EXHIBIT 1
SOUTHERN COMMUNITY CAPITAL TRUST I
(a Delaware business trust)
1,500,000 Preferred Securities
_____% Cumulative Convertible Trust Preferred Securities
(Liquidation Amount $10 per Preferred Security)
UNDERWRITING AGREEMENT
This Underwriting Agreement is made and entered into this
_____ day of ____ 2002 by and between Southern Community Capital Trust I (the
"Trust"), a statutory business trust organized under Delaware Business Trust Act
(the "Delaware Act"), Southern Community Financial Corporation, a North Carolina
corporation (the "Company"), as depositor of the Trust and as guarantor (the
Trust and the Company are referred to collectively as the "Offerors") and Xxxx,
Xxxx & Co, LLC (the "Underwriter"). The Offerors hereby confirm their agreement
with the Underwriter, with respect to the issue and sale by the Trust and the
purchase by the Underwriter of 1,500,000 (the "Initial Securities") of the
Trust's _____% Cumulative Convertible Trust Preferred Securities (the "Preferred
Securities"). The Trust and the Company also propose to issue and sell to the
Underwriter, at the Underwriter's option, up to an additional 225,000 Preferred
Securities (the "Option Securities") as set forth herein. The term "Preferred
Securities" as used herein, unless indicated otherwise, shall mean the Initial
Securities and the Option Securities.
The Preferred Securities and the Common Securities (as defined
herein) are to be issued pursuant to the terms of an Amended and Restated Trust
Agreement dated as of __________, 2002 (the "Trust Agreement"), among the
Company, as depositor, and Wilmington Trust Company (the "Trust Company"), a
Delaware banking corporation, as property trustee (the "Property Trustee"), the
Trust Company, as Delaware trustee (the "Delaware Trustee"), and F. Xxxxx Xxxxx,
Xxxxxxx X. Xxxx and Xxxx X. Xxxxx (the "Administrative Trustees" and, together
with the Property Trustee and the Delaware Trustee, the "Trustees") and the
holders from time to time of undivided interests in the assets of the Trust. The
Preferred Securities will be guaranteed by the Company to the extent provided in
the Guarantee Agreement, to be dated as of the closing time (as defined in
Section 2 hereof) (the "Guarantee Agreement"), between the Company and the Trust
Company, as trustee (the "Guarantee Trustee"), with respect to distributions and
payments upon liquidation, redemption and otherwise. The assets of the Trust
will consist of _____% convertible deferrable interest junior subordinated
debentures due __________, 2032 (the "Debentures") of the Company which will be
issued under the Indenture to be dated as of __________, 2002 (the "Indenture"),
between the Company and the Trust Company, as trustee (the "Indenture Trustee").
The Company has agreed to pay all costs, expenses and liabilities of the Trust
payable to third parties, with certain exceptions, pursuant to the Agreement as
to Expenses and Liabilities, dated as of __________, 2002, between the Company
and the Trust (the "Expense Agreement"). Under certain circumstances, the
Debentures will be distributable
to the holders of undivided beneficial interests in the assets of the Trust. The
entire proceeds from the sale of the Preferred Securities will be combined with
the entire proceeds from the sale by the Trust to the Company of the Trust's
common securities (the "Common Securities") and will be used by the Trust to
purchase an equivalent amount of the Debentures.
The initial public offering price for the Preferred
Securities, the purchase price to be paid by the Underwriter for the Preferred
Securities, the commission per Preferred Security to be paid by the Company to
the Underwriter, the Conversion Ratio for conversion of the Preferred Securities
into shares of common stock of the Company and the rate of interest to be paid
on the Preferred Securities shall be agreed upon by the Company and the
Underwriter, and such agreement shall be set forth in a separate written
instrument substantially in the form of Exhibit A hereto (the "Price
Determination Agreement"). The Price Determination Agreement may take the form
of an exchange of any standard form of written telecommunication between the
Company and the Underwriter and shall specify such applicable information as is
indicated in Exhibit A hereto. The offering of the Preferred Securities will be
governed by this Agreement, as supplemented by the Price Determination
Agreement. From and after the date of the execution and delivery of the Price
Determination Agreement, this Agreement shall be deemed to incorporate, and all
references herein to "this Agreement" shall be deemed to include, the Price
Determination Agreement.
The Offerors have prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-2
(File Nos. 333-_____ and 333-______-01) covering the registration of the
Preferred Securities, the Guarantee and the Debentures under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and, if such registration statement has not become
effective, the Company will prepare and file, prior to the effective date of
such registration statement, an amendment to such registration statement,
including a final prospectus. Each prospectus used before the time such
registration statement becomes effective is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and the
documents incorporated by reference therein pursuant to Item 12 of Form S-2
under the 1933 Act, at the time it becomes effective, is herein called the
"Registration Statement," and the prospectus, including the documents
incorporated by reference therein pursuant to Item 12 of Form S-2 under the 1933
Act, included in the Registration Statement at the time it becomes effective is
herein called the "Prospectus," except that, if any revised prospectus provided
to the Underwriter by the Company for use in connection with the offering of the
Preferred Securities differs from the prospectus included in the Registration
Statement at the time it becomes effective (whether or not such prospectus is
required to be filed pursuant to Rule 424(b) under the 1933 Act ("Rule 424(b)"),
the term "Prospectus" shall refer to such revised prospectus from and after the
time it is first furnished to the Underwriter for such use.
The Company understands that the Underwriter proposes to make
a public offering of the Preferred Securities (the "Offering") as soon as
possible after the Registration Statement becomes effective. The Underwriter may
assemble and manage a selling group of broker-dealers that are members of the
National Association of Securities Dealers, Inc. ("NASD") to participate in the
solicitation of purchase orders for the Preferred Securities.
-2-
Section 1. Representations and Warranties.
(a) The Offerors jointly and severally represent and
warrant to and agree with the Underwriter that:
(i) The Company meets the requirements for use of Form
S-2 under the 1933 Act and, when the Registration Statement on such
form shall become effective and at all times subsequent thereto up to
the Closing Time referred to below (and, with respect to the Option
Securities, up to the Option Closing Date referred to below), (A) the
Registration Statement and any amendments and supplements thereto will
comply in all material respects with the requirements of the 1933 Act
and the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations"); (B) neither the Registration Statement nor any
amendment or supplement thereto will contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and (C)
neither the Prospectus nor any amendment or supplement thereto will
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
except that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Offerors by the Underwriter
expressly for use in the Registration Statement or the Prospectus, or
any information contained in any Form T-1 which is an exhibit to the
Registration Statement. The statements contained under the caption
"Underwriting" in the Prospectus constitute the only information
furnished to the Offerors in writing by the Underwriter expressly for
use in the Registration Statement or the Prospectus.
(ii) The documents incorporated by reference in the
Prospectus pursuant to Item 12 of Form S-2 under the 1933 Act, at the
time they were filed either with the Commission, or, if filed by
Southern Community Bank and Trust Company, with the Federal Reserve
System (the "Fed"), as predecessor filer to the Company, complied in
all material respects with the requirements of the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and the rules and regulations
of the Commission thereunder (the "1934 Act Regulations") as adopted by
the appropriate federal banking regulator and, when read together and
with the other information in the Prospectus, at the time the
Registration Statement becomes effective and at all times subsequent
thereto up to the Closing Time, will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, in each case after excluding any statement that does not
constitute a part of the Registration Statement or the Prospectus
pursuant to Rule 412 of the 1933 Act Regulations.
