1
EXHIBIT 1.1
725,000 SHARES
COASTAL BANKING COMPANY, INC.
COMMON STOCK
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FORM OF
UNDERWRITING AGREEMENT
August ___, 1999
XXXXX X. XXXXXX & CO., INC.
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Post Xxxxxx Xxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Ladies and Gentlemen:
Coastal Banking Company, Inc., a South Carolina corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to Xxxxx X. Xxxxxx & Co., Inc. (the "Underwriter") an aggregate
of 725,000 shares (the "Firm Shares") of Common Stock, par value $.01 per share,
of the Company (the "Common Stock"), and, at the election of the Underwriter, up
to 108,750 additional shares (the "Additional Shares") of Common Stock to cover
over-allotments. The Firm Shares and the Additional Shares which the Underwriter
elects to purchase pursuant to Section 1 hereof collectively are called the
"Shares."
1. Purchase and Sale of the Shares.
(a) Subject to the terms and conditions set forth herein
and on the basis of the representations, warranties, covenants and agreements
herein contained, the Company agrees to sell to the Underwriter, and the
Underwriter agrees to purchase from the Company the Firm Shares at a purchase
price per share of $9.30, which represents a gross underwriting discount of
seven percent (7.0%) of the offering price of the securities (the "Underwriting
Discount").
Subject to the terms and conditions set forth herein, the Company shall
have the right to direct the Underwriter, subject to the Underwriter's receipt
of approval from the National Association of Securities Dealers, Inc. (the
"NASD"), to offer and sell up to 275,000 of the Firm Shares (the "Directed
Shares") to the Directors and officers of the Company and Lowcountry National
Bank, a federally chartered national bank (in organization) and a proposed
wholly-owned subsidiary of the Company (the "Bank"), and to certain other
investors identified by the Directors and officers set forth in Schedule I
hereto (the "Named Investors"). Notwithstanding the first paragraph of this
Section 1(a) and subject to the terms and conditions set forth herein and on the
basis of the representations, warranties, covenants and agreements herein
contained, there shall be
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no Underwriting Discount in connection with the sale of Directed Shares actually
purchased by the Named Investors. As a result, the purchase price per share
payable by the Underwriter to the Company for the Directed Shares actually
purchased by the Named Investors shall be $10.00 per share. The Underwriting
Discount shall apply with respect to any Directed Shares that are not purchased
by a Named Investor such that the purchase price payable by the Underwriter to
the Company for such shares shall be $9.30. The Company shall pay to the
Underwriter a financial advisory fee of $95,000; provided, however, that if the
number of Directed Shares purchased by the Named Investors is less than 275,000
shares, the financial advisory fee will be equal to an amount determined by
multiplying $95,000 by a fraction the numerator of which is the total number of
Directed Shares purchased by Named Investors and the denominator of which is
275,000.
(b) Subject to the terms and conditions set forth herein
and on the basis of the representations, warranties, covenants and agreements
herein contained, the Company hereby grants to the Underwriter the right to
purchase, exercisable in whole or in part from time to time at the Underwriter's
election, up to 108,750 Additional Shares at the purchase price per share set
forth in the first paragraph of Section 1(a) above ($9.30 per share), for the
sole purpose of covering over-allotments in the sale of the Firm Shares. Any
such election to purchase Additional Shares may be exercised in whole or in part
at any time and from time to time by written notice from the Underwriter to the
Company given prior to 9:00 p.m., Greenville, South Carolina time, on the 30th
day after the date of the Prospectus (as defined in Section 4 herein) (or, if
such 30th day shall be a Saturday or Sunday or a holiday, on the next business
day thereafter when the New York Stock Exchange is open for trading) and setting
forth the aggregate number of Additional Shares to be purchased and the date on
which such Additional Shares are to be delivered, as determined by the
Underwriter but in no event earlier than the Closing Date (as hereinafter
defined) or, unless the Underwriter and the Company otherwise agree in writing,
earlier than two or later than five business days after the date of such notice.
The Underwriter shall have no obligation to purchase Additional Shares prior to
the exercise of such option to purchase.
2. Offering by the Underwriter. Upon the authorization by the
Underwriter of the release of the Firm Shares after the Registration Statement
(as hereinafter defined) becomes effective, the Underwriter proposes to offer
the Firm Shares and the Additional Shares, if any, for sale upon the terms and
conditions set forth in the Prospectus (as hereinafter defined).
3. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriter of and payment for the Firm Shares shall be made at the office of
Long Xxxxxxxx & Xxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx,
at 10:00 A.M., Atlanta, Georgia time, on _________ ___, 1999 (the "Closing
Date"). The place of closing for the Firm Shares and the Closing Date may be
varied by agreement between the Underwriter and the Company.
Delivery to the Underwriter of and payment for any Additional Shares to
be purchased by the Underwriter shall be made at the aforementioned office of
Long Xxxxxxxx & Xxxxxx LLP at such time and on such date (the "Option Closing
Date"), which may be the same as the Closing Date but shall in no event be
earlier than the Closing Date nor earlier than two nor later than ten business
days after the giving of the notice hereinafter referred to, as shall be
specified in a written notice from the Underwriter to the Company of the
Underwriter's determination to purchase a number, specified in such notice, of
Additional Shares. The place of closing for any Additional Shares and the Option
Closing Date for such Shares may be varied by agreement between the Underwriter
and the Company.
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Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as the Underwriter shall request prior to 9:30 A.M., Greenville, South Carolina
time, on the second business day preceding the Closing Date or any Option
Closing Date, as the case may be. Such certificates shall be made available to
the Underwriter in Greenville, South Carolina for inspection and packaging not
later than 9:30 A.M., Greenville, South Carolina time, on the business day next
preceding the Closing Date or the Option Closing Date, as the case may be. The
certificates evidencing the Firm Shares and any Additional Shares to be
purchased hereunder shall be delivered to the Underwriter on the Closing Date or
the Option Closing Date, as the case may be, against payment of the purchase
price therefor by certified or official bank check or checks, payable to the
order of the Company in next day available funds or by wire transfer to the
account of the Company.
4. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, the
Underwriter that:
(a)(i) The Company meets the requirements for use of Form
SB-2 under the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
promulgated under the Act (collectively referred to as the "Rules and
Regulations") and has prepared and filed with the Commission a registration
statement relating to the Shares on Form SB-2 (No. 333-[___________]), including
the related preliminary prospectus, and such amendments to the registration
statement as may have been required to the date of this Agreement for the
registration of the Shares under the Act. Such registration statement (including
all financial statements, schedules and exhibits and (A) all information
contained in the form of final Prospectus filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations and deemed by Rule 430A of the Rules
and Regulations to be part of the Registration Statement at the time it was
declared effective and (B) all documents incorporated by reference or deemed
incorporated by reference in the Prospectus contained in the Registration
Statement at the time such Registration Statement became effective), as amended
at the time it becomes effective and as thereafter amended by any post-effective
amendment, is referred to in this Agreement as the "Registration Statement." The
prospectus in the form included in the Registration Statement or, if the
prospectus included in the Registration Statement omits information in reliance
upon Rule 430A of the Rules and Regulations and such information is included in
a prospectus filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or as part of a post-effective amendment to the Registration
Statement, the prospectus, as so filed, is referred to in this Agreement as the
"Prospectus." The term "Preliminary Prospectus" as used herein means a
preliminary prospectus as contemplated by Rule 430 or Rule 430A of the Rules and
Regulations included at any time as part of the Registration Statement.
(ii) If the Registration Statement has not become
effective, a further amendment to such Registration Statement, including a form
of final Prospectus, necessary to permit such Registration Statement to become
effective will be filed promptly by the Company with the Commission. If such
Registration Statement has become effective, a final Prospectus containing
information permitted to be omitted at the time of effectiveness by Rule 430A of
the Rules and Regulations will be filed promptly by the Company with the
Commission in accordance with Rule 424(b) of the Rules and Regulations. Copies
of each document with respect to such Registration Statement filed with the
Commission have been delivered to the Underwriter and no stop order suspending
the effectiveness of such Registration Statement has been issued and no
proceeding for that purpose has been instituted or threatened by the Commission.
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(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission or any other state or
federal governmental agency, and each Preliminary Prospectus, at the time of
filing thereof, conformed in all material respects to the requirements of the
Act and the Rules and Regulations, and did 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, in the light of the circumstances
under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by the Underwriter expressly for use therein. The Company acknowledges
that the statements relating to the Underwriter and the underwriting
arrangements set forth under the heading "Underwriting" in the Prospectus
constitute the only information relating to the Underwriter furnished in writing
to the Company by the Underwriter expressly for inclusion in the Registration
Statement (herein referred to as "Underwriter Information").
(c) On the date when the Registration Statement shall
become or became, as the case may be, effective (the "Effective Date"), when the
Prospectus is first filed pursuant to Rule 424(b) of the Rules and Regulations,
when any amendment to the Registration Statement becomes effective, when any
supplement to the Prospectus is filed with the Commission and at each of the
Closing Date and the Option Closing Date, (A) the Registration Statement, the
Prospectus and any amendments thereof and supplements thereto, including the
financial statements and schedules included or incorporated by reference in the
Prospectus or the Registration Statement, did or will conform in all material
respects to the requirements of the Act and the Rules and Regulations and to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission under the Exchange Act (the "Exchange Act
Rules and Regulations") and (B) neither the Registration Statement nor the
Prospectus or any amendment thereof or supplement thereto, including the
financial statements and schedules included or incorporated by reference in the
Prospectus or the Registration Statement, did or will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with Underwriter Information.
All contracts and other documents required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement have been described in the Registration Statement or the Prospectus or
filed as exhibits to, or incorporated by reference in, the Registration
Statement, as required by the Act or the Rules and Regulations.
(d) Each document incorporated or deemed incorporated by
reference into the Prospectus or the Registration Statement, at the time it or
any amendment thereto was or hereafter is filed with the Commission, complied or
will comply, as the case may be, with the requirements of the Act or the
Exchange Act, as applicable, and the Rules and Regulations and the Exchange Act
Rules and Regulations, and when read together with the other information in the
Prospectus at each time the Registration Statement and each time any
post-effective amendment to the Registration Statement was or hereafter is
declared effective, during the time a Prospectus is required to be delivered by
the Act and at the Closing Date and Option Closing Date, did not or will not, as
the case may be, contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(e) Neither the Company nor the Bank has sustained,
directly or indirectly, since the date of its latest financial statements
included or incorporated by reference in the Registration Statement, any
material loss or interference with its business from fire, explosion, flood,
hurricane, accident or other
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calamity, whether or not covered by insurance, or from any labor dispute or
arbitrators' or court or governmental or regulatory action, order or decree,
otherwise than as set forth or contemplated in the Prospectus. Since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has not been, and prior to the Closing Date and Option
Closing Date there will not be, any change in the capital stock or long-term
debt or short-term debt of the Company or the Bank, or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position, shareholders'
equity, assets or results of operations of the Company or the Bank, otherwise
than as set forth or contemplated in the Prospectus, whether or not arising in
the ordinary course of business. Except as disclosed in or contemplated by the
Prospectus, neither the Company nor the Bank has incurred or undertaken, and
prior to the Closing Date and Option Closing Date will not incur or undertake,
any liability or obligation, direct, indirect or contingent, not disclosed in
the Registration Statement or Prospectus which is material to the business or
condition (financial or other) of the Company or the Bank, except for
liabilities or obligations incurred in the ordinary course of business; and,
except as disclosed in or contemplated by the Registration Statement or the
Prospectus, the Company has not declared or paid, and prior to the Closing Date
and Option Closing Date will not declare or pay, any dividend on its capital
stock.
