Exhibit 1.1
650,000 Shares
Valley Commerce Bancorp
Common Stock
UNDERWRITING AGREEMENT
December __, 2004
Wedbush Xxxxxx Securities Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Valley Commerce Bancorp, a California corporation (the "Company"),
proposes to effect a public offering (the "Offering") of 650,000 shares (the
"Shares") of its Common Stock, no par value ("Common Stock"). Of the Shares, the
Company will sell to Wedbush Xxxxxx Securities Inc. (the "Underwriter") and the
Underwriter will purchase from the Company 305,000 of the Shares (the "Firm
Shares") subject to the terms and conditions of this Agreement and the Company
will reserve 45,750 shares (the "Option Shares", and together with the Firm
Shares, the "Underwriter's Shares") for sale to the Underwriter upon exercise of
an option to cover over-allotments as set forth in Section 3 below (the
"Option"). The Company proposes to offer the remaining 299,250 shares of the
Shares directly to its directors, customers and employees and their respective
friends and relatives (the "Directed Shares").
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. Representations and Warranties of the Company.
The Company represents and warrants to the Underwriter as follows:
(a) The Company has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form SB-2 (No. 333-118883), including a
preliminary prospectus, covering the registration of the Shares under the
Securities Act and one or more amendments to the registration statement and
prospectus included therein. The Company will file with the SEC either: (i)
prior to effectiveness of such registration statement, a further amendment
thereto, including a form of prospectus, and if required after effectiveness of
such registration statement, a final prospectus in accordance with Rule 424(b)
of the Rules and Regulations, or (ii) after effectiveness of such registration
statement, a final prospectus in accordance with Rules 430A and 424(b) of the
Rules and Regulations. Any such preliminary prospectus and any prospectus
included in the registration statement at the time it becomes effective that
omits information pursuant to Rule 430A of the Rules and Regulations, is
referred to herein as a "preliminary prospectus"; such registration statement,
as it may have been amended at the time when it becomes effective, including
financial statements, exhibits and the information, if any, deemed to be a part
of such registration statement by virtue of Rule 430A of the Rules and
Regulations, is referred to herein as the "Registration Statement"; and such
final form of prospectus, in the form in which it was first filed pursuant to
Rule 424(b) of the Rules and Regulations or, if no filing pursuant to Rule
424(b) of
the Rules and Regulations is made, in the form included in the Registration
Statement at the time it becomes effective, is referred to herein as the
"Prospectus." If the Company has filed an abbreviated registration statement to
register additional shares of Common Stock pursuant to Rule 462(b) under the
Securities Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462 Registration Statement.
(b) The SEC has not issued an order preventing or suspending the use of
any Prospectus relating to the Offering of the Shares nor instituted any Action
for that purpose. The Registration Statement contains, and the Prospectus and
any amendments or supplements thereto will contain, all statements that are
required to be stated therein by, and will conform to, the requirements of the
Act and the Rules and Regulations. The Registration Statement when it became
effective did not contain, and any amendment or supplement thereto will not
contain, any untrue statement of a material fact and did not omit, and will not
omit, to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus and any amendments
and supplements thereto do not contain, and will not contain, any untrue
statement of material fact and do not omit, and will not omit, to state any
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; provided, however, that the Company makes no representations or
warranties as to information contained in or omitted from the Registration
Statement or the Prospectus, or any such amendment or supplement, in reliance
upon, and in conformity with, written information furnished to the Company by or
on behalf of the Underwriter, specifically for use in the preparation thereof.
The Company Contracts and other documents as are summarized in the Registration
Statement or the Prospectus are fairly summarized in all material respects.
(c) This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid, legal, and binding obligation of the Company,
enforceable in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally, and subject to general
principles of equity. The Company has full corporate power and authority to
enter into this Agreement and to authorize, issue and sell the Shares as
contemplated by this Agreement.
(d) The Company and each Subsidiary have been duly organized and are
validly existing and in good standing under the laws of the State of California,
with corporate power and authority to own or lease their properties and conduct
their businesses as described in the Registration Statement. The Company does
not beneficially own any Equity Securities of any Person other than the
Subsidiaries. The Company and each of the Subsidiaries are duly qualified to
transact business and are in good standing in all jurisdictions in which the
conduct of their business requires such qualification except where the failure
to be so qualified or to be in good standing would not reasonably be expected to
have a Material Adverse Effect. The outstanding shares of capital stock or other
equity interests of each of the Subsidiaries have been duly authorized and are
validly issued, fully paid and non-assessable and except as set forth in the
Registration Statement, are wholly owned by the Company or another Subsidiary
free and clear of all Liens. There are no Stock Equivalents of any Subsidiary
outstanding.
(e) The Company is duly registered as a bank holding company with the FRB
under the BHC Act and no proceedings for the termination or revocation of such
registration are pending or, to the Company's knowledge, threatened. The Bank
has a valid certificate of authority issued by the California Commissioner of
Financial Institutions to transact a banking business. The Bank is a member in
good standing of the Federal Reserve System. The deposit accounts of the Bank
are insured by the Bank Insurance Fund administered by the FDIC up to the
maximum amount provided by law, and no such Action for the modification,
termination or revocation of any such insurance are pending or, to the Knowledge
of the Company, threatened.
(f) The shares of Common Stock outstanding as of the date of this
Agreement have been duly authorized and are validly issued, fully paid and
non-assessable. Except as described in the Registration Statement, there are no
outstanding Stock Equivalents of the Company issued by the Company. No Person
has any preemptive rights with respect to the issuance and sale of the
Underwriter's Shares. Neither the filing of the Registration Statement nor the
Offering as contemplated by this Agreement gives rise to any rights, other than
those which have been waived or satisfied, for or relating to the registration
of any shares of Common Stock.
(g) The information set forth under the caption "Capitalization" in the
Prospectus is true and correct as of the date set forth therein, and there have
been no changes since the date thereof with respect to the number of shares of
capital stock outstanding except pursuant to the issuance of shares upon
exercise of options under the Company's 1997 Stock Option Plan. The rights,
preferences and privileges with respect to the Shares conform to the description
of the Common Stock thereof contained in the Registration Statement. The form of
certificates for the Shares conforms to the corporate law of the State of
California.
(h) The Company has not distributed and will not distribute any prospectus
or other offering material (including, without limitation, content on the
Company's website that may be deemed to be a prospectus or other offering
material) in connection with the offering and sale of the Shares other than any
Preliminary Prospectus or the Prospectus or other materials permitted by the
Securities Act and the Rules and Regulations to be distributed by the Company.
(i) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the results of
operations and cash flows of the Company and the consolidated Subsidiaries, at
the indicated dates and for the indicated periods. Such financial statements and
related notes and schedules comply in all material respects as to form with the
Rules and Regulations with respect thereto and have been prepared in accordance
with GAAP, consistently applied throughout the periods involved, except as
disclosed therein, and all adjustments necessary for a fair presentation of
results for such periods have been made. No other financial statements or
supporting schedules are required to be included in the Registration Statement.
