Exhibit 1
[Form of Underwriting Agreement]
_________ Shares
SOUTHCOAST FINANCIAL CORPORATION
Common Stock
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Underwriting Agreement
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TRIDENT SECURITIES, INC.
a division of McDonald Investments Inc.
0000 Xxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
__________ __, 2003
Dear Sirs:
Southcoast Financial Corporation, a South Carolina corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to Trident Securities, Inc., a division of McDonald Investments
Inc. (the "Underwriter"), an aggregate of ______ shares (the "Firm Securities")
of common stock, no par value per share, of the Company (the "Common Stock")
and, at the election of the Underwriter, up to ______ additional shares (the
"Optional Securities"), of Common Stock. The Firm Securities and the Optional
Securities that the Underwriter elects to purchase pursuant to Section 2 hereof
are collectively called the "Securities." The Securities are more fully
described in the Prospectus, referred to below.
1. Representations and Warranties.
The Company represents and warrants to, and agrees with the Underwriter
as of the date hereof and as of each "Delivery Date" (as defined below) that:
(a) In connection with the transactions contemplated by this
Underwriting Agreement (the "Agreement"), a registration statement on Form SB-2
(Registration No. 333-108480) and as a part thereof a preliminary prospectus, in
respect of the Securities has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act") and has
been filed with the Securities and Exchange Commission (the "Commission") in the
form heretofore delivered to you; such registration statement, as amended, has
been declared effective by the Commission; no other document with respect to
such registration statement has heretofore been filed with the Commission; and
no stop order suspending the effectiveness of such registration statement has
been issued and no proceeding for that purpose has been instituted or threatened
by the Commission (any preliminary prospectus included in such registration
statement or filed with the Commission pursuant to Rule 424(a) under the Act
being hereinafter called a "Preliminary Prospectus"; the various parts of such
registration statement, including all exhibits thereto and including the
information contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a) of this
Agreement and deemed by virtue of Rule 430A under the Act to be a part of the
registration statement at the time it was declared effective, each as amended at
the time such part became effective, being herein called collectively the
"Registration Statement" and the final prospectus, in the form first filed
pursuant to Rule 424(b), being hereinafter called the "Prospectus");
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of the
Underwriter expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus and any
amendments or supplements thereto will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable filing
date as to the Prospectus and any amendment or supplement thereto 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;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Underwriter expressly
for use therein;
(d) Neither the Company nor its wholly-owned subsidiary bank,
Southcoast Community Bank, a South Carolina state chartered bank (the "Bank"),
has sustained since the date of the latest audited financial statements included
in the Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
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any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or expressly contemplated in the Prospectus;
(e) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise set forth or
expressly contemplated therein, (i) there has not been any change in the capital
stock or long term debt of the Company or the Bank, respectively, or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and the
Bank taken as a whole and (ii) there have been no transactions entered into by
the Company or the Bank, other than transactions entered into in the ordinary
course of business, that are material with respect to the Company and the Bank
taken as a whole;
(f) The Company and the Bank have good and marketable title to all real
property and good and marketable title to all personal property owned by them,
in each case free and clear of all liens, encumbrances and defects except such
as are described in the Prospectus or such as do not materially affect the value
of such property and do not interfere with the use made and proposed to be made
of such property by the Company and the Bank; and any real property and
buildings held under lease by the Company and the Bank are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and the Bank;
(g) The Company, the Bank and their subsidiaries have been duly
incorporated and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, with power and
authority (corporate and other) to own or lease their respective properties and
conduct their respective businesses as described in the Prospectus; and each has
been duly qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which it owns
or leases properties, or conducts any business, so as to require such
qualification, except where the failure to so qualify would not result in a
material adverse effect on the Company and the Bank taken as a whole; and each
of the Company, the Bank and their subsidiaries holds all material licenses,
certificates, authorizations and permits from governmental authorities necessary
for the conduct of its business as described in the Prospectus;
(h) The Company has an authorized capitalization as set forth in the
Prospectus; all of the issued shares of capital stock of the Company have been
duly and validly authorized and issued, are fully paid and nonassessable and
