NET.B@NK, INC.
(A GEORGIA CORPORATION)
COMMON STOCK
UNDERWRITING AGREEMENT
DATED: MAY __, 1997
NET.B@NK, INC.
UNDERWRITING AGREEMENT
May __, 1997
XXXXXX XXXXXX & COMPANY, INC.
INTERSTATE/XXXXXXX LANE CORPORATION
As Representatives of the Several
Underwriters Named in Schedule A hereto
c/o Xxxxxx Xxxxxx & Company, Inc.
00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Dear Sirs:
Net.B@nk, Inc., a Georgia corporation (the "Company"), proposes to issue
and sell to the underwriters named in SCHEDULE A (collectively, the
"Underwriters") an aggregate of 3,000,000 shares of Common Stock, $.01 par value
per share (the "Common Stock"), of the Company (the "Firm Shares"). The Firm
Shares are to be sold to each Underwriter, acting severally and not jointly, in
such amounts as are set forth in SCHEDULE A opposite the name of such
Underwriter.
The Company and Carolina First Bank, a bank organized under the laws of the
State of South Carolina (the "Selling Shareholder") also grant to the
Underwriters, severally and not jointly, the option described in Section 3 to
purchase, on the same terms as the Firm Shares, up to an aggregate of 450,000
additional shares of Common Stock (the "Option Shares") solely to cover
over-allotments. The Firm Shares, together with all or any part of the Option
Shares, are collectively herein called the "Shares."
Section 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-23717) with
respect to the Shares, including a preliminary form of prospectus, has been
prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and the applicable
rules and regulations (the "1933 Act Regulations") of the Securities and
Exchange Commission (the "Commission"), and has been filed with the
Commission; and such amendments to such registration statement as may have
been required prior to the date hereof have been filed with the Commission,
and such amendments have been similarly prepared. Copies of such
registration statement and amendment or amendments and of each related
preliminary prospectus, and the exhibits, financial statements and
schedules, as finally amended and revised, have been delivered to you. The
Company has prepared in the same manner, and proposes so to file with the
Commission, one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the form of
final prospectus, (ii) if the Company does not rely on Rule 434 of the 1933
Act, a final
prospectus in accordance with Rules 430A and 424(b) of the 1933 Act
Regulations or (iii) if the Company relies on Rule 434 of the 1933 Act, a
term sheet relating to the Shares that shall identify the preliminary
prospectus that it supplements containing such information as is required
or permitted by Rules 434, 430A and 424(b) of the 1933 Act. The Company
also may file a related registration statement with the Commission pursuant
to Rule 462(b) of the 1933 Act for the purpose of registering certain
additional shares of Common Stock, which registration statement will be
effective upon filing with the Commission. As filed, such amendment, any
registration statement filed pursuant to Rule 462(b) of the 1933 Act and
any term sheet and form of final prospectus, or such final prospectus,
shall include all Rule 430A Information (as defined below) and, except to
the extent that you shall agree in writing to a modification, shall be in
all respects in the form furnished to you prior to the date and time that
this Agreement was executed and delivered by the parties hereto, or, to the
extent not completed at such date and time, shall contain only such
specific additional information and other changes (beyond that contained in
the latest preliminary prospectus) as the Company shall have previously
advised you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Time (as hereinafter defined), shall also
mean such registration statement as so amended; provided, however, that
such term shall also include all Rule 430A Information contained in any
Prospectus and any Term Sheet (as hereinafter defined) and deemed to be
included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the 1933 Act
Regulations. The term "Preliminary Prospectus" shall mean any preliminary
prospectus referred to in the preceding paragraph and any preliminary
prospectus included in the Registration Statement at the time it becomes
effective that omits Rule 430A Information. The term "Prospectus" as used
in this Agreement shall mean (a) if the Company relies on Rule 434 of the
1933 Act, the Term Sheet relating to the Shares that is first filed
pursuant to Rule 424(b)(7) of the 1933 Act, together with the Preliminary
Prospectus identified therein that such Term Sheet supplements or (b) if
the Company does not rely on Rule 434 of the 1933 Act, the prospectus
relating to the Shares in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations or, if no
filing pursuant to Rule 424(b) of the 1933 Act Regulations is required,
shall mean the form of final prospectus included in the Registration
Statement at the time such Registration Statement becomes effective. The
term "Rule 430A Information" means information with respect to the Shares
and the offering thereof permitted pursuant to Rule 430A of the 1933 Act
Regulations to be omitted from the Registration Statement when it becomes
effective. The term "462(b) Registration Statement" means any registration
statement filed with the Commission pursuant to Rule 462(b) under the 1933
Act (including the Registration Statement and any Preliminary Prospectus or
Prospectus incorporated therein at the time such registration statement
becomes effective). The term "Term Sheet" means any term sheet that
satisfies the requirements of Rule 434 of the 1933 Act. Any reference to
the "date" of a Prospectus that includes a Term Sheet shall mean the date
of such Term Sheet.
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(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and no proceedings for that
purpose have been instituted or threatened by the Commission or the state
securities or blue sky authority of any jurisdiction, and each Preliminary
Prospectus and any amendment or supplement thereto, at the time of filing
thereof, conformed in all material respects to the requirements of the 1933
Act and the 1933 Act Regulations, and did not contain any 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; 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 an Underwriter expressly
for use in the Registration Statement or any 462(b) Registration Statement.
(c) When the Registration Statement and any 462(b) Registration
Statement shall become effective, or any Term Sheet that is part of the
Prospectus is filed with the Commission pursuant to Rule 434, when the
Prospectus is first filed pursuant to Rule 424(b) of the 1933 Act
Regulations, when any amendment to the Registration Statement or any 462(b)
Registration Statement becomes effective, and when any supplement to the
Prospectus or any Term Sheet is filed with the Commission and at the
Closing Time and Date of Delivery (as hereinafter defined), (i) the
Registration Statement, the 462(b) Registration Statement, the Prospectus,
the Term Sheet and any amendments thereof and supplements thereto will
conform in all material respects with the applicable requirements of the
1933 Act and the 1933 Act Regulations, and (ii) neither the Registration
Statement, the 462(b) Registration Statement, the Prospectus, any Term
Sheet nor any amendment or supplement thereto will contain any 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; 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 an
Underwriter expressly for use in the Registration Statement or any 462(b)
Registration Statement.
(c) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the state of Georgia with
all requisite corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus. The Company is duly registered under the
Savings and Loan Holding Company Act ("SLHCA") and will be duly registered
under the Georgia Bank Holding Company Act ("GBHCA"). The Company is duly
qualified to transact business as a foreign corporation and is in good
standing in each of the jurisdictions in which the ownership or leasing of
its properties or the nature or conduct of its business as described in the
Registration Statement and the Prospectus requires such qualification,
except where the failure to do so would not have a material adverse effect
on the condition (financial or other), business, properties, net worth or
results of operations of the Company and the Bank (as hereinafter defined)
taken as a whole.
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(d) At the Closing Time and Date of Delivery (as hereinafter
defined), the Company's sole subsidiary will be Atlanta Internet Bank, a
federally-chartered stock savings bank (the "Bank"). The Bank has been
duly organized and is validly existing as a federally-chartered stock
savings bank under the laws of the United States, with all requisite power
and authority to own, lease and operate its properties and conduct its
business as described in the Registration Statement and the Prospectus. The
Bank is duly qualified to do business in each jurisdiction in which the
ownership or leasing of its properties or the nature or conduct of its
business as described in the Registration Statement and the Prospectus
conducted requires such qualification, except where the failure to do so
would not have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of the
Bank.
(f) The Company has full corporate right, power and authority to
enter into this Agreement, to issue, sell and deliver the Shares as
provided herein and to consummate the transactions contemplated herein.
This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws of general applicability relating to or
affecting creditors' rights, or by general principles of equity whether
considered at law or at equity and except to the extent enforcement of the
indemnification provisions set forth in Section 8 of this Agreement may be
limited by federal or state securities laws or the public policy underlying
such laws.
(g) Each consent, approval, authorization, order, license,
certificate, permit, registration, designation or filing by or with any
governmental agency or body necessary for the valid authorization,
issuance, sale and delivery of the Shares, the execution, delivery and
performance of this Agreement and the consummation by the Company of the
transactions contemplated hereby has been made or obtained and is in full
force and effect, except as may be required under applicable state
securities laws or by the NASD. All terms, conditions, requirements, and
provisions precedent to the Reorganization (as defined in the Prospectus)
imposed on the Company, the Bank, or the Selling Shareholder by any of the
Board of Governors of the Federal Reserve System ("FRB"), the Office of
Thrift Supervision ("OTS"), the Federal Deposit Insurance Corporation
("FDIC"), and the Georgia Department of Banking and Finance ("DBF") have
been satisfied or waived. To the knowledge of the Company and the Bank, no
person has sought to obtain review of the final actions of the FRB, OTS,
FDIC or DBF in approving the Reorganization or threatened or initiated
legal proceedings to challenge such approvals of the Reorganization.
(h) The Bank is a member in good standing of the Federal Home Loan
Bank of Atlanta, and the Bank's deposit accounts are insured by the FDIC to
the fullest extent provided under applicable law, and no proceeding for the
termination or revocation of such issuance is pending or, to the knowledge
of the Company or the Bank, threatened.
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(i) Neither the issuance, sale and delivery by the Company of the
Shares, nor the execution, delivery and performance of this Agreement, nor
the consummation of the transactions contemplated hereby will conflict with
or result in a breach or violation of any of the terms and provisions of,
or (with or without the giving of notice or the passage of time or both)
constitute a default under the charter or bylaws of the Company or the
Bank, respectively, or under any indenture, mortgage, deed of trust, loan
agreement, note, lease or other material agreement or instrument to which
the Company or the Bank, respectively, is a party or to which the Company
or the Bank, respectively, any of their respective properties or other
assets is subject; or any applicable statute, judgment, decree, order, rule
or regulation of any court or governmental agency or body applicable to any
of the foregoing or any of their respective properties, the violation of
which would have a material adverse effect on the Company and the Bank
taken as a whole; or result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or asset of the Company or
the Bank, respectively.
(j) The Shares to be issued and sold to the Underwriters hereunder
have been duly authorized by the Company. When issued and delivered
against payment therefor as provided in this Agreement, the Shares will be
duly and validly issued, fully paid and nonassessable. No preemptive
rights of shareholders exist with respect to any of the Shares which have
not been satisfied or waived. No person or entity holds a right to require
or participate in the registration under the 1933 Act of the Shares
pursuant to the Registration Statement which has not been satisfied or
waived; and, except as set forth in the Prospectus, no person holds a right
to require registration under the 1933 Act of any shares of Common Stock of
the Company at any other time which has not been satisfied or waived.