The summary financial and statistical data included in the Registration
Statement presents fairly the information shown therein, and such data has been
compiled on a basis consistent with the financial statements presented therein
and the books and records of the Company. The financial information included in
the Prospectus (and any amendment or supplement thereto) included under the
captions "Selected Financial Data," "Capitalization," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
present fairly in accordance with GAAP the information shown therein (except for
non-GAAP financial measures and ratios which have been presented in compliance
with Regulation G of the Rules and Regulations) and have been compiled on a
basis consistent with that of the audited and unaudited financial statements
from which they were derived.
(j) Except (i) as described in the Registration Statement and the
Prospectus, (ii) as reflected in the consolidated financial statements of the
Company and the Subsidiaries, together with related notes and schedules as set
forth in the Registration Statement and (iii) for liabilities incurred in the
ordinary course of business since September 30, 2004 consistent with past
practice, neither the Company nor any Subsidiary has any material Liabilities.
Except as described in the Registration Statement and the Prospectus, neither
the Company nor any Subsidiary has engaged in or effected any transaction or
arrangement that would constitute an "off-balance sheet arrangement" (as defined
in Item 303 of Regulation S-B of the Rules and Regulations).
(k) The Company and the Subsidiaries maintain disclosure controls and
procedures (as defined in Rule 13a-15(e) of the SEC) that are designed to ensure
that information required to be
disclosed by the Company in reports it will file or submit under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms; the Company and the Subsidiaries maintain internal controls over
financial reporting (as defined in Rule 13a-15(f) of the SEC) sufficient to
provide reasonable assurance regarding the (i) reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with GAAP, (ii) maintenance of records that in reasonable detail
accurately and fairly reflect transactions and dispositions of the assets of the
Company and the Subsidiaries, (iii) recording of transactions as necessary to
permit preparation of financial statements in accordance with GAAP and that
receipts and expenditures of the Company and the Subsidiaries are being made
only in accordance with authorizations of management and directors of the
Company or the applicable Subsidiary, and (iv) prevention or timely detection of
unauthorized acquisition, use or disposition of the Company's or the
Subsidiaries' assets that reasonably could have a material effect on the
consolidated financial statements of the Company; the Company's management has
evaluated, with the participation of the Company's principal executive and
principal financial officers, or persons performing similar functions, the
effectiveness of the Company's and the Subsidiaries' disclosure controls and
procedures in connection with the preparation of the Registration Statement.
(l) Xxxxx Xxxxx LLP, which has audited certain financial statements of the
Company included in the Registration Statement and delivered its opinion with
respect thereto, are independent public accountants with respect to the Company
as required by the Securities Act and the Rules and Regulations. Xxxx Xxxxx
which has audited certain financial statements of the Company included in the
Registration Statement and delivered its opinion with respect thereto, are
independent public accountants with respect to the Company as required by the
Securities Act and the Rules and Regulations.
(m) There is no Action pending or threatened against the Company or any
Subsidiary required by SEC rules or regulations to be disclosed in the
Registration Statement or which if determined adversely to the Company or any
Subsidiary would reasonably be expected to have a Material Adverse Effect or
prevent the consummation of the purchase and sale of the Underwriter's Shares,
except as set forth in the Registration Statement and the Prospectus.
(n) No labor problem or dispute with the employees of the Company or any
Subsidiary exists or, to the Company's Knowledge, is threatened or imminent,
that reasonably could be expected have a Material Adverse Effect.
(o) The Company and the Subsidiaries have good and marketable title to all
of the properties and assets reflected in the financial statements hereinabove
described or as described in the Registration Statement, subject to no Lien
except those reflected in such financial statements or as described in the
Registration Statement or which are not material in amount to the Company and
the Subsidiaries taken as a whole. The Company and the Subsidiaries occupy their
leased properties under valid and binding leases conforming in all material
respects to the description thereof set forth in the Registration Statement and
the Prospectus.
(p) Except as described in the Registration Statement and the Prospectus,
the Company and the Subsidiaries have filed all Tax Returns which have been
required to be filed and have paid all Taxes required to be paid, to the extent
that such Taxes have become due and are not being contested in good faith and
for which an adequate reserve or accrual has been established in accordance with
GAAP. Except as described in the Registration Statement and the Prospectus, all
Tax Liabilities of the Company and the Subsidiaries have been adequately
provided for in the financial statements included in the Registration Statement,
and to the Knowledge of the Company there are no actual or proposed additional
material Tax assessments. There are no transfer Taxes or other similar fees or
charges under applicable
Law required to be paid in connection with the execution and delivery of this
Agreement or the issuance or sale by the Company of the Underwriter's Shares.
(q) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there has been no event,
circumstance or development that has had or is reasonably likely to have a
Material Adverse Effect, (ii) there has not been any material transaction
entered into or any material transaction that is probable of being entered into
by the Company or the Subsidiaries, other than transactions in the ordinary
course of business and transactions described in the Registration Statement and
the Prospectus, and (iii) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(r) Neither the Company nor any of the Subsidiaries is, or with the giving
of notice or lapse of time or both, will be, in violation of or in default under
its Articles of Incorporation. Neither the Company nor any of the Subsidiaries
is, or with the giving of notice or lapse of time or both, will be, in violation
of or in default under its By-Laws or under any Company Contract which violation
or default has had or is reasonably likely to have a Material Adverse Effect.
The execution and delivery of this Agreement and the consummation of the
transactions herein contemplated and the fulfillment of the terms hereof will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any Company Contract, the Articles of Incorporation
or Bylaws of the Company or any Subsidiary or any Order applicable to the
Company or any Subsidiary, or result in the creation or imposition of any Lien
upon any assets or property of the Company or any of the Subsidiaries, and no
Permit is required from any Person for the performance by the Company of its
obligations under this Agreement, except such Permits received prior to the date
hereof and such as may be required by the state securities or Blue Sky laws in
connection with the offer and sale of the Underwriter's Shares in such
jurisdictions.
(s) Each of the Company and each Subsidiary has all material Permits as
are necessary to conduct its business as currently conducted and to own, lease
and operate its properties in the manner described in the Prospectus. There is
no Action pending or, to the Knowledge of the Company, threatened, involving the
status of or sanctions under any of the Permits. Each of the Company and each
Subsidiary has fulfilled and performed all of its material obligations with
respect to the Permits, and no event has occurred which allows, or after notice
or lapse of time would allow, the revocation, termination, modification or other
impairment of the rights of the Company or any Subsidiary under such Permits.
(t) There are no affiliations or associations between any member of the
NASD and any of the Company's officers, directors or 5% or greater security
holders, except as set forth in the Registration Statement.
(u) Neither the Company nor any Subsidiary has taken or may take, directly
or indirectly, any action designed to cause or result in, or which has
constituted or which would reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Shares.