conform to the description of the capital stock of the Company contained in the
Prospectus; there are no preemptive or other rights to subscribe for or to
purchase any securities of the Company under the Articles of Incorporation of
the Company or under South Carolina law; except as described in the Prospectus,
there are no warrants, options or other rights to purchase any securities of the
Company which have been granted by the Company; and neither the filing of the
Registration Statement nor the offering or sale of the Securities as
contemplated by this Agreement gives rise to any rights for or relating to the
registration of any securities of the Company;
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(i) All outstanding shares of capital stock of the Bank are owned by
the Company free and clear of any perfected security interest and any other
security interests, claims, liens or encumbrances; and, other than the Bank, the
Company does not own or control, directly or indirectly, any corporation,
association or other entity;
(j) The Securities have been duly authorized and, when issued and
delivered against payment therefor as provided herein, will be validly issued
and fully paid and nonassessable and will conform to the description of the
Securities contained in the Prospectus;
(k) The issuance and sale of the Securities being issued at each
Delivery Date (as hereinafter defined) by the Company and the performance of
this Agreement and the consummation by the Company of the other transactions
herein 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, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or the Bank pursuant to, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the Company
or the Bank is a party or by which the Company or the Bank is bound or to which
any of the property or assets of the Company or the Bank is subject, nor will
such action result in any violation of the provisions of the Articles of
Incorporation or Bylaws of the Company or the Articles of Incorporation or
Bylaws of the Bank or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or the Bank
or any of their respective properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental
agency or body is required for the issuance and sale of the Securities or the
consummation by the Company of the transactions contemplated by this Agreement,
except such consents, approvals, authorizations, orders, registrations or
qualifications as may be required under the Act, under state securities or Blue
Sky laws, and under the rules of the National Association of Securities Dealers,
Inc. (the "NASD") in connection with the purchase and distribution of the
Securities by the Underwriter;
(l) There are no legal or governmental proceedings pending to which the
Company or the Bank is a party or of which any of their respective property or
assets is subject, which, if determined adversely to the Company or the Bank,
would individually or in the aggregate, have a material adverse effect on the
financial position, stockholders' equity or results of operations of the Company
and the Bank taken as a whole and, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities or
by others;
(m) Xxxxxxx Xxxxx, LLC, which has certified certain financial
statements of the Company and the Bank, are independent public accountants
within the meaning of the Act and the rules and regulations of the Commission
thereunder;
(n) All employee benefit plans established, maintained or contributed
to by the Company or the Bank comply in all material respects with all
applicable requirements of the Employee Retirement Income Security Act of 1974,
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as amended ("ERISA") and no such plan has incurred or assumed an "accumulated
funding deficiency" within the meaning of Section 302 of ERISA or has incurred
or assumed any material liability to the Pension Benefit Guaranty Corporation;
(o) The consolidated financial statements of the Company, together with
related notes, as set forth in the Registration Statement present fairly the
consolidated financial position and the results of operations of the Company at
the indicated dates and for the indicated periods, all in accordance with
generally accepted accounting principles, consistently applied throughout the
periods presented except as noted in such financial statements and the notes
thereon, and all adjustments necessary for a fair presentation of results for
such periods have been made; and the selected financial information included in
the Prospectus presents fairly the information shown therein and has been
compiled on a basis consistent with the financial statements presented therein;
(p) The Company and the Bank have filed all federal, state, local and
foreign income and franchise tax returns that have been required to be filed (or
have received extensions with respect thereto) other than those filings being
contested in good faith, and have paid, or made adequate reserves for, all taxes
indicated by said returns and all assessments received by them to the extent
that such taxes have become due and are not being contested in good faith;
(q) No relationship, direct or indirect, exists between or among the
Company and the Bank, on the one hand, and the directors, officers,
shareholders, customers or suppliers of the Company or the Bank, on the other
hand, that is required by the Act or by the rules and regulations thereunder to
be described in the Registration Statement and the Prospectus which is not so
described;
(r) The Company and the Bank have not taken and will not take, directly
or indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities;
(s) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company in
accordance with its terms; and
(t) The Securities have been approved for trading, subject to notice of
issuance, on the Nasdaq National Market.
