, on or about
____________, 2002, or at such other time, date and place as you and the Company
shall agree upon, such time and date being herein referred to as the "Closing
Date." Unless the transaction is closed book-entry through The Depository Trust
Company and no certificates are requested, in which case the procedures
applicable thereto shall be complied with, the certificates for the Shares will
be delivered in such denominations and in such registrations as the Underwriter
requests in writing not later than the third full business day prior to the
Closing Date, and will be made available for inspection by the Underwriter at
least 24 hours prior to the Closing Date. Such certificates will be delivered by
the Company to the Escrow Agent by 12:00 p.m. on the day prior to the Closing
Date, along with addressed labels to be used to mail the certificates to the
purchasers thereof. The Company shall direct the Escrow Agent to deliver (i)
payment of the portion of the Selling Commission due to the Underwriter by wire
transfer or certified or bank cashier's check drawn to the order of the
Underwriter in next day funds, to the Underwriter on the Closing Date and (ii)
payment of the portion of the Selling Commission due to each selected dealer by
wire transfer or certified or bank cashier's check
XxXxxxxx & Company, Inc.
____________, 2002
Page 8
drawn to the order of such selected dealer in next day funds, to each selected
dealer on the Closing Date.
5. Covenants of the Company. The Company covenants and agrees with the
Underwriter as follows:
(a) The Company will endeavor to cause the Registration Statement to
become effective and will advise you promptly and, if requested by you, will
confirm such advice in writing (i) when the Registration Statement has become
effective and when any amendment thereto thereafter becomes effective, (ii) of
any request by the Commission for amendments or supplements to the Registration
Statement or the Prospectus or for additional information, (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation or contemplation of any
proceeding for such purposes and (iv) within the period of time referred to in
Section 5(e), of the happening of any event that makes any statement made in the
Registration Statement or the Prospectus (as then amended or supplemented)
untrue in any material respect or that requires the making of any addition to or
change in the Registration Statement or the Prospectus (as then amended or
supplemented) to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or of the necessity to
amend or supplement the Prospectus (as then amended or supplemented) to comply
with the Securities Act or any other law. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration Statement,
the Company will make every reasonable effort to obtain the withdrawal of such
order at the earliest possible time.
(b) The Company will furnish you, without charge, three signed copies
of the Registration Statement as originally filed with the Commission and of
each amendment to it, including financial statements and all exhibits thereto,
and will also furnish to you, such number of conformed copies of the
Registration Statement (without exhibits) as originally filed and of each
amendment thereto as you may reasonably request.
(c) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which you
shall not have been advised previously or to which you shall reasonably object
in writing promptly after being so advised.
(d) Prior to the effective date of the Registration Statement, the
Company has delivered or will deliver to you, without charge, in such quantities
as you have requested or may hereafter reasonably request, copies of each form
of preliminary Prospectus. The Company consents to the use, in accordance with
the provisions of the Securities Act and with the securities or Blue Sky laws of
the jurisdictions in which the Shares are offered by the Underwriter and by
dealers to whom Shares may be sold, prior to the effective date of the
Registration Statement, of each preliminary Prospectus so furnished by the
Company.
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(e) On the effective date of the Registration Statement and
thereafter from time to time, for such period as in the opinion of counsel for
the Underwriter a prospectus is required by law to be delivered in connection
with sales by the Underwriter or a dealer, the Company will deliver to you and
each dealer through whom Shares may be sold without charge (except as provided
below) as many copies of the Prospectus as they may reasonably request. The
Company consents to the use of the Prospectus in accordance with the provisions
of the Securities Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the Underwriter and by dealers
through whom Shares may be sold, both in connection with the offering or sale of
the Shares and for such period of time thereafter as the Prospectus is required
by law to be delivered in connection therewith. If during such period of time
any event shall occur that in the judgment of the Company, or in the opinion of
counsel for the Underwriter, requires that a material fact be stated in the
Prospectus (as then amended or supplemented) in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with the Securities Act or any other law, the Company at its own expense
(except as provided below) will forthwith prepare and file with the Commission
an appropriate amendment or supplement thereto, and will furnish to the
Underwriter and each dealer through whom Shares may be sold without charge
(except as provided below), a reasonable number of copies thereof.