(v) The Company is not, and will not become, as a result of the
consummation of the transactions contemplated by this Agreement and the
application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
(w) The Company and each of the Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of their respective properties and
as is customary for companies engaged in similar industries. All policies of
insurance insuring the Company or any Subsidiary or any of their respective
businesses, assets,
employees, officers and directors are in full force and effect, and the Company
and the Subsidiaries are in compliance with the terms of such policies in all
material respects. There are no claims by the Company or any Subsidiary under
any such policy or instrument as to which an insurance company is denying
liability or defending under a reservation of rights clause. The Company has
directors and officers liability insurance in the aggregate amount of not less
than $5.0 million.
(x) The Company is in compliance in all material respects with applicable
provisions of the ERISA; no "reportable event" (as defined in ERISA) has
occurred with respect to any "pension plan" (as defined in ERISA) for which the
Company would reasonably be expected to have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the IRC; and each "pension plan" for which the Company
would have any liability and that is intended to be qualified under Section
401(a) of the IRC is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
(y) Other than as contemplated by this Agreement, the Company has not
incurred any liability for any finder's fee, broker's fee or agent's commission
in connection with the execution and delivery of this Agreement or the offer and
sale of the Shares.
(z) Neither the Company nor any of the Subsidiaries has sent or received
any notice indicating the termination of or intention to terminate any of the
Material Contracts and no such termination has been threatened by the Company,
any Subsidiary or, to the Knowledge of the Company, any other party to any
Material Contract.
(aa) Except as described in the Registration Statement and the Prospectus,
neither the Company nor any Subsidiary is in violation of Environmental Law, the
violation of which would reasonably be expected to cause a Material Adverse
Effect. To the Knowledge of the Company, neither the Company nor any Subsidiary
owns or operates any real property contaminated with any substance that is
subject to any Environmental Laws, is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, or is subject to any claim
relating to any Environmental Laws, which claim would reasonably be expected
individually or in the aggregate to have a Material Adverse Effect; and the
Company has no Knowledge of any pending investigation which would reasonably be
expected to lead to such a claim.
(bb) No payments or inducements have been made or given, directly or
indirectly, to any federal, state, local or foreign official or candidate for
any federal, state or local office in the United States or foreign offices by
the Company or any Subsidiary or, to the Knowledge of the Company, by any of
their officers, directors, employees or agents or any other Person in connection
with any opportunity, contract, permit, certificate, consent, order, approval,
waiver or other authorization relating to the business of the Company or any
Subsidiary, except for such payments or inducements as were lawful under
applicable Laws. Neither the Company nor any Subsidiary, nor, to the Knowledge
of the Company, any director, officer, agent, employee or other Person
associated with or acting on behalf of the Company or any Subsidiary, (i) has
used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment to any government official or employee from corporate
funds; (iii) violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or (iv) made any bribe, unlawful rebate, payoff,
influence payment, kickback or other unlawful payment in connection with the
business of the Company or any Subsidiary.
(cc) Except as described in the Registration Statement and the Prospectus,
the Company and the Subsidiaries own, license or otherwise have rights in all
United States and foreign patents, trademarks,
service marks, tradenames, copyrights, trade secrets and other proprietary
rights necessary for the conduct of their business as currently carried on and
as proposed to be carried on as described in the Registration Statement and the
Prospectus.
(dd) Except as described in the Registration Statement and the Prospectus,
each of the Company and each Subsidiary is in compliance with all Laws except to
the extent the failure to comply could not reasonably be expected to have a
Material Adverse Effect. Except as described in the Registration Statement and
the Prospectus, neither the Company nor any Subsidiary has received any
notification asserting, or has knowledge of, any present or past failure to
comply with or violation of any such Laws the violation of which would
reasonably be expected to cause a Material Adverse Effect.
(ee) The information contained in the Registration Statement and the
Prospectus regarding the Company's expectations, plans and intentions, and any
other information that constitutes "forward-looking" information within the
meaning of the Securities Act and the Exchange Act, were made by the Company on
a reasonable basis and reflect the Company's good faith belief and/or estimate
of the matters described therein at the time such statements were made.
(ff) The Company has originated, purchased, sold, funded, serviced,
collected, administered and foreclosed upon all loans, loan participations, loan
commitments and letters of credit, and has received, accepted and denied all
loan applications in compliance with, all applicable Laws, including without
limitation the Truth in Lending Act, as amended; the Equal Credit Opportunity
Act, as amended; the Fair Housing Act, as amended; the Home Mortgage Disclosure
Act of 1975, as amended; the Real Estate Settlement Procedures Act of 1974, as
amended; the Flood Disaster Protection Act of 1973, as amended; the Equal Credit
Opportunity Act, as amended, and all regulations and rulings thereunder, except
to the extent the failure to comply could not reasonably be expected to have a
Material Adverse Effect.
(gg) Except as set forth in Registration Statement and Prospectus, the
Company has no assets which under applicable Law should have been classified as
non-performing assets, troubled debt restructurings or other real estate owned;
the Company has not been advised orally or in writing by any Banking Regulator,
by its own internal auditors/examiners or any other auditor/examiner that any of
its assets have been improperly classified; the Company's allowances for loan
losses, both general and specific, are in accordance with all regulatory
requirements and GAAP, and are sufficient to absorb all losses determined to be
reasonably probable from loans based on facts, circumstances and conditions
existing as of the date hereof; the Company has properly classified all loans
and other assets under the asset classification requirements of the Banking
Regulators.
(hh) Neither the Company nor any Subsidiary has been subject to any
Regulatory Action.
Any certificate signed by any officer of the Company and delivered to the
Underwriter or counsel for the Underwriter pursuant to the terms of this
Agreement shall be deemed a representation and warranty by the Company to each
Underwriter and shall be deemed to be a part of this Section 1 and incorporated
herein by this reference.
2. Fee on Certain Sales of Directed Shares by the Company.
In consideration for providing the Company with assistance in structuring
the Offering and in preparing the Registration Statement, the Company shall pay
the Underwriter a fee equal to 5% of the sales price of any Directed Shares sold
by the Company, other than sales to Persons who were directors, employees or
customers of the Company at the time the Offering commenced and friends and
relatives of such directors and employees who are residents of Tulare County,
California. The Company shall make
the payment contemplated hereby on the Closing Date to the extent such payment
is due. In the event that the Company sells Directed Shares after the Closing
Date for which payment to the Underwriter is due, the Company shall make such
payment within five business days after the closing of any such sale.
3. Purchase, Sale and Delivery of the Shares.
(a) On the terms and subject to the conditions of this Agreement, the
Company agrees to sell to the Underwriter at the closing (the "Closing"), and
the Underwriter agrees to purchase from the Company at the Closing, the Firm
Shares for a price of $____ per share. The Closing shall be on the date which is
the third business day after the date of this Agreement or at such other time
and date not later than five business days thereafter as the Underwriter and the
Company shall agree upon, such time and date being herein referred to as the
"Closing Date."