(iii) Xxxxx Xxxx PLLC, who are reporting upon the audited
financial statements included or incorporated by reference in the
Registration Statement, has advised the Offerors that they are
independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
-3-
(iv) The consolidated financial statements, audited and
unaudited (including the notes thereto), included or incorporated by
reference in the Registration Statement present fairly the consolidated
financial position of the Company and its subsidiaries as of the dates
indicated and the consolidated results of operations and cash flows of
the Company and its subsidiaries for the periods specified. Such
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout
the periods involved, except as otherwise stated therein. The financial
statement schedules, if any, included in the Registration Statement
present fairly the information required to be stated therein. The
selected financial, pro forma and statistical data included in the
Prospectus are accurate in all material respects and present fairly the
information shown therein and have been compiled on a basis consistent
with that of the audited and unaudited consolidated financial
statements included or incorporated by reference in the Registration
Statement.
(v) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of North
Carolina with corporate power and authority under such laws to own,
lease and operate its properties and conduct its business as described
in the Prospectus. Each direct and indirect subsidiary of the Company
is an entity duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of organization with
corporate power and authority under such laws to own, lease and operate
its properties and conduct its business. The Company and each of its
direct and indirect subsidiaries is duly qualified to transact business
as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification
necessary, except to the extent that the failure to so qualify or be in
good standing would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs, assets or
business prospects of the Company and its subsidiaries, considered as
one enterprise.
(vi) The Company is duly registered with the Board of
Governors of the Federal Reserve System as a financial holding company
under the Xxxxx-Xxxxx-Xxxxxx Financial Services Act of 1999 ("GLB");
Southern Community Bank and Trust (the "Bank") is a North
Carolina-chartered commercial bank subsidiary of the Company; and the
deposit accounts of the Bank are insured by the Bank Insurance Fund of
the Federal Deposit Insurance Corporation (the "FDIC") up to the
maximum allowable limits thereof. The Offerors have all such power,
authority, authorization, approvals and orders as may be required to
enter into this Agreement, to carry out the provisions and conditions
hereof and to issue and sell the Preferred Securities and the
Debentures.
(vii) All of the outstanding shares of capital stock of the
Bank and each of the Company's other subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable
(except to the extent set forth in N.C.G.S. 53-42 as to the Bank) and
are owned by the Company directly or indirectly, free and clear of any
pledge, lien, security interest, charge, claim, equity or encumbrance
of any kind.
(viii) Except for the Bank and the Trust, the Company does
not have any "significant subsidiaries" as defined in Rule 1-02 of
Regulation S-X of the Commission.
-4-
(ix) The Company had at the date indicated a duly
authorized and outstanding capitalization as set forth in the
Prospectus under the caption "Capitalization." The capital stock of the
Company and the Debentures conform in all material respects to the
description thereof contained or incorporated by reference in the
Prospectus and such description conforms to the rights set forth in the
instruments defining the same.
(x) This Agreement has been duly authorized, executed and
delivered by the Offerors and, when duly executed by the Underwriter,
will constitute the valid and binding agreement of the Offerors
enforceable against the Offerors in accordance with its terms, except
as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles. The Guarantee Agreement, the Debentures, the Trust
Agreement, the Expense Agreement and the Indenture have each been duly
authorized and, when duly executed and delivered by the Company and, in
the case of the Guarantee, by the Guarantee Trustee, in the case of the
Trust Agreement, by the Trustees, and in the case of the Indenture, by
the Indenture Trustee, will constitute the valid and legally binding
obligations of the Company enforceable against the Company in
accordance with their respective terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors'
rights generally or general equitable principles. The Debentures are
entitled to the benefits of the Indenture, and the Guarantee Agreement,
the Debentures, the Trust Agreement, the Expense Agreement and the
Indenture conform in all material respects to the descriptions thereof
in the Prospectus. The Trust Agreement, the Guarantee Agreement and the
Indenture have been duly qualified under the Trust Indenture Act of
1939, as amended (the "TIA").
(xi) The Trust has been duly created and is validly
existing as a statutory business trust in good standing under the
Delaware Act with the power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus. The
Trust has conducted no business to date, and it will conduct no
business in the future that would be inconsistent with the description
of the Trust set forth in the Prospectus. The Trust is not a party to
or bound by any agreement or instrument other than this Agreement, the
Trust Agreement and the agreements and instruments contemplated by the
Trust Agreement or described in the Prospectus; the Trust has no
liabilities or obligations other than those arising out of the
transactions contemplated by this Agreement and the Trust Agreement and
described in the Prospectus; and the Trust is not a party to or subject
to any action, suit or proceeding of any nature.
(xii) The Preferred Securities have been duly and validly
authorized by the Trust for issuance and sale to the Underwriter
pursuant to this Agreement and, when executed and authenticated in
accordance with the terms of the Trust Agreement and delivered by the
Trust to the Underwriter pursuant to this Agreement against payment of
the consideration set forth herein, will be validly issued, fully paid
and non-assessable and will constitute valid and legally binding
obligations of the Trust enforceable in accordance with their terms and
entitled to the benefits provided by the Trust Agreement. The Preferred
Securities conform in all material respects to the description thereof
in the Prospectus, and such description conforms in all material
respects to the rights set forth in
-5-
the instruments defining the same; the holders of the Preferred
Securities will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware;
and the issuance of the Preferred Securities is not subject to any
preemptive or other similar rights.
(xiii) The Common Securities have been duly and validly
authorized by the Trust and, upon delivery by the Trust to the Company
against payment therefor as described in the Prospectus, will be duly
and validly issued and fully paid undivided beneficial interests in the
assets of the Trust and will conform in all material respects to the
description thereof in the Prospectus, and such description conforms in
all material respects to the rights set forth in the instruments
defining the same; the issuance of the Common Securities is not subject
to any preemptive or other similar rights; and at the Closing Time, all
of the issued and outstanding Common Securities of the Trust will be
directly owned by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(xiv) The issuance and sale of the Preferred Securities and
the Common Securities by the Trust, the compliance by the Trust with
all of the provisions of this Agreement, the purchase of the Debentures
by the Trust, and the consummation of the transactions herein
contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, the Trust
Agreement or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Trust or
any of its properties; and no consent, approval, authorization, order,
license, certificate, permit, registration or qualification of or with
any such court or other governmental agency or body is required to be
obtained by the Trust for the issue and sale of the Preferred
Securities and the Common Securities by the Trust, the purchase of the
Debentures by the Trust or the consummation by the Trust of the
transactions contemplated by this Agreement and the Trust Agreement,
except for such consents, approvals, authorizations, licenses,
certificates, permits, registrations or qualifications as have already
been obtained, or as may be required under the 1933 Act or the 1933 Act
Regulations, the 1934 Act or the 1934 Act Regulations, state securities
laws or the TIA.
(xv) The issuance by the Company of the Guarantee and the
Debentures, the compliance by the Company with all of the provisions of
this Agreement, the execution, delivery and performance by the Company
of the Trust Agreement, the Debentures, the Guarantee Agreement, the
Expense Agreement and the Indenture, and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, loan agreement, mortgage,
deed of trust or other material agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor will
such action result in any violation of the provisions of the articles
of incorporation or by-laws of the Company or any of its subsidiaries
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, any
of its
-6-
subsidiaries or any of their respective properties; and no consent,
approval, authorization, order, license, certificate, permit,
registration or qualification of or with any such court or other
governmental agency or body is required for the issue of the Guarantee
and the Debentures or the consummation by the Company of the other
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations, licenses, certificates, permits,
registrations or qualifications as have already been obtained, or as
may be required under the 1933 Act or the 1933 Act Regulations, the
1934 Act or the 1934 Act Regulations, state securities laws or the TIA.
(xvi) The Trust has not engaged in any activity that would
result in the Trust being, and after giving effect to the offering and
sale of the Preferred Securities the Trust 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
(the "Investment Company Act").