(k) The Company's authorized, issued and outstanding capital stock is
as disclosed in the Prospectus. All of the issued shares of capital stock
of the Company have been duly authorized and validly issued, are fully paid
and nonassessable and conform to the description of the Company's capital
stock contained in the Prospectus.
(l) All of the issued shares of capital stock of the Bank have been
duly authorized and validly issued, are fully paid and nonassessable and are
owned directly by the Company free and clear of all liens, security
interests, pledges, charges, encumbrances, defects, shareholders'
agreements, voting trusts, equities or claims of any nature whatsoever.
Other than the Bank, the Company does not own, directly or indirectly,
any capital stock or other equity securities of any other corporation or
any ownership interest in any partnership, joint venture or other
association.
(m) Except as disclosed in the Prospectus, there are no outstanding
(i) securities or obligations of the Company or the Bank convertible into
or exchangeable for any capital stock of the Company or the Bank, (ii)
warrants, rights or options to subscribe for or purchase from the Company
or the Bank any such capital stock or any such convertible or exchangeable
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securities or obligations, or (iii) obligations of the Company or the Bank
to issue any shares of capital stock, any such convertible or exchangeable
securities or obligation, or any such warrants, rights or options.
(n) The Company and the Bank have good and marketable title in fee
simple to all real property, if any, and good title to all personal
property owned by them, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and defects, except
such as are disclosed in the Prospectus or such as do not materially and
adversely affect the value of such property and do not interfere with the
use made or 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
or the Bank are held under valid, existing and enforceable leases, with
such exceptions as are disclosed in the Prospectus or are not material and
do not interfere with the use made or proposed to be made of such property
and buildings by the Company or the Bank.
(o) The financial statements of the Company included in the
Registration Statement and Prospectus present fairly the financial position
of the Company as of the dates indicated and the results of operations and
cash flows for the Company for the periods specified, all in conformity
with generally accepted accounting principles applied on a consistent
basis. The Statement of Assets and Liabilities Generated by the Internet
Banking Operations of the Company Held and Serviced by Carolina First Bank
presents fairly, in all material respects, the assets and liabilities
generated by the Internet Banking Operations of the Company as of the dates
specified in conformity with generally accepted accounting principles. The
financial statement schedules, if any, included in the Registration
Statement and the amounts in the Prospectus under the captions "Prospectus
Summary -- Summary Financial Data", "Pro Forma Condensed Balance Sheet",
"Pro Forma Condensed Statement of Operations" and "Selected Financial Data"
fairly present the information shown therein and have been compiled on a
basis consistent with the financial statements included in the Registration
Statement and the Prospectus. The unaudited pro forma financial
information (including the related notes) included in the Prospectus or any
Preliminary Prospectus complies as to form in all material respects to the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations, and management of the Company believes that the assumptions
underlying the pro forma adjustments are reasonable. Such pro forma
adjustments have been properly applied to the historical amounts in the
compilation of the information and such information fairly presents the
financial position, results of operations and other information purported
to be shown therein at the respective dates and for the respective periods
specified.
(p) Deloitte & Touche, LLP, who have examined and are reporting upon
the audited financial statements and schedules included in the Registration
Statement, are, and were during the periods covered by their reports
included in the Registration Statement and the Prospectus, independent
public accountants within the meaning of the 1933 Act and the rules and
regulations of the Commission thereunder.
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(q) Neither the Company nor the Bank has sustained, since December
31, 1996, any material loss or interference with its business from fire,
explosion, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or arbitrators' or court or
governmental action, order or decree; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, and except as otherwise stated in the Registration Statement
and Prospectus, there has not been (i) any material change in the capital
stock, long-term debt, obligations under capital leases or short-term
borrowings of the Company or the Bank; (ii) any material increase in the
aggregate dollar or principal amount of the Bank's assets which are
classified by the Bank as substandard, doubtful, or loss, or the Bank's
loans which are 90 days or more past due or real estate acquired by
foreclosure; (iii) any dividends or other distributions paid or declared by
the Company or the Bank with respect to its capital stock or any default by
the Company or the Bank in the payment of principal or interest or any
outstanding debt obligations; or (iv) any material adverse change, or any
development which could reasonably be seen as involving a prospective
material adverse change, in or affecting the business, prospects,
properties, assets, results of operations or condition (financial or other)
of the Company or the Bank.
(r) Neither the Company nor the Bank is in violation of its
respective charter, or by-laws, and no default exists, and no event has
occurred, nor state of facts exists, which, with notice or after the lapse
of time to cure or both, would constitute a default in the due performance
and observance of any obligation, agreement, term, covenant, consideration
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, note, lease or other material agreement or instrument to which
any such entity is a party or to which any such entity or any of its
properties is subject. Neither the Company nor the Bank is in violation
of, or in default with respect to, any statute, rule, regulation, order,
judgment or decree, except as may be properly described in the Prospectus
or such as in the aggregate do not now have and will not in the future have
a material adverse effect on the financial position, results of operations
or business of each such entity, respectively.
(s) There is not pending or, to the Company's knowledge, threatened,
any action, suit, proceeding, inquiry or investigation against the Company,
the Bank or, to the Company's knowledge, any of their respective officers
and directors or to which the properties, assets or rights of any such
entity are subject, before or brought by any court or governmental agency
or body or board of arbitrators that are required to be described in the
Registration Statement or the Prospectus but are not described as required.
(t) The descriptions in the Registration Statement and the Prospectus
of the contracts, leases and other legal documents therein described
present fairly the information required to be shown, and there are no
contracts, leases, or other 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 which are not described or filed as
required.
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(u) The Company and the Bank own, possess or have obtained all
material permits, licenses, franchises, certificates, consents, orders,
approvals and other authorizations of governmental or regulatory
authorities or other entities as are necessary to own or lease, as the case
may be, and to operate their respective properties and to carry on their
respective businesses as presently conducted, or as contemplated in the
Prospectus to be conducted, and neither the Company nor the Bank has
received any notice of proceedings relating to revocation or modification
of any such licenses, permits, franchises, certificates, consents, orders,
approvals or authorizations.
(v) The Company and the Bank own or possess adequate licenses or
other rights to use all patents, trademarks, service marks, trade names,
copyrights, software and design licenses, trade secrets, manufacturing
processes, other intangible property rights and know-how (collectively
"Intangibles") necessary to entitle the Company and the Bank to conduct
their respective businesses as described in the Prospectus, and neither the
Company nor the Bank has received notice of infringement of or conflict
with (and neither knows of such infringement of or conflict with) asserted
rights of others with respect to any Intangibles which could materially and
adversely affect the business, prospects, properties, assets, results of
operations or condition (financial or otherwise) of the Company or the
Bank.
(w) Each of the Company's and the Bank's respective systems of
internal accounting controls taken as a whole is sufficient to meet the
broad objectives of internal accounting control insofar as those objectives
pertain to the prevention or detection of errors or irregularities in
amounts that would be material in relation to the Company's or the Bank's
financial statements; and, none of the Company, the Bank, or, to the
knowledge of the Company, any employee or agent thereof, has made any
payment of funds of the Company or the Bank, or received or retained any
funds, and no funds of the Company or the Bank have been set aside to be
used for any payment, in each case in violation of any law, rule or
regulation.
(x) Each of the Company and the Bank has filed on a timely basis all
necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and have paid all
taxes shown as due thereon; and no tax deficiency has been asserted against
any such entity, nor does any such entity know of any tax deficiency which
is likely to be asserted against any such entity which if determined
adversely to any such entity, could materially adversely affect the
business, prospects, properties, assets, results of operations or condition
(financial or otherwise) of any such entity, respectively. All tax
liabilities are adequately provided for on the respective books of such
entities.
(y) Each of the Company and the Bank maintain insurance (issued by
insurers of recognized financial responsibility) of the types and in the
amounts generally deemed adequate for their respective businesses and,
consistent with insurance coverage maintained by similar companies in
similar businesses, including, but not limited to, insurance covering real
and personal property owned or leased by the Company and the Bank against
theft,
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damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect.
(z) Except as described in the Prospectus, there are no contractual
encumbrances or material restrictions on the ability of the Bank (i) to pay
dividends or make any other distributions on its capital stock or to pay
any indebtedness owed, (ii) to make any loans or advances to, or
investments in, any subsidiary, or (iii) to transfer any of its property or
assets to any subsidiary. The Bank meets the qualifications to make
capital distributions as a "Tier 1 Association" under 12 C.F.R. Section
563.134.
(aa) Each of the Company, the Bank, and their officers, directors or
affiliates has not taken and will not take, directly or indirectly, any
action designed to, or that might reasonably be expected to, cause or
result in or constitute the stabilization or manipulation of any security
of the Company or to facilitate the sale or resale of the Shares.
(bb) The Company is not, will not become as a result of the
transactions contemplated hereby, or will not conduct its respective
businesses in a manner in which the Company would become, "an investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDER. The
Selling Shareholder represents and warrants to, and agrees with, each of the
several Underwriters and the Company that:
(a) The Selling Shareholder has full right, power and authority to
enter into this Agreement, the Power of Attorney and the Custody Agreement
(as hereinafter defined) and to sell, assign, transfer and deliver to the
Underwriters the Shares to be sold by the Selling Shareholder hereunder;
and the execution and delivery of this Agreement, the Power of Attorney and
the Custody Agreement have been duly authorized by all necessary action of
the Selling Shareholder.
(b) The Selling Shareholder has duly executed and delivered this
Agreement, the Power of Attorney and the Custody Agreement, and each
constitutes the valid and binding agreement of the Selling Shareholder
enforceable against the Selling Shareholder in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or affecting
the enforcement of creditors' rights generally and to general equitable
principles.
(c) No consent, approval, authorization, order or declaration of or
from, or registration, qualification or filing with, any court or
governmental agency or body is required for the sale of the Shares to be
sold by the Selling Shareholder or the consummation of the transactions
contemplated by this Agreement, the Power of Attorney or the Custody
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Agreement, except the registration of such Shares under the 1933 Act
(which, if the Registration Statement is not effective as of the time of
execution hereof, shall be obtained as provided in this Agreement) and such
as may be required under state securities or blue sky laws in connection
with the offer, sale and distribution of such Shares by the Underwriters.