(b) The Company hereby grants to the Underwriter an option (the "Option")
to purchase the Option Shares at the same price per share as the price for the
Firm Shares. The Underwriter may at any time within 30 days after the date of
this Agreement (the "Option Period") exercise the Option only to cover
over-allotments in the offering of the Firm Shares by the Underwriter. The
Option may be exercised in whole or in part from time to time during the Option
Period by giving written notice to the Company. The notice shall set forth the
number of Option Shares as to which the Underwriter is exercising the Option and
the time and date at which such shares are to be delivered. The time and date at
which Option Shares are to be delivered shall be determined by the Underwriter
but shall not be earlier than two nor later than ten business days after the
exercise of the Option, nor in any event prior to the Closing Date (each such
time and date being herein referred to as the "Option Closing Date"). If the
date of exercise of the Option is two or more days before the Closing Date, the
notice of exercise shall set the Closing Date as the Option Closing Date.
(c) The Firm Shares and the Option Shares, if any, shall be registered in
such names and in such denominations as the Underwriter shall request in writing
not later than one full business day prior to the Closing Date or the applicable
Option Closing Date, as the case may be. The Firm Shares and the Option Shares
shall be delivered to the Underwriter on the Closing Date or an Option Closing
Date, as the case may be, for the account of the Underwriter, with any transfer
taxes payable in connection with the transfer of the Underwriter's Shares to the
Underwriter duly paid, against payment of the purchase price therefor in same
day funds.
4. Public Offering by the Underwriter.
It is understood that the Underwriter will make a public offering of the
Firm Shares as soon as the Underwriter deems it advisable to do so. The Firm
Shares will be initially offered to the public at the public offering price set
forth in the Prospectus. The Underwriter may from time to time thereafter change
the public offering price and other selling terms. To the extent, if at all,
that any Option Shares are purchased pursuant to Section 3 hereof, the
Underwriter will offer them to the public on the foregoing terms. The
Underwriter shall make such public offering of the Firm Shares and, if the
Underwriter shall exercise the Option, the Option Shares in compliance with
federal and state securities laws.
5. Covenants of the Company.
(a) The Company agrees with the Underwriter that the Company will (i) if
the procedure in Rule 430A of the Rules and Regulations is followed, prepare and
timely file with the SEC under Rule 424(b) of the Rules and Regulations a
Prospectus in a form reasonably acceptable to the Underwriter containing
information previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A of the Rules and Regulations; (ii) not file
any amendment to the Registration
Statement or supplement to the Prospectus of which the Underwriter shall not
previously have been advised and furnished with a copy or to which the
Underwriter shall have objected on reasonable grounds in writing or which is not
in compliance with the Rules and Regulations; and (iii) file on a timely basis
all reports and any definitive proxy or information statements required to be
filed by the Company with the SEC subsequent to the date of the Prospectus and
prior to the termination of the Offering of the Underwriter's Shares by the
Underwriter.
(b) The Company will not take, directly or indirectly, any action designed
to cause or result in, or that has constituted or would reasonably be expected
to constitute, the stabilization or manipulation of the price of any securities
of the Company.
(c) The Company will advise the Underwriter promptly (i) when the
Registration Statement or any post-effective amendment thereto shall have become
effective; (ii) of receipt of any comments from the SEC; (iii) of any request of
the SEC for amendment of the Registration Statement or for supplement to the
Prospectus or for any additional information; and (iv) of the issuance by the
SEC of any stop order suspending the effectiveness of the Registration Statement
or the use of the Prospectus or of the institution of any proceedings for that
purpose. The Company will use its commercially reasonable best efforts to
prevent the issuance of any such stop order preventing or suspending the use of
the Prospectus and to obtain as soon as reasonably possible the lifting thereof,
if issued.
(d) The Company will cooperate with the Underwriter in endeavoring to
qualify the Underwriter's Shares for sale under the securities laws of such
jurisdictions as the Underwriter may have designated and will make such
applications, file such documents, and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to file
such a consent. The Company will, from time to time, prepare and file such
statements, reports, and other documents as are or may be required to continue
such qualifications in effect for so long a period as the Underwriter may
reasonably request for distribution of the Underwriter's Shares by the
Underwriter.
(e) Upon request, the Company will deliver to, or upon the order of, the
Underwriter, from time to time, as many copies of any Preliminary Prospectus as
the Underwriter may reasonably request. Upon request, the Company will deliver
to, or upon the order of, the Underwriter during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Underwriter may
reasonably request. The Company will deliver to the Underwriter, at or before
the Closing Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith and all documents
incorporated by referenced therein (excluding exhibits), and will upon request
deliver to the Underwriter such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith and the
documents incorporated by reference therein (excluding exhibits) that may
reasonably be requested) and of all amendments thereto, as the Underwriter may
reasonably request.
(f) The Company will comply with the Securities Act, the Exchange Act and
the Rules and Regulations so as to permit the completion of the distribution of
the Underwriter's Shares as contemplated in this Agreement and the Prospectus.
If during the period in which a prospectus is required by law to be delivered by
an Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Underwriter, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is necessary
at any time to amend or supplement the Prospectus to comply with any law, the
Company promptly will prepare and file with the SEC an appropriate amendment to
the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with the law.
(g) The Company will timely file such reports under the Exchange Act as
are necessary to make generally available to holders of its securities as soon
as may be practicable, but in no event later than 15 months after the effective
date of the Registration Statement, an earnings statement (which need not be
audited but shall be in reasonable detail) covering a period of 12 months
commencing after the effective date of the Registration Statement, which will
satisfy the provisions of Section 11(a) of the Securities Act (including Rule
158 of the Rules and Regulations).
(h) Prior to the Closing Date, the Company will furnish to the
Underwriter, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any quarterly period subsequent to the period covered by the most recent
financial statements appearing in the Registration Statement and the Prospectus.
(i) No offer, sale, contract for the sale, short sale, pledge or other
disposition of any shares of Common Stock of the Company, securities convertible
into or exchangeable or exercisable for shares of Common Stock or derivatives
with respect to shares of Common Stock (or agreement for such) will be made,
directly or indirectly, by the Company for a period of 180 days after the date
of this Agreement otherwise than hereunder or with the prior written consent of
the Underwriter; provided, that this provision will not restrict the Company
from issuing shares of Common Stock upon the exercise of any option outstanding
on the date hereof or from granting awards of or options to purchase shares of
Common Stock pursuant to employee benefit plans described in the Prospectus and
consistent with past practice.
(j) The Company has caused each executive officer and director of the
Company to furnish to you, on or prior to the date of this agreement, a letter
or letters, in form and substance reasonably satisfactory to the Underwriter,
pursuant to which each such Person shall agree not to (i) offer, sell, contract
to sell, sell short, pledge or otherwise dispose of, whether directly or
indirectly, any shares of Common Stock of the Company, securities convertible
into or exchangeable or exercisable for shares of Common Stock or derivatives
with respect to shares of Common Stock beneficially owned by such Person, (ii)
enter into any transactions that would have the same effect, (iii) enter into
any swap, hedge or other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of Common Stock, whether any of these
transactions are to be settled by delivery of Common Stock or other securities,
in cash or otherwise, (iv) publicly disclose the intention to make any offer,
sale, contract to sell, short sale, pledge or other disposition or to enter into
any such other transaction, swap, hedge or other arrangement, (v) or request the
registration of any of the foregoing under the Securities Act for a period of
180 days after the date of this Agreement, directly or indirectly, except with
the prior written consent of the Underwriter (the "Lockup Agreements").
