Exhibit 1.0
________ SHARES OF _____% NONCUMULATIVE CONVERTIBLE
PREFERRED STOCK, SERIES B(1)
VINEYARD NATIONAL BANCORP
($25.00 LIQUIDATION VALUE)
EQUITY UNDERWRITING AGREEMENT
________ _, 2003
RBC Xxxx Xxxxxxxx Inc.
as the Representative of the Several Underwriters
named in Schedule I hereto
c/o RBC Capital Markets
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
Vineyard National Bancorp, a California corporation (the "Company")
proposes to sell to the several underwriters (the "Underwriters") named in
Schedule I hereto for whom you are acting as representative (the
"Representative"), an aggregate of __________ shares of the Company's __%
Noncumulative Convertible Preferred Stock, Series B, no par value (the "Series B
Preferred Stock") (the "Firm Shares"). The respective amounts of the Firm Shares
to be purchased by the Underwriters, acting severally and not jointly, are set
forth opposite their names in Schedule I hereto. The Representative may by
notice to the Company amend Schedule I to add, eliminate or substitute names set
forth therein (other than to eliminate the name of the Representative) and to
amend the number of Firm Shares to be purchased by any firm or corporation
listed thereon, provided that the total number of Firm Shares listed on Schedule
I shall equal _________. The Company also proposes to sell at the Underwriters'
option an aggregate of up to _________ additional shares of the Company's Series
B Preferred Stock (the "Option Shares") as set forth below. The Firm Shares and
the Option Shares (to the extent the aforementioned option is exercised) are
herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
--------
1 Plus an option to purchase up to _____ additional shares to cover
over-allotments.
1. Representations and Warranties of the Company.
The Company represents and warrants to each of the Underwriters as
follows:
(a) A registration statement on Form S-2 (File No. 333-_______) with
respect to the Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Act and
the Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore been
delivered by the Company to the Representative. Such registration statement,
together with any registration statement filed by the Company pursuant to Rule
462(b) of the Act, herein referred to as the "Registration Statement," which
shall be deemed to include all information omitted therefrom in reliance upon
Rule 430A and contained in the Prospectus referred to below, has become
effective under the Act and no post-effective amendment to the Registration
Statement has been filed as of the date of this Agreement. The date on which the
Registration Statement becomes effective is hereafter referred to as the
"Effective Date." "Prospectus" means the form of prospectus first filed with the
Commission pursuant to Rule 424(b). Each preliminary prospectus included in the
Registration Statement prior to the time it becomes effective is herein referred
to as a "Preliminary Prospectus." As filed, the Prospectus shall contain all
Rule 430A information, together with all other such required information, and,
except to the extent the Representative shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to the
Representative prior to the date hereof or, to the extent not completed at the
date hereof, shall contain only such specific additional information and other
changes as the Company has advised the Representative, prior to the date hereof,
shall be included or made therein.
(b) No order preventing or suspending the use of the Prospectus (or,
if the Prospectus is not in existence, any Preliminary Prospectus) has been
issued by the Commission, nor has the Commission, to the knowledge of the
Company, threatened to issue such an order or instituted proceedings for that
purpose. Each Preliminary Prospectus, at the time of filing thereof, (A)
complied in all material respects with the requirements of the Act and the Rules
and Regulations and (B) did not contain an untrue statement of a material fact
or omit to state any 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
does not apply to statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of any of the Underwriters expressly for inclusion in the Prospectus beneath the
heading "Underwriting" as set forth in Section 14 (such information referred to
herein as the "Underwriters' Information"). As of the date that each Preliminary
Prospectus was filed with the Commission or as of the date that the Prospectus
and any amendment or supplement thereto was filed with the Commission (or, if
not filed, on the date provided by the Company to the Underwriters in connection
with the offering and sale of the Shares), as the case may be, no event has or
will have occurred which
2
should have been set forth in an amendment or supplement to any Preliminary
Prospectus or the Prospectus which has not been set forth in any Preliminary
Prospectus, the Prospectus or such an amendment or supplement. Each Preliminary
Prospectus and the Prospectus will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to its XXXXX
system, except to the extent permitted by Regulation S-T.
(c) The Registration Statement has been declared effective under the
Act, and no post-effective amendment to the Registration Statement has been
filed with the Commission as of the date of this Agreement. No stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or, to the Company's
knowledge, threatened by the Commission. At the Effective Date and at all times
subsequent thereto, up to and including the Closing Date (as defined herein)
and, if applicable, the Option Closing Date (as defined herein), the
Registration Statement and any post-effective amendment thereto (A) complied and
will comply in all material respects with the requirements of the Act and the
Rules and Regulations and (B) did not and will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that this representation and warranty does not apply to the
Underwriters' Information. At the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), will not, and at the date of any filing pursuant to
Rule 424(b) and at all times when the Prospectus is required to be delivered in
connection with offers and sales of the Shares, including, without limitation,
the Closing Date and, if applicable, the Option Closing Date, the Prospectus, as
amended or supplemented, (A) complied and will comply in all material respects
with the requirements of the Act and the Rules and Regulations and (B) did not
contain and will not contain an untrue statement of a material fact or omit to
state any 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 does
not apply to the Underwriters' Information. Since the date that the Registration
Statement was filed with the Commission, no event has or will have occurred
which should have been set forth in an amendment or supplement to the
Registration Statement which has not then been set forth in such an amendment or
supplement. The Registration Statement will be identical to the electronically
transmitted copy thereof filed with the Commission pursuant to its XXXXX system,
except to the extent permitted by Regulation S-T.
(d) There are no contracts or documents that are required to be
filed as exhibits to the Registration Statement which are not so filed, and such
contracts and documents as are summarized in the Registration Statement or the
Prospectus (or if the Prospectus is not in existence, in each Preliminary
Prospectus) are fairly summarized in all material respects.
(e) This Agreement has been duly authorized, executed and delivered
by the Company, and constitutes a valid, legal, and binding obligation of the
Company, enforceable in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally, and subject to general
principles of equity. The Company has all such power, authority, authorization,
approvals and orders as may be required to enter into this Agreement, to carry
out the provisions and conditions
3
hereof and to issue and sell the Shares to be sold by it hereunder. All
corporate action required to be taken by the Company for the authorization,
issuance, sale and delivery of the Shares by the Company in accordance with such
provisions and conditions have been validly and duly taken.
(f) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of California, with
full corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement and the
Prospectus (or if the Prospectus is not in existence, in each Preliminary
Prospectus) and as currently being conducted. Vineyard Bank (the "Bank") is a
California-chartered commercial bank. Each of the subsidiaries of the Company
(collectively, the "Subsidiaries") has been duly organized and is validly
existing as a corporation or Trust in good standing under the laws of the
jurisdiction of its formation, with corporate power and authority to own, lease
and operate its properties and conduct its business as described in the
Registration Statement and the Prospectus (if the Prospectus is not in
existence, in each Preliminary Prospectus) and as currently being conducted. The
Subsidiaries are the only subsidiaries, direct or indirect, of the Company. The
Company and each of the Subsidiaries is duly qualified to transact business and
is in good standing in all jurisdictions in which the conduct of its business
requires such qualification; except where the failure to be so qualified or to
be in good standing would not have a material adverse effect on the condition
(financial or otherwise), business, prospects or results of operations of the
Company and its Subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business (a "Material Adverse Effect").
The Company does not own or control, directly or indirectly, more than 5% of any
class of equity security of any corporation, partnership, association, trust,
limited liability company, joint venture or other entity other than the
Subsidiaries. The outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid and
non-assessable and are wholly owned by the Company free and clear of any
security interest, lien, mortgage, pledge, encumbrance, restriction upon voting
or transfer, preemptive rights, claim, equity or other defect, other than those
described in the Registration Statement and the Prospectus (or if the Prospectus
is not in existence, in each Preliminary Prospectus); and no options, warrants
or other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into shares of capital stock or ownership
interests in the Subsidiaries are outstanding other than those described in the
Registration Statement (including the exhibits thereto) and the Prospectus (or
if the Prospectus is not in existence, in each Preliminary Prospectus).