(d) The sale of the Shares to be sold by such Selling Shareholder and
the performance of this Agreement, the Power of Attorney and the Custody
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with, or (with or without the giving of
notice or the passage of time or both) result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which the Selling Shareholder is a party or to
which any of its properties or assets is subject, nor will such action
conflict with or violate any provision of the charter or bylaws or other
governing instruments of the Selling Shareholder, if any, or any statute,
rule or regulation or any order, judgment or decree of any court or
governmental agency or body having jurisdiction over the Selling
Shareholder or any of the Selling Shareholder's properties or assets.
(e) The Selling Shareholder has, and at the Closing Time or, at the
Date of Delivery, as the case may be, the Selling Shareholder will have,
good and valid title to the Shares to be sold by the Selling Shareholder
hereunder, free and clear of all liens, security interests, pledges,
charges, encumbrances, defects, shareholders' agreements, voting trusts,
equities or claims of any nature whatsoever; and, upon delivery of such
Shares against payment therefor as provided herein, good and valid title to
such Shares, free and clear of all liens, security interests, pledges,
charges, encumbrances, defects, shareholders' agreements, voting trusts,
equities or claims of any nature whatsoever, will pass to the several
Underwriters.
(f) The Selling Shareholder has not (i) taken, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares or (ii) since the filing of
the Registration Statement (A) sold, bid for, purchased or paid anyone any
compensation for soliciting purchases of, the Shares or (B) paid or agreed
to pay to any person any compensation for soliciting another to purchase
any other securities of the Company.
(g) When any Preliminary Prospectus was filed with the Commission it
(i) contained all statements required to be stated therein in accordance
with, and complied in all material respects with the requirements of, the
1933 Act and the rules and regulations of the Commission thereunder, and
(ii) did not include any 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, not
misleading. When the Registration Statement or any amendment thereto or
any 462(b) Registration Statement or any amendment thereto was or is
declared effective and at the Closing Time or the Date of Delivery, as the
case may be,
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it (i) contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply in all material
respects with the requirements of, the 1933 Act and the rules and
regulations of the Commission thereunder and (ii) did not or will not
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading.
When the Prospectus or any amendment or supplement thereto is filed with
the Commission pursuant to Rule 424(b) (or, if the Prospectus or such
amendment or supplement is not required to be so filed, when the
Registration Statement or the amendment thereto containing such amendment
or supplement to the Prospectus was or is declared effective), and at the
Closing Time or the Date of Delivery, as the case may be, the Prospectus,
as amended or supplemented at any such time, (i) contained or will contain
all statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements of,
the 1933 Act and the rules and regulations of the Commission thereunder and
(ii) did not or will not include any 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, not
misleading. The foregoing provisions of this paragraph (g) do not apply to
statements or omissions made in any Preliminary Prospectus, the
Registration Statement, any 462(b) Registration Statement or any amendment
thereto or the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through you specifically for use therein.
In order to document the Underwriters' compliance with the reporting and
withholding provisions of the Internal Revenue Code of 1986, as amended, with
respect to the transactions herein contemplated, the Selling Shareholder agrees
to deliver to you prior to or at the Closing Time (as hereinafter defined) a
properly completed and executed United States Treasury Department form W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
The Selling Shareholder represents and warrants that certificates in
negotiable form representing all of the Shares to be sold by such Selling
Shareholder hereunder have been placed in custody under a custody agreement (the
"Custody Agreement"), in the form heretofore furnished to and approved by you,
duly executed and delivered by such Selling Shareholder to [INSERT NAME OF
CUSTODIAN], as custodian (the "Custodian"), and that such Selling Shareholder
has duly executed and delivered a Power of Attorney (the "Power of Attorney"),
in the form heretofore furnished to and approved by you, appointing [INSERT
NAME(S) OF ATTORNEYS-IN-FACT] as such Selling Shareholder's attorneys-in-fact
(the "Attorneys-in-Fact") with authority to execute and deliver this Agreement
on behalf of such Selling Shareholder, to determine the purchase price to be
paid by the Underwriters to the Selling Shareholders as provided in Section 3
hereof, to authorize the delivery of the Shares to be sold by such Selling
Shareholder hereunder and otherwise to act on behalf of such Selling Shareholder
in connection with the transactions contemplated by this Agreement and the
Custody Agreement.
11
The Selling Shareholder specifically agrees that the Shares represented by
the certificates held in custody for such Selling Shareholder under the Custody
Agreement are subject to the interests of the Underwriters hereunder, and that
the arrangements made by such Selling Shareholder for such custody, and the
appointment by such Selling Shareholder of the Attorneys-in-Fact by the Power of
Attorney, are irrevocable. The Selling Shareholder specifically agrees that the
obligations of the Selling Shareholder hereunder shall not be terminated by
operation of law, whether by the death or incapacity of Selling Shareholder or,
in the case of an estate or trust, by the death or incapacity of any executor or
trustee or the termination of such estate or trust, or in the case of a
partnership or corporation, by the dissolution of such partnership or
corporation, or by the occurrence of any other event.
Section 3. SALE AND DELIVERY OF THE SHARES TO THE UNDERWRITERS; CLOSING.
(a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to each of the Underwriters the Firm
Shares, and each Underwriter agrees, severally and not jointly, to purchase
from the Company the number of Firm Shares set forth opposite the name of
such Underwriter in SCHEDULE A (the proportion which each Underwriter's
share of the total number of the Firm Shares bears to the total number of
Firm Shares is hereinafter referred to as such Underwriter's "underwriting
obligation proportion"), at a purchase price of $__________ per share.
(b) In addition, on the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth,
the Company and the Selling Shareholder hereby grant an option to the
Underwriters, severally and not jointly, to purchase up to an additional
450,000 Option Shares (150,000 and 300,000 Option Shares to be sold by the
Selling Shareholder and the Company, respectively) at the purchase price
set forth in Section 3(a) above. Any such election to purchase Option
Shares shall be made (i) first to the 150,000 Option Shares to be sold by
the Selling Shareholder and (ii) then to the Company. The option hereby
granted will expire if not exercised within the thirty (30) day period
after the date of the Prospectus by giving written notice to the Company
and the Selling Shareholder. The option granted hereby may be exercised in
whole or in part (but not more than once), only for the purpose of covering
over-allotments that may be made in connection with the offering and
distribution of the Firm Shares. The notice of exercise shall set forth the
number of Option Shares as to which the several Underwriters are exercising
the option, and the time and date of payment and delivery thereof. Such
time and date of delivery (the "Date of Delivery") shall be determined by
you but shall not be later than three full business days after the exercise
of such option, nor in any event prior to the Closing Time. If the option
is exercised as to all or any portion of the Option Shares, the Option
Shares as to which the option is exercised shall be purchased by the
Underwriters, severally and not jointly, in their respective underwriting
obligation proportions.
12
(c) Payment of the purchase price for and delivery of certificates in
definitive form representing the Firm Shares shall be made at the offices
of Xxxxxx Xxxxxx & Company, Inc., 00 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000
or at such other place as shall be agreed upon by the Company and you, at
10:00 a.m., either (i) on the third full business day after the execution
of this Agreement, or (ii) at such other time not more than ten full
business days thereafter as you and the Company shall determine (unless, in
either case, postponed pursuant to the terms hereof), (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 Shares are purchased
by the Underwriters, payment of the purchase price for and delivery of
certificates in definitive form representing the Option Shares shall be
made at the offices of Xxxxxx Xxxxxx & Company, Inc. in the manner set
forth above, or at such other place as the Company and you shall determine,
on the Date of Delivery as specified in the notice from you to the Company.
Payment for the Firm Shares and the Option Shares shall be made to the
Company and the Selling Shareholder by wire transfer in same-day funds to
the accounts designated to the Underwriters in writing by the Company and
the Selling Shareholder, respectively, against delivery to you for the
respective accounts of the Underwriters of the Shares to be purchased by
them.
(d) The certificates representing the Shares to be purchased by the
Underwriters shall be in such denominations and registered in such names as
you may request in writing at least two full business days before the
Closing Time or the Date of Delivery, as the case may be. The certificates
representing the Shares will be made available at the offices of Xxxxxx
Xxxxxx & Company, Inc. or at such other place as Xxxxxx Xxxxxx & Company,
Inc. may designate for examination and packaging not later than 10:00 a.m.
at least one full business day prior to the Closing Time or the Date of
Delivery as the case may be.
(e) After the Registration Statement becomes effective, you intend to
offer the Shares to the public as set forth in the Prospectus, but after
the initial public offering of such Shares you may in your discretion vary
the public offering price.
Section 4. CERTAIN COVENANTS OF THE COMPANY. The Company covenants and
agrees with each Underwriter as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective (if not yet effective at the date and time
that this Agreement is executed and delivered by the parties hereto). If
the Company elects to rely upon Rule 430A of the 1933 Act Regulations or
the filing of the Prospectus is otherwise required under Rule 424(b) of the
1933 Act Regulations, the Company will comply with the requirements of Rule
430A and will file the Prospectus, properly completed, pursuant to the
applicable provisions of Rule 424(b), or a Term Sheet pursuant to and in
accordance with Rule 434, within the time period prescribed. If the
Company elects to rely upon Rule 462(b), the Company shall file a 462(b)
Registration Statement with the Commission in compliance with Rule 462(b)
by 10:00 p.m., Washington, D.C. time on the date of this Agreement, and the
Company shall at the time of filing either pay
13
to the Commission the filing fee for the Rule 462(b) Registration Statement
or give irrevocable instructions for the payment of such fee. The Company
will notify you immediately (i) when the Registration Statement, 462(b)
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 by the Commission to
amend the Registration Statement or 462(b) 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 any 462(b) Registration Statement or of
any order preventing or suspending the use of any Preliminary Prospectus or
the suspension of the qualification of the Shares for offering or sale in
any jurisdiction, or of the institution or threatening of any proceeding
for any such purposes. The Company 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
withdrawal thereof at the earliest possible moment.
(b) The Company will not at any time file or make any amendment to
the Registration Statement, or any amendment or supplement (i) to the
Prospectus, if the Company has not elected to rely upon Rule 430A, (ii) if
the Company has elected to rely upon Rule 430A, to either the Prospectus
included in the Registration Statement at the time it becomes effective or
to the Prospectus filed in accordance with Rule 424(b) or any Term Sheet
filed in accordance with Rule 434, or (iii) if the Company has elected to
rely upon Rule 462(b), to any 462(b) Registration Statement in any case if
you shall not have previously been advised and furnished a copy thereof a
reasonable time prior to the proposed filing, or if you or counsel for the
Underwriters shall object to such amendment or supplement.