(xvii) All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid
and non-assessable, and are not subject to the preemptive rights of any
stockholder of the Company.
(xviii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, there has not been (A) any material adverse
change in the condition (financial or otherwise), earnings, business
affairs, assets or business prospects of the Company and its
subsidiaries, considered as one enterprise, whether or not arising in
the ordinary course of business, (B) any transaction entered into by
the Company or any subsidiary, other than in the ordinary course of
business, that is material to the Company and its subsidiaries,
considered as one enterprise, or (C) any dividend (other than the stock
dividend declared by the Company on October 1, 2001) or distribution of
any kind declared, paid or made by the Company on its capital stock.
Neither the Company, the Bank nor any other subsidiary has any material
liability of any nature, contingent or otherwise, except as set forth
in the Prospectus.
(xix) Neither the Company, the Bank nor any other
subsidiary is in violation of any provision of its articles of
incorporation, charter or bylaws or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which it is a party or by
which it may be bound or to which any of its respective properties may
be subject, except for such defaults that, individually or in the
aggregate, would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs, assets or
business prospects of the Company and its subsidiaries, considered as
one enterprise.
(xx) Except as disclosed in the Prospectus, there is no
action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending or, to the
knowledge of the Company, threatened against the Company, the Bank or
any other subsidiary that is required to be disclosed in the Prospectus
or that could reasonably be expected to result in any material adverse
change in the condition
-7-
(financial or otherwise), earnings, business affairs, assets or
business prospects of the Company and its subsidiaries, considered as
one enterprise, or that could reasonably be expected materially and
adversely to affect the properties or assets of the Company and its
subsidiaries, considered as one enterprise, or that could reasonably be
expected materially and adversely to affect the consummation of the
transactions contemplated in this Agreement; all pending legal or
governmental proceedings to which the Company, the Bank or any other
subsidiary is a party that are not described in the Prospectus,
including ordinary routine litigation incidental to its business, if
decided in a manner adverse to the Company, would not have a material
adverse effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise.
(xxi) There are no material contracts or documents of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described and filed as required.
(xxii) Each of the Company and its direct and indirect
subsidiaries, including the Bank, has good and marketable title to all
properties and assets described in the Prospectus as owned by it, free
and clear of all liens, charges, encumbrances or restrictions, except
such as (A) are described in the Prospectus or (B) are neither material
in amount nor materially significant in relation to the business of the
Company and its subsidiaries, considered as one enterprise; all of the
leases and subleases material to the business of the Company and its
subsidiaries, considered as one enterprise are in full force and
effect, and neither the Company, the Bank nor any other subsidiary has
any notice of any material claim that has been asserted by anyone
adverse to the rights of the Company, the Bank or any other subsidiary
under any such lease or sublease or affecting or questioning the rights
of such corporation to the continued possession of the leased or
subleased premises under any such lease or sublease.
(xxiii) Each of the Company and its direct and indirect
subsidiaries, owns, possesses or has obtained all material governmental
licenses, permits, certificates, consents, orders, approvals and other
authorizations necessary to own or lease, as the case may be, and to
operate its properties and to carry on its business as presently
conducted, and neither the Company, the Bank nor any other subsidiary
has received any notice of any restriction upon, or any notice of
proceedings relating to revocation or modification of, any such
licenses, permits, certificates, consents, orders, approvals or
authorizations.
(xxiv) No labor problem with the employees of the Company,
the Bank or any other subsidiary exists or, to the best knowledge of
the Company, is imminent that could materially adversely affect the
condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as
one enterprise, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its, the Bank's
or any other subsidiary's principal suppliers, contractors or customers
that could reasonably be expected to materially adversely affect the
condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as
one enterprise.
-8-
(xxv) Except as disclosed in the Prospectus, there are no
persons with registration or other similar rights to have any
securities of the Company registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act.
(xxvi) Except as disclosed in the Prospectus, the Company
and its direct and indirect subsidiaries, including the Bank, own or
possess all patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets or other unpatented and/or
unpatentable proprietary or confidential information systems or
procedures), trademarks, service marks and trade names (collectively,
"patent and proprietary rights") currently employed by them in
connection with the business now operated by them except where the
failure to own, possess or acquire such patent and proprietary rights
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs, assets or business prospects of
the Company and its subsidiaries, considered as one enterprise. Neither
the Company, the Bank nor any other subsidiary has received any notice
or is otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any patent or proprietary rights, and
which infringement or conflict (if the subject of any unfavorable
decision, rule and refinement, singly or in the aggregate) could
reasonably be expected to result in any material adverse change in the
condition (financial or otherwise), earnings, business affairs, assets
or business prospects of the Company and its subsidiaries, considered
as one enterprise.
(xxvii) The Company and each subsidiary of the Company have
filed all federal, state and local income, franchise or other tax
returns required to be filed and have made timely payments of all taxes
due and payable in respect of such returns, and no material deficiency
has been asserted with respect thereto by any taxing authority.
(xxviii) The Preferred Securities have been approved for
inclusion in the Nasdaq National Market.
(xxix) The Company has filed with the NASD all documents and
notices required by the NASD of companies that have issued securities
that are traded in the over-the-counter market and quotations for which
are reported by the Nasdaq National Market.
(xxx) Neither the Trust, the Company, the Bank nor any
other subsidiary has taken or will take, directly or indirectly, any
action designed to cause or result in, or which has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation, under the Exchange Act or otherwise, of the price of the
Preferred Securities.
(xxxi) Neither the Company, the Bank nor any other
subsidiary is or has been (by virtue of any action, omission to act,
contract to which it is a party or by which it is bound, or any
occurrence or state of facts whatsoever) in violation of any applicable
foreign, federal, state, municipal or local statutes, laws, ordinances,
rules, regulations and/or orders issued pursuant to foreign, federal,
state, municipal or local statutes, laws,
-9-
ordinances, rules, or regulations (including those relating to any
aspect of banking, bank holding companies, consumer credit,
truth-in-lending, usury, currency transaction reporting, environmental
protection, occupational safety and health and equal employment
practices) heretofore or currently in effect, except such violations
that have been fully cured or satisfied without recourse or that in the
aggregate will not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs, assets or
business prospects of the Company and its subsidiaries, considered as
one enterprise.
(xxxii) Neither the Company, the Bank nor any other
subsidiary has any agreement or understanding with any person (A)
concerning the future acquisition by the Company or the Bank of a
controlling interest in any entity or (B) concerning the future
acquisition by any person of a controlling interest in the Company, the
Bank or any other subsidiary, in either case that is required by the
1933 Act or the 1933 Act Regulations to be disclosed by the Company
that is not disclosed in the Prospectus.
(b) Any certificate signed by any authorized officer of
the Company or the Bank and delivered to the Underwriter or to counsel for the
Underwriter pursuant to this Agreement shall be deemed a representation and
warranty by the Company to the Underwriter as to the matters covered thereby.
(c) The Underwriter represents and warrants to and agrees
with the Offerors that:
(i) The Underwriter is registered as a broker-dealer with
the Commission and is a member of the NASD.
(ii) The Underwriter is validly existing and in good
standing as a limited liability company under the laws of the State of
New Jersey with corporate power and authority to provide the services
to be furnished to the Offerors hereunder.