(g) The Company is duly registered as a bank holding company under
the Bank Holding Company Act of 1956, as amended ("BHCA"), with the Board of
Governors of the Federal Reserve System ("FRB"); each subsidiary of the Company
that conducts business as a bank or trust company is duly authorized to conduct
such business in each jurisdiction in which such business is currently
conducted, except to the extent that the failure to be so authorized would not
have a Material Adverse Effect and the deposit accounts of the Bank are insured
by the Bank Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC")
up to the maximum allowable limits thereof. No proceeding for the termination of
such insurance is pending or, to the Company's knowledge, is threatened. The
activities of the Company and the Bank are permitted under
4
applicable federal and state banking laws and regulations. The Company has all
necessary approvals, including the approval of the FDIC, the California
Department of Financial Institutions (the "DFI"), as applicable, to own the
capital stock of the Bank. Except as disclosed in the Prospectus (or if the
Prospectus is not in existence, in each Preliminary Prospectus), neither the
Company nor any Subsidiary is subject to any cease and desist order, written
agreement or memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or it subject to any order or directive (other
than orders or directives applicable to the banking or trust industry as a
whole) by, or is a recipient of any extraordinary supervisory agreement letter
from, or has adopted any board resolutions (other than board resolutions
required by law or regulation and applicable to the banking or trust industry as
a whole) at the request of, federal or state governmental authorities charged
with the supervision or regulation of national banking associations, saving
banks, banks, saving and loan companies or associations, bank holding companies
or savings and loan holding companies or engaged in the insurance of bank
deposits or other regulatory authority having jurisdiction over it
(collectively, the "Regulators") which imposes any restrictions or requirements
not generally applicable to entities of the same type as the Company and the
Subsidiaries. Neither the Company nor any Subsidiary has been advised by any
Regulator that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, directive or
extraordinary supervisory letter or other directive to make any material change
in the method of conducting the respective business and neither the Company nor
any Subsidiary is contemplating (A) becoming a party to any such written
agreement, memorandum of understanding, commitment letter or similar undertaking
with any Regulator or (B) adopting any such board resolutions at the request of
any Regulator.
(h) The outstanding securities of the Company have been duly
authorized and validly issued and are fully paid and non-assessable. All offers
and sales of the Company's securities by the Company prior to the date hereof
were at all relevant times registered under the Act or exempt from the
registration requirements of the Act and were duly registered with or the
subject of an available exemption from the registration requirements of the
applicable state securities or blue sky laws. The Shares have been duly and
validly authorized for issuance and when executed and issued and delivered in
accordance with this Agreement against payment of the consideration as set
forth in the Prospectus, will be validly issued and fully paid and
nonassessable and the Shares will conform in all material respects to the
descriptions thereof contained in the Prospectus. The common stock, no par
value, of the Company (the "Common Stock") to be issued upon conversion of the
Shares, has been duly authorized and when issued and paid for as contemplated
herein will be validly issued, fully paid and non-assessable; except as
described in the Prospectus (or, if the Prospectus is not in existence, in each
Preliminary Prospectus), there are no options, agreements, contracts,
preemptive or similar rights of stockholders in existence with respect to any
of the securities of the Company or the issue and sale thereof; and none of the
Shares to be sold by the Company hereunder, immediately prior to delivery, will
be subject to any security interest, lien, mortgage, pledge, encumbrance,
restriction upon voting or transfer, preemptive rights, claim, equity or other
defect.
(i) The information set forth in the column entitled "Actual" under
the caption "Capitalization" in the Prospectus (except that the authorized
capital stock of the
5
Company as of the Closing Date shall be as set forth under the heading "As
Adjusted" therein and except for subsequent issuances, if any, described therein
and the issuance of Shares by the Company pursuant to this Agreement) is true
and correct. All of the capital stock of the Company conforms to the description
thereof contained in the Prospectus (or, if the Prospectus is not in existence,
any Preliminary Prospectus). The forms of certificates for the capital stock of
the Company (including the Common Stock and the Series B Preferred Stock)
conform to the corporate law of the jurisdiction of the Company's incorporation.
No holders of capital stock of the Company have rights to the registration of
such securities under the Registration Statement that have not been waived or
satisfied.
(j) The Company has not distributed and will not distribute any
prospectus or other offering material (including, without limitation, content on
the Company's website that may be deemed to be a prospectus or other offering
material) in connection with the offering and sale of the Shares other than any
Preliminary Prospectus or the Prospectus or other materials permitted by the Act
and Rules and Regulations to be distributed by the Company and reviewed by the
Representative.
(k) No person has the right to request or require the Company or the
Subsidiaries to sell or otherwise issue to them, or to permit them to underwrite
the sale of, any of the Shares or register any securities for offering and sale
under the Act by reason of the filing of the Registration Statement with the
Commission or the issuance and sale of the Shares.
(l) A registration statement relating to the Series B Preferred
Stock has been declared effective by the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Series B
Preferred Stock is duly registered thereunder. The Shares have been approved for
listing on the American Stock Exchange.
(m) The consolidated financial statements, including the notes
thereto, included in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, in each Preliminary Prospectus) with respect to
the Company and the Subsidiaries comply with the Act and the Rules and
Regulations and present fairly in all material respects the consolidated
financial position of the Company and the Subsidiaries as of the dates indicated
and the consolidated results of operations, cash flows and stockholders' equity
of the Company and the Subsidiaries for the periods specified and have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis. The selected consolidated financial data concerning the
Company and the Subsidiaries included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, in each Preliminary
Prospectus) comply in all material respects with the Act and the Rules and
Regulations, present fairly the information set forth therein, have been derived
from the financial statements or operating records of the Company and have been
compiled on a basis consistent with that of the consolidated financial
statements of the Company and the Subsidiaries in the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, in each Preliminary
Prospectus). The other financial, statistical and numerical information included
in the Registration Statement and the Prospectus (or such Preliminary
Prospectus) is accurate in all material respects, complies in all material
6
respects with the Act and the Rules and Regulations, has been derived from the
financial statements or operating records of the Company, presents fairly the
information shown therein, and to the extent applicable has been compiled on a
basis consistent with the consolidated financial statements of the Company and
the Subsidiaries included in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, in each Preliminary Prospectus).
(n) The Company and each of the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's general or specific
authorizations, (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles in the United States and to maintain accountability for assets, (C)
access to assets is permitted only in accordance with management's general or
specific authorization, and (D) the recorded accounts for assets is compared
with the existing assets at reasonable intervals and appropriate action is taken
with respect thereto. The books, records and accounts and systems of internal
accounting controls of the Company and its Subsidiaries comply in all material
respects with the requirements of Section 13(b)(2) of the Exchange Act.
(o) Vavrinek, Trine, Day & Company LLP, who have certified certain
of the consolidated financial statements of the Company and the Subsidiaries,
including the notes thereto, included in the Registration Statement and
Prospectus, is an independent public accountant with respect to the Company and
the Subsidiaries, as required by the Act and the Rules and Regulations.
(p) No charge, investigation, action, suit or proceeding is pending
or, to the knowledge of the Company, threatened, against or affecting the
Company or the Subsidiaries or any of their respective properties before or by
any court or any regulatory, administrative or governmental official,
commission, board, agency or other authority or body, or any arbitrator, wherein
an unfavorable decision, ruling or finding would have, individually or in the
aggregate with other unfavorable decisions, rulings or findings, a material
adverse effect on the consummation of this Agreement or the transactions
contemplated herein or would have a Material Adverse Effect or which is required
to be disclosed in the Registration Statement or the Prospectus (or, if the
Prospectus is not in existence, in each Preliminary Prospectus) and is not so
disclosed.
(q) No labor dispute involving the Company or the Subsidiaries
exists or, to the knowledge of the Company, is imminent which would,
individually or in the aggregate with other disputes, have a Material Adverse
Effect or which is required to be disclosed in the Prospectus (or, if the
Prospectus is not in existence, in each Preliminary Prospectus). Neither the
Company nor any of the Subsidiaries has received notice of any existing or
threatened labor dispute by the employees of any of its principal suppliers,
customers or contractors which would have, individually or in the aggregate with
other disputes, a Material Adverse Effect.
(r) The Company and the Subsidiaries have good and marketable title
in fee simple to all real property and good title to all personal property owned
by them and necessary to their business, in each case free and clear of all
security interests, liens, mortgages, pledges,
7
encumbrances, restrictions, claims, equities and other defects except such as
are referred to in the Prospectus (or, if the Prospectus is not in existence, in
each Preliminary Prospectus) or such as do not materially affect the value of
such property in the aggregate and do not materially interfere with the use made
or proposed to be made of such property; and all of the material leases under
which the Company or the Subsidiaries hold real or personal property are valid
and existing leases, enforceable against the parties thereto, and in full force
and effect with such exceptions as are not material and do not materially
interfere with the use made or proposed to be made of such real or personal
property, and neither the Company nor any of the Subsidiaries is in default in
any material respect of any of the terms or provisions of any material leases.