(c) The Company has furnished or will furnish to you, at its expense,
as soon as available, three copies of the Registration Statement as
originally filed and of all amendments thereto, whether filed before or
after the Registration Statement becomes effective, copies of all exhibits
and documents filed therewith and signed copies of all consents and
certificates of experts, as you may reasonably request, and has furnished
or will furnish to each Underwriter, one conformed copy of the Registration
Statement as originally filed and of each amendment thereto.
(d) The Company will deliver to each Underwriter, at the Company's
expense, from time to time, as many copies of each Preliminary Prospectus
as such Underwriter may reasonably request, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act. The
Company will deliver to each Underwriter, at the Company's expense, as soon
as the Registration Statement shall have become effective and thereafter
from time to time as requested 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 each Underwriter may reasonably
request. The Company will comply to the best of its ability with the 1933
Act and the 1933 Act Regulations so as to permit the completion of the
14
distribution of the Shares as contemplated in this Agreement and in the
Prospectus. If the delivery of a prospectus is required at any time prior
to the expiration of nine months after the time of issue of the Prospectus
or any Term Sheet in connection with the offering or sale of the Shares and
if at such time any events shall have occurred as a result of which the
Prospectus or any Term Sheet 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 light of the
circumstances under which they were made when such Prospectus or any Term
Sheet is delivered not misleading, or, if for any reason it shall be
necessary during such same period to amend or supplement the Prospectus or
any Term Sheet in order to comply with the 1933 Act or the rules and
regulations thereunder, the Company will notify you and upon your request
prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably request
of an amended Prospectus or any Term Sheet or a supplement to the
Prospectus or any Term Sheet or an amendment or supplement to any such
incorporated document which will correct such statement or omission or
effect such compliance, and in case any Underwriter is required to deliver
a prospectus in connection with sales of any of the Shares at any time nine
months or more after the time of issue of the Prospectus or any Term Sheet,
upon your request but at the expense of such Underwriter, the Company will
prepare and deliver to such Underwriter as many copies as you may request
of an amended or supplemented Prospectus or any Term Sheet complying with
Section 10(a)(3) of the 1933 Act.
(e) The Company will use its best efforts to qualify the Shares for
offering and sale under the applicable securities laws of such states and
other jurisdictions as you may designate and to maintain such
qualifications in effect for as long as may be necessary to complete the
distribution of the Shares; 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 in any jurisdiction in which it is not so
qualified or to make any undertakings 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 Shares have been qualified as above provided.
(f) The Company will make generally available to its securityholders
as soon as practicable, but in any event not later than the end of the
fiscal quarter first occurring after the first anniversary of the
"effective date of the Registration Statement" (as defined in Rule 158(c)
of the 1933 Act Regulations), an earnings statement (in reasonable detail
but which need not be audited) complying with the provisions of Section
11(a) of the 1933 Act and Rule 158 thereunder and covering a period of at
least 12 months beginning after the effective date of the Registration
Statement.
(g) The Company will use the net proceeds received by it from the
sale of the Shares in the manner specified in the Prospectus under the
caption "Use of Proceeds."
15
(h) The Company will furnish to its securityholders, as soon as
practicable after the end of each respective period, annual reports
(including financial statements audited by independent public accountants)
and unaudited quarterly reports of operations for each of the first three
quarters of the fiscal year. During a period of five years after the date
hereof, the Company will furnish to you: (i) concurrently with furnishing
such reports to its securityholders, statements of operations of the
Company for each of the first three quarters in the form furnished to the
Company's securityholders; (ii) concurrently with furnishing to its
securityholders, a balance sheet of the Company as of the end of such
fiscal year, together with statements of operations, of cash flows and of
securityholders' equity of the Company for such fiscal year, accompanied by
a copy of the certificate or report thereon of independent public
accountants; (iii) as soon as they are available, copies of all reports
(financial or otherwise) mailed to securityholders; (iv) as soon as they
are available, copies of all reports and financial statements furnished to
or filed with the Commission, any securities exchange or the National
Association of Securities Dealers, Inc. (the "NASD"); (v) every material
press release in respect of the Company or its affairs which is released by
the Company; and (vi) any additional information of a public nature
concerning the Company or its business that you may reasonably request.
During such five-year period, the foregoing financial statements shall be
on a consolidated basis to the extent that the accounts of the Company are
consolidated with any subsidiaries, and shall be accompanied by similar
financial statements for any significant subsidiary that is not so
consolidated.
(i) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, the
Company will not, without the prior written consent of Xxxxxx Xxxxxx &
Company, Inc., offer, pledge, issue, sell, contract to sell, grant any
option for the sale of, or otherwise dispose of, or announce any offer,
pledge, sale, grant of any option to purchase or other disposition,
directly or indirectly, any shares of Common Stock or securities
convertible into, exercisable or exchangeable for, shares of Common Stock,
except as provided in Section 3 of this Agreement and other than _______
shares pursuant to the Company's stock option plans.
(j) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar (which
may be the same entity as the transfer agent) for its Common Stock.
(k) The Company will cause the Shares to be listed, subject to notice
of issuance, on the Nasdaq Stock Market and will maintain the listing of
the Shares on the Nasdaq Stock Market.
(l) [THE COMPANY IS FAMILIAR WITH THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, AND HAS IN THE PAST
CONDUCTED ITS AFFAIRS, AND WILL IN THE FUTURE CONDUCT ITS AFFAIRS, IN SUCH
A MANNER SO AS TO ENSURE THAT THE COMPANY WAS NOT AND WILL NOT BE AN
"INVESTMENT COMPANY" OR AN ENTITY
16
"CONTROLLED" BY AN "INVESTMENT COMPANY" WITHIN THE MEANING OF THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED.]
(m) The Company will not, and will use its best efforts to cause its
officers, directors and affiliates not to, (i) take, directly or indirectly
prior to termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in
the future reasonably be expected to cause or result in, the stabilization
or manipulation of the price of any security of the Company, to facilitate
the sale or resale of any of the Shares, (ii) sell, bid for, purchase or
pay anyone any compensation for soliciting purchases of the Shares or (iii)
pay or agree to pay to any person any compensation for soliciting any order
to purchase any other securities of the Company.
(n) If at any time during the 30-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your reasonable
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus) and after
written notice from you advising the Company to the effect set forth above,
the Company agrees to forthwith prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such rumor,
publication or event.
(o) The Company will file timely and accurate reports on Form SR with
the Commission in accordance with Rule 463 of the Commission under the 1933
Act or any successor provision.
(p) The Company will use its best efforts to become duly registered
under the GBHCA.
Section 5. COVENANTS OF THE SELLING SHAREHOLDER. The Selling Shareholder
covenants and agrees with each of the Underwriters:
(a) During the period beginning from the date hereof and continuing
to and including the date 365 days after the date of the Prospectus, the
Selling Shareholder will not, without the prior written consent of Xxxxxx
Xxxxxx & Company, Inc., offer, pledge, issue, sell, contract to sell, grant
any option for the sale of, or otherwise dispose of, (or announce any
offer, pledge, sale, grant of an option to purchase or other disposition,
directly or indirectly) any shares of Common Stock or securities
convertible into, exercisable or exchangeable for, shares of Common Stock,
except as provided in Section 3 of this Agreement.
(b) The Selling Shareholder will not (i) take, directly or
indirectly, prior to the termination of the underwriting syndicate
contemplated by this Agreement, any action
17
designed to cause or to result in, or that might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Shares, (ii)
sell, bid for, purchase or pay anyone any compensation for soliciting
purchases of, the Shares or (iii) pay to or agree to pay any person any
compensation for soliciting another to purchase any other securities of the
Company.
Section 6. PAYMENT OF EXPENSES. The Company will pay and bear all costs,
fees and expenses incident to the performance of its obligations under this
Agreement (excluding fees and expenses of counsel for the Underwriters, except
as specifically set forth below), including (a) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits), as originally filed and as amended, the Preliminary Prospectuses, the
Prospectus and any Term Sheet and any amendments or supplements thereto, and the
cost of furnishing copies thereof to the Underwriters, (b) the preparation,
printing and distribution of this Agreement, the certificates representing the
Shares, the Blue Sky Memoranda and any instruments relating to any of the
foregoing, (c) the issuance and delivery of the Shares to the Underwriters,
including any transfer taxes payable upon the sale of the Shares to the
Underwriters (other than transfer taxes on resales by the Underwriters), (d) the
fees and disbursements of the Company's counsel and accountants, (e) the
qualification of the Shares under the applicable securities laws in accordance
with the terms of this Agreement, including filing fees and fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the Blue Sky Memoranda, (f) all costs, fees and expenses in
connection with the notification to the Nasdaq Stock Market of the proposed
issuance of the Shares, (g) filing fees relating to the review of the offering
by the NASD, (h) the transfer agent's and registrar's fees and all miscellaneous
expenses referred to in Part II of the Registration Statement, (i) costs related
to travel and lodging incurred by the Company and its representatives relating
to meetings with and presentations to prospective purchasers of the Shares
reasonably determined by the Underwriters to be necessary or desirable to effect
the sale of the Shares to the public, and (j) all other costs and expenses
incident to the performance of the Company's obligations hereunder (including
costs incurred in closing the purchase of the Option Shares, if any) that are
not otherwise specifically provided for in this section. The Company, upon your
request, will provide funds in advance for filing fees in connection with "blue
sky" qualifications.
If the sale of the Shares provided for herein is not consummated because
any condition to the obligations of the Underwriters set forth in Section 7
hereof is not satisfied, because of any termination pursuant to Section 10
hereof 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 default by any of the Underwriters, the Company will
reimburse the Underwriters severally on demand for all reasonable out-of-pocket
expenses, including fees and disbursements of Underwriters' counsel, reasonably
incurred by the Underwriters in reviewing the Registration Statement and the
Prospectus, and in investigating and making preparations for the marketing of
the Shares, but the Company will not in such event be liable to any of the
several Underwriters for loss of anticipated profits from the sale of them by
the Shares.