(iii) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated have been duly and
validly authorized by all necessary corporate action on the part of the
Underwriter, and this Agreement is a legal, valid and binding
obligation of the Underwriter, enforceable in accordance with its
terms, except as limited under applicable law and subject to
bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditor's rights generally and equitable
principles limiting the right to obtain specific enforcement or similar
equitable relief.
(iv) The Underwriter and, to the Underwriter's knowledge,
its employees, and agents who shall perform any of the services
required hereunder to be performed by the Underwriter shall be duly
authorized and shall have all licenses, approvals and permits necessary
to perform such services.
(v) The execution and delivery of this Agreement by the
Underwriter, the fulfillment of the terms set forth herein and the
consummation of the transactions herein
-10-
contemplated shall not violate or conflict with the corporate charter
or By-laws of the Underwriter or violate, conflict with or constitute a
breach of, or default (or any event which, with notice or lapse of
time, or both, would constitute a default) under, any material
agreement, indenture or other instrument by which the Underwriter is
bound or under any governmental license or permit or any law,
administrative regulation, authorization, approval or order or court
decree, injunction or order applicable to it.
(vi) There is not now pending or, to the Underwriter's
knowledge, threatened against the Underwriter any material action or
proceeding before the Commission, the NASD, any state securities
commission or any state or federal court concerning the Underwriter's
activities as a broker-dealer.
Section 2. Sale and Delivery to the Underwriter; Closing.
(a) On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Trust agrees to sell to the Underwriter, and the Underwriter agrees to purchase
from the Trust, 1,500,000 Initial Securities at the purchase price and terms set
forth herein and in the Price Determination Agreement.
In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Trust hereby grants an option to the Underwriter to purchase up to an
additional 225,000 Preferred Securities in accordance with the terms set forth
herein and in the Price Determination Agreement. The option hereby granted will
expire at 5:00 p.m. on the 30th day after the date the Registration Statement is
declared effective by the Commission (or at 5:00 p.m. on the next business day
following the 30th day if such 30th day is not a business day) and may be
exercised, solely for the purpose of covering over-allotments which may be made
in connection with the offering and distribution of the Initial Securities upon
notice by the Underwriter to the Company setting forth the number of Option
Securities as to which the Underwriter is exercising the option and the time,
date and place of payment and delivery for the Option Securities. Such time and
date of delivery (the "Option Closing Date") shall be determined by the
Underwriter but shall not be later than five full business days after the
exercise of said option, nor in any event prior to Closing Time, as hereinafter
defined, nor earlier than the second business day after the date on which the
notice of the exercise of the option shall have been given.
(b) Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
_______, or at such other place as shall be agreed upon by the Company and the
Underwriter, at 9:30 a.m. on the third full business day after the effective
date of the Registration Statement, or at such other time not earlier than three
nor more than ten full business days thereafter as the Underwriter and the
Company shall determine (such date and time of payment and delivery being herein
called the "Closing Time"). In addition, in the event that any or all of the
Option Securities are purchased by the Underwriter, payment of the purchase
price for, and delivery of certificates for, such Option Securities shall be
made at the above-mentioned office of ______, or at such other place as shall be
agreed upon by the Company and the Underwriter, on the Option Closing Date as
specified in the notice from the Underwriter to the Company. Payment for the
Initial Securities and the Option Securities, if any, shall be made to the
Company by wire transfer of immediately available funds, against delivery to the
Underwriter for the account of the Underwriter of Preferred Securities to be
purchased by it.
-11-
(c) The Preferred Securities shall be issued in the form
of one or more fully registered global securities (the "Global Securities") in
book-entry form in such denominations and registered in the name of the nominee
of The Depository Trust Company ("DTC") or in such names as the Underwriter may
request in writing at least one business day before the Closing Date or the
Option Closing Date, as the case may be. The Global Securities representing the
Initial Securities or the Option Securities to be purchased will be made
available for examination by the Underwriter and counsel to the Underwriter not
later than 10:00 a.m. on the business day prior to the Closing Time or the
Option Closing Date, as the case may be.
Section 3. Certain Covenants of the Offerors. Each of the
Offerors covenants jointly and severally with the Underwriter as follows:
(a) The Offerors will use their best efforts to cause the
Registration Statement to become effective and will notify the Underwriter
immediately, and confirm the notice in writing, (i) when the Registration
Statement, or any post-effective amendment to the Registration Statement, shall
have become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request of the Commission to amend the Registration
Statement or amend or supplement the Prospectus or for additional information
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Preferred Securities for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for any of
such purposes. The Offerors will use every reasonable effort to prevent the
issuance of any such stop order or of any order preventing or suspending such
use and, if any such order is issued, to obtain the lifting thereof at the
earliest possible moment.
(b) The Offerors will not at any time file or make any
amendment to the Registration Statement or, if the Offerors have elected to rely
upon Rule 430A of the 1933 Act Regulations ("Rule 430A"), any amendment or
supplement to the Prospectus (including documents incorporated by reference into
the Registration Statement or the Prospectus) of which the Underwriter shall not
previously have been advised and furnished a copy, or to which the Underwriter
or counsel for the Underwriter shall reasonably object.
(c) The Offerors have furnished or will furnish to the
Underwriter as many signed and conformed copies of the Registration Statement as
originally filed and of each amendment thereto, whether filed before or after
the Registration Statement becomes effective, copies of all exhibits and
documents filed therewith (including documents incorporated by reference into
the Prospectus pursuant to Item 12 of Form S-2 under the 0000 Xxx) and signed
copies of all consents and certificates of experts as the Underwriter may
reasonably request.
(d) The Offerors will deliver or cause to be delivered to
the Underwriter, without charge, from time to time until the effective date of
the Registration Statement, as many copies of each preliminary prospectus as the
Underwriter may reasonably request, and the Offerors hereby consent to the use
of such copies for purposes permitted by the 1933 Act. The Offerors will deliver
or cause to be delivered to the Underwriter, without charge, as soon as the
-12-
Registration Statement shall have become effective (or, if the Offerors have
elected to rely upon Rule 430A, as soon as practicable after the Price
Determination Agreement has been executed and delivered) and thereafter from
time to time as requested by the Underwriter during the period when the
Prospectus is required to be delivered under the 1933 Act, such number of copies
of the Prospectus (as supplemented or amended) as the Underwriter may reasonably
request.
(e) The Company will comply to the best of its ability
with the 1933 Act and the 1933 Act Regulations, and the 1934 Act and the 1934
Act Regulations, so as to permit the completion of the distribution of the
Preferred Securities as contemplated in this Agreement and in the Prospectus.
If, at any time when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Preferred Securities, any event shall occur or
condition exist as a result of which it is necessary, in the reasonable opinion
of counsel for the Underwriter or counsel for the Offerors, to amend the
Registration Statement or amend or supplement the Prospectus in order that the
Prospectus will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading, in light of the circumstances existing at the time it is delivered
to a purchaser, or if it shall be necessary, in the reasonable opinion of either
such counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b) hereof, such amendment or supplement as
may be necessary to correct such untrue statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements.
(f) The Offerors will use their best efforts, in
cooperation with the Underwriter, to qualify the Preferred Securities and the
Debentures for offering and sale under the applicable securities laws of such
states and other jurisdictions as the Underwriter may designate and to maintain
such qualifications in effect for a period of not less than one year from the
effective date of the Registration Statement; provided, however, that the
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be required by
the laws of each jurisdiction in which the Preferred Securities have been
qualified as above provided.