(f) The audited and unaudited financial statements and
schedules (including the related notes) of the Company and the Bank included or
incorporated by reference in the Registration Statement or the Prospectus
present fairly the consolidated financial condition of the Company and the Bank
as of the dates indicated and the consolidated results of their respective
operations, changes in shareholders' equity and cash flows for the periods
specified. Such financial statements, schedules and related notes have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved. The supporting schedules
included or incorporated by reference in the Registration Statement and the
summary and selected financial data and other financial and statistical
information set forth or incorporated by reference in the Prospectus present
fairly the information shown therein and have been derived from, and are
consistent with, the audited and unaudited consolidated financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus. The financial statements and schedules (including the related notes)
included or incorporated by reference in the Registration Statement or the
Prospectus, conform to the requirements of Regulation S-X of the Commission
applicable thereto and present fairly the information shown therein for the
periods reflected. The statistical information required by Securities Act
Industry Guides, Guide 3 (Statistical Disclosure by Bank Holding Companies) of
the Commission to be included or incorporated by reference in the Registration
Statement and the Prospectus present fairly the information set forth therein,
are in compliance with the Act, the Rules and Regulations and such Industry
Guide 3, and are consistent with the respective financial statements of the
Company and the Bank set forth or incorporated by reference in the Registration
Statement and the Prospectus.
(g) Each of the Company and the Bank has good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by it, in each case free and clear of all
liens, encumbrances, claims, security interests, restrictions and defects except
such as are described in the Prospectus or such as do not materially affect the
operations of the Company or the Bank, as the case may be, or do not materially
affect the value of such property or materially interfere with the use made and
purpose of such property. Any real property and buildings held under lease by
the Company or the Bank are held under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings, and no default has
occurred or is continuing under such leases that might result in any material
adverse change in the condition (financial or otherwise), business, properties,
net worth, results of operations, prospects or management of the Company
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or the Bank. The only subsidiary (as defined in the Rules and Regulations) of
the Company is the Bank. The Company owns directly all of the outstanding
capital stock of the Bank; and except for the capital stock of the Bank and as
disclosed in the financial statements of the Company included in the
Registration Statement, the Company does not own, directly or indirectly, any
shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any firm or other entity.
(h) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of South
Carolina, with full power and authority (corporate and other) to own or lease
its properties and assets, and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing as a foreign corporation under
the laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, except where the
failure to so qualify would not have a material adverse effect on the condition
(financial or otherwise), business, properties, net worth, results of
operations, prospects or management of the Company. The Company is duly
registered as a "bank holding company" under the Bank Holding Company Act of
1956, as amended (the "BHC Act"), and is in good standing and in full compliance
with the BHC Act and the rules and regulations thereunder. The Bank (i) is duly
incorporated, duly organized, validly existing and in good standing as a
national bank under the laws of the United States, (ii) is a member in good
standing of the Federal Reserve System and the Bank Insurance Fund of the
Federal Deposit Insurance Corporation ("FDIC"), (iii) is duly authorized and has
full power and authority to conduct a general banking business in accordance
with its Charter and as described or incorporated by reference in the
Registration Statement, subject to supervision by appropriate federal and state
regulatory agencies, (iv) has full power and authority to own, lease and operate
its properties and assets and conduct its business as described or incorporated
by reference in the Prospectus and (v) is not required to be licensed or
qualified to do business as a foreign corporation in any jurisdiction. Complete
and correct copies of the Articles of Incorporation, Charter and bylaws of the
Company and the Bank, and all amendments thereto have been delivered to the
Underwriter.
(i) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus, and all the issued shares of
capital stock of the Company have been duly authorized and validly issued, are
fully paid and non-assessable, are not subject to any preemptive or similar
rights and conform to the description of the capital stock contained in the
Prospectus. None of the issued shares of the capital stock of the Company has
been issued in violation of any preemptive or similar rights (contractual or
other). All shares of capital stock of the Company that are subject to
outstanding options or warrants, if any, have been duly authorized and, when
issued in accordance with the terms of the applicable option or warrant, will be
validly issued, fully paid and non-assessable and will not be issued in
violation of any preemptive or similar rights (contractual or other). There is
no outstanding option, warrant or other right calling for the issuance of, and
no commitment, plan or arrangement to issue, any shares of capital stock of the
Company or any security convertible into or exchangeable for capital stock of
the Company, except as disclosed in the Registration Statement and the
Prospectus.
(j) The Shares have been duly authorized and, when issued
and delivered against payment therefor as provided herein, will be validly
issued, fully paid and non-assessable and free of preemptive or similar rights
and will conform to the description of the Common Stock contained in the
Prospectus. The Underwriter will receive good and marketable title to the Shares
to be issued and delivered by the Company hereunder, free and clear of all
liens, encumbrances, claims, security interests, restrictions, preemptive
rights, shareholders' agreements and voting trusts other than those that may be
or might have been created by the Underwriter.
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(k) All offers and sales of the Company's capital stock
or other securities prior to the date hereof were at all relevant times duly
registered under the Act and all applicable state securities or "Blue Sky" laws
or were the subject of an available exemption from the registration requirements
of the Act and all applicable state securities or "Blue Sky" laws.
(l) Neither the Company nor the Bank is, nor with the
giving of notice of passage of time or both would be, (i) in violation of any
provision of its respective Articles of Incorporation or Charter, as the case
may be, or its bylaws or any law, administrative rule or regulation or
arbitrators' or administrative or court decree, judgment or order, (ii) in
violation or default (there being no existing state of facts which with notice
or lapse of time or both would constitute a default) in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, deed of trust, mortgage, loan agreement, note, lease,
agreement or other instrument or franchise or permit to which the Company or the
Bank is a party or by which the Company or the Bank or any of their properties
or assets is or may be bound, (iii) in violation of any judgment, ruling,
decree, order, franchise, license or permit or any statute, rule or regulation
of any court or other governmental authority applicable to the business or
properties of the Company or the Bank, including, without limitation, all
statutes, rules and regulations relating to environmental protection, and the
statutes, rules and regulations of any state or other jurisdiction in which the
Company or the Bank does business, in each case together with the rules and
regulations promulgated thereunder and related thereto, other than any
violations or defaults which, in the aggregate, will not have a material adverse
effect upon the condition (financial or otherwise), business, properties, net
worth, results of operations, prospects or management of the Company or the
Bank. The execution and delivery of this Agreement, the issue and sale of the
Shares and the consummation of the transactions contemplated hereby will not
conflict with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or the Bank pursuant to any contract, indenture, mortgage,
deed of trust, loan agreement, note, lease, agreement or other instrument to
which the Company or the Bank is a party or by which the Company or the Bank may
be bound or to which any of the property or assets of the Company or the Bank is
subject, nor will such action result in any violation of the provisions of the
Articles of Incorporation or Charter, as the case may be, or bylaws of the
Company or the Bank or any law, administrative rule or regulation or
arbitrators' or administrative or court decree, judgment or order or franchise
or permit. The Company has full power and authority (corporate and other), and,
except as required by the Act and state securities or "Blue Sky" laws, all
authorizations, approvals, orders, licenses, certificates and permits to enter
into, deliver and perform this Agreement and to consummate the transactions
contemplated hereby, including the issuance, sale and delivery by it of the
Shares to be issued, sold and delivered by it hereunder.