18
Section 7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters to purchase and pay for (i) the Firm Shares that they have
respectively agreed to purchase pursuant to this Agreement (and any Option
Shares as to which the option granted in Section 3 has been exercised and the
Date of Delivery determined by you is the same as the Closing Time) at the
Closing Time and (ii) the Option Shares at the Date of Delivery of the Option
Shares, are subject to the accuracy of the representations and warranties of the
Company and the Selling Shareholder contained herein as of the Closing Time or
the Date of Delivery, as the case may be, and to the accuracy of the
representations and warranties of the Company and the Selling Shareholder
contained in certificates of any officer of the Company and the Selling
Shareholder delivered pursuant to the provisions hereof, to the performance by
the Company and the Selling Shareholder of their obligations hereunder, and to
the following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 p.m. on the date of this Agreement or, with your consent, at a
later time and date not later, however, than 5:30 p.m. on the first
business day following the date hereof, or at such later time or on such
later date as you may agree to in writing; if the Company has elected to
rely upon Rule 462(b), the 462(b) Registration Statement shall have become
effective by 10:00 p.m., Washington, D.C. time, on the date of this
Agreement; and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement or any 462(b) Registration
Statement shall have been issued under the 1933 Act and no proceedings for
that purpose shall have been instituted or shall be pending or, to your
knowledge or the knowledge of the Company, 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 Underwriters. If the Company has elected to rely upon Rule 430A, a
Prospectus or a Term Sheet containing the Rule 430A Information 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, you shall have received a favorable opinion
of Powell, Goldstein, Xxxxxx & Xxxxxx LLP, counsel for the Company, dated
as of the Closing Time, together with signed or reproduced copies of such
opinion for each of the other Underwriters, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the
laws of the State of Georgia with the corporate power
and authority to own, lease and operate its properties
and to conduct its business as described in the
Registration Statement and the Prospectus. The Company
is duly registered under the SLHCA. Neither the
Company nor the Bank is subject to any current formal
arrangement or memorandum of understanding with, or
cease and desist order by, any banking or similar
agency. The Company is qualified to transact business
as a foreign corporation
19
and is in good standing in each of the jurisdictions in
which the ownership or leasing of the Company's
properties or the nature or conduct of its business
requires such qualification, except where the failure
to do so would not have a material adverse effect on
the condition (financial or other), business,
properties, net worth or results of operations of the
Company and the Bank taken as a whole.
(ii) The Bank has been duly organized and is validly
existing as a federally-chartered stock savings bank
under the laws of the United States. The Bank has all
requisite power and authority to own, lease and operate
its properties and conduct its business as described in
the Registration Statement and the Prospectus. The Bank
is duly qualified to do business in each jurisdiction
in which the ownership or leasing of its properties or
the nature or conduct of its business requires such
qualification, except where the failure to do so would
not have a material adverse effect on the condition
(financial or other), business, properties, net worth
or results of operations of the Company and the Bank
taken as a whole. The Bank is a member of the Federal
Home Loan Bank of Atlanta, and its deposits are insured
by the FDIC and, to such counsel's knowledge, no
proceedings for the termination or revocation of such
insurance are pending or currently threatened.
(iii) The Company has the corporate power and authority to
enter into this Agreement, to issue, sell and deliver
the Shares as provided herein and to consummate the
transactions contemplated herein. This Agreement has
been duly authorized, executed and delivered by the
Company and, assuming due authorization, execution and
delivery by the Underwriters, constitutes a valid and
binding agreement of the Company, enforceable in
accordance with its terms, except to the extent
enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other laws
affecting creditors' rights or by general principles of
equity whether considered at law or in equity and
except to the extent that enforcement of the
indemnification provisions set forth in Section 8 of
this Agreement may be limited by federal or state
securities laws or the public policy underlying such
laws.
(iv) Each consent, approval, authorization, order, license,
certificate, permit, registration, designation or
filing by or with any governmental agency or body
necessary for the valid authorization, issuance, sale
and delivery of the Shares, the execution, delivery and
performance of this Agreement and the consummation by
the Company of the transactions contemplated hereby,
has been made or
20
obtained and is in full force and effect, except such
as may be necessary under state securities laws or
required by the NASD in connection with the purchase
and distribution of the Shares by the Underwriters, as
to which such counsel need express no opinion.
(v) Neither the issuance, sale and delivery by the Company
of the Shares, nor the execution, delivery and
performance of this Agreement, nor the consummation of
the transactions contemplated hereby will conflict with
or result in a breach or violation of any of the terms
and provisions of, or (with or without the giving
notice or the passage of time or both) constitute a
default under, the charter or by-laws of the Company or
the Bank, respectively, or, under any indenture,
mortgage, deed of trust, loan agreement, note, lease or
other material agreement or instrument to which the
Company or the Bank, respectively, is a party or to
which the Company or the Bank, respectively, any of
their respective properties or other assets, is
subject; or, to such counsel's knowledge, any
applicable statute, judgment, decree, order, rule or
regulation of any court or governmental agency or body,
the violation of which would have a material adverse
effect on the Company and the Bank taken as a whole; or
to such counsel's knowledge, result in the creation or
imposition of any lien, charge, claim or encumbrance
upon any property or asset of the Company or the Bank,
respectively.
(vi) The Reorganization has been duly authorized by the
board of directors of the Company. No action has been
taken, or, to such counsel's knowledge, is pending or
threatened to revoke such authorization or challenge
the Reorganization. The Company and the Bank have
conducted the Reorganization in all material respects
in accordance with all applicable laws, regulations,
decisions and orders and have satisfied all material
terms, conditions, requirements and provisions
precedent to the Reorganization imposed upon the
Company and the Bank by the FRB, OTS, and FDIC.
(vii) The Common Stock conforms in all material respects as
to legal matters to the description thereof contained
in the Registration Statement and the Prospectus under
the heading "Description of Capital Stock."
(viii) The Shares to be issued and sold to the Underwriters
hereunder have been duly authorized by the Company.
When issued and delivered against payment therefor as
provided in this Agreement, such shares will be validly
issued, fully paid and nonassessable. To such
21
counsel's knowledge, no preemptive rights of
shareholders exist with respect to any of the Shares
which have not been satisfied or waived. To such
counsel's knowledge, no person or entity holds a right
to require or participate in the registration under the
1933 Act of the Shares pursuant to the Registration
Statement which has not been satisfied or waived; and,
except as set forth in the Prospectus, no person holds
a right to require registration under the 1933 Act of
any shares of Common Stock of the Company at any other
time which has not been satisfied or waived. The form
of certificates evidencing the Shares complies with all
applicable requirements of Georgia law.
(ix) The Company has an authorized capitalization as set
forth in the Prospectus under the caption
"Capitalization." All of the issued shares of capital
stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable. None
of the issued shares of capital stock of the Company
has been issued or is owned or held in violation of any
preemptive rights of shareholders. All offers and
sales of the Company's capital stock prior to the date
hereof were at all relevant times duly registered under
the 1933 Act or were exempt from the registration
requirements of the 1933 Act and were duly registered
or the subject of an available exemption from the
registration requirements of the applicable state
securities or blue sky laws, provided, however, that
such counsel need not express any opinion with respect
to the registration or availability of an exemption
under applicable state securities or blue sky laws for
shares of Common Stock issued pursuant to an
underwritten public offering.
(x) All of the issued shares of capital stock of the Bank
have been duly authorized and validly issued, are fully
paid and nonassessable and are owned directly by the
Company free and clear of all liens, security
interests, pledges, charges, encumbrances, defects,
shareholders' agreements, voting trusts, equities or
claims of any nature whatsoever. Other than the Bank,
the Company does not own, directly or indirectly, any
capital stock or other equity securities of any other
corporation or any ownership interest in any
partnership, joint venture or other association.
(xi) Except as disclosed in the Prospectus, to the knowledge
of such counsel, there are no outstanding
(i) securities or obligations of the Company or the
Bank convertible into or exchangeable for any capital
stock of the Company or the Bank, (ii) warrants, rights
or options to subscribe for or purchase from the
Company or the Bank
22
any such capital stock or any such convertible or
exchangeable securities or obligations, or (iii)
obligations of the Company or the Bank to issue any
shares of capital stock, any such convertible or
exchangeable securities or obligation, or any such
warrants, rights or options.
(xii) [THE COMPANY AND THE BANK HAVE GOOD TITLE TO ALL
PERSONAL PROPERTY OWNED BY THEM, IN EACH CASE FREE AND
CLEAR OF ALL LIENS, SECURITY INTERESTS, PLEDGES,
CHARGES, ENCUMBRANCES, MORTGAGES AND DEFECTS, EXCEPT
SUCH AS ARE DISCLOSED IN THE PROSPECTUS OR SUCH AS DO
NOT MATERIALLY AND ADVERSELY AFFECT THE VALUE OF SUCH
PROPERTY AND DO NOT INTERFERE WITH THE USE MADE OR
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 OR THE BANK ARE HELD UNDER
VALID, EXISTING AND ENFORCEABLE LEASES, WITH SUCH
EXCEPTIONS AS ARE DISCLOSED IN THE PROSPECTUS OR ARE
NOT MATERIAL AND DO NOT INTERFERE WITH THE USE MADE OR
PROPOSED TO BE MADE OF SUCH PROPERTY AND BUILDINGS BY
THE COMPANY OR THE BANK.]
(xiii) Neither the Company nor the Bank is in violation of
their respective charter or by-laws, and, to the
knowledge of such counsel, no material default exists,
and no event has occurred nor state of facts exist
which, with notice or after the lapse of time to cure
or both, would constitute a material default in the due
performance and observance of any obligation,
agreement, term, covenant, or condition contained in
any indenture, mortgage, deed of trust, loan agreement,
note, lease or other material agreement or instrument
to which any such entity is a party or to which any
such entity or any of its properties is subject.
(xiv) To such counsel's knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or
investigation against the Company, the Bank or any of
their respective officers and directors or to which the
properties, assets or rights of any such entity are
subject, before or brought by any court or governmental
agency or body or board of arbitrators, that are
required to be described in the Registration Statement
or the Prospectus but are not described as required.
(xv) The descriptions in the Registration Statement and the
Prospectus of the contracts, leases and other legal
documents therein described present fairly the
information required to be shown and there are no
contracts, leases or other documents known to such
counsel of a
23
character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits
to the Registration Statement which are not described
or filed as required.
(xvi) The Common Stock has been approved for trading on the
Nasdaq Stock Market.