(g) The Company will make generally available (within the
meaning of Rule 158 of the 1933 Act Regulations ("Rule 158") to the holders of
the Preferred Securities and the Underwriter as soon as practicable, but not
later than 90 days after the close of the period covered thereby, an earnings
statement of the Company and its subsidiaries (in form complying with the
provisions of Rule 158) covering a period of at least 12 months beginning after
the effective date of the Registration Statement but not later than the first
day of the Company's fiscal quarter next following such effective date.
(h) The Trust shall apply the entire proceeds from its
sale of the Preferred Securities, combined with the entire proceeds from the
issuance by the Trust to the Company of the Trust's Common Securities, to
purchase an equivalent amount of Debentures from the Company. The Company and
the Bank will use the net proceeds received by them from the sale of the
Debentures in the manner specified in the Prospectus under the caption "Use of
Proceeds."
-13-
(i) The Offerors, during the period when a prospectus is
required by the 1933 Act to be delivered in connection with sales of Preferred
Securities, will file promptly all documents required to be filed with the
Commission pursuant to Section 13 or 14 of the 1934 Act subsequent to the time
the Registration Statement becomes effective.
(j) For a period of five years after the Closing Time,
the Company will furnish to the Underwriter copies of all annual reports,
quarterly reports and current reports filed by the Company with the Commission
and such other documents, reports, proxy statements and information as shall be
furnished by the Company to its stockholders generally.
(k) The Company will provide to the holders of the
Preferred Securities annual reports containing financial statements audited by
the Company's independent auditors and, upon written request, the Company's
annual reports on Form 10-K.
(l) The Offerors will file with the NASD all documents
and notices required by the NASD of companies that have issued securities that
are traded in the Nasdaq Stock Market.
(m) The Company shall cause to be prepared by its counsel
one or more "blue sky" surveys (each, a "Blue Sky Survey") for use in connection
with the offering of the Preferred Securities as contemplated by the Prospectus
and a copy of each Blue Sky Survey or surveys shall be delivered to each of the
Company and the Underwriter.
(n) If, at the time the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance upon
Rule 430A, then the Offerors will prepare, and file or transmit for filing with
the Commission in accordance with Rule 430A and Rule 424(b), copies of an
amended Prospectus or, if required by Rule 430A, a post-effective amendment to
the Registration Statement (including an amended Prospectus) containing all
information so omitted.
(o) The Company will, at its expense, subsequent to the
issuance of the Preferred Securities, prepare and distribute to the Underwriter
and counsel to the Underwriter a bound volume containing copies of the documents
used in connection with the issuance of the Preferred Securities.
(p) The Offerors will not, prior to the Option Closing
Date or thirty (30) days after the date of this Agreement, whichever occurs
first, incur any material liability or obligation, direct or contingent, or
enter into any material transaction, other than in the ordinary course of
business, or any transaction with a related party which is required to be
disclosed in the Prospectus pursuant to Item 404 of Regulation S-K of the
Commission, except as contemplated by the Prospectus.
(q) During a period of thirty (30) days from the date of
the Prospectus, neither the Trust nor the Company will, without the prior
written consent of the Underwriter, directly or indirectly, offer, sell, offer
to sell, or otherwise dispose of any Preferred Securities, any other beneficial
interests in the assets of the Trust, or any preferred securities or other
securities of the
-14-
Trust or the Company that are substantially similar to the Preferred Securities,
including any guarantee of such securities. The foregoing sentence shall not
apply to any of the Preferred Securities to be sold hereunder.
Section 4. Payment of Expenses.
(a) The Offerors jointly and severally will pay and bear
all costs and expenses incident to the performance of its and the Trust's
obligations under this Agreement, including (a) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits), as originally filed and as amended, all amendments thereto, all
preliminary prospectuses, the Prospectus and any amendments or supplements
thereto, and the cost of furnishing copies thereof to the Underwriter, (b) the
preparation, printing and distribution of this Agreement, the Preferred
Securities and each Blue Sky Survey, (c) the issuance and delivery of the
Preferred Securities to the Underwriter, including any transfer taxes payable
upon the sale of the Preferred Securities to the Underwriter, (d) the fees and
disbursements of the Company's counsel and accountants, (e) Nasdaq Stock Market
filing fees, (f) the qualification of the Preferred Securities under the
applicable securities laws of each state jurisdiction pursuant to each Blue Sky
Survey, (h) any filing fee for review of the Offering by the NASD, (i) the legal
fees and expenses of the Underwriter's counsel not to exceed $50,000 without the
Company's prior approval, and general out-of-pocket expenses of the Underwriter
not to exceed $10,000, (j) the fees and expenses of the Indenture Trustee,
including the fees and disbursements of counsel for the Indenture Trustee, in
connection with the Indenture and the Debentures; (k) the fees and expenses of
the Property Trustee and Delaware Trustee, including the fees and disbursements
of counsel for the Property Trustee and the Delaware Trustee, in connection with
the Trust Agreement and the Certificate of Trust, and (l) all other costs
incident to the performance of the Offerors' obligations hereunder.
(b) If (i) the Closing Time does not occur on or before
_______, 2002, (ii) the Company abandons or terminates the Offering, or (iii)
this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 5 or 9(a), the Company shall reimburse the Underwriter for
its reasonable out-of-pocket expenses, as set forth in this Section 4, including
the reasonable fees and disbursements of counsel for the Underwriter.
Section 5. Conditions of Underwriter's Obligations. The
obligations of the Underwriter to purchase and pay for the Preferred Securities
that it has agreed to purchase pursuant to this Agreement are subject to the
accuracy of the representations and warranties of the Offerors contained herein
or in certificates of the officers or trustees of the Offerors or any subsidiary
delivered pursuant to the provisions hereof, to the execution of the Price
Determination Agreement no later than 5:30 p.m. on the first business day
following the date hereof, or at such later time as the Underwriter may agree in
writing (in the Underwriter's sole discretion), to the performance by the
Offerors of their respective obligations hereunder and to the following further
conditions:
(a) The Registration Statement shall have become
effective not later than 4:00 p.m. on the first business day following the date
hereof, or at such later time or on such later date as the Underwriter may agree
to in writing; at the Closing Time, no stop order suspending the effectiveness
of the Registration Statement shall have been issued under the 1933 Act and no
-15-
proceedings for that purpose shall be pending or, to the Underwriter's knowledge
or the knowledge of the Offerors, shall be contemplated by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the satisfaction of counsel for the Underwriter. If the
Offerors have elected to rely upon Rule 430A, a prospectus containing the
information required by Rule 430A shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A).
(b) At the Closing Time, the Underwriter shall have
received:
(i) The favorable opinion, dated as of the Closing Time,
of Xxxxxx, Xxxxxx & Xxxxx, P.A. ("Xxxxxx"), counsel for the Company, in
form and substance reasonably satisfactory to counsel for the
Underwriter, substantially in the form set forth in Exhibit B.
(ii) The favorable opinion, dated as of the Closing Time,
of Xxxxxxxx, Xxxxxx and Finger ("RLF"), special Delaware counsel for
the Offerors, in form and substance satisfactory to counsel for the
Underwriter, substantially in the form set forth in Exhibit C.
(iii) The favorable opinion, dated as of the Closing Time,
of RLF, counsel for the Indenture Trustee and the Delaware Trustee, in
form and substance satisfactory to counsel for the Underwriter,
substantially in the form set forth in Exhibit D.
(iv) The favorable opinion, dated as of the Closing Time,
of Xxxxx & Xxxxxxxx, P.A., counsel for the Underwriter, in form and
substance satisfactory to the Underwriter.