(s) The Company and the Subsidiaries have filed all Federal, state,
local and foreign tax returns which have been required to be filed and have paid
all taxes indicated by said returns and all assessments received by them or any
of them to the extent that such taxes have become due, except such as are being
contested in good faith and for which an adequate reserve for accrual has been
established in accordance with generally accepted accounting principles in the
United States or where the failure to so timely and properly prepare and file
would not have, individually or in the aggregate, a Material Adverse Effect. The
Company has no knowledge of any tax deficiency which has been or might be
assessed against the Company or the Subsidiaries which, if the subject of an
unfavorable decision, ruling or finding, would have, individually or in the
aggregate, a Material Adverse Effect. All tax liabilities have been adequately
provided for in the financial statements of the Company. There are no transfer
taxes or other similar fees or charges under Federal law or the laws of any
state, or any political subdivision thereof, required to be paid in connection
with the execution and delivery of this Agreement by the Company or the issuance
or sale by the Company of the Shares.
(t) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, in each Preliminary Prospectus), except as otherwise stated therein:
(A) neither of the Company nor any of the Subsidiaries has
sustained any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree which, individually or
in the aggregate, has a Material Adverse Effect;
(B) neither of the Company nor any of the Subsidiaries has
incurred any liabilities or obligations, direct or contingent, or entered into
any transactions, other than in the ordinary course of business, which are
material, individually or in the aggregate, to the condition (financial or
otherwise), business, prospects or results of operations of the Company and the
Subsidiaries on a consolidated basis;
(C) the Company has not declared or paid any dividend, and
neither of the Company nor any of the Subsidiaries has become delinquent in the
payment of principal or interest on any outstanding borrowings;
8
(D) there has not been any change in the capital stock, equity
securities, long-term debt, obligations under capital leases or, other than in
the ordinary course of business, short-term borrowings of the Company or the
Subsidiaries; and
(u) Neither of the Company nor any of the Subsidiaries is in breach
or violation of its corporate charter, articles of incorporation, by-laws or
other governing documents in any material respect. Neither of the Company nor
any of the Subsidiaries is, and to the knowledge of the Company no other party
is, in violation, breach or default (with or without notice or lapse of time or
both) in the performance or observance of any term, covenant, agreement,
obligation, representation, warranty or condition contained in (A) any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease,
franchise, license, Permit (as herein defined) or any other agreement or
instrument to which it is a party or by which it or any of its properties may be
bound, which such breach, violation or default would have, individually or in
the aggregate with other breaches, violations or defaults, a Material Adverse
Effect and to the knowledge of the Company, no other party has asserted that the
Company or any of the Subsidiaries is in such violation, breach or default, or
(B) any order, decree, judgment, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality, domestic or foreign,
having jurisdiction over the Company or the Subsidiaries or any of their
respective properties, the breach, violation or default of which would have,
individually or in the aggregate with other breaches, violations or defaults, a
Material Adverse Effect.
(v) The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated by
this Agreement, the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, in each Preliminary Prospectus) (including,
without limitation, the issuance and sale of the Shares by the Company and the
use of proceeds to the Company from the sale of the Shares as described in the
Prospectus under the caption "Use of Proceeds") do not and will not conflict
with, result in the creation or imposition of any material lien, claim, charge,
encumbrance or restriction upon any property or assets of the Company or the
Subsidiaries or the Shares issued and sold by the Company to the Underwriters
pursuant to, constitute a breach or violation of, or constitute a default under,
with or without notice or lapse of time or both, any of the terms, provisions or
conditions of (A) the corporate charter, articles of incorporation, by-laws or
other governing documents of the Company or the Subsidiaries, (B) any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease,
franchise, license, Permit (as herein defined) or any other agreement or
instrument to which the Company or the Subsidiaries is a party or by which any
of them or any of their respective properties may be bound, or (C) any order,
decree, judgment, rule or regulation of any court, arbitrator, government, or
governmental agency or instrumentality, domestic or foreign, having jurisdiction
over the Company or the Subsidiaries or any of their respective properties,
which conflict, creation, imposition, breach, violation or default would have,
either individually or in the aggregate, a Material Adverse Effect.
(w) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection
9
with the execution and delivery by the Company of this Agreement and the
consummation by the Company of the transactions herein contemplated (except such
additional steps as may be required by the Commission, the National Association
of Securities' Dealers, Inc. (the "NASD") or such additional steps as may be
necessary to qualify the Shares for public offering by the Underwriters under
state securities or Blue Sky laws) has been obtained or made and is in full
force and effect.
(x) The Company and the Subsidiaries have all material permits,
easements, consents, licenses, franchises and other governmental and regulatory
authorizations from all appropriate federal, state, local or other public
authorities ("Permits") as are necessary to own and lease their properties and
conduct their businesses in the manner described in and contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, in each Preliminary Prospectus) and as currently being conducted. All
such Permits are in full force and effect and each of the Company and the
Subsidiaries is in all material respects complying therewith, and no event has
occurred that allows, or after notice or lapse of time would allow, revocation
or termination thereof or will result in any other material impairment of the
rights of the holder of any such Permit. Such Permits contain no restrictions
that would materially impair the ability of the Company or the Subsidiaries to
conduct their businesses in the manner consistent with their past practices.
Neither the Company nor any of the Subsidiaries have received notice or
otherwise has knowledge of any proceeding or action relating to the revocation
or modification of any such Permit.
(y) The Company and the Subsidiaries own, or possess adequate rights
to use, all patents, copyrights, trademarks, service marks, trade names and
other rights necessary to conduct the businesses now conducted by them in all
material respects or as described in the Prospectus (or, if the Prospectus is
not in existence, in each Preliminary Prospectus) and neither the Company nor
the Subsidiaries have received any notice of infringement or conflict with
asserted rights of others with respect to any patents, copyrights, trademarks,
service marks, trade names or other rights which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect, and the Company does not know of any basis for
any such infringement or conflict which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect.
(z) To the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers,
directors or 5% or greater security holders, except as set forth in the
Registration Statement.
(aa) The Company has not taken, directly or indirectly, any action
designed to result in, or which has constituted or which might reasonably be
expected to cause or result in, stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Shares in
violation of the Rules and Regulations, including, but not limited to,
Regulation M of the Exchange Act, and the Company is not aware of any such
action taken or to be taken by any affiliate of the Company. The Company
acknowledges that the Underwriters may engage in passive market making
transactions in the Shares on the American Stock Exchange in accordance with
Regulation M under the Exchange Act.
10
(bb) The Company is not and does not intend to conduct business in a
manner in which would cause it to become, an "investment company," an entity
"controlled" by an "investment company" or an "investment adviser" within the
meaning of the Investment Company Act of 1940, as amended or the Investment
Advisers Act of 1940, as amended.
(cc) Neither the Company nor any Subsidiary has any liability under
any "pension plan", as defined in the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). In addition, (A) the employee benefit plans,
including employee welfare benefit plans, of the Company and each of the
Subsidiaries (the "Employee Plans") have been operated in compliance with the
applicable provisions of ERISA, the Internal Revenue Code of 1986, as amended
(the "Code"), all regulations, rulings and announcements promulgated or issued
thereunder and all other applicable governmental laws and regulations, (B) no
reportable event under Section 4043(c) of ERISA has occurred with respect to any
Employee Plan of the Company or any of the Subsidiaries for which the reporting
requirements have not been waived by the Pension Benefit Guaranty Corporation,
(C) no prohibited transaction under Section 406 of ERISA, for which an exemption
does not apply, has occurred with respect to any Employee Plan of the Company or
any of the Subsidiaries and (D) all Employee Plans that are group health plans
have been operated in compliance with the group health plan continuation
coverage requirements of Section 4980B of the Code, except to the extent such
noncompliance, reportable event or prohibited transaction would not have,
individually or in the aggregate, a Material Adverse Effect. There are no
pending or, to the knowledge of the Company, threatened, claims by or on behalf
of any Employee Plan, by any employee or beneficiary covered under any such
Employee Plan or by any governmental authority, or otherwise involving such
Employee Plans or any of their respective fiduciaries (other than for routine
claims for benefits).
(dd) Other than as contemplated by this Agreement, the Company has
not incurred any liability for any finder's or broker's fee, or agent's
commission in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
(ee) Neither the Company nor any of the Subsidiaries has sent or
received any written notice indicating the termination of or intention to
terminate any of the contracts or agreements referred to or described in the
Registration Statement or the Prospectus (or, if the Prospectus is not in
existence, in each Preliminary Prospectus), or filed as an exhibit to the
Registration Statement, and no such termination has been threatened in writing
by the Company, any Subsidiary or any other party to any such contract or
agreement.