(xvii) The Registration Statement and any 462(b) Registration
Statement have become effective under the 1933 Act and,
to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration
Statement or any 462(b) Registration Statement has been
issued and no proceeding for that purpose has been
instituted or is pending or contemplated under the 1933
Act. Other than financial statements and other
financial and operating data and schedules contained
therein, as to which counsel need express no opinion,
the Registration Statement, any 462(b) Registration
Statement, all Preliminary Prospectuses, the Prospectus
and any amendment or supplement thereto, appear on
their face to conform as to form in all material
respects with the requirements of the 1933 Act and the
rules and regulations thereunder.
(xviii) The Company is not, or solely as a result of the
consummation of the transactions contemplated hereby
will not become, an "investment company," or a company
"controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as
amended.
(xix) The descriptions in the Prospectus of statutes,
regulations or legal or governmental proceedings are
accurate and present fairly a summary of the
information required to be shown under the 1933 Act and
the 1933 Act Regulations. The information in the
Prospectus under the captions "The Reorganization,"
"Business -- Supervision and Regulation" and "Shares
Available for Future Sale" to the extent that it
constitutes matters of law or legal conclusions, has
been reviewed by such counsel, is correct and presents
fairly the information required to be disclosed therein
under the 1933 Act and the 1933 Act Regulations.
Such counsel also shall state that they have no reason to believe
that the Registration Statement, any 462(b) Registration Statement or
any further amendment thereto made prior to the Closing Time or the
Date of Delivery, as the case may be, on its effective date and as of
the Closing Time or the Date of Delivery, as the case may be,
contained or contains any untrue statement of a material fact or
omitted or
24
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus, or any amendment or supplement thereto made prior to the
Closing Time or the Date of Delivery, as the case may be, as of its
issue date and as of the Closing Time or the Date of Delivery, as the
case may be, contained or contains any untrue statement of a material
fact or omitted or omits 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 (provided that such counsel need
express no belief regarding the financial statements and related
schedules and other financial data contained in the Registration
Statement, any 462(b) Registration Statement, any amendment thereto,
or the Prospectus, or any amendment or supplement thereto). 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.
(c) You shall have received an opinion, dated such Time of Delivery,
of _____________________, counsel for the Selling Shareholder, in form and
substance satisfactory to you and your counsel, to the effect that:
(i) The Power of Attorney and the Custody Agreement have
been duly executed and delivered by the Selling
Shareholder, and each is enforceable against the
Selling Shareholder in accordance with its terms
subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and moratorium laws and
other laws relating to or affecting the enforcement of
creditors' rights generally and to general equitable
principles.
(ii) This Agreement has been duly executed and delivered by
or on behalf of the Selling Shareholder; the sale of
the Shares to be sold by the Selling Shareholder at
such Time of Delivery and the performance of this
Agreement, the Power of Attorney and the Custody
Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with
or (with or without the giving of notice or the passage
of time or both) result in a breach or violation of any
of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to
which the Selling Shareholder is a party or to which
any of its properties or assets is subject, nor will
such action conflict with or violate any provision of
the charter or bylaws or other governing instruments of
the Selling Shareholder or any statute, rule or
regulation or any order, judgment or decree of any
court or governmental agency or body having
jurisdiction over the Selling Shareholder or any of the
Selling Shareholder's properties or assets.
25
(iii) No consent, approval, authorization, order or
declaration of or from, or registration, qualification
or filing with, any court or governmental agency or
body is required for the issue and sale of the Shares
being sold by the Selling Shareholder or the
consummation of the transactions contemplated by this
Agreement, the Power of Attorney or the Custody
Agreement, except the registration of such Shares under
the Act and such as may be required under state
securities or blue sky laws in connection with the
offer, sale and distribution of such Shares by the
Underwriters.
(iv) The Selling Shareholder has, and immediately prior to
such Closing Time the Selling Shareholder will have,
good and valid title to the Shares to be sold by the
Selling Shareholder hereunder, free and clear of all
liens, security interests, pledges, charges,
encumbrances, defects, shareholders' agreements, voting
trusts, equities or claims of any nature whatsoever;
and, upon delivery of such Shares against payment
therefor as provided herein, good and valid title to
such Shares, free and clear of all liens, security
interests, pledges, charges, encumbrances, defects,
shareholders' agreements, voting trusts, equities or
claims of any nature whatsoever, will pass to the
several Underwriters.
In rendering the opinions set forth in Sections 7(b) and 7(c),
such counsel may rely on the following:
(A) as to matters involving the application of laws
other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, upon an
opinion or opinions (in form and substance reasonably
satisfactory to Underwriters' counsel) of other counsel
familiar with the applicable laws, and
(B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the
Company and certificates or other written statements of
officers or departments of various jurisdictions, having
custody of documents respecting the existence or good
standing of the Company or the Bank, provided that copies of
all such opinions, statements or certificates shall be
delivered to Underwriters' counsel. The opinion of counsel
for the Company shall state that the opinion of any other
counsel, or certificate or written statement, on which such
counsel is relying is in form satisfactory to such counsel
and that you and they are justified in relying thereon.
26
(d) At the Closing Time, you shall have received a favorable opinion
from King & Spalding, counsel for the Underwriters, dated as of the Closing
Time, with respect to the incorporation of the Company, the issuance and
sale of the Shares, the Registration Statement, the Prospectus and other
related matters as the Underwriters may reasonably require, and the Company
shall have furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass on such matters.
(e) At the Closing Time, (i) the Registration Statement, any 462(b)
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 in all material
respects shall conform to the requirements of the 1933 Act and the 1933 Act
Regulations; the Company shall have complied in all material respects with
Rule 430A (if it shall have elected to rely thereon) and neither the
Registration Statement, any 462(b) 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 which information is given in the Registration Statement, any
material adverse change in the business, prospects, properties, assets,
results of operations or condition (financial or otherwise) of the Company,
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
Company's knowledge, threatened against the Company that would be required
to be set forth in the Prospectus other than as set forth therein and no
proceedings shall be pending or, to the knowledge of the Company,
threatened against the Company before or by any federal, state or other
commission, board or administrative agency wherein an unfavorable decision,
ruling or finding could materially adversely affect the business,
prospects, assets, results of operations or condition (financial or
otherwise) of the Company, other than as set forth in the Prospectus, (iv)
the Company shall have complied with all agreements and satisfied all
conditions on their part to be performed or satisfied at or prior to the
Closing Time, and (v) the representations and warranties of the Company set
forth herein shall be accurate as though expressly made at and as of the
Closing Time. At the Closing Time, you shall have received a certificate
executed by the Chief Executive Officer and the Chief Financial Officer of
the Company, dated as of the Closing Time, to such effect and with respect
to the following additional matters: (A) the Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or preventing or suspending the
use of the Prospectus has been issued, and no proceedings for that purpose
have been instituted or are pending or, to their knowledge, threatened
under the 1933 Act; and (B) they have reviewed the Registration Statement
and the Prospectus and, when the Registration Statement and any 462(b)
Registration Statement became effective and at all times subsequent thereto
up to the delivery of such certificate, the Registration Statement, any
462(b) Registration Statement and the Prospectus and any amendments or
supplements thereto contained all statements and information required to be
included therein or necessary to make the statements therein not
misleading and neither the
27
Registration Statement, any 462(b) Registration Statement, nor the
Prospectus nor any amendment or supplement thereto included any untrue
statement of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, and, since the effective date of the Registration Statement,
there has occurred no event required to be set forth in an amended or
supplemented Prospectus that has not been so set forth. The
representations and warranties of the Selling Shareholder set forth herein
shall be accurate as though expressly made at and as of the Closing Time.
At the Closing Time, you shall have received a certificate executed on
behalf of the Selling Shareholder to such effect.
(f) You shall have received from Deloitte & Touche, LLP, letters
dated, respectively, the date hereof (or, if the Registration Statement has
been declared effective prior to the execution and delivery of this
Agreement, dated such effective date and the date of this Agreement) and
the Closing Time and the Date of Delivery, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto. In the
event that the letters referred to in this subsection set forth any
changes, decreases or increases in the items specified in paragraph (iv)
of Annex I, it shall be a further condition to the obligations of the
Underwriters that (i) such letters shall be accompanied by a written
explanation by the Company as to the significance thereof, unless the
Underwriters deem such explanation unnecessary, and (ii) such changes,
decreases or increases do not, in your sole judgment, make it impracticable
or inadvisable to proceed with the purchase, sale and delivery of the
Shares as contemplated by the Registration Statement, as amended as of the
date of such letter.
(g) At the Closing Time, you shall have received from Deloitte &
Touche, LLP, a letter, in form and substance satisfactory to you and dated
as of the Closing Time, to the effect that they reaffirm the statements
made in the letter furnished pursuant to subsection (f) above, except that
the specified date referred to shall be a date not more than five days
prior to the Closing Time.
(h) At the Closing Time, counsel for the Underwriters shall have been
furnished with all such documents, certificates and opinions as they may
request for the purpose of enabling them to pass upon the issuance and sale
of the Shares as contemplated in this Agreement and the matters referred to
in Section 7(d) and in order to evidence the accuracy and completeness of
any of the representations, warranties or statements of the Company, the
performance of any of the covenants of the Company, 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 Shares as contemplated in this
Agreement shall be reasonably satisfactory in form and substance to you and
to counsel for the Underwriters. The Company will furnish you with such
number of conformed copies of such opinions, certificates, letters and
documents as you shall reasonably request.
28
(i) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to such offering, such terms or the
Underwriters' participation in the same.
(j) Subsequent to the date hereof, there shall not have occurred any
of the following: (i) if there has occurred or accelerated any outbreak of
hostilities or other national or international calamity or crisis or change
in economic or political conditions the effect of which on the financial
markets of the United States is such as to make it, in your judgment,
impracticable to market the Shares or enforce contracts for the sale of the
Shares, or (ii) if trading in any securities of the Company has been
suspended by the Commission or by the Nasdaq Stock Market, or if trading
generally on the New York Stock Exchange or in the over-the-counter market
has been suspended, or limitations on prices for trading (other than
limitations on hours or numbers of days of trading) have been fixed, or
maximum ranges for prices for securities have been required, by such
exchange or the NASD or by order of the Commission or any other
governmental authority, or (iii) if there has been any downgrading in the
rating of any of the Company's debt securities or preferred stock by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the 1933 Act), or (iv) if a banking
moratorium has been declared by federal or New York or Tennessee
authorities, or (v) any federal or state statute, regulation, rule or order
of any court or other governmental authority has been enacted, published,
decreed or otherwise promulgated which in your reasonable opinion
materially adversely affects or will materially adversely affect the
business or operations of the Company, or (vi) any action has been taken by
any federal, state or local government or agency in respect of its monetary
or fiscal affairs which in your reasonable opinion has a material adverse
effect on the securities markets in the United States.