In giving such opinions, such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the federal law of the
United States of America, the laws of North Carolina (in the case of Xxxxxx) and
the laws of Delaware (in the case of RLF) upon opinions of other counsel, who
shall be counsel satisfactory to counsel for the Underwriter, in which case the
opinion shall state that such counsel believes that it, the Underwriter and the
Underwriter's counsel are entitled to so rely upon the opinions of such other
counsel. Such counsel may also state that, insofar as such opinion involves
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers or trustees of the Company, the Bank and the Trust and
certificates of public officials.
(c) At the Closing Time and again at the Option Closing
Date, (i) the Registration Statement and the Prospectus, as they may then be
amended or supplemented, shall contain all statements that are required to be
stated therein under the 1933 Act and the 1933 Act Regulations and shall conform
in all material respects to the requirements of the 1933 Act and the 1933 Act
Regulations, the Offerors shall have complied in all material respects with Rule
430A (if they shall have elected to rely thereon), and neither the Registration
Statement nor the Prospectus, as they may then be amended or supplemented, shall
contain 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; (ii) there shall not have been, since the respective dates as of
-16-
which information is given in the Registration Statement, any material adverse
change in the condition (financial or otherwise), earnings, business affairs,
assets or business prospects of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business; (iii)
no action, suit or proceeding at law or in equity shall be pending or, to the
knowledge of the Offerors, threatened against the Company or any subsidiary or
the Trust that would be required to be set forth in the Prospectus that is not
set forth therein, and no proceedings shall be pending or, to the knowledge of
the Offerors, threatened against either of the Offerors or any subsidiary of the
Company before or by any federal, state or other commission, board or
administrative agency wherein an unfavorable decision, ruling or finding would
materially adversely affect the condition (financial or otherwise), earnings,
business affairs, assets or business prospects of the Company and its
subsidiaries, considered as one enterprise, other than as set forth in the
Prospectus; (iv) each of the Offerors shall have complied, in all material
respects, with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Time or Option Closing Date,
as applicable; (v) the other representations and warranties of the Offerors set
forth in Section l(a) hereof shall be accurate in all material respects as
though expressly made at and as of the Closing Time or Option Closing Date, as
applicable; and (vi) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that purpose
been initiated or, to the best knowledge of the Offerors, threatened by the
Commission. At the Closing Time, the Underwriter shall have received a
certificate of the President and the Chief Financial Officer of the Company,
dated as of the Closing Time, to such effect.
(d) At the time that this Agreement is executed by the
Company, the Underwriter shall have received from Xxxxx Xxxx PLLC a letter or
letters, dated such date, in form and substance satisfactory to the Underwriter,
confirming that they are independent certified public accountants with respect
to the Company within the meaning of the 1933 Act and the 1933 Act Regulations,
and stating in effect that, with respect to the Company:
(i) in their opinion, the consolidated financial
statements as of December 31, 2000 and 1999, and for each of the years
in the three year period ended December 31, 2000 and the related
financial statement schedules, if any, included or incorporated by
reference in the Registration Statement and the Prospectus and covered
by their opinions included therein comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations;
(ii) on the basis of procedures (but not an audit in
accordance with generally accepted accounting standards) specified by
the American Institute of Certified Public Accountants for a review of
interim financial information as described in SAS No. 71, Interim
Financial Information, including a reading of the latest available
interim consolidated financial statements of the Company, a reading of
the minutes of all meetings of the Board of Directors of the Company
and the Bank and of the Audit and Executive Committees of the Board of
Directors of the Bank since _____, 2002, inquiries of certain officials
of the Company and its subsidiaries responsible for financial and
accounting matters, and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) the unaudited interim consolidated financial
information included
-17-
or incorporated by reference in the Prospectus, if any, do not
comply as to form in all material respects with applicable
accounting requirements of the 1933 Act, or are not presented
in conformity with generally accepted accounting principles
applied on a basis consistent with that of the audited
financial statements included in the Prospectus;
(B) at a specified date not more than three days
prior to the date of this Agreement, there was any increase in
total borrowings, real estate owned or Federal Home Loan Bank
advances of the Company and its consolidated subsidiaries or
any decrease in total assets, total deposits or stockholders'
equity of the Company and its consolidated subsidiaries, any
increase in the number of outstanding shares of capital stock
of the Company and its consolidated subsidiaries or any
increase or decrease in loan loss allowance of the Company and
its consolidated subsidiaries, in each case as compared with
amounts shown in the financial statements at _____, 2002
included in the Registration Statement, except in all cases
for changes, increases or decreases that the Registration
Statement discloses have occurred or may occur; or
(C) for the period from December 31, 2001 to a
specified date not more than three days prior to the date of
this Agreement, there was any decrease in consolidated net
interest income, non-interest income, net income or net income
per share or any increase in the consolidated provision for
loan losses, in each case as compared with a period of
comparable length in the preceding year, except in all cases
for changes, increases or decreases that the Registration
Statement discloses have occurred or may occur; and
(iii) in addition to the procedures referred to in clause
(ii) above, they have performed other specified procedures, not
constituting an audit, with respect to certain amounts, percentages,
numerical data and financial information appearing in the Registration
Statement (including the Selected Consolidated Financial Data) (having
compared such items with, and have found such items to be in agreement
with, the financial statements of the Company or general accounting
records of the Company, as applicable, which are subject to the
Company's internal accounting controls or other data and schedules
prepared by the Company from such records); and
(iv) on the basis of a review of schedules provided to
them by the Company, nothing came to their attention that caused them
to believe that the pro forma information set forth in the Prospectus
under the heading "Capitalization" had not been correctly calculated on
the basis described therein.
(e) At the Closing Time, the Underwriter shall have
received from Xxxxx Xxxx PLLC a letter, in form and substance satisfactory to
the Underwriter and dated as of the Closing Time, reaffirming the statements
made in the letter(s) furnished pursuant to Section 5(d) hereof, except that the
inquiries specified in Section 5(d) hereof shall be made based upon the latest
available unaudited interim consolidated financial statements and the specified
date referred to shall be a date not more than five days prior to the Closing
Time.
-18-
(f) At the Closing Time, counsel for the Underwriter
shall have been furnished with all such documents, certificates and opinions as
they may reasonably request for the purpose of enabling them to pass upon the
issuance and sale of the Preferred Securities as contemplated in this Agreement
and the matters referred to in Section 5(c) hereof and in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements of the Offerors, the performance of any of the covenants of the
Offerors or the fulfillment of any of the conditions herein contained; and all
proceedings taken by the Company at or prior to the Closing Time in connection
with the authorization, issuance and sale of the Preferred Securities and the
Debentures as contemplated in this Agreement shall be satisfactory in form and
substance to the Underwriter and to counsel for the Underwriter.
(g) The Company shall have paid, or made arrangements
satisfactory to the Underwriter for the payment of, all such expenses as may be
required by Section 4 hereof.