2. Purchase and Sale of the Securities.
Subject to the terms and conditions herein set forth and in reliance
upon the representations and warranties contained herein, (a) the Company agrees
to sell to the Underwriter, and the Underwriter agrees to purchase from the
Company, at a purchase price per share of $_____, the Firm Securities; and (b)
in the event and to the extent that the Underwriter shall exercise the election
to purchase Optional Securities as provided below, the Company agrees to sell to
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the Underwriter and the Underwriter agrees to purchase from the Company, at the
same purchase price set forth in clause (a) of this Section 2, that number of
Optional Securities as to which such election shall have been exercised.
The Company grants the Underwriter the right to purchase, at its
election up to _______ Optional Securities, at the purchase price per share set
forth in the preceding paragraph, for the sole purpose of covering
overallotments in the sale of the Firm Securities. Any such election to purchase
the Optional Securities may be exercised no more than once by written notice
from you to the Company, given within a period of 30 days after the date of this
Agreement, setting forth the aggregate amount of the Optional Securities to be
purchased by the Underwriter, and the date on which such Optional Securities are
to be delivered, as determined by you but in no event earlier than the First
Delivery Date (as defined in Section 4 hereof) or, unless you otherwise agree in
writing, earlier than two or later than seven business days after the date of
such notice.
3. Offering by the Underwriter.
Upon authorization by you of the release of the Firm Securities, the
Underwriter proposes to offer the Firm Securities for sale upon the terms and
conditions set forth in the Prospectus.
4. Delivery and Payment.
Certificates in definitive form for the Securities to be purchased by
the Underwriter hereunder, and in such denominations and registered in such
names as you may request upon at least two business days' prior notice to the
Company, shall be delivered by or on behalf of the Company to you, against
payment of the purchase price therefor by certified or official bank check in
next day funds (unless the Company desires settlement in same day funds, in
which case the Company shall pay the Underwriter for any costs associated with
settlement in same day funds), all at the offices of Trident Securities, Inc.,
0000 Xxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx. Such Certificate may be
deposited with the Depository Trust Company ("DTC") or a custodian for DTC and
registered in the name Cede & Co., as nominee for DTC. The time and date of such
delivery and payment shall be, with respect to the Firm Securities, 10:00 a.m.,
New York, New York time, on ________ __, 2003, or at such other time and date as
you and the Company may agree upon in writing and, with respect to the Optional
Securities, 10:00 a.m., New York, New York time, on the date specified by you in
the written notice of the Underwriter's election to purchase such Optional
Securities, or at such other time and date as you and the Company may agree upon
in writing. Such time and date for delivery of the Firm Securities is herein
called the "First Delivery Date," such time and date for delivery of the
Optional Securities, if not the First Delivery Date, is herein called the
"Second Delivery Date," and each such time and date for delivery is herein
called a "Delivery Date." Such certificates will be made available to the
Underwriter for checking and packaging at least 24 hours prior to each Delivery
Date at the offices of the Underwriter in Raleigh, North Carolina or such other
location designated by the Underwriter to the Company.