(ff) The Company and the Subsidiaries maintain insurance covering
their properties, personnel and business, which insurance insures against such
losses and risks as, in the judgment of the executive officers of the Company,
are adequate to protect in all material respects the Company and the
Subsidiaries and their businesses. Neither the Company nor any of the
Subsidiaries has received notice from any insurer or agent of such insurer that
substantial capital improvements or other expenditures shall have to be made in
order to continue such insurance. All such insurance is outstanding and duly in
force on the date hereof and shall be
11
outstanding and duly in force on the Closing Date and, if applicable, the Option
Closing Date with such exceptions as would not have a Material Adverse Effect.
There are no claims by the Company or any Subsidiary under any such policy or
instrument as to which an insurance company is denying liability or defending
under a reservation of rights clause.
(gg) The Company and the Subsidiaries have complied in all material
respects with all foreign, federal, state and local statutes, regulations,
ordinances and rules as now in effect and applicable to the ownership and
operation of their properties or the conduct of their businesses as described in
and contemplated by the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, in each Preliminary Prospectus) and as currently
being conducted. Neither the Company nor any non-banking Subsidiary engages
directly or indirectly in any activity prohibited by the FRB or the BHCA or the
regulations promulgated thereunder.
(hh) Each of the contracts, agreements and instruments material to
the condition (financial or otherwise), business, prospects or results of
operations of the Company and its Subsidiaries on a consolidated basis, or
listed, described, or attached as an exhibit to the Registration Statement as
filed with the Commission, is in full force and effect and is the legal, valid
and binding agreement of the Company or the Subsidiaries and the other parties
thereto, enforceable in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally and subject to general principles of
equity.
(ii) No relationship, direct or indirect, exists between or among
the Company or the Subsidiaries, on the one hand, and the directors, officers,
trustees, stockholders, customers or suppliers of the Company or the
Subsidiaries, on the other hand, which is required to be described in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, in each Preliminary Prospectus) which is not adequately described
therein.
(jj) Except as described in the Prospectus (or, if the Prospectus is
not in existence, in each Preliminary Prospectus), there are no contractual
encumbrances or restrictions or requirements or material legal restrictions or
requirements required to be described therein, on the ability of the
Subsidiaries, (A) to pay dividends or make any other distributions on its
capital stock or to pay any indebtedness owed to the Company, (B) to make any
loans or advances to, or investments in, the Company or (C) to transfer any of
its property or assets to the Company. Except as described in the Prospectus
(or, if the Prospectus is not in existence, in each Preliminary Prospectus),
there are no restrictions, encumbrances or requirements affecting the payment of
dividends or the making of any other distributions on any of the capital stock
of the Company.
(kk) To the knowledge of the Company, except as described in the
Registration Statement and except as would not have, singly or in the aggregate,
a Material Adverse Effect, (A) neither the Company nor any of its Subsidiaries
is in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of human
health, the environment
12
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its Subsidiaries have all permits, authorizations
and approvals required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company or any of its
Subsidiaries and (D) there are no events or circumstances known to the Company
that could form the basis of an order for clean-up or remediation, or an action,
suit or proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its Subsidiaries relating to Hazardous
Materials or any Environmental Laws. Except as described in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, in each
Preliminary Prospectus) or as would not have, individually or in the aggregate,
a Material Adverse Effect, none of the property owned or leased by the Company
or any of the Subsidiaries or their predecessors is contaminated with any
Hazardous Materials, and neither the Company nor any of the Subsidiaries may be
deemed an "owner or operator" of a "facility" or "vessel" which owns, possesses,
transports, generates or disposes of a "hazardous substance" as those terms are
defined in Section 9601 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.
(ll) The Company and the Subsidiaries have properly administered all
accounts for which they act as a fiduciary, including but not limited to
accounts for which they serve as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents and applicable state and federal law and
regulation and common law, except where the failure to be in compliance would
not have, individually or in the aggregate, a Material Adverse Effect. Neither
the Company nor any Subsidiary nor, to the knowledge of the Company, any of
their directors, officers or employees, has committed any material breach of
trust with respect to any such fiduciary account, and the accountings for each
such fiduciary account are true and correct in all material respects and
accurately reflect the assets of such fiduciary account in all material
respects.
(mm) No report or application filed by the Company or any of its
Subsidiaries with the FRB, DFI or the FDIC, or any other Regulator, as of the
date it was filed or amended, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading when made or failed to comply in
all material respects with the applicable requirements of the FRB, DFI or the
FDIC, or such other Regulator, as the case may be.
(nn) Neither the Company nor any Subsidiary has any agreement or
understanding with any person (A) concerning the future acquisition by the
Company or the Bank of a controlling interest in any entity or (B) concerning
the future acquisition by any person of a controlling interest in the Company or
any Subsidiary, in either case that is required by the Act or
13
the Rules and Regulations to be disclosed by the Company that is not disclosed
in the Prospectus.
(oo) The information contained in the Registration Statement and the
Prospectus regarding the Company's expectations, plans and intentions, and any
other information that constitutes "forward-looking" information within the
meaning of the Act and the Exchange Act, were made by the Company on a
reasonable basis and reflect the Company's good faith belief and/or estimate of
the matters described therein.
(pp) The Company has not offered, or caused any Underwriter or any
of its affiliates to offer, Shares of the Company to any person with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company in order to alter the customer's or supplier's level or type of business
with the Company, or (ii) a trade journalist or publication to write or publish
favorable information about the Company or its products.
(qq) Except as disclosed in the Prospectus (or, if the Prospectus is
not in existence, in each Preliminary Prospectus), neither the Company nor the
Bank has (i) sold any of its respective securities within the last 18 months
(except for notes to evidence other bank loans and reverse repurchase
agreements); (ii) had any material dealings with any member of the NASD or any
person related to or associated with such member, other than discussions and
meetings relating to this proposed offering and routine purchases and sales of
U.S. Government and agency securities and other assets; (iii) entered into a
financial or management consulting agreement except as contemplated hereunder;
or (iv) engaged any intermediary between the Representative and the Company in
connection with this offering, and no person is being compensated in any manner
for such service.
For purposes of this Agreement, references to the knowledge of the Company
mean the actual knowledge of each person who is a director or executive officer
of the Company or either of its Significant Subsidiaries (as defined in Section
6(b)(i) of this Agreement).
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, (i) the
Company agrees to issue and sell to the Underwriters _________ Firm Shares, and
(ii) each Underwriter agrees, severally and not jointly, to purchase in the
amounts set forth their respective names on Schedule I, at a price of $______
per share, the Firm Shares from the Company. Certificates evidencing the Shares
shall be in definitive form and shall be registered in such names and in such
denominations as the Representative shall request at least two (2) business days
prior to the Closing Date or the Option Closing Date, as the case may be, by
written notice to the Company. For the purpose of expediting the checking and
packaging of certificates for the Shares, the Company agrees to make such
certificates available for inspection at least twenty-four (24) hours prior to
the Closing Date or the Option Closing Date, as the case may be, at the office
of DTC or its designated custodian.
14
(b) Payment for the Firm Shares to be sold hereunder is to be made
in Federal (same day) funds to an account designated by the Company for the
shares to be sold by it against delivery of certificates therefor to the
Representative for the several accounts of the Underwriters. Such payment and
delivery are to be made through the facilities of the Depository Trust Company
at 10:00 a.m., New York time, on the third business day after the date of this
Agreement or at such other time and date not later than five business days
thereafter as the Representative and the Company shall agree upon, such time and
date being herein referred to as the "Closing Date." (As used herein, "business
day" means a day on which the New York Stock Exchange is open for trading and on
which banks in New York are open for business and not permitted by law or
executive order to be closed.)
(c) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Underwriters to purchase the Option
Shares at the price per share as set forth in Section 2(a). The option granted
hereby may be exercised in whole or in part by giving written notice (i) at any
time before the Closing Date and (ii) only once thereafter within 30 days after
the date of this Agreement, by you, as the Representative of the several
Underwriters, giving notice to the Company, setting forth the number of Option
Shares as to which the Underwriters are exercising the option, the names and
denominations in which the Option Shares are to be registered and the time and
date at which such certificates are to be delivered. The time and date at which
certificates for Option Shares are to be delivered shall be determined by the
Representative but shall not be earlier than three nor later than 10 full
business days after the exercise of such option, nor in any event prior to the
Closing Date (such time and date being herein referred to as the "Option Closing
Date"). If the date of exercise of the option is three or more days before the
Closing Date, the notice of exercise shall set the Closing Date as the Option
Closing Date. The number of Option Shares to be purchased by each Underwriter
shall be in the same proportion to the total number of Option Shares being
purchased as the number of Firm Shares being purchased by such Underwriter bears
to the total number of Firm Shares, adjusted by the Representative in such
manner as to avoid fractional shares. The option with respect to the Option
Shares granted hereunder may be exercised only to cover over-allotments in the
sale of the Firm Shares by the Underwriters. You, as the Representative of the
several Underwriters, may cancel such option at any time prior to its expiration
by giving written notice of such cancellation to the Company. To the extent, if
any, that the option is exercised, payment for the Option Shares shall be made
on the Option Closing Date in Federal (same day) funds drawn to the order of the
Company against delivery of certificates therefor through the facilities of the
Depository Trust Company, New York, New York.