(k) The Bank shall have guaranteed the obligations of the Company
under this agreement, in such form reasonably satisfactory to you.
If any of the conditions specified in this Section 7 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this Agreement
may be terminated by you on notice to the Company 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 6. Notwithstanding any such
termination, the provisions of Section 8 shall remain in effect.
The several obligations of the Underwriters to purchase Option Shares
hereunder are subject to the satisfaction on and as of any Date of Delivery for
Option Shares of the conditions set forth in this Section 7, except that, if any
Date of Delivery for Option Shares is other than the Closing Time, the
certificates, opinions and letters referred to in paragraphs (b), (c), (d) and
(e) shall be revised to reflect the sale of Option Shares.
29
Section 8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject under the 1933 Act, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) (i) arise out of or are based upon any breach of any
warranty or covenant of the Company herein contained, (ii) arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in (A) any Preliminary Prospectus, the Registration
Statement, any 462(b) Registration Statement or the Prospectus, or any
amendment or supplement thereto, or (B) any application or other document,
or any amendment or supplement thereto, executed by the Company or based
upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Shares under the securities or
blue sky laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"), or (iii) arise
out of or are based upon the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement, any 462(b) Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
Application a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action; 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, any 462(b)
Registration Statement or the Prospectus, or any such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by any Underwriter expressly for use therein. In
addition to its other obligations under this Section 8(a), the Company
agrees that, as an interim measure during the pendency of any such claim,
action, investigation, inquiry or other proceeding arising out of or based
upon any statement or omission, or any alleged statement or omission,
described in this Section 8(a), it will reimburse the Underwriters on a
monthly basis for all reasonable legal and other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of
a judicial determination as to the propriety and enforceability of the
Company's obligation to reimburse the Underwriters for such expenses and
the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. Any such interim
reimbursement payments that are not made to an Underwriter within 30 days
of a request for reimbursement shall bear interest at the prime rate (or
reference rate or other commercial lending rate for borrowers of the
highest credit standing) published from time to time by The Wall Street
Journal (the "Prime Rate") from the date of such request. This indemnity
agreement shall be in addition to any liabilities that the Company may
otherwise have. The Company will not, without the prior written consent of
each Underwriter, settle or compromise or consent to the entry of any
judgment in any pending or threatened action or claim or related cause of
action or portion of such cause of action in respect of which
indemnification may be
30
sought hereunder (whether or not such Underwriter is a party to such action
or claim), unless such settlement, compromise or consent includes an
unconditional release of such Underwriter from all liability arising out of
such action or claim (or related cause of action or portion thereof).
The indemnity agreement in this Section 8(a) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the 1933
Act to the same extent as such agreement applies to the Underwriters.
(b) The Selling Shareholder will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject under the 1933 Act,
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) (i) arise out of or are based upon any breach
of any warranty or covenant of the Selling Shareholder herein contained,
(ii) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in (A) any Preliminary Prospectus,
the Registration Statement, any 462(b) Registration Statement or the
Prospectus, or any amendment or supplement thereto, or (B) any Application,
or (iii) arise out of or are based upon the omission or alleged omission to
state in any Preliminary Prospectus, the Registration Statement, any 462(b)
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any Application a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
the Selling Shareholder 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,
any 462(b) Registration Statement, or the Prospectus, or any such amendment
or supplement, in reliance upon and in conformity with written information
furnished to the Company by any Underwriter expressly for use therein;
provided, further, however, that the Selling Shareholder shall be liable
hereunder in any case only to the extent of the total net proceeds from the
offering (before deducting expenses) received by the Selling Shareholder
from the Underwriters for the Shares sold by such Selling Shareholder
hereunder, unless any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, any 462(b)
Registration Statement or any amendment or supplement thereto, any
Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto or any Application in reliance upon and in conformity with written
information furnished to the Company by the Selling Shareholder expressly
for use therein, in which case such limitation of the liability of the
Selling Shareholder shall not apply. In addition to their other
obligations under this Section 8(b), the Selling Shareholder agrees that,
as an interim measure during the pendency of any such claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged
31
statement or omission, described in this Section 8(b), the Selling
Shareholder will reimburse the Underwriters on a monthly basis for all
reasonable legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Selling
Shareholder's obligation to reimburse the Underwriters for such expenses
and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. Any such interim
reimbursement payments that are not made to an Underwriter within 30 days
of a request for reimbursement shall bear interest at the prime rate (or
reference rate or other commercial lending rate for borrowers of the
highest credit standing) published from time to time by The Wall Street
Journal (the "Prime Rate") from the date of such request. This indemnity
agreement shall be in addition to any liabilities that the Selling
Shareholder may otherwise have. The Selling Shareholder will not, without
the prior written consent of each Underwriter, settle or compromise or
consent to the entry of any judgment in any pending or threatened action or
claim or related cause of action or portion of such cause of action in
respect of which indemnification may be sought hereunder (whether or not
such Underwriter is a party to such action or claim), unless such
settlement, compromise or consent includes an unconditional release of such
Underwriter from all liability arising out of such action or claim (or
related cause of action or portion thereof).
The indemnity agreement in this Section 8(b) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the 1933
Act to the same extent as such agreement applies to the Underwriters.
(c) Each Underwriter, severally but not jointly, will indemnify and
hold harmless the Company and the Selling Shareholder against any losses,
claims, damages or liabilities to which the Company and the Selling
Shareholder may become subject, under the 1933 Act, or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any breach of any warranty or
covenant by such Underwriter herein contained or any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement, any 462(b) Registration Statement
or the Prospectus, or any amendment or supplement thereto, 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, the
Registration Statement or the Prospectus or any such amendment or
supplement thereto in reliance upon and in conformity with written
information furnished to the Company by such Underwriter expressly for use
therein; and will reimburse the Company and the Selling Shareholder for any
legal or other expenses reasonably incurred by the Company and the Selling
Shareholder in connection with investigating or defending any such loss,
claim, damage, liability or action. In addition to its other obligations
under this Section 8(c), the Underwriters agree that, as an
32
interim measure during the pendency of any such claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in
this Section 8(c), they will reimburse the Company and the Selling
Shareholder on a monthly basis for all reasonable legal and other expenses
incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and enforceability
of their obligation to reimburse the Company for such expenses and the
possibility that such payments might later be held to have been improper by
a court of competent jurisdiction. Any such interim reimbursement payments
that are not made to the Company within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement shall be in addition to any liabilities
that the Underwriters may otherwise have. No Underwriter will, without the
prior written consent of the Company, settle or compromise or consent to
the entry of judgment in any pending or threatened action or claim or
related cause of action or portion of such cause of action in respect of
which indemnification may be sought hereunder (whether or not the Company
is a party to such action or claim), unless such settlement, compromise or
consent includes an unconditional release of the Company from all liability
arising out of such action or claim (or related cause of action or portion
thereof).
The indemnity agreement in this Section 8(c) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each
officer and director of the Company and each person, if any, who controls
the Company and the Selling Shareholder within the meaning of the 1933 Act
to the same extent as such agreement applies to the Company and the Selling
Shareholder.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) 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; no
indemnification provided for in subsection (a), (b) or (c) shall be
available to any party who shall fail to give notice as provided in this
subsection (d) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by
the failure to give such notice, but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any
liability that it may have to any indemnified party otherwise than under
Section 8. 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 satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such subsection
for any legal or other expenses subsequently incurred by such indemnified
party in connection
33
with the defense thereof other than reasonable costs of investigation,
except that if the indemnified party has been advised by counsel in writing
that there are one or more defenses available to the indemnified party
which are different from or additional to those available to the
indemnifying party, then the indemnified party shall have the right to
employ separate counsel and in that event the reasonable fees and expenses
of such separate counsel for the indemnified party shall be paid by the
indemnifying party; provided, however, that if the indemnifying party is
the Company, the Company shall only be obligated to pay the reasonable fees
and expenses of a single law firm (and any reasonably necessary local
counsel) employed by all of the indemnified parties. The indemnifying party
shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Section 8(a), (b) and
(c) hereof, including the amounts of any requested reimbursement payments,
the method of determining such amounts and the basis on which such amounts
shall be apportioned among the indemnifying parties, shall be settled by
arbitration conducted pursuant to the Code of Arbitration Procedure of the
NASD. Any such arbitration must be commenced by service of a written demand
for arbitration or a written notice of intention to arbitrate, therein
electing the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration tribunal in
such demand or notice, then the party responding to said demand or notice
is authorized to do so. Any such arbitration will be limited to the
operation of the interim reimbursement provisions contained in Sections
8(a), (b) and (c) hereof and will not resolve the ultimate propriety or
enforceability of the obligation to indemnify for expenses that is created
by the provisions of Sections 8(a), (b) and (c).
(f) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 8 is
for any reason judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the right of appeal) to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company and the Selling Shareholder, on the one hand and the Underwriters
on the other shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity incurred
by the Company and the Selling Shareholder, and one or more of the
Underwriters, as incurred, in such proportions that (a) the Underwriters
are responsible pro rata for that portion represented by the percentage
that the underwriting discount appearing on the cover page of the
Prospectus bears to the public offering price (before deducting expenses)
appearing thereon, and (b) the Company and the Selling Shareholder is
responsible for the balance, provided, however, that no person guilty of
fraudulent misrepresentations (within the meaning of Section 11(f) of the
0000 Xxx) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation; provided, further, that
34
if the allocation provided above is not permitted by applicable law, the
Company and the Selling Shareholder, on the one hand, and the Underwriters
on the other shall contribute to the aggregate losses in such proportion as
is appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company and the Selling Shareholder, on
the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
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 to state a material fact relates to information supplied by the
Company and the Selling Shareholder, on the one hand or by the Underwriters
on the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Shareholder and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section 8(f) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this Section 8(f). The amount paid or
payable by a party as a result of the losses, claims, damages or
liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending such action or claim. Notwithstanding the
provisions of this Section 8(f), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The Underwriters'
obligations in this Section 8(f) to contribute are several in proportion to
their respective underwriting obligations and not joint. For purposes of
this Section 8(f), each person, if any, who controls an Underwriter within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company or the Selling Shareholder, within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company or the Selling Shareholder.