(h) In the event the Underwriter exercises its option
provided in Section 2 hereof to purchase all or any portion of the Option
Securities, the obligations of the Underwriter to purchase the Option Securities
that it has agreed to purchase shall be subject to the receipt by the
Underwriter on the Option Closing Date of:
(i) A certificate, dated the Option Closing Date, of the
President and the Chief Financial Officer of the Company confirming
that the certificate delivered at the Closing Time pursuant to Section
5(c) hereof remains true as of the Option Closing Date;
(ii) The favorable opinion of Xxxxxx, counsel for the
Company, addressed to the Underwriter and dated the Option Closing
Date, in form satisfactory to Xxxxx & Xxxxxxxx, P.A., counsel to the
Underwriter, relating to the Option Securities and otherwise to the
same effect as the opinion required by Section 5(b)(i) hereof;
(iii) The favorable opinion of RLF, special Delaware
counsel for the Offerors, addressed to the Underwriter and dated the
Option Closing Date, in form satisfactory to Xxxxx & Xxxxxxxx, P.A.,
counsel to the Underwriter, relating to the Option Securities and
otherwise to the same effect as the opinion required by Section
5(b)(ii) hereof;
(iv) The favorable opinion of RLF, counsel for the
Indenture Trustee and the Delaware Trustee, addressed to the
Underwriter and dated the Option Closing Date, in form satisfactory to
Xxxxx & Xxxxxxxx, P. A., counsel to the Underwriter, relating to the
Option Securities and otherwise to the same effect as the opinion
required by Section 5(b)(iii) hereof;
(v) The favorable opinion of Xxxxx & Xxxxxxxx, P.A.,
counsel to the Underwriter, dated the Option Closing Date, relating to
the Option Securities and otherwise to the same effect as the opinion
required by Section 5(b)(iv) hereof; and
(vi) A letter from Xxxxx Xxxx PLLC addressed to the
Underwriter and dated the Option Closing Date, in form and substance
satisfactory to the Underwriter and substantially the same in form and
substance as the letter(s) furnished to the Underwriter pursuant to
Section 5(e) hereof.
-19-
(i) The Preferred Securities, the Guarantee and the
Debentures shall have been qualified or registered for sale, or subject to an
available exemption from such qualification or registration, under the "blue
sky" or securities laws of such jurisdictions as shall have been reasonably
specified by the Underwriter, and the Offering contemplated by this Agreement
shall have been cleared by the NASD.
If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement, this Agreement may
be terminated by the Underwriter on notice to the Offerors at any time at or
prior to the Closing Time, and such termination shall be without liability of
any party to any other party, except as provided in Section 4 of this Agreement.
Notwithstanding any such termination, the provisions of Sections 4, 6, 7, 10 and
12 of this Agreement shall remain in effect.
Section 6. Indemnification.
(a) The Offerors jointly and severally agree to indemnify
and hold harmless the Underwriter, each officer, director, employee, agent and
legal counsel of the Underwriter, and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the 1934 Act, against any loss, liability, claim, damage and expense whatsoever
(which shall include, but not be limited to, amounts incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim or investigation whatsoever and any and all amounts paid in settlement of
any claim or litigation, provided such settlement is entered into with the
consent of the Offerors as provided herein), as and when incurred, arising out
of, based upon or in connection with (i) any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, contained in (A) any preliminary prospectus, the
Registration Statement or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto or in any document
incorporated by reference therein or required to be delivered with any
preliminary prospectus or the Prospectus or (B) in any application or other
document or communication (collectively called an "application") executed by or
on behalf of the Company or the Trust or based upon written information
furnished by or on behalf of the Company or the Trust filed in any jurisdiction
in order to qualify the Preferred Securities under the "blue sky" or securities
laws thereof or filed with the Commission, the NASD or any securities exchange,
unless such statement or omission or alleged statement or omission was made in
reliance upon and in conformity with written information concerning the
Underwriter, this Agreement or the compensation of the Underwriter furnished to
the Offerors by or on behalf of the Underwriter expressly for inclusion in any
preliminary prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or in any application, as the case may be, or
(ii) any breach of any representation, warranty, covenant or agreement of the
Offerors contained in this Agreement. For purposes of this section, the term
"expense" shall include, but not be limited to, counsel fees and costs, court
costs, out-of-pocket costs and compensation for the time spent by any of the
Underwriter's directors, officers, employees and counsel according to his or her
normal hourly billing rates. The indemnification provisions shall also extend to
all directors, officers, employees, agents, legal counsel and controlling
persons of each affiliate of the Underwriter.
-20-
(b) The Underwriter agrees to indemnify and hold harmless
each of the Offerors, each of their directors or trustees, each officer who
signed the Registration Statement, and each person, if any, who controls the
Offerors within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the 1934 Act, against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) above, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in any preliminary prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or any
application in reliance upon and in conformity with written information about
the Underwriter, this Agreement or the compensation of the Underwriter,
furnished to either of the Offerors by the Underwriter expressly for inclusion
in such preliminary prospectus, the Registration Statement or the Prospectus, or
any amendment or supplement thereto, or in any application.
(c) An indemnified party shall give prompt notice to each
indemnifying party if any action, suit, proceeding or investigation is commenced
in respect of which indemnity may be sought hereunder, but failure to notify an
indemnifying party shall not relieve the indemnifying party from its obligations
to indemnify hereunder, except to the extent that the indemnifying party has
been prejudiced in any material respect by such failure. If it so elects within
a reasonable time after receipt of such notice, an indemnifying party may assume
the defense of such action, including the employment of counsel satisfactory to
the indemnified parties and the payment of all expenses of the indemnified party
in connection with such action. Such indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such action
or the indemnifying party shall not have promptly employed counsel satisfactory
to such indemnified party or parties or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses available
to it or them or to other indemnified parties that are different from or
additional to those available to one or more of the indemnifying parties, in any
of which events such fees and expenses shall be borne by the indemnifying party
and the indemnifying party shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties. The Offerors shall be
jointly and severally liable for any settlement of any claim against the
Underwriter (or any of its directors, officers, employees, agents, legal counsel
or controlling persons) made with the Offerors' written consent, which consent
shall not be unreasonably withheld. The Offerors shall not, without the written
consent of the Underwriter, settle or compromise any claim against the
Underwriter (or any of its directors, officers, employees, agents, legal counsel
or controlling persons) based upon circumstances giving rise to an
indemnification claim against the Offerors hereunder unless such settlement or
compromise provides that the Underwriter and the other indemnified parties shall
be unconditionally and irrevocably released from all liability in respect to
such claim.
(d) In order to provide for just and equitable
contribution, if a claim for indemnification pursuant to these indemnification
provisions is made but it is found in a final judgment by a court that such
indemnification may not be enforced in such case, even though the express
provisions hereof provide for indemnification in such case, then the Offerors,
on the one hand, and the Underwriter, on the other hand, shall contribute to the
amount paid or payable by such indemnified persons as a result of such loss,
liability, claim, damage and expense (i) in such
-21-
proportion as is appropriate to reflect the relative benefits received by the
Offerors, on the one hand, and the Underwriter, on the other hand, from the
underwriting, or (ii) if the allocation provided by clause (i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Offerors, on the one hand, and the Underwriter, on the other hand, in
connection with the statements, acts or omissions which resulted in such loss,
liability, claim, damage and expense, and any other relevant equitable
considerations. No person found liable for a fraudulent misrepresentation or
omission shall be entitled to contribution from any person who is not also found
liable for such fraudulent misrepresentation or omission. Notwithstanding the
foregoing, the Underwriter shall not be obligated to contribute any amount
hereunder that exceeds the amount of the underwriting commission paid to the
Underwriter with respect to the Preferred Securities purchased by the
Underwriter.
(e) The indemnity and contribution agreements contained
herein are in addition to any liability which the Offerors may otherwise have to
the Underwriter.
(f) Neither termination nor completion of the engagement
of the Underwriter nor any investigation made by or on behalf of the Underwriter
shall affect the indemnification obligations of the Offerors or the Underwriter
hereunder, which shall remain and continue to be operative and in full force and
effect.
Section 7. Representations, Warranties and Agreements to
Survive Delivery. The representations, warranties, indemnities, agreements and
other statements of the Offerors or their officers or trustees set forth in or
made pursuant to this Agreement will remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Offerors or
the Underwriter or any controlling person and will survive delivery of and
payment for the Preferred Securities.