3. Offering by the Underwriters.
The Company is advised by the Representative that the several
Underwriters will make a public offering of the Firm Shares as soon the
Representative deems it advisable to do so. The Firm Shares are to be initially
offered to the public at the initial public offering price, and on the other
terms and conditions, set forth in the Prospectus. The Representative may from
time to time thereafter change the public offering price and other selling
terms. To the extent, if at all,
15
that any Option Shares are purchased pursuant to Section 3 hereof, the
Underwriters will offer them to the public on the foregoing terms.
It is further understood that you will act as the Representative for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
The Underwriters may reserve and sell such of the Shares purchased
by the Underwriters as the Underwriters may elect to dealers chosen by them (the
"Selected Dealers") at the public offering price set forth in the Prospectus
less the applicable Selected Dealers' concessions set forth therein, for
re-offering by Selected Dealers to the public at the public offering price. The
Underwriters may allow, and Selected Dealers may re-allow, a concession set
forth in the Prospectus to certain other brokers and dealers.
4. Covenants of the Company.
The Company covenants and agrees with each of the Underwriters that:
(a) The Company will (i) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved by the Representative containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Rules and Regulations; (ii) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representative shall not
previously have been advised and furnished with a copy or to which the
Representative shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations; and (iii) file on a timely basis all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission subsequent to the date of the Prospectus and
prior to the termination of the offering of the Shares by the Underwriters.
(b) The Company will not take, 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
securities of the Company in violation of the Rules and Regulations, including,
but not limited to, Regulation M of the Exchange Act, and the Company's not
aware of any such action taken or to be taken by any affiliate of the Company.
(c) The Company will advise the Representative promptly (i) when
the Registration Statement or any post-effective amendment thereto shall have
become effective; (ii) of receipt of any comments from the Commission; (iii) of
any request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information; and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution of any
proceedings for that purpose. The Company will use its best efforts to prevent
the issuance of any
16
such stop order preventing or suspending the use of the Prospectus and to obtain
as soon as possible the lifting thereof, if issued.
(d) The Company will advise the Representative promptly of any
proposal to amend or supplement the Registration Statement or the Prospectus
and, subject to Section 4(g) hereof, will file no such amendment or supplement
to which the Representative has reasonably objected in writing.
(e) The Company will cooperate with the Representative in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representative may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Representative may reasonably request for distribution of the Shares.
(f) The Company will deliver to, or upon the order of, the
Representative, from time to time, as many copies of any Preliminary Prospectus
as the Representative may reasonably request. The Company will deliver to, or
upon the order of, the Representative during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representative may
reasonably request. The Company will deliver to the Representative at or before
the Closing Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Representative such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested) and of all amendments thereto, as the Representative
may reasonably request.
(g) The Company will comply with the Act and the Rules and
Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is necessary
at any time to amend or supplement the Prospectus to comply with any law, the
Company promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the law.
17
(h) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise the Representative in writing when such statement has been so made
available.
(i) Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the Prospectus.
(j) No offering, sale, short sale or other disposition of any shares
of Series B Preferred Stock or Common Stock of the Company or other securities
convertible into or exchangeable or exercisable for shares of Series B Preferred
Stock or Common Stock or derivative of Common Stock (or agreement for such) will
be made for a period of 180 days after the date of this Agreement, directly or
indirectly, by the Company otherwise than hereunder or with the prior written
consent of the Representative; provided, that this provision will not restrict
the Company from awarding options to purchase its Common Stock pursuant to
employee benefit plans as described in the Prospectus.
(k) The Company will use its best efforts to list, subject to notice
of issuance, the Shares on the American Stock Exchange and maintain the Shares
for a period of five years on the American Stock Exchange, or for such shorter
period of time if the Company has called the Shares for redemption pursuant to
the terms of the Certificate of Determination.
(l) The Company has caused each executive officer and director to
furnish to the Representative, on or prior to the date of this agreement a
letter or letters, in form and substance satisfactory to the Underwriters,
pursuant to which each such person shall agree not to offer, sell, sell short or
otherwise dispose of any shares of Series B Preferred Stock or Common Stock of
the Company, or any other securities exchangeable or exercisable for Series B
Preferred Stock or Common Stock of the Company or derivative of Series B
Preferred Stock or Common Stock of the Company owned by such person or request
the registration for the offer or sale of any of the foregoing (or as to which
such person has the right to direct the disposition of) for a period of 180 days
after the effective date of the Registration Statement, directly or indirectly,
except with the prior written consent of the Representative ("Hold-Back
Agreements").
(m) The Company shall apply the net proceeds of its sale of the
Shares as described under the heading "Use of Proceeds" in the Prospectus and
shall report with the Commission with respect to the sale of the Shares and the
application of the proceeds therefrom as may be required in accordance with Rule
463 under the Act.
18
(n) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would
require the Company or any of the Subsidiaries to register as an investment
company under the 0000 Xxx.
(o) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Series B Preferred Stock and the Common Stock.
(p) The Company will furnish to the Underwriters for a period of
five years from the date of this Agreement (i) as soon as available, copies of
all annual, quarterly and current reports or other communications (financial or
otherwise) supplied to holders of shares of Common Stock, (ii) as soon as
practicable after the filing thereof, copies of all reports filed by the Company
with the Commission, the NASD or any securities exchange and (iii) such other
public information as the Underwriters may reasonably request regarding the
Company and its Subsidiaries, in each case, to the extent not available to the
Underwriters electronically and at no cost from the Commission, NASD or other
securities exchange.
(q) Prior to the Closing Date, the Company will not issue any press
releases or other communications directly or indirectly and will hold no press
conferences with respect to the Company or its Subsidiaries, on the financial
condition, results of operations, business, properties, assets or liabilities of
the Company or its Subsidiaries, or the offering of the Shares, without the
prior written consent of the Representative.
(r) The Company will advise the Representative promptly of any
notice indicating the termination of or intention to terminate any of the
contracts or agreements referred to or described in the Registration Statement
or the Prospectus (or, if the Prospectus is not in existence, in each
Preliminary Prospectus), or filed as an exhibit to the Registration Statement,
or of any threatened termination (written or oral) by the Company, any
Subsidiary or any other party to any such contract or agreement.
(s) To the extent required by law, or applicable rules and
regulations, the Company will promptly take all steps necessary to register the
Series B Preferred Stock under Section 12 of the Exchange Act.
5. Costs and Expenses.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting fees
of the Company; the fees and disbursements of counsel for the Company; the cost
of printing and delivering to, or as requested by, the Underwriters copies of
the Registration Statement, Preliminary Prospectuses, the Prospectus, the
Underwriters' Selling Memorandum and the Underwriters' Invitation Letters, if
any, the Listing Application, the Blue Sky Survey and any supplements or
amendments thereto; the filing fees of the Commission; the filing fees and
expenses (including legal fees and disbursements other than those
19
of Underwriters' counsel except as set forth below) incident to securing any
required review by the NASD of the terms of the sale of the Shares; the listing
fee of the American Stock Exchange; and the expenses, including the fees and
disbursements of counsel for the Underwriters, not to exceed $5,000 (assuming
the Shares are listed on the American Stock Exchange), incurred in connection
with (i) the qualification of the Shares under state securities or Blue Sky laws
or (ii) the Blue Sky Survey and any supplements or amendments thereto. Any
transfer taxes imposed on the sale of the Shares to the several Underwriters
will be paid by the Company.
The Company shall not, however, be required to pay for any of the
Underwriters expenses (other than those related to state securities or Blue Sky
laws) except that, if this Agreement shall not be consummated because the
conditions in Section 6 hereof are not satisfied, or because this Agreement is
terminated by the Representative pursuant to Section 11 hereof, or by reason of
any failure, refusal or inability on the part of the Company to perform any
undertaking or satisfy any condition of this Agreement or to comply with any of
the terms hereof on its part to be performed, unless such failure to satisfy
said condition or to comply with said terms be due to the default or omission of
any Underwriter, then the Company shall reimburse the several Underwriters for
reasonable out-of-pocket expenses, including all fees and disbursements of
counsel, reasonably incurred in connection with investigating, marketing and
proposing to market the Shares or in contemplation of performing their
obligations hereunder in an amount not to exceed $100,000, in each case
following reasonably detailed invoices therefor; but the Company shall not in
any event be liable to any of the several Underwriters for damages on account of
loss of anticipated profits from the sale by them of the Shares.