(m) The Company and the Bank are (or upon organization
will be), in the case of the Bank, and after the issuance of the Shares will
continue to be, in compliance with the capital adequacy guidelines adopted by
the Board of Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency (the "OCC") or applicable federal or state
regulatory authorities. The Company and the Bank are in compliance with all
applicable directives of and agreements with the OCC, the Federal Reserve
System, the FDIC and the state banking regulatory authorities of the State of
South Carolina. From and after the date the Bank opens for business, the
depository accounts of the Bank will be insured by the FDIC to the maximum
extent allowed by the Federal Deposit Insurance Act, as amended. The Bank has
received preliminary approval from the OCC and the FDIC to become a national
bank with final approval subject only to customary and reasonable conditions.
The Company has filed all requisite state and federal applications for approval
to become a bank holding company.
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(n) Except as disclosed in the Registration Statement and
the Prospectus, there is no legal or governmental proceeding or other action,
suit, proceeding or investigation, before any court or before or by any public,
regulatory or governmental body or board or arbitrator pending to which the
Company or the Bank or any of their officers or directors is a party, or of
which the properties or business of the Company or the Bank is the subject. To
the knowledge of the Company, its officers and directors, no such proceedings
are threatened or contemplated. No labor dispute by the employees of the Company
or the Bank exists, or is imminent or likely, which could have a material
adverse effect on their respective conditions (financial or otherwise),
business, properties, net worth, results of operations, prospects or management.
(o) The accounting firm of Xxxxxxxxx, Xxxxxxx &
Xxxxxxxxx, L.L.P., which has certified certain financial statements of the
Company, is, and was during the periods covered in its reports included in the
Registration Statement or Prospectus, independent certified public accountants
for the Company and the Bank as required by the Act, the Rules and Regulations,
the Exchange Act Rules and Regulations and Regulation S-X of the Commission.
(p) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; and (iii) assets are properly accounted for
and safeguarded against errors or loss from unauthorized use.
(q) The Company and the Bank operate and have operated
their business in conformity with applicable laws, regulations, ordinances,
rules and regulations except where such nonconformance will not result in a
material adverse affect on the earnings, assets, business, operations,
properties or condition (financial or other) of the Company or the Bank. The
Company and the Bank have such permits, licenses, franchises and authorizations
of governmental or regulatory authorities (collectively, "Permits") as are
necessary to own or lease their properties and conduct their business in the
manner described or incorporated by reference in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus, except where the failure
to have any such Permit would not have a material adverse effect on their
respective conditions (financial or otherwise), business, properties, net worth,
results of operations, prospects or management. The Company and the Bank have
fulfilled and performed all of their obligations with respect to such Permits,
and no event has occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or result in any other material
impairment of the rights of the holder of any such Permit, subject in each case
to such qualifications as may be set forth in the Prospectus. Except as
described in the Prospectus, such Permits contain no restrictions that are
materially burdensome to the Company or the Bank.
(r) The Company and the Bank have filed all federal,
state and local income and franchise tax returns required to be filed through
the date hereof and have paid all taxes of whatever nature due thereon, and no
tax deficiency has been, or is likely to be, asserted against the Company or the
Bank, which if determined adversely could materially and adversely affect their
respective conditions (financial or otherwise), business, properties, net worth,
results of operations, prospects or management. The Company and the Bank have
prepared or filed all tax information reports and currency transaction reports
and secured all IRS W-9 forms or begun backup withholding as required by law,
except where the failure to so file, secure or withhold would not have a
material adverse effect on their respective conditions (financial or otherwise),
business, properties, net worth, results of operations, prospects or management.
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(s) This Agreement has been duly and validly authorized,
executed and delivered by the Company and, upon its due authorization, execution
and delivery by the Underwriter, will be a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights, to general
equity principles.
(t) The Company and the Bank own, or possess adequate
rights to use, all trademarks, service marks, copyrights, patents, software and
design licenses, trade secrets and other rights (collectively, "Intangibles")
necessary for, or currently used in, the conduct of their respective business as
referred to in the Prospectus and, except as may be disclosed in the Prospectus,
neither the Company nor the Bank has received notice of infringement of or
conflict with the asserted intangibles of others (and there is no basis known to
the Company therefor) which, if adversely resolved, could materially and
adversely affect the earnings, assets, business or condition (financial or
other) of the Company or the Bank.
(u) Neither the Company, the Bank nor any of their
respective directors, officers or controlling persons (as defined in Section 15
of the Act) (i) has or will take, directly or indirectly, any action to cause or
result in, or which has constituted, or might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any of the Shares, or (ii) since
the filing of the Registration Statement, except for the marketing of the Shares
and the payment to the Underwriter of the compensation contemplated by Section 1
of this Agreement, (A) sold, bid for, purchased or paid anyone any compensation
for soliciting purchases of the Shares or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any securities of the
Company.
(v) The Company, the Bank and their respective officers,
directors and employees have complied and will comply with Section 5 of the Act
and no person has been authorized to give any information or to make any
representation or warranties other than those contained in the Prospectus.
(w) Neither the Company nor the Bank, nor any director,
officer, agent or employee of the Company nor the Bank nor any other person
associated with or acting on behalf of the Company or the Bank has, directly or
indirectly, (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activities, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds, (iii) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, (iv) made or received any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment, or (v) made any payment
of funds of the Company or the Bank prohibited by law or set aside any such
funds to be used for any payment prohibited by law.