(f) If required, the Company will cooperate with you and your counsel
in connection with the registration or qualification of the Shares for offer and
sale by you and by dealers through whom Shares may be sold under the securities
or Blue Sky laws of such jurisdictions as you may designate and will file such
consents to service of process or other documents as may be necessary in order
to effect such registration or qualification; provided that in no event shall
the Company be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action that would subject it to the
service of process in suits, other than those arising out of the offer and sale
of the Shares, in any jurisdiction where it is not now so subject.
(g) The Company will make generally available to its security holders
an earnings statement, which need not be audited, covering a 12-month period
commencing after the effective date of the Registration Statement and ending no
later than 15 months thereafter, as soon as practicable after the end of such
period, which earnings statement shall satisfy the provisions of Section 11(a)
of the Securities Act and any applicable regulation.
(h) During the period of five years after the Closing Date, the
Company will furnish to you without charge (i) as soon as available, a copy of
each report of the Company mailed to shareholders or filed with the Commission
and (ii) from time to time such other proper information concerning the business
and financial condition of the Company as you may reasonably request.
(i) For a period of 180 days from the date of the Prospectus, the
Company will not directly or indirectly, (i) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is designed
to, or could be expected to, result in the disposition by any person at any time
in the future of) any shares of Common Stock or securities convertible
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into or exchangeable for Common Stock (other than the Shares and shares issued
pursuant to employee benefit plans, qualified stock option plans or other
employee compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights), or sell or grant options, rights or
warrants with respect to any shares of Common Stock or securities convertible
into or exchangeable for Common Stock (other than the grant of options pursuant
to option plans existing on the date hereof), or (ii) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such shares of Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or other securities, in cash or
otherwise, in each case without the prior written consent of the Underwriter.
7. Costs and Expenses.
(a) The Company will pay all costs and expenses incident to the
performance by it of its obligations hereunder, including (i) the preparation,
printing and filing of the Registration Statement (including financial
statements and exhibits), each preliminary prospectus, the Prospectus and all
amendments and supplements to any of the foregoing, during the period specified
in Section 5(e) but not exceeding nine months after the date on which the Shares
are first offered to the public, (ii) the preparation, printing, authentication,
issuance and delivery of certificates for the Shares, including any stamp tax in
connection with the original issuance of the Shares, (iii) the preparation and
delivery of the preliminary and supplemental Blue Sky memoranda (including the
fees and disbursements of counsel for the Underwriter relating thereto), (iv)
the registration or qualification, if required, of the Shares for offer and sale
under the securities or Blue Sky laws of the several states (including the fees
and disbursements of counsel for the Underwriter relating thereto), (v) the fees
and expenses of the Company's accountants and the fees and expenses of counsel
for the Company and the Underwriter, (vi) during the period specified in Section
5(e) but not exceeding nine months after the date on which the Shares are first
offered to the public, delivery to the Underwriter and dealers through whom
Shares may be sold (including postage, air freight and the expenses of counting
and packaging) of such copies of the Registration Statement, the Prospectus,
each preliminary prospectus and amendments or supplements to the Registration
Statement and the Prospectus as may be requested for use by the Underwriter or
by dealers through whom Shares may be sold in connection with the offering and
sale of the Shares and during such period of time thereafter as the Prospectus
is required, in the judgment of the Company or in the opinion of counsel for the
Underwriter, to be delivered in connection with the offer and sale of the Shares
by you and by dealers, (vii) filing fees with the NASD in connection with the
Offering, (viii) filing fees and costs associated with the inclusion of the
Shares for trading on the Over-the-Counter Bulletin Board; (ix) the costs of all
informational and/or investor due diligence meetings, and (x) the performance by
the Company of its other obligations under this Agreement. The Underwriter shall
pay its own costs and expenses except as otherwise provided in this Agreement.