6. Conditions of Obligations of the Underwriters.
The obligations of the Underwriters to purchase the Firm Shares on
the Closing Date and the Option Shares, if any, on the Option Closing Date are
subject to the accuracy, as of the Closing Date and the Option Closing Date, if
any, of the representations and warranties of the Company contained herein, and
to the performance by the Company of its covenants and obligations hereunder and
to the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representative and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company, shall be contemplated by the Commission and no
injunction, restraining order, or order of any nature by a Federal or state
court of competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance of the Shares.
(b) The Representative shall have received on the Closing Date and
the Option Closing Date, if any, the opinions of Xxxxxx Xxxxx LLP, special
counsel for the Company, dated
20
the Closing Date or the Option Closing Date, if any, addressed to the
Underwriters (and stating that it may be relied upon by Silver, Xxxxxxxx & Taff,
LLP, as special counsel for the Underwriters) to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
California and is duly registered with the FRB as a bank holding company under
BHCA. The Bank is a California-chartered bank subject to regulation by the DFI
and the FDIC. The deposit accounts at the Bank are insured by the FDIC up to the
maximum amount provided by law, and no proceedings for the termination or
revocation of such insurance are pending or, to the knowledge of such counsel,
threatened. The Company has full corporate power and authority to own or lease
its properties and conduct its business as described in the Prospectus; the Bank
(the "Significant Subsidiary") is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with full
corporate power and authority to own or lease its properties and conduct its
business as disclosed in the Prospectus; the Company and the Significant
Subsidiary is duly qualified to transact business in each jurisdiction where it
owns or leases any material properties or conducts any material business; and
all of the outstanding shares of capital stock of the Significant Subsidiary
have been duly authorized and validly issued and are fully paid and
non-assessable and are owned by the Company; and, to such counsel's knowledge,
except as described in the Prospectus, the outstanding shares of capital stock
of the Significant Subsidiary are owned free and clear by the Company of any
security interest, mortgage, pledge, lien, encumbrance, equity and claim; none
of the outstanding shares of capital stock of the Significant Subsidiary was
issued in violation of the preemptive or similar rights pursuant to the laws of
its jurisdiction of incorporation or its chartering documents of any security
holder of such Subsidiary.
(ii) The Company has all requisite corporate power and
authority to issue, sell and deliver the Shares to be issued, sold and delivered
by it in accordance with and upon the terms and conditions set forth in this
Agreement. All corporate action required to be taken by the Company for the
authorization, issuance, sale and delivery of the Shares has been validly taken.
The Company has authorized and outstanding capital stock as set forth in the
column "Actual" under the caption "Capitalization" in the Prospectus. The Common
Stock and Shares conform in all material respects to the descriptions thereof
contained in the Prospectus. All of the issued and outstanding shares of Common
Stock of the Company will have been duly authorized, validly issued and fully
paid and non-assessable and, except as described in the Prospectus, to such
counsel's knowledge, there are no options, agreements, contracts or other rights
in existence to acquire from the Company any Common Stock. Sufficient Common
Stock has been duly authorized for issuance upon conversion of the Shares, and
when issued upon such conversion in accordance with the Certificate of
Determination, will be validly issued, fully paid and non-assessable. Except as
disclosed in the Prospectus, to such counsel's knowledge, there are no options,
agreements, contracts or other rights in existence to acquire from the Company
any Series B Preferred Stock. The Shares to be issued in the offering have been
duly and validly authorized for issuance and when issued and delivered against
payment of the consideration therefore, will be duly and validly issued and
fully paid and non-assessable. The certificates used to evidence shares of
Common Stock and Series B Preferred Stock are in due and proper form under
applicable
21
California law. The outstanding shares of common stock of the Bank have been
duly and validly authorized and issued and are fully paid and non-assessable.
The Company owns of record and beneficially, to such counsel's knowledge, all of
the issued and outstanding shares of capital stock of the Bank and, to such
counsel's knowledge, except as disclosed in the Prospectus, there are no
options, agreements, contracts or other rights in existence to purchase or
acquire any shares of capital stock of the Bank. Neither the issuance of the
Shares nor the issuance upon conversion of Common Stock is subject to preemptive
rights.
(iii) The Shares have such designations, preferences,
limitations and relative rights as set forth in the Company's Articles of
Incorporation and Certificate of Determination and such preferences, limitations
and relative rights do not conflict with (A) any provision of the charter or
bylaws of the Company; or (B) any existing applicable law, rule, regulation,
judgment and/or decree of any government or governmental instrumentality or
court having jurisdiction over the Company, except to the extent such
designations, preferences, limitations and relative rights may conflict with or
be excluded, in whole or in part, by the provisions of the sections of the
California General Corporation Law specified in Section 2115(b) of the
California General Corporation Law; and the statements made in the Prospectus
under "Description of Capital Stock," to the extent that they constitute matters
of law or legal conclusions, have been reviewed by such counsel and fairly
present the information disclosed therein.
(iv) Except as described in or contemplated by the Prospectus,
to the knowledge of such counsel, there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to have any Common Stock or other
securities of the Company included in the Registration Statement or the right,
as a result of the filing of the Registration Statement, to require registration
under the Act of any shares of Common Stock or other securities of the Company.
(v) The Registration Statement has become effective under the
Act; any required filing of the Prospectus pursuant to Rule 424(b) has been made
within the time period required by Rule 424(b) and, to the best of the knowledge
of such counsel, no stop order proceedings with respect thereto have been
instituted or are pending or threatened under the Act.
(vi) The Company has all requisite corporate power to enter
into and perform its obligations under this Agreement, and this Agreement has
been duly and validly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company enforceable in
accordance with its terms, except as the enforcement hereof may be limited by
(i) bankruptcy, insolvency, moratorium, reorganization, receivership,
conservatorship or other similar laws relating to or affecting the enforcement
of creditors' rights
22
generally or the rights of creditors of depository institution holding companies
the accounts of whose subsidiaries are insured by the FDIC, or (ii) general
equity principles, regardless of whether such enforceability is considered in a
proceeding in equity or at law, and except to the extent that rights to
indemnification and contribution under Section 10 hereof may be limited by state
or federal securities laws or the policies underlying such laws.
(vii) To such counsel's knowledge, neither the
Company nor any Subsidiary is in violation of, with or without notice or lapse
of time or both, its corporate charter or by-laws. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein (A) to such counsel's knowledge, do not result in the
creation or imposition of any lien, claim, charge, encumbrance or restriction
upon any property or assets of the Company or the Significant Subsidiary, (B) do
not and will not conflict with, or constitute a breach or violation of, or
constitute a default under, with or without notice or lapse of time or both, any
of the terms, provisions or conditions of the charter or by-laws of the Company
or the Significant Subsidiary or, to such counsel's knowledge, with any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease, franchise, license or any other agreement or instrument to which the
Company or the Significant Subsidiary is a party or by which either of them or
any of their respective properties may be bound, or (C) to such counsel's
knowledge, do not and will not conflict with any order, decree, judgment,
franchise, license, Permit, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality, domestic or foreign,
having jurisdiction over the Company or the Significant Subsidiary or any of
their respective properties which, in each case, would have a material adverse
effect on the financial condition, business or results of operations of the
Company and the Subsidiaries on a consolidated basis (other than state
securities or Blue Sky laws, as to which such counsel need not express any
opinion).
(viii) To such counsel's knowledge, no action,
suit or proceeding at law or in equity is pending or threatened in writing
against or affecting the Company or the Significant Subsidiary or any of their
properties before or by any court or governmental official, commission, board or
other administrative agency, authority or body, or any arbitrator, wherein an
unfavorable decision, ruling or finding would have a material adverse effect on
the consummation of this Agreement or which is required to be disclosed in the
Registration Statement or the Prospectus and is not so disclosed.
(ix) The Registration Statement and the Prospectus
and any amendments or supplements thereto (other than the financial statements,
notes to financial statements, financial tables and other tabular, financial and
statistical data included therein or omitted therefrom and the Underwriters'
Information, as to which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the Act and Rules and
Regulations as of their respective dates of effectiveness.
(x) The statements in the Registration Statement
and the Prospectus summarizing the documents referred to therein (including, but
not limited to, the exhibits filed in the Registration Statement), laws,
statutes, rules and regulations fairly and correctly present in all material
respects the information required to be presented by the Act or Rule and
Regulations.