5. Agreements of the Company.
The Company agrees with the Underwriter:
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(a) To prepare the Prospectus in a form reasonably approved by you and
to file such Prospectus pursuant to Rule 424(b) under the Act within the time
period prescribed or, if applicable, such earlier time as may be required by
Rule 430A under the Act; to make no amendment or supplement to the Registration
Statement or Prospectus which shall be reasonably disapproved by you promptly
after reasonable notice thereof; to advise you, promptly after it receives
notice thereof, of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you with copies thereof; to
file promptly all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission subsequent to the date
of the Prospectus and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Securities; to advise you, promptly
after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the issuance of
any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such qualification,
to use promptly its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such actions as you may
reasonably request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as you have requested and to comply with
such laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Securities, provided that in connection therewith 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;
(c) To furnish the Underwriter with copies of the Registration
Statement and the Prospectus in such quantities as you may from time to time
reasonably request during such period following the date hereof as a prospectus
is required to be delivered in connection with offers or sales of Securities,
and, if the delivery of a prospectus is required and if at such time any event
shall have occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be necessary
during such period to amend or supplement the Prospectus in order to comply with
the Act, to notify you and upon your request prepare and furnish without charge
to the Underwriter and to any dealer in securities as many copies as you may
from time to time reasonably request of an amended Prospectus or a supplement to
the Prospectus which will correct such statement or omission or effect such
compliance;
(d) As soon as practicable, but not later than the Availability Date
(as defined below), to make generally available to its security holders and
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deliver to you an earnings statement of the Company covering a period of at
least 12 months beginning after the effective date of the Registration Statement
which will satisfy the provisions of Section 11(a) of the Act (for the purpose
of this subsection 5(d) only, "Availability Date" means the 45th day after the
end of the fourth fiscal quarter following the fiscal quarter that includes the
effective date of the Registration Statement, except that, if such fourth fiscal
quarter is the last quarter of the Company's fiscal year, "Availability Date"
means the 90th day after the end of such fourth fiscal quarter);
(e) To furnish to the holders of the Securities as soon as practicable
after the end of the each fiscal year an annual report (including a balance
sheet and statements of operations, changes in stockholders' equity and cash
flows of the Company and its consolidated subsidiaries certified by independent
public accountants) and, make available to the holders of the Securities, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), consolidated summary financial information of
the Company and its consolidated subsidiaries for such quarter in reasonable
detail;
(f) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareholders, and deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed or the Nasdaq
Stock Market, Inc.; and (ii) such additional information concerning the business
and financial condition of the Company as you may from time to time reasonably
request;
(g) For a period of 120 days from the effective date of the
Registration Statement, not to offer, sell, contract to sell or otherwise
dispose of any securities of the Company which are substantially similar to the
Securities (other than the Securities or pursuant to (i) employee stock option
or stockholder dividend reinvestment plans, or (ii) merger and acquisition
transactions, (iii) currently outstanding warrants or options) without your
prior written consent; and
(h) To apply the net proceeds from the sale of the Securities for the
purposes set forth in the Prospectus.
6. Payment of Expenses.
The Company agrees with the Underwriter that the Company will pay or
cause to be paid the following, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriter and dealers; (ii) the cost of printing or reproducing
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this Agreement, the Blue Sky Survey and any other documents in connection with
the offering, purchase, sale and delivery of the Securities; (iii) all expenses
in connection with the qualification of the Securities for offering and sale
under state securities laws as provided in Section 5(b) hereof, including the
reasonable fees and disbursements of the Company's counsel in connection with
such qualification and in connection with the Blue Sky Survey; (iv) the filing
fees incident to securing any required review by the NASD of the terms of the
sale of the Securities; (v) the cost of preparing stock certificates; (vi) the
costs or expenses of any transfer agent or registrar; (vii) all fees relating to
the inclusion of the Securities on the Nasdaq National Market; and (viii) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section. It
is understood, however, that except as provided in this Section, Section 8 and
Section 9 hereof, the Underwriter will pay all of its own costs and expenses,
including the fees of its counsel, stock transfer taxes on resale of any of the
Securities by them, and any advertising expenses connected with any offers they
may make.
If the sale of the Securities provided for herein is not consummated
because any condition to the obligations of the Underwriter set forth in Section
7 hereof is not satisfied or because of any refusal, inability or failure on the
part of the Company to perform any agreement herein or comply with any provision
hereof other than by reason of a default by the Underwriter, the Company will
reimburse the Underwriter upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
it in connection with the proposed purchase and sale of the Securities.