(b) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than by notice given by you terminating this Agreement
pursuant to Section 11 hereof), or if this Agreement shall be terminated by you
because of any failure or refusal on the part of the Company to comply in any
material respect with the terms, or fulfill in any material
XxXxxxxx & Company, Inc.
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respect any of the conditions, of this Agreement, the Company agrees without
further obligation to reimburse you for all out-of-pocket expenses (including
fees and expenses of your counsel) actually incurred in connection herewith.
7. Conditions of the Underwriter's Obligations. The obligations of you
hereunder are subject to the following conditions:
(a) That the Registration Statement shall have become effective not
later than 5:00 p.m., on the date hereof, or at such later date and time as
shall be consented to by you.
(b) That subsequent to the effective date of the Registration
Statement, there shall not have occurred any change, or any development
involving a prospective change, in or affecting particularly the condition
(financial or otherwise), business, properties, net worth or results of
operations of the Company or the Subsidiaries not contemplated by the Prospectus
that, in your opinion, would materially adversely affect the market for the
Shares.
(c) That you shall have received on the Closing Date, an opinion in
form reasonably satisfactory to counsel for the Underwriter dated as of such
Closing Date, from Xxxxx & Associates, P.A., counsel to the Company, to the
effect that:
(i) each of the Company and the Subsidiaries has been duly
organized and incorporated or formed, as applicable, is validly existing under
the laws of their respective state or other jurisdiction of incorporation or
organization, is in good standing under applicable law and are duly qualified to
do business and are in good standing in all jurisdictions that require such
qualification or in which the failure to qualify in such jurisdictions could, in
the aggregate, have a material adverse effect on the business, condition or
properties of the Company or the Subsidiaries;
(ii) all of the shares of Common Stock of the Company outstanding
prior to the issuance of the Shares to be issued and sold by the Company
hereunder have been duly authorized and validly issued and are fully paid and
nonassessable;
(iii) all of the outstanding shares of capital stock or ownership
interests of the Subsidiaries are owned by the Company (except for _______
shares of the preferred stock of the Trust), have been duly authorized and
validly issued, and are fully paid and nonassessable (except as set forth in
North Carolina General Statutes Section 53-42) and, to the knowledge of such
counsel, are owned by the Company free and clear of any lien, claim, security
interest or other encumbrance, except as otherwise described in the Registration
Statement and the Prospectus or such as are not material;
(iv) the Shares to be issued and sold by the Company hereunder
have been duly authorized, and when issued and delivered in accordance with the
terms of this Agreement, will have been validly issued and will be fully paid
and nonassessable, and the issuance of such Shares is not subject to any
preemptive rights or, to the knowledge of such counsel, similar rights;
XxXxxxxx & Company, Inc.
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Page 12
(v) Except as described in the Prospectus, there are no
warrants or options to purchase any securities of the Company; and to the
knowledge of such counsel, the offering or sale of the Shares as contemplated by
this Agreement does not give rise to any rights for the offering or sale of
other shares of capital stock of the Company;
(vi) the certificates for the Shares are in proper legal form;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company and (assuming due authorization, execution and delivery
by the Underwriter) is a valid and binding agreement of the Company enforceable
in accordance with its terms, except in all cases as rights of indemnity or
contribution hereunder may be limited under applicable law and except as the
enforceability hereof may be limited by bankruptcy, receivership, moratorium,
conservatorship, reorganization or other laws of general application affecting
the rights of creditors generally or general equitable principles;
(viii) neither the Company nor the Subsidiaries, to the knowledge
of such counsel, is in violation of its articles of incorporation or bylaws or
in default in any material respect in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or other evidence
of indebtedness or in any agreement, indenture or other instrument known to such
counsel that is material to the conduct of the business of the Company and the
Subsidiaries taken as a whole, and the execution, delivery and performance of
this Agreement, compliance by the Company with all provisions hereof and the
consummation of the transactions contemplated hereby will not conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the articles of incorporation or bylaws or other organizational document or
operating agreement, as applicable, of the Company or the Subsidiaries or, to
the knowledge of such counsel, any material agreement, indenture or other
instrument to which the Company or a Subsidiary is a party or by which any of
them is bound, or (assuming compliance with the Securities Act and other
securities or Blue Sky laws) violate any law, administrative regulation or
ruling (except as the indemnification or contribution provisions in this
Agreement may be limited by applicable law) or, to the knowledge of such
counsel, court decree applicable to the Company or the Subsidiaries or any of
their respective properties;
(ix) except for the order of the Commission declaring the
Registration Statement effective and any permits and similar authorizations
required under other securities or Blue Sky laws, no consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the consummation of the sale
of the Shares to the purchasers through the Underwriter as contemplated by this
Agreement;
(x) the statements in the Prospectus under "Risk Factors",
"Business - Litigation", "Description of Capital Stock" and "Supervision and
Regulation" insofar as such statements constitute a summary of the documents,
legal matters or proceedings referred to therein, fairly and accurately present
in all material respects the information with respect to such documents, legal
matters or proceedings;
XxXxxxxx & Company, Inc.