(k) The Company shall apply the net proceeds of its sale of the Shares as
described under the heading "Use of Proceeds" in the Prospectus.
(l) The Company shall not invest or otherwise use the proceeds received by
the Company from its sale of the Shares in such a manner as would require the
Company or any of the Subsidiaries to register as an investment company under
the 1940 Act.
(m) The Company will maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar for the Common Stock.
(n) For a period of three years following commencement of public sales in
the Offering, the Company will provide the Underwriter with a right of first
offer to act as the underwriter or placement agent for any security offerings by
the Company and as financial advisor for any sale or merger of the Company, and
the Company agrees to negotiate in good faith to engage the Underwriter for such
purposes on commercially reasonable terms and conditions. This Section 5(n)
shall remain in full force and effect regardless of (i) any termination of this
Agreement or (ii) delivery of and payment for the Underwriter's Shares under
this Agreement, except in case of a material breach of this Agreement by the
Underwriter.
6. Costs and Expenses.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company under this Agreement and the sale
of the Directed Shares, including, without limiting the generality of the
foregoing, the following: accounting fees of the Company; the fees and
disbursements of counsel for the Company; the cost of printing and delivering
to, or as reasonably requested by, the Underwriter copies of the Registration
Statement, Preliminary Prospectuses, the Prospectus, the Underwriters' Selling
Memorandum and the Underwriters' Invitation Letter, if any, any listing
application or notice, the Blue Sky Survey and any supplements or amendments
thereto; the filing fees of the SEC; the filing fees and expenses (including
reasonable legal fees and disbursements of counsel to the Underwriter) incident
to securing any required review by the NASD of the terms of the sale of the
Shares; the listing fee of any national market; the costs and expenses of the
Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Shares, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations with the prior approval of the Company, travel and
lodging expenses of the Underwriter and officers of the Company and any such
consultants, and the cost of any aircraft chartered with the prior approval of
the Company in connection with the road show; and the expenses, including the
fees and disbursements of counsel in connection with the qualification of the
Shares under state securities or Blue Sky laws. Any transfer taxes imposed on
the sale of the Shares to the Underwriter will be paid by the Company.
In addition to the expenses referred to in the prior paragraph, the
Company shall reimburse the Underwriter for all reasonable out-of-pocket
expenses incurred in connection with investigating, marketing and proposing to
market the Underwriter's Shares or in contemplation of performing the
Underwriter's obligations hereunder, including, but not limited to, travel, cost
of database sources, and fees and expenses of its legal counsel, such fees and
expenses not to exceed (without the Company's prior approval): (i) in the event
the Closing of the Firm Shares occurs, $70,000; and (iii) in the event the
Closing of the Firm Shares does not occur, $95,000 (including the $25,000
retainer paid by the Company to the Underwriter prior to this Agreement). The
$70,000/$95,000 limit on fees and expenses of legal counsel shall not include
fees and expenses of counsel to the underwriters incurred in connection with
obtaining the qualification of the Underwriter's Shares under state securities
or Blue Sky laws.
Furthermore, if the Closing shall not occur because the conditions in
Section 7 hereof are not satisfied, or because this Agreement is terminated by
the Underwriter pursuant to Section 11 hereof, or by reason of any failure,
refusal or inability on the part of the Company to perform any undertaking or
satisfy any condition of this Agreement or to comply with any of the terms
hereof on its part to be performed, unless such failure to satisfy said
condition or to comply with said terms be due to the default or omission of the
Underwriter or (as to Sections 7(d) and 7(e)) of counsel to the Underwriter,
then the Company shall reimburse the Underwriter for all reasonable
out-of-pocket expenses, including all fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and proposing to
market the Underwriter's Shares or in contemplation of performing its
obligations hereunder; but the Company shall
not in any event be liable to the Underwriter for damages on account of loss of
anticipated profits from the sale by it of the Underwriter's Shares.
The Company paid to the Underwriter a $25,000 retainer prior to this
Agreement. In the event that the Closing of the Firm Shares does not occur, the
$25,000 retainer shall be returned to the Company, except to the extent that
such amount represents accountable out-of pocket expenses incurred by the
Underwriter as otherwise provided in this Section 6.
7. Conditions of Obligations of the Underwriter.
The obligation of the Underwriter to purchase the Firm Shares on the
Closing Date and the Option Shares, if any, on the Option Closing Date are
subject to the satisfaction of the following conditions:
(a) the representations and warranties of the Company in this Agreement
shall be true and correct on such date as if made on such date;
(b) the Company shall have complied with all of its covenants and
agreements under this Agreement required to have been performed at or prior to
such date;
(c) the Registration Statement and all post-effective amendments thereto
shall have become effective and any and all filings required by Rule 424 and
Rule 430A of the Rules and Regulations shall have been made, and any request of
the SEC for additional information (to be included in the Registration Statement
or otherwise) shall have been disclosed to the Underwriter and complied with to
its reasonable satisfaction;
(d) no stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no Action
for that purpose shall have been taken or, to the Knowledge of the Company,
shall be contemplated by the SEC and no Order shall have been issued prohibiting
the issuance of the Shares.
(e) the Underwriter shall have received on the Closing Date and the Option
Closing Date, if any, the opinion of Xxxxxxx XxXxxxxxx LLP, counsel for the
Company, dated the Closing Date or the Option Closing Date, if any, addressed to
the Underwriter (and stating that it may be relied upon by counsel for the
Underwriter) to the effect that:
(i) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of California,
with corporate power and authority to conduct its business as described in the
Prospectus;
(ii) the Company is duly registered as a bank holding company with
the FRB under the BHC Act and no proceedings for the termination or revocation
of such registration are, to such counsel's knowledge, pending or threatened;
(iii) the Bank has been duly incorporated and is validly existing as
a California state-chartered commercial bank in good standing under the laws of
the State of California with corporate power and authority to conduct its
business as described in the Prospectus, and has a valid certificate of
authority issued by the California Commissioner of Financial Institutions to
transact a banking business;
(iv) all of the Equity Securities of the Bank have been duly
authorized and are validly issued, fully paid and nonassessable, and are owned
by the Company to the knowledge of such counsel free and clear of all Liens;
(v) the Bank's deposit accounts are insured by the FDIC to the
fullest extent permitted by law, and to such counsel's knowledge, no Action for
the termination or revocation of such membership or insurance pending or
threatened;
(vi) the Company's authorized equity capitalization is as set forth
in the Prospectus, and the outstanding shares of the Company's capital stock
have been duly authorized and are validly issued, and to such counsel's
knowledge, based solely on certificates of officers of the Company, fully paid
and non-assessable; the Shares, when issued and paid for as contemplated herein,
will be duly authorized, validly issued, fully paid and non-assessable and free
and clear of all Liens created by the Company. There are no preemptive rights or
other rights to subscribe for or to purchase, or any restrictions upon the
voting or transfer of, any shares of capital stock of the Company pursuant to
the Articles of Incorporation or Bylaws of the Company, or to such counsel's
knowledge, any Company Contract other than pursuant to options described in the
Prospectus. To such counsel's knowledge, neither the Offering nor the sale of
the Shares gives or will give rise to any rights for or relating to the
underwriting or registration of any shares of capital stock or other securities
of the Company under the Securities Act that have not been satisfied or waived
prior to the date hereof.