7. Conditions to Obligations of the Underwriter.
The obligations of the Underwriter hereunder, as to the Securities to
be delivered at each Delivery Date, shall be subject, in its discretion, to the
condition that all representations and warranties and other statements of the
Company are, at and as of the date hereof and each Delivery Date, true and
correct and the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Registration Statement is effective; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b), the
Prospectus, and any such supplement, will be filed in the manner and within the
time period required by Rule 424(b); no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceeding for that
purpose shall have been initiated or, to the knowledge of the Company,
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) On each Delivery Date, XxXxxxx Xxxx, A Professional Corporation,
counsel for the Underwriter, shall have furnished to you such opinion or
opinions, dated such dates, with respect to the issuance and sale of the
Securities on each such Delivery Date, the Registration Statement, the
Prospectus, and other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
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(c) On each Delivery Date, Haynsworth Xxxxxxx Xxxx, P.A., counsel for
the Company, shall have furnished to you their written opinion, dated such
dates, in form and substance satisfactory to you, to the effect that:
(i) The Company and the Bank have been duly incorporated and are
validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation, with corporate power
and authority to own or lease their respective properties and conduct
their respective businesses as described in the Prospectus; and the
Company and the Bank are duly qualified to do business and are in good
standing in each jurisdiction in which it owns or leases properties or
conducts business so as to require such qualification;
(ii) The Company has an authorized capitalization as set forth
under the caption "Description of Capital Stock" in the Prospectus,
and all of the issued shares of capital stock of the Company have been
duly and validly authorized and issued, are fully paid and
nonassessable and conform to the description contained in the
Prospectus; there are no preemptive or similar rights to subscribe for
or to purchase any securities of the Company under the Articles of
Incorporation of the Company or under South Carolina law; except as
described in the Prospectus, there are no warrants or options to
purchase any securities of the Company which have been granted by the
Company; to the best of such counsel's knowledge, neither the filing
of the Registration Statement nor the offering or sale of the
Securities as contemplated by this Agreement gives rise to any rights
for or relating to the registration of any securities of the Company;
and the form of the certificates evidencing the Securities complies
with all formal requirements of South Carolina law;
(iii) The Registration Statement has been declared effective
under the Act and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been instituted or
threatened under the Act;
(iv) The Securities have been duly authorized and, when issued
and delivered against payment therefor as provided herein, will be
validly issued and fully paid and nonassessable and conform to the
description of the Securities contained in the Prospectus, as amended
or supplemented;
(v) All outstanding shares of capital stock of the Bank are owned
by the Company free and clear of any perfected security interests,
claims, liens or encumbrances;
(vi) To the best of such counsel's knowledge, there are no legal
or governmental proceedings pending to which the Company or the Bank
is a party or of which any property or assets of the Company or the
Bank is subject which, if determined adversely to the Company or Bank,
would individually or in the aggregate, have a material adverse effect
on the financial position, stockholders' equity or results of
operations of the Company and the Bank taken as a whole; and, to the
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best of such counsel's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others;
(vii) This Agreement has been duly authorized, executed and
delivered by the Company; and constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance or other similar laws affecting the rights of creditors now
or hereafter in effect, and to equitable principles that may limit the
right to specific enforcement of remedies, and except insofar as the
enforceability of the indemnity and contribution provisions contained
in this Agreement may be limited by federal and state securities laws,
and further subject to 12 U.S.C.1818(b)(6)(D) and similar bank
regulatory powers and to the application of principles of public
policy);
(viii) The issue and sale of the Securities and the performance
of this Agreement by the Company and the consummation of the other
transactions contemplated by this Agreement will not result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or Bank pursuant to, any material indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to such
counsel to which the Company or Bank is a party or by which the
Company or Bank is bound or to which any of the property or assets of
the Company or Bank is subject, nor will such action result in any
violation of the provisions of the Articles of Incorporation or Bylaws
of the Company or the Articles of Incorporation or Bylaws of the Bank
or of any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having
jurisdiction over the Company or Bank or any of their respective
properties;
(ix) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the issuance and sale of the Securities by the Company or
the consummation by the Company of the other transactions contemplated
by this Agreement, except such as have been obtained under the Act,
such as may be required under state securities or Blue Sky laws, and
under the rules of the NASD in connection with the purchase and
distribution of the Securities by the Underwriter;
(x) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such
Delivery Date (other than the financial statements and related
schedules and other financial and statistical information included
therein and information furnished for use therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the rules and
regulations thereunder; nothing has come to their attention which
leads them to believe that, as of the effective date of the
Registration Statement and as of each Delivery Date, either the
Registration Statement or the Prospectus or, as of its date, any
further amendment or supplement thereto made by the Company prior to
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the Delivery Date (in each case, other than the financial statements
and the related schedules and other financial and statistical
information included therein, as to which such counsel need express no
opinion) contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. With respect to such statement,
such counsel may state that their belief is based upon the procedures
set forth therein, but is without independent check or verification;
and
(xi) If the Securities are to be listed on the Nasdaq National
Market, authorization therefor has been given, subject to official
notice of issuance and evidence of satisfactory distribution;
In rendering such opinions, such counsel may rely as to matters of fact, to the
extent deemed proper, on certificates of responsible officers of the Company and
the Bank and public officials.