23
(xi) There are no material legal restrictions or,
to such counsel's knowledge, no contractual encumbrances or restrictions on the
ability of the Company or any Subsidiary (A) to pay dividends or make any other
distributions on its capital stock or to pay indebtedness owed to the Company,
(B) to make any loans or advances to, or investments in, the Company or (C) to
transfer any of its property or assets to the Company, in each case, which are
required to be described in the Prospectus but are not so described.
(xii) To such counsel's knowledge, the Company and each
Subsidiary possesses all permits, consents, licenses, franchises and
governmental and regulatory authorizations ("Permits") required to conduct
their businesses as described in the Prospectus and which are material to the
Company and the Subsidiaries on a consolidated basis, except in those instances
where the loss thereof or non-compliance therewith would not have a material
adverse effect on the financial condition, business, or results of operations
of the Company and the Subsidiaries on a consolidated basis.
(xiii) To such counsel's knowledge, all offers and sales by
the Company of its capital stock since ____________, 2000 (three years prior to
execution of this Agreement) were at all relevant times exempt from or complied
with the registration requirements of the Act.
(xiv) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by State securities
and Blue Sky laws as to which such counsel need express no opinion) except such
as have been obtained or made, specifying the same.
(xv) The Company is not, and will not become, as a result of
the consummation of the transactions contemplated by this Agreement, and
application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the Investment Company Act
of 1940.
In rendering such opinion, Xxxxxx Xxxxx LLP may rely (A) as to
matters involving the application of any laws other than the laws of the United
States, California corporate law or New York law, to the extent such counsel
deems proper and specified in such opinion, upon the opinion of counsel licensed
to practice in such jurisdiction and (B) as to matters of fact, on certificates
of responsible officers of the Company and the Bank and public officials.
Whenever any opinion expressed herein with respect to any matter is qualified by
the phrase "to such counsel's knowledge," "to the knowledge of such counsel" or
"known to such counsel" such language indicates that (i) the relevant knowledge
or awareness is limited to the actual knowledge or awareness of the individual
lawyers in the firm who have participated directly in the specific transactions
to which this opinion relates; (ii) such counsel has not undertaken any
independent investigation with respect to such matter except as may be
specifically set forth in such counsel's opinion; and (iii) no inference that
such counsel has actual knowledge concerning
24
such matter should be drawn from the fact of such counsel's representation of
the Company and the Bank as special counsel or such counsel's expression of such
opinion. For purposes of such opinion, no proceedings shall be deemed to be
pending and no action shall be deemed to be instituted unless, in each case, a
director or executive officer of the Company or the Bank shall have received a
copy of such proceedings, order or action. For purposes of such opinion, no
proceeding shall be deemed threatened unless the potential litigant or
government authority has manifested to the directors or management of the
Company or the Bank a present intention to initiate such litigation or
proceedings. In addition, such opinion may be limited to present statutes,
regulations and judicial interpretations and to facts as they presently exist;
in rendering such opinion, such counsel need assume no obligation to revise or
supplement it should the present laws be changed by legislative or regulatory
action, judicial decision or otherwise. Such counsel may assume that any
agreement is a valid and binding obligation of any parties to such agreement
other than the Company or the Bank.
Such counsel shall also confirm that, in connection with the
preparation of the Registration Statement and Prospectus, such counsel has
participated in conferences with officers and representatives of the Company,
the Company's independent public accountants and the Representative and its
counsel, at which conferences such counsel made inquiries of the Company's
officers, representatives and accountants and discussed in detail the contents
of the Registration Statement and Prospectus. While such counsel has not
confirmed the accuracy or completeness or otherwise verified the information
contained in the Registration Statement or the Prospectus or any amendment or
supplement thereto, and does not assume any responsibility for such information,
except as set forth in such counsel's opinion, based upon such conferences and a
review of corporate records of the Company as such counsel conducted in
connection with preparation of the Registration Statement and Prospectus
(relying as to materiality of factual matters on certificates of officers and
other factual representations by the Company), nothing has come to their
attention that would lead them to believe (A) that the Registration Statement or
any amendment thereto (except for the financial statements, notes to financial
statements, financial tables and other tabular, financial and statistical data
included therein or omitted therefrom and the Underwriters' Information as to
which such counsel need express no view), at the time the Registration Statement
or any such amendment became effective, contained 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 or (B) that
the Prospectus or any amendment or supplement thereto (except for the financial
statements, notes to financial statements, financial tables and other tabular,
financial and statistical data included therein or omitted therefrom and the
Underwriters' Information, as to which such counsel need express no view), at
the time the Registration Statement became effective (or, if the term
"Prospectus" refers to the prospectus first filed pursuant to Rule 424(b) of the
Act, at the time the Prospectus was issued), at the time any such amended or
supplemented Prospectus was issued, at the Closing Date, and if applicable, the
Option Closing Date, contained or contains any untrue statement of a material
fact or omitted or omits to state any 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 or (C) that there is
any amendment to the Registration Statement required to be filed.
25
(c) The Representative shall have received from Silver, Xxxxxxxx &
Taff, LLP, counsel for the Underwriters, an opinion dated the Closing Date and
the Option Closing Date, if any, with respect to the formation of the Company,
the validity of the Shares and other related matters as the Representative
reasonably may request, and such counsel shall have received such papers and
information as they request to enable them to pass upon such matters.
(d) The Representative shall have received at or prior to the
Closing Date from Silver, Xxxxxxxx & Xxxx, L.L.P. a memorandum or summary, in
form and substance satisfactory to the Representative, with respect to the
qualification for offering and sale by the Underwriters of the Shares under the
state securities or Blue Sky laws of such jurisdictions as the Representative
may reasonably have designated to the Company.
(e) The Representative shall have received, on each of the dates
hereof, the Closing Date and the Option Closing Date, if any, a letter dated the
date hereof, the Closing Date or the Option Closing Date, if any, in form and
substance satisfactory to you, of Vavrinek, Trine, Day & Company LLP confirming
that they are independent public accountants within the meaning of the Act and
the applicable published Rules and Regulations thereunder and stating that in
their opinion the financial statements and schedules examined by them and
included in the Registration Statement comply in form in all material respects
with the applicable accounting requirements of the Act and the related published
Rules and Regulations; and containing such other statements and information as
is ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and the Prospectus.
(f) The Representative shall have received on the Closing Date and
the Option Closing Date, if any, a certificate or certificates of the Company's
Chief Executive Officer and Chief Financial Officer to the effect that, as of
the Closing Date or the Option Closing Date, if any, each of them severally
represents as follows:
(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the Registrations
Statement has been issued, and no proceedings for such purpose have been taken
or are, to his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, if any;
(iii) All filings required to have been made pursuant to Rules
424 or 430A under the Act have been made;
(iv) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and Prospectus did not
omit to state a material fact required to be stated therein or
26
necessary in order to make the statements therein not misleading, and since the
effective date of the Registration Statement, no event has occurred which should
have been set forth in a supplement to or an amendment of the Prospectus which
has not been so set forth in such supplement or amendment (provided that no
certification will be made with respect to the Underwriters' Information); and
(v) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been any
material adverse change or any development involving a prospective change, which
has had or is reasonably likely to have a Material Adverse Effect, whether or
not arising in the ordinary course of business.
(g) The Company shall have furnished to the Representative such
further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as the
Representative may reasonably have requested.
(h) The Firm Shares and Option Shares, if any, have been approved
for listing upon notice of issuance on the American Stock Exchange.
(i) Each executive officer and director of the Company shall have
furnished to the Representative the Hold-Back Agreement described in Section
4(l), which agreement shall be in full force and effect.
(j) The common stock of the Bank is wholly owned by the Company,
free and clear of any liens, pledges, hypothecations, or other encumbrances
which represent 25.0% or more of the equity of the Bank.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representative and to Silver, Xxxxxxxx &
Taff, LLP, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representative by notifying the Company of such termination in writing on or
prior to the Closing Date or the Option Closing Date, if any.
In such event, the Company and the Underwriters shall not be under
any obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. Conditions of the Obligations of the Company.
The obligations of the Company to sell and deliver the portion of
the Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or, with respect to the
Option Shares, the Option Closing Date, if any, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and in effect
or proceedings therefor initiated or threatened.