(vii) A Registration Statement covering the Shares has been filed
with the SEC and become effective under the Securities Act. Any required filing
of the Prospectus, and any supplements thereto, pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b). To such
counsel's knowledge, no Action prohibiting the use of the Prospectus or any
amendment thereof or supplement thereto or suspending the Offering has been
taken by the SEC or any Governmental Authority, and no Action for that purpose
has been instituted;
(viii) The statements under the captions "Description of Capital
Stock," and "Regulation and Supervision," insofar as such statements constitute
a summary of documents referred to therein or matters of law, fairly summarize
in all material respects the information called for with respect to such
documents and matters;
(ix) To such counsel's knowledge, there are no Contracts or
documents required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus that are not so filed
or described as required, and such Contracts and documents as are summarized in
the Registration Statement or the Prospectus are fairly summarized in all
material respects;
(x) To such counsel's knowledge, there is no pending Action
involving the Company or any Subsidiary that is required to be described in the
Prospectus which is not so described;
(xi) To such counsel's knowledge, neither the Company, the Bank nor
any Subsidiary has been or is subject to any Regulatory Action;
(xii) The Company has the requisite power and authority to execute
and deliver the Underwriting Agreement and to perform its obligations
thereunder. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
(xiii) The offer and sale of the Shares as contemplated by the
Underwriting Agreement and the performance by the Company of its obligations
under the Underwriting Agreement will not result
in a breach or violation by the Company of, or constitute a default under, the
Articles of Incorporation or Bylaws of the Company or any Contract filed as an
Exhibit to the Registration Statement;
(xiv) All regulatory consents, authorizations, approvals, orders and
filings required to be obtained or made by the Company under the laws of the
United States and the laws of the State of California for the issuance, sale and
delivery of the Shares by the Company have been obtained or made by the Company
(other than as may be required under the blue sky laws of any jurisdiction in
connection with the Offering, as to which such counsel need express no opinion);
and
(xv) To counsel's knowledge, the Company is not, and will not become
as a result of the consummation of the transactions contemplated by this
Agreement and the application of the net proceeds therefrom as described in the
Prospectus, an "investment company" as defined in the Investment Company Act of
1940.
In rendering such opinion, Xxxxxxx XxXxxxxxx LLP may rely as to matters
governed by the laws of states other than California or Federal laws, on local
counsel in such jurisdictions, provided that in each case Xxxxxxx XxXxxxxxx LLP
shall state that they believe that they and the Underwriter are justified in
relying on such other counsel. In addition to the matters set forth above, such
opinion shall also include statements to the effect that (i) the Registration
Statement (except for financial statements and schedules as to which such
counsel need not express any opinion), as of its effective date, and the
Prospectus (except for financial statements and schedules as to which such
counsel need not express any opinion), as of the date of the Prospectus, comply
as to form in all material respects with the requirements of the Securities Act
and the applicable rules and regulations of the SEC thereunder; and (ii) nothing
has come to the attention of such counsel which leads them to believe that (A)
the Registration Statement (except for financial statements and schedules as to
which such counsel need not express any opinion), as of its effective date,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (B) the Prospectus (except for financial statements and
schedules as to which such counsel need not express any opinion), or any
supplement thereto, on the date it was filed pursuant to the Rules and
Regulations and as of the Closing Date and the Option Closing Date, if any,
contained an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading, it being understood
that counsel may state that they make no representation that they have
independently verified the accuracy and completeness of the statements contained
in the Registration Statement and Prospectus.
(f) The Underwriter shall have received from Xxxx & Xxxxx P.C., counsel to
the Underwriter, an opinion dated the Closing Date and the Option Closing Date,
if any, with respect to matters as the Underwriter reasonably may request, and
such counsel shall have received such papers and information as they request to
enable them to pass upon such matters.
(g) The Underwriter shall have received at or prior to the Closing Date
from Xxxx & Xxxxx P.C., a memorandum or summary, in form and substance
reasonably satisfactory to the Underwriter, with respect to the qualification
for offering and sale by the Underwriter of the Underwriter's Shares under the
state securities or Blue Sky laws of such jurisdictions as the Underwriter may
have designated to the Company.
(h) The Underwriter shall have received, as of the date of this Agreement,
and on each of the Closing Date and the Option Closing Date, if any, a letter
dated the date thereof, in form and substance satisfactory to it, of Xxxxx Xxxxx
LLP confirming that they are independent public accountants within the meaning
of the Act and the applicable Rules and Regulations and stating that in their
opinion the financial statements and schedules examined by them and included in
the Registration Statement comply in form in
all material respects with the applicable accounting requirements of the Act and
the Rules and Regulations; and containing such other statements and information
as is ordinarily included in accountants' "comfort letters" to the Underwriter
with respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and the Prospectus.
(i) The Underwriter shall have received, as of the date of this Agreement,
and on each of the Closing Date and the Option Closing Date, if any, a letter
dated the date thereof, in form and substance satisfactory to it, of Xxxx Xxxxx
LLP confirming that they are independent public accountants within the meaning
of the Act and the applicable Rules and Regulations and stating that in their
opinion the financial statements and schedules examined by them and included in
the Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the Rules and Regulations; and
containing such other statements and information as is ordinarily included in
accountants' "comfort letters" to the Underwriter with respect to the financial
statements and certain financial and statistical information contained in the
Registration Statement and the Prospectus.
(j) The Underwriter shall have received on the Closing Date and the Option
Closing Date, if any, a certificate or certificates of the Company's Chief
Executive Officer and Chief Financial Officer to the effect that, as of the
Closing Date or the Option Closing Date, if any:
(i) The Registration Statement has become effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for such purpose have
been taken or are, to his knowledge, contemplated by the SEC;
(ii) The representations and warranties of the Company contained in
Section 1 hereof are true and correct;
(iii) All filings required to have been made pursuant to Rules 424
or 430A under the Act have been made;
(iv) They have carefully examined the Registration Statement and the
Prospectus and, in their opinion, as of the effective date of the Registration
Statement, the statements contained in the Registration Statement were true and
correct as to each material fact stated therein and such Registration Statement
and Prospectus did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any material
adverse change or any development involving a prospective change, which has had
or is reasonably likely to have a Material Adverse Effect.
(k) The NASD shall have confirmed that it has not raised any objection
with respect to the fairness and reasonableness of the underwriting terms and
arrangements for the Offering.
(l) The Company shall have furnished to the Underwriter such further
certificates and documents requested by the Underwriter as may be reasonably
necessary to confirm the representations and warranties, covenants and
conditions contained herein.
(m) The Lockup Agreements described in Section 5(j) are in full force and
effect.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects reasonably satisfactory to the Underwriter's counsel.