(x) Except as set forth or contemplated in the
Prospectus, no holder of securities of the Company has any right to require the
registration of any securities of the Company, whether or not in connection with
the issuance and sale of the Shares.
(y) The Company is not, and will not be as a result of
the consummation of the transactions contemplated by this Agreement, an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, or a company "controlled" by, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended.
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(z) Except as set forth in the Prospectus, neither the
Company nor anyone acting on behalf of the Company has incurred or caused to be
incurred any liability on the part of the Company for any fee or commission in
the nature of a finder's, originator's or broker's fee in connection with any of
the transactions contemplated by this Agreement.
(aa) The Preliminary Prospectus and the Prospectus contain
or incorporate by reference, if and to the extent required, appropriate
disclosure of the material effects that compliance with federal, state and local
laws and regulations regulating the discharge of materials into the environment
or otherwise relating to the protection of the environment, may have upon
capital expenditures, earnings and competitive position of the Company and the
Bank, consistent with the Rules and Regulations and with all published
interpretations by the Commission of such Rules and Regulations.
(bb) The Company and the Bank carry, or are covered by,
insurance in such amounts and covering such risks as the Company believes are
adequate for the conduct of their respective businesses and the value of their
respective properties.
(cc) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company would have any liability; the Company has not incurred and
does not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified, and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification.
(dd) Any certificate signed by an officer of the Company
and delivered to the Underwriter or to counsel for the Underwriter shall be
deemed a representation and warranty by the Company to the Underwriter as to the
matters covered thereby.
5. Agreements of the Company. The Company covenants and agrees
with the Underwriter:
(a) To use its best efforts to cause the Registration
Statement to become effective if, at the time this Agreement is executed, the
Registration Statement has not yet been declared effective by the Commission; to
file such Prospectus pursuant to Rule 424(b) under the Act not later than the
close of business on the second business day following the execution and
delivery of this Agreement, or if applicable, such earlier times as may be
required by Rule 430A(a)(3) under the Act; to make no further amendment or any
supplement to the Registration Statement or Prospectus prior to the Closing Date
or the Option Closing Date, as the case may be, which shall not previously have
been submitted to the Underwriter a reasonable time prior to the proposed filing
or which shall be disapproved by the Underwriter promptly after reasonable
notice by the Company of its proposed filing or which is not in compliance with
the Act and the Rules and Regulations; to advise the Underwriter, promptly after
it receives notice thereof, of the time when the Registration Statement, or any
amendment thereto, has been filed or becomes effective, or any supplement to the
Prospectus or any amended Prospectus has been filed, and to furnish the
Underwriter copies thereof; to advise the Underwriter, promptly after it
receives notice thereof, of the issuance by the Commission of any stop order or
of any order preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the
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suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or the initiation or threatening of any proceeding for any such
purpose, or any request by the Commission for the amending or supplementing of
the Registration Statement, or Prospectus or for additional information; and, in
the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or suspending any
such qualification, to use promptly its best efforts to obtain the withdrawal of
such order at the earliest possible time;
(b) Promptly from time to time to take such action as the
Underwriter reasonably may request to qualify the Shares for offering and sale
under the state securities or "Blue Sky" laws of such jurisdictions as the
Underwriter may request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution and for a period of not less than
one year after the Effective Date, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction in which it is not
currently so subject;
(c) Promptly to furnish to the Underwriter, without
charge, two signed copies of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and all
exhibits thereto (including any document filed under the Exchange Act and deemed
to be incorporated by reference in the Registration Statement);
(d) To furnish the Underwriter with copies of the
Prospectus or any amendment or supplement thereto in such quantities as the
Underwriter may from time to time request. The Company consents to the use of
the Prospectus or any amendment or supplement thereto by the Underwriter and by
all dealers to whom the Shares may be sold, both in connection with the offering
or sale of the Shares and for any period of time thereafter during which the
Prospectus is required by law to be delivered in connection therewith. If the
delivery of the Prospectus is required at any time prior to the expiration of
nine months after the time of issue of the Prospectus in connection with the
offering or sale of the Shares and if at such time any event shall occur which
in the judgment of the Company or counsel to the Company should be set forth in
the Prospectus in order to make any statement therein, in light of the
circumstances under which it was made, not misleading, or if it is necessary to
supplement or amend the Prospectus to comply with law, the Company shall
immediately prepare and duly file with the Commission an appropriate supplement
or amendment thereto, and will deliver to the Underwriter, without charge, such
number of copies thereof as may be reasonably requested. In case the Underwriter
is required to deliver a prospectus in connection with sales of any of the
Shares at any time nine months or more after the time of issue of the
Prospectus, upon the Underwriter's request but at the expense of the Underwriter
the Company will prepare and deliver to the Underwriter as many copies as the
Underwriter may request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Act;
(e) To make generally available to its security holders a
consolidated earnings statement of the Company covering a 12 month period
commencing after the effective date of the Registration Statement and ending not
later than 15 months thereafter as soon as practicable after the end of such
period, which consolidated earnings statement shall satisfy the provisions of
Section 11(a) of the Act and the Rules and Regulations (including Rule 158 of
the Rules and Regulations);
(f) To furnish to its shareholders as soon as practicable
after the end of each fiscal year an annual report (including balance sheets and
statements of earnings, shareholders' equity and cash flows of the Company and
audited by independent certified public accountants) and, as soon as practicable
after the end of each of the first three quarters of each fiscal year (beginning
with the fiscal quarter ending after the
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Effective Date), summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the Effective
Date, to furnish to the Underwriter copies of all reports or other
communications (financial or other) furnished to shareholders of the Company,
and deliver to the Underwriter (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission, the
NASD or any national securities exchange on which any class of securities of the
Company is listed (such financial statements to be on a consolidated basis to
the extent the accounts of the Company and its subsidiaries are consolidated in
reports furnished to its shareholders generally or to the Commission); and (ii)
such additional information concerning the business and financial condition of
the Company as the Underwriter may from time to time reasonably request;
(h) To apply, and to cause the Bank to apply, the net
proceeds from the Offering in the manner set forth under the caption "Use of
Proceeds" in the Prospectus;
(i) To comply with the provisions of its undertakings
contained in the Registration Statement;
(j) That the Company will not at any time, directly or
indirectly, take any action designed, or which might reasonably be expected, to
cause or result in, or which will constitute, stabilization of the price of the
shares of any of its securities to facilitate the sale or resale of any of the
Shares;
(k) The Company will use its reasonable best efforts to
cause the Shares to be listed for trading on the American Stock Exchange or The
Nasdaq Stock Market as soon as practicable after the Shares are eligible to be
listed thereon. The Company will use its best efforts and take all actions
reasonably necessary to cause the Common Stock to continue to be listed on the
OTC Bulletin Board or, if the Company satisfies the criteria for listing the
Shares thereon, on the American Stock Exchange or The Nasdaq Stock Market for at
least five years after the date hereof.