Section 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
The representations, warranties, indemnities, agreements and other statements of
the Company and the Selling Shareholder, or their officers 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 Company, the Selling
Shareholder or any Underwriter or controlling person, and with respect to an
Underwriter or the Company and the Selling Shareholder, will survive delivery of
and payment for the Shares or termination of this Agreement.
Section 10. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
35
(a) This Agreement shall become effective immediately as to Sections
6 and 8 and, as to all other provisions, (i) if at the time of execution of
this Agreement the Registration Statement has not become effective, at
10:00 a.m., on the first full business day following the effectiveness of
the Registration Statement, or (ii) if at the time of execution of this
Agreement the Registration Statement has been declared effective, at 10:00
a.m. on the first full business day following the date of execution of this
Agreement; but this Agreement shall nevertheless become effective at such
earlier time after the Registration Statement becomes effective as you may
determine on and by notice to the Company or by release of any of the
Shares for sale to the public. For the purposes of this Section 10, the
Shares shall be deemed to have been so released upon the release of
publication of any newspaper advertisement relating to the Shares or upon
the release by you of telegrams (i) advising the Underwriters that the
Shares are released for public offering, or (ii) offering the Shares for
sale to securities dealers, whichever may occur first. By giving notice
before the time this Agreement becomes effective, you, as representative of
the several Underwriters, or the Company, may prevent this Agreement from
becoming effective, without liability of any party to any other party,
except that the Company shall remain obligated to pay costs and expenses to
the extent provided in Section 6 hereof.
(b) You may terminate this Agreement, by notice to the Company, at
any time at or prior to the Closing Time (i) in accordance with the last
paragraph of Section 7 of this Agreement, or (ii) if there has been since
the respective dates as of which information is given in the Registration
Statement, any material adverse change, or any development involving a
prospective material adverse change, in or affecting the business,
prospects, management, properties, assets, results of operations or
condition (financial or otherwise) of the Company, whether or not arising
in the ordinary course of business, or (iii) if there has occurred or
accelerated any outbreak of hostilities or other national or international
calamity or crisis or change in economic or political conditions the effect
of which on the financial markets of the United States is such as to make
it, in your judgment, impracticable to market the Shares or enforce
contracts for the sale of the Shares, or (iv) if trading in any securities
of the Company has been suspended by the Commission or by the Nasdaq Stock
Market or if trading generally on the New York Stock Exchange or in the
over-the-counter market has been suspended, or limitations on prices for
trading (other than limitations on hours or numbers of days of trading)
have been fixed, or maximum ranges for prices for securities have been
required, by such exchange or the NASD or by order of the Commission or any
other governmental authority, or (v) if there has been any downgrading in
the rating of any of the Company's debt securities or preferred stock by
any "nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the 1933 Act), or (vi) if a banking
moratorium has been declared by federal or New York or Tennessee
authorities, or (vii) any federal or state statute, regulation, rule or
order of any court or other governmental authority has been enacted,
published, decreed or otherwise promulgated which in your reasonable
opinion materially adversely affects or will materially adversely affect
the business or operations of the Company, or (viii) any action has been
taken by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in your reasonable opinion has a material
adverse effect on the securities markets in the United States.
36
(c) If this Agreement is terminated pursuant to this Section 10, such
termination shall be without liability of any party to any other party,
except to the extent provided in Section 6. Notwithstanding any such
termination, the provisions of Section 8 shall remain in effect.
Section 11. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more of
the Underwriters shall fail at the Closing Time to purchase the Shares that it
or they are obligated to purchase pursuant to this Agreement (the "Defaulted
Securities"), you shall have the right, within 36 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms set forth in
this Agreement; if, however, you have not completed such arrangements within
such 36-hour period, then:
(a) If the aggregate number of Firm Shares which are Defaulted
Securities does not exceed 10% of the aggregate number of Firm Shares to be
purchased pursuant to this Agreement, the non-defaulting Underwriters shall
be obligated to purchase the full amount thereof in the proportions that
their respective underwriting obligation proportions bear to the
underwriting obligations of all non-defaulting Underwriters, and
(b) If the aggregate number of Firm Shares which are Defaulted
Securities exceeds 10% of the aggregate number of Firm Shares to be
purchased pursuant to this Agreement, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 11 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default that does not result in a termination of
this Agreement, either you or the Company shall have the right to postpone the
Closing Time for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus that
may thereby be made necessary. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 11.
Section 12. DEFAULT BY THE COMPANY. If the Company shall fail at the
Closing Time to sell and deliver the aggregate number of Firm Shares that it is
obligated to sell, then this Agreement shall terminate without any liability on
the part of any non-defaulting party, except to the extent provided in Section 6
and except that the provisions of Section 8 shall remain in effect.
No action taken pursuant to this Section shall relieve the Company from
liability, if any, in respect to such default.
37
Section 13. 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 to the Underwriters shall be directed c/o Xxxxxx Xxxxxx & Company, Inc.,
00 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, Attention: Xx. Xxxx Xxxxxxx (with a
copy sent in the same manner to King & Spalding, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx 00000, Attention: Xxxx X. Xxxxxx, Esq.); and notices to the Company
shall be directed to it at Net.B@nk, Inc., 0000 Xxxxxxxxx-Xxxxxxxx Xxxx,
Xxxxxxxx 00, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, Attention: Mr. X.X. Xxxxxx
(with a copy sent in the same manner to Powell, Goldstein, Xxxxxx & Xxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxx, XX,
Esq.).
Section 14. PARTIES. This Agreement is made solely for the benefit of and
is binding upon the Underwriters, the Company and the Selling Shareholder, to
the extent provided in Section 8, any person controlling the Company, the
Selling Shareholder or any of the Underwriters, the officers and directors of
the Company, and their respective executors, administrators, successors and
assigns and subject to the provisions of Section 8, 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 any of the several Underwriters of the Shares.
All of the obligations of the Underwriters hereunder are several and not
joint.
Section 15. GOVERNING LAW AND TIME. This Agreement shall be governed by
the laws of the State of Tennessee. Specified time of the day refers to United
States Eastern Time. Time shall be of the essence of this Agreement.
Section 16. 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.
38
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, and upon the acceptance
hereof by Xxxxxx Xxxxxx & Company, Inc., on behalf of each of the Underwriters,
this instrument will become a binding agreement among the Company, the Selling
Shareholder and the several Underwriters in accordance with its terms. It is
understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in the Master Agreement
among Underwriters, a copy of which shall be submitted to the Company for
examination, upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
NET.B@NK, INC.
By:________________________________
Name: X.X. Xxxxxx
Title: Chief Executive Officer
CAROLINA FIRST BANK
By:________________________________
Name: Xxxx X. Xxxxxxx, Xx.
Title: Chief Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first written above:
XXXXXX XXXXXX & COMPANY, INC.
INTERSTATE/XXXXXXX XXXX CORPORATION
By: Xxxxxx Xxxxxx & Company, Inc.
By:_________________________________
(Authorized Representative)
On behalf of each of the Underwriters
39
SCHEDULE A
Number of
Firm Shares
to be Purchased
---------------
Underwriter
-----------
Xxxxxx Xxxxxx & Company, Inc. _____________________________
Interstate/Xxxxxxx Lane Corporation _____________________________
TOTAL _____________________________
ANNEX I
Pursuant to Section 7(f) of the Underwriting Agreement, Deloitte & Touche,
LLP shall furnish letters to the Underwriters to the effect that:
(i) they are independent public accountants with respect to the
Company and the Assets and Liabilities Generated by the Internet Operations
of the Company and Held by Carolina First Bank (collectively, the "CFB
Assets and Liabilities") within the meaning the 1933 Act and the applicable
published rules and regulations thereunder;
(ii) in their opinion, the consolidated financial statements and
schedules and statement of CFB Assets and Liabilities audited by them and
included in the Prospectus, the Registration Statement and any 462(b)
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the related
published rules and regulations thereunder;
(iii) The financial statements of the Company as of and for the three
month period ended March 31, 1997 and the Statement of CFB Assets and
Liabilities as of and for the same period were reviewed by them in
accordance with the standards established by the American Institute of
Certified Public Accountants and based upon their review, they are not
aware of any material modifications that should be made to such financial
statements for them to be in confirmity with generally accepted accounting
principles, and such financial statements comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and
the applicable rules and regulations thereunder;
(iv) on the basis of limited procedures, not constituting an audit
in accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and the latest available interim statement of CFB
Assets and Liabilities, inspection of the minute books of the Company since
the date of the latest audited financial statements included in the
Prospectus, inquiries of officials of the Company responsible for financial
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) as of a specified date not more than 5 days prior to
the date of such letter, there were any changes in the capital stock
(other than the issuance of capital stock upon exercise of options
which were outstanding on the date of the latest balance sheet
included in the Prospectus) or any increase in the long-term debt or
short-term debt of the Company, or any decreases in net current assets
or net assets or other items specified by the Underwriters, or any
increases in any items specified by the Underwriters, in each case as
compared with amounts shown in the latest balance sheet included in
the Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may occur or
which are described in such letter; and
(B) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in clause (A) there were any decreases in interest income or net
interest income or the total or per share amounts of net income or
other items specified by the Underwriters, or any increases in any
items specified by the Underwriters, in each case as compared with the
comparable period of the preceding year and with any other period of
corresponding length specified by the Underwriters, except in each
case for increases or decreases which the Prospectus discloses have
occurred or may occur which are described in such letter;
(v) in addition to the audit referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraph (iv) above,
they have carried out certain specified procedures, not constituting an
audit in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified
by the Underwriters included in the Registration Statement and the
Prospectus, or which appear in Part II of, or in exhibits and schedules to,
the Registration Statement specified by the Underwriters, and have compared
certain of such amounts, percentages and financial information with the
accounting records of the Company or other documents and have found them to
be in agreement;
(vi) on the basis of a reading of the unaudited pro forma combined
financial statements included in the Registration Statement and the
Prospectus, carrying out certain specified procedures that would not
necessarily reveal matters of significance with respect to the comments set
forth in this paragraph (vi), inquiries of certain officials of the
Company, the Selling Shareholder and Premier who have responsibility for
financial and accounting matters and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in the
unaudited pro forma combined financial statements, nothing came to their
attention that caused them to believe that the unaudited pro forma combined
financial statements do not comply as to form in all material respects with
the applicable accounting requirements of Rule 11-02 of Regulation S-X or
that the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of such statements.
References to the Registration Statement and the Prospectus in this
Annex I shall include any amendment or supplement thereto at the date of
such letter.
2