Section 8. Offering by the Underwriter. The Offerors are
advised by the Underwriter that the Underwriter proposes to make a public
offering of the Preferred Securities, on the terms and conditions set forth in
the Registration Statement from time to time as and when the Underwriter deems
advisable after the Registration Statement becomes effective. Because the NASD
is expected to view the Preferred Securities as interests in a direct
participation program, the offering of the Preferred Securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.
Section 9. Termination of Agreement.
(a) The Underwriter may terminate this Agreement, by
notice to the Offerors, at any time at or prior to the Closing Time (i) if there
has been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Registration Statement, any
material adverse change in the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its subsidiaries,
considered as one enterprise, whether or not arising in the ordinary course of
business; or (ii) if there has occurred any material adverse change in the
financial markets of the United States, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic
-22-
conditions, in each case the effect of which is such as to make it, in the
judgment of the Underwriter, impracticable or inadvisable to market the
Preferred Securities or enforce contracts for the sale of the Preferred
Securities; or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the NASD, or if trading
generally on The New York Stock Exchange, Nasdaq National Market, Nasdaq
SmallCap Market or in the over-the-counter market has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by such exchange or
system or by order of the Commission, the NASD or any other governmental
authority with appropriate jurisdiction over such matters, or a material
disruption has occurred in commercial banking or securities settlement or
clearance services in the United States; or (iv) if a banking moratorium has
been declared by any federal, North Carolina, New York or New Jersey authority;
or (v) if there shall have been such material and substantial change in the
market for securities in general or in political, financial or economic
conditions as in the Underwriter's judgment makes it inadvisable to proceed with
the offering, sale and delivery of the Preferred Securities on the terms
contemplated by the Prospectus; or (vi) if the Underwriter reasonably determines
(which determination shall be in good faith) that there has not been
satisfactory disclosure of all relevant financial information relating to the
Offerors in the Offerors' disclosure documents and that the sale of the
Preferred Securities is inadvisable given such disclosures; or (vii) if the
Price Determination Agreement has not been executed by all the parties hereto
prior to 5:30 p.m. on the first business day following the date of this
Agreement.
(b) If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party, except to the extent provided in Section 4 hereof. Notwithstanding any
such termination, the provisions of Sections 4, 6, 7, 10 and 12 hereof shall
remain in effect.
Section 10. Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered, mailed or transmitted by any standard form of
telecommunication. Notices shall be addressed as follows:
If to the Underwriter:
Xxxx, Xxxx & Co., LLC
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxx, Managing Director
with a copy to:
Xxxxx & Xxxxxxxx, P.A.
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, Xx., Esq.
-23-
If to the Company or the Trust:
Southern Community Financial Corp.
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx Xxxxx, Chief Executive Officer
with a copy to:
Xxxxxx, Xxxxxx & Xxxxx, P.A.
3200 Beechleaf Court
Xxxxxxxxx Xxxxx Xxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Section 11. Parties. This Agreement is made solely for the
benefit of the Underwriter, and the officers, directors, employees, agents and
legal counsel of the Underwriter specified in Section 6 hereof, the Trust and
the Company and, to the extent expressed, any person controlling the Trust, the
Company or the Underwriter, and the directors of the Company, or trustees of the
Trust, their respective officers who have signed the Registration Statement, and
their respective executors, administrators, successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement. The
term "successors and assigns" shall not include any purchaser, as such
purchaser, from the Underwriter of the Preferred Securities.
Section 12. WAIVER OF TRIAL BY JURY. EACH OF THE UNDERWRITER
AND THE OFFEROR WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) RELATED TO
OR ARISING OUT OF THIS AGREEMENT.
Section 13. Governing Law and Time. This Agreement shall be
governed by the laws of the State of New Jersey. Specified times of the day
refer to New York City time.
Section 14.Counterparts. This Agreement may be executed in one
or more counterparts, and when a counterpart has been executed by each party,
all such counterparts taken together shall constitute one and the same
agreement.
Section 15. Entire Agreement. This Agreement, including all
Exhibits hereto, constitutes the entire understanding of the parties and
supercedes any and all prior negotiations of the parties with respect to this
subject matter. This Agreement may be amended only in writing signed by each of
the parties.
-24-
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement and have declared it effective as of the date written above.
SOUTHERN COMMUNITY CAPITAL TRUST I
Southern Community Financial Corporation,
as Depositor
By:
--------------------------------
F. Xxxxx Xxxxx
President and Chief Executive
Officer
SOUTHERN COMMUNITY FINANCIAL CORPORATION
By:
--------------------------------
F. Xxxxx Xxxxx
President and Chief Executive
Officer
XXXX, XXXX & CO., LLC
By:
--------------------------------
Xxxxx X. Xxxxx
Managing Director
-25-
EXHIBIT A
SOUTHERN COMMUNITY CAPITAL TRUST I
(a Delaware business trust)
1,500,000 Preferred Securities
_____% Cumulative Convertible Trust Preferred Securities
(Liquidation Amount $10 per Preferred Security)
PRICE DETERMINATION AGREEMENT
__________, 2002
Xxxx, Xxxx & Co., Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated the date hereof
(the "Underwriting Agreement"), among Southern Community Capital Trust I, a
Delaware business trust (the "Trust"), Southern Community Financial Corporation,
a North Carolina corporation (the "Company" and, together with the Trust, the
"Offerors"), and Xxxx, Xxxx & Co., LLC (the "Underwriter"). The Underwriting
Agreement provides for the purchase by the Underwriter from the Trust, subject
to the terms and conditions set forth therein, of 1,500,000 of the ____%
Cumulative Convertible Trust Preferred Securities of the Trust (the "Preferred
Securities"), subject to the Underwriter's option to purchase up to an
additional 225,000 Preferred Securities (to cover over-allotments, if any). This
Agreement is the Price Determination Agreement referred to in the Underwriting
Agreement.
Pursuant to Section 2 of the Underwriting Agreement, the Offerors agree
with the Underwriter as follows:
1. The public offering price per Preferred Security shall be $10.
2. The purchase price for the Preferred Securities to be paid by
the Underwriter shall be $10 per Preferred Security.
3. The commission per Preferred Security to be paid by the
Company to the Underwriter for its commitment hereunder shall be $______ per
Preferred Security.
-26-
4. The distribution rate on the Preferred Securities shall be
____% per annum.
5. The Conversion Ratio for conversion of the Preferred
Securities into shares of common stock of the Company shall be _____.
The Offerors represent and warrant to the Underwriter that the
representations and warranties of the Offerors set forth in Section 1(a) of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
This Agreement shall be governed by the laws of the State of New
Jersey.
If the foregoing is in accordance with the understanding of the
Underwriter of the agreement between the Underwriter and the Offerors, please
sign and return to the Company a counterpart hereof, whereupon this instrument,
along with all counterparts and together with the Underwriting Agreement, shall
be a binding agreement between the Underwriter and the Offerors in accordance
with its terms and the terms of the Underwriting Agreement.
Very truly yours,
SOUTHERN COMMUNITY CAPITAL TRUST I
Southern Community Financial Corporation,
as Depositor
By:
--------------------------------
F. Xxxxx Xxxxx
President and [Chief Executive
Officer]
SOUTHERN COMMUNITY FINANCIAL CORPORATION
By:
--------------------------------
F. Xxxxx Xxxxx
President and [Chief Executive
Officer]
Confirmed and accepted as of
the date first above written:
XXXX, XXXX & CO., LLC
By:
--------------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Director
-27-