(d) At 10:00 a.m., New York, New York time, on the date of this
Agreement and also at each Delivery Date, Xxxxxxx Xxxxx, LLC shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set forth in
Annex I hereto;
(e) Since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or
long-term debt of the Company or the Bank or any change, or any development
involving a prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operation of the Company
or the Bank taken as a whole otherwise than as set forth or contemplated in the
Prospectus, the effect of which is in your judgment so material and adverse as
to make it impracticable or inadvisable to proceed with the public offering or
the delivery of the Securities being issued at such Delivery Date on the terms
and in the manner contemplated by the Prospectus;
(f) The Company shall have furnished or caused to be furnished to you
copies of agreements between the Company and each of the executive officers and
directors of the Company specified by you, in form and content satisfactory to
you, pursuant to which such persons agree not to offer, sell, or contract to
sell, or otherwise dispose of, any shares of Common Stock beneficially owned by
them or any securities convertible into, or exchangeable for, Common Stock on or
before the 90th day after the date of this Agreement without your prior written
consent;
(g) The Company shall have furnished or caused to be furnished to you
on the date of this Agreement and on the Delivery Date certificates of officers
of the Company satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of the date hereof and the Delivery
Date, as to the performance by the Company of all of its obligations hereunder
to be performed at or prior to the Delivery Date, as to the matters set forth in
12
subsections (a) and (e) of this Section and as to such other matters as you may
reasonably request; and
(h) The Common Stock shall have been approved for trading on the Nasdaq
National Market.
If any of the conditions specified in this Section 7 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriter and its counsel, this Agreement and all
obligations of the Underwriter hereunder may be canceled at, or at any time
prior to, the Closing Date by the Underwriter. Notice of such cancellation shall
be given to the Company in writing or by telephone or telegraph confirmed in
writing.
8. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless the Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
the Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any breach of any representation, warranty, agreement
or covenant of the Company herein contained or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement, or arise out of or are based upon 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, and will reimburse the Underwriter
for any legal or other expenses reasonably incurred by it in connection with
investigating, preparing to defend or defending, or appearing as a third party
witness in connection with, any such action or claims as such expenses are
incurred; provided, however, that the Company shall 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 any Preliminary Prospectus, the Registration Statement
or the Prospectus or any amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by you expressly
for use therein.