27
8. Indemnification.
(a) The Company agrees:
(i) to indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of the Act, against any
losses, claims, damages or liabilities to which such Underwriter or any such
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (1) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, (2) 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 the case of the Prospectus or any Preliminary
Prospectus, in light of the circumstances under which they were made), (3) the
enforcement of this indemnification provision or the contribution provisions of
Section 8(e) or (4) any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Shares or the offering
contemplated hereby and which is included as part of or referred to in any loss,
claim, damage, liability or action arising out of or based upon matters covered
by clause (1) or (2) above (provided, however, that the Company shall not be
liable under this Section (8)(a)(i) to the extent that it is determined in a
final judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct); provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission made in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with the Underwriters' Information; provided,
further, that the indemnification contained in this paragraph with respect to
any Preliminary Prospectus shall not inure to the benefit of an Underwriter (or
of any person controlling such Underwriter) to the extent any such losses,
claims, damages, liabilities or expenses directly results from the fact that
such Underwriter sold Shares to a person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the Prospectus (as
amended or supplemented if any amendments or supplements thereto shall have been
furnished to such Underwriter in sufficient time to distribute same with or
prior to the written confirmation of the sale involved), if required by law, and
if such loss, claim, damage, liability or expense would not have arisen but for
the failure to give or send such person such document. The foregoing indemnity
agreement is in addition to any liability the Company may otherwise have to any
such indemnified party.
(ii) to reimburse each Underwriter and each such controlling
person upon demand for any legal or other out-of-pocket expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental inquiry related to the
offering of the Shares, whether or not such Underwriter or controlling person is
a party to any action or proceeding. In the event that it is finally judicially
determined that the
28
Underwriters were not entitled to receive payments for legal and other expenses
pursuant to this subparagraph, the Underwriters will promptly return all sums
that had been advanced pursuant hereto.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, officers, employees, agents
and counsel, and each person, if any, who controls the Company within the
meaning of the Act, against any losses, claims, damages or liabilities to which
the Company or any such director, officer, employee, agent, counsel or
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which they
were made; and will reimburse upon demand any legal or other out-of-pocket
expenses reasonably incurred by the Company or any such director, officer,
employee agent, counsel or controlling person in connection with investigating
or defending any such loss, claim, damage, liability, action or proceeding or in
responding to a subpoena or governmental inquiry related to the offering of the
Shares, whether or not the Company or any such director, officer, employee
agent, counsel or controlling person is a party to any action or proceeding;
provided, however, that each Underwriter will be liable in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission has been made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or such amendment or
supplement, in reliance upon and in conformity with the Underwriters'
Information.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section, such person (the "indemnified
party") shall promptly notify the person against whom such indemnity may be
sought (the "indemnifying party") in writing. No indemnification provided for in
Section 8(a) or (b) shall be available to any party who shall fail to give
notice as provided in this Subsection if the party to whom notice was not given
was unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 8(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation) the
fees and expenses of the counsel retained by the indemnified party in the event:
29
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them, or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. Each indemnified party shall use
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim.
It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees and expenses of more than one separate firm
for all such indemnified parties. Such firm shall be designated in writing by
the Representative in the case of parties indemnified pursuant to Section 8(a)
and by the Company in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. In addition, the indemnifying party will not,
without the prior written consent of the indemnified party, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action or proceeding of which indemnification may be sought hereunder (whether
or not any indemnified party is an actual or potential party to such claim,
action or proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action or proceeding.
(d) If the indemnification provided for in this Section is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
several Underwriters from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law then each indemnifying party shall contribute to such amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and the Underwriters in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. In any case when the Company is the contributing party and the
Underwriters are the indemnified party, the relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bears to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue
30
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8(d) 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(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(d), (i) no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter, and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection to contribute are several in proportion to their respective
underwriting obligations and not joint.
For purposes of this Section 8(d), each person who controls an
Underwriter within the meaning of the Act shall have the same rights to
contribution as such Underwriter, and each person who controls the Company
within the meaning of the Act, each officer of the Company who shall have signed
the Registration Statement and each director of the Company shall have the same
rights to contribution as the Company subject in each case to the preceding
sentence. The obligations of the Company under this Section 8(d) shall be in
addition to any liability which the Company may otherwise have and the
obligations of the Underwriters under this Section 8(d) shall be in addition to
any liability that the Underwriters may otherwise have.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
9. Default by Underwriters.
If on the Closing Date or the Option Closing Date, if any, any
Underwriter shall fail to purchase and pay for the portion of the Shares which
such Underwriter has agreed to purchase and pay for on such date (otherwise than
by reason of any default on the part of the Company), you, as the Representative
of the Underwriters, shall use your reasonable efforts to procure within 36
hours thereafter one or more of the other Underwriters, or any others, to
31
purchase from the Company such amounts as may be agreed upon and upon the terms
set forth herein, the Firm Shares or Option Shares, as the case may be, which
the defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representative, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company or you
as the Representative of the Underwriters will have the right, by written notice
given within the next 36-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-defaulting
Underwriters or of the Company except to the extent provided in Section 8
hereof. In the event of a default by any Underwriter or Underwriters, as set
forth in this Section 9, the Closing Date or Option Closing Date, if any, may be
postponed for such period, not exceeding seven days, as you, as Representative,
may determine in order that the required changes in the Registration Statement
or in the Prospectus or in any other documents or arrangements may be effected.
The term "Underwriter" includes any person substituted for a defaulting
Underwriter. Any action taken under this Section 9 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
10. Notices.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, or faxed and confirmed as
follows:
if to the Underwriters, to RBC Xxxx Xxxxxxxx Inc.
c/o RBC Capital Markets
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxxx
Fixed Income Trading
Fax: (000) 000-0000
if to the Company to Vineyard National Bancorp
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Chief Executive Officer
Fax: (000) 000-0000
32
11. Termination.
(a) This Agreement may be terminated by the Representative by notice
to the Company at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective change, which has had or is reasonably
likely to have a Material Adverse Effect, (ii) any outbreak or escalation of
hostilities or declaration of war or national emergency or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, escalation, declaration, emergency, calamity,
crisis or change on the financial markets of the United States, in the
Representative's reasonable judgment, makes it impracticable or inadvisable to
market the Shares or to enforce contracts for the sale of the Shares, or (iii)
suspension of trading in securities generally on the New York Stock Exchange or
the American Stock Exchange or limitation on prices (other than limitations on
hours or numbers of days of trading) for securities on either such exchange,
(iv) the enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority which in
the Representative's reasonable opinion materially and adversely affects or may
materially and adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by United States or New York State
authorities, (vi) the taking of any action by any governmental body or agency in
respect of its monetary or fiscal affairs which in the Representative's
reasonable opinion has a material adverse effect on the securities markets in
the United States; or (vii) the Company shall have failed, refused, or been
unable to perform any agreement on its part to be performed under this
Agreement, or any of the conditions referred to in Section 6 shall not have been
fulfilled, when and as required by this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement, any termination of this Agreement, and whether or not this Agreement
is otherwise carried out, the provisions of Section 5 and Section 8 shall not in
any way be affected by such termination or failure to carry out the terms of
this Agreement or any part hereof.
12. EFFECTIVE DATE OF AGREEMENT.
If the Registration Statement is not effective at the time of
execution of this Agreement, this Agreement shall become effective on the
Effective Date at the time the Commission declares the Registration Statement
effective. The Company shall immediately notify the Representative when the
Registration Statement becomes effective.
If the Registration Statement is effective at the time of execution
of this Agreement, this Agreement shall become effective at the earlier of 11:00
a.m. Minneapolis time, on the first full business day following the day on which
this Agreement is executed, or at such earlier time as the Underwriters shall
release the Shares for initial public offering. The Representative shall notify
the Company immediately after the Underwriters have taken any action which
causes this Agreement to become effective.
33
Until such time as this Agreement shall have become effective, it
may be terminated by the Company by notifying the Representative, or by the
Representative, on behalf of the several Underwriters, by notifying the Company,
except that the provisions of Sections 5 and 8 shall at all times be effective.
13. Successors.
This Agreement has been and is made solely for the benefit of the
Company and Underwriters and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
14. Information Provided by Underwriters.
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in any Prospectus or the Registration Statement consists of the
information contained under the _____, _____, and ______ paragraphs under the
caption "Underwriting" in the Prospectus.
15. Miscellaneous.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof.
This Agreement may only be amended or modified in writing, signed by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit.
[remainder of page intentionally blank]
34
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
Vineyard National Bancorp
By:
------------------------------
Xxxxxx X. Xxxxxxx
Chief Executive Officer
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
As the Representative of the several
Underwriters listed on Schedule I
RBC XXXX XXXXXXXX INC.
By:
------------------------
Name:
------------------------
Title:
------------------------
35
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be purchased
----------- ---------------
RBC Xxxx Xxxxxxxx Inc.
----------
Total
==========
36
EXHIBIT A
LIST OF SUBSIDIARIES
Vineyard Bank
Vineyard Service Company, Inc.