If any of the conditions contained in this Section shall not have been
fulfilled when and as required by this Agreement, the obligations of the
Underwriter hereunder may be terminated by the Underwriter by notifying the
Company of such termination in writing on or prior to the Closing Date or the
Option Closing Date, if any. In such event, the Company and the Underwriter
shall not be under any obligation to each other except to the extent provided in
Sections 6 and 9 hereof.
8. Conditions of the Obligations of the Company.
The obligations of the Company to sell and deliver the portion of the
Underwriter's Shares required to be delivered as and when specified in this
Agreement are subject to the conditions that at the Closing Date or the Option
Closing Date, if any, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
9. Indemnification.
(a) The Company agrees:
(i) 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, against any Losses to which such Underwriter or any such
controlling Person may become subject under the Securities Act or otherwise,
insofar as such Losses (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, (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) any untrue statement or alleged untrue statement of any material fact
contained in any written or electronic materials, if any, used in connection
with the marketing of the Shares, including without limitation, power points,
slides, videos, films and tape recordings that are provided or furnished by the
Company; provided however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by or through the
Underwriter specifically for use in the preparation thereof; and
(ii) to reimburse the Underwriter and each such controlling Person
upon demand for any legal or other out-of-pocket expenses reasonably incurred by
such Underwriter or such controlling Person in connection with investigating or
defending any such loss, claim, damage or liability, action or proceeding or in
responding to a subpoena or governmental inquiry related to the offering of the
Shares, whether or not such Underwriter or controlling Person is a party to any
action or proceeding, or in obtaining payment pursuant to this Section 9. In the
event that it is finally judicially determined that the Underwriter was not
entitled to receive payments for legal and other expenses pursuant to this
subparagraph, the Underwriter will promptly return all sums that had been
advanced pursuant hereto.
(b) The Underwriter will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the Registration Statement,
and each Person, if any, who controls the Company within the meaning of the
Securities Act, against any Losses to which the Company or any such director,
officer, or controlling Person may become subject under the Securities Act or
otherwise, insofar
as such Losses (or actions or proceedings in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse any
legal or other out-of-pocket expenses reasonably incurred by the Company or any
such director, officer, or controlling Person in connection with investigating
or defending any such loss, claim, damage, liability, action or proceeding, or
in obtaining payment pursuant to this Section 9; provided, however, that the
Underwriter will be liable in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Underwriter specifically for use in the preparation thereof.
(c) In case any Action shall be instituted involving any Person in respect
of which indemnity may be sought pursuant to this Section, such Person (the
"indemnified party") shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 9(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Subsection if the party
to whom notice was not given was unaware of the proceeding to which such notice
would have related and to the extent and only the extent to which such party was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 9(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation) the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action.
It is understood that the indemnifying party shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate firm for all such
indemnified parties unless the representation of all such indemnified parties by
same counsel would be inappropriate due to actual or potential differing
interests between or among them. Such firm shall be designated in writing by you
in the case of parties indemnified pursuant to Section 9(a) and by the Company
in the case of parties indemnified pursuant to Section 9(b). The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but if settled with such consent, which consent shall not be
unreasonably withheld, or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding with respect to which indemnification may be sought
hereunder
(whether or not any indemnified party is an actual or potential party to such
claim, action 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 or proceeding.
(d) If the indemnification provided for in this Section 9 is unavailable
to or insufficient to hold harmless an indemnified party under Section 9(a) or
(b) above in respect of any Losses (or actions or proceedings in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such Losses
(or actions or proceedings in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriter on the other from the offering of the Underwriter's
Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and the Underwriter on the
other in connection with the statements or omissions which resulted in such
Losses (or actions or proceedings in respect thereof), 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 discounts and
commissions received by the Underwriter, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault 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
relates to information supplied by the Company on the one hand or 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 contributions pursuant to this Subsection 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 Subsection. The amount
paid or payable by an indemnified party as a result of the Losses (or actions or
proceedings in respect thereof) referred to above in this Subsection shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such Action
or in connection with obtaining payment pursuant to this Section 9.
Notwithstanding the provisions of this Subsection, (i) the Underwriter shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Underwriter's Shares were offered to the public exceeds the
amount of any damages which the Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission and (ii) no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 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) Any Losses for which an indemnified party is entitled to
indemnification or contribution under this Section shall be paid by the
indemnifying party to the indemnified party as such Losses are incurred. The
indemnity and contribution agreements contained in this Section and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and
effect, regardless of (i) any investigation made by or on behalf of the
Underwriter or any Person controlling the Underwriter, the Company, its
directors or officers or any Persons controlling the Company, (ii) acceptance of
any Underwriter's Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to the Underwriter or any Person
controlling the Underwriter, or a successor to the Company, its directors or
officers, or any Person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in this Section.
10. Definitions.
"Action" means any lawsuit, litigation, action, demand, mediation,
arbitration, investigation of which the Company has Knowledge, suit, proceeding,
arbitration or claim before any court, Governmental Authority or quasi-judicial
body (such as an arbitrator or alternative dispute resolution body or agency),
whether formal or informal, civil, criminal, administrative or investigative.
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Bank" means Bank of Visalia.
"Banking Regulators" means the FRB, the DFI and the FDIC.
"Company Contract" means any Contract to which the Company or any
Subsidiary is a party or otherwise bound, or to which any asset or property of
the Company or any Subsidiary is subject.
"Contract" means any written or oral note, bond, debenture, mortgage,
license, agreement, commitment, contract or understanding, but not including any
Permits or Orders.
"DFI" means the California Department of Financial Institutions.
"FDIC" means the Federal Deposit Insurance Corporation.
"Environmental Law" means any Law or Order relating to pollution or
protection of the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata), including without limitation
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, and other Laws relating to (i) emissions, discharges or releases of
pollutants, contaminants, chemicals, or industrial toxic or hazardous substances
or wastes (collectively known as "Polluting Substances") or (ii) the handling,
storage, disposal, reclamation, recycling or transportation of Polluting
Substances.
"Equity Securities" of any Person means the capital stock or other equity
interests of such Person and/or any Stock Equivalents of such Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended and
in effect from time to time.
"FRB" means the Board of Governors of the Federal Reserve System.
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, a public body or authority, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, whether domestic or foreign, or
national, regional, state or local.
"IRC" means the Internal Revenue Code of 1986, as amended and in effect
from time to time (or any successor statute in effect from time to time), and
the rules and regulations promulgated thereunder.
"Knowledge" with respect to any Person means the actual knowledge of the
Person, including, the actual knowledge of any of the officers or directors of
such Person or any of its Subsidiaries.
"Law" means any foreign, federal, state or local statute, law, rule,
regulation, ordinance, order, code, policy or rule of common law, now or
hereafter in effect, and in each case as amended, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including any order, consent, decree or judgment of any Governmental Authority.
"Liability" means any liability or obligation, whether known or unknown,
asserted or unasserted, absolute or contingent, matured or unmatured,
conditional or unconditional, latent or patent, accrued or unaccrued, liquidated
or unliquidated, or due or to become due.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever.
"Losses" means losses, liabilities, damages, fines, penalties and
judgments.