(l) That the Company will, and will cause each of its
directors and officers to enter into agreements with the Underwriter
substantially in the form attached as Annex I hereto to the effect that they
will not, for a period of 180 days after the commencement of the offering of the
Shares, without the Underwriter's prior written consent, offer for sale, sell,
contract to sell, grant any rights in, or otherwise dispose of, directly or
indirectly, any shares of Common Stock (or any securities convertible into or
exchangeable for any shares of Common Stock), or file a registration statement
under the Act with respect to any such stock or rights to acquire such stock,
except as contemplated in the Prospectus.
(m) That any options or warrants to purchase capital
stock issued by the Company during the first 12 months following the Closing
Date shall be issued with an exercise price no less than the greater of (a) $10
per share and (b) the closing market price per share for the capital stock (as
quoted on the OTC Bulletin Board or other quotation service, medium or exchange,
as applicable) on the date of grant of the option or warrant.
(n) That the aggregate total of warrants to purchase
shares of common stock issued to the Named Investors will not exceed 202,000.
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6. Expenses.
(a) The Company covenants and agrees with the Underwriter
that, whether or not the transactions contemplated herein are consummated or
this Agreement is terminated, the Company will pay or cause to be paid (directly
or by reimbursement) the following: (i) all expenses related to due diligence
and investigation of the business and financial condition of the Company; (ii)
the fees, disbursements and expenses of the Company's and the Bank's counsel and
accountants in connection with the registration of the Shares under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriter and dealers; (iii) the cost of preparing, printing or
producing this Agreement, the Selected Dealer Agreement, the Blue Sky Memoranda
and all other documents in connection with the offering, purchase, sale and
delivery of the Shares; (iv) all fees and expenses in connection with the
qualification of the Shares for offering and sale under state securities laws as
provided in Section 5(b) hereof, including the reasonable fees and disbursements
of counsel for the Underwriter in connection with such qualification and in
connection with the preparation and distribution of Blue Sky Memoranda; (v) the
fees and expenses incident to securing any required review by the NASD of the
terms of the sale of the Shares, including fees and expenses of counsel for the
Underwriter in connection with such review; (vi) all stock transfer taxes, if
any, incident to the sale and delivery of the Shares; (vii) the cost of
preparing stock certificates; (viii) the cost and charges of any transfer agent
or registrar; (ix) all stock taxes, if any, incident to the sale and delivery of
the Shares to the Underwriter; (x) the travel and lodging expenses of employees
of the Company who participate in the advertising and marketing of the Shares;
(xi) all listing fees for listing the Common Stock on an exchange, Nasdaq or the
OTC Bulletin Board; (xii) all miscellaneous expenses referred to in Item 25 of
Part II of the Registration Statement; (xiii) the fees and expenses of
Underwriter's counsel, up to an amount of $40,000 (exclusive of expenses and
fees payable by the Company pursuant to clause (iv) above); (xiv) all
miscellaneous and travel fees and expenses of the Underwriter not to exceed
$5,000, the costs of facilities and telephones within Beaufort County, South
Carolina for marketing purposes, and all expenses of any informational meetings
associated with the sale of the Shares; and (xv) all other costs and expenses
incident to the performance of the Company's obligations hereunder (including
the costs incurred in connection with the closing of the sale of the Additional
Shares, if any) that are not otherwise specifically provided for in this
Section. The Company, upon the Underwriter's request, will provide funds in
advance for filing fees in connection with "Blue Sky" qualifications. It is
understood, however, that except as provided in this Section, Section 8 and
Section 11 hereof, the Underwriter will pay all of its own costs and expenses
and any advertising expenses connected with any offers it may make.
(b) If this Agreement shall be terminated by the Company
pursuant to any of the provisions hereof or if for any reason the Company shall
be unable to perform its obligations hereunder, the Company will reimburse the
Underwriter for all out-of-pocket expenses (including the fees, disbursements
and other charges of the Underwriter's counsel) reasonably incurred in
connection herewith without regard to any limitations imposed by Section 6(a)
hereof.
7. Conditions to the Underwriter's Obligations. The obligations
of the Underwriter hereunder, as to the Shares to be delivered at the Closing
Date and the Option Closing Date, shall be subject, in the discretion of the
Underwriter, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of each of such Closing Date and
Option Closing Date, true and correct, the condition that the Company shall have
performed all of its obligations theretofore to be performed, and the following
additional conditions:
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(a) The Registration Statement shall have been declared
effective, and the Underwriter shall have received notice thereof, not later
than 5:00 p.m., Atlanta time, on the date of this Agreement, or at such other
time and date as the Underwriter may agree; all filings required by Rules 424(b)
and 430A of the Rules and Regulations shall have been timely made; no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened or, to the knowledge of the Company, contemplated by the staff of the
Commission; all requests for additional information on the part of the
Commission shall have been complied with to the reasonable satisfaction of the
Underwriter; and the NASD, upon review of the terms of the public offering of
the Shares, shall not have objected to such offering, such terms or the
Underwriter's participation in the same.
(b) The Underwriter shall not have advised the Company
that the Registration Statement or the Prospectus, or any amendment or any
supplement thereto, contains an untrue statement of fact which, in its judgment,
is material or omits to state a fact which, in its judgment, is material and is
required to be stated therein or necessary to make the statements therein not
misleading.