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Page 13
(xi) to the knowledge of such counsel, there are no pending or
threatened legal or governmental proceedings to which the Company or a
Subsidiary is a party or of which any property of the Company or a Subsidiary is
the subject, which, if determined adversely to the Company or a Subsidiary,
would individually or in the aggregate have a material adverse effect on the
business, condition or properties of the Company and the Subsidiaries taken as a
whole.
Subject to its customary practices and limitations relating to the scope of
such counsel's participation in the preparation of the Prospectus and its
investigation or verification of information contained therein, Xxxxx &
Associates, P.A. also shall state that nothing has come to its attention to
cause it to believe that the Prospectus (except for financial statements,
schedules and other financial data included therein, as to which such counsel
need not express any belief) contained any untrue statement of any material fact
or omitted to state any material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus (except as
aforesaid) contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
In rendering the opinions required by this Section 7(c), such counsel with
the consent of Underwriter's counsel may rely, as to matters of fact, upon
certificates and representations of officers of the Company and the Subsidiaries
and on certificates of public officials.
(d) That you shall have received letters addressed to you and dated
the date hereof and the Closing Date from Cherry, Bekaert & Holland, LLP,
independent public accountants, substantially in the form heretofore approved by
you.
(e) That (i) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be contemplated by the Commission at
or prior to the applicable Closing Date; (ii) there shall not have been any
material change in the capital stock of the Company nor any material increase in
long-term debt of the Company or the Subsidiaries from that set forth or
contemplated in the Registration Statement and the Prospectus; (iii) there shall
not have been, since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as may otherwise be stated
in the Registration Statement and the Prospectus, any material adverse change in
the condition (financial or otherwise), business, properties, net worth or
results of operations of the Company and the Subsidiaries taken as a whole; (iv)
neither the Company nor the Subsidiaries shall have any material liability or
obligation, direct or contingent, other than those liabilities or obligations
reflected in the Registration Statement and the Prospectus or incurred or
arising in the ordinary course of business; and (v) all of the representations
and warranties of the Company contained in this Agreement shall be true and
correct in all material respects on and as of the date hereof and the Closing
Date as if made on and as of such date, and you shall have received a
certificate, dated the Closing Date and signed by the President and the Chief
Financial Officer of the Company, to the effect set forth in this Section 7(e)
and Section 7(f) below.
XxXxxxxx & Company, Inc.
____________, 2002
Page 14
(f) That the Company shall not have failed at or prior to the Closing
Date to have performed or complied in any material respect with any of the
agreements or covenants herein contained and required to be performed or
complied with by it at or prior to the Closing Date.
(g) The Company shall have furnished you such further certificates and
documents confirming the representations and warranties contained herein and
related matters as you may reasonably have requested.
8. Conditions to the Obligations of the Company. The obligations of the
Company to sell and deliver the portion of the Shares required to be delivered
as and when specified in this Agreement are subject to the conditions that at or
before 5:00 p.m. on the date of this Agreement, or such later time and date to
which the Company and the Underwriter may from time to time consent, the
Registration Statement shall have become effective; at the Closing Date, no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and in effect or proceedings therefor initiated or threatened; and the
Escrow Agent shall have tendered to the Company payment for the Shares.
9. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Underwriter
and each person, if any, who controls the Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities or expenses (including
reasonable costs of investigation) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement based upon information relating to the Underwriter in the last
paragraph on the front cover of the Prospectus and in the Section of the
Prospectus entitled "Underwriting", which were made in reliance upon and
conformity with information furnished in writing to the Company by or on behalf
of the Underwriter expressly for use in connection therewith; provided that the
indemnification contained in this paragraph with respect to any preliminary
prospectus shall not inure to the benefit of the Underwriter (or any person
controlling the Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Shares by the Underwriter to
any person if a copy of the Prospectus shall not have been delivered or sent to
such person with or prior to the written confirmation of the sale involved (or
any supplement to the Prospectus at the time of such confirmation was not so
delivered or sent) and the statement or omission giving rise to such loss,
claim, damage, liability or expense was contained in the preliminary prospectus
and corrected in the Prospectus (or any supplement thereto at the time such
confirmation was delivered or sent).
(b) If any action or claim shall be brought against the Underwriter or
any person controlling the Underwriter, in respect of which indemnity may be
sought against the
XxXxxxxx & Company, Inc.
____________, 2002
Page 15
Company in accordance with Section 9(a), the Underwriter shall promptly notify
the Company in writing, and the Company shall assume the defense thereof,
including the employment of counsel and payment of all reasonable fees and
expenses. The Underwriter or any such person controlling the Underwriter shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the reasonable fees and expenses of such counsel shall
be at the expense of the Underwriter or such controlling person unless (i) the
Company has agreed in writing to pay such fees and expenses, (ii) the Company
has failed to assume the defense and employ counsel or (iii) the named parties
to any such action (including any impleaded party) include both the Underwriter
or controlling person and the Company and representations of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them (in which case, if the Underwriter or controlling person
notifies the Company in writing that it elects to employ separate counsel at the
expense of the Company, the Company shall not have the right to assume the
defense of such action on behalf of the Underwriter or such controlling person,
it being understood, however, that the Company shall not, in connection with any
such action or separate but substantially related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Underwriter and controlling persons, which firm
shall be designated in writing by you). The Company shall not be liable for any
settlement of any such action effected without the written consent of the
Company, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, the Company agrees to indemnify
and hold harmless the Underwriter and any such controlling person from and
against any loss, liability, damage or expense by reason of such settlement or
judgment.
(c) The Underwriter agrees to indemnify and hold harmless the Company,
its directors, its officers who sign the Registration Statement and any person
controlling the Company to the same extent as the foregoing indemnity from the
Company to the Underwriter, but only with respect to information in the last
paragraph on the front cover of the Prospectus and in the section of the
Prospectus entitled "Underwriting," which were furnished by or on behalf of the
Underwriter expressly for use in the Registration Statement and the Prospectus.
If any action or claim shall be brought or asserted against the Company, its
directors, any such officer or any such controlling person based on the
Registration Statement or the Prospectus and in respect of which indemnity may
be sought against the Underwriter, the Underwriter shall have the rights and
duties given to the Company by Section 9(b) hereof (except that if the Company
shall have assumed the defense thereof, the Underwriter shall not be required to
do so, but may employ separate counsel therein and participate in the defense
thereof but the fees and expenses of such counsel shall be at the expense of the
Underwriter), and the Company, its directors, any such officer and any such
controlling person shall have the rights and duties given to the Underwriter by
Section 9(b) above.
(d) If the indemnification of the Underwriter or the Company provided
for in this Section 9 is unavailable as a matter of law to the Underwriter or
the Company, as the case may be, in respect of any loss, claim, damage,
liability or expense referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage,
XxXxxxxx & Company, Inc.