"Material Adverse Effect" means a material adverse effect on the condition
(financial or other), properties, assets, liabilities, operations, results of
operations, prospects or business of the Company and its Subsidiaries taken as a
whole, whether or not arising from transactions in the ordinary course of
business, provided, however, that no effect or change reflecting general
business or economic conditions or affecting the banking industry generally
shall constitute a Material Adverse Effect.
"Material Contract" means any Contract required to be filed as an Exhibit
to the Registration Statement or any Company Contract otherwise material to the
Company or any Subsidiary.
"NASD" means the National Association of Securities Dealers.
"Order" means any order, ruling, decision, verdict, decree, writ,
subpoena, mandate, precept, command, directive, consent, approval, award,
judgment, injunction, or other similar determination or finding by, before, or
under the supervision of any Governmental Authority, arbitrator, or mediator,
but not including any Permits.
"Permit" means any permit, license, certificate, approval, consent,
notice, waiver, franchise, registration, filing, accreditation, or other similar
authorization issued by any Governmental Authority, but not including any
Orders.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, estate, trust, unincorporated association, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing, or other entity.
"Regulatory Action" with respect to a Person means any investigation of
such Person by any Governmental Authority (other than any regular or customary
examination by a Banking Regulator), or any cease and desist or other order,
capital or other directive, civil monetary or other penalty or assessment issued
to or assessed on such Person by any Governmental Authority, any consent
agreement, memorandum of understanding, supervisory agreement or other agreement
between such Person and any Governmental Authority, or any notice from any
Governmental Authority that it is considering any of the foregoing.
"Rules and Regulations" means the rules and regulations of the SEC.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Equivalents" of any Person means options, warrants, calls, rights,
commitments, convertible securities and other securities pursuant to which the
holder, directly or indirectly, has the right to acquire (with or without
additional consideration) Equity Securities of such Person.
"Subsidiary" means a subsidiary of the Company, which are subsidiaries are
identified in the Registration Statement.
"Tax Liabilities" means all liabilities related to Taxes.
"Tax Returns" means all returns, declaration, reports, claims for refund
or information return or statement filed in connection with the determination,
assessment, or collection of any Tax, including any schedule or attachment
thereto, and including any amendment thereof.
"Taxes" means all taxes, charges, fees, levies or other governmental
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, unemployment, social security (including any
social security charge or premium) excise, estimated, alternative minimum,
severance, stamp, occupation, property or other taxes, customs, dues, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority (federal, state, local or foreign).
11. Notices.
All notices hereunder shall be in writing and, except as otherwise
provided herein, shall be deemed sufficiently given and served for all purposes
(a) when personally delivered; (b) when transmitted by facsimile (receipt
confirmed), if delivered prior to 5:00 pm (Pacific time) on a business day,
otherwise on the next business day; (c) one business day after the notice is
deposited with a nationally-recognized overnight courier for overnight delivery,
charges prepaid, or (d) three business days after a writing is deposited in the
United States mail, first class postage or other charges prepaid and registered,
addressed as follows:
If to the Underwriter:
Wedbush Xxxxxx Securities Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx
with a copy to (not to constitute notice):
Xxxx & Xxxxx PC
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxx
Valley Commerce Bancorp
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx
with a copy to (not to constitute notice):
Xxxxxxx XxXxxxxxx XXX
Xxxxx Xxxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxx
Any party may change the address at which it is to receive communications
hereunder upon notice to the other parties as provided above.
12. Termination.
This Agreement, except for Sections 6, 9, 14 and 15, may be terminated by
the Underwriter by notice to the Company at any time prior to the Closing Date:
(a) if any of the following has occurred: (i) since the respective dates as of
which information is given in the Registration Statement and the Prospectus, any
material adverse change or any development involving a prospective material
adverse change, which has had or is reasonably likely to have a Material Adverse
Effect, (ii) any outbreak or escalation of hostilities or declaration of war or
national emergency or other national or international calamity or crisis or
change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make it
impracticable or inadvisable to market the Underwriter's Shares or to enforce
contracts for the sale of the Underwriter's Shares, (iii) suspension of trading
in securities generally on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market, limitation on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such Exchange or such Market or material disruption in securities settlement,
payment or clearance services in the United States, (iv) the enactment,
publication, decree or other promulgation of any Law which in the reasonable
opinion of Underwriter's counsel materially and adversely affects or reasonably
may materially and adversely affect the business or operations of the Company,
(v) declaration of a banking moratorium by United States or New York State
authorities, (vi) any downgrading, or placement on any watch list for possible
downgrading, in the rating of the Company's debt securities by any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Exchange Act); (vii) the suspension of trading of the Common
Stock by the SEC, or any other Governmental Authority or, (viii) the taking of
any action by any Governmental Authority in respect of its monetary or fiscal
affairs which in your reasonable opinion has a material adverse effect on the
securities markets in the United States; or (b) as provided in Section 7 of this
Agreement.
13. Successors.
This Agreement has been and is made solely for the benefit of the Company
and the Underwriter 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. No
purchaser of any of the Underwriter's Shares from the Underwriter shall be
deemed a successor or assign merely because of such purchase.
14. Information Provided by Underwriter.
The Company and the Underwriter acknowledge and agree that the only
information furnished or to be furnished by the Underwriter to the Company for
inclusion in any Prospectus, Preliminary Prospectus or the Registration
Statement is set forth (i) in the first four sentences of the first paragraph
following the first table under the heading "Underwriting and Plan of
Distribution" in the Prospectus, which paragraph begins "The underwriter
proposes initially..."; (ii) under the heading "Underwriting and Plan of
Distribution - Stabilization, Short Sales and Penalty Bids" in the Prospectus;
and (iii) in the first sentence under the heading "Underwriting and Plan of
Distribution - Electronic Distribution" in the Prospectus. It is further agreed
that no information has been omitted from the Registration Statement in reliance
on information supplied by the Underwriter in writing.
15. Miscellaneous.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument. Any signature page delivered by facsimile transmission shall be
binding to the same extent as an original signature page, with regard to any
agreement subject to the terms hereof or any amendment thereto. Any party who
delivers such a signature page agrees to later deliver an original counterpart
to any party who requests it.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California, excluding the application of any of its choice
of law rules that would result in the application of the laws of another
jurisdiction..
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof.
This Agreement may only be amended or modified in writing, signed by all
of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit.
The invalidity or unenforceability of any section, paragraph or provision
of this Agreement shall not affect the validity or enforceability of any other
section, paragraph or provision of this Agreement. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
The section headings in this Agreement are for convenience only and shall
not effect the construction of this Agreement.
[Remainder of page intentionally blank; signature page follows.]
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 among the Company and the
Underwriter in accordance with its terms.
Very truly yours,
Valley Commerce Bancorp
By
-------------------------------------------
Xxxxxx X. Xxxxxx, Chief Executive Officer
The foregoing Underwriting Agreement is hereby confirmed and accepted as
of the date first above written.
Wedbush Xxxxxx Securities Inc.
By:
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Name:
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Title:
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