(c) Prior to the execution and delivery of this
Agreement, on the effective date of any post-effective amendments to the
Registration Statement and also at each of the Closing Date and the Option
Closing Date, the accounting firm of Xxxxxxxxx, Xxxxxxx & Xxxxxxxxx, L.L.P.
shall have furnished to the Underwriter a letter or letters, dated the date of
this Agreement, the effective date of any post-effective amendment to the
Registration Statement and each of the Closing Date and the Option Closing Date,
respectively, in form and substance satisfactory to the Underwriter, to the
effect set forth in Annex II hereto.
(d) The Underwriter shall have received the opinion of
Xxxxxx Xxxxxxx Xxxxx & Scarborough LLP, counsel for the Company, dated each of
the Closing Date and the Option Closing Date, addressed to the Underwriter and
in form and substance satisfactory to the Underwriter's counsel, with reproduced
copies of signed counterparts thereof for the Underwriter, substantially to the
effect set forth at Annex III hereto.
(e) On or prior to the Closing Date, the Underwriter
shall have received an agreement substantially in the form attached as Annex I
hereto executed by each officer and director of the Company pursuant to which
each such person or entity agrees not to offer for sale, sell, distribute or
otherwise dispose of any shares of the Company's Common Stock (or any securities
convertible into or exchangeable for any shares of Common Stock) during the 180
days following the commencement of the offering of the Shares, except with the
Underwriter's prior written consent;
(f) (i) Neither the Company nor the Bank shall have
sustained since the date of the last audited financial statements included in
the Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus, there shall
not have been any change in the capital stock, long-term debt or short-term debt
of the Company or the Bank or any change or any development involving a
prospective change in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company or the
Bank, otherwise than as set forth or contemplated in the Prospectus, the effect
of which, in any such case described in clause (i) or (ii), would in the
Underwriter's judgment materially adversely affect the market for the Shares.
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(g) On or after the date hereof there shall not have
occurred any of the following: (i) a moratorium on banking activities in South
Carolina, or any state in which the Company or the Bank conducts its business
declared by either federal or state authorities, as the case may be; (ii) any
material adverse change in the financial or securities markets in the United
States or in the political, financial or economic conditions in the United
States or the outbreak or escalation of hostilities in which the United States
is involved, or any declaration, on or after the date hereof, of a national
emergency or war or any other substantial national or international calamity or
emergency, if the effect of any such event specified in this clause or (iii) in
the Underwriter's reasonable judgment makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares on the terms and
in manner contemplated in the Prospectus.
(h) The Company shall have furnished or caused to be
furnished to the Underwriter at each of the Closing Date and the Option Closing
Date certificates of officers of the Company satisfactory to the Underwriter as
to the accuracy of the representations and warranties of the Company herein at
and as of each of the Closing Date and the Option Closing Date, as to the
performance by the Company of all of its obligations hereunder to be performed
at or prior to each of the Closing Date and the Option Closing Date, and as to
such other matters as the Underwriter may reasonably request.
(i) The Underwriter shall have received evidence that is
reasonably satisfactory to the Underwriter that, except as disclosed in the
Prospectus, all offers and sales of the Company's capital stock or other
securities prior to the date hereof were at all relevant times duly registered
under, or exempt from the registration requirements of, the Act and were duly
registered or the subject of an available exemption from the registration
requirements of the applicable state securities or Blue Sky laws, or the
relevant statutes of limitation have expired, or civil liability therefor has
been eliminated by an offer to rescind, except for such transactions which are
in the aggregate immaterial to the Company.
(j) At each of the Closing Date and the Option Closing
Date, counsel for the Underwriter shall have been furnished with such documents
and opinions as they may have requested, prior to each of the Closing Date and
the Option Closing Date, in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions
hereof; and, all proceedings taken by the Company in connection with the
issuance and sale of the Shares as herein contemplated shall be satisfactory in
form and substance to the Underwriter and counsel for the Underwriter.
(k) The Common Stock, including the Shares, shall have
been approved for quotation on the OTC Bulletin Board subject only to notice of
issuance of the Shares.
8. Indemnification and Contribution.
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(a) The Company agrees to indemnify and hold harmless the
Underwriter and each person who controls the Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act (i) from and against
any losses, claims, damages, liabilities or expenses (including reasonable costs
of investigation), as incurred and whether joint or several, to which the
Underwriter or controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto (including any information incorporated therein
by reference or deemed to be part of the Registration Statement pursuant to Rule
430A(b), if applicable), or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (ii) against any and
all loss, liability, claim, damage or expense whatsoever, as incurred and
whether joint or several, to the extent of the aggregate amount paid in
settlement of any litigation or claim, or any investigation or proceeding by any
governmental, regulatory or arbitration agency, body or authority, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such settlement
is effected with the written consent of the Company, and (iii) against any and
all reasonable expenses whatsoever, as incurred and whether joint or several
(including the fees and reasonable expenses of counsel chosen by the
Underwriter), reasonably incurred in investigating, preparing for, providing
evidence in, or defending against any claim, litigation, action, investigation
or proceeding by any governmental, regulatory or arbitration agency, body or
authority, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under subsections (a)(i) or
(a)(ii) above; and will reimburse the Underwriter for any legal or other
expenses reasonably incurred by the Underwriter in connection with investigating
or defending any such action or claim; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with Underwriter Information;
and provided further, that the foregoing indemnity agreement is subject to the
conditions that, insofar as it relates to any untrue statement, omission, or
alleged omission made in any Preliminary Prospectus but eliminated or remedied
in the Prospectus, such indemnity agreement shall not inure to the benefit of
the Underwriter from whom the person asserting any loss, claim, damage, or
liability purchased any Shares that are the subject thereof (or to the benefit
of any person who controls the Underwriter), if a copy of the Prospectus was not
sent or given to such person within the time required by the Act and the Rules
and Regulations and the Prospectus would have cured the defect giving rise to
such loss, claim, damage, or liability.
(b) The Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages, liabilities or expenses, as
incurred, to which the Company may become subject, under the Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement thereto in reliance upon and in conformity with the Underwriter
Information; and will reimburse the Company for any legal or other expenses
reasonably incurred by the
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Company in connection with investigating or defending any such action or claim.