(b) The Underwriter agrees to indemnify and hold harmless the Company
against any losses, claims damages or liabilities, joint or several, to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement, or arise out of or
are based upon 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, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Preliminary Prospectus, Registration Statement or Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by you expressly for use therein; and will
reimburse the Company for any legal or other expenses reasonably incurred by the
13
Company in connection with investigating, preparing to defend or defending, or
appearing as a third party witness in connection with, any such action or claim
as such expenses are incurred. The Company acknowledges that for purposes of
this Section 8 the statement set forth in the statement on pages [43-45] of the
Prospectus concerning stabilization and over-allotment by the Underwriter, and
under the heading "Underwriting" in the Preliminary Prospectus and the
Prospectus constitute the only information furnished in writing by the
Underwriter for inclusion in the Preliminary Prospectus or the Prospectus, and
you confirm, that such statements are correct.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection, unless and to the extent that such
indemnifying party did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses. In case any such action 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 reasonably satisfactory to
such indemnified party; provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by counsel that representation of such
indemnified party and the indemnifying party would present such counsel with a
conflict of interest under applicable standards of professional conduct due to
actual or potential differing interests between them, the indemnified party or
parties shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. It is understood that the
indemnifying party shall, in connection with any such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm or attorneys together with appropriate
local counsel at any time for all indemnified parties not having actual or
potential differing interests with any indemnified party. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
appoint counsel to defend such action and approval by the indemnified party of
such counsel, the indemnifying party will not be liable for any settlement
entered into without its consent and will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence, (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying party; and except that, if clause (i) or (iii) is applicable,
14
such liability shall be only in respect of the counsel referred to in such
clause (i) or (iii). Notwithstanding the immediately preceding sentence and the
third preceding sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions 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, claims, damages or liabilities (or
actions 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 Securities. 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, claims, damages or
liabilities (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
and the paragraph immediately following such 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 (d) were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to above in this subsection
(d) 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 claim. Notwithstanding the provisions of this subsection (d), (i) the
provisions of the Selected Dealers Agreement shall govern contribution among the
Underwriter, (ii) in no case shall the Underwriter be required to contribute any
amount in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that the Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. Notwithstanding the provisions of this subsection (d), no
person guilty of fraudulent misrepresentation (within the meaning of Section
15
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director, employee and
agent of the Underwriter and each person, if any, who controls the Underwriter
within the meaning of the Act; and the obligations of the Underwriter under this
Section 8 shall be in addition to any liability which the Underwriter may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Act.
9. Representations and Warranties to Survive.
The respective indemnities, agreements, representations, warranties and
other statements of the Company and the Underwriter, as set forth in this
Agreement or made by them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation (or any statement as to the results
thereof) made by or on behalf of the Underwriter or any controlling person of
the Underwriter, or the Company, or any officer or director or controlling
person of the Company, and shall survive delivery of and payment for the
Securities.
10. Termination and Payment of Expenses.
(a) This Agreement shall be subject to termination in your absolute
discretion, by notice given to the Company prior to the delivery of any payment
for the Securities, if prior to such time there shall have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or the Nasdaq National Market; (ii) a
general moratorium on commercial banking activities in New York or South
Carolina declared by federal, New York State or South Carolina authorities;
(iii) the outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war, if any such
event specified in this clause (iii) would have such a materially adverse
effect, in your judgment, as to make it impracticable or inadvisable to proceed
with the offering or the delivery of the Securities on the terms and in the
manner contemplated in the Prospectus; (iv) the Company or the Bank shall have
sustained since the date of the latest audited financial statements included in
the Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or expressly contemplated in the Prospectus, or (v) such a
material adverse change in general economic, political, financial or
international conditions affecting financial markets in the United States having
a material adverse impact on trading prices of securities in general, as, in
your judgment, makes it impracticable or inadvisable to proceed with the
offering or delivery of the Securities on the terms and in the manner
contemplated in the Prospectus.
16
(b) If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriter set
forth in Section 7 hereof is not satisfied, because of any termination pursuant
to this Section 10 or because of any refusal, inability or failure on the part
of the Company to perform any agreements herein or comply with the provisions
hereof other than by reason of a default by the Underwriter, the Company will be
responsible for and will reimburse the Underwriter upon demand for all
out-of-pocket expenses, including fees and disbursements of counsel, reasonably
incurred by the Underwriter in connection with the proposed purchase, sale and
delivery of the Securities. Nothing in this Section 10 shall be deemed to
relieve the Underwriter of its liability, if any, to the Company for damages
occasioned by its default hereunder. If the sale of the Securities provided for
herein is not consummated for any other reason, the Company shall pay expenses
as required by Section 6, and no party shall have any additional liability to
the other except for such liabilities, if any, as may exist or thereafter arise
under Section 8.