____________, 2002
Page 16
liability or expense (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, as the case may be, on the one hand
and the Underwriter on the other from the Offering, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriter on the other in connection with the statements or
omissions that resulted in such loss, claim, damage, liability or expense, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriter on the other shall
be deemed to be in the same proportion as the total net proceeds from the
Offering (before deducting expenses) received by the Company, bear to the total
underwriting commissions received by the Underwriter as set forth in the table
on the cover page of the Prospectus and in the section entitled "Underwriting"
in the Prospectus. The relative fault of the Company on the one hand and of the
Underwriter on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact related to information
supplied by the Company on the one hand or by the Underwriter on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 9(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses actually and reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Shares sold by it as agent for the
Company exceeds the amount of any damages that the Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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
misrepresentations.
(e) In any proceeding relating to the Registration Statement or the
Prospectus, each party against whom contribution may be sought under this
Section 9 hereby consents to the jurisdiction of any court having jurisdiction
over any other contributing party, agrees that process issuing from such court
may be served upon him or it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may join
him or it as an additional defendant in any such proceeding in which such other
contributing party is a party.
(f) The indemnity and contribution agreements contained in this
Section 9 and the respective agreements, representations, warranties and other
statements of the Company or its officers and the Underwriter set forth in or
made pursuant to this Agreement shall remain
XxXxxxxx & Company, Inc.
____________, 2002
Page 17
operative and in full force and effect, regardless of (i) any investigation made
by or on behalf of the Underwriter or the Company or any person controlling the
Underwriter, the Company or its directors, officers (or any person controlling
the Company), (ii) acceptance of any Shares and payment therefor hereunder and
(iii) any termination of this Agreement. A successor of the Underwriter or the
Company or its directors or officers referred to above (or of any person
controlling the Underwriter or the Company) shall be entitled to the benefits of
the indemnity, contribution and reimbursement agreements contained in this
Section 9.
10. Effective Date of Agreement. This Agreement shall become effective when
notification of the effectiveness of the Registration Statement has been
released by the Commission. Until such time as this Agreement shall have become
effective, it may be terminated by the Company by notifying you, or by you by
notifying the Company; provided, however, that the provisions of this Section 10
and of Section 6 and Section 9 hereof shall at all times be effective.
11. Termination of Agreement. This Agreement shall be subject to
termination in your sole discretion, without liability on your part, by notice
given to the Company, if prior to the Firm Closing Date (i) trading in
securities generally on the New York Stock Exchange or the Nasdaq National or
SmallCap Market shall have been suspended or materially limited, (ii) a general
moratorium on commercial banking or thrift activities in North Carolina or the
United States shall have been declared by either federal or state authorities or
(iii) there shall have occurred any major outbreak or escalation of hostilities
or other international or domestic calamity or crisis or major change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in your reasonable
judgment, impracticable or inadvisable to proceed with the Offering. Notice of
such cancellation shall be given to the Company by telegraph or telephone but
shall be subsequently confirmed by letter.
12. Notices. All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered or telecopied and
confirmed as follows: if to the Underwriter, to XxXxxxxx & Company, Inc., 000
Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X.
XxXxxxxx, Xx. with a copy to Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP, 0000 Xxxx Xxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxxxxxx X.
Xxxxxxxxx; if to the Company, to Carolina Bank Holdings, Inc., 0000 Xxxxxxxx
Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxxx,
President, with a copy to Xxxxx & Associates, P.A., 000 Xxxxx Xxxxx Xxxxx, Xxxxx
000, Xxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxxxx Xxxxx, Xx.
13. Successors. This Agreement has been and is made solely for the benefit
of the Underwriter, the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. The term "successor" shall not include any purchaser of
the Shares merely because of such purchase.
XxXxxxxx & Company, Inc.
____________, 2002
Page 18
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of Virginia without reference to the conflict of laws
principles thereof.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement between the Company and the
Underwriter in accordance with its terms.
Very truly yours,
CAROLINA BANK HOLDINGS, INC.
By:______________________________
Name:____________________________
Title:___________________________
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
XxXXXXXX & COMPANY, INC.
By:________________________________
Name:______________________________
Title:_____________________________