(c) Promptly after receipt by an indemnified party under
subsections (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability except to the extent
it is prejudiced thereby. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to local counsel, if any)
separate from their own counsel for all indemnified parties in connection with
any action or separate, but similar or related, actions arising out of the same
general allegations or circumstances.
(d) If the indemnification provided for in this Section 8
is unavailable to or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above in respect of any losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof), referred
to therein and with respect to which such party would otherwise be entitled to
indemnity by virtue thereof, then each indemnifying party shall contribute the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (or actions or proceedings in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriter on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give notice required under subsection (c) above,
then each indemnifying party shall contribute such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and the Underwriter on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses (or actions or proceedings in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriter on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the 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 statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Underwriter Information on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriter agree that it would not
be just and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) referred to above in this subsection (d) shall
be deemed to include any legal or other
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expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which the Underwriter has otherwise
been required to pay by reason of such untrue statement or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Company under this Section 8
shall be in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each director, officer,
partner or person, if any, who controls the Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act; and the obligations
of the Underwriter under this Section 8 shall be in addition to any liability
which the Underwriter may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company who signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act.
9. Default of Underwriter.
If the Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Closing Date, the
Underwriter may in its discretion arrange for another party or other parties to
purchase such Shares on the terms contained herein. If within 36 hours after
such default by the Underwriter, the Underwriter does not arrange for the
purchase of such Shares, then the Company shall be entitled to a further period
of 36 hours within which to procure another party or other parties satisfactory
to the Underwriter to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, the Underwriter notifies the Company
that the Underwriter has so arranged for the purchase of such Shares, or the
Company notifies the Underwriter that it has so arranged for the purchase of
such Shares, the Underwriter or the Company shall have the right to postpone the
Closing Date or the Option Closing Date for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in the Underwriter's opinion may
thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares. The 36-hour periods referred to in this subsection (a) shall not include
any hours between (i) 5:00 p.m., Greenville, South Carolina time, on any Friday
through 9:00 a.m., Greenville, South Carolina time, the following Monday or (ii)
5:00 p.m., Greenville, South Carolina time, on the eve of any day on which the
New York Stock Exchange is closed for trading ("holiday"), and 9:00 a.m.,
Greenville, South Carolina time on the day following that holiday.
10. Financial Advisor Services. In the event that the Company or
the shareholders of the Company engage in a transaction prior to the
consummation of the sale of the Shares and for a period ending July 27, 2000, in
connection with which more than 25%, directly or indirectly, of the Company's
outstanding capital stock, or assets representing 25% or more of the value of
the Company's total assets are sold or agreed to be sold, the Company shall
engage Xxxxx X. Xxxxxx & Co., Inc. to serve as a financial advisor in connection
with such transaction based upon the terms of the customary agreement of Xxxxx
X. Xxxxxx & Co., Inc. in connection with such transactions, and shall pay a
financial advisory fee in the amount of 2% of the
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total consideration in connection with the transaction (including payments made
to shareholders of the Company, the face amount of any debt assumed and the
current value of any employment or noncompetition agreements involved in the
transaction). The financial advisory fee will be payable upon the consummation
of the transaction.
11. Survival. The respective indemnities, agreements,
representations, warranties and other statements of the Company and the
Underwriter, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of the Underwriter or any controlling person of the
Underwriter, or the Company or any officer or director or controlling person of
the Company, and shall survive delivery of and payment for the Shares.
12. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time as
this Agreement shall have become effective, it may be terminated by the Company,
by notifying the Underwriter, or by the Underwriter, by notifying the Company;
provided, however, that the provisions of this Section and of Sections 6, 8 and
10 hereof shall at all times be effective.
If this Agreement shall be terminated pursuant to Section 9
hereof, or if this Agreement, by election of the Underwriter, shall not become
effective pursuant to the provisions of this Section, the Company shall then be
under no liability to the Underwriter except as provided in Section 6 and
Section 8 hereof; but, if for any other reason any Shares are not delivered by
or on behalf of Company as provided herein, the Company will reimburse the
Underwriter for all out-of-pocket expenses approved in writing by the
Underwriter, including fees and disbursements of counsel, reasonably incurred by
the Underwriter in making preparations for the purchase, sale and delivery of
the Shares not so delivered, but the Company shall be under no further liability
to the Underwriter except as provided in Sections 6, 8 and 10 hereof.
13. Notices. All statements, requests, notices and agreements
hereunder shall be in writing or by telegram if promptly confirmed in writing,
and if to the Underwriter shall be sufficient in all respects if delivered or
sent by registered mail to Xxxxx X. Xxxxxx & Co., Inc., 00 Xxxxx Xxxx Xxxxxx,
Xxxxx 000, Post Xxxxxx Xxx 000, Xxxxxxxxxx, Xxxxx Xxxxxxxx, 00000 (and a copy
thereof shall be sent in the same manner to Long Xxxxxxxx & Xxxxxx LLP, 000
Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx, 00000, Attention: Xxxxxxx X.
Xxxxx, Esq.); and if to the Company shall be sufficient in all respects if
delivered or sent by registered mail to the address of the Company set forth in
the Registration Statement, Attention: Xx. Xxxxxxxx X. Xxxx (and a copy thereof
shall be sent in the same manner to Xxxxxx Xxxxxxx Xxxxx & Scarborough LLP, 000
Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000, Xxxxxxx, Xxxxxxx, 00000, Attention: Xxxx X.
Xxxxxxx, Esq.
14. Miscellaneous.
(a) This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriter and the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or the Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Shares from the Underwriter shall be
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deemed a successor or assign by reason merely of such purchase.
(b) Time shall be of the essence of this Agreement.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina, without giving effect
to the choice of law or conflicts of law principles thereof.
(d) This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.
If the foregoing is in accordance with the Underwriter's
understanding, please sign and return to us counterparts hereof, and upon the
acceptance hereof by the Underwriter, this letter and such acceptance hereof
shall constitute a binding agreement between the Underwriter and the Company.
Very truly yours,
COASTAL BANKING COMPANY, INC.
By:
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Xxxxxxxx X. Xxxx, President and
Chief Executive Officer
Accepted as of the date hereof at Greenville, South Carolina.
XXXXX X. XXXXXX & CO., INC.
By:
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Xxxxx X. Xxxxx, Chairman
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