11. Notices.
In all dealings hereunder, you shall act on behalf of each of the
selected dealers, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any selected dealer
made or given by you. All statements, requests, notices and agreements hereunder
shall be in writing or by telegram if promptly confirmed in writing, and if to
the Underwriter shall be sufficient in all respects if delivered or sent by
mail, telex or facsimile transmission to Trident Securities, Inc., 0000 Xxx
Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxxxx X.
Xxxxxxx, Managing Director; and if to the Company shall be sufficient in all
respects if delivered or sent by mail, telex or facsimile transmission to the
address of the Company set forth in the Prospectus, Attention: L. Xxxxx Xxxxxxx,
Chief Executive Officer. Any such statements, requests, notices or agreements
shall take effect upon receipt thereof provided, however, that any notice to any
selected dealer pursuant to Section 11 hereof shall be delivered or sent by
mail, telex or facsimile transmission to such selected dealer, which will be
supplied to the Company by you upon request.
12. Successors.
This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriter and the Company and, to the extent provided in Sections 8
and 9 hereof, the officers and directors of the Company, the officers and
directors, employees and agents of the Underwriter and each person who controls
the Company or the Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from the Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
13. Time of the Essence.
Time shall be of the essence in this Agreement.
17
14. Business Day.
As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
15. Applicable Law.
This Agreement shall be construed in accordance with the internal laws
of the State of New York applicable to agreements made and to be performed in
such State.
16. Captions.
The captions included in this Agreement are included solely for
convenience of reference and shall not be deemed to be a part of this Agreement.
17. Counterparts.
This Agreement may be executed by any one or more of the parties in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
18. Partial Unenforceability.
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 hereof. 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.
18
If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between the Underwriter and the Company.
Very truly yours,
SOUTHCOAST FINANCIAL CORPORATION
By: _________________________________
__________________
__________________
Accepted as of the date hereof at Raleigh, North Carolina:
TRIDENT SECURITIES, INC.
a division of McDonald Investments Inc.
By: _________________________________
__________________
__________________
19
ANNEX I
Pursuant to Section 7(d) of the Underwriting Agreement, Xxxxxxx Xxxxx,
LLC, shall furnish letters to the Underwriter to the effect that:
1. They are independent public accountants with respect to the Company
and its subsidiary within the meaning of the Act and the applicable published
rules and regulations thereunder;
2. In their opinion, the consolidated audited financial statements
audited by them and included in the Registration Statement or the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act or the Securities Exchange Act of 1934, as amended, as
applicable, and the related published rules and regulations thereunder;
3. On the basis of limited procedures, not constituting an examination
in accordance with generally accepted auditing standards, consisting of a
reading of the latest unaudited financial statements made available by the
Company, inspection of the minute books of the Company and the Bank since the
date of the latest audited financial statements included in the Prospectus,
inquiries of officials of the Company and the Bank 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 consolidated financial statements included
in the Registration Statement or the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and published rules and regulations thereunder
or are not presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited consolidated financial statements included in the Registration
Statement or Prospectus;
(B) (i) as of a specified date not more than five calendar
days prior to the date of delivery of such letter, there have been any
changes in the capital stock, short-term debt or long-term debt of the
Company, or any decreases in consolidated total assets or stockholders'
equity as compared with amounts shown on the most recent consolidated
balance sheet included in the Registration Statement or Prospectus, and
(ii) for the period from the date of the most recent consolidated
financial statements included in the Registration Statement or
Prospectus to such specified date there were any decreases in
consolidated net interest income or the total or per share amounts of
net income as compared with the corresponding period in the preceding
year, except in each case for increases or decreases which the
Prospectus discloses have occurred or may occur or which are described
in such letter; and
4. In addition to the audit referenced in their report included in the
Registration Statement and the Prospectus and the limited procedures, inspection
of minute books, inquiries and other procedures referred to above, they have
carried out certain specified procedures, not constituting an audit in
A-1
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information which are derived from the
general accounting records of the Company and the Bank, which appear in any
Preliminary Prospectus, the Prospectus, or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Underwriter, and have
compared certain of such amounts, percentages and financial information with the
accounting records of the Company and have found them to be in agreement.
A-2
